[Federal Register Volume 90, Number 135 (Thursday, July 17, 2025)]
[Proposed Rules]
[Pages 33476-33865]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-13360]
[[Page 33475]]
Vol. 90
Thursday,
No. 135
July 17, 2025
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 410, 412, 415 et al.
45 CFR Part 180
Medicare and Medicaid Programs: Hospital Outpatient Prospective Payment
and Ambulatory Surgical Center Payment Systems; Quality Reporting
Programs; Overall Hospital Quality Star Ratings; and Hospital Price
Transparency; Proposed Rule
Federal Register / Vol. 90 , No. 135 / Thursday, July 17, 2025 /
Proposed Rules
[[Page 33476]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 410, 412, 413, 415, 416, and 419
Office of the Secretary
45 CFR Part 180
[CMS-1834-P]
RIN 0938-AV51
Medicare and Medicaid Programs: Hospital Outpatient Prospective
Payment and Ambulatory Surgical Center Payment Systems; Quality
Reporting Programs; Overall Hospital Quality Star Ratings; and Hospital
Price Transparency
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Proposed rule.
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SUMMARY: This proposed rule would revise the Medicare Hospital
Outpatient Prospective Payment System (OPPS) and the Medicare
Ambulatory Surgical Center (ASC) payment system for calendar year 2026
based on our continuing experience with these systems. We also describe
the changes to the amounts and factors used to determine the payment
rates for Medicare services paid under the OPPS and those paid under
the ASC payment systems. This proposed rule would also update and
refine the requirements for the Hospital Outpatient Quality Reporting
Program, Rural Emergency Hospital Quality Reporting Program, Ambulatory
Surgical Center Quality Reporting Program, Overall Hospital Quality
Star Rating, and hospitals to make public their standard charge
information and enforcement of hospital price transparency. This rule
also contains requests for information on measure concepts regarding
Well-Being and Nutrition for consideration in future years for all
three programs (OQR, REHQR, and ASCQR; expanding the method to control
for unnecessary increases in the volume of covered OPD services to on-
campus clinic visits; software as a service; and adjusting payment
under the OPPS for services predominately performed in the ambulatory
surgical center or physician office settings.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, by September 15, 2025.
ADDRESSES: In commenting, please refer to file code CMS-1834-P.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1834-P, P.O. Box 8010,
Baltimore, MD 21244-8010.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1834-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Regulation coordination questions, contact Gina Aughenbaugh via
email at [email protected].
Add-on Payment for Radiopharmaceutical Technetium-99m (Tc-99m)
Derived from Domestically Produced Molybdenum-99, contact Au'Sha
Washington via email at [email protected] or Leone Kisler at
[email protected].
Adjusting Payment under the OPPS for Services Predominantly
Performed in the ASC or Physician Office Settings Request for
Information, contact Elise Barringer via email at
[email protected].
Advisory Panel on Hospital Outpatient Payment (HOP Panel), contact
the HOP Panel mailbox at [email protected].
Ambulatory Surgical Center Covered Procedures List (ASC CPL),
contact Abigail Cesnik via email at [email protected].
Ambulatory Surgical Center Quality Reporting (ASCQR) Program
measures, contact Marsha Hertzberg via email at
[email protected].
Ambulatory Surgical Center Quality Reporting (ASCQR) Program
policies, contact Anita Bhatia via email at [email protected].
All-Inclusive Rate (AIR) Add-On Payment for High-Cost Drugs
Provided by Indian Health Service (IHS) and Tribal Facilities, contact
Nate Vercauteren via email at [email protected].
Blood and Blood Products, contact Nicole Marcos via email at
[email protected].
Cancer Hospital Payments, contact Scott Talaga via email at
[email protected].
CMS Web Posting of the OPPS and ASC Payment Files, contact Gil Ngan
via email at [email protected].
Composite APCs (Multiple Imaging and Mental Health) and
Comprehensive APCs (C-APCs), contact Elise Barringer via email at
[email protected].
Device-Intensive Status and No Cost/Full Credit and Partial Credit
Devices, contact Scott Talaga via email at [email protected].
Graduate Medical Education (GME) Accreditation, contact
[email protected].
Hospital Outpatient Quality Reporting (OQR) Program policies,
contact Kimberly Go via email at [email protected].
Hospital Outpatient Quality Reporting (OQR) Program measures,
contact Kristina Rabarison via email at [email protected].
Hospital Outpatient Visits (Emergency Department Visits and
Critical Care Visits), contact Elise Barringer via email at
[email protected].
Hospital Price Transparency, contact Sarah Wheat via email at
[email protected].
Inpatient Only (IPO) Procedures List, contact Abigail Cesnik via
email at [email protected].
Market-Based Data Collection and Market-Based MS-DRG Relative
Weight Methodology Issues, contact [email protected].
Medical Review of Certain Inpatient Hospital Admissions under
Medicare Part A for CY 2026 and Subsequent Years (2-Midnight Rule),
contact Nate Vercauteren via email at [email protected].
Medicare OPPS Drug Acquisition Cost Survey, contact Cory Duke via
email at [email protected] or Gil Ngan at [email protected] or
Nate Vercauteren at [email protected].
Method to Control Unnecessary Increases in the Volume of Outpatient
Services, contact Elise Barringer via email at
[email protected].
New Technology Intraocular Lenses (NTIOLs), contact Scott Talaga
via email at [email protected].
Non-Opioid Policy or Implementation of Section 4135 of the
Consolidated Appropriations Act (CAA), 2023,
[[Page 33477]]
contact Cory Duke via email at [email protected] or Nicole Marcos
via email at [email protected].
OPPS Brachytherapy, contact Cory Duke via email at
[email protected] and Scott Talaga via email at
[email protected].
OPPS Data (APC Weights, Conversion Factor, Copayments, Cost-to-
Charge Ratios (CCRs), Data Claims, Geometric Mean Calculation, Outlier
Payments, and Wage Index), contact Erick Chuang via email at
[email protected] or Scott Talaga via email at
[email protected].
OPPS Drugs, Radiopharmaceuticals, Biologicals, and Biosimilar
Products, contact Gil Ngan via email at [email protected], Cory Duke
via email at [email protected], or Nate Vercauteren via email at
[email protected].
OPPS New Technology Procedures/Services, contact the New Technology
APC mailbox at [email protected].
OPPS Packaged Items/Services, contact Cory Duke via email at
[email protected].
OPPS Pass-Through Devices, contact the Device Pass-Through mailbox
at [email protected].
OPPS Status Indicators (SI) and Comment Indicators (CI), contact
Marina Kushnirova via email at [email protected] or Tonya
Gierke at [email protected].
Overall Hospital Quality Star Rating policies, contact Tyson
Nakashima Sr. via email [email protected].
Partial Hospitalization Program (PHP), Intensive Outpatient (IOP),
and Community Mental Health Center (CMHC) Issues, contact the PHP
Payment Policy Mailbox at [email protected].
Remote Services, contact Elise Barringer via email at
[email protected] or Nate Vercauteren via email at
[email protected].
Rural Emergency Hospital Quality Reporting (REHQR) Program
policies, contact Anita Bhatia via email at [email protected].
Rural Emergency Hospital Quality Reporting (REHQR) Program
measures, contact Melissa Hager via email at [email protected].
Skin Substitute Products, contact Susan Janeczko via email at
[email protected], Cory Duke via email at
[email protected], or Nicole Marcos via email at
[email protected].
Software as a Service, contact Nicole Marcos via email at
[email protected].
Virtual Direct Supervision of Outpatient Therapeutic and Diagnostic
Services in Hospitals and CAHs, contact Nate Vercauteren via email at
[email protected].
All Other Issues Related to Hospital Outpatient Payments Not
Previously Identified, contact the OPPS mailbox at
[email protected].
All Other Issues Related to the Ambulatory Surgical Center Payments
Not Previously Identified, contact the ASC mailbox at
[email protected].
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following
website as soon as possible after they have been received: https://www.regulations.gov. Follow the search instructions on that website to
view public comments. CMS will not post on Regulations.gov public
comments that make threats to individuals or institutions or suggest
that the individual will take actions to harm the individual. CMS
continues to encourage individuals not to submit duplicative comments.
We will post acceptable comments from multiple unique commenters even
if the content is identical or nearly identical to other comments.
Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a
plain language summary of this rule may be found at https://www.regulations.gov/.
Deregulation Request for Information (RFI): On January 31, 2025,
President Trump issued Executive Order (E.O.) 14192 ``Unleashing
Prosperity Through Deregulation,'' which states the Administration
policy to significantly reduce the private expenditures required to
comply with Federal regulations to secure America's economic prosperity
and national security and the highest possible quality of life for each
citizen. We would like public input on approaches and opportunities to
streamline regulations and reduce administrative burdens on providers,
suppliers, beneficiaries, and other interested parties participating in
the Medicare program. CMS has made available an RFI at https://www.cms.gov/medicare-regulatory-relief-rfi. Please submit all comments
in response to this request for information through the provided
weblink.
Addenda Available Only Through the Internet on the CMS Website
In the past, a majority of the Addenda referred to in our OPPS/ASC
proposed and final rules were published in the Federal Register as part
of the annual rulemakings. However, beginning with the calendar year
(CY) 2012 OPPS/ASC proposed rule, all of the Addenda no longer appear
in the Federal Register as part of the annual OPPS/ASC proposed and
final rules to decrease administrative burden and reduce costs
associated with publishing lengthy tables. Instead, these Addenda are
published and available only on the CMS website. The Addenda relating
to the OPPS are available at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices.
The Addenda relating to the ASC payment system are available at https://www.cms.gov/medicare/payment/prospective-payment-systems/ambulatory-surgical-center-asc/asc-regulations-and-notices.
Current Procedural Terminology (CPT) Copyright Notice
Throughout this proposed rule, we use CPT codes and descriptions to
refer to a variety of services. We note that CPT codes and descriptions
are copyright 2025 American Medical Association (AMA). All Rights
Reserved. CPT is a registered trademark of the AMA. Applicable Federal
Acquisition Regulations and Defense Federal Acquisition Regulations
apply.
Table of Contents
I. Summary and Background
A. Executive Summary of This Document
B. Legislative and Regulatory Authority for the Hospital OPPS
C. Excluded OPPS Services and Hospitals
D. Prior Rulemaking
E. Advisory Panel on Hospital Outpatient Payment (the HOP Panel
or the Panel)
F. Public Comments Received on the CY 2025 OPPS/ASC Final Rule
With Comment Period
II. Updates Affecting OPPS Payments
A. Recalibration of APC Relative Payment Weights
B. Proposed Conversion Factor Update
C. Proposed Wage Index Changes
D. Proposed Statewide Average Default Cost-to-Charge Ratios
(CCRs)
E. Proposed Adjustment for Rural Sole Community Hospitals (SCHs)
and Essential Access Community Hospitals (EACHs) Under Section
1833(t)(13)(B) of the Act for CY 2026
F. Proposed Payment Adjustment for Certain Cancer Hospitals for
CY 2026
G. Proposed Hospital Outpatient Outlier Payments
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H. Proposed Calculation of an Adjusted Medicare Payment From the
National Unadjusted Medicare Payment
I. Proposed Beneficiary Copayments
III. Proposed OPPS Ambulatory Payment Classification (APC) Group
Policies
A. Proposed OPPS Treatment of New and Revised HCPCS Codes
B. OPPS Changes--Variations Within APCs
C. New Technology APCs
D. Universal Low Volume APC Policy for Clinical and
Brachytherapy APCs
E. APC-Specific Policies
F. Comment Solicitation on Payment Policy for Software as a
Service (SaaS)
G. Continuation of Payment Policy for Radiation Therapy Services
Furnished at Nonexcepted Off-Campus Provider Based Departments
(PBDs)
IV. OPPS Payment for Devices
A. Pass-Through Payment for Devices
B. Device-Intensive Procedures
V. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals
A. OPPS Transitional Pass-Through Payment for Additional Costs
of Drugs, Biologicals, and Radiopharmaceuticals
B. Proposed OPPS Payment for Drugs, Biologicals, and
Radiopharmaceuticals Without Pass-Through Payment Status
C. Notice of Intent To Conduct Medicare OPPS Drugs Acquisition
Cost Survey
VI. Estimate of OPPS Transitional Pass-Through Spending for Drugs,
Biologicals, Radiopharmaceuticals, and Devices
A. Amount of Additional Payment and Limit on Aggregate Annual
Adjustment
B. Proposed Estimate of Pass-Through Spending for CY 2026
VII. OPPS Payment for Hospital Outpatient Visits and Critical Care
Services
VIII. Payment for Partial Hospitalization and Intensive Outpatient
Services
A. Background
B. Coding and Billing for PHP and IOP Services Under the OPPS
C. Proposed CY 2026 Payment Rates for PHP and IOP
D. Outlier Policy for CMHCs
IX. Services That Will Be Paid Only as Inpatient Services
A. Background
B. Current Methodology for Identifying Appropriate Changes to
the IPO List
C. Proposed CY 2026 Changes to IPO List
X. Nonrecurring Policy Changes
A. Method To Control Unnecessary Increases in the Volume of
Outpatient Services Furnished in Excepted Off-Campus Provider-Based
Departments (PBDs)
B. Request for Information: Adjusting Payment Under the OPPS for
Services Predominately Performed in the Ambulatory Surgical Center
or Physician Office Settings
C. Virtual Direct Supervision of Cardiac Rehabilitation (CR),
Intensive Cardiac Rehabilitation (ICR), Pulmonary Rehabilitation
(PR) Services and Diagnostic Services Furnished to Hospital
Outpatients
D. Medical Review of Certain Inpatient Hospital Admissions Under
Medicare Part A for CY 2026 and Subsequent Years
E. Coding and Payment for Category B IDE Devices and Studies
XI. Proposed CY 2026 OPPS Payment Status and Comment Indicators
A. Proposed CY 2026 OPPS Payment Status Indicator Definitions
B. Proposed CY 2026 Comment Indicator Definitions
XII. MedPAC Recommendations
A. OPPS Payment Rates Update
B. Medicare Safety Net Index
XIII. Proposed Updates to the Ambulatory Surgical Center (ASC)
Payment System
A. Background, Legislative History, Statutory Authority, and
Prior Rulemaking for the ASC Payment System
B. Proposed ASC Treatment of New and Revised Codes
C. Proposed Payment Policies Under the ASC Payment System
D. Proposed Additions to ASC Covered Surgical Procedures and
Covered Ancillary Services Lists
E. Proposed CY 2026 Non-Opioid Policy for Pain Relief Under the
OPPS and ASC Payment System
F. Proposed New Technology Intraocular Lenses (NTIOLs)
G. Proposed Calculation of the ASC Payment Rates and the ASC
Conversion Factor
XIV. Cross-Program Proposals for the Hospital Outpatient Quality
Reporting (OQR), Rural Emergency Hospital Quality Reporting (REHQR),
and Ambulatory Surgical Center Quality Reporting (ASCQR) Programs
A. Background
B. Measure Concepts Under Consideration for Future Years in the
Hospital OQR, REHQR, and ASCQR Programs-Request for Information
(RFI): Well-Being and Nutrition
C. Proposed Changes to the Hospital OQR, REHQR, and ASCQR
Program Measure Sets
D. Proposed Updates to the Extraordinary Circumstances Exception
(ECE) Policy for the Hospital OQR, REHQR, and ASCQR Programs
XV. Hospital Outpatient Quality Reporting (OQR) Program
A. Background and History of the Hospital OQR Program
B. Proposed Changes to the Hospital OQR Program Measure Set
C. Proposed Updates to the Form, Manner, and Timing of Hospital
OQR Program Data Submission
D. Payment Reduction for Hospitals That Fail To Meet the
Hospital OQR Program Requirements for the CY 2026 Payment
Determination
XVI. Rural Emergency Hospital Quality Reporting (REHQR) Program
A. Background and History of the REHQR Program
B. Proposed Changes to the REHQR Program Measure Set R-C Pages
C. Proposed Updates to the Form, Manner, and Timing of REHQR
Program Data Submission
XVII. Ambulatory Surgical Center Quality Reporting (ASCQR) Program
A. Background and History of the ASCQR Program
B. Proposed Changes to the ASCQR Program Measure Set
C. Proposed Updates to the Form, Manner, and Timing of ASCQR
Program Data Submission
D. Payment Reduction for ASCs That Fail To Meet the ASCQR
Program Requirements
XVIII. Overall Hospital Quality Star Rating Modification To
Emphasize the Safety of Care Measure Group
A. Summary
B. Background
C. Current Overall Hospital Quality Star Rating Methodology
(Sec. 412.190)
D. Proposed Modification to the Overall Hospital Quality Star
Rating Methodology
XIX. Updates to Requirements for Hospitals To Make Public a List of
Their Standard Charges
A. Introduction and Overview
B. Proposal To Modify the Requirements for Making Public
Hospital Standard Charges at 45 CFR 180.50
C. Proposal To Improve and Enhance Enforcement
XX. Proposed Market-Based Medicare Severity-Diagnosis Related Groups
(MS-DRG) Relative Weight Data Collection and Change in Methodology
for Calculating MS-DRG Relative Weights Under the Inpatient
Prospective Payment System
A. Overview
B. Factors Considered
C. Market-Based MS-DRG Relative Weight Estimation
XXI. Graduate Medical Education Accreditation
XXII. Collection of Information Requirements
A. ICRs for the Hospital Outpatient Quality Reporting (OQR)
Program
B. ICRs for the Rural Emergency Hospital Quality Reporting
(REHQR) Program
C. ICRs for the Ambulatory Surgical Center Quality Reporting
(ASCQR) Program
D. Summary of Information Collection Burden Estimates for the
Overall Hospital Quality Star Rating
E. ICRs for Payer-Specific Negotiated Charges Data Collection
F. ICRs for Medicare OPPS Drug Acquisition Cost Survey
G. ICRs for Hospital Price Transparency
XXIII. Files Available to the Public via the Internet
XXIV. Response to Comments
XXV. Economic Analyses
A. Statement of Need
B. Overall Impact of Provisions of This Proposed Rule
C. Detailed Economic Analyses
D. Regulatory Review Cost Estimation
E. Regulatory Flexibility Act (RFA) Analysis
F. Unfunded Mandates Reform Act (UMRA)
G. Federalism
H. E.O. 14192, ``Unleashing Prosperity Through Deregulation''
[[Page 33479]]
I. Summary and Background
A. Executive Summary of this Document
1. Purpose
We propose to update the payment policies and payment rates for
services furnished to Medicare beneficiaries in hospital outpatient
departments (HOPDs) and ambulatory surgical centers (ASCs), beginning
January 1, 2026. Section 1833(t) of the Social Security Act (the Act)
requires us to annually review and update the payment rates for
services payable under the Hospital Outpatient Prospective Payment
System (OPPS). Specifically, section 1833(t)(9)(A) of the Act requires
the Secretary of the Department of Health and Human Services (the
Secretary) to review certain components of the OPPS not less often than
annually, and to revise the groups, the relative payment weights, and
the wage and other adjustments to take into account changes in medical
practice, changes in technology, and the addition of new services, new
cost data, and other relevant information and factors. In addition,
under section 1833(i)(D)(v) of the Act, we annually review and update
the ASC payment rates. This proposed rule also includes additional
policy changes made in accordance with our experience with the OPPS and
the ASC payment system and recent changes in our statutory authority.
We describe these and various other statutory authorities in the
relevant sections of this proposed rule. In addition, this proposed
rule would update the requirements for the Hospital Outpatient Quality
Reporting (OQR), the Rural Emergency Hospital Quality Reporting
(REHQR), the Ambulatory Surgical Center Quality Reporting (ASCQR)
Programs, and Overall Hospital Quality Star Rating. Finally, we would
also update and refine the requirements for hospitals to make public
their standard charges and CMS enforcement of hospital price
transparency (HPT) regulations.
Please note, some sections of this proposed rule contain a request
for information (RFI). In accordance with the implementing regulations
of the Paperwork Reduction Act of 1995 (PRA), specifically 5 CFR
1320.3(h)(4), these general solicitations are exempt from the PRA.
Facts or opinions submitted in response to general solicitations of
comments from the public, published in the Federal Register or other
publications, regardless of the form or format thereof, provided that
no person is required to supply specific information pertaining to the
commenter, other than that necessary for self-identification, as a
condition of the agency's full consideration, are not generally
considered information collections and therefore not subject to the
PRA.
Respondents are encouraged to provide complete but concise
responses. These RFIs are issued solely for information and planning
purposes; they do not constitute a Request for Proposal (RFP),
applications, proposal abstracts, or quotations. These RFIs do not
commit the U.S. Government to contract for any supplies or services or
make a grant award. Further, CMS is not seeking proposals through these
RFIs and will not accept unsolicited proposals. Responders are advised
that the U.S. Government will not pay for any information or
administrative costs incurred in response to these RFIs; all costs
associated with responding to these RFIs will be solely at the
interested party's expense. Not responding to these RFIs does not
preclude participation in any future procurement, if conducted. It is
the responsibility of the potential responders to monitor these RFI
announcements for additional information pertaining to these requests.
Please note that CMS will not respond to questions about the policy
issues raised in these RFIs. CMS may or may not choose to contact
individual responders. Such communications would only serve to further
clarify written responses. Contractor support personnel may be used to
review RFI responses. Responses to this notice are not offers and
cannot be accepted by the U.S. Government to form a binding contract or
issue a grant. Information obtained as a result of these RFIs may be
used by the U.S. Government for program planning on a non-attribution
basis. Respondents should not include any information that might be
considered proprietary or confidential. These RFIs should not be
construed as a commitment or authorization to incur cost for which
reimbursement would be required or sought. All submissions become U.S.
Government property and will not be returned. CMS may publicly post the
comments received, or a summary thereof.
2. Summary of the Major Provisions
OPPS Update: For CY 2026, we propose to increase the
payment rates under the OPPS by an Outpatient Department (OPD) fee
schedule increase factor of 2.4 percent. This increase factor is based
on the proposed inpatient hospital market basket percentage increase of
3.2 percent for inpatient services paid under the hospital inpatient
prospective payment system (IPPS) reduced by a proposed productivity
adjustment of 0.8 percentage point. Based on this update, we estimate
that total payments to OPPS providers (including beneficiary cost
sharing and estimated changes in enrollment, utilization, and case mix)
for calendar year (CY) 2026 will be approximately $100.0 billion, an
increase of approximately $8.1 billion compared to estimated CY 2025
OPPS payments.
We are continuing to implement the statutory 2.0 percentage point
reduction in payments for hospitals that fail to meet the hospital
outpatient quality reporting requirements by applying a reporting
factor of 0.9805 to the OPPS payments and copayments for all applicable
services. We note that under the proposed 340B remedy offset, payments
for services at hospitals subject to the 340B remedy offset will be
reduced by 2.0 percentage points.
ASC Payment Update: For CYs 2019 through 2023, we adopted
a policy to update the ASC payment system using the hospital market
basket update. In light of the impact of the COVID-19 public health
emergency (PHE) on healthcare utilization, we extended our policy to
update the ASC payment system using the hospital market basket update
an additional 2 years--through CYs 2024 and 2025. In this proposed
rule, we propose to extend our utilization of the hospital market
basket update as the update factor for the ASC payment system for 1
additional year (through CY 2026). Using the hospital market basket
update, for CY 2026, we propose to increase payment rates under the ASC
payment system by 2.4 percent for ASCs that meet the quality reporting
requirements under the ASCQR Program. This increase is based on a
proposed hospital market basket percentage increase of 3.2 percent
reduced by a proposed productivity adjustment of 0.8 percentage point.
Based on this proposed update, we estimate that total payments to ASCs
(including beneficiary cost sharing and estimated changes in
enrollment, utilization, and case-mix) for CY 2026 will be
approximately $9.2 billion, an increase of approximately $480 million
compared to estimated CY 2025 Medicare payments.
Device Pass-Through Payment Applications: For CY 2026, we
received 7 complete applications for device pass-through payments. We
solicit public comment on these applications and will make final
determinations on these applications in the CY 2026 OPPS/ASC final rule
with comment period.
Changes to the List of ASC Covered Surgical Procedures and
Ancillary
[[Page 33480]]
Services Lists: For CY 2026, we propose to expand the ASC CPL by
revising the criteria under Sec. 416.166 to modify the general
standard criteria and to eliminate five of the general exclusion
criteria, moving them into a new section as nonbinding physician
considerations for patient safety. We also propose to add 276
procedures to the ASC CPL based on these criteria changes and add an
additional 271 codes to the ASC CPL that are proposed for removal from
the IPO list for CY 2026.
Changes to the Inpatient Only (IPO) List: For CY 2026, we
propose to phase out the IPO list over 3 years, beginning with the
removal of 285 mostly musculoskeletal services for CY 2026.
Add-on Payment for Radiopharmaceutical Technetium-99m (Tc-
99m) Derived from Domestically Produced Molybdenum-99 (Mo-99): In the
CY 2025 OPPS/ASC final rule with comment period, we finalized that for
CY 2026 the add-on payment for radiopharmaceuticals produced without
the use of Tc-99m derived from non-Highly Enriched Uranium sources
would be replaced with an add-on payment for radiopharmaceuticals that
use Tc-99m derived from domestically produced Mo-99. For CY 2026, we
propose a $10 per dose amount for this add-on payment, and that at
least 50 percent of the Mo-99 used in the Tc-99m generator that
produces a dose of Tc-99m must be domestically produced for the dose to
qualify for the add-on payment. We also propose to codify our
definition for domestically produced Mo-99, and to establish new HCPCS
C-code C917X (Tc-99m from domestically produced non-HEU Mo-99, [minimum
50 percent], full cost recovery add-on, per study dose).
Cross-Program Proposals for the Hospital Outpatient
Quality Reporting (OQR), Rural Emergency Hospital Quality Reporting
(REHQR), and Ambulatory Surgical Center Quality Reporting (ASCQR)
Programs: We propose to remove: (1) the COVID-19 Vaccination Coverage
Among Healthcare Personnel (HCP) measure from the Hospital OQR and
ASCQR Program measure sets beginning with the CY 2024 reporting period/
CY 2026 payment determination; (2) the Hospital Commitment to Health
Equity (HCHE) measure from the Hospital OQR and REHQR Program measure
sets and the Facility Commitment to Health Equity (FCHE) measure from
the ASCQR Program measure set beginning with the CY 2025 reporting
period/CY 2027 payment or program determination; and (3) the Screening
for Social Drivers of Health (SDOH) measure and the Screen Positive
Rate for SDOH measure from the Hospital OQR, REHQR, and ASCQR Program
measure sets beginning with the CY 2025 reporting period. Additionally,
we seek comments regarding measured concepts related to well-being and
nutrition for future consideration in the Hospital OQR, REHQR, and
ASCQR Programs. We also propose to update and codify the Extraordinary
Circumstance Exception (ECE) policy to clarify that CMS has the
discretion to grant an extension in response to an ECE request for the
Hospital OQR, REHQR, and ASCQR Programs.
Hospital Outpatient Quality Reporting (OQR) Program: In
addition to the cross-program measures and policies, we propose to: (1)
adopt the Emergency Care Access & Timeliness eCQM with one year of
voluntary reporting for the CY 2027 reporting period followed by
mandatory reporting for the CY 2028 reporting period/CY 2030 payment
determination and subsequent years; (2) remove the Median Time from
Emergency Department (ED) Arrival to ED Departure for Discharged ED
Patients and the Left Without Being Seen measures beginning with the CY
2028 reporting period/2030 payment determination, contingent upon
finalization of adoption of the Emergency Care Access and Timeliness
eCQM; and (3) modify the Excessive Radiation Dose or Inadequate Image
Quality for Diagnostic Computed Tomography (CT) in Adults (Hospital
Level--Outpatient) measure (Excessive Radiation eCQM) from mandatory
reporting beginning with the CY 2027 reporting period to continue
voluntary reporting in the CY 2027 reporting period and subsequent
years.
Rural Emergency Hospital Quality Reporting (REHQR)
Program: In addition to the cross-program measures and policies, we
propose to: (1) adopt the Emergency Care Access & Timeliness eCQM
beginning with the CY 2027 reporting period/CY 2029 program
determination; and (2) establish related eCQM data submission and
reporting requirements, including that REHs would be provided the
option of reporting either the Emergency Care Access and Timeliness
eCQM or the Median Time from Emergency Department (ED) Arrival to ED
Departure for Discharged ED Patients measure beginning with the CY 2027
reporting period/CY 2029 program determination.
Ambulatory Surgical Center Quality Reporting (ASCQR)
Program: In addition to the cross-program measures and policies, we
propose to: (1) adopt the Patient Understanding of Key Information
Related to Recovery After a Facility-Based Outpatient Procedure or
Surgery, Patient Reported Outcome-Based Performance Measure
(Information Transfer PRO-PM) beginning with voluntary reporting for
the CY 2027 and CY 2028 reporting periods followed by mandatory
reporting beginning with the CY 2029 reporting period/CY 2031 payment
determination.
Overall Hospital Quality Star Rating Modification to
Emphasize the Safety of Care Measure Group: We propose updating the
methodology that will be used to calculate the Overall Hospital Quality
Star Rating through implementation of a 2-stage methodologic update. We
are updating the methodology to emphasize the importance of the Safety
of Care measure group, particularly to address the issue of hospitals
receiving a high Star Rating despite performing in the lowest quartile
of the Safety of Care measure group. The first-stage methodology update
would be a narrow but focused transitional step that would limit
hospitals to a maximum of four out of five stars (based on at least
three Safety of Care measure scores) if they performed in the lowest
quartile of the Safety of Care measure group in the 2026 Overall
Hospital Quality Star Rating. The second stage of the methodology
update would replace the first-stage update and reduce the Star Rating
of any hospital in the lowest quartile of Safety of Care (based on at
least three Safety of Care measure scores) by one star, to a minimum 1-
star rating for the 2027 Overall Hospital Quality Star Rating and later
years. These changes will prioritize safety for both patients and
healthcare workers and reflect CMS' fundamental commitment to ensuring
high-quality, safe care as a central component of health system
performance.
Partial Hospitalization and Intensive
Outpatient: We propose to calculate the CY 2026 Community Mental Health
Center (CMHC) Partial Hospitalization Program (PHP), and Intensive
Outpatient Program (IOP) costs based on 40 percent of the corresponding
proposed hospital-based PHP and IOP costs. This change would resolve a
cost inversion in CMHC cost data that resulted in higher geometric mean
costs for 3-service days than for 4-service days. It would also
stabilize rates for CMHCs by basing them on data from a much larger set
of providers while preserving the adjustment for the structural
differences between CMHC and hospital costs.
Notice of Intent to Conduct a Medicare OPPS
Drugs Acquisition Cost
[[Page 33481]]
Survey: Section 1833(t)(14)(D)(ii) of the Act requires the Secretary to
periodically conduct surveys of hospital acquisition costs for each
specified covered outpatient drug for use in setting the payment rates
for such drugs. Additionally, on April 18, 2025, President Trump signed
Executive Order (E.O.) 14273, ``Lowering Drug Prices by Once Again
Putting Americans First.'' Section 5 of the E.O., ``Appropriately
Accounting for Acquisition Costs of Drugs in Medicare,'' which directs
the Secretary of HHS to publish in the Federal Register a plan to
conduct a survey under section 1833(t)(14)(D)(ii) of the Act so he can
determine the hospital acquisition cost for covered outpatient drugs at
hospital outpatient departments. Accordingly, we will be conducting a
survey, with the survey submission window opening by early CY 2026, of
the acquisition costs for each separately payable drug acquired by all
hospitals paid under the OPPS. We intend for the survey to be completed
in time for the survey results to be used to inform policymaking
beginning with the CY 2027 OPPS/ASC proposed rule.
Two-Midnight Rule Medical Review Activities Exemptions:
For CY 2026, we propose to continue our existing policy exempting
procedures that are removed from the inpatient only (IPO) list under
the OPPS from certain medical review activities related to the two-
midnight policy. Under this policy, procedures removed from the IPO
list are exempted from site-of-service claim denials, Beneficiary and
Family-Centered Care Quality Improvement Organization (BFCC-QIO)
referrals to Recovery Audit Contractor (RAC) for persistent
noncompliance with the 2-midnight rule, and RAC reviews for ``patient
status'' (that is, site-of-service) until claims data demonstrates that
the procedures are more commonly billed in the outpatient setting than
the inpatient setting. We also propose to revise 42 CFR 412.3(d)(2) for
clarity.
Virtual Direct Supervision of Pulmonary
Rehabilitation (PR), Coronary Rehabilitation (CR), Intensive Coronary
Rehabilitation and Diagnostic Services. For CY 2026, we propose to
revise Sec. 410.27(a)(1)(iv)(B)(1) and Sec. 410.28(e)(2)(iii) to make
the availability of the direct supervision of CR, ICR, PR services and
diagnostic services via audio-video real-time communications technology
(excluding audio-only) permanent, except for diagnostic services that
have a global period indicator of 010 or 090.
Prospective Adjustment to Payments for Non-Drug
Items and Services to Offset the Increased Payments for Non-Drug Items
and Services Made in CY 2018 Through CY 2022 as a Result of the 340B
Payment Policy. For CY 2026, we propose to revise the reduction to the
OPPS conversion factor under Sec. 419.32(b)(1)(iv)(B)(12) used to
determine the payment amounts for non-drug items and services for
hospitals for whom this adjustment applies from 0.5 percent to 2
percent. The Remedy for the 340B-Acquired Drug Payment Policy for
Calendar Years 2018-2022 (88 FR 77150) codified a 0.5 percent reduction
in the OPPS conversion factor applicable to non-drug items and
services, excluding hospitals that enrolled in Medicare after January
1, 2018. This 0.5 percent reduction would remain in effect until the
estimated payment reduction reached the estimated $7.8 billion of
increased non-drug item and services payments made from CY 2018 through
CY 2022, which we estimated would occur in CY 2041. This prospective
offset aimed to balance the goal of restoring hospitals to their
financial position had the original 340B policy never existed, while
avoiding burdening them with an immediate single year recovery. After
subsequent reconsideration of balancing these two goals, we have
determined a shorter timeframe to be more appropriate. This proposed 2
percent reduction would remain in effect for certain hospitals until
the estimated payment reduction reaches $7.8 billion, which we estimate
will occur in CY 2031.
Payment for Skin Substitute Products under the
OPPS. For CY 2026, we propose to separately pay for the provision of
certain groups of skin substitute products as supplies when they are
used during a covered application procedure paid under the PFS in the
non-facility setting or under the OPPS. We propose to group skin
substitutes that are not drugs or biologicals using three FDA
regulatory categories (PMAs, 510(k)s, and 361 HCT/Ps) to set payment
rates. To effectuate this categorization into a payment policy under
the OPPS, we propose to create three new APCs for HCPCS codes that
describe skin substitute products organized by clinical and resource
similarity. These three APCs will divide skin substitutes by their FDA
regulatory pathway. Specifically, we propose to create: APC 6000 (PMA
Skin Substitute Products); APC 6001 (510(k) Skin Substitute Products);
and APC 6002 (361 HCT/P Skin Substitute Products). This proposal would
result in an initial payment rate of $125.38 for each of the new
proposed APCs. We propose implementing this policy in both the non-
facility, ambulatory surgical center setting, and outpatient hospital
settings.
Method to Control Unnecessary Increases in the
Volume of Outpatient Services Furnished in Excepted Off-Campus
Provider-Based Departments (PBDs): For CY 2026, we propose to use our
authority under section 1833(t)(2)(F) of the Act to apply the Physician
Fee Schedule equivalent rate for any HPCPCs codes assigned to the drug
administration services APCs, when provided at an off-campus PBD
excepted from section 1833(t)(21) of the Act. We propose to exempt
rural Sole Community Hospitals from this method to control the
unnecessary volume of drug administration services. Finally, we are
requesting information on expanding our volume control method to on-
campus clinic visits.
Request for information on Adjusting Payment
under the OPPS for Services Predominately Performed in the Ambulatory
Surgical Center or Physician Office Settings: For CY 2026, we are
requesting information for future rulemaking on the development of a
systematic process for identifying ambulatory services at high risk of
shifting to the hospital setting based on financial incentives rather
than medical necessity and adjusting payments according.
Request for information on Software as a
Service: We are issuing a request for information on alternative and
consistent payment methods for software as a service (SaaS) services
under the OPPS to consider for future rulemaking. We intend to identify
whether specific adjustments to our payment policies for SaaS services
are needed to more accurately and appropriately pay for these products
and services across settings of care.
Proposed Market-Based MS-DRG Relative Weight
Data Collection and Change in Methodology for Calculating MS-DRG
Relative Weights Under the Inpatient Prospective Payment System: As
discussed in section XX. of the proposed rule, in order to reduce the
Medicare program's reliance on the hospital chargemaster, and to
support the development of a market-based approach to payment under the
Medicare FFS system, we propose that hospitals would be required to
report certain market-based payment rate information on their Medicare
cost report for cost reporting periods ending on or after January 1,
2026, to be used in a proposed change to the methodology for
calculating the IPPS MS-DRG relative weights to reflect
[[Page 33482]]
relative market-based pricing. Specifically, the market-based rate
information we propose to collect on the Medicare cost report would be
the median of the payer-specific negotiated charges by MS-DRG, for a
hospital's MA organizations (MAOs). As described further in section
XX.C.2. of this proposed rule, we specifically propose that for the
purposes of reporting the data on the cost report, hospitals would
report the median of the payer-specific negotiated charges for an MS-
DRG that the hospital has disclosed for all of its MAOs on the most
recent version of the machine-readable file (MRF) that the hospital is
required to disclose under the hospital price transparency regulations
at 45 CFR part 180. We also propose a change to the methodology for
calculating the IPPS MS-DRG relative weights to incorporate this
market-based rate information, beginning in FY 2029. This proposed MS-
DRG relative weight methodology would utilize the proposed median
payer-specific negotiated charge information, collected on the cost
report, for calculating the MS-DRG relative weights.
Graduate Medical Education (GME) Accreditation:
In order to ensure that accreditation for approved medical residency
programs is in compliance with applicable laws related to race-based
admission policies and to improve the accreditation process, we propose
that accreditors may not require as part of accreditation, or otherwise
encourage institutions to put in place, diversity, equity, and
inclusion programs that encourage unlawful discrimination on the basis
of race or other violations of Federal law. We also note that the
Secretary may recognize other organizations that meet or exceed
Medicare's requirements as accreditors in order to increase the
potential for competition in the accreditation space and improve the
quality of the accreditation process. The effective date of this
proposal would be January 1, 2026.
Proposed Updates to Requirements for Hospitals
to Make Public a List of Their Standard Charges: We propose amendments
to the hospital price transparency (HPT) regulations to enhance clarity
and standardization in hospital pricing disclosures. Specifically, we
propose revisions to Sec. 180.20 to add definitions for ``tenth (10th)
percentile allowed amount,'' ``median allowed amount,'' and ``ninetieth
(90th) percentile allowed amount,'' to more accurately reflect the
distribution of actual amounts that the hospital has received for an
item or service. In tandem with this, we propose revisions to Sec.
180.50 to remove the requirement for hospitals to encode the estimated
allowed amount and instead require hospitals, beginning January 1,
2026, to disclose the 10th percentile, median, and 90th percentile
allowed amounts in machine-readable files (MRFs) when standard charges
are based on percentages or algorithms, as well as the count of allowed
amounts. We also propose that hospitals should use EDI 835 transaction
remittance advice (ERA) transaction data to calculate and encode these
values, and we propose specific instructions to hospitals with regard
to the methodology, including lookback period, that should be used to
calculate these amounts. We propose revisions to Sec. 180.50(a)(3) to
update the attestation language hospitals must include in the MRF and
to require hospitals to encode the name of the chief executive officer,
president or senior hospital official designated to oversee the
encoding of true, accurate, and complete data in the MRF. We also
propose revisions to Sec. 180.50(b)(2)(i)(A) to require hospitals,
beginning January 1, 2026, to encode in a newly created general data
element in the MRF their Type 2 (organizational) National Provider
Identifier(s) (NPI). Finally, to encourage faster resolution and
payment of CMPs and in exchange for a hospital's admission of having
violated HPT requirements, we propose to update Sec. 180.90 to allow
hospitals, under certain circumstances, the opportunity to have the
amount of a CMP reduced by 35 percent where the hospital waives its
right to an ALJ hearing. These proposed changes aim to improve price
transparency, facilitate efficient enforcement, and empower consumers
with actionable pricing information.
3. Summary of Costs and Benefits
In section XXV. of this proposed rule, we set forth a detailed
analysis of the regulatory and Federalism impacts that the proposed
changes would have on affected entities and beneficiaries. Key
estimated impacts are described below.
a. Impacts of all OPPS Changes
Table 112 in section XXV.C. of this proposed rule displays the
distributional impact of all the OPPS changes on various groups of
hospitals and CMHCs for CY 2026 compared to all estimated OPPS payments
in CY 2025. We estimate that the proposed policies in this proposed
rule would result in a 1.9 percent increase in OPPS payments to
providers for services prior to the 340B remedy offset. We estimate
that total OPPS payments for CY 2026, including beneficiary cost-
sharing, to the approximately 4,000 facilities paid under the OPPS
(including general acute care hospitals, children's hospitals, cancer
hospitals, and CMHCs) would increase by approximately $1.61 billion
compared to CY 2025 payments due to the OPD update, excluding changes
in enrollment, utilization, and case-mix. However, for providers
subject to the 340B remedy offset, the 340B remedy offset is estimated
to reduce payments by $1.1 billion in CY 2026.
We estimated the isolated impact of our OPPS policies on CMHCs
because CMHCs have historically only been paid for partial
hospitalization services under the OPPS. Beginning CY 2024, they are
also paid for IOP services under the OPPS. Based on our proposal to
calculate CMHC PHP and IOP costs based on 40 percent of the
corresponding proposed hospital-based PHP and IOP costs, we estimate a
0.6 percent increase in CY 2026 payments to CMHCs relative to their CY
2025 payments.
b. Impacts of the Updated Wage Indexes
We estimate that our update of the wage indexes based on the fiscal
year (FY) 2026 IPPS proposed rule wage indexes will result in a 0.1
percent increase for urban hospitals under the OPPS and a 0.4 percent
increase for rural hospitals. These wage indexes include continued
implementation of the Office of Management and Budget (OMB) labor
market area delineations based on 2020 Decennial Census data, with
updates, as discussed in section II.C. of this proposed rule.
c. Impacts of the Rural Adjustment and the Cancer Hospital Payment
Adjustment
For CY 2026, we proposed to continue to provide additional payments
to cancer hospitals so that a cancer hospital's payment-to-cost ratio
(PCR) after the additional payments is equal to the weighted average
PCR for the other OPPS hospitals using the most recently submitted or
settled cost report data. Section 16002(b) of the 21st Century Cures
Act requires that this weighted average PCR be reduced by 1.0
percentage point. In light of the COVID-19 PHE impact on claims and
cost data used to calculate the target PCR, we maintained the CY 2021
target PCR of 0.89 through CYs 2022 and 2023. However, in CY 2024, we
finalized a policy to reduce the target PCR by 1.0 percentage point
each calendar year until the target PCR equals the PCR of non-cancer
hospitals using the most recently submitted or settled cost report
data. For CY 2025, we finalized a target PCR of 0.87. For CY 2026, we
propose
[[Page 33483]]
a target PCR of 0.87, the same PCR of non-cancer hospitals using the
most recently submitted or settled cost report data, to determine the
CY 2026 cancer hospital payment adjustment to be paid at cost report
settlement. That is, the payment adjustments would be the additional
payments needed to result in a PCR equal to 0.87 for each cancer
hospital.
d. Impacts of the OPD Fee Schedule Increase Factor
For the CY 2026 OPPS/ASC, we are establishing an OPD fee schedule
increase factor of 2.4 percent and applying that increase factor to the
conversion factor for CY 2025. As a result of the OPD fee schedule
increase factor and other budget neutrality adjustments, we estimate
that urban hospitals would experience an increase in payments of
approximately 2.6 percent and that rural hospitals would experience an
increase in payments of 2.5 percent. Classifying hospitals by teaching
status, we estimate non-teaching hospitals would experience an increase
in payments of 2.6 percent, minor teaching hospitals would experience
an increase in payments of 2.8 percent, and major teaching hospitals
would experience an increase in payments of 2.3 percent. We also
classified hospitals by the type of ownership. We estimate that
hospitals with voluntary ownership would experience an increase of 2.5
percent in payments, while hospitals with government ownership would
experience an increase of 2.5 percent in payments. We estimate that
hospitals with proprietary ownership will experience an increase of 3.0
percent in payments.
e. Impacts of the ASC Payment Update
For impact purposes, the surgical procedures on the ASC covered
surgical procedure list are aggregated into surgical specialty groups
using CPT and HCPCS code range definitions. The percentage change in
estimated total payments by specialty groups under the proposed CY 2026
payment rates, compared to estimated CY 2025 payment rates, generally
ranges between an increase of 1 percent and an increase of 3 percent,
depending on the service, with some exceptions from expected
utilization changes with new CY 2026 AMA CPT codes.
f. Impacts of the Proposed Market-Based MS-DRG Relative Weight Data
Collection and Change in Methodology for Calculating MS-DRG Relative
Weights Under the Inpatient Prospective Payment System.
In section XX. of this proposed rule, we seek comment on a proposed
methodology for estimating the MS-DRG relative weights beginning in FY
2029 based on the median payer-specific negotiated charge information
we propose to collect on the cost report. We note that the estimated
total annual burden hours for this proposal are as follows: 3,038
hospitals times 20 hours per hospital equals 60,760 annual burden hours
and $4,857,458.20. We refer readers to section XXII.E. of this proposed
rule for further analysis of this assessment.
g. Impacts of Hospital Price Transparency
We propose to require hospitals to report four new data elements
when the payer-specific negotiated charge is based on a percentage or
algorithm--the median allowed amount (which would replace the estimated
allowed amount data element), the 10th percentile allowed amount, the
90th percentile allowed amount, and the count of allowed amounts. We
also propose to update the attestation language hospitals must include
in the MRF and to require hospitals to encode the name of the chief
executive officer, president or senior official designated to oversee
the encoding of true, accurate and complete data in the MRF.
Additionally, we propose to require hospitals to add their National
Provider Identifiers (NPIs) to the MRF. The proposals would advance the
comparability of standard charge information across hospitals and of
the HPT data with other healthcare data, including health plan
transparency data from the Transparency in Coverage (TiC) MRFs. These
proposals include a one-time burden of $478.08 per hospital, and a
total national cost of $3,545,441.28 ($478.08 x 7,416 hospitals). As
discussed in detail in section XIX. of this proposed rule, we believe
that the benefits to the public (and to hospitals themselves) outweigh
the burden imposed on hospitals.
B. Legislative and Regulatory Authority for the Hospital OPPS
When Title XVIII of the Act was 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 reasonable cost-based
payment methodology with a prospective payment system (PPS). The
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) added section
1833(t) to the Act, authorizing implementation of a PPS for hospital
outpatient services. The OPPS was first implemented for services
furnished on or after August 1, 2000. Implementing regulations for the
OPPS are located at 42 CFR parts 410 and 419.
The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of
1999 (BBRA) (Pub. L. 106-113) made major changes in the hospital OPPS.
The following Acts made additional changes to the OPPS: the Medicare,
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000
(BIPA) (Pub. L. 106-554); the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 (MMA) (Pub. L. 108-173); the Deficit
Reduction Act of 2005 (DRA) (Pub. L. 109-171), enacted on February 8,
2006; the Medicare Improvements and Extension Act under Division B of
Title I of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA)
(Pub. L. 109-432), enacted on December 20, 2006; the Medicare,
Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (Pub. L. 110-173),
enacted on December 29, 2007; the Medicare Improvements for Patients
and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), enacted on July
15, 2008; the Patient Protection and Affordable Care Act (Pub. L. 111-
148), enacted on March 23, 2010, as amended by the Health Care and
Education Reconciliation Act of 2010 (HCERA, Pub. L. 111-152), enacted
on March 30, 2010 (these two public laws are collectively known as the
Affordable Care Act); the Medicare and Medicaid Extenders Act of 2010
(MMEA, Pub. L. 111-309); the Temporary Payroll Tax Cut Continuation Act
of 2011 (TPTCCA, Pub. L. 112-78), enacted on December 23, 2011; the
Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA, Pub. L.
112-96), enacted on February 22, 2012; the American Taxpayer Relief Act
of 2012 (Pub. L. 112-240), enacted January 2, 2013; the Pathway for SGR
Reform Act of 2013 (Pub. L. 113-67) enacted on December 26, 2013; the
Protecting Access to Medicare Act of 2014 (PAMA, Pub. L. 113-93),
enacted on March 27, 2014; the Medicare Access and CHIP Reauthorization
Act (MACRA) of 2015 (Pub. L. 114-10), enacted April 16, 2015; the
Bipartisan Budget Act of 2015 (Pub. L. 114-74), enacted November 2,
2015; the Consolidated Appropriations
[[Page 33484]]
Act, 2016 (Pub. L. 114-113), enacted on December 18, 2015, the 21st
Century Cures Act (Pub. L. 114-255), enacted on December 13, 2016; the
Consolidated Appropriations Act, 2018 (Pub. L. 115-141), enacted on
March 23, 2018; the Substance Use Disorder- Prevention that Promotes
Opioid Recovery and Treatment for Patients and Communities Act (Pub. L.
115-271), enacted on October 24, 2018; the Further Consolidated
Appropriations Act, 2020 (Pub. L. 116-94), enacted on December 20,
2019; the Coronavirus Aid, Relief, and Economic Security Act (Pub. L.
116-136), enacted on March 27, 2020; the Consolidated Appropriations
Act, 2021 (Pub. L. 116-260), enacted on December 27, 2020; the
Inflation Reduction Act, 2022 (Pub. L. 117-169), enacted on August 16,
2022; and the Consolidated Appropriations Act (CAA), 2023 (Pub. L. 117-
238), enacted December 29, 2022.
Under the OPPS, we generally pay for hospital Part B services on a
rate-per-service basis that varies according to the APC group to which
the service is assigned. We use the Healthcare Common Procedure Coding
System (HCPCS) (which includes certain Current Procedural Terminology
(CPT) codes) to identify and group the services within each APC. The
OPPS includes payment for most hospital outpatient services, except
those identified in section I.C of this proposed rule. Section
1833(t)(1)(B) of the Act provides for payment under the OPPS for
hospital outpatient services designated by the Secretary (which
includes partial hospitalization services furnished by CMHCs), and
certain inpatient hospital services that are paid under Medicare Part
B.
The OPPS rate is an unadjusted national payment amount that
includes the Medicare payment and the beneficiary copayment. This rate
is divided into a labor-related amount and a nonlabor-related amount.
The labor-related amount is adjusted for area wage differences using
the hospital inpatient wage index value for the locality in which the
hospital or CMHC is located.
All services and items within an APC group are comparable
clinically and with respect to resource use, as required by section
1833(t)(2)(B) of the Act. In accordance with section 1833(t)(2)(B) of
the Act, subject to certain exceptions, items and services within an
APC group cannot be considered comparable with respect to the use of
resources if the highest median cost (or mean cost, if elected by the
Secretary) for an item or service in the APC group is more than 2 times
greater than the lowest median cost (or mean cost, if elected by the
Secretary) for an item or service within the same APC group (referred
to as the ``2 times rule''). In implementing this provision, we
generally use the cost of the item or service assigned to an APC group.
For new technology items and services, special payments under the
OPPS may be made in one of two ways. section 1833(t)(6) of the Act
provides for temporary additional payments, which we refer to as
``transitional pass-through payments,'' for at least 2 but not more
than 3 years for certain drugs, biological agents, brachytherapy
devices used for the treatment of cancer, and categories of other
medical devices. For new technology services that are not eligible for
transitional pass-through payments, and for which we lack sufficient
clinical information and cost data to appropriately assign them to a
clinical APC group, we have established special APC groups based on
costs, which we refer to as New Technology APCs. These New Technology
APCs are designated by cost bands which allow us to provide appropriate
and consistent payment for designated new procedures that are not yet
reflected in our claims data. Similar to pass-through payments, an
assignment to a New Technology APC is temporary; that is, we retain a
service within a New Technology APC until we acquire sufficient data to
assign it to a clinically appropriate APC group.
C. Excluded OPPS Services and Hospitals
Section 1833(t)(1)(B)(i) of the Act authorizes the Secretary to
designate the hospital outpatient services that are paid under the
OPPS. While most hospital outpatient services are payable under the
OPPS, section 1833(t)(1)(B)(iv) of the Act excludes payment for
ambulance, physical and occupational therapy, and speech-language
pathology services, for which payment is made under a fee schedule. It
also excludes screening mammography, diagnostic mammography, and
effective January 1, 2011, an annual wellness visit providing
personalized prevention plan services. The Secretary exercises the
authority granted under the statute to also exclude from the OPPS
certain services that are paid under fee schedules or other payment
systems. Such excluded services include, for example, the professional
services of physicians and nonphysician practitioners paid under the
Medicare Physician Fee Schedule (MPFS); certain laboratory services
paid under the Clinical Laboratory Fee Schedule (CLFS); services for
beneficiaries with end-stage renal disease (ESRD) that are paid under
the ESRD prospective payment system; and services and procedures that
require an inpatient stay that are paid under the hospital IPPS. In
addition, section 1833(t)(1)(B)(v) of the Act does not include
applicable items and services (as defined in subparagraph (A) of
paragraph (21)) that are furnished on or after January 1, 2017, by an
off-campus outpatient department of a provider (as defined in
subparagraph (B) of paragraph (21)). We set forth the services that are
excluded from payment under the OPPS in regulations at 42 CFR 419.22.
Under Sec. 419.20(b) of the regulations, we specify the types of
hospitals that are excluded from payment under the OPPS. These excluded
hospitals are:
Critical access hospitals (CAHs);
Hospitals located in Maryland and paid under Maryland's
All-Payer or Total Cost of Care Model;
Hospitals located outside of the 50 States, the District
of Columbia, and Puerto Rico;
Indian Health Service (IHS) hospitals; and
Rural emergency hospitals (REH).
D. Prior Rulemaking
On April 7, 2000, we published in the Federal Register a final rule
with comment period (65 FR 18434) to implement a prospective payment
system for hospital outpatient services. The hospital OPPS was first
implemented for services furnished on or after August 1, 2000. Section
1833(t)(9)(A) of the Act requires the Secretary to review certain
components of the OPPS, not less often than annually, and to revise the
groups, the relative payment weights, and the wage and other
adjustments to take into account changes in medical practices, changes
in technology, the addition of new services, new cost data, and other
relevant information and factors.
Since initially implementing the OPPS, we have published final
rules in the Federal Register annually to implement statutory
requirements and changes arising from our continuing experience with
this system. These rules can be viewed on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices.
E. Advisory Panel on Hospital Outpatient Payment (the HOP Panel or the
Panel)
1. Authority of the Panel
Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of
Public Law 106-113, and redesignated by section 202(a)(2) of Public Law
106-113,
[[Page 33485]]
requires that we consult with an expert outside advisory panel composed
of an appropriate selection of representatives of providers to annually
review (and advise the Secretary concerning) the clinical integrity of
the payment groups and their weights under the OPPS. In CY 2000, based
on section 1833(t)(9)(A) of the Act, the Secretary established the
Advisory Panel on Ambulatory Payment Classification Groups (APC Panel)
to fulfill this requirement. In CY 2011, based on section 222 of the
Public Health Service Act (the PHS Act), which gives discretionary
authority to the Secretary to convene advisory councils and committees,
the Secretary expanded the panel's scope to include the supervision of
hospital outpatient therapeutic services in addition to the APC groups
and weights. To reflect this new role of the panel, the Secretary
changed the panel's name to the Advisory Panel on Hospital Outpatient
Payment (the HOP Panel). The HOP Panel is not restricted to using data
compiled by CMS, and in conducting its review, it may use data
collected or developed by organizations outside the Department.
2. Establishment of the Panel
On November 21, 2000, the Secretary signed the initial charter
establishing the Panel, and, at that time, named the APC Panel. This
expert panel is composed of appropriate representatives of providers
(currently employed full-time, not as consultants, in their respective
areas of expertise) who review clinical data and advise CMS about the
clinical integrity of the APC groups and their payment weights. Since
CY 2012, the Panel also is charged with advising the Secretary on the
appropriate level of supervision for individual hospital outpatient
therapeutic services. The Panel is technical in nature, and it is
governed by the provisions of the Federal Advisory Committee Act
(FACA). The current charter specifies, among other requirements, that
the Panel--
May advise on the clinical integrity of Ambulatory Payment
Classification (APC) groups and their associated weights;
May advise on the appropriate supervision level for
hospital outpatient services;
May advise on OPPS APC rates for ASC covered surgical
procedures;
Continues to be technical in nature;
Is governed by the provisions of the FACA;
Has a Designated Federal Official (DFO); and
Is chaired by a Federal Official designated by the
Secretary.
The Panel's charter was amended on November 15, 2011, renaming the
Panel and expanding the Panel's authority to include supervision of
hospital outpatient therapeutic services and to add critical access
hospital (CAH) representation to its membership. The Panel's charter
was also amended on November 6, 2014 (80 FR 23009), and the number of
members was revised from up to 19 to up to 15 members. The Panel's
current charter was approved on November 21, 2024, for a 2-year period.
The current Panel membership and other information pertaining to
the Panel, including its charter, Federal Register notices, membership,
meeting dates, agenda topics, and meeting reports, can be viewed on the
CMS website at https://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/AdvisoryPanelonAmbulatoryPaymentClassificationGroups.html.
3. Panel Meetings and Organizational Structure
The Panel has held many meetings, with the last meeting taking
place on August 26, 2024. The recommendations of the Panel for the most
recent meeting are available on the CMS website at https://www.cms.gov/medicare/regulations-guidance/advisory-committees/hospital-outpatient-payment. Prior to each meeting, we publish a notice in the Federal
Register to announce the meeting, new members, and any other changes of
which the public should be aware. Beginning in CY 2017, we have
transitioned to one meeting per year (81 FR 31941). In CY 2022, we
published a Federal Register notice requesting nominations to fill
vacancies on the Panel (87 FR 68499). We are currently accepting
nominations at: https://mearis.cms.gov.
In addition, the Panel has established an administrative structure
that, in part, currently includes the use of three subcommittee
workgroups to provide preparatory meeting and subject support to the
larger panel. The three current subcommittees include the following:
APC Groups and Status Indicator Assignments Subcommittee,
which advises and provides recommendations to the Panel on the
appropriate status indicators to be assigned to HCPCS codes, including
but not limited to whether a HCPCS code or a category of codes should
be packaged or separately paid, as well as the appropriate APC
assignment of HCPCS codes regarding services for which separate payment
is made.
Data Subcommittee, which is responsible for studying the
data issues confronting the Panel and for recommending options for
resolving them; and
Visits and Observation Subcommittee, which reviews and
makes recommendations to the Panel on all technical issues pertaining
to observation services and hospital outpatient visits paid under the
OPPS.
Each of these workgroup subcommittees was established by a majority
vote from the full Panel during a scheduled Panel meeting, and the
Panel recommended at the August 26, 2024, meeting that the
subcommittees continue. We accepted this recommendation.
For discussions of earlier Panel meetings and recommendations, we
refer readers to previously published OPPS/ASC proposed and final
rules, the CMS website mentioned earlier in this section, and the FACA
database at https://facadatabase.gov.
F. Public Comments Received on the CY 2025 OPPS/ASC Final Rule With
Comment Period
We received approximately 29 timely pieces of correspondence on the
CY 2025 OPPS/ASC final rule with comment period that appeared in the
Federal Register on November 27, 2024 (88 FR 93912).
II. Updates Affecting OPPS Payments
A. Recalibration of APC Relative Payment Weights
1. Database Construction
a. Database Source and Methodology
Section 1833(t)(9)(A) of the Act requires that the Secretary review
not less often than annually and revise the relative payment weights
for Ambulatory Payment Classifications (APCs). In the April 7, 2000,
OPPS final rule with comment period (65 FR 18482), we explained in
detail how we calculated the relative payment weights that were
implemented on August 1, 2000, for each APC group.
For the CY 2026 OPPS, we propose to recalibrate the APC relative
payment weights for services furnished on or after January 1, 2026, and
before January 1, 2027 (CY 2026), using the same basic methodology that
we described in the CY 2025 OPPS/ASC final rule with comment period (89
FR 93921 through 93922), using CY 2024 claims data. That is, we propose
to recalibrate the relative payment weights for each APC based on
claims and cost report data for hospital outpatient department (HOPD)
services to construct a database for calculating APC group weights.
For the purpose of recalibrating the proposed APC relative payment
weights
[[Page 33486]]
for CY 2026, we began with approximately 143 million final action
claims (claims for which all disputes and adjustments have been
resolved and payment has been made) for HOPD services furnished on or
after January 1, 2024, and before January 1, 2025, before applying our
exclusionary criteria and other methodological adjustments. After the
application of those data processing changes, we used approximately 76
million final action claims to develop the proposed CY 2026 OPPS
payment weights. For exact numbers of claims used and additional
details on the claims accounting process, we refer readers to the
claims accounting narrative under supporting documentation for this
proposed rule on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
Addendum N to this proposed rule (which is available via the
internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices)
includes the proposed list of bypass codes for CY 2026. The proposed
list of bypass codes contains codes that are reported on claims for
services in CY 2024 and, therefore, includes codes that were in effect
in CY 2024 and used for billing. We propose to retain these deleted
bypass codes on the proposed CY 2026 bypass list because these codes
existed in CY 2024 and were covered HOPD services in that period, and
CY 2024 claims data were used to calculate proposed CY 2026 payment
rates. Keeping these deleted bypass codes on the bypass list
potentially allows us to create more ``pseudo'' single procedure claims
for ratesetting purposes. ``Overlap bypass codes'' that are members of
the proposed multiple imaging composite APCs are identified by
asterisks (*) in the third column of Addendum N to this proposed rule.
HCPCS codes that we propose to add for CY 2026 are identified by
asterisks (*) in the fourth column of Addendum N.
b. Proposed Calculation and Use of Cost-to-Charge Ratios (CCRs)
For CY 2026, we propose to continue to use the hospital-specific
overall ancillary and departmental cost-to-charge ratios (CCRs) to
convert charges to estimated costs through application of a revenue
code-to-cost center crosswalk. To calculate the APC costs on which the
proposed CY 2026 APC payment rates are based, we calculated hospital-
specific departmental CCRs for each hospital for which we had CY 2024
claims data by comparing these claims data to the most recently
available hospital cost reports, which, in most cases, are from CY
2023. For the proposed CY 2026 OPPS payment rates, we used the set of
claims processed during CY 2024. We applied the hospital-specific CCR
to the hospital's charges at the most detailed level possible, based on
a revenue code-to-cost center crosswalk that contains a hierarchy of
CCRs used to estimate costs from charges for each revenue code. To
ensure the completeness of the revenue code-to-cost center crosswalk,
we reviewed changes to the list of revenue codes for CY 2024 (the year
of claims data we used to calculate the proposed CY 2026 OPPS payment
rates) and updates to the National Uniform Billing Committee (NUBC)
2024 Data specifications Manual. That crosswalk is available for review
and continuous comment on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
In accordance with our longstanding policy, similar to our
finalized policy for CY 2025 OPPS ratesetting, we propose to calculate
CCRs for the standard cost centers--cost centers with a predefined
label--and nonstandard cost centers--cost centers defined by a
hospital--accepted by the electronic cost report database. In general,
the most detailed level at which we calculate CCRs is the hospital-
specific departmental level.
While we generally view the use of additional cost data as
improving our OPPS ratesetting process, we have historically not
included cost report lines for certain nonstandard cost centers in the
OPPS ratesetting database construction when hospitals have reported
these nonstandard cost centers on cost report lines that do not
correspond to the cost center number. We believe it is important to
further investigate the accuracy of these cost report data before
including such data in the ratesetting process. Further, we believe it
is appropriate to gather additional information from the public as well
before including the data in OPPS ratesetting. For CY 2026, we propose
not to include the nonstandard cost centers reported in this way in the
OPPS ratesetting database construction.
2. Proposed Data Development and Calculation of Costs Used for
Ratesetting
In this section of this proposed rule, we discuss the use of claims
to calculate the OPPS payment rates for CY 2026. The Hospital OPPS page
on the CMS website on which this proposed rule is posted (https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient) provides an accounting of claims used in the development of
the proposed payment rates. That accounting provides additional detail
regarding the number of claims derived at each stage of the process. In
addition, later in this section we discuss the file of claims that
comprises the data set that is available upon payment of an
administrative fee under a CMS data use agreement. The CMS website
https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient, includes information about obtaining the ``OPPS
Limited Data Set,'' which now includes the additional variables
previously available only in the OPPS Identifiable Data Set, including
International Classification of Diseases, Tenth Revision, Clinical
Modification (ICD-10-CM) diagnosis codes and revenue code payment
amounts. This file is derived from the CY 2024 claims that are used to
calculate the proposed payment rates for this proposed rule.
Previously, the OPPS established the scaled relative weights on
which payments are based using APC median costs, a process described in
the CY 2012 OPPS/ASC final rule with comment period (76 FR 74188).
However, as discussed in more detail in section II.A.2.f. of the CY
2013 OPPS/ASC final rule with comment period (77 FR 68259 through
68271), we finalized the use of geometric mean costs to calculate the
relative weights on which the CY 2013 OPPS payment rates were based.
While this policy changed the cost metric on which the relative
payments are based, the data process in general remained the same under
the methodologies that we used to obtain appropriate claims data and
accurate cost information in determining estimated service cost.
We used the methodology described in sections II.A.2.a. through
II.A.2.c. of this proposed rule to calculate the costs we used to
establish the proposed relative payment weights used in calculating the
OPPS payment rates for CY 2026 shown in Addenda A and B to this
proposed rule (which are available via the internet on the CMS website
at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices). We refer readers to section
II.A.4. of this proposed rule for a discussion of the conversion of APC
costs to scaled payment weights.
We note that under the OPPS, CY 2019 was the first year in which
the claims data used for setting payment rates (CY 2017 data) contained
lines with the modifier ``PN,'' which indicates nonexcepted items and
[[Page 33487]]
services furnished and billed by off-campus provider-based departments
(PBDs) of hospitals. Because nonexcepted items and services are not
paid under the OPPS, in the CY 2019 OPPS/ASC final rule with comment
period (83 FR 58832), we finalized a policy to remove those claim lines
reported with modifier ``PN'' from the claims data used in ratesetting
for the CY 2019 OPPS and subsequent years. For the CY 2026 OPPS, we
propose to continue to remove claim lines with modifier ``PN'' from the
ratesetting process.
For details of the claims accounting process used in this CY 2026
OPPS/ASC proposed rule, we refer readers to the claims accounting
narrative under supporting documentation for this proposed rule on the
CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
a. Calculation of Single Procedure APC Criteria-Based Costs
(1) Blood and Blood Products
Since the implementation of the OPPS in August 2000, we have made
separate payments for blood and blood products through APCs rather than
packaging payment for them into payments for the procedures with which
they are administered. Hospital payments for the costs of blood and
blood products, as well as for the costs of collecting, processing, and
storing blood and blood products, are made through the OPPS payments
for specific blood product APCs. We propose to continue to establish
payment rates for blood and blood products using our blood-specific CCR
methodology (88 FR 49562), which utilizes actual or simulated CCRs from
the most recently available hospital cost reports to convert hospital
charges for blood and blood products to costs. This methodology has
been our standard ratesetting methodology for blood and blood products
since CY 2005. It was developed in response to data analysis indicating
that there was a significant difference in CCRs for those hospitals
with and without blood-specific cost centers and past public comments
indicating that the former OPPS policy of defaulting to the overall
hospital CCR for hospitals not reporting a blood-specific cost center
often resulted in an underestimation of the true hospital costs for
blood and blood products. To address the differences in CCRs and to
better reflect hospitals' costs, our methodology simulates blood CCRs
for each hospital that does not report a blood cost center by
calculating the ratio of the blood-specific CCRs to hospitals' overall
CCRs for those hospitals that do report costs and charges for blood
cost centers and applies this mean ratio to the overall CCRs of
hospitals not reporting costs and charges for blood cost centers on
their cost reports. We propose to calculate the costs upon which the
proposed payment rates for blood and blood products are based using the
actual blood-specific CCR for hospitals that reported costs and charges
for a blood cost center and a hospital-specific, simulated, blood-
specific CCR for hospitals that did not report costs and charges for a
blood cost center.
We continue to believe that the hospital-specific, simulated,
blood-specific CCR methodology takes into account the unique charging
and cost accounting structure of each hospital, as it better responds
to the absence of a blood-specific CCR for a hospital than alternative
methodologies, such as defaulting to the overall hospital CCR or
applying an average blood-specific CCR across hospitals. This
methodology also yields more accurate estimated costs for these
products and results in payment rates for blood and blood products that
appropriately reflect the relative estimated costs of these products
for hospitals without blood cost centers and for these blood products
in general.
We refer readers to Addendum B to this proposed rule (which is
available via the internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices) for the proposed CY 2026 payment rates for blood
and blood products (which are generally identified with status
indicator ``R'').
For a more detailed discussion of payments for blood and blood
products through APCs, we refer readers to:
the CY 2005 OPPS proposed rule (69 FR 50524 and 50525) for
a more comprehensive discussion of the blood-specific CCR methodology;
the CY 2008 OPPS/ASC final rule with comment period (72 FR
66807 through 66810) for a detailed history of the OPPS payment for
blood and blood products; and
the CY 2015 OPPS/ASC final rule with comment period (79 FR
66795 and 66796) for additional discussion of our policy not to make
separate payments for blood and blood products when they appear on the
same claims as services assigned to a C-APC.
(2) Brachytherapy Sources
Section 1833(t)(2)(H) of the Act mandates the creation of
additional groups of covered OPD services that classify devices of
brachytherapy--cancer treatment through solid source radioactive
implants--consisting of a seed or seeds (or radioactive source)
(``brachytherapy sources'') separately from other services or groups of
services. The statute provides certain criteria for the additional
groups. For the history of OPPS payment for brachytherapy sources, we
refer readers to prior OPPS final rules, such as the CY 2012 OPPS/ASC
final rule with comment period (77 FR 68240 and 68241). As we have
stated in prior OPPS updates, we believe that adopting the general OPPS
prospective payment methodology for brachytherapy sources is
appropriate for several reasons (77 FR 68240). The general OPPS
methodology uses costs based on claims data to set the relative payment
weights for hospital outpatient services. This payment methodology
results in more consistent, predictable, and equitable payment amounts
per source across hospitals by averaging the extremely high and low
values, in contrast to payment based on hospitals' charges adjusted to
costs. We believe that the OPPS methodology, as opposed to payment
based on hospitals' charges adjusted to cost, also would provide
hospitals with incentives for efficiency in the provision of
brachytherapy services to Medicare beneficiaries. Moreover, this
approach is consistent with our payment methodology for most items and
services paid under the OPPS. We refer readers to the CY 2016 OPPS/ASC
final rule with comment period (80 FR 70323 through 70325) for further
discussion of the history of OPPS payment for brachytherapy sources.
For CY 2026, except where otherwise indicated, we propose to
continue our policy and use the costs derived from CY 2024 claims data
to set the proposed CY 2026 payment rates for brachytherapy sources
because we propose to use CY 2024 data to set the proposed payment
rates for most other items and services that would be paid under the CY
2026 OPPS. With the exception of the proposed payment rate for
brachytherapy source C2645 (Brachytherapy planar source, palladium-103,
per square millimeter) and the proposed payment rates for low-volume
brachytherapy APCs discussed in section III.D. of this proposed rule,
we propose to base the payment rates for brachytherapy sources on the
geometric mean unit costs for each source, consistent with the
methodology that we propose for other items and services paid under the
OPPS, as discussed in section II.A.2. of this proposed rule. We also
propose for CY 2026 and subsequent years to continue the other payment
policies for
[[Page 33488]]
brachytherapy sources that we finalized and first implemented in the CY
2010 OPPS/ASC final rule with comment period (74 FR 60537). For CY 2026
and subsequent years, we propose to pay for the stranded and
nonstranded not otherwise specified (NOS) codes, HCPCS codes C2698
(Brachytherapy source, stranded, not otherwise specified, per source)
and C2699 (Brachytherapy source, non-stranded, not otherwise specified,
per source), at a rate equal to the lowest stranded or nonstranded
prospective payment rate for such sources, respectively, on a per-
source basis (as opposed to, for example, per mCi), which is based on
the policy we established in the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66785). For CY 2026 and subsequent years, we also
propose to continue the policy we implemented in the CY 2010 OPPS/ASC
final rule with comment period (74 FR 60537) regarding payment for new
brachytherapy sources for which we have no claims data, for the same
reasons we discussed in the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66786; which was delayed until January 1, 2010, by
section 142 of Pub. L. 110-275). Specifically, this policy is intended
to enable us to assign new HCPCS codes for new brachytherapy sources to
their own APCs, with prospective payment rates set based on our
consideration of external data and other relevant information regarding
the expected costs of the sources to hospitals. The proposed CY 2026
payment rates for brachytherapy sources are included in Addendum B to
this proposed rule (which is available via the internet on the CMS
website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices) and identified with
status indicator ``U (Brachytherapy Sources, Paid under OPPS; separate
APC payment).''
For CY 2018, we assigned status indicator ``U'' to HCPCS code C2645
(Brachytherapy planar source, palladium-103, per square millimeter) in
the absence of claims data and established a payment rate using
external data (invoice price) at $4.69 per mm\2\ for the brachytherapy
source's APC--APC 2648 (Brachytx planar, p-103) (82 FR 49233 through
49244). For CY 2019, in the absence of sufficient claims data, we
continued to establish a payment rate for C2645 at $4.69 per mm\2\ for
APC 2648 (Brachytx planar, p-103) (83 FR 58834 through 58836). Our CY
2018 claims data available for the CY 2020 OPPS/ASC final rule with
comment period (84 FR 61142) included two claims with a geometric mean
cost for HCPCS code C2645 of $1.02 per mm\2\. In response to comments
from interested parties, we agreed that, given the limited claims data
available and a new outpatient indication for C2645, a payment rate for
HCPCS code C2645 based on the geometric mean cost of $1.02 per mm\2\
may not adequately reflect the cost of HCPCS code C2645. In the CY 2020
OPPS/ASC final rule with comment period, we finalized our policy to use
our equitable adjustment authority under section 1833(t)(2)(E) of the
Act, which states that the Secretary shall establish, in a budget
neutral manner, other adjustments as determined to be necessary to
ensure equitable payments, to maintain the CY 2019 payment rate of
$4.69 per mm\2\ for HCPCS code C2645 for CY 2020. Similarly, in the
absence of sufficient claims data to establish an APC payment rate, in
the CY 2021, CY 2022, CY 2023, CY 2024, and CY 2025 OPPS/ASC final
rules with comment period (85 FR 85879 through 85880, 86 FR 63469, 87
FR 71760-71761, 88 FR 81553, and 89 FR 93925), we finalized our policy
to use our equitable adjustment authority under section 1833(t)(2)(E)
of the Act to maintain the CY 2019 payment rate of $4.69 per mm\2\ for
HCPCS code C2645 for CYs 2021 through 2025.
There are no CY 2024 claims available that reported HCPCS code
C2645 for this proposed rule. Therefore, in the absence of claims data,
we propose to continue to use our equitable adjustment authority under
section 1833(t)(2)(E) of the Act to maintain the CY 2025 payment rate
of $4.69 per mm\2\ for HCPCS code C2645, which we propose to be
assigned to APC 2648 (Brachytx planar, p-103), for CY 2026.
Additionally, for CY 2022 and subsequent calendar years, we adopted
a Universal Low Volume APC policy for clinical and brachytherapy APCs.
As discussed in further detail in section X.C. of the CY 2022 OPPS/ASC
final rule with comment period (86 FR 63743 through 63747), we adopted
this policy to mitigate wide variation in payment rates that occur from
year to year for APCs with low utilization. Such volatility in payment
rates from year to year can result in even lower utilization and
potential barriers to access. Brachytherapy APCs that have fewer than
100 single claims used for ratesetting purposes are designated as Low
Volume APCs unless an alternative payment rate is applied, such as the
use of our equitable adjustment authority under section 1833(t)(2)(E)
of the Act in the case of APC 2648 (Brachytx planar, p-103), for which
HCPCS code C2645 (Brachytherapy planar source, palladium-103, per
square millimeter) is the only code assigned as discussed previously in
this section.
For CY 2026, we propose to designate six brachytherapy APCs as Low
Volume APCs as these APCs meet our criteria to be designated as Low
Volume APCs. For more information on the brachytherapy APCs we propose
to designate as Low Volume APCs, see section III.D. of this proposed
rule.
We invite interested parties to submit recommendations for new
codes to describe new brachytherapy sources. Such recommendations
should be directed via email to [email protected]. We will
continue to add new brachytherapy source codes and descriptors to our
systems for payment on a quarterly basis.
b. Comprehensive APCs (C-APCs) for CY 2026
(1) Background
In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861
through 74910), we finalized a comprehensive payment policy that
packages payment for adjunctive and secondary items, services, and
procedures into the most costly primary procedure under the OPPS at the
claim level. The policy was finalized in CY 2014, but the effective
date was delayed until January 1, 2015, to allow additional time for
further analysis, opportunity for public comment, and systems
preparation. The comprehensive APC (C-APC) policy was implemented
effective January 1, 2015, with modifications and clarifications in
response to public comments received regarding specific provisions of
the C-APC policy (79 FR 66798 through 66810).
A C-APC is defined as a classification for the provision of a
primary service and all adjunctive services provided to support the
delivery of the primary service. We established C-APCs as a category
broadly for OPPS payment and implemented 25 C-APCs beginning in CY 2015
(79 FR 66809 and 66810). We have gradually added new C-APCs since the
policy was implemented beginning in CY 2015, with the number of C-APCs
now totaling 72 (80 FR 70332; 81 FR 79584 and 79585; 83 FR 58844
through 58846; 84 FR 61158 through 61166; 85 FR 85885; 86 FR 63474; 87
FR 71769; 88 FR 81562; and 89 FR 93926).
Under our C-APC policy, we designate a service described by a HCPCS
code assigned to a C-APC as the primary service when the service is
[[Page 33489]]
identified by OPPS status indicator ``J1.'' When such a primary service
is reported on a hospital outpatient claim, taking into consideration
the few exceptions that are discussed below, we make payment for all
other items and services reported on the hospital outpatient claim as
being integral, ancillary, supportive, dependent, and adjunctive to the
primary service (hereinafter collectively referred to as ``adjunctive
services'') and representing components of a complete comprehensive
service (78 FR 74865 and 79 FR 66799). Payments for adjunctive services
are packaged into the payments for the primary services. This results
in a single prospective payment for each of the primary, comprehensive
services based on the costs of all reported services at the claim
level. One example of a primary service would be a partial mastectomy,
and an example of a secondary service packaged into that primary
service would be a radiation therapy procedure.
Services excluded from the C-APC policy under the OPPS include
services that are not covered OPD services, services that cannot, by
statute, be paid for under the OPPS, and services that are required by
statute to be separately paid. This includes certain mammography and
ambulance services that are not covered OPD services in accordance with
section 1833(t)(1)(B)(iv) of the Act; brachytherapy seeds, which also
are required by statute to receive separate payment under section
1833(t)(2)(H) of the Act; pass-through payment drugs and devices, which
also require separate payment under section 1833(t)(6) of the Act;
self-administered drugs (SADs) that are not otherwise packaged as
supplies because they are not covered under Medicare Part B under
section 1861(s)(2)(B) of the Act; and certain preventive services (78
FR 74865 and 79 FR 66800 and 66801). A list of services excluded from
the C-APC policy is included in Addendum J to this proposed rule (which
is available via the internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices). If a service does not appear on this
list of excluded services, payment for it will be packaged into the
payment for the primary C-APC service when it appears on an outpatient
claim with a primary C-APC service.
The C-APC policy payment methodology set forth in the CY 2014 OPPS/
ASC final rule with comment period and modified and implemented
beginning in CY 2015 is summarized as follows (78 FR 74887 and 79 FR
66800):
Basic Methodology. As stated in the CY 2015 OPPS/ASC final rule
with comment period, we define the C-APC payment policy as including
all covered OPD services on a hospital outpatient claim reporting a
primary service that is assigned to status indicator ``J1,'' \1\
excluding services that are not covered OPD services or that cannot by
statute be paid for under the OPPS. Services and procedures described
by HCPCS codes assigned to status indicator ``J1'' are assigned to C-
APCs based on our usual APC assignment methodology by evaluating the
geometric mean costs of the primary service claims to establish
resource similarity and the clinical characteristics of each procedure
to establish clinical similarity within each APC.
---------------------------------------------------------------------------
\1\ Status indicator ``J1'' denotes Hospital Part B Services
Paid Through a Comprehensive APC. Further information can be found
in CY 2026 Addendum D1.
---------------------------------------------------------------------------
In the CY 2016 OPPS/ASC final rule with comment period, we expanded
the C-APC payment methodology to qualifying extended assessment and
management encounters through the ``Comprehensive Observation
Services'' C-APC (C-APC 8011). Services within this APC are assigned
status indicator ``J2.'' \2\ Specifically, we make a payment through C-
APC 8011 for a claim that:
---------------------------------------------------------------------------
\2\ Status indicator ``J2'' denotes Hospital Part B Services
That May Be Paid Through a Comprehensive APC. Further information
can be found in CY 2026 Addendum D1.
---------------------------------------------------------------------------
Does not contain a procedure described by a HCPCS code to
which we have assigned status indicator ``T;'' \3\
---------------------------------------------------------------------------
\3\ Status Indicator ``T'' is defined as a ``Procedure or
Service, Multiple Procedure Reduction Applies'' the OPPS payment
status is ``Paid under OPPS; separate APC payment.'' Definitions to
all OPPS payment status indicators are available in Addenda D1 to
this proposed rule.
---------------------------------------------------------------------------
Contains 8 or more units of services described by HCPCS
code G0378 (Hospital observation services, per hour);
Contains services provided on the same date of service or
one day before the date of service for HCPCS code G0378 that are
described by one of the following codes: HCPCS code G0379 (Direct
admission of patient for hospital observation care) on the same date of
service as HCPCS code G0378; CPT code 99281 (Emergency department visit
for the evaluation and management of a patient (Level 1)); CPT code
99282 (Emergency department visit for the evaluation and management of
a patient (Level 2)); CPT code 99283 (Emergency department visit for
the evaluation and management of a patient (Level 3)); CPT code 99284
(Emergency department visit for the evaluation and management of a
patient (Level 4)); CPT code 99285 (Emergency department visit for the
evaluation and management of a patient (Level 5)) or HCPCS code G0380
(Type B emergency department visit (Level 1)); HCPCS code G0381 (Type B
emergency department visit (Level 2)); HCPCS code G0382 (Type B
emergency department visit (Level 3)); HCPCS code G0383 (Type B
emergency department visit (Level 4)); HCPCS code G0384 (Type B
emergency department visit (Level 5)); CPT code 99291 (Critical care,
evaluation and management of the critically ill or critically injured
patient; first 30-74 minutes); or HCPCS code G0463 (Hospital outpatient
clinic visit for assessment and management of a patient); and
Does not contain services described by a HCPCS code to
which we have assigned status indicator ``J1.''
The assignment of status indicator ``J2'' to a specific set of
services performed in combination with each other allows for all other
OPPS payable services and items reported on the claim (excluding
services that are not covered OPD services or that cannot by statute be
paid for under the OPPS) to be deemed adjunctive services representing
components of a comprehensive service and resulting in a single
prospective payment for the comprehensive service based on the costs of
all reported services on the claim (80 FR 70333 through 70336).
Services included under the C-APC payment packaging policy, that
is, services that are typically adjunctive to the primary service and
provided during the delivery of the comprehensive service, include
diagnostic procedures, laboratory tests, and other diagnostic tests and
treatments that assist in the delivery of the primary procedure; visits
and evaluations performed in association with the procedure; uncoded
services and supplies used during the service; durable medical
equipment as well as prosthetic and orthotic items and supplies when
provided as part of the outpatient service; and any other components
reported by HCPCS codes that represent services that are provided
during the complete comprehensive service (78 FR 74865 and 79 FR
66800).
In addition, payment for hospital outpatient department services
that are similar to therapy services, such as speech language
pathology, and delivered either by therapists or nontherapists is
included as part of the payment for the packaged complete comprehensive
service. These services that are provided during the perioperative
period are adjunctive services and are deemed not to be therapy
services as described in section
[[Page 33490]]
1834(k) of the Act, regardless of whether the services are delivered by
therapists or other nontherapist health care workers. We have
previously noted that therapy services are those provided by therapists
under a plan of care in accordance with section 1835(a)(2)(C) and
section 1835(a)(2)(D) of the Act and are paid for under section 1834(k)
of the Act, subject to annual therapy caps as applicable (78 FR 74867
and 79 FR 66800). However, certain other services similar to therapy
services are considered and paid for as hospital outpatient department
services. Payment for these nontherapy outpatient department services
that are reported with therapy codes and provided with a comprehensive
service is included in the payment for the packaged complete
comprehensive service. We note that these services, even though they
are reported with therapy codes, are hospital outpatient department
services and not therapy services. We refer readers to the July 2016
OPPS Change Request 9658 (Transmittal 3523) \4\ for further
instructions on reporting these services in the context of a C-APC
service.
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\4\ https://www.cms.gov/regulations-and-guidance/guidance/transmittals/downloads/r3523cp.pdf.
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Items included in the packaged payment provided in conjunction with
the primary service also include all drugs, biologicals, and
radiopharmaceuticals, regardless of cost, except those drugs with pass-
through payment status and SADs, unless they function as packaged
supplies (78 FR 74868, 74869, and 74909 and 79 FR 66800). We refer
readers to Section 50.2M, Chapter 15, of the Medicare Benefit Policy
Manual for a description of our policy on SADs treated as hospital
outpatient supplies, including lists of SADs that function as supplies
and those that do not function as supplies.\5\
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\5\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c15.pdf.
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We define each hospital outpatient claim reporting a single unit of
a single primary service assigned to status indicator ``J1'' as a
single ``J1'' unit procedure claim (78 FR 74871 and 79 FR 66801). Line-
item charges for services included on the C-APC claim are converted to
line-item costs, which are then summed to develop the estimated APC
costs. These claims are then assigned one unit of the service with
status indicator ``J1'' and later used to develop the geometric mean
costs for the C-APC relative payment weights. (We note that we use the
term ``comprehensive'' to describe the geometric mean cost of a claim
reporting ``J1'' service(s) or the geometric mean cost of a C-APC,
inclusive of all the items and services included in the C-APC service
payment bundle.) Charges for services that would otherwise be
separately payable are added to the charges for the primary service.
This process differs from our traditional cost accounting methodology
only in that all such services on the claim are packaged (except
certain services as described above). We apply our standard data trims,
which exclude claims with extremely high primary units or extreme
costs.
The comprehensive geometric mean costs are used to establish
resource similarity and, along with clinical similarity, dictate the
assignment of the primary services to the C-APCs. We establish a
ranking of each primary service (single unit only) to be assigned to
status indicator ``J1'' according to its comprehensive geometric mean
costs. For the minority of claims reporting more than one primary
service assigned to status indicator ``J1'' or units thereof, we
identify one ``J1'' service as the primary service for the claim based
on our cost-based ranking of primary services. We then assign these
multiple ``J1'' procedure claims to the C-APC to which the service
designated as the primary service is assigned. If the reported ``J1''
services on a claim map to different C-APCs, we designate the ``J1''
service assigned to the C-APC with the highest comprehensive geometric
mean cost as the primary service for that claim. If the reported
multiple ``J1'' services on a claim map to the same C-APC, we designate
the most costly service (at the HCPCS code level) as the primary
service for that claim. This process results in initial assignments of
claims for the primary services assigned to status indicator ``J1'' to
the most appropriate C-APCs based on both single and multiple procedure
claims reporting these services and clinical and resource homogeneity.
Complexity Adjustments. We use complexity adjustments to provide
increased payment for certain comprehensive services. We apply a
complexity adjustment by promoting qualifying paired ``J1'' service
code combinations or paired code combinations of ``J1'' services and
certain add-on codes (as described further below) from the originating
C-APC (the C-APC to which the designated primary service is first
assigned) to the next higher paying C-APC in the same clinical family
of C-APCs. We apply this type of complexity adjustment when the paired
code combination represents a complex, costly form or version of the
primary service according to the following criteria:
Frequency of 25 or more claims reporting the code
combination (frequency threshold); and
Violation of the 2 times rule, as stated in section
1833(t)(2) of the Act and section III.B.2. of this proposed rule, in
the originating C-APC (cost threshold).
These criteria identify paired code combinations that occur
commonly and exhibit materially greater resource requirements than the
primary service. The CY 2017 OPPS/ASC final rule with comment period
(81 FR 79582) included a revision to the complexity adjustment
eligibility criteria. Specifically, we finalized a policy to
discontinue the requirement that a code combination (that qualifies for
a complexity adjustment by satisfying the frequency and cost criteria
thresholds described above) also not create a 2 times rule violation in
the higher level or receiving APC.
After designating a single primary service for a claim, we evaluate
that service in combination with each of the other procedure codes
reported on the claim assigned to status indicator ``J1'' (or certain
add-on codes) to determine if there are paired code combinations that
meet the complexity adjustment criteria. For a new HCPCS code, we
determine initial C-APC assignment and qualification for a complexity
adjustment using the best available information, crosswalking the new
HCPCS code to a predecessor code(s) when appropriate.
Once we have determined that a particular code combination of
``J1'' services (or combinations of ``J1'' services reported in
conjunction with certain add-on codes) represents a complex version of
the primary service because it is sufficiently costly, frequent, and a
subset of the primary comprehensive service overall according to the
criteria described above, we promote the claim including the complex
version of the primary service as described by the code combination to
the next higher cost C-APC within the clinical family, unless the
primary service is already assigned to the highest cost APC within the
C-APC clinical family or assigned to the only C-APC in a clinical
family. We do not create new APCs with a comprehensive geometric mean
cost that is higher than the highest geometric mean cost (or only) C-
APC in a clinical family just to accommodate potential complexity
adjustments. Therefore, the highest payment for any claim including a
code combination for services
[[Page 33491]]
assigned to a C-APC would be the highest paying C-APC in the clinical
family (79 FR 66802).
We package payment for all add-on codes into the payment for the C-
APC. However, certain primary service add-on combinations may qualify
for a complexity adjustment. As noted in the CY 2016 OPPS/ASC final
rule with comment period (80 FR 70331), all add-on codes that can be
appropriately reported in combination with a base code that describes a
primary ``J1'' service are evaluated for a complexity adjustment.
To determine which combinations of primary service codes reported
in conjunction with an add-on code may qualify for a complexity
adjustment for CY 2026, we apply the frequency and cost criteria
thresholds discussed above, testing claims reporting one unit of a
single primary service assigned to status indicator ``J1'' and any
number of units of a single add-on code for the primary ``J1'' service.
If the frequency and cost criteria thresholds for a complexity
adjustment are met and reassignment to the next higher cost APC in the
clinical family is appropriate (based on meeting the criteria outlined
above), we make a complexity adjustment for the code combination; that
is, we reassign the primary service code reported in conjunction with
the add-on code to the next higher cost C-APC within the same clinical
family of C-APCs. As previously stated, we package payment for add-on
codes into the C-APC payment rate. If any add-on code reported in
conjunction with the ``J1'' primary service code does not qualify for a
complexity adjustment, payment for the add-on service continues to be
packaged into the payment for the primary service and is not reassigned
to the next higher cost C-APC. We list the proposed complexity
adjustments for ``J1'' and add-on code combinations for CY 2026, along
with all the other proposed complexity adjustments, in Addendum J to
this proposed rule (which is available via the internet on the CMS
website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices).
Addendum J to this proposed rule includes the cost statistics for
each code combination that would qualify for a complexity adjustment
(including primary code and add-on code combinations). Addendum J to
this proposed rule also contains summary cost statistics for each of
the paired code combinations that describe a complex code combination
that would qualify for a complexity adjustment and be reassigned to the
next higher cost C-APC within the clinical family. The combined
statistics for all proposed reassigned complex code combinations are
represented by an alphanumeric code with the first four digits of the
designated primary service followed by a letter. For example, the
proposed geometric mean cost listed in Addendum J for the code
combination described by complexity adjustment assignment 3320R, which
is assigned to C-APC 5224 (Level 4 Pacemaker and Similar Procedures),
includes all paired code combinations that will be reassigned to C-APC
5224 when CPT code 33208 is the primary code. Providing the information
contained in Addendum J to this proposed rule allows interested parties
the opportunity to better assess the impact associated with the
assignment of claims with each of the paired code combinations eligible
for a complexity adjustment.
(2) Comment Solicitation on C-APC Complexity Adjustment Criteria
We have received a variety of requests from interested parties as
well, as public comments in past rulemaking, related to our C-APC
complexity adjustment criteria. Interested parties and commenters have
requested that CMS modify the established C-APC complexity adjustment
eligibility criteria of 25 or more claims reporting the code
combination (frequency threshold) and a violation of the 2 times rule
in the originating C-APC (cost threshold) to allow additional code
combinations to qualify for complexity adjustments. Interested parties
and commenters have also requested expanding the qualifying code
combinations for complexity adjustments to allow clusters of
procedures, consisting of a ``J1'' code pair and multiple other
associated add-on codes, to be used in combination with that ``J1''
code pair to qualify. These interested parties and commenters have
noted these expanded combinations may allow for a more accurate
reflection of medical practice when multiple procedures are performed
together or there are certain complex procedures that include numerous
add-on codes.
For CY 2026, we are soliciting comments on potential refinements to
our C-APC complexity adjustment criteria. Under this solicitation, we
are seeking comment on expanding code combinations that qualify for
complexity adjustments, including any specifications related to
determining specific combination types and how they represent a
complex, costly subset of the primary service. We are seeking comment
on how CMS could identify service pairings or clusters of services for
complexity adjustments that are clinically appropriate but are
currently not evaluated for complexity adjustments. Additionally, if we
were to expand our complexity adjustment criteria to allow for clusters
of codes, we are seeking comment on what the appropriate cost and
frequency thresholds could be used to identify which code clusters
truly reflect complex and resource-intensive code combinations that are
commonly performed in the hospital outpatient department setting.
We are seeking comment on which services are clinically integral to
the provision of ``J1'' services that would qualify for a complexity
adjustment under an expanded evaluation framework. Specifically, we are
seeking comment on what criteria we could add, reflecting clinical
practice, that would determine the costly additional components that
are often associated with other high-cost packaged items and services.
Finally, we are seeking comment on how we might address the unintended
consequences of granular coding on the mechanics of the complexity
adjustment criteria and if highly specific coding truly reflects
clinical practice in hospital outpatient departments.
(3) Exclusion of Procedures Assigned to New Technology APCs From the C-
APC Policy
Services that are assigned to New Technology APCs are typically new
procedures that do not have sufficient claims history to establish an
accurate payment for them. Beginning in CY 2002, we retain services
within New Technology APC groups until we gather sufficient claims data
to enable us to assign the service to an appropriate clinical APC. This
policy allows us to move a service from a New Technology APC in less
than 2 years if sufficient data are available. It also allows us to
retain a service in a New Technology APC for more than 2 years if
sufficient data upon which to base a decision for reassignment have not
been collected (82 FR 59277).
The C-APC payment policy packages payment for adjunctive and
secondary items, services, and procedures into the most costly primary
procedure under the OPPS at the claim level. Prior to CY 2019, when a
procedure assigned to a New Technology APC was included on the claim
with a primary procedure, identified by OPPS status indicator ``J1,''
payment for the new technology service was typically packaged into the
payment for the primary procedure.
[[Page 33492]]
Because the new technology service was not separately paid in this
scenario, the overall number of single claims available to determine an
appropriate clinical APC for the new service was reduced. This was
contrary to the objective of the New Technology APC payment policy,
which is to gather sufficient claims data to enable us to assign the
service to an appropriate clinical APC.
To address this issue and ensure that there are sufficient claims
data for services assigned to New Technology APCs, in the CY 2019 OPPS/
ASC final rule with comment period (83 FR 58847), we finalized
excluding payment for any procedure that is assigned to a New
Technology APC (APCs 1491 through 1599 and APCs 1901 through 1908) from
being packaged when included on a claim with a ``J1'' service assigned
to a C-APC. In the CY 2020 OPPS/ASC final rule with comment period, we
finalized that beginning in CY 2020, payment for services assigned to a
New Technology APC would be excluded from being packaged into the
payment for comprehensive observation services assigned status
indicator ``J2'' when they are included on a claim with a ``J2''
service (84 FR 61167).
(4) Exclusion of Drugs and Biologicals Described by HCPCS Code C9399
(Unclassified Drugs or Biologicals) From the C-APC Policy
Section 1833(t)(15) of the Act, as added by section 621(a)(1) of
the Medicare Prescription Drug, Improvement, and Modernization Act of
2003 (Pub. L. 108-173), provides for payment under the OPPS for new
drugs and biologicals until HCPCS codes are assigned. Under this
provision, we are required to make payment for a covered outpatient
drug or biological that is furnished as part of covered outpatient
department services but for which a HCPCS code has not yet been
assigned in an amount equal to 95 percent of average wholesale price
(AWP) for the drug or biological.
In the CY 2005 OPPS/ASC final rule with comment period (69 FR
65805), we implemented section 1833(t)(15) of the Act by instructing
hospitals to bill for a drug or biological that is newly approved by
the Food and Drug Administration (FDA) and that does not yet have a
HCPCS code by reporting the National Drug Code (NDC) for the product
along with the newly created HCPCS code C9399 (Unclassified drugs or
biologicals). We explained that when HCPCS code C9399 appears on a
claim, the Outpatient Code Editor (OCE) suspends the claim for manual
pricing by the Medicare Administrative Contractor (MAC). The MAC prices
the claim at 95 percent of the drug or biological's AWP, using Red Book
or an equivalent recognized compendium, and processes the claim for
payment. We emphasized that this approach enables hospitals to bill and
receive payment for a new drug or biological concurrent with its
approval by the FDA. The hospital does not have to wait for the next
quarterly release or for approval of a product specific HCPCS code to
receive payment for a newly approved drug or biological or to resubmit
claims for adjustment. We instructed that hospitals would discontinue
billing HCPCS code C9399 and the NDC upon implementation of a product
specific HCPCS code, status indicator, and appropriate payment amount
with the next quarterly update. We also note that HCPCS code C9399 is
paid in a similar manner in the ASC setting, as 42 CFR 416.171(b)
outlines that certain drugs and biologicals for which separate payment
is allowed under the OPPS are considered covered ancillary services for
which the OPPS payment rate, which is 95 percent of AWP for HCPCS code
C9399, applies. Since the implementation of the C-APC policy in 2015,
payment for drugs and biologicals described by HCPCS code C9399 had
been included in the C-APC payment when these products appear on a
claim with a primary C-APC service. Packaging payment for these drugs
and biologicals that appear on a hospital outpatient claim with a
primary C-APC service is consistent with our C-APC packaging policy
under which we make payment for all items and services, including all
non-pass-through drugs, reported on the hospital outpatient claim as
being integral, ancillary, supportive, dependent, and adjunctive to the
primary service and representing components of a complete comprehensive
service, with certain limited exceptions (78 FR 74869). It was our
position that the total payment for the C-APC with which payment for a
drug or biological described by HCPCS code C9399 is packaged includes
payment for the drug or biological at 95 percent of its AWP.
However, we determined that in certain instances, drugs and
biologicals described by HCPCS code C9399 are not being paid at 95
percent of their AWPs when payment for them is packaged with payment
for a primary C-APC service. In order to ensure payment for new drugs
and biologicals described by HCPCS code C9399 at 95 percent of their
AWP, for CY 2023 and subsequent years, we finalized our proposal to
exclude any drug or biological described by HCPCS code C9399 from
packaging when the drug or biological is included on a claim with a
``J1'' service, which is the status indicator assigned to a C-APC, and
a claim with a ``J2'' service, which is the status indicator assigned
to comprehensive observation services. See Addendum J to this proposed
rule for the proposed CY 2026 C-APC payment policy exclusions.
In the CY 2023 OPPS/ASC final rule with comment period, we
finalized the proposal in section XI., ``CY 2023 OPPS Payment Status
and Comment Indicators'', to add a new definition to status indicator
``A'' to include unclassified drugs and biologicals that are reportable
with HCPCS code C9399 (87 FR 72051). The current definition, as
finalized in the CY 2023 OPPS/ASC final rule with comment period, can
be found in Addendum D1 of this proposed rule, would ensure the MAC
prices claims for drugs or biologicals billed with HCPCS code C9399 at
95 percent of the drug or biological's AWP and pays separately for the
drug or biological under the OPPS when it appears on the same claim as
a primary C-APC service.
(5) Exclusion of Cell and Gene Therapies From the C-APC Policy
As previously discussed in this section, and in the CY 2014 OPPS/
ASC final rule with comment period (78 FR 74865), the C-APC policy
packages payment for items and services that are typically integral,
ancillary, supportive, dependent, or adjunctive to the primary service
and provided during the delivery of the comprehensive service,
including diagnostic procedures, laboratory tests and other diagnostic
tests and treatments that assist in the delivery of the primary
procedure. In the CY 2014 OPPS/ASC final rule with comment period (78
FR 74861), we finalized defining a comprehensive APC as a
classification for the provision of a primary service and all
adjunctive services provided to support the delivery of the primary
service. Because a comprehensive APC treats all individually reported
codes as representing components of the comprehensive service, we make
a single prospective payment based on the cost of all individually
reported codes that represent the provision of a primary service and
all adjunctive services provided to support that delivery of the
primary service.
As discussed in the CY 2025 OPPS/ASC proposed rule (89 FR 59201
through 59204), we generally treat all items and services reported on a
C-APC claim as integral, ancillary, supportive, dependent, and
adjunctive to the
[[Page 33493]]
primary service and representing components of a comprehensive service.
Historically, items packaged for payment provided in conjunction with
the primary C-APC service also include all drugs, biologicals, and
radiopharmaceuticals, regardless of cost, except those drugs with pass-
through payment status and those drugs that are usually self-
administered (SADs), unless they function as supplies (78 FR 74868
through 74869 and 74909).
However, we recognized in the 2025 OPPS/ASC proposed rule (89 FR
59201 through 59204) that there are rare instances in which cell and
gene therapies appear on the same claim as a primary C-APC service and
therefore, have their payment packaged with payment for the primary C-
APC service. As stated in the CY 2025 OPPS/ASC final rule with comment
period (89 FR 93932 through 93938), given the unique nature of these
therapies, we do not believe they function as integral, ancillary,
supportive, dependent, or adjunctive to any of the current primary C-
APC services. Additionally, we stated that when these products are
administered, they are the primary treatment being administered to a
patient and thus, are not integral, ancillary, supportive, dependent,
or adjunctive to any primary C-APC services.
Therefore, we finalized a policy for CY 2025 and subsequent years
(89 FR 93932 through 93938), to not package payment for cell and gene
therapies into C-APCs, when those cell and gene therapies are not
functioning as integral, ancillary, supportive, dependent, or
adjunctive to the primary C-APC service. For new cell and gene therapy
products that are not integral, ancillary, supportive, dependent, or
adjunctive to any C-APC primary service, we will continue to add their
product specific HCPCS codes, when created, to the C-APC exclusion
list. The current list of qualifying products can be found in Table 1.
We list all proposed C-APC exclusion categories for CY 2026 in
Addendum J to this proposed rule (which is available via the internet
on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices).
[GRAPHIC] [TIFF OMITTED] TP17JY25.000
[[Page 33494]]
(6) Exclusion of Non-Opioid Products for Pain Relief Under Section 4135
of the Consolidated Appropriations Act, 2023 From the C-APC Policy
The Consolidated Appropriations Act (CAA), 2023 (Pub. L. 117-328),
was signed into law on December 29, 2022. Section 4135(a) and (b) of
the CAA, 2023, titled ``Access to Non-Opioid Treatments for Pain
Relief,'' amended section 1833(t)(16) and section 1833(i) of the Social
Security Act, respectively, to provide for temporary additional
payments for non-opioid treatments for pain relief (as that term is
defined in section 1833(t)(16)(G)(i) of the Act). In particular,
section 1833(t)(16)(G) provides that with respect to a non-opioid
treatment for pain relief furnished on or after January 1, 2025, and
before January 1, 2028, the Secretary shall not package payment for the
non-opioid treatment for pain relief into payment for a covered OPD
service (or group of services) and shall make an additional payment for
the non-opioid treatment for pain relief as specified in clause (ii) of
that section. Clauses (ii) and (iii) of section 1833(t)(16)(G) of the
Act provide for the amount of additional payment and set a limitation
on that amount. As stated earlier in this section, our current policy
is to exclude from the packaged C-APC payment those items and services
that are required by statute to be separately paid.
Accordingly, in the CY 2025 OPPS/ASC final rule with comment
period, we finalized a policy to exclude the non-opioid treatments for
pain relief identified as satisfying the required criteria for payment
under section 4135 of the CAA, 2023 from the C-APC policy to ensure
payment is not packaged into any C-APC and that separate payment is
made in accordance with the statute (89 FR 93938 through 93939).
(7) C-APCs for CY 2026
For CY 2026 and subsequent years, we propose to continue to apply
the C-APC payment policy methodology. We refer readers to the CY 2017
OPPS/ASC final rule with comment period (81 FR 79583) for a discussion
of the C-APC payment policy methodology and revisions.
Each year, in accordance with section 1833(t)(9)(A) of the Act, we
review and revise the services within each APC group and the APC
assignments under the OPPS. As a result of our annual review of the
services and the APC assignments under the OPPS, we are not proposing
to convert any standard APCs to C-APCs in CY 2026; thus, we propose
that the number of C-APCs for CY 2026 would be the same as the number
for CY 2025, which is 72 C-APCs.
Table 2 lists the proposed C-APCs for CY 2026, all of which were
established in past rules. All C-APCs are displayed in Addendum J to
this proposed rule. Addendum J to this proposed rule also contains all
the data related to the C-APC payment policy methodology, including the
list of complexity adjustments and other information.
[[Page 33495]]
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[[Page 33496]]
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c. Calculation of Composite APC Criteria-Based Costs
As discussed in the CY 2008 OPPS/ASC final rule with comment period
(72 FR 66613), we believe it is important that the OPPS enhance
incentives for hospitals to provide necessary, high-quality care as
efficiently as possible. For CY 2008, we developed composite APCs to
provide a single payment for groups of services that are typically
performed together during a single clinical encounter and that result
in the provision of a complete service. Combining payment for multiple,
independent services into a single OPPS payment in this way enables
hospitals to manage their resources with
[[Page 33497]]
maximum flexibility by monitoring and adjusting the volume and
efficiency of services themselves. An additional advantage to the
composite APC model is that we can use data from correctly coded
multiple procedure claims to calculate payment rates for the specified
combinations of services, rather than relying upon single procedure
claims which may be low in volume and/or incorrectly coded. Under the
OPPS, we currently have composite policies for mental health services
and multiple imaging services. We refer readers to the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66611 through 66614 and 66650
through 66652) for a full discussion of the development of the
composite APC methodology, and the CY 2012 OPPS/ASC final rule with
comment period (76 FR 74163) and the CY 2018 OPPS/ASC final rule with
comment period (82 FR 59241, 59242, and 59246 through 52950) for
further background.
(1) Mental Health Services Composite APC
For CY 2026, we propose to continue our longstanding policy of
limiting the aggregate payment for specified less resource-intensive
mental health services furnished on the same date to the payment for a
day of partial hospitalization services provided by a hospital, which
we consider to be the most resource-intensive of all outpatient mental
health services (88 FR 49572). We refer readers to the April 7, 2000,
OPPS final rule with comment period (65 FR 18452 through 18455) for the
initial discussion of this longstanding policy and the CY 2012 OPPS/ASC
final rule with comment period (76 FR 74168) for further background.
In the CY 2018 OPPS/ASC proposed rule and final rule with comment
period (82 FR 33580 and 33581 and 82 FR 59246 and 59247), we proposed
and finalized the policy for CY 2018 and subsequent years that, when
the aggregate payment for specified mental health services provided by
one hospital to a single beneficiary on a single date of service, based
on the payment rates associated with the APCs for the individual
services, exceeds the maximum per diem payment rate for partial
hospitalization services provided by a hospital, those specified mental
health services will be paid through composite APC 8010 (Mental Health
Services Composite). In addition, we set the payment rate for composite
APC 8010 for CY 2018 at the same payment rate for APC 5863, which was
the maximum partial hospitalization per diem payment rate for a
hospital, and finalized a policy that the hospital would continue to be
paid the payment rate for composite APC 8010. This policy applied in
CYs 2018 through 2023.
In the CY 2024 OPPS/ASC proposed rule, we stated that APC 5863 was
no longer the maximum partial hospitalization per diem payment rate for
a hospital due to the creation of APC 5864, which is four or more
hospital-based PHP services per day (88 FR 49572). We solicited comment
on whether APC 5864 would be appropriate to use as the daily mental
health cap, as we have historically set the daily mental health cap for
composite APC 8010 at the maximum partial hospitalization per diem
payment rate for a hospital (88 FR 49572). Based on public comments
received and our longstanding policy, in CY 2024 OPPS/ASC final rule,
we finalized APC 5864, four hospital-based PHP services per day, as the
daily mental health cap (88 FR 81566).
We continue to believe that the costs associated with administering
a partial hospitalization program represent the most resource intensive
of all outpatient mental health services. For CY 2026 and subsequent
years, we propose to continue this policy that when the aggregate
payment for specified mental health services provided by one hospital
to a single beneficiary on a single date of service, based on the
payment rates associated with the APCs for the individual services,
exceeds the per diem payment rate for 4 partial hospitalization
services provided in a day by a hospital (the payment amount for APC
5864), those specified mental health services would be paid through
composite APC 8010. In addition, we propose to continue to set the
payment rate for composite APC 8010 at the same payment rate that we
propose for APC 5864, which is a partial hospitalization per diem
payment rate for 4 partial hospitalization services furnished in a day
by a hospital.
Under the proposed policy, the Integrated OCE (I/OCE) would
continue to determine whether to pay for these specified mental health
services individually, or to make a single payment at the same payment
rate established for APC 5864 for all the specified mental health
services furnished by the hospital on that single date of service by
paying for the services through composite APC 5863.
(2) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and
8008)
Effective January 1, 2009, we provide a single payment each time a
hospital submits a claim for more than one imaging procedure within an
imaging family on the same date of service, to reflect and promote the
efficiencies hospitals can achieve when performing multiple imaging
procedures during a single session (73 FR 41448 through 41450). We
utilize three imaging families based on imaging modality for purposes
of this methodology: (1) ultrasound; (2) computed tomography (CT) and
computed tomographic angiography (CTA); and (3) magnetic resonance
imaging (MRI) and magnetic resonance angiography (MRA). The HCPCS codes
subject to the multiple imaging composite policy and their respective
families are listed in Table 3.
While there are three imaging families, there are five multiple
imaging composite APCs due to the statutory requirement under section
1833(t)(2)(G) of the Act that we differentiate payment for OPPS imaging
services provided with and without contrast. While the ultrasound
procedures included under the policy do not involve contrast, both CT/
CTA and MRI/MRA scans can be provided either with or without contrast.
The five multiple imaging composite APCs established in CY 2009 are:
APC 8004 (Ultrasound Composite);
APC 8005 (CT and CTA without Contrast Composite);
APC 8006 (CT and CTA with Contrast Composite);
APC 8007 (MRI and MRA without Contrast Composite); and
APC 8008 (MRI and MRA with Contrast Composite).
We define the single imaging session for the ``with contrast''
composite APCs as having at least one or more imaging procedures from
the same family performed with contrast on the same date of service.
For example, if the hospital performs an MRI without contrast during
the same session as at least one other MRI with contrast, the hospital
will receive payment based on the payment rate for APC 8008, the ``with
contrast'' composite APC.
We make a single payment for those imaging procedures that qualify
for payment based on the composite APC payment rate, which includes any
packaged services furnished on the same date of service. The standard
(noncomposite) APC assignments continue to apply for single imaging
procedures and multiple imaging procedures performed across families.
For a full discussion of the development of the multiple imaging
composite APC methodology, we refer readers to the CY 2009 OPPS/ASC
final rule with comment period (73 FR 68559 through 68569).
[[Page 33498]]
For CY 2026, we propose to continue to pay for all multiple imaging
procedures within an imaging family performed on the same date of
service using the multiple imaging composite APC payment methodology.
We continue to believe that this policy would reflect and promote the
efficiencies hospitals can achieve when performing multiple imaging
procedures during a single session.
For CY 2026, except where otherwise indicated, we propose to use
the costs derived from CY 2024 claims data to set the proposed CY 2026
payment rates. Therefore, for CY 2026, the proposed payment rates for
the five multiple imaging composite APCs (APCs 8004, 8005, 8006, 8007,
and 8008) were based on proposed geometric mean costs calculated from
CY 2024 claims available for the CY 2026 OPPS/ASC proposed rule that
qualify for composite payment under the current policy (that is, those
claims reporting more than one procedure within the same family on a
single date of service). To calculate the proposed geometric mean
costs, we used the same methodology that we used to calculate the
geometric mean costs for these composite APCs since CY 2014, as
described in the CY 2014 OPPS/ASC final rule with comment period (78 FR
74918). The imaging HCPCS codes referred to as ``overlap bypass codes''
that we removed from the bypass list for purposes of calculating the
proposed multiple imaging composite APC geometric mean costs, in
accordance with our established methodology as stated in the CY 2014
OPPS/ASC final rule with comment period (78 FR 74918), are identified
by asterisks in Addendum N to this proposed rule (which is available
via the internet on the CMS website https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices) and are discussed in more detail in section II.A.1.a. of this
proposed rule.
For this proposed rule, we were able to identify approximately 0.98
million ``single session'' claims out of an estimated 2.2 million
potential claims for payment through composite APCs from our
ratesetting claims data, which represents approximately 44.0 percent of
all eligible claims, to calculate the proposed CY 2026 geometric mean
costs for the multiple imaging composite APCs. Table 3 lists the
proposed HCPCS codes that would be subject to the multiple imaging
composite APC policy and their respective families and approximate
composite APC final geometric mean costs for CY 2026.
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3. Proposed Changes to Packaged Items and Services
a. Background and Rationale for Packaging in the OPPS
Like other prospective payment systems, the OPPS relies on the
concept of averaging to establish a payment rate for services. The
payment may be more or less than the estimated cost of providing a
specific service or a bundle of specific services for a particular
beneficiary. The OPPS packages payments for multiple interrelated items
and services into a single payment to create incentives for hospitals
to furnish services most efficiently and to manage their resources with
maximum flexibility. Our packaging policies support our strategic goal
of using larger payment bundles in the OPPS to maximize hospitals'
incentives to provide care in the most efficient
[[Page 33503]]
manner. For example, where there are a variety of devices, drugs,
items, and supplies that could be used to furnish a service, some of
which are more costly than others, packaging encourages hospitals to
use the most cost-efficient item that meets the patient's needs, rather
than to routinely use a more expensive item, which may occur if
separate payment is provided for the item.
Packaging also encourages hospitals to effectively negotiate with
manufacturers and suppliers to reduce the purchase price of items and
services or to explore alternative group purchasing arrangements,
thereby encouraging the most economical health care delivery.
Similarly, packaging encourages hospitals to establish protocols that
ensure that necessary services are furnished, while scrutinizing the
services ordered by practitioners to maximize the efficient use of
hospital resources. Packaging payments into larger payment bundles
promotes the predictability and accuracy of payment for services over
time. Finally, packaging may reduce the importance of refining service-
specific payments because packaged payments include costs associated
with higher cost cases requiring many ancillary items and services and
lower cost cases requiring fewer ancillary items and services.
Packaging encourages efficiency and is an essential component of a
prospective payment system; therefore, packaging payments for items and
services that are typically integral, ancillary, supportive, dependent,
or adjunctive to a primary service has been a fundamental part of the
OPPS since its implementation in August 2000. As we continue to develop
larger payment groups that more broadly reflect services provided in an
encounter or episode of care, we have expanded the OPPS packaging
policies. Most, but not necessarily all, categories of items and
services currently packaged in the OPPS are listed in 42 CFR 419.2(b).
Our overarching goal is to make payments for all services under the
OPPS more consistent with those of a prospective payment system and
less like those of a per-service fee schedule, which pays separately
for each coded item. As a part of this effort, we have continued to
examine the payment for items and services provided under the OPPS to
determine which OPPS services can be packaged to further achieve the
objective of advancing the OPPS toward a more prospective payment
system.
b. Proposed CY 2026 Policy on Packaged Items and Services
For CY 2026, we examined the items and services currently provided
under the OPPS, reviewing categories of integral, ancillary,
supportive, dependent, or adjunctive items and services for which we
believe payment would be appropriately packaged into payment for the
primary service that they support. Specifically, we examined the HCPCS
code definitions (including CPT code descriptors) and hospital
outpatient department billing patterns to determine whether there were
categories of codes for which packaging would be appropriate according
to existing OPPS packaging policies or a logical expansion of those
existing OPPS packaging policies.
For CY 2026, we are not proposing any changes to the overall
packaging policy discussed. We propose to continue to conditionally
package the costs of selected newly identified ancillary services into
payment for a primary service where we believe that the packaged item
or service is integral, ancillary, supportive, dependent, or adjunctive
to the provision of care that was reported by the primary service HCPCS
code.
c. Payment for Diagnostic Radiopharmaceuticals
(1) Background on OPPS Packaging Policy for Diagnostic
Radiopharmaceuticals
Under the OPPS, we package several categories of nonpass-through
drugs, biologicals, and radiopharmaceuticals, regardless of the cost of
the products. Because the products are packaged according to the
policies in Sec. 419.2(b), we refer to them as ``policy-packaged''
drugs, biologicals, and radiopharmaceuticals. In particular, under
Sec. 419.2(b)(15), payment for drugs, biologicals, and, prior to CY
2025, all radiopharmaceuticals that function as supplies when used in a
diagnostic test or procedure are packaged with the payment for the
related procedure or service. Packaging costs into a single aggregate
payment for a service, encounter, or episode of care is a fundamental
principle that distinguishes a prospective payment system from a fee
schedule. In general, packaging the costs of supportive items and
services into the payment for the primary procedure or service with
which they are associated encourages hospital efficiencies and enables
hospitals to manage their resources with maximum flexibility.
In the CY 2008 OPPS/ASC final rule with comment period, we
finalized the packaging status of diagnostic radiopharmaceuticals as
part of our overall enhanced packaging approach for the CY 2008 OPPS
and subsequent years (72 FR 66635 through 66641). Importantly, we noted
that we believe diagnostic radiopharmaceuticals are always intended to
be used with a diagnostic nuclear medicine procedure and function as
supplies when used in a diagnostic test or procedure, making it
appropriate to package the payment for the diagnostic
radiopharmaceutical into the payment for the related nuclear medicine
procedure. Higher cost diagnostic radiopharmaceuticals were one
specific type of product that, prior to CY 2025, was policy packaged
under the category described by Sec. 419.2(b)(15). Since we
implemented this policy in CY 2008, interested parties raised concerns
regarding policy packaging of diagnostic radiopharmaceuticals.
In the CY 2025 OPPS/ASC proposed rule (89 FR 59213 through 59222),
we stated that we continue to believe diagnostic radiopharmaceuticals
are always intended to be used with a diagnostic nuclear medicine
procedure and function as supplies when used in a diagnostic test or
procedure, generally making it appropriate to package payment for them
with payment for the related nuclear medicine procedure. However, we
stated there are certain situations in which the packaged payment
amount attributed to the diagnostic radiopharmaceutical used in an
imaging procedure assigned to a nuclear medicine APC may not adequately
account for the cost of a diagnostic radiopharmaceutical that has a
significantly higher cost, but lower utilization relative to the other
diagnostic radiopharmaceuticals that may be used with the procedure.
In the CY 2025 OPPS/ASC final rule with comment period (89 FR 93948
through 93963) we finalized a policy to pay separately for any
diagnostic radiopharmaceutical with a per day cost greater than $630
for CY 2025. We propose to use the same methodology that was finalized
in the CY 2025 OPPS/ASC final rule with comment period in order to
calculate the per day costs for diagnostic radiopharmaceuticals for CY
2026 and future years (89 FR 93953 through 93955). We noted that any
diagnostic radiopharmaceutical with a per day cost at or below that
threshold will continue to be policy packaged under our longstanding
policy at Sec. 419.2(b)(15). Additionally, we finalized the policy
that starting in CY 2026 and for subsequent years, we will update the
threshold amount of $630 by a forecast of the Producer Price Index
(PPI) for Pharmaceuticals for Human
[[Page 33504]]
Use, Prescription (Bureau of Labor Statistics (BLS) series code
WPUSI07003) from IHS Global, Inc (IGI) (89 FR 93955).
In the CY 2025 OPPS/ASC final rule with comment period, we also
finalized a policy to pay for nonpass-through, separately payable
diagnostic radiopharmaceuticals with per day costs above the designated
threshold based on our authority under section 1833(t)(14)(A)(iii)(II)
of the Act. As we found that the ASP data we had was not usable for the
purpose of paying for diagnostic radiopharmaceuticals, we finalized a
policy to pay for qualifying nonpass-through diagnostic
radiopharmaceuticals with claims data based on mean unit cost data
derived from hospital claims. Additionally, we finalized corresponding
modifications to the regulation text at Sec. 419.2(b)(15) and Sec.
419.41 to codify our finalized payment policy for diagnostic
radiopharmaceuticals and our existing policy for therapeutic
radiopharmaceuticals. For additional information regarding the policy
finalized for CY 2025, reference 89 FR 93948 through 93963.
(2) Proposed Diagnostic Radiopharmaceutical Packaging Threshold
For CY 2026, we propose to continue the policy finalized in CY
2025. Specifically, we propose to continue to calculate the per day
cost of diagnostic radiopharmaceuticals based on the methodology
described in section V.B.1.b. of this proposed rule, which relies on
the methodology finalized in the CY 2006 OPPS final rule with comment
period (70 FR 68636 through 68638).
As finalized in the CY 2025 OPPS/ASC final rule with comment period
(89 FR 93955), starting in the OPPS/ASC rulemaking for CY 2026 and for
subsequent years, we stated we would update the proposed threshold
amount of $630 by a forecast of the PPI for Pharmaceuticals for Human
Use, Prescription (BLS series code WPUSI07003) from IHS Global, Inc
(IGI) by using most recently available four-quarter moving average PPI
levels to trend from the third quarter of the year 2 years prior to the
applicable calendar year to the third quarter of the year prior to the
applicable calendar year (for example, from the third quarter of 2024
to the third quarter of 2025 for CY 2026). We propose a technical
refinement to this policy. We propose to use the most recently
available four-quarter moving average PPI levels to trend the CY 2025
final threshold forward from the third quarter of the CY 2025 to the
third quarter of the payment year (CY 2026) and round the resulting
dollar amount to the nearest $5 increment. We believe using the most
recently available four-quarter moving average PPI levels more
appropriately updates the packaging threshold from CY 2025 for payment
in CY 2026. For CY 2027 and subsequent updates, we therefore, propose
to trend the CY 2025 threshold of $630 forward using the four-quarter
moving average PPI levels for Pharmaceuticals for Human Use,
Prescription for CY 2025 (third quarter) forward using the PPI for
Pharmaceuticals for Human Use, Prescription for the applicable payment
year (third quarter). This is the same as the update factor used for
the OPPS drug packaging threshold, where we originally used the four-
quarter moving average PPI levels for Pharmaceutical Preparations,
Prescription (BLS series code WPUSI07003, formerly BLS series code
32541DRX) to trend the $50 threshold forward from the third quarter of
CY 2005 (when the Pub. L. 108-173 mandated threshold became effective)
to the third quarter of the applicable payment year (71 FR 68085 and
68086).
Therefore, for CY 2026, we propose to update the CY 2025 $630
threshold amount by the four-quarter moving average PPI levels for
Pharmaceuticals for Human Use, Prescription to trend the $630 threshold
forward. Specifically, we propose to use the most recently available
forecast of the four-quarter moving average PPI levels for
Pharmaceutical for Human Use, Prescription from the third quarter of
2025 to the third-quarter of 2026, and to round the resulting dollar
amount to the nearest $5 increment. Based on this methodology, we
trended the $630 threshold forward and rounded the resulting dollar
amount ($654.23) to the nearest $5 increment, which yields a proposed
figure of $655 per day for CY 2026. Consistent with our methodology and
practices listed in section V.B.1.b. of this proposed rule, we also
propose that if more recent data are subsequently available (for
example, a more recent estimate of the PPI for Pharmaceuticals for
Human Use, Prescription), we would use such data, if appropriate, to
determine the CY 2026 diagnostic radiopharmaceutical packaging
threshold in the final rule.
(3) Amount of Separate Payment for Diagnostic Radiopharmaceuticals
Exceeding the Threshold
As discussed in the CY 2025 OPPS/ASC final rule with comment period
(89 FR 93955 through 93959), once we determine that the per day cost of
a nonpass-through diagnostic radiopharmaceutical exceeds the cost
threshold, proposed to be $655 per day for CY 2026, we will then assign
that radiopharmaceutical to an APC, making it a specified covered
outpatient drug (SCOD) per section 1833(t)(14)(B) of the Act. We
propose to continue our current policy for CY 2026, and propose to pay
for those nonpass-through, separately payable diagnostic
radiopharmaceuticals based on our authority under section
1833(t)(14)(A)(iii)(II) of the Act. While, under this authority, we
would ordinarily use the ASP methodology under section 1847A of the
Act, we continue to find that the ASP data we have is not usable for
payment purposes. We continue to believe that arithmetic Mean Unit Cost
(MUC) would be an appropriate proxy for the average price for a
diagnostic radiopharmaceutical for a given year, as it is calculated
based on the average costs for a particular year and is directly
reflective of the actual cost data that hospitals submit to CMS.
Therefore, we propose to continue our current policy and propose for CY
2026 to pay qualifying diagnostic radiopharmaceuticals with per day
costs above the diagnostic radiopharmaceutical packaging threshold,
based on their arithmetic MUC, which would be derived from calendar
year 2024 claims data.
Although we propose to base payment for qualifying
radiopharmaceuticals on their arithmetic MUC for CY 2026, we continue
to encourage manufacturers to submit ASP information for diagnostic
radiopharmaceuticals, if possible. While we propose to continue to use
MUC to pay for separately payable diagnostic radiopharmaceuticals in CY
2026, manufacturers can begin, or continue, to report ASP data for
potential future use in paying for diagnostic radiopharmaceuticals. For
CY 2026, ASP reporting is voluntary for diagnostic radiopharmaceuticals
paid under the OPPS. We encourage interested parties to submit comments
regarding potential issues that may arise that prevent appropriate ASP
reporting for diagnostic radiopharmaceuticals. We refer readers to the
CY 2025 OPPS/ASC final rule with comment period as it discusses some of
the known concerns regarding ASP reporting for diagnostic
radiopharmaceuticals (89 FR 93948 through 93963). We reiterate our
stance from the CY 2025 OPPS/ASC final rule with comment period, that
if we were to use average sales price as the basis of calculating a
payment, we believe there must be more consistent, validated, and
universal reporting in order for ASP to
[[Page 33505]]
be a viable payment methodology (89 FR 93961).
We also reiterate, as we stated in the CY 2025 OPPS/ASC final rule
with comment period (89 FR 93957), that there could be potential value
in the use of ASP data for payment purposes for diagnostic
radiopharmaceuticals when reported correctly and by all manufacturers
who manufacture a product that is described by a given HCPCS code. We
continue to believe that the use of ASP information for OPPS payment
could provide an opportunity to improve payment accuracy for separately
payable diagnostic radiopharmaceuticals by applying an established
methodology that has already been successfully implemented under the
OPPS for other separately payable drugs and biologicals, as well as
therapeutic radiopharmaceuticals.
In order to facilitate potential future payment for diagnostic
radiopharmaceuticals on ASP, we are seeking comment from interested
parties on how CMS can ensure more consistent, validated, and universal
reporting in order for ASP to be a viable payment methodology utilized
in future rulemaking. For example, we are seeking comment on how CMS
may update its past guidance, Submission of OPPS ASP Data for Nonpass-
Through Separately Payable Therapeutic Radiopharmaceuticals and
Radiopharmaceuticals with Pass-Through Status,\6\ in order to reflect
current clinical practices and to reflect ASP reporting for diagnostic
radiopharmaceuticals.
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\6\ https://www.cms.gov/medicare/medicare-fee-for-service-payment/hospitaloutpatientpps/downloads/opps_asp_radiopharm_guidance10302009.pdf.
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Additionally, as discussed in section V.B.5. of this proposed rule
(Proposed Payment for Nonpass-Through Drugs, Biologicals, and
Radiopharmaceuticals with HCPCS Codes but Without OPPS Hospital Claims
Data), we propose to set the payment rate for new diagnostic
radiopharmaceuticals that exceed the diagnostic radiopharmaceutical
packaging threshold and with HCPCS codes, but which do not have pass-
through status and are without claims data at ASP plus 6 percent. If
ASP data for these diagnostic radiopharmaceuticals are not available,
we propose to pay WAC plus 3 percent during the product's initial sales
period, consistent with our policy described in section V.B.2. of this
proposed rule. If the WAC also is unavailable, we propose to make
payment for new diagnostic radiopharmaceuticals at 95 percent of the
products' most recent AWP. Following the initial sales period, a
payment rate of WAC plus 6 percent would apply, if ASP data for these
diagnostic radiopharmaceuticals remain unavailable. We believe the
volume of products in this category will typically be very low;
however, in these rare situations, we believe it would continue to be
appropriate to use ASP, WAC plus 3 or 6 percent, or 95 percent of AWP
until a MUC is available. As stated in the CY 2025 OPPS/ASC final rule
with comment period, we stated we believe it would be appropriate to
use this payment hierarchy until a MUC is available. There is typically
only one manufacturer for a diagnostic radiopharmaceutical that is new
and described by a HCPCS code, but without claims data, so CMS does not
have to ensure all manufacturers are reporting ASP for that particular
HCPCS code prior to establishing a separate payment amount based on
ASP. Additionally, although reporting of ASP is not a condition of CMS
approving a HCPCS application, CMS has the opportunity to actively
engage with the manufacturer, or sponsor of a HCPCS application, during
the HCPCS application process. This allows for ongoing dialogue and
education regarding the unique ASP reporting requirements that may be
associated with a particular product, including how to ensure the
reported ASP aligns with the dose descriptor for the newly assigned
HCPCS code (89 FR 93958). We believe the hierarchy previously specified
is appropriate to determine the payment for a diagnostic
radiopharmaceutical that is new and described by a HCPCS code, but
without claims data, as it is consistent with the typical hierarchy
associated with payment for drugs and biologicals paid under the OPPS
as discussed in section V.A. and V.B. of this proposed rule.
(4) Qualifying Diagnostic Radiopharmaceuticals Above the Diagnostic
Radiopharmaceutical Packaging Threshold
The HCPCS codes that describe diagnostic radiopharmaceuticals with
per day costs that exceed the proposed diagnostic radiopharmaceutical
packaging threshold are proposed to be assigned to a status indicator
of ``K'', indicating separate payment to be paid based on that HCPCS
code's arithmetic MUC. A proposed APC and a proposed payment rate would
be assigned as shown in Addendum B to this proposed rule. HCPCS codes
that describe diagnostic radiopharmaceuticals with per day costs that
are at or below the proposed diagnostic radiopharmaceutical packaging
threshold are proposed to continue to be assigned to a status indicator
of ``N'', indicating packaged payment.
The proposed list of diagnostic radiopharmaceuticals that we
calculated as having per day costs that exceed $655 and their proposed
status indicators can be found in Table 4.
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Proposed definitions of status indicators can be found in Addendum
D1 to this proposed rule. Addenda to this proposed rule can be found on
the CMS OPPS web page.
4. Proposed Implementation of Section 4135 of the Consolidated
Appropriations Act (CAA), 2023
The Consolidated Appropriations Act (CAA), 2023 (Pub. L. 117-328),
was signed into law on December 29, 2022. Section 4135(a) and (b) of
the CAA, 2023, titled Access to Non-Opioid Treatments for Pain Relief,
amended sections 1833(t)(16) and 1833(i) of the Act, respectively, to
provide for temporary additional payments for non-opioid treatments for
pain relief (as that term is defined in section 1833(t)(16)(G)(i) of
the Act). In particular, section 1833(t)(16)(G) of the Act provides
that with respect to a non-opioid treatment for pain relief furnished
on or after January 1, 2025, and before January 1, 2028, the Secretary
shall not package payment for the non-opioid treatment for pain relief
into payment for a covered OPD service (or group of services) and shall
make an additional payment for the non-opioid treatment for pain relief
as specified in clause (ii) of that section. Clauses (ii) and (iii) of
section 1833(t)(16)(G) of the Act provide for the amount of additional
payment and set a limitation on that amount, respectively.
The required additional payments began on January 1, 2025, based on
the policy finalized in the CY 2025 OPPS/ASC final rule with comment
period (89 FR 94343 through 94361). In section XIII.F. of this proposed
rule, we propose to continue for CY 2026 the policy finalized in the CY
2025 OPPS/ASC final rule with comment period. We also propose non-
opioid treatments for pain relief that would qualify under this policy
for CY 2026 and seek public comment on those product evaluations.
5. Calculation of OPPS Scaled Payment Weights
We established a policy in the CY 2013 OPPS/ASC final rule with
comment period (77 FR 68283) of using geometric mean-based APC costs to
calculate relative payment weights under the OPPS. In the CY 2025 OPPS/
ASC final rule with comment period (89 FR 93964 through 93965), we
applied this policy and calculated the relative
[[Page 33507]]
payment weights for each APC for CY 2025 that were shown in Addenda A
and B of the CY 2025 OPPS/ASC final rule with comment period (which
were made available via the internet on the CMS website) using the APC
costs discussed in sections II.A.1. and II.A.2. of the CY 2025 OPPS/ASC
final rule with comment period (89 FR 93921 through 93947). For CY
2026, as we did for CY 2025, we propose to continue to apply the policy
established in CY 2013 and calculate relative payment weights for each
APC for CY 2026 using geometric mean-based APC costs.
For CY 2012 and CY 2013, outpatient clinic visits were assigned to
one of five levels of clinic visit APCs, with APC 0606 representing a
mid-level clinic visit. In the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75036 through 75043), we finalized a policy that created
alphanumeric HCPCS code G0463 (Hospital outpatient clinic visit for
assessment and management of a patient), representing all clinic visits
under the OPPS. HCPCS code G0463 was assigned to APC 0634 (Hospital
Clinic Visits). We also finalized a policy to use CY 2012 claims data
to develop the CY 2014 OPPS payment rates for HCPCS code G0463 based on
the total geometric mean cost of the levels one through five CPT
Evaluation or Assessment and Management (E/M) codes for clinic visits
previously recognized under the OPPS (CPT codes 99201 through 99205 and
99211 through 99215). In addition, we finalized a policy to no longer
recognize a distinction between new and established patient clinic
visits.
For CY 2016, we deleted APC 0634 and reassigned the outpatient
clinic visit HCPCS code G0463 to APC 5012 (Level 2 Examinations and
Related Services) (80 FR 70372). For CY 2026, as we did for CY 2025, we
propose to continue to standardize all the relative payment weights to
APC 5012. We believe that standardizing relative payment weights to the
geometric mean of the APC to which HCPCS code G0463 is assigned
maintains consistency in calculating unscaled weights that represent
the cost of some of the most frequently provided OPPS services. For CY
2026, as we did for CY 2025, we propose to assign APC 5012 a relative
payment weight of 1.00 and to divide the geometric mean cost of each
APC by the geometric mean cost for APC 5012 to derive the unscaled
relative payment weight for each APC. The choice of the APC on which to
standardize the relative payment weights does not affect payments made
under the OPPS because we scale the weights for budget neutrality.
Section 1833(t)(9)(B) of the Act requires that APC reclassification
and recalibration changes, wage index changes, and other adjustments be
made in a budget neutral manner. Budget neutrality ensures that the
estimated aggregate weight under the OPPS for CY 2026 is neither
greater than nor less than the estimated aggregate weight that would
have been calculated without the changes. To comply with this
requirement concerning the APC changes, we propose to compare the
estimated aggregate weight using the CY 2025 scaled relative payment
weights to the estimated aggregate weight using the proposed CY 2026
unscaled relative payment weights.
For CY 2025, we multiplied the CY 2025 scaled APC relative payment
weight applicable to a service paid under the OPPS by the volume of
that service from CY 2024 claims to calculate the total relative
payment weight for each service. We then added together the total
relative payment weight for each of these services to calculate an
estimated aggregate weight for the year. For CY 2026, we propose to
apply the same process using the estimated CY 2026 unscaled relative
payment weights rather than scaled relative payment weights. We propose
to calculate the weight scalar by dividing the CY 2025 estimated
aggregate weight by the unscaled CY 2026 estimated aggregate weight.
For a detailed discussion of the weight scalar calculation, we
refer readers to the OPPS claims accounting document available on the
CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices. Click on the
link labeled ``Hospital Outpatient Prospective Payment System Proposed
Rule'' for 2026, which can be found under the heading ``Hospital
Outpatient Regulations and Notices'' and open the claims accounting
document link, which is labeled ``2026 Proposed Rule OPPS Claims
Accounting (PDF).''
We propose to compare the estimated unscaled relative payment
weights in CY 2026 to the estimated total relative payment weights in
CY 2025 using CY 2024 claims data, holding all other components of the
payment system constant to isolate changes in total weight. Based on
this comparison, we propose to adjust the calculated CY 2026 unscaled
relative payment weights for purposes of budget neutrality. We propose
to adjust the estimated CY 2026 unscaled relative payment weights by
multiplying them by a proposed weight scalar of 1.4624 to ensure that
the proposed CY 2026 relative payment weights are scaled to be budget
neutral. The proposed CY 2026 relative payment weights listed in
Addenda A and B to this proposed rule (which are available via the
internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices)
are scaled and incorporate the recalibration adjustments discussed in
sections II.A.1. and II.A.2. of this proposed rule.
Section 1833(t)(14) of the Act provides the methodology for payment
rates for certain specified covered outpatient drugs (SCODs). Section
1833(t)(14)(H) of the Act provides that additional expenditures
resulting from this paragraph shall not be taken into account in
establishing the conversion factor, weighting, and other adjustment
factors for 2004 and 2005 under paragraph (9) but shall be taken into
account for subsequent years. Therefore, the cost of those SCODs (as
discussed in section V.B.2. of this proposed rule) is included in the
budget neutrality calculations for the CY 2026 OPPS.
B. Proposed Conversion Factor Update
1. OPD Fee Schedule Increase Factor
Section 1833(t)(3)(C)(ii) of the Act requires the Secretary to
update the conversion factor used to determine the payment rates under
the OPPS on an annual basis by applying the OPD fee schedule increase
factor. For purposes of section 1833(t)(3)(C)(iv) of the Act, subject
to sections 1833(t)(17) and 1833(t)(3)(F) of the Act, the OPD fee
schedule increase factor is equal to the hospital inpatient market
basket percentage increase applicable to hospital discharges of the Act
(or an amount that is computed and applied with respect to covered OPD
services). In the FY 2026 IPPS/Long Term Care Hospital (LTCH) PPS
proposed rule (90 FR 18266), consistent with current law, based on IHS
Global, Inc.'s fourth quarter 2024 forecast, the proposed FY 2026 IPPS
market basket percentage increase was 3.2 percent. We note that under
our regular process for the CY 2026 OPPS/ASC final rule with comment
period, we would use the market basket update for the FY 2026 IPPS/LTCH
PPS final rule. If that forecast is different than the IPPS market
basket percentage increase used for this proposed rule, the CY 2026
OPPS/ASC final rule with comment period OPD fee schedule increase
factor would reflect that updated forecast of the market basket
percentage increase.
For CY 2026, we propose to use the estimate of the hospital
inpatient market basket percentage increase of 3.2
[[Page 33508]]
percent as one component to calculate the OPD fee schedule increase
factor.
2. Productivity Adjustment
Section 1833(t)(3)(F)(i) of the Act requires that, for 2012 and
subsequent years, the OPD fee schedule increase factor under
subparagraph (C)(iv) be reduced by the productivity adjustment
described in section 1886(b)(3)(B)(xi)(II) of the Act. Section
1886(b)(3)(B)(xi)(II) of the Act defines the productivity adjustment as
equal to the 10-year moving average of changes in annual economy-wide,
private nonfarm business multifactor productivity (MFP) (as projected
by the Secretary for the 10-year period ending with the applicable
fiscal year, year, cost reporting period, or other annual period) (the
``productivity adjustment''). In the FY 2012 IPPS/LTCH PPS final rule
(76 FR 51689 through 51692), we finalized our methodology for
calculating and applying the productivity adjustment. The U.S.
Department of Labor's Bureau of Labor Statistics (BLS) publishes the
official measures of private nonfarm business productivity for the U.S.
economy. We note that previously the productivity measure referenced in
section 1886(b)(3)(B)(xi)(II) of the Act was published by BLS as
private nonfarm business multifactor productivity. Beginning with the
November 18, 2021, release of productivity data, BLS replaced the term
multifactor productivity (MFP) with total factor productivity (TFP).
BLS noted that this is a change in terminology only and will not affect
the data or methodology. As a result of the BLS name change, the
productivity measure referenced in section 1886(b)(3)(B)(xi)(II) of the
Act is now published by BLS as private nonfarm business total factor
productivity. However, as mentioned, the data and methods are
unchanged. Please see www.bls.gov for the BLS historical published TFP
data. A complete description of IHS Global, Inc.'s (IGI) TFP projection
methodology is available on the CMS website at https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-program-rates-statistics/market-basket-research-and-information. In addition, we note
that beginning with the FY 2022 IPPS/LTCH PPS final rule, we refer to
this adjustment as the productivity adjustment rather than the MFP
adjustment to more closely track the statutory language in section
1886(b)(3)(B)(xi)(II) of the Act. We note that the adjustment continues
to rely on the same underlying data and methodology. In the FY 2026
IPPS/LTCH PPS proposed rule (90 FR 18266), the proposed productivity
adjustment for FY 2026 was 0.8 percentage point.
Therefore, we propose that the productivity adjustment for the CY
2026 OPPS/ASC would be 0.8 percentage point. We also propose that if
more recent data subsequently become available after the publication of
the CY 2026 OPPS/ASC proposed rule (for example, a more recent estimate
of the market basket percentage increase and/or the productivity
adjustment), we would use such data, if appropriate, to determine the
CY 2026 hospital inpatient market basket update and the productivity
adjustment for the final rule, which are components in calculating the
OPD fee schedule increase factor under sections 1833(t)(3)(C)(iv) and
1833(t)(3)(F) of the Act.
We note that section 1833(t)(3)(F) of the Act provides that
application of this subparagraph may result in the OPD fee schedule
increase factor under section 1833(t)(3)(C)(iv) of the Act being less
than 0.0 percent for a year and may result in OPPS payment rates being
less than rates for the preceding year. As described in further detail
below, we proposed for CY 2026 an OPD fee schedule increase factor of
2.4 percent for the CY 2026 OPPS/ASC (which is the proposed estimate of
the hospital inpatient market basket percentage increase of 3.2
percent, less the proposed 0.8 percentage point productivity
adjustment).
3. Other Conversion Factor Adjustments
To set the OPPS conversion factor for 2026, we propose to increase
the CY 2025 conversion factor of $89.169 by 2.4 percent. In accordance
with section 1833(t)(9)(B) of the Act, we propose to further adjust the
conversion factor for CY 2026 to ensure that any revisions made to the
wage index and rural adjustment are made on a budget neutral basis. We
propose to apply an overall budget neutrality factor of 1.0116 for wage
index changes by comparing proposed total estimated payments from our
simulation model using the proposed FY 2026 IPPS wage indexes to those
payments using the CY 2025 OPPS wage indexes. We further propose to
calculate an additional budget neutrality factor of 0.9955 to account
for our proposed policy to cap wage index reductions for hospitals at 5
percent on an annual basis and the CY 2026 proposed transitional
exception.
For CY 2026, we propose to maintain the current rural adjustment
policy, as discussed in section II.E. of this proposed rule with
comment period. Therefore, the proposed budget neutrality factor for
the rural adjustment is 1.0000.
We propose to calculate a CY 2026 budget neutrality adjustment
factor for the cancer hospital payment adjustment. We previously
finalized transitioning from the target PCR of 0.89 for CYs 2020
through 2023 (which included the 1.0 percentage point reduction as
required by section 16002(b) of the 21st Century Cures Act) and
incrementally reducing the target PCR by an additional 1.0 percentage
point for each calendar year, beginning with CY 2024, until the target
PCR equals the PCR of non-cancer hospitals calculated using the most
recent data minus 1.0 percentage point as required by section 16002(b)
of the 21st Century Cures Act. Based on the most recent data available
for this proposed rule, the target PCR now equals the PCR of non-cancer
hospitals. We propose a CY 2026 target PCR equal to 0.87 for the cancer
hospital payment adjustment, which includes the 1.0 percentage point
reduction as required by section 16002(b) of the 21st Century Cures
Act. We note that this proposed target PCR is the same as the final
target PCR established in the CY 2025 OPPS (89 FR 93979). Therefore, we
propose to apply a budget neutrality adjustment factor of 1.0000 to the
conversion factor for the cancer hospital payment adjustment.
For the CY 2026 OPPS/ASC proposed rule, we estimate that proposed
pass-through spending for drugs, biologicals, and devices for CY 2026
will equal approximately $587 million, which represents 0.59 percent of
total projected CY 2026 OPPS spending. Therefore, we state that the
proposed conversion factor would be adjusted by the difference between
the 0.37 percent estimate of pass-through spending for CY 2025 and the
0.59 percent estimate of proposed pass-through spending for CY 2026,
resulting in a proposed decrease to the conversion factor for CY 2026
of 0.22 percentage point.
We propose that estimated payments for outliers would be 1.0
percent of total OPPS payments for CY 2026. We estimate for the
proposed rule that outlier payments will be approximately 0.92 percent
of total OPPS payments in CY 2025; the 1.00 percent for proposed
outlier payments in CY 2026 would constitute a 0.08 percentage point
increase in payment in CY 2026 relative to CY 2025.
For CY 2026, we propose to use a conversion factor of $91.747 in
the calculation of the national unadjusted payment rates for those
items and services for which payment rates are calculated using
geometric mean costs; that is, the proposed OPD fee schedule
[[Page 33509]]
increase factor of 1.024 (2.4 percent for CY 2026), the required
proposed wage index budget neutrality adjustment of approximately
1.0116, the proposed 5 percent annual cap for individual hospital wage
index reductions adjustment and the proposed transitional exception of
approximately 0.9955, the proposed cancer hospital payment adjustment
of 1.0000, and the proposed adjustment factor of 0.9978 (a decrease of
0.22 percentage point) for the difference in pass-through spending, and
a 0.08 percentage point increase in projected OPPS spending for the
projected increase in outlier payments, which resulted in a proposed
conversion factor for CY 2026 of $91.747
For CY 2026, we also propose that hospitals that fail to meet the
reporting requirements of the Hospital OQR Program would continue to be
subject to a further reduction of 2.0 percentage points to the OPD fee
schedule increase factor. For hospitals that fail to meet the
requirements of the Hospital OQR Program, we propose to make all other
adjustments discussed above and apply an adjustment factor of 0.9805 to
the proposed CY 2026 conversion factor of $91.747. We propose that the
hospitals that fail to meet the requirements of the Hospital OQR
Program will use a reduced OPD fee schedule update factor of 0.4
percent (that is, the proposed OPD fee schedule increase factor of 2.4
percent further reduced by 2.0 percentage points).
For CY 2026, as previously discussed in section V.B.7. of this
proposed rule, we propose to reduce payments for non-drug items and
services for hospitals for whom the annual reduction to payment amounts
under Sec. 419.32(b)(1)(iv)(B)(12) applies with a 2 percentage point
reduction to the OPD fee schedule increase factor, explained in more
detail in section XIV.D. of this proposed rule. This would result in a
proposed reduced conversion factor for CY 2026 of approximately $89.958
for this group of hospitals. The calculations we performed to determine
the CY 2026 proposed conversion factor are shown in Table 5.
BILLING CODE 4120-01-P
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[GRAPHIC] [TIFF OMITTED] TP17JY25.008
[[Page 33511]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.009
BILLING CODE 4120-01-C
C. Proposed Wage Index Changes
Section 1833(t)(2)(D) of the Act requires the Secretary to
determine a wage adjustment factor to adjust the portion of payment and
coinsurance attributable to labor-related costs for relative
differences in labor and labor-related costs across geographic regions
in a budget neutral manner (codified at 42 CFR 419.43(a)). This portion
of the OPPS payment rate is called the OPPS labor-related share. Budget
neutrality is discussed in section II.A.5. of this proposed rule.
The OPPS labor-related share is 60 percent of the national OPPS
payment. This labor-related share is based on a regression analysis
that determined that, for all hospitals, approximately 60 percent of
the costs of services paid under the OPPS were attributable to wage
costs. We confirmed that this labor-related share for outpatient
services is appropriate during our regression analysis for the payment
adjustment for rural hospitals in the CY 2006 OPPS final rule with
comment period (70 FR 68553). We propose to continue this policy for
the CY 2026 OPPS/ASC. We refer readers to section II.C. of this
proposed rule for a description and an example of how the wage index
for a particular hospital is used to determine payment for the
hospital.
As discussed in the claims accounting narrative included with the
supporting documentation for this proposed rule (which is available via
the internet on the CMS website (https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices)),
for estimating APC costs, we would standardize 60 percent of estimated
claims costs for geographic area wage variation using the same FY 2026
pre-reclassified wage index that we use under the IPPS to standardize
costs. This standardization process removes the effects of differences
in area wage levels from the determination of a national unadjusted
OPPS payment rate and copayment amount.
Under Sec. Sec. 419.41(c)(1) and 419.43(c) (published in the OPPS
April 7, 2000, final rule with comment period (65 FR 18495 and 18545)),
the OPPS adopted the final fiscal year IPPS post-reclassified wage
index as the calendar year wage index for adjusting the OPPS standard
payment amounts for labor market differences. Therefore, the wage index
that applies to a particular acute care, short-stay hospital under the
IPPS also applies to that hospital under the OPPS. As initially
explained in the September 8, 1998, OPPS/ASC proposed rule (63 FR
47576), we believe that using the IPPS wage index as the source of an
adjustment factor for the OPPS is reasonable and logical, given the
inseparable, subordinate status of the HOPD within the hospital
overall. In accordance with section 1886(d)(3)(E) of the Act, the IPPS
wage index is updated annually.
The Affordable Care Act contained several provisions affecting the
wage index. These provisions were discussed in the CY 2012 OPPS/ASC
final rule with comment period (76 FR 74191). Section 10324 of the
Affordable Care Act added section 1886(d)(3)(E)(iii)(II) to the Act,
which defines a frontier State and amended section 1833(t) of the Act
to add paragraph (19), which requires a frontier State wage index floor
of 1.00 in certain cases, and states that the frontier State floor
shall not be applied in a budget neutral manner. We codified these
requirements at Sec. 419.43(c)(2) and (3) of our regulations. For CY
2026, we propose to implement this provision in the same manner as we
have since CY 2011. Under this policy, the frontier State hospitals
would receive a wage index of 1.00 if the otherwise applicable wage
index (including reclassification, the rural floor, and rural floor
budget neutrality) is less than 1.00. Because the HOPD receives a wage
index based on the geographic location of the specific inpatient
hospital with which it is associated, the frontier State wage index
adjustment applicable for the inpatient hospital also would apply for
any associated HOPD. We refer readers to the FY 2011 through FY 2025
IPPS/LTCH PPS final rules for discussions regarding this provision,
including our methodology for identifying which areas meet the
definition of ``frontier States'' as provided for in section
1886(d)(3)(E)(iii)(II) of the Act: for FY 2011, 75 FR 50160 through
50161; for FY 2012, 76 FR 51793, 51795, and 51825; for FY 2013, 77 FR
53369 and 53370; for FY 2014, 78 FR 50590 and 50591; for FY 2015, 79 FR
49971; for FY 2016, 80 FR 49498; for FY 2017, 81 FR 56922; for FY 2018,
82 FR 38142; for FY 2019, 83 FR 41380; for FY 2020, 84 FR 42312; for FY
2021, 85 FR 58765; for FY 2022, 86 FR 45178; FY 2023, 87 FR 49006; FY
2024, 88 FR 58977; and for FY 2025, 89 FR 69300.
In addition to the changes required by the Affordable Care Act, we
note that the proposed FY 2026 IPPS wage indexes continue to reflect a
number of adjustments implemented in past years, including, but not
limited to, reclassification of hospitals to different geographic
areas, the rural floor provisions, the imputed floor wage index
adjustment in all-urban states, an adjustment for occupational mix, an
adjustment to the wage index based on commuting patterns of employees
(the out-migration adjustment), and the permanent 5 percent cap on any
decrease to a hospital's wage index from its wage index in a prior FY.
Beginning with FY 2024, we include hospitals with Sec. 412.103
reclassification along with geographically rural hospitals in all rural
wage index calculations, and to exclude ``dual reclass'' hospitals
(hospitals with simultaneous Sec. 412.103 and Medicare Geographic
Classification Review Board (MGCRB) reclassifications) implicated by
the hold harmless provision at section 1886(d)(8)(C)(ii) of the Act (88
FR 58971 through 58973). We refer readers to the FY 2026 IPPS/LTCH PPS
proposed rule (90 FR 18217 through 18236) for a detailed discussion of
all proposed changes to the FY 2026 IPPS wage indexes.
We note that in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49018
through 49021), we finalized a permanent approach to smooth year-to-
year decreases in hospitals' wage
[[Page 33512]]
indexes. Specifically, for FY 2023 and subsequent years, we apply a 5
percent cap on any decrease to a hospital's wage index from its wage
index in the prior FY, regardless of the circumstances causing the
decline. That is, a hospital's wage index for FY 2026 would not be less
than 95 percent of its final wage index for FY 2025. Except for newly
opened hospitals, we apply the cap for a fiscal year using the final
wage index applicable to the hospital on the last day of the prior
fiscal year. A newly opened hospital would be paid the wage index for
the area in which it is geographically located for its first full or
partial fiscal year (subject to any reclassification), and it would not
receive a cap for that first year, because it would not have been
assigned a wage index in the prior year (in accordance with 42 CFR
419.41(c)(1) and 419.43(c), as noted previously).
Consistent with the FY 2026 IPPS/LTCH PPS proposed rule (90 FR
18233), we propose to discontinue for CY 2026 and subsequent years the
low wage index hospital policy under the OPPS. Under the low wage index
hospital policy that we adopted for the OPPS (84 FR 61186 through
61188), we increase the wage index for hospitals with a wage index
value below the 25th percentile wage index value for a calendar year by
half the difference between the otherwise applicable final wage index
value for a year for that hospital and the 25th percentile wage index
value for that year across all hospitals. We removed the low wage index
hospital policy from the IPPS wage index calculation for FY 2025 after
considering the Court of Appeals for the D.C. Circuit's decision in
Bridgeport Hosp. v. Becerra, 108 F.4th 882 (D.C. Cir. 2024). On July
23, 2024, the court held in Bridgeport Hosp. v. Becerra that the
Secretary lacked authority under section 1886(d)(3)(E) of the Act or
under the ``adjustments'' language of section 1886(d)(5)(I)(i) of the
Act to adopt the low wage index hospital policy for FY 2020 for the
IPPS, and that the policy for FY 2020 and related budget neutrality
adjustment in the IPPS must be vacated. After considering the court's
decision, in the interim final action with comment period (IFC) titled
``Medicare Program; Changes to the Fiscal Year 2025 Hospital Inpatient
Prospective Payment System (IPPS) Rates Due to Court Decision''
(referred to herein as the FY 2025 IFC) (89 FR 80405 through 80421), we
recalculated the FY 2025 IPPS hospital wage index to remove the low
wage index hospital policy for FY 2025 and also removed the low wage
index budget neutrality factor from the FY 2025 standardized amounts.
In the FY 2026 IPPS/LTCH PPS proposed rule, after considering the
D.C. Circuit's decision in Bridgeport Hosp. v. Becerra, we proposed to
discontinue the low wage index hospital policy for FY 2026 and
subsequent fiscal years. We refer the reader to the FY 2025 IFC (89 FR
80405 through 80421) and FY 2026 IPPS/LTCH PPS proposed rule (90 FR
18233 through 18236) for a detailed discussion regarding the removal of
the low wage index hospital policy from the IPPS for FYs 2025 and 2026.
As discussed previously, from the establishment of the OPPS in 2000
through 2024, we adopted the IPPS wage index on a calendar year basis
in the OPPS. From FY 2020 to FY 2024, the IPPS wage index included the
low wage index hospital policy and we correspondingly adopted the low
wage index hospital policy under the OPPS for CY 2020 to CY 2024.
However, when the Bridgeport decision was issued in July 2024, the OPPS
did not remove the low wage index hospital policy from the calculation
of the CY 2025 wage index. As discussed in the CY 2025 OPPS/ASC final
rule with comment period, this decision to continue the low wage index
hospital policy under the OPPS for CY 2025 (and thus to diverge from
the IPPS wage index for FY 2025) was due principally to the unique
circumstances presented by the timing of the court decision and
subsequent IFC and the statutory authority that CMS relied upon to
implement the low wage index hospital policy under the OPPS was
different than the statutory authority relied upon for the policy under
the IPPS. We took this approach for the CY 2025 OPPS given the unusual
circumstances wherein an appellate court ruled that CMS lacked
authority under the IPPS statute for a policy under the FY 2020 IPPS
wage index that the OPPS proposed rule had already proposed to include
in the OPPS wage index. Under these circumstances, we concluded that
continuing the low wage index hospital policy for CY 2025 would avoid
unexpected and arguably unfair payment consequences for hospitals that
were not plaintiffs in Bridgeport. Additionally, we believed that the
same reasons underlying adoption of the IFC policies for the FY 2025
IPPS wage index weighed against incorporating those policies for
purposes of the CY 2025 OPPS wage index. Specifically, we noted in the
IFC that the intention of the policies implemented therein was to
``promote certainty regarding...payments'' and ``provide for payment
stability and promote predictability,'' in light of the court's
decision in Bridgeport (89 FR 80408) and we determined that those
interests would be better served by finalizing the OPPS wage index
methodology as proposed, including the low wage index hospital policy.
Based on these considerations, we continued the low wage index hospital
policy under the OPPS for CY 2025 as proposed but indicated that we
would explore options for realigning the IPPS and OPPS wage index
values through future rulemaking. We refer readers to the CY 2025 OPPS/
ASC final rule with comment period for a detailed discussion regarding
our retention of the low wage index hospital policy under the OPPS for
CY 2025 (89 FR 93975 through 93976).
Given the proposal to discontinue the low wage index hospital
policy under the IPPS in the FY 2026 IPPS/LTCH PPS proposed rule and
the absence of the timing issues which compelled us to continue the low
wage index hospital policy under the OPPS for CY 2025, we think it is
now appropriate to return to our longstanding policy of using the IPPS
wage index as the source of an adjustment factor for the OPPS.
Consequently, to effectuate full realignment of the IPPS and OPPS wage
index values in CY 2026, we propose to eliminate the low wage index
hospital policy under the OPPS and use the IPPS wage index in CY 2026
and subsequent years.
To effectuate full realignment of the IPPS and OPPS wage index
values in CY 2026, we propose that the 5 percent cap that will apply to
the CY 2026 OPPS wage index will be based off the IPPS wage index for
FY 2025 rather than the OPPS wage index for CY 2025. We note that
because the CY 2025 OPPS wage index was different than the FY 2025 IPPS
wage index (due to the continuation of the low wage index hospital
policy under the OPPS), using the FY 2026 IPPS wage index for the CY
2026 OPPS wage index will result in decreases greater than 5 percent to
some hospitals' wage indexes under the OPPS. Therefore, under our
proposal the 5 percent cap on wage index decreases in the CY 2026 OPPS
would apply in a similar manner to years prior to the CY 2025 OPPS, in
which IPPS hospitals would receive the same wage index with the cap on
wage index decreases as they would under the FY IPPS, and non-IPPS
hospitals and CMHCs would receive a similar corresponding wage index
with the cap on wage index decreases policy under the broader wage
index adoption.
We note that in the FY 2026 IPPS proposed rule (90 FR 18233 through
18235) we propose, using our authority
[[Page 33513]]
under section 1886(d)(5)(I)(i) of the Act, to adopt a narrow
transitional exception to the calculation of FY 2026 IPPS payments for
low wage index hospitals significantly impacted by the discontinuation
of the low wage index hospital policy. As indicated in that rule, we
propose this temporary payment exception ``to mitigate short-term
instability and payment fluctuations that can negatively impact
hospitals consistent with principles of certainty and predictability
under prospective payment systems.'' To address these same concerns
under the OPPS, we correspondingly propose a transitional payment
exception for CY 2026 under the OPPS using our equitable adjustment
authority under section 1833(t)(2)(E) of the Act. This authority allows
the Secretary to establish, in a budget neutral manner, adjustments as
determined to be necessary to ensure equitable payments.
The transitional exception policy we propose would apply to
hospitals that benefitted from the CY 2024 low wage index hospital
policy. For those hospitals, we propose to compare the hospital's
proposed CY 2026 wage index to the hospital's CY 2024 wage index. If
the hospital is significantly impacted by the discontinuation of the
low wage index hospital policy, meaning the hospital's proposed CY 2026
wage index is decreasing by more than 9.75 percent from the hospital's
CY 2024 wage index, then the transitional payment exception for CY 2026
for that hospital would be equal to the additional CY 2026 amount the
hospital would be paid under the OPPS if its CY 2026 wage index were
equal to 90.25 percent of its CY 2024 wage index. This proposed
transitional payment exception would be applied after the application
of the 5-percent cap described at 42 CFR 412.64(h)(7). We propose to
make this policy budget neutral under the OPPS through the second wage
index budget neutrality adjustment applied to the OPPS conversion
factor (which currently includes the 5 percent hold harmless cap
policy).
Core Based Statistical Areas (CBSAs) are made up of one or more
constituent counties. Each CBSA and constituent county has its own
unique identifying codes. The FY 2018 IPPS/LTCH PPS final rule (82 FR
38130) discussed the two different lists of codes to identify counties:
Social Security Administration (SSA) codes and Federal Information
Processing Standard (FIPS) codes. Historically, CMS listed and used SSA
and FIPS county codes to identify and crosswalk counties to CBSA codes
for purposes of the IPPS and OPPS wage indexes. However, the SSA county
codes are no longer being maintained and updated, although the FIPS
codes continue to be maintained by the U.S. Census Bureau. The Census
Bureau's most current statistical area information is derived from
ongoing census data received since 2010; the most recent data are from
2015. The Census Bureau maintains a complete list of changes to
counties or county equivalent entities on the website at https://www.census.gov/programs-surveys/geography/technical-documentation/county-changes.html. In the FY 2018 IPPS/LTCH PPS final rule (82 FR
38130), for purposes of crosswalking counties to CBSAs for the IPPS
wage index, we finalized our proposal to discontinue the use of the SSA
county codes and begin using only the FIPS county codes. Similarly, for
the purposes of crosswalking counties to CBSAs for the OPPS wage index,
in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59260),
we finalized our proposal to discontinue the use of SSA county codes
and begin using only the FIPS county codes. For CY 2026, under the
OPPS, we are continuing to use only the FIPS county codes for purposes
of crosswalking counties to CBSAs.
We propose to use the FY 2026 IPPS post-reclassified wage index for
urban and rural areas as the wage index for the OPPS to determine the
wage adjustments for both the OPPS payment rate and the copayment rate
for CY 2026. Therefore, any policies and adjustments that are finalized
for the FY 2026 IPPS post-reclassified wage index would be reflected in
the final CY 2026 OPPS wage index beginning on January 1, 2026, if
appropriate. We refer readers to the FY 2026 IPPS/LTCH PPS proposed
rule (90 FR 18217 through 18236) and the proposed FY 2026 hospital wage
index files posted on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/fy-2026-ipps-proposed-rule-home-page. Regarding budget neutrality for the CY 2026
OPPS wage index, we refer readers to section II.C. of this proposed
rule. We continue to believe that using the IPPS post-reclassified wage
index as the source of an adjustment factor for the OPPS is reasonable
and logical, given the inseparable, subordinate status of the HOPD
within the hospital overall.
Hospitals that are paid under the OPPS, but not under the IPPS, do
not have an assigned hospital wage index under the IPPS. Therefore, for
non-IPPS hospitals paid under the OPPS, it is our longstanding policy
to assign the wage index that would be applicable if the hospital was
paid under the IPPS, based on its geographic location and any
applicable wage index policies and adjustments. We propose to continue
this policy for CY 2026. We refer readers to the FY 2026 IPPS/LTCH PPS
proposed rule (90 FR 18217 through 18236) for a detailed discussion of
the proposed changes to the FY 2026 IPPS wage indexes.
It has been our longstanding policy to allow non-IPPS hospitals
paid under the OPPS to qualify for the out-migration adjustment if they
are located in a section 505 out-migration county (section 505 of the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003
(MMA)) (Pub. L. 108-173). Applying this adjustment is consistent with
our policy of adopting IPPS wage index policies for hospitals paid
under the OPPS. We note that, because non-IPPS hospitals cannot
reclassify, they are eligible for the out-migration wage index
adjustment if they are located in a section 505 out-migration county.
This is the same out-migration adjustment policy that would apply if
the hospital were paid under the IPPS. For CY 2026, we propose to
continue our policy of allowing non-IPPS hospitals paid under the OPPS
to qualify for the outmigration adjustment if they are located in a
section 505 out-migration county (section 505 of the MMA) (88 FR 49585
and 49586). Furthermore, we propose that the wage index that would
apply for CY 2026 to non-IPPS hospitals paid under the OPPS would
continue to include the rural floor adjustment and any policies and
adjustments applied to the IPPS wage index. In addition, we propose
that the wage index that would apply to non-IPPS hospitals paid under
the OPPS would include the 5 percent cap on wage index decreases and
the previously described proposed transitional payment exception for
hospitals significantly impacted by the discontinuation of the low wage
index hospital policy.
For CMHCs, for CY 2026, we propose to continue to calculate the
wage index by using the post-reclassification IPPS wage index based on
the CBSA where the CMHC is located. Furthermore, we propose that the
wage index that would apply to a CMHC for CY 2026 would continue to
include the rural floor adjustment and any policies and adjustments
applied to the IPPS wage index. In addition, the wage index that would
apply to CMHCs would include the 5 percent cap on wage index decreases.
Also, we propose that the wage index that would apply to CMHCs would
not include the outmigration
[[Page 33514]]
adjustment because that adjustment only applies to hospitals.
Table 4A associated with the FY 2026 IPPS/LTCH PPS proposed rule
(available via the internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/fy-2026-ipps-proposed-rule-home-page) identifies counties that would be
eligible for the out-migration adjustment. Table 2 associated with the
FY 2026 IPPS/LTCH PPS proposed rule (available for download via the
website noted previously) identifies IPPS hospitals that would receive
the out-migration adjustment for FY 2026. We are including the
outmigration adjustment information from Table 2 associated with the FY
2026 IPPS/LTCH PPS proposed rule as Addendum L to this proposed rule,
with the addition of non-IPPS hospitals that would receive the section
505 outmigration adjustment under this proposed rule. Addendum L is
available via the internet on the CMS website. We refer readers to the
CMS website for the OPPS at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices. At
this link, readers will find a link to the proposed FY 2026 IPPS wage
index tables and Addendum L.
D. Proposed Statewide Average Default Cost-to-Charge Ratios (CCRs)
In addition to using CCRs to estimate costs from charges on claims
for ratesetting, we use overall hospital-specific CCRs calculated from
the hospital's most recent cost report (OMB control number: 0938-0050
for Form CMS-2552-10) to determine outlier payments, payments for pass-
through devices, and monthly interim transitional corridor payments
under the OPPS during the PPS year. For certain hospitals, under the
regulations at 42 CFR 419.43(d)(5)(iii), we use the statewide average
default CCRs to determine the payments mentioned earlier if it is not
possible to determine an accurate CCR for a hospital in certain
circumstances. This includes hospitals that are new, hospitals that
have not accepted assignment of an existing hospital's provider
agreement, and hospitals that have not yet submitted a cost report. We
also use the statewide average default CCRs to determine payments for
hospitals whose CCR falls outside the predetermined ceiling threshold
for a valid CCR or for hospitals in which the most recent cost report
reflects an all-inclusive rate status (Medicare Claims Processing
Manual (Pub. L. 100-04), Chapter 4, Section 10.11).
We discussed our policy for using default CCRs, including setting
the ceiling threshold for a valid CCR, in the CY 2009 OPPS/ASC final
rule with comment period (73 FR 68594 through 68599) in the context of
our adoption of an outlier reconciliation policy for cost reports
beginning on or after January 1, 2009. For details on our process for
calculating the statewide average CCRs, we refer readers to the Claims
Accounting Narrative for this proposed rule, which is posted on the CMS
website. We propose to calculate the default ratios for CY 2026 using
the most recent cost report data. We will update these ratios in the
final rule with comment period if more recent cost report data are
available.
We no longer publish a table in the Federal Register containing the
statewide average CCRs in the annual OPPS/ASC proposed rule and final
rule with comment period. These CCRs and the upper limit CCR value at
which we would apply statewide CCRs will be available for download with
each OPPS/ASC CY proposed rule and final rule on the CMS website. We
refer readers to our website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices;
click on the link on the left of the page titled ``Annual Policy
Files'' and then select the relevant year to download the statewide
CCRs and upper limits in the ``Downloads'' section of the web page.
E. Proposed Adjustment for Rural Sole Community Hospitals (SCHs) and
Essential Access Community Hospitals (EACHs) Under Section
1833(t)(13)(B) of the Act for CY 2026
In the CY 2006 OPPS final rule with comment period (70 FR 68556),
we finalized a payment increase for rural sole community hospitals
(SCHs) of 7.1 percent for all services and procedures paid under the
OPPS, excluding separately payable drugs and biologicals, brachytherapy
sources, items paid at charges reduced to costs, and devices paid under
the pass-through payment policy, in accordance with section
1833(t)(13)(B) of the Act, as added by section 411 of the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003 (MMA)
(Pub. L. 108-173). Section 1833(t)(13) of the Act provides the
Secretary the authority to make an adjustment to OPPS payments for
rural hospitals, effective January 1, 2006, if justified by a study of
the difference in costs by APC between hospitals in rural areas and
hospitals in urban areas. Our analysis showed a difference in costs for
rural SCHs. Therefore, for the CY 2006 OPPS, we finalized a payment
adjustment for rural SCHs of 7.1 percent for all services and
procedures paid under the OPPS, excluding separately payable drugs and
biologicals, brachytherapy sources, items paid at charges reduced to
costs, and devices paid under the pass-through payment policy, in
accordance with section 1833(t)(13)(B) of the Act.
In the CY 2007 OPPS/ASC final rule with comment period (71 FR 68010
and 68227), for purposes of receiving this rural adjustment, we revised
our regulations at Sec. 419.43(g) to clarify that essential access
community hospitals (EACHs) are also eligible to receive the rural SCH
adjustment, assuming these entities otherwise meet the rural adjustment
criteria. Currently, two hospitals are classified as EACHs, and as of
CY 1998, under section 4201(c) of the Balanced Budget Act of 1997 (BBA)
(Pub. L. 105-33), a hospital can no longer become newly classified as
an EACH.
This adjustment for rural SCHs is budget neutral and applied before
calculating outlier payments and copayments. We stated in the CY 2006
OPPS final rule with comment period (70 FR 68560) that we would not
reestablish the adjustment amount on an annual basis, but we may review
the adjustment in the future and, if appropriate, would revise the
adjustment. We provided the same 7.1 percent adjustment to rural SCHs,
including EACHs, again in CYs 2008 through 2025 (89 FR 93977).
For CY 2026, we propose to continue the current policy of a 7.1
percent payment adjustment for rural SCHs, including EACHs, for all
services and procedures paid under the OPPS, excluding separately
payable drugs and biologicals, brachytherapy sources, items paid at
charges reduced to costs, and devices paid under the pass-through
payment policy, applied in a budget neutral manner.
F. Proposed Payment Adjustment for Certain Cancer Hospitals for CY 2026
1. Background
Since the inception of the OPPS, which was authorized by the BBA,
Medicare has paid the 11 hospitals that meet the criteria for cancer
hospitals identified in section 1886(d)(1)(B)(v) of the Act under the
OPPS for covered outpatient department services. These cancer hospitals
are exempted from payment under the IPPS. With the Medicare, Medicaid
and SCHIP Balanced Budget Refinement Act of 1999 (Pub. L. 106-113), the
Congress added section 1833(t)(7), ``Transitional Adjustment to Limit
Decline in
[[Page 33515]]
Payment,'' to the Act, which requires the Secretary to determine OPPS
payments to cancer and children's hospitals based on their pre-BBA
payment amount (these hospitals are often referred to under this policy
as ``held harmless'' and their payments are often referred to as ``hold
harmless'' payments).
As required under section 1833(t)(7)(D)(ii) of the Act, a cancer
hospital receives the full amount of the difference between payments
for covered outpatient department services under the OPPS and a ``pre-
BBA amount.'' That is, cancer hospitals are permanently held harmless
to their ``pre-BBA amount,'' and they receive transitional outpatient
payments (TOPs) or hold harmless payments to ensure that they do not
receive a payment that is lower in amount under the OPPS than the
payment amount they would have received before implementation of the
OPPS, as set forth in section 1833(t)(7)(F) of the Act. The ``pre-BBA
amount'' is the product of the hospital's reasonable costs for covered
outpatient department services occurring in the current year and the
base payment-to-cost ratio (PCR) for the hospital defined in section
1833(t)(7)(F)(ii) of the Act. The ``pre-BBA amount'' and the
determination of the base PCR are defined at Sec. 419.70(f). TOPs are
calculated on Worksheet E, Part B, of the Hospital Cost Report or the
Hospital Health Care Complex Cost Report (Form CMS-2552-96 or Form CMS-
2552-10 (OMB NO: 0938-0050), respectively), as applicable each year.
Section 1833(t)(7)(I) of the Act exempts TOPs from budget neutrality
calculations.
Section 3138 of the Affordable Care Act (Pub. L. 111-148) amended
section 1833(t) of the Act by adding a new paragraph (18), which
instructs the Secretary to conduct a study to determine if, under the
OPPS, outpatient costs incurred by cancer hospitals described in
section 1886(d)(1)(B)(v) of the Act with respect to APC groups exceed
outpatient costs incurred by other hospitals furnishing services under
section 1833(t) of the Act, as determined appropriate by the Secretary.
Section 1833(t)(18)(A) of the Act requires the Secretary to take into
consideration the cost of drugs and biologicals incurred by cancer
hospitals and other hospitals. Section 1833(t)(18)(B) of the Act
provides that, if the Secretary determines that cancer hospitals' costs
are higher than those of other hospitals, the Secretary shall provide
an appropriate adjustment under section 1833(t)(2)(E) of the Act to
reflect these higher costs. In 2011, after conducting the study
required by section 1833(t)(18)(A) of the Act, we determined that
outpatient costs incurred by the 11 specified cancer hospitals were
greater than the costs incurred by other OPPS hospitals. For a complete
discussion regarding the cancer hospital cost study, we refer readers
to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74200 and
74201).
Based on these findings, we finalized a policy to provide a payment
adjustment to the 11 specified cancer hospitals that reflects their
higher outpatient costs, as discussed in the CY 2012 OPPS/ASC final
rule with comment period (76 FR 74202 through 74206). Specifically, we
adopted a policy to provide additional payments to the cancer hospitals
so that each cancer hospital's final PCR for services provided in a
given calendar year is equal to the weighted average PCR (which we
refer to as the ``target PCR'') for other hospitals paid under the
OPPS. The target PCR is set in advance of the calendar year and is
calculated using the most recently submitted or settled cost report
data that are available at the time of final rulemaking for the
calendar year. The amount of the payment adjustment is made on an
aggregate basis at cost report settlement. We note that the changes
made by section 1833(t)(18) of the Act do not affect the existing
statutory provisions that provide for TOPs for cancer hospitals. The
TOPs are assessed, as usual, after all payments, including the cancer
hospital payment adjustment, have been made for a cost reporting
period. Table 6 displays the target PCR for purposes of the cancer
hospital adjustment for CY 2012 through CY 2025.
[GRAPHIC] [TIFF OMITTED] TP17JY25.010
2. Proposed Policy for CY 2026
Section 16002(b) of the 21st Century Cures Act (Pub. L. 114-255)
amended section 1833(t)(18) of the Act by adding subparagraph (C),
which requires that in applying Sec. 419.43(i) (that is, the payment
adjustment for certain cancer hospitals) for services furnished on or
after January 1, 2018, the Secretary shall use a target PCR that is 1.0
percentage point less than the target PCR that would otherwise apply.
Section 16002(b) of the 21st Century Cures Act also provides that, in
addition to the
[[Page 33516]]
percentage reduction, the Secretary may consider making an additional
percentage point reduction to the target PCR that takes into account
payment rates for applicable items and services described under section
1833(t)(21)(C) of the Act for hospitals that are not cancer hospitals
described under section 1886(d)(1)(B)(v) of the Act. Further, in making
any budget neutrality adjustment under section 1833(t) of the Act,
section 16002(b) of the 21st Century Cures Act provides that the
Secretary shall not take into account the reduced expenditures that
result from application of section 1833(t)(18)(C) of the Act.
We propose to provide additional payments to the 11 specified
cancer hospitals so that each cancer hospital's proposed PCR is equal
to the weighted average PCR (or ``target PCR'') for the other OPPS
hospitals, generally using the most recent submitted or settled cost
report data that are available, reduced by 1.0-percentage point, to
comply with section 16002(b) of the 21st Century Cures Act. As
discussed further below, we are not proposing an additional reduction
beyond the 1.0-percentage point reduction required by section 16002(b)
of the 21st Century Cures Act for CY 2026.
To calculate the proposed CY 2026 target PCR, we propose to use the
same extract of cost report data from HCRIS used to estimate costs for
the CY 2026 OPPS which, in most cases, would be the most recently
available hospital cost reports. Using these cost report data, we
included data from Worksheet E, Part B, for each hospital, using data
from each hospital's most recent cost report, whether as submitted or
settled.
We then limited the dataset to the hospitals with CY 2024 claims
data that we used to model the impact of the proposed CY 2026 APC
relative payment weights (3,388 hospitals) because it is appropriate to
use the same set of hospitals that are being used to calibrate the
modeled CY 2026 OPPS. The cost report data for the hospitals in this
dataset were from cost report periods with fiscal year ends ranging
from 2022 to 2024; however, the cost reporting periods were
predominantly from fiscal years ending in 2023 and 2024. We then
removed the cost report data of the 49 hospitals located in Puerto Rico
from our dataset because we did not believe their cost structure
reflected the costs of most hospitals paid under the OPPS, and,
therefore, their inclusion may bias the calculation of hospital-
weighted statistics. We also removed the cost report data of 12
hospitals because these hospitals had cost report data that were not
complete (missing aggregate OPPS payments, missing aggregate cost data,
or missing both), so that all cost reports in the study would have both
the payment and cost data necessary to calculate a PCR for each
hospital, leading to a proposed analytic file of 3,327 hospitals with
cost report data.
Using this smaller dataset of cost report data, we estimated that,
on average, the OPPS payments to other hospitals furnishing services
under the OPPS were approximately 88 percent of reasonable cost
(weighted average PCR of 0.88). Therefore, after applying the 1.0-
percentage point reduction, as required by section 16002(b) of the 21st
Century Cures Act, using our standard process the payment amount
associated with the cancer hospital payment adjustment to be determined
at cost report settlement would be the additional payment needed to
result in a target PCR equal to 0.87 for each cancer hospital.
In the CY 2024 OPPS/ASC final rule with comment period (88 FR 81586
through 81589), we explained that we believe we should begin to take
into consideration the PCR of non-cancer hospitals based on the most
recently available data for calculating the target PCR. We noted that
we do not know if the changes in the data that have yielded lower PCRs
for non-cancer hospitals are likely to continue in future years or if,
when data from after the PHE is available, we will see the target PCR
increase toward its historical norm. Therefore, in the CY 2024 OPPS/ASC
final rule with comment period, we finalized our proposal to transition
from the target PCR of 0.89 we finalized for CYs 2020 through 2024
(which included the 1.0-percentage point reduction as required by
section 16002(b) of the 21st Century Cures Act) and incrementally
reduce the target PCR by an additional 1.0 percentage point for each
calendar year, beginning with CY 2024, until the target PCR equals the
PCR of non-cancer hospitals calculated using the most recent data minus
1.0-percentage point as required by section 16002(b) of the 21st
Century Cures Act. Therefore, utilizing this methodology, we finalized
in the CY 2025 OPPS/ASC final rule with comment period (89 FR 93977
through 93980) our policy to reduce the CY 2024 target PCR of 0.88 by
1-percentage point and finalized a cancer hospital target PCR of 0.87
for CY 2025.
Since the target PCR based on the OPPS payments to other hospitals
furnishing services under the OPPS would be 0.87 after applying the
1.0-percentage point reduction, as required by the section 16002(b) of
the 21st Century Cures Act, and would equal the CY 2025 target PCR, it
is no longer necessary to continue our transition policy of gradually
reducing the pre-COVID-19 PHE target PCR by 1.0 percentage point in
lieu of our target PCR calculation. For CY 2026 and subsequent years,
we propose to calculate the target PCR based on our longstanding target
PCR calculation methodology described in this proposed rule, and then
apply the 1.0-percentage point reduction as required by section
16002(b) of the 21st Century Cures Act.
Table 7 shows the estimated percentage increase in OPPS payments to
each cancer hospital for CY 2026, due to the cancer hospital payment
adjustment policy. The actual, final amount of the CY 2026 cancer
hospital payment adjustment for each cancer hospital will be determined
at cost report settlement and will depend on each hospital's CY 2026
payments and costs from the settled CY 2026 cost report. We note that
the requirements contained in section 1833(t)(18) of the Act do not
affect the existing statutory provisions that provide for TOPs for
cancer hospitals. The TOPs will be assessed, as usual, after all
payments, including the cancer hospital payment adjustment, have been
made for a cost reporting period.
[[Page 33517]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.011
G. Proposed Hospital Outpatient Outlier Payments
1. Background
The OPPS provides outlier payments to hospitals to help mitigate
the financial risk associated with high-cost and complex procedures,
where a very costly service could present a hospital with significant
financial loss. As explained in the CY 2015 OPPS/ASC final rule with
comment period (79 FR 66832 through 66834), we set our projected target
for aggregate outlier payments at 1.0 percent of the estimated
aggregate total payments under the OPPS for the prospective year.
Outlier payments are provided on a service-by-service basis when the
cost of a service exceeds the APC payment amount multiplier threshold
(the APC payment amount multiplied by a certain amount) as well as the
APC payment amount plus a fixed-dollar amount threshold (the APC
payment plus a certain dollar amount). In CY 2025, the outlier
threshold was met when the hospital's cost of furnishing a service
exceeded 1.75 times the APC payment amount (the multiplier threshold)
and exceeded the APC payment amount plus $7,175 (the fixed-dollar
amount threshold) (89 FR 93980 through 93982). If the hospital's cost
of furnishing a service exceeds both the multiplier threshold and the
fixed-dollar threshold, the outlier payment is calculated as 50 percent
of the amount by which the hospital's cost of furnishing the service
exceeds 1.75 times the APC payment amount. Beginning with CY 2009
payments, outlier payments are subject to a reconciliation process
similar to the IPPS outlier reconciliation process for cost reports, as
discussed in the CY 2009 OPPS/ASC final rule with comment period (73 FR
68594 through 68599).
It has been our policy to report the actual amount of outlier
payments as a percent of total spending in the claims being used to
model the OPPS. Our estimate of total outlier payments as a percent of
total CY 2024 OPPS payments, using CY 2024 claims available for this CY
2026 OPPS/ASC proposed rule, is approximately 0.82 percent. Therefore,
for CY 2024, we estimate that we did not meet the outlier target by
0.18 percent of total aggregated OPPS payments.
For this CY 2026 OPPS/ASC proposed rule, using CY 2024 claims data
and CY 2025 payment rates, we estimate that the aggregate outlier
payments for CY 2025 would be approximately 0.92 percent of the total
CY 2025 OPPS payments. We provide estimated CY 2026 outlier payments
for hospitals and CMHCs with claims included in the claims data that we
used to model impacts in the Hospital-Specific Impacts--Provider-
Specific Data file on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
2. Proposed Outlier Calculation for CY 2026
For CY 2026, we propose to continue our policy of estimating
outlier payments to be 1.0 percent of the estimated aggregate total
payments under the OPPS. We propose that a portion of that 1.0 percent,
an amount equal to less than 0.01 percent of outlier payments (or
0.0001 percent of total OPPS payments), would be allocated to CMHCs for
partial hospitalization program (PHP) and intensive outpatient program
(IOP) outlier payments. This is the amount of estimated outlier
payments that would result from the proposed CMHC outlier threshold as
a proportion of total estimated OPPS outlier payments. We propose to
continue our outlier policy that if a CMHC's cost for PHP and IOP
services exceeds 3.40 times the APC payment rate, the outlier payment
would be calculated as 50 percent of the amount
[[Page 33518]]
by which the cost exceeds 3.40 times the proposed APC payment rate.
For further discussion of CMHC outlier payments, we refer readers
to section VIII.C. of this proposed rule.
To ensure that the estimated CY 2026 aggregate outlier payments
would equal 1.0 percent of estimated aggregate total payments under the
OPPS, we propose that the hospital outlier threshold be set so that
outlier payments would be triggered when a hospital's cost of
furnishing a service exceeds 1.75 times the APC payment amount and
exceeds the APC payment amount plus the fixed-dollar threshold.
We calculate the proposed fixed-dollar threshold using the standard
methodology most recently used for CY 2025 (89 FR 93980 through 93982).
For purposes of estimating outlier payments for CY 2026, we use the
hospital-specific overall ancillary CCRs available in the April 2025
update to the Outpatient Provider-Specific File (OPSF). The OPSF
contains provider-specific data, such as the most current CCRs, which
are maintained by the MACs and used by the OPPS Pricer to pay claims.
The claims that we generally use to model each OPPS update lag by 2
years.
In order to estimate the CY 2026 hospital outlier payments, we
inflate the charges on the CY 2024 claims using the same proposed
charge inflation factor of 1.1118 that we used to estimate the IPPS
fixed-loss cost threshold for the FY 2026 IPPS/LTCH PPS proposed rule
(90 FR 18434 through 18436). We used an inflation factor of 1.05440 to
estimate CY 2025 charges from the CY 2024 charges reported on CY 2024
claims before applying CY 2025 CCRs to estimate the percent of outliers
paid in CY 2025. The proposed methodology for determining these charge
inflation factors is discussed in the FY 2026 IPPS/LTCH PPS proposed
rule (90 FR 18434). As we stated in the CY 2005 OPPS final rule with
comment period (69 FR 65844 through 65846), we believe that the use of
the same charge inflation factors is appropriate for the OPPS because,
with the exception of the inpatient routine service cost centers,
hospitals use the same ancillary and cost centers to capture costs and
charges for inpatient and outpatient services.
As noted in the CY 2007 OPPS/ASC final rule with comment period (71
FR 68011), we are concerned that we could systematically overestimate
the OPPS hospital outlier threshold if we did not apply a CCR inflation
adjustment factor. Therefore, we propose to apply the same CCR
adjustment factor that we proposed to apply for the FY 2026 IPPS
outlier calculation to the CCRs used to simulate the proposed CY 2026
OPPS outlier payments to determine the fixed-dollar threshold.
Specifically, for CY 2026, we propose to apply an adjustment factor of
0.970113 to the CCRs that were in the April 2025 OPSF to trend them
forward from CY 2025 to CY 2026. The methodology for calculating the
proposed CCR adjustment factor is discussed in the FY 2026 IPPS/LTCH
PPS proposed rule (90 FR 18434 through 18435).
To model hospital outlier payments for the CY 2026 proposed rule,
we applied the overall CCRs from the April 2025 OPSF after adjustment
(using the proposed CCR inflation adjustment factor of 0.970113 to
approximate CY 2026 CCRs) to charges on CY 2024 claims that were
adjusted (using the proposed charge inflation factor of 1.1118 to
approximate CY 2026 charges). We simulated aggregated CY 2024 hospital
outlier payments using these costs for several different fixed-dollar
thresholds, holding the 1.75 multiplier threshold constant and assuming
that outlier payments would continue to be made at 50 percent of the
amount by which the cost of furnishing the service would exceed 1.75
times the APC payment amount, until the total outlier payments equaled
1.0 percent of aggregated estimated total CY 2026 OPPS payments. We
estimated that a proposed fixed-dollar threshold of $6,450 combined
with the proposed multiplier threshold of 1.75 times the APC payment
rate, would allocate 1.0 percent of aggregated total OPPS payments to
outlier payments for CY 2026. For CMHCs, we propose that, if a CMHC's
cost for partial hospitalization or intensive outpatient services
exceeds 3.40 times the APC payment rate, the outlier payment would be
calculated as 50 percent of the amount by which the cost exceeds 3.40
times the APC payment rate.
Section 1833(t)(17)(A) of the Act, which applies to hospitals, as
defined under section 1886(d)(1)(B) of the Act, requires that hospitals
that fail to report data required for the quality measures selected by
the Secretary, in the form and manner required by the Secretary under
section 1833(t)(17)(B) of the Act, incur a 2.0-percentage point
reduction to their OPD fee schedule increase factor; that is, the
annual payment update factor. The application of a reduced OPD fee
schedule increase factor results in reduced national unadjusted payment
rates that would apply to certain outpatient items and services
furnished by hospitals that are required to report outpatient quality
data and that fail to meet the Hospital Outpatient Quality Reporting
(OQR) Program requirements. For hospitals that fail to meet the
Hospital OQR Program requirements, we propose to continue the policy
that we implemented in CY 2010 that the hospitals' costs would be
compared to the reduced payments for purposes of outlier eligibility
and payment calculation. For more information on the Hospital OQR
Program, we refer readers to section XV. of this proposed rule.
H. Proposed Calculation of an Adjusted Medicare Payment From the
National Unadjusted Medicare Payment
The national unadjusted payment rate is the payment rate for most
APCs before accounting for the wage index adjustment or any applicable
adjustments. The basic methodology for determining prospective payment
rates for HOPD services under the OPPS is set forth in existing
regulations at 42 CFR part 419, subparts C and D. For this proposed
rule, the payment rate for most services and procedures for which
payment is made under the OPPS is the product of the conversion factor
calculated in accordance with section II.B. of this proposed rule and
the relative payment weight described in section II.A. of this proposed
rule. The national unadjusted payment rate for most APCs contained in
Addendum A to this proposed rule (which is available on the CMS website
``Hospital Outpatient Regulations and Notices'' \7\) and for most HCPCS
codes to which separate payment under the OPPS has been assigned in
Addendum B to this proposed rule (which is available on the CMS
website, see link above) is calculated by multiplying the proposed CY
2026 scaled weight for the APC by the CY 2026 conversion factor.
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\7\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient-pps/quarterly-addenda-updates.
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We note that section 1833(t)(17) of the Act, which applies to
hospitals, as defined under section 1886(d)(1)(B) of the Act, requires
that hospitals that fail to submit data required to be submitted on
quality measures selected by the Secretary, in the form and manner and
at a time specified by the Secretary, incur a reduction of 2.0
percentage points to their OPD fee schedule increase factor, that is,
the annual payment update factor. The application of a reduced OPD fee
schedule increase factor results in reduced national unadjusted payment
rates that apply to certain outpatient items and services provided by
hospitals that are required to report outpatient quality data and that
fail to meet the Hospital OQR
[[Page 33519]]
Program requirements. For further discussion of the payment reduction
for hospitals that fail to meet the requirements of the Hospital OQR
Program, we refer readers to section XIV. of this proposed rule.
Below we demonstrate the steps used to determine the APC payments
that will be made in a CY under the OPPS to a hospital that fulfills
the Hospital OQR Program requirements and to a hospital that fails to
meet the Hospital OQR Program requirements for a service that has any
of the following status indicator assignments: ``J1,'' ``J2,'' ``P,''
``Q1,'' ``Q2,'' ``Q3,'' ``Q4,'' ``R,'' ``S,'' ``T,'' ``U,'' or ``V''
(as defined in Addendum D1 to this proposed rule, which is available
via the internet on the CMS website), in a circumstance in which the
multiple procedure discount does not apply, the procedure is not
bilateral, and conditionally packaged services (status indicator of
``Q1'' and ``Q2'') qualify for separate payment. We note that, although
blood and blood products with status indicator ``R'' and brachytherapy
sources with status indicator ``U'' are not subject to wage adjustment,
they are subject to reduced payments when a hospital fails to meet the
Hospital OQR Program requirements.
Individual providers interested in calculating the payment amount
that they would receive for a specific service from the national
unadjusted payment rates presented in Addenda A and B to this proposed
rule (which are available via the internet on the CMS website) should
follow the formulas presented in the following steps. For purposes of
the payment calculations below, we refer to the national unadjusted
payment rate for hospitals that meet the requirements of the Hospital
OQR Program as the ``full'' national unadjusted payment rate. We refer
to the national unadjusted payment rate for hospitals that fail to meet
the requirements of the Hospital OQR Program as the ``reduced''
national unadjusted payment rate. The reduced national unadjusted
payment rate is calculated by multiplying the reporting ratio of 0.9806
times the ``full'' national unadjusted payment rate. The national
unadjusted payment rate used in the calculations below is either the
full national unadjusted payment rate or the reduced national
unadjusted payment rate, depending on whether the hospital met its
Hospital OQR Program requirements to receive the full CY 2025 OPPS fee
schedule increase factor.
Step 1. Calculate 60 percent (the labor-related portion) of the
national unadjusted payment rate. Since the initial implementation of
the OPPS, we have used 60 percent to represent our estimate of that
portion of costs attributable, on average, to labor. We refer readers
to the April 7, 2000 OPPS final rule with comment period (65 FR 18496
through 18497) for a detailed discussion of how we derived this
percentage. During our regression analysis for the payment adjustment
for rural hospitals in the CY 2006 OPPS final rule with comment period
(70 FR 68553), we confirmed that this labor-related share for hospital
outpatient services is appropriate.
The formula below is a mathematical representation of Step 1 and
identifies the labor-related portion of a specific payment rate for a
specific service.
X is the labor-related portion of the national unadjusted payment
rate.
X = .60 * (national unadjusted payment rate).
Step 2. Determine the wage index area in which the hospital is
located and identify the wage index level that applies to the specific
hospital. The wage index values assigned to each area would reflect the
geographic statistical areas (which are based upon OMB standards) to
which hospitals are assigned for FY 2026 under the IPPS,
reclassifications through the Medicare Geographic Classification Review
Board (MGCRB), section 1886(d)(8)(B) ``Lugar'' hospitals, and
reclassifications under section 1886(d)(8)(E) of the Act, as
implemented in Sec. 412.103 of the regulations. For CY 2026, we
propose to apply for the CY 2026 OPPS wage index any adjustments for
the FY 2026 IPPS post-reclassified wage index, including, but not
limited to, the rural floor adjustment and a wage index floor of 1.00
in frontier states, in accordance with section 10324 of the Affordable
Care Act of 2010. For further discussion of the wage index we are
applying for the CY 2026 OPPS, including the low wage index hospital
policy, we refer readers to section II.C. of this proposed rule.
Step 3. Adjust the wage index of hospitals located in certain
qualifying counties that have a relatively high percentage of hospital
employees who reside in the county, but who work in a different county
with a higher wage index, in accordance with section 505 of the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003
(Pub. L. 108-173). Addendum L to this proposed rule (which is available
via the internet on the CMS website) contains the qualifying counties
and the associated wage index increase developed for the proposed FY
2026 IPPS wage index, which are listed in Table 3 associated with the
FY 2026 IPPS proposed rule and available via the internet on the CMS
website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps. (Click on the link on the left side of the
screen titled ``FY 2026 IPPS Proposed Rule Home Page'' and select ``FY
2026 Proposed Rule Tables.'') This step is to be followed only if the
hospital is not reclassified or redesignated under section 1886(d)(8)
or section 1886(d)(10) of the Act.
Step 4. Multiply the applicable wage index determined under Steps 2
and 3 by the amount determined under Step 1 that represents the labor-
related portion of the national unadjusted payment rate.
The formula below is a mathematical representation of Step 4 and
adjusts the labor-related portion of the national unadjusted payment
rate for the specific service by the wage index.
Xa is the labor-related portion of the national unadjusted payment
rate (wage adjusted).
Xa = labor-portion of the national unadjusted payment
rate * applicable wage index.
Step 5. Calculate 40 percent (the nonlabor-related portion) of the
national unadjusted payment rate and add that amount to the resulting
product of Step 4. The result is the wage index adjusted payment rate
for the relevant wage index area.
The formula below is a mathematical representation of Step 5 and
calculates the remaining portion of the national payment rate, the
amount not attributable to labor, and the adjusted payment for the
specific service.
Y is the nonlabor-related portion of the national unadjusted payment
rate.
Y = 0.40 * (national unadjusted payment rate).
Step 6. If a provider is an SCH, as set forth in the regulations at
Sec. 412.92, or an EACH, which is considered to be an SCH under
section 1886(d)(5)(D)(iii)(III) of the Act, and located in a rural
area, as defined in Sec. 412.64(b), or is treated as being located in
a rural area under Sec. 412.103, multiply the wage index adjusted
payment rate by 1.071 to calculate the total payment.
The formula below is a mathematical representation of Step 6 and
applies the rural adjustment for rural SCHs.
Adjusted Medicare Payment (SCH or EACH) = Adjusted Medicare Payment *
1.071.
Step 7. The adjusted payment rate is the sum of the wage adjusted
labor-related portion of the national unadjusted payment rate and the
nonlabor-related portion of the national unadjusted payment rate.
Xa is the labor-related portion of the national unadjusted payment rate
(wage adjusted).
[[Page 33520]]
Y is the nonlabor-related portion of the national unadjusted payment
rate.
Adjusted Medicare Payment = Xa + Y
We are providing examples below of the calculation of both the full
and reduced national unadjusted payment rates that would apply to
certain outpatient items and services performed by hospitals that meet
and that fail to meet the Hospital OQR Program requirements, using the
steps outlined previously. For purposes of this example, we are using a
provider that is located in Brooklyn, New York that is assigned to CBSA
35614. This provider bills one service that is assigned to APC 5071
(Level 1 Excision/Biopsy/Incision and Drainage). The proposed CY 2026
full national unadjusted payment rate for APC 5071 is $703.32. The
proposed reduced national adjusted payment rate for APC 5071 for a
hospital that fails to meet the Hospital OQR Program requirements is
$716.08. This reduced rate is calculated by multiplying the reporting
ratio of 0.9805 by the full unadjusted payment rate for APC 5071.
Step 1. The labor-related portion of the proposed full national
unadjusted payment is approximately $438.19 (0.60 * $703.32). The
labor-related portion of the proposed reduced national adjusted payment
is approximately $429.65 (0.60 * $716.08).
Step 2 & 3. The FY 2026 wage index for a provider located in CBSA
35614 in New York, which includes the adoption of the proposed IPPS
2026 wage index policies, is 1.2589.
Step 4. The wage adjusted labor-related portion of the proposed
full national unadjusted payment is approximately $551.64 ($438.19 *
1.2589). The wage adjusted labor-related portion of the proposed
reduced national adjusted payment is approximately $540.89 ($429.65 *
1.2589).
Step 5. The nonlabor-related portion of the proposed full national
unadjusted payment is approximately $292.13 (0.40 * $730.32). The
nonlabor-related portion of the proposed reduced national adjusted
payment is approximately $286.43(0.40 * $716.08).
Step 6. For this example of a provider located in Brooklyn, New
York, the rural adjustment for rural SCHs does not apply.
Step 7. The sum of the labor-related and nonlabor-related portions
of the proposed full national unadjusted payment is approximately
$843.77 ($551.64 + $292.13). The sum of the portions of the proposed
reduced national adjusted payment is approximately $827.32 ($540.89 +
$286.43) as shown in Table 8.
[GRAPHIC] [TIFF OMITTED] TP17JY25.012
I. Proposed Beneficiary Copayments
1. Background
Section 1833(t)(3)(B) of the Act requires the Secretary to set
rules for determining the unadjusted copayment amounts to be paid by
beneficiaries for covered OPD services. Section 1833(t)(8)(C)(ii) of
the Act specifies that the Secretary must reduce the national
unadjusted copayment amount for a covered OPD service (or group of such
services) furnished in a year in a manner so that the effective
copayment rate (determined on a national unadjusted basis) for that
service in the year does not exceed a specified percentage. As
specified in section 1833(t)(8)(C)(ii)(V) of the Act, the effective
copayment rate for a covered OPD service paid under the OPPS in CY
2006, and in CYs thereafter, shall not exceed 40 percent of the APC
payment rate.
Section 1833(t)(3)(B)(ii) of the Act provides that, for a covered
OPD service (or group of such services) furnished in a year, the
national unadjusted copayment amount cannot be less than 20 percent of
the OPD fee schedule amount. However, section 1833(t)(8)(C)(i) of the
Act limits the amount of beneficiary copayment that may be collected
for a procedure (including items such as drugs and biologicals)
performed in a year to the amount of the inpatient hospital deductible
for that year.
Section 4104 of the Affordable Care Act eliminated the Medicare
Part B coinsurance for preventive services furnished on and after
January 1, 2011, that meet certain requirements, including flexible
sigmoidoscopies and screening colonoscopies, and waived the Part B
deductible for screening colonoscopies that become diagnostic during
the procedure. For a discussion of the changes made by the Affordable
Care Act with regard to copayments for preventive services furnished on
and after January 1, 2011, we refer readers to section XII.B. of the CY
2011 OPPS/ASC final rule with comment period (75 FR 72013).
Section 122 of the Consolidated Appropriations Act (CAA), 2021
(Pub. L. 116-260), Waiving Medicare Coinsurance for Certain Colorectal
Cancer Screening Tests, amended section 1833(a) of the Act to offer a
special coinsurance rule for screening flexible sigmoidoscopies and
screening colonoscopies, regardless of the code that is billed for the
establishment of a diagnosis as a result of the test, or for the
removal of tissue or other matter or other procedure, that is furnished
in connection with, as a result of, and in the same clinical encounter
as the colorectal cancer screening test. We refer readers to section
X.B., ``Changes to Beneficiary Coinsurance for Certain Colorectal
Cancer Screening Tests,'' of the CY 2022 OPPS/ASC final rule with
comment period for the full discussion of this policy (86 FR 63740
through 63743). Under the regulation at 42 CFR 410.152(l)(5)(i)(B), the
Medicare Part B payment percentage for colorectal cancer screening
tests described in the regulation at Sec. 410.37(j) that are furnished
in CY 2023 through CY 2026 is 85 percent, with beneficiary coinsurance
equal to 15 percent.
On August 16, 2022, the Inflation Reduction Act of 2022 (IRA) (Pub.
L. 117-169) was signed into law. Section 11101(a) of the IRA amended
section 1847A of the Act by adding a new subsection (i), which requires
the payment of rebates into the Supplementary Medical Insurance Trust
Fund for Part B rebatable drugs if the payment limit amount exceeds the
inflation-adjusted payment amount, which is calculated as set forth in
section 1847A(i)(3)(C) of the Act. The provisions of section 11101 of
the IRA were initially implemented through program instruction, as
permitted under section 1847A(c)(5)(C) of the Act. On February 9, 2023
and December 14,
[[Page 33521]]
2023, we issued initial \8\ and revised \9\ guidance, respectively,
implementing the Medicare Part B Inflation Rebate Program, including
the computation of inflation-adjusted beneficiary coinsurance under
section 1847A(i)(5) of the Act and amounts paid under section
1833(a)(1)(EE) of the Act.\10\ For additional information regarding
implementation of section 11101 of the IRA, please see the inflation
rebates resources page at https://www.cms.gov/inflation-reduction-act-and-medicare/inflation-rebates-medicare.
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\8\ https://www.cms.gov/files/document/medicare-part-b-inflation-rebate-program-initial-guidance.pdf.
\9\ https://www.cms.gov/files/document/medicare-part-b-inflation-rebate-program-revised-guidance.pdf.
\10\ In addition, beginning with the April 2023 ASP Drug Pricing
file, the file includes the coinsurance percentage for each drug and
specifies ``inflation-adjusted coinsurance'' in the ``Notes'' column
if the coinsurance for a drug is less than 20 percent of the
Medicare Part B payment amount. Drug pricing files are available at
https://www.cms.gov/medicare/medicare-fee-for-service-part-b-drugs/mcrpartbdrugavgsalesprice.
---------------------------------------------------------------------------
Section 11101(b) of the IRA amended sections 1833(i) and 1833(t)(8)
of the Act by adding a new paragraph (9) and subparagraph (F),
respectively. Section 1833(i)(9) requires under the ASC payment system
that, in the case of a Part B rebatable drug for which payment is not
packaged into a payment for a service, in lieu of calculation of
coinsurance that would otherwise apply under the ASC payment system,
the provisions of section 1847A(i)(5) of the Act shall, as determined
appropriate by the Secretary, apply for calculation of beneficiary
coinsurance in the same manner as the provisions of section 1847A(i)(5)
of the Act apply under that section. Similarly, section 1833(t)(8)(F)
of the Act requires under the OPPS that in the case of a Part B
rebatable drug (except for a drug that has no copayment applied under
subparagraph (E) of such section or for which payment is packaged into
the payment for a covered OPD service or group of services), in lieu of
the calculation of the copayment amount that would otherwise apply
under the OPPS, the provisions of section 1847A(i)(5) of the Act shall,
as determined appropriate by the Secretary, apply in the same manner as
the provisions of section 1847A(i)(5) of the Act apply under that
section. Section 1847A(i)(5) of the Act requires that for Part B
rebatable drugs, as defined in section 1847A(i)(2)(A) of the Act,
furnished on or after April 1, 2023, in quarters in which the payment
amount described in section 1847A(i)(3)(A)(ii)(I) of the Act (or, in
the case of selected drugs described under section 1192(c) of the Act,
the payment amount described in section 1847A(b)(1)(B) of the Act),
exceeds the inflation-adjusted payment amount determined in accordance
with section 1847A(i)(3)(C) of the Act, the coinsurance will be 20
percent of the inflation-adjusted payment amount for such quarter
(hereafter, the inflation-adjusted coinsurance amount). This inflation-
adjusted coinsurance amount is applied as a percent, as determined by
the Secretary, to the payment amount that would otherwise apply for
such calendar quarter in accordance with section 1847A(b)(1)(B) or (C)
of the Act, as applicable, including in the case of a selected drug.
Paragraph (9) of section 1833(i) of the Act and subparagraph (F) of
section 1833(t)(8) of the Act, as added by section 11101(b) of the IRA,
also provide that in lieu of the amounts of payment otherwise
applicable under the ASC payment system and the OPPS, the provisions of
paragraph (1)(EE) of subsection (a) of section 1833 of the Act shall
apply, as determined appropriate by the Secretary. Section 11101(b) of
the IRA amended section 1833(a)(1) of the Act by adding a new
subparagraph (EE), which requires that if the payment amount under
section 1847A(i)(3)(A)(ii)(I) of the Act or, in the case of a selected
drug, the payment amount described in section 1847A(b)(1)(B) of the
Act, for that drug exceeds the inflation-adjusted payment amount for a
Part B rebatable drug, the Part B payment amount would, subject to the
Part B deductible and sequestration, equal the difference between such
payment amount and the inflation-adjusted coinsurance amount.
Consistent with the policy adopted in section 40 of the revised
Medicare Part B Drug Inflation Rebate Guidance, the calculation to
determine the applicable beneficiary coinsurance amount would not be
adjusted for sequestration. CMS codified the Medicare payment for Part
B rebatable drugs in the CY 2024 PFS final rule by adding new paragraph
(m) to Sec. 410.152 (88 FR 79043).
In the CY 2024 OPPS/ASC final rule with comment period (88 FR
81594), we codified the OPPS program payment and cost as required by
section 1833(t)(8)(F) of the Act by adding a new paragraph (e) to Sec.
419.41, which cross-references the regulations adopted in the CY 2024
PFS final rule (Sec. Sec. 410.152(m) and 489.30(b)(6)). We also
amended the regulation text to reflect our longstanding policies for
calculating the Medicare program payment and cost sharing amounts for
separately payable drugs and biologicals by adding a new paragraph (d)
to Sec. 419.41. Similarly, we codified the ASC cost sharing amounts
for Part B rebatable drugs as required by section 1833(i)(9) of the Act
by revising Sec. 416.172(d) to include a cross-reference to 42 CFR
489.30(b)(6), which codified the cost sharing amounts for Part B
rebatable drugs with prices increasing at a rate faster than inflation.
In the CY 2025 PFS final rule (89 FR 98228 through 98275), CMS
codified regulations implementing section 11101 of the IRA in newly
added 42 CFR part 427, chapter IV, including new provisions at
Sec. Sec. 427.200 and 427.201 to codify the policies regarding the
computation of the inflation-adjusted beneficiary coinsurance, defined
in Sec. 427.200, for Part B rebatable drugs as required by section
1847A(i)(5) of the Act. As finalized, Sec. 427.201(a) establishes that
CMS will use the methodology established in such section to calculate
the inflation-adjusted beneficiary coinsurance and associated adjusted
Medicare payment percentage and incorporates references to the existing
provisions at Sec. Sec. 410.152(m), 419.41(e), and 489.30(b)(6).
Section 427.201(c) provides that any category of products that is
excluded from the identification of Part B rebatable drugs at Sec.
427.101(b) is not subject to the inflation-adjusted beneficiary
coinsurance. Examples of these excluded products include separately
payable radiopharmaceuticals, skin substitute products, and qualifying
biosimilar biological products.
Section 427.201(b) sets forth the calculation of the inflation-
adjusted beneficiary coinsurance. CMS will compare the payment amount
in paragraph (b)(3) of such section to the inflation-adjusted payment
amount for an applicable calendar quarter; if the payment amount
exceeds the inflation-adjusted payment amount, the inflation-adjusted
beneficiary coinsurance is calculated by multiplying the inflation-
adjusted payment amount by 0.20. Section 427.201(b)(3) specifies that
CMS will use the published payment amount in quarterly pricing files
11 12 13 to determine if a Part B rebatable drug should have
an adjusted beneficiary coinsurance. If so, such adjusted beneficiary
coinsurance shall be equal to 20 percent of the inflation-adjusted
payment amount as described in section 1847A(i)(3)(C) of the Act for a
calendar
[[Page 33522]]
quarter. This approach deviates from the rebate calculation approach
set forth in Sec. 427.302, which relies on the specified amount
defined at Sec. 427.20 even when the specified amount and the
published payment amount in quarterly pricing files differ.
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\11\ See: https://www.cms.gov/medicare/payment/part-b-drugs/asp-pricing-files.
\12\ See: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/addendum-a-b-updates.
\13\ See: https://www.cms.gov/medicare/payment/prospective-payment-systems/ambulatory-surgical-center-asc/asc-payment-rates-addenda.
---------------------------------------------------------------------------
We note that the cost sharing amounts of rebatable drugs paid under
the OPPS published in the quarterly Addendum A and B updates reflect
the inflation-adjusted coinsurance applied as a percent of the payment
amount that would otherwise apply in accordance with section
1847A(b)(1)(B) or (C) of the Act, as determined by the Secretary
pursuant to 1847A(i)(5) of the Act using the methodology in Sec.
427.201. As we explained in the CY 2025 PFS final rule (89 FR 98237),
this policy is intended to hold beneficiaries harmless in situations
where the payment amount is calculated differently from the specified
amount, and we believe this approach is consistent with the statutory
language and appropriately reflects the differences in the statutory
text of section 1847A(i)(5) of the Act, which sets forth the payment
amount that is used to determine whether coinsurance should be
adjusted, and section 1847A(i)(3)(A) of the Act, which sets forth the
``specified amount'' used to determine rebate amounts. We refer readers
to the full discussion at 89 FR 98237 and 98238 for additional details.
2. Proposed OPPS Copayment Policy
For CY 2026, we propose to determine copayment amounts for new and
revised APCs using the same methodology that we implemented beginning
in CY 2004. We refer readers to the November 7, 2003 OPPS final rule
with comment period for a discussion of that methodology (68 FR 63458).
In addition, we propose to use the same standard rounding principles
that we have historically used in instances where the application of
our standard copayment methodology would result in a copayment amount
that is less than 20 percent and cannot be rounded, under standard
rounding principles, to 20 percent. We refer readers to the CY 2008
OPPS/ASC final rule with comment period (72 FR 66687) in which we
discuss our rationale for applying these rounding principles. The
proposed national unadjusted copayment amounts for services payable
under the OPPS that would be effective January 1, 2026, are included in
Addenda A and B to this proposed rule (which are available via the
internet on the CMS website).
As discussed in section XIV.E. of this proposed rule, for CY 2026,
the Medicare beneficiary's minimum unadjusted copayment and national
unadjusted copayment for a service to which a reduced national
unadjusted payment rate applies will equal the product of the reporting
ratio and the national unadjusted copayment, or the product of the
reporting ratio and the minimum unadjusted copayment, respectively, for
the service.
We note that OPPS copayments may increase or decrease each year
based on changes in the calculated APC payment rates, due to updated
cost report and claims data, and any changes to the OPPS cost modeling
process. However, as described in the CY 2004 OPPS final rule with
comment period, the development of the copayment methodology generally
moves beneficiary copayments closer to 20 percent of OPPS APC payments
(68 FR 63458 through 63459).
In the CY 2004 OPPS final rule with comment period (68 FR 63459),
we adopted a new methodology to calculate unadjusted copayment amounts
in situations including reorganizing APCs, and we finalized the
following rules to determine copayment amounts in CY 2004 and
subsequent years.
When an APC group consists solely of HCPCS codes that were
not paid under the OPPS the prior year because they were packaged or
excluded or are new codes, the unadjusted copayment amount would be 20
percent of the APC payment rate.
If a new APC that did not exist during the prior year is
created and consists of HCPCS codes previously assigned to other APCs,
the copayment amount is calculated as the product of the APC payment
rate and the lowest coinsurance percentage of the codes comprising the
new APC.
If no codes are added to or removed from an APC and, after
recalibration of its relative payment weight, the new payment rate is
equal to or greater than the prior year's rate, the copayment amount
remains constant (unless the resulting coinsurance percentage is less
than 20 percent).
If no codes are added to or removed from an APC and, after
recalibration of its relative payment weight, the new payment rate is
less than the prior year's rate, the copayment amount is calculated as
the product of the new payment rate and the prior year's coinsurance
percentage.
If HCPCS codes are added to or deleted from an APC and,
after recalibrating its relative payment weight, holding its unadjusted
copayment amount constant results in a decrease in the coinsurance
percentage for the reconfigured APC, the copayment amount would not
change (unless retaining the copayment amount would result in a
coinsurance rate less than 20 percent).
If HCPCS codes are added to an APC and, after
recalibrating its relative payment weight, holding its unadjusted
copayment amount constant results in an increase in the coinsurance
percentage for the reconfigured APC, the copayment amount would be
calculated as the product of the payment rate of the reconfigured APC
and the lowest coinsurance percentage of the codes being added to the
reconfigured APC.
We noted in the CY 2004 OPPS final rule with comment period that we
would seek to lower the copayment percentage for a service in an APC
from the prior year if the copayment percentage was greater than 20
percent. We noted that this principle was consistent with section
1833(t)(8)(C)(ii) of the Act, which accelerates the reduction in the
national unadjusted coinsurance rate so that beneficiary liability will
eventually equal 20 percent of the OPPS payment rate for all OPPS
services to which a copayment applies, and with section 1833(t)(3)(B)
of the Act, which achieves a 20 percent copayment percentage when fully
phased in and gives the Secretary the authority to set rules for
determining copayment amounts for new services. We further noted that
the use of this methodology would, in general, reduce the beneficiary
coinsurance rate and copayment amount for APCs for which the payment
rate changes as the result of the reconfiguration of APCs and/or
recalibration of relative payment weights (68 FR 63459).
3. Proposed Calculation of an Adjusted Copayment Amount for an APC
Group
Individuals interested in calculating the national copayment
liability for a Medicare beneficiary for a given service provided by a
hospital that met or failed to meet its Hospital OQR Program
requirements should follow the formulas presented in the following
steps.
Step 1. Calculate the beneficiary payment percentage for the APC by
dividing the APC's national unadjusted copayment by its proposed
payment rate. For example, using APC 5071, $140.07 is 20 percent of the
full national unadjusted payment rate of $730.32. For APCs with only a
minimum unadjusted copayment in Addenda A and B to this proposed rule
(which are available via the internet on the CMS website), the
beneficiary payment percentage is 20 percent.
The formula below is a mathematical representation of Step 1 and
calculates
[[Page 33523]]
the national copayment as a percentage of national payment for a given
service.
B is the beneficiary payment percentage.
B = National unadjusted copayment for APC/national unadjusted
payment rate for APC.
Step 2. Calculate the appropriate wage-adjusted payment rate for
the APC for the provider in question, as indicated in Steps 2 through 4
under section II.H. of this proposed rule. Calculate the rural
adjustment for eligible providers, as indicated in Step 6 under section
II.H. of this proposed rule.
Step 3. Multiply the percentage calculated in Step 1 by the payment
rate calculated in Step 2. The result is the wage-adjusted copayment
amount for the APC.
The formula below is a mathematical representation of Step 3 and
applies the beneficiary payment percentage to the adjusted payment rate
for a service calculated under section II.H. of this proposed rule,
with and without the rural adjustment, to calculate the adjusted
beneficiary copayment for a given service.
Wage-adjusted copayment amount for the APC = Adjusted Medicare Payment
* B.
Wage-adjusted copayment amount for the APC (SCH or EACH) = (Adjusted
Medicare Payment * 1.071) * B.
Step 4. For a hospital that failed to meet its Hospital OQR Program
requirements, multiply the copayment calculated in Step 3 by the
reporting ratio of 0.9805.
The unadjusted copayments for services payable under the OPPS that
would be effective January 1, 2026, are shown in Addenda A and B to
this proposed rule (which are available via the CMS website). We note
that the proposed national unadjusted payment rates and copayment rates
shown in Addenda A and B to this proposed rule reflect the CY 2026 OPD
fee schedule increase factor discussed in section II.B. of this
proposed rule.
In addition, as noted earlier, section 1833(t)(8)(C)(i) of the Act
limits the amount of beneficiary copayment that may be collected for a
procedure performed in a year to the amount of the inpatient hospital
deductible for that year.
III. Proposed OPPS Ambulatory Payment Classification (APC) Group
Policies
A. Proposed OPPS Treatment of New and Revised HCPCS Codes
Payments for OPPS procedures, services, and items are generally
based on medical billing codes, specifically, Healthcare Common
Procedure Coding System (HCPCS) codes, that are reported on hospital
outpatient department (HOPD) claims. HCPCS codes are used to report
surgical procedures, medical services, items, and supplies under the
hospital OPPS. The HCPCS is divided into two principal subsystems,
referred to as Level I and Level II of the HCPCS. Level I is comprised
of CPT (Current Procedural Terminology) codes, a numeric and
alphanumeric coding system that is established and maintained by the
American Medical Association (AMA), and consists of Category I, II,
III, MAAA, and PLA CPT codes. Level II, which is established and
maintained by CMS, is a standardized coding system that is used
primarily to identify products, supplies, and services not included in
the CPT codes. Together, Level I and II HCPCS codes are used to report
procedures, services, items, and supplies under the OPPS payment
system. Specifically, we recognize the following codes on OPPS claims:
Category I CPT codes, which describe surgical procedures,
diagnostic and therapeutic services, and vaccine codes;
Category III CPT codes, which describe new and emerging
technologies, services, and procedures;
MAAA CPT codes, which describe laboratory multianalyte
assays with algorithmic analyses (MAA);
PLA CPT codes, which describe proprietary laboratory
analyses (PLA) services; and
Level II HCPCS codes (also known as alpha-numeric codes),
which are used primarily to identify drugs, devices, supplies,
temporary procedures, and services not described by CPT codes.
The codes are updated and changed throughout the year. CPT and
Level II HCPCS code changes that affect the OPPS are published through
the annual rulemaking cycle and through the OPPS quarterly update
Change Requests (CRs). Generally, these code changes are effective
January 1, April 1, July 1, or October 1. CPT code changes are released
by the AMA (via their website) while Level II HCPCS code changes are
released to the public via the CMS HCPCS website. CMS recognizes the
release of new CPT and Level II HCPCS codes outside of the formal
rulemaking process via OPPS quarterly update CRs. Based on our review,
we assign the new codes to interim status indicators (SIs) and APCs.
These interim assignments are finalized in the OPPS/ASC final rules.
This quarterly process offers hospitals access to codes that more
accurately describe the items or services furnished and provides
payment for these items or services in a timelier manner than if we
waited for the annual rulemaking process. We solicit public comments on
the new CPT and Level II HCPCS codes, status indicators, and APC
assignments through our annual rulemaking process.
We note that, under the OPPS, the APC assignment determines the
payment rate for an item, procedure, or service. The items, procedures,
or services not exclusively paid separately under the hospital OPPS are
assigned to appropriate status indicators. Certain payment status
indicators provide separate payment while other payment status
indicators do not. In section XI. ``Proposed CY 2026 Payment Status and
Comment Indicators'' of this proposed rule, we discuss the various
status indicators and comment indicators used under the OPPS. We also
provide a complete list of the status indicators and their definitions
in Addendum D1 to this proposed rule.
[[Page 33524]]
1. April 2025 HCPCS Codes Proposed Rule Comment Solicitation
For the April 2025 update, 104 new HCPCS codes were established and
made effective on April 1, 2025. Through the April 2025 OPPS quarterly
update CR (Transmittal 13135, Change Request 13993, dated March 20,
2025), we recognized several new HCPCS codes for payment under the
OPPS. In this proposed rule, we solicit public comments on the proposed
APC and status indicator assignments for the codes listed in Table 9
(New HCPCS Codes Effective April 1, 2025). The proposed status
indicator, APC assignment, and payment rate for each HCPCS code can be
found in Addendum B to this proposed rule. The new codes effective
April 1, 2025, are assigned to comment indicator ``NP'' in Addendum B
to this proposed rule to indicate that the codes are assigned to an
interim APC assignment and comments will be accepted on their interim
APC assignments. The complete list of proposed status indicators and
definitions used under the OPPS can be found in Addendum D1 to this
proposed rule, while the complete list of proposed comment indicators
and definitions can be found in Addendum D2. We note that OPPS Addendum
B (OPPS payment file by HCPCS code), Addendum D1 (OPPS Status
Indicators), and Addendum D2 (OPPS Comment Indicators) are available
via the CMS website.
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2. July 2025 HCPCS Codes Proposed Rule Comment Solicitation
For the July 2025 update, 110 new codes were established and made
effective July 1, 2025. Through the July 2025 OPPS quarterly update CR
(Transmittal 13258, Change Request 14091, dated June 23, 2025) we
recognized several new codes for payment and assigned them to
appropriate interim OPPS status indicators and APCs. In this proposed
rule, we solicit public comments on the proposed APC and status
indicator assignments for the codes listed in Table 10 (New HCPCS Codes
Effective July 1, 2025). The proposed status indicator, APC assignment,
and payment rate for each HCPCS code can be found in Addendum B to this
proposed rule. The complete list of proposed status indicators and
corresponding definitions used under the OPPS can be found in Addendum
D1 to this proposed rule. In addition, the new codes are assigned to
comment indicator ``NP'' in Addendum B to this proposed rule to
indicate that the codes are assigned to an interim APC assignment and
comments will be accepted on their interim APC assignments. The
complete list of proposed comment indicators and definitions used under
the OPPS can be found in Addendum D2 to this proposed rule. We note
that OPPS Addendum B (OPPS payment file by HCPCS code), and Addendum D2
(OPPS Comment Indicators) are available via the internet on the CMS
website.
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3. October 2025 HCPCS Codes Final Rule Comment Solicitation
As has been our practice in the past, we will solicit comments on
the new CPT and Level II HCPCS codes that will be effective October 1,
2025, in the CY 2026 OPPS/ASC final rule with comment period, thereby
allowing us to finalize the status indicators and APC assignments for
the codes in the CY 2026 OPPS/ASC final rule with comment period. The
HCPCS codes will be released to the public through the October 2025
OPPS Update CR and the CMS HCPCS website while the CPT codes will be
released to the public through the AMA website.
For CY 2026, we propose to continue our established policy of
assigning comment indicator ``N1'' in Addendum B to this proposed rule
for those new HCPCS codes that will be effective October 1, 2025, to
indicate that we are assigning them an interim status indicator, which
is subject to public comment. We will be inviting public comments in
the CY 2026 OPPS/ASC final rule with comment period on the status
indicator and APC assignments, which would then be finalized in the CY
2027 OPPS/ASC final rule with comment period.
4. January 2026 HCPCS Codes
a. New Level II HCPCS Codes Final Rule Comment Solicitation
Consistent with past practice, we will solicit comments on the new
Level II HCPCS codes that will be effective January 1, 2026, in the CY
2026 OPPS/ASC final rule with comment period, thereby allowing us to
finalize the status indicators and APC assignments for the codes in the
CY 2027 OPPS/ASC final rule with comment period. Unlike the CPT codes
that are effective January 1 and are included in the OPPS/ASC proposed
rules, and except for the proposed new C-codes and G-codes listed in
Addendum O of this proposed rule, most Level II HCPCS codes are not
released until sometime around November to be effective January 1.
Because these codes are not available until November, we are unable to
include them in the OPPS/ASC proposed rules. Consequently, for CY 2026,
we propose to include the new Level II HCPCS codes effective January 1,
2026, in Addendum B to the CY 2026 OPPS/ASC final rule with comment
period, which would be incorporated in the January 2026 OPPS quarterly
update CR. Specifically, for CY 2026, we propose to continue our
established policy of assigning comment indicator ``N1'' in Addendum B
to the OPPS/ASC final rule with comment period to the new HCPCS codes
that will be effective January 1, 2026, to indicate that we are
assigning them an interim status indicator, which is subject to public
comment. We will be inviting public comments in the CY 2026 OPPS/ASC
final rule with comment period on the status indicator and APC
assignments, which would then be finalized in the CY 2027 OPPS/ASC
final rule with comment period.
[[Page 33534]]
b. New CPT Codes Proposed Rule Comment Solicitation
In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66841
through 66844), we finalized a revised process of assigning APC and
status indicators for new and revised Category I and III CPT codes that
would be effective January 1. Specifically, for the new/revised CPT
codes that we receive in a timely manner from the AMA's CPT Editorial
Panel, we finalized our proposal to include the codes that would be
effective January 1 in the OPPS/ASC proposed rules, along with proposed
APC and status indicator assignments for them, and to finalize the APC
and status indicator assignments in the OPPS/ASC final rules beginning
with the CY 2016 OPPS update. For those new/revised CPT codes that were
received too late for inclusion in the OPPS/ASC proposed rule, we
finalized our proposal to establish and use HCPCS G-codes that mirror
the predecessor CPT codes and retain the current APC and status
indicator assignments for a year until we can propose APC and status
indicator assignments in the following year's rulemaking cycle. We note
that even if we find that we need to create HCPCS G-codes in place of
certain CPT codes for the PFS proposed rule, we do not anticipate that
these HCPCS G-codes will always be necessary for OPPS purposes. We will
make every effort to include proposed APC and status indicator
assignments for all new and revised CPT codes that the AMA makes
publicly available in time for us to include them in the proposed rule,
and to avoid resorting to use of HCPCS G-codes and the resulting delay
in utilization of the most current CPT codes. Also, we finalized our
proposal to make interim APC and status indicator assignments for CPT
codes that are not available in time for the proposed rule and that
describe wholly new services (such as new technologies or new surgical
procedures), to solicit public comments in the final rule, and to
finalize the specific APC and status indicator assignments for those
codes in the following year's rule.
For the CY 2026 OPPS update, we received the CPT codes that will be
effective January 1, 2026, from the AMA in time to be included in this
proposed rule. The new, revised, and deleted CPT codes can be found in
Addendum B to this proposed rule (which is available via the internet
on the CMS website). We note that the new and revised CPT codes are
assigned to comment indicator ``NP'' in Addendum B of this proposed
rule to indicate that the code is new for the next calendar year or the
code is an existing code with substantial revision to its code
descriptor in the next calendar year as compared to the current
calendar year with a proposed APC assignment, and that comments will be
accepted on the proposed APC assignment and status indicator. Further,
we note that the CPT code descriptors that appear in Addendum B are
short descriptors and do not accurately describe the complete
procedure, service, or item described by the CPT code. Therefore, we
are including the 5-digit placeholder codes and the long descriptors
for the new and revised CY 2026 CPT codes in Addendum O, specifically
under the column labeled ``CY 2026 OPPS/ASC Proposed Rule 5-Digit AMA/
CMS Placeholder Code.'' The final HCPCS code numbers will be included
in the CY 2026 OPPS/ASC final rule with comment period. In summary, we
solicit public comments on the proposed CY 2026 status indicators and
APC assignments for the new and revised CPT codes that will be
effective January 1, 2026. The CPT codes listed in Addendum B appear
with short descriptors only, therefore, we list them again in Addendum
O to this proposed rule with long descriptors. In addition, we propose
to finalize the status indicator and APC assignments for these codes
(with their final CPT code numbers) in the CY 2026 OPPS/ASC final rule
with comment period. The proposed status indicator and APC assignment
for these codes can be found in Addendum B to this proposed rule. In
addition, the complete list of proposed comment indicators and
definitions used under the OPPS can be found in Addendum D2 to this
proposed rule. We note that OPPS Addendum B (OPPS payment file by HCPCS
code), Addendum D1 (OPPS Status Indicators), and Addendum D2 (OPPS
Comment Indicators) are available via the internet on the CMS website.
Finally, in Table 11 (Comment and Finalization Timeframes for New
and Revised OPPS-Related HCPCS Codes) below, we summarize our current
process for updating codes through our OPPS quarterly update CRs,
seeking public comments, and finalizing the treatment of these codes
under the OPPS.
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B. OPPS Changes--Variations Within APCs
1. Background
Section 1833(t)(2)(A) of the Act requires the Secretary to develop
a classification system for covered hospital outpatient department
services. In addition, section 1833(t)(2)(B) of the Act provides that
the Secretary may establish groups of covered OPD services within this
classification system, so that services classified within each group
are comparable clinically and with respect to the use of resources. In
accordance with these provisions, we developed a grouping
classification system, referred to as Ambulatory Payment
Classifications (APCs), as set forth in regulations at 42 CFR 419.31.
We use Level I (also known as CPT codes) and Level II HCPCS codes (also
known as alphanumeric codes) to identify and group the services within
each APC. The APCs are organized such that each group is homogeneous
both clinically and in terms of resource use. Using this classification
system, we have established distinct groups of similar services. We
also have developed separate APC groups for certain medical devices,
drugs, biologicals, therapeutic radiopharmaceuticals, and brachytherapy
devices that are not packaged into the payment for the procedure.
We have packaged into the payment for each procedure or service
within an APC group, the costs associated with those items and services
that are typically ancillary and supportive to a primary diagnostic or
therapeutic modality and, in those cases, are an integral part of the
primary service they support. Therefore, we do not make separate
payment for these packaged items or services. In general, packaged
items and services include, but are not limited to, the items and
services listed in regulations at 42 CFR 419.2(b). A further discussion
of packaged services is included in section II.A.3. of this proposed
rule.
Under the OPPS, we generally pay for covered hospital outpatient
services on a rate-per-service basis, where the service may be reported
with one or more HCPCS codes. Payment varies according to the APC group
to which the independent service or combination of services is
assigned. For CY 2026, we propose that each APC relative payment weight
represents the hospital cost of the services included in that APC,
relative to the hospital cost of the services included in APC 5012
(Clinic Visits and Related Services). The APC relative payment weights
are scaled to APC 5012 because it is the hospital clinic visit APC and
clinic visits are among the most frequently furnished services in the
hospital outpatient setting.
1. Application of the 2 Times Rule
Section 1833(t)(9)(A) of the Act requires the Secretary to review,
not less often than annually, and revise the APC groups, the relative
payment weights, and the wage and other adjustments described in
section 1833(t)(2) of the Act to consider changes in medical practice,
changes in technology, the addition of new services, new cost data, and
other relevant information and factors. Section 1833(t)(9)(A) of the
Act also requires the Secretary to consult with an expert outside
advisory panel composed of an appropriate selection of representatives
of providers to review (and advise the Secretary concerning) the
clinical integrity of the APC groups and the relative payment weights.
We note that the Advisory Panel on Hospital Outpatient Payment (also
known as the HOP Panel or the Panel) recommendations for specific
services for the CY 2026 OPPS update will be discussed in the relevant
specific sections throughout the CY 2026 OPPS/ASC final rule with
comment period. In addition, 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 regarding the use of
resources if the highest cost for an item or service in the group is
more than 2 times greater than the lowest cost for an item or service
within the same group (referred to as the ``2 times rule'').
[[Page 33536]]
The statute authorizes the Secretary to make exceptions to the 2 times
rule in unusual cases, such as for low-volume items and services (but
the Secretary may not make such an exception 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). In determining the APCs
with a 2 times rule violation, we consider only those HCPCS codes that
are significant based on the number of claims. We note that, for
purposes of identifying significant procedure codes for examination
under the 2 times rule, we consider procedure codes that have more than
1,000 single major claims or procedure codes that both have more than
99 single major claims and contribute at least 2 percent of the single
major claims used to establish the APC cost to be significant (75 FR
71832). This longstanding definition of when a procedure code is
significant for purposes of the 2 times rule was selected because we
believe that a subset of 1,000 or fewer claims is negligible within the
set of approximately 100 million single procedure or single session
claims we use for establishing costs. Similarly, a procedure code for
which there are fewer than 99 single claims and that comprises less
than 2 percent of the single major claims within an APC will have a
negligible impact on the APC cost (75 FR 71832). In this section of
this proposed rule, for CY 2026, we propose to make exceptions to this
limit on the variation of costs within each APC group in unusual cases,
such as for certain low-volume items and services.
For the CY 2026 OPPS update, we identified the APCs with violations
of the 2 times rule, and we propose changes to the procedure codes
assigned to these APCs (with the exception of those APCs for which we
propose a 2 times rule exception) in Addendum B to this proposed rule.
We note that Addendum B does not appear in the printed version of the
Federal Register as part of this proposed rule. Rather, it is published
and made available via the internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices. To eliminate a violation of the 2 times
rule and improve clinical and resource homogeneity in the APCs for
which we are not proposing a 2 times rule exception, we propose to
reassign these procedure codes to new APCs that contain services that
are similar with regard to both their clinical and resource
characteristics. In many cases, the proposed HCPCS code reassignments
and associated APC reconfigurations for CY 2026 included in this
proposed rule are related to changes in costs of services that were
observed in the CY 2024 claims data available for CY 2026 ratesetting.
Addendum B to this proposed rule identifies with a comment indicator
``CH'' those procedure codes for which we propose a change to the APC
assignment or status indicator, or both, that were initially assigned
in the July 1, 2025, OPPS Addendum B Update, which is available via the
internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/addendum-a-b-update.
2. Proposed APC Exceptions to the 2 Times Rule
While considering the APC changes that we propose for CY 2026, we
reviewed all of the APCs for which we identified 2 times rule
violations to determine whether any of the APCs would qualify for an
exception. We used the following criteria to evaluate whether to
propose exceptions to the 2 times rule for affected APCs:
Resource homogeneity;
Clinical homogeneity;
Hospital outpatient setting utilization;
Frequency of service (volume); and
Opportunity for upcoding and code fragments.
For a detailed discussion of these criteria, we refer readers to
the April 7, 2000 final rule (65 FR 18457 through 18458).
Based on the CY 2024 claims data available for this proposed rule,
we found 26 APCs with violations of the 2 times rule. We applied the
criteria as described above to identify the APCs for which we propose
to make exceptions under the 2 times rule for CY 2026 and found that
all of the 26 APCs we identified meet the criteria for an exception to
the 2 times rule based on the CY 2024 claims data available for this
proposed rule. We note that, on an annual basis, based on our analysis
of the latest claims data, we identify violations to the 2 times rule
and propose changes when appropriate. Those APCs that violate the 2
times rule are identified and appear in Table 12. In addition, we did
not include in that determination those APCs where a 2 times rule
violation was not a relevant concept, such as APC 5401 (Dialysis),
which only has two HCPCS codes assigned to it that have similar
geometric mean costs and do not create a 2 times rule violation.
Therefore, we have only identified those APCs, including those with
criteria-based costs, such as device-dependent CPT/HCPCS codes, with
violations of the 2 times rule, where a 2 times rule violation is a
relevant concept.
Table 12 of this proposed rule lists the 26 APCs for which we
propose to make an exception under the 2 times rule for CY 2026 based
on the criteria cited above and claims data submitted between January
1, 2024, and December 31, 2024, and processed on or before December 31,
2024, and CCRs, if available. The proposed geometric mean costs for
covered hospital outpatient services for these and all other APCs that
were used in the development of this proposed rule can be found on the
CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices.
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C. New Technology APCs
1. Background
In the CY 2002 OPPS final rule (66 FR 59903), we finalized changes
to the time period in which a service can be eligible for payment under
a New Technology APC. Beginning in CY 2002, we retain services within
New Technology APC groups until we gather sufficient claims data to
enable us to assign the service to an appropriate clinical APC. This
policy allows us to move a service from a New Technology APC in less
than 2 years if sufficient data are available. It also allows us to
retain a service in a New Technology APC for more than 2 years if
sufficient data upon which to base a decision for reassignment have not
been collected.
We also adopted in the CY 2002 OPPS final rule the following
criteria for assigning a complete or comprehensive service to a New
Technology APC: (1) the service must be truly new, meaning it cannot be
appropriately reported by an existing HCPCS code assigned to a clinical
APC and does not appropriately fit within an existing clinical APC; (2)
the service is not eligible for transitional pass-through payment
(however, a truly new, comprehensive service could qualify for
assignment to a new technology APC even if it involves a device or drug
that could, on its own, qualify for pass-through payment); and (3) the
service falls within the scope of Medicare benefits under section
1832(a) of the Act and is reasonable and necessary in accordance with
section 1862(a)(1)(A) of the Act (66 FR 59898 through 59903). For
additional information about our New Technology APC policy, we refer
readers to https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough payment on the CMS website
and then follow the instructions to access the MEARISTM
system for OPPS New Technology APC applications.\14\
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\14\ Currently approved under OMB control number 0938-0860;
expires October 31, 2027.
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In the CY 2004 OPPS final rule with comment period (68 FR 63416),
we restructured the New Technology APCs to make the cost intervals more
consistent across payment levels and refined the cost bands for these
APCs to retain two parallel sets of New Technology APCs: one set with a
status indicator of ``S'' (Significant Procedures, Not Discounted when
Multiple. Paid under OPPS; separate APC payment) and the other set with
a status indicator of ``T'' (Significant Procedure, Multiple Reduction
Applies. Paid under OPPS; separate APC payment). These current New
Technology APC configurations allow us to price new technology services
more appropriately and consistently.
For CY 2025, there were 52 New Technology APC levels, ranging from
the lowest cost band assigned to APC 1491 (New Technology--Level 1A
($0-$10)) to the highest cost band assigned to APC 1908 (New
Technology--Level 52 ($145,001-$160,000)). We note that the cost bands
for the New Technology APCs, specifically, APCs 1491 through 1599 and
1901 through 1908, vary with increments ranging from $10 to $14,999.
These cost bands identify the APCs to which new technology procedures
and services with estimated service costs that fall within those cost
bands are assigned under the OPPS. Payment for each APC is made at the
mid-point of the APC's assigned cost band. For example, payment for APC
1507 (New
[[Page 33538]]
Technology--Level 7 ($501-$600)) is made at $550.50.
Under the OPPS, one of our goals is to make payments that are
appropriate for the services that are necessary for the treatment of
Medicare beneficiaries. The OPPS, like other Medicare payment systems,
is budget neutral and increases are limited to the annual hospital
market basket increase reduced by the productivity adjustment. We
believe that our payment rates reflect the costs that are associated
with providing care to Medicare beneficiaries and are adequate to
ensure access to services (80 FR 70374). For many emerging
technologies, there is a transitional period during which utilization
may be low, often because providers are first learning about the
technologies and their clinical utility. Quite often, parties request
that Medicare make higher payments under the New Technology APCs for
new procedures in that transitional phase. These requests, and their
accompanying estimates for expected total patient utilization, often
reflect very low rates of patient use of expensive equipment, resulting
in high per-use costs for which requesters believe Medicare should make
full payment. Medicare does not, and we believe should not, assume
responsibility for more than its share of the costs of procedures based
on projected utilization for Medicare beneficiaries and does not set
its payment rates based on initial projections of low utilization for
services that require expensive capital equipment. For the OPPS, we
rely on hospitals to make informed business decisions regarding the
acquisition of high-cost capital equipment, taking into consideration
their knowledge about their entire patient base (Medicare beneficiaries
included) and an understanding of Medicare's and other payers' payment
policies. We refer readers to the CY 2013 OPPS/ASC final rule with
comment period (77 FR 68314) for further discussion regarding this
payment policy.
Some services assigned to New Technology APCs have low annual
volume, which we consider to be fewer than 100 claims in the year of
claims data used for ratesetting (86 FR 63528). Where utilization of
services assigned to a New Technology APC is low, it can lead to wide
variation in payment rates from year to year, resulting in even lower
utilization and potential barriers to access of new technologies, which
ultimately limits our ability to assign the service to the appropriate
clinical APC. To mitigate these issues, we finalized a policy in the CY
2019 OPPS/ASC final rule with comment period to utilize our equitable
adjustment authority at section 1833(t)(2)(E) of the Act to adjust how
we determine the costs for low-volume services assigned to New
Technology APCs (83 FR 58892 through 58893). Specifically, in the CY
2019 OPPS/ASC final rule with comment period (83 FR 58893), we
established that, in each of our annual rulemakings, we would calculate
and present the result of each statistical methodology (arithmetic
mean, geometric mean, and median) based on up to 4 years of claims data
and solicit public comment on which methodology should be used to
establish the payment rate for the low-volume new technology service.
In the CY 2022 OPPS/ASC final rule (86 FR 63529), we replaced the New
Technology APC low volume policy with the universal low volume APC
policy. Unlike the New Technology APC low volume policy, the universal
low volume APC policy applies to clinical APCs and brachytherapy APCs,
in addition to procedures assigned to New Technology APCs, and uses the
highest of the geometric mean, arithmetic mean, or median based on up
to 4 years of claims data to set the payment rate for the APC. We refer
readers to the CY 2022 OPPS/ASC final rule with comment period (86 FR
63529) for further discussion regarding this policy.
Despite the universal low volume APC policy, we continued to see
payment instability for services with very low claims volume of fewer
than 10 claims in the 4-year lookback period used under the universal
low volume APC policy. For CY 2025, we finalized a policy to exempt
services assigned to New Technology APCs with fewer than 10 claims over
the 4-year lookback period used for the universal low volume policy.
Instead of assigning these services to a different New Technology APC
based on the very few claims available, we maintained the New
Technology APC assignment for each service from the prior year, CY
2024. We refer readers to the CY 2025 OPPS/ASC final rule with comment
period for a discussion on the policy (89 FR 94016 through 94018).
Finally, we note that, in a budget-neutral system, payments may not
fully cover hospitals' costs in a particular circumstance, including
those for the purchase and maintenance of capital equipment. We rely on
hospitals to make their decisions regarding the acquisition of high-
cost equipment with the understanding that the Medicare program must be
careful to establish its initial payment rates, including those made
through New Technology APCs, for new services that lack hospital claims
data based on realistic utilization projections for all such services
delivered in cost-efficient hospital outpatient settings. As the OPPS
acquires claims data regarding hospital costs associated with new
procedures, we regularly examine the claims data and any available new
information regarding the clinical aspects of new procedures to confirm
that our OPPS payments remain appropriate for procedures as they
transition into mainstream medical practice (77 FR 68314). For CY 2026,
we included the proposed payment rates for New Technology APCs 1491 to
1599 and 1901 through 1908 in Addendum A to this proposed rule (which
is available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.
2. Proposal To Continue To Exempt Services With Under 10 Claims in the
4-Year Lookback Period From APC Reassignment Based on the Universal Low
Volume Policy
We continue to be concerned about payment stability for services
assigned to New Technology APCs, specifically services with fewer than
10 claims in the 4-year lookback period used under the universal low
volume APC policy. We also continue to believe that determining initial
cost estimates for these services may be particularly challenging,
given the lack of cost information for new and innovative technologies,
and that we generally utilize claims data from hospitals as soon as
these data become available.
We propose to continue our policy moving forward to exempt services
assigned to New Technology APCs with fewer than 10 claims over the 4-
year lookback period from the universal low volume policy. Instead of
assigning these services to a different clinical or New Technology APC
based on the very few claims available, we propose to continue
maintaining the New Technology APC assignment for each service from the
prior year. For example, for CY 2026, services assigned to New
Technology APCs with fewer than 10 claims in up to the previous four
years will maintain their New Technology APC assignment from CY 2025.
We propose to continue this policy in future years, until, or unless,
an alternative policy is finalized. We maintain that it is appropriate
to apply this policy to services assigned to New Technology APCs
because these services represent new technologies for which it may be
more challenging to determine an appropriate cost than for other, more
[[Page 33539]]
established services. We continue to believe 10 claims is an
appropriate ceiling for exempting services from reassignment based on
the universal low volume APC policy because we believe that at 10
claims a rough standard distribution begins to appear. We also continue
to believe that services with so few claims over the 4-year lookback
period would be especially vulnerable to large changes in payment rates
year-to-year as a result of one or two new claims being available or
one or two claims from what was previously the fourth year of the
lookback period no longer being included in that period.
Consistent with our overall policy regarding use of updated claims
data in the final rule, we propose to perform a similar analysis for
the final rule using updated claims data, including determining whether
specific HCPCS codes continue to meet the criteria for our universal
low volume APC policy or would be subject to our proposed policy to
continue exempting services with fewer than 10 claims in the 4-year
lookback period from the universal low volume APC policy and maintain
the New Technology APC assignment from the previous year. We would
update the APC placement as needed in the final rule.
3. Procedures Assigned to New Technology APC Groups for CY 2026
As we described in the CY 2002 OPPS final rule (66 FR 59902), we
generally retain a procedure in the New Technology APC to which it is
initially assigned until we have obtained sufficient claims data to
justify reassignment of the procedure to a clinically appropriate APC.
In addition, in cases where we find that our initial New Technology APC
assignment was based on inaccurate or inadequate information (although
it was the best information available at the time), where we obtain new
information that was not available at the time of our initial New
Technology APC assignment, or where the New Technology APCs are
restructured, we may, based on more recent resource utilization
information (including claims data) or the availability of refined New
Technology APC cost bands, reassign the procedure or service to a
different New Technology APC that more appropriately reflects its cost
(66 FR 59903).
Consistent with our current policy, for CY 2026, we propose to
retain services within New Technology APC groups until we obtain
sufficient claims data to justify reassignment of the service to an
appropriate clinical APC. The flexibility associated with this policy
allows us to reassign a service from a New Technology APC in less than
2 years if we have obtained sufficient claims data. It also allows us
to retain a service in a New Technology APC for more than 2 years if we
have not obtained sufficient claims data upon which to base a
reassignment decision (66 FR 59902).
a. Administration of Subretinal Therapies Requiring Vitrectomy (APC
1563)
Effective January 1, 2021, CMS established HCPCS code C9770
(Vitrectomy, mechanical, pars plana approach, with subretinal injection
of pharmacologic/biologic agent) and assigned it to a New Technology
APC based on the geometric mean cost of CPT code 67036 (Vitrectomy,
mechanical, pars plana approach) due to similar resource utilization.
For CY 2021, HCPCS code C9770 was assigned to APC 1561 (New
Technology--Level 24 ($3001-$3500)). This code may be used to describe
the administration of HCPCS code J3398 (Injection, voretigene
neparvovec-rzyl, 1 billion vector genomes). This procedure was
previously discussed in depth in the CY 2021 OPPS/ASC final rule with
comment period (85 FR 85939 through 85940). For CY 2022, we maintained
the APC assignment of APC 1561 (New Technology--Level 24 ($3001-$3500))
for HCPCS code C9770 (86 FR 63531 through 63532).
HCPCS code J3398 (Injection, voretigene neparvovec-rzyl, 1 billion
vector genomes) is for a gene therapy product indicated for a rare
mutation-associated retinal dystrophy. Voretigene neparvovec-rzyl
(Luxturna[supreg]) was approved by FDA in December of 2017 and is an
adeno-associated virus vector-based gene therapy indicated for the
treatment of patients with confirmed biallelic RPE65 mutation-
associated retinal dystrophy.\15\ This therapy is administered through
a subretinal injection, which interested parties describe as an
extremely delicate and sensitive surgical procedure. The FDA-approved
package insert describes one of the steps for administering Luxturna
as, ``after completing a vitrectomy, identify the intended site of
administration. The subretinal injection can be introduced via pars
plana.''
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\15\ Luxturna. FDA Package Insert. Available: https://www.fda.gov/media/109906/download.
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Interested parties, including the manufacturer of Luxturna[supreg],
recommended CPT code 67036 (Vitrectomy, mechanical, pars plana
approach) for the administration of the gene therapy.\16\ However, the
manufacturer previously contended the administration was not accurately
described by any existing codes as CPT code 67036 (Vitrectomy,
mechanical, pars plana approach) does not account for the
administration itself. CMS recognized the need to accurately describe
the unique procedure that is required to administer the therapy
described by HCPCS code J3398. Therefore, in the CY 2021 OPPS/ASC final
rule with comment period, we established a new HCPCS code, C9770
(Vitrectomy, mechanical, pars plana approach, with subretinal injection
of pharmacologic/biologic agent) to describe this process. For CY 2021,
we assigned HCPCS code C9770 to APC 1561 (New Technology--Level 24
($3001-$3500)) using the geometric mean cost of CPT code 67036. For CY
2022, we continued to assign HCPCS code C9770 to APC 1561 (New
Technology--Level 24 ($3001-$3500)) using the geometric mean cost of
CPT code 67036.
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\16\ LUXTURNA REIMBURSEMENT GUIDE FOR TREATMENT CENTERS. https://mysparkgeneration.com/uploads/2022/09/LUXTURNA-Reimbursement-Guide-for-Treatment-Centers-ISI-Update-April-2022-P-RPE65-US-320025.pdf.
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CY 2023 was the first year that claims data were available for
HCPCS code C9770; therefore, we proposed and finalized a policy to base
the payment rate of HCPCS code C9770 on claims data for that code
rather than on the geometric mean cost of CPT code 67036. Given the low
number of claims for this procedure, we designated HCPCS code C9770 as
a low volume procedure under our universal low volume APC policy and
used the greater of the geometric mean, arithmetic mean, or median cost
calculated based on the available claims data to calculate an
appropriate payment rate for purposes of assigning HCPCS code C9770 to
a New Technology APC.
Based on the claims data available for the CY 2023 OPPS/ASC final
rule with comment period, we found the median was the statistical
methodology that estimated the highest cost for the service. The
payment rate calculated using this methodology fell within the cost
band for APC 1562 (New Technology--Level 25 ($3501-$4000)). Therefore,
we finalized our proposal to assign HCPCS code C9770 to APC 1562 for CY
2023.
For CY 2024, we proposed and finalized that we would delete HCPCS
code C9770 effective December 31, 2023 and recognize CPT code 0810T
(Subretinal injection of a pharmacologic agent, including vitrectomy
and 1 or more retinotomies) starting January 1,
[[Page 33540]]
2024 (88 FR 81617 through 81619). We determined the payment rate for
CPT code 0810T using the claims data for HCPCS code C9770 and
designated CPT code 0810T as a low volume procedure under our universal
low volume APC policy and used the greater of the geometric mean,
arithmetic mean, or median cost calculated based on the available
claims data for HCPCS code C9770 to calculate an appropriate payment
rate for purposes of assigning CPT code 0810T to a New Technology APC.
For CY 2024, we finalized assignment of CPT code 0810T to APC 1563 (New
Technology--Level 26 ($4001-$4500)) (88 FR 81617 through 81619). For
2025, claims data for CPT code 0810T was not yet available. Therefore,
we continued to use claims data for HCPCS code C9770 to determine the
appropriate APC for CPT code 0810T and finalized to continue to assign
CPT code 0810T to APC 1563 for CY 2025.
CY 2026 is the first year that we have claims data available for
CPT code 0810T, and there are 6 claims available. Since the procedure
described by CPT code 0810T was billed using HCPCS code C9770 prior to
January 1, 2024, we propose to use the available combined 42 claims for
both codes during this time period to allow for a more accurate picture
of the costs associated with this procedure. For CY 2026, we propose to
designate CPT code 0810T as a low volume procedure under our universal
low volume APC policy, given that there are only 42 combined claims
available. This is below the threshold of 100 claims for a service
within a year required to designate a service as a low volume service
and apply our universal low volume APC policy. Therefore, we propose to
use the greater of the geometric mean, arithmetic mean, or median cost
calculated based on the available claims data from a 4-year lookback
period to calculate an appropriate payment rate for purposes of
assigning CPT code 0810T to a New Technology APC.
Using all available claims for CPT code 0810T and HCPCS code C9770
from the 4-year lookback period, based on 42 claims, we determined the
geometric mean cost to be approximately $4,040, the arithmetic mean
cost to be $4,327, and the median cost to be $3,999. Because the
arithmetic mean is the statistical methodology that estimated the
highest cost for the service, we propose to use this cost to determine
the New Technology APC placement. The arithmetic mean of $4,327 falls
within the cost band for APC 1563 (New Technology--Level 26 ($4001-
$4500)). Therefore, we propose to continue to assign CPT code 0810T to
APC 1563 for CY 2026. Additionally, we propose to perform a similar
analysis using updated claims data, including determining if CPT code
0810T continues to meet the criteria for our universal low volume APC
policy, in the CY 2026 OPPS/ASC final rule with comment period and
update the APC assignment as needed.
Please refer to Table 13 for the proposed OPPS New Technology APC
and status indicator assignments for CPT code 0810T for CY 2026. The
proposed CY 2026 payment rates can be found in Addendum B to this
proposed rule via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP17JY25.024
b. BgRT (APC 1514 and 1525)
Biology Guided Radiation Therapy (BgRT) uses positron-emitting
radiopharmaceuticals to control delivery of radiation therapy to treat
primary and metastatic lung or bone tumors. During radiation treatment
delivery, the same system applies these firing filters to the real-time
positron emission tomography (PET) data collected by the radiation
treatment delivery machine. Effective January 1, 2024, CMS created
HCPCS codes C9794 (Therapeutic radiology simulation-aided field
setting; complex, including acquisition of PET and CT imaging data
required for radiopharmaceutical-directed radiation therapy treatment
planning (i.e., modeling) and C9795 (Stereotactic body radiation
therapy, treatment delivery, per fraction to 1 or more lesions,
including image guidance and real-time positron emissions-based
delivery adjustments to 1 or more lesions, entire course not to exceed
5 fractions) to describe the modeling and treatment delivery portions
of the BgRT service. We assigned HCPCS code C9794 to APC 1521 (New
Technology--Level 21 ($1901-$2000)) and HCPCS code C9795 to APC 1525
(New Technology--Level 25 ($3501-$4000)) for CY 2024.
For CY 2025, we continued to assign HCPCS code C9794 to APC 1521
(New Technology--Level 21 ($1901-$2000)) with a payment rate of
$1,950.50 and HCPCS code C9795 to APC 1525 (New Technology--Level 25
($3501-$4000)) with a payment rate of $3,750.50 because we did not have
any claims data for the service.
Effective January 1, 2025, HCPCS codes C9794 and C9795 were
replaced by HCPCS codes G0562 and G0563, respectively. For CY 2026, the
proposed OPPS payment rates are based on available CY 2024 claims data.
There are no CY 2024 claims for HCPCS codes G0562 and G0563 since they
were not effective until CY 2025. However, as HCPCS codes C9794 and
C9795 were still in use until December 31, 2024, we propose to
determine the payment rate for HCPCS codes G0562 and G0563 using the
available claims data for HCPCS codes C9794 and C9795, respectively.
For CY 2026, we propose to designate HCPCS codes G0562 and G0563 as low
volume procedures under our universal low volume APC policy, given that
there are only 16 claims for C9794 and 28 claims for C9795 during the
claims period. For HCPCS code G0562, using all available claims for
C9794, we determined the arithmetic mean cost to be $1,241, the median
cost to be $1,203, and the geometric mean cost to be $1,121. Because
the arithmetic
[[Page 33541]]
mean cost is the statistical methodology that estimated the highest
cost for the service, we propose to use this cost to determine the New
Technology APC placement. The arithmetic mean cost of $1,241 falls
within the cost band for APC 1514 (New Technology--Level 14 ($1201-
$1300)). Therefore, we propose to assign HCPCS code G0562 to APC 1514
(New Technology--Level 14 ($1201-$1300) with a payment rate of
$1,250.50 for CY 2026. For HCPCS code G0563, using all available claims
for C9795, we determined the arithmetic mean cost to be $3,606; the
median cost to be $2,915, and the geometric mean cost to be $3,348. The
arithmetic mean cost is the statistical methodology that estimated the
highest cost for the service; therefore, we propose to use this cost to
determine the New Technology APC placement. The arithmetic mean cost of
$3,606 falls within the cost band for APC 1525 (New Technology--Level
25 ($3501-$4000)). Therefore, we propose to assign HCPCS code G0563 to
APC 1525 (New Technology--Level 25 ($3501-$4000) with a payment rate of
$3,750.50 for CY 2026.
Additionally, we propose to perform a similar analysis using
updated claims data, including determining if HCPCS codes G0562 and
G0563 continue to meet the criteria for our universal low volume APC
policy, in the CY 2026 OPPS/ASC final rule with comment period and
update the APC assignments as needed.
Please refer to Table 14 for the proposed OPPS New Technology APC
and status indicator assignment for HCPCS codes G0562 and G0563 for CY
2026. The proposed CY 2026 payment rates can be found in Addendum B to
this proposed rule via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP17JY25.025
c. Blinded Procedure for NYHA Class III/IV Heart Failure
A randomized, double-blinded, controlled IDE study was conducted
for the V-Wave interatrial shunt. The V-Wave interatrial shunt is for
patients with severe symptomatic heart failure and is designed to
regulate left atrial pressure in the heart. All participants who passed
initial screening for the study receive a right heart catheterization
procedure described by CPT code 93451 (Right heart catheterization
including measurement(s) of oxygen saturation and cardiac output, when
performed). Participants assigned to the experimental group also
receive the V-Wave interatrial shunt procedure while participants
assigned to the control group only receive right heart catheterization.
The developer of V-Wave was concerned that the current coding of these
services by Medicare would reveal to the study participants whether
they had received the interatrial shunt because an additional procedure
code, CPT code 93799 (Unlisted cardiovascular service or procedure),
would be included on the claims for participants receiving the
interatrial shunt. Therefore, for CY 2020, we created a temporary HCPCS
code to describe the V-Wave interatrial shunt procedure for both the
experimental group and the control group in the study. Specifically, we
established HCPCS code C9758 (Blinded procedure for NYHA class III/IV
heart failure; transcatheter implantation of interatrial shunt or
placebo control, including right heart catheterization, trans-
esophageal echocardiography (TEE)/intracardiac echocardiography (ICE),
and all imaging with or without guidance (for example, ultrasound,
fluoroscopy), performed in an approved investigational device exemption
(IDE) study) to describe the service, and we assigned the service to
APC 1589 (New Technology--Level 38 ($10,001-$15,000)) with a payment
rate of $12,500.50.
In the CY 2021 OPPS/ASC final rule with comment period (85 FR
85946), we stated that we believe similar resources and device costs
are involved with the V-Wave interatrial shunt procedure and the Corvia
Medical interatrial shunt procedure (HCPCS code C9760), except that
payment for HCPCS codes C9758 and C9760 differs based on how often the
interatrial shunt is implanted when each code is billed. An interatrial
shunt is implanted one-half of the time HCPCS code C9758 is billed,
whereas an interatrial shunt is implanted every time HCPCS code C9760
is billed. Accordingly, for CY 2021, we reassigned HCPCS code C9758 to
APC 1590 (New Technology--Level 39 ($15,001-$20,000)), which reflects
the cost of furnishing the interatrial shunt one-half of the time the
procedure is performed. Since CY 2021, HCPCS code C9758 has continued
to be assigned to APC 1590.
For CY 2026, the developer of the V-Wave interatrial shunt informed
us that the IDE study had concluded and HCPCS code C9758 was no longer
being utilized. Therefore, we propose to delete HCPCS code C9758 for CY
2026.
Please refer to Table 15 for the proposed OPPS New Technology APC
and status indicator assignments for HCPCS code C9758 for CY 2026.
[[Page 33542]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.026
d. Bronchoscopy With Transbronchial Ablation of Lesion(s) by Microwave
Energy
Effective January 1, 2019, CMS established HCPCS code C9751
(Bronchoscopy, rigid or flexible, transbronchial ablation of lesion(s)
by microwave energy, including fluoroscopic guidance, when performed,
with computed tomography acquisition(s) and 3-D rendering, computer-
assisted, image-guided navigation, and endobronchial ultrasound (EBUS)
guided transtracheal and/or transbronchial sampling (e.g.,
aspiration[s]/biopsy[ies]) and all mediastinal and/or hilar lymph node
stations or structures and therapeutic intervention(s)). This microwave
ablation procedure utilizes a flexible catheter to access the lung
tumor via a working channel and may be used as an alternative procedure
to a percutaneous microwave approach. Based on our review of the New
Technology APC application for this service and the service's clinical
similarity to existing services paid under the OPPS, we estimated the
likely cost of the procedure would be between $8,001 and $8,500. We
assigned the procedure to APC 1571 (New Technology--Level 34 ($8001-
$8500)) for CY 2019.
In claims data available from CY 2019 for the CY 2021 OPPS/ASC
final rule with comment period, there were four claims reported for
bronchoscopy with transbronchial ablation of lesions by microwave
energy. Given the low volume of claims for the service, we proposed for
CY 2021 to apply the universal low volume APC policy we adopted in CY
2019, under which we utilize our equitable adjustment authority under
section 1833(t)(2)(E) of the Act to calculate the geometric mean,
arithmetic mean, and median costs to determine an appropriate payment
rate for purposes of assigning bronchoscopy with transbronchial
ablation of lesions by microwave energy to a New Technology APC. Based
on this analysis using claims from CY 2019, we assigned HCPCS code
C9751 to APC 1562 (New Technology--Level 25 ($3501-$4000)) with a
$3750.50 payment rate for CY 2021.
There have been no separately payable claims reported for HCPCS
code C9751 since 2019. Therefore, we have continued to use claims from
CY 2019 to determine the payment rate for this service in CY 2023, CY
2024, and CY 2025 OPPS/ASC final rules with comment period. Based on
the information available, we continue to assign HCPCS code C9751 to
APC 1562 (New Technology--Level 25 ($3501-$4000)), with a payment rate
of $3,750.50.
For CY 2026, we were informed that the Neuwave Flex program is no
longer available for commercial use, and that HCPCS code C9751 is no
longer being utilized. Therefore, we propose to delete HCPCS code C9751
for CY 2026.
Please refer to Table 16 for the proposed OPPS New Technology APC
and status indicator assignments for HCPCS code C9751 for CY 2026.
[GRAPHIC] [TIFF OMITTED] TP17JY25.027
[[Page 33543]]
e. Cardiac Positron Emission Tomography (PET)/Computed Tomography (CT)
Studies (APCs 1519 and 1522)
For CY 2026, the OPPS payment rates for the service described by
CPT codes 78431, 78432, and 78433 are proposed to be based on available
CY 2024 claims data. CPT code 78431 had over 30,000 single frequency
claims in CY 2024. The geometric mean cost for CPT code 78431 is
approximately $2,200. The geometric mean falls within APC 1522 (New
Technology--Level 22 ($2001-$2500)) with a payment rate of $2,250.50,
which is the current APC assignment for this service. Therefore, we
propose, for CY 2026, to continue to assign CPT code 78431 to APC 1522
(New Technology--Level 22 ($2001-$2500)) with a payment rate of
$2,250.50.
There were only 31 single frequency claims in CY 2024 for CPT code
78432. As this is below the threshold of 100 claims for a service
within a year, we propose to apply our universal low volume New
Technology APC policy and use the highest of the geometric mean cost,
arithmetic mean cost, or median cost based on up to 4 years of claims
data to assign CPT code 78432 to the appropriate New Technology APC.
Using available claims data from CY 2021, CY 2022, and CY 2023, our
analysis found the geometric mean cost of the service is approximately
$1,591, the arithmetic mean cost of the service is approximately
$1,737, and the median cost of the service is approximately $1,364. The
arithmetic mean is the statistical methodology that estimates the
highest cost for the service. The arithmetic mean cost of $1,737, is an
amount that is below the cost band for APC 1520 (New Technology--Level
20 ($1801-$1900)), where the procedure is currently assigned.
Therefore, we propose, for CY 2026, to assign CPT code 78432 to APC
1519 (New Technology--Level 19 ($1701-$1800)) with a payment rate of
$1,750.50.
There were over 1,400 single frequency claims for CPT code 78433 in
CY 2024. The geometric mean for CPT code 78433 is approximately $2,037,
which is an amount that is above the current New Technology APC cost
band APC 1521 (New Technology--Level 21 ($1901-$2000)) to which it is
assigned. Therefore, for CY 2026, we propose to reassign CPT code 78433
to APC 1522 (New Technology--Level 22 ($2001-$2500)) with a payment
rate of $2,250.50.
We note that, over the past several years, the claims volumes for
CPT codes 78431 and 78433 have increased significantly while the
geometric mean costs of the codes have remained relatively stable.
However, CPT code 78432, which is closely related to CPT codes 78431
and 78433, continues to have low claims frequency and fluctuating
geometric mean costs. Due to our concerns regarding CPT code 78432 and
the lack of an appropriate clinical APC for CPT codes 78431 and 78433
at this time based on resource cost similarity, we propose to continue
to assign CPT codes 78431 through 78433 to New Technology APCs for CY
2026.
Please refer to Table 17 for the proposed OPPS New Technology APC
and status indicator assignments for CPT codes 78431, 78432, and 78433
for CY 2026. The proposed CY 2026 payment rates can be found in
Addendum B to the CY 2026 OPPS/ASC proposed rule via the internet on
the CMS website.
[GRAPHIC] [TIFF OMITTED] TP17JY25.028
[[Page 33544]]
f. CardiAMP (APC 1590)
The CardiAMP cell therapy IDE studies are two randomized, double-
blinded, controlled IDE studies: the CardiAMP Cell Therapy Chronic
Myocardial Ischemia Trial \17\ and the CardiAMP Cell Therapy Heart
Failure Trial.\18\ The two trials are designed to investigate the
safety and efficacy of autologous bone marrow mononuclear cell
treatment for the following: (1) patients with medically refractory and
symptomatic ischemic cardiomyopathy; and (2) patients with refractory
angina pectoris and chronic myocardial ischemia. On April 1, 2022, we
established HCPCS code C9782 to describe the CardiAMP cell therapy IDE
studies and assigned HCPCS code C9782 to APC 1574 (New Technology--
Level 37 ($9,501-$10,000)) with the status indicator ``T.'' We
subsequently revised the descriptor for HCPCS code C9782 to: (Blinded
procedure for New York Heart Association (NYHA) Class II or III heart
failure, or Canadian Cardiovascular Society (CCS) Class III or IV
chronic refractory angina; transcatheter intramyocardial
transplantation of autologous bone marrow cells (e.g., mononuclear) or
placebo control, autologous bone marrow harvesting and preparation for
transplantation, left heart catheterization including ventriculography,
all laboratory services, and all imaging with or without guidance
(e.g., transthoracic echocardiography, ultrasound, fluoroscopy), all
device(s), performed in an approved Investigational Device Exemption
(IDE) study) to clarify the inclusion of the Helix trans endocardial
injection catheter device in the descriptor. Additionally, we
determined that APC 1590 (New Technology--Level 39 ($15,001-$20,000))
most accurately accounted for the resources associated with furnishing
the procedure described by HCPCS code C9782.
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\17\ ClinicalTrials.gov. ``Randomized Controlled Pivotal Trial
of Autologous Bone Marrow Cells Using the CardiAMP Cell Therapy
System in Patients With Refractory Angina Pectoris and Chronic
Myocardial Ischemia.'' Accessed May 10, 2022. https://clinicaltrials.gov/ct2/show/NCT03455725?term=NCT03455725&rank=1.
\18\ ClinicalTrials.gov. ``Randomized Controlled Pivotal Trial
of Autologous Bone Marrow Mononuclear Cells Using the CardiAMP Cell
Therapy System in Patients With Post Myocardial Infarction Heart
Failure.'' Accessed May 10, 2022. https://clinicaltrials.gov/ct2/show/NCT02438306.
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For CY 2025, the OPPS payment rates were based on available CY 2023
claims data. We identified three single frequency paid claims for C9782
for ratesetting for CY 2025. Because we finalized our proposal to
maintain current New Technology APC assignments for CY 2025 for New
Technology APC services with fewer than 10 claims in the 4-year
lookback period, we continued to assign HCPCS code C9782 to APC 1590
with a payment rate of $17,500.50 for CY 2025.
For CY 2026, there were no new claims reported for HCPCS code
C9782. Therefore, there are still only three single frequency claims
available for HCPCS code C9782 in the 4-year lookback period. Given our
proposal to maintain current New Technology APC assignments for CY 2026
for New Technology APC services with fewer than 10 claims in the 4-year
lookback period applicable for the universal low-volume APC policy
moving forward, we propose to continue to assign HCPCS code C9782 to
APC 1590 (New Technology--Level 39 ($15,001-$20,000)) with a payment
rate of $17,500.50.
Please refer to Table 18 for the proposed OPPS New Technology APC
and status indicator assignments for HCPCS code C9782 for CY 2026. The
proposed CY 2026 payment rates can be found in Addendum B to this
proposed rule via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP17JY25.029
g. Atherosclerosis Imaging-Quantitative Computer Tomography (AI-QCT)
(APC 1511)
Atherosclerosis Imaging-Quantitative Computer Tomography (AI-QCT)
is a Software as a Service (SaaS) that assesses the extent of coronary
artery disease severity. This procedure is performed to quantify the
extent of coronary plaque and stenosis in patients who have undergone
coronary computed tomography analysis (CCTA). The AMA CPT Editorial
Panel established the following four codes associated with this
service, effective January 1, 2021:
0623T: Automated quantification and characterization of coronary
atherosclerotic plaque to assess severity of coronary disease, using
data from coronary computed tomographic angiography; data preparation
and transmission, computerized analysis of data, with review of
computerized analysis output to reconcile discordant data,
interpretation and report.
0624T: Automated quantification and characterization of coronary
atherosclerotic plaque to assess severity of coronary disease, using
data from coronary computed tomographic
[[Page 33545]]
angiography; data preparation and transmission.
0625T: Automated quantification and characterization of coronary
atherosclerotic plaque to assess severity of coronary disease, using
data from coronary computed tomographic angiography; computerized
analysis of data from coronary computed tomographic angiography.
0626T: Automated quantification and characterization of coronary
atherosclerotic plaque to assess severity of coronary disease, using
data from coronary computed tomographic angiography; review of
computerized analysis output to reconcile discordant data,
interpretation and report.
Of these four CPT codes, only CPT code 0625T was determined to be
separately payable in the OPPS and was assigned to status indicator =
``S'' (Procedure or Service, Not Discounted When Multiple) starting
October 1, 2022. We assigned CPT code 0625T to a separately payable
status indicator based on the technology and its potential utilization
in the HOPD setting, our evaluation of the service, as well as input
from our medical advisors. The procedure was assigned to APC 1511 (New
Technology--Level 11 ($900-$1000)) with a payment rate of $950.50.
For CY 2024, the OPPS payment rates were based on available CY 2022
claims data. There were 37 claims for CPT code 0625T during this time
period. As this was below the threshold of 100 claims for a service
within a year, we explained that we could propose to designate CPT code
0625T as a low volume service under our universal low volume New
Technology APC policy and use the highest of the geometric mean cost,
arithmetic mean cost, or median cost based on up to 4 years of claims
data to assign code 0625T to the appropriate New Technology APC. We
found the geometric mean cost for the service to be approximately
$3.70, the arithmetic mean cost to be approximately $4.10, and the
median cost to be approximately $3.50. Under our universal low volume
New Technology APC policy, we would use the greatest of the statistical
methodologies, the arithmetic mean, to assign CPT code 0625T to New
Technology 1491 (New Technology Level 1A--(0-$10)) with a payment rate
of $5.00. However, we acknowledged that, because CPT code 0625T was
only made separately payable as part of the OPPS in October 2022, and,
therefore, the CY 2022 claims available only reflected two months of
data, we were concerned that we did not have sufficient claims data to
justify reassignment to another New Technology APC (66 FR 69902).
Therefore, consistent with our current policy to retain services within
New Technology APC groups until we obtain sufficient claims data to
justify reassignment (66 FR 59902), for CY 2024, we finalized our
proposal to maintain CPT code 0625T's assignment to APC 1511 (New
Technology--Level 11 ($901-$1000) with a payment rate of $950.50 rather
than applying the universal low volume APC policy. For 2025, there were
only 3 available claims for 0625T. We continued to have concerns that
we did not have sufficient claims data to justify reassignment to
another New Technology APC based on the CY 2023 geometric mean cost of
$180. Therefore, we used our authority under section 1833(t)(2)(E) for
CY 2025 to continue to assign CPT code 0625T to APC 1511 (New
Technology--Level 11 ($901-$1000) with a payment rate of $950.50.
Effective January 1, 2026, the AMA CPT Editorial Panel is creating
a new Category I CPT code for AI-QCT, which is currently described by
CPT placeholder code 75XX6 (Quantification and characterization of
coronary atherosclerotic plaque to assess severity of coronary disease,
derived from augmentative software analysis of the data set from a
coronary computed tomographic angiography, with interpretation and
report by a physician or other qualified healthcare professional). CPT
codes 0623T-0626T are being deleted and replaced with CPT placeholder
code 75XX6. Since CPT placeholder code 75XX6 will not be effective
until January 1, 2026, we will not have claims data available for
ratesetting for this code until the CY 2028 rulemaking cycle. However,
as CPT code 0625T will still be in use until December 31, 2025, we
propose to determine the payment rate for CPT placeholder code 75XX6
using the available CY 2024 claims data for CPT code 0625T.
For CY 2026 ratesetting, there were 22 separately payable claims in
the CY 2024 data reported for CPT code 0625T with a geometric mean cost
of approximately $496. Given that there were fewer than 100 claims, CPT
code 0625T would fall under our universal low volume New Technology APC
policy where we would use the highest of the geometric mean cost,
arithmetic mean cost, or median cost based on up to 4 years of claims
data to assign CPT code 0625T to the appropriate New Technology APC.
Using a 4-year lookback of claims data, we determined the geometric
mean cost to be $13.21, the arithmetic mean cost to be $243, and the
median cost to be $3.51. However, this lookback includes the claims
from CY 2021 and CY 2022 that indicate that the cost of the procedure
is less than $5, which would not appear to cover the basic costs of
this procedure including computing time, generating a report, and
having medical personnel interpret the report. The claims were also
significantly lower than the expected cost of this procedure based on
evidence submitted by the manufacturer when this technology was
initially evaluated for placement in a New Technology APC. For CY 2024,
the geometric mean cost of around $496 based on 22 claims may better
reflect the cost of the procedure described by CPT code 0625T, but
there are not enough claims to be confident about the result. Due to
these issues, we are not confident that the results of the 4-year
lookback period accurately reflect the actual costs of CPT code 0625T.
Additionally, we recognize that software-based technologies are unique
and rapidly evolving and that a significant fluctuation in payment may
hinder patient access to these new services. We are issuing a comment
solicitation in section III.F. of this proposed rule to collect
information on alternative and consistent payment methods that seek to
reflect the underlying value of SaaS services under the OPPS to
consider in future rulemaking. We hope to identify whether specific
adjustments to our payment policies for SaaS services are needed to
more accurately and appropriately pay for these products and services
across settings of care. Therefore, we propose to use our authority
under section 1833(t)(2)(E) to assign CPT placeholder code 75XX6 to APC
1511 (New Technology--Level 11 ($901--$1000) with a payment rate of
$950.50 for CY 2026, which based on the information currently available
to us, best reflects the cost of the service as described by the New
Technology APC application.
Please refer to Table 19 for the proposed OPPS New Technology APC
and status indicator assignments for CPT code 0625T and CPT placeholder
code 75XX6 for CY 2026. The proposed CY 2026 payment rates can be found
in Addendum B to the CY 2026 OPPS/ASC proposed rule via the internet on
the CMS website.
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h. Corvia Medical Interatrial Shunt Procedure (APC 1592)
On July 1, 2020, we established HCPCS code C9760 (Non-randomized,
non-blinded procedure for nyha class ii, iii, iv heart failure;
transcatheter implantation of interatrial shunt or placebo control,
including right and left heart catheterization, transeptal puncture,
trans-esophageal echocardiography (tee)/intracardiac echocardiography
(ice), and all imaging with or without guidance (for example,
ultrasound, fluoroscopy), performed in an approved investigational
device exemption (ide) study) to facilitate payment for the
implantation of the Corvia Medical interatrial shunt.
As we stated in the CY 2021 OPPS final rule with comment period (85
FR 85947), we believe that similar resources and device costs are
involved with the Corvia Medical interatrial shunt procedure and the V-
Wave interatrial shunt procedure. Unlike the V-Wave interatrial shunt,
which is implanted half the time the associated interatrial shunt
procedure described by HCPCS code C9758 is billed, the Corvia Medical
interatrial shunt is implanted every time the associated interatrial
shunt procedure (HCPCS code C9760) is billed. Therefore, for CY 2021,
we assigned HCPCS code C9760 to APC 1592 (New Technology--Level 41
($25,001-$30,000)) with a payment rate of $27,500.50. We also modified
the code descriptor for HCPCS code C9760 to remove the phrase ``or
placebo control,'' from the descriptor.
For CY 2025, the OPPS payment rates were based on available CY 2023
claims data. There were two claims for HCPCS code C9760 in CY 2023. We
continued to assign HCPCS code C9760 to APC 1592 (New Technology--Level
41 ($25,001-$30,000)) based on our CY 2025 policy to maintain current
New Technology APC assignments for CY 2025 for New Technology APC
services with fewer than 10 claims in the 4-year lookback period
applicable for the universal low-volume APC policy.
For CY 2026, the OPPS payment rates are proposed to be based on
available CY 2024 claims data. There were no claims for HCPSC code
C9760 in CY 2024. Therefore, for CY 2026, given our proposal to
maintain current New Technology APC assignments for CY 2026 for New
Technology APC services with fewer than 10 claims in the 4-year
lookback period applicable for the universal low-volume APC policy
moving forward, we propose to continue to assign HCPCS code C9760 to
APC 1592 (New Technology--Level 41 ($25,001-$30,000)) with a payment
rate of $27,500.50.
Please refer to Table 20 for the proposed OPPS New Technology APC
and status indicator assignments for CPT code C9760. The proposed CY
2026 payment rates can be found in Addendum B to this proposed rule via
the internet on the CMS website.
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[GRAPHIC] [TIFF OMITTED] TP17JY25.031
i. DARI Motion Procedure (APC 1505)
Effective January 1, 2022, CPT code 0693T (Comprehensive full body
computer-based markerless 3D kinematic and kinetic motion analysis and
report) is associated with the DARI Motion Procedure, a service that
provides human motion analysis to aid clinicians in pre- and post-
operative surgical intervention and in making other treatment
decisions, including selecting the best course of physical therapy and
rehabilitation. The technology consists of eight cameras that surround
a patient, which send live video to a computer workstation that
analyzes the video to create a 3D reconstruction of the patient without
the need for special clothing, markers, or devices attached to the
patient's clothing or skin.
Since CPT code 0693T became effective January 1, 2022, we have had
no claims for the DARI Motion Procedure and, therefore, have maintained
its initial APC assignment to APC 1505 (New Technology--Level 5 ($301-
$400)) with a payment of $350.50.
For CY 2026, the OPPS payment rates are proposed based on available
CY 2024 claims data. Because we do not have any available claims data,
we propose to continue to assign CPT code 0693T to APC 1505 (New
Technology--Level 5 ($301-400)), with a payment rate of $350.50, for CY
2026.
Please refer to Table 21 for the proposed OPPS New Technology APC
and status indicator assignments for CPT code 0693T for CY 2026. The
proposed CY 2026 payment rates can be found in Addendum B to this
proposed rule via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP17JY25.032
j. Instillation of Anti-Neoplastic Pharmacologic/Biologic Agent Into
Renal Pelvis (APC 1553)
Effective October 1, 2023, CMS established HCPCS code C9789
(Instillation of anti-neoplastic pharmacologic/biologic agent into
renal pelvis, any method, including all imaging guidance, including
volumetric measurement if performed) and assigned it to APC 1559 (New
Technology--Level 22 ($2001-$2500)), with a payment rate of $2,250.50
based on our review of the clinical and resource characteristics of
this service.
This code may be used to describe the unique procedure associated
with the administration of the drug described by HCPCS code J9281
(Mitomycin pyelocalyceal instillation, 1 mg) or similar products. HCPCS
code J9281 may be used to describe the product, Jelmyto (mitomycin for
pyelocalyceal solution). The FDA approved Jelmyto in 2020, and the FDA
approved indication and usage for Jelmyto is as an alkylating drug
indicated for the treatment of adult patients with low-grade Upper
Tract Urothelial Cancer (LG-UTUS).\19\
---------------------------------------------------------------------------
\19\ Jelymyto Package Insert, Revised: 01/2021. https://www.accessdata.fda.gov/drugsatfda_docs/label/2021/211728s002lbl.pdf
---------------------------------------------------------------------------
For CY 2025, the OPPS payment rates were based on available CY 2023
claims data. Because we created HCPCS code C9789 effective October 1,
2023, we had limited claims data from CY 2023 available for CY 2025
rulemaking. Specifically, we only had 6 claims available for
ratesetting, so we maintained the New Technology APC assignment of APC
1559 (New Technology--Level 22 ($2001-$2500)) with a payment of
$2,250.50 for CY 2025, based on our CY 2025 policy to maintain the New
Technology APC assignment for New Technology APC services with fewer
than 10 claims in the 4-year lookback period applicable for the
universal low-volume APC policy.
For CY 2026, the OPPS payment rates are proposed based on available
CY 2024 claims data. HCPCS code C9789 had 109 single frequency claims
in CY 2024, which exceeds the 100 claims threshold generally used for
the
[[Page 33548]]
universal low volume APC policy. The geometric mean cost for HCPCS code
C9789 is approximately$1,401. Therefore, for CY 2026, we propose to
assign HCPCS code C9789 to APC 1553 (New Technology--Level 16 ($1401--
$1500)) with a payment rate of $1,450.50.
Please refer to Table 22 for the proposed OPPS New Technology APC
and status indicator assignments for CPT code C9789 for CY 2026. The
proposed CY 2026 payment rate for this HCPCS code can be found in
Addendum B to the CY 2026 OPPS/ASC proposed rule via the internet on
the CMS website.
[GRAPHIC] [TIFF OMITTED] TP17JY25.033
k. LimFlow TADV Procedure CPT Code 0620T (APC 1579)
The LimFlow TADV procedure which is described by CPT code 0620T
(Endovascular venous arterialization, tibial or peroneal vein, with
transcatheter placement of intravascular stent graft(s) and closure by
any method, including percutaneous or open vascular access, ultrasound
guidance for vascular access when performed, all catheterization(s) and
intraprocedural roadmapping and imaging guidance necessary to complete
the intervention, all associated radiological supervision and
interpretation, when performed) is an endovascular procedure that is
used to treat patients with chronic limb-threatening ischemia.
According to the developer, these patients are no longer eligible for
conventional endovascular or open bypass surgery to treat their artery
blockage, and without this procedure, they are likely to face limb
amputation.
CPT code 0620T was established in January 2021 and was assigned to
APC 5194 (Level 4 Endovascular Procedures) with a payment rate of
approximately $17,400, which is the highest-paying APC for endovascular
procedures. While we proposed to continue to assign CPT code 0620T to
APC 5194 for CY 2024, we finalized a reassignment from a clinical APC
to a New Technology APC with a higher payment rate based on comments
received expressing concern that the low payment rate of the procedure
would discourage providers from performing the procedure and deny
access to the procedure. For CY 2024, the procedure was assigned to APC
1578 (New Technology--Level 41 ($25,001-$30,000)). For CY 2025
ratesetting, there were 11 single frequency claims for CPT code 0620T
in the CY 2023 claims data. As this is below the threshold of 100
claims for a service within a year, we applied our universal low volume
APC policy and used the highest of the geometric mean cost, arithmetic
mean cost, or median cost based on up to 4 years of claims data to
assign the service to the appropriate New Technology APC. Based on our
review of the available claims and the application of the universal low
volume APC policy, we assigned HCPCS code 0620T to APC 1579 (New
Technology--Level 42 ($30,001-$40,000)) with a payment rate of
$35,000.50 based on the median cost of approximately $36,400.
For CY 2026, the OPPS payment rates are proposed to be based on
available CY 2024 claims data. There were 19 single frequency claims
for 0620T in the CY 2024 claims data. As this is below the threshold of
100 claims for a service within a year, we propose to again apply our
universal low volume APC policy and use the highest of the geometric
mean cost, arithmetic mean cost, or median cost based on up to 4 years
of claims data to assign the service to the appropriate New Technology
APC. Based on our review of the available claims, we have determined
that the arithmetic mean is approximately $39,000; the median is
approximately $38,000; and the geometric mean cost is approximately
$35,000. Of these, the arithmetic mean is the statistical methodology
that estimated the highest cost for the service. The payment rate
calculated using this methodology falls within the cost band for APC
1579 (New Technology--Level 42 ($30,001-$40,000)) with a payment rate
of $35,000.50. Therefore, for CY 2026, we propose to designate this
service as a low volume service under our universal low volume APC
policy and to continue to assign HCPCS code 0620T to APC 1579 (New
Technology--Level 42 ($30,001-$40,000)) with a payment rate of
$35,000.50.
Please refer to Table 23 for the proposed OPPS New Technology APC
and status indicator assignments for CPT code 0620T for CY 2026. The
proposed CY 2026 payment rates can be found in Addendum B to this
proposed rule via the internet on the CMS website.
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[GRAPHIC] [TIFF OMITTED] TP17JY25.034
l. Liver Histotripsy Service (APC 1579)
CPT code 0686T (Histotripsy (i.e., non-thermal ablation via
acoustic energy delivery) of malignant hepatocellular tissue, including
image guidance) was first effective July 1, 2021, and describes the
histotripsy service associated with the use of the HistoSonics system.
Histotripsy is a non-invasive, non-thermal, mechanical process that
uses a focused beam of sonic energy to destroy cancerous liver tumors
and is currently in a non-randomized, prospective clinical trial to
evaluate the efficacy and safety of the device for the treatment of
primary or metastatic tumors located in the liver.\20\ When HCPCS code
0686T was first effective, the histotripsy procedure was designated as
a Category A IDE clinical study (NCT04573881). Since devices in
Category A IDE studies are excluded from Medicare payment, payment for
CPT code 0686T only reflected the cost of the service that is performed
(absent the cost of the device) each time it is reported on a claim. On
March 2, 2023, the histotripsy IDE clinical study was re-designated as
a Category B (Non-experimental/Investigational) IDE study. Due to this
new designation, payment for CPT code 0686T in CY 2024 reflected
payment for both the service that was performed and the device used
each time it was reported on a claim. For CY 2024, we assigned CPT code
0686T to APC 1576 (New Technology--Level 39 ($15,001--$20,000)) with a
payment rate of $17,500.50. For CY 2025, we continued to assign CPT
code 0686T to APC 1576 (New Technology--Level 39 ($15,001-$20,000) due
to our CY 2025 policy to maintain current New Technology APC
assignments for CY 2025 for New Technology APC services with fewer than
10 claims in the 4-year lookback period applicable for the universal
low volume APC policy, and based on the fact that there were only 3
claims for CPT code 0686T in the prior 4-year period.
---------------------------------------------------------------------------
\20\ ClinicalTrials.gov. ``The HistoSonics System for Treatment
of Primary and Metastatic Liver Tumors Using Histotripsy
(#HOPE4LIVER) (#HOPE4LIVER).'' Accessed May 10, 2022. https://clinicaltrials.gov/ct2/show/study/NCT04573881.
---------------------------------------------------------------------------
For CY 2026, the OPPS payment rates are proposed to be based on
available CY 2024 claims data. We have identified 94 claims for CPT
code 0686T within this period. As this is below the threshold of 100
claims for a service within a year, we propose to apply our universal
low volume APC policy and use the highest of the geometric mean cost,
arithmetic mean cost, or median cost based on up to 4 years of claims
data to assign CPT code 0686T to the appropriate New Technology APC. We
identified $32,307.41 as the arithmetic mean, $20,577.77 as the median,
and $21,264.91 as the geometric mean. The arithmetic mean was the
statistical methodology that estimated the highest cost for CPT code
0686T. For CY 2026, we propose to reassign CPT code 0686T to APC 1579
(New Technology--Level 42 ($30,001-$40,000)) with a payment rate of
35,000.50.
For final rulemaking, when additional claims data are available, we
update the values of the statistical methodologies with any additional
CY 2024 claims that may have been processed between the time that the
proposed rule is released, and the final rule is drafted. Therefore, if
additional CY 2024 claims are processed after the proposed rule is
released, the values of the statistical methodologies may change,
impacting the final payment rate. We also note that if the total
available CY 2024 single frequency claims for CPT 0686T surpass the 99-
claim threshold for the universal low volume APC policy, we would
anticipate using the geometric mean cost to set the payment rate for
CPT 0686T for CY 2026 under our standard ratesetting methodology rather
than the highest of the three statistical methodologies under the
universal low volume APC policy.
Please refer to Table 24 for the proposed OPPS New Technology APC
and status indicator assignments for CPT code 0686T for CY 2026. The
proposed CY 2026 payment rates can be found in Addendum B to this
proposed rule via the internet on the CMS website.
[[Page 33550]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.035
m. LiverMultiScan Service (APC 1511)
CPT codes 0648T (Quantitative magnetic resonance for analysis of
tissue composition (eg, fat, iron, water content), including
multiparametric data acquisition, data preparation and transmission,
interpretation and report, obtained without diagnostic mri examination
of the same anatomy (eg, organ, gland, tissue, target structure) during
the same session; single organ) and 0649T (Quantitative magnetic
resonance for analysis of tissue composition (eg, fat, iron, water
content), including multiparametric data acquisition, data preparation
and transmission, interpretation and report, obtained with diagnostic
mri examination of the same anatomy (eg, organ, gland, tissue, target
structure); single organ (list separately in addition to code for
primary procedure)) became effective July 1, 2021 and are associated
with the LiverMultiScan service.
LiverMultiScan is a Software as a medical Service (SaaS) that is
intended to aid the diagnosis and management of chronic liver disease,
the most prevalent of which is Non-Alcoholic Fatty Liver Disease
(NAFLD). It provides standardized, quantitative imaging biomarkers for
the characterization and assessment of inflammation, hepatocyte
ballooning, and fibrosis, as well as steatosis, and iron accumulation.
LiverMultiScan receives MR images acquired from patients' providers and
analyzes the images using their proprietary Artificial Intelligence
(AI) algorithms. It then sends the providers a quantitative metric
report of the patient's liver fibrosis and inflammation. In accordance
with our SaaS add-on codes policy (87 FR 72032 to 72033), SaaS CPT add-
on codes are assigned to the same APCs and status indicators as their
standalone codes. Thus, CPT code 0649T, the add-on code for
LiverMultiScan, is assigned to the identical APC and status indicator
as CPT code 0648T, the standalone code for the same service.
For CY 2024 and CY 2025, we used our equitable adjustment authority
under section 1833(t)(2)(E) to continue to assign CPT codes 0648T and
0649T to APC 1511 (New Technology--Level 11 ($901-$1,000) with a
payment rate of $950.50.
For CY 2026, the OPPS payment rates are proposed based on available
CY 2024 claims data. We identified 107 single frequency claims for CPT
code 0648T and 104 single frequency claims CPT code 0649T for CY 2024.
The geometric mean cost for CPT code 0648T is $253.68 and the geometric
mean cost for CPT code 0649T is $162.96. Based on the geometric mean
cost for CPT code 0648T, we would assign CPT codes 0648T and 0649T to
APC 1504 (New Technology--Level 4 ($201-$300)) with a payment rate of
$250.50. However, assigning these SaaS services based on the geometric
costs would significantly impact the payment by decreasing the payment
rate by around 75 percent. We recognize that software-based
technologies, like those described by CPT codes 0648T and 0649T,
continue to evolve and that the limited claims data that we have may
not truly represent the cost of this service. We are issuing a comment
solicitation in section III.F. of this proposed rule to collect
information on alternative and consistent payment methods that seek to
reflect the underlying value of SaaS services under the OPPS to
consider in future rulemaking. We hope to identify whether specific
adjustments to our payment policies for SaaS services are needed to
more accurately and appropriately pay for these products and services
across settings of care.
Therefore, we propose to use our authority under section
1833(t)(2)(E) for CY 2026 to continue to assign CPT codes 0648T and
0649T to APC 1511 (New Technology--Level 11 ($901-$1000)) with a
payment rate of $950.50 which we believe best reflects the cost of the
service at this time, based on information provided by the applicant.
The proposed New Technology APC and status indicator assignments
for CPT codes 0648T and 0649T are shown in Table 25. The proposed CY
2026 payment rates for these CPT codes can be found in Addendum B to
this proposed rule via the internet on the CMS website.
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n. Optellum Lung Cancer Prediction (LCP) (APC 1508)
CPT codes 0721T (Quantitative computed tomography (CT) tissue
characterization, including interpretation and report, obtained without
concurrent CT examination of any structure contained in previously
acquired diagnostic imaging) and 0722T (Quantitative computed
tomography (CT) tissue characterization, including interpretation and
report, obtained with concurrent CT examination of any structure
contained in the concurrently acquired diagnostic imaging dataset (list
separately in addition to code for primary procedure)) became effective
July 1, 2022, and are associated with the Optellum LCP technology. The
Optellum LCP applies an algorithm to a patient's CT scan to produce a
raw risk score for a patient's pulmonary nodule. The physician uses the
risk score to quantify the risk of lung cancer and to determine what
the next management step should be for the patient (for example, CT
surveillance versus invasive procedure). In accordance with our SaaS
add-on codes policy (87 FR 72032 to 72033), SaaS CPT add-on codes are
assigned to the same APCs and status indicators as their standalone
codes. Thus, CPT code 0722T, the add-on code for the Optellum LCP
service, is assigned to the identical APC and status indicator as CPT
code 0721T, the standalone code for the same service. For CY 2024, we
assigned CPT codes 0721T and 0722T to APC New Technology 1508 (New
Technology--Level 8 ($601-$700)).
For CY 2025, the OPPS payment rates were proposed to be based on
available CY 2023 claims data. We identified only three claims for CPT
codes 0721T and 0722T for ratesetting for CY 2025. We continued to
assign CPT codes 0721T and 0722T to APC 1508 (New Technology--Level 8
($601-$700)) with a payment rate of $650.50 based on our CY 2025 policy
to maintain New Technology APC assignments for CY 2025 for New
Technology APC services with fewer than 10 claims in the 4-year
lookback period applicable for the universal low-volume APC policy.
For CY 2026, the OPPS payment rates are proposed to be based on
available CY 2024 claims data. There were 496 combined claims for CPT
codes 0721T and 0722T for CY 2024: 7 claims for CPT code 0721T and 489
claims for 0722T. The geometric mean cost of CPT code 0721T is $30.24
and the geometric mean cost for CPT code 0722T is $60.47. Based on the
geometric mean cost for CPT code 0722T, which has a significantly
greater number of claims than 0721T, we would assign CPT codes 0721T
and 0722T to APC 1502 (New Technology--Level 2 ($51-$100) with a
payment rate of $75.50. However, assigning these SaaS services based on
the geometric costs would significantly impact the payment by
decreasing the payment rate by close to 90 percent in 1 year. We
recognize that software-based technologies, like those described by CPT
codes 0721T and 0722T, continue to evolve and that the limited claims
data that we have may not truly represent the cost of this service. We
are issuing a comment solicitation in section III.F. of this proposed
rule to collect information on alternative and consistent payment
methods that seek to reflect the underlying value of SaaS services
under the OPPS to consider in future rulemaking. We hope to identify
whether specific adjustments to our payment policies for SaaS services
are needed to more accurately and appropriately pay for these products
and services across settings of care.
While we recognize that there are certain unknowns regarding the
cost of technologies like the Optellum LCP service, we believe it would
be unlikely for the cost to be 90 percent less than the initial
estimated costs based on our review of the information provided in the
New Technology APC application. Therefore, we propose to use our
authority under section 1833(t)(2)(E) for CY 2026 to continue to assign
CPT codes 0721T and 0722T to APC 1508 (New Technology--Level 8 ($601-
$700)) with a payment rate of $650.50 based on the information provided
to us by the manufacturer in their application, which we believe may
better reflect the cost of the service at this time than the available
claims data.
Please refer to Table 26 for the proposed OPPS New Technology APC
and status indicator assignments for HCPCS codes 0721T and 0722T for CY
2026. The proposed CY 2026 payment rates can be found in Addendum B to
this proposed rule via the internet on the CMS website.
[[Page 33552]]
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o. Quantitative Magnetic Resonance (QMR) for Analysis of Tissue
Composition (APC 1509)
Effective January 1, 2022, CPT codes 0697T (Quantitative magnetic
resonance for analysis of tissue composition (e.g., fat, iron, water
content), including multiparametric data acquisition, data preparation
and transmission, interpretation and report, obtained without
diagnostic mri examination of the same anatomy (e.g., organ, gland,
tissue, target structure) during the same session; multiple organs) and
0698T (Quantitative magnetic resonance for analysis of tissue
composition (e.g., fat, iron, water content), including multiparametric
data acquisition, data preparation and transmission, interpretation and
report, obtained with diagnostic mri examination of the same anatomy
(e.g., organ, gland, tissue, target structure); multiple organs (list
separately in addition to code for primary procedure)) are associated
with the CoverScan Software as a medical Service (SaaS). This service
is a medical image management and processing software package that
analyzes MR data and provides quantified metrics of multiple organs
such as the heart, lungs, liver, spleen, pancreas, and kidney. For CY
2024, we assigned CPT codes 0697T and 0698T to APC 1511 (New
Technology--Level 11 ($900-$1,000)).
For CY 2025, there were fewer than 100 claims for ratesetting and
because we recognized that the number of claims used to apply our
universal low volume policy (using the highest of the geometric mean
cost, arithmetic mean cost, or median cost based on up to 4 years of
claims data) may not have represented the cost of this SaaS service, we
used our equitable adjustment authority under section 1833(t)(2)(E) to
continue to assign CPT codes 0697T and 0698T to APC 1511 (New
Technology--Level 11 ($900-$1,000)) with a payment of $950.50. In
accordance with our SaaS add-on codes policy (87 FR 72032 to 72033),
SaaS CPT add-on codes are assigned to the same APCs and status
indicators as their standalone codes. Thus, CPT code 0698T, the add-on
code for CoverScan was assigned to the identical APC and status
indicator as CPT code 0697T, the standalone code for the same service.
For CY 2026, the OPPS payment rates are proposed to be based on
available CY 2024 claims data. We identified 55 single frequency claims
for CPT code 0698T and no claims for CPT code 0697T in CY 2024. Because
the SaaS standalone and add-on services are identical, we believe it is
important for purposes of ratesetting to use the data that is
available, whether it is associated with the standalone code or the
add-on code. As the 55 single frequency claims are below the threshold
of 100 claims for a service within a year, we would propose applying
our universal low volume APC policy and use the highest of the
geometric mean cost, arithmetic mean cost, or median cost based on up
to 4 years of claims data to assign CPT codes 0697T and 0698T to the
appropriate New Technology APC. Our analysis of the combined data, zero
claims for CPT code 0697T and 137 claims for CPT code 0698T, yielded a
geometric mean cost of approximately $422, an arithmetic mean cost of
approximately $600, and a median cost of approximately $777. The median
cost is the statistical methodology that estimates the highest cost for
CPT codes 0697T and 0698T. Based on the median cost, we would propose
to assign CPT codes 0697T and 0698T to APC 1509 (New Technology--Level
9 ($701-$800)) with a payment of $750.50. As in CY 2025, for CY 2026,
we recognize that the few claims available for CPT codes 0697T and
0698T may not truly represent the cost of this SaaS service. We
recognize that software-based technologies, like those described by CPT
codes 0697T and 0698T, are unique and rapidly evolving and that a
significant fluctuation in payment may hinder patient access to these
new services. We are issuing a comment solicitation in section III.F of
this proposed rule to collect information on alternative and consistent
payment methods that seek to reflect the underlying value of SaaS
services under the OPPS to consider in future rulemaking. We hope to
identify whether specific adjustments to our payment policies for SaaS
services are needed to more accurately and appropriately pay for these
products and services across settings of care.
Because we continue to have the same concerns about payment
variability and the possible effects the payment may have on patient
access to these SaaS services, we propose to use our authority under
section 1833(t)(2)(E) for
[[Page 33553]]
CY 2026 to continue to assign CPT codes 0697T and 0698T to APC 1511
(New Technology--Level 11 ($900-$1,000)) with a payment of $950.50
which we believe best reflects the cost of the service at this time.
Please refer to Table 27 for the proposed OPPS New Technology APC
and status indicator assignments for CPT codes 0697T and 0698T for CY
2026. The proposed CY 20265 payment rates can be found in Addendum B to
this proposed rule via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP17JY25.038
p. Quantitative Magnetic Resonance Cholangiopancreatography (QMRCP)
(APC 1511)
Effective July 1, 2022, CPT codes 0723T (Quantitative magnetic
resonance cholangiopancreatography (QMRCP) including data preparation
and transmission, interpretation and report, obtained without
diagnostic magnetic resonance imaging (MRI) examination of the same
anatomy (e.g., organ, gland, tissue, target structure) during the same
session) and 0724T (Quantitative magnetic resonance
cholangiopancreatography (QMRCP), including data preparation and
transmission, interpretation and report, obtained with diagnostic
magnetic resonance imaging (MRI) examination of the same anatomy (e.g.,
organ, gland, tissue, target structure) (list separately in addition to
code for primary procedure)) are associated with the QMRCP Software as
a medical Service (SaaS). The service performs quantitative assessment
of the biliary tree and gallbladder. It uses a proprietary algorithm
that produces a three-dimensional reconstruction of the biliary tree
and pancreatic duct and also provides precise quantitative information
of biliary tree volume and duct metrics. In accordance with our SaaS
add-on codes policy (87 FR 72032 to 72033), SaaS CPT add-on codes are
assigned to the same APCs and status indicators as their standalone
codes. Consistent with our SaaS add-on codes policy, CPT code 0724T,
the add-on code for QMRCP is assigned to the identical APC and status
indicator as CPT code 0723T, the standalone code for the same service.
For CY 2024, we assigned CPT codes 0723T and 0724T to APC 1511 (New
Technology--Level 11 ($900-$1,000)). For CY 2025, we continued to
assign CPT codes 0723T and 0724T to APC 1511 (New Technology--Level 11
($900-$1,000)) based on there being fewer than 10 claims in the 4-year
lookback period and the exception from the universal low-volume APC
policy.
For CY 2026, the OPPS payment rates are proposed to be based on
available CY 2024 claims data. There are only four new claims for HCPCS
code 0724T and no claims for CPT code 0723T. Given our proposal to
maintain current New Technology APC assignments for CY 2026 for New
Technology APC services with fewer than 10 claims in the 4-year
lookback period due to an exception from the universal low-volume APC
policy, we propose, for CY 2026, to continue to assign CPT codes 0723T
and 0724T to APC 1511 (New Technology--Level 11 ($901-$1000)), with a
payment rate of $950.50.
Please refer to Table 28 for the proposed OPPS New Technology APC
and status indicator assignments for CPT codes 0723T and 0724T for CY
2026. The proposed CY 2026 payment rates can be found in Addendum B to
this proposed rule via the internet on the CMS website.
[[Page 33554]]
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q. Scalp Cooling (APC 1515)
CPT code 0662T (Scalp cooling, mechanical; initial measurement and
calibration of cap) became effective on July 1, 2021, to describe
initial measurement and calibration of a scalp cooling device for use
during chemotherapy administration to prevent hair loss. According to
Medicare's National Coverage Determination (NCD) policy, specifically,
NCD 110.6 (Scalp Hypothermia During Chemotherapy to Prevent Hair Loss),
the scalp cooling cap itself is classified as an incident to supply to
a physician service, and would not be paid under the OPPS; however,
interested parties have indicated that there are substantial resource
costs of around $1,900 to $2,400 associated with calibrating and
fitting the cap. CPT guidance states that CPT code 0662T should be
billed once per chemotherapy session, which we interpret to mean once
per course of chemotherapy. Therefore, if a course of chemotherapy
involves, for example, 6 or 18 sessions, HOPDs should report CPT 0662T
only once for that 6 or 18 therapy sessions. We note that CPT code
0663T (Scalp cooling, mechanical; placement of device, monitoring, and
removal of device (List separately in addition to code for primary
procedure)) describes an ancillary service, and is assigned to status
indicator ``N'' to indicate that OPPS payment is packaged into the
payment for the primary service.
For CY 2022, we assigned CPT code 0662T to APC New Technology 1520
(New Technology--Level 20 ($1,801-$1,900)) with a payment rate of
$1,850.50. For CY 2023, we did not have any claims data, so we
continued to assign CPT code 0662T to APC 1520. For CY 2024 we
finalized reassignment of CPT code 0662T to APC 1514 (New Technology--
Level 14 ($1,201-$1,300)) with a payment rate of $1,250.50 based on 11
single frequency claims.
For CY 2025, the OPPS payment rates were proposed to be based on
available CY 2023 claims data. There were 50 single frequency paid
claims for CPT code 0662T for CY 2023. As this is below the threshold
of 100 claims for a service within a year, we designated CPT code 0662T
as a low volume service under our universal low volume APC policy and
used the highest of the geometric mean cost, arithmetic mean cost, or
median cost based on up to 4 years of claims data to assign the service
to the appropriate New Technology APC. Based on the median cost of the
service, which we determined to be the highest statistical methodology
for CY 2023 claims, we assigned CPT code 0662T to APC 1519 (New
Technology--Level 19 ($1701-$1800)) with a payment rate of $1750.50 for
CY 2025.
For CY 2026, the OPPS payment rates are proposed to be based on
available CY 2024 claims data. CPT code 0662T had 112 single frequency
claims in CY 2024. The geometric mean cost for CPT code 0662T is
approximately $1,504, an amount that is lower than its current New
Technology APC assignment. Therefore, we would propose to assign CPT
code 0662T to APC 1517 (New Technology--Level 17 ($1501-$1600) with a
$1,550.50 payment rate for CY 2026 based on its geometric mean cost.
However, effective January 1, 2026, temporary CPT codes 0662T and 0663T
will be replaced with three CPT Category I codes. Their current
placeholder codes and descriptors are as follows:
9XX01--Mechanical scalp cooling, including individual cap
supply with head measurement, fitting, and patient education.
9XX02--Mechanical scalp cooling; including hair
preparation, individual cap placement, therapy initiation, and
precooling period).
9XX03--Mechanical scalp cooling; provided after
discontinuation of chemotherapy, each 30 minutes (List separately in
addition to code for primary procedure).
Based on our review of the procedure descriptions and input from
our CMS medical officers, we believe that CPT placeholder code 9XX01
most closely describes the primary service currently described by CPT
code 0662T, while CPT placeholder codes 9XX02 and 9XX03 describe
ancillary services for which payment would be packaged in the primary
service. Therefore, we are making two proposals. First, we propose to
use the existing claims data for CPT code 0662T to set the New
Technology APC assignment for CPT placeholder code 9XX01. Specifically,
we propose to
[[Page 33555]]
assign CPT placeholder code 9XX01 to APC 1517 (New Technology--Level 17
($1501-$1600) with a $1,550.50 payment rate for CY 2026. Second, we
propose to assign status indicator ``N'' to CPT placeholder codes 9XX02
and 9XX03 to align with our current packaging policies, generally, and
specifically with regard to our current packaging of CPT code 0663T.
Finally, we note that because CPT is deleting CPT codes 0662T and
0663T, they will similarly be deleted under the OPPS/ASC payment
systems.
Please refer to Table 29 for the current and proposed OPPS New
Technology APC and status indicator assignments for CPT codes 9XX01,
9XX02, and 9XX03. The proposed CY 2026 payment rates can be found in
Addendum B to this proposed rule via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP17JY25.040
r. Supervised Visits for Esketamine Self-Administration (APCs 1512 and
1517)
On March 5, 2019, FDA approved SpravatoTM (esketamine)
nasal spray, used in conjunction with an oral antidepressant,\21\ for
treatment of depression in adults who have tried other antidepressant
medicines but have not benefited from them (treatment-resistant
depression (TRD)). This is the first FDA approval of esketamine for any
use.
---------------------------------------------------------------------------
\21\ The FDA Prior Approval supplemental new drug application
(sNDA) provides for the following modification: expansion of the
indication to include monotherapy of SpravatoTM
(esketamine) for treatment resistant depression (TRD). See https://www.accessdata.fda.gov/drugsatfda_docs/appletter/2025/211243Orig1s016ltr.pdf.
---------------------------------------------------------------------------
Esketamine is a noncompetitive N-methyl D-aspartate (NMDA) receptor
antagonist. It is a nasal spray supplied as an aqueous solution of
esketamine hydrochloride in a vial with a nasal spray device. Each
device delivers two sprays containing a total of 28 mg of esketamine.
Patients would require either two (2) devices (for a 56 mg dose) or
three (3) devices (for an 84 mg dose) per treatment.
Because of the risk of serious adverse outcomes resulting from
sedation and dissociation caused by esketamine nasal spray
administration, and the potential for misuse of the product, it is only
available through a restricted distribution system under a Risk
Evaluation and Mitigation Strategy (REMS). A REMS is a drug safety
program that the FDA can require for certain medications with serious
safety concerns to help ensure the benefits of the medication outweigh
its risks. The SpravatoTM REMS program requires the
esketamine nasal spray to be dispensed and administered to enrolled
patients in health care settings that are certified in the REMS. See
www.fda.gov for more information regarding the SpravatoTM
REMS program compliance requirements.
A treatment session of esketamine consists of instructed nasal
self-administration by the patient followed by a period of at least 2
hours post-administration observation of the patient under direct
supervision of a health care professional in the certified health care
setting. Refer to the CY 2020 PFS final rule and interim final rule for
more information about supervised visits for esketamine nasal spray
self-administration (84 FR 63102 through 63105).
To facilitate prompt beneficiary access to the new, potentially
life-saving treatment for TRD using esketamine, we created two new
HCPCS G codes, G2082 and G2083, effective January 1, 2020. HCPCS code
G2082 is for an outpatient visit for the evaluation and management of
an established patient who requires the supervision of a physician or
other qualified health care professional and provision of up to 56 mg
of esketamine through nasal self-administration and includes two hours
of post-administration observation. HCPCS code G2083 describes a
similar service to HCPCS code G2082 but involves the administration of
more than 56 mg of esketamine.
For CY 2025, HCPCS code G2082 was assigned to APC 1513 (New
Technology--Level 13 ($1101-$1200)) with a payment rate of $1,150.50
and HCPCS code G2083 was assigned to APC 1516 (New Technology--Level 16
($1401-$1,500)) with a payment rate of $1,450.50.
For CY 2026, the OPPS payment rates are proposed based on available
CY 2024 claims data as the available single frequency claims exceed the
100 claims threshold generally used for our universal low volume
policy. Therefore, for CY 2026, we propose to assign HCPCS codes G2082
and G2083 to New Technology APCs based on each of the
[[Page 33556]]
codes' geometric mean costs. Specifically, we propose to assign HCPCS
code G2082 to APC 1512 (New Technology--Level 12 ($1001-$1100)) with a
payment rate of $1,050.50 based on its geometric mean cost of $1,019,
which was calculated using the available 558 single frequency claims
from CY 2024 claims data. We also propose to assign HCPCS code G2083 to
APC 1517 (New Technology--Level 17 ($1501-$1600)) with a payment rate
of $1,550.50 based on its geometric mean cost of $1,549, which was
calculated using the available 4,138single frequency claims from CY
2024 claims data. As we continue to gather adequate claims data on
these codes, we invite public comment on the appropriate clinical APC
assignments for HCPCS codes G2082 and G2083.
Please refer to Table 30 for the proposed OPPS New Technology APC
and status indicator assignments for HCPCS code G2082 and G2083 for CY
2026. The proposed CY 2026 payment rates can be found in Addendum B to
this proposed rule via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP17JY25.041
s. Surfacer[supreg] Inside-Out[supreg] Access Catheter System (APC
1534)
HCPCS code C9780 (Insertion of central venous catheter through
central venous occlusion via inferior and superior approaches (e.g.,
inside-out technique), including imaging guidance) describes the
procedure associated with the use of the Surfacer[supreg] Inside-
Out[supreg] Access Catheter System that is designed to address central
venous occlusion. HCPCS code C9780 was established on October 1, 2021,
and since its establishment the code has been assigned to APC 1534 (New
Technology--Level 34 ($8001-$8500)).
For CY 2026, there are only three new claims for HCPCS code C9780.
Therefore, there are only seven single frequency claims available for
HCPCS code C9780 in the 2 years of data since the code has been
available. Given our proposal to maintain current New Technology APC
assignments for CY 2026 for New Technology APC services with fewer than
10 claims in the 4-year lookback period applicable for the universal
low-volume APC policy, we propose for CY 2026 to continue to assign
HCPCS code C9780 to APC 1534 (New Technology--Level 34 ($8001-$8500))
with a payment rate of $8,250.50.
Please refer to Table 31 for the proposed OPPS New Technology APC
and status indicator assignment for HCPCS code C9780 for CY 2026. The
proposed CY 2026 payment rates can be found in Addendum B to this
proposed rule via the internet on the CMS website.
[[Page 33557]]
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t. Transcatheter Atrial Shunt System (TASS) (APC 1537)
The Transcatheter Atrial Shunt System (TASS) is a nitinol self-
expanding cardiovascular implant consisting of four arms including two
left atrial (LA) arms and two coronary sinus (CS) arms placed between
the left atrium and coronary sinus to create a 7mm flow diameter
channel for blood to flow from the high pressure region of the left
atrium to the lower pressure region of the right atrium via the
coronary sinus.
TASS was designated as a Category A IDE clinical study
(NCT03523416) on July 31, 2019. Effective October 1, 2023 CMS created
HCPCS code C9792 (Blinded or nonblinded procedure for symptomatic New
York Heart Association (NYHA) Class II, III, IVa heart failure;
transcatheter implantation of left atrial to coronary sinus shunt using
jugular vein access, including all imaging necessary to intra
procedurally map the coronary sinus for optimal shunt placement (e.g.,
TEE or ICE ultrasound, fluoroscopy), performed under general anesthesia
in an approved investigational device exemption (IDE) study) to
describe the TASS service and assigned it to APC 1537 (New Technology--
Level 37 ($9501-$10000)) with a payment rate of $9750.50. Since devices
in Category A IDE studies are not covered by Medicare during the study,
the payment for HCPCS code C9792 reflects only the cost of the service
that is performed each time it is reported on a claim.
For CY 2025, there were no claims available so we maintained the
APC assignment for HCPCS code C9792 to APC 1537 (New Technology--Level
37 ($9501-$10000)).
For CY 2026, the proposed OPPS payment rates are based on available
CY 2024 claims data. We do not have any claims data for HCPCS code
C9792. Therefore, for CY 2026, we propose to continue to assign HCPCS
code C9792 to APC 1537 (New Technology--Level 37 ($9501-$10000)) with a
payment rate of $9,750.50.
Please refer to Table 32 for the proposed OPPS New Technology APC
and status indicator assignment for HCPCS code C9792. The proposed CY
2026 payment rates can be found in Addendum B to this proposed rule via
the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP17JY25.043
u. Magnetic Resonance Imaging With Inhaled Hyperpolarized Xenon-129
Contrast Agent (APC 1551)
HCPCS code C9791 (Magnetic resonance imaging with inhaled
hyperpolarized xenon-129 contrast agent, chest, including preparation
and administration of agent) was established on October 1, 2023. For CY
2023, we assigned HCPCS code C9791 to APC 1551 (New Technology--Level
14 ($1201-$1300)). Due to the effective date of the service of October
1, 2023, there were no claims available for HCPCS code C9791 for rate
setting in CY 2024. Therefore, in CY 2024, we continued to assign HCPCS
code C9791 to APC 1551(New Technology--Level 14 ($1201-$1300)). There
were no claims available for HCPCS code C9791 when we were setting
rates for CY 2025, so we continued to assign HCPCS code C9791 to APC
1551 (New Technology--Level 14 ($1201-$1300)).
For CY 2026, the proposed OPPS payment rates are based on the
available CY 2024 data. There are only four new claims for HCPCS code
C9791. Given our proposal to maintain current New
[[Page 33558]]
Technology APC assignments for CY 2026 for New Technology APC services
with fewer than 10 claims in the 4-year lookback period applicable for
the universal low-volume APC policy, we propose for CY 2026 to continue
to assign HCPCS code C9791 to APC 1551--New Technology--Level 14
($1201-$1300)), with a payment rate of $1,250.50.
Please refer to Table 33 for the proposed OPPS New Technology APC
and status indicator assignment for HCPCS code C9791 for CY 2026. The
proposed CY 2026 payment rates can be found in Addendum B to this
proposed rule via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP17JY25.044
v. SAINT Neuromodulation System (APCs 1511, 1521, 1522, and 1525)
The SAINT Neuromodulation System is a non-invasive repetitive
transcranial magnetic stimulation (rTMS) system that identifies an
individualized target and delivers navigationally directed repetitive
magnetic pulses to that individualized target located within the left
dorsolateral prefrontal cortex to treat major depressive disorder
(MDD). The patient first receives structural MRI and functional MRI
scans that are analyzed by the provider to identify and localize the
personalized stimulation target in the patient's dorsolateral
prefrontal cortex. Once the areas targeted for treatment are
identified, the patient receives non-invasive magnetic stimulation in
the targeted area. The patient has 10 treatment sessions per day with
each treatment session lasting 10 minutes followed by 50 minutes of
rest before another treatment session occurs. The treatment is
administered over five days for a total of 50 sessions of non-invasive
magnetic stimulation therapy. There are four CPT codes listed in Table
34 that describe the MRI scans that are used to target the treatment
and describe the administration of the non-invasive magnetic
stimulation therapy.
[GRAPHIC] [TIFF OMITTED] TP17JY25.045
For CY 2025, the OPPS payment rates were proposed based on
available CY 2023 claims data. However, CPT codes 0889T, 0890T, 0891T,
and 0892T did not become effective until July 1, 2024, which means
there are no claims data for the procedures described these CPT codes.
We assigned our proposed rates for these services based on our
evaluation of the resources needed to perform these services.
For CY 2026, the OPPS payment rates are proposed based on available
CY 2024 claims data. There are only five
[[Page 33559]]
claims for CPT code 0889T and three claims for CPT code 0892T within
this period. Given our proposal to maintain current New Technology APC
assignments for CY 2026 for New Technology APC services with fewer than
10 claims in the 4-year lookback period applicable for the universal
low-volume APC policy, we propose to continue to assign CPT code 0889T
to APC 1511 (New Technology--Level 11 ($901-$1000)) with a payment of
$950.50 and CPT code 0892T to APC 1525 (New Technology--Level 25
($3501-$4000)) with a payment of $3750.50.
There were 12 single frequency claims for CPT 0890T and 39 single
frequency claims for CPT 0891T. As this is above the threshold of 10
claims and below the threshold of 100 claims for a service within a
year, we propose to apply our universal low volume New Technology APC
policy and use the highest of the geometric mean cost, arithmetic mean
cost, or median cost based on up to 4 years of claims data to assign
CPT codes 0890T and 0891T to the appropriate New Technology APCs.
Using available claims data from CY 2024, our analysis found the
geometric mean cost of CPT 0890T is approximately $1,646, the median
mean cost is approximately $1,009, and the arithmetic mean cost is
approximately $1,950. The arithmetic mean is the statistical
methodology that estimates the highest cost for the service. Therefore,
we propose, for CY 2026, to assign CPT code 0890T to APC 1521 (New
Technology--Level 21 ($1901-$2000)) with a payment rate of $1,950.50.
For CPT 0891T, using the available claims data from CY 2024, our
analysis found the geometric mean cost is approximately $1,692, the
median cost is approximately $1,009, and the arithmetic mean cost is
approximately $2,010. The arithmetic mean is the statistical
methodology that estimates the highest cost for the service. Therefore,
we propose, for CY 2026, to assign CPT code 0891T to APC 1522 (New
Technology--Level 22 ($2001-$2500)) with a payment rate of $2,250.50.
Please refer to Table 35 for the CY 2026 proposed OPPS New
Technology APC and status indicator assignments for CPT codes 0889T,
0890T, 0891T, and 0892T. The proposed CY 2026 payment rates can be
found in Addendum B to the CY 2026 OPPS/ASC proposed rule via the
internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP17JY25.046
[[Page 33560]]
w. Implantable Glucose Monitoring System (APC 1561)
Effective January 1, 2017, the AMA CPT Editorial Panel established
CPT codes 0446T (Creation of subcutaneous pocket with insertion of
implantable interstitial glucose sensor, including system activation
and patient training) and 0448T (Removal of implantable interstitial
glucose sensor with creation of subcutaneous pocket at different
anatomic site and insertion of new implantable sensor, including system
activation) to describe an implantable glucose sensor for patients with
diabetes. These codes were used to describe sensors with a 90-day or
180-day battery life. Although these CPT codes were effective January
1, 2017, the implantable interstitial glucose sensor did not receive
FDA approval for marketing until June 6, 2019. For CY 2021, we assigned
CPT codes 0446T and 0448T to APC 5054 (Level 4 Skin Procedures) and a
status indicator of ``T'' (Procedure or Service, Multiple Procedure
Reduction Applies; Paid under OPPS; separate APC payment.) and have
maintained these APC assignments since then.
In the CY 2025 OPPS/ASC final rule, we created the following two
HCPCS G codes effective January 1, 2025, to describe the implantable
interstitial glucose sensor with a 365-day battery life.
G0546 (Creation of subcutaneous pocket with insertion of
365 day implantable interstitial glucose sensor, including system
activation and patient training); and
G0565 (Removal of implantable interstitial glucose sensor
with creation of subcutaneous pocket at different anatomic site and
insertion of new 365 day implantable sensor, including system
activation).
We assigned HCPCS codes G0564 and G0565 to APC 1561 (New
Technology--Level 24 ($3001-$3500)) with a payment rate of $3,250.50.
For the April 1, 2025, quarterly update, we deleted HCPCS codes
G0564 and G0565 and assigned 0446T and 0448T to APC 1561 (New
Technology--Level 24 ($3001-$3500)) with a payment rate of $3,250.50 to
describe the new implantable interstitial glucose sensor with a 365-day
battery life. The 365-day glucose sensor replaced previous versions of
the implantable interstitial glucose sensor with shorter battery lives.
Therefore, the 365-day sensor is the only sensor on the market and can
only be described by CPT codes 0446T and 0448T.
For CY 2026, the proposed OPPS payment rates are based on available
CY 2024 claims data. As CPT codes 0446T and 0448T were assigned to New
Technology APCs to describe this new sensor for the April 2025
quarterly update and the G codes describing this service were only
effective for one quarter, we do not have any claims data for the
service. Therefore, for CY 2026, we propose to continue to assign CPT
codes 0446T and 0448T to APC 1561 (New Technology--Level 24 ($3001-
$3500)) with a payment rate of $3,250.50.
Please refer to Table 36 for the proposed OPPS New Technology APC
and status indicator assignment for CPT codes 0446T and 0448T for CY
2026. The proposed CY 2026 payment rates can be found in Addendum B to
this proposed rule via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP17JY25.047
x. Skin Cell Suspension Autograft (SCSA) Procedures (CPT Code 15013 and
HCPCS Code C8002) (APC 1567)
Effective January 1, 2025, both CPT code 15013 (Preparation of skin
cell suspension autograft, requiring enzymatic processing, manual
mechanical disaggregation of skin cells, and filtration; first 25 sq cm
or less of harvested skin) and HCPCS code C8002 (Preparation of skin
cell suspension autograft, automated, including all enzymatic
processing and device components (do not report with manual suspension
preparation)) describe the preparation step of a skin cell suspension
autograft (SCSA) procedure to treat acute thermal burn injuries. Both
codes describe the preparation step of a three-step SCSA procedure:
harvesting, preparation, and application. The difference between the
codes is that CPT code 15013 describes the manual preparation of the
SCSA, and HCPCS code C8002 describes the automated preparation of the
SCSA. Due to the similarities between the procedures, in the CY 2025
OPPS/ASC final rule with comment period, we assigned both CPT code
15013 and HCPCS code C8002 to APC 1567 (New Technology--Level 30
($6,001-$6,500)) with a payment rate of $6,250.50 and status indicator
``T''. In the CY 2025 OPPS/ASC final rule with comment period, we noted
that we believed the sum of the payment rates for the three-step
process should approximate $10,000. However, because of the effect of
the multiple procedure reduction, the total payment for the skin cell
suspension autograft furnished using the RECELL System would have been
approximately $8,000, contrary to the intended target of $10,000 as
stated in the CY 2025 OPPS/ASC final rule with comment period. To
correct this error, in the CY 2025 OPS/ASC Correction Notice, we
assigned both CPT code 15013 and HCPCS code C8002 to APC 1532 (New
Technology--Level 32 ($7,001-$7,500)) with a payment rate of $7,250.50
and status indicator ``S'' (Procedure or service, not discounted when
multiple, paid under OPPS; separate APC payment).
For CY 2026, the OPPS payment rates are proposed to be based on
available CY 2024 claims data. Since CPT code 15013 and HCPCS code
C8002 were not
[[Page 33561]]
effective until January 1, 2025, we do not have any claims for either
code for CY 2024. Therefore, for CY 2026, we propose to continue to
assign CPT code 15013 and HCPCS code C8002 to APC 1532 (New
Technology--Level 32 ($7,001-$7,500)) with a payment rate of $7,250.50.
Please refer to Table 37 for the proposed OPPS New Technology APC
and status indicator assignments for CPT code 15013 and HCPCS code
C8002 for CY 2026. The proposed CY 2026 payment rates can be found in
Addendum B to this proposed rule via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP17JY25.048
y. Renal Histotripsy Service (APC 1576)
HCPCS code C9790 (Histotripsy (that is, non-thermal ablation via
acoustic energy delivery) of malignant renal tissue, including image
guidance) was created October 1, 2023, and was used to describe the
Medicare approved Category B IDE (investigational device exemption)
clinical study involving the renal histotripsy procedure associated
with the use of the HistoSonics Edison System. CPT code 0888T
(Histotripsy (i.e., non-thermal ablation via acoustic energy delivery)
of malignant renal tissue, including image guidance) replaced HCPCS
code C9790 effective July 1, 2024.
Renal histotripsy is a non-invasive, non-thermal, mechanical
process that uses a focused beam of sonic energy to destroy solid renal
tumors and is currently in a prospective, multi-center, single-arm
pivotal trial designed to evaluate the effectiveness and safety of the
device for the destruction of kidney tissue by treating primary solid
renal tumors.\22\ Because the renal histotripsy clinical study is
designated as a Category B (non-experimental/investigational) IDE
study, the Medicare payment for CPT code 0888T reflects payment for
both the service that is performed, and the device used each time it is
reported on a claim. For CY 2025 we assigned CPT code 0888T to APC 1576
(New Technology--Level 39 ($15,001-$20,000)) with a payment rate of
$17,500.50 based on the previous APC and status indicator assignments
for HCPCS code C9790.
---------------------------------------------------------------------------
\22\ See ``The HistoSonics System for Treatment of Primary Solid
Renal Tumors Using Histotripsy (#HOPE4KIDNEY) at https://clinicaltrials.gov/study/NCT05820087.
---------------------------------------------------------------------------
For CY 2026, the OPPS payment rates are proposed to be based on
available CY 2024 claims data. We identified one single frequency claim
for HCPCS code C9790 and six single frequency claims for CPT code
0888T. Given our proposal to maintain current New Technology APC
assignments for CY 2026 for New Technology services with fewer than 10
claims in the 4-year lookback period applicable for the universal low-
volume APC policy, we propose to continue to assign CPT code 0888T to
APC 1576 (New Technology--Level 39 ($15,001-$20,000)) with a payment
rate of $17,500.50 based on the data currently available to us, which
we believe best reflects the cost of the service.
The proposed New Technology APC and status indicator assignment for
CPT code 0888T is shown in Table 38. The proposed CY 2026 payment rates
for these CPT codes can be found in Addendum B to this proposed rule
via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP17JY25.049
D. Universal Low Volume APC Policy for Clinical and Brachytherapy APCs
In the CY 2022 OPPS/ASC final rule with comment period (86 FR 63743
through 63747), we adopted a policy to designate clinical and
brachytherapy APCs as low volume APCs if they have fewer than 100
single claims that can be used for ratesetting purposes in the claims
year used for ratesetting for the prospective year. For the CY 2026
OPPS/ASC proposed rule, CY 2024 claims are generally the claims used
for ratesetting; and clinical and brachytherapy APCs with fewer than
100 single claims from CY 2024 that can be used for ratesetting would
be low
[[Page 33562]]
volume APCs subject to our universal low volume APC policy. As we
stated in the CY 2022 OPPS/ASC final rule with comment period, we
adopted this policy to reduce the volatility in the payment rate for
those APCs with fewer than 100 single claims. Where a clinical or
brachytherapy APC has fewer than 100 single claims that can be used for
ratesetting, under our low volume APC payment adjustment policy, we
determine the APC cost as the greatest of the geometric mean cost,
arithmetic mean cost, or median cost based on up to 4 years of claims
data. We excluded APC 5853 (Partial Hospitalization for CMHCs) and APC
5863 (Partial Hospitalization for Hospital-based PHPs) from our
universal low volume APC policy given the different nature of policies
that affect the partial hospitalization program. We also excluded APC
2698 (Brachytx, stranded, nos) and APC 2699 (Brachytx, non-stranded,
nos) as our current methodology for determining payment rates for non-
specified brachytherapy sources is appropriate.
Based on claims data available for this CY 2026 OPPS/ASC proposed
rule, we propose to designate six brachytherapy APCs and five clinical
APCs as low volume APCs under the OPPS. The six brachytherapy APCs and
five clinical APCs meet our criteria of having fewer than 100 single
claims in the claims' year used for ratesetting (CY 2024 for this CY
2026 OPPS/ASC proposed rule). Ten of the 11 APCs were designated as low
volume APCs in CY 2025. Based on data for this CY 2026 OPPS/ASC
proposed rule, APC 2645 (Brachytx, non-stranded, gold-198) has 103
single claims and no longer meets our criteria to be designated as a
low volume APC; however, APC 2643 (Brachytx, non-stranded, c-131) has
only 88 single claims and does meet our criteria to be designated as a
low volume APC. Table 39 includes the CY 2024 claims available for
ratesetting for each of the APCs we propose to designate as a low
volume APC for CY 2026. The proposed cost statistics for our CY 2026
low volume APCs, such as the median, arithmetic mean, and geometric
mean cost are available for download with this proposed rule on the CMS
website. We refer readers to our website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices; click on the relevant regulation to download the
low volume APC cost statistics under the comprehensive (OPPS)
ratesetting methodology in the downloads section of the web page.
[GRAPHIC] [TIFF OMITTED] TP17JY25.050
E. APC-Specific Policies
1. Neurostimulator and Related Procedures (APCs 5461 Through 5465)
In the CY 2021 OPPS/ASC final rule with comment period, we
finalized a five-level APC structure for the Neurostimulator and
Related Procedures series (85 FR 85968 through 85970). For a detailed
discussion of the history of neurostimulators policy, we refer readers
to the CY 2015, CY 2020, CY 2021, CY 2023, CY 2024, and CY 2025 OPPS/
ASC final rules with comment period (79 FR 66807 through 66808; 84 FR
61162 through 6116, 8 FR 85968 through 85970; 87 FR 71869; 88 FR 81645
through 81658; 89 FR 94062 through 96045).
CPT Code 61885
Effective January 1, 1982, CMS established the CPT code 61885
(Insertion or replacement of cranial neurostimulator pulse generator or
receiver, direct or inductive coupling; with connection to a single
electrode array) which is currently assigned to APC 5464 (Level 4
Neurostimulator and Related Procedures). Based on the claims data
available for CY 2026 OPPS ratesetting, there are approximately 2,839
single claims with an estimated geometric mean cost of $31,512.82. APC
5465 (Level 5 Neurostimulator and Related Procedures) has an estimated
geometric mean cost around $32,246.05. Based on the estimated resource
costs and clinical similarity of HCPCS code 61885 to other procedures
assigned to APC 5465, we propose to assign HCPCS 61885 to APC 5465 in
the CY 2026 OPPS.
2. APC Structure
In prior rulemaking, some interested parties have requested that we
create a Level 6 Neurostimulator and Related Procedures APC, due to
their concerns around clinical and resource cost similarity in the
Level 5 Neurostimulator and Related Procedures APC. We most recently
responded to this request in the CY 2025 OPPS/ASC final rule with
comment period (89 FR 94064). We believe that the current 5 level APC
structure for the
[[Page 33563]]
Neurostimulator and Related Procedures series provides for an
appropriate distribution of clinical and cost similarity at the
different APC levels. As discussed in the CY 2021 OPPS/ASC final rule
with comment period, we reiterate that the OPPS is a prospective
payment system. We group procedures with similar clinical
characteristics and resource costs into APCs and establish a payment
rate that reflects the geometric mean of all services in the group even
though the cost of any individual service within the APC may be higher
or lower than the APC's geometric mean. As a result, in the OPPS, any
individual procedure may potentially be overpaid or underpaid because
the payment rate is based on the geometric mean of the entire group of
services in the APC. However, the impact of these payment differences
should be mitigated when distributed across a large number of APCs (85
FR 85968).
While we continue to believe that a five-level structure for the
Neurostimulator and Related Procedures APC series remains appropriate,
we solicit comment from interested parties on the need for a Level 6
APC, given the clinical and estimated cost characteristics of the
services currently assigned to the Level 5 and New Technology APC 1580.
In summary, for the CY 2026 OPPS, we propose to assign HCPCS code
61885 to APC 5465 and maintain the current 5 level structure for the
Neurostimulator and Related Procedure APC series. We are also
soliciting comments on potentially creating an additional Level 6 APC
in the series.
See Table 40 for proposed CY 2026 SI and APC assignments for
specific HCPCS codes in the series and Table 41 for the proposed CY
2026 Neurostimulator and Related Procedures APCs.
[GRAPHIC] [TIFF OMITTED] TP17JY25.051
[GRAPHIC] [TIFF OMITTED] TP17JY25.052
3. Musculoskeletal Procedures (APCs 5111 Through 5117)
Prior to the CY 2016 OPPS, payment for musculoskeletal procedures
was primarily divided according to anatomy and the type of
musculoskeletal procedure. As part of the CY 2016 reorganization to
better structure the OPPS payments to utilize prospective payment
packages, we consolidated these individual APCs so that they became a
general Musculoskeletal APC series (80 FR 70397 and 70398).
In the CY 2018 OPPS/ASC final rule with comment period (82 FR
59300), we continued to apply a six-level structure for the
Musculoskeletal APCs because doing so provided an appropriate
distinction for resource costs at each level and provided clinical
homogeneity. However, we indicated that we would continue to review the
structure of these APCs to determine whether additional granularity
would be necessary. In the CY 2019 OPPS proposed rule (83 FR 37096), we
recognized that commenters had previously expressed concerns regarding
the granularity of the current
[[Page 33564]]
APC levels and, therefore, requested comment on the establishment of
additional levels. Specifically, we solicited comments on the creation
of a new APC level between the current Level 5 and Level 6 within the
Musculoskeletal APC series. While some commenters suggested APC
reconfigurations and requested changes to APC assignments, many
commenters requested that we maintain the current six-level structure
and continue to monitor the claims data as they become available.
Therefore, in the CY 2019 OPPS/ASC final rule with comment period, we
maintained the six-level APC structure for the Musculoskeletal
Procedures APCs (83 FR 58920 and 58921).
Since that time, we have continued an ongoing dialogue with
interested parties regarding the six level structure of the
Musculoskeletal Procedures APC series and the codes assigned to these
APCs. For a detailed discussion of the history of musculoskeletal APC
series policy, we refer readers to the CY 2020, CY 2021, CY 2022, CY
2023, CY 2024 and CY 2025 OPPS/ASC final rules with comment period (84
FR 61252 through 61254; 85 FR 85966 through 85968; 86 FR 63559; 87 FR
71868 through 71870; 88 FR 81696 through 81697; 89 FR 94106 through
94107).
In reviewing the claims data available for CY 2026 OPPS
ratesetting, we note that APC 5116 (Level 6 Musculoskeletal Procedures)
has a bimodal distribution in geomean costs for significant codes, with
clusters from approximately $17,000 to $18,000 and approximately
$27,000 to $28,000. This meaningful distinction between service costs
within the APC suggests the creation of an additional level could be
appropriate. Based on the distinction between the different cost
significant services within the APC and the volume of claims available
to establish ratesetting for both the additional APC level, as well as
the codes remaining in the current APC, we believe that creating an
additional payment level at the higher range of procedure costs for the
Musculoskeletal Procedures APC series would allow for a smoother
distribution of the costs between the different levels, based on their
resource costs and clinical characteristics.
In addition, for CY 2026, as part of the proposed phased
elimination of the Inpatient Only (IPO) List, we propose to remove
musculoskeletal codes on the IPO List and assign them to clinical APCs,
as discussed in section IX.B. of this proposed rule. As many of these
proposed codes are in the Musculoskeletal Procedures APC series, we
anticipate there may be effects on the geometric means of these APCs as
the limited claims data for those codes is included in OPPS
ratesetting. Several HCPCS codes proposed to be removed from the IPO
List that are currently assigned to the Level 6 Musculoskeletal
Procedures APCs have significant CY 2024 claims volume, with several
codes having greater than a thousand single claims from which to
calculate their geometric mean costs. The significant claims volume
associated with these procedures makes these codes relevant for two
times rule evaluation purposes and provides a meaningful basis for
establishing the additional APC level. We believe creating an
additional level would allow for the appropriate placement of
procedures newly removed from IPO List to an APC with an applicable
range of estimated costs, due to the large volume of claims data
available for procedures with similar clinical and resource
characteristics.
Therefore, based on our evaluation of the claims data and proposed
removal of musculoskeletal codes from the IPO list, we propose to
establish a 7 level Musculoskeletal Procedures APC series for CY 2026.
Table 42 displays the proposed CY 2026 Musculoskeletal Procedures
APC series' structure and APC geometric mean costs.
[GRAPHIC] [TIFF OMITTED] TP17JY25.053
4. Fractional Flow Reserve Derived From Computed Tomography (FFRct),
CPT Code 75580 (APC 5724)
Fractional Flow Reserve Derived from Computed Tomography (FFRCT),
also known by the trade name HeartFlow[supreg], is a noninvasive
diagnostic service that allows physicians to measure coronary artery
disease in a patient through the use of coronary CT scans. The
HeartFlow[supreg] service is indicated for clinically stable
symptomatic patients with coronary artery disease, and, in many cases,
may avoid the need for an invasive coronary angiogram procedure.
HeartFlow[supreg] uses a proprietary data analysis process performed at
a central facility to develop a three-dimensional image of a patient's
coronary arteries, which allows physicians to identify the fractional
flow reserve to assess whether patients should undergo further invasive
testing (that is, a coronary angiogram). HeartFlow[supreg] is currently
[[Page 33565]]
described by CPT code 75580 (Noninvasive estimate of coronary
fractional flow reserve (FFR) derived from augmentative software
analysis of the data set from a coronary computed tomography
angiography, with interpretation and report by a physician or other
qualified health care professional).
On January 1, 2024, the Category III CPT code 0503T was replaced
with the Category I CPT code 75580 (Noninvasive estimated coronary
fractional flow reserve (ffr) derived from coronary computed tomography
angiography data using computation fluid dynamics physiologic
simulation software analysis of functional data to assess the severity
of coronary artery disease; analysis of fluid dynamics and simulated
maximal coronary hyperemia, and generation of estimated ffr model) and
was assigned to APC 5724 (Level 4 Diagnostic Tests and Related
Services) with a payment rate of approximately $1,000. We maintained
the same payment assignments for CY 2025.
For CY 2026, the proposed OPPS payment rates are based on available
CY 2024 claims data as the available single frequency claims exceed the
100 claims threshold generally used for our universal low volume
policy. While we have identified 17,813 single frequency claims that
were used to calculate the geometric mean cost of $278.51 in CY 2024,
we believe that the geometric mean cost may have been impacted by an
outdated automated return-to-provider (RTP) Healthcare Common Procedure
Coding System-to-revenue code edit that occurred when the Category I
CPT code became effective. This issue was identified by a commenter in
the CY 2025 OPPS/ASC final rule with comment period (89 FR 94094). The
edit prevented providers from reporting the cardiology revenue code
(0480), which maps to the cardiology cost center (03140), when billing
CPT code 75580. The cardiology cost center has a higher cost-to-charge
ratio (CCR) than the imaging cost centers, and the inability to report
the cardiology revenue code may have resulted in a lower payment rate
for the HeartFlow[supreg] service as was the case with the cardiac CT
CPT codes 75572, 75573, and 75574. (See 89 FR 59276 through 59279.)
Since the OPPS ratesetting process utilizes the applicable cost
center's CCR to reduce the charges on the claim to estimated cost,
utilizing cost centers with lower CCRs results in a lower OPPS payment
compared to utilizing cost centers with higher CCRs.
Although the edit was removed, and providers were notified
(Official CMS news from the Medicare Learning Network[supreg], Weekly
Edition dated September 26, 2024) \23\ to resubmit any incorrectly
returned claims, we believe that the outdated edit may have impacted
the geometric mean for CPT code 75580. Therefore, we propose to use our
authority under section 1833(t)(2)(E) to continue to assign CPT code
75580 to APC 5724 (Level 4 Diagnostic Tests and Related Services) with
a payment amount of approximately $1,000 which we believe best reflects
the cost of the service at this time.
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\23\ https://www.cms.gov/training-education/medicare-learning-network/newsletter/2024-09-26-mlnc#_Toc178152800.
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The proposed APC and status indicator assignment for CPT code 75580
is shown in Table 43. The proposed CY 2026 payment rates for CPT code
75580 can be found in Addendum B to this proposed rule via the internet
on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP17JY25.054
F. Comment Solicitation on Payment Policy for Software as a Service
(SaaS)
In recent years, there have been rapid developments in the use of
software-based technologies with new functionalities, including
artificial intelligence, to support clinical decision-making in the
outpatient and physician office settings. Medicare refers to these
software-based technologies as software as a service (SaaS). Prior to
CY 2018, SaaS procedures were considered supportive or ancillary
services, and therefore, payment for the SaaS was packaged into the
payment for the underlying clinical service. For example, payment for
image processing software that visually enhances an image in an
existing MRI, would be packaged into the payment for the MRI service.
In recent years, CMS has paid separately for SaaS procedures under the
OPPS through New Technology APCs, which are cost bands that allow us to
provide appropriate and consistent payment for designated new
procedures that are not yet reflected in our claims data, and various
clinical APCs based on clinical and resource similarity to existing
services, including Imaging APCs and Diagnostic Tests and Related
Services APCs. We currently do not have a payment methodology
specifically for SaaS, and as these technologies have continued to
evolve and diversify, some interested parties have stated that the lack
of a consistent payment policy for SaaS can be an impediment to patient
access when these services are otherwise approved by the FDA.
Interested parties have requested that CMS consider development of a
payment policy for these services that is stable and consistent across
settings of care, payment systems, and types of SaaS.
We welcome public comment as we consider how to appropriately pay
for these services, including any applicable lessons or best practices
from risk-bearing payment arrangements, how we can determine that
Medicare payments for SaaS truly reflect the value of the technologies
to medical practice, and
[[Page 33566]]
how to ensure that any payment policies on this topic demonstrate
fiscal responsibility and good stewardship by promoting high-value,
cost-effective care. For pricing new technologies where we do not have
substantive supporting data, there are ambiguities regarding the
service costs for purposes of setting a payment rate. For example, we
have observed wide variations in the purported costs of clinically
similar SaaS technologies. The various costs that manufacturers
consider when pricing their technologies, including research and
development as well as software maintenance, are often not publicly
verifiable. It is also unclear to what extent Medicare should pay for
the research and development costs of SaaS that could be frequently
used by non-Medicare beneficiaries in hospital outpatient departments
and ambulatory surgical center settings. Additionally, due to the novel
and evolving nature of these technologies, there are rarely existing
medical items or services that can be utilized for comparison purposes
to determine clinical and resource similarity. Finally, while there has
been a rapid increase in the development and coding of these services
in recent years, there is a very limited amount of Medicare claims data
for these services.
Given these issues and our interest in developing payment policies
that seek to reflect the underlying value of a service or technology to
the practice of medicine, we are requesting public comment on future
SaaS payment ideas, including:
What factors could Medicare consider when setting payment
rates for SaaS?
What APCs, existing or new, should we use to pay for SaaS?
How should we assess the costs of SaaS, and how can we
account for hospital acquisition costs?
What cost or claims data should be used to establish the
payment rates for the services?
Why are the geometric mean costs, as provided in our
claims data, for SaaS currently assigned to APCs (both clinical and New
Technology APCs) consistently lower than the manufacturers' purported
costs of the technologies?
Is there an alternative data source outside of the limited
Medicare claims data currently available and hospital invoices provided
by manufacturers, which may not fully depict total hospital acquisition
costs, that can accurately reflect the costs of the SaaS?
What kinds of efficiencies, if any, would SaaS provide for
services performed in hospital outpatient departments and ambulatory
surgical centers?
In the context of setting Medicare payment rates, how can
CMS best reflect the quality and efficacy of SaaS technologies ?
We welcome input from interested parties on these questions as well
as any additional suggestions that would enhance our ability to provide
accurate and consistent payment for SaaS procedures. Finally, we note
that there is a similar comment solicitation on a payment policy for
SaaS under the Physician Fee Schedule, and direct readers to the CY
2026 PFS proposed rule with comment period to provide comments.
G. Continuation of Payment Policy for Radiation Therapy Services
Furnished at Nonexcepted Off-Campus Provider Based Departments (PBDs)
1. Background on Section 603 of the Bipartisan Budget Act of 2015 and
the PFS Relativity Adjuster
Section 603 of the Bipartisan Budget Act of 2015 (Pub. L. 114-74)
(BBA, 2015) (hereinafter referred to as ``section 603'') amended
section 1833(t) of the Act by adding a new clause (v) to paragraph
(1)(B) and adding a new paragraph (21). As a general matter, under
sections 1833(t)(1)(B)(v) and (t)(21) of the Act, applicable items and
services furnished by certain off-campus outpatient departments of a
provider on or after January 1, 2017, are not considered covered OPD
services as defined under section 1833(t)(1)(B) of the Act for purposes
of payment under the OPPS. Instead such items are paid ``under the
applicable payment system'' under Medicare Part B if the requirements
for such payment are otherwise met. Section 603 amended section
1833(t)(1)(B) of the Act by adding a new clause (v), which excludes
from the definition of ``covered OPD services'' applicable items and
services (defined in paragraph (21)(A) of the section) that are
furnished on or after January 1, 2017, by an off-campus PBD, as defined
in paragraph (21)(B) of the section.
In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79699
through 79719), we adopted a number of policies to implement section
603. Broadly, we: (1) defined applicable items and services in
accordance with section 1833(t)(21)(A) of the Act for purposes of
determining whether such items and services are covered OPD services
under section 1833(t)(1)(B)(v) of the Act or whether payment for such
items and services will instead be made under the applicable payment
system designated under section 1833(t)(21)(C) of the Act; (2) defined
off-campus PBD for purposes of sections 1833(t)(1)(B)(v) and (t)(21) of
the Act; and (3) established policies for payment for applicable items
and services furnished by an off-campus PBD (nonexcepted items and
services) under section 1833(t)(21)(C) of the Act. To do so, we
finalized policies that define whether certain items and services
furnished by a given off-campus PBD may be considered excepted and,
thus, continue to be paid under the OPPS; established the requirements
for the off-campus PBDs to maintain excepted status (both for the
excepted off-campus PBDs and for the items and services furnished by
such excepted off-campus PBDs); and described the applicable payment
system for nonexcepted items and services (generally, the PFS).
To effectuate payment for nonexcepted items and services, in the CY
2017 interim final rule with comment period (81 FR 79720 through
79729), we established a new set of payment rates under the PFS that
reflected the relative resource costs of furnishing the technical
component of a broad range of services to be paid under the PFS
specific to the nonexcepted off-campus PBDs of a hospital.
Specifically, we established a PFS Relativity Adjuster that is applied
to the OPPS rate for the billed nonexcepted items and services
furnished in a nonexcepted off-campus PBD in order to calculate payment
rates under the PFS. The PFS Relativity Adjuster reflects the estimated
overall difference between the payment that would otherwise be made to
a hospital under the OPPS for the nonexcepted items and services
furnished in nonexcepted off-campus PBDs and the resource-based payment
under the PFS for the technical aspect of those services with reference
to the difference between the facility and nonfacility (office) rates
and policies under the PFS. Nonexcepted items and services furnished by
nonexcepted off-campus PBDs are generally paid under the PFS at the
applicable OPPS payment rate adjusted by the PFS Relativity Adjuster of
40 percent (that is, 60 percent less than the OPPS rate) (82 FR 53030).
In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79719
and 79725), we created modifier ``PN'' to collect data for purposes of
implementing section 603 but also to trigger payment under the newly
adopted PFS-equivalent rates for nonexcepted items and services.
Nonexcepted off-campus PBDs bill for nonexcepted items and services on
the institutional claim utilizing modifier
[[Page 33567]]
``PN'' to indicate that an item or service is a nonexcepted item or
service.
For a full discussion of our initial implementation of section 603,
we refer readers to the CY 2017 OPPS/ASC final rule with comment period
(81 FR 79699 through 79719) and the interim final rule with comment
period (79720 through 79729). For a detailed discussion of the current
PFS Relativity Adjuster related to payments under section 603, we refer
readers to the CY 2018 OPPS/ASC final rule with comment period (82 FR
52356 through 52637) and the CY 2019 PFS final rule with comment period
(82 FR 59505 through 59513).
2. Payment for Radiation Therapy Services Furnished at Nonexcepted Off-
Campus PBDs
The PFS Relativity Adjuster is not applied to radiation therapy
services (radiation treatment delivery and related imaging guidance
services) furnished by nonexcepted off-campus PBDs. Due to section
1848(c)(2)(K) of the Act, which required maintenance of the CY 2016
coding and payment inputs for these services for CY 2017 and CY 2018
under the PFS, when the section 603 requirements were implemented in
the CY 2017 final OPPS rule, we instructed nonexcepted off-campus PBDs
to bill the PFS G-codes for these services. As we explained in that
rule:
``. . .-[S]everal radiation treatment delivery and imaging guidance
services also are reported using different codes under the MPFS and
the OPPS. CMS established HCPCS Level II G-codes to describe
radiation treatment delivery services when furnished in the
physician office setting (79 FR 67666 through 67667). However, these
HCPCS G-codes are not recognized under the OPPS; rather, CPT codes
are used to describe these services when furnished in the HOPD. Both
sets of codes were implemented for CY 2015 and were maintained for
CY 2016. Under the MPFS, there is a particular statutory provision
under section 1848(c)(2)(K) of the Act that requires maintenance of
the CY 2016 coding and payment inputs for these services for CY 2017
and CY 2018. Accordingly, the finalized CY 2017 MPFS rates for these
services were calculated based on the maintenance of the CY 2016
coding payment inputs. On that basis, we are establishing payment
amounts for nonexcepted items and services consistent with the
payments that would be made to other facilities under the MPFS. That
is, an off-campus PBDs submitting claims for nonexcepted items and
services will bill the HCPCS G-codes established under the MPFS to
describe radiation treatment delivery procedures. However, the off-
campus PBD must append modifier ``PN'' to each applicable claim line
for nonexcepted items and services. The payment amount for these
services will be set to reflect the technical component rate for the
code under the MPFS.'' (81 FR 79726).
As discussed in the CY 2026 Physician Fee Schedule (PFS) proposed
rule, we propose to delete radiation therapy G-codes (G6001--G6017)
that describe imaging guidance for radiation treatment (G6001, G6002,
G6017) and radiation treatment delivery (G6003-G6015) because CPT codes
77402, 77407, and 77412 have been revised and may be used to report
these services instead. See Table 44 for the long descriptors of the G
codes that will be deleted effective January 1, 2026 and Table 45 for
the current and revised long descriptors for CPT codes 77402, 77407,
and 77412. The proposed CY 2026 payment rates for the radiation
treatment delivery codes can be found in Addendum B to this proposed
rule via the internet on the CMS website.
If finalized as proposed, the G-codes that nonexcepted off-campus
PBDs currently use to report radiation therapy services will no longer
be available after December 31, 2025. To continue paying the PFS-
equivalent rate for these services to these departments, we propose
that, effective January 1, 2026, nonexcepted off-campus PBDs use the
revised CPT codes described in the 2026 PFS proposed rule. In other
words, because the G codes are being eliminated, we propose that the
revised CPT codes be used to preserve the existing policy of paying
nonexcepted off-campus PBDs a specific radiation treatment rate, which
is the technical component for the code under the MPFS. Crosswalk
information between the G codes and the revised CPT codes is available
under the Downloads section \24\ of the PFS proposed rule, under ``CY
2025 Analytic Crosswalk to CY 2026.'' Nonexcepted off-campus PBDs
should continue to append the ``PN'' modifier to each applicable claim
line for these services. We emphasize that this is not a new policy but
rather a continuation of current policy adjusting for the newly revised
CPT codes and the corresponding deletion of the G codes.
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\24\ https://www.cms.gov/medicare/payment/fee-schedules/physician/federal-regulation-notices.
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BILLING CODE 4120-01-C
IV. OPPS Payment for Devices
A. Pass-Through Payment for Devices
1. Beginning Eligibility Date for Device Pass-Through Status and
Quarterly Expiration of Device Pass-Through Payments
a. Background
The intent of transitional device pass-through payment, as
implemented at Sec. 419.66, is to facilitate access for beneficiaries
to the advantages of new and truly innovative devices by allowing for
adequate payment for these new devices while the necessary cost data is
collected to incorporate the costs for these devices into the procedure
APC rate (66 FR 55861). Under section 1833(t)(6)(B)(iii) of the Act,
the period for which a device category eligible for transitional pass-
through payments under the OPPS can be in effect is at least 2 years
but not more than 3 years.
In the CY 2017 OPPS/ASC final rule with comment period, in
accordance with section 1833(t)(6)(B)(iii)(II) of the Act, we amended
Sec. 419.66(g) to provide that the pass-through eligibility period for
a device category begins on the first date on which pass-through
payment is made under the OPPS for any medical device described by such
category (81 FR 79654). In addition, in the CY 2017 OPPS/ASC final rule
with comment period, we finalized a policy to allow for quarterly
expiration of pass-through payment status for devices to afford a pass-
through payment period that is as close to a full 3 years as possible
for all pass-through payment devices (81 FR 79655). We also established
a policy to package the costs of the devices that are no longer
eligible for pass-through payments into the costs of the procedures
with which the devices are reported in the claims data used to set the
payment rates (67 FR 66763).
We refer readers to the CY 2017 OPPS/ASC final rule with comment
period (81 FR 79648 through 79661) for a full discussion of the current
device pass-through payment policy.\25\
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\25\ To apply for OPPS transitional device pass-through status,
applicants complete an application that is subject to the Paperwork
Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq.). This
information collection (CMS-10052) is currently approved under OMB
control number 0938-0857 and has an expiration date of November 30,
2025.
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In the CY 2023 OPPS/ASC final rule with comment period, we
finalized our policy to publicly post online OPPS device pass-through
applications received on or after March 1, 2023, beginning with the
issuance of the CY 2025 proposed rule and for each OPPS rulemaking
thereafter. We refer readers to the CY 2023 OPPS/ASC final rule with
comment period (87 FR 71934 through 71938) for a full discussion of the
policy to publicly post OPPS device pass-through applications.
b. Expiration of Transitional Pass-Through Payments for Certain Devices
As stated earlier, section 1833(t)(6)(B)(iii) of the Act requires
that, under the OPPS, a category of devices be eligible for
transitional pass-through payments for at least 2 years, but not more
than 3 years. Currently, there are 17 device categories eligible for
pass-through payment. These devices are listed in Table 46 of this
proposed rule where we detail the expiration dates of pass-through
payment status for each of the 17 devices currently receiving device
pass-through payment.
BILLING CODE 4120-01-P
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BILLING CODE 4120-01-C
2. New Device Pass-Through Applications for CY 2026
a. Background
Section 1833(t)(6) of the Act provides for pass-through payments
for devices, and section 1833(t)(6)(B) of the Act requires CMS to use
categories in determining the eligibility of devices for pass-through
payments. As part of implementing the statute through regulations, we
have continued to believe that it is important for hospitals to receive
pass-through payments for devices that offer substantial clinical
improvement in the treatment of Medicare beneficiaries to facilitate
access by beneficiaries to the advantages of the new technology.
Conversely, we have noted that the need for additional payments for
devices that offer little or no clinical improvement over previously
existing devices is less apparent. In such cases, these devices can
still be used by hospitals, and hospitals will be paid for them through
appropriate APC payment. Moreover, a goal is to target pass-through
payments for those devices where cost considerations are most likely to
interfere with patient access (66 FR 55852; 67 FR 66782; and 70 FR
68629).
As specified in regulations at Sec. 419.66(b)(1) through (3), to
be eligible for transitional pass-through payment under the OPPS, a
device must meet the following criteria:
If required by FDA, the device must have received FDA
approval or clearance and FDA marketing authorization (except for a
device that has received an FDA investigational device exemption (IDE)
and has been classified as a Category B device by FDA), or meet another
appropriate FDA exemption; and the pass-through payment application
must be submitted within 3 years from the date of the initial FDA
marketing authorization, if required, unless there is a documented,
verifiable delay in U.S. market availability after FDA marketing
authorization is granted, in which case CMS will consider the pass-
through payment application if it is submitted within 3 years from the
date of market availability;
The device is determined to be reasonable and necessary
for the diagnosis or treatment of an illness or injury or to improve
the functioning of a malformed body part, as required by section
1862(a)(1)(A) of the Act; and
The device is an integral part of the service furnished,
is used for one patient only, comes in contact with human tissue, and
is surgically implanted or inserted (either permanently or
temporarily), or applied in or on a wound or other skin lesion.
In addition, according to Sec. 419.66(b)(4), a device is not
eligible to be considered for device pass-through payment if it is any
of the following: (1) equipment, an instrument, apparatus, implement,
or item of this type for which depreciation and financing expenses are
recovered as depreciation assets as defined in Chapter 1 of the
Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a
material or supply furnished incident to a service (for example, a
suture, customized surgical kit, or clip, other than a radiological
site marker).
Separately, we use the following criteria, as set forth under Sec.
419.66(c), to determine whether a new category of pass-through payment
devices should be established. The device to be included in the new
category must--
Not be appropriately described by an existing category or
by any category previously in effect established for transitional pass-
through payments, and was not being paid for as an outpatient service
as of December 31, 1996;
Have an average cost that is not ``insignificant''
relative to the payment amount for the procedure or service with which
the device is associated as determined under Sec. 419.66(d) by
demonstrating: (1) the estimated average reasonable cost of devices in
the category exceeds 25 percent of the applicable APC payment amount
for the service related to the category of devices; (2) the estimated
average reasonable cost of the devices in the category exceeds the cost
of the device-related portion of the APC payment amount for the related
service by at least 25 percent; and (3) the difference
[[Page 33572]]
between the estimated average reasonable cost of the devices in the
category and the portion of the APC payment amount for the device
exceeds 10 percent of the APC payment amount for the related service
(with the exception of brachytherapy and temperature-monitored
cryoablation, which are exempt from the cost requirements as specified
at Sec. 419.66(c)(3) and (e)); and
Demonstrate a substantial clinical improvement, that is,
substantially improve the diagnosis or treatment of an illness or
injury or improve the functioning of a malformed body part compared to
the benefits of a device or devices in a previously established
category or other available treatment, or, for devices for which pass-
through payment status will begin on or after January 1, 2020, as an
alternative pathway to demonstrating substantial clinical improvement,
a device is part of the FDA's Breakthrough Devices Program and has
received marketing authorization for the indication covered by the
Breakthrough Device designation.
In the CY 2016 OPPS/ASC final rule with comment period, we changed
our device pass-through evaluation and determination process. Device
pass-through applications are still submitted to CMS through the
quarterly process, but the applications are subject to notice and
comment rulemaking in the next applicable OPPS annual rulemaking cycle.
Under this process, all applications that are preliminarily approved
upon quarterly review will automatically be included in the next
applicable OPPS annual rulemaking cycle, while submitters of
applications that are not approved upon quarterly review will have the
option of being included in the next applicable OPPS annual rulemaking
cycle or withdrawing their application from consideration. Under this
notice-and-comment process, applicants may submit new evidence, such as
clinical trial results published in a peer-reviewed journal or other
materials, for consideration during the public comment process for the
proposed rule. This process allows those applications that we are able
to determine meet all of the criteria for device pass-through payment
under the quarterly review process to receive timely pass-through
payment status, while still allowing for a transparent, public review
process for all applications (80 FR 70417 through 70418).
In the CY 2020 OPPS/ASC final rule with comment period, we
finalized an alternative pathway for devices that are granted a
Breakthrough Device designation (84 FR 61295) and receive FDA marketing
authorization for the indication covered by the Breakthrough Device
designation. Under this alternative pathway, devices that are granted
an FDA Breakthrough Device designation are not evaluated in terms of
the current substantial clinical improvement criterion at Sec.
419.66(c)(2) for the purposes of determining device pass-through
payment status, but do need to meet the other requirements for pass-
through payment status in our regulation at Sec. 419.66. Devices that
are part of the Breakthrough Devices Program, have received FDA
marketing authorization for the indication covered by the Breakthrough
Devices designation, and meet the other criteria in the regulation can
be approved through the quarterly process and announced through that
process (81 FR 79655). Proposals regarding these devices and whether
pass-through payment status should continue to apply are included in
the next applicable OPPS rulemaking cycle. This process promotes timely
pass-through payment status for innovative devices, while also
recognizing that such devices may not have a sufficient evidence base
to demonstrate substantial clinical improvement at the time of FDA
marketing authorization.
More details on the requirements for device pass-through payment
applications are included on the CMS website in the application form
itself at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html, in the
``Downloads'' section. In addition, CMS is amenable to meeting with
applicants or potential applicants to facilitate information sharing to
support the evaluation of an OPPS device pass-through payment
application or discuss general application criteria, including the
substantial clinical improvement criterion.
In accordance with section V. of this proposed rule, skin
substitutes with an approved Biologics License Application (BLA) would
be considered under transitional drug pass-through payment status and
skin substitutes with FDA Premarket approval (PMA) or FDA 510(k)
clearance would continue to be evaluated under transitional device
pass-through payment status.
b. Applications Received for Device Pass-Through Status for CY 2026
We received eight complete applications by the March 3, 2025,
quarterly deadline, which was the last quarterly deadline for
applications to be received in time to be included in this proposed
rule. Of the complete applications, we received one application in the
second quarter of 2024, three applications in the third quarter of
2024, one application in the fourth quarter of 2024, and three
applications in the first quarter of 2025. One application was
withdrawn. Two of the applications were approved for device pass-
through payment during the quarterly review process: VasQ, which was
preliminarily approved upon quarterly review under the alternative
pathway effective July 1, 2024, and the SCOUT MDTM Surgical
Guidance System which was preliminarily approved upon quarterly review
under the alternative pathway effective September 1, 2024. As
previously stated, all applications that are preliminarily approved
upon quarterly review will automatically be included in the next
applicable OPPS annual rulemaking cycle. Therefore, VasQ and the SCOUT
MDTM Surgical Guidance System are discussed in the following
section IV.2.b.1. of this proposed rule.
Applications received for the later deadlines for the remaining
2025 quarters (the quarters beginning June 1, September 1, and December
1 of 2025), if any, will be discussed in the CY 2027 OPPS/ASC proposed
rule. We note that the quarterly application process and requirements
have not changed because of the addition of rulemaking review. Detailed
instructions on submission of a quarterly device pass-through payment
application are included on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/catapp.pdf.
Discussions of the applications we received by the March 3, 2025,
deadline are included below.
(1) Alternative Pathway Device Pass-Through Applications
We received four device pass-through applications by the March 2025
quarterly application deadline for devices that have received
Breakthrough Device designation from FDA and FDA marketing
authorization for the indication for which they have a Breakthrough
Device designation, and therefore were eligible to apply under the
alternative pathway.
(a) aprevo[supreg] Cervical ACDF System, aprevo[supreg] Cervical ACDF-X
System, aprevo[supreg] Cervical ACDF-X NO CAM System
Carlsmed, Inc. submitted an application for a new device category
for transitional pass-through payment status for the aprevo[supreg]
Cervical ACDF system, aprevo[supreg] Cervical ACDF-X system, and
aprevo[supreg] Cervical ACDF-X
[[Page 33573]]
NO CAM system (herein after collectively referred to as the
aprevo[supreg] Cervical ACDF System) for CY 2026. Per the applicant,
the aprevo[supreg] Cervical ACDF System is designed to stabilize the
cervical spinal column and facilitate fusion. The applicant further
explained that the personalized aprevo[supreg] Cervical ACDF System
devices incorporate patient-specific features to allow the clinician to
tailor the deformity correction to the individual needs of the patient
and include an aperture for the packing of bone graft. Per the
applicant, the aprevo[supreg] Cervical ACDF System includes the
following components: (1) aprevo[supreg] implant, which includes two
implants with slightly different heights for each vertebral level, (2)
aprevo[supreg] insertion instrument, and (3) for the aprevo[supreg]
Cervical ACDF-X system only, integrated fixation screws. The applicant
further stated that the aprevo[supreg] Cervical ACDF-X NO CAM system
has a part that blocks screws from backing out.
Please refer to the online application posting for the
aprevo[supreg] Cervical ACDF System, available at https://mearis.cms.gov/public/publications/device-ptp/DEP250303GJ8LW.
As stated previously, to be eligible for transitional pass-through
payment under the OPPS, a device must meet the criteria at Sec.
419.66(b)(1) through (4). With respect to the newness criterion at
Sec. 419.66(b)(1), the aprevo[supreg] Cervical ACDF System received
FDA Breakthrough Device designation effective September 15, 2023, under
the name aprevo[supreg] C cervical interbody fusion device. The
approved FDA indication for the aprevo[supreg] Cervical ACDF System is:
For use in skeletally mature patients with degenerative
cervical conditions including cervical disc degeneration, stenosis,
deformity, and/or instability of the cervical spine (C2-T1) at one or
more levels. DDD \26\ is defined as discogenic pain with degeneration
of the disc confirmed by history and radiographic studies. These
patients should have had at least six (6) weeks of non-operative
treatment. These devices are to be filled with autograft bone and/or
allogenic bone graft composed of cancellous, cortical, and/or cortico-
cancellous bone. The aprevo[supreg]-C cervical interbody fusion devices
can be used with supplemental fixation, such as an anterior plate, or
as a standalone construct to be used [with the] integrated bone screw
fixation.
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\26\ The Medicare Coverage Database defines DDD as degenerative
disc disease. In addition, we believe that DDD is commonly referred
to as degenerative disk disease in the healthcare industry.
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FDA granted the applicant 510(k) clearance for the aprevo[supreg]
Cervical ACDF System on November 15, 2024, with separate indications
for the aprevo[supreg] Cervical ACDF system and the aprevo[supreg]
Cervical ACDF-X system (with and without CAM).\27\ We note that while
the indication for the FDA Breakthrough Device designation and the
indication for the FDA 510(k) clearance for the aprevo[supreg] Cervical
ACDF System vary, per FDA, the FDA 510(k) clearance indication is
covered by the Breakthrough Device designation. We received the
application for a new device category for transitional pass-through
payment status for the aprevo[supreg] Cervical ACDF System on March 3,
2025, which is within 3 years of the date of the initial FDA marketing
authorization.
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\27\ For more information on the aprevo[supreg] Cervical ACDF
System's indications, we refer readers to the November 15, 2024, FDA
510(k) clearance letter (K242260) https://www.accessdata.fda.gov/cdrh_docs/pdf24/K242260.pdf
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It is unclear to us whether the aprevo[supreg] Cervical ACDF system
and the aprevo[supreg] Cervical ACDF-X system (with and without CAM)
are different devices such that they should be evaluated separately for
OPPS pass-through payment status. We note that the aprevo[supreg]
Cervical ACDF-X system (with and without CAM) includes additional
components, such as the integrated fixation screws, and has a different
indicated use as stated in the November 15, 2024 FDA 510(k) clearance
letter (K242260). Specifically, based on the FDA 510(k) clearance
indication, we note that a key difference of the aprevo[supreg]
Cervical ACDF-X system (with and without CAM)'s interbody implant is
that it incorporates integrated screw fixation and may be used as a
standalone system for certain indications. We also note that, for
deformity procedures to correct coronal angulation or any use of
hyperlordotic correction (20[deg]), the aprevo[supreg] Cervical ACDF-X
system (with and without CAM) must include supplemental fixation such
as posterior cervical screw fixation or anterior plating.
We are inviting public comments on whether the aprevo[supreg]
Cervical ACDF system and aprevo[supreg] Cervical ACDF-X system should
be evaluated separately for OPPS pass-through payment status.
Separately, we are inviting public comments on whether the
aprevo[supreg] Cervical ACDF System meets the newness criterion at
Sec. 419.66(b)(1).
With respect to the eligibility criteria at Sec. 419.66(b)(3), the
device must be an integral part of the service furnished, be used for
one patient only, come in contact with human tissue, and be surgically
inserted or implanted, or applied in or on a wound or other skin
lesion. Per the applicant, the aprevo[supreg] Cervical ACDF System
meets the requirements at Sec. 419.66(b)(3).
With respect to the aprevo[supreg] Cervical ACDF System, we
question whether the aprevo[supreg] insertion instrument, the
integrated fixation screws, and/or the CAM components or parts are
integral to the service furnished. We note that, in the CY 2014 OPPS/
ASC final rule with comment period (78 FR 75005), we stated that we
have interpreted the term ``integral'' to mean that the device is
necessary to furnish or deliver the primary procedure with which it is
used. For example, a pacemaker is integral to the procedure of
implantation of a pacemaker. Given our interpretation of integral, we
question whether these components and parts of the aprevo[supreg]
Cervical ACDF System are integral to the service furnished as it
remains unclear which of these components and parts are utilized during
the primary procedure and we question whether some of these components
or parts may be purely additive in nature and not necessary to furnish
the service. Specifically, we note that it is unclear whether other
available insertion instruments may be used to implant the
aprevo[supreg] implant, and, for the aprevo[supreg] Cervical ACDF-X
system, whether any or all of the integrated fixation screws may be
replaced with other commercially available screws. In addition, it is
unclear whether the CAM is part of the aprevo[supreg] implant, part of
the integrated fixation screws, or is a separate part altogether. It is
also unclear whether the CAM can be removed and replaced by other
products, and whether there are any requirements for its utilization.
We are interested in additional information about these components and
parts of the aprevo[supreg] Cervical ACDF System, including how and
when they are used, and whether they can be substituted with other
products.
We are inviting public comments on whether the aprevo[supreg]
Cervical ACDF System meets the eligibility criterion at Sec.
419.66(b)(3).
With respect to the exclusion criteria at Sec. 419.66(b)(4), a
device is not eligible to be considered for pass-through payment if it
is any of the following: (1) equipment, an instrument, apparatus,
implement, or item of this type for which depreciation and financing
expenses are recovered as depreciation assets as defined in Chapter 1
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a
[[Page 33574]]
material or supply furnished incident to a service (for example, a
suture, customized surgical kit, or clip, other than a radiological
site marker). Per the applicant, the aprevo[supreg] Cervical ACDF
System is (1) not considered equipment, an instrument, apparatus,
implement, or item of this type for which depreciation and financing
expenses are recovered as depreciation assets, and is (2) not a
material or supply furnished incident to a service, and, therefore, is
eligible to be considered for pass-through payment.
With respect to the aprevo[supreg] Cervical ACDF System, we
question whether the aprevo[supreg] insertion instrument, the
integrated fixation screws, and/or the CAM components or parts may be
considered a material or supply furnished incident to the service.
Specifically, as discussed previously with respect to criteria at Sec.
419.66(b)(3), we note that it is unclear whether other available
insertion instruments may be used to implant the aprevo[supreg] implant
and, for the aprevo[supreg] Cervical ACDF-X system, whether any or all
of the integrated fixation screws may be replaced with other
commercially available screws. In addition, we are unclear about
whether the CAM is part of the aprevo[supreg] implant, part of the
integrated fixation screws, or is a separate part altogether, and
whether the CAM can be removed and replaced by other products. We are
seeking clarification about each of these components and parts,
including how and when they are used and whether they can be
substituted with other commercially available products. We question
whether these components or parts of the aprevo[supreg] Cervical ACDF
System may be considered a supply or material furnished incident to a
service and excluded from device pass-through payment eligibility under
Sec. 419.66(b)(4).
We are inviting public comments on whether the aprevo[supreg]
Cervical ACDF System meets the exclusion criterion at Sec.
419.66(b)(4).
In addition to the criteria at Sec. 419.66(b)(1) through (4), the
criteria for establishing new device categories are specified at Sec.
419.66(c). The first criterion, at Sec. 419.66(c)(1), provides that
CMS determines that a device to be included in the category is not
appropriately described by any of the existing categories or by any
category previously in effect, and was not being paid for as an
outpatient service as of December 31, 1996. Per the applicant, the
existing pass-through code C1831 (Interbody cage, anterior, lateral or
posterior, personalized (implantable)) does not appropriately describe
the aprevo[supreg] Cervical ACDF System because C1831 was created for
the original (lumbar-specific) aprevo[supreg] product. According to the
applicant, the aprevo[supreg] Cervical ACDF System device is different
from C1831 because (1) the original (lumbar-specific) aprevo[supreg]
and the nominated aprevo[supreg] Cervical ACDF System are separate and
distinct products that have no overlap in anatomical indications for
use or patient population; (2) the original (lumbar-specific)
aprevo[supreg] and the aprevo[supreg] Cervical ACDF System are billed
with different primary procedure CPT codes, are indicated for a
different set of surgical approaches, are typically assigned to
different places of service, and are mapped to different payment
classifications; and (3) CMS transmittals state that C1831 is limited
to lumbar procedures.
We note, based on the description provided by the applicant, that
the aprevo[supreg] Cervical ACDF System is a personalized interbody
cage that is implanted using an anterior surgical approach, and
therefore, could be appropriately described by C1831. Specifically,
C1831 may appropriately describe the aprevo[supreg] Cervical ACDF
System because it describes any device that is a personalized interbody
cage, designed for anterior, lateral, or posterior procedures. We note
that CMS does not establish pass-through device categories for the
purposes of describing specific devices, but rather, device categories
which are intended to encompass all devices that can be appropriately
described by a category. In this context, we believe that the
aprevo[supreg] Cervical ACDF System may be similar to devices described
by C1831 and therefore, the aprevo[supreg] Cervical ACDF System may be
appropriately described by C1831.
We are inviting public comment on whether the aprevo[supreg]
Cervical ACDF System meets the device category criterion at Sec.
419.66(c)(1).
The second criterion for establishing a device category, at Sec.
419.66(c)(2), provides that CMS determines either of the following: (i)
that a device to be included in the category has demonstrated that it
will substantially improve the diagnosis or treatment of an illness or
injury or improve the functioning of a malformed body part compared to
the benefits of a device or devices in a previously established
category or other available treatment; or (ii) for devices for which
pass-through status will begin on or after January 1, 2020, as an
alternative to the substantial clinical improvement criterion, the
device is part of the FDA's Breakthrough Devices Program and has
received FDA marketing authorization for the indication covered by the
Breakthrough Device designation. The aprevo[supreg] Cervical ACDF
System has a Breakthrough Device designation and marketing
authorization from FDA for the indication covered by the Breakthrough
Device designation (as explained in more detail of the newness
criterion) and therefore is not evaluated for substantial clinical
improvement.
We are inviting public comment on whether the aprevo[supreg]
Cervical ACDF System meets the device category criterion at Sec.
419.66(c)(2).
The third criterion for establishing a device category, at Sec.
419.66(c)(3), requires us to determine that the cost of the device is
not insignificant, as described in Sec. 419.66(d). Section 419.66(d)
includes three cost significance criteria that must each be met. The
applicant stated that the aprevo[supreg] Cervical ACDF System would be
reported with HCPCS codes as shown in Table 47.
[[Page 33575]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.059
To meet the cost criterion for device pass-through payment status,
a device must pass all three tests of the cost criterion for at least
one APC. As we explained in the CY 2005 OPPS/ASC final rule (69 FR
65775), we generally use the lowest APC payment rate applicable for use
with the nominated device when we assess whether a device meets the
cost significance criterion, thus increasing the probability the device
will pass the cost significance test. Beginning in CY 2017, we
calculate the device offset amount at the HCPCS/CPT code level instead
of the APC level (81 FR 79657). We note the applicant used the CY 2025
payment rates for the three tests of the cost criterion. For our
calculations, we used APC 5115, which had a CY 2025 payment rate of
$12,866.82 at the time the application was received. HCPCS code 22554
in APC 5115 had a device offset amount of $5,190.48 at the time the
application was received. Per the applicant, the average number of
levels for cervical interbody fusions per procedure is expected to be
3.25, based on the projected mix of diagnoses between deformity and
degenerative condition. The applicant stated that, per procedure, the
first level costs $19,000.00, and each additional level costs
$6,000.00. Therefore, according to the applicant, the average cost per
procedure for the aprevo[supreg] Cervical ACDF System is $32,500.00.
Regarding the cost of the aprevo[supreg] Cervical ACDF System, as
discussed previously with respect to Sec. 419.66(b)(3) and (b)(4), we
remain unclear regarding how and when the aprevo[supreg] insertion
instrument, the integrated fixation screws, and the CAM components and
parts are used and whether they can be substituted with other
commercially available products. Therefore, we question how these
components and parts are accounted for in the estimated average cost of
the aprevo[supreg] Cervical ACDF System and whether these components or
parts are eligible for OPPS pass-through payment status. In addition,
we remain unclear whether the aprevo[supreg] Cervical ACDF system and
the aprevo[supreg] Cervical ACDF-X system (with and without CAM) are
different devices with different associated costs and, as such, whether
this may require separate cost significance test evaluations. For the
purposes of this proposed rule, we use the average cost per procedure
provided by the applicant for the aprevo[supreg] Cervical ACDF System
($32,500.00). We welcome additional information about the use and cost
of the aprevo[supreg] insertion instrument, the integrated fixation
screws, and the CAM at each level per procedure. We also welcome
information on the costs of the various systems (the aprevo[supreg]
Cervical ACDF system and the aprevo[supreg] Cervical ACDF-X system
(with and without CAM)) should we determine they are different devices.
Section 419.66(d)(1), the first cost significance requirement,
provides that the estimated average reasonable cost of devices in the
category must exceed 25 percent of the applicable APC payment amount
for the service related to the category of devices. The average
reasonable cost of $32,500.00 for the aprevo[supreg] Cervical ACDF
System is 252.59 percent of the applicable APC payment amount for the
service related to the category of devices of $12,866.82 (($32,500.00/
$12,866.82) x 100 = 252.59 percent). Therefore, when utilizing the
average cost provided by the applicant, we believe that the
aprevo[supreg] Cervical ACDF System meets the first cost significance
requirement.
The second cost significance requirement, at Sec. 419.66(d)(2),
provides that the estimated average reasonable cost of the devices in
the category must exceed the cost of the device-related portion of the
APC payment amount for the related service by at least 25 percent,
which means that the device cost needs to be at least 125 percent of
the offset amount (the device-related portion of the APC found on the
offset list). The estimated average reasonable cost of $32,500.00 for
the aprevo[supreg] Cervical ACDF System is 626.15 percent of the cost
of the device-related portion of the APC payment amount for the related
service of $5,190.48 (($32,500.00/$5,190.48) x 100 = 626.15 percent).
Therefore, when utilizing the average cost provided by the applicant,
we
[[Page 33576]]
believe that the aprevo[supreg] Cervical ACDF System meets the second
cost significance requirement.
The third cost significance requirement, at Sec. 419.66(d)(3),
provides that the difference between the estimated average reasonable
cost of the devices in the category and the portion of the APC payment
amount for the device must exceed 10 percent of the APC payment amount
for the related service. The difference between the estimated average
reasonable cost of $32,500.00 for the aprevo[supreg] Cervical ACDF
System and the portion of the APC payment amount for the device of
$5,190.48 is 212.25 percent of the APC payment amount for the related
service of $12,866.82 ((($32,500.00-$5,190.48)/$12,866.82) x 100 =
212.25 percent). Therefore, when utilizing the average cost provided by
the applicant, we believe that the aprevo[supreg] Cervical ACDF System
meets the third cost significance requirement.
We are inviting public comment on whether the aprevo[supreg]
Cervical ACDF System meets the cost criterion at Sec. 419.66(c)(3).
(b) FARAPULSETM Pulsed Field Ablation (PFA) System
Boston Scientific Corporation submitted an application for a new
device category for transitional pass-through payment status for the
FARAPULSETM PFA System for CY 2026. Per the applicant, the
FARAPULSETM PFA System is intended for the isolation of the
pulmonary veins in the treatment of paroxysmal atrial fibrillation
(PAF) by rendering targeted cardiac tissue electrically non-conductive
to prevent cardiac arrhythmia initiation or maintenance. According to
the applicant, the FARAPULSETM PFA System is comprised of
several components, including the FARAWAVETM PFA Catheter,
FARADRIVETM Steerable Sheath, FARASTARTM
Recording System Module, FARASTARTM Catheter Connection
Cable, and the FARASTARTM PFA Generator.
The applicant is only seeking a new device category for
transitional pass-through payment status for the FARAWAVETM
PFA Catheter component of the FARAPULSETM PFA System. The
applicant stated that the FARAWAVETM PFA Catheter is a
percutaneous, pentaspline, 20-electrode, over-the-wire catheter used to
perform irreversible electroporation to treat drug-resistant (Class I,
II, III, or IV), recurrent, symptomatic PAF. Per the applicant, the
FARAWAVETM PFA Catheter's deployment mechanism enables two
poses, a partially-deployed basket shape and a fully-deployed flower
shape, to deliver brief, high voltage PFA pulses (when connected to the
FARASTARTM PFA Generator) within and at the antral area of
the pulmonary veins as well as full circumferential coverage around the
entire pulmonary vein.
Please refer to the online application posting for the
FARAPULSETM Pulsed Field Ablation (PFA) System, available at
https://mearis.cms.gov/public/publications/device-ptp/DEP2405312MYT4.
As stated previously, to be eligible for transitional pass-through
payment under the OPPS, a device must meet the criteria at Sec.
419.66(b)(1) through (4). With respect to the newness criterion at
Sec. 419.66(b)(1), FARAPULSETM PFA System received FDA
Breakthrough Device designation under the name FARAPULSETM
Endocardial Ablation System on March 14, 2019. The approved FDA
indication for the FARAPULSETM PFA System is:
The FARAPULSE Endocardial Ablation System is indicated for
cardiac tissue ablation for the treatment of drug refractory,
recurrent, symptomatic paroxysmal atrial fibrillation.\28\
---------------------------------------------------------------------------
\28\ The FDA granted Breakthrough Device designation for the
FARAPULSETM Endocardial Ablation System, which is the
previous name for the FARAPULSETM PFA System.
---------------------------------------------------------------------------
FDA approved the premarket approval (PMA) application for the
FARAPULSETM PFA System on January 30, 2024. We note that
while the indication for the FDA Breakthrough Device designation and
the indication for the FDA PMA vary slightly, we believe that the FDA
PMA indication is covered by the Breakthrough Device designation. We
received the application for a new device category for transitional
pass-through payment status for the FARAPULSETM PFA System
on May 31, 2024, which is within 3 years of the initial FDA marketing
authorization.
We are inviting public comments on whether the
FARAPULSETM Pulsed Field Ablation (PFA) System, inclusive of
the FARAWAVETM PFA Catheter meets the newness criterion at
Sec. 419.66(b)(1).
As previously noted, the applicant is only seeking a new device
category for transitional pass-through payment status for the
FARAWAVETM PFA Catheter component of the
FARAPULSETM PFA System, as such, the eligibility and
exclusion criteria will evaluate FARAWAVETM PFA Catheter.
With respect to the eligibility criteria at Sec. 419.66(b)(3), the
device must be an integral part of the service furnished, be used for
one patient only, come in contact with human tissue, and be surgically
inserted or implanted, or applied in or on a wound or other skin
lesion. Per the applicant, the FARAWAVETM PFA Catheter meets
the requirements at Sec. 419.66(b)(3).
We are inviting public comments on whether the
FARAWAVETM PFA Catheter meets the eligibility criterion at
Sec. 419.66(b)(3).
With respect to the exclusion criteria at Sec. 419.66(b)(4), a
device is not eligible to be considered for pass-through payment if it
is any of the following: (1) equipment, an instrument, apparatus,
implement, or item of this type for which depreciation and financing
expenses are recovered as depreciation assets as defined in Chapter 1
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a
material or supply furnished incident to a service (for example, a
suture, customized surgical kit, or clip, other than a radiological
site marker). Per the applicant, the FARAWAVETM PFA Catheter
is (1) not considered equipment, an instrument, apparatus, implement,
or item of this type for which depreciation and financing expenses are
recovered as depreciation assets, and is (2) not a material or supply
furnished incident to a service, and, therefore, is eligible to be
considered for pass-through payment.
We are inviting public comments on whether the
FARAWAVETM PFA Catheter meets the exclusion criterion at
Sec. 419.66(b)(4).
In addition to the criteria at Sec. 419.66(b)(1) through (4), the
criteria for establishing new device categories are specified at Sec.
419.66(c). The first criterion, at Sec. 419.66(c)(1), provides that
CMS determines that a device to be included in the category is not
appropriately described by any of the existing categories or by any
category previously in effect and was not being paid for as an
outpatient service as of December 31, 1996. Per the applicant, the
existing pass-through codes C1730 (Catheter, electrophysiology,
diagnostic, other than 3D mapping (19 or fewer electrodes)) and C1731
(Catheter, electrophysiology, diagnostic, other than 3D mapping (20 or
more electrodes)) do not appropriately describe the
FARAWAVETM PFA Catheter because the FARAWAVETM
PFA Catheter is used for ablation and is not a diagnostic catheter. The
applicant also stated that the existing pass-through code C1732
(Catheter, electrophysiology, diagnostic/ablation, 3D or vector
mapping) does not appropriately describe the FARAWAVETM PFA
Catheter because
[[Page 33577]]
the FARAWAVETM PFA Catheter is not a 3D or vector mapping
catheter. In addition, the applicant asserted that the existing pass-
through codes C1733 (Catheter, electrophysiology, diagnostic/ablation,
other than 3D or vector mapping, other than cool-tip) and C2630
(Catheter, electrophysiology, diagnostic/ablation, other than 3D or
vector mapping, cool-tip) do not appropriately describe the
FARAWAVETM PFA Catheter because these codes describe
catheters that deliver thermal energy, whereas the
FARAWAVETM PFA Catheter utilizes pulsed field energy to
perform irreversible electroporation and deliver tissue selective
ablation. The applicant also noted that the FARAWAVETM PFA
Catheter does not have a cool tip, as described by pass-through device
code C2630. Finally, the applicant stated that the existing pass-
through code C1889 (Implantable/insertable device, not otherwise
classified) does not appropriately describe the FARAWAVETM
PFA Catheter. We note that C1889 is not a device pass-through category
code, and therefore, would not describe the FARAWAVETM PFA
Catheter for the purposes of device pass-through.
We note that, based on the description provided by the applicant,
the FARAWAVETM PFA Catheter is used to achieve catheter
ablation to treat PAF, and therefore, could be appropriately described
by C1733 (Catheter, electrophysiology, diagnostic/ablation, other than
3D or vector mapping, other than cool-tip). Specifically, we believe
that the pass-through payment category C1733 might appropriately
describe the FARAWAVETM PFA Catheter because it includes a
catheter used for ablation of tissue without a cool-tip. Further, C1733
does not specify the ablation modality, such as thermal energy or
electroporation. In this context, we believe that the
FARAWAVETM PFA Catheter might be appropriately described by
C1733.
We are inviting public comment on whether the FARAWAVETM
PFA Catheter meets the device category criterion at Sec. 419.66(c)(1).
The second criterion for establishing a device category, at Sec.
419.66(c)(2), provides that CMS determines either of the following: (1)
that a device to be included in the category has demonstrated that it
will substantially improve the diagnosis or treatment of an illness or
injury or improve the functioning of a malformed body part compared to
the benefits of a device or devices in a previously established
category or other available treatment; or (2) for devices for which
pass-through status will begin on or after January 1, 2020, as an
alternative to the substantial clinical improvement criterion, the
device is part of the FDA's Breakthrough Devices Program and has
received FDA marketing authorization for the indication covered by the
Breakthrough Device designation. The FARAPULSETM PFA System
has a Breakthrough Device designation and marketing authorization from
FDA for the indication covered by the Breakthrough Device designation
(as explained in more detail in the newness criterion), and therefore,
is not evaluated for substantial clinical improvement.
We are inviting public comment on whether the FARAWAVETM
PFA Catheter meets the device category criterion at Sec. 419.66(c)(2).
The third criterion for establishing a device category, at Sec.
419.66(c)(3), requires CMS to determine that the cost of the device is
not insignificant, as described in Sec. 419.66(d). Section 419.66(d)
includes three cost significance criteria that must each be met. The
applicant stated that the FARAWAVETM PFA Catheter would be
reported with HCPCS code as shown in Table 48.
[GRAPHIC] [TIFF OMITTED] TP17JY25.060
To meet the cost criterion for device pass-through payment status,
a device must pass all three tests of the cost criterion for at least
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775),
we generally use the lowest APC payment rate applicable for use with
the nominated device when we assess whether a device meets the cost
significance criterion, thus increasing the probability the device will
pass the cost significance test. Beginning in CY 2017, we calculate the
device offset amount at the HCPCS/CPT code level instead of the APC
level (81 FR 79657). We note that the applicant utilized the CY 2024
payment rates for the three tests of the cost criterion. For our
calculations, we used APC 5213, which had a CY 2024 payment rate of
$22,629.19 at the time the application was received. HCPCS code 93656
in APC 5213 had a device offset amount of $11,251.23 at the time the
application was received. According to the applicant, the cost of the
FARAWAVETM PFA Catheter is $7,983.00.
Section 419.66(d)(1), the first cost significance requirement,
provides that the estimated average reasonable cost of devices in the
category must exceed 25 percent of the applicable APC payment amount
for the service related to the category of devices. The average
reasonable cost of $7,983.00 for the FARAWAVETM PFA Catheter
is 35.28 percent of the applicable APC payment amount for the service
related to the category of devices of $22,629.19 (($7,983.00/
$22,629.19) x 100 = 35.28 percent). Therefore, we believe that the
FARAWAVETM PFA Catheter meets the first cost significance
requirement.
The second cost significance requirement, at Sec. 419.66(d)(2),
provides that the estimated average reasonable cost of the devices in
the category must
[[Page 33578]]
exceed the cost of the device-related portion of the APC payment amount
for the related service by at least 25 percent, which means that the
device cost needs to be at least 125 percent of the offset amount (the
device-related portion of the APC found on the offset list). The
estimated average reasonable cost of $7,983.00 for the
FARAWAVETM PFA Catheter is 70.95 percent of the cost of the
device-related portion of the APC payment amount for the related
service of $11,251.23 (($7,983.00/$11,251.23) x 100 = 70.95 percent).
Therefore, we do not believe that the FARAWAVETM PFA
Catheter meets the second cost significance requirement.
The third cost significance requirement, at Sec. 419.66(d)(3),
provides that the difference between the estimated average reasonable
cost of the devices in the category and the portion of the APC payment
amount for the device must exceed 10 percent of the APC payment amount
for the related service. The difference between the estimated average
reasonable cost of $7,983.00 for the FARAWAVETM PFA Catheter
and the portion of the APC payment amount for the device of $11,251.23
is negative14.44 percent of the APC payment amount for the related
service of $22,629.19 (($7,983.00-$11,251.23)/$22,629.19) x 100 = -
14.44 percent). Therefore, we do not believe that the
FARAWAVETM PFA Catheter meets the third cost significance
requirement.
We are inviting public comment on whether the FARAWAVETM
PFA Catheter meets the cost criterion at Sec. 419.66(c)(3).
(c) SCOUT MDTM Surgical Guidance System
Merit Medical Systems submitted an application for a new device
category for transitional pass-through payment status for the SCOUT
MDTM Surgical Guidance System for CY 2026. According to the
applicant, the SCOUT MDTM Surgical Guidance System
communicates the location of tumor tissue during a tumor excision
procedure. Per the applicant, the SCOUT MDTM Surgical
Guidance System consists of the SCOUT MDTM Delivery System,
SCOUT MDTM Guide, SCOUT MDTM Handpiece, and SCOUT
MDTM Console.
The applicant is only seeking a new device category for
transitional pass-through payment status for the SCOUT MDTM
Delivery System component of the SCOUT MDTM Surgical
Guidance System. The SCOUT MDTM Delivery System, consists of
the SCOUT MDTM Reflectors and the SCOUT MDTM
Delivery Device, a plastic, molded handle attached to a 16 GA
introducer needle with a SCOUT MDTM Reflector preloaded
inside. According to the applicant, the SCOUT MDTM Delivery
System is used to implant the SCOUT MDTM Reflectors, which
identify the location of the tumor tissue to be excised and/or the
boundaries of the region of tissue to be excised during a separately
scheduled procedure. The applicant further explained that there are
four unique configurations of the SCOUT MDTM Reflectors,
which return a detectable signal within surrounding tissue when
illuminated by the micro-impulse radar signal from the SCOUT
MDTM Guide and Handpiece used during the tumor excision
procedure. Per the applicant, each single-use SCOUT MDTM
Delivery System contains one SCOUT MDTM Delivery Device with
one preloaded SCOUT MDTM Reflector.
Please refer to the online application posting for the SCOUT
MDTM Surgical Guidance System, available at https://mearis.cms.gov/public/publications/device-ptp/DEP240830W9M8U.
As stated previously, to be eligible for transitional pass-through
payment under the OPPS, a device must meet the criteria at Sec.
419.66(b)(1) through (4). With respect to the newness criterion at
Sec. 419.66(b)(1), the SCOUT MDTM Surgical Guidance System
received FDA Breakthrough Device designation effective February 1,
2023. The approved FDA indication for the SCOUT MDTM
Surgical Guidance System is:
The SCOUT MD Reflectors are intended to be placed
percutaneously in soft tissue (>30 days) to mark a biopsy site or a
soft tissue site intended for surgical removal. Using imaging guidance
(such as ultrasound, MRI, or radiography) or aided by non-imaging
guidance (SCOUT MD System), the SCOUT MD Reflector is located and
surgically removed with the target tissue. The SCOUT MD System is
intended only for the non-imaging detection and localization of the
SCOUT MD Reflector that has been implanted in a soft tissue biopsy site
or a soft tissue site intended for surgical removal.
FDA granted 510(k) clearance for the SCOUT MDTM Surgical
Guidance System on February 12, 2024, for the same indication as the
one covered by the Breakthrough Device designation. We received the
application for a new device category for transitional pass-through
payment status for the SCOUT MDTM Surgical Guidance System
on August 30, 2024, which is within 3 years of the date of the initial
FDA marketing authorization.
We are inviting public comments on whether the SCOUT
MDTM Surgical Guidance System, inclusive of the SCOUT
MDTM Delivery System meets the newness criterion at Sec.
419.66(b)(1).
As previously noted, the applicant is only seeking a new device
category for transitional pass-through payment status for the SCOUT
MDTM Delivery System component of the SCOUT MDTM
Surgical Guidance System, as such, the eligibility and exclusion
criteria will evaluate SCOUT MDTM Delivery System.
With respect to the eligibility criteria at Sec. 419.66(b)(3), the
device must be an integral part of the service furnished, be used for
one patient only, come in contact with human tissue, and be surgically
inserted or implanted, or applied in or on a wound or other skin
lesion. Per the applicant, the SCOUT MDTM Delivery System
meets the requirements at Sec. 419.66(b)(3).
We are inviting public comments on whether the SCOUT
MDTM Delivery System meets the eligibility criterion at
Sec. 419.66(b)(3).
With respect to the exclusion criteria at Sec. 419.66(b)(4), a
device is not eligible to be considered for pass-through payment if it
is any of the following: (1) equipment, an instrument, apparatus,
implement, or item of this type for which depreciation and financing
expenses are recovered as depreciation assets as defined in Chapter 1
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a
material or supply furnished incident to a service (for example, a
suture, customized surgical kit, or clip, other than a radiological
site marker). Per the applicant, the SCOUT MDTM Delivery
System is (1) not considered equipment, an instrument, apparatus,
implement, or item of this type for which depreciation and financing
expenses are recovered as depreciation assets, and is (2) not a
material or supply furnished incident to a service, and, therefore, is
eligible to be considered for pass-through payment.
We are inviting public comments on whether the SCOUT
MDTM Delivery System meets the exclusion criterion at Sec.
419.66(b)(4).
In addition to the criteria at Sec. 419.66(b)(1) through (4), the
criteria for establishing new device categories are specified at Sec.
419.66(c). The first criterion, at Sec. 419.66(c)(1), provides that
CMS determines that a device to be included in the category is not
appropriately described by any of the existing categories or by any
category previously in effect, and was not being paid for as an
outpatient service as of December 31, 1996. Per the applicant,
[[Page 33579]]
the existing pass-through codes C1879 \29\ (Tissue marker
(implantable)) and C1819 (Tissue localization excision device) do not
appropriately describe the SCOUT MDTM Delivery System
because the SCOUT MDTM Delivery System is different than
other wire-free localization/fiducial devices used for breast
conserving surgery and is the only device that: (1) incorporates
application-specific integrated circuit (ASIC) technology customized
for use with the SCOUT MDTM Surgical Guidance System; (2)
uses radar technology to detect, locate and identify the implanted
reflector(s) within 1 millimeter (mm) of accuracy; (3)
utilizes up to 4 uniquely shaped reflectors for a more clearly defined
radiographic image of the area of interest to be excised; (4)
incorporates differentiated radar signatures and detection cadences
specific to each reflector; (5) can detect up to 4 unique reflectors
simultaneously or individually to more precisely identify pre-defined
surgical margins; and (6) has no significant MRI artifact. The
applicant further explained that the SCOUT MDTM Delivery
system includes four distinct implant (SCOUT MDTM Reflector)
shapes, each with a unique radar signature that enables clear detection
and identification of the multiple localization devices previously
placed to mark the desired surgical margins during the excision
procedure. Upon review, we have not identified an existing pass-through
payment category that describes the SCOUT MDTM Delivery
System.
---------------------------------------------------------------------------
\29\ Effective July 1, 2013, CMS deleted HCPCS code C1879
(Tissue marker, implantable) because it is described by HCPCS code
A4648 (Tissue marker, implantable, any type). Centers for Medicare &
Medicaid Services (2013). Pub 100-04 Medicare Claims Processing
(Transmittal 2718) in CMS Manual System. Accessed at https://www.cms.gov/regulations-and-guidance/guidance/transmittals/2013-transmittals-items/r2718cp.
---------------------------------------------------------------------------
We are inviting public comment on whether the SCOUT MDTM
Delivery System meets the device category criterion at Sec.
419.66(c)(1).
The second criterion for establishing a device category, at Sec.
419.66(c)(2), provides that CMS determines either of the following: (1)
that a device to be included in the category has demonstrated that it
will substantially improve the diagnosis or treatment of an illness or
injury or improve the functioning of a malformed body part compared to
the benefits of a device or devices in a previously established
category or other available treatment; or (2) for devices for which
pass-through status will begin on or after January 1, 2020, as an
alternative to the substantial clinical improvement criterion, the
device is part of the FDA's Breakthrough Devices Program and has
received FDA marketing authorization for the indication covered by the
Breakthrough Device designation. The SCOUT MDTM Surgical
Guidance System has a Breakthrough Device designation and marketing
authorization from FDA for the indication covered by the Breakthrough
Device designation (as explained in more detail of the newness
criterion) and therefore is not evaluated for substantial clinical
improvement.
We are inviting public comment on whether the SCOUT MDTM
Delivery System meets the device category criterion at Sec.
419.66(c)(2).
The third criterion for establishing a device category, at Sec.
419.66(c)(3), requires CMS to determine that the cost of the device is
not insignificant, as described in Sec. 419.66(d). Section 419.66(d)
includes three cost significance criteria that must each be met. The
applicant stated that the SCOUT MDTM Delivery System would
be reported with HCPCS codes as shown in Table 49.
[GRAPHIC] [TIFF OMITTED] TP17JY25.061
To meet the cost criterion for device pass-through payment status,
a device must pass all three tests of the cost criterion for at least
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775),
we generally use the lowest APC payment rate applicable for use with
the nominated device when we assess whether a device meets the cost
significance criterion, thus increasing the probability the device will
pass the cost significance test. Beginning in CY 2017, we calculate the
device offset amount at the HCPCS/CPT code level instead of the APC
level (81 FR 79657). We note that the applicant utilized the CY 2025
payment rates for the three tests of the cost criterion. For our
calculations, we used APC 5071, which had a CY 2025 payment rate of
$703.59 at the time the application was received. HCPCS code 19287 in
APC 5071 had a device offset amount of $240.56 at the
[[Page 33580]]
time the application was received.\30\ Per the applicant, an average of
1.95 SCOUT MDTM Reflectors are placed per procedure with a
selling price of $550.00 for each single-use SCOUT MDTM
Delivery System containing a SCOUT MDTM Delivery Device with
one preloaded SCOUT MDTM Reflector. Therefore, according to
the applicant, the average cost per procedure for the SCOUT
MDTM Delivery System is $1,072.00.
---------------------------------------------------------------------------
\30\ We note the applicant selected APC 5072 and an APC payment
rate of $1,620.24 for the three tests of the cost criteria. However,
for our calculation, we selected APC 5071, which we believe had the
lowest applicable APC payment rate of $703.59 found in the CY 2025
OPPS/ASC final rule with comment period, among the APCs related to
the HCPCS/CPT codes provided by the applicant. We selected the
HCPCS/CPT code level device offset amount of $240.56 related to
HCPCS 19287 in APC 5071. Based on our initial assessment for this
proposed rule, using the APC payment rate of $703.59 and the device
offset amount of $240.56 would result in the SCOUT MDTM
Delivery System meeting the cost significance requirement.
---------------------------------------------------------------------------
Section 419.66(d)(1), the first cost significance requirement,
provides that the estimated average reasonable cost of devices in the
category must exceed 25 percent of the applicable APC payment amount
for the service related to the category of devices. The average
reasonable cost of $1,072.00 for the SCOUT MDTM Delivery
System is 152.36 percent of the applicable APC payment amount for the
service related to the category of devices, of $703.59 (($1,072.00/
$703.59 x 100 = 152.36 percent). Therefore, we believe that the SCOUT
MDTM Delivery System meets the first cost significance
requirement.
The second cost significance requirement, at Sec. 419.66(d)(2),
provides that the estimated average reasonable cost of the devices in
the category must exceed the cost of the device-related portion of the
APC payment amount for the related service by at least 25 percent,
which means that the device cost needs to be at least 125 percent of
the offset amount (the device-related portion of the APC found on the
offset list). The estimated average reasonable cost of $1,072.00 for
the SCOUT MDTM Delivery System is 445.63 percent of the cost
of the device-related portion of the APC payment amount for the related
service, of $240.56 ($1,072.00/$240.56 x 100 = 445.63 percent).
Therefore, we believe that the SCOUT MDTM Delivery System
meets the second cost significance requirement.
The third cost significance requirement, at Sec. 419.66(d)(3),
provides that the difference between the estimated average reasonable
cost of the devices in the category and the portion of the APC payment
amount for the device must exceed 10 percent of the APC payment amount
for the related service. The difference between the estimated average
reasonable cost of $1,072.00 for the SCOUT MDTM Delivery
System and the portion of the APC payment amount for the device of
$240.56 is 118.17 percent of the APC payment amount for the related
service, of $703.59 ((($1,072.00-$240.56)/$703.59) x 100 = 118.17
percent). Therefore, we believe that the SCOUT MDTM Delivery
System meets the third cost significance requirement.
We are inviting public comment on whether the SCOUT MDTM
Delivery System meets the cost criterion at Sec. 419.66(c)(3).
(d) VasQTM
Laminate Medical submitted an application for a new device category
for transitional pass-through payment status for VasQTM for
CY 2026. Per the applicant, VasQTM is a nitinol implant
which is surgically placed outside and/or around an artery and/or vein
to provide external support to arteriovenous fistulas created for
vascular access by means of vascular surgery. The applicant further
explained that VasQTM reinforces the juxta-anastomotic
region against increased wall tension in the newly arterialized vein,
guides a more laminate hemodynamic profile of flow with its tapered
configuration, and maintains the structural integrity of the
anastomotic configuration.
Please refer to the online application posting for
VasQTM, available at https://mearis.cms.gov/public/publications/device-ptp/DEP2405312T1JR.
As stated previously, to be eligible for transitional pass-through
payment under the OPPS, a device must meet the criteria at Sec.
419.66(b)(1) through (4). With respect to the newness criterion at
Sec. 419.66(b)(1), VasQTM received FDA Breakthrough Device
designation effective June 5, 2020. The approved FDA indication for
VasQTM is:
For use include use as an external support for upper
extremity arteriovenous fistulas created for vascular access by means
of vascular surgery.
FDA granted De Novo classification for VasQTM on
September 26, 2023, for the same indication as the one covered by the
Breakthrough Device designation. We received the application for a new
device category for transitional pass-through payment status for
VasQTM on May 31, 2024, which is within 3 years of the date
of the initial FDA marketing authorization.
We are inviting public comments on whether VasQTM meets
the newness criterion at Sec. 419.66(b)(1).
With respect to the eligibility criteria at Sec. 419.66(b)(3), the
device must be an integral part of the service furnished, be used for
one patient only, come in contact with human tissue, and be surgically
inserted or implanted, or applied in or on a wound or other skin
lesion. Per the applicant, VasQTM meets the requirements at
Sec. 419.66(b)(3).
We are inviting public comments on whether VasQTM meets
the eligibility criterion at Sec. 419.66(b)(3).
With respect to the exclusion criteria at Sec. 419.66(b)(4), a
device is not eligible to be considered for pass-through payment if it
is any of the following: (1) equipment, an instrument, apparatus,
implement, or item of this type for which depreciation and financing
expenses are recovered as depreciation assets as defined in Chapter 1
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a
material or supply furnished incident to a service (for example, a
suture, customized surgical kit, or clip, other than a radiological
site marker). Per the applicant, VasQTM is (1) not
considered equipment, an instrument, apparatus, implement, or item of
this type for which depreciation and financing expenses are recovered
as depreciation assets, and is (2) not a material or supply furnished
incident to a service, and, therefore, is eligible to be considered for
pass-through payment.
We are inviting public comments on whether VasQTM meets
the exclusion criterion at Sec. 419.66(b)(4).
In addition to the criteria at Sec. 419.66(b)(1) through (4), the
criteria for establishing new device categories are specified at Sec.
419.66(c). The first criterion, at Sec. 419.66(c)(1), provides that
CMS determines that a device to be included in the category is not
appropriately described by any of the existing categories or by any
category previously in effect, and was not being paid for as an
outpatient service as of December 31, 1996. Per the applicant, no
existing (current or previous) device categories for pass-through
payment appropriately describe VasQTM. According to the
applicant, pass-through code: C1877 (Stent, non-coated/non-covered,
without delivery system) does not appropriately describe
VasQTM because VasQTM is not a stent and does not
come in contact with blood. The applicant also stated that pass-through
code C1768 (Graft, vascular) does not appropriately describe
VasQTM because VasQTM is not a dialysis graft, is
not permitted to be cannulated, and does not have direct contact with
blood. The applicant asserted that pass-through code C1881 (Dialysis
access system (implantable)) does not appropriately
[[Page 33581]]
describe VasQTM because VasQTM is not a dialysis
access system, is not permitted to be cannulated, and does not have
direct contact with blood. Upon review, we have not identified an
existing pass-through payment category that describes
VasQTM.
We are inviting public comment on whether VasQTM meets
the device category criterion at Sec. 419.66(c)(1).
The second criterion for establishing a device category, at Sec.
419.66(c)(2), provides that CMS determines either of the following: (1)
that a device to be included in the category has demonstrated that it
will substantially improve the diagnosis or treatment of an illness or
injury or improve the functioning of a malformed body part compared to
the benefits of a device or devices in a previously established
category or other available treatment; or (2) for devices for which
pass-through status will begin on or after January 1, 2020, as an
alternative to the substantial clinical improvement criterion, the
device is part of the FDA's Breakthrough Devices Program and has
received FDA marketing authorization for the indication covered by the
Breakthrough Device designation. VasQTM has a Breakthrough
Device designation and marketing authorization from FDA for the
indication covered by the Breakthrough Device designation (as explained
in more detail of the newness criterion) and therefore is not evaluated
for substantial clinical improvement.
We are inviting public comment on whether VasQTM meets
the device category criterion at Sec. 419.66(c)(2).
The third criterion for establishing a device category, at Sec.
419.66(c)(3), requires CMS to determine that the cost of the device is
not insignificant, as described in Sec. 419.66(d). Section 419.66(d)
includes three cost significance criteria that must each be met. The
applicant stated that VasQTM would be reported with HCPCS
codes as shown in Table 50.
[GRAPHIC] [TIFF OMITTED] TP17JY25.062
To meet the cost criterion for device pass-through payment status,
a device must pass all three tests of the cost criterion for at least
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775),
we generally use the lowest APC payment rate applicable for use with
the nominated device when we assess whether a device meets the cost
significance criterion, thus increasing the probability the device will
pass the cost significance test. Beginning in CY 2017, we calculate the
device offset amount at the HCPCS/CPT code level instead of the APC
level (81 FR 79657). We note the applicant used the CY 2024 payment
rates for the three tests of the cost criterion. For our calculations,
we used APC 5183, which had a CY 2024 payment rate of $3,037.01 at the
time the application was received. HCPCS code 36821 in APC 5183 had a
device offset amount of $49.81 at the time the application was
received. According to the applicant, the cost of VasQTM is
$4,900.00.
Section 419.66(d)(1), the first cost significance requirement,
provides that the estimated average reasonable cost of devices in the
category must exceed 25 percent of the applicable APC payment amount
for the service related to the category of devices. The average
reasonable cost of $4,900.00 for VasQTM is 161.34 percent of
the applicable APC payment amount for the service related to the
category of devices of $3,037.01 (($4,900.00/$3,037.01) x 100 = 161.34
percent). Therefore, we believe that VasQTM meets the first
cost significance requirement.
The second cost significance requirement, at Sec. 419.66(d)(2),
provides that the estimated average reasonable cost of the devices in
the category must exceed the cost of the device-related portion of the
APC payment amount for the related service by at least 25 percent,
which means that the device cost needs to be at least 125 percent of
the offset amount (the device-related portion of the APC found on the
offset list). The estimated average reasonable cost of $4,900.00 for
VasQTM is 9,837.38 percent of the cost of the device-related
portion of the APC payment amount for the related service of $49.81
(($4,900.00/$49.81) x 100 = 9,837.38 percent). Therefore, we believe
that VasQTM meets the second cost significance requirement.
The third cost significance requirement, at Sec. 419.66(d)(3),
provides that the difference between the estimated average reasonable
cost of the devices in the category and the portion of the APC payment
amount for the device must exceed 10 percent of the APC payment amount
for the related service. The difference between the estimated average
reasonable cost of $4,900.00 for VasQTM and the portion of
the APC payment amount for the device of $49.81 is 159.70 percent of
the APC payment amount for the related service of $3,037.01
((($4,900.00-$49.81)/$3,037.01) x 100 = 159.70 percent). Therefore, we
believe that VasQTM meets the third cost significance
requirement.
We are inviting public comment on whether VasQTM meets
the cost criterion at Sec. 419.66(c)(3).
(2) Traditional Device Pass-Through Applications
(a) Axoguard HA+ Nerve ProtectorTM
Axogen Corporation submitted an application for a new device
category for transitional pass-through payment status for the Axoguard
HA+ Nerve ProtectorTM for CY 2026. Per the
[[Page 33582]]
applicant, the Axoguard HA+ Nerve ProtectorTM is a porcine
small intestinal submucosa (SIS) decellularized extracellular matrix
(ECM), with a dry coating of sodium hyaluronate and sodium alginate
applied to both sides of the device that forms a thin layer of
lubricous hydrogel when hydrated. According to the applicant, the
Axoguard HA+ Nerve ProtectorTM is designed to be a
protective interface between the nerve and the surrounding tissue to
minimize the potential for soft tissue attachments and tethering that
restricts the nerve's ability to glide and move through the tissue
structures during anatomic movement.
Please refer to the online application posting for the Axoguard HA+
Nerve ProtectorTM, available at https://mearis.cms.gov/public/publications/device-ptp/DEP240830YUKGT.
As stated previously, to be eligible for transitional pass-through
payment under the OPPS, a device must meet the criteria at Sec.
419.66(b)(1) through (4). With respect to the newness criterion at
Sec. 419.66(b)(1), FDA granted the applicant 510(k) clearance for the
Axoguard HA+ Nerve ProtectorTM on April 7, 2023, and then
granted a second 510(k) clearance for an expanded indication on October
12, 2023. The approved FDA indications for the Axoguard HA+ Nerve
ProtectorTM are:
For the management of peripheral nerve injuries where
there is no gap;
For the management and protection of peripheral nerve
injuries where there is no gap or following closure of the gap.
We received the application for a new device category for
transitional pass-through payment status for the Axoguard HA+ Nerve
ProtectorTM on August 30, 2024, which is within 3 years of
the date of the initial FDA marketing authorization.
Per the applicant, the OPPS pass-through application for the
Axoguard HA+ Nerve ProtectorTM is only for the protection of
peripheral nerve injuries where there is no nerve gap, specifically for
protecting a nerve following a revision (secondary) carpal tunnel (CT)
or cubital tunnel (CuT) nerve decompression procedure.
We are inviting public comments on whether the Axoguard HA+ Nerve
ProtectorTM meets the newness criterion at Sec.
419.66(b)(1).
With respect to the eligibility criteria at Sec. 419.66(b)(3), the
device must be an integral part of the service furnished, be used for
one patient only, come in contact with human tissue, and be surgically
inserted or implanted, or applied in or on a wound or other skin
lesion. Per the applicant, the Axoguard HA+ Nerve
ProtectorTM meets the requirements at Sec. 419.66(b)(3).
We are inviting public comments on whether the Axoguard HA+ Nerve
ProtectorTM meets the eligibility criterion at Sec.
419.66(b)(3).
With respect to the exclusion criteria at Sec. 419.66(b)(4), a
device is not eligible to be considered for pass-through payment if it
is any of the following: (1) equipment, an instrument, apparatus,
implement, or item of this type for which depreciation and financing
expenses are recovered as depreciation assets as defined in Chapter one
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a
material or supply furnished incident to a service (for example, a
suture, customized surgical kit, or clip, other than a radiological
site marker). Per the applicant, the Axoguard HA+ Nerve
ProtectorTM is (1) not considered equipment, an instrument,
apparatus, implement, or item of this type for which depreciation and
financing expenses are recovered as depreciation assets and is (2) not
a material or supply furnished incident to a service, and therefore, is
eligible to be considered for pass-through payment.
We are inviting public comments on whether the Axoguard HA+ Nerve
ProtectorTM meets the exclusion criterion at Sec.
419.66(b)(4).
In addition to the criteria at Sec. 419.66(b)(1) through (4), the
criteria for establishing new device categories are specified at Sec.
419.66(c). The first criterion, at Sec. 419.66(c)(1), provides that
CMS determines that a device to be included in the category is not
appropriately described by any of the existing categories or by any
category previously in effect and was not being paid for as an
outpatient service as of December 31, 1996. According to the applicant,
no existing device categories for pass-through payment appropriately
describe the Axoguard HA+ Nerve ProtectorTM because the
existing device categories C1763 (Connective tissue, non-human
(includes synthetic)), C1765 (Adhesion barrier), and C1781 (Mesh
(implantable)) describe similar, but distinct products. The applicant
stated that the existing pass-through code C1763 does not appropriately
describe the Axoguard HA+ Nerve ProtectorTM because the
devices described by C1763 are used for treating urinary incontinence
or for implantation to reinforce soft tissues where weakness exists in
the urological or musculoskeletal anatomy, whereas the Axoguard HA+
Nerve ProtectorTM is indicated for the management of
peripheral nerve injuries. In addition, the applicant asserted that the
existing pass-through code C1765 does not appropriately describe the
Axoguard HA+ Nerve ProtectorTM because the devices described
by C1765 are bioresorable substances and principally used in spinal
surgeries, while the Axoguard HA+ Nerve ProtectorTM is
indicated for peripheral nerves. Moreover, the applicant stated that
the existing pass-through code C1781 does not appropriately describe
the Axoguard HA+ Nerve ProtectorTM because the nominated
device is indicated specifically for management of peripheral nerve
injuries, whereas devices described by C1781 are for use in hernia
repair. The applicant further asserted that C1765 and C1781 do not
describe the Axoguard HA+ Nerve ProtectorTM because the
device's porcine SIS ECM is not simply resorbed, but is remodeled into
a meso/epineurium-like tissue, while its sodium hyaluronate and sodium
alginate coating reduces friction and promotes nerve gliding.
We note that based on the description the applicant provided, the
Axoguard HA+ Nerve ProtectorTM is a porcine SIS ECM with
hyaluronate-alginate coating used for the management and protection of
peripheral nerve injuries where there is no gap or following closure of
a gap, and thus, could be encompassed by the descriptors C1763 and
C1765. Specifically, we believe that the description the applicant
provided for the C1763 category definition is incomplete. The applicant
stated that C1763 is indicated for treating urinary incontinence
resulting from hypermobility or Intrinsic Sphincter Deficiency (ISD),
pelvic floor repair, [or implantation] to reinforce soft tissues where
weakness exists in the urological or musculoskeletal anatomy. However,
we note that, in reference to C1763, section 60.4.3, Chapter 4 of the
Medicare Claims Processing Manual provides that, these tissues include
a natural, acellular collagen matrix typically obtained from porcine or
bovine small intestinal submucosa, or pericardium. This bio-material is
intended to repair or support damaged or inadequate soft tissue. They
are used to treat urinary incontinence resulting from hypermobility or
Intrinsic Sphincter Deficiency (ISD), pelvic floor repair, or for
implantation to reinforce soft tissues where weakness exists in the
urological or musculoskeletal anatomy. [This excludes those items that
are used to replace skin.] Thus, because the Axoguard HA+ Nerve
ProtectorTM is an ECM obtained from porcine SIS and intended
to support a damaged or inadequate soft tissue (nerve), we
[[Page 33583]]
believe that the pass-through payment category C1763 may appropriately
describe the Axoguard HA+ Nerve ProtectorTM.
Additionally, we believe that the pass-through payment category
C1765 may also appropriately describe the Axoguard HA+ Nerve
ProtectorTM because the device, as described by the
applicant, is designed to be placed on and around neural structures to
be a protective interface between a nerve and the surrounding tissue,
to minimize the potential for soft tissue attachments, and to ensure
the nerve's ability to glide through tissue structures during anatomic
movement, and therefore may be appropriately described as an adhesion
barrier consistent with devices described by C1765.
We further note that the two neuroplasty procedure codes that could
be used with the Axoguard HA+ Nerve ProtectorTM (CPT[supreg]
codes 64718 and 64721) have previously been used with both categories
C1763 and C1765 and that FDA has previously approved devices described
by C1763 and C1765 and billed using CPT[supreg] codes 64718 or 64721
for neuroplasty and/or transposition of the ulnar nerve at elbow or
median nerve at carpal tunnel. We also note that the inclusion of these
neuroplasty devices in categories C1763 and C1765 appears contradictory
to the applicant's assertion that the categories are inapplicable for
devices indicated for peripheral nerves. In this context, we believe
the Axoguard HA+ Nerve ProtectorTM may be similar to the
devices described by C1763 and C1765, and therefore, the Axoguard HA+
Nerve ProtectorTM may be appropriately described by C1763
and C1765.
We are inviting public comment on whether the Axoguard HA+ Nerve
ProtectorTM meets the device category criterion at Sec.
419.66(c)(1).
The second criterion for establishing a device category, at Sec.
419.66(c)(2), provides that CMS determines either of the following: (1)
that a device to be included in the category has demonstrated that it
will substantially improve the diagnosis or treatment of an illness or
injury or improve the functioning of a malformed body part compared to
the benefits of a device or devices in a previously established
category or other available treatment; or (2) for devices for which
pass-through status will begin on or after January 1, 2020, as an
alternative to the substantial clinical improvement criterion, the
device is part of the FDA's Breakthrough Devices Program and has
received FDA marketing authorization for the indication covered by the
Breakthrough Device designation. The applicant asserted that the
Axoguard HA+ Nerve ProtectorTM represents a substantial
clinical improvement over existing technologies in the management of
peripheral nerve injuries where there is no nerve gap, specifically in
protecting a nerve following a revision (secondary) CT or CuT nerve
decompression procedure.
The applicant provided three redacted manufacturer internal reports
to support these claims, as well as eight background articles/documents
about the predicate device, the Axoguard Nerve ProtectorTM.
We note that the predicate device differs from the Axoguard HA+ Nerve
ProtectorTM in that the nominated device has a dry coating
of sodium hyaluronate and sodium alginate applied to both sides that
forms a thin layer of lubricous hydrogel when hydrated. The addition of
the dry coating of sodium hyaluronate and sodium alginate to the
Axoguard Nerve ProtectorTM appears to be the distinguishing
feature of the device that is the subject of this application. In
addition, the applicant submitted 32 supplemental background articles
describing topics including general disease processes and disease
prevalence. The applicant's assertions regarding the substantial
clinical improvement criterion are shown in Table 51. Please see the
online posting for the Axoguard HA+ Nerve ProtectorTM for
the applicant's complete statements regarding the substantial clinical
improvement criterion and the supporting evidence provided.
BILLING CODE 4120-01-P
[[Page 33584]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.063
[[Page 33585]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.064
[[Page 33586]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.065
[[Page 33587]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.066
[[Page 33588]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.067
BILLING CODE 4120-01-C
After review of the information provided by the applicant, we have
the following concerns regarding whether the Axoguard HA+ Nerve
ProtectorTM meets the substantial clinical improvement
criterion.
The applicant asserted that the Axoguard HA+ Nerve
ProtectorTM demonstrates clinical improvement in: (1) nerve
health in an injured tissue bed through less adhesion, extraneural
scarring, and inflammatory markers, (2) nerve health in an injured
tissue bed through decreased friction between the nerve and surrounding
tissue to allow for gliding and to minimize potential for soft tissue
attachment, (3) device performance due to its sodium hyaluronate and
sodium alginate gel layer that allows for nerve gliding, and (4)
sensory and motor symptoms. We note that the applicant provided
redacted internal studies of animal models (Axogen Corporation, 2024;
Axogen Corporation, n.d.; Axogen Corporation, 2022) and an abstract
(Alsmadi et al., 2025) on Axoguard HA+ Nerve ProtectorTM in
rats. We note that the applicant did not submit studies assessing the
Axoguard HA+ Nerve ProtectorTM in humans. Therefore, we
question whether data from animal studies is sufficient to extrapolate
to human populations for the purposes of demonstrating substantial
clinical improvement.
For the other claims, the applicant provided only background
evidence, specifically retrospective studies, which describe findings
for a predicate device, the Axoguard Nerve ProtectorTM,
which received FDA 510(k) clearance on January 10, 2014, not the
nominated device, the Axoguard HA+ Nerve ProtectorTM. We
note that the applicant stated that the nominated Axoguard HA+ Nerve
ProtectorTM improved on the predicate device, but the
applicant did not provide any additional information or evidence to
support this claim. We also note that the application does not include
comparative outcome data between the Axoguard HA+ Nerve
ProtectorTM and its predicate device. We would welcome
additional information that compares outcome data from the Axoguard HA+
Nerve ProtectorTM and the predicate device, the Axoguard
Nerve ProtectorTM, to help inform our assessment of whether
the Axoguard HA+ Nerve ProtectorTM demonstrates a
substantial clinical improvement.
In addition, we are concerned that the provided evidence does not
directly support the applicant's 10 claims that the Axoguard HA+ Nerve
ProtectorTM demonstrates substantial clinical improvement
over existing technologies. We note that no evidence was provided
comparing the Axoguard HA+ Nerve ProtectorTM to other
currently available treatments for the indicated condition including
autologous flaps/fat pads and xenografts or off-the-shelf wraps that
include materials sourced from human amniotic membrane, bovine,
porcine, and plants. We welcome further evidence that compares the
Axoguard HA+ Nerve ProtectorTM to currently available
treatments in the clinical setting where it is most likely to be used.
To demonstrate substantial clinical improvement over currently
available treatments, we consider supporting evidence, preferably
published peer-reviewed clinical trials, that show improved clinical
outcomes, such as reduction in mortality, complications, subsequent
interventions, future hospitalizations, recovery time, pain, or a more
rapid beneficial resolution of the disease process compared to the
standard of care. Additional supporting evidence demonstrating these
improved clinical outcomes would help inform our assessment of whether
the Axoguard HA+ Nerve ProtectorTM demonstrates
[[Page 33589]]
substantial clinical improvement over existing technologies.
We are inviting public comment on whether the Axoguard HA+ Nerve
ProtectorTM meets the device category criterion at Sec.
419.66(c)(2).
The third criterion for establishing a device category, at Sec.
419.66(c)(3), requires CMS to determine that the cost of the device is
not insignificant, as described in Sec. 419.66(d). Section 419.66(d)
includes three cost significance criteria that must each be met. The
applicant stated that the Axoguard HA+ Nerve ProtectorTM
would be reported with HCPCS codes as shown in Table 52.
[GRAPHIC] [TIFF OMITTED] TP17JY25.068
To meet the cost criterion for device pass-through payment status,
a device must pass all three tests of the cost criterion for at least
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775),
we generally use the lowest APC payment rate applicable for use with
the nominated device when we assess whether a device meets the cost
significance criterion, thus increasing the probability the device will
pass the cost significance test. Beginning in CY 2017, we calculate the
device offset amount at the HCPCS/CPT code level instead of the APC
level (81 FR 79657). We note the applicant utilized the CY 2025 payment
rates for the three tests of the cost criterion. For our calculations,
we used APC 5431, which had a CY 2025 payment rate of $1,952.77 at the
time the application was received. HCPCS code 64721 in APC 5431 had a
device offset amount of $11.52 at the time the application was
received. Per the applicant, the average selling price (ASP) of the
Axoguard HA+ Nerve ProtectorTM will fluctuate slightly
depending on the overall mix of units sold and contracted prices during
a given time period. According to the applicant, the average cost of
the Axoguard HA+ Nerve ProtectorTM, which represents the ASP
from August 2024 to February 2025, is $3,375.25.
Section 419.66(d)(1), the first cost significance requirement,
provides that the estimated average reasonable cost of devices in the
category must exceed 25 percent of the applicable APC payment amount
for the service related to the category of devices. The average
reasonable cost of $3,375.25 for the Axoguard HA+ Nerve
ProtectorTM is 172.84 percent of the applicable APC payment
amount for the service related to the category of devices of $1,952.77
(($3, 375.25/$1,952.77) x 100 = 172.84 percent). Therefore, we believe
that the Axoguard HA+ Nerve ProtectorTM meets the first cost
significance requirement.
The second cost significance requirement, at Sec. 419.66(d)(2),
provides that the estimated average reasonable cost of the devices in
the category must exceed the cost of the device-related portion of the
APC payment amount for the related service by at least 25 percent,
which means that the device cost needs to be at least 125 percent of
the offset amount (the device-related portion of the APC found on the
offset list). The estimated average reasonable cost of $3,375.25 for
the Axoguard HA+ Nerve ProtectorTM is 29,299.05 percent of
the cost of the device-related portion of the APC payment amount for
the related service of $11.52 (($3,375.25/$11.52) x 100 = 29,299.05
percent). Therefore, we believe that the Axoguard HA+ Nerve
ProtectorTM meets the second cost significance requirement.
The third cost significance requirement, at Sec. 419.66(d)(3),
provides that the difference between the estimated average reasonable
cost of the devices in the category and the portion of the APC payment
amount for the device must exceed 10 percent of the APC payment amount
for the related service. The difference between the estimated average
reasonable cost of $3,375.25 for the Axoguard HA+ Nerve
ProtectorTM and the portion of the APC payment amount for
the device of $11.52 is 172.25 percent of the APC payment amount for
the related service of $1,952.77 ((($3,375.25-$11.52)/$1,952.77) x 100
= 172.25 percent). Therefore, we believe that the Axoguard HA+ Nerve
ProtectorTM meets the third cost significance requirement.
We are inviting public comment on whether the Axoguard HA+ Nerve
ProtectorTM meets the cost criterion at Sec. 419.66(c)(3).
(b) LithoVueTM Elite Digital Flexible Ureteroscope System
With Pressure Monitoring
Boston Scientific Corporation submitted an application for a new
device category for transitional pass-through payment status for the
LithoVueTM Elite Digital Flexible Ureteroscope System with
Pressure Monitoring (the LithoVueTM Elite System) for CY
2026. Per the applicant, the LithoVueTM Elite System
consists of a single-use, disposable flexible ureteroscope (the
LithoVueTM Elite Ureteroscope) and a workstation (the
StoneSmart Connect Console), that provide real-time intraluminal
pressure monitoring in the kidney and ureter during ureteroscopy and
can be used in conjunction with endoscopic accessories to perform
various diagnostic and therapeutic procedures in the urinary tract. The
applicant stated that the distal tip of the LithoVueTM Elite
Ureteroscope's shaft includes the working channel, the illumination
optics, the digital imaging sensor, and a Micro-Electro-Mechanical
Systems (MEMS) pressure sensor for monitoring the real-time
intraluminal pressure during ureteroscopy.
The applicant is only seeking a new device category for
transitional pass-through payment status for the LithoVueTM
Elite Ureteroscope, a component of the LithoVueTM Elite
System.
Please refer to the online application posting for the
LithoVueTM Elite Digital Flexible Ureteroscope System with
Pressure Monitoring, available at https://mearis.cms.gov/public/publications/device-ptp/DEP2503038TF22.
As stated previously, to be eligible for transitional pass-through
payment under the OPPS, a device must meet the criteria at Sec.
419.66(b)(1) through (4). With respect to the newness criterion at
Sec. 419.66(b)(1), FDA granted the applicant 510(k) clearance for the
LithoVueTM Elite System on February 2, 2023. The approved
FDA indication for the LithoVueTM Elite System is:
To be used to visualize organs, cavities, and canals in
the urinary tract (urethra, bladder, ureter, calyces and renal
papillae) via transurethral or percutaneous access routes. It can also
be used in conjunction with endoscopic accessories to perform various
diagnostic and therapeutic procedures in the urinary tract.
[[Page 33590]]
On July 1, 2024, FDA granted the applicant Special 510(k) clearance
for the LithoVueTM Elite Ureteroscope (with pressure
monitoring) with a redesigned distal tip to improve its durability
during a ureteroscopy for this same indication. We received the
application for a new device category for transitional pass-through
payment status for the LithoVueTM Elite System on March 3,
2025, which is within 3 years of the date of the initial FDA marketing
authorization.
We are inviting public comments on whether the
LithoVueTM Elite System meets the newness criterion at Sec.
419.66(b)(1).
As previously noted, the applicant is only seeking a new device
category for transitional pass-through payment status for the
LithoVueTM Elite Ureteroscope component of the
LithoVueTM Elite System, and as such, the eligibility and
exclusion criteria will evaluate LithoVueTM Elite
Ureteroscope.
With respect to the eligibility criteria at Sec. 419.66(b)(3), the
device must be an integral part of the service furnished, be used for
one patient only, come in contact with human tissue, and be surgically
inserted or implanted, or applied in or on a wound or other skin
lesion. Per the applicant, the LithoVueTM Elite Ureteroscope
meets the requirements at Sec. 419.66(b)(3).
With respect to the LithoVueTM Elite Ureteroscope, we
question whether the MEMS pressure sensor is integral to the service
furnished. In the CY 2014 OPPS final rule with comment period (78 FR
75005), we stated that we have interpreted ``integral'' to mean that
the device is necessary to furnish or deliver the primary procedure
with which it is used. For example, a pacemaker is integral to the
procedure of implantation of a pacemaker. Per the applicant, the
LithoVueTM Elite Ureteroscope differs from other currently
available ureteroscopes, because the device includes the MEMS pressure
sensor which is located at the distal tip of the ureteroscope and
enables continuous, real-time monitoring of intrarenal pressure (IRP)
during ureteroscopy. We note that neither the FDA 510(k) indication nor
the FDA Special 510(k) indication include the MEMS pressure sensor, and
the cleared indications appear to be consistent with the indications
for other FDA approved ureteroscopes. In addition, as discussed in more
detail in the Sec. 419.66(c)(2) discussion below, we question whether
there is sufficient evidence to support the assertion that continuous
pressure monitoring is necessary and/or required to furnish or deliver
the primary procedure (ureteroscopy) with which it is used. While we do
not question whether the ureteroscope itself is integral to the service
furnished, we question whether the MEMS pressure sensor, the mechanism
which the applicant asserts is the distinguishing feature of the
LithoVueTM Elite Ureteroscope, is integral to the service
furnished in accordance with Sec. 419.66(b)(3), because pressure
monitoring during ureteroscopy procedures appears to be purely additive
and not necessary to furnish the ureteroscopy.
We are inviting public comments on whether the
LithoVueTM Elite Ureteroscope meets the eligibility
criterion at Sec. 419.66(b)(3).
With respect to the exclusion criteria at Sec. 419.66(b)(4), a
device is not eligible to be considered for pass-through payment if it
is any of the following: (1) equipment, an instrument, apparatus,
implement, or item of this type for which depreciation and financing
expenses are recovered as depreciation assets as defined in Chapter 1
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a
material or supply furnished incident to a service (for example, a
suture, customized surgical kit, or clip, other than a radiological
site marker). Per the applicant, the LithoVueTM Elite
Ureteroscope, the component nominated in this application, is (1) not
considered equipment, an instrument, apparatus, implement, or item of
this type for which depreciation and financing expenses are recovered
as depreciation assets, and (2) not a material or supply furnished
incident to a service, and therefore, is eligible to be considered for
pass-through payment.
We are inviting public comments on whether the
LithoVueTM Elite Ureteroscope meets the exclusion criterion
at Sec. 419.66(b)(4).
In addition to the criteria at Sec. 419.66(b)(1) through (4), the
criteria for establishing new device categories are specified at Sec.
419.66(c). The first criterion, at Sec. 419.66(c)(1), provides that
CMS determines that a device to be included in the category is not
appropriately described by any of the existing categories or by any
category previously in effect, and was not being paid for as an
outpatient service as of December 31, 1996. Per the applicant, the
existing pass-through code C1747 (Endoscope, single-use (i.e.,
disposable), urinary tract, imaging/illumination device (insertable))
does not appropriately describe the LithoVueTM Elite
Ureteroscope because the category description does not include the
LithoVueTM Elite Ureteroscope's pressure monitoring feature.
The applicant also stated that the existing pass-through code C2624
(Implantable wireless pulmonary artery pressure sensor with delivery
catheter, including all system components) does not appropriately
describe the LithoVueTM Elite Ureteroscope because the
nominated device is an insertable ureteroscope that measures IRP,
whereas C2624 is specific to sensors that measure pulmonary artery
pressure.
We note that, based on the description the applicant provided, the
LithoVueTM Elite Ureteroscope is a single use, disposable
ureteroscope inserted into the urinary tract for imaging and
illumination, and thus, could be appropriately described by C1747.
Specifically, we believe that C1747 may appropriately describe the
LithoVueTM Elite Ureteroscope because it describes any
device that is a single-use (i.e., disposable) endoscope with imaging/
illumination capabilities intended for use in the urinary tract to
perform ureteroscopy procedures. We note that the descriptor for C1747
does not reference device features that would exclude the inclusion of
a pressure monitoring feature. Further, we note that the HCPCS
procedure codes with which the applicant has stated the
LithoVueTM Elite Ureteroscope would be reported are
consistent with the HCPCS codes approved for C1747. In this context, we
believe that the LithoVueTM Elite Ureteroscope may be
similar to the devices described by C1747, and therefore, the
LithoVueTM Elite Ureteroscope may also be appropriately
described by C1747.
We are inviting public comment on whether the LithoVueTM
Elite Ureteroscope meets the device category criterion at Sec.
419.66(c)(1).
The second criterion for establishing a device category, at Sec.
419.66(c)(2), provides that CMS determines either of the following: (1)
that a device to be included in the category has demonstrated that it
will substantially improve the diagnosis or treatment of an illness or
injury or improve the functioning of a malformed body part compared to
the benefits of a device or devices in a previously established
category or other available treatment; or (2) for devices for which
pass-through status will begin on or after January 1, 2020, as an
alternative to the substantial clinical improvement criterion, the
device is part of the FDA's Breakthrough Devices Program and has
received FDA marketing authorization for the indication covered by the
Breakthrough Device designation. The applicant asserted that the
LithoVueTM Elite Ureteroscope represents a substantial
clinical improvement over existing
[[Page 33591]]
technologies because it addresses a critical unmet need by providing a
novel feature to continuously measure real-time IRP during urological
surgeries. According to the applicant, IRP management during
ureteroscopy is a vitally important patient safety consideration. Per
the applicant, irrigation of the renal collecting system during
ureteroscopy is essential for maintaining a clear field of view, which
is crucial for effective kidney stone treatment; however, the use of
irrigation to enhance visibility typically increases IRP. The applicant
stated that dangerous IRP elevations can occur without immediate
warning signs, with symptoms often emerging only after significant
physiological damage has taken place. The applicant further asserted
that a prolonged increase in IRP can lead to complications both during
and post procedure.
The applicant provided nine background documents to support these
claims, which include six studies and three sets of clinical
guidelines. The applicant's assertions regarding the substantial
clinical improvement criterion are shown in Table 53. Please see the
online posting for the LithoVueTM Elite System for the
applicant's complete statements regarding the substantial clinical
improvement criterion and the supporting evidence provided.
[[Page 33592]]
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[GRAPHIC] [TIFF OMITTED] TP17JY25.070
[[Page 33594]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.071
After review of the information provided by the applicant, we have
the following concerns regarding whether the LithoVueTM
Elite Ureteroscope meets the substantial clinical improvement
criterion.
[[Page 33595]]
First, we note that none of the studies provided by the applicant
directly evaluate, assess, or review the LithoVueTM Elite
Ureteroscope or any clinical outcomes associated with use of the
nominated device. Rather, the applicant provided background documents
that reference IRP monitoring in general and the potential risks
associated with increased IRP during ureteroscopy procedures. While the
background information provided is relevant to the assertion that IRP
management during ureteroscopy is an important patient safety
consideration, the evidence provided does not directly support the
applicant's claim that utilization of the LithoVueTM Elite
Ureteroscope during ureteroscopy procedures demonstrates a substantial
clinical improvement over existing technologies because it addresses a
critical unmet need of continuous IRP monitoring. Further, the
applicant appears to rely on the assumption that use of the
LithoVueTM Elite Ureteroscope's continuous real-time
pressure monitoring correlates to a low IRP and reduced post-operative
complications, but the submitted information does not support these
assertions. Rather, the applicant provided evidence which seems to rely
on indirect inferences from other sources of data that do not include
the use of the nominated device. In addition, the evidence shows that
adverse events and complications, including sepsis, may generally
result from ureteroscopy and these risks may be higher in the Medicare
population. We would welcome additional evidence that directly
evaluates the clinical outcomes associated with the use of the
LithoVueTM Elite Ureteroscope with continuous IRP monitoring
during ureteroscopy procedures.
Second, while the applicant indicated that there are other single-
use, disposable flexible ureteroscopes available on the market, such as
the LithoVueTM Ureteroscope, Uretero1TM
Ureteroscope System, and Ambu[supreg] aScopeTM 5
Ureteroscope, the documents submitted lack direct comparison of the
nominated device to other similar devices and do not directly show any
clinical improvement that results from the use of the nominated device
compared to the use of other devices. In order to demonstrate
substantial clinical improvement over currently available ureteroscope
options, we favor supporting evidence, preferably published peer-
reviewed clinical trials, that shows improved clinical outcomes, such
as reduction in mortality, complications, subsequent interventions,
future hospitalizations, recovery time, pain, or a more rapid
beneficial resolution of the disease process comparing use of
ureteroscopes with continuous pressure monitoring capability to use of
ureteroscopes without continuous pressure monitoring capability.
Further, we note that FDA determined that the LithoVueTM
Elite Ureteroscope is substantially equivalent to the earlier,
predicate device that the applicant had previously legally marketed.
The FDA 510(k) summary indicated that both devices, the nominated and
predicate, share similar technological characteristics, such as
illumination source, a digital complementary metal oxide semiconductor
imager, and raw image data. Furthermore, the 510(k) summary indicated
that both devices have the same technical characteristics, including
the working channel size, shaft working length, sterilization agent,
imager type and location, mechanical specifications, and optical
specifications. The only noted difference between the two devices is
that the nominated LithoVueTM Elite Ureteroscope has
continuous real-time IRP monitoring capability. Additional supporting
evidence, preferably published peer-reviewed clinical trials, that
shows these improved clinical outcomes would help inform our assessment
of whether the LithoVueTM Elite Ureteroscope demonstrates
substantial clinical improvement over existing technologies.
Third, the applicant provided three review articles highlighting
that IRP monitoring during endourological procedures may potentially
mitigate risks; three clinical guidelines that identify the risks
associated with increased IRP and recommend maintaining low IRP for
safety; and two retrospective studies and a meta-analysis presenting
the common post-procedure risks of ureteroscopy, including sepsis.
While the articles and studies affirm that increased IRP may be
harmful, we note that the totality of the evidence provided does not
establish that continuous real-time, routine IRP monitoring during
ureteroscopy is mandatory or should be the standard of care for
ureteroscopies.31 32 33 None of the three submitted clinical
guidelines establish specific procedural IRP metrics, recommend
continuous real-time IRP measurement during ureteroscopy, or suggest
that continuous real-time IRP measurement should be adopted as the
standard of care. Further, we note that the clinical relevance remains
questionable and the utility of continuous real-time IRP monitoring is
limited, as it is currently primarily used in clinical research as
opposed to everyday clinical practice.\34\ As such, it is not clear
that use of continuous real-time interoperative IRP monitoring during
ureteroscopy procedure represents a substantial clinical improvement.
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\31\ John, J., Wisniewski, P., Fieggen, G., Kaestner, L., &
Lazarus, J. (2024, January). Intrarenal pressure in retrograde
intrarenal surgery: a narrative review. Urology, 195, 201-209.
https://doi.org/10.1016/j.urology.2024.09.026.
\32\ Tokas, T., Herrmann, T.R., Skolarikos, A., Nagele, U., &
Training and Research in Urological Surgery and Technology (TRUST)-
Group. (2019). Pressure matters: intrarenal pressures during normal
and pathological conditions, and impact of increased values to renal
physiology. World Journal of Urology, 37(1), 125-131. https://doi.org/10.1007/s00345-018-2378-4.
\33\ Chew, B.H., Jung, H.U., Emiliani, E., Miller, L.E., Miller,
A.L., & Bhojani, N. (2023, November). Complication risk of
endourological procedures: the role of intrarenal pressure. Urology,
181, 45-47. https://doi.org/10.1016/j.urology.2023.08.011.
\34\ Ho, L., & Sivalingam, Sri. (2023, December 15). What Is the
True Value of Intrarenal Pressure Monitoring During Endourologic
Procedures? AUANews. https://auanews.net/issues/articles/2023/december-extra-2023/what-is-the-true-value-of-intrarenal-pressure-monitoring-during-endourologic-procedures.
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Additionally, although the negative consequences of elevated IRP
are accepted, the pressure levels at which these negative outcomes
occur are not clearly defined. While not included in the evidence
submitted by the applicant in support of the substantial clinical
improvement claims for LithoVueTM Elite Ureteroscope, we
note that three studies, Ho & Sivalingam (2023), Somani et al. (2025),
and Bhojani et al. (2023), provide notable evidence directly related to
IRP monitoring during ureteroscopy.35 36 37 Ho & Sivalingam
(2023) discusses AUA clinical guidelines that recommend maintaining low
intrarenal irrigation pressure to avoid negative consequences of high
IRP during endourological procedures. This article notes several ways
to mitigate elevated IRP in addition to use of pressure sensing
ureteroscopes, such as the LithoVueTM Elite Ureteroscope. Ho
& Sivalingam (2023) further states that the clinical usefulness of IRP-
monitoring technology
[[Page 33596]]
is yet to be determined. Somani et al. (2025) details the findings of a
Delphi panel assembled by the European Association of Urologists. The
panel did not come to a consensus on a safe or acceptable IRP threshold
during endourological procedures. Bhojani et al. (2023) established
that a ureteroscope with pressure monitoring, such as the
LithoVueTM Elite Ureteroscope, can be used to better
understand the role of IRP during retrograde intrarenal surgery. Yet,
these articles highlight that there is no consensus on the IRP levels
or duration that may negatively impact patients, therefore questioning
whether it is clinically relevant to continuously measure IRP in real-
time. We again note that no evidence was presented on the current
standard of care in regard to continuous monitoring of IRP levels
during ureteroscopy. Without this information, it is unclear if the
clinical outcomes of a patient population would improve as a result of
the LithoVueTM Elite Ureteroscope's continuous IRP
monitoring during ureteroscopy procedures.
---------------------------------------------------------------------------
\35\ Ho, 2023, op cit.
\36\ Somani, B., Davis, N., Emiliani, E., G[ouml]cke, M.I.,
Junge, H., Keller, E.X., Miernik, A., Proietti, S., Turney, B.,
Wiseman, O., Bosworth Smith, A., Caterino, M., Saunders, R.,
Boulmani, M., & Traxer, O. (2025). Intrarenal pressure monitoring
during ureteroscopy: A Delphi panel consensus. European Urology Open
Science, 73, 43-50. https://doi.org/10.1016/j.euros.2025.01.005.
\37\ Bhojani, N., Koo, K.C., Bensaadi, K., Halawani, A., Wong,
V.K., & Chew, B.H. (2023). Retrospective first-in-human use of the
LithoVueTM Elite Ureteroscope to measure intrarenal
pressure. BJU International, 132(6), 678-685. https://doi.org/10.1111/bju.16173.
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Additionally, we note that, based on the language in the
application, it is our understanding that continuous real-time pressure
monitoring may only be relevant in kidney stone procedures. We would be
interested in evidence and further information on other procedures
where pressure is continuously monitored during ureteroscopy.
We question whether the evidence submitted by the applicant
demonstrates that the use of continuous real-time intraoperative IRP
monitoring by a ureteroscope offers a substantial clinical improvement
over currently available treatments.
We are inviting public comment on whether the LithoVueTM
Elite Ureteroscope meets the device category criterion at Sec.
419.66(c)(2).
The third criterion for establishing a device category, at Sec.
419.66(c)(3), requires CMS to determine that the cost of the device is
not insignificant, as described in Sec. 419.66(d). Section 419.66(d)
includes three cost significance criteria that must each be met. The
applicant stated that the LithoVueTM Elite Ureteroscope
would be reported with HCPCS codes in the codes as shown in Table 54.
BILLING CODE 4120-01-P
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[GRAPHIC] [TIFF OMITTED] TP17JY25.072
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[GRAPHIC] [TIFF OMITTED] TP17JY25.073
BILLING CODE 4120-01-C
To meet the cost criterion for device pass-through payment status,
a device must pass all three tests of the cost criterion for at least
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775),
we generally use the lowest APC payment rate applicable for use with
the nominated device when we assess whether a device meets the cost
significance criterion, thus increasing the probability the device will
pass the cost significance test. Beginning in CY 2017, we calculate the
device offset amount at the HCPCS/CPT code level instead of the APC
level (81 FR 79657). We note the applicant used the CY 2025 payment
rates for the three tests of the cost criterion. For our calculations,
we used APC 5374, which had a CY 2025 payment rate of $3,448.97 at the
time the application was received. HCPCS code 50970 in APC 5374 had a
device offset amount of $192.45 at the time the application was
received. According to the applicant, the cost of the
LithoVueTM Elite Ureteroscope is $2,400.00.
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\38\ We noted that the applicant stated the
LithoVueTM Elite Ureteroscope would be reported with
HCPCS code 50597, with the HCPCS code long descriptor being
``Ureteral endoscopy through established ureterostomy, with or
without irrigation, instillation, or ureter pyelography, exclusive
of radiologic service; with fulguration and/or incision, with or
without biopsy''. We believe the HCPCS code the applicant provided
was incorrect, and the correct HCPCS code that is associated with
the HCPCS code long descriptor is HCPCS code 50957.
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Section 419.66(d)(1), the first cost significance requirement,
provides that the estimated average reasonable cost of devices in the
category must exceed 25 percent of the applicable APC payment amount
for the service related to the category of devices. The average
reasonable cost of $2,400.00 for the LithoVueTM Elite
Ureteroscope is 69.59 percent of the applicable APC payment amount for
the service related to the category of devices of $3,448.97
(($2,400.00/$3,448.97) x 100 = 69.59 percent). Therefore, we believe
that the LithoVueTM Elite Ureteroscope meets the first cost
significance requirement.
The second cost significance requirement, at Sec. 419.66(d)(2),
provides that the estimated average reasonable cost of the devices in
the category must exceed the cost of the device-related portion of the
APC payment amount for the related service by at least 25 percent,
which means that the device cost needs to be at least 125 percent of
the offset amount (the device-related portion of the APC found on the
offset list). The estimated average reasonable cost of $2,400.00 for
the LithoVueTM Elite Ureteroscope is 1,247.08 percent of the
cost of the device-related portion of the APC payment amount for the
related service of $192.45 (($2,400.00/$192.45) x 100 = 1,247.08
percent). Therefore, we believe that the LithoVueTM Elite
Ureteroscope meets the second cost significance requirement.
The third cost significance requirement, at Sec. 419.66(d)(3),
provides that the difference between the estimated average reasonable
cost of the devices in the category and the portion of the APC payment
amount for the device must exceed 10 percent of the APC payment amount
for the related service. The difference between the estimated average
reasonable cost of $2,400.00 for the LithoVueTM Elite
Ureteroscope and the portion of the APC payment amount for the device
of $192.45 is 64.01 percent of the APC payment amount for the related
service of $3,448.97 ((($2,400.00-$192.45)/$3,448.97) x 100 = 64.01
percent). Therefore, we believe that the LithoVueTM Elite
Ureteroscope meets the third cost significance requirement.
[[Page 33599]]
We are inviting public comment on whether the LithoVueTM
Elite Ureteroscope meets the cost criterion at Sec. 419.66(c)(3).
(c) VersaVueTM Single-Use Flexible Cystoscope
Boston Scientific Corporation submitted an application for a new
device category for transitional pass-through payment status for the
VersaVueTM Single-Use Flexible Cystoscope for CY 2026. Per
the applicant, the VersaVueTM Single-Use Flexible Cystoscope
is used in cystoscopy procedures to diagnose or treat diseases of the
lower urinary tract. According to the applicant, the
VersaVueTM Single-Use Flexible Cystoscope is a single-use,
disposable flexible cystoscope intended to be operated with its
compatible display system, the VersaVueTM Tablet (a tablet
where the image is present directly on the tablet) or the
VersaVueTM Video Box (a standalone imaging transfer system
which can be connected to a computer to project live imaging), that
provides live imaging of the lower urinary tract.
Please refer to the online application posting for the
VersaVueTM Single-Use Flexible Cystoscope, available at
https://mearis.cms.gov/public/publications/device-ptp/DEP250211C4HRV.
As stated previously, to be eligible for transitional pass-through
payment under the OPPS, a device must meet the criteria at Sec.
419.66(b)(1) through (4). With respect to the newness criterion at
Sec. 419.66(b)(1), FDA granted the applicant 510(k) clearance for the
VersaVueTM Single-Use Flexible Cystoscope on October 6,
2023. The approved FDA indication for the VersaVueTM Single-
Use Flexible Cystoscope is:
The VersaVueTM Single-Use Flexible Cystoscope
is a sterile, single-use, and flexible device intended to be operated
with its compatible display system (VersaVueTM Tablet or
VersaVueTM Video Box). The device provides endoscopic
procedure and surgical treatment within the lower urinary tract. The
Cystoscope is intended to provide visualization via [the] displaying
unit. The Cystoscope is intended for use in a hospital environment or
medical office environment. It is designed for use in adults.
We received the application for a new device category for
transitional pass-through payment status for the VersaVueTM
Single-Use Flexible Cystoscope on February 11, 2025, which is within 3
years of the date of the initial FDA marketing authorization.
We are inviting public comments on whether the
VersaVueTM Single-Use Flexible Cystoscope meets the newness
criterion at Sec. 419.66(b)(1).
With respect to the eligibility criteria at Sec. 419.66(b)(3), the
device must be an integral part of the service furnished, be used for
one patient only, come in contact with human tissue, and be surgically
inserted or implanted, or applied in or on a wound or other skin
lesion. Per the applicant, the VersaVueTM Single-Use
Flexible Cystoscope meets the requirements at Sec. 419.66(b)(3).
We are inviting public comments on whether the
VersaVueTM Single-Use Flexible Cystoscope meets the
eligibility criterion at Sec. 419.66(b)(3).
With respect to the exclusion criteria at Sec. 419.66(b)(4), a
device is not eligible to be considered for pass-through payment if it
is any of the following: (1) equipment, an instrument, apparatus,
implement, or item of this type for which depreciation and financing
expenses are recovered as depreciation assets as defined in Chapter 1
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a
material or supply furnished incident to a service (for example, a
suture, customized surgical kit, or clip, other than a radiological
site marker). Per the applicant, the VersaVueTM Single-Use
Flexible Cystoscope is (1) not considered equipment, an instrument,
apparatus, implement, or item of this type for which depreciation and
financing expenses are recovered as depreciation assets, and is (2) not
a material or supply furnished incident to a service, and, therefore,
is eligible to be considered for pass-through payment.
We are inviting public comments on whether the
VersaVueTM Single-Use Flexible Cystoscope meets the
exclusion criterion at Sec. 419.66(b)(4).
In addition to the criteria at Sec. 419.66(b)(1) through (4), the
criteria for establishing new device categories are specified at Sec.
419.66(c). The first criterion, at Sec. 419.66(c)(1), provides that
CMS determines that a device to be included in the category is not
appropriately described by any of the existing categories or by any
category previously in effect, and was not being paid for as an
outpatient service as of December 31, 1996. Per the applicant, the
existing pass-through code C1747 (Endoscope, single-use (i.e.
disposable), urinary tract, imaging/illumination device (insertable))
does not appropriately describe the VersaVueTM Single-Use
Flexible Cystoscope because cystourethroscopy procedures are not
encompassed by this pass-through device category.\39\ The applicant
also stated that the existing code C1889 (Implantable/insertable
device, not otherwise classified) does not appropriately describe the
VersaVueTM Single-Use Flexible Cystoscope. We note that
C1889 is not a device pass-through category code and therefore would
not describe the VersaVueTM Single-Use Flexible Cystoscope
for the purposes of device pass-through status. Upon review, we have
not identified an existing pass-through payment category that describes
the VersaVueTM Single-Use Flexible Cystoscope.
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\39\ As discussed in section IV.A.2 (New Device Pass-Through
Applications for CY 2023) of the CY 2023 OPPS/ASC final rule with
comment period, we approved HCPCS code C1747 (Endoscope, single-use
(i.e. disposable), urinary tract, imaging/illumination device
(insertable)), as a new device category for pass-through status
under the OPPS, with an effective date of January 1, 2023. For the
full discussion on the criteria used to evaluate device pass-through
applications, refer to the CY 2023 OPPS/ASC final rule with comment
period, which was published in the Federal Register on November 23,
2022 (87 FR 71929 through 71934). We note that HCPCS code C1747 was
established for a ureteroscope that can only be used for a single
procedure and cannot be reprocessed. As such, HCPCS code C1747 only
describes devices that cannot be reprocessed.
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We are inviting public comment on whether the VersaVueTM
Single-Use Flexible Cystoscope meets the device category criterion at
Sec. 419.66(c)(1).
The second criterion for establishing a device category, at Sec.
419.66(c)(2), provides that CMS determines either of the following: (1)
that a device to be included in the category has demonstrated that it
will substantially improve the diagnosis or treatment of an illness or
injury or improve the functioning of a malformed body part compared to
the benefits of a device or devices in a previously established
category or other available treatment; or (2) for devices for which
pass-through status will begin on or after January 1, 2020, as an
alternative to the substantial clinical improvement criterion, the
device is part of the FDA's Breakthrough Devices Program and has
received FDA marketing authorization for the indication covered by the
Breakthrough Device designation. The applicant asserted that single-
use, disposable cystoscopes, including the VersaVueTM
Single-Use Flexible Cystoscope, represent a substantial clinical
improvement of over reusable cystoscopes.
The applicant provided five documents to support these claims,
which include three studies and two FDA communications concerning
reusable, reprocessed urological endoscopes. The applicant's assertions
regarding the substantial clinical
[[Page 33600]]
improvement criterion are shown in Table 55. Please see the online
posting for the VersaVueTM Single-Use Flexible Cystoscope
for the applicant's complete statements regarding the substantial
clinical improvement criterion and the supporting evidence provided.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP17JY25.074
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[GRAPHIC] [TIFF OMITTED] TP17JY25.075
BILLING CODE 4120-01-C
After review of the information provided by the applicant, we have
the following concerns regarding whether the VersaVueTM
Single-Use Flexible Cystoscope meets the substantial clinical
improvement criterion.
Overall, we note that the applicant indicated that the technology
does not offer a treatment option for patients unresponsive to or
ineligible for currently available treatments, stating that the same
patient population could be treated using a reusable, reprocessed
cystoscope. Further, the applicant did not claim that the nominated
device, the VersaVueTM Single-Use Flexible Cystoscope,
offers a substantial clinical improvement over other single-use,
[[Page 33602]]
disposable cystoscopes available on the market. Specifically, the
applicant stated that no claim is being made that a specific disposable
device offers a substantial clinical improvement over other disposable
devices in the same category. Rather, the applicant stated that it
presented evidence to support its claim that single-use, disposable
cystoscopes (as a group) demonstrate substantial clinical improvement
over reusable cystoscopes. We note that for the purposes of the device
pass-through evaluation process, CMS evaluates the nominated device
that is the subject of an application to determine if the device meets
the eligibility criteria described in Sec. 419.66.
Further, for the purposes of our substantial clinical improvement
evaluation, we consider both reusable, reprocessed cystoscopes and
single-use, disposable cystoscopes as available treatment options for
this patient population and note that single-use, disposable
cystoscopes appear to be widely accessible and well utilized in the
outpatient setting. According to the applicant, of the 2.2 million
flexible cystoscopy procedures furnished annually across all payers, 23
percent are performed with single-use, disposable cystoscopes. As
discussed in more detail below, we are interested in additional
evidence that demonstrates substantial clinical improvement with the
use of the VersaVueTM Single-Use Flexible Cystoscope over
other available treatment options (both single-use, disposable
cystoscopes and reusable, reprocessed cystoscopes). In order to
evaluate substantial clinical improvement over currently available
treatments to meet the transitional pass-through payment criterion at
Sec. 419.66(c)(2), we consider supporting evidence, preferably
published peer-reviewed clinical trials, that demonstrates improved
clinical outcomes, such as reduction in mortality, complications,
subsequent interventions, future hospitalizations, recovery time, pain,
or a more rapid beneficial resolution of the disease process comparing
the nominated device to the standard of care (88 FR 81733).
First, the evidence provided did not include data demonstrating
that the use of the VersaVueTM Single-Use Flexible
Cystoscope compared to other available single-use, disposable
cystoscopes for this patient population results in substantial clinical
improvement. The applicant identified other devices it believes are
closely related or similar to the VersaVueTM Single-Use
Flexible Cystoscope, including the following: (1) Ambu[supreg] aScope
4TM Cysto manufactured by AMBU A/S, (2) Ambu[supreg] aScope
5TM Cysto manufactured by AMBU A/S, (3) WiScope[supreg]
Single-Use Digital Flexible Cystoscope manufactured by OTU Medical
AnQing, (4) Medical Single Use Flexible Cystoscope manufactured by
Shanghai AnQing Medical Instrument Company, and (5) Pusen Single Use
Flexible Video Cystoscope System manufactured by Zhuhai Pusen Medical
Technology Company. We note that the VersaVueTM Single-Use
Flexible Cystoscope was determined to be substantially equivalent to a
legally marketed device, the Ambu[supreg] aScope 4TM Cysto
(K193095), which received 510(k) clearance on April 2, 2020.\40\ The
FDA 510(k) summary for the VersaVueTM Single-Use Flexible
Cystoscope stated that both devices have the same intended use and
similar specifications, and that there are no significant differences.
According to the applicant, these five similar devices would also
become eligible for transitional pass-through payment under the
additional category proposed by the applicant. We reiterate that we
consider other single-use, disposable cystoscopes as available
treatment options for this patient population and that the devices
appear to share similar technological and/or procedural
characteristics. We note that none of the studies the applicant
included reference another single-use, disposable device as a
comparator against which to evaluate and assess the
VersaVueTM Single-Use Flexible Cystoscope. While we find
that the source articles provide background information about multiple
risks associated with reprocessing reusable devices, we would welcome
additional evidence demonstrating a comparison of the
VersaVueTM Single-Use Flexible Cystoscope's performance
against other similar single-use, disposable devices. We question
whether the VersaVueTM Single-Use Flexible Cystoscope offers
a substantial clinical improvement over other single-use, disposable
cystoscopes currently on the market. We welcome evidence that
demonstrates substantial clinical improvement with the use of the
VersaVueTM Single-Use Flexible Cystoscope over other single-
use, disposable cystoscopes.
---------------------------------------------------------------------------
\40\ U.S. Food and Drug Administration. (2020, April 2).
Decision Summary for K193095 [Ambu[supreg] aScopeTM 4
Cysto]. U.S. Department of Health and Human Services. https://www.accessdata.fda.gov/cdrh_docs/pdf19/K193095.pdf.
---------------------------------------------------------------------------
Second, we question whether the supporting evidence submitted by
the applicant demonstrates substantial clinical improvement of the
VersaVueTM Single-Use Flexible Cystoscope over reusable,
reprocessed cystoscopes for this patient population. In the first
claim, the applicant asserted that the use of single-use, disposable
cystoscopes decreases post-procedure encounters and infections compared
to reusable cystoscope devices. However, while Geldmaker et al. (2023)
reported some improved clinical outcomes with the use of a specific
single-use, disposable cystoscope when compared to the use of a
specific reusable cystoscope,\41\ we note that the study does not
assess, evaluate, or review clinical outcomes associated with the use
of the VersaVueTM Single-Use Flexible Cystoscope or compare
clinical outcomes associated with the use of the VersaVueTM
Single-Use Flexible Cystoscope to reusable cystoscopes. Rather, the
evidence provided compared clinical outcomes associated with another
device, the single-use, disposable Ambu aS4C cystoscope [Ambu[supreg]
aScope 4TM Cysto] to the reuseable Olympus[supreg] CYF-5 V2
Flexible cystoscope. Therefore, we question whether the use of the
VersaVueTM Single-Use Flexible Cystoscope results in
substantial clinical improvement as compared to reusable, reprocessed
cystoscopes.
---------------------------------------------------------------------------
\41\ Geldmaker, L.E., Baird, B.A., Lyon, T.D., Regele, E.J.,
Wajswol, E.J., Pathak, R.A., Petrou, S.P., Haehn, D.A., Gajarawala,
N.M., Ball, C.T., Broderick, G.A., & Thiel, D.D. (2023). Conversion
to disposable cystoscopes decreased post-procedure encounters and
infections compared to reusable cystoscopes. Urology Practice,
12(1), 58-64. https://doi.org/10.1097/UPJ.0000000000000410.
---------------------------------------------------------------------------
In addition, we note that, as a retrospective study, Geldmaker et
al. (2023) fails to establish that the differences in the observed
clinical outcomes are caused by using reusable, reprocessed cystoscopes
versus single-use, disposable cystoscopes. We note that retrospective
studies can only suggest associations between variables and cannot
establish cause and effect relationships. While the propensity score
matching did an adequate job of balancing the two groups (reusable,
reprocessed cystoscope procedures versus single-use, disposable
cystoscope procedures) and yielded statistically significant results,
we question whether the propensity score matching variables used in the
study adequately account for patient factors that may impact the
outcomes, such as the reason for the cystoscopy, positive preoperative
UTI, and other comorbid conditions. We note that data were collected
during different time periods (reusable, reprocessed cystoscope data
were collected in 2020, and single-use, disposable cystoscope data were
collected in 2021), which may introduce systematic errors in the
measurement due to retrospective data
[[Page 33603]]
collection or confounders not accounted for, such as changes in
clinical practice between the 2 study years. Further, per the study
authors, we note that urine cultures were ordered more frequently in
the reusable cystoscope group, potentially increasing the likelihood of
a UTI diagnosis in the reusable cystoscope group. We would be
interested in whether equivalent pre- and post-procedure urine cultures
from patients in both groups would have yielded different results. We
note that the evidence is not conclusive to support whether the use of
single-use, disposable cystoscopes results in improved clinical
outcomes compared to reuseable, reprocessed cystoscopes.
Moreover, while not included in the evidence submitted by the
applicant in support of the substantial clinical improvement claims for
the VersaVueTM Single-Use Flexible Cystoscope, we note that
two studies, Anderson et al. (2024) and Johnson et al. (2023), provide
notable evidence directly related to the use of single-use, disposable
cystoscopes versus reusable cystoscopes.42 43 Anderson et
al. (2024), a systematic review (using meta-analyses techniques)
comparing the clinical outcomes of all single-use, disposable
endoscopes used in urology with those of reusable endoscopes across a
range of urological procedures, found that of the seven studies that
reported the rate of postoperative infections, none found a
statistically significant difference in postoperative infection rate
between single-use, disposable endoscopes and reusable endoscopes.\44\
Further, we note that the Anderson et al. (2024) sub-group analysis of
cystoscopes found no difference in overall complication rates or
postoperative infection rates between the single-use, disposable
cystoscopes and the reusable cystoscope subgroups. Similarly, Johnson
et al. (2023) found no statistically significant difference in adverse
events in a multicenter, randomized trial comparing single-use,
disposable cystoscopes (Ambu[supreg] aScope 4TM Cysto) with
reusable cystoscopes for ureteral stent removal in 102 patients.\45\
Given the evidence in these additional studies, we question whether the
totality of available evidence establishes that the use of a single-
use, disposable cystoscope results in substantial clinical improvement
when compared to reuseable, reprocessed cystoscopes, and furthermore,
whether the use of the VersaVueTM Single-Use Flexible
Cystoscope compared to reusable, reprocessed cystoscopes results in
decreased adverse events, including post-procedure encounters and
infections. We welcome studies that evaluate whether the use of the
VersaVueTM Single-Use Flexible Cystoscope results in
substantial clinical improvement over reusable, reprocessed
cystoscopes, such as a reduction in mortality, complications,
subsequent interventions, future hospitalizations, recovery time, pain,
or a more rapid beneficial resolution of the disease process compared
to reuseable, reprocessed cystoscopes.
---------------------------------------------------------------------------
\42\ Anderson, S., Patterson, K., Skolarikos, A., Somani, B.,
Bolton, D.M., & Davis, N.F. (2024). Perspectives on technology: To
use or to reuse, that is the endoscopic question--a systematic
review of single-use endoscopes. BJU International, 133(1), 14-24.
https://doi.org/10.1111/bju.16206.
\43\ Johnson, B.A., Raman, J.D., Best, S.L., & Lotan, Y. (2023).
Prospective randomized trial of single-use vs reusable cystoscope
for ureteral stent removal. Journal of Endourology, 37(10). https://doi.org/10.1089/end.2023.0134.
\44\ Anderson, 2024, op. cit.
\45\ Johnson, 2023, op. cit.
\46\ Lee, J., Kaplan-Marans, E., Jivanji, D., Tennenbaum, D., &
Schulman, A. (2022). Post-cystoscopy infections and device
malfunctions in reprocessed flexible cystoscopes in a national
database. Canadian Journal of Urology, 29(6), 11361-11365. https://pubmed.ncbi.nlm.nih.gov/36495577.
\47\ Muscarella, L.F. (2022, January 28). Contamination of
flexible endoscopes and associated infections: A comprehensive
review and analysis of FDA adverse event reports. Discussions in
Infection Control. https://lfm-hcs.com/2022/01/contamination-of-flexible-endoscopes-and-associated-infections/.
\48\ U.S. Food and Drug Administration. (2021, April 1). FDA is
investigating reports of infections associated with reprocessed
urological endoscopes: Agency is taking action to remind health care
providers about the proper way to clean certain devices for reuse.
[FDA News Release]. https://www.fda.gov/news-events/press-announcements/fda-investigating-reports-infections-associated-reprocessed-urological-endoscopes.
\49\ U.S. Food and Drug Administration. (2025, January 31).
Update on alert: Endoscope accessories forceps/irrigation plug issue
from Olympus. https://www.fda.gov/medical-devices/medical-device-recalls/update-alert-endoscope-accessories-forcepsirrigation-plug-issue-olympus.
\50\ U.S. Food and Drug Administration. (2024, June 6). About
the Manufacturer and User Facility Device Experience (MAUDE)
database. U.S. Department of Health and Human Services. https://www.fda.gov/medical-devices/mandatory-reporting-requirements-manufacturers-importers-and-device-user-facilities/about-manufacturer-and-user-facility-device-experience-maude-database.
\51\ U.S. Food and Drug Administration, 2024, op. cit.
\52\ U.S. Food and Drug Administration, 2024, op. cit.
---------------------------------------------------------------------------
Third, in the second, third, fourth and fifth claims, the applicant
asserted that the use of single-use, disposable cystoscopes avoids
post-cystoscopy infections, device malfunctions, and contamination
problems associated with reusable devices, and eliminates the need for
reprocessing and avoids the risk of infection associated with improper
reprocessing. In support of these claims, the applicant provided two
retrospective reviews (Lee et al., 2022 and Muscarella, 2022) of
medical device reports (MDRs) from the FDA Manufacturer and User
Facility Device Experience (MAUDE) database, an FDA News Release (2021,
April 1) concerning infection and contamination risks associated with
reusable urological endoscopes, and an FDA Update (2025, January 31)
communicating the recall of endoscope accessories from Olympus[supreg]
reusable urological endoscopes as supporting
evidence.46 47 48 49 First, we question whether, per the
applicant, the avoidance of device malfunctions, contamination
problems, and the elimination of the need for reprocessing demonstrates
substantial clinical improvement, as these are not clinical outcome
metrics. Second, while we concur that avoiding post-cystoscopy
infections is important, we note that none of the studies the applicant
submitted as evidence evaluated or assessed the VersaVueTM
Single-Use Flexible Cystoscope and that none of the studies compared
clinical outcomes, such as adverse events (including post-cystoscopy
infection) associated with the use of the VersaVueTM Single-
Use Flexible Cystoscope to clinical outcomes associated with reusable
cystoscopes. Third, while these studies discuss potential adverse
events from reusable cystoscope procedures, we note that FDA states
that the FDA MAUDE database's MDR data are not intended to be used to
evaluate rates of adverse events, evaluate a change in event rates over
time, or compare adverse event occurrence rates across devices.\50\ FDA
explains that the MAUDE database is a passive surveillance system, and
that incidence, prevalence, or cause of an event cannot be determined
from this surveillance system alone due to under-reporting of events,
inaccuracies in reports, lack of verification that the device caused
the reported event, and lack of information about frequency of device
use.\51\ FDA further explains that the submission of an MDR itself does
not necessarily demonstrate that the device caused or contributed to
the adverse outcome or event.\52\ Therefore, we question whether these
studies can substantiate that the use of single-use, disposable
cystoscopes, like the VersaVueTM Single-Use Flexible
Cystoscope, would result in substantial clinical improvements over
currently available reuseable, reprocessed cystoscopes. Fourth, while
the applicant asserted that the FDA News Release (2021, April 1)
encouraged manufacturers to transition to single-use, disposable
devices, we note that this FDA News Release does not
[[Page 33604]]
specifically reference single-use, disposable cystoscopes but, rather
encouraged manufacturers to transition to devices with features that
eliminate the need for reprocessing and provided information to
manufacturers on how to modify and validate their reprocessing
instructions. As such, we question the assertion that this FDA
communication encouraged manufacturers to transition to single-use,
disposable cystoscopes, such as the VersaVueTM Single-Use
Flexible Cystoscope. We further note that FDA stated that the risk of
infection from reuseable, reprocessed urological endoscopes was low
based on its data.\53\ We also note that the FDA Update (2025, January
31) communicated a medical device recall of the Olympus[supreg]
endoscope accessory (MAJ-891 Forceps/Irrigation Plug) that is attached
to the instrument channel port of a certain endoscope, due to the risk
of infection that may result from improper reprocessing, but that this
communication made no mention of the use of the nominated device or
single-use, disposable devices, instead it appears to be a concern
related to a particular reusable device.\54\
---------------------------------------------------------------------------
\53\ U.S. Food and Drug Administration, 2021, op. cit.
\54\ U.S. Food and Drug Administration, 2025, op. cit.
---------------------------------------------------------------------------
While the applicant asserted that the use of single-use, disposable
cystoscopes avoids risk of infection associated with improper
reprocessing, the applicant did not submit any FDA safety
communications directly related to single-use, disposable cystoscopes.
We question whether the evidence provided by the applicant directly
supports this claim.
Finally, we note that the intent of transitional device pass-
through payment, as implemented at Sec. 419.66, is to facilitate
access for beneficiaries to the advantages of new and truly innovative
devices by allowing for adequate payment for these new devices while
the necessary cost data is collected to incorporate the costs for these
devices into the procedure APC rate (66 FR 55861). Based on the
information provided by the applicant, approximately 510,600 units of
single-use, disposable cystoscope devices, like those that would be
included in the proposed device category for single-use, disposable
cystoscopes, are estimated to have sold annually in the U.S. Moreover,
the applicant provided that, of the 2.2 million flexible cystoscopy
procedures furnished annually, 23 percent are performed with single-
use, disposable cystoscopes, further, single-use, disposable
cystoscopes are used in at least 500 hospitals and clinics, including
35 to 50 academic medical centers. Based on the information provided in
the application, it appears as though single-use, disposable
cystoscopes are widely available and consistently utilized for the
purposes of performing cystoscopy procedures in outpatient facilities.
As such, we question whether the creation of a device pass-through
payment category code for single-use, disposable cystoscopes is
consistent with the intent of transitional device pass-through payment
and necessary to appropriately incorporate adequate cost data of these
devices into the applicable procedure APC.
We question whether the evidence submitted by the applicant
demonstrates that the use of single-use, disposable cystoscopes results
in improved patient outcomes and reduced patient risk compared to the
use of reusable devices. Further, we question whether the
VersaVueTM Single-Use Flexible Cystoscope offers a
substantial clinical improvement in the treatment of Medicare
beneficiaries over other available treatment and whether a transitional
device pass-through category for single-use, disposable cystoscopes is
in alignment with the intent of the transitional device pass-through
payment program policy.
We are inviting public comment on whether the VersaVueTM
Single-Use Flexible Cystoscope meets the device category criterion at
Sec. 419.66(c)(2).
The third criterion for establishing a device category, at Sec.
419.66(c)(3), requires CMS to determine that the cost of the device is
not insignificant, as described in Sec. 419.66(d). Section 419.66(d)
includes three cost significance criteria that must each be met. The
applicant stated that the VersaVueTM Single-Use Flexible
Cystoscope would be reported with HCPCS codes as shown in Table 56.
BILLING CODE 4120-01-P
[[Page 33605]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.076
[[Page 33606]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.077
BILLING CODE 4120-01-C
To meet the cost criterion for device pass-through payment status,
a device must pass all three tests of the cost criterion for at least
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775),
we generally use the lowest APC payment rate applicable for use with
the nominated device when we assess whether a device meets the cost
significance criterion, thus increasing the probability the device will
pass the cost significance test. Beginning in CY 2017, we calculate the
device offset amount at the HCPCS/CPT code level instead of the APC
level (81 FR 79657). We note the applicant used the CY 2025 payment
rates for the three tests of the cost criterion. For our calculations,
we used APC 5372, which had a CY 2025 payment rate of $667.47 at the
time the application was received. HCPCS code 52000 in APC 5372 had a
device offset amount of $0.87 at the time the application was received.
According to the applicant, the cost of the VersaVueTM
Single-Use Flexible Cystoscope is $250.00.
Section 419.66(d)(1), the first cost significance requirement,
provides that the estimated average reasonable cost of devices in the
category must exceed 25 percent of the applicable APC payment amount
for the service related to the category of devices. The average
reasonable cost of $250.00 for the VersaVueTM Single-Use
Flexible Cystoscope is 37.45 percent of the applicable APC payment
amount for the service related to the category of devices of $667.47
(($250.00/$667.47) x 100 = 37.45 percent). Therefore, we believe that
the VersaVueTM Single-Use Flexible Cystoscope meets the
first cost significance requirement.
The second cost significance requirement, at Sec. 419.66(d)(2),
provides that the estimated average reasonable cost of the devices in
the category must exceed the cost of the device-related portion of the
APC payment amount for the related service by at least 25 percent,
which means that the device cost needs to be at least 125 percent of
the offset
[[Page 33607]]
amount (the device-related portion of the APC found on the offset
list). The estimated average reasonable cost of $250.00 for the
VersaVueTM Single-Use Flexible Cystoscope is 28,735.63
percent of the cost of the device-related portion of the APC payment
amount for the related service of $0.87 (($250.00/$0.87) x 100 =
28,735.63 percent). Therefore, we believe that the
VersaVueTM Single-Use Flexible Cystoscope meets the second
cost significance requirement.
The third cost significance requirement, at Sec. 419.66(d)(3),
provides that the difference between the estimated average reasonable
cost of the devices in the category and the portion of the APC payment
amount for the device must exceed 10 percent of the APC payment amount
for the related service. The difference between the estimated average
reasonable cost of $250.00 for the VersaVueTM Single-Use
Flexible Cystoscope and the portion of the APC payment amount for the
device of $0.87 is 37.32 percent of the APC payment amount for the
related service of $667.47 ((($250.00-$0.87)/$667.47) x 100 = 37.32
percent). Therefore, we believe that the VersaVueTM Single-
Use Flexible Cystoscope meets the third cost significance requirement.
We are inviting public comment on whether the VersaVueTM
Single-Use Flexible Cystoscope meets the cost criterion at Sec.
419.66(c)(3).
B. Device-Intensive Procedures
1. Background
Under the OPPS, prior to CY 2017, device-intensive status for
procedures was determined at the APC level for APCs with a device
offset percentage greater than 40 percent (79 FR 66795). Beginning in
CY 2017, CMS began determining device-intensive status at the HCPCS
code level. In assigning device-intensive status to an APC prior to CY
2017, the device costs of all the procedures within the APC were
calculated and the geometric mean device offset of all of the
procedures had to exceed 40 percent. Almost all of the procedures
assigned to device-intensive APCs utilized devices, and the device
costs for the associated HCPCS codes exceeded the 40-percent threshold.
The no cost/full credit and partial credit device policy (79 FR 66872
through 66873) applies to device-intensive procedures and is discussed
in detail in section IV.B.4. of this proposed rule. A related device
policy was the requirement that certain procedures assigned to device-
intensive APCs require the reporting of a device code on the claim (80
FR 70422) and is discussed in detail in section IV.B.3. of this
proposed rule. For further background information on the device-
intensive APC policy, we refer readers to the CY 2016 OPPS/ASC final
rule with comment period (80 FR 70421 through 70426).
a. HCPCS Code-Level Device-Intensive Determination
As stated earlier, prior to CY 2017, under the device-intensive
methodology we assigned device-intensive status to all procedures
requiring the implantation of a device that were assigned to an APC
with a device offset greater than 40 percent and, beginning in CY 2015,
that met the three criteria as listed. Historically, the device-
intensive designation was at the APC level and applied to the
applicable procedures within that APC. In the CY 2017 OPPS/ASC final
rule with comment period (81 FR 79658), we changed our methodology to
assign device-intensive status at the individual HCPCS code level
rather than at the APC level. Under this policy, a procedure could be
assigned device-intensive status regardless of its APC assignment, and
device-intensive APC designations were no longer applied under the OPPS
or the ASC payment system.
We believe that a HCPCS code-level device offset is, in most cases,
a better representation of a procedure's device cost than an APC-wide
average device offset based on the average device offset of all of the
procedures assigned to an APC. Unlike a device offset calculated at the
APC level, which is a weighted average offset for all devices used in
all of the procedures assigned to an APC, a HCPCS code-level device
offset is calculated using only claims for a single HCPCS code. We
believe that this methodological change results in a more accurate
representation of the cost attributable to implantation of a high-cost
device, which ensures consistent device-intensive designation of
procedures with a significant device cost. Further, we believe a HCPCS
code-level device offset removes inappropriate device-intensive status
for procedures without a significant device cost that are granted such
status because of their APC assignment.
Under our existing policy, procedures that meet the criteria listed
in section IV.C.1.b. of this proposed rule are identified as device-
intensive procedures and are subject to all the policies applicable to
procedures assigned device-intensive status under our established
methodology, including our policies on device edits and no cost/full
credit and partial credit devices discussed in sections IV.C.3. and
IV.C.4. of this proposed rule.
b. Use of the Three Criteria To Designate Device-Intensive Procedures
We clarified our established policy in the CY 2018 OPPS/ASC final
rule with comment period (82 FR 52474), where we explained that device-
intensive procedures require the implantation of a device and
additionally are subject to the following criteria:
All procedures must involve implantable devices that would
be reported if device insertion procedures were performed.
The required devices must be surgically inserted or
implanted devices that remain in the patient's body after the
conclusion of the procedure (at least temporarily); and
The device offset amount must be significant, which is
defined as exceeding 40 percent of the procedure's mean cost.
We changed our policy to apply these three criteria to determine
whether procedures qualify as device-intensive in the CY 2015 OPPS/ASC
final rule with comment period (79 FR 66926), where we stated that we
would apply the no cost/full credit and partial credit device policy--
which includes the three criteria listed previously--to all device-
intensive procedures beginning in CY 2015. We reiterated this position
in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70424),
where we explained that we were finalizing our proposal to continue
using the three criteria established in the CY 2007 OPPS/ASC final rule
with comment period for determining the APCs to which the CY 2016
device intensive policy will apply. Under the policies we adopted in
CYs 2015, 2016, and 2017, all procedures that require the implantation
of a device and meet the previously described criteria are assigned
device-intensive status, regardless of their APC placement.
2. Proposed Device-Intensive Procedure Policy
As part of our effort to better capture costs for procedures with
significant device costs, in the CY 2019 OPPS/ASC final rule with
comment period (83 FR 58944 through 58948), for CY 2019, we modified
our criteria for device-intensive procedures. We had heard from
interested parties that the criteria excluded some procedures that
interested parties believed should qualify as device-intensive
procedures. Specifically, we were persuaded by interested party
arguments that procedures requiring expensive surgically inserted or
implanted devices
[[Page 33608]]
that are not capital equipment should qualify as device-intensive
procedures, regardless of whether the device remains in the patient's
body after the conclusion of the procedure. We agreed that a broader
definition of device-intensive procedures was warranted, and made two
modifications to the criteria for CY 2019 (83 FR 58948). First, we
allowed procedures that involve surgically inserted or implanted
single-use devices that meet the device offset percentage threshold to
qualify as device-intensive procedures, regardless of whether the
device remains in the patient's body after the conclusion of the
procedure. We established this policy because we no longer believe that
whether a device remains in the patient's body should affect a
procedure's designation as a device-intensive procedure, as such
devices could, nonetheless, comprise a large portion of the cost of the
applicable procedure. Second, we modified our criteria to lower the
device offset percentage threshold from 40 percent to 30 percent, to
allow a greater number of procedures to qualify as device intensive. We
stated that we believe allowing these additional procedures to qualify
for device-intensive status will help ensure these procedures receive
more appropriate payment in the ASC setting, which will help encourage
the provision of these services in the ASC setting. In addition, we
stated that this change would help to ensure that more procedures
containing relatively high-cost devices are subject to the device
edits, which leads to more correctly coded claims and greater accuracy
in our claims data. Specifically, for CY 2019 and subsequent years, we
finalized that device-intensive procedures will be subject to the
following criteria:
All procedures must involve implantable devices assigned a
CPT or HCPCS code;
The required devices (including single-use devices) must
be surgically inserted or implanted; and
The device offset amount must be significant, which is
defined as exceeding 30 percent of the procedure's mean cost (83 FR
58945).
In addition, to further align the device-intensive policy with the
criteria used for device pass-through payment status, we finalized, for
CY 2019 and subsequent years, that for purposes of satisfying the
device-intensive criteria, a device-intensive procedure must involve a
device that:
Has received FDA marketing authorization, has received an
FDA investigational device exemption (IDE), and has been classified as
a Category B device by FDA in accordance with Sec. Sec. 405.203
through 405.207 and 405.211 through 405.215, or meets another
appropriate FDA exemption from premarket review;
Is an integral part of the service furnished;
Is used for one patient only;
Comes in contact with human tissue;
Is surgically implanted or inserted (either permanently or
temporarily); and
Is not either of the following:
++ Equipment, an instrument, apparatus, implement, or item of the
type for which depreciation and financing expenses are recovered as
depreciable assets as defined in Chapter 1 of the Medicare Provider
Reimbursement Manual (CMS Pub. 15-1); or
++ A material or supply furnished incident to a service (for
example, a suture, customized surgical kit, scalpel, or clip, other
than a radiological site marker) (83 FR 58945).
In addition, for new HCPCS codes describing procedures requiring
the implantation of devices that do not yet have associated claims
data, in the CY 2017 OPPS/ASC final rule with comment period (81 FR
79658), we finalized a policy for CY 2017 to apply device-intensive
status with a default device offset set at 41 percent for new HCPCS
codes describing procedures requiring the implantation or insertion of
a device that did not yet have associated claims data until claims data
are available to establish the HCPCS code-level device offset for the
procedures. This default device offset amount of 41 percent was not
calculated from claims data; instead, it was applied as a default until
claims data were available upon which to calculate an actual device
offset for the new code. The purpose of applying the 41-percent default
device offset to new codes that describe procedures that implant or
insert devices was to ensure ASC access for new procedures until claims
data become available.
As discussed in the CY 2019 OPPS/ASC proposed rule and final rule
with comment period (83 FR 37108 through 37109 and 83 FR 58945 through
58946, respectively), in accordance with our policy stated previously
to lower the device offset percentage threshold for procedures to
qualify as device-intensive from greater than 40 percent to greater
than 30 percent, for CY 2019 and subsequent years, we modified this
policy to apply a 31-percent default device offset to new HCPCS codes
describing procedures requiring the implantation of a device that do
not yet have associated claims data until claims data are available to
establish the HCPCS code-level device offset for the procedures. In
conjunction with the policy to lower the default device offset from 41
percent to 31 percent, we continued our current policy of, in certain
rare instances (for example, in the case of a very expensive
implantable device), temporarily assigning a higher offset percentage
if warranted by additional information such as pricing data from a
device manufacturer (81 FR 79658). Once claims data are available for a
new procedure requiring the implantation or insertion of a device,
device-intensive status is applied to the code if the HCPCS code-level
device offset is greater than 30 percent, according to our policy of
determining device-intensive status by calculating the HCPCS code-level
device offset.
In addition, in the CY 2019 OPPS/ASC final rule with comment
period, we clarified that since the adoption of our policy in effect as
of CY 2018, the associated claims data used for purposes of determining
whether or not to apply the default device offset are the associated
claims data for either the new HCPCS code or any predecessor code, as
described by CPT coding guidance, for the new HCPCS code. Additionally,
for CY 2019 and subsequent years, in limited instances where a new
HCPCS code does not have a predecessor code as defined by CPT, but
describes a procedure that was previously described by an existing
code, we use clinical discretion to identify HCPCS codes that are
clinically related or similar to the new HCPCS code but are not
officially recognized as a predecessor code by CPT, and to use the
claims data of the clinically related or similar code(s) for purposes
of determining whether or not to apply the default device offset to the
new HCPCS code (83 FR 58946). Clinically related and similar procedures
for purposes of this policy are procedures that have few or no clinical
differences and use the same devices as the new HCPCS code. In
addition, clinically related and similar codes for purposes of this
policy are codes that either currently or previously describe the
procedure described by the new HCPCS code. Under this policy, claims
data from clinically related and similar codes are included as
associated claims data for a new code, and where an existing HCPCS code
is found to be clinically related or similar to a new HCPCS code, we
apply the device offset percentage derived from the existing clinically
related or similar HCPCS code's claims data to the new HCPCS code for
determining the device offset percentage. We stated that we believe
that claims data for HCPCS codes
[[Page 33609]]
describing procedures that have minor differences from the procedures
described by new HCPCS codes will provide an accurate depiction of the
cost relationship between the procedure and the device(s) that are
used, and will be appropriate to use to set a new code's device offset
percentage, in the same way that predecessor codes are used. If a new
HCPCS code has multiple predecessor codes, the claims data for the
predecessor code that has the highest individual HCPCS-level device
offset percentage is used to determine whether the new HCPCS code
qualifies for device-intensive status. Similarly, in the event that a
new HCPCS code does not have a predecessor code but has multiple
clinically related or similar codes, the claims data for the clinically
related or similar code that has the highest individual HCPCS level
device offset percentage is used to determine whether the new HCPCS
code qualifies for device-intensive status.
In the CY 2025 OPPS/ASC final rule with comment period (89 FR 94214
through 92419), we finalized a change to our methodology for applying
default device offset percentages for new device-intensive procedures.
Under our previous policy, if a new CPT/HCPCS code did not have
available claims data, either from the new HCPCS code or any
predecessor code or clinically-similar code that uses the same device,
and the CPT/HCPCS code otherwise met our criteria for device-intensive
status, we would apply a default device offset percentage of 31
percent. However, we were aware of certain situations where the default
device offset amount might not adequately reflect the existing device
portion of the procedure's costs when compared to the cost of similar
devices. A potential large difference between the default device offset
amount and the device portion of similar devices might impede our
ability to accurately remove device offset amounts from new device-
intensive procedures under the OPPS and to set payment rates for
device-intensive procedures under the ASC payment system. Therefore,
for CY 2025 and subsequent CYs, we finalized our proposal to modify our
default device offset percentage policy for new device-intensive
procedures. Specifically, for new CPT/HCPCS codes that both describe a
procedure that requires the surgical implantation or insertion of a
single-use device that exceeds 30 percent of the procedure's cost and
that meets our requirements of a device as described above and lack
claims data (from either the new HCPCS code or any predecessor code or
clinically-similar code that uses the same device), we would apply a
default device offset percentage that is the greater of 31 percent or
the device offset percentage of the APC to which the procedure has been
assigned. We stated that we still believe that a HCPCS code-level
device offset is, in most cases, a more accurate representation of a
procedure's device cost than an APC-wide average device offset based on
the average device offset of all the procedures assigned to an APC.
However, because newer device-intensive procedures lack claims data, we
believe the APC-wide average device offset percentage is, in many
cases, a better reflection of the estimated device costs of the
procedure than a default 31 percent offset. Additionally, there can be
instances where the typical device costs of procedures in an APC can be
significantly greater than the 31 percent default device offset. For
these reasons, we finalized our modification to our default device
offset percentage for new device-intensive procedures. This
methodological change was finalized for both the OPPS and ASC Payment
System for CY 2025 and subsequent CYs and applies to new procedures
assigned to clinical APCs, but not to new procedures assigned to New
Technology APCs.
Additionally, in the CY 2025 OPPS/ASC final rule with comment
period (89 FR 92414 through 92419), we stated that we were persuaded by
commenters that the lack of a device edit for device-intensive
procedures, particularly new technologies, might lead to an
underreporting of device costs and total procedure costs and
potentially impede beneficiary access to such new technologies over
time. Therefore, in addition to finalizing a modification to our device
edits policy for CY 2025, we finalized a modification to our device
offset percentage calculation. For procedures subject to our modified
device edits policy for CY 2025 that cannot report modifier ``CG'' to
bypass this claims processing edit, the device offset percentages
calculated (for the CPT/HCPCS code or its predecessor code) are based
on hospital claims that reported a device code. We stated that we
believed that hospital outpatient claims that report a device code with
such procedures provide, in general, a more accurate representation of
the procedures' total costs. We also finalized, for purposes of
determining device offset percentages, that we will not use claims data
from procedures that had a status indicator of ``E1'' during the
calendar year we are using for ratesetting and determining device
offset percentages. Lastly, we refined our process for applying device
offset percentages to use available claims data from predecessor codes
annually, rather than the first year of the successor code's activation
date, until we have available claims data from the successor code.
We propose to continue these policies for CY 2026. As we indicated
in the CY 2019 OPPS/ASC proposed rule and final rule with comment
period, additional information for our consideration of an offset
percentage higher than the default of 31 percent (or the APC-wide
default offset percentage) for new HCPCS codes describing procedures
requiring the implantation (or, in some cases, the insertion) of a
device that do not yet have associated claims data, such as pricing
data or invoices from a device manufacturer, should be directed to the
Division of Outpatient Care, Mail Stop C4-01-26, Centers for Medicare &
Medicaid Services, 7500 Security Boulevard, Baltimore, MD 21244-1850,
or electronically [email protected]. Additional information can
be submitted prior to issuance of an OPPS/ASC proposed rule or as a
public comment (see DATES section of this proposed rule) in response to
an issued OPPS/ASC proposed rule. Device offset percentages will be set
in each year's final rule.
The full listing of the proposed CY 2026 device-intensive
procedures can be found in Addendum P to this proposed rule (which is
available via the internet on the CMS website). Further, our claims
accounting narrative contains a description of our device offset
percentage calculation. Our claims accounting narrative for this
proposed rule can be found under supporting documentation for the CY
2026 OPPS/ASC proposed rule on our website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
3. Device Edit Policy
In the CY 2015 OPPS/ASC final rule with comment period (79 FR
66795), we finalized a policy and implemented claims processing edits
that require any of the device codes used in the previous device-to-
procedure edits to be present on the claim whenever a procedure code
assigned to any of the APCs listed in Table 5 of the CY 2015 OPPS/ASC
final rule with comment period (the CY 2015 device-dependent APCs) was
reported on the claim. In addition, in the CY 2016 OPPS/ASC final rule
with comment period (80 FR 70422), we modified our previously existing
policy and applied the device coding requirements exclusively to
procedures that require the implantation of a device
[[Page 33610]]
assigned to a device-intensive APC. In the CY 2016 OPPS/ASC final rule
with comment period, we also finalized our policy that the claims
processing edits are such that any device code, when reported on a
claim with a procedure assigned to a device-intensive APC (listed in
Table 42 of the CY 2016 OPPS/ASC final rule with comment period (80 FR
70422)), will satisfy the edit.
In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79658
through 79659), we changed our policy for CY 2017 and subsequent years
to apply the CY 2016 device coding requirements to the newly defined
device-intensive procedures. For CY 2017 and subsequent years, we also
specified that any device code, when reported on a claim with a device-
intensive procedure, will satisfy the edit. In addition, we created
HCPCS code C1889 to recognize devices furnished during a device-
intensive procedure that are not described by a specific Level II HCPCS
Category C-code. Reporting HCPCS code C1889 with a device-intensive
procedure will satisfy the edit requiring a device code to be reported
on a claim with a device-intensive procedure. In the CY 2019 OPPS/ASC
final rule with comment period, we revised the description of HCPCS
code C1889 to remove the specific applicability to device-intensive
procedures (83 FR 58950). For CY 2019 and subsequent years, the
description of HCPCS code C1889 is ``Implantable/insertable device, not
otherwise classified.''
In the CY 2024 OPPS/ASC final rule with comment period (88 FR 81758
through 81759), we finalized our proposal to establish a procedure-to-
device edit for the procedures assigned to APC 5496 (Level 6
Intraocular Procedures) and require hospitals to report the correct
device HCPCS codes when reporting any of the four procedures--CPT codes
0308T and 0616T, 0617T, and 0618T. (We note that CPT codes 0617T and
0618T were deleted effective January 1, 2025 and CPT code 0616T was
deleted effective January 1, 2025 and replaced with new CPT code
66683.) We have noted that interested parties have previously
recommended in past rulemaking that we reestablish all our previous
procedure-to-device edits, but we do not expect to extend this policy
beyond the procedures assigned to APC 5496 (Level 6 Intraocular
Procedures). This APC represents a unique situation--the APC (which was
the Level 5 Intraocular APC in previous years) had been a Low Volume
APC (fewer than 100 claims in a claims year) since we established our
Low Volume APC policy, the procedures associated with this APC have
significant procedure costs often greater than $15,000, and the
procedures associated with this APC require the implantation of a high-
cost intraocular device. In the CY 2025 OPPS/ASC final rule, we
finalized to continue this policy for APC 5496 (Level 6 Intraocular
Procedures) for CY 2025 and subsequent years.
In the CY 2025 OPPS/ASC final rule with comment period (89 FR 92419
through 92422), we finalized a modification to our device edits policy.
While historically our device edits policy has only applied to
procedures that are device-intensive based on the most recent claims
data available, commenters had raised concerns about hospitals
underreporting device costs in years when certain device-intensive
procedures had lost device-intensive status because the device portion
of a procedure can fluctuate above and below our device-intensive
threshold of 30 percent. Commenters indicated to us that the presence
of the device edit requirement can have a significant impact on the
device portion and geometric mean cost of a procedure, particularly for
newer technologies. Therefore, for CY 2025 and subsequent CYs, we
finalized a policy to apply our device edits policy permanently once a
procedure is designated as a device-intensive procedure in a given
year. Additionally, we finalized a policy to reinstate our device edits
policy for procedures that have been device-intensive since we began
assigning device-intensive status at the HCPCS code level on January 1,
2017. We believed that by applying our device edit policy to procedures
that were device-intensive on or after January 1, 2017, we might
continue to receive device cost information for relatively new
procedures with limited claims data, which may have been impacted by
our policy to require that only existing device-intensive procedures be
subject to our device edits policy. For CY 2026, under our modified
device edits policy, our device edits requirement will apply to
procedures that are designated as device-intensive in CY 2026 and will
apply in subsequent years.
We are not proposing any changes to our device edit policy for CY
2026.
4. Adjustment to OPPS Payment for No Cost/Full Credit and Partial
Credit Devices
a. Background
To ensure equitable OPPS payment when a hospital receives a device
without cost or with full credit, in CY 2007, we implemented a policy
to reduce the payment for specified device-dependent APCs by the
estimated portion of the APC payment attributable to device costs (that
is, the device offset) when the hospital receives a specified device at
no cost or with full credit (71 FR 68071 through 68077). Hospitals were
instructed to report no cost/full credit device cases on the claim
using the ``FB'' modifier on the line with the procedure code in which
the no cost/full credit device is used. In cases in which the device is
furnished without cost or with full credit, hospitals were instructed
to report a token device charge of less than $1.01. In cases in which
the device being inserted is an upgrade (either of the same type of
device or to a different type of device) with a full credit for the
device being replaced, hospitals were instructed to report as the
device charge the difference between the hospital's usual charge for
the device being implanted and the hospital's usual charge for the
device for which it received full credit. In CY 2008, we expanded this
payment adjustment policy to include cases in which hospitals receive
partial credit of 50 percent or more of the cost of a specified device.
Hospitals were instructed to append the ``FC'' modifier to the
procedure code that reports the service provided to furnish the device
when they receive a partial credit of 50 percent or more of the cost of
the new device. We refer readers to the CY 2008 OPPS/ASC final rule
with comment period for more background information on the ``FB'' and
``FC'' modifiers payment adjustment policies (72 FR 66743 through
66749).
In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75005
through 75007), beginning in CY 2014, we modified our policy of
reducing OPPS payment for specified APCs when a hospital furnishes a
specified device without cost or with a full or partial credit. For CY
2013 and prior years, our policy had been to reduce OPPS payment by 100
percent of the device offset amount when a hospital furnishes a
specified device without cost or with a full credit and by 50 percent
of the device offset amount when the hospital receives partial credit
in the amount of 50 percent or more of the cost for the specified
device. For CY 2014, we reduced OPPS payment, for the applicable APCs,
by the full or partial credit a hospital receives for a replaced
device. Specifically, under this modified policy, hospitals are
required to report on the claim the amount of the credit in the amount
portion for value code ``FD'' (Credit Received from the
[[Page 33611]]
Manufacturer for a Replaced Device) when the hospital receives a credit
for a replaced device that is 50 percent or greater than the cost of
the device. For CY 2014, we also limited the OPPS payment deduction for
the applicable APCs to the total amount of the device offset when the
``FD'' value code appears on a claim. For CY 2015, we continued our
policy of reducing OPPS payment for specified APCs when a hospital
furnishes a specified device without cost or with a full or partial
credit and to use the three criteria established in the CY 2007 OPPS/
ASC final rule with comment period (71 FR 68072 through 68077) for
determining the APCs to which our CY 2015 policy will apply (79 FR
66872 through 66873). In the CY 2016 OPPS/ASC final rule with comment
period (80 FR 70424), we finalized our policy to no longer specify a
list of devices to which the OPPS payment adjustment for no cost/full
credit and partial credit devices would apply and instead apply this
APC payment adjustment to all replaced devices furnished in conjunction
with a procedure assigned to a device-intensive APC when the hospital
receives a credit for a replaced specified device that is 50 percent or
greater than the cost of the device.
b. Policy for No Cost/Full Credit and Partial Credit Devices
In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79659
through 79660), for CY 2017 and subsequent years, we finalized a policy
to reduce OPPS payment for device-intensive procedures, by the full or
partial credit a provider receives for a replaced device, when a
hospital furnishes a specified device without cost or with a full or
partial credit. Under our current policy, hospitals continue to be
required to report on the claim the amount of the credit in the amount
portion for value code ``FD'' when the hospital receives a credit for a
replaced device that is 50 percent or greater than the cost of the
device.
In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75005
through 75007), we adopted a policy of reducing OPPS payment for
specified APCs when a hospital furnishes a specified device without
cost or with a full or partial credit by the lesser of the device
offset amount for the APC or the amount of the credit. We adopted this
change in policy in the preamble of the CY 2014 OPPS/ASC final rule
with comment period and discussed it in subregulatory guidance,
including chapter 4, section 61.3.6 of the Medicare Claims Processing
Manual. Further, in the CY 2021 OPPS/ASC final rule with comment period
(85 FR 86017 through 86018, 86302), we made conforming changes to our
regulations at Sec. 419.45(b)(1) and (2) that codified this policy.
We are not proposing any changes to our policies regarding payment
for no cost/full credit and partial credit devices for CY 2026.
V. Proposed OPPS Payment for Drugs, Biologicals, and
Radiopharmaceuticals
A. Proposed OPPS Transitional Pass-Through Payment for Additional Costs
of Drugs, Biologicals, and Radiopharmaceuticals
1. Background
Section 1833(t)(6) of the Act provides for temporary additional
payments or ``transitional pass-through payments'' for certain drugs
and biologicals. A ``biological'' as used in this proposed rule
includes (but is not necessarily limited to) a ``biological product''
or a ``biologic'' as defined under section 351 of the PHS Act. As
enacted by the Medicare, Medicaid, and SCHIP Balanced Budget Refinement
Act of 1999 (BBRA) (Pub. L. 106-113), this pass-through payment
provision requires the Secretary to make additional payments to
hospitals for: current orphan drugs for rare diseases and conditions,
as designated under section 526 of the Federal Food, Drug, and Cosmetic
Act; current drugs and biologicals and brachytherapy sources used in
cancer therapy; and current radiopharmaceutical drugs and biologicals.
``Current'' refers to those types of drugs or biologicals mentioned
above that are hospital outpatient services under Medicare Part B for
which transitional pass-through payment was made on the first date the
hospital OPPS was implemented.
Transitional pass-through payments also are provided for certain
``new'' drugs and biologicals that were not being paid for as an HOPD
service as of December 31, 1996, and whose cost is ``not
insignificant'' in relation to the OPPS payments for the procedures or
services associated with the new drug or biological. For pass-through
payment purposes, radiopharmaceuticals are included as ``drugs.'' As
required by statute, transitional pass-through payments for a drug or
biological described in section 1833(t)(6)(C)(i)(II) of the Act can be
made for a period of at least 2 years, but not more than 3 years, after
the payment was first made for the drug as a hospital outpatient
service under Medicare Part B. Proposed CY 2026 pass-through drugs and
biologicals and their designated APCs are assigned status indicator
``G'' in Addenda A and B to this proposed rule (which are available on
the CMS website).\55\
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\55\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
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Section 1833(t)(6)(D)(i) of the Act specifies that the pass-through
payment amount, in the case of a drug or biological, is the amount by
which the amount determined under section 1842(o) of the Act for the
drug or biological exceeds the portion of the otherwise applicable
Medicare OPD fee schedule that the Secretary determines is associated
with the drug or biological. The methodology for determining the pass-
through payment amount is set forth in regulations at 42 CFR 419.64. In
accordance with section V.B.9. of this proposed rule, skin substitutes
with an approved Biologics License Application (BLA) would be
considered under transitional drug pass-through payment status. As
such, we propose to amend our regulation at Sec. 419.64 to remove
paragraph (a)(4)(iv) ``A biological that is not a skin substitute or
similar product that aids wound healing.'' The regulations at 42 CFR
419.64 specify that the pass-through payment equals the amount
determined under section 1842(o) of the Act minus the portion of the
APC payment that CMS determines is associated with the drug or
biological. Section 1847A of the Act establishes the average sales
price (ASP) methodology, which is used for payment for drugs and
biologicals described in section 1842(o)(1)(C) of the Act furnished on
or after January 1, 2005. The ASP methodology, as applied under the
OPPS, uses several sources of data as a basis for payment, including
the ASP, the wholesale acquisition cost (WAC), and the average
wholesale price (AWP). In this proposed rule, the term ``ASP
methodology'' and ``ASP-based'' are inclusive of all data sources and
methodologies described therein. Additional information on the ASP
methodology can be found on our website at https://www.cms.gov/medicare/payment/fee-for-service-providers/part-b-drugs/average-drug-sales-price.
The pass-through application \56\ and review process for drugs and
biologicals is described on our website at https://www.cms.gov/
medicare/payment/prospective-payment-systems/hospital-outpatient/pass-
through-payment-
[[Page 33612]]
status-new-technology-ambulatory-payment-classification-apc.
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\56\ To apply for OPPS transitional Pass-Through Payment Status
and New Technology Ambulatory Payment Classification (APC),
applicants complete an application that is subject to the Paperwork
Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq.). This
information collection (CMS-10008) is currently approved under OMB
control number of 0938-0802 and has an expiration date of July 31,
2027.
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2. Transitional Pass-Through Payment Period for Pass-Through Drugs,
Biologicals, and Radiopharmaceuticals and Quarterly Expiration of Pass-
Through Status
As required by statute, transitional pass-through payments for a
drug or biological described in section 1833(t)(6)(C)(i)(II) of the Act
can be made for a period of at least 2 years, but not more than 3
years, after the payment was first made for the drug or biological as a
hospital outpatient service under Medicare Part B. Drugs and
biologicals pass-through applications are accepted and approved on a
quarterly basis in which pass-through payments for approved
applications could begin on the next available OPPS quarterly update.
Furthermore, our current policy, which was finalized in CY 2017 OPPS/
ASC final rule with comment period (81 FR 79662), is to allow for
quarterly expiration of pass-through payment status for drugs,
biologicals, and radiopharmaceuticals to afford a pass-through payment
period that is as close to a full 3 years as possible to allow, on a
prospective basis, for the maximum pass-through payment period without
exceeding the statutory limit of 3 years. Notice of drugs for which
pass-through payment status is ending during the calendar year is
included in the quarterly OPPS Change Request transmittals.
3. Drugs and Biologicals With Expiring Pass-Through Payment Status in
CY 2025
There are 28 drugs and biologicals for which pass-through payment
status expires by December 31, 2025, as listed in Table 57. These drugs
and biologicals will have received OPPS pass-through payment for 3
years during the period of April 1, 2022 through December 31, 2025. In
accordance with the policy finalized in the CY 2017 OPPS/ASC final rule
with comment period (81 FR 79662) and described earlier, pass-through
payment status for drugs and biologicals approved in CY 2017 and
subsequent years will expire on a quarterly basis, with a pass-through
payment period as close to 3 years as possible.
With the exception of those groups of drugs and biologicals that
are always packaged when they do not have pass-through payment status
(specifically, anesthesia drugs; drugs, biologicals, and
radiopharmaceuticals \57\ that function as supplies when used in a
diagnostic test or procedure; and drugs and biologicals that function
as supplies when used in a surgical procedure), our standard
methodology for providing payment for drugs and biologicals with
expiring pass-through payment status in an upcoming calendar year is to
determine the product's estimated per day cost and compare it with the
OPPS drug packaging threshold for that calendar year, which is proposed
to be $140 for CY 2026 for all drugs, biologicals, and therapeutic
radiopharmaceuticals (for high-cost diagnostic radiopharmaceuticals, we
would provide separate payment when their per day cost greater than the
threshold we propose to adopt of $655). These policies are discussed
further in section V.B.1. of this proposed rule. If the estimated per
day cost for the drug or biological is less than or equal to the
applicable OPPS drug packaging threshold, we package payment for the
drug or biological into the payment for the associated procedure in the
upcoming calendar year. If the estimated per day cost of the drug or
biological is greater than the OPPS drug packaging threshold, we
provide separate payment at the applicable ASP methodology-based
payment amount (which is generally ASP plus 6 percent), as discussed
further in section V.B.2. of this proposed rule.
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\57\ In the CY 2025 OPPS/ASC final rule with comment period (89
FR 93948), we finalized the diagnostic radiopharmaceuticals policy
to separately pay those products when the per-day costs are greater
than a threshold. Please refer to section II.A.3.c. of this proposed
rule for more information regarding this policy.
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BILLING CODE 4120-01-P
[[Page 33613]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.079
BILLING CODE 4120-01-C
[[Page 33614]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.080
4. Drugs, Biologicals, and Radiopharmaceuticals With Pass-Through
Payment Status Expiring in CY 2026
We propose to end pass-through payment status in CY 2026 for 52
drugs and biologicals. These drugs and biologicals, which were
initially approved for pass-through payment status between April 1,
2023 and January 1, 2024, are listed in Table 57. The APCs and HCPCS
codes for these drugs and biologicals, which have pass-through payment
status that will end by December 31, 2026, are assigned status
indicator ``G'' (Pass-Through Drugs and Biologicals) in Addenda A and B
to this proposed rule (which are available on the CMS website).\58\ The
APCs and HCPCS codes for these drugs and biologicals are assigned
status indicator ``G'' only for the duration of their pass-through
status.
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\58\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
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Section 1833(t)(6)(D)(i) of the Act sets the amount of pass-through
payment for pass-through drugs and biologicals (the pass-through
payment amount) as the difference between the amount authorized under
section 1842(o) of the Act and the portion of the otherwise applicable
OPD fee schedule that the Secretary determines is associated with the
drug or biological. For CY 2026, we are continuing our policy to pay
for pass-through drugs and biologicals using the ASP methodology,
meaning a payment rate based on ASP, WAC, or AWP, as applicable. This
payment rate is generally ASP plus 6 percent, equivalent to the payment
rate these drugs and biologicals would receive in the physician's
office setting in CY 2026. We note that, under the OPD fee schedule,
separately payable drugs assigned to an APC are generally payable at
ASP plus 6 percent. Therefore, a $0 pass-through payment amount will
continue to be paid for pass-through drugs and biologicals under the CY
2026 OPPS because the difference between the amount authorized under
section 1842(o) of the Act, which is generally ASP plus 6 percent, and
the portion of the otherwise applicable OPD fee schedule that the
Secretary determines is appropriate, which is generally ASP plus 6
percent, is $0.
In the case of policy-packaged drugs (which include the following:
anesthesia drugs; drugs, biologicals, and radiopharmaceuticals \59\
below the applicable cost threshold that function as supplies when used
in a diagnostic test or procedure; and drugs and biologicals that
function as supplies when used in a surgical procedure), their pass-
through payment amount will continue to be equal to a payment rate
calculated using the ASP methodology, meaning a payment rate based on
ASP, WAC, or AWP. This payment rate will generally continue to be ASP
plus 6 percent for CY 2026, minus a payment offset for the portion of
the otherwise applicable OPD fee schedule that the Secretary determines
is associated with the drug or biological. We note that if not for the
pass-through payment status of these policy-packaged products, payment
for these products would be packaged into the associated procedure and
therefore, there are associated OPD fee schedule amounts for them.
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\59\ In the CY 2025 OPPS/ASC final rule with comment period (89
FR 93948), we finalized the diagnostic radiopharmaceuticals policy
to separately pay those products when the per-day costs are greater
than a threshold. Please refer to section II.A.3.c. of this proposed
rule for more information regarding this policy.
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We note that in the CY 2025 OPPS/ASC final rule with comment period
(89 FR 93948 through 93963), we modified the regulation text at 42 CFR
419.2(b)(15) to specify that only those diagnostic radiopharmaceuticals
with per-day costs at or below the per-day diagnostic
radiopharmaceutical packaging threshold for the applicable year are
policy-packaged. Meaning, for these diagnostic radiopharmaceuticals
that are below the diagnostic radiopharmaceutical packaging threshold,
for purposes of pass-through co-insurance calculations, they are
treated like policy packaged drugs. For those diagnostic
radiopharmaceuticals above the diagnostic radiopharmaceutical packaging
threshold, they are not packaged, and are not considered policy
packaged; therefore, for purposes of pass-through co-insurance
calculations, they are treated like separately payable drugs assigned
to an APC. Accordingly, a $0 pass-through payment amount is assigned
consistent with our policy described previously in this section for
separately payable drugs assigned to an APC.
We will continue our policy to update pass-through payment rates on
a quarterly basis on the CMS website during CY 2026 if later quarter
ASP submissions (or more recent WAC or
[[Page 33615]]
AWP information, as applicable) indicate that adjustments to the
payment rates for these pass-through payment drugs or biologicals are
necessary. For a full description of this policy, we refer readers to
the CY 2006 OPPS/ASC final rule with comment period (70 FR 68632
through 68635).
For CY 2026, consistent with our CY 2025 policy for diagnostic and
therapeutic radiopharmaceuticals, we will continue to provide payment
for both diagnostic and therapeutic radiopharmaceuticals that are
granted pass-through payment status based on the ASP methodology. As
stated earlier, for purposes of pass-through payment, we consider
radiopharmaceuticals to be drugs under the OPPS. Therefore, if a
diagnostic or therapeutic radiopharmaceutical receives pass-through
payment status during CY 2026, we will continue to follow the standard
ASP methodology to determine the pass-through payment rate that drugs
receive under section 1842(o) of the Act, which is generally ASP plus 6
percent. If ASP data are not available for a radiopharmaceutical, we
will continue to provide pass-through payment at WAC plus 3 percent
(consistent with our policy in section V.B.2.a. of this proposed rule),
the equivalent payment provided for pass-through drugs and biologicals
without ASP information. Additional detail on the WAC plus 3 percent
payment policy can be found in section V.B.2.a. of this proposed rule.
If WAC information also is not available, we will continue to provide
payment for the pass-through radiopharmaceutical at 95 percent of its
most recent AWP.
We refer readers to Table 58 for the list of drugs and biologicals
with pass-through payment status expiring during CY 2026.
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BILLING CODE 4120-01-C
5. Drugs, Biologicals, and Radiopharmaceuticals With Pass-Through
Payment Status Continuing Through CY 2026
We propose to continue pass-through payment status in CY 2026 for
41 drugs and biologicals. These drugs and biologicals, which were
approved for pass-through payment status with effective dates beginning
between April 1, 2024 and April 1, 2025, are listed in Table 58. The
APCs and HCPCS codes for these drugs and biologicals, which have pass-
through payment status that would continue after December 31, 2026, are
assigned status indicator ``G'' in Addenda A and B to this proposed
rule (which are available on the CMS website).\60\
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Section 1833(t)(6)(D)(i) of the Act sets the amount of pass-through
payment for pass-through drugs and biologicals (the pass-through
payment amount) as the difference between the amount authorized under
section 1842(o) of the Act and the portion of the otherwise applicable
OPD fee schedule that the Secretary determines is associated with the
drug or biological. For CY 2026, we are continuing our policy to pay
for pass-through drugs and biologicals at a payment rate based on the
ASP methodology, which may be based on ASP, WAC, or AWP, but is
generally ASP plus 6 percent, which is equivalent to the payment rate
these drugs and biologicals would receive in the physician's office
setting in CY 2026. We will continue with our policy of paying a $0
pass-through payment amount for pass-through drugs and biologicals that
are not policy-packaged under the CY 2026 OPPS, because the difference
between the amount authorized under section 1842(o) of the Act, which
would generally be ASP plus
[[Page 33620]]
6 percent, and the portion of the otherwise applicable OPD fee schedule
that the Secretary determines is appropriate, which would also
generally be ASP plus 6 percent, is $0.
In the case of policy-packaged drugs (which include the following:
anesthesia drugs; drugs, biologicals, and radiopharmaceuticals \61\
that function as supplies when used in a diagnostic test or procedure;
and drugs and biologicals that function as supplies when used in a
surgical procedure), their pass-through payment amount would continue
to be equal to a payment rate based on the ASP methodology, which may
be based on ASP, WAC, or AWP, but would generally be ASP plus 6 percent
for CY 2026, minus a payment offset for any predecessor drug products
contributing to the pass-through payment. We note if not for the pass-
through payment status of these policy-packaged products, payment for
these products would be packaged into the associated procedure and
therefore, there are associated OPD fee schedule amounts for them.
---------------------------------------------------------------------------
\61\ In the CY 2025 OPPS/ASC final rule with comment period (89
FR 93948), we finalized a diagnostic radiopharmaceuticals policy to
separately pay those products when the per-day costs are greater
than a threshold. Please refer to section II.A.3.c. of this proposed
rule for more information regarding this policy.
---------------------------------------------------------------------------
We are continuing our policy to update pass-through payment rates
on a quarterly basis on our website during CY 2026 if later quarter ASP
submissions (or more recent WAC or AWP information, as applicable)
indicate that adjustments to the payment rates for these pass-through
payment drugs or biologicals are necessary. For a full description of
this policy, we refer readers to the CY 2006 OPPS/ASC final rule with
comment period (70 FR 68632 through 68635).
For CY 2026, consistent with our CY 2025 policy for diagnostic and
therapeutic radiopharmaceuticals, we propose to continue our policy to
provide payment for both diagnostic and therapeutic
radiopharmaceuticals that are granted pass-through payment status based
on the ASP methodology. As stated earlier, for purposes of pass-through
payment, we consider radiopharmaceuticals to be drugs under the OPPS.
Therefore, if a diagnostic or therapeutic radiopharmaceutical receives
pass-through payment status during CY 2026, we will continue to follow
the standard ASP methodology to determine the pass-through payment rate
that drugs receive under section 1842(o) of the Act, which would
generally be ASP plus 6 percent. If ASP data are not available for a
radiopharmaceutical, we would provide pass-through payment at WAC plus
3 percent (consistent with our policy in section V.B.2.a. of this
proposed rule), the equivalent payment provided for pass-through drugs
and biologicals without ASP information. Additional detail on the WAC
plus 3 percent payment policy can be found in section V.B.2.a. of this
proposed rule. If WAC information also is not available, we would
provide payment for the pass-through radiopharmaceutical at 95 percent
of its most recent AWP.
The drugs and biologicals that would have pass-through payment
status expire after December 31, 2026, are shown in Table 59.
BILLING CODE 4120-01-P
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BILLING CODE 4120-01-C
B. Proposed OPPS Payment for Drugs, Biologicals, and
Radiopharmaceuticals Without Pass-Through Payment Status
1. Criteria for Packaging Payment for Drugs, Biologicals, and
Radiopharmaceuticals
a. Proposed Packaging Threshold
In accordance with section 1833(t)(16)(B) of the Act, the threshold
for establishing separate APCs for payment of drugs and biologicals was
set to $50 per administration during CYs 2005 and 2006. In CY 2007, we
used the four-quarter moving average Producer Price Index (PPI) levels
for Pharmaceutical Preparations (Prescription) to trend the $50
threshold forward from the third quarter of CY 2005 (when the Pub. L.
108-173 mandated threshold became effective) to the third quarter of CY
2007. We then rounded the resulting dollar amount to the nearest $5
increment to determine the CY 2007 threshold amount of $55. Using the
same methodology as that used in CY 2007 (which is discussed in more
detail in the CY 2007 OPPS/ASC final rule with comment period (71 FR
68085 through 68086)), we set the packaging threshold for establishing
separate APCs for drugs and biologicals at $140 for CY 2025 (89 FR
94237).
Following the CY 2007 methodology, for the CY 2026 OPPS/ASC
proposed rule, we propose to use the most recently available four
quarter moving average PPI levels to trend the $50 threshold forward
from the third quarter of CY 2005 to the third quarter of CY 2026 and
round the resulting dollar amount ($141.67) to the nearest $5
increment, which yields a figure of $140. In performing this
calculation, we
[[Page 33624]]
used the most recent forecast of the quarterly index levels for the PPI
for Pharmaceuticals for Human Use (Prescription) (Bureau of Labor
Statistics series code WPUSI07003) from IGI. IGI is a nationally
recognized economic and financial forecasting firm with which CMS
contracts to forecast various price indexes including the PPI
Pharmaceuticals for Human Use (Prescription). Based on these
calculations, we propose a packaging threshold for CY 2026 of $140 for
drugs, biologicals, and therapeutic radiopharmaceuticals. We also
propose that if more recent data subsequently become available after
the publication of the CY 2026 OPPS/ASC proposed rule, we would use
such updated data, if appropriate, to determine the final CY 2026 OPPS
drug packaging threshold amount in the CY 2026 OPPS/ASC final rule with
comment period.
We finalized in section II.A.3.c. of the CY 2025 OPPS/ASC final
rule with comment period (89 FR 94238 through 94241) to pay separately
for diagnostic radiopharmaceuticals with a per-day cost above the
packaging threshold for CY 2025 of $630. We also finalized that
starting in CY 2026 and subsequent years, we would update this
threshold by the PPI for Pharmaceuticals for Human Use (Prescription)
(Bureau of Labor Statistics series code WPUSI07003) from IHS Global,
Inc (IGI). For the diagnostic radiopharmaceutical packaging threshold,
we finalized using the same methodology as that used in CY 2007 (which
is discussed in more detail in the CY 2007 OPPS/ASC final rule with
comment period (71 FR 68085 and 68086)) to calculate the update to the
OPPS drug packaging threshold. Specifically, we finalized that,
starting for the CY 2026 rulemaking, we would use the most recently
available four quarter moving average PPI levels to trend the final
current year (CY 2025) threshold forward from the third quarter of the
data year (CY 2024) to the third quarter of the current year (CY 2025)
and round the resulting dollar amount to the nearest $5 increment. We
are now proposing a technical refinement to this policy to use the most
recently available four-quarter moving average PPI levels to trend the
CY 2025 final threshold forward from the third quarter of CY 2025 to
the third quarter of the payment year (CY 2026) and round the resulting
dollar amount to the nearest $5 increment. We believe using the most
recently available four quarter moving average PPI levels more
appropriately updates the packaging threshold from CY 2025 for payment
in CY 2026. For this CY 2026 OPPS/ASC proposed rule, we are using the
most recently available four quarter moving average PPI levels to trend
the $630 diagnostic radiopharmaceutical packaging threshold forward
from the third quarter of CY 2025 to the third quarter of CY 2026 and
we are rounding the resulting dollar amount ($654.23) to the nearest $5
increment, which yields a figure of $655. We also propose that if more
recent data subsequently becomes available after the publication of the
CY 2026 OPPS/ASC proposed rule, we would use such updated data, if
appropriate, to determine the final CY 2026 diagnostic
radiopharmaceutical packaging threshold amount in the CY 2026 OPPS/ASC
final rule with comment period. For CY 2027 and subsequent updates, we
therefore propose to trend the CY 2025 threshold of $630 forward using
the four-quarter moving average PPI levels for Pharmaceuticals for
Human Use, Prescription for CY 2025 (third quarter) forward using the
PPI for Pharmaceuticals for Human Use, Prescription for the applicable
payment year (third quarter).
b. Proposed Packaging of Payment for HCPCS Codes That Describe Certain
Drugs, Certain Biologicals, and Certain Radiopharmaceuticals Under the
Cost Thresholds
To determine the proposed CY 2026 packaging status for all nonpass-
through drugs, biologicals, diagnostic and therapeutic
radiopharmaceuticals that are not policy packaged, we calculated, on a
HCPCS code-specific basis, the per day cost of all drugs, biologicals,
and therapeutic radiopharmaceuticals that had a HCPCS code in CY 2024
and were paid (via packaged or separate payment) under the OPPS. We
used data from CY 2024 claims processed through December 31, 2024, for
this calculation. However, we did not perform this calculation for
those drugs and biologicals with multiple HCPCS codes that include
different dosages, as described in section V.B.1.d. of this proposed
rule, or for the following policy-packaged items that we propose to
continue to package in CY 2026: anesthesia drugs; drugs, biologicals,
and contrast agents and other drugs that function as supplies when used
in a diagnostic test or procedure; and drugs and biologicals that
function as supplies when used in a surgical procedure. Consistent with
our policy described in section V.B.5. of this proposed rule, in
situations where we have no claims data and must determine if these
products exceed the per-day cost threshold, we estimated the average
number of units of each product that would typically be furnished to a
patient during one day in the hospital outpatient setting and utilized
the ASP methodology to determine whether their payment will be packaged
as well as their payment status indicators.
In order to calculate the per day costs for drugs, biologicals,
diagnostic radiopharmaceuticals, and therapeutic radiopharmaceuticals
to determine their proposed packaging status in CY 2026, we used the
methodology that was described in detail in the CY 2006 OPPS proposed
rule (70 FR 42723 through 42724) and finalized in the CY 2006 OPPS
final rule with comment period (70 FR 68636 through 68638). For each
drug and biological HCPCS code, we used an estimated payment rate based
on the ASP methodology, which is generally ASP plus 6 percent (which is
the payment rate we proposed for separately payable drugs and
biologicals) for CY 2026, as discussed in more detail in section V.A.1.
and V.B.2. of this proposed rule to calculate the CY 2026 proposed rule
per day costs. We used the manufacturer-submitted ASP data from the
fourth quarter of CY 2024 (data that were used for payment purposes in
the physician's office setting, effective April 1, 2025) to determine
the CY 2026 OPPS/ASC proposed rule per day cost.
As is our standard methodology, for CY 2026, we propose to use
payment rates based on the ASP data from the fourth quarter of CY 2024
for budget neutrality estimates, packaging determinations, impact
analyses, and completion of Addenda A and B to this proposed rule
(which are available via the internet on the CMS website) because these
are the most recent data available for use at the time of development
of the CY 2026 OPPS/ASC proposed rule. These data also are the basis
for drug payments in the physician's office setting, effective April 1,
2025. Exceptions to our standard methodology include:
For therapeutic radiopharmaceuticals that do not have
pass-through status as of April 1, 2025, and do not have an ASP-based
payment rate, we did not use a payment rate based on WAC or AWP for
those items, consistent with our policy described in section V.B.3.a.
of the CY 2025 OPPS/ASC proposed rule. Instead, we used their mean unit
cost derived from the CY 2024 hospital claims data to determine their
per day cost.
For diagnostic radiopharmaceuticals that do not have pass-
through status as of April 1, 2025, we used their mean unit cost
derived from the CY 2024 hospital claims data
[[Page 33625]]
to determine their per day cost. We did not use an ASP-based, WAC-
based, or AWP-based payment rate for those items unless there was no
mean unit cost reported for the product, consistent with our proposed
policy described in section V.B.3.b of the CY 2025 OPPS/ASC final rule
with comment period.
For items other than diagnostic or therapeutic
radiopharmaceuticals that did not have either an ASP-based payment
rate, a payment rate based on WAC, or a payment rate based on AWP, we
used mean unit cost of the items derived from the CY 2024 hospital
claims data to determine their per day cost.
We propose to package drugs, biologicals, and therapeutic
radiopharmaceuticals with a per day cost less than or equal to $140 and
identify items with a per day cost greater than $140 as separately
payable unless they are policy-packaged. For diagnostic
radiopharmaceuticals, we propose to package those items with a per day
cost less than or equal to $655 and identify items with a per day cost
greater than $655 as separately payable. Consistent with our past
practice (72 FR 667580), we cross-walked historical OPPS claims data
from the CY 2024 HCPCS codes that were reported to the CY 2024 HCPCS
codes that we display in Addendum B to this proposed rule (which is
available on the CMS website) \62\ for proposed payment in CY 2026.
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\62\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
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Our policy during previous cycles of OPPS rulemaking has been to
use updated ASP and claims data to make final determinations of the
packaging status of HCPCS codes for drugs, biologicals, and therapeutic
radiopharmaceuticals for the OPPS/ASC final rule with comment period
(71 FR 68086; 78 FR75022; 89 FR 94238). We note that it is also our
policy to make an annual packaging determination for a HCPCS code only
when we develop the OPPS/ASC final rule with comment period for the
update year (71 FR 68086). Only HCPCS codes that are identified as
separately payable in the final rule with comment period are subject to
quarterly updates. For our calculation of per day costs of HCPCS codes
for drugs, biologicals, and radiopharmaceuticals in this proposed rule,
we propose to use ASP data from the fourth quarter of CY 2024, which is
the basis for calculating payment rates for drugs and biologicals in
the physician's office setting using the ASP methodology, effective
April 1, 2025, along with updated hospital claims data from CY 2024. We
note that we also propose to use these data for budget neutrality
estimates and impact analyses for this proposed rule.
We propose that payment rates for HCPCS codes for separately
payable drugs and biologicals included in Addenda A and B of the CY
2026 OPPS/ASC final rule with comment period would be based on ASP data
from the second quarter of CY 2025. These data are the basis for
calculating payment rates for drugs and biologicals in the physician's
office setting using the ASP methodology, effective October 1, 2025.
These payment rates would then be updated in the January 2026 OPPS
update, based on the most recent ASP data to be used for physicians'
office and OPPS payment as of January 1, 2026. For drugs and
biologicals that do not currently have a payment rate based on ASP,
WAC, or AWP, for therapeutic radiopharmaceuticals that do not currently
have an ASP payment rate, and for all diagnostic radiopharmaceuticals,
we will calculate their mean unit cost from all of the CY 2024 claims
data and updated cost report information available for the CY 2026
final rule with comment period to determine their final per day cost.
Consequently, the final rule packaging status of some HCPCS codes
for drugs, biologicals, and radiopharmaceuticals in this proposed rule
may be different from the same drugs' HCPCS codes' packaging status
determined based on the data used for this proposed rule. Under such
circumstances, we propose to continue to follow the established
policies initially adopted for the CY 2005 OPPS final rule with comment
period (69 FR 65780) is in order to more equitably pay for those drugs
whose costs fluctuate relative to the proposed CY 2026 OPPS drug
packaging threshold and the drug's payment status (packaged or
separately payable) in CY 2026. These established policies have not
changed for many years and are the same as described in the CY 2016
OPPS/ASC final rule with comment period (80 FR 70434). Specifically,
for CY 2026 and subsequent years, consistent with our historical
practice, we propose to apply the following policies to those HCPCS
codes for drugs, biologicals, and therapeutic radiopharmaceuticals
whose relationship to the drug packaging threshold changes based on the
updated drug packaging threshold and on the final updated data:
HCPCS codes for drugs, biologicals, and
radiopharmaceuticals that were paid separately in CY 2025 and that are
proposed for separate payment in CY 2026, and that then have per day
costs equal to or less than the CY 2026 final rule drug packaging
threshold or diagnostic radiopharmaceutical packaging threshold, based
on the updated ASPs and hospital claims data used for the CY 2026 final
rule, would continue to receive separate payment in CY 2026.
HCPCS codes for drugs, biologicals, and
radiopharmaceuticals that were packaged in CY 2025 and that are
proposed for separate payment in CY 2026, and that then have per day
costs equal to or less than the CY 2026 final rule drug packaging
threshold or diagnostic radiopharmaceutical packaging threshold, based
on the updated ASPs and hospital claims data used for the CY 2026 final
rule, would remain packaged in CY 2026.
HCPCS codes for drugs, biologicals, and
radiopharmaceuticals for which we proposed packaged payment in CY 2026
but that then have per-day costs greater than the CY 2026 final rule
drug packaging threshold or diagnostic radiopharmaceutical packaging
threshold, based on the updated ASPs and hospital claims data used for
the CY 2026 final rule, would receive separate payment in CY 2026.
c. Policy-Packaged Drugs, Biologicals, and Radiopharmaceuticals
As mentioned earlier in this section, under the OPPS, we package
several categories of nonpass-through drugs, biologicals, and
radiopharmaceuticals, regardless of the cost of the products. Because
the products are packaged according to the policies in 42 CFR 419.2(b),
we refer to these packaged drugs, biologicals, and radiopharmaceuticals
as ``policy-packaged'' drugs, biologicals, and radiopharmaceuticals.
These policies are either longstanding or based on longstanding
principles and inherent to the OPPS and are currently as follows:
Anesthesia, certain drugs, biologicals, and other
pharmaceuticals; medical and surgical supplies and equipment; surgical
dressings; and devices used for external reduction of fractures and
dislocations (Sec. 419.2(b)(4));
Intraoperative items and services (Sec. 419.2(b)(14));
Drugs, biologicals, and radiopharmaceuticals that function
as supplies when used in a diagnostic test or procedure (including but
not limited to, diagnostic radiopharmaceuticals with per-day costs at
or below the per-day diagnostic radiopharmaceutical packaging threshold
for the applicable year, contrast agents, and pharmacologic stress
agents) (Sec. 419.2(b)(15)); and
Drugs and biologicals that function as supplies when used
in a surgical
[[Page 33626]]
procedure (including, but not limited to, skin substitutes and similar
products that aid wound healing and implantable biologicals) (Sec.
419.2(b)(16)).
The policy at Sec. 419.2(b)(16) is broader than the policy at
Sec. 419.2(b)(14). As we stated in the CY 2015 OPPS/ASC final rule
with comment period: ``We consider all items related to the surgical
outcome and provided during the hospital stay in which the surgery is
performed, including postsurgical pain management drugs, to be part of
the surgery for purposes of our drug and biological surgical supply
packaging policy'' (79 FR 66875). The category described by Sec.
419.2(b)(15) is large and includes diagnostic radiopharmaceuticals that
have a per day cost below the finalized diagnostic radiopharmaceutical
packaging threshold that we discuss in section II.A.3. of this proposed
rule, contrast agents, stress agents, and some other products. The
category described by Sec. 419.2(b)(16) currently includes skin
substitutes and some other products. We believe it is important to
reiterate that cost consideration is not a factor when determining
whether an item is a surgical supply (79 FR 66875).
d. Packaging Determination for HCPCS Codes That Describe the Same Drug
or Biological but Different Dosages
In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60490
through 60491), we finalized a policy to make a single packaging
determination for a drug, rather than an individual HCPCS code, when a
drug has multiple HCPCS codes describing different dosages because we
believe that adopting the standard HCPCS code-specific packaging
determinations for these codes could lead to inappropriate payment
incentives for hospitals to report certain HCPCS codes instead of
others. We continue to believe that making packaging determinations on
a drug-specific basis eliminates payment incentives for hospitals to
report certain HCPCS codes for drugs and allows hospitals flexibility
in choosing to report all HCPCS codes for different dosages of the same
drug or only the lowest dosage HCPCS code. Therefore, we propose to
continue our policy to make packaging determinations on a drug-specific
basis, rather than a HCPCS code-specific basis, for those HCPCS codes
that describe the same drug or biological but different dosages in CY
2026.
In order to propose a packaging determination that is consistent
across all HCPCS codes that describe different dosages of the same drug
or biological, we aggregated both our CY 2024 claims data and our
pricing information, which is based on the ASP methodology, generally
ASP plus 6 percent, across all of the HCPCS codes that describe each
distinct drug or biological in order to determine the mean units per
day of the drug or biological in terms of the HCPCS code with the
lowest dosage descriptor. The following drugs did not have pricing
information available for the ASP methodology for this proposed rule;
and, as is our current policy for determining the packaging status of
other drugs, we used the mean unit cost available from the CY 2024
claims data to make the proposed packaging determinations for them:
HCPCS code J3472 (Injection, hyaluronidase, ovine, preservative free,
per 1000 usp units); HCPCS code J7100 (Infusion, dextran 40,500 ml);
and HCPCS code J7110 (Infusion, dextran 75,500 ml).
For all other drugs and biologicals that have HCPCS codes
describing different doses, we then multiplied the proposed weighted
average ASP methodology based payment rate, which is generally ASP plus
6 percent, per-unit payment amount across all dosage levels of a
specific drug or biological by the estimated units per day for all
HCPCS codes that describe each drug or biological from our claims data
to determine if the estimated per day cost of each drug or biological
is less than or equal to the proposed CY 2026 drug packaging threshold
of $140 (in which case all HCPCS codes for the same drug or biological
would be packaged) or greater than the proposed CY 2026 drug packaging
threshold of $140 (in which case all HCPCS codes for the same drug or
biological would be separately payable). The proposed packaging status
of each drug and biological HCPCS code to which this methodology would
apply in CY 2026 is displayed in Table 60.
[[Page 33627]]
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We propose that our policy to make packaging determinations on a
drug-specific basis, rather than a HCPCS code-specific basis, for those
HCPCS codes that describe the same drug or biological but different
dosages in CY 2026 would also apply to diagnostic radiopharmaceuticals.
This is because, as with drugs and biologicals, we believe that
adopting standard HCPCS code-specific packaging determinations for
radiopharmaceutical codes could lead to inappropriate payment
incentives for hospitals to report certain HCPCS codes instead of
others. To propose a packaging determination that is consistent across
all HCPCS codes that describe different dosages of the same diagnostic
radiopharmaceutical, we would aggregate our CY 2024 claims data across
all of the HCPCS codes that describe each distinct diagnostic
radiopharmaceutical in order to determine the mean units per day of the
diagnostic radiopharmaceutical in terms of the HCPCS code with the
lowest dosage descriptor. We would then analyze the aggregate per day
cost of the diagnostic radiopharmaceutical to determine if the per day
cost is less than or equal to the proposed CY 2026 diagnostic
radiopharmaceutical packaging threshold of $655 (in which case all
HCPCS codes for the same diagnostic radiopharmaceutical would be
packaged) or greater than the proposed CY 2026 diagnostic
radiopharmaceutical packaging threshold of $655 (in which case all
HCPCS codes for the same diagnostic radiopharmaceutical would be
separately payable). There are currently no diagnostic
radiopharmaceuticals that this policy would apply to.
2. Proposed Payment for Drugs and Biologicals Without Pass-Through
Status That Are Not Packaged
a. Payment for Specified Covered Outpatient Drugs (SCODs) and Other
Separately Payable Drugs and Biologicals
Section 1833(t)(14) of the Act defines certain separately payable
radiopharmaceuticals, drugs, and biologicals and mandates specific
payments for these items. Under section 1833(t)(14)(B)(i) of the Act, a
``specified covered outpatient drug'' (known as a SCOD) is defined as a
covered outpatient drug, as defined in section 1927(k)(2) of the Act,
for which a separate APC has been established and that either is a
radiopharmaceutical agent or a drug or biological for which payment was
made on a pass-through basis on or before December 31, 2002.
Under section 1833(t)(14)(B)(ii) of the Act, certain drugs and
biologicals are designated as exceptions and are not included in the
definition of SCODs. These exceptions are--
A drug or biological for which payment is first made on or
after January 1, 2003, under the transitional pass-through payment
provision in section 1833(t)(6) of the Act.
A drug or biological for which a temporary HCPCS code has
not been assigned.
During CYs 2004 and 2005, an orphan drug (as designated by
the Secretary).
Section 1833(t)(14)(A)(iii) of the Act requires that payment for
SCODs in CY 2006 and subsequent years be equal to the average
acquisition cost for the drug for that year as determined by the
Secretary, subject to any adjustment for overhead costs and considering
the hospital acquisition cost survey data
[[Page 33628]]
collected by the Government Accountability Office (GAO) in CYs 2004 and
2005, and later periodic surveys conducted by the Secretary as set
forth in the statute. If hospital acquisition cost data are not
available, the law requires that payment be equal to payment rates
established under the methodology described in section 1842(o), section
1847A, or section 1847B of the Act, as calculated and adjusted by the
Secretary as necessary for purposes of paragraph (14). We refer to this
alternative methodology as the ``statutory default.'' Most physician
Part B drugs are paid at ASP plus 6 percent in accordance with section
1842(o) and section 1847A of the Act.
Section 1833(t)(14)(E)(ii) of the Act provides for an adjustment in
OPPS payment rates for SCODs to consider overhead and related expenses,
such as pharmacy services and handling costs. Section 1833(t)(14)(E)(i)
of the Act required MedPAC to study pharmacy overhead and related
expenses and to make recommendations to the Secretary regarding
whether, and if so how, a payment adjustment should be made to
compensate hospitals for overhead and related expenses. Section
1833(t)(14)(E)(ii) of the Act authorizes the Secretary to adjust the
weights for ambulatory procedure classifications for SCODs to consider
the findings of the MedPAC study.\63\
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\63\ Medicare Payment Advisory Committee. June 2005 Report to
the Congress. Chapter 6: Payment for pharmacy handling costs in
hospital outpatient departments. Available at https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/June05_ch6.pdf.
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It has been our policy since CY 2006 to apply the same treatment to
all separately payable drugs and biologicals, which include SCODs, and
drugs and biologicals that are not SCODs. Therefore, we apply the
payment methodology in section 1833(t)(14)(A)(iii) of the Act to SCODs,
as required by statute, but we also apply it to separately payable
drugs and biologicals that are not SCODs, which is a policy
determination rather than a statutory requirement. For CY 2023 and
subsequent years, we finalized a policy to apply section
1833(t)(14)(A)(iii)(II) of the Act to all separately payable drugs and
biologicals, including SCODs. Although we do not distinguish SCODs in
this discussion, we note that we are required to apply section
1833(t)(14)(A)(iii)(II) of the Act to SCODs; but we also are applying
this provision to other separately payable drugs and biologicals,
consistent with our history of using the same payment methodology for
all separately payable drugs and biologicals.
For a detailed discussion of our OPPS drug payment policies from CY
2006 to CY 2012, we refer readers to the CY 2013 OPPS/ASC final rule
with comment period (77 FR 68383 through 68385). In the CY 2013 OPPS/
ASC final rule with comment period (77 FR 68386 through 68389), we
first adopted the statutory default policy to pay for separately
payable drugs and biologicals at ASP plus 6 percent based on section
1833(t)(14)(A)(iii)(II) of the Act. We have continued this policy of
paying for separately payable drugs and biologicals at the statutory
default for CYs 2014 through 2025.
In the case of a drug or biological during an initial sales period
in which data on the prices for sales of the drug or biological are not
sufficiently available from the manufacturer, section 1847A(c)(4) of
the Act permits the Secretary to make payments that are based on WAC.
Under section 1833(t)(14)(A)(iii)(II) of the Act, the amount of payment
for a separately payable drug equals the average price for the drug for
the year established under, among other authorities, section 1847A of
the Act. As explained in greater detail in the CY 2019 PFS final rule,
under section 1847A(c)(4) of the Act, although payments may be based on
WAC, unlike section 1847A(b) of the Act (which specifies that payments
using ASP or WAC must be made with a 6 percent add-on), section
1847A(c)(4) of the Act does not require that a particular add-on amount
be applied to WAC-based pricing for this initial period when ASP data
are not available. Consistent with section 1847A(c)(4) of the Act, in
the CY 2019 PFS final rule (83 FR 59661 to 59666), we finalized a
policy that, effective January 1, 2019, WAC-based payments for Part B
drugs made under section 1847A(c)(4) of the Act will utilize a 3
percent add-on in place of the 6 percent add-on that was being used
according to our policy in effect as of CY 2018. For the CY 2019 OPPS,
we followed the same policy finalized in the CY 2019 PFS final rule (83
FR 59661 to 59666). Since CY 2020, we have continued to utilize a 3
percent add-on instead of a 6 percent add-on for drugs that are paid
based on WAC pursuant to our authority under section
1833(t)(14)(A)(iii)(II) of the Act (84 FR 61318 and 85 FR 86039), which
provides, in part, that the amount of payment for a SCOD is the average
price of the drug in the year established under section 1847A of the
Act. We also apply this provision to non-SCOD separately payable drugs,
biologicals, and certain radiopharmaceuticals. Because we establish the
average price for a drug paid based on WAC under section 1847A of the
Act as WAC plus 3 percent instead of WAC plus 6 percent, we believe it
is appropriate to price separately payable drugs paid based on WAC at
the same amount under the OPPS. Our policy to pay for drugs and
biologicals at WAC plus 3 percent, rather than WAC plus 6 percent,
applies whenever WAC-based pricing is used for a drug, biological, or
radiopharmaceutical under section 1847A(c)(4). We refer readers to the
CY 2019 PFS final rule (83 FR 59661 to 59666) for additional background
on this policy.
Consistent with our current policy, payments for separately payable
drugs, biologicals, and radiopharmaceuticals are included in the budget
neutrality adjustments, under the requirements in section 1833(t)(9)(B)
of the Act. Also, the budget neutral weight scalar is not applied in
determining payments for these separately payable drugs and
biologicals.
Separately payable drug, biological, and radiopharmaceutical
payment rates are listed in Addenda A and B to this proposed rule
(available on the CMS website).\64\ These addenda provide the proposed
CY 2026 payment rates based on the ASP methodology for separately
payable nonpass-through drugs, biologicals, and radiopharmaceuticals,
with exceptions for certain radiopharmaceuticals previously discussed,
and the ASP methodology for pass-through drugs, biologicals, and
radiopharmaceuticals. Except for proposed payment rates for certain
radiopharmaceuticals, these rates are based either on ASP information
that is the basis for calculating payment rates for drugs and
biologicals in the physician's office setting effective April 1, 2025,
or WAC, AWP, or mean unit cost from CY 2024 claims data and updated
cost report information available for this proposed rule. For nonpass-
through therapeutic radiopharmaceuticals, payment rates are based on
ASP data or mean unit cost. As we proposed to continue, in section
II.A.3.c.(3). of this proposed rule, to pay separately at mean unit
cost for diagnostic radiopharmaceuticals with per day costs above the
proposed threshold; the payment rates proposed for qualifying
diagnostic radiopharmaceuticals are entirely mean unit cost if
available. In general, these published proposed payment rates are not
the same as the actual January 2026 payment rates. This is because
payment rates for drugs, biologicals, and
[[Page 33629]]
therapeutic radiopharmaceuticals with ASP information for January 2026
will be determined through the standard quarterly process where ASP
data submitted by manufacturers for the third quarter of CY 2025 (July
1, 2025, through September 30, 2025) will be used to set the payment
rates that are released for the quarter beginning in January 2026 in
December 2025. In addition, in Addenda A and B to this proposed rule,
payment rates for drugs, biologicals, and therapeutic
radiopharmaceuticals for which there was no ASP, WAC, or AWP
information available for April 2025, as well as all separately payable
diagnostic radiopharmaceuticals, are based on mean unit cost in the
available CY 2024 claims data. If new pricing information becomes
available for payment for the quarter beginning in January 2026, we
will price payment for these drugs, biologicals, therapeutic
radiopharmaceuticals, and diagnostic radiopharmaceuticals based on
their newly available information. Finally, there may be drugs,
biologicals and therapeutic radiopharmaceuticals that have ASP, WAC, or
AWP information available for the proposed rule (reflecting April 2025
ASP data) that do not have ASP, WAC, or AWP information available for
the quarter beginning in January 2026. These drugs, biologicals and
therapeutic radiopharmaceuticals would then be paid based on mean unit
cost data derived from CY 2024 hospital claims. Therefore, the proposed
payment rates listed in Addenda A and B to this proposed rule are not
for January 2026 payment purposes and are only illustrative of the CY
2026 OPPS payment methodology using the most recently available
information at the time of issuance of the CY 2026 OPPS/ASC proposed
rule.
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We note that payment amounts for most drugs separately payable
under Medicare Part B are determined using the methodology in section
1847A of the Act, and in many cases, payment is based on the average
sales price (ASP) plus a statutorily mandated 6 percent add-on.
In CY 2025, we clarified that only ASP data or, if ASP data are not
available, mean unit cost data, would be used to set payment rates for
separately payable nonpass-through therapeutic radiopharmaceuticals
under the OPPS. For CY 2026, we are not proposing any changes to our
policies for payment for separately payable therapeutic or diagnostic
radiopharmaceuticals other than the technical update being proposed to
the diagnostic radiopharmaceutical packaging threshold update factor as
discussed in section V.B.1. of this proposed rule.
For CY 2026, we are not proposing any changes to our policies for
payment for separately payable drugs, biologicals, and
radiopharmaceuticals. We propose to continue our payment policy that
has been in effect since CY 2013 to pay for separately payable drugs
and biologicals in accordance with section 1833(t)(14)(A)(iii)(II) of
the Act (the statutory default).
b. Biosimilar Biological Products
For CY 2024, we finalized the exception of biosimilars from the
OPPS threshold packaging policy when their reference products are
separately paid (88 FR 81783 through 81785). This policy allows for
separate payment for biosimilars even if the biosimilar's per-day cost
is below the packaging threshold if the biosimilar's reference product
is separately paid. This policy removes the financial incentive to use
a more expensive separately payable biological and promotes biosimilar
use as a lower cost alternative to higher cost reference products.
Payment rates for drugs and biologicals (including biosimilars)
under Medicare Part B are determined using the methodology in section
1847A of the Act, and in many cases, payment is based on the average
sales price (ASP) plus a statutorily mandated 6 percent add-on.
Additionally, section 11403 of the IRA requires that a qualifying
biosimilar be paid at ASP plus 8 percent of the reference product's ASP
rather than 6 percent during the applicable 5-year period. Section
1847A(b)(8)(B)(ii) of the Act defines the applicable 5-year period for
a qualifying biosimilar for which payment has been made using ASP (that
is, payment under section 1847A(b)(8) of the Act) as of September 30,
2022, as the 5-year period beginning on October 1, 2022. For a
qualifying biosimilar for which payment is first made using ASP during
the period beginning October 1, 2022, and ending December 31, 2027, the
statute defines the applicable 5-year period as the 5-year period
beginning on the first day of such calendar quarter of such payment (88
FR 81783). These payment rates are published in the quarterly release
of Addendum B or ASP pricing files.
c. Invoice Drug Pricing for CY 2026
In the CY 2025 OPPS/ASC final rule with comment period (89 FR 94243
to 94244), we finalized without modification that, for separately
payable drugs or biologicals for which CMS does not provide a payment
rate in Addendum B, which would indicate to MACs that CMS does not have
pricing information (specifically, that ASP, WAC, AWP, and mean unit
cost information is not available to determine a payment rate), MACs
would calculate the payment based on provider invoices. The drug or
biological invoice cost would be the net acquisition cost minus any
rebates, chargebacks, or post-sale concessions. Before calculating an
invoice-based payment amount, MACs would use the provider invoice to
determine that: (a) the drug is not policy packaged; and (b) the per-
day cost of the drug, biological, therapeutic radiopharmaceutical or
diagnostic radiopharmaceutical is above the threshold packaging amount,
as applicable. If both conditions are met, the MACs would use the
provider invoice amount to set a payment rate for the separately
payable drug, biological, or radiopharmaceutical until its payment
amount becomes available to CMS. We generally expect invoice pricing to
be temporary, lasting two to three quarters, for qualified drugs
required to report ASP under section 1847A of the Act. For drug
products that are not required to report ASP under section 1847A of the
Act (i.e., diagnostic pharmaceuticals), invoice pricing may be used on
a longer term basis until a MUC can be calculated. We finalized the
invoice pricing policy for drugs to be effective January 1, 2026, with
the intent to make technical updates to outpatient hospital claims and
to allow providers time to prepare for any operational changes. We
noted that National Uniform Billing Committee (NUBC) created a value
code that would allow for the reporting of invoice prices of drugs,
biologicals, and radiopharmaceuticals for CY 2026 for the purpose of
this policy. The NUBC value code create is 92 (Drug/Biologic Invoice
Cost), with the definition of: ``Invoice Cost of drug/biologic. For use
with Revenue Category 0636 when required by federal regulation.'' We
propose a technical clarification to this policy. Previously, we stated
that MACs would use the provider invoice to determine that: (1) the
drug is not policy packaged; and (2) the per-day cost of the drug,
biological, therapeutic radiopharmaceutical or diagnostic
radiopharmaceutical is above the threshold packaging amount, as
applicable. However, we propose to clarify that CMS will determine
whether the first condition is met, whether the drug is not policy
packaged; however, the MAC will continue to determine whether the
second condition is met, whether the per-day cost of the drug,
biological, therapeutic radiopharmaceutical or diagnostic
[[Page 33630]]
radiopharmaceutical is above threshold packaging amount, as applicable.
3. Payment Policy for Radiopharmaceuticals
For a complete history of the OPPS payment policy for
radiopharmaceuticals, we refer readers to the CY 2005 OPPS final rule
with comment period (69 FR 65811), the CY 2006 OPPS final rule with
comment period (70 FR 68655), and the CY 2010 OPPS/ASC final rule with
comment period (74 FR 60524).
a. Payment Policy for Therapeutic Radiopharmaceuticals
In the CY 2023 OPPS/ASC final rule with comment period, we adopted
as final our proposal to continue our longstanding payment policy for
therapeutic radiopharmaceuticals for CY 2023 and subsequent years.
Accordingly, this payment policy for therapeutic radiopharmaceuticals
will continue to apply in CY 2026.
Specifically, our policy of paying for separately payable pass-
through therapeutic radiopharmaceuticals under the ASP methodology
adopted for separately payable drugs and biologicals described in
section V.A.1. of this proposed rule will continue to apply for CY
2026. We will pay for separately payable nonpass-through therapeutic
radiopharmaceuticals through a modified ASP methodology where we pay at
ASP plus 6 percent if ASP data are available. However, if ASP
information is unavailable for a separately payable nonpass-through
therapeutic radiopharmaceutical, we will continue to base the payment
rate on arithmetic mean unit cost data derived from hospital claims.
Our policy not to use WAC or AWP to establish payment for separately
payable nonpass-through therapeutic radiopharmaceuticals if ASP is not
available will continue for CY 2026. We explained our rationale in the
CY 2010 OPPS/ASC final rule with comment period (74 FR 60524 through
60525) when we first adopted our policy to apply the principles of
separately payable drug pricing to therapeutic radiopharmaceuticals.
For a full discussion of ASP-based payment for therapeutic
radiopharmaceuticals, we refer readers to the CY 2010 OPPS/ASC final
rule with comment period (74 FR 60520 through 60521). We will rely on
CY 2024 mean unit cost data derived from hospital claims data for
payment rates for separately payable nonpass-through therapeutic
radiopharmaceuticals for which ASP data are unavailable and update the
payment rates for these products according to our usual process for
updating the payment rates for separately payable drugs and biologicals
on a quarterly basis if updated ASP information becomes available.
The proposed CY 2026 payment rates for separately payable nonpass-
through therapeutic radiopharmaceuticals are included in Addenda A and
B of this proposed rule (which are available on the CMS website).\65\
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b. Payment Policy for Diagnostic Radiopharmaceuticals
For CY 2025, we finalized, as described in the CY 2025 OPPS/ASC
final rule (89 FR 93948 through 93963), to pay separately at arithmetic
mean unit cost for diagnostic radiopharmaceuticals with a per day cost
above our proposed diagnostic radiopharmaceutical packaging threshold
(proposed at $655 for CY 2026). We also finalized our policy to pay for
pass-through diagnostic radiopharmaceuticals based on ASP, WAC, and
AWP.
We continue to believe that paying for nonpass-through diagnostic
radiopharmaceuticals using arithmetic mean unit cost would
appropriately pay for the average price of a nonpass-through separately
payable diagnostic radiopharmaceutical. In our view, MUC is an
appropriate proxy for the average price for a diagnostic
radiopharmaceutical for a given year, as it is calculated based on the
average costs for a particular year and is directly reflective of the
actual cost data that hospitals submit to CMS. As we stated in the CY
2010 OPPS/ASC final rule with comment period (74 FR 60523), we believe
that WAC or AWP is not an appropriate proxy to provide OPPS payment for
radiopharmaceuticals because these pricing methodologies do not include
discounts. Specifically, the absence of appropriate ASP reporting could
result in payment for a separately payable diagnostic
radiopharmaceutical based on WAC or AWP indefinitely, a result which we
believe would be inappropriate, as these pricing metrics do not capture
all of the pricing discounts that may be reflected in the ASP.
Additionally, in the CY 2025 OPPS/ASC final rule with comment
period (89 FR 93948 through 93963), we finalized to base the initial
payment for new diagnostic radiopharmaceuticals with HCPCS codes that
do not have pass-through status or claims data on ASP, and on the WAC
for these products if ASP data for these diagnostic
radiopharmaceuticals are not available. To further clarify, these
products will be paid based on ASP plus 6 percent, and at WAC plus 3 or
6 percent according to the policy in section V.B.2.a. of this proposed
rule if ASP data are not available.
If the WAC also is unavailable, we proposed to make payment for new
diagnostic radiopharmaceuticals at 95 percent of the products' most
recent AWP. We believe the volume of products in this category will
typically be very low; however, in these rare situations, we believe it
would be appropriate to use ASP, WAC, or AWP until a MUC is established
for new diagnostic radiopharmaceuticals with HCPCS codes that do not
have passthrough status or claims data.
Please refer to section II.A.3.c of this proposed rule information
regarding our payment policies for diagnostic radiopharmaceuticals,
including our proposed policy to pay separately for diagnostic
radiopharmaceuticals above a certain cost threshold. The proposed CY
2026 payment rates for separately payable nonpass-through diagnostic
radiopharmaceuticals are included in Addenda A and B of this proposed
rule (which are available on the CMS website).\66\
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4. Payment for Blood Clotting Factors
For CY 2026, we propose to continue our established policy to
provide payment for blood clotting factors using the same methodology
as other separately payable drugs and biologicals under the OPPS and to
continue to pay a furnishing fee. For a full discussion of our
established payment policy for blood clotting factors, please refer to
the CY 2023 OPPS/ASC final rule with comment period (87 FR 71969
through 71970). In accordance with our policy as finalized in the CY
2008 OPPS/ASC final rule with comment period (72 FR 66765), we will
announce the actual figure of the percent change in the applicable CPI
and the updated furnishing fee calculation based on that figure through
the applicable program instructions and posting on the CMS website at
https://www.cms.gov/medicare/payment/fee-for-service-providers/part-b-drugs/average-drug-sales-price.
5. Payment for Nonpass-Through Drugs, Biologicals, and
Radiopharmaceuticals With HCPCS Codes but Without OPPS Hospital Claims
Data
In the CY 2023 OPPS/ASC final rule with comment period, we adopted
as
[[Page 33631]]
final our proposal to continue our longstanding payment policy for
nonpass-through drugs, biologicals, and radiopharmaceuticals with HCPCS
codes but without OPPS hospital claims data for CY 2023 and subsequent
years. Therefore, for CY 2026, this policy will continue to apply. For
a detailed discussion of the payment policy and methodology, we refer
readers to the CY 2016 OPPS/ASC final rule with comment period (80 FR
70442 through 70443). Consistent with our policy, because we have no
claims data and must determine if these products, drugs, biologicals,
therapeutic radiopharmaceuticals, and diagnostic radiopharmaceuticals,
exceed the per-day cost threshold, we estimated the average number of
units of each product that would typically be furnished to a patient
during one day in the hospital outpatient setting and utilized the
payment rate for the product, typically the ASP methodology, to
determine whether their payment will be packaged as well as their
payment status indicators.
6. Requirement in the CY 2026 Physician Fee Schedule Proposed Rule for
HOPDs and ASCs To Report Discarded Amounts of Certain Single-Dose or
Single-Use Package Drugs
Section 90004 of the Infrastructure Investment and Jobs Act (Pub.
L. 117-9, November 15, 2021) (``the Infrastructure Act'') amended
section 1847A of the Act to re-designate subsection (h) as subsection
(i) and insert a new subsection (h), which requires manufacturers to
provide a refund to CMS for certain discarded amounts from a refundable
single-dose container or single-use package drug. We explain in this CY
2026 OPPS/ASC proposed rule that the CY 2026 PFS proposed rule includes
proposals related to the discarded drug refund policy, including
proposals that may impact hospital outpatient departments (HOPDs) and
ambulatory surgical centers (ASCs). Similar to our past notices in
OPPS/ASC proposed rules, such as in the CY 2025 OPPS/ASC proposed rule
(89 FR 59370), we wanted to ensure interested parties were aware of
these proposals and knew to refer to the CY 2026 PFS proposed rule for
a full description of the proposed policy. Interested parties are asked
to submit comments on any proposals to implement section 90004 of the
Infrastructure Act to the CY 2026 PFS proposed rule. We note that
public comments on these proposals would be addressed in the CY 2026
PFS final rule with comment period.
7. CY 2026 Prospective Adjustment to Payments for Non-Drug Items and
Services To Offset the Increased Payments for Non-Drug Items and
Services Made in CY 2018 Through CY 2022 as a Result of the 340B
Payment Policy
a. Overview
Under the OPPS, we generally set payment rates for separately
payable drugs, and biologicals (hereinafter referred to collectively as
``drugs'' in this section) under section 1833(t)(14)(A) of the Act).
Section 1833(t)(14)(A)(iii)(II) of the Act provides that, if hospital
acquisition cost data are not available, the payment amount is the
average price for the drug in a year established under sections
1842(o), 1847A, or 1847B of the Act, as the case may be. Payment rates
for drugs have usually been established under section 1847A of the Act,
which generally sets a default rate of the average sales price (ASP)
plus 6 percent. Section 1833(t)(14)(A)(iii)(II) of the Act also
provides that the average price for the drug in the year as established
under section 1847A of the Act, is calculated and adjusted by the
Secretary as necessary for purposes of paragraph (14).
In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59353
through 59371), CMS reexamined the appropriateness of paying the ASP
plus 6 percent for drugs acquired through the 340B Drug Pricing Program
(hereinafter referred to as the ``340B Program''), a Health Resources
and Services Administration (HRSA)-administered program that allows
covered entities to purchase certain covered outpatient drugs at
discounted prices from drug manufacturers. Based on findings of the
Government Accountability Office (GAO),\67\ the HHS Office of the
Inspector General (OIG),\68\ and the Medicare Payment Advisory
Commission (MedPAC) \69\ that 340B hospitals were acquiring drugs at a
significant discount under the 340B Program, CMS adopted a policy
beginning in 2018 generally to pay an adjusted amount of ASP minus 22.5
percent for certain separately payable drugs or biologicals acquired
through the 340B Program. This adjustment amount was based on our
concurrence with an analysis by MedPAC that concluded that the
estimated average minimum discount of 22.5 percent of ASP adequately
represented the average minimum discount that a 340B participating
hospital received for separately payable drugs under the OPPS (82 FR
59354 through 59371). Our intent in implementing this payment reduction
was to reflect more accurately the actual costs incurred by
participating hospitals in acquiring 340B drugs. We stated our belief
that such changes would allow Medicare beneficiaries and the Medicare
program to pay a more appropriate amount when hospitals participating
in the 340B Program furnished drugs to Medicare beneficiaries that were
purchased under the 340B Program (82 FR 59353 through 59371).
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\67\ Government Accountability Office. ``Medicare Part B Drugs:
``Action Needed to Reduce Financial Incentives to Prescribe 340B
Drugs at Participating Hospitals.'' June 2015. Available at https://www.gao.gov/assets/gao-15-442.pdf.
\68\ Office of Inspector General. ``Part B Payment for 340B
Purchased Drugs. OEI-12-14-00030''. November 2015. Available at:
https://oig.hhs.gov/oei/reports/oei-12-14-00030.pdf.
\69\ Medicare Payment Advisory Commission. March 2016 Report to
the Congress: Medicare Payment Policy. March 2016. Available at
Medicare Payment Advisory Commission. March 2016 Report to the
Congress: Medicare Payment Policy. March 2016. Available at https://www.medpac.gov/document/http-www-medpac-gov-docs-default-source-reports-may-2015-report-to-the-congress-overview-of-the-340b-drug-pricing-program-pdf/.
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b. Payment for 340B Drugs and Biologicals in CYs 2018 through 2022
From January 1, 2018 through September 27, 2022, under the OPPS we
generally paid for certain separately payable drugs acquired through
the 340B Program at ASP minus 22.5 percent. In the CY 2018 OPPS/ASC
final rule with comment period (82 FR 59369 through 59370), we
finalized our proposal to adjust the payment rate for separately
payable drugs (other than drugs with pass-through payment status and
vaccines) acquired under the 340B Program from ASP plus 6 percent to
ASP minus 22.5 percent. We also noted that critical access hospitals
are not paid under the OPPS and therefore were not subject to the OPPS
340B drug payment adjustment policy. For ease of reference, the OPPS
340B drug payment adjustment policy is hereinafter referred to as the
``340B Payment Policy'' and refers both to the adjustments made to
payment rates for 340B-acquired drugs described here and the
corresponding rate adjustment for non-drug services and items described
later in section V.B.7.c. We note that rural sole community hospitals,
children's hospitals, and PPS-exempt cancer hospitals were exempted
from the adjustments made to payment rates for 340B-acquired drugs
primarily due to these hospitals receiving special payment adjustments
under the OPPS. In addition, as stated in the CY 2018 OPPS/ASC final
rule with comment period, this policy change did not apply to drugs
with pass-through payment
[[Page 33632]]
status, which are required to be paid based on the ASP methodology, or
vaccines, which are excluded from the 340B Program.
In the CY 2019 OPPS/ASC final rule with comment period (83 FR
58981), we continued the Medicare 340B payment policies that were
implemented in CY 2018 and adopted a policy to pay for non-pass-through
340B-acquired biosimilars at ASP minus 22.5 percent of the biosimilar's
ASP, rather than the reference biological product's ASP. Additionally,
in the CY 2019 OPPS/ASC final rule with comment period (83 FR 59015
through 59022), we finalized a policy to pay ASP minus 22.5 percent for
340B-acquired drugs furnished in non-exempted off-campus provider-based
departments (PBDs) paid under the PFS. We adopted this payment policy
for CY 2019 and subsequent years. Also, during the CY 2019 OPPS/ASC
rulemaking cycle, we clarified that the 340B payment adjustment applied
to drugs priced using either wholesale acquisition cost (WAC) or
average wholesale price (AWP), and since the policy was first adopted,
we applied the 340B payment adjustment to 340B-acquired drugs priced
using these pricing methodologies. The 340B payment adjustment for WAC-
priced drugs was WAC minus 22.5 percent. 340B-acquired drugs that were
priced using AWP were paid an adjusted amount of 69.46 percent of AWP
(83 FR 37125).\70\
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\70\ The 69.46 percent of AWP was calculated by first reducing
the original 95 percent of AWP price by 6 percent to generate a
value that is similar to ASP or WAC with no percentage markup. Then
we applied the 22.5 percent reduction to ASP/WAC-similar AWP value
to obtain the 69.46 percent of AWP, which was similar to either ASP
minus 22.5 percent or WAC minus 22.5 percent.
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As discussed further in section V.B.7.f. of this proposed rule, the
results of this policy meant that hospitals received an estimated $10.6
billion less in 340B drug payments (including money that would have
been paid by Medicare and money that would have come from beneficiaries
as copayments) than they would have for drugs provided in CY 2018
through September 27th of 2022 had the 340B Payment Policy not been
implemented (88 FR 77162). These reduced payments are detailed in Table
61 and are derived from Addendum AAA published with the 340B Remedy
Rule (88 FR 77150).
[GRAPHIC] [TIFF OMITTED] TP17JY25.089
For more detailed descriptions of our OPPS payment policy for drugs
acquired under the 340B Program during this timeframe, we refer readers
to the CY 2018 OPPS/ASC final rule with comment period (82 FR 59353
through 59371); the CY 2019 OPPS/ASC final rule with comment period (83
FR 59015 through 59022); the CY 2020 OPPS/ASC final rule with comment
period (84 FR 61321 through 61327); the CY 2021 OPPS/ASC final rule
with comment period (85 FR 86042 through 86055); the CY 2022 OPPS/ASC
final rule with comment period (86 FR 63640 through 63649); the CY 2023
OPPS/ASC final rule with comment period (87 FR 71972 through 71973);
and the CY 2024 OPPS/ASC final rule with comment period 88 FR 81789
through 81792).
c. Payment for Non-Drug Items and Services in CY 2018 Through CY 2022
In the CY 2018 OPPS/ASC final rule with comment period (82 FR
59216, 59258), to comply with the statutory budget neutrality
requirements under sections 1833(t)(9)(B) and (t)(14)(H) of the Act, we
finalized our proposal to redistribute our estimated reduction in
payments for separately payable drugs as a result of the 340B Payment
Policy by increasing the conversion factor used to determine the
payment amounts for non-drug items and services. As further described
in the CY 2018 OPPS/ASC final rule with comment period, we used updated
CY 2016 claims data and a list of 340B-eligible providers to calculate
an estimated impact of $1.6 billion based on the final CY 2018 policy
to pay for OPPS 340B-acquired drugs at a payment rate of generally ASP
minus 22.5 percent. To effectuate the budget neutrality provisions of
the OPPS for CY 2018, we redistributed an estimated $1.6 billion in
reduced drug payments from adoption of the final 340B payment
methodology to all hospitals paid under the OPPS by increasing the
payment rates by 3.19 percent for nondrug items and services furnished
by all hospitals paid under the OPPS for CY 2018. We carried through
this conversion factor adjustment from CYs 2019 through 2022,
increasing payments for non-drug items and services in these CYs. This
resulted in approximately $7.769 billion, which for ease of reference
in this rule we hereafter refer to as $7.8 billion, in additional
spending on non-drug items and services from CYs 2018 through 2022.
d. Litigation History of the 340B Payment Policy
The 340B Payment Policy was the subject of extensive litigation.
See the Proposed Remedy for the 340B-Acquired Drug Payment Policy for
Calendar Years 2018-2022 (hereinafter referred to as the ``proposed
remedy rule'') for a more comprehensive summary of the litigation
history (88 FR 44079 through 44080).
On June 15, 2022, the Supreme Court held that because we had not
conducted a survey of hospitals' acquisition costs, we could not vary
the payment rates for outpatient prescription drugs by hospital group.
See Am. Hosp. Ass'n v. Becerra, 142 S. Ct. 1896, 1906 (2022). The
Supreme Court declined to opine on the appropriate remedy, id. at 1903,
and on September 28, 2022, the district court vacated the reimbursement
rate for
[[Page 33633]]
340B-acquired drugs for the remainder of 2022. See Am. Hosp. Ass'n v.
Becerra,1:18-cv-2084-RC, 2022 WL 4534617, at *5.\71\ On January 10,
2023, the district court remanded without vacatur to give the agency
the opportunity to determine the proper remedy for the reduced payment
amounts to 340B hospitals under the payment rates in the final OPPS
rules for CY 2018 through CY 2022. See Am. Hospital Ass'n v. Becerra,
1:18-cv-2084-RC, 2023 WL 143337, at *6.\72\
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\71\ https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2018cv2084-79.
\72\ https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2018cv2084-86.
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e. Payment for 340B-Acquired Drug Claims for September 28, 2022 Through
CY 2025
The agency complied with the district court's September 28, 2022
decision by uploading revised OPPS drug files to pay the default rate
(generally ASP plus 6 percent) for all CY 2022 claims for 340B-acquired
drugs paid from September 28, 2022, through the end of CY 2022.
In the CY 2023 OPPS/ASC final rule with comment period (87 FR
71970), we finalized a policy reversing the 340B Payment Policy, so
that going forward we would pay for 340B acquired drugs no differently
than we pay for drugs that are not acquired through the 340B program.
To do so, we first provided that drugs acquired through the 340B
Program would be paid at the statutory default rate (generally ASP plus
6 percent) for CY 2023. Second, to ensure budget neutrality for CY 2023
OPPS payment rates as required by statute, we finalized a reduction of
3.09 percent to the 2023 OPPS conversion factor. This one-time
adjustment to the conversion factor removed the effect of this aspect
of the 340B Payment Policy, as originally adopted in CY 2018, for CY
2023 and subsequent years. This adjustment to the conversion factor
reduced the conversion factor to the conversion factor that would have
been in place in CY 2023 if the 340B payment policy had never been
implemented. For more detail on the payment rate for drugs acquired
under the 340B Program for CY 2023 and the corresponding adjustment to
the conversion factor to maintain budget neutrality as a result of
reversing the 340B adjustment and paying for all separately payable
drugs at ASP plus 6 percent (or WAC plus 3 or 6 percent or 95 percent
of AWP), we refer readers to the CY 2023 OPPS/ASC final rule with
comment period (87 FR 71973 through 71976).
For CYs 2024 and 2025, consistent with our policy finalized for CY
2023, we continued to pay the statutory default rate for 340B acquired
drugs (88 FR 81789 through 81791).
f. Remedy Payment Adjustment for 340B-Acquired Drugs From CY 2018
Through September 27, 2022
The agency complied with the district court's January 10, 2023,
remand order by issuing the Final Remedy for the 340B-Acquired Drug
Payment Policy for Calendar Years 2018-2022 (hereinafter referred to as
the ``Final Remedy rule'') on November 8, 2023 (88 FR 81540). The
purpose of this rule was to address the reduced payment amounts to 340B
hospitals under the reimbursement rates in effect for CY 2018 through
September 27, 2022 and to comply with the statutory requirement to
maintain budget neutrality under the OPPS.
To address the reduced payment amounts to 340B hospitals under the
reimbursement rates in effect for CY 2018 through September 27, 2022,
CMS made one-time lump sum payments to affected 340B covered entity
hospitals, calculated as the difference between what an affected 340B
covered entity hospital received for 340B-acquired drugs from CY 2018
through September 27, 2022 and what they would have received for those
drugs if the 340B adjustment had not been in place. These one-time lump
sum payments were issued in early 2024. For more information on the
calculation and distribution of the one-time lump sum payments, see the
Final Remedy rule (88 FR 77156 through 77170).
g. Prospective Adjustment to Payments for Non-Drug Items and Services
To Offset the Increased Payments for Non-Drug Items and Services Made
in CY 2018 Through CY 2022
As previously described under section V.B.7.c. of this proposed
rule, to comply with statutory budget neutrality requirements, the
decreased payments made to 340B hospitals for drugs in CY 2018 through
September 27, 2022 were budget neutralized by corresponding increased
payments to all hospitals for non-drug items and services starting in
CY 2018 through CY 2022. When these past payments were subsequently
increased through the one-time lump sum payments in 2024, the same
budget neutrality requirements correspondingly required us to decrease
the non-drug item and services payments made from CY 2018 through CY
2022.
To reduce the burden on providers of immediately offsetting the
estimated $7.8 billion of increased non-drug item and services payments
made from CY 2018 through CY 2022, we decided to implement the offset
prospectively over the course of several years. As we explained in the
proposed and Final Remedy rules (88 FR 44088, 88 FR 77172), this
approach was similar to the original budget neutrality adjustment in
the 340B Payment Policy that increased the payment for every non-drug
item and service for CY 2018 through CY 2022 to offset the downward
adjustment in the payment rate for drugs acquired under the 340B
Program. We finalized in the Final Remedy rule that, beginning in CY
2026, we would reduce the conversion factor for non-drug items and
services to all OPPS providers--except any hospital that enrolled in
Medicare after January 1, 2018 (as described further below)--by 0.5
percent each year until the total offset was reached (which we
estimated would take approximately 16 years (88 FR 77181).
As we stated in the proposed and Final Remedy rule, we believed an
annual reduction in the conversion factor would be appropriate because
it would balance the need to address the past payments for non-drug
items and services to ensure budget neutrality while also ensuring that
the offset was not immediately overly financially burdensome on
impacted entities, which we believed would be the case if we were to
apply an adjustment for the full offset amount in a single year. (88 FR
44087, 88 FR 77170).
Accordingly, the Final Remedy rule finalized changes to the
calculation of the OPPS conversion factor applicable to non-drug items
and services beginning in CY 2026. Specifically, we codified a 0.5
percent reduction in the OPPS conversion factor applicable to non-drug
items and services in the regulations by adding new paragraph
(b)(1)(iv)(B)(12) to Sec. 419.32. This 0.5 percent reduction would
remain in effect until the estimated payment reduction reached $7.8
billion, which we estimated would occur in CY 2041. For a fuller
discussion of our CY 2026 adjustment to the conversion factor for non-
drug items and services, see the Final Remedy rule (88 FR 77156 through
77170).
In finalizing our policy to apply a prospective adjustment, we
recognized that any hospital that enrolled in Medicare after January 1,
2018 (hereinafter referred to as a ``new provider'') received less than
the full amount of the increased non-drug item and service payments
made during that time than they otherwise would have received if
enrolled prior to that date (88 FR 44080). We therefore exempted these
providers from the prospective rate
[[Page 33634]]
reduction, which was predominantly designed to account for non-drug
item and service payments made during CY 2018 through CY 2022. As we
explained, that meant that we would calculate payment rates for new
providers using the conversion factor before applying the 0.5 percent
annual reduction to the conversion factor for non-drug items and
services that would apply for hospitals that are not ``new providers''
for purposes of this policy. For the purpose of designating a new
provider, we defined the date of enrollment in Medicare as the
provider's CMS certification number (CCN) effective date. We codified
the exclusion of these new providers from the prospective payment
adjustment to the conversion factor for the duration of its application
in the regulations by adding new paragraph (b)(1)(iv)(B)(12) to Sec.
419.32. We have reviewed our provider enrollment and OPPS billing
records, and based on that data, the providers that would be subject to
the proposed payment reduction are listed in Addendum R-340B Remedy
Offset Providers to this proposed rule. We welcome comment on the
providers listed in Addendum R-340B Remedy Offset Providers to this
proposed rule, and based upon those comments, we propose to publish a
final Addendum R-340B Remedy Offset Providers for CY 2026 in the CY
2026 OPPS/ASC final rule with comment period. Providers not included on
this list (providers that began billing Medicare under the OPPS after
January 1, 2018) will not be subject to the proposed payment reduction.
For a complete discussion of our exclusion of new providers from the
prospective payment adjustment, we refer readers to the Final Remedy
rule (88 FR 77182 through 77185).
h. CY 2026 Proposed Prospective Payment Adjustment
When we considered how to recover the estimated $7.8 billion in
increased payments made for non-drug items and services from 2018
through 2022, we considered several alternatives, including those that
would fully recover that amount in a single year. For example, in the
Proposed Remedy rule, we rejected an aggregate payment approach which
would have implemented budget neutrality requirements through an
immediate lump sum payment recoupment that would mirror the lump sum
remedy payment because ``[s]uch an approach would require immediate,
and in many cases large, retroactive recoupments from the majority of
OPPS hospitals and would impose a substantial, immediate burden on
these hospitals as well as an uncertain impact on beneficiaries.'' (88
FR 44083). To avoid imposing such a burden, we elected to reduce
payments prospectively until the total offset was reached, which we
estimated would take approximately 16 years.
As discussed previously in this section, we considered various
methods to implement this prospective payment reduction. In the Final
Remedy rule, we made the prospective payment reduction by applying an
annual 0.5-percentage point downward adjustment to the OPPS conversion
factor. We continue to believe that a downward adjustment to the OPPS
conversion factor is a fair way to apportion the $7.8 billion reduction
amongst hospitals, because relative hospital utilization of non-drug
items and services beginning in 2026 will approximately track the
relative hospital utilization for non-drug items and services each
hospital received from CY 2018 through CY 2022. The future payment
reductions will thus roughly offset the windfall those hospitals
received from increased payments from CY 2018 through CY 2022. And as
we noted in the final rule, the approach of tethering future payments
for each non-drug item and service for each hospital ``was similar to
the original budget neutrality adjustment in the 340B Payment Policy
that increased the payment for every non-drug item and service for CY
2018 through CY 2022 to offset the downward adjustment in the payment
rate for drugs acquired under the 340B Program.'' (88 FR 77172.)
Finally, the methodology does so with minimal administrative burden to
hospitals and beneficiaries, because we can effectuate the offset by
calculating the appropriate payment reduction in annual rulemaking
without requiring any subsequent action by hospitals. Other
methodologies--like delivering a series of demand letters to each
hospital for a share of the $7.8 billion--would not only require us to
recalculate the proper amount to apportion to each hospital but would
most likely require large lump-sum payments from hospitals after each
demand letter. Hospitals may find it financially disruptive to promptly
write such one-time checks depending on their financial circumstances
when we issue the demand letters, whereas implementing a percentage
reduction in their Medicare OPPS payments over a number of years would
be less disruptive. Such one-time payments would impose greater
administrative burden on hospitals and possibly introduce complications
to our collections efforts if hospitals delay payments.
While we continue to believe that a reduction to the OPPS
conversion factor is the best way to effectuate budget neutrality, we
are reconsidering whether the timing we selected--a 0.5-percentage
point annual reduction for approximately 16 years--best achieves the
overarching goal of the Final Remedy rule, which is to restore
hospitals to as close to the financial position they would have been in
had the 340B Payment Policy never been implemented as is reasonably
feasible. In particular, the further away from CY 2018 through CY 2022
the adjustments extend, the less likely that relative hospital
utilization of non-drug items and services will correlate to the
relative hospital utilization of non-drug items and services from 2018
through 2022. In other words, a hospital's utilization of non-drug
items and services is likely going to diverge more from CY 2018
utilization in CY 2041 than it would in CY 2031 or CY 2026. And the
more a hospital's utilization of non-drug items and services diverge,
the less hospitals would be restored to as close as possible to the
approximate financial position as they would have been in had the 340B
Payment Policy never been implemented. By beginning the decrease to
non-drug item and service payments in CY 2026, there is already an 8-
year delay between the first year of the OPPS 340B payment policy and
the first year of the prospective offset. Thus, the longer it takes for
us to fully recover the $7.8 billion, the less likely that the relative
burden on hospitals from the adjustments will match the relevant
benefits those hospitals previously received. In addition, it is
possible that at least some hospitals that benefited from the increased
payments from CY 2018 through CY 2022 will leave the market before
2041, increasing the risk that the remaining hospitals might ultimately
account for a larger share of the payment reductions than they would
have if the annual reduction to the OPPS conversion factor concluded
sooner. We note the $7.8 billion dollar figure calculated in the 340B
Remedy Rule (88 FR 77150) does not and will not account for inflation
and does not contain interest even though the prospective offset is
occurring many years after both the start of the 340B payment policy in
CY 2018 as well as the lump sum remedy payments made in CY 2024.
Accordingly, effective January 1, 2026, we propose to revise the
annual reduction to the OPPS conversion factor under Sec.
419.32(b)(1)(iv)(B)(12) used to determine the payment amounts for non-
drug items and services from 0.5
[[Page 33635]]
percent to 2 percent. Under this revised rate, we expect it would take
approximately 6 years to reach the total offset of $7.8 billion (see
Table 62). Consistent with the Final Remedy rule, this reduction would
not apply to new providers. We have also included on Table 62 an
alternative policy option with an annual reduction of 5 percent which
would reach the total offset of $7.8 billion in approximately 3 years.
We acknowledge that this revised annual reduction would be a change
to the approach we finalized in the Final Remedy rule and that, at that
time, we considered but did not adopt a suggestion from a commenter
requesting that we recover the amount over a shorter timeframe than 16
years. (88 FR 77179.) Our basis for not accepting the suggestion was
that the 0.5 percent rate/16-year timeframe ``properly reverses the
increased payments for non-drug items and services to comply with
statutory budget neutrality requirements while at the same time
accounting for any reliance interests and ensuring that the offset is
not overly burdensome to impacted entities.'' We now think that this
balancing insufficiently accounted for the main premise of the Final
Remedy rule, which is to implement the budget neutrality requirement in
a manner that restores affected 340B covered entity hospitals to the
financial position they would have been in had the 340B Payment Policy
not been implemented in 2018. For the reasons explained above, we
believe that a 6-year time frame better achieves that main goal. And we
believe this time frame balances better that goal and our budget
neutrality obligations against hospital burden and reliance interests.
For example, the 16-year timeframe is more than three times longer than
the 5-year period the 340B Payment Policy was in place. The 6 years we
expect that the revised policy would be in effect, by contrast, is
closer to the timeframe the 340B Payment Policy was in place, and the 2
percent payment reduction we propose is still well below the 3.19
percent payment increase hospitals received for that time period (82 FR
52624 through 52625). Because we are proposing this policy in advance
of CY 2026 and before any rate reductions go into effect for OPPS and
Medicare Fee for Service payments, any reliance interests hospitals
have in a policy that has not been implemented yet for these payment
systems would be minimal and outweighed by the other considerations
discussed in this proposed rule.
BILLING CODE 4120-01-P
[[Page 33636]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.090
BILLING CODE 4120-01-C
i. Impact of the Prospective Offset to the OPPS Conversion Factor on
the ASC Payment System
As we noted in the CY 2023 OPPS/ASC final rule with comment period
(87 FR 71975), budget neutrality adjustments to the OPPS conversion
factor do not impact the ASC conversion factor. However, we also noted
in that rule that revisions to the OPPS conversion factor can have an
indirect impact on the ASC payment system because the ASC standard
ratesetting methodology adopts OPPS payment rates and the device
portion (or device offset amount). Specifically, because the device
portion for device-intensive procedures is held constant with the OPPS
and is not calculated with the ASC conversion factor, a reduction to
[[Page 33637]]
the OPPS conversion factor will lower the device portion for device-
intensive procedures, including the payment rates for device-intensive
procedures under the ASC payment system. We further clarified, however,
that any decline in expenditures for device portions under the ASC
payment system would be fully offset through the ASC weight scalar,
which increases payment for the non-device portions of all covered
surgical procedures and certain covered ancillary services. Together,
that means that reducing the OPPS conversion factor can mean that we
pay relatively less for device-intensive procedures and relatively more
for other surgical procedures.
In the Final Remedy rule (88 FR 77179), a commenter referenced this
discussion in the CY 2023 OPPS/ASC final rule with comment period and
requested that CMS provide an analysis of the impact of the remedy's
proposed OPPS conversion factor reduction on ASC payment rates.
Specifically, the commenter requested additional details on the
magnitude of the change in payments for device-intensive procedures
with and without the OPPS conversion factor reduction. As further
discussed in section XIII. of this proposed rule, historically, the ASC
payment system has generally adopted the final OPPS conversion factor
for a calendar year in determining the OPPS payment rates that are used
for determining the device portions for device-intensive procedures
under the ASC payment system. A 2 percent reduction in OPPS payment
rates would otherwise reduce ASC payments for device-intensive
procedures by approximately one percent; the non-device portions for
all covered surgical procedures would otherwise be increased to offset
reduction to device portions for device-intensive procedures. For CY
2026, we estimate the reduction to device portions would be
approximately $42 million and would otherwise increase the ASC weight
scalar by 0.1 percent.
However, we propose to set ASC payment rates based on the OPPS
payment rates without the remedy's 2 percent prospective offset. In
other words, these payment rates would be based on OPPS payment rates
for hospitals that enrolled in Medicare after January 1, 2018. We
acknowledge that in the CY 2023 OPPS/ASC rule we stated that ``the
revised OPPS conversion factor will have an impact on the ASC payment
system,'' but we were responding to a comment asking about how
unwinding the 340B Payment Policy would reduce the OPPS conversion
factor prospectively beginning in CY 2023, not about how we should
approach any temporary reduction in the OPPS conversion factor to
unwind the 340B Payment Policy in place from CY 2018 through 2022. (87
FR 71975.) In this context, we believe that selecting the higher OPPS
payment rate is more consistent with the history and logic of both the
ASC payment system as well as the Final Remedy rule.
As for the ASC payment system, including the 2 percent prospective
offset would not be an accurate reflection of the device costs of
covered surgical procedures in the ASC setting. Further, we are
concerned beneficiaries could have access issues to certain device-
intensive procedures in the ASC setting, such as total knee
arthroplasty and total hip arthroplasty, if we maintained a 2-percent
reduction to the payment rates for device-intensive procedures for each
calendar year we applied the prospective offset. The total payment for
device portions of device-intensive procedures under the ASC payment
system is roughly 27 percent of total ASC payments.
This proposed policy would also be consistent with the logic of the
Final Remedy rule. As we have explained, the reduction to the OPPS
payment rate is intended to comply with statutory budget neutrality
requirements and was implemented in a manner to place hospitals in as
close to the financial position they would have been in had this policy
not been implemented in CY 2018 as is reasonably feasible. By contrast,
it would not satisfy any similar statutory budget neutrality
requirements to pass through this reduction to ASC payment rates. Nor
would changing ASC payment rates for the next several years help place
hospitals affected by the 340B Payment Policy in the same position as
they have been absent that policy. Even if the agency wanted to extend
the Final Remedy rule's logic to ASCs and try to place ASCs--none of
whom ever challenged the 340B Payment Policy--in the same position as
they would have been absent that policy, we doubt that passing through
the 2 percent OPPS payment reduction to the device portion of ASC
payment rates would do so. That is because, as discussed previously,
doing so would have a purely distributional impact on ASC payment rates
that financially favors procedures that are less device-intensive.
Therefore, as discussed in section XIII.C.4. of this proposed rule, we
propose that the OPPS payment rates used for ratesetting under the ASC
payment system for CY 2026 and subsequent years would not include the
2-percent prospective offset to the OPPS conversion factor as a result
of the 340B remedy offset that we are proposing to implement in this
proposed rule.
8. All-Inclusive Rate (AIR) Add-On Payment for High-Cost Drugs Provided
by Indian Health Service and Tribal Facilities
a. Background
In the CY 2000 OPPS final rule (65 FR 18434), CMS implemented the
PPS for hospital outpatient services furnished to Medicare
beneficiaries, as set forth in section 1833(t) of the Act. In the CY
2000 OPPS final rule, we noted that the OPPS applies to covered
hospital outpatient services furnished by all hospitals participating
in the Medicare program with a few exceptions. We identified one of
these exceptions as ``outpatient services provided by hospitals of the
Indian Health Service (IHS).'' We stated that these services would
``continue to be paid under separately established rates which are
published annually in the Federal Register'' and, in the CY 2002 OPPS/
ASC final rule (66 FR 59856), we finalized a revision to Sec. 419.20
(Hospitals subject to the hospital outpatient prospective payment
system) by adding paragraph (b)(4), which specifies that hospitals of
the IHS are excluded from the OPPS.
In the intervening years, IHS and tribal facilities have been paid
under the separately established All-Inclusive Rate (AIR). On an annual
basis, the IHS calculates and publishes, in the Federal Register,
calendar year reimbursement rates.\73\ Due to the higher cost of living
in Alaska, separate rates are calculated for Alaska and the lower 48
States. For CY 2025, the Medicare Outpatient per Visit Rate is $718 for
the lower 48 states (hereinafter referred to as ``the lower 48 AIR'')
and $1,193 for Alaska.\74\
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\73\ https://www.ihs.gov/BusinessOffice/reimbursement-rates/.
\74\ 89 FR 101607 (December 16, 2024); https://www.federalregister.gov/documents/2024/12/16/2024-29505/reimbursement-rates-for-calendar-year-2025.
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In the CY 2025 OPPS/ASC final rule with comment period (89 FR 94280
through 94286), we finalized a policy to separately pay IHS and tribal
hospitals for high-cost drugs, biologicals, and radiopharmaceuticals
(hereinafter referred to as ``drugs'' for the purpose of this section)
furnished in hospital outpatient departments through an add-on payment
in addition to the AIR using the authority under which the AIR is
calculated.\75\ We note that the AIR and
[[Page 33638]]
the add-on payment are paid out of the Part B trust fund and are not
subject to OPPS budget neutrality.
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\75\ Sections 321(a) and 322(b) of the Public Health Service Act
(42 U.S.C. 248(a) and 249(b)), Public Law 83-568 (42 U.S.C.
2001(a)), and the Indian Health Care Improvement Act (25 U.S.C. 1601
et seq.).
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We defined high cost drugs (i.e., drugs qualifying for the add-on
payment) for the purpose of the policy as all drugs covered under
Medicare Part B and for which payment would otherwise be made under the
OPPS whose per day cost exceeds two times the lower 48 AIR amount in
effect at the time of the release of each year's OPPS/ASC final rule.
In the CY 2025 OPPS/ASC final rule with comment period, this amount was
identified as $1,334 (2 times the CY 2024 lower 48 AIR of $667).
To determine the calculated per day cost for each drug HCPCS code,
we employed a methodology similar to our longstanding methodology used
to calculate the per day cost of drugs for OPPS payment purposes.
Specifically, to calculate the per day cost for CY 2025, we used an
estimated payment rate based on the ASP methodology payment rate, which
for purposes of the policy was generally ASP plus 0 percent (which is
the payment rate for separately payable IHS drugs under the policy). We
then used the manufacturer-submitted ASP data from the fourth quarter
of CY 2023 to determine the per day cost. For drugs that did not have
either an ASP-based payment rate or a payment rate based on WAC, we
used mean unit cost (MUC) of the items derived from the CY 2023
hospital claims data to determine their per day cost.
We finalized that the amount of the add-on payment for a high-cost
drug would be the average sales price (ASP) for the drug with no
additional payment (i.e., ASP plus zero percent). We note that this
add-on payment was implemented on a per-dose basis. In the event ASP
pricing information was not available for a particular drug, we paid
the Wholesale Acquisition Cost (WAC) plus 0 percent and if WAC pricing
information was not available, we paid 89.6 percent of Average
Wholesale Price (AWP). We also adopted a drug packaging threshold
exception for biosimilars in which the add-on payment is made for
biosimilars whose per-day costs do not exceed the threshold of two
times the lower 48 AIR but whose reference products do exceed the
threshold.
To implement this policy, we finalized in the CY 2025 OPPS/ASC
final rule with comment period a recurring annual process in which the
lower 48 AIR in effect at the time of the release of each year's OPPS/
ASC final rule with comment period would be used to create a list of
drugs qualifying for the add-on payment for the following calendar
year. Once the drugs qualifying for the add-on payment were determined,
the payment rate for a unit of the drug would be determined in
accordance with the above described pricing hierarchy. The results of
that process for CY 2025 were displayed in Addendum Q to the CY 2025
OPPS/ASC final rule with comment period. We additionally finalized that
during the calendar year, the list of drugs would be modified on a
quarterly basis to add new-to-market drugs with per-day costs that
exceeded two times the lower 48 AIR and to update qualifying drugs'
ASPs. For a full discussion of the AIR add-on payment for high cost
drugs provided by IHS and tribal hospitals, we refer readers to the CY
2025 OPPS/ASC final rule with comment period (89 FR 94280 through
94286).
b. AIR Add-On Payment for High-Cost Drugs Provided by Indian Health
Service and Tribal Facilities Policy for CY 2026
For CY 2026, as described in the CY 2025 OPPS/ASC final rule with
comment period, we would continue to separately pay IHS and tribal
hospitals for high-cost drugs furnished in hospital outpatient
departments through an add-on payment in addition to the AIR using the
authorities under which the AIR is calculated.
We would continue to define high cost drugs (i.e., drugs qualifying
for the add-on payment) for the purpose of the policy as any drugs
covered under Medicare Part B and for which payment would otherwise be
made under the OPPS which have per day costs exceeding two times the
lower 48 AIR amount in effect at the time of the release of the CY 2026
OPPS/ASC final rule with comment period. For CY 2026, if the CY 2025
lower 48 AIR amount is in effect at the time of the release of the CY
2026 OPPS/ASC final rule with comment period, this amount would be
$1,436 (2 times the CY 2025 lower 48 AIR of $718).
To determine the calculated per day cost for each drug HCPCS code,
we would continue using an estimated payment rate based on the ASP
methodology payment rate (generally ASP plus 0 percent) and then using
the manufacturer-submitted ASP data from the fourth quarter of CY 2024
to determine the per day cost. For drugs that do not have either an
ASP-based payment rate or a payment rate based on WAC, we would
continue to use the MUC of the items derived from the CY 2024 hospital
claims data to determine their per day cost.
With respect to the amount of the add-on payment, we propose to use
the same pricing hierarchy that we adopted in the CY 2025 OPPS/ASC
final rule with comment period. For CY 2025, we now explain that we
adopted a practice of paying the MUC when AWP pricing is not available
for a particular drug, and we propose to continue that practice for CY
2026. We propose for CY 2026 that the amount of the add-on payment for
each dose of a high-cost drug will continue to be the average sales
price (ASP) for the drug with no additional payment (i.e., ASP plus
zero percent). In the event ASP pricing information is not available
for a particular drug, we propose to continue to pay the Wholesale
Acquisition Cost (WAC) plus 0 percent. If WAC pricing information is
not available, we propose to continue to pay 89.6 percent of Average
Wholesale Price (AWP). And, consistent with our practice for purposes
of CY 2025, if AWP pricing information is not available, we propose to
pay the MUC. Finally, we continue the drug packaging threshold
exception for biosimilars in which the add-on payment is made for
biosimilars whose per-day costs do not exceed the threshold of two
times the lower 48 AIR but whose reference products do exceed the
threshold.
c. Proposed List of Drugs Qualifying for the Add-On Payment for CY 2026
Using two times the lower 48 AIR amount of $718 that is in effect
for CY 2025 and applying the above described per-day cost methodology
and pricing hierarchy, we have included as Addendum Q a preliminary
list of the drugs qualifying for the proposed add-on payment and their
proposed add on payment rates for CY 2026.
We will create a final Addendum Q in the CY 2026 OPPS/ASC final
rule with comment period using the claims data (units used per day) and
ASPs available at that time. HCPCS codes for drugs that are proposed
for separate payment in CY 2026, but then have per day costs equal to
or less than $1,436 (2 times $718) in the CY 2026 OPPS/ASC final rule
with comment period, based on the updated ASPs and hospital claims data
used for the CY 2026 OPPS/ASC final rule with comment period, would
still receive separate payment in CY 2026.
Finally, during CY 2026, as we did during CY 2025, we propose to
modify the list on a quarterly basis (January, April, July, October) to
add new-to-market drugs with per-day costs that exceed two times the
lower 48 AIR and to update qualifying drugs' ASPs.
[[Page 33639]]
9. Payment for Skin Substitutes
a. Background
The CY 2014 Hospital Outpatient Prospective Payment System (OPPS)/
Ambulatory Surgical Center (ASC) final rule with comment period
describes skin substitutes as ``a category of products that are most
commonly used in outpatient settings for the treatment of diabetic foot
ulcers and venous leg ulcers'' (78 FR 74930 through 74931). When a
procedure utilizing a skin substitute product is performed, providers
bill one or more Healthcare Common Procedure Coding System (HCPCS)
codes to describe the preparation of the wound, the use of at least one
skin substitute product, and application of the skin substitute product
through suturing or various other techniques. Specifically, CPT codes
15271 through 15278 describe the application of skin substitutes to
various size wounds and anatomical locations.
Recently, several novel industry practices have come to our
attention, likely driving substantial and unusual increases in the
number of available skin substitute products, the sales and
distribution structure for these products, and the rapidity of products
changing manufacturer ownership. These industry changes are causing a
significant increase in spending under Medicare Part B for skin
substitute products in the non-facility setting. According to Medicare
claims data, Part B spending for these products rose from approximately
$250 million in 2019 to over $10 billion in 2024, a nearly 40-fold
increase, while the number of patients receiving these products only
doubled. Increases in payment rates, and launch prices for skin
substitutes, especially newer products, account for the majority of
observed Medicare spending increases on these products. Of note, as
part of its workplan, the U.S. Department of Health and Human Services'
Office of the Inspector General announced, in November 2024, plans to
review Medicare Part B claims for skin substitutes to identify payments
that were at risk for noncompliance with Medicare requirements with an
expected issue date of fiscal year 2026.\76\
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\76\ https://oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000894.asp.
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We outlined our HCPCS Level II coding and payment policy objectives
for skin substitutes in the CY 2023 OPPS/ASC proposed rule (87 FR
71985) because we concluded it would be beneficial for interested
parties to understand our priorities as we work to create a consistent
approach for the suite of products we have referred to as skin
substitutes. As discussed in the CY 2023 OPPS/ASC proposed rule, we
have a number of objectives related to refining our Medicare policies
in this area, including: (1) ensuring a consistent payment approach for
skin substitute products across the physician office and hospital
outpatient department settings; (2) ensuring that appropriate HCPCS
codes describe skin substitute products; (3) employing a uniform
benefit category across products within the physician office setting,
regardless of whether the product is synthetic or comprised of human-
or animal-based material, so we can incorporate payment methodologies
that are more consistent; and (4) promoting clarity for interested
parties on CMS skin substitutes policies and procedures. Interested
parties have asked CMS to address what they have described as
inconsistencies in our payment and coding policies, indicating that
treating clinically similar products (for example, animal-based and
synthetic skin products) differently for purposes of payment is
confusing and problematic for healthcare providers and patients. These
concerns exist specifically within the non-facility setting; however,
interested parties have also indicated that further alignment of our
policies across the non-facility and hospital outpatient department
settings would reduce confusion.
On April 25, 2024, the Medicare Administrative Contractors (MACs)
released a proposed Local Coverage Determination (LCD) to provide
appropriate coverage for skin substitute grafts used for chronic non-
healing diabetic foot and venous leg ulcers. The MACs issued the
collaborative proposed Skin Substitute Grafts/Cellular and Tissue-Based
Products for the Treatment of Diabetic Foot Ulcers and Venous Leg
Ulcers LCD to make sure that Medicare covers, and people with Medicare
have access to, skin substitute products that are supported by evidence
that shows that they are reasonable and necessary for the treatment of
diabetic foot and venous leg ulcers in the Medicare population and that
coverage aligns with professional guidelines for appropriately managing
these wounds. All of the MACs have delayed the effective date of the
final local coverage determinations for cellular and tissue-based
products for wounds in diabetic foot ulcers and venous leg ulcers,
moving the implementation date across all MAC jurisdictions to January
1, 2026. For details, please see the final LCD, L36377, titled: Skin
Substitute Grafts/Cellular and Tissue-Based Products for the Treatment
of Diabetic Foot Ulcers and Venous Leg Ulcers at https://www.cms.gov/medicare-coverage-database/view/lcd.aspx?lcdId=36377&ver=19. We note
that additional coverage determinations may apply to skin substitute
products.
The Medicare statute, regulations, and manual provisions empower
the Medicare program to determine if a product is reasonable and
necessary for the treatment of a beneficiary's condition and safe and
effective, not experimental or investigational, and appropriate and
therefore eligible for coverage under Part B. See, e.g., 42 U.S.C.
1395l(e), 1395y(a)(1)(A), 42 CFR 411.15(k)(1), 424.5(a)(6), Medicare
Program Integrity Manual Section 3.6.2.2, Medicare Benefit Policy
Manual chapter 15, section 50.4.1-50.4.3, and Medicare Program
Integrity Manual, chapter 13 section 13.5.3, 13.5.4. The inclusion of a
product in this payment rule does not necessarily imply that a
determination has been made by CMS or its contractors that it is
reasonable and necessary and meets the other preconditions to Medicare
coverage. Similarly, the use of short descriptors and associated FDA
regulatory categories \77\ may reflect current FDA regulation but are
not intended to imply that FDA has determined that a product meets any
specific FDA statutory or regulatory requirements. FDA's statutory and
regulatory framework, including, for example, FDA's findings that a
product is ``safe and effective,'' is not controlling of Medicare's
determination under its own authorities of whether a product is
``reasonable and necessary'' for a Medicare beneficiary and meets all
preconditions for Medicare coverage and payment. FDA does not make
Medicare coverage or payment determinations, nor do FDA statutes and
regulations govern Medicare coverage or payment determinations.
However, CMS has determined that, when it is setting payment rates on a
prospective basis, a different inquiry and set of considerations apply
and that it makes sense to consider how FDA regulates products that CMS
considers to be skin substitutes.
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\77\ The term ``FDA regulatory categories'' is used in this
proposed rule when referring to the basis for CMS' proposed payment
policies but is not intended to reflect or imply that the products
discussed within this Proposed Rule are characterized as such or
grouped together by FDA.
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We continue to believe that our existing payment policies are
unsatisfactory, unsustainable over the long term, and rooted in
historical practice established two decades ago prior to significant
evolutions in medical technology and practice. After
[[Page 33640]]
holding a town hall \78\ to provide an opportunity for public input,
including discussion of potential approaches to the methodology for
payment of skin substitute products, as well as reviewing several years
of comments in response to CY rulemaking in 2023, 2024, and 2025 on
this subject, we have developed a proposal that addresses our stated
objectives as well as many of the comments we have received.
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\78\ CMS Skin Substitutes Town Hall, which was held virtually on
January 18, 2023. More information regarding the CMS Skin
Substitutes Town Hall such as links to recording and transcripts is
available at https://www.cms.gov/medicare/payment/fee-schedules/
physician/skin-
substitutes#:~:text=The%20CMS%20Skin%20Substitutes%20Town,Physician%2
0Fee%20Schedule%20(PFS).
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b. Medicare Part B Payment for Skin Substitutes
(1) Payment for Skin Substitutes When Used During a Covered Application
Procedure Under the PFS in the Non-Facility Setting
CMS has historically considered skin substitutes to be biologicals
for payment purposes under Medicare Part B. The Medicare Prescription
Drug, Improvement, and Modernization Act of 2003 (Pub. L. 108-173)
(MMA) established a payment methodology for drugs and biologicals under
section 1847A of the Act. Under this methodology, a vast majority of
drugs and biologicals separately paid under Medicare Part B are paid at
the Average Sales Price (ASP) plus six percent. Section 303 of the MMA,
titled ``Payment reform for covered outpatient drugs and biologicals,''
amended Title XVIII of the Act by adding new section 1847A of the Act.
In part, this section established the use of the ASP to determine the
payment limit for drugs and biologicals described in section
1842(o)(1)(C) of the Act (that is, drugs or biologicals billed by a
physician, supplier, or any other person and not paid on a cost or
prospective payment basis) furnished on or after January 1, 2005.
Because Medicare is currently paying for most skin substitutes as
biologicals using the methodology under section 1847A of the Act, each
skin substitute product receives a unique billing code (typically, a
Level II HCPCS code) and payment limit.
Section 401 of Division CC, Title IV of the Consolidated
Appropriations Act, 2021 (Pub. L. 116-260) (CAA, 2021) amended section
1847A of the Act to add new section 1847A(f)(2) of the Act, which
requires certain manufacturers without a Medicaid drug rebate
agreement, such as certain manufacturers of skin substitutes, to report
ASP data to CMS for calendar quarters beginning on January 1, 2022, for
drugs or biologicals payable under Medicare Part B and described in
sections 1842(o)(1)(C), (E), or (G) or 1881(b)(14)(B) of the Act,
including items, services, supplies, and products that are payable
under Part B as a drug or biological. Because most skin substitutes are
currently paid as biologicals using the methodology described in
section 1847A of the Act, manufacturers of these products are currently
required to report their ASP data to CMS every quarter. Prior to this,
section 1927(b)(3)(A)(iii)(I) of the Act only required manufacturers
with a Medicaid drug rebate agreement to report ASP data to CMS for
drugs or biologicals described in section 1842(o)(1)(C) of the Act.
Section 1847A of the Act also includes several relevant
definitions. While the definition of ``single-source drug or
biological'' provided at section 1847A(c)(6)(D) of the Act includes ``a
biological,'' sections 1847A(c)(6)(H) and (I) of the Act offer more
insight into the meaning of the term for purposes of this section.
Subparagraph (I) defines the term ``reference biological product'' as a
biological product licensed under section 351 of the PHS Act.
Subparagraph (H) defines the term ``biosimilar biological product'' as
``a biological product approved under an abbreviated application for a
license of a biological product that relies in part on data or
information in an application for another biological product licensed
under section 351 of the Public Health Service Act.''
Section 1927 of the Act, which is referred to multiple times in
section 1847A of the Act, also references section 351 of the PHS Act
when referencing biologicals. The title of section 303 of the MMA,
which added section 1847A to the Act, refers to ``covered outpatient
drugs,'' defined in section 1927(k)(2) of the Act. Subparagraph (B)
adds biological products to this definition when those products are
licensed under section 351 of the PHS Act, among other requirements.
In the CY 2022 PFS final rule, to address the need to establish a
payment mechanism for synthetic skin substitutes in the physician
office setting and to be responsive to feedback received from
commenters, we finalized an approach for payment of each synthetic skin
substitute for which we had received a HCPCS Level II coding
application. We finalized that those products would be payable in the
physician office setting and billed separately from the procedure to
apply them using HCPCS A-codes (86 FR 65120).
(2) Payment for Skin Substitutes Under the Outpatient Prospective
Payment System (OPPS)
Prior to CY 2014, all products considered to be skin substitutes
were separately paid under the OPPS as if they were biologicals
according to the ASP methodology (78 FR 74930 through 74931). In the CY
2014 OPPS/ASC final rule with comment period (78 FR 74938), we
unconditionally packaged skin substitute products furnished in the
hospital outpatient setting into their associated application
procedures as part of a broader policy to package all drugs and
biologicals that function as supplies when used in a surgical
procedure. As part of the policy to package skin substitutes, we also
finalized a methodology that divides the skin substitutes into a high-
cost group and a low-cost group, to ensure adequate resource
homogeneity among APC assignments for the skin substitute application
procedures (78 FR 74933). In the CY 2015 OPPS/ASC final rule with
comment period (79 FR 66886), we stated that skin substitutes are best
characterized as either surgical supplies or devices because of their
required surgical application and because they share significant
clinical similarity with other surgical devices and supplies.
Skin substitutes assigned to the high-cost group are described by
CPT codes 15271 through 15278. Skin substitutes assigned to the low-
cost group are described by HCPCS codes C5271 through C5278. Claims
billed with primary CPT codes 15271, 15273, 15275, or 15277 are used to
calculate the geometric mean costs for procedures assigned to the high-
cost group, and claims billed with primary HCPCS codes C5271, C5273,
C5275, or C5277 are used to calculate the geometric mean costs for
procedures assigned to the low-cost group (78 FR 74935). The graft skin
substitute administration add-on codes, which include ``each additional
25 sq cm'' in the description (i.e., CPT codes 15272, 15274, 15276, and
15278; HCPCS codes C5272, C5274, C5276, and C5278), are packaged into
the payment rates for the primary administration codes.
For CY 2025, each of the HCPCS codes described earlier are assigned
to one of the following three skin procedure APCs according to the
geometric mean cost for the code: APC 5053 (Level 3 Skin Procedures):
HCPCS codes C5271, C5275, and C5277; APC 5054 (Level 4 Skin
Procedures): HCPCS codes C5273, 15271, 15275, and 15277; or APC 5055
(Level 5 Skin Procedures):
[[Page 33641]]
HCPCS code 15273. In CY 2025, the payment rate for APC 5053 (Level 3
Skin Procedures) is $612.13, the payment rate for APC 5054 (Level 4
Skin Procedures) is $1,829.23, and the payment rate for APC 5055 (Level
5 Skin Procedures) is $3,660.97. Table 63 lists the APC assignments and
CY 2025 payment rates for the HCPCS codes describing the skin
substitute application procedures. This information is also available
in Addenda A and B of the CY 2025 final OPPS/ASC rule with comment
period (the Addenda A and B are available on the CMS website https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices).
[GRAPHIC] [TIFF OMITTED] TP17JY25.091
Beginning in CY 2016, we adopted a policy where we determine the
high-cost/low-cost status for each skin substitute product based on
either a product's geometric mean unit cost (MUC) exceeding the
geometric MUC threshold or the product's per day cost (PDC), which is
calculated as the total units of a skin substitute multiplied by the
mean unit cost and divided by the total number of days, exceeding the
PDC threshold. We assign each skin substitute that exceed either the
MUC threshold or the PDC threshold to the high-cost group. In addition,
we assign any skin substitute with a MUC or a PDC that does not exceed
either the MUC threshold or the PDC threshold to the low-cost group (87
FR 71976).
We also assign skin substitutes with pass-through payment status to
the high-cost category. We assign skin substitutes with some pricing
information but without claims data for which to calculate a geometric
MUC or PDC to either the high-cost or low-cost category based on the
product's ASP plus 6 percent payment rate as compared to the MUC
threshold. If ASP is not available, we use the wholesale acquisition
cost (WAC) plus 3 percent to assign a product to either the high-cost
or low-cost category. Finally, if neither ASP nor WAC is available, we
use 95 percent of average wholesale price (AWP) to assign a skin
substitute to either the high-cost or low-cost category.
In the CY 2021 OPPS/ASC final rule with comment period, after the
first entirely synthetic skin substitute products were introduced into
the market, we revised our description of skin substitutes to include
both biological and synthetic products (85 FR 86064 through 86067). Any
skin substitute product that is assigned to a code in the HCPCS A2XXX
series is assigned to the high-cost skin substitute group, including
new products without pricing information. New skin substitutes without
pricing information that are not assigned a code in the HCPCS A2XXX
series are assigned to the low-cost category until pricing information
is available to compare to the MUC and PDC thresholds (89 FR 94247).
In the CY 2014 OPPS/ASC final rule, we also noted that several skin
substitute products are applied as either liquids or powders per
milliliter or per milligram and are employed in procedures outside of
CPT codes 15271 through 15278. We stated that these products ``will be
packaged into the surgical procedure in which they are used.'' (78 FR
74930 through 74931).
We also clarified that our definition of skin substitutes does not
include bandages or standard dressings, and that, under the OPPS, these
items cannot be assigned to either the high-cost or low-cost skin
substitute groups or be reported with either CPT codes 15271 through
15278 or HCPCS codes C5271 through C5278 (85 FR 86066).
c. Current FDA Regulation of Products CMS Considers To Be Skin
Substitutes
The FDA regulates products that CMS considers to be skin
substitutes based on a variety of factors, including product
composition, mode of action, and intended use. Relevant categories of
FDA regulation for skin substitute products include the following:
(1) Self Determination Under Section 361 of the PHS Act and the
Regulations in 21 CFR 1271 (361 HCT/Ps)
Human Cells, Tissues, and Cellular and Tissue-Based Products (HCT/
Ps) are defined in 21 CFR 1271.3(d) as articles containing or
consisting of human cells or tissues that are intended for
implantation, transplantation, infusion, or transfer into a human
recipient. Examples include bone, ligament, skin, dura mater, heart
valve, cornea, hematopoietic stem/progenitor cells derived from
peripheral and cord blood, manipulated autologous chondrocytes,
epithelial cells on a synthetic matrix, and semen or other reproductive
tissue. Pursuant to section 361 of the Public Health Service (PHS) Act,
FDA promulgated regulations at 21 CFR 1271, et seq that create an
electronic registration and listing system for establishments that
manufacture HCT/Ps, regulate donor eligibility, and establish current
good tissue practice and other procedures to prevent the introduction,
transmission, and spread of communicable diseases by HCT/Ps.
A subset of HCT/Ps are those that are regulated solely under
section 361 of the PHS Act and the regulations in 21 CFR 1271 (361 HCT/
Ps). The FDA has taken a risk-based, tiered approach in regulating HCT/
Ps; as the potential risk posed by a product increases, so does the
level of oversight (63 FR 26745). Although FDA is authorized to apply
the requirements in the Federal Food,
[[Page 33642]]
Drug, and Cosmetic Act (FD&C Act) and/or the PHS Act to those products
that meet the definition of drug, biological product, or device, under
a tiered, risk-based approach, HCT/Ps that meet specific criteria or
fall within detailed exceptions do not require premarket review and
approval. HCT/Ps that do not meet all the criteria in 21 CFR 1271.10(a)
are not regulated solely under section 361 of the PHS Act and the
regulations in 21 CFR part 1271. Unless an exception in 21 CFR 1271.15
applies, such products are regulated as drugs, devices, and/or
biological products under the FD&C Act and/or the PHS Act and are
subject to additional regulation, including applicable premarket
review. An HCT/P is regulated solely under section 361 of the PHS Act
and 21 CFR part 1271 if it meets all of the following criteria (21 CFR
1271.10(a)):
The HCT/P is minimally manipulated;
The HCT/P is intended for homologous use only, as
reflected by the labeling, advertising, or other indications of the
manufacturer's objective intent;
The manufacture of the HCT/P does not involve the
combination of the cells or tissues with another article, except for
water, crystalloids, or a sterilizing, preserving, or storage agent,
provided that the addition of water, crystalloids, or the sterilizing,
preserving, or storage agent does not raise new clinical safety
concerns with respect to the HCT/P; and
Either:
++ The HCT/P does not have a systemic effect and is not dependent
upon the metabolic activity of living cells for its primary function;
or
++ The HCT/P has a systemic effect or is dependent upon the
metabolic activity of living cells for its primary function, and:
--Is for autologous use;
--Is for allogeneic use in a first-degree or second-degree blood
relative; or
--Is for reproductive use.
Establishments that manufacture 361 HCT/Ps, as defined by 21 CFR
1271.3(e), must register and list their 361 HCT/Ps in the FDA's
electronic Human Cell and Tissue Establishment Registration System
(eHCTERS), but premarket review and approval by FDA is not needed.
However, FDA acceptance of an establishment registration and 361 HCT/P
listing form does not constitute a determination that an establishment
is compliant with applicable FDA rules and regulations, that the FDA
has agreed with the manufacturer's self-determination as a 361 HCT/P,
or that the HCT/P is licensed or approved by FDA (21 CFR 1271.27(b)).
When this proposed rule refers to 361 HCT/Ps, it generally refers to
products where an establishment has self-determined that their product
is a 361 HCT/P.\79\ If an HCT/P does not meet the criteria set out in
21 CFR 1271.10(a), and the establishment that manufactures the HCT/P
does not qualify for any of the exceptions in 21 CFR 1271.15, the HCT/P
will be regulated as a drug, device, and/or biological product under
the FD&C Act, and/or section 351 of the PHS Act (42 U.S.C. 262), and
applicable regulations, including 21 CFR part 1271, and premarket
review generally is required.
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\79\ We note that establishments may seek feedback from FDA
regarding their self-determination analysis and conclusion that a
particular product is a 361 HCT/P. See, for example, https://www.fda.gov/vaccines-blood-biologics/tissue-tissue-products/tissue-reference-group.
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(2) 510(k) Premarket Notification Submissions, Premarket Approval
Applications, and De Novo Requests
``Devices,'' as defined under 21 U.S.C. 321(h)(1), do not achieve
their primary intended purposes through chemical action and are not
dependent upon being metabolized for the achievement of their primary
intended purposes. Devices may be subject to premarket review through:
(1) a 510(k) premarket notification submission (510(k)) in accordance
with section 510(k) of the FD&C Act and implementing regulations in
subpart E of 21 CFR part 807; (2) a premarket approval application
(PMA) under section 515 of the FD&C Act and regulations in 21 CFR part
814; or, potentially, (3) a De Novo classification request (De Novo
request) under section 513(f)(2) of the FD&C Act and regulations in
subpart D of 21 CFR part 860. A 510(k) is a premarket submission made
to the FDA to demonstrate that the device to be marketed is
substantially equivalent to a legally marketed device that is not
subject to premarket approval (sections 510(k) and 513(i) of the FD&C
Act). Premarket approval is the most rigorous type of review and
generally is required for class III medical devices. Class III devices
are those devices for which insufficient information exists to
determine that general controls and special controls would provide a
reasonable assurance of safety and effectiveness and are purported or
represented to be for a use in supporting or sustaining human life or
for a use which is of substantial importance in preventing impairment
of human health, or present potential unreasonable risk of illness or
injury (section 513(a)(1)(C) of the FD&C Act). De Novo classification
is a marketing pathway for novel medical devices for which general
controls alone (class I), or general and special controls (class II),
provide reasonable assurance of safety and effectiveness, but for which
there is no legally marketed predicate device. Devices that are
classified into class I or class II through a De Novo request may be
marketed and used as predicates for future premarket notification (that
is, 510(k)) submissions, when applicable.
(3) Biologics License Application
To lawfully introduce or deliver for introduction into interstate
commerce a drug that is a biological product, a valid biologics license
application (BLA) must be in effect under section 351(a)(1) of the PHS
Act, 42 U.S.C. 262(a)(1), unless exempted under 42 U.S.C. 262(a)(3).
Such licenses are issued only after showing that the product is safe,
pure, and potent. Approval of a biologics license application or
issuance of a biologics license shall constitute a determination that
the establishment(s) and the product meet applicable requirements to
ensure the continued safety, purity, and potency of such products (21
CFR 601.2(d)). Potency has long been interpreted to include
effectiveness (21 CFR 600.3(s)).
The definition of the term ``biological product'' in section 351(i)
of the PHS Act is: ``a virus, therapeutic serum, toxin, antitoxin,
vaccine, blood, blood component or derivative, allergenic product,
protein, or analogous product . . . applicable to the prevention,
treatment, or cure of a disease or condition of human beings.'' (42
U.S.C. 262(i)). In contrast to the registration and listing
requirements for a 361 HCT/P or the substantial equivalence
requirements for 510(k)s, products licensed under section 351 of the
PHS Act are required to meet stringent pre-and post-market requirements
to ensure the products' safety and efficacy when marketed. Table 64
lists several other notable differences between the relevant FDA
regulatory categories for products CMS considers to be skin
substitutes.
[[Page 33643]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.092
d. Proposed Payment of Skin Substitute Products Under the PFS and OPPS
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\80\ No premarket authorization is required for 361 HCT/Ps.
\81\ https://www.fda.gov/industry/fda-user-fee-programs/medical-device-user-fee-amendments-mdufa.
\82\ These numbers include either a review within 180 days for
decisions without advisory committee input or a review within 320
days for decisions with advisory committee input, respectively.
\83\ PDUFA performance goals call for FDA to review and act on
90 percent of original BLA submissions within 10 months of the 60-
day filing date. Other regulatory pathways may have different
timelines. See https://www.fda.gov/patients/learn-about-drug-and-device-approvals/fast-track-breakthrough-therapy-accelerated-approval-priority-review; https://www.fda.gov/drugs/development-approval-process-drugs.
\84\ https://www.fda.gov/industry/fda-user-fee-programs/prescription-drug-user-fee-amendments.
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1. Separate Payment for Skin Substitute Products as Incident-To
Supplies
We have carefully considered our policy objectives, which include:
(1) ensuring a consistent payment approach for skin substitute products
across the physician office and hospital outpatient department
settings; (2) ensuring that appropriate HCPCS codes describe skin
substitute products; (3) employing a uniform approach across products
within the physician office setting, regardless of whether the product
is synthetic or comprised of human- or animal-based material; and (4)
providing clarity for interested parties on CMS skin substitutes
policies and procedures. We propose, starting January 1, 2026, to
separately pay for the provision of certain groups of skin substitute
products as incident-to supplies when, for those products that are
coverable under Medicare's rules, they are used during a covered
application procedure paid under the PFS in the non-facility setting or
under the OPPS. This proposal does not apply to biological products
licensed under section 351 of the PHS Act, which will continue to be
paid as biologicals under the ASP methodology in section 1847A of the
Act. While we considered proposing to pay separately for skin
substitutes initially under just the PFS in non-facility settings
consistent with current practice, one of our primary policy objectives
is to ensure a consistent payment approach for skin substitute products
across the physician office and hospital outpatient department
settings; and so, we ultimately determined that the suite of products
referred to as skin substitutes should be treated in a uniform manner
across different outpatient care settings, to the extent permitted by
applicable law, such as section 1833(t)(2)(B) of the Act. The
physician, in consultation with his or her patient, decides the site of
service for treatment. While many factors are considered as a part of
that decision, substantial differences in payment for the application
of the same skin substitute product in one site of service versus
another, or between similar skin substitute products, should not be one
of them. Establishing a consistent framework for how these products are
treated within the non-facility and hospital outpatient settings would
empower providers to make the best treatment decisions for their
patients, ensure equitable access to needed services, and pay
appropriately for these services. We also considered bundling payment
for skin substitute products in both the PFS and OPPS as part of this
proposal. While supplies are generally bundled into the payment of the
service in both the physician office and hospital outpatient
departments, for many years skin substitute products have been paid
separately in the physician office setting, where the majority of these
products are currently applied. So, we have determined that bundling
payment for skin substitute products with their administration
procedures across both settings under this new proposal, before efforts
are made to address improper utilization patterns, would be premature.
Depending on whether our proposal is finalized, and the outcomes of a
final policy, we may consider packaging skin substitute products with
the related application procedure in both the hospital outpatient
setting and non-facility setting in future rulemaking. We seek comments
on our proposal to separately pay for the provision of certain groups
of skin substitute products as well as on our proposal to implement
this policy in both the non-facility and hospital outpatient settings.
For additional details on the PFS proposal for skin substitutes, please
see the CY 2026 PFS proposed rule with comment period; the remainder of
this policy proposal will focus on implementation under the OPPS.
In the CY 2014 OPPS/ASC final rule with comment period, we
finalized a policy to package the payment for skin substitutes into
high- and low-cost administration codes (see 78 FR 74930 through 74931
and 42 CFR 419.2(b)(16)). Under this proposal, the payment for skin
substitutes would no longer be packaged into the administration
procedures under the OPPS, when performed in the outpatient hospital
setting. Rather, we propose to remove skin substitutes from the list of
packaged items and services at 42 CFR 419.2(b)(16) and specify that we
will continue to package payment for products that aid wound healing
that are not skin substitute products. Accordingly, the C-codes
describing the low-cost group, HCPCS codes C5271 through C5278, would
be deleted; and skin substitutes assigned to the high-cost group,
described by HCPCS codes 15271 through 15278, would remain to describe
skin substitute administration procedures. As a result of the
unbundling of the skin substitute products from HCPCS codes 15271
through 15278, the costs associated with
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the HCPCS codes may be impacted, resulting in changes in APC
assignments. We refer readers to Addendum B to the CY 2026 OPPS/ASC
proposed rule with comment period for the APC assignments and
associated payment rates for HCPCS codes 15271 through 15278. We also
propose to combine the existing claims data available for the two sets
of current OPPS codes, the low-cost and the high-cost administration
groups, to set the initial payment rate for the proposed skin
substitute administration procedures described by HCPCS codes 15271
through 15278. We believe it is appropriate to combine the available
claims data from both the low-cost and high-cost administration groups
to calculate the payment rate for the proposed skin substitute
administration procedures as both the low-cost and high-cost groups
describe skin substitute administration. While HCPCS add-on
administration codes 15272, 15274, 15276, and 15278 would still be
packaged in the hospital outpatient setting, because add-on codes are
generally packaged in the hospital outpatient setting, we anticipate
that many of the concerns expressed by presenters at previous meetings
of the Advisory Panel on Hospital Outpatient Payment (HOP Panel) and by
public commenters on previous rules that providers are discouraged from
treating larger wounds in the hospital outpatient setting (89 FR 94247)
would be addressed by our proposal to pay separately for codes
describing provision of skin substitute products from their associated
administration codes. We seek comment on our proposal to pay separately
for provision of skin substitutes as incident-to supplies when used as
part of an administration procedure in the hospital outpatient setting.
In the CY 2014 OPPS/ASC final rule with comment period, we
finalized a policy to treat skin substitutes as biologicals that
function as supplies when used in a surgical procedure. Similarly,
under this proposal, most skin substitutes would be considered
incident-to supplies in accordance with section 1861(s)(2)(A) of the
Act. Supplies are a large category of items that typically are either
for single use or have a shorter use life span than equipment. Supplies
can be anything that is not equipment and include not only minor,
inexpensive, or commodity-type items but also include a wide range of
products used in outpatient settings, including certain implantable
medical devices. ``Incident-to supplies'' refers to supplies that are
furnished as an integral, although incidental, part of the physician's
personal professional services in the course of diagnosis or treatment
of an injury or illness (42 CFR 410.26). Because a skin substitute must
be used to perform any of the procedures described by a CPT code in the
range 15271 through 15278, and the procedure of treating the wound and
applying a covering to the wound is the independent service, skin
substitute products serve as a necessary supply for these surgical
repair procedures.
One purpose of the new proposed policy is to limit some of the
current profiteering practices occurring in this industry. For example,
as reflected in CMS's ASP Pricing Files, we have observed a dramatic
increase in launch prices. It is unclear how these prices could be
attached to realistic changes in resource costs as many of these new
products are minimally manipulated tissues. Our proposed policy is
likely to disincentivize this practice, as well as several other novel
industry practices that have come to our attention, by preventing
exploitation of skin substitute pricing under section 1847A of the Act,
overuse of expensive skin substitute products, and waste resulting from
use of more-expensive skin substitute products over clinically-
appropriate, less-expensive alternatives. Notably, there has not been
significant growth in payments for skin substitutes in the OPPS, due in
part to our packaging principles. We note that the relevant statutory
provisions, when considered together, do not require all of these kinds
of products to be paid as biologicals under section 1847A of the Act.
Therefore, under this proposed policy, unless a skin substitute is
approved as a drug or as a biological product under section 351 of the
PHS Act, in which case we would continue to pay for it consistent with
section 1847A of the Act, we would consider it a supply for payment
purposes under the OPPS with definitions and rates described below. For
Medicare purposes, we propose to codify the definition of
``biological'' as ``a product licensed under section 351 of the Public
Health Service Act'' at Sec. Sec. 414.802 and 414.902. We seek
comments on our proposal to limit application of section 1847A of the
Act to skin substitutes that are approved as a drug or as a biological
under section 351 of the PHS Act and our proposed edits to the
regulations.
2. Payment Categories Based on FDA Regulatory Pathways
Paying separately for skin substitutes in the non-facility setting
has led to dramatic price increases for these products, as noted above.
Grouping similar products or services into a single billing code and
using a single payment amount for them, as we do with many services
under the OPPS, some services under the PFS, and all multiple-source
drugs under section 1847A of the Act, incentivizes hospitals and
prescribers to make more cost-efficient, clinically effective
decisions. However, we recognize that grouping dissimilar products and/
or services to set payment rates, can limit beneficiaries' access to
appropriate care, especially when some groups encompass products and
services with significant clinical and resource variability. In the
case of skin substitutes, no single product among the wide range of
products stands out as typical; so, we have reviewed several methods to
group or classify skin substitutes to determine which best reflects
clinical and resource similarities between these products.
To reflect relevant product characteristics, we propose to group
skin substitutes that are not drugs or biologicals (i.e., biological
products licensed under section 351 of the PHS Act) using three CMS
payment categories based on FDA regulatory categories ( (PMAs, 510(k)s,
and 361 HCT/Ps) to set payment rates. We have previously noted in
rulemaking that CMS has no obligation to categorize products based on
the FDA's current regulatory framework (74 FR 60476); but, in this
case, we have determined that the FDA regulatory categories provide an
appropriate level of distinction for a heterogeneous category of
products that exhibit clinical and resource variability that can
ultimately improve the accuracy of payment under the OPPS. Proposing a
payment policy that aligns with FDA's current regulatory framework also
provides for predictability and efficiency for purposes of Medicare
payment. Payment for new products, as discussed below, could be
achieved quickly and consistently by CMS's capacity to immediately
recognize the FDA regulatory categories.
a. 361 HCT/Ps
As described previously, 361 HCT/Ps are a subset of HCT/Ps that are
regulated solely under section 361 of the PHS Act and the regulations
in 21 CFR 1271 and listed in the FDA's eHCTERS. Currently, registered
361 HCT/Ps generally are dressings intended only to cover and protect a
wound. They are not intended to act on the wound to mediate,
facilitate, or accelerate wound healing. Their activity is typically
limited to that of a physical covering or wrap. A structural tissue
intended for wound care is generally limited to the
[[Page 33645]]
homologous use of cover and protect in order to be a 361 HCT/P.\85\
Intended uses such as wound treatment, promotion or acceleration of
wound healing, or serving as a skin substitute would generally be non-
homologous uses of structural tissues. Instead, products for such
intended uses (for example, the treatment of wounds) generally are
subject to PMA or BLA requirements.
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\85\ See Regulatory Considerations for HCT/Ps: Minimal
Manipulation and Homologous Use, July 2020 (pg. 19).
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b. Devices Requiring 510(k)s
A 510(k) is a premarket submission made to the FDA generally by the
manufacturer of a device to demonstrate that the device to be marketed
is substantially equivalent to legally marketed device that is not
subject to premarket approval. (FD&C Act sections 510(k),513(i)).
Currently, 510(k)-cleared devices that we are considering for purposes
of this proposal generally are dressings intended only to cover and
protect a wound, to absorb exudate, and to maintain appropriate
moisture balance within the wound. They are not intended to act on the
wound to mediate, facilitate, or accelerate wound healing. Their
activity is typically limited to that of a physical covering or wrap.
When intended only to cover and protect a wound, to absorb exudate, and
to maintain appropriate moisture balance within the wound and otherwise
meeting the device definition, generally the FDA's Center for Devices
and Radiological Health (CDRH) regulates wound dressings composed of
natural biomaterials, including animal and human derived tissue as
devices, and they are currently subject to 510(k) requirements. At this
time, wound dressings have not been 510(k) cleared by FDA for
indications such as wound treatment, promotion or acceleration of wound
healing, or serving as a skin substitute.\86\ Instead, products for
such intended uses generally are subject to PMA or BLA requirements.
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\86\ FDA Executive Summary Prepared for the October 26 & 27,
2022 Meeting of the General and Plastic Surgery Devices Panel of the
Medical Devices Advisory Panel Classification of Wound Dressings
with Animal-derived Materials (Section 3). Available at download.
---------------------------------------------------------------------------
For the purposes of this policy, we propose to group any skin
substitutes authorized through the De Novo pathway with those cleared
under 510(k)s. Similar to products cleared under 510(k)s, De Novo
classification is a marketing pathway for medical devices for which
general controls alone (class I), or general and special controls
(class II), provide reasonable assurance of safety and effectiveness.
While products authorized through the De Novo pathway have no legally
marketed predicate device, devices that are classified into class I or
class II through a De Novo request may be marketed and used as
predicates for future premarket notification (that is, 510(k))
submissions, when applicable. Because of this, we would expect skin
substitutes authorized through the De Novo pathway and those cleared
under 510(k)s to be similar for payment purposes. We seek comment on
our proposal to group skin substitutes into three FDA approval
categories, PMA, 510(k), and 361 HCT/P, to set payment rates and our
proposal to group any skin substitutes authorized through the De Novo
pathway with those cleared under 510(k)s for payment purposes.
c. Products Subject to PMAs
Premarket approval is the most rigorous type of review and
generally is required for class III medical devices. Similar to BLA-
approved wound care products, PMA-approved wound care products
generally are intended to go beyond a simple wound cover to provide
some type of direct treatment effect. The FDA has not defined the term
``skin substitute.'' However, the term has been used as a descriptor
for certain wound care constructs that are currently approved under a
BLA or PMA for treatment of burns or skin ulcers, including ulcers that
appear to have failed to heal after standard of care. The intended uses
of these products may include scaffold claims, reference to matrix
attributes that promote endogenous cell binding, migration,
differentiation, or proliferation, and/or activities mediated by
matrix-associated regulatory factors that facilitate wound healing.
Currently, wound care products intended to interact with the wound to
facilitate, promote, or accelerate wound healing generally require
approval of a BLA or, in some instances, a PMA. Approval of these
products requires demonstration of safety and efficacy for the intended
use, which generally requires the performance of clinical studies. So
PMA-approved devices can be readily distinguished from 510(k)-cleared
devices and 361 HCT/P products, which are intended mainly to cover and
protect the wound. They are clinically different, provide different
benefits, and would theoretically be used for patients presenting with
different clinical scenarios. As discussed, PMA-approved devices also
go through a much more rigorous review process before marketing as
compared to the substantial equivalence requirements for 510(k)s and
lack of premarket review for registered 361 HCT/Ps. This more rigorous
review for PMAs, as well as differences in clinical utility, and the
associated costs to manufacturers, suggests that the resources involved
in furnishing these products could be distinct from 361 HCT/Ps and
510(k)s. We seek comment on our proposal to group skin substitutes into
three FDA categories, PMA, 510(k), and 361 HCT/P, to set payment rates.
We note that device pass-through payment status would still be
available to new skin substitutes that meet the pass-through payment
criteria in the hospital outpatient setting. However, while skin
substitutes approved under device pass-through payment status are
currently assigned to the high-cost category, because our proposal
would eliminate the low- and high-cost groups, we propose to pay for
skin substitutes approved under device pass-through payment status
consistent with other devices approved under that payment pathway. For
the purposes of eligibility of skin substitutes for transitional drug
pass-through payment, we propose to define the term ``biological''
consistent with our interpretation of the term under section 1847A of
the Act. Under this proposal, skin substitutes with an approved BLA
would be considered under transitional drug pass-through payment status
and skin substitutes with PMA or 510(k) clearance would continue to be
evaluated under transitional device pass-through payment status. See
section IV.A. of this proposed rule for more information on device
pass-through payments under the OPPS and see section V.A. of this
proposed rule for more information on drug pass-through payments under
the OPPS.
Section 1833(t)(2) requires the Secretary to establish groups so
that services classified within each group are comparable clinically
and with respect to the use of resources. To effectuate this
categorization into a payment policy under the OPPS, we propose to
create three new APCs for HCPCS codes that describe skin substitute
products organized by clinical and resource similarity. These three
APCs will divide skin substitutes by their FDA regulatory pathway.
Specifically, we propose to create: APC 6000 (PMA Skin Substitute
Products); APC 6001 (510(k) Skin Substitute Products); or APC 6002 (361
HCT/P Skin Substitute Products). In addition, as noted previously, we
propose to assign any skin substitutes approved through the De Novo
pathway to APC 6001 (510(k) Skin Substitute Products) based on our
proposed policy of categorizing products with these two
[[Page 33646]]
regulatory statuses together. We also propose to create three new
unlisted C-codes, one to describe skin substitute products in each
approval pathway, for new skin substitute product that have received
FDA approval or clearance but do not yet have their own code in effect.
We propose to create HCPCS placeholder codes QXXX1 (Unlisted PMA skin
substitute product) and assign it to APC 6000 (PMA Skin Substitute
Products); QXXX2 (Unlisted 510(k) skin substitute product) and assign
it to APC 6001 (510(k) Skin Substitute Products); and QXXX3 (Unlisted
361 HCT/P skin substitute product) and assign it to APC 6002 (361 HCT/P
Skin Substitute Products). We propose to create these unlisted codes to
prevent delays in Medicare payments for new FDA-approved or cleared
skin substitute products. We note that unlisted codes should only be
reported when there is no other existing CPT or HCPCS code that
adequately describes the service being performed.
3. Alternative Payment Categories
As a conceptually possible alternative to our proposal to group
skin substitutes based on FDA regulatory categories for purposes of
payment, we considered aligning these products based on their
composition, for example, whether they are non-synthetic or synthetic.
Two examples provided by interested parties include grouping the
products as allografts (for example, amniotic products, cellular
products), xenografts (for example, collagen products derived from
animals), synthetics (for example, artificial products made from
various biomaterials) and grouping the products as human living/
cryopreserved tissue, dehydrated human/amniotic tissue, animal
xenografts, and synthetics/polymers. However, as noted previously, skin
substitutes are a heterogenous group with an increasing intersection
between tissue, bioengineered, and synthetic components. With many
products now including both non-synthetic and synthetic components,
clear categorization of skin substitutes is no longer feasible. This
makes this alternative extremely complex to implement because it would
be necessary to determine which category would be most appropriate for
each individual product based on the components of its composition and
an assessment of the importance of each component. In addition, it is
unclear if grouping products based solely on their composition would
provide accurate differentiation with respect to resource or clinical
similarity for the purposes of setting an appropriate payment rate.
Other alternatives we considered include grouping all products
together to set a single payment rate or creating two or more
categories reflecting product cost, similar to the groupings used
currently to set payment rates for skin substitutes in hospital
outpatient departments. While these options may offer certain
operational advantages for their simplicity, neither recognizes the
clinical differences among skin substitutes as reflected by their
different intended uses. Paying for similar items and services at a
comparable rate is a foundational aspect of our payment systems, but
hospital outpatient departments paid under the OPPS and physicians and
other practitioners paid under the PFS would instead have a financial
incentive to use the least expensive skin substitute or the product
offering the greatest discount, which could negatively affect patient
outcomes and disincentivize innovation in this space if clinical
differences are not recognized and differential payments rates are not
set. In addition, dividing products by cost relies on pricing set by
manufacturers. Especially in light of the dramatic growth of skin
substitutes' ASP-based payment limits, this method is unlikely to
accurately reflect skin substitute resource costs or clinical
similarity.
We seek comment on whether adding certain subcategories to the
three proposed FDA categories would improve clinical or resource
similarity. One potential example is creating certain subcategories for
payment based on one or more FDA device product codes, which is a
categorization process that FDA uses to group similar products
together. Other examples that have come to our attention include
setting unique payment rates for 361 HCT/Ps based on the number of
tissue layers (for example, one layer, two layers, and three or more
tissue layers) or entirely synthetic products versus non-synthetic
products for 510(k)s. If significant clinical or resource differences
were identified between products in one or more of these categories,
CMS could create a separate payment grouping for these products for
payment purposes.
We also seek comments on whether products that are not in sheet
form are appropriately considered skin substitutes for the purposes of
providing separate payment under this policy. Examples include gel,
powder, ointment, foam, liquid, or injected products listed in the
nontraditional units of cc, mL, mg, and cm\3\. We request feedback on
whether these products could be appropriately used as part of the CPT
administration codes in the range 15271 through 15278, despite existing
CPT coding guidelines limiting their use, and how these units could be
paid using the FDA regulatory category groups. For example, assuming
these products were appropriate to administer using the noted CPT
administration codes or other administration codes, CMS could include
products listed in units of cc, mL, or cm\3\ in the applicable FDA
categories and equate a single cm\2\ unit to each cc, mL, or cm\3\ for
payment purposes. We seek comments on whether other administration
codes could be used to appropriately describe services performed using
products with units other than cm\2\.
4. Establishing Initial Payment Rates
We propose to establish initial payment rates for the three FDA
regulatory categories based on the volume-weighted average ASP, with no
additional markup, for skin substitute products in each category as
submitted by manufacturers, when available. We have developed initial
payment rates for each group based on the weighted, per-unit average of
ASPs for the fourth quarter of calendar year 2024. These initial
payment rates are listed in the file titled ``Skin Substitute Products
by FDA Regulatory Category'' on the CMS website under downloads for the
CY 2026 PFS proposed rule at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html. When ASP was not available, we used the MUC, which we
currently use to determine the high-cost/low-cost status for each skin
substitute product in the hospital outpatient setting to calculate the
proposed initial rates. We considered using only the MUC data to
calculate payment rates for these products. However, when ASP is
reported, it may serve as a better estimate of cost across both
settings as the ASP reflects sales to physicians as well as hospitals.
We seek comment on our proposal to calculate payment rates for skin
substitute products in each of the three FDA regulatory categories
using ASP, or MUC when ASP is not available, using per-unit averaged
pricing data from the fourth quarter of 2024. We also seek comments on
whether these calculations, if finalized, should be updated with the
most recently available data at the time the final rule is drafted.
As we are proposing to implement this policy for CY 2026 in a site-
neutral manner across both the non-facility setting under the PFS and
hospital outpatient setting under the OPPS, we are including all
products used in either setting to calculate the rates. However,
[[Page 33647]]
when product-specific utilization across both settings is used to
calculate volume-weighted average payments, the result is an apparent
rank order anomaly; despite having a more rigorous regulatory review
process and receiving indications to treat and heal wounds, the PMA
category has the lowest average payment. We are concerned that the use
of the novel pricing practices noted above has resulted in a decoupling
of actual resource costs from the ASP. To address this, as a short-term
measure, we propose to weight the product-specific utilization in
calculating the proposed rates using the proportions from only the
hospital OPPS data and establish, for CY 2026, a single payment rate
that would apply to all skin substitute products in the three FDA
regulatory categories, or APCs. We believe the OPPS utilization data
may better predict utilization patterns under our proposed policies for
non-facility settings because, similar to our proposals, these products
are already grouped together for payment purposes under the OPPS. By
grouping skin substitutes into high- and low-cost groups in the OPPS,
hospitals are incentivized to choose either the lowest-cost, clinically
appropriate product in the low-cost group or the lowest-cost,
clinically appropriate product in the high-cost group. No similar
incentive currently exists in the non-facility setting for physicians
and other suppliers billing under the PFS. As the proposed policies are
intended to mitigate the problematic incentives associated with current
patterns of use in the non-facility setting by establishing payment
rates for the products in groups instead of individually, we do not
believe it would reflect the expected resource costs involved in
providing care if we were to base the initial rates on utilization data
from the non-facility setting that may be skewed by incentives that
would no longer exist under our proposals. For these reasons, we
propose to initially use hospital outpatient utilization to weight how
much each product's price contributes to the proposed payment rates for
skin substitutes cleared through the 510(k) pathway, self-determined to
be 361 HCT/Ps, or approved under a PMA. We seek comments on the use of
these product utilization patterns to set payment rates.
We also propose for CY 2026 to establish the same initial APC
payment rate for each group of skin substitutes, including 510(k)-
cleared products, registered 361 HCT/Ps, and approved PMAs. To ensure
we are not underestimating the resources involved in using these
products in furnishing care, we propose to use the highest of the
calculated volume-weighted average payment amounts for 510(k)s, 361
HCT/Ps, and PMAs to set initial payment valuations. As the 361 HCT/Ps
have the highest volume-weighted average payment amount, this average
payment rate is reflected in the proposed initial payment rate below.
However, we note that, in future notice and comment rulemaking, we
intend to propose using claims data to set payment rates for products
in these three categories, which would likely result in payment
valuations that diverge based on the updated data. Another alternative
is to set the payment rate for products in these categories at the
volume-weighted average for all three categories, resulting in a lower
initial payment rate for all three groups of products. We seek comment
on our proposal to use the 361 HCT/P volume-weighted average payment
amount to set the initial payment rates for products in all three
categories as well as the alternative of using a pooled average of the
three categories to set the initial payment rates.
Alternatively, while the ASP Pricing Files show that skin
substitutes across all three of the FDA regulatory categories have
increased in cost substantially since 2019, unlike the self-determined
361 HCT/Ps and 510(k)-cleared devices, there has not been a substantial
increase in the number of skin substitutes with approved PMAs.
Consequently, it is possible that the non-facility utilization of the
skin substitutes with approved PMAs is not as distorted as the
utilization of the other kinds of skin substitutes. Setting a separate
payment rate for this category using combined product utilization
patterns (from both OPPS and non-facility settings), would result in a
higher initial payment rate for the PMA category. This would rationally
order the FDA regulatory categories, based on clinical considerations
and some indicators of resource cost, until pricing data removed from
these aberrant financial incentives can be incorporated. We seek
comment on this alternative policy option.
The proposed calculation methodology would result in an initial
payment rate of $125.38 for all three proposed new APCs based on the
FDA categories including PMA-approved devices, 361 HCT/Ps, and 510(k)
devices. Specifically, this proposal would result in an initial payment
rate of $125.38 for each HCPCS code assigned to APC 6000 ``PMA Skin
Substitute Products,'' APC 6001 ``510(k) Skin Substitute Products,''
and APC 6002 ``361 HCT/P Skin Substitute Products.'' We seek comments
on these proposed initial payment rates. We determined these proposed
rates using product pricing and volume for skin substitutes from paid
claims with dates of service in the fourth quarter of 2024 because it
is the most recent, substantially complete quarter of data available.
For professional claims, we excluded claims without a positive line-
level allowed amount, so that we did not inadvertently include volume
without presumed costs in the calculation. In addition, in reviewing
the ASP pricing files from the first quarter of 2017 through the first
quarter of 2025, the most complete ASP reporting is in the fourth
quarter of each year. To determine the payment rates, we first used a
product's ASP if it was available. If the ASP rate was missing, we used
the 2024 MUC for the HCPCS code. We then calculated a single rate for
each FDA category by taking the volume-weighted average of the rates
for the applicable codes using the hospital outpatient utilization to
weight each category. We note that if rather than using the final
quarter of CY 2024, we alternatively, were to use pricing and volume
from all four quarters of 2024 to determine proposed rates, the rate
for all categories would be approximately $114.87. Using a pooled
payment rate across all three categories would result in a rate of
approximately $65.85, while splitting the categories to pay the PMA
category using the combined product utilization patterns and the 510(k)
and 361 HCT/P categories using the OPPS utilization patterns would
result in rates of approximately $259.47 and $125.38 respectively. We
seek comment on our proposed process to calculate initial payment rates
as well as these alternatives.
We propose to maintain the current structure of HCPCS codes for
skin substitutes, including a process to introduce new product-specific
codes and propose initial valuation based on the typical resource costs
(i.e., those reflected in ASP and MUC data) of the groups associated
with each skin substitute's HCPCS code. We propose to assign each
current HCPCS code that describes an individual skin substitute product
to one of the three new APCs based on the product's appropriate FDA
regulatory category. For a complete list of codes and FDA categories,
please see file entitled ``Skin Substitute Products by FDA Regulatory
Category'' available on the CMS website under downloads for the CY 2026
PFS proposed rule at https://www.cms.gov/Medicare/Medicare-Fee-for-
Service-Payment/
[[Page 33648]]
PhysicianFeeSched/PFS-Federal-Regulation-Notices.html. Individual HCPCS
coding, as provided in the file, remains necessary to provide
identification on claims and track each product's cost. This will also
allow effectuation of any applicable coverage policies and improve our
ability to determine if any refinements in payment categories would be
appropriate in future rulemaking.
For the most part, materials or supplies furnished incident to a
service (for example, a suture, customized surgical kit, scalpel, or
clip, other than a radiological site marker) are not paid separately
under the OPPS. However, separate payment for products is not novel,
since Medicare pays for various components of services through the use
of separate HCPCS codes and/or payment modifiers. The most obvious
examples of these kinds of payment and coding splits occur in
diagnostic tests, radiation treatment services, and blood product
services. For example, under the OPPS, blood products receive specific
HCPCS codes and are paid separately from other services. In this case,
the procedure of applying or administering a skin substitute product
would not be described or paid for by a single code. Rather, when a
skin substitute product is applied, both the application code as well
as the HCPCS code of the skin substitute that is being applied would be
billed under the OPPS. For example, when CPT Code 15271 (application of
skin substitute graft, leg or ankle) is billed, we would expect for the
hospital outpatient department to also report a skin substitute HCPCS
code, which would be paid at a payment rate that includes the resources
involved in using the skin substitute product. We propose for skin
substitute products to receive a separate payment independent from the
payment for the application procedure. To effectuate this proposed
payment policy under the OPPS, we propose to create a new status
indicator for HCPCS codes describing skin substitutes that are assigned
to one of the three new APCs for skin substitutes based on FDA
regulatory pathway. Specifically, we propose to create status indicator
``S1'' to indicate that the skin substitute product is paid separately
from other procedure codes under the OPPS. We propose to assign all
existing HCPCS codes describing skin substitute products to status
indicator ``S1'' for CY 2026. The proposed status indicator ``SI,''
along with its descriptor and payment status, is listed in Table 65.
[GRAPHIC] [TIFF OMITTED] TP17JY25.093
We also seek comments on whether we should consider treating the
codes describing skin substitute products as add-on codes to the
current CPT administration codes (CPT codes 15271-15278). This would
more clearly indicate that the only skin substitute products to be paid
for and treated as supplies by Medicare are those used in conjunction
with the already existing CPT administration codes. If we were to treat
these codes as add-on codes to the administration codes, we would
effectuate this by revising the code descriptors of the skin substitute
products to state ``list separately in addition to the primary
procedure.'' While we would normally assign the add-on codes to a
status indicator that indicates that payment is packaged (i.e., status
indicator ``N'' (Items and Services Packaged into APC Rates)), given
our proposal to pay separately for skin substitute products as
incident-to supplies, we would still propose to assign status indicator
``S1,'' to the skin substitute codes.
We propose that new HCPCS codes describing skin substitutes would
be categorized based on whether they are PMA-approved, 510(k)-cleared,
or 361 HCT/Ps and the payment rates that apply to that category would
be applied to the new code at the next quarterly update. Currently,
HCPCS Level II coding applications are submitted and reviewed during
our quarterly and biannual coding cycles. We post our coding
determinations for drugs and biologicals on a quarterly basis, and do
not routinely review those applications at a HCPCS public meeting. For
non-drugs and non-biologicals, we post our coding decisions on a
biannual basis. For our biannual cycles for non-drugs and non-
biologicals, we post preliminary coding determinations then invite
feedback on those preliminary coding determinations at a biannual HCPCS
public meeting; final coding determinations are posted following the
HCPCS public meeting. CMS has been reviewing skin substitutes marketed
as 361 HCT/Ps in the quarterly drugs and biologicals coding cycle and
510(k)-cleared skin substitutes in the biannual, non-drugs and non-
biologicals coding cycle. Beginning January 1, 2026, we propose to
review HCPCS Level II coding applications for all skin substitutes
marketed as 361 HCT/Ps through our biannual coding cycle for non-drugs
and non-biological products, rather than on a quarterly basis. Skin
substitutes that received a 510(k) clearance, PMA approval, or a
granted De Novo request would continue to be evaluated in the biannual
HCPCS Level II coding cycles. Therefore, under this proposal, CMS would
evaluate all complete HCPCS Level II applications for skin substitutes
in our biannual cycles. Should any products come to market under the
BLA, NDA, or ANDA pathways that could potentially be considered skin
substitutes, CMS would instead review them in a quarterly HCPCS Level
II drugs and biologicals coding cycle.
Before a code is assigned to describe the skin substitute product,
not otherwise classified (NOC) codes would be used and the CMS MACs
would assign the appropriate payment based on the product's FDA
category. We propose to create three new unlisted codes to describe
skin substitute products that are FDA authorized or cleared but have
not yet received a specific individual HCPCS or CPT code: HCPCS
placeholder codes QXXX1 (Unlisted PMA skin substitute product), QXXX2
(Unlisted 510(k) skin substitute product), and QXXX3 (Unlisted 361 HCT/
P skin substitute product). We propose to assign the unlisted HCPCS
codes to the appropriate APCs based on the product's FDA approval or
clearance. Specifically, we propose to assign HCPCS code QXXX1 to APC
6000 (PMA Skin Substitute Products); QXXX2 to APC 6001 (Unlisted 510(k)
[[Page 33649]]
Skin Substitute Products); and HCPCS Code QXXX3 to APC 6002 (Unlisted
361 HCT/P Skin Substitute Products). and assign it to APC 6002 (361
HCT/P Skin Substitute Products). We propose to create these unlisted
codes to prevent delays in Medicare payments for new FDA-approved or
cleared skin substitute products that do not yet have a specific HCPCS
or CPT code.
If skin substitutes that are not licensed under section 351 of the
PHS Act are no longer paid as biologicals using the methodology under
section 1847A of the Act, as proposed, then the manufacturers of these
products would no longer be required to report ASP data to CMS under
section 1847A(f)(2) of the Act. However, when ASP data is reported, it
may serve as a better estimate of resources across the hospital
outpatient and non-facility settings than hospital outpatient MUC data.
We propose to update the rates for the skin substitute categories
annually through rulemaking using the most recently available calendar
quarter of ASP data, when available, to set the rates. However, we have
concerns that using a single, scheduled quarter of ASP data to set
payment rates could encourage gaming. We seek comment on the use of a
longer timeframe, such as the most recently available four calendar
quarters, to set payment rates in future years. In the event ASP is not
available for a particular product, we propose to use the MUC data. If
MUC is not available, we propose to use the product's WAC or 89.6
percent of AWP if WAC is also unavailable, similar to other products
for which ASP is used to calculate a payment rate.\87\ Once updated use
patterns reflecting this policy are available to calculate rates, we
propose using all relevant products and the combined product
utilization patterns (OPPS and non-facility) to determine a weighted
average per-unit cost by category to set separate payment rates for
each of the three new APC groups. We seek comments on our proposed
methodology to set and update the payment rates for skin substitutes as
well as the rates themselves.
---------------------------------------------------------------------------
\87\ 89.6 percent of AWP was calculated by first reducing the
usual 95 percent of AWP price by 6 percent to generate a value that
is similar to WAC with no percentage markup.
---------------------------------------------------------------------------
5. Summary
To implement this policy, we propose, starting January 1, 2026, to
separately pay for skin substitute products as incident-to supplies in
both the non-facility and hospital outpatient settings. Under the OPPS,
we propose to unpackage the skin substitute product from the payment
for the administration of the skin substitute product and pay for the
administration of the skin substitute product separately from the skin
substitute product itself. Accordingly, we propose to delete the C-
codes describing the skin substitutes assigned to the low-cost group,
HCPCS codes C5271 through C5278. We are not proposing to delete the
HCPCS codes assigned to the high-cost group, described by HCPCS codes
15271 through 15278, as they would remain to describe skin substitute
administration procedures. We are specifying that HCPCS add-on
administration codes 15272, 15274, 15276, and 15278 would still be
packaged in the outpatient hospital setting.
We propose to pay separately for certain groups of skin substitute
products as incident-to supplies involved in furnishing services under
both the physician non-facility and outpatient hospital settings.
Unless a skin substitute meets the definition of a biological in
section 1847A, in which case the payment methodology under section
1847A would continue to apply, we propose to create three clinical APCs
to pay for skin substitutes based on their FDA regulatory categories:
APC 6000 (PMA Skin Substitute Products), APC 6001 (510(k) Skin
Substitute Products), and APC 6002 (361 HCT/P Skin Substitute
Products). We propose to use the hospital outpatient utilization
patterns to set the payment rates for all three skin substitute APCs,
which we propose to combine this year for payment purposes. For CY
2026, this proposal would result in an initial payment rate of $125.38
for APCs 6000 (PMA Skin Substitute Products), 6001 (510(k) Skin
Substitute Products), and 6002 (361 HCT/P Skin Substitute Products).
We propose to maintain the current HCPCS codes for skin substitutes
and assign the codes to the three APCs based on the product's FDA
regulatory category. We propose to create three new unlisted codes to
describe skin substitute products that are FDA authorized or cleared
but have not yet received a specific individual HCPCS or CPT code:
HCPCS placeholder codes QXXX1 (Unlisted PMA skin substitute product),
QXXX2 (Unlisted 510(k) skin substitute product), and QXXX3 (Unlisted
361 HCT/P skin substitute product). We propose to assign the unlisted
HCPCS codes to the appropriate APCs based on the product's FDA approval
or clearance. Specifically, we propose to assign HCPCS code QXXX1 to
APC 6000 (PMA Skin Substitute Products); QXXX2 to APC 6001 (Unlisted
510(k) Skin Substitute Products); and HCPCS Code QXXX3 to APC 6002
(Unlisted 361 HCT/P Skin Substitute Products). and assign it to APC
6002 (361 HCT/P Skin Substitute Products). We propose to create these
unlisted codes to prevent delays in Medicare payments for new FDA-
approved or cleared skin substitute products that do not yet have a
specific HCPCS or CPT code. We propose to create a new status
indicator, S1, for skin substitute products to allow for separate
payment under the OPPS. We propose to assign status indicator S1 to all
skin substitute products assigned to APCs 6000, 6001, and 6002.
We propose to update the rates for the skin substitute categories
annually through rulemaking using the most recently available calendar
quarter of ASP data, when available, to set the rates. In the event ASP
is not available for a particular product, we propose to use the
outpatient hospital MUC data. If MUC is not available, we propose to
use the product's WAC or 89.6 percent of AWP if WAC is also
unavailable. We propose to include all skin substitute products used
across both settings as well as the combined product utilization
patterns, as soon as data is available that reflects the results of
this policy, to determine a weighted average per-unit cost by group to
set the payment rates for each of the three categories. We propose to
evaluate all complete HCPCS Level II applications for skin substitutes
in our biannual cycles. We propose to codify the definition of
``biological'' as ``a product licensed under section 351 of the Public
Health Service Act'' at Sec. Sec. 414.802 and 414.902. Finally, we
note that these proposed changes for the CY 2026 OPPS skin substitute
policy will affect prospective CY 2026 OPPS payments and weights, and
as a result will be budget neutralized through the OPPS weight scaler,
which accounts for prospective changes in OPPS payments and payment
weight. For a discussion of the OPPS budget neutral weight scaler, see
section II.A.5. of this proposed rule. We direct readers to section
XIII. of this proposed rule for more information on our proposal for
payment for skin substitute products applied in the ASC setting.
10. CY 2026 Physician Fee Schedule Proposal Regarding Cell and Gene
Therapies
In the CY 2026 PFS proposed rule, we propose that (1) preparatory
procedures for tissue procurement required for manufacturing an
autologous cell-based immunotherapy or gene therapy be included in the
payment of the product
[[Page 33650]]
itself and (2) that, beginning January 1, 2026, any preparatory
procedures for tissue procurement required for manufacturing an
autologous cell-based immunotherapy or gene therapy that were paid for
by the manufacturer be included in the calculation of the
manufacturer's ASP.
We are making readers aware of this proposal as it may impact
therapies paid under the OPPS and ASC payment system. We direct readers
to submit their comments on this topic to the CY 2026 PFS proposed
rule. Comments submitted to the PFS rule will be responded to in the CY
2026 PFS final rule with comment period along with the finalized
policy.
11. Medicare Part B Drugs Without a Medicaid National Drug Rebate
Agreement (NDRA)
CMS has reviewed drugs, biologicals, and radiopharmaceuticals with
HCPCS codes that meet the definition of a covered outpatient drug
(defined at 42 CFR 447.502) and are receiving payment under Medicare
Part B. In accordance with section 1927(a)(1) of the Social Security
Act, for payment to be available under Medicare Part B for covered
outpatient drugs of a manufacturer, the manufacturer must have entered
into and have in effect a Medicaid NDRA. As of the writing of this
notice, our records indicate that the manufacturers of the single
source drugs, biologicals, and radiopharmaceuticals listed in Table 66
do not currently have a Medicaid NDRA in effect. Accordingly, if the
manufacturers, or labelers, of these products do not promptly enter
into a Medicaid NDRA, Medicare Part B payment will no longer be
available for these products, which includes payment under the OPPS and
ASC payment system. These HCPCS codes will be assigned to an OPPS
status indicator of E1, which indicates a non-payable status by
Medicare when submitted on outpatient claims (any outpatient bill
type). Similarly, these HCPCS codes will be assigned to an ASC payment
indicator of B5.
BILLING CODE 4120-01-P
[[Page 33651]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.094
BILLING CODE 4120-01-C
12. Add-on Payment for Technetium-99m (Tc-99m) Derived From
Domestically Produced Molybdenum-99 (Mo-99)
Radioisotopes are widely used in modern medical imaging,
particularly for cardiac imaging and predominantly for the Medicare
population. Technetium-99m (Tc-99m), the radioisotope used in the
majority of such diagnostic imaging services, is produced through the
radioactive decay of molybdenum-99 (Mo-99). The United States makes up
roughly half of global demand for molybdenum-99 (Mo-99). However, 100
percent of this crucial radioisotope is produced outside of the United
States. The aging reactors producing it and the fast decay of the
radioisotope over long shipping distances leave the United States
vulnerable to supply disruptions.
Congress passed the American Medical Isotopes Production Act of
2012 (AMIPA) to support the development of a reliable supply of Mo-99
produced in the United States. In support of this effort, beginning in
CY 2013, CMS finalized a policy to provide an additional payment of $10
for the marginal cost for radioisotopes produced by non-Highly Enriched
Uranium (HEU) sources (77 FR 68323). In the CY 2023 OPPS/ASC final rule
[[Page 33652]]
with comment period, we stated that we believed the conversion to non-
HEU sources of Tc-99m had reached a point where it was necessary to
reassess our policy of providing an additional payment of $10 for the
marginal cost for radioisotopes produced by non-HEU sources (87 FR
71987). As we explained in the CY 2023 OPPS/ASC final rule with comment
period (87 FR 71987), we believed that, starting in CY 2025, the
Medicare claims data utilized to set payment rates (likely CY 2023
claims data) would only include claims for diagnostic
radiopharmaceuticals that utilized non-HEU-sourced Tc-99m, meaning the
data would reflect the full cost of the Tc-99m diagnostic
radiopharmaceuticals that would be used by providers in CY 2025. As a
result, we believed there would no longer be a need for the additional
$10 add-on payment for CY 2025 or future years. As such, we adopted a
policy in the CY 2024 OPPS final rule with comment period (88 FR 81803)
to end the additional $10 add-on payment described by HCPCS code Q9969
for non-HEU-sourced Tc-99m through the end of CY 2025 to continue to
ensure adequate payment for non-HEU-sourced Tc-99m.
In the CY 2025 OPPS/ASC final rule (89 FR 94256 through 94259), we
shared that the Department of Energy and other interested parties
raised another issue affecting the domestic supply chain for Mo-99 and
Tc-99 that, left unaddressed, could cause payment inequity among
outpatient hospital providers. Foreign Mo-99 production has
historically been subsidized by foreign governments, resulting in
prices below the true cost of production. These artificially low,
foreign government-subsidized prices have created a disincentive for
domestic investments in Mo-99 production infrastructure and a barrier
to entry for new producers, including U.S. companies, which in turn has
resulted in unreliable production and periodic shortages. Unlike many
foreign producers, U.S. companies must price their products high enough
to cover the full cost of operating their production facilities. Based
in part on these differences in pricing models, U.S. companies have
experienced challenges in competing with foreign producers for
customers in the past.
Multiple companies have since developed technologies to produce Mo-
99 and are expected to enter the market within the coming years.
Additionally, U.S. companies have made significant progress towards
establishing the infrastructure needed for large-scale Mo-99
production. Currently, there is no domestic production of Mo-99.
However, once U.S. companies initiate Mo-99 production, the difference
in pricing models will likely create a payment inequity, as hospitals
purchasing Tc-99m derived from domestically produced Mo-99 would likely
pay higher prices than those purchasing Tc-99m derived from imported
Mo-99. Additionally, as domestic companies enter the market, we expect
this transition to introduce new costs into the payment system that are
not accounted for in the historical claims data.
In the CY 2025 OPPS/ASC final rule (89 FR 94256 through 94259), we
finalized our proposal to address the payment inequity resulting from
the higher cost of Tc-99m derived from domestically produced Mo-99 by
establishing a new add-on payment of $10 per dose for
radiopharmaceuticals that use Tc-99m derived from domestically produced
Mo-99 starting on January 1, 2026, using our equitable adjustment
authority under section 1833(t)(2)(E) of the Act.
We stated that the Department of Energy, National Nuclear Security
Administration (DOE/NNSA) would establish the criteria to certify
whether the Tc-99m radiopharmaceutical dose is derived from
domestically produced Mo-99 and eligible for the add-on payment, which
would be included in this CY 2026 OPPS/ASC proposed rule. We also
stated that once requirements are established defining a domestically
produced Tc-99m radiopharmaceutical, we will consider in future
rulemaking any requirements for providers to document that the Tc-99m
radiopharmaceutical used in a procedure was domestically produced and
can qualify to receive the add-on payment. While we recognized that
there may not be domestic production of Mo-99 and Tc-99m in CY 2026, we
stated that we believed it is better to have a regulatory framework for
this policy in place for when domestic production of Tc-99m
radiopharmaceuticals begins. Specifically, we believe that by having a
regulatory framework already in place, providers will be knowledgeable
about the availability of additional payments for domestically sourced
Tc-99m radiopharmaceuticals. Likewise, producers of domestic Mo-99 will
have certainty that the Medicare OPPS payment policy takes into account
the additional costs of domestic production of Mo-99.
a. Criteria for Classifying a Tc-99m Radiopharmaceutical Dose as
Domestically Produced
As mentioned above, in the CY 2025 OPPS/ASC final rule, CMS stated
that DOE/NNSA would establish the criteria to certify whether the Tc-
99m radiopharmaceutical dose is derived from domestically produced Mo-
99 and eligible for the add-on payment, which would be included in this
CY 2026 OPPS/ASC proposed rule. For purposes of this provision, DOE/
NNSA recommended, and we propose here, to define a domestically
produced dose of Tc-99m, as a dose of Tc-99m generated from
domestically produced Mo-99. Similarly, DOE/NNSA recommended, and we
propose here, to define domestically produced Mo-99 to mean Mo-99 that
was both irradiated and processed in the United States. DOE/NNSA also
recommended, and we propose here, to define ``irradiated,'' as the
process of bombarding a uranium or molybdenum target with radiation in
order to produce Mo-99, and to specify that irradiation is typically
performed with a nuclear reactor or particle accelerator. Lastly, DOE/
NNSA recommended, and we propose here, to define ``processed'' in this
context to refer to the purification of Mo-99 from irradiated material.
A dose of Tc-99m generated from Mo-99 that was irradiated or
processed outside the United States would not qualify for this add-on
payment, even if the Mo-99 was loaded into a Tc-99m generator in the
United States or if the Tc-99m was eluted \88\ at a radiopharmacy in
the United States. For example, we note that Mo-99 imported and shipped
separately to a US-based generator manufacturer or radiopharmacy, and
then loaded in a generator stateside, would not be considered
domestically produced Mo-99 for the purposes of this add-on payment.
More specifically, although the Mo-99 was loaded into a generator or
eluted in the United States, the Mo-99 was irradiated and processed
abroad, imported, and then loaded into the domestic generator, and
would therefore be excluded from this add-on payment.
---------------------------------------------------------------------------
\88\ ``Eluted'' refers to the process by which Tc-99m is
chemically separated from Mo-99 within the generator and collected
in an elution vial.
---------------------------------------------------------------------------
In this proposed rule, as part of the implementation process for
the add-on payment for Tc-99m derived from domestically produced Mo-99,
per DOE/NNSA's recommended definitions for the purpose of this add-on
payment, we propose to codify the aforementioned definitions and
references for domestically produced Mo-99 to
[[Page 33653]]
Sec. 419.49 to specify when a dose of Tc-99m generated from
domestically produced Mo-99 could be eligible for the add-on payment.
b. Coding and Documentation for the Add-On Payment for Tc-99m Derived
From Domestically Produced Mo-99
In CY 2013, we finalized a policy to provide an additional payment
of $10 for the marginal cost for radioisotopes produced by non-HEU
sources (77 FR 68323). Under this policy, hospitals reported HCPCS code
Q9969 (Tc-99m from non-highly enriched uranium source, full cost
recovery add-on per study dose) once per dose, along with any
diagnostic scan or scans furnished using Tc-99m, as long as the Tc-99m
doses used could be certified by the hospital to be at least 95 percent
derived from non-HEU sources (77 FR 68323).
In this rule, we propose to establish new HCPCS C-code C917X (Tc-
99m from domestically produced non-HEU Mo-99, [minimum 50 percent],
full cost recovery add-on, per study dose), effective January 1, 2026.
Similar to the implementation plan for the non-HEU add-on payment
policy and the reporting of the corresponding HCPCS code Q9969,
hospitals will be able to report new HCPCS C-code C917X once per dose,
along with any diagnostic scan or scans furnished using Tc-99m derived
from domestically produced Mo-99. Hospitals can bill this add-on code
if the hospital can certify that at least 50 percent of the Mo-99 in
the Tc-99m generator to produce the Tc-99m was domestically produced
Mo-99.
Similar to the non-HEU add-on payment certification and tracking
requirement, we expect that hospitals requesting this additional
payment will perform standard due diligence to ensure that their claims
are supported by internal records. For example, we believe that
facilities could accept a tracking mechanism by a supplier (invoice,
label, contract, among others) to track a dose that has been labeled or
claimed as both irradiated and processed in the United States as
satisfactory proof for the purposes of the facility with minimum
administrative burden. We note that the use of the word ``certify'' in
this subsection is meant only to indicate a formal statement by one
party to assure another party of the source and composition.
c. Comment Solicitation on the Add-On Payment for Tc-99m Derived From
Domestically Produced Mo-99
CMS aims to account for the per-dose cost of Tc-99m derived from
domestically produced Mo-99 while limiting administrative burden for
hospitals and protecting the Medicare trust fund. We are seeking
comment on the following questions:
Please provide any insight regarding the irradiation and
processing required to produce Mo-99 that may be relevant.
As we mentioned in the CY 2025 OPPS/ASC final rule,
available information from the Organization for Economic Co-operation
and Development, Nuclear Energy Agency (OECD/NEA) supports an add-on
payment amount of $10 as appropriate to address the cost of Tc-99m
derived from domestically produced Mo-99 for hospital outpatient
departments. However, we are seeking additional information that could
further inform the cost differentials between radioisotopes derived
from domestic and foreign-produced Mo-99, including, but not limited
to, production, transportation, and storage costs that outpatient
hospital departments may incur that would not be accounted for in
historical claims data. CMS may consider reevaluating the amount of the
add-on payment if we receive new, substantial information to inform
these cost differential factors of Tc-99m derived from domestically
produced Mo-99.
The threshold for billing the Tc-99m add-on code in this
proposed rule is that 50 percent of the Mo-99 used in the Tc-99m
generator to produce the Tc-99m was domestically produced Mo-99. Is
this the appropriate threshold to use? What are some additional factors
that CMS may consider when defining the eligibility threshold?
What forms and levels of documentation are most viable and
efficient for tracking and certifying if the Mo-99 and Tc-99m were
domestically produced?
What additional steps can CMS take to reduce
administrative burden or improve tracking of domestically produced Mo-
99 for purposes of this add-on payment?
C. Notice of Intent To Conduct Medicare OPPS Drugs Acquisition Cost
Survey
As noted above, section 1833(t)(14)(A)(iii) requires the Secretary
to set payment rates for specified covered outpatient drugs (SCODs)
\89\ beginning in 2006 at the amount the Secretary determines to be the
average acquisition cost for the drug for that year, at least when
certain hospital acquisition cost survey data is available. To collect
the cost survey data for the Secretary to use for 2006 payment rates,
section 1833(t)(14)(D)(i)(I) of the Act required the Comptroller
General of the United States to conduct a survey in each of 2004 and
2005 to determine the hospital acquisition cost for each SCOD. To
inform payment rates in later years, section 1833(t)(14)(D)(ii)
requires the Secretary periodically to conduct surveys of hospital
acquisition costs for each SCOD. In developing that survey, section
1833(t)(14)(D)(i)(II) requires the Secretary to take into account
certain recommendations from the Comptroller General regarding
frequency and methodology of subsequent surveys.
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\89\ For the definition of a SCOD, see section 1833(t)(14)(B) of
the Act at https://www.ssa.gov/OP_Home/ssact/title18/1833.htm.
---------------------------------------------------------------------------
The GAO conducted the required surveys in 2004 and 2005, and, in
reporting the results in 2006, recommended that the Secretary
thereafter validate, ``on an occasional basis--possibly every 5 or 10
years--ASP data that manufacturers report to CMS for developing SCOD
payment rates.'' \90\ CMS has not yet conducted a survey of the
acquisition costs for each SCOD for all hospitals paid under the OPPS.
Additionally, on April 18, 2025, President Trump signed Executive Order
(E.O.) 14273, ``Lowering Drug Prices by Once Again Putting Americans
First.'' \91\ Section 5 of the E.O., ``Appropriately Accounting for
Acquisition Costs of Drugs in Medicare,'' directs the Secretary of HHS
to publish in the Federal Register a plan to conduct a survey under
section 1833(t)(14)(D)(ii) of the Act so he can determine the hospital
acquisition cost for covered outpatient drugs at hospital outpatient
departments.
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\90\ https://www.gao.gov/assets/gao-06-372.pdf.
\91\ https://www.govinfo.gov/content/pkg/FR-2025-04-18/pdf/2025-06837.pdf.
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Accordingly, under section 1833(t)(14)(D)(ii) of the Act, we will
be conducting a survey of the acquisition costs for each separately
payable drug acquired by all hospitals paid under the OPPS, including
SCODs, and drugs and biologicals CMS historically treats as SCODs. This
survey will be open starting at the end of CY 2025 to early CY 2026. We
have reviewed and taken into account the Comptroller General's
recommendations regarding the frequency and methodology of these
surveys in developing our proposed survey, and we intend for the survey
to be completed in time for the survey results to be used to inform
policy making beginning with the CY 2027 OPPS/ASC proposed rule. We
intend to propose and seek comment on any payment rates for SCODs based
on the survey results in CY 2027 rulemaking.
Under section 1833(t)(14)(D)(iii) of the Act, the surveys must have
a large
[[Page 33654]]
sample of hospitals that is sufficient to generate a statistically
significant estimate of the average hospital acquisition cost for each
specified covered outpatient drug. Consequently, we will seek an
adequate response rate to the survey and surveyed hospitals have an
obligation to respond to the survey. Hospitals have ample notice in
this proposed rule regarding the intent and the details of the OPPS
Drug Acquisition Cost Survey, so we expect all hospitals will submit
their acquisition costs in a timely manner to CMS. We understand that
hospitals have significant drug acquisition costs, and so (consistent
with the Comptroller's General experience conducting earlier drug
acquisition cost surveys in which 83 percent of the hospitals surveyed
provided usable data \92\), we anticipate hospitals would want to
respond to this survey to demonstrate to CMS these costs. We request
comment from readers on whether we should make responding to the survey
a mandatory requirement of all hospitals paid under the OPPS through
1833(t)(14)(D)(iii) of the Act.
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\92\ https://www.gao.gov/assets/gao-06-372.pdf. Page 7.
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We also welcome comment on how we might propose to interpret non-
responses to the survey. For example, since a failure on the part of a
hospital to respond to the survey could suggest that the hospital has
minimal acquisition costs, or has lower acquisition costs than an
otherwise similar hospital that responds to the survey and so is
withholding its response strategically, we might, if the data so
suggests, determine that groups of hospitals who do not respond to the
survey have lower acquisition costs for SCODs than their otherwise
similar counterparts under section 1833(t)(14)(A)(iii)(I) of the Act.
In such instances, we would consider various appropriate ways, taking
into account the hospital acquisition cost survey data, to determine
the average acquisition cost. One method we might consider, depending
on the cost survey data, could be to use the lowest acquisition cost
reported among otherwise similar responding hospitals as a proxy for
the average acquisition costs for hospitals that do not respond to the
survey. We might also consider supplemental data sources to inform our
determination of average acquisition costs for hospitals for whom we
lack cost acquisition survey data. For example, we might consider
using, as available, pricing from the Federal Supply Schedule (FSS);
\93\ 340B ceiling price; \94\; ASP plus 6 percent, 0 percent or another
percentage; or other recognized drug pricing for payment of hospitals
that do not respond to the survey.
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\93\ FSS pricing from the Veteran Affairs' (VA's) pharmaceutical
pricing database is publicly available at the NDC level and
published at https://www.va.gov/opal/nac/fss/pharmPrices.asp.
\94\ Section 340B(a)(1) of the Public Health Service Act.
https://www.hrsa.gov/about/faqs/what-difference-between-340b-ceiling-price-package-adjusted-price-which-are-both-published-340b.
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We could also consider a hospital's non-response to the survey when
determining how to package drug costs for particular hospital groups.
Under section 1833(t)(2)(B) of the Act, the OPPS establishes groups of
covered HOPD services, namely APC groups, and uses them as the basic
unit of payment. In the case of much of the care paid under the OPPS,
we view a complete service as potentially being reported by a
combination of two or more HCPCS codes, rather than a single code, and
establish payment policies that support this view. Ideally, we would
consider a complete HOPD service to be the totality of care furnished
in a hospital outpatient encounter or in an episode of care. We
generally package payment for items and services that are typically
ancillary and supportive into the payment for the primary diagnostic or
therapeutic modalities in which they are used rather than pay for them
separately. As noted previously, if a hospital does not submit its
acquisition cost data, it could suggest that the hospital has minimal
acquisition costs. If the hospital has minimal acquisition costs for
drugs, that could support viewing those costs as ancillary or
supportive, and we might, if the data supports it, conclude that
hospitals who do not report their drug acquisition costs lack
meaningful additional, marginal costs related to their acquisition of
these drugs and, as such, their drugs costs should not be paid
separately but rather should be packaged into the payment for the
associated service.
We seek comment broadly on how to approach payment to hospitals for
drugs usually paid under the OPPS absent a hospital's response to the
survey.
Consistent with E.O. 14273 and Paperwork Reduction Act
requirements, additional details of this survey can be found in section
XXII. of this proposed rule.
VI. Proposed Estimate of OPPS Transitional Pass-Through Spending for
Drugs, Biologicals, Radiopharmaceuticals, and Devices
A. Amount of Additional Payment and Limit on Aggregate Annual
Adjustment
Section 1833(t)(6)(E) of the Act limits the total projected amount
of transitional pass-through payment for drugs, biologicals, and
categories of devices for a given year to an ``applicable percentage,''
currently not to exceed 2.0 percent of total program payments estimated
to be made for all covered services under the OPPS furnished for that
year. If we estimate before the beginning of the calendar year that the
total amount of pass-through payments in that year would exceed the
applicable percentage, section 1833(t)(6)(E)(iii) of the Act requires a
uniform prospective reduction in the amount of each of the transitional
pass-through payments made in that year to ensure that the limit is not
exceeded. We estimate the pass-through spending to determine whether
payments exceed the applicable percentage and the appropriate pro rata
reduction to the conversion factor for the projected level of pass-
through spending in the following year to ensure that total estimated
pass-through spending for the prospective payment year is budget
neutral, as required by section 1833(t)(6)(E) of the Act.
For devices, developing a proposed estimate of pass-through
spending in CY 2026 entails estimating spending for two groups of
items. The first group of items consists of device categories that are
currently eligible for pass-through payment and that will continue to
be eligible for pass-through payment in CY 2026. The CY 2008 OPPS/ASC
final rule with comment period (72 FR 66778) describes the methodology
we have used in previous years to develop the pass-through spending
estimate for known device categories continuing into the applicable
update year. The second group of items consists of devices that we know
are newly eligible, or project may be newly eligible, for device pass-
through payment in the remaining quarters of CY 2025 or beginning in CY
2026. The sum of the proposed CY 2026 pass-through spending estimates
for these two groups of device categories equals the proposed total CY
2026 pass-through spending estimate for device categories with pass-
through payment status. We determined the device pass-through estimated
payments for each device category based on the amount of payment as
required by section 1833(t)(6)(D)(ii) of the Act, and as
[[Page 33655]]
outlined in previous rules, including the CY 2025 OPPS/ASC final rule
with comment period (89 FR 94259 through 94261). We note that,
beginning in CY 2010, the pass-through evaluation process and pass-
through payment methodology for implantable biologicals newly approved
for pass-through payment beginning on or after January 1, 2010, that
are surgically inserted or implanted (through a surgical incision or a
natural orifice) use the device pass-through process and payment
methodology (74 FR 60476). As has been our past practice (76 FR 74335),
we include an estimate of any implantable biologicals eligible for
pass-through payment in our estimate of pass-through spending for
devices. Similarly, we finalized a policy in CY 2015 that applications
for pass-through payment for skin substitutes and similar products be
evaluated using the medical device pass-through process and payment
methodology (76 FR 66885 through 66888). Therefore, as we did beginning
in CY 2015, for CY 2026, we also propose to include an estimate of any
skin substitutes and similar products in our estimate of pass-through
spending for devices.
For drugs and biologicals eligible for pass-through payment,
section 1833(t)(6)(D)(i) of the Act establishes the pass-through
payment amount as the amount by which the amount authorized under
section 1842(o) of the Act (or, if the drug or biological is covered
under a competitive acquisition contract under section 1847B of the
Act, an amount determined by the Secretary equal to the average price
for the drug or biological for all competitive acquisition areas and
year established under such section as calculated and adjusted by the
Secretary) exceeds the portion of the otherwise applicable fee schedule
amount that the Secretary determines is associated with the drug or
biological. Consistent with current policy, we propose to apply a rate
of ASP plus 6 percent to most drugs and biologicals for CY 2026, and
therefore our estimate of drug and biological pass-through payment for
CY 2026 for this group of items is $15.2 million.
Payment for certain drugs,\95\ specifically contrast agents without
pass-through payment status, is packaged into payment for the
associated procedures, and these products are not separately paid. In
addition, we policy-package non-pass-through drugs and biologicals that
function as supplies when used in a diagnostic test or procedure unless
a high-cost diagnostic radiopharmaceutical with a per-day cost greater
than the proposed per-day threshold referenced in section II.A.3.c. of
this proposed rule is used for the test or procedure. We policy-package
all drugs and biologicals that function as supplies when used in a
surgical procedure or for anesthesia, and other categories of drugs and
biologicals, as discussed in section V.B.1.c. of this proposed rule.
Consistent with current policy, for CY 2026, we propose that policy-
packaged drugs and biologicals with pass-through payment status will be
paid at ASP+6 percent, like other pass-through drugs and biologicals
less the policy-packaged drug APC offset amount described below. Our
estimate of pass-through payment for policy-packaged drugs and
biologicals with pass-through payment status approved prior to CY 2026
is not $0. This is because the pass-through payment amount and the fee
schedule amount associated with the drug or biological will not be the
same, unlike for separately payable drugs and biologicals. In the CY
2024 OPPS/ASC final rule with comment period (88 FR 81774 through
81776), we discussed our policy to determine if the costs of certain
policy-packaged drugs or biologicals are already packaged into the
existing APC structure. If we determine that a policy-packaged drug or
biological approved for pass-through payment resembles predecessor
drugs or biologicals already included in the costs of the APCs that are
associated with the drug receiving pass-through payment, we offset the
amount of pass-through payment for the policy-packaged drug or
biological. For these drugs or biologicals, the APC offset amount is
the portion of the APC payment for the specific procedure performed
with the pass-through drug or biological, which we refer to as the
policy-packaged drug APC offset amount. Consistent with current policy
described in section V.A.5. of this proposed rule, if we determine that
an offset is appropriate for a specific policy-packaged drug or
biological receiving pass-through payment, we propose to reduce our
estimate of pass-through payments for these drugs or biologicals by the
APC offset amount.
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\95\ In the CY 2025 OPPS/ASC final rule with comment period, we
finalized the high-cost diagnostic radiopharmaceuticals policy to
separately pay those products when the per-day costs are greater
than a threshold. Please refer to section II.A.3.c. of this proposed
rule for more information regarding this policy.
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Similar to pass-through spending estimates for devices, the first
group of drugs and biologicals requiring a pass-through payment
estimate consists of those products that were recently made eligible
for pass-through payment and that will continue to be eligible for
pass-through payment in CY 2026. The second group contains drugs and
biologicals that we know are newly eligible, or project will be newly
eligible, in CY 2026. The sum of the CY 2026 pass-through spending
estimates for these two groups of drugs and biologicals equals the
total CY 2026 pass-through spending estimate for drugs and biologicals
with pass-through payment status.
B. Proposed Estimate of Pass-Through Spending for CY 2026
For CY 2026, we propose to set the applicable pass-through payment
percentage limit at 2.0 percent of the total projected OPPS payments
for CY 2026, consistent with section 1833(t)(6)(E)(ii)(II) of the Act
and our OPPS policy from CY 2004 through CY 2025 (89 FR 94260). The
pass-through payment percentage limit is calculated using pass-through
spending estimates for devices and for drugs and biologicals.
For the first group of devices, consisting of device categories
that are currently eligible for pass-through payment and will continue
to be eligible for pass-through payment in CY 2026, there are 14 active
categories for CY 2026. The active categories are described by HCPCS
codes C1600, C1601, C1602, C1603, C1604, C1605, C1606, C8000, C1735,
C1736, C1737, C1738, C1739, and C9610. Based on information from the
device manufacturers, we estimated that HCPCS code C1600 will cost $0.3
million in pass-through expenditures in CY 2026, HCPCS code C1601 will
cost $5.0 million in pass-through expenditures in CY 2026, HCPCS code
C1602 will cost $0.2 million in pass-through expenditures in CY 2026,
HCPCS code C1603 will cost $0.1 million in pass-through expenditures in
CY 2026, HCPCS code C1604 will cost $2.0 million in pass-through
expenditures in CY 2026, HCPCS code C1605 will cost $113.0 million in
pass-through expenditures in CY 2026, HCPCS code C1606 will cost $0.3
million in pass-through expenditures in CY 2026, HCPCS code C8000 will
cost $2.9 million in pass-through expenditures in CY 2026, HCPCS code
C1735 will cost $16.0 million in pass-through expenditures in CY 2026,
HCPCS code C1736 will cost $32.8 million in pass-through expenditures
in CY 2026, HCPCS code C1737 will cost $34.1 million in pass-through
expenditures in CY 2026, HCPCS code C1738 will cost $0.8 million in
pass-through expenditures in CY 2026,
[[Page 33656]]
HCPCS code C1739 will cost $8.5 million in pass-through expenditures in
CY 2026, and HCPCS code C9610 will cost $36.0 million in pass-through
expenditures in CY 2026. Therefore, we propose an estimate for the
first group of devices of $252.0 million.
In estimating our proposed CY 2026 pass-through spending for device
categories in the second group, we included the following: (1) device
categories that we assumed at the time of the development of the
proposed rule would be newly eligible for pass-through payment in CY
2026; (2) additional device categories that we estimated could be
approved for pass-through status after the development of this proposed
rule and before January 1, 2026; and (3) contingent projections for new
device categories established in the second through fourth quarters of
CY 2026. For CY 2026, we propose to use the general methodology
described in the CY 2008 OPPS/ASC final rule with comment period (72 FR
66778), while also taking into account recent OPPS experience in
approving new pass-through device categories. For this proposed rule,
the proposed estimate of CY 2026 pass-through spending for this second
group of device categories is $319.8 million.
To estimate proposed CY 2026 pass-through spending for drugs and
biologicals in the first group, specifically those drugs and
biologicals recently made eligible for pass-through payment and
continuing on pass-through payment status for at least one quarter in
CY 2026, we propose to use the CY 2024 Medicare hospital outpatient
claims data regarding their utilization, information provided in their
respective pass-through applications, other historical hospital claims
data, pharmaceutical industry information, and clinical information
regarding these drugs and biologicals to project the CY 2026 OPPS
utilization of the products.
For the known drugs and biologicals (excluding policy-packaged
contrast agents, drugs, biologicals, radiopharmaceuticals with per-day
costs at or below the packaging threshold that function as supplies
when used in a diagnostic test or procedure, and drugs and biologicals
that function as supplies when used in a surgical procedure) that will
be continuing on pass-through payment status in CY 2026, we estimated
the pass-through payment amount as the difference between the general
payment rate of ASP+6 percent and the payment rate for non-pass-through
drugs and biologicals that would be separately paid. Because we propose
to utilize a payment rate of ASP plus 6 percent for most separately
payable drugs and biologicals in this proposed rule, the proposed
payment rate difference between the pass-through payment amount and the
non-pass-through payment amount is $0 for this group of drugs.
Because payment for policy-packaged drugs and biologicals is
packaged if the product is not paid separately due to its pass-through
payment status, we propose to include in the CY 2026 pass-through
estimate the difference between payment for the policy-packaged drug or
biological at ASP+6 percent (or WAC+6 percent, or 95 percent of AWP, if
ASP or WAC information is not available) and the policy-packaged drug
APC offset amount, if we determine that the policy-packaged drug or
biological approved for pass-through payment resembles a predecessor
drug or biological already included in the costs of the APCs that are
associated with the drug receiving pass-through payment. Diagnostic
radiopharmaceuticals that currently have pass-through status, but would
likely be paid separately because of the policy initially established
in the CY 2025 OPPS/ASC final rule with comment period (89 FR 93953) to
separately pay for high-cost diagnostic radiopharmaceuticals with per-
day costs greater than the proposed per-day threshold and which we
propose to continue as discussed in section II.A.3.c of this proposed
rule, are not considered to be policy-packaged and therefore are not
included in this group. For this first group of policy-packaged drugs
and biologicals, we estimated a pass-through spending for CY 2026 of
$5.2 million.
To estimate proposed CY 2026 pass-through spending for drugs and
biologicals in the second group (that is, drugs and biologicals that we
knew at the time of development of this proposed rule were newly
eligible or recently became eligible for pass-through payment in CY
2025, additional drugs and biologicals that we estimated could be
approved for pass-through status subsequent to the development of this
proposed rule and before January 1, 2026, and projections for new drugs
and biologicals that could be initially eligible for pass-through
payment in the second through fourth quarters of CY 2026), we propose
to use utilization estimates from pass-through applicants,
pharmaceutical industry data, clinical information, recent trends in
the per unit ASPs of hospital outpatient drugs, and projected annual
changes in service volume and intensity as our basis for making the CY
2026 pass-through payment estimate. We also propose to consider the
most recent OPPS experience in approving new pass-through drugs and
biologicals. Using our proposed methodology for estimating CY 2026
pass-through payments for this second group of drugs, we calculated a
proposed spending estimate for this second group of drugs and
biologicals of approximately $10 million.
We estimate for this proposed rule that the amount of pass-through
spending for the device categories and the drugs and biologicals that
are continuing to receive pass-through payment in CY 2026 and the
amount of pass-through spending for those device categories, drugs, and
biologicals that first become eligible for pass-through payment during
CY 2026 would be approximately $587.0 million (approximately $571.8
million for device categories and approximately $15.2 million for drugs
and biologicals), which represents only 0.59 percent of total projected
OPPS payments for CY 2026 (approximately $100 billion). Therefore, we
estimate that pass-through spending in CY 2026 will not exceed the 2.0
percent of total projected OPPS CY 2026 program spending limit provided
for in section 1833(t)(6)(E) of the Act.
VII. OPPS Payment for Hospital Outpatient Visits and Critical Care
Services
For CY 2026, we propose to continue our current clinic and
emergency department (ED) hospital outpatient visits payment policies.
For a description of these policies, we refer readers to the CY 2016
OPPS/ASC final rule with comment period (80 FR 70298). We also propose
to continue our payment policy for critical care services for CY 2026.
For a description of this policy, we refer readers to the CY 2016 OPPS/
ASC final rule with comment period (80 FR 70298), and for the history
of this payment policy, we refer readers to the CY 2014 OPPS/ASC final
rule with comment period (78 FR 75043).
As we stated in the CY 2022 OPPS/ASC final rule with comment period
(86 FR 63663), the volume control method for clinic visits furnished by
excepted off-campus provider-based departments (PBDs) applies for CY
2022 and subsequent years. More specifically, we finalized a policy to
continue to utilize a PFS-equivalent payment rate for the hospital
outpatient clinic visit service described by HCPCS code G0463 when it
is furnished by these departments for CY 2022 and subsequent years. The
PFS-equivalent rate for CY 2026 is 40 percent of the proposed OPPS
payment. Under this policy, these departments will be paid
approximately 40 percent
[[Page 33657]]
of the OPPS rate for the clinic visit service in CY 2026. For CY 2026,
we propose to implement a volume control method for additional services
furnished by excepted PBDs. For more information on this proposal, we
refer readers to section X.A. of this proposed rule.
In the CY 2023 OPPS/ASC final rule with comment period (87 FR
71748), we finalized a policy that excepted off-campus PBDs
(departments that bill the modifier ``PO'' on claim lines) of rural
Sole Community Hospitals (SCHs), as described under 42 CFR 412.92 and
designated as rural for Medicare payment purposes, are exempt from the
clinic visit payment policy that applies a PFS-equivalent payment rate
for the clinic visit service, as described by HCPCS code G0463, when
provided at an off-campus PBD excepted from section 1833(t)(21) of the
Act. For the full discussion of this policy, we refer readers to the CY
2023 OPPS/ASC final rule with comment period (87 FR 72047 through
72051). For CY 2026, we propose to exempt excepted off-campus PBDs
(departments that bill the modifier ``PO'' on claim lines) of rural
SCHs, as described under 42 CFR 412.92 and designated- as rural for
Medicare payment purposes, from any additional services subject to our
volume control method payment policy. For more information on this
proposal, we refer readers to section X.A. of this proposed rule.
VIII. Payment for Partial Hospitalization and Intensive Outpatient
Services
This section discusses payment for partial hospitalization services
as well as intensive outpatient services. Since CY 2000, Medicare has
paid for partial hospitalization services under the OPPS. Beginning in
CY 2024, as authorized by section 4124 of the Consolidated
Appropriations Act (CAA), 2023 (Pub. L. 117-328), Medicare began paying
for intensive outpatient services furnished by hospital outpatient
departments, community mental health centers, federally qualified
health centers, and rural health clinics in addition to opioid
treatment programs. Additional background on the partial
hospitalization and intensive outpatient benefits is included in the
following paragraphs.
A. Background
1. Partial Hospitalization
A partial hospitalization program (PHP) is an intensive outpatient
program of psychiatric services provided as an alternative to inpatient
psychiatric care for individuals who have an acute mental illness,
which includes, but is not limited to, conditions such as depression,
schizophrenia, and substance use disorders (SUD). Section 1861(ff)(1)
of the Act defines partial hospitalization services as the items and
services described in paragraph (2) prescribed by a physician and
provided under a program described in paragraph (3) under the
supervision of a physician pursuant to an individualized, written plan
of treatment established and periodically reviewed by a physician (in
consultation with appropriate staff participating in such program),
which sets forth the physician's diagnosis, the type, amount,
frequency, and duration of the items and services provided under the
plan, and the goals for treatment under the plan. Section 1861(ff)(2)
of the Act describes the items and services included in partial
hospitalization services. Section 1861(ff)(3)(A) of the Act specifies
that a PHP is a program furnished by a hospital to its outpatients or
by a community mental health center (CMHC), as a distinct and organized
intensive ambulatory treatment service, offering less than 24-hour-
daily care, in a location other than an individual's home or inpatient
or residential setting. Section 1861(ff)(3)(B) of the Act defines a
CMHC for purposes of this benefit. We refer readers to sections
1833(t)(1)(B)(i), 1833(t)(2)(B), 1833(t)(2)(C), and 1833(t)(9)(A) of
the Act and 42 CFR 419.21, for additional information regarding PHP.
PHP policies and payment have been addressed under OPPS since CY
2000. In CY 2008, we began efforts to strengthen the PHP benefit
through extensive data analysis, along with policy and payment changes,
by implementing two refinements to the methodology for computing the
PHP median. For a detailed discussion on these policies, we refer
readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR
66670 through 66676). In CY 2009, we implemented several regulatory,
policy, and payment changes. For a detailed discussion on these
policies, we refer readers to the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68688 through 68697). In CY 2010, we retained the
two-tier payment approach for partial hospitalization services and used
only hospital-based PHP data in computing the PHP APC per diem costs,
upon which PHP APC per diem payment rates are based (74 FR 60556
through 60559). In CY 2011 (75 FR 71994), we established four separate
PHP APC per diem payment rates: two for CMHCs (APC 0172 and APC 0173)
and two for hospital-based PHPs (APC 0175 and APC 0176). We also
instituted a 2-year transition period for CMHCs to the CMHC APC per
diem payment rates. For a detailed discussion, we refer readers to
section X.B. of the CY 2011 OPPS/ASC final rule with comment period (75
FR 71991 through 71994). In CY 2012, we determined the relative payment
weights for partial hospitalization services provided by CMHCs based on
data derived solely from CMHCs and the relative payment weights for
partial hospitalization services provided by hospital-based PHPs based
exclusively on hospital data (76 FR 74348 through 74352). In the CY
2013 OPPS/ASC final rule with comment period, we finalized our proposal
to base the relative payment weights that underpin the OPPS APCs,
including the four PHP APCs (APCs 0172, 0173, 0175, and 0176), on
geometric mean costs rather than on the median costs. For a detailed
discussion on this policy, we refer readers to the CY 2013 OPPS/ASC
final rule with comment period (77 FR 68406 through 68412).
In the CY 2014 OPPS/ASC proposed rule (78 FR 43621 and 43622) and
CY 2015 OPPS/ASC final rule with comment period (79 FR 66902 through
66908), we continued to apply our established policies to calculate the
four PHP APC per diem payment rates based on geometric mean per diem
costs using the most recent claims data for each provider type. For a
detailed discussion on this policy, we refer readers to the CY 2014
OPPS/ASC final rule with comment period (78 FR 75047 through 75050). In
the CY 2016 OPPS/ASC final rule with comment period (80 FR 70453
through 70467), we described our extensive analysis of the claims and
cost data and ratesetting methodology, corrected a cost inversion that
occurred in the final rule data with respect to hospital-based PHP
providers, and renumbered the PHP APCs. In the CY 2017 OPPS/ASC final
rule with comment period (81 FR 79687 through 79691), we continued to
apply our established policies to calculate the PHP APC per diem
payment rates based on geometric mean per diem costs and finalized a
policy to combine the Level 1 and Level 2 PHP APCs for CMHCs and for
hospital-based PHPs. We also implemented an eight-percent outlier cap
for CMHCs to mitigate potential outlier billing vulnerabilities. For a
comprehensive description of PHP payment policy, including a detailed
methodology for determining PHP per
[[Page 33658]]
diem amounts, we refer readers to the CY 2016 and CY 2017 OPPS/ASC
final rules with comment period (80 FR 70453 through 70455 and 81 FR
79678 through 79680, respectively).
In the CYs 2018 and 2019 OPPS/ASC final rules with comment period
(82 FR 59373 through 59381 and 83 FR 58983 through 58998,
respectively), we continued to apply our established policies to
calculate the PHP APC per diem payment rates based on geometric mean
per diem costs, designated a portion of the estimated 1.0 percent
hospital outpatient outlier threshold specifically for CMHCs, and
proposed updates to the PHP allowable HCPCS codes. We finalized these
proposals in the CY 2020 OPPS/ASC final rule with comment period (84 FR
61352).
In the CY 2020 OPPS/ASC final rule with comment period (84 FR 61339
through 61350), we finalized a proposal to use the calculated CY 2020
CMHC geometric mean per diem cost and the calculated CY 2020 hospital-
based PHP geometric mean per diem cost, but with a cost floor equal to
the CY 2019 final geometric mean per diem costs as the basis for
developing the CY 2020 PHP APC per diem rates. Also, we continued to
designate a portion of the estimated 1.0 percent hospital outpatient
outlier threshold specifically for CMHCs, consistent with the
percentage of projected payments to CMHCs under the OPPS, excluding
outlier payments.
In the April 30, 2020 interim final rule with comment (85 FR 27562
through 27566), effective as of March 1, 2020 and for the duration of
the COVID-19 Public Health Emergency (PHE), hospital and CMHC staff
were permitted to furnish certain outpatient therapy, counseling, and
educational services (including certain PHP services), incident to a
physician's services, to beneficiaries in temporary expansion
locations, including the beneficiary's home, as long as the location
met all conditions of participation to the extent not waived. A
hospital or CMHC could furnish such services using telecommunications
technology to a beneficiary in a temporary expansion location if that
beneficiary was registered as an outpatient. In the CY 2023 OPPS/ASC
final rule with comment period (87 FR 72247), we confirmed that these
provisions applied only for the duration of the COVID-19 PHE. On May
11, 2023, the COVID-19 PHE ended, and accordingly, these flexibilities
ended as well.
In the CY 2021 OPPS/ASC final rule with comment period (85 FR 86073
through 86080), we continued our current methodology to utilize cost
floors, as needed. In the CY 2022 OPPS/ASC final rule with comment
period (86 FR 63665 and 63666), as a result of the COVID-19 PHE, we
finalized our proposal to calculate the PHP per diem costs using the
year of claims consistent with the calculations that would be used for
other OPPS services, by using the CY 2019 claims and the cost reports
that were used for CY 2021 final rulemaking to calculate the CY 2022
PHP per diem costs. In addition, for CY 2022 and subsequent years, we
finalized our proposal to use cost and charge data from the Hospital
Cost Report Information System (HCRIS) as the source for the CMHC cost-
to-charge ratios (CCRs), instead of using the Outpatient Provider
Specific File (OPSF) (86 FR 63666).
In the CY 2023 OPPS/ASC final rule with comment period (87 FR
71995), we finalized our proposal to use the latest available CY 2021
claims but use the cost information from prior to the COVID-19 PHE for
calculating the CY 2023 CMHC and hospital-based PHP APC per diem costs.
The application of the OPPS standard methodology, including the effect
of budget neutralizing all other OPPS policy changes unique to CY 2023,
resulted in the final calculated CMHC PHP APC payment rate being
unexpectedly lower than the CY 2022 final CMHC PHP APC rate. Therefore,
we finalized utilizing the equitable adjustment authority of section
1833(t)(2)(E) of the Act to appropriately pay for CMHC PHP services at
the same payment rate as for CY 2022, that is, $142.70. In addition, we
clarified the payment under the OPPS for new HCPCS codes that designate
non-PHP services provided for the purposes of diagnosis, evaluation, or
treatment of a mental health disorder and are furnished to
beneficiaries in their homes by clinical staff of the hospital that
would not be recognized as PHP services; however, none of the PHP
regulations would preclude a patient that is under a PHP plan of care
from receiving other reasonable and medically necessary non-PHP
services from a hospital (87 FR 72001 and 72002).
In the CY 2024 OPPS/ASC final rule with comment period (88 FR
81811), we revised the regulation at Sec. 424.24(e)(1)(i) to require
the physician certification for PHP services to include a certification
that the patient requires such services for a minimum of 20 hours per
week, as required by section 1861(ff)(1) of the Act, as amended by
section 4124(a) of Division FF of the CAA, 2023. In addition, we
modified the regulations for PHP at Sec. 410.43 to include references
to SUD. In the same CY 2024 OPPS/ASC final rule with comment period, we
also established separate payment rates for PHP days with 3 services
and days with 4 or more services. Accordingly, we established four
separate PHP APC per diem payment rates: one for CMHCs for 3-service
days and another for CMHCs for 4-service days (APC 5853 and APC 5854,
respectively), and one for hospital-based PHPs for 3-service days and
another for hospital--based PHPs for 4-service days (APC 5863 and APC
5864, respectively). We also finalized a policy to utilize the separate
CMHC rates for 3-service and 4-service PHP days as the Medicare
Physician Fee Schedule (MPFS) rates, depending upon whether a
nonexcepted- off-campus hospital outpatient department furnishes 3 or 4
PHP services in a day. Lastly, we finalized several changes beginning
in CY 2024 to align coding, billing, and payment between PHPs and
intensive outpatient programs.
In the CY 2025 OPPS/ASC final rule with comment period (89 FR 94266
through 94268), we maintained the coding and billing policies for PHP
as established in the CY 2024 OPPS/ASC final rule with comment period.
2. Intensive Outpatient Program Services
Section 4124(b) of the CAA, 2023 established Medicare coverage for
intensive outpatient services effective for items and services
furnished on or after January 1, 2024. An intensive outpatient program
(IOP) is a distinct and organized program of psychiatric services for
individuals who have an acute mental illness, which includes, but is
not limited to, conditions such as depression, schizophrenia, and SUD.
Intensive outpatient services are not required to be provided in lieu
of inpatient hospitalization. Section 1861(ff)(4) of the Act defines
intensive outpatient services as the items and services described in
paragraph (2) prescribed by a physician for an individual determined
(not less frequently than every other month) by a physician to have a
need for such services for a minimum of 9 hours per week and provided
under a program described in paragraph (3) under the supervision of a
physician pursuant to an individualized, written plan of treatment
established and periodically reviewed by a physician (in consultation
with appropriate staff participating in such program), which plan sets
forth the physician's diagnosis, the type, amount, frequency, and
duration of the items and services provided under the plan, and the
goals for treatment under the plan. Section 1861(ff)(2) of the Act
describes the items and services included in intensive
[[Page 33659]]
outpatient services. Section 1861(ff)(4)(C) of the Act specifies that
an IOP is a program furnished by a hospital to its outpatients, by a
CMHC, by a Federally qualified health center (FQHC), or by a rural
health clinic (RHC) as a distinct and organized intensive ambulatory
treatment service, offering less than 24-hour-daily care, in a location
other than an individual's home or inpatient or residential setting.
Section 1861(ff)(3)(B) of the Act defines a CMHC for purposes of this
benefit. We refer readers to sections 1833(t)(1)(B)(i), 1833(t)(2)(B),
1833(t)(2)(C), and 1833(t)(9)(A) of the Act and 42 CFR 419.21, for
additional information regarding IOP.
In the CY 2024 OPPS/ASC final rule with comment period (88 FR 81812
through 81857), we established payment and program requirements for the
IOP benefit furnished by a hospital to its outpatients, or by a CMHC,
an FQHC, or an RHC. In addition, we established Medicare Part B
coverage for IOP services provided by Opioid Treatment Programs (OTPs)
for the treatment of opioid use disorder (OUD).
Consistent with the statutory definition of intensive outpatient
services under section 1861(ff)(2) of the Act, we finalized regulations
at 42 CFR 410.44 to set forth the conditions and exclusions applicable
for intensive outpatient services, and at Sec. 424.24 to set forth the
content of the certification and plan of treatment requirements for
intensive outpatient services. We also revised certain existing
regulations at Sec. Sec. 410.2, 410.3, 410.10, 410.27, 410.150, and
419.21 to add a regulatory definition of intensive outpatient services
and to include intensive outpatient services in the regulations for
medical and other health services paid for under Medicare Part B, and
in the case of Sec. 419.21, under the OPPS. Additionally, we created
regulations at Sec. 410.111 to establish the requirements for coverage
of IOP services furnished in CMHCs, and at Sec. 410.173 to establish
conditions of payment for IOP services furnished in CMHCs. Lastly, we
revised Sec. 410.155 to exclude IOP services from the outpatient
mental health treatment limitation, consistent with the statutory
requirement of section 1833(c)(2) of the Act, as amended by section
4124(b)(3) of the CAA, 2023.
In addition, as discussed in greater detail in the following
sections, we established coding, billing, and payment policies for IOP
that align with the policies established for PHP provided in the same
settings. Specifically, we established four separate IOP APC per diem
payment rates at the same rates we proposed for the PHP APCs: one for
CMHCs for 3-service days and another for CMHCs for 4-service days (APC
5851 and APC 5852, respectively), and one for hospital-based IOPs for
3-service days and another for hospital-based IOPs for 4-service days
(APC 5861 and APC 5862, respectively). Similar to the policy finalized
for PHP, we finalized a policy to utilize the CMHC rates for 3-service
and 4-service IOP days as the MPFS rates, depending upon whether a
nonexcepted hospital outpatient department furnishes 3 or 4 IOP
services in a day.
For IOP services provided by an RHC or FQHC, we established a 3-
service per day payment rate based on the same rate as APC 5861, which
is the 3-service hospital-based IOP rate (Sec. 405.2462(j)). In the CY
2025 PFS final rule, we established a 4 or more services per day
payment rate for an IOP provided by an RHC or FQHC based on the same
rate as APC 5862, which is the 4 or more services hospital-based IOP
rate (89 FR 98017 and 98018). Information regarding payment policies
for IOP services furnished by FQHCs and RHCs, including information
regarding proposed CY 2026 policies for those settings, can be found in
the MPFS proposed rule, which is published elsewhere in the Federal
Register.
Furthermore, in the CY 2024 OPPS/ASC final rule, we established a
payment adjustment for IOPs provided by an OTP based on three times the
payment rate for APC 5861 beginning in CY 2024 (Sec.
410.67(d)(4)(i)(F)). We finalized regulations at Sec. 410.67(d)(4)(ii)
to add that the payment amount for OTP intensive outpatient services
will be geographically adjusted using the Geographic Adjustment Factor
(GAF) described in Sec. 414.26. Lastly, we amended Sec.
410.67(d)(4)(iii) to add that payment for OTP intensive outpatient
services is updated annually using the Medicare Economic Index
described in Sec. 405.504(d). Payment rates for IOP provided in the
OTP setting are updated as part of the OTP fee schedule and are not
addressed in this CY 2026 OPPS/ASC proposed rule.
Lastly, in the CY 2025 OPPS/ASC final rule with comment period (89
FR 94266 through 94268), we maintained the coding and billing policies
for IOP as established in the CY 2024 OPPS/ASC final rule with comment
period.
B. Coding and Billing for PHP and IOP Services Under the OPPS
In the CY 2024 OPPS/ASC final rule with comment period, we
finalized a billing requirement that all providers use condition code
41 to indicate that a claim is for partial hospitalization services and
use condition code 92 to identify intensive outpatient claims,
effective January 1, 2024. Since the statutory definitions of both IOP
and PHP generally include the same types of items and services covered,
we stated in the CY 2024 OPPS/ASC final rule with comment period that
we believe it is appropriate to align the programs using a consistent
list of services, so that level of intensity would be the only
differentiating factor between partial hospitalization services and
intensive outpatient services. The use of condition codes 41 for PHP
claims and 92 for IOP claims allows us to differentiate between these
services for billing purposes.
We recognize that the level of intensity of mental health services
that a patient requires may vary over time; therefore, we believe
utilizing a consolidated list of HCPCS codes to identify services under
both the IOP and PHP benefits supports a smooth transition for patients
when a change in the intensity of their services is necessary to best
meet their needs. For example, a patient receiving IOP services may
experience an acute mental health need that necessitates more intense
services through a PHP. Alternatively, an IOP patient that no longer
requires the level of intensity provided by the IOP can access less
intense mental health services, such as individual mental health
services. The full list of HCPCs codes recognized under the PHP and IOP
benefits can be found in the Medicare Claims Processing internet Only
Manual, Chapter 4, sections 260.1 and 261.1, respectively, and their
subsections, available at https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/clm104c04.pdf.
To qualify for payment for the IOP APC (5851, 5852, 5861, or 5862)
or the PHP APC (5853, 5854, 5863, or 5864), one service provided that
day must be from the Partial Hospitalization and Intensive Outpatient
Primary list. We refer readers to the CY 2024 OPPS final rule with
comment period for further discussion regarding our expectation that at
least one of the services on the PHP and IOP Primary list will be
indicated per day for patients who need the level of care offered by a
PHP or IOP program. The PHP and IOP Primary List can be found in the CY
2024 OPPS/ASC final rule with comment period at 88 FR 81821.
Beginning in CY 2024, we recognized caregiver training services and
Principal Illness Navigation (PIN) services as PHP and IOP services. We
explained that the reported costs associated with providing such
services are included when we calculate the PHP and IOP payment
[[Page 33660]]
rates; however, these services do not count toward the determination of
whether a PHP or IOP day is paid at the 3-service or 4-service rate. We
refer readers to the CY 2024 OPPS/ASC final rule with comment period
for a detailed discussion of this policy (88 FR 81823 through 81825).
As finalized in the CY 2024 OPPS/ASC final rule with comment period
(88 FR 81821 and 81822), if new codes are established that represent
the PHP and IOP services described under Sec. Sec. 410.43(a)(4) and
410.44(a)(4), respectively, such codes are added to the list of codes
recognized for payment for PHP or IOP through sub-regulatory guidance.
We note that coding updates frequently occur outside of the standard
rulemaking timeline. We adopted this sub-regulatory process in order to
pay expeditiously when new codes are created that describe any of the
services enumerated at Sec. Sec. 410.43(a)(4) and 410.44(a)(4), which
PHPs and IOPs, respectively, would provide. We explained that this
policy applies to new codes that are cross walked to a previously
included code, or whose code descriptor is substantially similar to a
descriptor for a code on the list or describes a service on the list.
We stated that any additional services not described at Sec.
410.43(a)(4) or Sec. 410.44(a)(4) would be added to the lists in
regulation through notice and comment rulemaking.
In the CY 2025 OPPS/ASC final rule with comment period (89 FR 94266
through 94268), we did not add any new services not described at Sec.
410.43(a)(4) or Sec. 410.44(a)(4) to the list of PHP and IOP services.
C. Proposed CY 2026 Payment Rates for PHP and IOP
We propose for CY 2026 to maintain the current payment rate
methodology that we use for calculating PHP and IOP payment rates for
hospital-based providers. For CMHCs, we propose to revise our
methodology for calculating PHP and IOP payment rates. Specifically, we
propose to apply the 40 percent MPFS Relativity Adjuster to calculate
PHP and IOP payment rates for CMHCs. Under this proposed methodology,
we would multiply the CY 2026 rates for the hospital-based PHP and IOP
APCs by 0.4 to calculate the payment rates for the CMHC PHP and IOP
APCs.
1. Background on the Current Payment Rate Methodology for PHP and IOP
Beginning in CY 2024, we established four separate PHP APC per diem
payment rates: one for CMHCs for 3-service days and another for CMHCs
for 4-service days (APC 5853 and APC 5854, respectively), and one for
hospital-based PHPs for 3-service days and another for hospital-based
PHPs for 4-service days (APC 5863 and APC 5864, respectively). In
addition, for hospital-based PHPs, we finalized a policy to calculate
payment rates using the broader OPPS data set, instead of using
hospital-based PHP data only. We explained that using the broader OPPS
data set allows CMS to capture data from claims not identified as PHP,
but that also include the service codes and intensity required for a
PHP day. Because we established consistent coding and payment between
the PHP and IOP benefits, we considered all OPPS data for PHP days and
non-PHP days that include 3 or more of the same service codes. We
established four separate IOP APC per diem payment rates at the same
rates we proposed for the PHP APCs: one for CMHCs for 3-service days
and another for CMHCs for 4-service days (APC 5851 and APC 5852,
respectively), and one for hospital-based IOPs for 3-service days and
another for hospital-based IOPs for 4-service days (APC 5861 and APC
5862, respectively).
In the CY 2024 OPPS/ASC final rule with comment period (88 FR 81829
and 81830), we noted that the standard PHP day is typically four
services or more per day. We explained that we have historically
provided payment for three services a day for extenuating circumstances
when a beneficiary would be unable to complete a full day of PHP
treatment. As we stated in the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66672), it was never our intention that days with only
three units of service should represent the number of services provided
in a typical PHP day. Our intention was to cover days that consisted of
three units of service only in certain limited circumstances. For
example, as we noted in the CY 2009 OPPS/ASC proposed rule (73 FR
41513), we believe 3-service days may be appropriate when a patient is
transitioning towards discharge (or days when a patient is at the
beginning of his or her PHP stay). Another example of when it may be
appropriate for a program to provide only three units of service in a
day is when a patient is required to leave the PHP early for the day
due to an unexpected medical appointment.
In the same CY 2024 OPPS/ASC final rule with comment period, we
also explained that prior to CY 2024, we historically prepared the data
by first applying PHP-specific trims and data exclusions and assessing
CCRs. We direct the reader to the CY 2016 OPPS/ASC final rule with
comment period (80 FR 70463 through 70465) for a more complete
discussion of these trims, data exclusions, and CCR adjustments. In
prior rules, we typically included a discussion of PHP-specific data
trims, exclusions, and CCR adjustments; we did not include that
discussion in the CY 2024 OPPS/ASC proposed rule or final rule with
comment period. We stated that these PHP-specific data trims and
exclusions addressed limitations as well as anomalies in the PHP data.
However, as noted earlier, we finalized a methodology for CY 2024 to
calculate hospital-based PHP payment rates for 3 services per day and 4
services per day based on cost per day using the broader OPPS data set.
Accordingly, we did not apply PHP-specific trims and data exclusions,
but rather we applied the same trims and data exclusions consistent
with the OPPS.
We stated in the CY 2024 OPPS/ASC final rule with comment period
(88 FR 81830) that while no IOP benefit existed prior to the CAA, 2023,
the types of items and services included in IOP had been, and were,
paid for by Medicare either as part of the PHP benefit or under the
OPPS more generally. Additionally, we stated that prior to the CAA,
2023, CMS had begun gathering information from interested parties on
IOP under Medicare. In the CY 2023 OPPS/ASC proposed rule (87 FR
44679), we issued a comment solicitation on intensive outpatient mental
health treatment, including SUD treatment furnished by IOPs, to collect
information regarding whether there are any gaps in coding that may be
limiting access to needed levels of care for treatment of mental health
disorders or SUDs for Medicare beneficiaries, and specific information
about IOP services, such as the settings of care in which these
programs typically furnish services, the range of services typically
offered, and the range of practitioner types that typically furnish
these services.
In addition, in the same CY 2024 OPPS/ASC final rule with comment
period, we explained that along with the requirements for IOP mandated
by the CAA, 2023, we took into consideration information we received
from the comment solicitation to construct an appropriate data set to
develop proposed rates for IOP. Since IOPs furnish the same types of
services as PHP, just at a lower intensity, we stated that we believe
it was appropriate to use the same data and methodology for calculating
payment rates for both PHP and IOP for CY 2024. We explained that
although PHP claims can be specifically identified, there was no
specific
[[Page 33661]]
identifier or billing code to indicate IOP services that may have been
provided before CY 2024. However, we noted that hospitals have been
permitted to furnish and bill for many of these services as outpatient
services under the OPPS. Thus, we analyzed a broader set of data that
included both PHP and non-PHP days with 3 or more services in order to
calculate proposed payment for PHP services. In order to establish
consistent payment between PHP and IOP, we set IOP payment rates at the
same rates as PHP. We stated that the primary goal in developing the
payment rate methodology for IOP and PHP services was to pay providers
an appropriate amount relative to the patients' needs, and to avoid
cost inversion in future years. We stated that setting the IOP payment
rates equal to the PHP payment rates was appropriate because IOP was a
newly established benefit, and we did not have definitive data on
utilization. However, we explained that both programs utilize the same
services, but furnish them at different levels of intensity, with
different numbers of services furnished per day and per week, depending
on the program. Therefore, we stated that we expect it would be
appropriate to pay the same per diem rates for IOP and PHP services
unless future data analysis supports calculating rates independently.
In the CY 2024 OPPS/ASC final rule with comment period (88 FR
81833) we established a policy of applying the 4-service day payment
rate (that is, payment for PHP APCs 5854 for CMHCs and 5864 for
hospitals, and IOP APCs 5852 for CMHCs and 5862 for hospitals) for days
with 4 or more services. For days with three or fewer services, we
apply the 3-service day payment rate (that is, payment for PHP APCs
5853 for CMHCs and 5863 for hospitals, and IOP APCs 5851 for CMHCs and
5861 for hospitals). As we noted in the CY 2024 OPPS/ASC final rule
with comment period, we expect days with fewer than three services
would be very infrequent, and we intend to monitor the provision of
these days among providers and individual patients.
In the CY 2025 OPPS/ASC final rule with comment period (89 FR
94269), for beneficiaries in a PHP or IOP, we maintained the payment
rate methodology finalized in the CY 2024 OPPS/ASC final rule with
comment period.
2. Analysis of PHP and IOP Costs Under the Current Methodology
Following the current structure, the calculated CY 2026 geometric
mean per diem cost for hospital-based PHP and IOP providers that
provide 3 services per day is $340.90, which we propose to use for
calculating the payment rate for the 3-service day hospital-based PHP
APC 5863 and the 3-service day hospital-based IOP APC 5861, as
discussed in the following section. The calculated CY 2026 geometric
mean per diem cost for hospital-based PHP and IOP providers that
provide 4 services per day is $424.60, which we propose to use for
calculating the payment rate for the 4-service day hospital-based PHP
APC 5864 and the 4-service day hospital-based IOP APC 5862, as
discussed in the following section.
The calculated CY 2026 geometric mean per diem cost for CMHC PHP
and IOP providers resulted in an inversion, with the CMHC 3-service
geometric mean per diem costs equaling $191.83 and the CMHC 4-service
geometric mean per diem costs equaling $110.39. We believe the inverted
geometric mean per diem costs are influenced by the small number of
CMHCs that bill Medicare for PHP and IOP services, as well as CMHCs
with low costs that first began billing Medicare for services in CY
2024. Table 67 summarizes the PHP and IOP geomean costs calculated
using the current methodology.
[GRAPHIC] [TIFF OMITTED] TP17JY25.095
3. Proposed CY 2026 Payment Rate Methodology for PHP and IOP
For CY 2026, we propose to maintain our current methodology of
calculating separate rates for hospitals and CMHCs. For the four
hospital-based PHP and IOP APCs (that is, APCs 5861, 5862, 5863, and
5864), we propose using the latest available cost information, from
cost reports beginning three fiscal years prior to the year that is the
subject of the rulemaking, and CY 2024 OPPS claims to update the
payment rates. This proposal is consistent with the overall proposed
use of cost data for the OPPS, which is discussed in section II.A.1.a.
of this proposed rule.
In accordance with the methodology finalized in the CY 2024 OPPS/
ASC final rule with comment period, we propose to base the payment rate
for each hospital-based PHP APC on the geometric mean per diem cost for
days with three services and four or more services. We propose to use
the broader set of OPPS data to calculate the geometric mean costs for
hospital outpatient departments, and we propose to apply the same trims
and exclusions consistent with the OPPS. We also propose to set the
payment rates for the hospital-based IOP APCs based on the geometric
mean per diem cost for PHP
[[Page 33662]]
days with three services and four or more services.
For the four CMHC PHP and IOP APCs (that is, APCs 5851, 5852, 5853,
and 5854), we propose to calculate the CY 2026 geometric mean per diem
costs based on 40 percent of the corresponding hospital-based PHP and
IOP APCs (APCs 5861, 5862, 5863, and 5864, respectively). We propose
this change in methodology for calculating the four CMHC PHP and IOP
APCs because using the current methodology would result in inverted
costs for CMHCs (that is, the cost for 3-service days would be greater
than the cost for 4-service days), as discussed in the preceding
section. As we discuss further in the following section of this
proposed rule, we believe this proposed methodology would be generally
appropriate for estimating CMHC costs and would align with the
methodology that is used for other nonexcepted OPPS services furnished
by a nonexcepted off-campus hospital outpatient department.
Lastly, we propose that if more recent hospital cost data
subsequently become available after the publication of the CY 2026
OPPS/ASC proposed rule, we would consider using such updated data to
determine the CY 2026 payment rates for the four PHP APCs and the four
IOP APCs.
4. Proposed CY 2026 PHP and IOP APC Geometric Mean Per Diem Costs
In the CY 2024 OPPS/ASC final rule with comment period (88 FR
81831), we anticipated there would be significant differences between
CMHCs' and hospitals' costs of furnishing IOP, based on our observation
of CMHCs incurring significantly different costs than hospitals in the
provision of PHP services. Our longstanding payment policies reflect
those differences. For CY 2026, we continue to observe significant cost
structure differences between hospitals and CMHCs in the provision of
PHP and IOP services. That is, we continue to see lower PHP and IOP
costs in the CMHC setting as compared to the hospital setting. However,
as we noted earlier in this proposed rule, if we were to apply our
current methodology for calculating the CY 2026 geometric mean per diem
costs for CMHC PHP and IOP APCs, those costs would be inverted (that
is, the cost for 3-service days would be greater than the cost for 4-
service days).
We believe it is appropriate to continue to recognize the
differences in cost structures for different providers of PHP and IOP.
This is of particular importance not only to the Medicare program, but
also for the Medicare beneficiaries that CMHCs serve, who are subject
to a 20 percent coinsurance requirement on all PHP and IOP services
under Part B. However, as we previously explained, one of our goals is
to avoid cost inversion because we would expect that the geometric mean
per diem costs when providing three services per day would be lower
than the geometric mean per diem costs when providing four or more
services per day. We note that our current estimates are significantly
impacted by a small number of CMHCs with low estimated costs who first
began billing Medicare for services in CY 2024.\96\ We are concerned
that these cost estimates may not best reflect the costs of providing
PHP and IOP in CY 2026. As such, we believe that using CMHC data to
establish the CMHC payment rates would not be appropriate for CY 2026,
given the cost inversion. For this CY 2026 OPPS/ASC proposed rule, we
considered alternative methodological approaches to estimate the costs
for PHP and IOP services furnished by CMHCs.
---------------------------------------------------------------------------
\96\ As we discussed in the CY 2023 OPPS/ASC final rule, our
longstanding ratesetting methodology defaults any CMHC CCR that is
not available or any CMHC CCR greater than one to the statewide
hospital CCR associated with the provider's urban/rural designation
and their state location.
---------------------------------------------------------------------------
Section 1833(t)(9)(A) of the Act requires the Secretary to annually
review and revise the relative payment weights by taking into account
new cost data, and other relevant information and factors. We note that
in creating the original APC for PHP services (APC 0033), the initial
relative payment weight for PHP services provided in hospital-based and
CMHC-based settings was based on hospital data only. Subsequently, CMS
has, in prior rulemaking, exercised its authority under section
1833(t)(9)(A) of the Act to change the data source for the relative
payment weights for hospital-based and CMHC-based PHP services as new
cost data became available. We refer readers to the CY 2012 OPPS/ASC
final rule with comment period (76 FR 74350 and 74351) for more details
on the history of changes in the data sources for relative payment
weights for PHP services.
For this proposed rule, we considered alternative methodological
approaches for calculating the CMHC costs that could avoid cost
inversions and provide greater stability for CMHC payment rates. We
believe the stability of CMHC payment rates and the avoidance of cost
inversions are important for CMHCs to more easily anticipate future
payments associated with the PHP and IOP benefits. For this CY 2026
OPPS/ASC proposed rule, we considered whether the 40 percent MPFS
Relativity Adjuster would appropriately estimate CMHC PHP and IOP
costs.
First, we considered the similarities between CMHCs and nonexcepted
off-campus hospital outpatient departments. CMHCs are freestanding
entities that are not part of a hospital, but they provide the same PHP
and IOP services as hospital-based PHP and IOPs. As we noted in the CY
2017 OPPS/ASC final rule with comment period (81 FR 79717), this is
similar to the differences between freestanding entities paid under the
MPFS that furnish other services also provided by hospital-based
entities. Similar to other entities currently paid for their technical
component services under the MPFS, we believe CMHCs would typically
have lower cost structures than hospital-based PHP and IOPs, largely
due to lower overhead costs and other indirect costs such as
administration, personnel, and security.
The 40 percent MPFS Relativity Adjuster was established in the CY
2018 PFS final rule (82 FR 53030) and applies to payments for
nonexcepted items and services furnished in nonexcepted off-campus
provider-based departments, including a hospital outpatient department.
In that same final rule, we discussed our rationale for finalizing the
MPFS Relativity Adjuster at 40 percent (82 FR 53026 through 53030). We
explained that we believe a 40 percent adjuster would reflect a middle
ground between the CY 2017 PFS Relativity Adjuster of 50 percent
(selected to ensure adequate payment to hospitals) and the proposed CY
2018 PFS Relativity Adjuster of 25 percent (selected to ensure that
hospitals are not paid more than others would be paid through the PFS
non-facility rate).
If we were to apply the 40 percent MPFS Relativity Adjuster to
determine the CMHC geometric mean per diem costs, the relative payment
weights for PHP and IOP services furnished by CMHCs would be based on
hospital cost data, which we note has been more stable than CMHC cost
data in recent years. The stability of the hospital cost data is
primarily driven by the larger number of providers and the fact that
hospital-based providers more consistently bill for PHP and IOP
services from one year to the next. We believe this methodology would
appropriately stabilize CMHC payment rates by setting them relative to
hospital-based rates, while avoiding cost inversions in future years.
We also believe applying the 40 percent MPFS Relativity Adjuster to
calculate payment rates for the CMHC PHP and IOP APCs would support our
longstanding goal to
[[Page 33663]]
pay providers an appropriate amount relative to the patients' needs.
If we applied the 40 percent MPFS Relativity Adjuster to the
hospital-based PHP and IOP geometric mean per diem costs, it would
result in proposed CY 2026 CMHC costs of $136.36 for a 3-service day
and $169.84 for a 4-service day. These proposed CY 2026 CMHC costs are
generally in line with the CY 2025 CMHC costs, which were $112.59 for a
3-service day and $170.37 for a 4-service day. Additionally, we
observed on average, the CY 2024 and CY 2025 geometric mean costs for
the CMHC PHP and IOP APCs were 40 percent of the CY 2024 and CY 2025
geometric mean costs for the hospital-based PHP and IOP APCs.
Therefore, we believe that applying the 40 percent Relativity Adjuster
to hospital-based PHP and IOP costs would better approximate CMHC cost
structures than the latest available CMHC cost data would. As we
previously noted, the latest available CMHC cost data is influenced by
the small number of CMHCs that bill Medicare for PHP and IOP services,
as well as by CMHCs with low costs that first began billing Medicare
for services in CY 2024.
Therefore, for the reasons discussed in the prior paragraphs, we
propose to apply the 40 percent MPFS Relativity Adjuster to the
hospital-based PHP and IOP costs for the purposes of calculating the
proposed geometric mean per diem costs for the CMHC PHP and IOP APCs
for CY 2026 and subsequent years.
Given the requirements of section 1833(t)(9)(A) of the Act, we
believe it would be appropriate to revise our methodology for setting
the relative payment weights for the OPPS rates for PHP and IOP
services furnished by CMHCs based on new cost data and other relevant
information and factors. Specifically, we propose to base this
calculation on hospital cost data and the observed relationship between
PHP and IOP costs in the hospital and CMHC settings, which as we noted
earlier has been approximately 40 percent in recent years.
We intend to monitor the provision of services in both PHP and IOP
programs to better understand utilization patterns, and would
reevaluate our payment rate methodology, if necessary. We note that if
more recent data becomes available for the CY 2026 OPPS/ASC final rule
that mitigates the cost inversion for CMHC geometric mean per diem
costs, we may consider using such data as a basis for finalizing a
payment rate methodology based on CMHC costs, rather than based on
hospital costs adjusted by the 40 percent MPFS Relativity Adjuster.
We solicit comments on our current and proposed payment rate
methodologies for PHP and IOP services furnished by CMHCs. We are also
soliciting comments on potential methodological changes or changes to
data that could avoid or mitigate future cost inversions and
instability for CMHC payment rates. Table 68 shows the proposed
calculated geometric mean per diem costs for hospital-based PHP and IOP
APCs, and the proposed geometric mean per diem costs for CMHC PHP and
IOP APCs based on our proposal to apply the 40 percent MPFS Relativity
Adjuster for this CY 2026 OPPS/ASC proposed rule. Additional
information about the data trims, data exclusions, and CCR adjustments
applicable to the data used for this proposed rule can be found online
at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.\97\
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\97\ Click on the link labeled ``CY 2026 OPPS/ASC Notice of
Proposed Rulemaking'', which can be found under the heading
``Hospital Outpatient Prospective Payment System Rulemaking'' and
open the claims accounting document link at the bottom of the page,
which is labeled ``2026 NPRM OPPS Claims Accounting (PDF)''.
[GRAPHIC] [TIFF OMITTED] TP17JY25.096
D. Outlier Policy for CMHCs
For CY 2026, we propose to maintain the calculations of the CMHC
outlier percentage, cutoff point and percentage payment amount, outlier
reconciliation, outlier payment cap, and fixed dollar threshold
according to previously established policies to include PHP and IOP
services. We refer readers to the CY 2024 OPPS/ASC final rule with
comment period (88 FR 81834 through 81836) for more details on CMHC
outlier policies, and to section II.G.1. of this proposed rule for our
general policies for hospital outpatient outlier payments.
1. Background
As discussed in the CY 2004 OPPS final rule with comment period (68
FR 63469 and 63470), we created a separate outlier policy specific to
the estimated costs and OPPS payments provided to CMHCs. We designated
a portion of the estimated OPPS outlier threshold
[[Page 33664]]
specifically for CMHCs, consistent with the percentage of projected
payments to CMHCs under the OPPS each year, excluding outlier payments,
and established a separate outlier threshold for CMHCs.
2. CMHC Outlier Percentage
In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59267
and 59268), we described the current outlier policy for hospital
outpatient payments and CMHCs. We note that we also discussed our
outlier policy for CMHCs in more detail in section VIII.C of that same
final rule (82 FR 59381). We set our projected target for all OPPS
aggregate outlier payments at 1.0 percent of the estimated aggregate
total payments under the OPPS (82 FR 59267). This same policy was also
reiterated in the CY 2019 OPPS/ASC final rule with comment period (83
FR 58996), the CY 2020 OPPS/ASC final rule with comment period (84 FR
61350), and the CY 2021 OPPS/ASC final rule with comment period (85 FR
86082). We are not proposing any changes to the CMHC outlier percentage
policy for CY 2026.
3. Cutoff Point and Percentage Payment Amount
Also described in the CY 2018 OPPS/ASC final rule with comment
period (82 FR 59381), our policy has been to pay CMHCs for outliers if
the estimated cost of the day exceeds a cutoff point. In CY 2006, we
set the cutoff point for outlier payments at 3.4 times the highest CMHC
PHP APC payment rate implemented for that calendar year (70 FR 68551).
For CY 2018, the highest CMHC PHP APC payment rate was the payment rate
for CMHC PHP APC 5853. In addition, in CY 2002, the final OPPS outlier
payment percentage for costs above the multiplier threshold was set at
50 percent (66 FR 59889). In CY 2018, we continued to apply the same 50
percent outlier payment percentage that applies to hospitals to CMHCs
and continued to use the existing cutoff point (82 FR 59381).
Therefore, for CY 2018, we continued to pay for partial hospitalization
services that exceeded 3.4 times the CMHC PHP APC payment rate at 50
percent of the amount of CMHC PHP APC geometric mean per diem costs
over the cutoff point. This same policy was also reiterated in the CY
2019 OPPS/ASC final rule with comment period (83 FR 58996 and 58997),
the CY 2020 OPPS/ASC final rule with comment period (84 FR 61351), the
CY 2021 OPPS/ASC final rule with comment period (85 FR 86082 and
86083), the CY 2022 OPPS/ASC final rule with comment period (86 FR
63670), the CY 2023 OPPS/ASC final rule with comment period (87 FR
72004), and the CY 2024 OPPS/ASC final rule with comment period (88 FR
81835). In the CY 2024 OPPS/ASC final rule with comment period, we
extended this policy to intensive outpatient services. We are not
proposing any changes to the cutoff point and payment amount policy for
CY 2026.
4. Outlier Reconciliation
In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68594
through 68599), we established an outlier reconciliation policy to
address charging aberrations related to OPPS outlier payments. We
addressed vulnerabilities in the OPPS outlier payment system that led
to differences between billed charges and charges included in the
overall CCR, which are used to estimate cost and would apply to all
hospitals and CMHCs paid under the OPPS. We initiated steps to ensure
that outlier payments appropriately account for the financial risk when
providing an extraordinarily costly and complex service but are only
being made for services that legitimately qualify for the additional
payment.
For a comprehensive description of outlier reconciliation, we refer
readers to the CY 2023 OPPS/ASC and CY 2019 OPPS/ASC final rules with
comment period (83 FR 58874 and 58875 and 81 FR 79678 through 79680,
respectively). We are not proposing any changes to the outlier
reconciliation policy for CY 2026.
5. Outlier Payment Cap
In the CY 2017 OPPS/ASC final rule with comment period, we
implemented a CMHC outlier payment cap to be applied at the provider
level, such that in any given year, an individual CMHC will receive no
more than a set percentage of its CMHC total per diem payments in
outlier payments (81 FR 79692 through 79695). Our analysis of CY 2014
claims data found that CMHC outlier payments began to increase
similarly to the way they had prior to CY 2004. This was due to
inflated costs from three CMHCs that accounted for 98 percent of all
CMHC outlier payments that year and received outlier payments that
ranged from 104 percent to 713 percent of their total per diem
payments. To balance our concern about disadvantaging CMHCs with our
interest in protecting the benefit from excessive outlier payments and
to mitigate potential inappropriate outlier billing vulnerabilities, we
finalized the CMHC outlier payment cap at 8 percent of the CMHC's total
per diem payments (81 FR 79694 and 79695) to limit the impact of
inflated CMHC charges on outlier payments. This cap was established
after detailed analysis of claims data, which showed that a cap set at
8 percent would effectively address excessive outlier payments while
minimally impacting CMHCs with legitimate high-cost cases. The cap
applies to each CMHC's total per diem payments, which include both the
Medicare payment portion and the beneficiary cost-sharing amount. The 8
percent cap continues to be calculated and applied on a calendar year
basis, with outlier payments monitored throughout the year to ensure
compliance with the cap.
This outlier payment cap only affects CMHCs; it does not affect
other provider types (that is, hospital-based PHPs), and is in addition
to and separate from the current outlier policy and reconciliation
policy in effect. We are not proposing any changes to the outlier
payment cap for CY 2026.
6. Fixed-Dollar Threshold
In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59267
and 59268), for the hospital outpatient outlier payment policy, we set
a fixed-dollar threshold in addition to an APC multiplier threshold.
Fixed-dollar thresholds are typically used to drive outlier payments
for very costly items or services, such as cardiac pacemaker
insertions. Currently, for CY 2025, CMHC PHP APCs (5853 or 5854) and
IOP APCs (5851 or 5852) are the only APCs for which CMHCs may receive
payment under the OPPS, and these APCs are for providing a defined set
of services that are relatively low cost when compared to other OPPS
services. Because of the relatively low cost of CMHC services that are
used to comprise the structure of CMHC PHP APCs (5853 or 5854) and IOP
APCs (5851 or 5852), it is not necessary to also impose a fixed-dollar
threshold on CMHCs. Therefore, in the CY 2018 OPPS/ASC final rule with
comment period, we did not set a fixed-dollar threshold for CMHC
outlier payments (82 FR 59381). This same policy was also reiterated in
the CY 2020 OPPS/ASC final rule with comment period (84 FR 61351), the
CY 2021 OPPS/ASC final rule with comment period (85 FR 86083), the CY
2022 OPPS/ASC final rule with comment period (86 FR 63508), the CY 2023
OPPS/ASC final rule with comment period (87 FR 72004), the CY 2024
OPPS/ASC final rule with comment period (88 FR 81836), and the CY 2025
OPPS/ASC final rule with comment period (89 FR 94271). We are not
proposing any changes to the fixed-dollar threshold policy for CY 2026.
[[Page 33665]]
IX. Services That Will Be Paid Only as Inpatient Services
A. Background
The Inpatient Only (IPO) list was established in rulemaking as part
of the initial implementation of the Outpatient Prospective Payment
System (OPPS) in 2000, pursuant to the Secretary's authority under
section 1833(t)(1)(B)(I) of the Act (65 FR 18455). The IPO list was
created to identify services for which Medicare will make payment only
when furnished in the inpatient hospital setting because of the
invasive nature of the procedures, the underlying physical condition of
the Medicare patient, or the need for at least 24 hours of
postoperative recovery time or monitoring before the patient can be
safely discharged (70 FR 68695). The creation of the IPO list was based
on the premise (rooted in the practice of medicine at that time) that
Medicare should not pay for procedures furnished as outpatient services
which are performed on an inpatient basis virtually all of the time for
the Medicare population because performing these procedures on an
outpatient basis would not be safe or appropriate, and therefore not
reasonable and necessary under Medicare rules (86 FR 63671; 63 FR
47571). Designation of a service as inpatient only does not preclude
the service from being furnished in a hospital outpatient setting but
means that Medicare will not make payment for the service if it is
furnished to a Medicare beneficiary in the hospital outpatient setting
(65 FR 18443). Conversely, the absence of a procedure from the list
should not be interpreted as identifying that procedure as
appropriately performed only in the hospital outpatient setting (70 FR
68696). Rather, from the beginning, we have emphasized our expectation
that, in every case, the physician or surgeon and hospital will
exercise their professional judgment and assess the risk of the
procedure or service to the individual patient, taking into account the
site of service and act in that patient's best interest (65 FR 18456).
We have also previously stated that for procedures that are not
included on the inpatient list, we rely on the practitioner's judgment
to determine on a patient-by-patient basis whether or not a particular
procedure would be most appropriately performed in the inpatient
setting (70 FR 68698).
The IPO list policy has elicited both opposition and support in
public comments since its establishment in CY 2000. In 2000, some
commenters stated that they believed that CMS (then, the Health Care
Financing Administration) was making decisions, such as the site of
service for a particular medical procedure, that should be left to the
discretion of surgeons and their patients (65 FR 18455). In 2011,
certain comments suggested that regulations should not supersede the
physician's level of knowledge and assessment of the patient's
condition, and that the physician can appropriately determine whether a
procedure can be performed in a hospital outpatient setting, and many
commenters suggested that the inpatient only list be eliminated in its
entirety (76 FR 74354). Again in 2013, some commenters requested that
the IPO list be eliminated in its entirety (78 FR 75055). From the
beginning, several interested parties have also stated that the
exclusion of services from payment under the OPPS is unnecessary and
could have an adverse effect on advances in surgical care (65 FR
18442). Others have noted that the existence of the IPO list suggests
that services that are not on the list or have been removed from the
list should be/must be provided in the outpatient setting, regardless
of the clinical judgment of the physician or the needs of the patient
(85 FR 86084). Other commenters have defended the need for the list,
stating that the IPO list serves as an important programmatic safeguard
and maintains a common standard in the Medicare program (85 FR 86086).
In the CY 2021 OPPS/ASC final rule with comment period, published
in the Federal Register on December 29, 2020 (85 FR 86084 through
86088), we finalized a policy to eliminate the IPO list over the course
of 3 years (85 FR 86093). We revised our regulation at 42 CFR 419.22(n)
to state that, effective January 1, 2021, the Secretary shall eliminate
the list of services and procedures designated as requiring inpatient
care through a 3-year transition. As part of the first phase of this
elimination of the IPO list, we removed 298 codes, including 266
musculoskeletal-related services, from the list beginning in CY 2021.
In the 2022 OPPS/ASC final rule with comment period, published on
November 16, 2021, we halted the elimination of the IPO list and, after
clinical review of the services removed from the IPO list in CY 2021 as
part of the first phase of eliminating the IPO list, we returned most
services removed from the IPO list in 2021 back to the IPO list
beginning in CY 2022 (86 FR 63671 through 63736). We amended the
regulation at Sec. 419.22(n) to remove the reference to the
elimination of the list of services and procedures designated as
requiring inpatient care through a 3-year transition. We also finalized
our proposal to codify the five longstanding criteria for determining
whether a service or procedure should be removed from the IPO list in
the regulation at Sec. 419.23 (86 FR 63678). For CY 2023 through CY
2025, we maintained the IPO list and continued to evaluate services
brought forth by interested parties for removal using the five
longstanding criteria (87 FR 72004 through 72012; 88 FR 81858 through
81863; and 89 FR 94271 through 92475).
B. Current Methodology for Identifying Appropriate Changes to the IPO
List
Currently, there are approximately 1,731 services on the IPO list.
Under our longstanding policy and current regulations, we annually
review the IPO list to identify any services that should be removed
from, or added to, the list, based on the most recent data and medical
evidence available. We have established five criteria to determine
whether a procedure should be removed from the IPO list (65 FR 18455),
which we codified in the CY 2022 OPPS/ASC final rule with comment
period (86 FR 63676). As noted in the CY 2012 OPPS/ASC final rule with
comment period (76 FR 74353), we assess whether a procedure or service
met these criteria to determine if it should be removed from the IPO
list and assign to an APC group for payment under the OPPS when
provided in the hospital outpatient setting. We have explained that
while we only require a service to meet one criterion to be considered
for removal, satisfying only one criterion does not guarantee that the
service will be removed; instead, the case for removal is strengthened
with the more criteria the service meets. The criteria for assessing
procedures for removal from the IPO list are:
Most outpatient departments are equipped to provide the
service or procedure to the Medicare population.
The simplest service or procedure described by the code
may be performed in most outpatient departments.
The service or procedure is related to codes that CMS has
already removed from the Inpatient Only list.
CMS determines that the service or procedure is being
performed in numerous hospitals on an outpatient basis.
CMS determines that the service or procedure can be
appropriately and safely performed in an ambulatory surgical center,
and is specified as a covered ambulatory surgical procedure, or CMS has
proposed to specify it as a covered ambulatory surgical procedure.
We encouraged interested parties, including professional societies,
hospitals, surgeons, hospital
[[Page 33666]]
associations, and beneficiary advocacy groups, to evaluate the IPO list
and determine whether services should be added to or removed from the
list. We requested that they submit corresponding evidence in support
of their claims that a code or group of codes met the longstanding
criteria for removal from the IPO list and is safe to perform on the
Medicare population in the hospital outpatient setting--including, but
not limited to case reports, operative reports of actual cases, peer-
reviewed medical literature, medical professional analysis, clinical
criteria sets, and patient selection protocols (67 FR 66740). Our
clinicians thoroughly review all information submitted within the
context of the established criteria and if, following this reviewed, we
determined that there was sufficient evidence to confirm that the
medical procedure represented by the code could be safely and
appropriately performed on an outpatient basis, we assigned the service
to an APC and included it as a payable procedure under the OPPS(67 FR
66740). We determine the APC assignment for services removed from the
IPO list by evaluating the clinical similarity and resource costs of
the service compared to other services paid under the OPPS and
reviewing the Medicare Severity Diagnosis Related Groups (MS-DRG) rate
for the service under the IPPS. It should be noted, however, that we
would generally expect the cost to provide a service in the outpatient
setting to be less than the cost to provide the service in the
inpatient setting (67 FR 66740).
As we have stated in prior rulemaking, over time, given advances in
technology and surgical technique, we will continue to evaluate
services to determine whether they should be removed from the IPO list.
We have made it clear that, insofar as advances in medical practice
mitigate concerns about these procedures being performed on an
outpatient basis, we are prepared to remove procedures from the IPO
list and provide for payment for them under the OPPS (65 FR 18443).
C. Proposed CY 2026 Changes to IPO List
1. CY 2026 Proposal To Eliminate the IPO List
Since the IPO list was established in 2000, it has been our policy
that, regardless of how a procedure is classified for the purposes of
payment, we expect in every case the surgeon and the hospital will
assess the risk of a procedure or service to the individual patient,
taking site of service into account, and will act in that patient's
best interests (65 FR 18456). We have reiterated this expectation in
rulemaking over the years, including in our discussion of the removal
of total knee arthroplasty (TKA) from the IPO list in the CY 2018 OPPS/
ASC final rule with comment period, total hip arthroplasty (THA) from
the IPO list in the CY 2020 OPPS/ASC final rule with comment period,
and lumbar spine fusion, shoulder joint reconstruction, and ankle
reconstruction in CY 2021 (82 FR 59383; 84 FR 61354; 85 FR 86093). In
those rules, we stated that the decision regarding the most appropriate
care setting for a given surgical procedure is a complex medical
judgment made by the physician based on the beneficiary's individual
clinical needs and preferences and on the general coverage rules
requiring that any procedure be reasonable and necessary.
Over the course of the years since the establishment of the IPO
list, we have received comments from some interested parties who
believe that we should eliminate the IPO list entirely and, instead,
defer to the clinical judgment of physicians for decisions regarding
site of service. For example, in the CY 2000 final rule with comment
period, in response to the establishment of the IPO list, certain
commenters stated that they believed CMS was making decisions, such as
the appropriate site of service for a particular medical procedure,
that should be left to the discretion of surgeons and their patients
(65 FR 18442 and 18455). In its 2001 and 2002 public meetings, the
Advisory Panel on APC Groups supported eliminating the IPO list (67 FR
66722). We refer readers to the CY 2021 OPPS/ASC final rule with
comment period for additional discussion of the opposition to the IPO
list, including its lack of deference to physician judgment, its
adverse effect on advances in surgical care, and the expectation it can
create that non-IPO services must be furnished in the outpatient
setting (85 FR 86084 through 86089).
Other interested parties have supported maintaining the IPO list
and consider it an important tool to indicate which services are
appropriate to furnish in the outpatient setting and to ensure that
Medicare beneficiaries receive quality care. They have stated that many
of the procedures that we currently designated as ``inpatient only''
are currently performed appropriately and safely only in the inpatient
setting (65 FR 18442). We refer readers to the CY 2022 OPPS/ASC final
rule with comment period for a summary of recent commenter concerns
related to patient safety and quality of care in the absence of the IPO
list (86 FR 63674).
Interested parties have also supported the use of the IPO list
because services included on the IPO list are an exception to the 2-
midnight rule and, as such, are considered appropriate for payment
under Medicare Part A, regardless of the expected length of stay. As a
result, many procedures are not subject to medical review by the
Beneficiary and Family-Centered Care Quality Improvement Organizations
(BFCC-QIOs) for ``patient status'' (that is, site-of-service). We note
that, in the CY 2020 OPPS/ASC final rule with comment period, we
finalized a policy to exempt procedures that have been removed from the
IPO list from certain medical review activities for 2 calendar years
following their removal from the IPO list. In the CY 2021 OPPS/ASC
final rule with comment period, we finalized a policy to indefinitely
exempt such procedures from those medical review activities while the
IPO list was eliminated over 3 years.
For CY 2026 and subsequent years, we propose to eliminate the IPO
list through a 3-year transition, completing the elimination by January
1, 2029. While we agreed with commenters in previous rulemakings that
the IPO list was necessary, and that it would be inappropriate for us
to establish payment rates for those services under the OPPS (78 FR
75055, 86 FR 63673), we have reconsidered the various comments from
interested parties requesting that we eliminate the IPO list, and
reevaluated the need for CMS to restrict payment for certain procedures
in the hospital outpatient setting. As a result of that
reconsideration, we no longer believe there is a need for the IPO list
to identify services that require inpatient care. We agree with past
commenters that the physician should use clinical knowledge and
judgment, together with consideration of the beneficiary's specific
needs, to determine whether a procedure can be performed appropriately
in a hospital outpatient setting or whether inpatient care is required
for the beneficiary, subject to the general coverage rules requiring
that any procedure be reasonable and necessary. We believe that this
change would ensure maximum availability of services to beneficiaries
in the outpatient setting.
Although we decided to halt the elimination of the IPO list in the
2022 OPPS/ASC final rule with comment period, for the reasons we
discuss later in this section, we have come to believe with greater
certainty that, since the IPO list was established, there have been
[[Page 33667]]
significant developments in the practice of medicine that have allowed
numerous services to now be provided safely and effectively in the
outpatient setting. We acknowledged in the CY 2000 OPPS/ASC final rule
with comment period that we believed that emerging new technologies and
innovative medical practice were blurring the difference between the
need for inpatient care and the sufficiency of outpatient care for many
services (65 FR 18456). We also stated in the CY 2001 OPPS/ASC interim
final rule with comment period that, over time, given advances in
technology and surgical technique, many of the procedures that were on
the IPO list at the time may eventually be performed safely in a
hospital outpatient setting and that we would continue to evaluate
services to determine whether they should be removed from the IPO list
(65 FR 67826). Specifically, we stated that, insofar as advances in
medical practice mitigate concerns about these services being furnished
on an outpatient basis, we would be prepared to remove them from the
IPO list and provide for payment under the OPPS (65 FR 67826).
Over the course of the last 25 years, these expectations have been
borne out. There have been many new technologies and advances in
surgical techniques and surgical care protocols, including the use of
minimally invasive surgical procedures such as laparoscopy, improved
perioperative anesthesia, expedited rehabilitation protocols, as well
as significant enhancements to postoperative processes such as
improvements in pain management, that have reduced the inpatient length
of stay and the need for postoperative care following a surgical
service. In consideration of these advancements, we have removed
certain services from the IPO list that were previously considered to
require inpatient care, including musculoskeletal procedures such as
TKA in CY 2018 (82 FR 59385), THA in CY 2020 (84 FR 61355), and lumbar
spine fusion, shoulder joint reconstruction, and ankle reconstruction
in CY 2021 (85 FR 86093).
Since we previously considered elimination of the IPO list in the
CY 2021 OPPS/ASC rule final rule with comment period, there have also
been other innovations in the practice of medicine; for example,
innovations in infection control spurred by the COVID-19 PHE (87 FR
72194). During that time, CMS issued flexibilities in the furnishing of
acute hospital services at different locations, including the patient's
home. While this Acute Hospital at Home Initiative was originally
spurred by the necessity of expanding hospital capacity, it has
demonstrated an increased ability to deliver certain services outside
of the traditional inpatient setting. Congress accordingly extended
this initiative through 2024 in section 4140 of the Further
Consolidated Appropriations Act, 2023 (Pub. L. 117-328 (Dec. 29,
2022)). These advances have heightened awareness of practices that can
increase patient safety across provider types, ensuring that clinicians
emphasize these considerations in the practice of medicine, including
site of service decisions. As medical practice continues to develop, we
believe that the difference between the need for inpatient care and the
appropriateness of outpatient care will continue to be less and less
distinct for many services. Therefore, we believe that the IPO list is
no longer necessary to identify services that require inpatient care.
In recent years, there have also been certain procedures which we
have decided to remove from the IPO list multiple times. For example,
we removed several maxillofacial procedures in CY 2023, after
originally removing them from the IPO list in CY 2021 and adding them
back in CY 2022 (87 FR 72009). This frequency of change in policy can
cause an uncertain regulatory landscape in which hospitals and
providers are unclear on the policy and whether or not certain
procedures are paid for in the hospital outpatient setting, potentially
impacting access to care for beneficiaries. Eliminating the IPO list
and the related annual review process would mitigate this issue,
offering more regulatory certainty for Medicare beneficiaries and
providers.
Enabling IPO list services to be delivered outside of the inpatient
setting, when clinically appropriate, can also advance important goals
related to access to care. In the past, we have noted longstanding
concerns over the closures of rural hospitals, which has prompted other
policy actions to maximize access to care in rural or underserved areas
(87 FR 72160). The experience of the COVID-19 PHE has also highlighted
the importance of assisting areas and populations that suffer from a
lower supply of medical services, which we addressed with temporary
flexibilities during the COVID-19 PHE. Allowing for a greater exercise
of clinical judgment will increase the ability of hospitals to provide
Medicare-reimbursed services on an outpatient basis when clinically
appropriate, while preserving inpatient beds for individual patients
who truly need to be admitted. This will increase the availability of
such services and additionally provide facilities with greater
experience and flexibility that can be particularly crucial during
future public health emergencies that constrict the supply of medical
care.
We acknowledge the seriousness of the concerns regarding patient
safety and quality of care that various interested parties have
expressed regarding removing procedures from the IPO list or
eliminating the IPO list altogether. However, we believe that the
evolving nature of the practice of medicine has mitigated, and
continues to mitigate, patient safety and quality of care risks. That
allows more procedures to be performed on an outpatient basis with a
shorter recovery time. This trend, combined with physician judgment,
state and local licensure requirements, accreditation requirements,
hospital conditions of participation (CoPs), medical malpractice laws,
and CMS quality and monitoring initiatives and programs, will continue
to ensure the safety of beneficiaries in both the inpatient and
outpatient settings, even in the absence of the IPO list. As mentioned
previously in this section, we have consistently believed that it is
important for physicians to exercise their clinical expertise based on
the circumstances of individual patients and in light of these
protections. We refer readers to the CY 2021 OPPS/ASC final rule with
comment period for a full discussion of how these factors provide
extensive safeguards for patients receiving services from Medicare
enrolled providers, including hospital CoPs in 42 CFR part 482 (such as
the requirement at Sec. 482.30 that hospitals conduct a utilization
review on medical necessity of admission, length of stay, and services
rendered, and the most efficient use of available health facilities and
services) (85 FR 48910).
2. CY 2026 Proposal To Use a 3-Year Transition To Eliminate the IPO
List
We propose to eliminate the IPO list over a 3-year transition
period, beginning in CY 2026. We also propose eliminating the criteria
for removing procedures from the IPO list currently codified at Sec.
419.23, as a conforming change.
Given the significant number of services on the list and that we
would establish new reimbursement rates for those services under the
OPPS, we recognize that interested parties may need time to adjust to
the removal of procedures from the list. Providers may need time to
prepare to furnish newly removed procedures on an outpatient basis,
update their billing systems, and gain experience with newly removed
procedures eligible to be paid under either the IPPS or OPPS.
Therefore, we
[[Page 33668]]
propose to transition services off of the IPO list over a 3-year
period, with the list completely eliminated by CY 2029. In accordance
with this proposal, we propose to amend Sec. 419.22(n) to state that
effective beginning on January 1, 2026, the Secretary shall eliminate
the list of services and procedures designated as requiring inpatient
care through a 3-year transition, with the full list eliminated in its
entirety by January 1, 2029.
For CY 2026, we propose that musculoskeletal services would be the
first group of services that would be removed from the IPO list, as we
had done in the CY 2021 OPPS/ASC final rule with comment period. We
believe it is appropriate to remove this group of services first for
several reasons. In recent years, due to new technologies and advances
in surgical care protocols, expedited rehabilitation protocols,
improved infection control practices, and significant enhancements to
postoperative processes, we have removed TKA and THA, both
musculoskeletal services, from the IPO list. During the COVID-19 PHE,
there was an accelerated decrease in short-length inpatient stays
associated with musculoskeletal procedures--a decrease which was about
four times faster than before the COVID-19 PHE (14.5 percent from 2020
to 2021). The number of Medicare ASCs specializing in orthopedic or
musculoskeletal services also roughly doubled between 2016 and 2021.
These trends suggest a shift in musculoskeletal services from inpatient
to outpatient settings.\98\
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\98\ https://www.medpac.gov/wp-content/uploads/2023/03/Mar23_MedPAC_Report_To_Congress_SEC.pdf.
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Furthermore, during the notice and comment process of removing TKA
and THA from the IPO list, interested parties continually requested
that CMS remove other musculoskeletal services from the IPO list as
well, citing shortened length of stay times, advancements in
technologies and surgical techniques, and improved postoperative
processes. Additionally, we note that, more often than not, interested
parties' historical requests for removals of medical procedures from
the IPO list were for musculoskeletal services. Further, there is
already a set of C-APCs for musculoskeletal services for payment in the
outpatient setting, which facilitates the removal of these types of
services from the IPO list for CY 2026. Specifically, because we have
previously removed codes corresponding to musculoskeletal services from
the IPO list that are similar clinically and in terms of resource cost
and assigned them to these C-APCs, these APCs generally describe
appropriate ranges and placements for these musculoskeletal codes being
proposed for removal in CY 2026, which will allow for appropriate
payment. As discussed in section III.E.3. of this rule, we also propose
to establish a 7 level Musculoskeletal Procedures APC series, which
will allow for the assignment of musculoskeletal procedures removed
from the IPO list to an APC with an applicable range of estimated
costs. We had previously finalized the removal of 266 musculoskeletal
procedures from the IPO list in the 2021 OPPS/ASC final rule. Although
we largely reversed this action in the 2022 OPPS/ASC final rule based
on our halting of the elimination of the IPO list and re-evaluation of
our removal criteria at the time, we maintained the removal of seven
musculoskeletal procedures, and their related anesthesia services, from
the IPO list. In the CY 2023 OPPS/ASC final rule, we removed 11 more
musculoskeletal services from the IPO list. As we have explained, we
now believe the entire IPO list should be eliminated over a 3-year
transition period. Our previous consideration of removing
musculoskeletal procedures from the IPO list, and the continued removal
of such procedures from it, suggests that we should begin the
elimination and transition from the IPO list with the removal of these
procedures from the list.
For CY 2026, we have identified 285 mostly musculoskeletal services
that we propose to remove from the IPO list, including 16 non-
musculoskeletal services that were recommended by the 2020 HOP Panel
and removed from the IPO list in CY 2021 (85 FR 86089 through 86092).
These 16 services, which include cardiovascular, lymphatic, digestive,
gynecological, and endovascular procedures, were added back to the IPO
list when the elimination of the IPO list was halted in CY 2022. The
285 services that we propose to remove from the IPO list for CY 2026
and subsequent years, including the CPT/HCPCS code, long descriptor,
and the proposed CY 2026 payment indicators, are included in Table 69.
These services and their proposed status indicators and APC assignments
(if applicable) are included in Addendum B of this proposed rule as
well. The complete list of codes that describe services that will be
paid by Medicare in CY 2026 as inpatient only services is included as
Addendum E to this CY 2026 OPPS/ASC proposed rule, which is available
on the CMS website.\99\
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\99\ In this rulemaking, we propose to eliminate, the IPO list,
beginning in CY 2026, with all services being removed from the list
over the course of a three-year transition period. The CY 2026 IPO
List can be found here: Hospital Outpatient PPS, https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.
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3. Effect on Beneficiary Cost-Sharing
As noted in the CY 2021 OPPS/ASC final rule, some interested
parties have shared concerns with us that removing procedures from the
IPO list and allowing them to be paid under the OPPS when performed in
the outpatient setting may result in an increased financial burden for
beneficiaries for certain complex services (85 FR 86086). Under current
law, the OPPS cost-sharing for a service is capped at the applicable
Part A hospital inpatient deductible amount for that year for each
service. This cap applies to individual services, and some commenters
have expressed concern in the past that if a Medicare beneficiary
receives multiple separately payable OPPS services, it is possible that
the aggregate cost-sharing for a beneficiary may be higher for services
provided in the outpatient setting than it would be had the services
been furnished during an inpatient stay. However, we emphasize that
services included on the IPO list tend to be surgical procedures that
would typically be the focus of the hospital outpatient stay and would
likely be assigned to a comprehensive APC (C-APC) when they are removed
from the IPO list. As such, these services would likely be considered a
single episode of care with one payment rate and one copayment amount,
instead of multiple copayments for each individual service. In most
instances, we expect that beneficiaries will not be responsible for
multiple copayments for individual ancillary services removed from the
IPO list since, because of their assignment to C-APCs, the inpatient
deductible cap will apply to the entire hospital claim which is billed
and paid as a comprehensive service or procedure. In the event there
are separately payable OPPS services included on a claim with a service
assigned to a C-APC, the policy that the OPPS cost-sharing for an
individual service is capped at the applicable Part A hospital
inpatient deductible amount for that year for each service remains
applicable, which is that the OPPS cost-sharing for an individual
service is capped at the applicable Part A hospital inpatient
deductible amount for that year for each service. For further
information regarding beneficiary
[[Page 33669]]
copayments, please refer to section II.I. of this proposed rule.
4. Exemption From Certain Medical Review Activities for Services
Removed From the IPO List
To further address concerns from interested parties, we propose to
continue to exempt procedures that have been removed from the IPO list
from certain medical review activities to assess compliance with the 2-
midnight rule until the Secretary determines that the service or
procedure is more commonly performed in the Medicare population in the
outpatient setting. Specifically, we propose to continue the indefinite
exemption from site-of-service claim denials, referrals to Recovery
Audit Contractors (RACs), and RAC reviews for ``patient status'' for
procedures that are removed from the IPO list under the OPPS beginning
on January 1, 2021, as part of the transition away from the IPO list
(85 FR 86120). Pursuant to this exemption, initial medical review
contractors may continue to review claims for procedures previously on
the IPO list in order to provide education for practitioners and
providers regarding compliance with the 2-midnight rule, but will not
deny claims identified as noncompliant with respect to the site-of-
service under Medicare Part A. We propose that this exemption will
continue for all services or procedures removed from the IPO list until
the Secretary determines that the exemption is no longer appropriate
for each specific service or procedure because it is more commonly
performed in the outpatient setting. We are also seeking comment on
whether other exemption periods may be more warranted. For more
information on this proposal and the 2-Midnight rule, please refer to
section X.D. of this proposed rule.
Although we believe it is important to pause certain medical review
activities related to patient status to allow providers time to adjust
to the proposed changes to the IPO list, we note that initial medical
review contractors routinely address, and will continue to address, any
beneficiary quality of care complaints that include concerns about
treatment as a hospital inpatient or outpatient, not receiving expected
services, early discharge, and discharge planning. CMS's case
management system currently allows initial medical review contractors
and CMS to monitor the frequency and status of beneficiary quality of
care complaints and other beneficiary appeals by topic, provider type,
and geographic area. These numbers are currently compiled by the BFCC-
QIO national coordinating and oversight review contractor and reported
to the QIOs and CMS leadership on a weekly basis for monitoring
purposes. As previously noted, although we propose to continue to
indefinitely exempt procedures removed from the IPO list beginning on
January 1, 2021, from site-of-service claim denials, referrals to RACs,
and RAC reviews of ``patient status,'' medical review contractors would
continue to conduct initial medical reviews concerning the medical
necessity of both the services and the site of service, and will
continue to be permitted and expected to deny claims if the service
itself is determined not to be reasonable and medically necessary, as
noted in the CY 2021 OPPS/ASC final rule (85 FR 86118). Therefore,
given CMS's increasing ability to measure the safety of procedures
performed in the outpatient setting and to monitor the quality of care,
in addition to the other safeguards detailed previously in this
section, we now believe that quality of care is unlikely to be
negatively affected by the elimination of the IPO list. However, we
request that commenters submit evidence on what effect, if any, they
believe eliminating the IPO list may have on the quality of care.
5. Comment Solicitation on Order of Removal of Additional Clinical
Families From the IPO List During the Transition To Complete
Elimination of the IPO List
As stated previously in this section, we propose to eliminate the
current IPO list of 1,731 services, starting with the 285 mostly
musculoskeletal-related services as provided in Table 69. We are
requesting comments from the public on whether 3 years is an
appropriate time frame for the transition, whether there are other
services that would be ideal candidates for removal from the IPO list
in the near term, given known technological and other advances in care,
and the order of removal of additional clinical families of services,
and/or specific services, for each of the CY 2027 and CY 2028
rulemakings, until the IPO list is completely eliminated. Additionally,
we seek comment on whether we should restructure or create any new APCs
or C-APCs to allow for efficient OPPS payment for services that are
removed from the IPO list.
6. Comment Solicitation on Changes to IPO List Removal Criteria
In addition to our proposal to eliminate the IPO list over a 3-year
period, we propose to eliminate the codified criteria for removing
procedures from the IPO list at Sec. 419.23. As mentioned previously
in this section, we finalized the adoption of these longstanding
criteria for removal procedures from the list in the CY 2022 OPPS/ASC
final rule with comment period when we decided to halt the elimination
of the IPO list (86 FR 63678). However, if we finalize our proposal to
eliminate the IPO list in its entirety, there would no longer be any
need to maintain a list of criteria for removing individual procedures
from the list in any given year. However, we acknowledge that some
commenters may disagree with our proposed approach to the IPO list.
Therefore, we wish to consider other methods to provide greater
deference to the medical judgment of clinicians besides eliminating the
IPO list completely. We solicit comment on other approaches to provide
greater flexibility in making site-of-service decisions, such as
updating the list of criteria for removing procedures from the IPO
list.
In summary, given the developments in surgical technique and
technological advances in the practice of medicine, as well as the
various safeguards discussed previously in this section, we propose to
eliminate the IPO list over the course of the next 3 years, starting
with the removal of 285 mostly musculoskeletal-related services, as
provided in Table 69, in CY 2026. We propose to amend Sec. 419.22(n)
to state that, effective beginning on January 1, 2026, the Secretary
shall eliminate the list of services and procedures designated as
requiring inpatient care through a 3-year transition period, with the
list eliminated in its entirety by January 1, 2029. We believe that
there are a number of safety mechanisms that would continue to ensure
the safety of our beneficiaries and the quality of care, including
physician judgment, State and local regulations, accreditation
requirements, medical malpractice laws, hospital conditions of
participation, and other CMS initiatives.
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X. Nonrecurring Policy Changes
A. Method To Control Unnecessary Increases in the Volume of Outpatient
Services Furnished in Excepted Off-Campus Provider-Based Departments
(PBDs)
1. Background
In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59004
through 59014), we adopted a method to control unnecessary increases in
the volume of the clinic visit services furnished in excepted off-
campus provider-based departments (PBDs). We refer readers to the CY
2019 OPPS/ASC final rule with comment period for a detailed discussion
of the background, legislative provisions, and payment policies we
developed to address increases in the volume of covered outpatient
department (OPD) services. Below we discuss the policy we finalized in
the CY 2019 OPPS/ASC final rule with comment period and its application
under the OPPS for CY 2020 and subsequent years.
In the CY 2019 OPPS/ASC final rule with comment period, we
finalized a policy to use our authority under section 1833(t)(2)(F) of
the Act to adopt a method to control unnecessary increases in the
volume of covered outpatient department services. We applied an amount
equal to the site-specific Medicare Physician Fee Schedule (PFS)
payment rate for nonexcepted items and services furnished by a
nonexcepted off-campus PBD (the PFS payment rate) for the clinic visit
service, as described by HCPCS code G0463, when provided at an off-
campus PBD excepted from section 1833(t)(21) of the Act (departments
that bill the modifier ``PO'' on claim lines). However, we phased-in
the application of the reduction in payment for the clinic visit
service described by HCPCS code G0463 in the excepted provider-based
department setting over 2 years. For CY 2019, the payment reduction was
phased-in by applying 50 percent of the total reduction in payment that
would have applied if these departments were paid the site-specific PFS
rate for the clinic visit service. The PFS equivalent rate was 40
percent of the OPPS payment for CY 2019 (that is, 60 percent less than
the OPPS rate). We provided for a 2-year phase-in of this policy under
which one-half of the total 60 percent payment reduction (a 30-percent
reduction) was applied in CY 2019. These departments were paid
approximately 70 percent of the OPPS rate (100 percent of the OPPS rate
minus the 30 percent payment reduction that was applied in CY 2019) for
the clinic visit service in CY 2019.
For CY 2020, the second year of the 2-year phase-in, we stated that
we
[[Page 33685]]
would apply the total reduction in payment that is applied if these
departments (departments that bill the modifier ``PO'' on claims lines)
are paid the site specific PFS rate for the clinic visit service
described by HCPCS code G0463. For CY 2020 and subsequent years, the
PFS-equivalent rate was 40 percent of the proposed OPPS payment (that
is, 60 percent less than the OPPS rate).
In addition, as we stated in the CY 2019 OPPS/ASC final rule with
comment period (83 FR 59013), this policy was implemented in a non-
budget neutral manner. In order to effectively establish a method for
controlling the unnecessary growth in the volume of clinic visits
furnished by excepted off-campus PBDs that does not simply increase
other expenditures that are unnecessary within the OPPS and drive
different service-distorting decisions, we believed that this method
had to be adopted in a non-budget neutral manner consistent with the
OPPS statute.
In the CY 2023 OPPS/ASC final rule with comment period (87 FR
71748), we finalized a policy which provided that off-campus PBDs
(departments that bill the modifier ``PO'' on claim lines) of rural
Sole Community Hospitals (SCHs), as described under 42 CFR 412.92 and
designated as rural for Medicare payment purposes, are exempt from the
clinic visit payment policy that applies a Physician Fee Schedule-
equivalent payment rate for the clinic visit service, as described by
HCPCS code G0463, when provided at an off-campus PBD excepted from
section 1833(t)(21) of the Act. For the full discussion of this policy,
we refer readers to the CY 2023 OPPS/ASC final rule with comment period
(87 FR 72047 through 72051). For CY 2024 and CY 2025, we continued to
exempt excepted off-campus PBDs of rural SCHs from the clinic visit
payment policy.
We continue to believe that section 1833(t)(2)(F) of the Act
provides authority to implement this policy. The U.S. Court of Appeals
for the District of Columbia Circuit held in American Hospital
Association v. Azar, that a service-specific, non-budget-neutral
reduction of the reimbursement rate for OPD services ``qualifies as a
`method for controlling unnecessary increases in the volume of covered
[outpatient] services' '' under that provision. 964 F.3d 1230, 1245
(D.C. Cir. 2020) (quoting 42 U.S.C. 1395l(t)(2)(F)). The D.C. Circuit
reasoned in part that because ``[t]he lower the reimbursement rate for
a service, the less the incentive to provide it, all else being
equal[,] [r]educing particular the reimbursement rate . . . is
naturally suited to addressing unnecessary increases in the overall
volume of a service provided by hospitals.'' Id. at 1241. It ultimately
concluded that the policy ``falls comfortably within the plain text''
of section 1833(t)(2)(F) of the Act ``and fit[s] the design of the
statute as a whole and its object and policy.'' Id. at 1241, 45
(cleaned up). Our interpretation of the Act was, and still is, the best
one that falls well within the Act's delegation to the Secretary to
``develop a method for controlling unnecessary increases in the volume
of covered OPD services.'' We proceed on that basis here.
2. Expanding the Method To Control Unnecessary Increases in the Volume
of Outpatient Services Furnished in Excepted Off-Campus Provider-Based
Departments
As described in the CY 2019 OPPS/ASC final rule with comment
period, we found that previous rulemaking efforts were insufficient to
control the unnecessary growth of covered OPD services and as a result
we implemented a method to control for unnecessary growth in covered
OPD services by adjusting the payment rate for clinic visits in
excepted off-campus PBDs to be at the PFS-equivalent rate rather than
the higher OPPS rate. While this regulatory change and related
legislative enactments have had a positive impact, there is evidence of
continued growth in the volume of OPD services driven by site of
service payment differentials. Volume increases that seek to take
advantage of financial incentives created by payment policy rather than
clinical need are unnecessary and therefore warrant policy changes to
halt and address these increases. As the D.C. Circuit explained, ``[i]t
is reasonable to think that Congress . . . would have wanted the agency
to avoid causing unnecessary volume growth with its own reimbursement
practices.'' Am. Hosp. Ass'n, 964 F.3d at 1245. Accordingly, we propose
here to remove this differential for drug administration services
delivered in excepted PBDs.
Many healthcare services can be performed in multiple settings.
Even when there is little variation in the service provided across
settings, the Medicare Trust Fund and Medicare beneficiaries typically
pay more when that service is performed in an OPD than when the same
service is performed in a physician office. That payment differential
creates an incentive for providers to shift the care of beneficiaries
to an OPD rather than a physician office or ASC, even if the services
can be safely performed in the physician office or an ASC. Generally,
20 percent of any increased payment is the responsibility of the
beneficiary in the form of coinsurance. Taking into account that any
payment differential occurs across millions of claims for drug
administration and other services each year, this threatens to create a
significant source of unnecessary spending by Medicare beneficiaries
directly (in the form of unnecessarily high copayments) and on behalf
of Medicare (in the form of unnecessarily high Medicare payments for
services that can be performed safely in a different setting).
In the CY 2019 OPPS/ASC final rule with comment period we discussed
vertical consolidation and the practice of hospitals purchasing
freestanding physician practices and converting the billing from the
PFS to higher paying OPD visits. These conversions shift market share
from freestanding physician offices to OPDs. We stated that we believed
there was a correlation among the increasing volume of OPD clinic
visits, vertical integration, and the higher OPPS payment rates for
clinic visits. Favorable reimbursement for hospital-owned sites has
been shown to encourage hospitals' acquisition of physician
practices.100 101 Once a practice is acquired and designated
as an outpatient department, physician services can be billed at
higher, hospital-based rates. This type of consolidation has been
associated with higher Medicare spending and more intense treatment
patterns.102 103 104 We believe that the impact of vertical
integration and the increases in volume of outpatient services extends
beyond just the clinic visit. In the CY 2019 OPPS/ASC final rule with
comment period we cited our concern that beneficiaries receiving
chemotherapy administration, a high-volume service within the drug
administration APC family, receive more sessions on average when
treated in the OPD. Chemotherapy days per beneficiary were an estimated
9 to 12 percent higher in the hospital outpatient department than the
physician office setting.\105\ From 2003-2015 the rate of hospital or
health system ownership of cancer care
[[Page 33686]]
practices doubled from about 30 percent to about 60 percent.\106\ For
some drug administration services for cancer care, provider
consolidation increases the cost of outpatient chemotherapy
treatment.\107\
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\100\ https://www.healthaffairs.org/doi/10.1377/hlthaff.2016.0830.
\101\ https://onlinelibrary.wiley.com/doi/10.1111/1475-6773.13613.
\102\ https://jamanetwork.com/journals/jamainternalmedicine/fullarticle/2463591.
\103\ https://www.healthaffairs.org/doi/10.1377/hlthaff.2020.01183.
\104\ https://onlinelibrary.wiley.com/doi/10.1111/1475-6773.14172.
\105\ https://www.siteneutral.org/wp-content/uploads/2016/06/14_USON-Moran-Report-08272013.pdf.
\106\ https://www.healthaffairs.org/doi/10.1377/hlthaff.2016.0830.
\107\ https://www.healthaffairs.org/doi/10.1377/hlthaff.2016.0830.
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Our policy in the CY 2019 OPPS/ASC final rule with comment period
to pay for clinic visits in excepted off-campus PBDs at the PFS-
equivalent rate addressed the financial incentive for only one type of
service in one outpatient setting. However, the share of other
ambulatory services billed under the OPPS has continued to increase.
For example, in its 2023 report, MedPAC stated that the share of
chemotherapy services furnished in OPDs has grown from 35.2 percent in
2012 to 51.9 percent in 2021. HCPCS code 96413--which describes
chemotherapy administration, intravenous infusion technique; up to 1
hour, single or initial substance/drug--is one of the most frequently
billed drug administration codes in the OPPS. In 2025 this service has
a physician office payment rate of around $119 dollars and an OPPS
payment rate of approximately $341, making the same chemotherapy
infusion service 186 percent more expensive in the OPD than in the
physician office. Similarly, between 2012 and 2021, the OPD share of
nuclear cardiography services has grown from 33.9 percent to 47.6
percent, and the OPD share of echocardiography services has grown from
31.6 percent to 43.1 percent.\108\
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\108\ https://www.medpac.gov/wp-content/uploads/2023/06/Jun23_Ch8_MedPAC_Report_To_Congress_SEC.pdf.
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We are not aware of any clinical or other substantive change in the
services provided that would have led to the increases in the share of
these services furnished in OPDs, as opposed to in other settings. The
natural inference is that these changes result from financial
incentives, and therefore are unnecessary increases in the volume of
OPD services.
We believe that financial incentives have driven volume from the
office setting to the higher paying OPD setting, creating unnecessary
increases in the volume of OPD services. We believe that this problem
is pervasive and exists across service families. Any time a service is
provided in the higher cost OPD when it could be provided safely in the
physician office, but it is not because of financial incentives, that
represents unnecessary utilization of the OPD setting. In CY 2019, we
chose to start tackling this problem by addressing the clinic visit
when provided in excepted PBDs. In that case, it was practical to
address only a single code, G0463, the clinic visit. For CY 2026, we
are proposing to address drug administration services provided at
excepted PBDs. We propose to address payment for these services across
the APC family, as we believe this volume control method should apply
to all drug administration services at excepted PBDs. As discussed
later in this section, in future years we plan to examine other APC
families of services, such as imaging without contrast, and other
settings, specifically on-campus outpatient clinic visits.
Our authority under section 1833(t)(2)(F) of the Act to adopt a
method to control unnecessary increases in the volume of covered
outpatient department services authorizes us to address the
consequences of these payment inequalities. Given these continued
disparities, we believe it is necessary to further examine and refine
our volume control method by identifying additional covered OPD
services at high risk of unnecessarily shifting to the hospital setting
based on financial incentives rather than medical necessity. We
conducted analyses of several families of services paid under the OPPS
and present our findings on the utilization and payment of drug
administration services in the sections below.
3. Utilization of Drug Administration Services
The high volume of drug administration services and the magnitude
of rate differences between the physician office and OPD settings make
it a family of services likely to migrate to a higher paying setting of
care. Drug administration includes the intravenous or intramuscular
administration of a range of medicines. Drug administration can be
performed in either physician offices or OPDs. The effort to administer
a drug does not meaningfully differ between a physician office or OPD.
In the OPPS, drug administration is categorized into four levels of
complexity. Payments are set at a category level, called an Ambulatory
Payment Classification (APC). The APCs for drug administration are
5691, 5692, 5693, and 5694. Currently, 61 Healthcare Common Procedure
Coding System (HCPCS) codes make up the four drug administration APCs.
HCPCS codes that are similar in terms of cost and clinical attributes
are placed in the same APC. All HCPCS codes in the same APC have the
same OPPS payment rate. The individual HCPCS and APC assignments are
available in Addendum B to this proposed rule.
We evaluated the growth in volume and spending for multiple
families of Ambulatory Payment Classifications (APCs) in OPDs across
multiple years of claims data. Should commenters wish to replicate any
of our analyses, the CMS website includes information about obtaining
the ``Limited Data Set,'' https://www.cms.gov/data-research/files-for-order/data-disclosures-and-data-use-agreements-duas/limited-data-set-lds through which OPPS claims data is available for purchase. We found
that there has been an increase in volume of services paid through the
drug administration APCs (5691-5694) over time, which would indicate
that there has been migration of these services to the OPD setting.
From 2011 to 2019 the volume of drug administration services paid under
these APCs grew by almost 35 percent. This growth persisted even with
the introduction of the PFS-equivalent rate for PBDs subject to section
603 of the Bipartisan Budget Act of 2015 starting in 2017. The COVID-19
Public Health Emergency (PHE) did impact utilization across the OPPS,
but we have seen the volume of drug administration services rebound and
return to this pattern of growth. Between 2018 and 2024 the number of
beneficiaries enrolled in fee-for-service Medicare decreased by over 14
percent.\109\ Since 2022, we have simultaneously seen increases in the
volume of drug administration services provided in OPDs utilized per
beneficiary.\110\ Meaning that while there are now fewer Medicare fee-
for-service beneficiaries than there were prior to the COVID-19 PHE,
each beneficiary on average is receiving more drug administration
services in the OPD setting than they were prior to the COVID-19 PHE.
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\109\ https://data.cms.gov/summary-statistics-on-beneficiary-enrollment/medicare-and-medicaid-reports/medicare-monthly-enrollment.
\110\ Based on our analysis of claims data and Medicare FFS
enrollment.
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In addition to looking at the growth in volume and spending at the
APC level, we looked at the growth in volume at the HCPCS code level
and found that some HCPCS codes within the drug administration APCs
have experienced significant growth. HCPCS code 96413--which describes
chemotherapy administration, intravenous infusion technique; up to 1
hour, single or initial substance/drug--is the most frequently billed
HCPCS code within any of the drug administration APCs at excepted PBDs.
This code has seen an almost 70 percent increase in volume from 2011 to
[[Page 33687]]
2023.\111\ In 2025, this service has a physician office payment rate of
around $119 dollars and an OPPS payment rate of approximately $341.
That makes the same chemotherapy infusion service 184 percent more
expensive in the OPD than in the physician office. We conclude that
this 70 percent increase in excepted hospital outpatient department
volume over a 10-year period was at least partially driven by the
payment differential between the physician office and OPD setting. The
HCPCS codes representing chemotherapy administration grew in volume by
64 percent in the OPPS between 2011 and 2023.\112\ The chemotherapy
administration codes represent some of the highest cost and most
frequently billed services within the drug administration APCs. MedPAC
found that from 2015 to 2021, the volume of chemotherapy administration
in freestanding clinician offices, the ambulatory setting for which
payment rates are usually lowest, fell 14.2 percent.\113\ We conclude
that if there was not a difference in payment rates, fewer of these
services would have shifted to the hospital outpatient setting and the
corresponding increase in Medicare payments and beneficiary cost-
sharing would not have occurred.
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\111\ Based on our analysis of claims data.
\112\ HCPCS included in the chemotherapy administration category
are:96423, 96549, 96401, 96402, 96405, 96411, 96415, 96417, 96406,
96409, 96422, 96542, 96413, 96416, 96420, 96425, 96440, 96446,
96450, G0498.
\113\ https://www.medpac.gov/wp-content/uploads/2023/06/Jun23_Ch8_MedPAC_Report_To_Congress_SEC.pdf.
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We are also concerned about beneficiaries who pay higher cost
sharing because of the payment incentives driving them to OPDs. Drug
administration services are skewed toward a small portion of the
population with high utilization. Cancer patients receiving
chemotherapy are among the highest utilizers of these services. The
administration of chemotherapy highlights that a small portion of the
population is disproportionately harmed by the current state of drug
administration payment in the OPPS. A meaningful number of
beneficiaries in this cohort are paying substantially more per year in
cost sharing than they would had they received the same treatments at
freestanding facilities or non-excepted off-campus PBDs.\114\ Focusing
on the cost sharing of chemotherapy patients demonstrates how this
cohort is disproportionately impacted by the current payment structure
and is uniquely positioned to benefit from an appropriate application
of our authority to control for unnecessary increases in the volume of
OPD services. Indeed, one study found that ``in 2021, approximately
74,000 Medicare FFS chemotherapy patients utilized excepted off-campus
OPDs and would have had cost sharing expenses that were $292 lower per
patient had site neutrality applied. For the highest utilizing 5,000
patients who received chemotherapy most frequently at excepted off-
campus OPDs, cost sharing would have been $1,055 lower per patient if
payments had been site neutral.'' \115\
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\114\ https://craftmediabucket.s3.amazonaws.com/uploads/Drug-Admin-Off-Campus-Site-Neutrality-2023.10.18.pdf.
\115\ https://craftmediabucket.s3.amazonaws.com/uploads/Drug-Admin-Off-Campus-Site-Neutrality-2023.10.18.pdf.
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While there have been increases in the volume of drug
administration services in the hospital outpatient setting in recent
years, drug administration services are still frequently provided in
freestanding facilities. One study found that 68 percent of drug
administration services currently take place in physician offices,
indicating that they are safely performed in multiple settings.\116\ In
its 2023 report, MedPAC examined APCs for which it might be appropriate
to make a site neutral payment. To identify appropriate APCs they
compared the volume of services in each APC that was provided in OPDs,
ASCs, and freestanding offices over the period of 2016 through 2021,
but omitted 2020 because the coronavirus pandemic affected the volume
of care in ambulatory settings. If freestanding offices had the highest
volume for an APC, they concluded that the services in that APC could
be provided safely in freestanding offices for most beneficiaries and
that beneficiaries would be able to access the services in that APC.
Therefore, for those services, it would be reasonable to align the OPPS
payment rates with the PFS payment rates. MedPAC found that all four of
the drug administration APCs had higher volume in freestanding
facilities than in OPDs, indicating that these services can be safely
provided to beneficiaries in a lower cost setting of care. We believe
MedPAC's analysis aligns well with the rationale CMS adopted in the CY
2019 OPPS/ASC final rule with comment period: we consider OPPS
utilization unnecessary if the beneficiary can safely receive the same
services in a lower cost setting but instead receives care in the
hospital outpatient setting because of site-of-service payment
differentials.
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\116\ https://craftmediabucket.s3.amazonaws.com/uploads/Drug-Admin-Off-Campus-Site-Neutrality-2023.10.18.pdf.
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In our review of the utilization of drug administration services in
excepted PBDs we found increases in the volume of services over time,
increases in the volume of services provided per beneficiary, and cases
of significant volume growth for some individual HCPCS codes within the
drug administration APC family. We believe that these changes represent
unnecessary increases in the volume of covered outpatient department
drug administration services and that it would be appropriate to apply
our volume control method to these services.
4. Payment for Drug Administration Services at PBDs
As discussed in the CY 2017 OPPS/ASC final rule with comment period
(81 FR 33648), we established a PFS relativity adjuster that is applied
to the OPPS rate for the billed non-excepted items and services
furnished in a non-excepted off-campus PBD in order to calculate
payment rates under the PFS. The PFS relativity adjuster reflects the
estimated overall difference between the payment that would otherwise
be made to a hospital under the OPPS for the non-excepted items and
services furnished in non-excepted off-campus PBDs and the resource-
based payment under the PFS for the technical aspect of those services
with reference to the difference between the facility and nonfacility
(office) rates and policies under the PFS. The current PFS relativity
adjuster is set at 40 percent of the amount that would have been paid
under the OPPS (82 FR 53028). Non-excepted PBDs are required to use the
modifier ``PN'' so that the PFS relativity adjuster is applied to the
payment of their claim. Excepted PBDs use the modifier ``PO'' on their
claims to indicate that the service was provided at an excepted off-
campus PBD and that payment should generally be made at the OPPS rate.
In the CY 2019 OPPS/ASC final rule with comment period, we stated
that we consider the shift of services from the physician office to the
hospital outpatient department unnecessary if the beneficiary can
safely receive the same services in a lower cost setting but is instead
receiving services in the higher paid setting due to payment
incentives.\117\ In order to better understand the migration of
services in
[[Page 33688]]
OPDs we analyzed claims data for drug administration services to assess
whether increases in volume and spending could be driven by payment
incentives. We examined the top twenty most frequently billed HCPCS
codes in the drug administration APC family at both excepted and non-
excepted off-campus PBDs. Twenty HCPCS codes account for over 98
percent of the volume of drug administration services in off-campus
PBDs. We found that the top twenty most frequently billed HCPCS codes
in the drug administration APCs when provided at an off-campus PBD
excepted from section 1833(t)(21) of the Act (departments that bill the
modifier ``PO'' on claim lines) and off-campus PBDs that are not
excepted from section 603 (departments that bill the modifier ``PN''),
are the same with slight variations in the order based on volume. We
know that there is claims volume for the overwhelming majority of HCPCS
codes in the drug administration APCs with both the ``PO'' and ``PN''
modifiers. That indicates that the payment rate in non-excepted PBDs is
sufficient and can support of the provision of these services in an
off-campus PBD. We further used the PFS payment rates for the top
twenty most frequently billed drug administration HCPCS codes by
excepted PBDs (departments that bill the modifier ``PO'' on claim
lines) and volume weighted them to create a PFS proxy APC payment rate
for each of the four drug administration APCs. We found that for each
of the four APC payment levels, the same services were paid 200-300
percent higher under the OPPS than under the PFS. The volume-weighted
PFS payment for the drug administration APCs ranged from 24 percent to
33 percent of the OPPS payment.
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\117\ https://www.federalregister.gov/documents/2018/11/21/2018-24243/medicare-program-changes-to-hospital-outpatient-prospective-payment-and-ambulatory-surgical-center.
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We conclude that the differential in our payment rates has created
a payment incentive that has led to unnecessary growth for the services
in the drug administration APCs. If the PFS payment rate for drug
administration APCs ranges from 24 percent to 33 percent of the OPPS
payment, then payment using the PFS relativity adjuster of 40 percent
should sufficiently cover the cost of these services. We consider the
shift of services from the physician office to the hospital outpatient
department unnecessary if the beneficiary can safely receive the same
services in a lower cost setting but is instead receiving services in
the higher paid setting due to payment incentives. We believe the OPPS
payment rate for drug administration APCs being several times greater
than the PFS rate provides this payment incentive and that the growth
in drug administration services paid under the OPPS over time is
unnecessary.
5. Patient Severity and Cost of Care
In comments to the CY 2019 OPPS/ASC proposed rule and subsequent
rulemaking, we heard from commenters that the higher payments for
services in hospital outpatient settings are justified by the level of
care patients need, the higher costs of providing care in hospitals,
and the costs of maintaining emergency care and standby capacity. We
recognize that OPDs serve unique patient populations and provide
services to medically complex beneficiaries; however, there is no
evidence to demonstrate the need for higher payment for services
provided in OPDs that could also be provided in lower-cost settings. In
general, despite marked differences in payment rates for a range of
services, identical services are being delivered to very similar
patients across physicians' offices, hospital outpatient departments,
and ASCs.118 119 Moreover, a 2023 literature review found no
peer-reviewed evidence that shows differences in the quality of
services delivered across hospital outpatient departments and
physicians' offices.\120\ In their 2023 report, MedPAC evaluated risk
scores from the CMS hierarchical condition category (CMS-HCC) risk-
adjustment model to compare the medical complexity of OPD patients with
patients in freestanding offices. They found that, on average, OPD
patients have higher risk scores, which suggests that OPD patients are
potentially more medically complex than those in physician offices.
However, they also found substantial overlap in the CMS-HCC risk scores
of patients in these two settings, which suggests that the difference
in patient severity between settings is small. Their analysis showed
that the effects of patient severity on cost of care for the aligned
services is not statistically significant as the services, like drug
administration, are generally of low complexity. In addition, if there
is a need to bill for more complex cases, under the OPPS providers can
often bill separately for additional services that a patient might
need.
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\118\ https://tobin.yale.edu/sites/default/files/2023-10/Site-Neutral%20Payment%20Literature%20Review%2010302023.pdf.
\119\ https://medpac.gov/wp-content/uploads/2023/06/Jun23_Ch8_MedPAC_Report_To_Congress_SEC.pdf.
\120\ https://tobin.yale.edu/sites/default/files/2023-10/Site-Neutral%20Payment%20Literature%20Review%2010302023.pdf.
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6. Impact of Unnecessary Increases in Volume on the OPPS
Our concern with unnecessary increases in the volume of drug
administration services is tied to the health and sustainability of the
OPPS. In the CY 2019 OPPS/ASC final rule with comment period, we found
that the mean and median annual increase in the volume and intensity of
hospital outpatient services was about 5.5 percent and 5.4 percent,
respectively, from 2011 to 2019. During this time period, the estimated
increase in aggregate annual hospital reimbursements incurred through
Medicare Fee for Service (FFS) Part B was $28.2 billion.\121\ As Table
70 shows, we projected that between 2019 and 2027, the cost of
outpatient hospital services per FFS enrollee would grow at a mean of
about 7.3 percent per year and a median of 8.1 percent per year. This
accounts for a $27.2 billion increase in aggregate annual incurred
reimbursements for hospitals in FFS Part B during that time, far
exceeding the growth of other categories of Part B services in FFS in
dollar terms.\122\
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\121\ Available in Table IV.B6 at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/TR2019.pdf.
\122\ Available in Tables IV.B3 and B6 at https://www.cms.gov/oact/tr/2024.
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[[Page 33689]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.112
As we stated in the CY 2019 OPPS/ASC final rule with comment
period, there is evidence that increased volume and intensity of
certain covered OPD services is likely driven by financial incentives
to furnish services in hospitals in order to receive higher
reimbursement, rather than making site-of-service decisions based on
medical necessity. We continue to be concerned with the rate of
increase in program expenditures under the OPPS for several reasons.
The OPPS was originally designed to manage Medicare spending growth by
replacing a cost-based system with a prospective payment system.
Contrary to this Congressional purpose, the OPPS has continued to be
the one of the fastest growing sectors of Medicare payments out of all
payment systems under Medicare Parts A and B.\124\ Furthermore, we are
concerned that the persisting rate of growth relative to other payment
systems suggests that payment incentives, rather than patient acuity or
medical necessity, continue to affect site-of-service decision-making.
This site-of-service selection has an impact on not only the Medicare
program, but also on Medicare beneficiary out-of-pocket spending.
Therefore, to the extent that there are lower-cost sites-of-service
available, we continue to believe that beneficiaries and the physicians
treating them should have that choice and not be encouraged to receive
or provide care in higher paid settings solely for financial reasons.
Our authority to implement volume control methods is an important tool
in combating unnecessary OPPS utilization. We have seen success in
stemming the unnecessary growth in the volume of off-campus clinic
visits and believe off-campus drug administration services are in need
of similar examination.
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\123\ Available in Table IV.B3 at https://www.cms.gov/oact/tr/2024.
\124\ https://www.gpo.gov/fdsys/pkg/FR-2018-11-21/pdf/2018-24243.pdf.
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As we stated in the CY 2019 OPPS/ASC final rule with comment
period, we consider the shift of services from the physician office to
the hospital outpatient department unnecessary if the beneficiary can
safely receive the same services in a lower cost setting but is instead
receiving services in the higher paid setting due to payment
incentives. We believe the increase in the volume of drug
administration services is due to the payment incentive that exists to
provide this service in the higher cost setting. Because these services
could generally be safely provided in a lower cost setting, we believe
that the growth in drug administration services paid under the OPPS is
unnecessary. Further, we believe that paying for drug administration
services provided at excepted off-campus departments at the PFS-
equivalent rate would be an effective method to control the volume of
these unnecessary services because the payment differential that is
driving the site-of-service decision will be removed. In particular, we
believe this method will control unnecessary volume increases both in
terms of the number of covered outpatient department services furnished
and costs associated with those services.
Therefore, given the unnecessary increases in the volume of drug
administration services in hospital outpatient departments, for the CY
2026 OPPS, we propose to use our authority under section 1833(t)(2)(F)
of the Act to apply an amount equal to the site-specific PFS payment
rate for nonexcepted items and services furnished by a non-excepted
off-campus PBD (the PFS payment rate) for any HPCPCs codes assigned to
the drug administration services APCs, when provided at an off-campus
PBD excepted from section 1833(t)(21) of the Act (departments that bill
the modifier ``PO'' on claim lines). Table 71 shows the specific APCs
that we would identify for this proposal, which are APCs 5691-5694.
Off-campus PBDs that are not excepted from section 603 (departments
that bill the modifier ``PN'') already receive a PFS-equivalent payment
rate for any HCPCS codes assigned to the drug administration services
APCs. Additionally, this proposal aligns with President Trump's
Executive Order (E.O.) 14273, ``Lowering Drug Prices by Once Again
Putting Americans First.'' \125\ Section 11 of the E.O., ``Reducing
Costly Care for Seniors,'' directs the Secretary to ``evaluate and, if
appropriate and consistent with applicable law, propose regulations to
ensure that payment within the Medicare program is not encouraging a
shift in drug administration volume away from less costly physician
office settings to more expensive hospital outpatient departments.''
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\125\ https://www.govinfo.gov/content/pkg/FR-2025-04-18/pdf/2025-06837.pdf.
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[[Page 33690]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.113
In the CY 2019 OPPS/ASC proposed rule (83 FR 37142), we finalized
our method to address the unnecessary increases in utilization of
clinic visits in the OPD setting in a nonbudget neutral manner. For CY
2026, we likewise propose to implement this proposed method to address
the unnecessary increases in utilization of drug administration
services in the OPD setting in a non-budget neutral manner. We continue
to believe that, while section 1833(t)(9)(B) of the Act requires that
certain changes made under the OPPS be made in a budget neutral manner,
this section does not apply to the volume control method under section
1833(t)(2)(F) of the Act. In particular, section 1833(t)(9)(A) of the
Act, titled ``Periodic review,'' provides, in part, that the Secretary
must annually review and revise the groups, the relative payment
weights, and the wage and other adjustments described in paragraph (2)
to take into account changes in medical practice, changes in
technology, the addition of new services, new cost data, and other
relevant information and factors'' (emphasis added). Section
1833(t)(9)(B) of the Act, titled ``Budget neutrality adjustment''
provides that if ``the Secretary makes adjustments under paragraph (A),
then the adjustments for a year may not cause the estimated amount of
expenditures under this part for the year to increase or decrease from
the estimated amount of expenditures under this part that would have
been made if the adjustments had not been made'' (emphasis added).
However, a volume-control method under section 1833(t)(2)(F) of the Act
is not an ``adjustment'' under paragraph (2). Unlike the wage
adjustment under section 1833(t)(2)(D) of the Act and the outlier,
transitional pass-through, and equitable adjustments under section
1833(t)(2)(E) of the Act, section 1833(t)(2)(F) of the Act refers to a
``method'' for controlling unnecessary increases in the volume of
covered OPD services, not an adjustment. Likewise, sections
1833(t)(2)(D) and (E) of the Act also explicitly require the
adjustments authorized by those paragraphs to be budget neutral, while
the volume control method authority at section 1833(t)(2)(F) of the Act
does not. Therefore, the volume control method proposed under section
1833(t)(2)(F) of the Act is not one of the adjustments under section
1833(t)(2) of the Act that is referenced under section 1833(t)(9)(A) of
the Act that must be included in the budget neutrality adjustment under
section 1833(t)(9)(B) of the Act. Moreover, section 1833(t)(9)(C) of
the Act specifies that if the Secretary determines under methodologies
described in paragraph (2)(F) that the volume of services paid for
under this subsection increased beyond amounts established through
those methodologies, the Secretary may appropriately adjust the update
to the conversion factor otherwise applicable in a subsequent year. We
interpret this provision to mean that the Secretary can implement a
volume control method under section 1833(t)(2)(F) of the Act in a
nonbudget neutral manner in the year in which the method is
implemented, and that the Secretary may then make further adjustments
to the conversion factor in a subsequent year to account for volume
increases that are beyond the amounts estimated by the Secretary under
the volume control method.
We stated in the CY 2019 OPPS/ASC proposed rule (83 FR 37143) that
we believe implementing a volume control method in a budget neutral
manner would not appropriately reduce the overall unnecessary volume of
covered OPD services, and instead would simply shift the movement of
the volume within the OPPS system in the aggregate, a concern similar
to the one we discussed in the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66613). We believe that concern applies to drug
administration services just the same. The estimated payment impact for
various provider classifications is displayed in Table 113: Estimated
Impact of the Proposed Changes for the Hospital Outpatient Prospective
Payment System of this proposed rule. For CY 2026, the estimated
savings are $280 million, with $210 million of the savings accruing to
Medicare, and $70 million saved by Medicare beneficiaries in the form
of reduced beneficiary coinsurance. To effectively establish a method
for controlling the unnecessary growth in the volume of drug
administration services furnished by excepted off-campus PBDs that does
not simply reallocate expenditures that are unnecessary within the
OPPS, we believe that this method must be adopted in a nonbudget
neutral manner. The impact associated with this proposal is further
described in section XXV. of this proposed.
While we are refining our method to control for unnecessary
increases in the volume of hospital outpatient department services, we
continue to recognize the importance of not impeding development or
beneficiary access to new innovations. We are soliciting public
comments on other ways to exercise the Secretary's statutory authority
under section 1833(t)(2)(F) of the Act:
Are there other services for which CMS should develop a
method to control unnecessary increases in the volume of covered OPD
services by paying a PFS-equivalent rate for services provided at
excepted off-campus PBDs? Of particular concern for us are the services
within the imaging without contrast APCs (APCs 5521-5524). Imaging
without contrast services are some the most costly and frequently
provided services at excepted PBDs. We believe that there is a high
likelihood that there has been unnecessary growth in this space and
that a volume control method would be appropriate to apply here in the
future. Would it be appropriate to apply this method to the Imaging
Without Contrast APCs?
7. Request for Information: Expanding the Method To Control for
Unnecessary Increases in the Volume of Covered OPD Services to On-
Campus Clinic Visits
As discussed above, we finalized a method to control unnecessary
increases in the volume of covered OPD services under section
1833(t)(2)(F) of the Act in the CY 2019 OPPS/ASC final rule with
comment period. This method was to pay the PFS-equivalent payment rate
for clinic visit services furnished by excepted off-campus PBDs,
removing the payment incentive to furnish clinic
[[Page 33691]]
visit services in these PBDs. In the above discussion, we note that the
volume of covered OPD services is still unnecessarily high for other
services, and we propose a similar policy for drug administration
services furnished by excepted off-campus PBDs. For the reasons
explained above, we believe that drug administration is the next most
appropriate service to include in our method for volume at excepted
off-campus PBDs. However, we recognize that the clinic visit is still
the most utilized service across the OPPS and over 60 percent of clinic
visits furnished under the OPPS are furnished on-campus. These on-
campus clinic visits are not impacted by the existing volume control
policy. Given the volume for clinic visits is so significant, we are
requesting information on whether it would be appropriate to address
unnecessary increases in the volume of covered OPD services by
expanding the method to control unnecessary increases in volume to on-
campus clinic visits. We are requesting information on the potential
impact of a policy to pay the PFS-equivalent rate of 40 percent of the
OPPS rate for clinic visit services furnished in on-campus OPDs. We
intend to use the responses to this request to inform future
rulemaking. Specifically, we are requesting feedback on to the
following topics:
Given clinic visits can safely be performed in other,
lower cost settings, to what extend are clinic visits performed at OPDs
``necessary'' or ``unnecessary''? Is it appropriate to include on-
campus clinic visits when considering how to address unnecessary volume
increases at OPDs? How would commenters suggest that CMS could identify
which clinic visits may be necessary to be provided on-campus at an
OPD? Are there such clinic visits?
What would be the impact on providers of such a policy?
Would any category of hospital be impacted more than others, for
example, those in rural areas? Would such a policy result in lower on-
campus OPD volume for clinic visits?
What would be the impact on beneficiaries of such a
policy? To what extent would removing any payment incentive from site-
of-service determination provide beneficiaries with greater access at
sites other than on-campus? To what extent would lower payments for on-
campus clinic visits reduce beneficiary access at on-campus OPDs? To
what extent would lower co-payments for on-campus clinic visits improve
beneficiary access by reducing cost as a potential barrier to care?
Are there additional costs associated with on-campus
clinic visits? If there are additional costs associated with on-campus
clinic visits, to what extent could these clinic visits be furnished in
a lower-cost setting, for example an off-campus PBD or a physician's
office?
Rural SCHs are excluded from the off-campus clinic visit
policy. Should rural SCHs be excluded from any similar on-campus
policy? Should any other type of hospital be excluded? Are there any
types of hospitals where clinic visits would be more likely to
represent ``necessary'' volume despite being able to be furnished in a
lower-cost setting?
8. Exemptions for Rural Sole Community Hospitals
We propose to expand our method to control unnecessary increases in
the volume of covered OPD services by paying a PFS-equivalent payment
rate for drug administration services furnished in excepted off-campus
PBDs. As discussed earlier in this section, we believe that this policy
is an appropriate method for controlling unnecessary volume of these
drug administration services in excepted off-campus PBDs because
beneficiaries can generally safely receive these same services in a
lower cost setting but instead receive care in a higher cost setting
due to payment incentives. In these cases, we explained that, similar
to the clinic visit policy established in the CY 2019 OPPS/ASC final
rule with comment period (83 FR 37142), to the extent similar services
can be safely provided in more than one setting, we do not believe it
is prudent for the Medicare program to pay more for these services in
one setting than another. We continue to believe the difference in
payment for these services is a significant factor in the shift in
services from the physician's office setting to the hospital outpatient
department.
In the CY 2023 OPPS/ASC final rule with comment period (87 FR 72047
through 72051), we stated that we believe that the volume of the clinic
visit service in PBDs of rural Sole Community Hospitals (SCHs) has been
driven by factors other than the payment differential for that service.
In that rule, we finalized an exemption to our clinic visit volume
control method and to instead pay the full OPPS payment rate, rather
than the PFS-equivalent rate, when the clinic visit is furnished in
excepted PBDs. In that rule, we explained that rural SCHs have
historically received special payment treatment to account for their
higher costs and the disproportionately harmful impact that payment
reductions could have on them. Because we propose a site-neutral
payment policy for drug administration services, we have additionally
considered whether a similar policy for rural SCHs or other provider
types would be appropriate.
a. Special Payment Treatment for Rural SCHs
Across the various Medicare payment systems, CMS has established a
number of special payment provisions for rural providers to ensure
access to high quality care for beneficiaries in rural areas. CMS
administers five statutory hospital payment designations in which rural
or isolated hospitals that meet specified eligibility criteria receive
higher reimbursement for hospital services than they otherwise would
receive under Medicare's standard payment methodologies. A rural
hospital may qualify as a Critical Access Hospital,\126\ Sole Community
Hospital \127\ (SCH), Rural Emergency Hospital \128\ (REH), or Medicare
Dependent Hospital \129\--each of which has different eligibility
criteria and payment methodologies. With the exception of Critical
Access Hospitals, rural hospitals may also qualify as Low Volume
Hospitals \130\ and Rural Referral Centers (RRCs),\131\ which qualify
these hospitals for additional payments or exemptions. Not all rural or
isolated hospitals receive special payment treatment under the OPPS.
For instance, CAHs are not paid under the OPPS and are reimbursed at
101 percent of reasonable costs for outpatient services. PBDs of CAHs
are not subject to Section 603 of the Bipartisan Budget Act of 2015.
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\126\ 42 CFR 485.601 through 485.647.
\127\ 42 CFR 412.92
\128\ 42 CFR 419.91
\129\ 42 CFR 412.108.
\130\ 42 CFR 412.101.
\131\ 42 CFR 412.96.
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Rural SCHs are a hospital type that has received special payment
treatment under the OPPS to account for their higher costs and the
disproportionately harmful impact that payment reductions could have on
them. In the CY 2006 OPPS final rule with comment period (70 FR 68556
through 68561), we finalized a payment increase for rural SCHs of 7.1
percent for all services and procedures paid under the OPPS, excluding
separately payable drugs and biologicals, items paid at charges reduced
to costs, and devices paid under the pass-through payment policy. This
policy was adopted under section 1833(t)(13)(B) of the Act, which
required the Secretary, by January 1, 2006, to provide for an
appropriate
[[Page 33692]]
adjustment under paragraph (t)(2)(E) to reflect the higher costs of
hospitals in rural areas if the Secretary determined, pursuant to a
study required by section 1833(t)(13)(A), that the costs to rural
hospitals by APC exceeded those costs for hospitals in urban areas. Our
analysis revealed that rural SCHs had significantly higher costs per
unit than urban hospitals. We have continued to adjust payments for
rural SCHs by 7.1 percent each year since 2006. As discussed in section
II.E. of this proposed rule, for CY 2026 we propose to continue the
current policy of utilizing a 7.1 percent payment adjustment for rural
SCHs.
As noted above, in the CY 2023 OPPS/ASC final rule with comment
period we finalized an exemption to our policy to pay the PFS-
equivalent rate for the clinic visit service at excepted off-campus
PBDs to control unnecessary increases in the volume of covered OPD
services. Commenters were generally supportive of this proposal and
noted that rural SCHs are typically the chief, if not sole, source of
community outpatient care for rural residents and opined that this
exemption would be vital to ensuring continued access to the care they
need. Some commenters stated that the exemption should be extended to
other types of hospitals, including urban SCHs. In that rule, we
explained that our analysis did not find that urban SCHs had the
additional resource costs for covered outpatient department services
that rural SCHs have, and only finalized applying the clinic visit
policy exemption to rural SCHs.
b. Utilization of Drug Administration Services in Off-Campus Provider-
Based Departments of Rurals SCHs
Earlier in this section, where we propose the volume control method
policy for drug administration services, we state that to the extent
there are lower-cost sites of service available, beneficiaries and the
physicians treating them should be able to choose the appropriate care
setting and not be encouraged to receive or provide care in settings
for which payment rates are higher solely for financial reasons.
However, many rural providers, and rural SCHs in particular, are often
the only source of care in their communities,\132\ which means
beneficiaries and providers are not choosing between a higher paying
off-campus PBD of a hospital and a lower paying physicians' office
setting. The closure of inpatient departments of hospitals and the
shortage of primary care providers in rural areas likely further drives
utilization to off-campus PBDs in areas where rural SCHs are located.
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\132\ https://www.shepscenter.unc.edu/wp-content/uploads/dlm_uploads/2017/11/SCHs_Differences_in_Community_Characteristics.pdf.
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We have reviewed utilization data for drug administration services
at rural SCHs and have not found strong evidence that drug
administration services are being utilized at an unnecessary volume at
excepted off-campus PBDs of rural SCHs. As with clinic visits, we do
not believe that rural SCH site-of-service decisions for drug
administration are being made solely based on payment rates. Rural
areas often experience lower availability of health care professionals
and hospitals than urban areas.\133\ Hospital closures in rural
communities are associated with lower access to health care and worse
health outcomes.\134\ Access to outpatient services, particularly in
rural areas, is vital to keeping beneficiaries healthy and out of the
hospital because beneficiaries in rural settings face unique challenges
that impact their health. In the CY 2023 OPPS/ASC final rule, we
explained that we believe that exempting rural SCHs from the clinic
visit policy would help to maintain access to care in rural areas by
ensuring rural providers are paid for clinic visit services provided at
off-campus PBDs at rates comparable to those paid at on-campus
departments (87 FR 72049). We believe that a similar exemption would be
warranted for the drug administration policy for similar reasons.
Specifically, we are proposing to exempt rural SCHs from payment of the
site-specific PFS-equivalent payment for drug administration services,
as described by APC family 569X, when furnished at an off-campus PBD
exempted from section 1833(t)(21) of the Act (departments that bill the
modifier ``PO'' on claim lines). Under this proposed policy, a rural
SCH would continue to bill services in APC family 569X with the ``PO''
modifier for CY 2026 and the payment rate for such services would
continue be the full OPPS payment without the PFS relativity
adjustment.
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\133\ https://www.gao.gov/assets/gao-21-93.pdf.
\134\ Mills CA, Yeager VA, Unroe KT, Holmes A, Blackburn J. The
impact of rural general hospital closures on communities--A
systematic review of the literature. J Rural Health. 2024;40:238-
248. https://doi.org/10.1111/jrh.12810.
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This exemption, should it be finalized, would result in higher
payments to excepted off-campus PBDs of rural SCHs compared to if it
were not finalized and rural SCHs were subject to the proposed volume
control method. The proposed CY 2026 OPPS full payment rates for drug
administration APCs 5691, 5692, 5693, and 5694 are $47.83, $74.57,
$216.49, $341.52, respectively. The PFS-equivalent rates for these
APCs, calculated by applying the 40 percent relativity adjuster to the
OPPS payment rates for rural SCHs, would be $19.13, $29.83, $86.60,
$136.61, respectively. By exempting rural SCHs, the Medicare payments
for these services would remain at the OPPS level. We estimate that
exempting rural SCHs from the method to control unnecessary volume of
drug administration services reduces the savings from this provision by
approximately $16 million for CY 2026. Per treatment, exempting rural
SCHs from this policy results in beneficiary cost sharing remaining
between $5.74 and $40.98 higher than it would be should we not finalize
this exemption, depending on the service. We note, however, that these
figures do not represent increases in costs to Medicare or the
beneficiaries above the current policy, as our proposed exemption would
maintain current payment rates at excepted off-campus PBDs of rural
SCHs of 107.1 percent of the OPPS payment rate for these services.
These figures are solely for the purpose of comparing potential savings
should we implement a method to control unnecessary volume in drug
administration services without such an exemption.
We invite comments on all aspects of the proposed exemption for
rural SCHs from the method to control unnecessary volume of drug
administration services. Specifically, we are requesting comments on
whether such an exemption is appropriate for rural SCHs, what the
impact on SCHs would be should we finalize the method without an
exemption for rural SCHs, and whether we should consider any other
hospital types for an exemption to either of the policies to control
unnecessary volume of outpatient services at off-campus PBDs.
Additionally, we are requesting comments on whether the current
exemption for rural SCHs from the method to control unnecessary volume
of clinic visit services remains appropriate.
B. Request for Information: Adjusting Payment Under the OPPS for
Services Predominately Performed in the Ambulatory Surgical Center or
Physician Office Settings
In general, Medicare payments to hospital outpatient departments
under the Outpatient Prospective Payment System (OPPS) are higher than
payments made to ASCs under the ASC payment system or to physician
offices under the Physician Fee Schedule (PFS)
[[Page 33693]]
for the same services. As discussed in section X.A. of this proposed
rule, CMS has taken steps to address payment disparities between
hospital outpatient departments and the physician office setting. While
we believe that our regulatory and the related legislative efforts to
control for unnecessary utilization and promote site neutrality in
Medicare payments for OPD services has had a positive impact, there is
evidence of continued growth in the volume of OPD services driven by
site-of-service payment differentials. Building on the CY 2019 OPPS/ASC
final rule with comment period policy for clinic visits, section X.A.
of this proposed rule includes a proposal to pay off-campus PBDs
otherwise excepted under section 603 of the BBA at the equivalent of
the site-specific PFS rate for drug administration services.
While we have implemented site-neutral policies to pay for certain
hospital outpatient clinic visits at a rate closer to that under the
PFS and propose to expand this policy to drug administration services,
we are seeking feedback for future rulemaking on the development of a
more systematic process for identifying ambulatory services at high
risk of shifting to the hospital setting based on financial incentives
rather than medical necessity and adjusting payments according.
Specifically, we seek feedback on the following questions:
1. What items and services paid under the OPPS may have experienced
unnecessary increases in volume? Should any policies that address those
increases be more targeted to those services that have the most notable
increases in volume indicative of shifting care from the ASC or
physician office setting to the hospital OPD setting?
2. Should we limit OPPS payment for certain services to the payment
made for that service under the ASC payment system or the PFS--
depending on the setting where the service is performed most
frequently? We note that the OPPS currently does not have a payment
policy to limit OPPS payment rates to the rate under ASC payment system
for procedures that are predominantly performed in an ASC. For example,
while a simple cataract removal with insertion of an intraocular lens
is a commonly-performed hospital outpatient surgical procedure, 82
percent of all such procedures that Medicare beneficiaries receive are
performed in an ASC setting. In general, ASC payment rates are roughly
55 percent of the payment rate under the OPPS (86 FR 63485).
3. If we were to adjust payment based on the setting-specific
volume of ambulatory services, should we pay the ASC payment amount if
the service is predominantly performed in the ASC setting; and if the
service is predominantly performed in the physician office setting,
should we continue to calculate the PFS-equivalent rate using a PFS
relativity adjuster that we would periodically update?
4. In determining the setting in which a service is performed most
frequently, should we use the most recent data available or should we
use data that is 5 or even 10 years prior to the rate-setting year? For
example, as noted above, the share of chemotherapy administration
services billed under the OPPS increased from 35.2 percent to 51.9
percent between 2012 and 2021, so using only more recent data may lead
to the conclusion that most of these services take place in the
hospital OPD setting, even if that was not historically true. For
services that experienced this type of migration, we believe it may be
prudent to attempt to address the accumulation of past unnecessary
increases in volume rather than allow that shift and the underlying
financial incentive that caused it to remain permanent. Should we use
solely Medicare FFS data for our analysis or should we explore and
potentially incorporate Medicare Advantage data into our work (to the
extent feasible and practicable)?
5. How could we account for the availability of OPDs, ASCs, and
physician offices in a geographic area when determining the setting in
which a service is most frequently performed? If there is a shortage of
one of these settings of care in a geographic area, would it be
appropriate to tie payment for a service to a setting of care that may
not be readily available to a beneficiary?
6. What are the best ways to address different packaging and
bundling policies across ambulatory payment systems? The PFS has less
packaging of ancillary items than the OPPS and ASC payment system and
tends to provide separate payment more frequently. Conversely, certain
surgical procedures that have a global code in the PFS may not be
packaged in the OPPS or ASC payment systems and the packaging policies
of the OPPS and ASC payment system are not based on the period of time
elapsed before or after the procedure or service. We could consider
retaining the original payment rate that would apply absent any
expanded site neutral policies, or we could apply a payment adjustment
that approximates the impact of the packaging policies in the payment
system whose rate would apply to the item or service under the proposed
ambulatory payment adjustment.
7. Should we exempt certain services from a larger site neutral
policy if such services are delivered in relation to emergent care,
trauma-related care, or other care where the hospital is the most
appropriate setting regardless of whether the item or service is
typically furnished in a different setting? We note that physicians are
appropriately responsible for making site-of-service decisions based on
their clinical expertise and may determine that the hospital OPD
setting is most appropriate for their patient's circumstances
regardless of the level of Medicare payment. We solicit comment on the
best way to designate items and services as being emergent or trauma-
related and whether to include other categories of care or
circumstances where certain items or services would be most
appropriately paid at the OPPS rate regardless of the typical setting
of care where they are furnished.
8. Should we apply OPPS site neutral policies more broadly to all
hospital OPDs or should we instead consider applying this payment
adjustment to only certain hospital OPDs, such as excepted off-campus
hospital PBDs?
9. Should we exempt certain types of hospitals from a larger site
neutral policy, such as rural Sole Community Hospitals, Medicare
Dependent Hospitals, or Rural Emergency Hospitals? Currently, rural
Sole Community Hospitals are exempted from the clinic visit site
neutrality policy and instead are paid the full OPPS rate when such
visits are furnished in excepted off-campus PBDs of these hospitals.
10. What other methods may be warranted to control unnecessary
increases in the volume of outpatient services besides changes to
payment rates, including prior authorization or other utilization
management policies?
11. What impact would the proposed ambulatory payment adjustment
have on beneficiaries and the health care market, including the
development of or beneficiary access to new health care innovations?
[[Page 33694]]
C. Virtual Direct Supervision of Cardiac Rehabilitation (CR), Intensive
Cardiac Rehabilitation (ICR), Pulmonary Rehabilitation (PR) Services
and Diagnostic Services Furnished to Hospital Outpatients
1. Background
a. Virtual Direct Supervision of CR, ICR and PR Services Furnished to
Hospital Outpatients (42 CFR 410.27(a)(1)(iv)(B)(1))
In the interim final rule with comment period titled ``Policy and
Regulatory Provisions in Response to the COVID-19 Public Health
Emergency,'' published on April 6, 2020 (the April 6th COVID-19 IFC)
(85 FR 19230, 19246, 19286), we changed the regulation at 42 CFR
410.27(a)(1)(iv)(D) \135\ to provide that, during a Public Health
Emergency (PHE) as defined in 42 CFR 400.200, the presence of the
physician for purposes of the direct supervision requirement for PR,
CR, and ICR services includes virtual presence through audio/video
real-time communications technology when use of such technology is
indicated to reduce exposure risks for the beneficiary or health care
provider. Specifically, the required direct physician supervision can
be provided through virtual presence using audio/video real-time
communications technology (excluding audio-only) subject to the
clinical judgment of the supervising practitioner. We further amended
Sec. 410.27(a)(1)(iv)(B) \136\ in the CY 2021 OPPS/ASC final rule with
comment period to provide that this flexibility continues until the
later of the end of the calendar year in which the PHE as defined in
Sec. 400.200 ends or December 31, 2021 (85 FR 86113 and 86299). In the
CY 2021 OPPS/ASC final rule with comment period we also clarified that
this flexibility excluded the presence of the supervising practitioner
via audio-only telecommunications technology (85 FR 86113).
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\135\ In the CY 2023 OPPS/ASC final rule with comment period, we
removed Sec. 410.27(a)(1)(iv)(D) in its entirety and added its
language regarding pulmonary rehabilitation, cardiac rehabilitation,
and intensive cardiac rehabilitation services and the virtual
presence of a physician through audio/video real-time communications
technology during the PHE to the newly designated Sec.
410.27(a)(1)(iv)(B)(1) (87 FR 72024).
\136\ Ibid.
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In the CY 2023 OPPS/ASC final rule with comment period, we
finalized a policy to extend the revised definition of direct
supervision of CR, ICR, and PR services to include the presence of the
supervising physician through two-way, audio/video telecommunications
technology (excluding audio-only) until December 31, 2023 (87 FR 72019
and 72020).
In the CY 2024 OPPS/ASC final rule with comment period, we
finalized a policy to further revise Sec. 410.27(a)(1)(iv)(B)(1) to
continue to allow for the direct supervision requirement for CR, ICR,
and PR services to include the virtual presence of the physician
through audio-video real-time communications technology (excluding
audio-only) through December 31, 2024 and to extend this policy to the
nonphysician practitioners, that is NPs, PAs, and CNSs, who were
eligible to supervise these services beginning in CY 2024 (88 FR 81863
through 81867).
In the CY 2025 OPPS/ASC final rule with comment period, we
finalized a policy to continue to allow for the direct supervision of
CR, ICR, PR services to include the virtual presence of the physician
(or other nonphysician practitioner) through audio-video real-time
communications technology (excluding audio-only) through December 31,
2025 (89 FR 94280).
b. Virtual Direct Supervision of Diagnostic Services Furnished to
Hospital Outpatients (42 CFR 410.28(e)(2)(iii))
In the April 6th, 2020 COVID-19 IFC, for consistency with the
revisions made to 42 CFR 410.27(a)(1)(iv)(D) \137\ described above and
410.32(b)(3)(ii) (revising the definition of direct supervision of
diagnostic services furnished in a physician's office to include
virtual supervision for the duration of the PHE), we changed the
regulation at 42 CFR 410.28(e) to provide that, during a PHE as defined
in 42 CFR 400.200, the presence of the physician for purposes of the
direct supervision requirement for diagnostic services includes virtual
presence through audio/video real-time communications technology when
use of such technology is indicated to reduce exposure risks for the
beneficiary or health care provider (85 FR 19245 and 19246).
To ensure consistency with additional revisions made to 42 CFR
410.27(a)(1)(iv)(B)(1) and 410.32(b)(3)(ii) extending the end date of
the flexibility allowing for the virtual supervision of the services
governed by those regulations, the CY 2023 OPPS final rule with comment
period (87 FR 72024 through 72026), CY 2024 OPPS final rule with
comment period (88 FR 81866 and 81867), and CY 2025 OPPS final rule
with comment period (89 FR 94278 and 94280) subsequently extended the
end date of the flexibility allowing for direct supervision to include
the virtual supervision of outpatient diagnostic services through
audio/video real-time communications technology (excluding audio-only)
through December 31, 2025.
2. CY 2026 Virtual Direct Supervision of CR, ICR, PR Services and
Diagnostic Services Furnished to Hospital Outpatients
In the CY 2026 Physician Fee Schedule (PFS) proposed rule,
published elsewhere in the Federal Register, we propose to revise the
definition of direct supervision at Sec. 410.26(a)(2) and Sec.
410.32(b)(3)(ii) to make permanent the availability of virtual direct
supervision of therapeutic and diagnostic services under the PFS,
except for services that have a global surgery indicator of 010 or 090.
This information can be found in the PFS PPRVU public use file (https://www.cms.gov/medicare/payment/fee-schedules/physician/pfs-relative-value-files). These global surgery indicators are defined in IOM Pub.
100-04, chapter 23, section 50.6 as 010 ``Minor procedure with
preoperative relative values on the day of the procedure and
postoperative relative values during a 10-day postoperative period
included in the fee schedule amount; evaluation and management services
on the day of the procedure and during this 10-day postoperative period
generally not payable'' and 090 ``Major surgery with a 1-day
preoperative period and 90-day postoperative period included in the fee
schedule payment amount'' As explained in that rule, this proposal is
made in response to overwhelming support and requests to extend this
policy permanently for a wider set of services than the ones that were
finalized in the CY 2025 PFS Final Rule and would build on the
incremental approach of making the virtual supervision of certain
services permanent which we began in the CY 2025 PFS rule. As noted in
the CY 2026 PFS proposed rule, this approach would recognize that
virtual supervision has been available and widely utilized since the
beginning of the PHE while excluding certain services to ensure quality
of care and patient safety, and in particular, the ability of the
supervising practitioner to intervene if complications arise,
particularly in complex, high-risk instances where unexpected or
adverse events may occur or for procedures that may be riskier or more
intense since a patient's clinical status can quickly change. For the
complete discussion of the proposed revisions to Sec. 410.26(a)(2) and
Sec. 410.32(b)(3)(ii), we refer readers to the
[[Page 33695]]
CY 2026 PFS proposed rule published elsewhere in the Federal Register.
In addition to desiring uniformity under the PFS and OPPS in how
regulations are applied to similarly situated clinicians and providers,
we agree that the approach proposed in the PFS proposed rule strikes
the appropriate balance between recognizing that the virtual
supervision of diagnostic services has been available and widely
utilized since the beginning of the PHE and ensuring quality of care
and patient safety. Consequently, we propose to revise Sec.
410.27(a)(1)(iv)(B)(1) and Sec. 410.28(e)(2)(iii) to make the
availability of the direct supervision of CR, ICR, PR services and
diagnostic services via audio-video real-time communications technology
(excluding audio-only) permanent, except for diagnostic services that
have a global surgery indicator of 010 or 090. We would like to note
that permanently adopting a definition of direct supervision that
allows ``immediate availability'' of the supervising practitioner using
audio/video real-time communications technology (excluding audio-only),
for CR, ICR, PR and diagnostic services described under Sec. 410.28,
except for diagnostic services that have a global surgery indicator of
010 or 090 does not mean that it is appropriate to allow virtual
presence for every service for every Medicare beneficiary in every
clinical scenario. As always, the physician or nonphysician
practitioner should use his or her complex professional judgment to
determine the appropriate supervision modality on a case-by-case basis.
D. Medical Review of Certain Inpatient Hospital Admissions Under
Medicare Part A for CY 2026 and Subsequent Years
1. Background on the 2-Midnight Rule
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50944 through
50952), we clarified our policy regarding when an inpatient admission
is considered reasonable and necessary for purposes of Medicare Part A
payment. Under this policy, we established a benchmark providing that
surgical procedures, diagnostic tests, and other treatments would be
generally considered appropriate for payment under Medicare Part A when
the physician expects the patient to require a stay that crosses at
least 2 midnights and admits the patient as an inpatient based upon
that expectation. Conversely, when a beneficiary enters a hospital for
a surgical procedure not designated as an inpatient-only (IPO)
procedure as described in 42 CFR 419.22(n), a diagnostic test, or any
other treatment, and the physician expects to keep the beneficiary in
the hospital for only a limited period of time that does not cross 2
midnights, the services would be generally inappropriate for payment
under Medicare Part A, regardless of the hour that the beneficiary came
to the hospital or whether the beneficiary used a bed. With respect to
services designated under the OPPS as IPO procedures, we explained that
because of the intrinsic risks, recovery impacts, or complexities
associated with such services, these procedures would continue to be
appropriate for payment under Medicare Part A regardless of the
expected length of stay. We also indicated that there might be further
``rare and unusual'' exceptions to the application of the benchmark,
which would be detailed in subregulatory guidance.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50944 through
50952), we also finalized the 2-midnight presumption, which is related
to the 2-midnight benchmark but is a separate medical review policy.
The 2-midnight benchmark represents guidance to reviewers to identify
when an inpatient admission is generally reasonable and necessary for
purposes of Medicare Part A payment, while the 2-midnight presumption
relates to instructions to medical reviewers regarding the selection of
claims for medical review. Specifically, under the 2-midnight
presumption, inpatient hospital claims with lengths of stay greater
than 2 midnights after the formal admission following the order are
presumed to be appropriate for Medicare Part A payment and are not the
focus of medical review efforts, absent evidence of systematic gaming,
abuse, or delays in the provision of care in an attempt to qualify for
the 2-midnight presumption. We refer readers to the CY 2021 OPPS/ASC
final rule with comment period for additional discussion about the
distinction between the 2-midnight presumption and benchmark (85 FR
86113 through 86114).
In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70538
through 70545), we revisited the previous rare and unusual exceptions
policy and finalized a proposal to allow for case-by-case exceptions to
the 2-midnight benchmark, whereby Medicare Part A payment may be made
for inpatient admissions where the admitting physician does not expect
the patient to require hospital care spanning 2 midnights, if the
documentation in the medical record supports the physician's
determination that the patient nonetheless requires inpatient hospital
care. We stated that the following criteria would be relevant to
determining whether an inpatient admission with an expected length of
stay of less than 2 midnights is nonetheless appropriate for Medicare
Part A payment:
Complex medical factors such as history and comorbidities;
The severity of signs and symptoms;
Current medical needs; and
The risk of an adverse event.
In other words, for purposes of Medicare payment, an inpatient
admission is payable under Part A if the documentation in the medical
record supports either the admitting physician's reasonable expectation
that the patient will require hospital care spanning at least 2
midnights, or the physician's determination based on factors such as
those identified previously that the patient nonetheless requires care
on an inpatient basis. The exceptions for procedures on the IPO list
and for ``rare and unusual'' circumstances designated by CMS as
national exceptions were unchanged by the CY 2016 OPPS/ASC final rule
with comment period.
As we stated in the CY 2016 OPPS/ASC final rule with comment
period, the decision to formally admit a patient to the hospital is
subject to medical review. Specifically, for inpatient admissions not
related to a surgical procedure specified by Medicare as an IPO
procedure under Sec. 419.22(n) and for which there is not a national
exception, payment of the claim under Medicare Part A is subject to the
clinical judgment of the medical reviewer to determine whether the
medical record supports a reasonable expectation of the need for
hospital care crossing at least 2 midnights or otherwise supports a
need for inpatient care. The medical reviewer's clinical judgment
involves the synthesis of all submitted medical record information (for
example, progress notes, diagnostic findings, medications, nursing
notes, and other supporting documentation) to make a medical review
determination on whether the clinical requirements in the relevant
policy have been met. In addition, Medicare review contractors must
abide by CMS' policies in making payment determinations. While Medicare
review contractors may continue to use commercial screening tools to
help evaluate the inpatient admission decision for purposes of payment
under Medicare Part A, such tools are not binding on the hospital, CMS,
or its review contractors. This type of information also may be
[[Page 33696]]
appropriately considered by the physician as part of the complex
medical judgment that guides his or her decision to keep a beneficiary
in the hospital and formulation of the expected length of stay.
2. Current Policy for Medical Review of Inpatient Hospital Admissions
for Procedures Removed From the Inpatient Only List
In the CY 2020 OPPS/ASC final rule with comment period, we
finalized a policy to exempt procedures that have been removed from the
IPO list from certain medical review activities to assess compliance
with the 2-midnight rule within the 2 calendar years following their
removal from the IPO list. We stated that these procedures would be
exempted from site-of-service claim denials under Medicare Part A,
eligibility for Beneficiary and Family-Centered Care Quality
Improvement Organizations (BFCC-QIOs) referrals to Recovery Audit
Contractors (RACs) for noncompliance with the 2-midnight rule, and RAC
reviews for ``patient status'' (that is, site-of-service). We explained
that during this 2-year period, BFCC-QIOs would have the opportunity to
review such claims in order to provide education for practitioners and
providers regarding compliance with the 2-midnight rule, but claims
identified as noncompliant would not be denied with respect to the
site-of-service under Medicare Part A.
For CY 2021, in conjunction with our proposal to eliminate the IPO
list, we modified our proposal to continue the 2-year exemption, and
instead finalized a policy under which procedures removed from the IPO
list on or after January 1, 2021, would be indefinitely exempted from
the above described medical review activities. We explained that the
elimination of the IPO list was a large-scale change that created brand
new considerations for providers regarding site-of-service
determinations. We believed a change of this significance required us
to reevaluate our stance on the exemption period for procedures removed
from the IPO list, resulting in our decision to finalize an indefinite
exemption period rather than continuing the previous 2-year exemption
period. We stated that this exemption would last with respect to each
procedure removed from the IPO list until we had Medicare claims data
indicating that the procedure was more commonly performed in the
outpatient setting than the inpatient setting. Thus, for the exemption
to end for a specific procedure, in a single calendar year we would
need to have Medicare claims data indicating that the procedure was
performed more than 50 percent of the time in the outpatient setting.
We noted that the end of the exemption period for each procedure
removed from the IPO list on or after January 1, 2021 would be
announced via rulemaking.
Consequently, in the CY 2021 OPPS/ASC final rule with comment
period, we amended 42 CFR 412.3(d)(2) to clarify when a procedure
removed from the IPO list is exempt from the identified medical review
activities. To account for the previous exemption policy that was in
effect for CY 2020, we added Sec. 412.3(d)(2)(i) which stated that for
``those services and procedures removed between January 1 and December
31, 2020, this exemption will last for 2 years from the date of such
removal.'' To implement the change to an indefinite exemption period
that we finalized in CY 2021, we added Sec. 412.3(d)(2)(ii) which
stated that for ``those services and procedures removed on or after
January 1, 2021, this exemption will last until the Secretary
determines that the service or procedure is more commonly performed in
the outpatient setting.''
In the CY 2022 OPPS/ASC final rule with comment period (86 FR 63736
through 63740), given our decision in that rule to halt the elimination
of the IPO list, and the fact that we were accordingly no longer
removing an unprecedented number of procedures from the list at one
time, we proposed to return to the 2-year exemption period from the
specified medical review activities for procedures removed from the IPO
list. Under the circumstances of that final rule with comment period,
we believed that a 2-year exemption period was adequate to enable
providers to gain experience with the application of the 2-midnight
rule to those procedures that have been newly removed from the IPO
list. We also stated that we believed that a 2-year exemption from the
medical review activities was also sufficient time for providers and
BFCC-QIOs to understand the documentation necessary to support Part A
payment for those patients for which the admitting physician determines
that the procedures should be furnished in an inpatient setting.
In the preamble to the CY 2022 OPPS/ASC final rule with comment
period (86 FR 63739), we stated that we were amending Sec. 412.3(d)(2)
to clarify ``that for all services and procedures removed after January
1, 2020, this exemption would last for 2 years from the date of such
removal. This would include those services and procedures removed on or
after January 1, 2021, for which this exemption would also be for 2
years from the date of such removal.'' Accordingly, Sec.
412.3(d)(2)(i) was revised to read ``for those services and procedures
removed on or after January 1, 2020, the exemption in this paragraph
(d)(2) will last for 2 years from the date of such removal.'' However,
due to a drafting oversight, we failed to correspondingly remove Sec.
412.3(d)(2)(ii): ``For those services and procedures removed on or
after January 1, 2021, the exemption in this paragraph (d)(2) will last
until the Secretary determines that the service or procedure is more
commonly performed in the outpatient setting.'' As a result of this
error, the exemption period was not changed to two years as we intended
and instead remained the indefinite exemption period that was finalized
in the CY 2021 OPPS/ASC final rule with comment period.
3. Medical Review of Inpatient Hospital Admissions for Procedures
Removed From the Inpatient Only List for CY 2026 and Subsequent Years
As stated earlier in this section, services on the IPO list are not
subject to the 2-midnight rule for purposes of determining whether
payment is appropriate under Medicare Part A. However, the 2-midnight
rule is applicable once services have been removed from the IPO list.
Outside of the exemption periods discussed above, services that have
been removed from the IPO list are currently subject to initial medical
reviews of claims for short-stay inpatient admissions conducted by
BFCC-QIOs.
BFCC-QIOs may also refer providers to the RACs for further medical
review due to exhibiting persistent noncompliance with Medicare payment
policies, including, but not limited to:
Having high denial rates;
Consistently failing to adhere to the 2-midnight rule; or
Failing to improve their performance after QIO educational
intervention.
However, as finalized in the CY 2021 OPPS/ASC final rule with
comment period, procedures that have been removed from the IPO list on
January 1, 2021 or later were indefinitely exempted from site-of-
service claim denials under Medicare Part A, eligibility for BFCC-QIO
referrals to RACs for noncompliance with the 2-midnight rule, and RAC
reviews for ``patient status'' (that is, site-of-service). We stated
that this exemption would last for each procedure until we have
Medicare claims data indicating that the procedure is more commonly
performed in the outpatient setting than the inpatient setting.
[[Page 33697]]
As stated in section IX., we propose to eliminate the IPO list in
CY 2026 with a transitional period of 3 years. For CY 2026, we propose
to remove all musculoskeletal procedures from the IPO list. Prior to
the CY 2020 exemption for services removed from the IPO list, the
elimination of the IPO list would have meant that procedures currently
on the IPO list would be subject to the 2-midnight rule (both the 2-
midnight benchmark and 2-midnight presumption) upon removal from the
IPO list.
We believe that with the proposed elimination of the IPO list, the
2-midnight benchmark remains an important metric to help guide when
Part A payment for inpatient hospital admissions is appropriate. As
technology advances and more services may be safely performed in the
hospital outpatient setting and paid under the OPPS, it is increasingly
important for physicians to exercise their clinical judgment in
determining the appropriate clinical setting for their patient to
receive a procedure, whether that be as an inpatient or on an
outpatient basis. Importantly, removal of a service from the IPO list
has never meant that a beneficiary cannot receive the service as a
hospital inpatient--as always, the physician should use his or her
complex medical judgment to determine the appropriate setting on a
case-by-case basis.
As finalized in the CY 2021 OPPS/ASC final rule with comment
period, procedures removed from the IPO list after January 1, 2021,
were indefinitely exempted from site-of-service claim denials under
Medicare Part A, eligibility for BFCC-QIO referrals to RACs for
noncompliance with the 2-midnight rule, and RAC reviews for ``patient
status'' (that is, site-of-service). These procedures are not
considered by the BFCC-QIOs in determining whether a provider exhibits
persistent noncompliance with the 2-midnight rule for purposes of
referral to the RAC nor will claims for these procedures be reviewed by
RACs for ``patient status.'' During the exemption period, BFCC-QIOs
have the opportunity to review such claims in order to provide
education for practitioners and providers regarding compliance with the
2-midnight rule, but claims identified as noncompliant are not denied
with respect to the site-of-service under Medicare Part A. Again,
information gathered by the BFCC-QIO when reviewing procedures as they
are newly removed from the IPO list can be used for educational
purposes but will not result in a claim denial during the exemption
period.
When we previously finalized elimination of the IPO list in the CY
2021 OPPS/ASC final rule with comment period, we received numerous
comments that suggested a longer exemption period would be appropriate,
due to the unprecedented volume of procedures becoming subject to the
2-midnight rule. Therefore, we finalized an indefinite exemption period
for procedures removed from the IPO list during the 3-year transition
from the list to allow providers to become more familiar with how to
comply with the 2-midnight rule and with the availability of payment
under both the hospital inpatient and outpatient payment systems for
procedures removed from the IPO list. Our current proposal to eliminate
the IPO list over a 3-year period warrants similar considerations.
Accordingly, we propose to maintain the indefinite exemption period
under 42 CFR 412.3(d)(2)(ii) for procedures that are removed from the
IPO list that is currently in effect. In the interest of clarity, we
propose to delete Sec. 412.3(d)(2)(i) and (ii) and revise Sec.
412.3(d)(2) to read ``An inpatient admission for a surgical procedure
specified by Medicare as inpatient only under Sec. 419.22(n) of this
chapter is generally appropriate for payment under Medicare Part A
regardless of the expected duration of care. Procedures no longer
specified as inpatient only under Sec. 419.22(n) of this chapter are
appropriate for payment under Medicare Part A in accordance with
paragraph (d)(1) or (3) of this section. Claims for services and
procedures removed from the inpatient only list under Sec. 419.22 of
this chapter on or after January 1, 2021 are exempt from certain
medical review activities until the Secretary determines that the
service or procedure is more commonly performed in the outpatient
setting.'' As indicated in the CY 2021 OPPS/ASC final rule with comment
period, the determination of the Secretary that a service or procedure
is more commonly performed in the outpatient setting is based on claims
data that demonstrates that the service or procedure is being performed
more than 50 percent of the time in the outpatient setting in a single
calendar year (85 FR 86117 and 86119). We note that this would be an
exemption from certain medical review activities, not an exception to
the 2-midnight rule. Providers are still required to comply with the 2-
midnight rule during the exemption period, and CMS or its contractors
may still conduct patient status medical review in cases in which there
is evidence of systemic fraud or abuse occurring. Additionally, we note
that other types of medical review, unrelated to patient status, would
not be impacted by the proposed exemption. We will announce in
subregulatory guidance when the exemption is ending for a particular
service or procedure prior to the effective date of the end of the
exemption for the particular service or procedure. We invite commenters
to indicate whether and why they believe an indefinite exemption
period, or another time period, would be most appropriate.
In summary, for CY 2026 and subsequent years, we propose to
continue the indefinite exemption from site-of-service claim denials,
initial medical review contractor \138\ referrals to RACs, and RAC
reviews for ``patient status'' (that is, site-of-service) finalized in
the CY 2021 OPPS/ASC final rule with comment period for procedures that
are removed from the IPO list in CY 2021 or later under the OPPS. We
also propose to remove Sec. 412.3(d)(2)(i) and (ii) and revise Sec.
412.3(d)(2) to clarify that claims for services and procedures removed
from the IPO list on or after January 1, 2021 are exempt from certain
medical review activities until the Secretary determines that the
service or procedure is more commonly performed in the outpatient
setting than the inpatient setting. Finally, we are seeking comment on
whether other exemption periods may be warranted.
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\138\ On May 22, 2025, CMS announced that responsibility for
short-stay reviews will be transitioned from the BFCC-QIOs to the
MACs, as of September 1, 2025. https://www.cms.gov/data-research/monitoring-programs/medicare-fee-service-compliance-programs/medical-review-and-education/hospital-patient-status-reviews.
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E. Coding and Payment for Category B IDE Devices and Studies
We propose to revise the section heading and paragraph (a)
introductory text at Sec. 419.47 to correct two errors that occurred
when this regulation was revised in the CY 2025 OPPS/ASC final rule
with comment period (89 FR 94304 through 94307).
In the CY 2025 OPPS/ASC final rule with comment period, we
finalized our proposal to codify our coding and payment policy for
Category B Investigational Device Exemption (IDE) clinical trials with
control arms through revisions to Sec. 419.47. Specifically, we
revised Sec. 419.47's paragraph (a) introductory text to specify that
our policy only applies to IDE studies with a placebo control arm and
where a payment adjustment is necessary to preserve the scientific
validity of such a study. However, in making these revisions, we
inadvertently deleted
[[Page 33698]]
existing regulatory text that was not changed in the CY 2025 OPPS/ASC
final rule with comment period. Specifically, we inadvertently deleted
Sec. 419.47(a)(1) ``The Medicare coverage IDE study criteria in Sec.
405.212 of this chapter are met'' and paragraph (2) ``A new or revised
code is necessary to preserve the scientific validity of such a study,
such as by preventing the unblinding of the study.'' Therefore,
effective January 1, 2026, we propose to amend the regulatory text at
Sec. 419.47(a) to restore these two inadvertently removed paragraphs.
Additionally, in the CY 2025 OPPS/ASC final rule with comment
period, we decided not to finalize our CY 2025 OPPS/ASC proposal to
extend our coding and payment policy to drugs and devices that are
being studied in clinical trials under a Coverage with Evidence
Development (CED) National Coverage Determination (NCD) \139\ for which
the trial includes a treatment and control arm for CY 2025. However,
despite our intent to remove all proposed revisions relating to this
extension of the policy in the final rule, we inadvertently revised the
section heading at Sec. 419.47 to state that the policy applied to
``devices/drugs studies.'' Since we did not finalize the policy for CY
2025, we propose, effective January 1, 2026, to delete ``and devices/
drugs studies'' from the section heading at Sec. 419.47.
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\139\ https://www.cms.gov/medicare/coverage/evidence.
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XI. Proposed CY 2026 OPPS Payment Status and Comment Indicators
A. Proposed CY 2026 OPPS Payment Status Indicator Definitions
Payment status indicators (SIs) that we assign to HCPCS codes and
APCs serve an important role in determining payment for services under
the OPPS. They indicate whether a service represented by a HCPCS code
is payable under the OPPS or another payment system and whether
particular OPPS policies apply to the code.
For CY 2026 and subsequent years, we propose to create a new status
indicator ``S1''. We propose this new status indicator to indicate that
the skin substitute product is paid separately from other procedure
codes under the OPPS. We propose to assign all existing HCPCS codes
describing skin substitute products to status indicator ``S1'' for CY
2026. This policy is further discussed in section V.B.10. of this
proposed rule. The proposed definition and payment status of proposed
status indicator ``S1'' can be found in Table 72.
[GRAPHIC] [TIFF OMITTED] TP17JY25.114
We are not proposing to make any additional changes to the existing
definitions of status indicators that were listed in Addendum D1 to the
CY 2025 OPPS/ASC final rule with comment period, which is available on
the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices.
The complete list of proposed CY 2026 payment status indicators and
their definitions is displayed in Addendum D1 to this proposed rule,
which is available on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices. The proposed CY 2026 payment status indicator assignments for
APCs and HCPCS codes are shown in Addendum A and Addendum B,
respectively, to this proposed rule, which are available on the CMS
website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices. We solicit public
comments on the proposed definitions of the OPPS payment status
indicators for CY 2026.
B. Proposed CY 2026 Comment Indicator Definitions
We propose to use four comment indicators for the CY 2026 OPPS.
These comment indicators, ``CH,'' ``NC,'' ``NI,'' and ``NP,'' are in
effect for CY 2025; and we propose to continue their use in CY 2026.
The proposed CY 2026 OPPS comment indicators are as follows:
``CH''--Active HCPCS code in current and next calendar
year, status indicator and/or APC assignment has changed; or active
HCPCS code that will be discontinued at the end of the current calendar
year.
``NC''--New code for the next calendar year or existing
code with substantial revision to its code descriptor in the next
calendar year, as compared to current calendar year for which we
requested comments in the proposed rule; final APC assignment; comments
will not be accepted on the final APC assignment for the new code.
``NI''--New code for the next calendar year or existing
code with substantial revision to its code descriptor in the next
calendar year, as compared to current calendar year, interim APC
assignment; comments will be accepted on the interim APC assignment for
the new code.
``NP''--New code for the next calendar year or existing
code with substantial revision to its code descriptor in the next
calendar year, as compared to current calendar year, proposed APC
assignment; comments will be accepted on the proposed APC assignment
for the new code.
The definitions of the proposed OPPS comment indicators for CY 2026
are listed in Addendum D2 to this proposed rule, which is available on
the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices. We solicit
public comments on our proposed definitions of the OPPS comment
indicators for CY 2026.
XII. MedPAC Recommendations
The Medicare Payment Advisory Commission (MedPAC) was established
under section 1805 of the Act in large part to advise the U.S. Congress
on issues affecting the Medicare program. As required under the
statute, MedPAC submits reports to the Congress no later than March and
June of each year that
[[Page 33699]]
present its Medicare payment policy recommendations. The March report
typically provides discussion of Medicare payment policy across
different payment systems and the June report typically discusses
selected Medicare issues. We are including this section to make
interested parties aware of certain MedPAC recommendations for the OPPS
and ASC payment systems as discussed in its March 2025 report.
A. OPPS Payment Rates Update
The March 2025 MedPAC ``Report to the Congress: Medicare Payment
Policy,'' recommended that Congress update Medicare OPPS payment rates
by the amount specified in current law plus one percent. We refer
readers to the March 2025 report for a complete discussion of this
recommendation.\140\ We appreciate MedPAC's recommendation and, as
discussed further in section II.B. of this proposed rule, we propose to
increase the OPPS payment rates by the amount specified in current law.
---------------------------------------------------------------------------
\140\ Medicare Payment Advisory Committee. March 2025 Report to
the Congress. Chapter 3: Hospital inpatient and outpatient services,
pp.61-94. Available at: https://www.medpac.gov.
---------------------------------------------------------------------------
B. Medicare Safety Net Index
In the March 2025 MedPAC ``Report to the Congress: Medicare Payment
Policy,'' MedPAC stated that their recommended update to IPPS and OPPS
payment rates of current law plus 1 percent may not be sufficient to
ensure the financial viability of some Medicare safety-net hospitals
with a poor payer mix. MedPAC recommends redistributing the current
Medicare safety-net payments (disproportionate share hospital and
uncompensated care payments) using the MedPAC-developed Medicare
Safety-Net Index (MSNI) for hospitals. In addition, MedPAC recommends
adding $4 billion to this MSNI pool of funds to help maintain the
financial viability of Medicare safety-net hospitals and recommended to
the Congress transitional approaches for an MSNI policy. The FY 2026
IPPS/LTCH proposed rule provides additional information regarding
statutory requirements for disproportionate share hospital and
uncompensated care payments. We look forward to working with Congress
on these matters.
XIII. Proposed Updates to the Ambulatory Surgical Center (ASC) Payment
System
A. Background, Legislative History, Statutory Authority, and Prior
Rulemaking for the ASC Payment System
For a detailed discussion of the legislative history and statutory
authority related to payments to ASCs under Medicare, we refer readers
to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74377
through 74378) and the June 12, 1998 proposed rule (63 FR 32291 through
32292). For a discussion of prior rulemaking on the ASC payment system,
we refer readers to the CYs 2012 to 2025 OPPS/ASC final rules with
comment period (76 FR 74378 through 74379; 77 FR 68434 through 68467;
78 FR 75064 through 75090; 79 FR 66915 through 66940; 80 FR 70474
through 70502; 81 FR 79732 through 79753; 82 FR 59401 through 59424; 83
FR 59028 through 59080; 84 FR 61370 through 61410; 85 FR 86121 through
86179; 86 FR 63761 through 63815; 87 FR 72054 through 72096; 88 FR
81900 through 81961; and 89 FR 94309 through 94367).
B. Proposed ASC Treatment of New and Revised Codes
1. Background on Process for New and Revised HCPCS Codes
We update the lists and payment rates for covered surgical
procedures and covered ancillary services in ASCs in conjunction with
the annual proposed and final rulemaking process to update the OPPS and
the ASC payment systems (Sec. 416.173; 72 FR 42535). We base ASC
payment and policies for most covered surgical procedures, drugs,
biologicals, and certain other covered ancillary services on the OPPS
payment policies and we use quarterly change requests (CRs) to update
services paid for under the OPPS. We also provide quarterly update CRs
for ASC covered surgical procedures and covered ancillary services
throughout the year (January, April, July, and October). We release new
and revised Level II HCPCS codes and recognize the release of new and
revised CPT codes by the American Medical Association (AMA) and make
these codes effective (that is, the codes are recognized on Medicare
claims) via these ASC quarterly update CRs. We recognize the release of
new and revised Category III CPT codes in the July and January CRs.
These updates implement newly created and revised Level II HCPCS and
Category III CPT codes for ASC payments and update the payment rates
for separately paid drugs and biologicals based on the most recently
submitted ASP data. New and revised Category I CPT codes, except
vaccine codes, are released only once a year, and are implemented only
through the January quarterly CR update. New and revised Category I CPT
vaccine codes are released twice a year and are implemented through the
January and July quarterly CR updates. We refer readers to Table 41 in
the CY 2012 OPPS/ASC proposed rule for an example of how this process
is used to update HCPCS and CPT codes, which we finalized in the CY
2012 OPPS/ASC final rule with comment period (76 FR 42291; 76 FR 74380
through 74384).
In our annual updates to the ASC list of covered surgical
procedures and covered ancillary services, we undertake a review of
excluded surgical procedures, new codes, and codes with revised
descriptors, to identify any that we believe meet the criteria for
designation as ASC covered surgical procedures or covered ancillary
services. Updating the lists of ASC covered surgical procedures and
covered ancillary services, as well as their payment rates, in
association with the annual OPPS rulemaking cycle, is particularly
important because the OPPS relative payment weights and, in some cases,
payment rates, are used as the basis for the payment of many covered
surgical procedures and covered ancillary services under the revised
ASC payment system. This joint update process ensures that the ASC
updates occur in a regular, predictable, and timely manner.
Payment for ASC procedures, services, and items are generally based
on medical billing codes, specifically, HCPCS codes, that are reported
on ASC claims. The HCPCS is divided into two principal subsystems,
referred to as Level I and Level II. Level I is comprised of CPT
(Current Procedural Terminology) codes, a numeric and alphanumeric
coding system maintained by the AMA, and includes Category I, II, and
III CPT codes. Level II of the HCPCS, which is maintained by CMS, is a
standardized coding system that is used primarily to identify products,
supplies, and services not included in the CPT codes. Together, Level I
and II HCPCS codes are used to report procedures, services, items, and
supplies under the ASC payment system. Specifically, we recognize the
following codes on ASC claims:
Category I CPT codes, which describe surgical procedures,
diagnostic and therapeutic services, and vaccine codes;
Category III CPT codes, which describe new and emerging
[[Page 33700]]
technologies, services, and procedures; and
Level II HCPCS codes (also known as alpha-numeric codes),
which are used primarily to identify drugs, devices, supplies,
temporary procedures, and services not described by CPT codes.
We finalized a policy in the August 2, 2007 final rule (72 FR 42533
through 42535) to evaluate each year all new and revised Category I and
Category III CPT codes and Level II HCPCS codes that describe surgical
procedures, and to make preliminary determinations during the annual
OPPS/ASC rulemaking process regarding whether or not they meet the
criteria for payment in the ASC setting as covered surgical procedures
and, if so, whether or not they are office-based procedures. In
addition, we identify new and revised codes as ASC covered ancillary
services based upon the final payment policies of the revised ASC
payment system. In prior rulemakings, we refer to this process as
recognizing new codes. However, this process has always involved the
recognition of new and revised codes. We consider revised codes to be
new when they have substantial revision to their code descriptors that
necessitate a change in the current ASC payment indicator. To clarify,
we refer to these codes as new and revised in this CY 2026 OPPS/ASC
proposed rule.
We have separated our discussion below based on when the codes are
released and whether we propose to solicit public comments in the
proposed rule (and respond to those comments in the CY 2026 OPPS/ASC
final rule with comment period) or whether we will be soliciting public
comments in the CY 2026 OPPS/ASC final rule with comment period (and
responding to those comments in the CY 2027 OPPS/ASC final rule with
comment period).
2. April 2025 HCPCS Codes Proposed Rule Comment Solicitation
For the April 2025 update, there were no new CPT codes; however,
there were several new Level II HCPCS codes. In the April 2025 ASC
quarterly update (Transmittal 13152, dated April 10, 2025, CR 14017),
we added several new Level II HCPCS codes to the list of covered
ancillary services. Table 73 (New Level II HCPCS Codes for ASC Covered
Surgical Procedures and Ancillary Services Effective April 1, 2025) of
this proposed rule lists the new Level II HCPCS codes that were
implemented April 1, 2025. The proposed comment indicators, payment
indicators and payment rates, where applicable, for these April codes
can be found in Addendum BB to this proposed rule. The list of ASC
payment indicators and corresponding definitions can be found in
Addendum DD1 to this proposed rule. These new codes that are effective
April 1, 2025 are assigned to comment indicator ``NP'' in Addendum BB
to this proposed rule to indicate that the codes are assigned to an
interim APC assignment and that comments will be accepted on their
interim APC assignments. The list of comment indicators and definitions
used under the ASC payment system can be found in Addendum DD2 to this
proposed rule. We note that the following ASC addenda and OPPS Addendum
O are available via the internet on the CMS website.
ASC Addendum AA: Proposed ASC Covered Surgical
Procedures for CY 2026 (Including Surgical Procedures for Which Payment
is Packaged),
ASC Addendum BB: Proposed ASC Covered Ancillary
Services Integral to Covered Surgical Procedures for CY 2026 (Including
Ancillary Services for Which Payment is Packaged),
ASC Addendum DD1: Proposed ASC Payment
Indicators (PI) for CY 2026,
ASC Addendum DD2: Proposed ASC Comment
Indicators (CI) for CY 2026,
ASC Addendum EE: Proposed Surgical Procedures to
be Excluded from Payment in ASC for CY 2026, and
ASC Addendum FF: Proposed ASC Device Offset
Percentages for CY 2026,
Addendum O: Long Descriptors for New Category I
CPT Codes, Category III CPT Codes, C-codes, and G-Codes Effective
January 1, 2026.
We invite public comments on the proposed payment indicators for
the new HCPCS codes that were recognized as ASC covered ancillary
services in April 2025 through the quarterly update CRs, as listed in
Table 73 (New Level II HCPCS Codes for ASC Covered Surgical Procedures
and Ancillary Services Effective April 1, 2025) of this proposed rule.
We propose to finalize their payment indicators in the CY 2026 OPPS/ASC
final rule with comment period.
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[[Page 33701]]
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3. July 2025 HCPCS Codes Proposed Rule Comment Solicitation
In the July 2025 ASC quarterly update (Transmittal 13259, Change
Request 14101, June 6, 2025), we added several separately payable CPT
and Level II HCPCS codes to the list of covered surgical procedures and
covered ancillary services. Table 74 (New HCPCS Codes for ASC Covered
Surgical Procedures and Ancillary Services Effective July 1, 2025) of
this proposed rule, lists the new HCPCS codes that are effective July
1, 2025. The proposed comment indicators, payment indicators, and
payment rates for the codes can be found in Addendum AA and Addendum BB
to this proposed rule. The list of ASC payment indicators and
corresponding definitions can be found in Addendum DD1 to this proposed
rule. These new codes that are effective July 1, 2025, are assigned to
[[Page 33702]]
comment indicator ``NP'' in Addendum AA and BB to this proposed rule to
indicate that the codes are assigned to an interim APC assignment and
that comments will be accepted on their interim APC assignments. The
list of comment indicators and definitions used under the ASC payment
system can be found in Addendum DD2 to this proposed rule. We note that
ASC Addenda AA, BB, DD1, and DD2 are available via the internet on the
CMS website.,
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[[Page 33703]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.117
[[Page 33704]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.118
We invite public comments on the proposed payment indicators for
the new HCPCS codes newly recognized as ASC covered surgical procedures
and covered ancillary services effective April 1, 2025 and July 1,
2025, through the quarterly update CRs, as listed in Tables 73 and 74.
We propose to finalize the payment indicators in the CY 2026 OPPS/ASC
final rule with comment period.
4. October 2025 HCPCS Codes Final Rule Comment Solicitation
For CY 2026, consistent with our established policy, we propose
that the Level II HCPCS codes that will be effective October 1, 2025,
would be ``NI'' in Addendum BB to the CY 2026 OPPS/ASC final rule with
comment period to indicate that we have assigned the codes an interim
ASC payment status for CY 2025. We will invite public comments in the
CY 2026 OPPS/ASC final rule with comment period on the interim payment
indicators, which would then be finalized in the CY 2027 OPPS/ASC final
rule with comment period.
5. January 2026 HCPCS Codes
a. Level II HCPCS Codes Final Rule Comment Solicitation
As has been our practice in the past, we incorporate those new
Level II HCPCS codes that are effective January 1 in the final rule
with comment period, thereby updating the ASC payment system for the
calendar year. We note that unlike the CPT codes that are effective
January 1 and are included in the OPPS/ASC proposed rules, and except
for the G-codes listed in Addendum O to this proposed rule, most Level
II HCPCS codes are not released until sometime around November to be
effective January 1. Because these codes are not available until
November, we are unable to include them in the OPPS/ASC proposed rules.
Therefore, these Level II HCPCS codes will be released to the public
through the CY 2026 OPPS/ASC final rule with comment period, January
2026 ASC Update CR, and the CMS HCPCS website.
In addition, for CY 2026, we propose to continue our established
policy of assigning comment indicator ``NI'' in Addendum AA and
Addendum BB to the OPPS/ASC final rule with comment period to the new
Level II HCPCS codes that will be effective January 1, 2026, to
indicate that we are assigning them an interim payment indicator, which
is subject to public comment. We will be inviting public comments in
the CY 2026 OPPS/ASC final rule with comment period on the payment
indicator assignments, which would then be finalized in the CY 2027
OPPS/ASC final rule with comment period.
b. CPT Codes Proposed Rule Comment Solicitation
For the CY 2026 ASC update, we received the CPT codes that will be
effective January 1, 2026, from the AMA in time to be included in this
proposed rule. The new, revised, and deleted CPT codes can be found in
ASC Addendum AA and Addendum BB to this proposed rule (which are
available via the internet on the CMS website). We note that the new
and revised CPT codes are assigned to comment indicator ``NP'' in ASC
Addendum AA and Addendum BB of
[[Page 33705]]
this proposed rule to indicate that the code is new for the next
calendar year, or the code is an existing code with substantial
revision to its code descriptor in the next calendar year as compared
to the current calendar year with a proposed payment indicator
assignment. We will accept comments and finalize the payment indicators
in the CY 2026 OPPS/ASC final rule with comment period. Further, we
remind readers that the CPT code descriptors that appeared in Addendum
AA and Addendum BB are short descriptors and do not describe the
complete procedure, service, or item described by the CPT code.
Therefore, we included the 5-digit placeholder codes and their long
descriptors for the new CY 2026 CPT codes in Addendum O to this
proposed rule (which is available via the internet on the CMS website)
so that the public can comment on our proposed payment indicator
assignments. The 5-digit placeholder codes can be found in Addendum O
to this proposed rule, specifically under the column labeled ``CY 2026
OPPS/ASC Proposed Rule 5-Digit Placeholder Code.'' We intend to include
the final CPT code numbers in the CY 2026 OPPS/ASC final rule with
comment period.
In summary, we solicit public comments on the proposed CY 2026
payment indicators for the new Category I and III CPT codes that will
be effective January 1, 2026. Because these codes are listed in
Addendum AA and Addendum BB with short descriptors only, we are listing
them again in Addendum O with the long descriptors. We also propose to
finalize the payment indicator for these codes (with their final CPT
code numbers) in the CY 2026 OPPS/ASC final rule with comment period.
The proposed payment indicators and comment indicators for these codes
can be found in Addendum AA and BB to this proposed rule. The list of
ASC payment indicators and corresponding definitions can be found in
Addendum DD1 to this proposed rule. The new CPT codes that will be
effective January 1, 2026, are assigned to comment indicator ``NP'' in
Addendum AA and BB to this proposed rule to indicate that the codes are
assigned to an interim payment indicator and that comments will be
accepted on their interim payment ASC payment assignments. The list of
comment indicators and definitions used under the ASC payment system
can be found in Addendum DD2 to this proposed rule. We note that ASC
Addenda AA, BB, DD1, and DD2 are available via the internet on the CMS
website.
Finally, in Table 75, we summarize our process for updating codes
through our ASC quarterly update CRs, seeking public comments, and
finalizing the treatment of these new codes under the ASC payment
system.
[GRAPHIC] [TIFF OMITTED] TP17JY25.119
6. Proposed ASC Payment and Comment Indicators
a. Background
In addition to the payment indicators that we introduced in the
August 2, 2007 ASC final rule with comment period, we created final
comment indicators for the ASC payment system in the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66855). We created Addendum DD1
to define ASC payment indicators that we use in Addenda AA and BB to
provide payment information regarding covered surgical procedures and
covered ancillary services, respectively, under the revised ASC payment
system. The ASC payment indicators in Addendum DD1 are intended to
capture policy-relevant characteristics of HCPCS codes that may receive
packaged or separate payment in ASCs, such as whether they were on the
ASC CPL prior to CY 2008; payment designation, such as device-intensive
or office-based, and the corresponding ASC payment
[[Page 33706]]
methodology; and their classification as separately payable ancillary
services, including radiology services, brachytherapy sources, OPPS
pass-through devices, corneal tissue acquisition services, drugs or
biologicals, NTIOLs, or qualifying non-opioid devices.
We also created Addendum DD2 that lists the ASC comment indicators.
The ASC comment indicators included in Addenda AA and BB to the
proposed rules and final rules with comment period serve to identify,
for the revised ASC payment system, the status of a specific HCPCS code
and its payment indicator with respect to the timeframe when comments
will be accepted. The comment indicator ``NI'' is used in the OPPS/ASC
final rule with comment period to indicate new codes for the next
calendar year for which the interim payment indicator assigned is
subject to comment. The comment indicator ``NI'' also is assigned to
existing codes with substantial revisions to their descriptors such
that we consider them to be describing new services, and the interim
payment indicator assigned is subject to comment, as discussed in the
CY 2010 OPPS/ASC final rule with comment period (74 FR 60622).
The comment indicator ``NP'' is used in the OPPS/ASC proposed rule
to indicate new codes for the next calendar year for which the proposed
payment indicator assigned is subject to comment. The comment indicator
``NP'' also is assigned to existing codes with substantial revisions to
their descriptors, such that we consider them to be describing new
services, and the proposed payment indicator assigned is subject to
comment, as discussed in the CY 2016 OPPS/ASC final rule with comment
period (80 FR 70497).
The ``CH'' comment indicator is used in Addenda AA and BB to the
proposed rule (these addenda are available via the internet on the CMS
website) to indicate that the payment indicator assignment has changed
for an active HCPCS code in the current year and the next calendar
year, for example, if an active HCPCS code is newly recognized as
payable in ASCs or an active HCPCS code is discontinued at the end of
the current calendar year. The ``CH'' comment indicators that are
published in the final rule are provided to alert readers that a change
has been made from one calendar year to the next, but do not indicate
that the change is subject to comment.
In the CY 2021 OPPS/ASC final rule with comment period, we
finalized the addition of ASC payment indicator ``K5''--Items, Codes,
and Services for which pricing information and claims data are not
available. No payment made--to ASC Addendum DD1 (which is available via
the internet on the CMS website) to indicate those services and
procedures that CMS anticipates will become payable when claims data or
payment information becomes available.
In CY 2024 OPPS/ASC final rule with comment period, we finalized
the addition of two ASC payment indicators, ``D1''--``Ancillary dental
service/item; no separate payment made'' and ``D2''--``Non office-based
dental procedure added in CY 2024 or later'', for new dental codes for
CY 2024 and subsequent calendar years to indicate potentially payable
dental services and procedures in the ASC setting (88 FR 81907). We
added these two codes to Addendum DD1 (which is available via the
internet on the CMS website).
In CY 2025 OPPS/ASC final rule with comment period, we finalized
the modification of the descriptor of ASC payment indicator ``L6'' to
``Special payment; New Technology Intraocular Lens (NTIOL) or
qualifying non-opioid devices'', to account for non-opioid devices paid
for under the ASC payment system pursuant to section 4135 of the CAA,
2023 (89 FR 94317). We added this code to Addendum DD1 (which is
available via the internet on the CMS website).
b. Proposed ASC Payment and Comment Indicators for CY 2026
For CY 2026, we propose new and revised Category I and III CPT
codes as well as new and revised Level II HCPCS codes. Proposed
Category I and III CPT codes that are new and revised for CY 2026 and
any new and existing Level II HCPCS codes with substantial revisions to
the code descriptors for CY 2026, compared to the CY 2025 descriptors,
are included in ASC Addenda AA and BB to this proposed rule and labeled
with comment indicator ``NP'' to indicate that these CPT and Level II
HCPCS codes are open for comment as part of the CY 2026 OPPS/ASC
proposed rule.
As discussed in section III. of this proposed rule, we propose to
create APC groups to pay separately for certain skin substitutes under
the OPPS and, as discussed in section XIII.D. of this proposed rule, we
also propose to pay separately for skin substitute supplies in the ASC
payment system and add such supplies to the ancillary items and
services list for CY 2026.
Under the ASC payment system, skin substitute products are
currently packaged and assigned an ASC payment indicator of ``N1''
(Packaged service/item; no separate payment made). We do not believe
there is an existing payment indicator available that would adequately
describe these supplies and provide the correct separate payment under
the ASC payment system. Under this new policy, payment under the ASC
payment system for separately-payable skin substitute products would be
based on the OPPS conversion factor, not on the ASC conversion factor.
Additionally, payment for these skin substitute products would not be
subject to the ASC wage index. Therefore, for CY 2026 and subsequent
years, we propose to create a new ASC payment indicator ``S2''--(Skin
substitute supply group; paid separately when provided integral to a
surgical procedure on ASC list; payment based on OPPS rate)--to
Addendum DD1 to this proposed rule to describe skin substitute products
paid separately in an ASC. This ``S2'' payment indicator would indicate
a separately payable ancillary skin substitute supply when provided
integral to a separately payable ASC covered surgical procedure.
We refer readers to Addenda DD1 and DD2 of this proposed rule
(these addenda are available via the internet on the CMS website) for
the complete list of ASC payment and comment indicators proposed for
the CY 2026 update.
C. Proposed Payment Policies Under the ASC Payment System
1. Proposed ASC Payment for Covered Surgical Procedures
a. Background
Our ASC payment policies for covered surgical procedures under the
revised ASC payment system are described in the CY 2008 OPPS/ASC final
rule with comment period (72 FR 66828 through 66831). Under our
established policy, we use the ASC standard ratesetting methodology of
multiplying the ASC relative payment weight for the procedure by the
ASC conversion factor for that same year to calculate the national
unadjusted payment rates for procedures with payment indicators ``G2''
and ``A2.'' Payment indicator ``A2'' was developed to identify
procedures that were included on the list of ASC covered surgical
procedures in CY 2007 and, therefore, were subject to transitional
payment prior to CY 2011. Although the 4-year transitional period has
ended and payment indicator ``A2'' is no longer required to identify
surgical procedures subject to transitional payment, we have retained
payment indicator ``A2'' because it is used to identify procedures that
are exempted from the application of the office-based designation.
[[Page 33707]]
Payment rates for office-based procedures (payment indicators
``P2,'' ``P3,'' and ``R2'') are the lower of the PFS nonfacility PE
RVU-based amount or the amount calculated using the ASC standard rate
setting methodology for the procedure. As detailed in section
XIII.C.3.b. of this proposed rule, we update the payment amounts for
office-based procedures (payment indicators ``P2,'' ``P3,'' and ``R2'')
using the most recent available MPFS and OPPS data. We compare the
estimated current year rate for each of the office-based procedures,
calculated according to the ASC standard rate setting methodology, to
the PFS nonfacility PE RVU-based amount to determine which is lower
and, therefore, would be the current year payment rate for the
procedure under our final policy for the revised ASC payment system
(Sec. 416.171(d)).
The rate calculation established for device-intensive procedures
(payment indicator ``J8'') is structured so only the service (non-
device) portion of the rate is subject to the ASC conversion factor. We
update the payment rates for device-intensive procedures to incorporate
the most recent device offset percentages calculated under the ASC
standard ratesetting methodology, as discussed in section XIII.C.4. of
this proposed rule.
In the CY 2014 OPPS/ASC final rule with comment period (78 FR
75081), we finalized our proposal to calculate the CY 2014 payment
rates for ASC covered surgical procedures according to our established
methodologies, with the exception of device removal procedures. For CY
2014, we finalized a policy to conditionally package payment for device
removal procedures under the OPPS. Under the OPPS, a conditionally
packaged procedure (status indicators ``Q1'' and ``Q2'') describes a
HCPCS code where the payment is packaged when it is provided with a
significant procedure but is separately paid when the service appears
on the claim without a significant procedure. Because ASC services
always include a covered surgical procedure, HCPCS codes that are
conditionally packaged under the OPPS are always packaged (payment
indicator ``N1'') under the ASC payment system. Under the OPPS, device
removal procedures are conditionally packaged and, therefore, would be
packaged under the ASC payment system. There is no Medicare payment
made when a device removal procedure is performed in an ASC without
another surgical procedure included on the claim; therefore, no
Medicare payment would be made if a device was removed but not
replaced. To ensure that the ASC payment system provides separate
payment for surgical procedures that only involve device removal--
conditionally packaged in the OPPS (status indicator ``Q2'')--we have
continued to provide separate payment since CY 2014 and assign the
current ASC payment indicators associated with these procedures.
b. Update to ASC Covered Surgical Procedure Payment Rates for CY 2026
We propose to update ASC payment rates for CY 2026 and subsequent
years using the established rate calculation methodologies under Sec.
416.171 and using our definition of device-intensive procedures, as
discussed in section XIII.C.4. of this proposed rule. As the proposed
OPPS relative payment weights are generally based on geometric mean
costs, we propose that the ASC payment system will generally use the
geometric mean cost to determine proposed relative payment weights
under the ASC standard methodology. We propose to continue to use the
amount calculated under the ASC standard ratesetting methodology for
procedures assigned payment indicators ``A2'' and ``G2.''
We propose to calculate payment rates for office-based procedures
(payment indicators ``P2,'' ``P3,'' and ``R2'') and device-intensive
procedures (payment indicator ``J8'') according to our established
policies and to identify device-intensive procedures using the
methodology discussed in section XIII.C.4. of this proposed rule.
Therefore, we propose to update the payment amount for the service
portion (the non-device portion) of the device-intensive procedures
using the standard ASC ratesetting methodology and the payment amount
for the device portion based on the proposed CY 2026 device offset
percentages that have been calculated using the standard OPPS APC
ratesetting methodology. We propose that payment for office-based
procedures would be at the lesser of the proposed CY 2026 MPFS
nonfacility PE RVU-based amount or the proposed CY 2026 ASC payment
amount calculated according to the ASC standard ratesetting
methodology.
As we did for CYs 2014 through 2025, for CY 2026, we propose to
continue our policy for device removal procedures, such that device
removal procedures that are conditionally packaged in the OPPS (status
indicators ``Q1'' and ``Q2'') will be assigned the current ASC payment
indicators associated with those procedures and will continue to be
paid separately under the ASC payment system.
c. Proposed Payment for ASC Add-On Procedures Eligible for Complexity
Adjustments Under the OPPS
In this section, we discuss the policy to provide increased payment
under the ASC payment system for combinations of certain ``J1'' service
codes and add-on procedure codes that are eligible for a complexity
adjustment under the OPPS.
(1) OPPS C-APC Complexity Adjustment Policy
Under the OPPS, complexity adjustments are utilized to provide
increased payment for certain comprehensive services. As discussed in
section II.A.2.b. of this proposed rule, we apply a complexity
adjustment by promoting qualifying paired ``J1'' service code
combinations or paired code combinations of ``J1'' services and add-on
codes from the originating Comprehensive APC (C-APC) (the C-APC to
which the designated primary service is first assigned) to the next
higher paying C-APC in the same clinical family of C-APCs. A ``J1''
status indicator refers to a hospital outpatient service paid through a
C-APC. We package payment for all add-on codes, which are codes that
describe a procedure or service always performed in addition to a
primary service or procedure, into the payment for the C-APC. However,
certain combinations of primary service codes and add-on codes may
qualify for a complexity adjustment.
We apply complexity adjustments when the paired code combination
represents a complex, costly form or version of the primary service
when the frequency and cost thresholds are met. The frequency threshold
is met when there are 25 or more claims reporting the code combination,
and the cost threshold is met when there is a violation of the 2 times
rule, as specified in section 1833(t)(2) of the Act and described in
section III.A.2.b. of this proposed rule, in the originating C-APC.
These paired code combinations that meet the frequency and cost
threshold criteria represent those that exhibit materially greater
resource requirements than the primary service. After designating a
single primary service for a claim, we evaluate that service in
combination with each of the other procedure codes reported on the
claim that are either assigned to status indicator ``J1'' or add-on
codes to determine if there are paired code combinations that meet the
complexity adjustment criteria. Once we have determined that a
particular combination of ``J1'' services, or combinations of a ``J1''
service and add-
[[Page 33708]]
on code, represents a complex version of the primary service because it
is sufficiently costly, frequent, and a subset of the primary
comprehensive service overall according to the criteria described
previously, we promote the claim to the next higher cost C-APC within
the clinical family unless the primary service is already assigned to
the highest cost APC within the C-APC clinical family or assigned to
the only C-APC in a clinical family. We do not create new C-APCs with a
comprehensive geometric mean cost that is higher than the highest
geometric mean cost (or only) C-APC in a clinical family just to
accommodate potential complexity adjustments. Therefore, the highest
payment for any claim including a code combination for services
assigned to a C-APC would be the highest paying C-APC in the clinical
family (79 FR 66802).
As previously stated, we package payment for add-on codes into the
C-APC payment rate. If any add-on code reported in conjunction with the
``J1'' primary service code does not qualify for a complexity
adjustment, payment for the add-on service continues to be packaged
into the payment for the primary service and the primary service code
reported with the add-on code is not reassigned to the next higher cost
C-APC. We list the proposed complexity adjustments for ``J1'' and add-
on code combinations for CY 2026, along with all of the other proposed
complexity adjustments, in Addendum J to this proposed rule (which is
available via the internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices).
(2) CY 2026 ASC Special Payment Policy Proposal for OPPS Complexity-
Adjusted C-APCs
For CY 2026, we propose to continue the special payment policy and
methodology for OPPS complexity-adjusted C-APCs that was finalized in
the CY 2023 OPPS/ASC final rule with comment period (87 FR 72078
through 72080).
For those ASC complexity adjustment codes for which we have claims
data, we propose to use the claims data to calculate the code
combination utilization and estimated payments for the ASC payment
system budget neutrality calculations for CY 2026. The ASC complexity
adjustment budget neutrality calculations are discussed further in
section XIII.H.2.a. of this proposed rule. The full list of the
proposed ASC complexity adjustment codes for CY 2026 can be found in
the CY 2026 proposed ASC Addendum AA and the supplemental policy file,
which also includes both the existing ASC complexity adjustment codes
and proposed additions and published with the proposed rule on the CMS
website at https://www.cms.gov/medicare/medicare-fee-for-service-payment/ascpayment/asc-regulations-and-notices. Since the complexity
adjustment assignments change each year under the OPPS, the proposed
list of ASC complexity adjustment codes eligible for the proposed
payment policy has changed slightly from the previous year.
Additionally, since complexity adjustment assignments may change
between the proposed rule and final rule under the OPPS, the final list
of ASC complexity adjustment codes eligible for this payment policy may
be slightly different than the proposed list of ASC complexity
adjustment codes.
d. Proposed Low Volume APCs and Limit on ASC Payment Rates for
Procedures Assigned to Low Volume APCs
As stated in section XIII.D.1.b. of the CY 2025 OPPS/ASC proposed
rule, the ASC payment system generally uses OPPS geometric mean costs
under the standard methodology to determine proposed relative payment
weights under the standard ASC ratesetting methodology.
In the CY 2022 OPPS/ASC final rule with comment period (86 FR 63743
through 63747), we adopted a universal low volume APC policy for CY
2022 and subsequent calendar years. Under our policy, we expanded the
low volume adjustment policy that is applied to procedures assigned to
New Technology APCs to also apply to clinical and brachytherapy APCs.
Specifically, a clinical APC or brachytherapy APC with fewer than 100
claims per year would be designated as a low volume APC. For items or
services assigned to a low volume APC, we use up to 4 years of claims
data to establish a payment rate for the APC as we currently do for low
volume services assigned to New Technology APCs. The payment rate for a
low volume APC or a low volume New Technology procedure would be based
on the highest of the median cost, arithmetic mean cost, or geometric
mean cost calculated using multiple years of claims data.
Based on claims data available for this proposed rule, we propose
to designate six brachytherapy APCs and four clinical APCs as low
volume APCs under the ASC payment system. The four clinical APCs and
six brachytherapy APCs meet our criteria of having fewer than 100
single claims in the relevant claims year (CY 2024 for this CY 2026
OPPS/ASC proposed rule) and therefore, we propose that they would be
subject to our universal low volume APC policy and the APC cost metric
would be based on the greater of the median cost, arithmetic mean cost,
or geometric mean cost using up to 4 years of claims data. Nine of the
ten APCs were designated as low volume APCs in CY 2025. Based on data
for this CY 2026 OPPS/ASC proposed rule, APC 2645 (Brachytx, non-
stranded, gold-198) has 103 single claims and no longer meets our
criteria to be designated as a low volume APC; however, APC 2643
(Brachytx, non-stranded, c-131) has only 88 single claims and does meet
our criteria to be designated as a low volume APC.
Table 76 includes the CY 2024 claims available for ratesetting for
each of the APCs we are proposing to designate as a low volume APC for
CY 2026.
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2. Proposed Payment for Covered Ancillary Services
a. Background
Our payment policies under the ASC payment system for covered
ancillary services generally vary according to the particular type of
service and its payment policy under the OPPS. Our overall policy
provides separate ASC payment for certain ancillary items and services
integrally related to the provision of ASC covered surgical procedures
that are paid separately under the OPPS and provides packaged ASC
payment for other ancillary items and services that are packaged or
conditionally packaged (status indicators ``N,'' ``Q1,'' and ``Q2'')
under the OPPS.
In the CY 2013 OPPS/ASC rulemaking (77 FR 45169 and 77 FR 68457
through 68458), we further clarified our policy regarding the payment
indicator assignment for procedures that are conditionally packaged in
the OPPS (status indicators ``Q1'' and ``Q2''). Under the OPPS, a
conditionally packaged procedure describes a HCPCS code where the
payment is packaged when it is provided with a significant procedure
but is separately paid when the service appears on the claim without a
significant procedure. Because ASC services always include a surgical
procedure, HCPCS codes that are conditionally packaged under the OPPS
are generally packaged (payment indicator ``N1'') under the ASC payment
system (except for device removal procedures, as discussed in the CY
2022 OPPS/ASC proposed rule (86 FR 42083)). Thus, our policy generally
aligns ASC payment bundles with those under the OPPS (72 FR 42495). In
all cases, in order for ancillary items and services also to be paid,
the ancillary items and services must be provided integral to the
performance of ASC covered surgical procedures for which the ASC bills
Medicare.
Our ASC payment policies generally provide separate payment for
drugs and biologicals that are separately paid under the OPPS at the
OPPS rates and package payment for drugs and biologicals for which
payment is packaged under the OPPS. However, as discussed in the CY
2022 OPPS/ASC final rule with comment period, for CY 2022, we finalized
a policy to unpackage and pay separately at ASP plus 6 percent for the
cost of non-opioid pain management drugs and biologicals that function
as a supply when used in a surgical procedure as determined by CMS
under Sec. 416.174 (86 FR 63483).
We generally pay for separately payable radiology services at the
lower of the PFS nonfacility PE RVU-based (or technical component)
amount or the rate calculated according to the ASC standard ratesetting
methodology (72 FR 42497). However, as finalized in the CY 2011 OPPS/
ASC final rule with comment period (75 FR 72050), payment indicators
for all nuclear medicine procedures (defined as CPT codes in the range
of 78000 through 78999) that are designated as radiology services that
are paid separately when provided integral to a surgical procedure on
the ASC list are set to ``Z2'' so that payment is made based on the ASC
standard ratesetting methodology rather than the MPFS nonfacility PE
RVU amount (``Z3''), regardless of which is lower (Sec.
416.171(d)(1)).
Similarly, we also finalized our policy to set the payment
indicator to ``Z2'' for radiology services that use contrast agents so
that payment for these procedures will be based on the OPPS relative
payment weight using the ASC standard ratesetting methodology and,
therefore, will include the cost for the contrast agent (Sec.
416.171(d)(2)).
ASC payment policy for brachytherapy sources mirrors the payment
policy under the OPPS. ASCs are paid for brachytherapy sources provided
integral to ASC covered surgical procedures at prospective rates
adopted under the OPPS or, if OPPS rates are unavailable, at
contractor-priced rates (72 FR 42499). Since December 31, 2009, ASCs
have been paid for brachytherapy sources provided integral to ASC
covered surgical procedures at prospective rates adopted under the
OPPS.
Our ASC policies also provide separate payment for: (1) certain
items and services that CMS designates as contractor-priced, including,
but not limited to, the procurement of corneal tissue; and (2) certain
implantable items that have pass-through payment status under the OPPS.
These categories do not have prospectively established ASC payment
rates according to ASC payment system policies (72 FR 42502 and 42508
through 42509; Sec. 416.164(b)). Under the ASC payment system, we have
designated corneal tissue acquisition and hepatitis B vaccines as
contractor-priced. Corneal tissue acquisition is contractor-priced
based on the invoice costs for acquiring the corneal tissue for
transplantation. Hepatitis B vaccines are contractor-priced based on
invoiced costs for the vaccine.
Devices that are eligible for pass-through payment under the OPPS
are separately paid under the ASC payment system and are contractor-
priced. Under
[[Page 33710]]
the revised ASC payment system (72 FR 42502), payment for the surgical
procedure associated with the pass-through device is made according to
our standard methodology for the ASC payment system, based on only the
service (non-device) portion of the procedure's OPPS relative payment
weight if the APC weight for the procedure includes other packaged
device costs. We also refer to this methodology as applying a ``device
offset'' to the ASC payment for the associated surgical procedure. This
ensures that duplicate payment is not provided for any portion of an
implanted device with OPPS pass-through payment status.
In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66933
through 66934), we finalized that, beginning in CY 2015, certain
diagnostic tests within the medicine range of CPT codes for which
separate payment is allowed under the OPPS are covered ancillary
services when they are integral to an ASC covered surgical procedure.
We finalized that diagnostic tests within the medicine range of CPT
codes include all Category I CPT codes in the medicine range
established by CPT, from 90000 to 99999, and Category III CPT codes and
Level II HCPCS codes that describe diagnostic tests that crosswalk or
are clinically similar to procedures in the medicine range established
by CPT. In the CY 2015 OPPS/ASC final rule with comment period, we also
finalized our policy to pay for these tests at the lower of the PFS
nonfacility PE RVU-based (or technical component) amount or the rate
calculated according to the ASC standard ratesetting methodology (79 FR
66933 through 66934). We finalized that the diagnostic tests for which
the payment is based on the ASC standard ratesetting methodology be
assigned to payment indicator ``Z2'' and revised the definition of
payment indicator ``Z2'' to include a reference to diagnostic services
and those for which the payment is based on the PFS nonfacility PE RVU-
based amount be assigned payment indicator ``Z3,'' and revised the
definition of payment indicator ``Z3'' to include a reference to
diagnostic services.
b. Proposed Payment for Covered Ancillary Items and Services for CY
2026
We propose to update the ASC payment rates and to make changes to
ASC payment indicators, as necessary, to maintain consistency between
the OPPS and ASC payment system regarding the packaged or separately
payable status of services and the proposed CY 2026 OPPS and ASC
payment rates and subsequent years' payment rates. We propose to
continue to set the CY 2026 ASC payment rates and subsequent years'
payment rates for brachytherapy sources and separately payable drugs
and biologicals equal to the OPPS payment rates for CY 2026 and
subsequent years' payment rates.
Covered ancillary services and their proposed payment indicators
for CY 2026 are listed in Addendum BB of this proposed rule (which is
available via the internet on the CMS website). For those covered
ancillary services where the payment rate is the lower of the rate
under the ASC standard rate setting methodology and the PFS proposed
rates (similar to our office-based payment policy), the proposed
payment indicators and rates set forth in this proposed rule are based
on a comparison using the proposed PFS rates effective January 1, 2026.
For a discussion of the PFS rates, we refer readers to the CY 2026 PFS
proposed rule which is available on the CMS website at https://www.cms.gov/medicare/payment/fee-schedules/physician/federal-regulation-notices.
3. Covered Surgical Procedures Designated as Office-Based Procedures
a. Background
In the August 2, 2007 ASC final rule with comment period, we
finalized our policy to designate as ``office-based'' those procedures
that are added to the ASC Covered Procedures List (CPL) in CY 2008 or
later years that we determine are furnished predominantly (more than 50
percent of the time) in physicians' offices based on consideration of
the most recent available volume and utilization data for each
individual procedure code and/or, if appropriate, the clinical
characteristics, utilization, and volume of related codes. In that
final rule, we also finalized our policy to exempt all procedures on
the CY 2007 ASC list from application of the office-based
classification (72 FR 42512). The procedures that were added to the ASC
CPL beginning in CY 2008 that we determined were office-based were
identified in Addendum AA to that final rule with payment indicator
``P2'' (Office-based surgical procedure added to ASC list in CY 2008 or
later with MPFS nonfacility PE RVUs; payment based on OPPS relative
payment weight); ``P3'' (Office-based surgical procedures added to ASC
list in CY 2008 or later with MPFS nonfacility PE RVUs; payment based
on MPFS nonfacility PE RVUs); or ``R2'' (Office-based surgical
procedure added to ASC list in CY 2008 or later without MPFS
nonfacility PE RVUs; payment based on OPPS relative payment weight),
depending on whether we estimated the procedure would be paid according
to the ASC standard ratesetting methodology based on its OPPS relative
payment weight or at the MPFS nonfacility PE RVU-based amount.
Consistent with our final policy to annually review and update the
ASC CPL to include all covered surgical procedures eligible for payment
in ASCs, each year we identify covered surgical procedures as either
temporarily office-based (these are new procedure codes with little or
no utilization data that we have determined are clinically similar to
other procedures that are permanently office-based), permanently
office-based, or nonoffice-based, after taking into account updated
volume and utilization data.
b. CY 2026 Proposed Office-Based Procedures
In developing this proposed rule, we followed our policy to
annually review and update the covered surgical procedures for which
ASC payment is made and to identify new procedures that may be
appropriate for ASC payment, including their potential designation as
office-based. Historically, we also review the most recent claims
volume and utilization data (CY 2024 claims) and the clinical
characteristics for all covered surgical procedures that are currently
assigned a payment indicator in CY 2025 of ``G2'' (Non office-based
surgical procedure added in CY 2008 or later; payment based on OPPS
relative payment weight) as well as for those procedures assigned one
of the temporary office-based payment indicators, specifically ``P2,''
``P3,'' or ``R2'' in the CY 2025 OPPS/ASC final rule with comment
period (89 FR 94322 through 94326).
Our review of the CY 2024 volume and utilization data of covered
surgical procedures currently assigned a payment indicator of ``G2''
(Non office-based surgical procedure added in CY 2008 or later; payment
based on OPPS relative payment weight) resulted in the identification
of one surgical procedure--CPT code 21930 (Excision, tumor, soft tissue
of back or flank, subcutaneous; less than 3 cm)--that we believed met
the criteria for designation as permanently office-based. The data
indicated that this procedure is performed more than 50 percent of the
time in physicians' offices, and the services are of a level of
complexity consistent with other procedures performed routinely in
physicians'
[[Page 33711]]
offices. We have included CPT code 21930 in our list of surgical
procedures we propose to permanently designate as office-based for CY
2026 in Table 77.
As discussed in the August 2, 2007 ASC final rule with comment
period (72 FR 42533 through 42535), we finalized our policy to
designate certain new surgical procedures as temporarily office-based
until adequate claims data are available to assess their predominant
sites of service, whereupon if we confirm their office-based nature,
the procedures are permanently assigned to the list of office-based
procedures. In the absence of claims data, we use other available
information, including our clinical advisors' judgment, predecessor CPT
and Level II HCPCS codes, information submitted by representatives of
specialty societies and professional associations, and information
submitted by commenters during the public comment period.
In Table 153 of the CY 2025 OPPS/ASC final rule with comment
period, we finalized assigning temporary office-based designations to
nine surgical procedures for CY 2025 (89 FR 94325 through 94326). As
discussed in section XIII.B. of this proposed rule, two of the nine
procedures were deleted effective April 2025--HCPCS codes G0564 and
G0565. For two of the remaining seven surgical procedures, interested
parties submitted information that suggested CPT code 15013
(Preparation of skin cell suspension autograft, requiring enzymatic
processing, manual mechanical disaggregation of skin cells, and
filtration; first 25 sq cm or less of harvested skin) and its automated
counterpart HCPCS C8002 (Preparation of skin cell suspension autograft,
automated, including all enzymatic processing and device components (do
not report with manual suspension preparation)) are not most similar to
CPT code 11310 (Shaving of epidermal or dermal lesion, single lesion,
face, ears, eyelids, nose, lips, mucous membrane; lesion diameter 0.5
cm or less) as we stated in the CY 2025 OPPS/ASC final rule with
comment period (89 FR 94322 through 94324) since CPT code 15013 must be
performed with other skin cell suspension autograft procedure codes and
the entirety of the procedure--harvesting of skin, preparation and
application of the skin cell suspension autograft--is not expected to
be predominantly performed in an office setting. After reviewing the
information and consulting with our medical officers, we agree that the
entirety of the procedure is not expected to be performed in a
physician office setting and that CPT code 11310 would not be an
accurate crosswalk for site-of-service utilization. Therefore, as shown
in Table 78, in this proposed rule, we propose to permanently remove
the temporarily office-based designation for CPT code 15013 and HCPCS
code C8002.
We reviewed CY 2024 volume and utilization data for the remaining
five surgical procedures designated as temporarily office-based in the
CY 2025 OPPS/ASC final rule with comment period. As shown in Table 77
and Table 78, for one of the five surgical procedures--CPT code 0864T--
there are greater than 50 claims available and the volume and
utilization indicated this procedure was performed predominantly in the
office setting. Therefore, we propose to no longer designate this
procedure as temporarily office-based and to permanently designate this
procedure as office-based and assign one of the office-based payment
indicators, specifically ``P2'', ``P3'', or ``R2.''
[GRAPHIC] [TIFF OMITTED] TP17JY25.121
[[Page 33712]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.122
For the remaining four procedures that were designated as
temporarily office-based in the CY 2025 OPPS/ASC final rule with
comment period and temporarily assigned one of the office-based payment
indicators, specifically ``P2,'' ``P3,'' or ``R2,'' there were fewer
than 50 claims; therefore, there was an insufficient number of claims
to determine if the office setting was the predominant setting of care
for these procedures. Therefore, as shown in Table 79, we propose to
continue to designate such procedures as temporarily office-based for
CY 2026 and assign one of the office-based payment indicators.
For CY 2026, we are not proposing to designate any new CY 2026 CPT
codes for ASC covered surgical procedures as temporarily office-based.
[[Page 33713]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.123
The procedures for which the proposed office-based designation for
CY 2026 is temporary are also indicated by an asterisk in Addendum AA
to this proposed rule (which is available via the internet on the CMS
website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/ASCPayment/ASC-Regulations-and-Notices.).
4. Device-Intensive ASC Covered Surgical Procedures
a. Background
We refer readers to the CY 2019 OPPS/ASC final rule with comment
period (83 FR 59040 through 59041), for a summary of our existing
policies regarding ASC covered surgical procedures that are designated
as device-intensive.
b. CY 2026 Proposed Device Intensive Procedures
In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59040
through 59043), we modified our criteria for device-intensive
procedures to better capture costs for procedures with significant
device costs. We adopted a policy to allow procedures that involve
surgically inserted or implanted, high-cost, single-use devices to
qualify as device-intensive procedures. In addition, we modified our
criteria to lower the device offset percentage threshold from 40
percent to 30 percent. The device offset percentage is the percentage
of device costs within a procedure's total costs. Specifically, for CY
2019 and subsequent years, we adopted a policy that device-intensive
procedures would be subject to the following criteria:
All procedures must involve implantable or insertable
devices assigned a CPT or HCPCS code;
The required devices (including single-use devices) must
be surgically inserted or implanted; and
The device offset amount must be significant, which is
defined as exceeding 30 percent of the procedure's mean cost.
Corresponding to this change in the cost criterion, we adopted a policy
that the default device offset for new codes that describe procedures
that involve the implantation of medical devices will be 31 percent
beginning in CY 2019. For new codes describing procedures that are
payable when furnished in an ASC and involve the implantation of a
medical device, we adopted a policy that the default device offset
would be applied in the same manner as the policy we adopted in section
IV.B.2 of the CY 2019 OPPS/ASC final rule with comment period (83 FR
58944 through 58948). We amended Sec. 416.171(b)(2) of the regulations
to reflect these new device criteria.
In addition, as also adopted in section IV.B.2. of the CY 2019
OPPS/ASC final rule with comment period, to further align the device-
intensive policy with the criteria used for device pass-through status,
we specified, for CY 2019 and subsequent years, that for purposes of
satisfying the device-intensive criteria, a device-intensive procedure
must involve a device that:
Has received FDA marketing authorization, has received an
FDA investigational device exemption (IDE) and has been classified as a
Category B device by FDA in accordance with 42 CFR 405.203 through
405.207 and
[[Page 33714]]
405.211 through 405.215, or meets another appropriate FDA exemption
from premarket review;
Is an integral part of the service furnished;
Is used for one patient only;
Comes in contact with human tissue;
Is surgically implanted or inserted (either permanently or
temporarily); and
Is not any of the following:
++ Equipment, an instrument, apparatus, implement, or item of this
type for which depreciation and financing expenses are recovered as
depreciable assets as defined in Chapter 1 of the Medicare Provider
Reimbursement Manual (CMS Pub. 15-1); or
++ A material or supply furnished incident to a service (for
example, a suture, customized surgical kit, scalpel, or clip, other
than a radiological site marker).
In the CY 2022 OPPS/ASC final rule with comment period (86 FR 63773
through 63775), we modified our approach to assigning device-intensive
status to surgical procedures under the ASC payment system. First, we
adopted a policy of assigning device-intensive status to procedures
that involve surgically inserted or implanted, high-cost, single-use
devices if their device offset percentage exceeds 30 percent under the
ASC standard ratesetting methodology, even if the procedure is not
designated as device-intensive under the OPPS. Second, we adopted a
policy that if a procedure is assigned device-intensive status under
the OPPS, but has a device offset percentage below the device-intensive
threshold under the standard ASC ratesetting methodology, the procedure
will be assigned device-intensive status under the ASC payment system
with a default device offset percentage of 31 percent. The policies
were adopted to provide consistency between the OPPS and ASC payment
system and provide a more appropriate payment rate for surgical
procedures with significant device costs under the ASC payment system.
In the CY 2023 OPPS/ASC final rule with comment period (87 FR 72078
through 72080), we finalized our policy to create certain C-codes, or
ASC complexity adjustment codes that describe certain combinations of a
primary covered surgical procedure as well as a packaged (payment
indicator = ``N1'') procedure that are otherwise eligible for a
complexity adjustment under the OPPS (as listed in Addendum J). Each
ASC complexity adjustment code's APC assignment is based on its
corresponding OPPS complexity adjustment code's APC assignment. In the
CY 2023 OPPS/ASC final rule with comment period, we stated our belief
that it would be appropriate for these ASC complexity adjustment codes
to qualify for device-intensive status under the ASC payment system if
the primary procedure of the code was also designated as device-
intensive. Under our current policy, the ASC complexity adjustment code
retains the device portion of the primary procedure (also called the
``device offset amount'') and not the device offset percentage.
Therefore, for device-intensive ASC complexity adjustment codes, we set
the device portion of the combined procedure equal to the device
portion of the primary procedure and calculate the device offset
percentage by dividing the device portion by the ASC complexity
adjustment code's APC payment rate. Further, we apply our standard ASC
payment system ratesetting methodology to the non-device portion of the
ASC complexity adjustment code's APC payment rate; that is, we multiply
the OPPS relative weight by the ASC budget neutrality adjustment and
the ASC conversion factor and sum that amount with the device portion
to calculate the ASC payment rate.
In the CY 2025 OPPS/ASC final rule with comment period, we
finalized a modification to our policy regarding default device offset
percentages for new codes that meet our criteria for device-intensive
status. Under both the OPPS and ASC payment system, for new device-
intensive procedures that lack claims data, or lack claims data from a
predecessor code or a clinically-similar code that uses the same
device, we apply the greater of the APC-wide device offset percentage
or 31 percent (the previous default device offset percentage). We
believe that an APC-wide average device offset percentage is, in most
cases, a better reflection of device costs when the typical device
costs of procedures assigned to such APC are significantly greater than
31 percent. This policy does not apply to new device-intensive
procedures assigned to New Technology APCs.
In section V.B.8.i. of this proposed rule, we discuss the
implementation of the Final Remedy for the 340B-Acquired Drug Payment
Policy for Calendar Years 2018-2022 rule and the impact of the OPPS
conversion factor on the ASC payment system. Since most ASC payment
rates for surgical procedures are constructed from OPPS relative
weights or the MPFS unadjusted nonfacility PE RVU-based amount, the
remedy's proposed prospective offset to the OPPS conversion has a very
limited impact on the ASC payment system. The only impact of the
proposed reduction to the OPPS conversion factor is the payment rate
for device-intensive procedures under the ASC payment system. Since the
ASC payment system holds device portions constant between the two
settings, the device portion is the device offset percentage multiplied
by the OPPS payment rate.
Historically, in our proposed rules, device portions for device-
intensive procedures would be based on the proposed prospective OPPS
conversion factor multiplied by the proposed prospective OPPS relative
weights. However, for this CY 2026 OPPS/ASC proposed rule, we believe
it would be inaccurate and inappropriate to use OPPS payment rates that
have been reduced by the remedy's prospective offset since this could
accumulate to have a potentially noticeable impact on ASC payment rates
for certain device-intensive procedures over time. Since the ASC
payment system would otherwise set the device portion in the ASC
setting at the amount without the two percent reduction to OPPS payment
rates, we believe it would not be an accurate reflection of the device
costs of covered surgical procedures in the ASC setting if we were to
incorporate the 2 percent prospective offset that we propose in this
proposed rule. Further, we are concerned beneficiaries could have
access issues to certain device-intensive procedures in the ASC setting
if we maintained a 2-percent reduction to the payment rates for device-
intensive procedures for each calendar year we applied the prospective
offset. Therefore, we are proposing that the OPPS payment rates used
for ratesetting under the ASC payment system for CY 2026 and subsequent
years would not incorporate the two percent prospective offset to the
OPPS conversion factor as a result of the 340B remedy offset that we
propose to implement in this proposed rule. For proposed CY 2026 device
offset percentages, which include device offset percentages based on CY
2024 claims processed through March 31, 2025, we refer readers to
Addendum FF of this proposed rule. Final CY 2026 device offset
percentages may differ from the proposed percentages, as we rely on the
most recently available claims data for the CY 2026 OPPS/ASC final rule
with comment period (CY 2024 claims data processed through June 30th).
c. Adjustment to ASC Payments for No Cost/Full Credit and Partial
Credit Devices
Our ASC payment policy for costly devices implanted or inserted in
ASCs at no cost/full credit or partial credit is set forth in Sec.
416.179 of our regulations
[[Page 33715]]
and is consistent with the OPPS policy that was in effect until CY
2014. We refer readers to the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66845 through 66848) for a full discussion of the ASC
payment adjustment policy for no cost/full credit and partial credit
devices. ASC payment is reduced by 100 percent of the device offset
amount when a hospital furnishes a specified device without cost or
with a full credit and by 50 percent of the device offset amount when
the hospital receives partial credit in the amount of 50 percent or
more of the cost for the specified device.
Effective CY 2014, under the OPPS, we finalized our proposal to
reduce OPPS payment for applicable APCs by the full or partial credit a
provider receives for a device, capped at the device offset amount.
Although we finalized our proposal to modify the policy of reducing
payments when a hospital furnishes a specified device without cost or
with full or partial credit under the OPPS, in the CY 2014 OPPS/ASC
final rule with comment period (78 FR 75076 through 75080), we
finalized our proposal to maintain our ASC policy for reducing payments
to ASCs for specified device-intensive procedures when the ASC
furnishes a device without cost or with full or partial credit. Unlike
the OPPS, there is currently no mechanism within the ASC claims
processing system for ASCs to submit to CMS the amount of the actual
credit received when furnishing a specified device at full or partial
credit. Therefore, under the ASC payment system, we finalized our
proposal for CY 2014 to continue to reduce ASC payments by 100 percent
or 50 percent of the device offset amount when an ASC furnishes a
device without cost or with full or partial credit, respectively.
Under current ASC policy, all ASC device-intensive covered surgical
procedures are subject to the no cost/full credit and partial credit
device adjustment policy. Specifically, when a device-intensive
procedure is performed to implant or insert a device that is furnished
at no cost or with full credit from the manufacturer, the ASC appends
the HCPCS ``FB'' modifier on the line in the claim with the procedure
to implant or insert the device. The contractor reduces payment to the
ASC by the device offset amount that we estimate represents the cost of
the device when the necessary device is furnished without cost or with
full credit to the ASC. We continue to believe that the reduction of
ASC payment in these circumstances is necessary to pay appropriately
for the covered surgical procedure furnished by the ASC.
In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59043
through 59044) we adopted a policy to reduce the payment for a device-
intensive procedure for which the ASC receives partial credit by one-
half of the device offset amount that would be applied if a device was
provided at no cost or with full credit if the credit to the ASC is 50
percent or more (but less than 100 percent) of the cost of the new
device. The ASC will append the HCPCS ``FC'' modifier to the HCPCS code
for the device-intensive surgical procedure when the facility receives
a partial credit of 50 percent or more (but less than 100 percent) of
the cost of a device. To report that the ASC received a partial credit
of 50 percent or more (but less than 100 percent) of the cost of a new
device, ASCs have the option of either: (1) submitting the claim for
the device-intensive procedure to their Medicare contractor after the
procedure's performance, but prior to manufacturer acknowledgment of
credit for the device, and subsequently contacting the contractor
regarding a claim adjustment, once the credit determination is made; or
(2) holding the claim for the device implantation or insertion
procedure until a determination is made by the manufacturer on the
partial credit and submitting the claim with the ``FC'' modifier
appended to the implantation procedure HCPCS code if the partial credit
is 50 percent or more (but less than 100 percent) of the cost of the
device. Beneficiary coinsurance would be based on the reduced payment
amount. As finalized in the CY 2015 OPPS/ASC final rule with comment
period (79 FR 66926), to ensure our policy covers any situation
involving a device-intensive procedure where an ASC may receive a
device at no cost or receive full credit or partial credit for the
device, we apply our ``FB''/``FC'' modifier policy to all device-
intensive procedures.
In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59043
through 59044) we stated we would reduce the payment for a device-
intensive procedure for which the ASC receives partial credit by one-
half of the device offset amount that would be applied if a device was
provided at no cost or with full credit, if the credit to the ASC is 50
percent or more (but less than 100 percent) of the cost of the device.
In the CY 2020 OPPS/ASC final rule with comment period, we finalized
continuing our existing policies for CY 2020. We note that we
inadvertently omitted language that this policy would apply not just in
CY 2019 but also in subsequent calendar years. We intended to apply
this policy in CY 2019 and subsequent calendar years. Therefore, we
finalized our proposal to apply our policy for partial credits
specified in the CY 2019 OPPS/ASC final rule with comment period (83 FR
59043 through 59044) in CY 2022 and subsequent calendar years (86 FR
63775 through 63776). Specifically, for CY 2022 and subsequent calendar
years, we would reduce the payment for a device-intensive procedure for
which the ASC receives partial credit by one-half of the device offset
amount that would be applied if a device was provided at no cost or
with full credit, if the credit to the ASC is 50 percent or more (but
less than 100 percent) of the cost of the device. To report that the
ASC received a partial credit of 50 percent or more (but less than 100
percent) of the cost of a device, ASCs have the option of either: (1)
submitting the claim for the device intensive procedure to their
Medicare contractor after the procedure's performance, but prior to
manufacturer acknowledgment of credit for the device, and subsequently
contacting the contractor regarding a claim adjustment, once the credit
determination is made; or (2) holding the claim for the device
implantation or insertion procedure until a determination is made by
the manufacturer on the partial credit and submitting the claim with
the ``FC'' modifier appended to the implantation procedure HCPCS code
if the partial credit is 50 percent or more (but less than 100 percent)
of the cost of the device. Beneficiary coinsurance would be based on
the reduced payment amount.
We are not proposing any changes to our policies related to no
cost/full credit or partial credit devices for CY 2026.
5. Requirement in the Physician Fee Schedule CY 2026 Proposed Rule for
HOPDs and ASCs To Report Discarded Amounts of Certain Single-dose or
Single-use Package Drugs
Section 90004 of the Infrastructure Investment and Jobs Act (Pub.
L. 117-9, November 15, 2021) (``the Infrastructure Act'') amended
section 1847A of the Act to re-designate subsection (h) as subsection
(i) and insert a new subsection (h), which requires manufacturers to
provide a refund to CMS for certain discarded amounts from a refundable
single-dose container or single-use package drug.
The CY 2026 PFS proposed rule includes proposals related to the
discarded drug refund policy, including proposals that may impact
hospital outpatient departments (HOPDs) and
[[Page 33716]]
ambulatory surgical centers (ASCs). Similar to our CY 2023, CY 2024,
and CY 2025 notices in the OPPS/ASC proposed rules (87 FR 71988, 88 FR
49760, and 89 FR 59421 through 59422), we are including a notice in
this CY 2026 proposed rule to ensure interested parties are aware of
these proposals and know to refer to the CY 2026 Physician Fee Schedule
proposed rule for a full description of the proposed policy. Interested
parties are asked to submit comments on any proposals to further
implement section 90004 of the Infrastructure Act to the CY 2026 PFS
proposed rule. Public comments on these proposals will be addressed in
the CY 2026 PFS final rule with comment period. We note that this same
notice appeared in section V.B. of this proposed rule.
D. Proposed Additions to ASC Covered Surgical Procedures and Covered
Ancillary Services Lists
1. Current Review Process for the List of ASC Covered Surgical
Procedures
Section 1833(i)(1) of the Act requires us, in part, to specify, in
consultation with appropriate medical organizations, surgical
procedures that are appropriately performed on an inpatient basis in a
hospital but that can also be safely performed in an ASC, a CAH, or an
HOPD, and to review and update the list of ASC covered surgical
procedures at least every 2 years. We evaluate the ASC covered
procedures list (ASC CPL) each year to determine whether procedures
should be added to or removed from the list, and changes to the list
are often made in response to specific concerns raised by interested
parties.
Under our regulations at Sec. Sec. 416.2 and 416.166, covered
surgical procedures furnished on or after January 1, 2022, are surgical
procedures that meet the general standards specified in Sec.
416.166(b) and are not excluded under the general exclusion criteria
specified in Sec. 416.166(c). Specifically, under Sec. 416.166(b),
the general standards provide that covered surgical procedures are
surgical procedures specified by the Secretary and published in the
Federal Register and/or via the internet on the CMS website that are
separately paid under the OPPS, that would not be expected to pose a
significant safety risk to a Medicare beneficiary when performed in an
ASC, and for which standard medical practice dictates that the
beneficiary would not typically be expected to require active medical
monitoring and care at midnight following the procedure.
Section 416.166(c) sets out the general exclusion criteria used
under the ASC payment system to evaluate the safety of procedures for
performance in an ASC. The general exclusion criteria provide that
covered surgical procedures do not include those surgical procedures
that: (1) generally result in extensive blood loss; (2) require major
or prolonged invasion of body cavities; (3) directly involve major
blood vessels; (4) are generally emergent or life-threatening in
nature; (5) commonly require systemic thrombolytic therapy; (6) are
designated as requiring inpatient care under Sec. 419.22(n); (7) can
only be reported using a CPT unlisted surgical procedure code; or (8)
are otherwise excluded under Sec. 411.15.
In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59029
through 59030), we defined a surgical procedure under the ASC payment
system as any procedure described within the range of Category I CPT
codes that the CPT Editorial Panel of the AMA defines as ``surgery''
(CPT codes 10000 through 69999) (72 FR 42476), as well as procedures
that are described by Level II HCPCS codes or by Category I CPT codes
or by Category III CPT codes that directly crosswalk or are clinically
similar to procedures in the CPT surgical range that we determined met
the general standards established in previous years for addition to the
ASC CPL.
For a detailed discussion of the history of our policies for adding
surgical procedures to the ASC CPL, we refer readers to the CY 2021
through CY 2025 OPPS/ASC final rules with comment period (85 FR 86143
through 86145; 86 FR 63777 through 63805; 87 FR 72068 through 72076; 88
FR 81923 through 81945; and 89 FR 94331 through 94334).
2. Proposed Changes to the List of ASC Covered Surgical Procedures for
CY 2026
Historically, we have reviewed the clinical characteristics of
procedures and consulted with appropriate medical organizations, other
interested parties, and our clinical advisors to determine if those
procedures would meet our existing regulatory criteria under 42 CFR
416.2 and 42 CFR 416.166.
In the CY 2021 OPPS/ASC final rule with comment period, we
significantly revised our policy for adding surgical procedures to the
ASC CPL to provide that the general exclusion and general standard
criteria that we used to identify covered surgical procedures would be
safety factors for physicians to consider for a specific beneficiary
when determining whether to perform a covered surgical procedure (85 FR
86143 through 86153). We also stated that we would add surgical
procedures when we identified a surgical procedure that met general
standards criteria or when we were notified of a surgical procedure
that could meet general standards criteria and we confirmed that the
procedure met those requirements.
In the CY 2022 OPPS/ASC final rule with comment period, we
reinstated the general standard and general exclusion criteria as part
of the review process, rather than safety factors for physicians to
consider, and renamed the notifications process finalized in the CY
2021 rule as a nominations process, later re-named the ``Pre-Proposed
Rule CPL Recommendation Process'' (86 FR 63776 through 63782). Under
this process, which became effective in CY 2024, an external party can
recommend a surgical procedure by March 1 of a calendar year for the
list of ASC covered surgical procedures for the following calendar
year. As a result of the reinstatement of the general standard and
general exclusion criteria, we finalized the removal of 255 procedures
that had been added to the ASC CPL in CY 2021. We also maintained these
criteria and the Pre-Proposed Rule CPL Recommendation Process during
the CY 2023 through CY 2025 rulemaking cycles.
In the CY 2022 OPPS/ASC final rule with comment period, commenters
were largely split on the issue of reinstating the general standard and
general exclusion criteria at Sec. 416.166 that were in place prior to
CY 2021. Many commenters opposed this proposal and recommended that CMS
not re-adopt these criteria. Commenters contended that this policy may
substitute administrative criteria for physician clinical judgment,
reduce beneficiary choice, and increase costs since the lack of payment
in the ASC setting may push these procedures to be performed in the
higher-cost hospital setting.
For CY 2026, we propose to revise our regulatory criteria at 42 CFR
416.166 to evaluate potential additions to the ASC CPL, similar to the
changes we finalized in the CY 2021 OPPS/ASC final rule with comment
period. Specifically, we propose to revise our regulatory criteria by
removing certain general standard and general exclusion criteria at 42
CFR 416.166(b) and (c), moving them to a new section as nonbinding
physician considerations for patient safety. Under the revised
criteria, we propose to add certain surgical procedures to the ASC CPL,
beginning in CY 2026, in order to expand access, while maintaining the
safety for Medicare beneficiaries
[[Page 33717]]
through the nonbinding physician considerations for patient safety.
a. ASC CPL Review Process for CY 2026
(1) Proposed Changes to General Standards and Exclusion Criteria for CY
2026
For CY 2026, we are continuing to build on our efforts to maximize
patient and physician choice and access to care by exploring broader
approaches to adding procedures to the ASC CPL in order to further
increase the availability of ASCs as an alternative and often lower
cost site of care for Medicare beneficiaries. An expansion of the ASC
CPL would maximize the ability of ASCs to divert patients that can be
safely treated in an ASC setting away from the hospital setting, which
would preserve the capacity of hospitals to treat more acute patients.
Expanding the procedures placed on the ASC CPL would also build on the
policy changes we have made in recent years to further site neutrality
between the HOPD and ASC settings.
In light of these objectives, we propose to modify the existing
general standard criteria under 42 CFR 416.166(b) that currently
require covered surgical procedures to be surgical procedures specified
by the Secretary and published in the Federal Register and/or via the
internet on the CMS website, separately paid under the OPPS, not
expected to pose a significant safety risk to a Medicare beneficiary
when performed in an ASC, and for which standard medical practice
dictates that the beneficiary would not typically be expected to
require active medical monitoring and care at midnight following the
procedure. We would retain the condition that procedures be separately
paid under the OPPS and move the latter two standards to a new section
outlining possible physician considerations in making site-of-service
decisions.
We also propose to eliminate five of the current general exclusion
criteria at 42 CFR 416.166(c)(1) through (c)(5) and move them to the
new physician considerations section. We believe these five
exclusionary criteria may no longer be necessary to determine what
procedures can be safely added to the ASC CPL because many ASCs are
currently able to safely provide services with these characteristics,
based on prior interested parties' feedback and public comments we have
received. This would also allow physicians practicing in the ASC
setting, who have the greatest familiarity and insight into the needs
of individual beneficiaries, to use their complex medical judgement to
determine whether they can safely perform a procedure in the ASC, given
the entirety of the circumstances, including the clinical profile of
the patient, the surgical back-up available at the ASC, and the ability
to safely and timely respond to unexpected complications.
Under this proposal, we would keep the remaining three general
exclusion criteria at 42 CFR 416.166(c)(6) through (c)(8) because the
original reasons we adopted them in CY 2008 continue to exist, subject
to the proposed modifications to 416.166(c)(6). These criteria would
continue to exclude certain procedures from the ASC CPL, namely those
that are designated as requiring inpatient care under 42 CFR 419.22(n),
can only be reported using a CPT unlisted surgical procedure code, or
are otherwise excluded under 42 CFR 411.15. We believe that these
proposed criteria are sufficient guardrails to ensure, along with
appropriate patient selection and complex medical judgement of the
physician, that the procedure can be performed safely on an ambulatory
basis, including procedures that involve these five currently excluded
characteristics. We believe that this proposal could advance the goals
of increasing physician and patient choice and expanding site neutral
options in conjunction with patient safety considerations.
With respect to the existing general exclusion at 42 CFR
416.166(c)(6), which excludes procedures designated as requiring
inpatient care under 42 CFR 419.22(n) from classification as covered
surgical procedures, this proposal would modify this standard since the
IPO list is proposed for elimination beginning in CY 2026 with a 3-year
transition period, as described in section IX. of this proposed rule.
While we recognize the need to revisit the criterion at 42 CFR
416.166(c)(6) following the elimination of the IPO list, we believe
that maintaining this criterion for CY 2026 would allow for consistency
between the two lists during the 3-year phaseout period. We note that
if a service comes off the IPO list at any time, then the general
exclusion at 42 CFR 416.166(c)(6) would cease to apply to the service.
We acknowledge that this approach is a departure from the existing
criteria that we established effective beginning in 2008, and from our
policy finalized in the CY 2022 OPPS/ASC rule. However, we believe that
this approach would expand and build upon our 2008 policy intent.
Although there are some differences when comparing our CY 2008 criteria
and the proposed CY 2026 criteria, such as removing the general
standards and several of the original general exclusion criteria,
permitting the addition of procedures to the ASC CPL that would have
been prohibited by those criteria, and the different accreditation
requirements and conditions of participation requirements between HOPDs
and ASCs, these concerns have largely been addressed by the progress in
medical practice and ASC capabilities in the 17 years since the
criteria were developed as previously noted. In particular, given
advances in the practice of medicine and the evolving nature of ASCs,
we believe ASCs are now better equipped to safely perform procedures
that were once too complex or risky to be performed safely on Medicare
beneficiaries in the ASC setting. As previously mentioned, although
ASCs and hospitals have different health and safety requirements, many
ASCs often undergo accreditation as a condition of state licensure and
share some similar licensure and compliance requirements with
hospitals. Each of these requirements provides additional safeguards
for the health and safety of Medicare beneficiaries receiving surgical
procedures in an ASC. Additionally, in the CY 2022 OPPS/ASC final rule
with comment period, when we reinstated the ASC CPL criteria that were
in effect during CY 2020, we stated that many of the surgical
procedures added to the list in CY 2021 may pose a significant safety
risk to a typical Medicare beneficiary when performed in an ASC (86 FR
63777). However, we believe that these procedures are safe to perform
in an ASC setting because all procedures identified are already payable
in the HOPD setting and, therefore, are already safely performed on an
ambulatory basis, consistent with the statutory requirement under
section 1833(i)(1) of the Act. In addition, while several of the
identified procedures may typically require hospital care that lasts
beyond midnight, we expect that appropriately selected patient
populations in the ASC setting would be healthier and less complex and
would likely not require active monitoring or medical care past
midnight beyond the procedure.
(2) Proposed Review Process
CMS will add surgical procedures to the ASC CPL in rulemaking as we
become aware of new surgical procedures that meet the four requirements
at Sec. 416.166(b)(2). A member of the public may also notify CMS of a
surgical procedure they believe meets the requirements at new Sec.
416.166(b)(2) through the pre-proposed rule recommendation process
[[Page 33718]]
or the public comment period. CMS will confirm whether the procedure
does meet those requirements and will add it to the ASC CPL if it does
meet that criteria. In accordance with the new proposed regulatory text
at Sec. 416.166(d), physicians would then assess whether their
specific patients can or cannot safely receive such covered surgical
procedure in the ASC setting based on patient-specific considerations.
b. Proposed Procedure Additions for CY 2026
For CY 2026, we proposed to update the ASC CPL by adding 276
potential surgery or surgery-like codes to the list that we believe
would meet the proposed revised ASC CPL criteria under 42 CFR 416.166.
This includes procedures submitted through our pre-proposed rule
nominations process for addition to the ASC CPL under the proposed
revised criteria.
c. Summary of Proposals
For CY 2026, we propose to revise the ASC CPL criteria under 42 CFR
416.166, modifying the general standard criteria and eliminating five
of the general exclusion criteria. Using these revised criteria, we
propose to add approximately 276 potential surgery or surgery-like
codes to the CPL that are not on the CY 2025 IPO list. Additionally, we
propose to add 271 surgery or surgery-like codes to the CPL that are
currently on the IPO list, if we finalize our proposal to remove these
services from the IPO list for CY 2026. These codes, along with their
long descriptors and proposed payment indicator assignments, are listed
in Tables 80 and 81. We believe that these proposed policies will
increase the flexibility for physicians to exercise their complex
medical judgment, factoring in patient safety considerations, and for
patients to choose from more settings of care in which to receive
surgical procedures.
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3. Covered Ancillary Services
Covered ancillary services are specified in Sec. 416.164(b) and,
as stated previously, are eligible for separate ASC payment. As
provided at Sec. 416.164(b), we make separate ASC payments for
ancillary items and services when they are provided integral to ASC
covered surgical procedures that include the following: (1)
brachytherapy sources; (2) certain implantable items that have pass-
through payment status under the OPPS; (3) certain items and services
that we designate as contractor-priced, including, but not limited to,
procurement of corneal tissue; (4) certain drugs and biologicals for
which separate payment is allowed under the OPPS; (5) certain radiology
services for which separate payment is allowed under the OPPS; and (6)
non-opioid pain management drugs that function as a supply when used in
a surgical procedure. Payment for ancillary items and services that are
not paid separately under the ASC payment system is packaged into the
ASC payment for the covered surgical procedure.
In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59062
through 59063), consistent with the established ASC payment system
policy (72 FR 42497), we finalized the policy to update the ASC list of
covered
[[Page 33742]]
ancillary services to reflect the payment status for the services under
the OPPS and to continue this reconciliation of packaged status for
subsequent calendar years. As discussed in prior rulemaking,
maintaining consistency with the OPPS may result in changes to ASC
payment indicators for some covered ancillary services. For example, if
a covered ancillary service was separately paid under the ASC payment
system in CY 2024, but will be packaged under the CY 2025 OPPS, we
would also package the ancillary service under the ASC payment system
for CY 2025 to maintain consistency with the OPPS. Comment indicator
``CH'' is used in Addendum BB (which is available via the internet on
the CMS website) to indicate covered ancillary services for which we
proposed a change in the ASC payment indicator to reflect a proposed
change in the OPPS treatment of the service for CY 2025.
In the CY 2022 OPPS/ASC final rule with comment period, we
finalized our proposal to revise 42 CFR 416.164(b)(6) to include, as
ancillary items that are integral to a covered surgical procedure and
for which separate payment is allowed, non-opioid pain management drugs
and biologicals that function as a supply when used in a surgical
procedure as determined by CMS (86 FR 63490).
New CPT and HCPCS codes for covered ancillary services for CY 2026
can be found in section XIII.B. of this proposed rule. All ASC covered
ancillary services and their proposed payment indicators for CY 2026
are also included in Addendum BB to this proposed rule (which is
available via the internet on the CMS website).
4. Proposed Changes to the List of ASC Covered Items and Services for
CY 2026
As we discussed in section III. of this proposed rule, beginning
January 1, 2026, we propose to remove skin substitutes from the list of
packaged items and services at 42 CFR 419.2(b)(16) under the OPPS and
under 42 CFR 416.164(a)(5) under the ASC payment system. Our proposal
is intended to establish a consistent and uniform framework for how
these products are treated across different outpatient settings of care
to help ensure equitable access and appropriate payment for these
services. While we do not believe these products are commonly used in
the ASC setting, we believe extending our uniform framework from the
physician office and hospital outpatient setting to the ASC setting
will help ensure equitable access to these products in the future
across the different sites of outpatient care.
Our payment policies under the ASC payment system for covered
ancillary services generally vary according to the particular type of
item or service and its payment policy under the OPPS. Drugs and
biologicals that are separately paid under the ASC payment system are
paid at the prospective rates adopted under the OPPS. Similar to how
ASCs are paid for brachytherapy sources provided integral to ASC
covered surgical procedures at prospective rates adopted under the
OPPS, we propose to pay for groups of skin substitute products at
annual prospective rates adopted under the OPPS, effective January 1,
2026. Additionally, these prospective rates would not be subject to the
ASC wage index adjustment and beneficiaries would be responsible for 20
percent coinsurance.
To separately pay for the provision of certain groups of skin
substitute products when used during a covered surgical procedure, we
propose to revise 42 CFR 416.164(b) to include groups of skin
substitute products as covered ancillary items and services that are
integral to a covered surgical procedure. As discussed in section
XIII.B.6. of this proposed rule, we propose to identify HCPCS skin
substitute codes which may be separately payable with our proposed
payment indicator of ``S2''--Skin substitute supply group paid
separately when provided integral to a surgical procedure on ASC list;
payment based on OPPS rate. Therefore, for those existing skin
substitute products for which we propose to separately pay for, we are
revising the payment indicator from ``N1''--Packaged service/item; no
separate payment made--to payment indicator ``S2'' effective January 1,
2026. Additionally for new skin substitute products which we propose to
add to the list of ASC covered ancillary items and services, we propose
to assign these skin substitute products an ASC payment indicator of
``S2''.
F. Proposed CY 2026 Non-Opioid Policy for Pain Relief Under the OPPS
and ASC Payment System
1. Background on Access to Non-Opioid Treatments for Pain Relief
The Consolidated Appropriations Act (CAA), 2023 (Pub. L. 117-328),
was signed into law on December 29, 2022. Section 4135(a) and (b) of
the CAA, 2023, titled Access to Non-Opioid Treatments for Pain Relief,
amended section 1833(t)(16) and section 1833(i) of the Social Security
Act, respectively, to provide for temporary additional payments for
non-opioid treatments for pain relief (as that term is defined in
section 1833(t)(16)(G)(i) of the Act). In particular, section
1833(t)(16)(G) provides that with respect to a non-opioid treatment for
pain relief furnished on or after January 1, 2025, and before January
1, 2028, the Secretary shall not package payment for the non-opioid
treatment for pain relief into payment for a covered OPD service (or
group of services) and shall make an additional payment for the non-
opioid treatment for pain relief as specified in clause (ii) of that
section. Clauses (ii) and (iii) of section 1833(t)(16)(G) of the Act
provide for the amount of additional payment and set a limitation on
that amount.
Paragraph (10) of section 1833(i) of the Act cross-references the
OPPS provisions about the additional payment amount and payment
limitation for non-opioid treatments for pain relief and applies them
to payment under the ASC payment system. In particular, paragraph (A)
of paragraph (10) of section 1833(i) of the Act, as added by section
4135(b) of the CAA, 2023, provides that in the case of surgical
services furnished on or after January 1, 2025, and before January 1,
2028, additional payments shall be made under the ASC payment system
for non-opioid treatments for pain relief in the same amount provided
in clause (ii) and subject to the limitation in clause (iii) of section
1833(t)(16)(G) of the Act for the OPPS. Paragraph (B) of section
1833(i)(10) of the Act provides that a drug or biological that meets
the requirements of 42 CFR 416.174 and is a non-opioid treatment for
pain relief shall also receive additional payment in the amount
provided in clause (ii) and subject to the limitation in clause (iii)
of section 1833(t)(16)(G) of the Act.
Additional payments under this policy began on January 1, 2025. As
stated in the CY 2025 OPPS/ASC final rule with comment period (89 FR
94343 through 94344), the statute directs CMS to provide ``additional
payment'', and for purposes of this policy, we interpret this language
to be equivalent to ``separate payment,'' since CMS provides an
additional payment by unpackaging the product and then making a
separate payment. ``Separate payment'' is the more commonly used
terminology in the OPPS rule and likely more familiar to readers. To
avoid confusion, we will continue to use ``separate payment''
throughout the rest of this section, which we believe to be synonymous
with ``additional payment.''
For CY 2025, CMS finalized its implementation methodology for
section 4135 of the CAA, 2023, and
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finalized regulation text at 42 CFR 416.174 and 42 CFR 419.43(k), which
outline the payment for non-opioid pain management drugs, biologicals,
and medical devices under both the ASC payment system and OPPS,
respectively.
As noted in the preceding paragraphs, section 4135 of the CAA,
2023, provides for temporary separate payments for certain non-opioid
treatments for pain relief in both the hospital outpatient department
and ambulatory surgical center settings from January 1, 2025, through
December 31, 2027. Specifically, these separate payments are for
qualifying drugs, biologicals, and devices that, among other
requirements, have their payment packaged into payment for a covered
OPD service (or group of services). Pursuant to section 1833(t)(2)(E)
of the Act, the temporary separate payments must be made in a budget
neutral manner.
For background information on the ASC Payment Policy for Non-Opioid
Post-Surgery Pain Management Drugs and Biologicals prior to CY 2025,
please see the summary provided in the CY 2025 OPPS/ASC final rule with
comment period (89 FR 94342 through 94343).
2. Final CY 2025 Non-Opioid Policy Implementation of Section 4135 of
the CAA, 2023
In CY 2025, we finalized our implementation of Section 4135 of CAA,
2023 (89 FR 94343 through 94361) to provide for separate payments for
certain non-opioid treatment for pain relief in the hospital outpatient
department and ambulatory surgical center settings on a temporary
basis. These payment policies and the statutory language authorizing
their implementation are discussed in the following sections. These
policies are also outlined in regulation text finalized at 42 CFR
416.174 and 419.43.
a. Drugs and Biologicals Subject to the ASC Non-Opioid Policy (42 CFR
416.174)
Section 1833(i)(10)(B), titled ``Transition,'' provides that a drug
or biological that meets the requirements of the regulation at 42 CFR
416.174, the current ASC non-opioid policy, and also meets the
definition of a non-opioid treatment for pain relief at section
1833(t)(16)(G)(iv) shall receive separate payments under section 4135
of the CAA, 2023, subject to the payment limitation. In light of this
requirement, we finalized that drugs and biologicals that meet the
definition of a non-opioid treatment for pain relief for purposes of
section 4135 that were subject to the ASC policy for non-opioid
treatments authorized by section 6082 of the SUPPORT Act in CY 2024,
would instead receive separate payments, subject to the limitation, for
the duration of the payment period for section 4135. The policy was
finalized to be in effect for the duration of the payment period for
section 4135.
b. Definition of Non-Opioid Treatment for Pain Relief
Section 1833(t)(16)(G)(iv) of the Act defines a non-opioid
treatment for pain relief. In order for a drug or biological product to
qualify as a non-opioid treatment for pain relief, pursuant to section
1833(t)(16)(G)(iv)(I), the product must have ``a label indication
approved by the Food and Drug Administration to reduce postoperative
pain, or produce postsurgical or regional analgesia, without acting
upon the body's opioid receptors.'' In order for a medical device to
qualify as a non-opioid treatment for pain relief, pursuant to section
1833(t)(16)(G)(iv)(II)(bb), the medical devices must be ``used to
deliver a therapy to reduce postoperative pain, or produce post-
surgical or regional analgesia.'' This subparagraph also defines such a
device as having ``an application under section 515 of the Federal
Food, Drug, and Cosmetic Act that has been approved with respect to the
device, been cleared for market under section 510(k) of such Act, or is
exempt from the requirements of section 510(k) of such Act pursuant to
subsection (l) or (m) or section 510 of such Act or section 520(g) of
such Act'' and ``demonstrated the ability to replace, reduce, or avoid
intraoperative or postoperative opioid use or the quantity of opioids
prescribed in a clinical trial or through data published in a peer-
reviewed journal.''
c. Evidence Requirement for Medical Devices
To determine whether a medical device fulfills the statutory
requirement that it has demonstrated the ability to replace, reduce, or
avoid intraoperative or postoperative opioid use or the quantity of
opioids prescribed in a clinical trial or through data published in a
peer-reviewed journal, we finalized in the CY 2025 OPPS/ASC final rule
with comment period (89 FR 94345) a policy to review all data submitted
during the public comment period to determine if the device
demonstrates the ability to replace, reduce, or avoid intraoperative or
postoperative opioid use or the quantity of opioids. In CY 2025, we
encouraged interested parties submitting non-opioid device
recommendations to submit any relevant literature that demonstrates
that the named medical device replaces, reduces, or avoids opioid use
per this statutory provision with their public comments. We review any
literature submitted and determine whether it meets this evidence
criterion. There is no requirement that commenters submit any data or
literature with their device recommendations. If there is no data or
literature submitted for a medical device, or if the materials
submitted do not demonstrate any ability of the medical device to
replace, reduce, or avoid opioids, the medical device would not meet
this evidence criterion and would not qualify for separate payment
under section 4135.
d. Non-Opioid Product Indications
(1) FDA-Approved Indications for Drugs and Biologicals
Section 1833(t)(16)(G)(iv)(I) of the Act specifies that to meet the
definition of a non-opioid treatment for pain relief and to be eligible
for separate payment, a drug or biological product must have a label
indication approved by the Food and Drug Administration to reduce
postoperative pain, or produce postsurgical or regional analgesia,
without acting upon the body's opioid receptors.
Given these statutory requirements, we finalized a policy in the CY
2025 OPPS/ASC final rule with comment period (89 FR 94345 through
94346) only to approve separate payment for drug or biological products
with an FDA-approved indication that closely aligns with the
statutorily required indication language to reduce post-operative pain
or produce post-surgical or regional analgesia. We noted that products
with an indication that does not meet this statutory requirement would
not qualify. We specifically stated that products with only a general
pain indication will not qualify.
As discussed in the CY 2025 OPPS/ASC final rule with comment period
(89 FR 94345 through 94346), we note that Congress specifically
included language requiring that drugs or biologicals have ``a label
indication approved by the Food and Drug Administration to reduce
postoperative pain, or produce postsurgical or regional analgesia,
without acting upon the body's opioid receptors.'' Therefore, products
with an indication that does not meet the statutory requirement will
not qualify. We also noted that many patients who receive services paid
under the OPPS and ASC payment system are often in a post-surgical
environment, given the nature of the procedures typically performed in
an ASC or HOPD.
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(2) Intended Use for Medical Devices
Regarding medical devices, section 1833(t)(16)(G)(iv)(II) of the
Act specifies that such a device must be used to deliver a therapy to
reduce postoperative pain or produce post-surgical or regional
analgesia to qualify for separate payment under section 4135 of the
CAA, 2023. It also must have an application approved under section 515
of the Federal Food, Drug, and Cosmetic Act (FDCA), have been cleared
for market under section 510(k) of the FDCA, or be exempt from the
requirements of section 510(k) of the FDCA pursuant to section 510(l)
or (m) or 520(g) of the FDCA. For CY 2025, for medical devices, we
finalized without modification our proposal that a device must be used
to deliver a therapy to reduce postoperative pain or produce post-
surgical or regional analgesia to qualify for separate payment under
section 4135 of the CAA, 2023 (89 FR 94346 through 94347). We also
finalized that the medical device must have an application approved
under section 515 of the Federal Food, Drug, and Cosmetic Act (FDCA),
which has been cleared for market under section 510(k) of the FDCA, or
be exempt from the requirements of section 510(k) of the FDCA pursuant
to section 510(l) or (m) or 520(g) of the FDCA. (89 FR 94346 through
94347). This is consistent with the regulation text at 42 CFR
419.43(k)(2)(i) through (iv).
e. Amount of Payment
Section 1833(t)(16)(G)(ii)(I) of the Act provides that, for a non-
opioid treatment for pain relief that is a drug or biological product,
the amount of separate payment is the amount of payment for such
product determined under section 1847A of the Act that exceeds the
portion of the otherwise applicable Medicare OPD fee schedule that the
Secretary determines is associated with the drug or biological, subject
to a limitation, as described in the next section. Section
1833(t)(16)(G)(ii)(II) of the Act provides that, for a non-opioid
treatment for pain relief that is a medical device, the amount of
separate payment is the amount of the hospital's charges for the
device, adjusted to cost, that exceeds the portion of the otherwise
applicable Medicare OPD fee schedule that the Secretary determines is
associated with the device, subject to a limitation, as described in
the next section.
We finalized a policy to assign a payment offset of zero dollars
for the qualifying drugs, biologicals, and devices for CY 2025 (89 FR
94347 through 94348). A zero dollar offset means that we would not
offset or remove the amount that the non-opioid product represents from
the procedure payment rate when setting payment rates. We finalized a
zero dollar offset for the initial year of the policy as some of these
products are new products or newly separately paid in the OPPS setting
and their costs may not be fully reflected yet in the cost of
procedures in which they may be used. Therefore, the separate payment
for a drug or biological will be determined by subtracting from the
amount calculated using the methodology outlined in section 1847A of
the Act the portion of the otherwise applicable Medicare OPD fee
schedule associated with the drug or biological, which as previously
discussed, we finalized to be zero dollars for CY 2025. For the amount
of payment for a medical device, since we are unable to reduce charges
to costs for ASCs, the separate payment amount will be contractor-
priced by the ASC's Medicare Administrative Contractor reduced by the
portion of the otherwise applicable Medicare OPD fee schedule amount
associated with the medical device, which as previously discussed, we
finalized to be zero dollars for CY 2025. These separate payment
amounts are all subject to the payment limitation, described in the
subsequent section.
Section 1833(i)(10) of the Act establishes the same separate
payment for the ASC setting as for hospital outpatient departments, as
described in section 1833(t)(16)(G)(ii) of the Act. Both separate
payments are subject to the limitation in section 1833(t)(16)(G)(iii)
of the Act, which specifies that the separate payment amount shall not
exceed the estimated average of 18 percent of the OPD fee schedule
amount for the OPD service (or group of services) with which the non-
opioid treatment for pain relief is furnished. Given this statutory
requirement, we finalized paying the same separate payment amount for
qualifying non-opioid products in both the HOPD and ASC settings.
As the statute requires separate payment for these non-opioid
treatments for pain relief, these products cannot be packaged into the
procedure payment. Under our current threshold packaging policy, if the
estimated per day cost for a drug or biological is less than or equal
to the applicable OPPS drug packaging threshold, we package payment for
the drug or biological into the payment for the associated procedure.
Similarly, under our comprehensive APC (C-APC) policy, we package all
payments for services integral, ancillary, supportive, dependent, and
adjunctive to the primary service into a single payment for the primary
comprehensive service. For CY 2025, we finalized that non-opioid
treatments for pain relief would not be subject to the threshold
packaging policy and would also be separately paid when used during a
comprehensive APC (C-APC) procedure in the HOPD setting (89 FR 94347
through 94348). See section V.B.1.a. of this proposed rule for more
information regarding the drug packaging threshold. Section II.A.2.b.
of this proposed rule contains further information on threshold
packaging and C-APC packaging.
f. Payment Limitation
Section 1833(t)(16)(G)(iii) of the Act states that the separate
payment amount specified in clause (ii), (which is described in the
previous section) shall not exceed the estimated average of 18 percent
of the OPD fee schedule amount for the OPD service (or group of
services) with which the non-opioid treatment for pain relief is
furnished, as determined by the Secretary.
In the CY 2025 OPPS/ASC final rule, we finalized a policy to base
the 18 percent payment limitation on the volume weighted average of the
payment rates of the top five primary procedures by volume into which a
non-opioid treatment for pain relief would have their payment packaged,
absent this policy. We also finalized applying the 18 percent payment
limitation per date of service billed (89 FR 94349).
g. Payment Limitation With No Claims Data
For drugs, biologicals, and devices with no claims data, such as
for newly FDA-approved and marketed products or products that did not
previously have their own product-specific HCPCS code by which to track
payment and utilization data, we finalized in the 2025 OPPS/ASC final
rule with comment period (89 FR 94350) a policy where CMS will utilize
the services with which a product would be expected to be furnished and
would typically be packaged absent this policy, to calculate the
payment limitation based on expected clinical use patterns. The
finalized policy stated that CMS will determine the service, or group
of services, to use to calculate the payment limitation through
engagement with interested parties and a review by CMS Medical Officers
and clinical staff during annual rulemaking. In the absence of
engagement from interested parties, we will determine clinically
appropriate procedures with which we would expect the drug or device to
be frequently used in order to determine
[[Page 33745]]
the payment limitation, including review of FDA approval materials,
procedures identified in literature available to CMS, and other
relevant materials. We noted that we may update the payment limitation
amount in future rulemaking as we gather additional claims data on the
utilization of and payment for this product.
3. Proposed CY 2026 Non-Opioid Policy Implementation of Section 4135 of
the CAA, 2023
For CY 2026, we propose to continue the policies finalized in the
CY 2025 OPPS ASC final rule without modification.
We continue to believe a zero-dollar offset is appropriate for all
qualifying products regulated under the non-opioid policy as some of
these products are new products or newly separately paid in the OPPS
setting and their costs may not be fully reflected yet in the cost of
procedures in which they may be used. Additionally, the data used for
CY 2026 ratesetting is derived from CY 2024 claims, which was prior to
the effective date of this policy in CY 2025. Accordingly, we propose
to edit the regulation text at 42 CFR 416.174(c)(1) to remove the
following text: ``which is determined to be zero dollars for calendar
year 2025.'' We are removing this language pertaining to the portion of
the otherwise applicable Medicare OPD fee schedule amount for CY 2025,
as we will discuss the appropriate amount in each year's rulemaking.
We note that the final payment limitation calculation in the CY
2026 OPPS/ASC final rule with comment period would be based on the
proposed procedure payment rates and utilization data available in this
proposed rule. Therefore, the values included in Table 83 are
approximate payment limitations based on the best data available at the
time of writing this proposed rule. We note that the final payment
limitations for the CY 2026 OPPS/ASC final rule will also be based on
the proposed payment rates in this proposed rule.
Table 82 includes citations to the indications of the drugs and
biologicals proposed to have met the statutory requirements and qualify
for separate payment for this CY 2026 OPPS/ASC proposed rule. We
welcome public comment on all of these policies, including the
procedures used to determine the payment limitations that are detailed
in Table 83.
We welcome comments regarding additional drugs or devices that
readers believe meet the criteria at 42 CFR 416.174 and 42 CFR
419.43(k) and should qualify as non-opioid treatments for pain relief.
We will review these comments, evaluate the products against the
criteria, and, if appropriate, will finalize additional drugs and
devices that meet these criteria as non-opioid treatments for pain
relief in the CY 2026 OPPS/ASC final rule with comment period to begin
payment in CY 2026. We note that CMS finalized the regulation text at
42 CFR 416.174, which states that CMS will determine if the eligibility
requirements are met through that year's rulemaking, due to this
required review of materials, the need for input from the public, and
the need to maintain budget neutrality per section 1833(t)(2)(E) of the
Act.
a. Qualifying Products for CY 2026
The following table, Table 82, lists the non-opioid alternatives
that we propose will receive separate payment as a non-opioid pain
management drug or device under section 4135 criteria for CY 2026.
CMS routinely receives public comments with detailed rationales on
why they believe a particular drug, biological, medical device, or
other item or service should receive separate payment. As such, we
solicit comment on whether there are any additional drugs, biologicals,
or medical devices that meet the statutory requirements outlined in
sections 1833(t)(16)(G) and 1833(i)(10) of the Act. In addition to
soliciting comment on the actual product and how it meets the criteria
at 42 CFR 416.174 and 42 CFR 419.43(k), we solicit comment on the top 5
procedures used to calculate the payment limitation, as well as HCPCS
coding for the product, which CMS could use to establish the payment
rate, if CMS determines that the product discussed in the comment
qualifies as a non-opioid treatment for pain relief.
As discussed previously in this section, there are specific
requirements that must be met in order for the product to qualify for
separate payment. Interested parties that believe that a product not
addressed in this proposed rule meets the statutory requirements are
encouraged to submit information during the comment period indicating
how the product meets the statutory eligibility requirements. If CMS
determines that the product(s) does in fact meet the statutory
eligibility requirements, we will finalize separate payment for the
product(s) in the CY 2026 OPPS/ASC final rule with comment period.
For drugs and biological products not addressed in the proposed
rule, if no comment is submitted that outlines how that drug or
biological meets the statutory criteria, then CMS will not finalize
separate payment for such product for CY 2026. Additionally, for
medical devices not addressed in the proposed rule, unless a comment is
submitted that both outlines how that device meets the statutory
criteria and includes literature that demonstrates that the device has
the ability to replace, reduce, or avoid intraoperative or
postoperative opioid use or the quantity of opioids prescribed in a
clinical trial or through data published in a peer-reviewed journal,
CMS will not finalize separate payment for such device for CY 2026.
We note that we propose that the HCPCS codes describing the
qualifying devices and drugs in Table 82 will be placed on the ASC
covered ancillary procedures list. We note that Medicare Administrative
Contractors (MACs) determine whether a drug, device, procedure, or
other service meets all program requirements and conditions for
coverage and payment. HOPDs and ASCs only receive payment for
qualifying drugs, biologicals, and medical devices when the appropriate
MAC determines that the service meets the relevant conditions for
coverage and payment. As we have consistently stated in past OPPS/ASC
final rules (see, e.g., 87 FR 71879 and 88 FR 81660 through 81661), the
fact that a drug, device, procedure or service is assigned a HCPCS code
and a payment rate under the OPPS does not imply coverage by the
Medicare program, but indicates only how the product, procedure, or
service may be paid if covered by the program (see, e.g., Pub 100-04
Medicare Claims Processing, Transmittal 11937).
BILLING CODE 4120-01-P
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BILLING CODE 4120-01-C
G. Proposed New Technology Intraocular Lenses (NTIOLs)
New Technology Intraocular Lenses (NTIOLs) are intraocular lenses
that replace a patient's natural lens that has been removed in cataract
surgery and that also meet the requirements listed in Sec. 416.195.
1. NTIOL Application Cycle
Our process for reviewing applications to establish new classes of
NTIOLs is as follows:
Applicants submit their NTIOL requests for review to CMS
by the annual deadline which is announced in the annual OPPS/ASC final
rule with comment period. For a request to be considered complete, we
require submission of the information requested in the guidance
document titled ``Application Process and Information Requirements for
Requests for a New Class of New Technology Intraocular Lenses (NTIOLs)
or Inclusion of an IOL in an Existing NTIOL Class'' posted on the CMS
website at https://www.cms.gov/medicare/payment/prospective-payment-systems/ambulatory-surgical-center-asc/new-technology-intraocular-lenses-ntiols.
We announce annually, in the proposed rule updating the
ASC and OPPS payment rates for the following calendar year, a list of
all requests to establish new NTIOL classes accepted for review during
the calendar year in which the proposal is published. In accordance
with section 141(b)(3) of Public Law 103-432 and our regulations at
Sec. 416.185(b), the deadline for receipt of public comments is 30
days following publication of the list of requests to establish a new
NTIOL class as published in the proposed rule.
In the final rule with comment period updating the ASC and
OPPS payment rates for the following calendar year, we--
[[Page 33750]]
++ Provide a list of determinations made as a result of our review
of all new NTIOL class requests and public comments.
++ When a new NTIOL class is created, identify the predominant
characteristic of NTIOLs in that class that sets them apart from other
IOLs (including those previously approved as members of other expired
or active NTIOL classes) and that is associated with an improved
clinical outcome.
++ Set the date of implementation of a payment adjustment in the
case of approval of an IOL as a member of a new NTIOL class
prospectively as of 30 days after publication of the ASC payment update
final rule, consistent with the statutory requirement.
++ Announce the deadline for submitting requests for review of an
application for a new NTIOL class for the following calendar year.
2. Requests To Establish New NTIOL Classes for CY 2026
We did not receive any requests for review to establish a new NTIOL
class for CY 2026 by March 1, 2025, the due date published in the CY
2025 OPPS/ASC final rule with comment period (89 FR 94361).
3. Payment Adjustment
The current payment adjustment for a 5-year period from the
implementation date of a new NTIOL class is $50 per lens. Since
implementation of the process for adjustment of payment amounts for
NTIOLs in 1999, we have not revised the payment adjustment amount, and
we do not propose to revise the payment adjustment amount for CY 2026.
H. Proposed Calculation of the ASC Payment Rates and the ASC Conversion
Factor
1. Background
In the August 2, 2007, ASC final rule with comment period (72 FR
42493), we established our policy to base ASC relative payment weights
and payment rates under the revised ASC payment system on APC groups
and the OPPS relative payment weights. Consistent with that policy and
the requirement at section 1833(i)(2)(D)(ii) of the Act that the
revised payment system be implemented so that it would be budget
neutral, the initial ASC conversion factor (CY 2008) was calculated so
that estimated total Medicare payments under the revised ASC payment
system in the first year would be budget neutral to estimated total
Medicare payments under the prior (CY 2007) ASC payment system (the ASC
conversion factor is multiplied by the relative payment weights
calculated for many ASC services in order to establish payment rates).
That is, application of the ASC conversion factor was designed to
result in aggregate Medicare expenditures under the revised ASC payment
system in CY 2008 being equal to aggregate Medicare expenditures that
would have occurred in CY 2008 in the absence of the revised system,
taking into consideration the cap on ASC payments in CY 2007, as
required under section 1833(i)(2)(E) of the Act (72 FR 42522). We
adopted a policy to make the system budget neutral in subsequent
calendar years (72 FR 42532 through 42533; Sec. 416.171(e)).
In the CY 2008 OPPS/ASC final rule with comment period (72 FR 66857
through 66858), we set out a step-by-step illustration of the final
budget neutrality adjustment calculation based on the methodology
finalized in the August 2, 2007, ASC final rule (72 FR 42521 through
42531) and as applied to updated data available for the CY 2008 OPPS/
ASC final rule with comment period. The application of that methodology
to the data available for the CY 2008 OPPS/ASC final rule with comment
period resulted in a budget neutrality adjustment of 0.65.
For CY 2008, we adopted the OPPS relative payment weights as the
ASC relative payment weights for most services and, consistent with the
final policy, we calculated the CY 2008 ASC payment rates by
multiplying the ASC relative payment weights by the final CY 2008 ASC
conversion factor of $41.401. For covered office-based surgical
procedures, covered ancillary radiology services (excluding covered
ancillary radiology services involving certain nuclear medicine
procedures or involving the use of contrast agents, as discussed in
section XIII.D.2. of the CY 2023 OPPS/ASC proposed rule (87 FR 44715
through 44716)), and certain diagnostic tests within the medicine range
that are covered ancillary services, the established policy is to set
the payment rate at the lower of the MPFS unadjusted nonfacility PE
RVU-based amount or the amount calculated using the ASC standard
ratesetting methodology. Further, as discussed in the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66841 through 66843), we also
adopted alternative ratesetting methodologies for specific types of
services (for example, device-intensive procedures).
As discussed in the August 2, 2007 ASC final rule with comment
period (72 FR 42517 through 42518) and as codified at Sec. 416.172(c)
of the regulations, the revised ASC payment system accounts for
geographic wage variation when calculating individual ASC payments by
applying the pre-floor and pre-reclassified IPPS hospital wage indexes
to the labor-related share, which is 50 percent of the ASC payment
amount based on a GAO report of ASC costs using 2004 survey data.
Beginning in CY 2008, CMS accounted for geographic wage variation in
labor costs when calculating individual ASC payments by applying the
pre-floor and pre-reclassified hospital wage index values that CMS
calculates for payment under the IPPS, using updated Core Based
Statistical Areas (CBSAs) issued by OMB in June 2003.
The reclassification provision in section 1886(d)(10) of the Act is
specific to acute care hospitals. We believe that using the most
recently available pre-floor and pre-reclassified IPPS hospital wage
indexes result in the most appropriate adjustment to the labor portion
of ASC costs. We continue to believe that the pre-floor, pre-
reclassified hospital wage indexes, which are updated yearly and are
used by several other Medicare payment systems, appropriately account
for geographic variation in labor costs for ASCs (89 FR 23424).
Therefore, the wage index for an ASC is the pre-floor and pre-
reclassified hospital wage index for the fiscal year under the IPPS of
the CBSA that maps to the CBSA where the ASC is located.
On July 21, 2023, OMB issued OMB Bulletin No. 23-01, which provided
the delineations of all Metropolitan Statistical Areas, Metropolitan
Divisions, Micropolitan Statistical Areas, Combined Statistical Areas,
and New England City and Town Areas in the United States and Puerto
Rico based on the standards published on July 16, 2021, in the Federal
Register (86 FR 37770) and 2020 Census Bureau data. (A copy of this
bulletin may be obtained at https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf.) As discussed in the FY 2025
IPPS/LTCH PPS final rule with comment period (89 FR 69253 through
69266), we finalized our proposal to use the new CBSAs delineations
issued by OMB in OMB Bulletin 23-01 for the IPPS hospital wage index
beginning in CY 2025. Therefore, because the ASC wage indexes for the
calendar year are the pre-floor and pre-reclassified IPPS hospital wage
indexes for the fiscal year, in the CY 2025 OPPS/ASC final rule with
comment period (89 FR 94362 through 94363) we finalized our proposal to
incorporate the new OMB delineations into CY 2025 ASC wage indexes. We
believe that using the revised delineations based on OMB
[[Page 33751]]
Bulletin No. 23-01 will increase the integrity of the ASC wage index
system by creating a more accurate representation of current geographic
variations in wage levels. In addition to adopting the revised
delineations based on OMB Bulletin No. 23-01, we also finalized our
proposal to limit year-to-year ASC wage index value changes to no more
than a 5-percent decrease, similar to the policy of other Medicare
payment systems under Parts A and B. This 5-percent cap, implemented in
a budget neutral manner through the wage index scalar, mitigates any
large negative impacts of adopting the new delineations and prevents
large year-to-year declines in wage index values as a means to reduce
volatility in Medicare payments.
The proposed CY 2026 ASC wage indexes fully reflect the OMB labor
market area delineations (including the revisions to the OMB labor
market delineations discussed previously, as set forth in OMB Bulletin
No. 23-01). We note that, in certain instances, there might be urban or
rural areas for which there is no IPPS hospital that has wage index
data that could be used to set the wage index for that area. When all
of the areas contiguous to the urban CBSA of interest are rural and
there is no IPPS hospital that has wage index data that could be used
to set the wage index for that area, our policy has been to determine
the ASC wage index by calculating the average of all wage indexes for
urban areas in the State (75 FR 72058 through 72059). In other
situations, where there are no IPPS hospitals located in a relevant
labor market area, we apply our current policy of calculating an urban
or rural area's wage index by calculating the average of the wage
indexes for CBSAs (or metropolitan divisions where applicable) that are
contiguous to the area with no wage index. For example, for CY 2026, we
are proposing that we continue to apply a proxy wage index based on
this methodology to ASCs located in CBSA 25980 (Hinesville, GA) and in
CBSA 35 (Rural North Dakota). Further, the proposed CY 2026 ASC wage
index includes our policy finalized in the CY 2025 OPPS/ASC final rule
with comment period that limits wage index changes to decrease by no
more than 5 percent from the final CY 2025 ASC wage index value.
2. Calculation of the ASC Payment Rates
a. Updating the ASC Relative Payment Weights for CY 2026 and Future
Years
We update the ASC relative payment weights each year using the
national OPPS relative payment weights (and PFS nonfacility PE RVU-
based amounts, as applicable) for that same calendar year and uniformly
scale the ASC relative payment weights for each update year to make
them budget neutral (72 FR 42533). The OPPS relative payment weights
are scaled to maintain budget neutrality for the OPPS. We then scale
the OPPS relative payment weights again to establish the ASC relative
payment weights. To accomplish this, we hold estimated total ASC
payment levels constant between calendar years for purposes of
maintaining budget neutrality in the ASC payment system. That is, we
apply the weight scalar to ensure that projected expenditures from the
updated ASC payment weights in the ASC payment system are equal to what
would be the current expenditures based on the scaled ASC payment
weights. In this way, we ensure budget neutrality and that the only
changes to total payments to ASCs result from increases or decreases in
the ASC payment update factor.
As discussed in section II.A.1.a. of this proposed rule, we are
using the CY 2024 claims data to be consistent with the OPPS claims
data for the proposed rule. Consistent with our established policy, we
propose to scale the CY 2026 relative payment weights for ASCs
according to the following method. Holding ASC utilization, the ASC
conversion factor, and the mix of services constant from CY 2024, we
propose to compare the estimated total payment using the CY 2025 ASC
relative payment weights with the estimated total payment using the CY
2026 ASC relative payment weights to take into account the changes in
the OPPS relative payment weights between CY 2025 and CY 2026.
In consideration of our policy to provide a higher ASC payment rate
with ASC complexity adjustment codes for certain primary procedures
when performed with add-on packaged services, we incorporated estimated
total spending and estimated utilization for these codes in our budget
neutrality calculation for CYs 2023 and 2024. For this proposed rule,
our estimated change in ASC spending related to our proposed ASC
complexity adjustment codes for CY 2026 did not impact the ASC weight
scalar.
Additionally, as discussed in section XIII.E. of the CY 2025 OPPS/
ASC final rule with comment period (89 FR 94342 through 94361), section
4135(a) and (b) of the CAA, 2023, titled ``Access to Non-Opioid
Treatments for Pain Relief,'' amended section 1833(t)(16) and section
1833(i) of the Act, respectively, to provide for temporary separate
payments for non-opioid treatments for pain relief. As discussed in
further detail in section XIII.E. of the CY 2025 OPPS/ASC final rule,
for qualifying non-opioid products, we finalized applying an 18 percent
payment limitation on the volume weighted payment average of the top 5
services associated with the use of the qualifying non-opioid product.
In CY 2024, four of these qualifying nonopioid products were separately
payable without the 18 percent payment limitation--HCPCS Codes C9089
(Bupivacaine implant, 1 mg), C9290 (Inj, bupivacaine liposome), J1096
(Dexametha opth insert 0.1 mg), and J1097 (Phenylep ketorolac opth
soln). Therefore, to maintain budget neutrality, we estimated the total
anticipated reduction in ASC spending for these qualifying non-opioid
products for CY 2025 as a result of the 18 percent payment limitation
required by section 4135 of the CAA, 2023. Based on the updated 18
percent payment limitations and CY 2024 utilization, we estimate that
the proposed CY 2026 payment limitations will not impact the ASC weight
scalar.
In section XIII.C.2.b. of this proposed rule, we discuss our
proposal to unpackage and pay separately for groups of skin substitute
products under the ASC payment system beginning January 1, 2026.
Currently, these products are packaged into payment for the primary
covered surgical procedures. To maintain budget neutrality under the
OPPS, the reduction in any APC's relative weights from the loss of skin
substitute costs in the APC's geometric mean cost will be offset by an
increase in the OPPS weight scalar. To maintain budget neutrality, this
increase in the OPPS weight scalar will be offset by a reduction in
estimated new OPPS payment for skin substitute APC groups.
Since we ask ASCs not to report packaged items and services on ASC
claims, we are unable to perform a similar adjustment and determine
existing utilization of skin substitute products from ASC claims. To
resolve this limitation but maintain budget neutrality within the ASC
payment system, we multiplied the change in the geometric mean costs of
covered surgical skin procedure in the ASC setting from unpackaging
skin substitute products by the utilization of such skin procedures in
the ASC setting to approximate the estimated skin substitute payments
in the ASC setting. Based on existing surgical procedure utilization
and our estimated utilization of skin substitute products in the ASC
setting, our estimated separate payments
[[Page 33752]]
for skin substitutes in the ASC setting did not impact the ASC weight
scalar.
We propose to use the ratio of estimated CY 2025 to estimated CY
2026 total payments (the weight scalar) to scale the ASC relative
payment weights for CY 2026. The proposed CY 2026 ASC weight scalar is
0.842. As discussed further in the CY 2025 OPPS/ASC final rule with
comment period (89 FR 94363 through 94364), we have historically
displayed this figure rounded to the nearest ten thousandth; however,
we believe this level of specificity is unnecessarily burdensome for an
ASC payment system that is less than one-tenth the size of the OPPS (in
which the weight scalar is rounded to the nearest ten-thousandth).
Consistent with historical practice, we propose to scale, using this
method (with an ASC weight scalar rounded to the nearest thousandth),
the ASC relative payment weights of covered surgical procedures,
covered ancillary radiology services, and certain diagnostic tests
within the medicine range of CPT codes, which are covered ancillary
services for which the ASC payment rates are based on OPPS relative
payment weights.
We propose that we would not scale ASC payment for separately
payable covered ancillary services that have a predetermined national
payment amount (that is, their national ASC payment amounts are not
based on OPPS relative payment weights), such as drugs and biologicals
that are separately paid or services that are contractor-priced or paid
at reasonable cost in ASCs. Any service with a predetermined national
payment amount, which includes the device portion of device-intensive
procedures, would be included in the ASC budget neutrality comparison,
but scaling of the ASC relative payment weights would not apply to
those services or the portion of those services. The ASC payment
weights for those services without predetermined national payment
amounts would be scaled to eliminate any difference in the total
payment between the current year and the update year.
However, as discussed in sections V.B.8.i. and XIII.C.4. of this
proposed rule, we propose that the OPPS payment rates used for
ratesetting under the ASC payment system for CY 2026 and subsequent
years would not incorporate the two percent prospective offset to the
OPPS conversion factor, as a result of the 340B remedy offset that we
are proposing to implement in this proposed rule. Historically, the ASC
payment system has generally adopted the OPPS conversion factor used
for determining the proposed or final OPPS payment rates for
determining the device portions for device-intensive procedures under
the ASC payment system. A two percent reduction in the OPPS conversion
factor would otherwise reduce ASC payments for device-intensive
procedures by approximately one percent; the non-device portions for
all covered surgical procedures would otherwise be increased to offset
reduction to device portions for device-intensive procedures. For CY
2026, we estimate the reduction to device portions from the two percent
prospective offset would have reduced proposed CY 2026 ASC expenditures
for device-intensive procedures by approximately $42 million and would
have otherwise increased the ASC weight scalar by 0.1 percent to offset
such reduction.
For any given year's ratesetting, we typically use the most recent
full calendar year of claims data to model budget neutrality
adjustments. We propose to use the CY 2024 claims data to model our
budget neutrality adjustment for CY 2026.
b. Updating the ASC Conversion Factor
Under the OPPS, we typically apply a budget neutrality adjustment
for provider-level changes, most notably a change in the wage index
values for the upcoming year, to the conversion factor. Consistent with
our final ASC payment policy, for the CY 2017 ASC payment system and
subsequent years, in the CY 2017 OPPS/ASC final rule with comment
period (81 FR 79751 through 79753), we finalized our policy to
calculate and apply a budget neutrality adjustment to the ASC
conversion factor for supplier-level changes in wage index values for
the upcoming year, just as the OPPS wage index budget neutrality
adjustment is calculated and applied to the OPPS conversion factor.
For CY 2026, we calculated the proposed adjustment for the ASC
payment system by using the most recent CY 2024 claims data available
and estimating the difference in total payment that would be created by
introducing the proposed CY 2026 ASC wage indexes. Specifically,
holding CY 2024 ASC utilization, service-mix, and the proposed CY 2026
national payment rates after application of the weight scalar constant,
we calculated the total adjusted payment using the CY 2025 ASC wage
indexes and the total adjusted payment using the proposed CY 2026 ASC
wage indexes which included the 5-percent cap on wage index declines.
We used the 50 percent labor-related share for both total adjusted
payment calculations. We then compared the total adjusted payment
calculated with the CY 2025 ASC wage indexes to the total adjusted
payment calculated with the proposed CY 2026 ASC wage indexes and
applied the resulting ratio of 0.9999 (the proposed CY 2026 ASC wage
index budget neutrality adjustment) to the CY 2025 ASC conversion
factor to calculate the proposed CY 2026 ASC conversion factor.
Section 1833(i)(2)(D)(v) of the Act requires that the ASC
conversion factor be reduced by a productivity adjustment in each
calendar year. Section 1886(b)(3)(B)(xi)(II) of the Act defines the
productivity adjustment to be equal to the 10-year moving average of
changes in annual economy-wide private nonfarm business multifactor
productivity (MFP). We finalized the methodology for calculating the
productivity adjustment in the CY 2011 PFS final rule with comment
period (75 FR 73394 through 73396) and revised it in the CY 2012 PFS
final rule with comment period (76 FR 73300 through 73301) and the CY
2016 OPPS/ASC final rule with comment period (80 FR 70500 through
70501). The proposed productivity adjustment for CY 2026 was projected
to be 0.8 percentage point, as published in the FY 2026 IPPS/LTCH PPS
proposed rule (90 FR 18266) based on IGI's 2024 fourth quarter
forecast.
Section 1833(i)(2)(C)(i) of the Act requires that, if the Secretary
has not updated amounts established under the revised ASC payment
system in a calendar year, the payment amounts shall be increased by
the percentage increase in the Consumer Price Index for all urban
consumers (CPI-U), U.S. city average, as estimated by the Secretary for
the 12-month period ending with the midpoint of the year involved. The
statute does not mandate the adoption of any particular update
mechanism, but it requires the payment amounts to be increased by the
CPI-U in the absence of any update. Because the Secretary updates the
ASC payment amounts annually, we adopted a policy, which we codified at
Sec. 416.171(a)(2)(ii)), to update the ASC conversion factor using the
CPI-U for CY 2010 and subsequent calendar years.
In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59075
through 59080), we finalized a policy to apply the hospital market
basket update (which is the inpatient hospital market basket percentage
increase reduced by the productivity adjustment) to ASC payment system
rates for an interim period of 5 years (CY 2019 through CY 2023),
during which we would assess whether there was a migration of the
performance of procedures from the
[[Page 33753]]
hospital setting to the ASC setting as a result of the use of a
hospital market basket update, as well as whether there were any
unintended consequences, such as less than expected migration of the
performance of procedures from the hospital setting to the ASC setting.
At that time, the most recently available full year of claims data to
assess the expected migration applying the productivity-adjusted
hospital market basket update during the interim period was within the
period from CY 2019 through CY 2022. However, the impact of the COVID-
19 PHE on health care utilization, CY 2020 in particular, was
tremendously profound, particularly for elective surgeries, because
many beneficiaries avoided healthcare settings, when possible, to avoid
possible infection from the SARS-CoV-2 virus. As a result, it was
nearly impossible to disentangle the effects from the COVID-19 PHE in
our analysis of whether the higher update factor for the ASC payment
system caused increased migration to the ASC setting. To analyze
whether procedures migrated from the hospital setting to the ASC
setting, we needed to use claims data from a period during which the
COVID-19 PHE had less of an impact on health care utilization.
Therefore, for CY 2024, we finalized our proposal to extend the 5-year
interim period an additional 2 years through CY 2024 and CY 2025. We
believed hospital outpatient and ASC utilization data from CYs 2023 and
2024 would enable us to more accurately analyze whether the application
of the hospital market basket update to the ASC payment system had an
effect on the migration of services from the hospital setting to the
ASC setting. We revised our regulations at 42 CFR 416.171(a)(2)(iii),
(iv), (vi), (vii), and (viii) which establish the annual update to the
ASC conversion factor, to reflect this 2-year extension.
For this CY 2026 OPPS/ASC proposed rule, we propose to extend our
utilization of the hospital market basket update factor in the ASC
payment system for one additional year, through CY 2026, as we continue
to review and evaluate hospital outpatient and ASC utilization data, as
well as the migration of surgical procedures between settings. In
conjunction with our proposal, we are revising our regulations at 42
CFR 416.171(a)(2)(iii), (iv), (vi), (vii), and (viii), which establish
the annual update to the ASC conversion factor, the 2.0 percentage
point reduction for ASCs that fail to meet the standards for reporting
ASC quality measures, and the productivity adjustment, to reflect this
one year extension.
2. CY 2026 Proposed ASC Conversion Factor
For CY 2026, we propose to utilize the proposed inpatient hospital
market basket percentage increase of 3.2 percent reduced by the
proposed productivity adjustment of 0.8 percentage point, resulting in
a proposed hospital market basket update of 2.4 percent for ASCs
meeting the quality reporting requirements. Therefore, we propose to
apply a proposed 2.4 percent hospital market basket update factor to
the CY 2025 ASC conversion factor for ASCs meeting the quality
reporting requirements to determine the CY 2026 ASC payment amounts.
The ASCQR Program affected payment rates beginning in CY 2014 and,
under this program, there is a 2.0 percentage point reduction to the
hospital market basket update factor for ASCs that fail to meet the
ASCQR Program requirements.
We refer readers to section XIV.E. of the CY 2019 OPPS/ASC final
rule with comment period (83 FR 59138 through 59139) and section XIV.E.
of this proposed rule for a detailed discussion of our policies
regarding payment reduction for ASCs that fail to meet ASCQR Program
requirements. We propose to utilize the proposed inpatient hospital
market basket percentage increase of 3.2 percent reduced by 2.0
percentage points for ASCs that do not meet the quality reporting
requirements and then reduced by the proposed 0.8 percentage point
productivity adjustment. Therefore, we propose to apply a 0.4 percent
hospital market basket update factor to the CY 2025 ASC conversion
factor for ASCs not meeting the quality reporting requirements. We also
propose that if more recent data are subsequently available (for
example, a more recent estimate of the inpatient hospital market basket
percentage increase or productivity adjustment), we would use such
data, if appropriate, to determine the CY 2026 ASC update for the CY
2026 OPPS/ASC final rule with comment period.
For CY 2026, we are adjusting the CY 2025 ASC conversion factor
($54.895) by a wage index budget neutrality factor of 0.9999 in
addition to the productivity-adjusted hospital market basket update of
2.4 percent, discussed previously, which results in a proposed CY 2026
ASC conversion factor of $56.207 for ASCs meeting quality reporting
requirements. For ASCs not meeting quality reporting requirements, we
are adjusting the CY 2025 ASC conversion factor ($54.895) by the wage
index budget neutrality factor of 0.9999 in addition to the reduced
productivity-adjusted hospital market basket update of 0.4 percent,
discussed above, which results in a proposed CY 2026 ASC conversion
factor of $55.109 for ASCs not meeting the quality reporting
requirements.
3. Display of the Proposed CY 2026 ASC Payment Rates
Addenda AA and BB to this proposed rule (which are available on the
CMS website) display the proposed ASC payment rates for CY 2026 for
covered surgical procedures and covered ancillary services,
respectively. The proposed payment rates included in Addenda AA and BB
to this proposed rule reflect the full ASC payment update and not the
reduced payment update used to calculate payment rates for ASCs not
meeting the quality reporting requirements under the ASCQR Program.
These Addenda contain several types of information related to the
proposed CY 2026 payment rates. Specifically, in Addendum AA, a ``Y''
in the column titled ``To be Subject to Multiple Procedure
Discounting'' indicates that the surgical procedure would be subject to
the multiple procedure payment reduction policy. As discussed in the CY
2008 OPPS/ASC final rule with comment period (72 FR 66829 through
66830), most covered surgical procedures are subject to a 50 percent
reduction in the ASC payment for the lower-paying procedure when more
than one procedure is performed in a single operative session.
The values displayed in the column titled ``Proposed CY 2026
Payment Weight'' are the proposed relative payment weights for each of
the listed services for CY 2026. The proposed relative payment weights
for all covered surgical procedures and covered ancillary services
where the ASC payment rates are based on OPPS relative payment weights
were scaled for budget neutrality. Therefore, scaling was not applied
to the device portion of the device-intensive procedures; services that
are paid at the MPFS nonfacility PE RVU-based amount; separately
payable covered ancillary services that have a predetermined national
payment amount, such as drugs and biologicals and brachytherapy sources
that are separately paid under the OPPS; or services that are
contractor-priced or paid at reasonable cost in ASCs. This includes
separate payment for non-opioid pain management drugs.
To derive the proposed CY 2026 payment rate displayed in the
``Proposed CY 2026 Payment Rate''
[[Page 33754]]
column, each ASC payment weight in the ``Proposed CY 2026 Payment
Weight'' column was multiplied by the proposed CY 2026 conversion
factor. The conversion factor includes a budget neutrality adjustment
for changes in the wage index values and the annual update as reduced
by the productivity adjustment. The proposed CY 2026 ASC conversion
factor uses the proposed CY 2026 productivity-adjusted hospital market
basket update factor of 2.4 percent (which is equal to the inpatient
hospital market basket percentage increase of 3.2 percent reduced by
the productivity adjustment of 0.8 percentage point). We also propose
that if more recent data subsequently become available (for example, a
more recent estimate of the inpatient hospital market basket percentage
increase and the productivity adjustment), we would use such data, if
appropriate, to determine the CY 2026 ASC conversion factor in the
final rule.
In Addendum BB, there are no relative payment weights displayed in
the ``Proposed CY 2026 Payment Weight'' column for items and services
with predetermined national payment amounts, such as separately payable
drugs and biologicals. The ``Proposed CY 2026 Payment'' column displays
the proposed CY 2026 national unadjusted ASC payment rates for all
items and services. The proposed CY 2026 ASC payment rates listed in
Addendum BB for separately payable drugs and biologicals are based on
the most recently available data used for payment in physicians'
offices. For CY 2021, we finalized adding a new column to ASC Addendum
BB titled ``Drug Pass-Through Expiration during Calendar Year'' where
we flag through the use of an asterisk each drug for which pass-through
payment is expiring during the calendar year (that is, on a date other
than December 31st).
Addendum EE to this proposed rule provides the HCPCS codes and
short descriptors for surgical procedures that are to be excluded from
payment in ASCs for CY 2026.
Addendum FF to this proposed rule displays the OPPS payment rate
(based on the standard ratesetting methodology), the APC device offset
percentage, the device offset percentage for determining device-
intensive status (based on the standard ratesetting methodology), and
the device portion of the ASC payment rate for CY 2026 for covered
surgical procedures.
XIV. Cross-Program Proposals for the Hospital Outpatient Quality
Reporting (OQR), Rural Emergency Hospital Quality Reporting (REHQR),
and Ambulatory Surgical Center Quality Reporting (ASCQR) Programs
A. Background
We refer readers to sections XV., XVI., and XVII. of this proposed
rule for program specific background information, including the
statutory authorities, and previously finalized and newly proposed
measure sets, for the Hospital Outpatient Quality Reporting (OQR),
Rural Emergency Hospital Quality Reporting (REHQR), and Ambulatory
Surgical Center Quality Reporting (ASCQR) Programs, respectively.
B. Measure Concepts Under Consideration for Future Years in the
Hospital OQR, REHQR, and ASCQR Programs--Request for Information (RFI):
Well-Being and Nutrition
We are seeking input on well-being and nutrition measures for
consideration in future rulemaking for the Hospital OQR, REHQR, and
ASCQR Programs. Well-being is a comprehensive approach to disease
prevention and health promotion, as it integrates mental and physical
health while emphasizing preventative care to proactively address
potential health issues.\141\ This comprehensive approach emphasizes
person-centered care by promoting the well-being of patients and family
members. We are seeking comments on tools and measures that assess
overall health, happiness, and satisfaction in life, which could
include aspects of emotional well-being, social connections, purpose,
and fulfillment. We would like to receive input and comments on the
applicability of tools and constructs that assess the integration of
complementary and integrative health, skill building, and self-care.
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\141\ Centers for Disease Control and Prevention. (May 2024).
About Emotional Well-Being. Available at https://www.cdc.gov/emotional-well-being/about/#cdc_behavioral_basics_types-health-benefits. Accessed: April 30, 202.5.
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We are also seeking comments on tools and measures that assess
optimal nutrition and preventive care in the Hospital OQR, REHQR, and
ASCQR Programs. Assessments for nutritional status may include
strategies, guidelines, and practices that promote healthy eating
habits and ensure individuals receive the necessary nutrients for
maintaining health, growth, and overall well-being. Such assessments
may also include aspects of health that support or mediate nutritional
status, such as physical activity and sleep. In this context,
preventive care plays a vital role by proactively addressing factors
that may lead to poor nutritional status or related health issues.
These efforts not only support optimal nutrition but also work to
prevent conditions that could otherwise hinder an individual's health
and nutritional needs.
While we will not be responding to specific comments in response to
this RFI in the CY 2026 OPPS/ASC final rule, we intend to use this
input to inform our future measure development efforts.
C. Proposed Changes to the Hospital OQR, REHQR, and ASCQR Program
Measure Sets
1. Proposed Removal of the COVID-19 Vaccination Coverage Among
Healthcare Personnel (HCP) Measure From the Hospital OQR and ASCQR
Programs Beginning With the CY 2024 Reporting Period/CY 2026 Payment
Determination
We refer readers to the CY 2022 OPPS/ASC final rule where we
adopted the COVID-19 Vaccination Coverage Among HCP measure into the
Hospital OQR and ASCQR Programs (86 FR 63824 through 63833 and 86 FR
63875 through 63883, respectively) and the CY 2024 OPPS/ASC final rule
with comment period where we modified the COVID-19 Vaccination Coverage
Among HCP measure to account for updated vaccine guidance (88 FR 81963
through 81968 and 88 FR 82013 through 82017, respectively).
For the Hospital OQR and ASCQR Programs, we propose to remove the
COVID-19 Vaccination Coverage Among HCP measure beginning with the CY
2024 reporting period/CY 2026 payment determination under removal
Factor 8, the costs associated with a measure outweigh the benefit of
its continued use in the program (Sec. Sec. 419.46(i)(3)(i)(H) and
416.320(c)(2)(viii), respectively). Reporting on this measure currently
requires reporting data on COVID-19 Vaccination Coverage Among HCP for
at least 1 week every month. This requires healthcare facilities to
track current vaccination status for all employees, licensed
independent practitioners, adult students/trainers and volunteers, and
other contract personnel and log in to the National Healthcare Safety
Network (NHSN) system to report the data monthly, either manually in
NHSN or by uploading a comma-separated value (CSV) file.\142\ The
estimated
[[Page 33755]]
burden of collecting this information annually across all 3,200
hospitals in the Hospital OQR Program is between $1,446,400 and
$1,687,680. Across the 4,590 ASCs in the ASCQR Program, the estimated
annual burden is between $2,074,680 and $2,420,766. We refer readers to
section XXIII. of this proposed rule for more details on this estimated
burden calculation.
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\142\ Centers for Disease Control and Prevention. (2025). Weekly
COVID-19 Vaccination Module for Healthcare Personnel. Available at
https://www.cdc.gov/nhsn/pdfs/hps/covidvax/2025-hcp-combined-protocol-508.pdf. Accessed: April 30, 2025.
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When we first adopted the COVID-19 Vaccination Coverage Among HCP
measure for the Hospital OQR and ASCQR Programs, the U.S. was in the
midst of a Public Health Emergency (PHE) that incurred millions of
cases and over 718,000 COVID-19 deaths (86 FR 63825 and 86 FR 63875
through 63876, respectively).\143\ While preventing the spread of
COVID-19 remains a public health goal, the PHE ended on May 11,
2023.\144\ In addition, the number of deaths due to COVID-19 in the
U.S. has decreased since the adoption of this measure. In August 2021,
when this measure was being proposed, the U.S. was averaging over 6,000
deaths related to COVID-19 per week.\145\ In April 2023, the last full
month of the PHE, weekly number of deaths attributed to COVID-19
averaged around 1,300.\146\ With the end of the PHE and the decrease in
COVID-19 deaths, we believe the continued costs and burden to
healthcare facilities of tracking and monthly reporting on this measure
outweigh the benefit of continued information collection on COVID-19
vaccination coverage among HCP. As it may be costly for hospitals and
ASCs to continue to report on the COVID-19 Vaccination Coverage Among
HCP measure, removal of this measure would allow for the Hospital OQR
and ASCQR Programs to focus on other clinical goals.
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\143\ Centers for Disease Control and Prevention. (2025). COVID
Data Tracker. Available at https://covid.cdc.gov/covid-data-tracker/#trends_totaldeaths_select_00. Accessed: April 30, 2025.
\144\ U.S. Department of Health and Human Services. (2023).
COVID-19 Public Health Emergency. Available at https://www.hhs.gov/coronavirus/covid-19-public-health-emergency/index.html. Accessed:
April 30, 2025.
\145\ Centers for Disease Control and Prevention. (2025). COVID
Data Tracker. Available at https://covid.cdc.gov/covid-data-tracker/#trends_weeklydeaths_select_00. Accessed: April 30, 2025.
\146\ Centers for Disease Control and Prevention. (2025). COVID
Data Tracker. Available at https://covid.cdc.gov/covid-data-tracker/#trends_weeklydeaths_select_00. Accessed: April 30, 2025.
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If this proposal is finalized as proposed, hospitals and ASCs that
do not report their CY 2024 reporting period data for the COVID-19
Vaccination Coverage Among HCP measure to CMS would not be considered
noncompliant with the measure for their CY 2026 payment determination
(that is, hospitals and ASCs that do not report CY 2024 reporting
period data would not be penalized for CY 2026 payments due to this
measure). Any COVID-19 Vaccination Coverage Among HCP measure data
received by CMS would not be used for public reporting or payment
purposes.
If this proposal is not finalized as proposed, hospitals and ASCs
that do not report their CY 2024 reporting data for the COVID-19
Vaccination Coverage Among HCP measure to CMS would be considered
noncompliant with the measure for their CY 2026 payment determination
and would receive a letter of noncompliance. Payment adjustments would
apply to CY 2026 payment determination for fee-for-service claims as
previously finalized.
We invite public comment on this proposal.
2. Proposed Removal of the Hospital Commitment to Health Equity (HCHE)
Measure From the Hospital OQR and REHQR Programs and the Facility
Commitment to Health Equity (FCHE) Measure From the ASCQR Program
Beginning With the CY 2025 Reporting Period/CY 2027 Payment or Program
Determination
We refer readers to the CY 2025 OPPS/ASC final rule with comment
period where we adopted the Hospital Commitment to Health Equity
(hereafter referred to as HCHE) measure into the Hospital OQR and REHQR
Programs and the Facility Commitment to Health Equity (hereafter
referred to as FCHE) measure into the ASCQR Program (89 FR 94368
through 94381). For the Hospital OQR, REHQR, and ASCQR Programs, we
propose to remove the HCHE and FCHE measures beginning with the CY 2025
reporting period/CY 2027 payment or program determination under removal
Factor 8, due to the costs associated with achieving a high score on
the measure outweighing the benefit of its continued use in the program
(Sec. Sec. 419.46(i)(3)(i)(H), 419.95(e)(3)(i)(H), and
416.320(c)(2)(viii), respectively).
When adopted, we intended the collection of data described in the
five domains of these measures to provide hospital, REH, and ASC
leadership with meaningful and actionable health data to drive quality
improvements to eliminate health disparities. Based on feedback
received from hospitals, REHs, and ASCs, as well as a re-focus on
clinical outcomes and direct patient care, for which the HCHE and FCHE
measures, as structural measures, do not directly measure, the burden
of collecting these measures may outweigh the benefits. Removal of
these measures would alleviate an estimated annual burden of
approximately 533 hours, at a cost of $22,518, across all participating
hospitals (89 FR 94523); 6 hours, at a cost of $332, across all
participating REHs (89 FR 94530); and 746 hours, at a cost of $41,313
across all participating ASCs (89 FR 94534).
An important goal of the Hospital OQR, REHQR, and ASCQR Programs is
moving forward in the least burdensome manner possible while
maintaining a parsimonious set of meaningful quality measures and
continuing to incentivize improvement in the quality of care provided
to patients. Removing these measures from the Hospital OQR, REHQR and
ASCQR Programs serves this goal. Our priority is a re-focus on
measurable clinical outcomes as well as identifying quality measures on
topics of prevention, nutrition, and well-being. As such we refer
readers to our request for comment on ``Measure Concepts under
Consideration for Future Years in the Hospital OQR, REHQR, and ASCQR
Programs--Request for Information (RFI): Well-Being and Nutrition'' in
section XIV.B. of this proposed rule.
We acknowledge that some hospitals, REHs, and ASCs may have
expended resources to implement some or all of the activities described
in the HCHE and FCHE measures attestation statements in order to be
able to attest ``yes'' for measure reporting purposes.
If this proposal is finalized as proposed, hospitals, REHs, and
ASCs that do not report their CY 2025 reporting period data for the
HCHE or FHCE measure to CMS would not be considered noncompliant with
the measure for purposes of their CY 2027 payment or program
determination (that is, hospitals, REHs, or ASCs that do not report CY
2025 reporting period data would not be penalized for CY 2027 payments
due to this measure, if applicable). Any HCHE or FCHE measure data
received by CMS would not be used for public reporting or payment
purposes.
If this proposal is not finalized as proposed, hospitals, REHs, or
ASCs that do not report their CY 2025 reporting data for the HCHE or
FCHE measures to CMS would be considered noncompliant with the measure
for their CY 2027 payment or program determination and would receive a
letter of noncompliance. Payment adjustments would apply to CY 2027
payment determination fee-for-service (FFS) claims as previously
finalized in
[[Page 33756]]
the Hospital OQR and ASCQR Programs.
We invite public comment on these proposals.
3. Proposed Removal of Two Social Drivers of Health Measures From the
Hospital OQR, REHQR, and ASCQR Programs Beginning With the CY 2025
Reporting Period
We propose to remove two social drivers of health (SDOH) process
measures from the Hospital OQR, REHQR, and ASCQR Programs beginning
with the CY 2025 reporting period: Screening for Social Drivers of
Health (adopted at 89 FR 94381 through 94398); and Screen Positive Rate
for Social Drivers of Health (adopted at 89 FR 94398 through 94403).
We propose to remove the SDOH measures beginning with the CY 2025
reporting period under removal Factor 8, the costs associated with the
measure outweigh the benefit of its continued use in these programs
(Sec. Sec. 419.46(i)(3)(i)(H), 419.95(e)(3)(i)(H), and
416.320(c)(2)(viii), respectively). We have heard from some hospitals,
REHs, and ASCs concerned with the costs and resources associated with
screening patients via manual processes, manually storing such data,
training staff, and altering workflows for these measures. In the CY
2025 OPPS/ASC final rule with comment period, we estimated a total
annual burden of 6,878,055 hours at a cost of $168,460,032 in the
Hospital OQR Program (89 FR 94523 and 94524), 12,984 hours at a cost of
$318,163 in the REHQR Program (89 FR 94530 and 94531), and 711,479
hours at a cost of $17,447,164 in the ASCQR Program (89 FR 94534 and
94535), to screen all admitted patients in accordance with measure
specifications for Screening for Social Drivers of Health and report
the measure data. For Screen Positive Rate for Social Drivers of
Health, we estimated a total annual burden of 533 hours at a cost of
$29,518 in the Hospital OQR Program (89 FR 94524), 6 hours at a cost of
$332 in the REHQR Program (89 FR 94531 and 94532), and 746 hours at a
cost of $41,313 in the ASCQR Program (89 FR 94535), to report the
measure data. We note that the HQR system calculates the rate for these
two measures, and that hospitals, REHs, and ASCs' responsibility is to
report the aggregate number of patients screened, the aggregate number
of patients that screened positive, and their total patient population.
Further, we note that these measures document an administrative process
and report aggregate level results, and do not shed light on the extent
to which providers are ultimately connecting patients with resources or
services and whether patients are benefiting from these screenings.
We have concluded that the costs of the continued use of these
measures in the Hospital OQR, REHQR, and ASCQR Programs outweigh the
benefits to facilities and patients. Removal of these measures would
alleviate the burden on hospitals, REHs, and ASCs to manually screen
each patient and submit data each reporting cycle, allowing hospitals,
REHs, and ASCs to focus resources on measurable clinical outcomes and
direct patient care. This will also remove the patient burden
associated with repeated SDOH screenings across multiple healthcare
facilities. We refer readers to our request for comment, ``Measure
Concepts under Consideration for Future Years in the Hospital OQR,
REHQR, and ASCQR Programs--Request for Information (RFI): Well-Being
and Nutrition'' in section XIV.B. of this proposed rule for more
information regarding our areas of focus for new measures. We
acknowledge that some hospitals, ASCs and REHs may have expended
resources to implement SDOH screenings, however, hospitals that had
already implemented such screenings prior to adoption of the measures
would not have expended similar resources. The objectives of the
Hospital OQR Program continue to incentivize the improvement of care
quality and health outcomes for all patients through transparency and
use of appropriate quality measures.
We invite public comment on these proposals.
D. Proposed Updates to the Extraordinary Circumstances Exception (ECE)
Policy for the Hospital OQR, REHQR, and ASCQR Programs
1. Background
Under our current Extraordinary Circumstances Exception (ECE)
regulations, we have granted exceptions to data submission deadlines
and requirements for the Hospital OQR, REHQR, and ASCQR Programs in the
event of extraordinary circumstances beyond the control of a hospital,
REH, or ASC (42 CFR 419.46(e); 419.95(g); 416.310(d), respectively).
Extraordinary circumstances may include, but are not limited to,
natural disasters or systemic problems with data collection
systems.\147\ We refer readers to the CY 2022 OPPS/ASC final rule with
comment period (86 FR 63873), the CY 2024 OPPS/ASC final rule with
comment period (88 FR 82076), and the CY 2018 OPPS/ASC final rule with
comment period (82 FR 59474 through 59475) for further background about
the ECE policies for Hospital OQR, REHQR, and ASCQR Programs,
respectively. We also refer readers to the QualityNet website for
program-specific requirements for submitting an ECE request.\148\
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\147\ Centers for Medicare & Medicaid Services. (May 2024).
Quality Program Extraordinary Circumstances Exceptions (ECE) Request
Form. QualityNet. Available at https://qualitynet.cms.gov/files/677e843f50ed8df7419f60e1?filename=HQR_ECE_Req_Form_CY_2025.pdf.
Accessed: April 30, 2025.
\148\ Centers for Medicare & Medicaid Services. Hospital OQR
Program Extraordinary Circumstances Exceptions (ECE) Policy: https://qualitynet.cms.gov/outpatient/oqr/participation%23tab2#tab2; REHQR
Program Extraordinary Circumstances Exceptions (ECE) Policy: https://qualitynet.cms.gov/reh/rehqr/participation#tab2; and ASCQR Program
Extraordinary Circumstances Exceptions (ECE) Policy: https://qualitynet.cms.gov/asc/ascqr/participation%23tab3#tab2. Accessed:
April 30, 2025.
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Our ECE policy provides flexibility for Hospital OQR, REHQR, and
ASCQR Program participants toward meeting program requirements in the
event of an extraordinary circumstance. For instance, we recognize
that, in circumstances where a full exception is not applicable, it is
beneficial for a hospital, REH, or ASC to report data later than the
reporting deadline. Delayed reporting authorized under our ECE policy
allows temporary relief for a hospital, REH, or ASC experiencing an
extraordinary circumstance while preserving the benefits of data
reporting, such as transparency and informed decision-making for
beneficiaries and providers alike. Accordingly, we propose to update
our regulations to specify that an ECE could take the form of an
extension of time for a hospital, REH, or ASC to comply with a data
reporting requirement if CMS determines that this type of relief would
be appropriate under the circumstances.
2. Proposal To Update the Extraordinary Circumstances Exception (ECE)
Policy for the Hospital OQR, REHQR, and ASCQR Programs
We propose to update the current Hospital OQR, REHQR, and ASCQR
Program ECE policies codified at 42 CFR 419.46(e); 419.95(g); and
416.310(d), respectively, to include extensions of time as a form of
relief and to further clarify the policy. Specifically, we propose to
update the regulations at 42 CFR 419.46(e)(1); 419.95(g)(1); and
416.310(d)(1) to state that CMS may grant an ECE with respect to
reporting requirements in the event of an extraordinary circumstance--
defined as an event beyond the control of a hospital, REH, or ASC (for
example, a
[[Page 33757]]
natural or man-made disaster such as a hurricane, tornado, earthquake,
terrorist attack, or bombing)--that affected the ability of the
hospital, REH, or ASC to comply with one or more applicable reporting
requirements with respect to a calendar year.
We propose that the steps for requesting or granting an ECE would
remain the same as the current ECE process, detailed by CMS at the
QualityNet website or a successor website.\149\ However, at proposed
Sec. 419.46(e)(2)(i); 419.95(g)(2)(i); and 416.310(d)(2)(i), we
propose that a hospital, REH, or ASC, respectively, may request an ECE
within 30-calendar days of the date that the extraordinary circumstance
occurred. Our current policy allows a request within 90 days; this
proposed change would align the Hospital OQR, REHQR, and ASCQR policy
with CMS systems implementation requirements across all quality
reporting programs. Under this proposed codified policy, we clarify
that CMS retains the authority to grant an ECE as a form of relief at
any time after the extraordinary circumstance has occurred. For the
Hospital OQR, REHQR, and ASCQR Programs, at proposed Sec. Sec.
419.46(e)(2)(ii); 419.95(g)(2)(ii); and 416.310(d)(2)(ii),
respectively, we propose that CMS notify the requestor with a decision
in writing. If CMS grants an ECE to the hospital, REH or ASC, the
written decision will specify whether the hospital, REH, or ASC is
exempted from one or more reporting requirements or whether CMS has
granted the hospital, REH, or ASC an extension of time to comply with
one or more reporting requirements.
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\149\ Centers for Medicare & Medicaid Services. Hospital OQR
Program Extraordinary Circumstances Exceptions (ECE) Policy: https://qualitynet.cms.gov/outpatient/oqr/participation%23tab2#tab2; REHQR
Program Extraordinary Circumstances Exceptions (ECE) Policy: https://qualitynet.cms.gov/reh/rehqr/participation#tab2; and ASCQR Program
Extraordinary Circumstances Exceptions (ECE) Policy: https://qualitynet.cms.gov/asc/ascqr/participation%23tab3#tab2. Accessed:
April 30, 2025.
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Additionally, at Sec. Sec. 419.46(e)(3); 419.95(g)(3); and
416.310(d)(3), we propose that CMS may grant an ECE to one or more
hospitals, REHs, or ASCs that have not requested an ECE if CMS
determines that: a systemic problem with a CMS data collection system
directly impacted the ability of the hospital, REH, or ASC to comply
with a quality data reporting requirement, or that an extraordinary
circumstance has affected an entire region or locale. As is the case
under our current policy, any ECE granted will specify whether the
affected hospitals, REHs, or ASCs are exempted from one or more
reporting requirements or whether CMS has granted the hospital, REH, or
ASC an extension of time to comply with one or more reporting
requirements.
This proposed ECE policy would provide further reporting
flexibility for a hospital, REH, or ASC and clarify the ECE process.
We invite public comment on these proposals.
XV. Hospital Outpatient Quality Reporting (OQR) Program
A. Background and History of the Hospital OQR Program
The Hospital Outpatient Quality Reporting (OQR) Program is a pay-
for-reporting program intended to ensure transparency and quality of
care furnished at hospital outpatient departments (HOPDs). Section
1833(t)(17)(A) of the Social Security Act (the Act) states that
subsection (d) hospitals (as defined under section 1886(d)(1)(B) of the
Act) that do not submit data required for measures selected with
respect to such a year, in the form and manner required by the
Secretary, will incur a 2.0-percentage point reduction to their annual
Outpatient Department (OPD) fee schedule increase factor.
We refer readers to the CY 2011 OPPS/ASC final rule with comment
period (75 FR 72064 through 72065) for a detailed discussion of the
statutory history of the Hospital OQR Program. The Hospital OQR Program
requirements are codified at 42 CFR 419.46. We also refer readers to
the CMS website at https://www.cms.gov/medicare/quality/initiatives/hospital-quality-initiative/hospital-outpatient-quality-reporting-program for general background on the Hospital OQR Program, as well as
the CMS QualityNet Hospital OQR website at https://qualitynet.cms.gov/outpatient for current program requirements and measure specifications.
B. Proposed Changes to the Hospital OQR Program Measure Set
We propose to adopt the Emergency Care Access & Timeliness
electronic clinical quality measure (eCQM) beginning with voluntary
reporting for the CY 2027 reporting period followed by mandatory
reporting beginning with the CY 2028 reporting period/CY 2030 payment
determination. In addition, we propose to remove the Median Time from
Emergency Department (ED) Arrival to ED Departure for Discharged ED
Patients (Median Time for Discharged ED Patients) measure and the Left
Without Being Seen measure, beginning with the CY 2028 reporting
period/CY 2030 payment determination, if the Emergency Care Access &
Timeliness eCQM is finalized as proposed. We propose to modify the
Excessive Radiation Dose or Inadequate Image Quality for Diagnostic
Computed Tomography (CT) in Adults (Hospital Level--Outpatient) measure
(Excessive Radiation eCQM) from mandatory reporting to voluntary
reporting beginning with the CY 2027 reporting period.
We also refer readers to section XIV.C. of this proposed rule,
Cross-Program Proposals, where we discuss our proposals to remove the
following Hospital OQR Program measures: (1) COVID-19 Vaccination
Coverage Among Healthcare Personnel (HCP) measure beginning with the CY
2024 reporting period/CY 2026 payment determination; (2) Hospital
Commitment to Health Equity (HCHE) measure beginning with the CY 2025
reporting period/CY 2027 payment determination; (3) Screening for
Social Drivers of Health (SDOH) measure beginning with the CY 2025
reporting period; and (4) Screen Positive Rate for SDOH measure
beginning with the CY 2025 reporting period.
1. Proposed Adoption of the Emergency Care Access & Timeliness eCQM
Beginning With Voluntary Reporting for the CY 2027 Reporting Period
Followed by Mandatory Reporting Beginning With the CY 2028 Reporting
Period/CY 2030 Payment Determination
a. Background
Occupancy and boarding rates in U.S. emergency departments (EDs)
continue to worsen and exceed pre-pandemic levels.\150\ ED boarding,
defined as holding a patient in the ED after the patient is admitted or
placed into observation status at a hospital, often occurs due to
shortages of inpatient beds and staff and contributes to ED crowding,
leading to safety risks for patients and stressful working conditions
for healthcare personnel.\151\ A recent report from the Agency for
Healthcare Research and Quality (AHRQ) characterized patient ED
boarding as a growing public health
[[Page 33758]]
crisis and engaged interested parties to address the strain on the U.S.
healthcare system.\152\
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\150\ Moore, C. & Heckmann R. (2025). Hospital Boarding In The
ED: Federal, State, And Other Approaches. Health Affairs Forefront.
Available at https://www.healthaffairs.org/content/forefront/hospital-boarding-ed-federal-state-and-other-approaches. Accessed:
April 30, 2025.
\151\ Moore, C. & Heckmann R. (2025). Hospital Boarding In The
ED: Federal, State, And Other Approaches. Health Affairs Forefront.
Available at https://www.healthaffairs.org/content/forefront/hospital-boarding-ed-federal-state-and-other-approaches. Accessed:
April 30, 2025.
\152\ Agency for Healthcare Research and Quality. (2025).
Technical Report: AHRQ Summit To Address Emergency Department
Boarding. Available at https://www.ahrq.gov/sites/default/files/wysiwyg/topics/ed-boarding-summit-report.pdf. Accessed: April 30,
2025.
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Recent studies indicate that delays in the timeliness of ED care
are associated with patient harm.153 154 Long ED wait times
are also one of the most cited reasons for patients leaving an ED
without being evaluated by a clinician.\155\ Increased ED length of
stay (LOS) is also a strong predictor of poor timeliness of care and is
significantly impacted by ED boarding. One study found that for every
patient boarded, the median ED LOS for all admitted patients increased
by at least 12 minutes.\156\ Furthermore, ED boarding and crowding have
been associated with poor patient outcomes, such as increased
mortality,\157\ delays in needed care,\158\ and negative patient and
staff experiences.159 160 For instance, evidence shows that
ED crowding can harm sepsis patients by delaying administration of
lifesaving intravenous (IV) fluids and antibiotics.\161\
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\153\ Gaieski, D.F., Agarwal, A.K., Mikkelsen, M.E., Drumheller,
B., Cham Sante, S., Shofer, F.S., Goyal, M., & Pines, J.M. (2017).
The impact of ED crowding on early interventions and mortality in
patients with severe sepsis. The American Journal of Emergency
Medicine, 35(7), 953-960. Available at https://doi.org/10.1016/j.ajem.2017.01.061. Accessed: April 30, 2025.
\154\ Laam L.A., Wary A.A., Strony R.S., Fitzpatrick M.H., &
Kraus C.K. (2021). Quantifying the impact of patient boarding on
emergency department length of stay: All admitted patients are
negatively affected by boarding. Journal of American College
Emergency Physicians, 2(2):e12401. Available at https://doi.org/10.1002/emp2.12401. Accessed: April 30, 2025.
\155\ Janke, A.T., Melnick, E.R., & Venkatesh, A.K. (2022).
Monthly Rates of Patients Who Left Before Accessing Care in U.S.
Emergency Departments, 2017-2021. JAMA, 5(9), e2233708. Available at
https://doi.org/10.1001/jamanetworkopen.2022.33708. Accessed: April
30, 2025.
\156\ Laam L.A., Wary A.A., Strony R.S., Fitzpatrick M.H., &
Kraus C.K. (2021). Quantifying the impact of patient boarding on
emergency department length of stay: All admitted patients are
negatively affected by boarding. Journal of American College
Emergency Physicians, 2(2):e12401. Available at https://doi.org/10.1002/emp2.12401. Accessed: April 30, 2025.
\157\ Hsuan, C., Segel, J.E., Hsia, R.Y., Wang, Y., & Rogowski,
J. (2023). Association of emergency department crowding with
inpatient outcomes. Health Services Research, 58(4), 828-843.
Available at https://doi.org/10.1111/1475-6773.14076. Accessed:
April 30, 2025.
\158\ Gaieski, D.F., Agarwal, A.K., Mikkelsen, M.E., Drumheller,
B., Cham Sante, S., Shofer, F.S., Goyal, M., & Pines, J.M. (2017).
The impact of ED crowding on early interventions and mortality in
patients with severe sepsis. The American Journal of Emergency
Medicine, 35(7), 953-960. Available at https://doi.org/10.1016/j.ajem.2017.01.061. Accessed: April 30, 2025.
\159\ Reznek, M.A., Larkin, C.M., Scheulen, J.J., Harbertson,
C.A., & Michael, S.S. (2021). Operational factors associated with
emergency department patient satisfaction: Analysis of the Academy
of Administrators of Emergency Medicine/Association of Academic
Chairs of Emergency Medicine national survey. Academic Emergency
Medicine: Official Journal of the Society for Academic Emergency
Medicine, 28(7), 753-760. Available at https://doi.org/10.1111/acem.14278. Accessed: April 30, 2025.
\160\ Loke, D.E., Green, K.A., Wessling, E.G., Stulpin, E.T., &
Fant, A.L. (2023). Clinicians' Insights on Emergency Department
Boarding: An Explanatory Mixed Methods Study Evaluating Patient Care
and Clinician Well-Being. Joint Commission Journal on Quality and
Patient Safety, 49(12), 663-670. Available at https://doi.org/10.1016/j.jcjq.2023.06.017. Accessed: April 30, 2025.
\161\ Gaieski, D.F., Agarwal, A.K., Mikkelsen, M.E., Drumheller,
B., Cham Sante, S., Shofer, F.S., Goyal, M., & Pines, J.M. (2017).
The impact of ED crowding on early interventions and mortality in
patients with severe sepsis. The American Journal of Emergency
Medicine, 35(7), 953-960. Available at https://doi.org/10.1016/j.ajem.2017.01.061. Accessed: April 30, 2025.
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Due to growing concerns about the quality and timeliness of care in
the ED, as well as the burden associated with two chart-abstracted ED
measures adopted in the Hospital OQR Program measure set, the Median
Time for Discharged ED Patients measure and the Left Without Being Seen
measure, CMS is assessing additional ways to support efforts that
reduce patient harm and improve outcomes for patients requiring
emergency care.
b. Measure Overview
The Emergency Care Access & Timeliness eCQM \162\ is specified for
the hospital setting and calculates the proportion of four outcome
metrics that quantify access to and timeliness of care in an ED setting
against specified thresholds, including: (1) patient wait time--1 hour;
(2) whether the patient left the ED without being evaluated; (3)
patient boarding time in the ED (as defined by a Decision to Admit
(order) to ED departure for admitted patients)--4 hours; and (4)
patient ED LOS (time from ED arrival to ED physical departure, as
defined by the ED departure timestamp)--8 hours. The Emergency Care
Access & Timeliness eCQM provides HOPDs with data for each of these
individual numerator components, which are described in greater detail
in section XV.B.1.c. of this proposed rule.
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\162\ The Emergency Care Access and Timeliness eCQM was
previously named the Emergency Care Capacity and Quality (ECCQ)
eCQM. The name of the measure has been updated to better reflect the
purpose of the measure based on feedback from the Pre-Rulemaking
Measure Review (PRMR) Hospital Recommendation Group Meeting on
January 16, 2025. Available at https://p4qm.org/sites/default/files/2025-02/PRMR-Hospital-Recommendation-Group-Meeting-Summary.pdf.
Accessed: April 30, 2025.
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The numerator components of the Emergency Care Access & Timeliness
eCQM overlap with the patient population and measure specifications of
two chart-abstracted measures in the Hospital OQR Program: (1) the
Median Time for Discharged ED Patients measure, and (2) the Left
Without Being Seen measure. The Median Time for Discharged ED Patients
measure assesses the time patients spent in the ED before being sent
home, also known as ED throughput. The Left Without Being Seen measure
assesses the percentage of patients who leave the ED without being
evaluated by a physician/advanced practice nurse/physician's assistant
(physician/APN/PA). Numerator component (2) overlaps with the Left
Without Being Seen patient population, and numerator component (4)
overlaps with the Median Time for Discharged ED Patients measure. In
addition to capturing the same data elements as the Median Time for
Discharged ED Patients and Left Without Being Seen measures, the
Emergency Care Access & Timeliness eCQM measures boarding time in the
ED, numerator component (3), and time from arrival to placement in a
treatment room, numerator component (1), which are not currently
captured by any other measure currently in the Hospital OQR Program
measure set.\163\
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\163\ Partnership for Quality Measurement. Emergency Care
Capacity and Quality. Available at https://p4qm.org/measures/4625e.
Accessed: April 30, 2025.
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The proposed removal of two chart-abstracted measures in
conjunction with the proposed adoption of the Emergency Care Access &
Timeliness eCQM would reduce HOPD burden by requiring the reporting of
one digital quality measure instead of two chart-abstracted measures.
While the Median Time for Discharged ED Patients and the Left Without
Being Seen measures require manual intervention to retrieve data from
clinical documentation, the Emergency Care Access & Timeliness eCQM
allows for automated extraction of patient-level data directly from the
electronic health record (EHR). We acknowledge that updating EHRs with
new measures requires some initial investment from hospitals, but in
the long-term it would automate timely collection of more granular
quality information. In addition, we refer readers to the eCQI Resource
Center for eCQM implementation guidance: https://ecqi.healthit.gov/oqr?qt-tabs_oqr=ecqm-resources&global_measure_group=eCQMs. We also
refer readers to
[[Page 33759]]
section XV.B.2. of this proposed rule for more information on these
contingent measure removals.
For more information about the testing, feasibility, scientific
acceptability, meaningfulness, and validity of the Emergency Care
Access & Timeliness eCQM, we refer readers to https://p4qm.org/measures/4625e.
c. Measure Calculation
The measure denominator includes all ED encounters associated with
patients of all ages, for all-payers, during a 12-month period of
performance. Patients can have multiple encounters during a period of
performance, and each encounter is eligible to contribute to the
calculation of the measure.\164\
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\164\ For proposed measure specifications, we refer readers to
the CMS QualityNet Hospital OQR Program website at https://qualitynet.cms.gov/outpatient.
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The measure numerator includes any ED encounter in the denominator
where the patient experiences any one of the following: (1) the patient
waited longer than 1 hour after arrival to the ED to be placed in a
treatment room or dedicated treatment area that allows for audiovisual
privacy during history-taking and physical examination; (2) the patient
left the ED without being evaluated; (3) the patient boarded in the ED
for longer than 4 hours; and (4) the patient had an ED LOS of longer
than 8 hours.\165\ An encounter is considered part of the numerator if
it includes any one of the four numerator events, with events not being
mutually exclusive and each contributing only once to the numerator. ED
encounters with ED observation stays \166\ are excluded from components
(3) and (4) but are included in the denominator. Patients who have a
``decision to admit'' after an ED observation stay remain excluded from
criteria (3) calculations.\167\
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\165\ For proposed measure specifications, we refer readers to
the CMS QualityNet Hospital OQR Program website at https://qualitynet.cms.gov/outpatient.
\166\ ED observations stays are defined as an observation
encounter where the patient remains physically in an area under
control of the ED and under the care of an ED clinician inclusive of
observation in a hospital bed. Partnership for Quality Measurement.
Emergency Care Capacity and Quality. Available at https://p4qm.org/measures/4625e. Accessed: April 30, 2025.
\167\ Specific codes required to calculate the numerator are
outlined in the value set data dictionary and eCQM package (Quality
Data Model--QDM output). Please refer to the ``Measure Calculation''
Section for information: https://p4qm.org/measures/4625e. Accessed:
April 30, 2025
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These four outcomes were selected based on published literature
demonstrating that each numerator component is associated with patient
harm,\168\ as well as input from clinical experts including ED experts
and statistical and methodological experts and a Technical Expert Panel
(TEP) that was convened by the measure developer.\169\ A Patient and
Family Engagement (PFE) Work Group provided feedback on experiences
with emergency care, noting long wait times to be seen by a provider,
long wait times to be transferred, and gaps in the discharge processes.
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\168\ Partnership for Quality Measurement. Emergency Care
Capacity and Quality. Available at https://p4qm.org/measures/4625e.
Accessed: April 30, 2025.
\169\ Partnership for Quality Measurement. Emergency Care
Capacity and Quality. Available at https://p4qm.org/measures/4625e.
Accessed: April 30, 2025.
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The numerator thresholds were developed according to evidence and
consensus-based clinical guidelines for ED time thresholds, including
guidelines developed by The Joint Commission (TJC), the American
College of Emergency Physicians (ACEP), and the Emergency Department
Benchmarking Alliance as well as input from a TEP, literature reviews,
and environmental scans. For example, the four-hour threshold for
numerator component (3), boarding time, was developed according to
recommendations from TJC and ACEP.170 171
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\170\ The Joint Commission. (2012). Patient Flow through the
Emergency Department. Available at https://www.jointcommission.org/-/media/tjc/documents/%20standards/r3-reports/r3_report_issue_4.pdf.
Accessed: April 30, 2025.
\171\ American College of Emergency Physicians. (2024).
Emergency Department Boarding and Crowding. Available at https://www.acep.org/administration/crowding-boarding. Accessed: April 30,
2025.
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Measure testing for the Emergency Care Access & Timeliness eCQM was
conducted by the measure developer across 32 hospital-based EDs,
representing a diverse mix of geographic regions, rurality, hospital
size, teaching status, trauma level, and EHR vendors, demonstrating
that the measure is reliable, valid, and feasible for all required data
elements.\172\ Measure testing results showed a wide range in overall
scores, and across all strata, indicating variation in performance and
implying room for quality improvement.\173\
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\172\ Partnership for Quality Measurement. Emergency Care
Capacity and Quality. Available at https://p4qm.org/measures/4625e.
Accessed: April 30, 2025.
\173\ Partnership for Quality Measurement. Emergency Care
Capacity and Quality. Available at https://p4qm.org/measures/4625e.
Accessed: April 30, 2025.
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The measure score is first calculated at the individual ED level as
the proportion of ED encounters where any one of the four outcomes
occurred. Raw measure scores are then standardized by ED case volume
using z-scores. The z-score, or standard score, indicates how many
standard deviations a data point is from the mean of a normal
distribution. It is calculated by subtracting the mean from a data
point, then dividing the result by the standard deviation. For the
Emergency Care Access & Timeliness eCQM, a volume-adjusted z-score
shows how an ED's performance compares to the average for similar-
volume EDs, addressing differences in patient population in HOPDs and
ensuring fair ``like to like'' comparisons between EDs of similar size.
ED volume strata are defined in volume bands of 20,000 ED visits, and
each ED is assigned to only one volume stratum. For CMS Certification
Numbers (CCNs) with more than one ED, volume-adjusted z-scores are then
combined as a weighted average for that CCN.\174\
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\174\ For proposed measure specifications, we refer readers to
the CMS QualityNet Hospital OQR Program website at https://qualitynet.cms.gov/outpatient.
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The results of the Emergency Care Access & Timeliness eCQM are
stratified into four groups, two by age (18 years and older, and under
18 years) and two by mental health diagnoses (with, and without).\175\
The stratification of results by age and mental health diagnosis, as
well as standardization of measure performance scores by volume, is
sufficient to account for differences between hospitals without further
need for risk adjustment.
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\175\ The principal diagnosis (first listed diagnosis at ED
discharge) will be used to define strata inclusion. For this
measure's purpose, mental health diagnoses do not include substance
use disorder diagnoses. Mental health refers to mental health
diagnoses, life stressors and crises, and stress-related physical
symptoms.
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For more detail on the proposed measure specifications, we refer
readers to the CMS QualityNet Hospital OQR Program website at https://qualitynet.cms.gov/outpatient.
d. Pre-Rulemaking Measure Review (PRMR)
As required under section 1890A of the Act, the Secretary must
establish and follow a pre-rulemaking process for selection of quality
and efficiency measures, including for the Hospital OQR Program. The
pre-rulemaking process, which we refer to as the Pre-Rulemaking Measure
Review (PRMR), includes a review of measures published on the publicly
available ``Measures Under Consideration List'' (MUC List) by one of
several committees convened by the consensus-based entity (CBE), with
which we contract in accordance with section 1890 of the Act,
[[Page 33760]]
for the purpose of providing interested parties input to the Secretary
on the selection of quality and efficiency measures under consideration
for use in certain Medicare quality programs, including the Hospital
OQR Program. We refer readers to the CY 2025 OPPS/ASC final rule with
comment period (89 FR 94372) for details on the PRMR process, including
the voting procedures used to reach consensus on measure
recommendations. The PRMR Hospital Recommendation Group met on January
15 and 16, 2025, to review measures included by the Secretary on the
publicly available 2024 MUC List, including the Emergency Care Access &
Timeliness eCQM (MUC2024-075), and provided additional recommendations
on the potential use of this measure.\176\
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\176\ Partnership for Quality Measurement. (2025). 2024-2025
Pre-Rulemaking Measure Review (PRMR) Recommendation Group Final
Meeting Summary: Hospital Committee. Available at https://p4qm.org/sites/default/files/2025-02/PRMR-Hospital-Recommendation-Group-Meeting-Summary.pdf. Accessed: April 30, 2025.
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The voting results of the PRMR Hospital Recommendation Group for
the proposed Emergency Care Access & Timeliness eCQM within the
Hospital OQR Program were: 10 members recommended adopting the measure
into the Hospital OQR Program; 10 members recommended adoption with
conditions; 7 members voted not to recommend the measure for adoption.
No voting category reached 75 percent or greater, including the
combination of the recommend and the recommend with conditions
categories and thus, the Hospital Recommendation Group did not reach
consensus.\177\
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\177\ Partnership for Quality Measurement. (2025). 2024-2025
Pre-Rulemaking Measure Review (PRMR) Recommendation Group Final
Meeting Summary: Hospital Committee. Available at https://p4qm.org/sites/default/files/2025-02/PRMR-Hospital-Recommendation-Group-Meeting-Summary.pdf. Accessed: April 30, 2025.
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The PRMR Hospital Recommendation Group noted in their deliberations
that the measure will provide important insights into ED wait times
which impact experience of care. The Group expressed concern that this
measure may cause an increase in cost of care due to patients being
transferred from the ED to observation.\178\ While we acknowledge that
patients transferred from the ED to observation may result in increased
short-term costs due to additional monitoring and extended stays, the
measure is designed to address significant issues surrounding the
access to timely care which have been proven to reduce long-term
costs.\179\ Hospital Recommendation Group members also expressed
concern about the lack of CBE endorsement. We note that we submitted
the Emergency Care Access & Timeliness eCQM for CBE endorsement for
review in the Fall 2024 cycle and the CBE endorsed the measure with
conditions on February 12, 2025.\180\
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\178\ Partnership for Quality Measurement. (2025). 2024-2025
Pre-Rulemaking Measure Review (PRMR) Recommendation Group Final
Meeting Summary: Hospital Committee. Available at https://p4qm.org/sites/default/files/2025-02/PRMR-Hospital-Recommendation-Group-Meeting-Summary.pdf. Accessed: April 30, 2025.
\179\ Dyas, S.R., Greenfield, E., Messimer, S., Thotakura, S.,
Gholston, S., Doughty, T., Hays, M., Ivey, R., Spalding, J., &
Phillips, R. (2015). Process-Improvement Cost Model for the
Emergency Department. Journal of Healthcare Management, 60(6): 442-
57. Available at https://doi.org/10.1097/00115514-201511000-00011.
Accessed: April 30, 2025.
\180\ Partnership for Quality Measurement. (2024). 2024 Pre-
Rulemaking Measure Review Preliminary Assessment. Available at
https://p4qm.org/sites/default/files/2024-12/PRMR-PA-MUC2024-075.pdf. Accessed: April 30, 2025.
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The Hospital Recommendation Group discussed conditions specific to
the Hospital OQR Program, including changing the name of the measure to
better reflect the measure's focus.\181\ We agree with this feedback
and have changed the name of the measure from the Emergency Care
Capacity and Quality eCQM to Emergency Care Access & Timeliness. Group
members also recommended refraining from including the Emergency Care
Access & Timeliness eCQM in Overall Hospital Quality Star Ratings (Star
Ratings) due to the possible duplication of data with existing
measures. We note that we propose to remove two existing measures in
the Hospital OQR Program, the Median Time for Discharged ED Patients
and the Left Without Being Seen measures, to avoid duplicative data
collection and reporting. We also note that the Emergency Care Access &
Timeliness measure would only be included in the Star Ratings
calculation after the existing measures are removed. We refer readers
to section XV.B.2. of this proposed rule for more information on the
removal of the Median Time for Discharged ED Patients and the Left
Without Being Seen measures.
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\181\ Partnership for Quality Measurement. (2025). 2024-2025
Pre-Rulemaking Measure Review (PRMR) Recommendation Group Final
Meeting Summary: Hospital Committee. Available at https://p4qm.org/sites/default/files/2025-02/PRMR-Hospital-Recommendation-Group-Meeting-Summary.pdf. Accessed: April 30, 2025.
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The Hospital Recommendation Group also recommended revising the
measure specifications to create separate measure components and
explore alternative measures for patient boarding time and patient ED
LOS. We acknowledge the Hospital Recommendation Group's concerns and
note that multiple TEPs and interested parties supported the inclusion
of more than one numerator component as a strategy for internally
balancing the measure and that the time thresholds for patient boarding
time and ED LOS are based on more than a decade of consensus work.
Lastly, Group members recommended stratifying the measure by factors
such as care type, region, and hospital or trauma level designation. We
emphasize that the approach to stratification by age and mental health
diagnosis, as well as volume standardization of the measure performance
scores, is sufficient to account for differences between hospitals
without further need for additional stratification.\182\
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\182\ Partnership for Quality Measurement. (2025). 2024-2025
Pre-Rulemaking Measure Review (PRMR) Recommendation Group Final
Meeting Summary: Hospital Committee. Available at https://p4qm.org/sites/default/files/2025-02/PRMR-Hospital-Recommendation-Group-Meeting-Summary.pdf. Accessed: April 30, 2025.
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e. Measure Endorsement
Section 1833(t)(17)(C)(i) of the Act provides that the Hospital OQR
Program shall include measures that reflect consensus among affected
parties and, to the extent feasible and practicable, shall include
measures set forth by one or more national consensus-based entities. A
TEP consisting of interested parties, experts, and consumer advocates
contributed their input through the Emergency Care Access & Timeliness
eCQM measure design process.\183\ The Emergency Care Access &
Timeliness eCQM was submitted to the CBE for endorsement review in the
Fall 2024 cycle (CBE #4625e), and the CBE endorsed the measure with
conditions for use in the Hospital OQR Program on February 12, 2025.
The conditions include that the measure developer explore within 3
years: (1) the unintended consequences to patients and providers,
including burden, by engaging with the patient community and
accountable entities (for instance, qualitative assessments and
empirical analyses); and (2) the data elements to identify and address
where challenges may persist, including engaging accountable entities.
If the proposal to adopt the Emergency Care Access & Timeliness eCQM
for the Hospital OQR Program is finalized, CMS will monitor the burden
on patients and providers and identify areas where challenges may
[[Page 33761]]
persist as part of the standard measure maintenance.
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\183\ Yale New Haven Health Services Corporation. (September
2024). Technical Expert Panel (TEP) Evaluation of Measure Emergency
Care Capacity and Quality Electronic Clinical Quality Measure
(eCQM). Available at https://mmshub.cms.gov/sites/default/files/ECCQ-TEP-Summary-Report-081624.pdf. Accessed: April 30, 2025.
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f. Data Collection, Submission, and Reporting
The Emergency Care Access & Timeliness eCQM is specified in a
standard electronic format, utilizing data extracted electronically
from EHRs, with all data coming from defined fields in electronic
sources. We note that eCQMs allow for retrieval of data directly from
an EHR, reducing administrative burden on hospitals and minimizing
errors due to manual abstraction of data.\184\
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\184\ Centers for Medicare & Medicaid Services. (2023).
Electronic Clinical Quality Measures (eCQMs) Specification, Testing,
Standards, Tools, and Community. Available at https://mmshub.cms.gov/sites/default/files/eCQM-Specifications-Testing-Standards-Tools-Community.pdf. Accessed: April 30, 2025.
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We propose to adopt the Emergency Care Access & Timeliness eCQM
beginning with voluntary reporting for the CY 2027 reporting period
followed by mandatory reporting beginning with the CY 2028 reporting
period/CY 2030 payment determination. We believe this would provide
HOPDs sufficient time to test and integrate the eCQM into existing
clinical workflows. Additionally, limiting voluntary reporting to 1
year prioritizes addressing long ED wait times and ED boarding as well
as removing two chart-abstracted measures from the Hospital OQR Program
measure set to reduce HOPD burden. We refer readers to section XV.C.2.
of this proposed rule for a discussion of proposed Emergency Care
Access and Timeliness eCQM form, manner, and timing of data submission
and reporting requirements.
We refer readers to section XVI.B.1. of this proposed rule where we
propose adoption of a similar measure for the Rural Emergency Hospital
Quality Reporting Program.
We invite public comment on this proposal.
2. Proposed Removals of the Median Time From ED Arrival to ED Departure
for Discharged ED Patients (Median Time for Discharged ED Patients)
Measure and the Left Without Being Seen Measure Beginning With the CY
2028 Reporting Period/CY 2030 Payment Determination
The Emergency Care Access & Timeliness eCQM, if finalized as
proposed, would serve as a replacement for two existing chart-
abstracted measures in the Hospital OQR Program. The Median Time for
Discharged ED Patients measure (75 FR 72086) and the Left Without Being
Seen measure (75 FR 72088 through 72089) were adopted in the CY 2011
OPPS/ASC final rule with comment period to promote transparency,
improve patient care and access to EDs, and reduce avoidable delays in
the emergency care setting. The Median Time for Discharged ED Patients
measure assesses the time patients spent in the ED before being sent
home, also known as ED throughput. The Left Without Being Seen measure
assesses the percentage of patients who leave the ED without being
evaluated by a physician/advanced practice nurse/physician's assistant
(physician/APN/PA). Both measures are chart-abstracted, requiring human
review and manual intervention to extract data elements from clinical
documentation.
In the CY 2024 OPPS/ASC final rule with comment period (88 FR
81963), we did not finalize our proposal to remove the Left Without
Being Seen measure due in part to public comments emphasizing the
importance of the measure in addressing ED overcrowding and boarding.
We stated our intention to identify a more granular measure that could
replace the Left Without Being Seen measure, which can now be achieved
through the adoption of the Emergency Care Access & Timeliness eCQM. We
note that Hospital OQR Program measure specifications can be found at
https://qualitynet.cms.gov/outpatient.
As stated in section XV.B.1. of this proposed rule, the Emergency
Care Access & Timeliness eCQM is specified for the hospital setting and
calculates the proportion of four outcome metrics that quantify access
to and timeliness of care in an ED setting against specified
thresholds. The numerator components of the Emergency Care Access &
Timeliness eCQM overlap with data elements of the Median Time for
Discharged ED Patients and the Left Without Being Seen measures. The
numerator of the Emergency Care Access & Timeliness eCQM is comprised
of any ED visit in the denominator where the patient experiences any
one of the following: (1) waited longer than 1 hour to be placed in a
treatment room or a dedicated treatment area that allows for
audiovisual privacy history-taking and physical examination; (2) left
the ED without being evaluated by a physician/advanced practice nurse/
physician's assistant; (3) boarded (defined as time from a Decision to
Admit (order) to ED departure for admitted patients) for longer than 4
hours; or (4) had an ED LOS (time from ED arrival to ED physical
departure as defined by the ED departure timestamp) of longer than 8
hours. Numerator component (2) overlaps with the Left Without Being
Seen patient population and numerator component (4) overlaps with the
Median Time for Discharged ED Patients measure. The Emergency Care
Access & Timeliness eCQM also incorporates additional metrics to
enhance its comprehensiveness and analytic value, including boarding
time in the ED, numerator component (3), and time from arrival to
placement in a treatment room, numerator component (1), which are not
currently captured by any other measure in the Hospital OQR
Program.\185\
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\185\ Partnership for Quality Measurement. Emergency Care
Capacity and Quality. Available at https://p4qm.org/measures/4625e.
Accessed: April 30, 2025.
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The Emergency Care Access & Timeliness eCQM therefore provides an
alternative approach to quality measurement used to address ED boarding
and barriers to emergency care by capturing multiple components of
quality and capacity. In addition, the Emergency Care Access &
Timeliness eCQM allows for retrieval of patient-level data directly
from the EHR. As a result, the Emergency Care Access & Timeliness eCQM,
along with our previously adopted eCQMs, advances the Hospital OQR
Program toward the use of EHR data for quality measurement, leading to
more accurate quality data as well as reduced burden for providers. The
adoption of the Emergency Care Access & Timeliness eCQM would allow us
to employ a more precise assessment of the timeliness and
appropriateness of ED visits and to provide additional information
important to patients and hospitals on ED boarding and ED LOS.
Our measure removal policy, codified at 42 CFR 419.46(i)(3),
identifies eight factors CMS will consider in the removal of quality
measures. Removal Factor 4, described at Sec. 419.46(i)(3)(i)(D), is
the availability of a more broadly applicable (across settings,
populations, or conditions) measure for the topic. Compared to the
Median Time for Discharged ED Patients measure and the Left Without
Being Seen measure, the Emergency Care Access & Timeliness eCQM is a
more broadly applicable measure for the topic. We therefore propose
that, if the Emergency Care Access & Timeliness eCQM is adopted in the
Hospital OQR Program as proposed in section XV.B.1. of this proposed
rule, we would remove the Median Time for Discharged ED Patients
measure and the Left Without Being Seen measure under removal Factor 4.
We propose that these measure
[[Page 33762]]
removals would begin with the CY 2028 reporting period/CY 2030 payment
determination, when reporting for the Emergency Care Access &
Timeliness eCQM is proposed to become mandatory.
We invite public comment on these proposals.
3. Modify the Excessive Radiation Dose or Inadequate Image Quality for
Diagnostic Computed Tomography (CT) in Adults (Hospital Level--
Outpatient) Measure (Excessive Radiation eCQM) From Mandatory Reporting
Beginning With the CY 2027 Reporting Period/CY 2029 Payment
Determination To Continue Voluntary Reporting in the CY 2027 Reporting
Period and Subsequent Years
In the CY 2024 OPPS/ASC final rule with comment period, we
finalized our proposal to adopt the Excessive Radiation eCQM with
voluntary reporting beginning with the CY 2025 reporting period and
mandatory reporting beginning with the CY 2027 reporting period/CY 2029
payment determination, one year later than originally proposed (88 FR
81992). We explained our delay in implementing mandatory reporting of
the Excessive Radiation eCQM was in response to commenters' concerns
regarding the burden associated with implementing the eCQM.
In this proposed rule, we propose to modify the reporting
requirements for the Excessive Radiation eCQM in the Hospital OQR
Program by maintaining voluntary reporting instead of mandatory
reporting of the measure, beginning with the CY 2027 reporting period.
Our proposal to maintain indefinite voluntary reporting of this measure
arises from continued feedback expressing concerns about the complex
interfaces necessary to develop, maintain, and report the Excessive
Radiation eCQM, including the financial burden and operational
feasibility needed to translate CT radiology data into standardized
eCQM-consumable data used by the measure. In January 2025, we issued a
notice to clarify that hospitals and clinicians who choose to report
this eCQM can use any vendor's translation software to calculate this
measure,\186\ consistent with the measure's specifications, and stated
our intent to monitor measure results to ensure that all reported data
for the Excessive Radiation eCQM are both reliable and valid.\187\
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\186\ eCQI Resource Center. Excessive Radiation Dose or
Inadequate Image Quality for Diagnostic Computed Tomography in
Adults eCQM--Measure Clarification. Available at https://ecqi.healthit.gov/excessive-radiation-dose-or-inadequate-image-quality-diagnostic-computed-tomography-adults-ecqm-measure-clarification. Accessed June 5, 2025.
\187\ In that notice, we also clarified that while CMS is not
requiring vendors to demonstrate their software's capabilities to
CMS, hospitals and clinicians that choose to do so may request
information from a vendor about a specific software's ability to
generate and transform the radiology data into the necessary format.
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The proposed modification from mandatory to voluntary reporting of
the Excessive Radiation eCQM beginning with the CY 2027 reporting
period would allow HOPDs additional time to integrate, adequately test,
and gain experience with implementing the eCQM. This modification would
also provide CMS with additional time to monitor implementation
progress, including data collection burden and response rates. We will
continue to consider feedback regarding this measure and may propose
additional changes in future rulemaking.
We invite public comment on this proposal.
4. Summary of Previously Finalized and Newly Proposed Hospital OQR
Program Measure Set for CY 2026 to CY 2031 Payment Determinations
Table 84 summarizes the previously finalized and newly proposed
Hospital OQR Program measure set for the CY 2026 to CY 2031 payment
determinations, which would remove the HCHE, Screening for SDOH, Screen
Positive Rate for SDOH, and COVID-19 Vaccination Coverage Among HCP
measures as discussed in section XIV.C. of this proposed rule; modify
reporting requirements for the Excessive Radiation eCQM from mandatory
to voluntary reporting beginning with the CY 2027 reporting period, as
discussed in section XV.B.3 of this proposed rule; remove the Left
Without Being Seen and the Median Time for Discharged ED Patients
measures as discussed in section XV.B.2. of this proposed rule; and add
the Emergency Care Access & Timeliness eCQM as discussed in section
XV.B.1. of this proposed rule.
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We refer readers to the QualityNet website at https://qualitynet.cms.gov/outpatient for additional information on the
reporting periods and submission deadlines for each measure previously
finalized in the Hospital OQR Program.
5. Hospital OQR Program Measures and Topics for Future Consideration
We refer readers to section XIV.B. of this proposed rule for our
cross-program Request for Information on measure concepts regarding
well-being and nutrition for consideration in the Hospital OQR Program.
C. Proposed Updates to the Form, Manner, and Timing of Hospital OQR
Program Data Submission
1. Background on Data Submission and Reporting Requirements for
eCQMs
We refer readers to Sec. 419.46(j) and the CY 2025 OPPS/ASC final
rule with comment period (89 FR 94418 through 94420) for a discussion
of our previously finalized eCQM requirements.
2. Proposed Data Submission and Reporting Requirements for the
Emergency Care Access & Timeliness eCQM
In section XV.B.1. of this proposed rule, we discuss the proposed
adoption of the Emergency Care Access & Timeliness eCQM beginning with
voluntary reporting for the CY 2027 reporting period followed by
mandatory reporting beginning with the CY 2028 reporting period/CY 2030
payment determination. For the CY 2027 reporting period, we propose
that hospitals that voluntarily submit Emergency Care Access and
Timeliness eCQM data could submit data for any quarter(s) (that is, up
to all four quarters of data).
Beginning with the CY 2028 reporting period/CY 2030 payment
determination, we propose to require that hospitals report all four
calendar quarters (1-calendar year) of data for the Emergency Care
Access & Timeliness eCQM. We also propose to require Emergency Care
Access and Timeliness eCQM data submission by May 15 in the year prior
to the affected payment determination year, in alignment with our
policies on eCQM submission deadlines, as finalized in the CY 2022
OPPS/ASC final rule with comment period (86 FR 63867 through 63870).
For example, for the CY 2028 reporting period/CY 2030 payment
determination, hospitals would be required to submit eCQM data by May
15, 2029. All deadlines occurring on a Saturday, Sunday, or legal
holiday, or on any other day declared at least in part to be a non-
workday for federal employees by statute or Executive Order, would be
extended to the first day thereafter. All current CMS policies
regarding eCQM data submission requirements--including file format,
zero denominator declarations, case thresholds, submission deadlines,
and EHR certification requirements outlined at Sec. 419.46(j) and
finalized in the CY 2022 or CY 2025 OPPS/ASC final rules (86 FR 63867
through 63870 and 89 FR 94418 through 94420, respectively) would apply
to the Emergency Care Access & Timeliness eCQM for both the voluntary
and mandatory data submission periods.
We invite public comment on these proposals.
3. Hospital OQR Program Extraordinary Circumstances Exception (ECE)
Policy
We refer readers to section XIV.D. of this proposed rule for our
cross-program proposal to codify updates to the ECE policy for the
Hospital OQR Program.
D. Payment Reduction for Hospitals That Fail To Meet the Hospital OQR
Program Requirements for the CY 2026 Payment Determination
1. Background
Section 1833(t)(17) of the Act, which applies to subsection (d)
hospitals (as defined under section 1886(d)(1)(B) of the Act), states
that hospitals that fail to report data required to be submitted on
measures selected by the Secretary, in the form and manner, and at a
time, specified by the Secretary will incur a 2.0-percentage point
reduction to their Outpatient Department (OPD) fee schedule increase
factor; that is, the annual payment update factor. Section
1833(t)(17)(A)(ii) of the Act specifies that any reduction applies only
to the payment year involved and will not be taken into account in
computing the applicable OPD fee schedule increase factor for a
subsequent year.
The application of a reduced OPD fee schedule increase factor
results in reduced national unadjusted payment rates that apply to
certain outpatient items and services provided by hospitals that are
required to report outpatient quality data in order to
[[Page 33767]]
receive the full payment update factor and that fail to meet the
Hospital OQR Program requirements. Hospitals that meet the reporting
requirements receive the full OPPS payment update without the
reduction. For a more detailed discussion of how this payment reduction
was initially implemented, we refer readers to the CY 2009 OPPS/ASC
final rule with comment period (73 FR 68769 through 68772).
The national unadjusted payment rates for many services paid under
the OPPS equal the product of the OPPS conversion factor and the scaled
relative payment weight for the APC to which the service is assigned.
The OPPS conversion factor, which is updated annually by the OPD fee
schedule increase factor, is used to calculate the OPPS payment rate
for services with the following status indicators (listed in Addendum B
to the proposed rule, which is available via the internet on the CMS
website): ``J1,'' ``J2,'' ``P,'' ``Q1,'' ``Q2,'' ``Q3,'' ``R,'' ``S,''
``T,'' ``V,'' or ``U.'' Payment for all services assigned to these
status indicators will be subject to the reduction of the national
unadjusted payment rates for hospitals that fail to meet Hospital OQR
Program requirements, with the exception of services assigned to New
Technology APCs with assigned status indicator ``S'' or ``T.'' We refer
readers to the CY 2009 OPPS/ASC final rule with comment period (73 FR
68770 through 68771) for a discussion of this policy. In the CY 2017
OPPS/ASC final rule with comment period (81 FR 79796), we clarified
that the reporting ratio does not apply to codes with status indicator
``Q4'' because services and procedures coded with status indicator
``Q4'' are either packaged or paid through the Clinical Laboratory Fee
Schedule and are never paid separately through the OPPS.
The OPD fee schedule increase factor is an input into the OPPS
conversion factor, which is used to calculate OPPS payment rates. To
reduce the OPD fee schedule increase factor for hospitals that fail to
meet reporting requirements, we calculate two conversion factors--a
full market basket conversion factor (that is, the full conversion
factor), and a reduced market basket conversion factor (that is, the
reduced conversion factor). We then calculate a reduction ratio by
dividing the reduced conversion factor by the full conversion factor.
We refer to this reduction ratio as the ``reporting ratio'' to indicate
that it applies to payment for hospitals that fail to meet their
reporting requirements. Applying this reporting ratio to the OPPS
payment amounts results in reduced national unadjusted payment rates
that are mathematically equivalent to the reduced national unadjusted
payment rates that would result if we multiplied the scaled OPPS
relative payment weights by the reduced conversion factor. For example,
to determine the reduced national unadjusted payment rates that applied
to hospitals that failed to meet their quality reporting requirements
for the CY 2010 OPPS/ASC final rule with comment period, we multiplied
the final full national unadjusted payment rate found in Addendum B of
the CY 2010 OPPS/ASC final rule with comment period by the CY 2010 OPPS
final rule with comment period reporting ratio of 0.980 (74 FR 60642).
We note that the only difference in the calculation for the full
conversion factor and the calculation for the reduced conversion factor
is that the full conversion factor uses the full OPD update, and the
reduced conversion factor uses the reduced OPD update. The baseline
OPPS conversion factor calculation is the same since all other
adjustments would be applied to both conversion factor calculations.
Therefore, our standard approach of calculating the reporting ratio as
described earlier in this section is equivalent to dividing the reduced
OPD update factor by that of the full OPD update factor. In other
words:
Full Conversion Factor = Baseline OPPS conversion factor * (1 + OPD
update factor)
Reduced Conversion Factor = Baseline OPPS conversion factor * (1 + OPD
update factor - 0.02)
Reporting Ratio = Reduced Conversion Factor / Full Conversion Factor
Which is equivalent to:
Reporting Ratio = (1 + OPD Update factor - 0.02) / (1 + OPD update
factor)
In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68771
through 68772), we established a policy that the Medicare beneficiary's
minimum unadjusted copayment and national unadjusted copayment for a
service to which a reduced national unadjusted payment rate applies
would each equal the product of the reporting ratio and the national
unadjusted copayment or the minimum unadjusted copayment, as
applicable, for the service. Under this policy, we apply the reporting
ratio to both the minimum unadjusted copayment and national unadjusted
copayment for services provided by hospitals that receive the payment
reduction for failure to meet the Hospital OQR Program reporting
requirements. This application of the reporting ratio to the national
unadjusted and minimum unadjusted copayments is calculated according to
Sec. 419.41 of our regulations, prior to any adjustment for a
hospital's failure to meet the quality reporting standards according to
Sec. 419.43(h). Beneficiaries and secondary payers thereby share in
the reduction of payments to these hospitals.
In the CY 2009 OPPS/ASC final rule with comment period (73 FR
68772), we established the policy that all other applicable adjustments
to the OPPS national unadjusted payment rates apply when the OPD fee
schedule increase factor is reduced for hospitals that fail to meet the
requirements of the Hospital OQR Program. For example, the following
standard adjustments apply to the reduced national unadjusted payment
rates: the wage index adjustment, the multiple procedure adjustment,
the interrupted procedure adjustment, the rural sole community hospital
adjustment, and the adjustment for devices furnished with full or
partial credit or without cost. Similarly, OPPS outlier payments made
for high cost and complex procedures will continue to be made when
outlier criteria are met. For hospitals that fail to meet the quality
data reporting requirements, the hospitals' costs are compared to the
reduced payments for purposes of outlier eligibility and payment
calculation. We established this policy in the OPPS beginning in the CY
2010 OPPS/ASC final rule with comment period (74 FR 60642). For a
complete discussion of the OPPS outlier calculation and eligibility
criteria, we refer readers to section II.G. of the CY 2023 OPPS/ASC
proposed rule (87 FR 44533 through 44534).
2. Reporting Ratio Application and Associated Adjustment Policy for CY
2026
We propose to continue our established policy of applying the
reduction of the OPD fee schedule increase factor through the use of a
reporting ratio for those hospitals that fail to meet the Hospital OQR
Program requirements for the full CY 2026 annual payment update factor.
For the CY 2026 OPPS/ASC proposed rule, the proposed reporting ratio is
0.9805, which, when multiplied by the proposed full conversion factor
of $91.747, equals a proposed conversion factor for hospitals that fail
to meet the requirements of the Hospital OQR Program (that is, the
reduced conversion factor) of $89.958. We propose to continue to apply
the reporting ratio to all services calculated using the OPPS
conversion factor. We propose to continue to apply the reporting ratio,
[[Page 33768]]
when applicable, to all HCPCS codes to which we have proposed status
indicator assignments of ``J1,'' ``J2,'' ``P,'' ``Q1,'' ``Q2,'' ``Q3,''
``R,'' ``S,'' ``T,'' ``V,'' and ``U'' (other than New Technology APCs
to which we have proposed status indicator assignments of ``S'' and
``T''). We propose to continue to exclude services paid under New
Technology APCs. We propose to continue to apply the reporting ratio to
the national unadjusted payment rates and the minimum unadjusted and
national unadjusted copayment rates of all applicable services for
those hospitals that fail to meet the Hospital OQR Program reporting
requirements. We also propose to continue to apply all other applicable
standard adjustments to the OPPS national unadjusted payment rates for
hospitals that fail to meet the requirements of the Hospital OQR
Program. Similarly, we propose to continue to calculate OPPS outlier
eligibility and outlier payment based on the reduced payment rates for
those hospitals that fail to meet the reporting requirements. In
addition to our proposal to implement the policy through the use of a
reporting ratio, we propose to continue to calculate the reporting
ratio to four decimals.
For CY 2026, the proposed reporting ratio is 0.9805, which, when
multiplied by the proposed full conversion factor of $91.747, equals a
proposed conversion factor for hospitals that fail to meet the
requirements of the Hospital OQR Program (that is, the reduced
conversion factor) of $89.958.
XVI. Rural Emergency Hospital Quality Reporting (REHQR) Program
A. Background and History of the REHQR Program
The Rural Emergency Hospital Quality Reporting (REHQR) Program is
intended to ensure transparency and quality for rural emergency
hospitals (REHs), defined at section 1861(kkk)(2) of the Act. Section
1861(kkk)(7)(A) authorizes the Secretary to implement a quality
reporting program requiring REHs to submit data on measures in
accordance with the Secretary's requirements in section 1861(kkk)(7).
Section 1861(kkk)(7)(B)(ii) requires REHs to submit quality measure
data to the Secretary ``in a form and manner, and at a time, specified
by the Secretary.'' The Act does not require the Secretary to provide
incentives for submitting this data under the REHQR Program, nor does
it require the Secretary to impose penalties for failing to comply with
this requirement under the REHQR Program. We refer readers to the CY
2024 OPPS/ASC final rule with comment period (88 FR 82046 through
82047) for a detailed discussion of the history of the REHQR Program.
The REHQR Program requirements are codified at 42 CFR 419.95. We also
refer readers to the CMS QualityNet REHQR Program website at https://qualitynet.cms.gov/reh/rehqr for current program requirements and
measure specifications.\188\
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\188\ For additional information on REHs, we refer readers to a
CMS Fact Sheet on REHs (Sept. 2024). Available at https://www.cms.gov/files/document/rural-emergency-hospitals-factsheet-september-2024.pdf.
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B. Proposed Changes to the REHQR Program Measure Set
We propose to adopt the Emergency Care Access & Timeliness
electronic clinical quality measure (eCQM) beginning with the CY 2027
reporting period/CY 2029 program determination as an alternative to
reporting the Median Time from Emergency Department (ED) Arrival to ED
Departure for Discharged ED Patients measure. We also refer readers to
section XIV.C. of this proposed rule where we discuss the following
proposed measure removals: (1) Hospital Commitment to Health Equity
(HCHE) measure, beginning with the CY 2025 reporting period/CY 2027
program determination; (2) Screening for Social Drivers of Health
(SDOH) measure, beginning with the CY 2025 reporting period; and (3)
Screen Positive Rate for SDOH measure, beginning with the CY 2025
reporting period.
1. Proposed Adoption of the Emergency Care Access & Timeliness eCQM
Beginning With Optional Reporting for the CY 2027 Reporting Period/CY
2029 Program Determination
a. Background
Occupancy and boarding rates in United States (U.S.) emergency
departments (EDs) continue to worsen and exceed pre-pandemic
levels.\189\ ED boarding, defined as holding a patient in the ED when
there are no available inpatient beds, often occurs due to shortages of
inpatient beds and staff. ED boarding time contributes to ED crowding
which heightens safety risks for patients and can lead to stressful
working conditions for healthcare personnel.\190\ A recent report from
the Agency for Healthcare Research and Quality (AHRQ) characterized
patient ED boarding as a growing public health crisis and engaged
interested parties to address the strain on the U.S. healthcare
system.\191\
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\189\ Moore, C. & Heckmann R. (2025). Hospital Boarding In The
ED: Federal, State, And Other Approaches. Health Affairs Forefront.
Available at https://www.healthaffairs.org/content/forefront/hospital-boarding-ed-federal-state-and-other-approaches. Accessed:
April 30, 2025.
\190\ Moore, C. & Heckmann R. (2025). Hospital Boarding In The
ED: Federal, State, And Other Approaches. Health Affairs Forefront.
Available at https://www.healthaffairs.org/content/forefront/hospital-boarding-ed-federal-state-and-other-approaches. Accessed:
April 30, 2025.
\191\ Agency for Healthcare Research and Quality. (2025).
Technical Report: AHQR Summit To Address Emergency Department
Boarding. Available at https://www.ahrq.gov/sites/default/files/wysiwyg/topics/ed-boarding-summit-report.pdf. Accessed: April 30,
2025.
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Recent studies indicate that delays in the timeliness of ED care
are associated with patient harm.192 193 Long ED wait times
are also one of the most cited reasons for patients leaving an ED
without being evaluated by a clinician.\194\ One recent study indicated
that ED crowding can harm sepsis patients by delaying administration of
lifesaving intravenous (IV) fluids and antibiotics.\195\ ED boarding
time can lead to an increased length of stay (LOS) which is also a
strong predictor of poor timeliness of care. One study found that for
every patient boarded, the median ED LOS for all admitted patients
increased by at least 12 minutes.\196\ While less studied than
inpatient boarding, transfer boarding (defined as keeping the patient
in the ED after the decision to transfer has been made), can have
similar impacts as inpatient boarding, with greater impacts on patients
receiving care in rural
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settings.197 198 The timeliness of care provided at REHs may
be further impacted by transfer boarding due to lack of inpatient beds
and resources required to coordinate transfers.\199\
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\192\ Gaieski, D.F., Agarwal, A.K., Mikkelsen, M.E., Drumheller,
B., Cham Sante, S., Shofer, F.S., Goyal, M., & Pines, J.M. (2017).
The impact of ED crowding on early interventions and mortality in
patients with severe sepsis. The American Journal of Emergency
Medicine, 35(7), 953-960. Available at https://doi.org/10.1016/j.ajem.2017.01.061. Accessed: April 30, 2025.
\193\ Laam L.A., Wary A.A., Strony R.S., Fitzpatrick M.H., &
Kraus C.K. (2021). Quantifying the impact of patient boarding on
emergency department length of stay: All admitted patients are
negatively affected by boarding. Journal of American College
Emergency Physicians, 2(2):e12401. Available at https://doi.org/10.1002/emp2.12401. Accessed: April 30, 2025.
\194\ Janke, A.T., Melnick, E.R., & Venkatesh, A.K. (2022).
Monthly Rates of Patients Who Left Before Accessing Care in US
Emergency Departments, 2017-2021. JAMA, 5(9), e2233708. Available at
https://doi.org/10.1001/jamanetworkopen.2022.33708. Accessed: April
30, 2025.
\195\ Gaieski, D.F., Agarwal, A.K., Mikkelsen, M.E., Drumheller,
B., Cham Sante, S., Shofer, F.S., Goyal, M., & Pines, J.M. (2017).
The impact of ED crowding on early interventions and mortality in
patients with severe sepsis. The American Journal of Emergency
Medicine, 35(7), 953-960. Available at https://doi.org/10.1016/j.ajem.2017.01.061. Accessed: April 30, 2025.
\196\ Laam L.A., Wary A.A., Strony R.S., Fitzpatrick M.H., &
Kraus C.K. (2021). Quantifying the impact of patient boarding on
emergency department length of stay: All admitted patients are
negatively affected by boarding. Journal of American College
Emergency Physicians, 2(2):e12401. Available at https://doi.org/10.1002/emp2.12401. Accessed: April 30, 2025.
\197\ Mohr, N.M., Wu,C., Ward, M.J., McNaughton, C.D., Faine,
B., Pomeranz, K., Richardson, K., & Kaboli, P.J. (2022). Transfer
boarding delays care more in low-volume rural emergency departments:
A cohort study.The Journal of Rural Health: Official Journal of the
American Rural Health Association and the National Rural Health Care
Association, 38(1), 282-292. Available at https://doi.org/10.1111/jrh.12559. Accessed: April 30, 2025.
\198\ Usher, M., Sahni, N., Herrigel, D., Simon, G., Melton,
G.B., Joseph, A., & Olson, A. (2018). Diagnostic Discordance, Health
Information Exchange, and Inter-Hospital Transfer Outcomes: A
Population Study. Journal of General Internal Medicine, 33(9): 1447-
53. Available at https://doi.org/10.1007/s11606-018-4491-x.
Accessed: April 30, 2025.
\199\ McNaughton, C.D., Bonnet, K., Schlundt, D., Mohr, N.M.,
Chung, S., Kaboli, P.J., & Ward, M.J. (2020). Rural Interfacility
Emergency Department Transfers: Framework and Qualitative Analysis.
The Western Journal of Emergency Medicine, 21(4), 858-865. Available
at https://doi.org/10.5811/westjem.2020.3.46059. Accessed: April 30,
2025.
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Due to growing concerns about the quality and timeliness of care in
the ED as well as the burden associated with manually abstracting the
chart-abstracted ED measure adopted in the REHQR Program measure set,
the Median Time from ED Arrival to ED Departure for Discharged ED
Patients (Median Time for Discharged ED Patients) measure, CMS is
assessing additional ways to support efforts that reduce patient harm
and improve outcomes for patients requiring emergency care while also
providing flexibility for REHs. We previously sought comment on eCQM
reporting under the REHQR Program in the CY 2024 OPPS/ASC proposed rule
(88 FR 49840 through 49841). Our proposal to adopt the Emergency Care
Access & Timeliness eCQM as an optional measure into the REHQR Program
measure set, as discussed in section XVI.C.2.c. of this proposed rule,
is in response to public comment recommending that CMS add eCQMs as
optional measures initially (88 FR 82070). We refer readers to section
XVI.C.2. of this proposed rule for proposed eCQM reporting and
submission policies and requirements for the REHQR Program.
b. Measure Overview
An intermediate outcome measure, the Emergency Care Access &
Timeliness eCQM \200\ as specified for the REH setting calculates the
proportion of four outcome metrics that quantify access to and the
timeliness of care in an ED setting against specified thresholds,
including: (1) patient wait time; (2) whether the patient left the ED
without being evaluated; (3) patient transfer boarding time in the ED;
and (4) patient ED LOS. The numerator components for the Emergency Care
Access & Timeliness eCQM are described in detail in section XVI.B.1.c.
of this proposed rule. We note that the population and measure
specifications for the Median Time for Discharged ED Patients measure
overlaps with the Emergency Care Access & Timeliness eCQM for the
numerator outcome metric (4), but that the scope of the proposed
Emergency Care Access & Timeliness eCQM is broader than the Median Time
for Discharged ED Patients measure.\201\ The Median Time for Discharged
ED Patients measure assesses one component, the time patients spent in
the ED before being sent home, also known as ED throughput. The
Emergency Care Access & Timeliness eCQM measures four different ED
components in a single measure and provides REHs with separate data for
each individual component. Additionally, the eCQM measures transfer
boarding time in the ED and time from arrival to placement in a
treatment room, which is not measured by the Median Time for Discharged
ED Patients measure, or any other measure currently in the REHQR
Program measure set.\202\ As discussed later in section XVI.C.2.c. of
this proposed rule, to provide flexibility for REHs, we propose that
REHs could elect to report either the Emergency Care Access &
Timeliness eCQM or the Median Time for Discharged ED Patients measure
beginning with the CY 2027 reporting period/CY 2029 program
determination. While CMS proposes that the Emergency Care Access &
Timeliness eCQM would not be required to be reported by REHs, REHs must
nonetheless elect to report either the Emergency Care Access &
Timeliness eCQM or the Median Time for Discharged ED Patient measure to
meet program requirements, beginning with the CY 2027 reporting period/
CY 2029 program determination. We believe this timeline would provide
REHs sufficient time to test and integrate the Emergency Care Access &
Timeliness eCQM into existing clinical workflows.
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\200\ The Emergency Care Access & Timeliness eCQM was previously
named the Emergency Care Capacity and Quality (ECCQ) eCQM. The name
of the measure has been updated to better reflect the purpose of the
measure based on feedback from the Pre-Rulemaking Measure Review
(PRMR) Hospital Recommendation Group Meeting on January 16, 2025.
Available at https://p4qm.org/sites/default/files/2025-02/PRMR-Hospital-Recommendation-Group-Meeting-Summary.pdf.
\201\ The Median Time for Discharged ED Patients was adopted in
the REHQR Program in the CY 2024 OPPS/ASC final rule with comment
period (88 FR 49832).
\202\ Partnership for Quality Measurement. Emergency Care
Capacity and Quality. Available at https://p4qm.org/measures/4625e.
Accessed: April 30, 2025.
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For more information about the testing, feasibility, scientific
acceptability, meaningfulness, and validity of the Emergency Care
Access & Timeliness eCQM, we refer readers to the ``Feasibility'' and
``Scientific Acceptability'' sections of the Emergency Care Access &
Timeliness eCQM listing on the Partnership for Quality Measurement
website at https://p4qm.org/measures/4625e.
c. Measure Calculation
The measure denominator includes all ED encounters by patients of
all ages, for all-payers, during a 12-month period of performance.
Patients can have multiple encounters during a period of performance
and each encounter is eligible to contribute to the calculation of the
measure.\203\
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\203\ For proposed measure specifications, we refer readers to
the CMS QualityNet REHQR Program website at https://qualitynet.cms.gov/reh/rehqr.
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The measure numerator includes any ED encounter in the denominator
where the patient experiences any one of the following: (1) the patient
waited longer than 1 hour after arrival to the ED to be placed in a
treatment room or dedicated treatment area that allows for audiovisual
privacy during history-taking and physical examination; (2) the patient
left the ED without being evaluated; (3) the patient, if transferred,
boarded in the ED for longer than 4 hours; \204\ or (4) the patient had
an ED LOS of longer than 8 hours. An encounter is included in the
numerator if any one of the four numerator events occurred with events
not being mutually exclusive and each contributing only once to the
numerator. ED encounters with ED observation stays \205\ are excluded
from components (3) and (4).
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\204\ This measure component is calculated at the encounter
level by subtracting ``Decision to Transfer'' order time from ``ED
Departure Time'' for visits with the ED disposition of
``Transferred'' (to an acute care hospital), and then flagging as a
numerator event if >240 minutes.
\205\ ED observations stays are defined as an observation
encounter where the patient remains physically in an area under
control of the ED and under the care of an ED clinician inclusive of
observation in a hospital bed. Partnership for Quality Measurement.
Emergency Care Capacity and Quality. Available at https://p4qm.org/measures/4625e. Accessed: April 30, 2025.
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These four outcomes were selected based on published literature
demonstrating that each numerator component is associated with patient
harm,\206\ as well as clinical (including
[[Page 33770]]
ED), statistical, and methodological expert input. Additionally, a
Technical Expert Panel (TEP) was convened by the measure
developer.\207\ The Patient and Family Engagement (PFE) Work Group
provided feedback on emergency care experiences such as long wait times
to be seen by a provider, long wait times to be transferred, and gaps
in discharge processes.\208\
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\206\ Partnership for Quality Measurement. Emergency Care
Capacity and Quality. Available at https://p4qm.org/measures/4625e.
Accessed: April 30, 2025.
\207\ Partnership for Quality Measurement. Emergency Care
Capacity and Quality. Available at https://p4qm.org/measures/4625e.
Accessed: April 30, 2025.
\208\ Partnership for Quality Measurement. Emergency Care
Capacity and Quality. Available at https://p4qm.org/measures/4625e.
Accessed: April 30, 2025.
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The numerator thresholds were developed according to evidence and
consensus-based clinical guidelines for ED time thresholds from a TEP
and environmental scans. For example, the four-hour threshold for
numerator component (3), transfer boarding time, was developed per
recommendations from The Joint Commission (TJC) and the American
College of Emergency Physicians (ACEP).\209\ If this proposal to adopt
the Emergency Care Access & Timeliness eCQM for the REHQR Program is
finalized, CMS would closely monitor the effect of this measure in REHs
and may revise thresholds as appropriate.
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\209\ Yale New Haven Health Services Corporation. (2024).
Technical Expert Panel (TEP) Evaluation of Measure Emergency Care
Capacity and Quality Electronic Clinical Quality Measure (eCQM).
Available at https://mmshub.cms.gov/sites/default/files/ECCQ-TEP-Summary-Report-081624.pdf. Accessed: April 30, 2025.
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Measure testing for the Emergency Care Access & Timeliness eCQM was
conducted by the measure developer across 32 hospital-based EDs,
representing a diverse mix of geographic regions, rurality, hospital
size, teaching status, trauma level, and electronic health record (EHR)
vendors, demonstrating that the measure is reliable, valid, and
feasible for all required data elements.\210\ Measure testing results
had a wide range in overall scores, and across all strata, indicating
variation in performance and implying room for quality
improvement.\211\ Although data element feasibility testing was
performed at only one REH, the measure was also tested at a few rural
hospital-based EDs with similar characteristics of pre-conversion REHs
(for example, average bed range of under 25).\212\ Based on this, we
believe these measure testing results are applicable to REHs.
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\210\ Partnership for Quality Measurement. Emergency Care
Capacity and Quality. Available at https://p4qm.org/measures/4625e.
Accessed: April 30, 2025.
\211\ Partnership for Quality Measurement. Emergency Care
Capacity and Quality. Available at https://p4qm.org/measures/4625e.
Accessed: April 30, 2025.
\212\ Partnership for Quality Measurement. 7.1 Supplemental
Attachment. Available at https://p4qm.org/sites/default/files/2024-10/4625e-section-7.1-supplemental-attachment.pdf. Accessed: April
30, 2025.
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The measure score is calculated at the individual ED level as the
proportion of ED encounters where any one of the four outcomes
occurred, divided by the number of encounters in a performance period.
For CMS Certification Numbers (CCNs) with more than one ED, individual
ED scores are then combined as a weighted average for that CCN.\213\
The results of the Emergency Care Access & Timeliness eCQM are
stratified into four groups, two by age (18 and older, and under 18)
and two by mental health diagnoses (with, and without).\214\ We note
that the approach to stratification by age and mental health diagnosis
is sufficient to account for differences between REHs without further
need for risk adjustment.
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\213\ Because REHs are typically a low volume setting, volume
standardization is not applied to calculate the Emergency Care
Access & Timeliness eCQM, unlike the version of the Emergency Care
Access & Timeliness eCQM proposed for the Hospital OQR Program in
section XV.B.1. this proposed rule.
\214\ The principal diagnosis (first listed diagnosis at ED
discharge) will be used to define strata inclusion. For this
measure's purpose, mental health diagnoses do not include substance
use disorder diagnoses. Mental health refers to mental health
diagnoses, life stressors and crises, and stress-related physical
symptoms.
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For additional details regarding the proposed measure
specifications, we refer readers to the CMS QualityNet REHQR Program
website at https://qualitynet.cms.gov/reh/rehqrhttps://qualitynet.cms.gov/outpatient.
d. Pre-Rulemaking Measure Review (PRMR)
As required under section 1890A of the Act, the Secretary must
establish and follow a pre-rulemaking process for selection of quality
and efficiency measures, including for the REHQR Program. The pre-
rulemaking process, which we refer to as the Pre-Rulemaking Measure
Review (PRMR), includes a review of measures published on the publicly
available list of Measures Under Consideration (MUC List) by one of
several committees convened by the consensus-based entity (CBE), with
which we contract in accordance with section 1890 of the Act, for the
purpose of providing interested parties input to the Secretary on the
selection of quality and efficiency measures under consideration for
use in certain Medicare quality programs, including the REHQR Program.
We refer readers to the CY 2025 OPPS/ASC final rule with comment period
(89 FR 94372) for details on the PRMR process, including the voting
procedures used to reach consensus on measure recommendations. The PRMR
Hospital Recommendation Group met on January 15 and 16, 2025, to review
measures included by the Secretary on the publicly available ``2024
Measures Under Consideration List'' (MUC List), including the Emergency
Care Access & Timeliness eCQM (MUC2024-095), and provided additional
recommendations on the potential use of this measure.\215\
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\215\ Partnership for Quality Measurement. (2025). 2024-2025
Pre-Rulemaking Measure Review (PRMR) Recommendation Group Final
Meeting Summary: Hospital Committee. Available at https://p4qm.org/sites/default/files/2025-02/PRMR-Hospital-Recommendation-Group-Meeting-Summary.pdf. Accessed: April 30, 2025.
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The voting results of the PRMR Hospital Recommendation Group for
the proposed Emergency Care Access & Timeliness eCQM within the REHQR
Program were: 9 members recommended adopting the measure into the REHQR
Program; 6 members recommended adoption with conditions; 11 members
voted not to recommend the measure for adoption. No voting category
reached 75 percent or greater, including the combination of the
recommend and the recommend with conditions categories and thus, the
Hospital Recommendation Group did not reach consensus.\216\
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\216\ Partnership for Quality Measurement. (2025). 2024-2025
Pre-Rulemaking Measure Review (PRMR) Recommendation Group Final
Meeting Summary: Hospital Committee. Available at https://p4qm.org/sites/default/files/2025-02/PRMR-Hospital-Recommendation-Group-Meeting-Summary.pdf. Accessed: April 30, 2025.
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The PRMR Hospital Recommendation Group noted in their deliberations
that the measure will provide important insights into ED wait times
which impact experience of care. The Group expressed concern that this
measure may cause an increase in cost of care due to patients being
transferred from the ED to observation.\217\ While we acknowledge that
patients transferred from the ED to observation may result in increased
short-term costs due to additional monitoring and extended stays, the
measure is designed to address significant issues surrounding the
access to timely care which have been proven to reduce long-term
[[Page 33771]]
costs.\218\ Hospital Recommendation Group members also expressed
concern about the lack of CBE endorsement. We note that we submitted
the Emergency Care Access & Timeliness eCQM for CBE endorsement for
review in the Fall 2024 cycle and the CBE endorsed the measure with
conditions for use in the REHQR Program on February 12,
2025.219 220 We refer readers to section XVI.B.1.e. of this
proposed rule for additional details on CBE endorsement.
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\217\ Partnership for Quality Measurement. (2025). 2024-2025
Pre-Rulemaking Measure Review (PRMR) Recommendation Group Final
Meeting Summary: Hospital Committee. Available at https://p4qm.org/sites/default/files/2025-02/PRMR-Hospital-Recommendation-Group-Meeting-Summary.pdf. Accessed: April 30, 2025.
\218\ Dyas, S.R., Greenfield, E., Messimer, S., Thotakura, S.,
Gholston, S., Doughty, T., Hays, M., Ivey, R., Spalding, J., &
Phillips, R. (2015). Process-Improvement Cost Model for the
Emergency Department. Journal of Healthcare Management, 60(6): 442-
57. Available at https://doi.org/10.1097/00115514-201511000-00011.
Accessed: April 30, 2025.
\219\ Partnership for Quality Measurement. (2024). 2024 Pre-
Rulemaking Measure Review Preliminary Assessment. Available at:
https://p4qm.org/sites/default/files/2024-12/PRMR-PA-MUC2024-075.pdf. Accessed: April 30, 2025.
\220\ Partnership for Quality Measurement. (2025). Fall 2024
Cycle Endorsement and Maintenance (E&M) Technical Report. Available
at https://p4qm.org/sites/default/files/Initial%20Recognition%20and%20Management/material/EM-Fall-2024-Initial-Recognition-Final-Project-Report.pdf. Accessed: April 30,
2025.
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The Hospital Recommendation Group discussed a few conditions
specific to the REHQR Program, including changing the name of the
measure to better reflect the measure's focus.\221\ We agree with this
feedback and have changed the name of the measure from the Emergency
Care Capacity and Quality eCQM to Emergency Care Access & Timeliness.
Additionally, Group members recommended stratifying the measure by
factors such as care type as well as by region and trauma level
designation. We emphasize that the approach to stratification by age
and mental health diagnosis is sufficient to account for differences
between REHs without further need for additional stratification.\222\
---------------------------------------------------------------------------
\221\ Partnership for Quality Measurement. (2025). 2024-2025
Pre-Rulemaking Measure Review (PRMR) Recommendation Group Final
Meeting Summary: Hospital Committee. Available at https://p4qm.org/sites/default/files/2025-02/PRMR-Hospital-Recommendation-Group-Meeting-Summary.pdf. Accessed: April 30, 2025.
\222\ Partnership for Quality Measurement. (2025). 2024-2025
Pre-Rulemaking Measure Review (PRMR) Recommendation Group Final
Meeting Summary: Hospital Committee. Available at https://p4qm.org/sites/default/files/2025-02/PRMR-Hospital-Recommendation-Group-Meeting-Summary.pdf. Accessed: April 30, 2025.
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The Hospital Recommendation Group recommended revising the measure
specifications to create separate measure components with the
encouragement to explore additional measures for patient transfer
boarding time and ED LOS as well as conducting further testing to
expand the measure's applicability to REHs. We acknowledge the Hospital
Recommendation Group's concerns and note that multiple TEPs and
interested parties supported the inclusion of more than one numerator
component as a strategy for internally balancing the measure and that
time thresholds are based on more than a decade of consensus
work.223 224 225 If the proposal to adopt the Emergency Care
Access & Timeliness eCQM for the REHQR Program is finalized, CMS will
closely monitor the effect of this measure in REHs and revise
thresholds as appropriate. We note that out of the 32 hospital-based
EDs that were tested for reliability, validity, and feasibility,
approximately 20 percent were rural EDs, although not in the REHQR
Program. Finally, Group members recommended implementing the Emergency
Care Access & Timeliness eCQM with a phased approach with 2 years of
voluntary reporting. We note that we propose adoption of the Emergency
Care Access & Timeliness eCQM as an optional measure in lieu of the
Median Time for Discharged ED Patients measure to provide additional
flexibility for REHs given the anticipated implementation burden of
this measure.
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\223\ Partnership for Quality Measurement. Emergency Care
Capacity and Quality. Available at https://p4qm.org/measures/4625e.
Accessed: April 30, 2025.
\224\ Yale New Haven Health Services Corporation. (April 2024).
Technical Expert Panel (TEP) Evaluation of Measure Emergency Care
Capacity and Quality Electronic Clinical Quality Measure (eCQM).
Available at https://mmshub.cms.gov/sites/default/files/ECCQ-TEP-2-Summary-Report.pdf. Accessed: April 30, 2025.
\225\ Yale New Haven Health Services Corporation. (September
2024). Technical Expert Panel (TEP) Evaluation of Measure Emergency
Care Capacity and Quality Electronic Clinical Quality Measure
(eCQM). Available at https://mmshub.cms.gov/sites/default/files/ECCQ-TEP-Summary-Report-081624.pdf. Accessed: April 30, 2025.
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e. Measure Endorsement and Consideration of Low Case Volumes
Section 1861(kkk)(7)(C)(i) of the Act generally provides that any
measure specified by the Secretary for use in the REHQR Program be
endorsed by the entity with a contract under section 1890(a) of the
Act, also known as the consensus-based entity (CBE).
The Emergency Care Access & Timeliness eCQM was submitted to the
CBE for endorsement review in the Fall 2024 cycle (CBE #4625e), and the
CBE endorsed the measure for use in the REHQR Program with conditions
on February 12, 2025.\226\ The conditions include that the measure
developer explore: (1) the unintended consequences to patients and
providers by engaging with the patient community and accountable
entities; and (2) the data elements to identify and address where
challenges may persist. If our proposal to adopt the Emergency Care
Access & Timeliness eCQM for the REHQR Program is finalized, CMS would
closely monitor the effects of this measure in REHs and data as part of
the standard measure maintenance.
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\226\ Partnership for Quality Measurement. (2025). Fall 2024
Cycle Endorsement and Maintenance (E&M) Technical Report. Available
at https://p4qm.org/sites/default/files/Initial%20Recognition%20and%20Management/material/EM-Fall-2024-Initial-Recognition-Final-Project-Report.pdf. Accessed: April 30,
2025.
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We believe this measure is appropriate for measuring quality of
care under the REHQR Program because ED care is the primary focus of
REHs. Furthermore, we believe that this measure meets the selection
criteria under section 1861(kkk)(7)(C)(i) of the Act because it is
endorsed by the CBE.
The REHQR Program's statute also includes a requirement at section
1861(kkk)(7)(C)(iii) of the Act to consider ways to account for rural
emergency hospitals that lack sufficient case volumes when selecting
measures to ensure that the performance rates for such measures are
reliable. We note that the target population for this measure is
comprised of patients of all ages, for all payers, that visit an REH
during a 1-year measurement period. As such, we anticipate that the
overall number of patients that visit an REH within a given year would
be high enough so that there would not be any issues with low case
volumes that could undermine the reliability of this measure when used
in the REH context. We therefore do not believe the Emergency Care
Access & Timeliness eCQM would suffer from low case volumes, and we
further believe that we have appropriately considered low case volumes
as required by the REHQR statute when selecting this measure.
f. Data Collection, Submission, and Reporting
The Emergency Care Access & Timeliness eCQM is specified in a
standard electronic format, utilizing data extracted electronically
from EHRs, with all data coming from defined fields in electronic
sources. We note that eCQMs allowing for the retrieval of data directly
from the EHR will minimize errors due to manual abstraction of
data.\227\ As discussed in section XVI.C.2.c. of this proposed rule, we
propose that REHs would be required to
[[Page 33772]]
report either the Emergency Care Access & Timeliness eCQM or the Median
Time for Discharged Patients measure. We refer readers to section
XVI.C.2.c. of this proposed rule for a discussion of proposed eCQM
form, manner, and timing of data submission and reporting requirements.
If an REH chooses to report the Emergency Care Access & Timeliness
eCQM, the REH would report the data using the proposed methods and
standards specified in section XVI.C.2. of this proposed rule.
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\227\ Centers for Medicare & Medicaid Services. (2023).
Electronic Clinical Quality Measures (eCQMs) Specification, Testing,
Standards, Tools, and Community. Available at https://mmshub.cms.gov/sites/default/files/eCQM-Specifications-Testing-Standards-Tools-Community.pdf. Accessed: April 30, 2025.
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We propose to adopt the Emergency Care Access & Timeliness eCQM
into the REHQR Program measure set beginning with the CY 2027 reporting
period/CY 2029 program determination. However, as discussed later in
section XVI.C.2.c. of this proposed rule, we also propose that the
Emergency Care Access & Timeliness eCQM would not be a required measure
under the REHQR Program, and that REHs could thus elect to report
either the Emergency Care Access & Timeliness eCQM or the Median Time
for Discharged ED Patients measure for a given reporting period/program
determination. Providing REHs with the option to report either of these
measures would provide greater flexibility for REHs to implement EHR
infrastructure that meets their individual needs while still
prioritizing measurement of the variation in access to and the
timeliness of emergency care, the goal of promoting interoperability,
and reducing burden for REHs in the long term. We note that adoption of
this measure does not change the number of mandatory quality measures
required to be reported in the REHQR measure set.
The Median Time for Discharged ED Patients measure assesses the
time patients spent in the ED before being sent home, also known as ED
throughput. We note that this measure is reported quarterly, compared
to the Emergency Care Access & Timeliness eCQM, which is less
burdensome as it is reported annually. We further emphasize that the
Emergency Care Access & Timeliness eCQM measures four different ED
metric components in a single measure and is more comprehensive than
the Median Time for Discharged ED Patients measure which measures one
ED metric component.\228\ Additionally, the eCQM measures transfer
boarding time in the ED and time from arrival to placement in a
treatment room, which are not currently captured by the Median Time for
Discharged ED Patients measure, or any other measure currently in the
REHQR Program measure set.\229\
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\228\ The Median Time for Discharged ED Patients was adopted in
the REHQR Program in the CY 2024 OPPS/ASC final rule with comment
period (88 FR 49832).
\229\ Partnership for Quality Measurement. Emergency care
capacity and quality. Available at: https://p4qm.org/measures/4625e.
Accessed: April 30, 2025.
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We refer readers to section XV.B.1. of this proposed rule where we
propose adoption of a similar version of this eCQM for the Hospital
Outpatient Quality Reporting Program. If CMS finalizes that proposal,
adoption of this eCQM in the REHQR Program would also provide greater
alignment with HOPD metrics.
We refer readers to the CY 2024 OPPS/ASC final rule with comment
period (88 FR 49832) for more information on the Median Time for
Discharged ED Patients measure.\230\
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\230\ Partnership for Quality Measurement. Median Time from ED
Arrival to ED Departure for Discharged ED Patients. Available at:
https://p4qm.org/measures/0496. Accessed: April 30, 2025.
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We intend to publicly report data submitted on the Emergency Care
Access & Timeliness eCQM and the Median Time for Discharged ED Patients
measure on our Compare tool on Medicare.gov (https://www.medicare.gov/care-compare/) or their successor websites after a 30-day preview
period. Public reporting for both measures help to provide similar data
on timeliness and encourage REHs to implement process improvements and
reduce inefficiencies in ED operations, resulting in better quality of
care.
We invite public comment on this proposal.
2. Summary of Previously Finalized and Newly Proposed REHQR Program
Measure Set for CY 2026 to CY 2031 Program Determinations
Table 85 summarizes the previously finalized and newly proposed
REHQR Program measure set for the CY 2026 to CY 2031 program
determinations, which would remove the Hospital Commitment to Health
Equity (HCHE), Screening for SDOH, and Screen Positive Rate for SDOH
measures as discussed in section XIV.C. of this proposed rule and add
the Emergency Care Access & Timeliness eCQM as discussed in section
XVI.B.1. of this proposed rule.
[[Page 33773]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.155
[[Page 33774]]
We refer readers to the QualityNet website at https://qualitynet.cms.gov/reh/rehqr for additional information on the
reporting periods and submission deadlines for each measure finalized
and proposed in the REHQR Program.
3. REHQR Program Measures and Topics for Future Consideration
We refer readers to section XIV.B. of this proposed rule for our
cross-program Request for Information on measure concepts regarding
well-being and nutrition for consideration in the REHQR Program.
C. Proposed Updates to the Form, Manner, and Timing of REHQR Program
Data Submission
We propose to update program policies for introducing eCQMs into
the REHQR Program by establishing eCQM data submission and reporting
requirements which apply to the proposed Emergency Care Access &
Timeliness eCQM.
1. Maintenance of Technical Specifications for Quality Measures
CMS maintains technical specifications for adopted REHQR Program
measures. The manuals containing the specifications for adopted
measures are on the QualityNet website at https://qualitynet.cms.gov/reh/specifications-manuals. We refer readers to the CY 2024 OPPS/ASC
final rule with comment period (88 FR 82054) for additional information
regarding these specification manuals.
In alignment with the Hospital OQR Program, we propose that the
technical specifications for eCQMs for the REHQR Program would be
contained in the CMS Annual Update for the Hospital Quality Reporting
Programs (Annual Update). The Annual Update and implementation guidance
documents are available on the eCQI Resource Center website at https://ecqi.healthit.gov/. For eCQMs, we would generally update the measure
specifications on an annual basis through the Annual Update which
includes code updates, logic corrections, alignment with current
clinical guidelines, and additional guidance for REHs and EHR vendors
to collect and submit data on eCQMs from EHRs.
We invite public comment on this proposal.
2. Proposed Data Submission and Reporting Requirements for eCQMs for
the REHQR Program Beginning With the CY 2027 Reporting Period/CY 2029
Program Determination
a. Background
Collection and reporting of data through health information
technology greatly simplifies and streamlines quality reporting, and
automated electronic extraction and reporting of clinical quality data
would significantly reduce the administrative burden on REHs for the
REHQR Program. Certified EHR technology (CEHRT) could effectively
assist REHs in a variety of ways, such as by improving coordination of
care with receiving hospitals during transfers, facilitating the types
of staffing and personnel models required for REHs, and using eCQMs to
improve quality and safety. In response to our request for comments in
the CY 2024 OPPS/ASC proposed rule (88 FR 49840 through 49841) on eCQM
reporting for the REHQR Program, some commenters recommended that CMS
should consider adding eCQMs as optional measures initially (88 FR
82070). REHs have some familiarity and experience with reporting eCQMs
when formerly operating as a subsection (d) hospital or CAH
participating in the Medicare Promoting Interoperability Program,
although we acknowledge that technological, monetary, and staffing
barriers may present challenges to eCQM adoption and use in some REHs.
We refer readers to section XVI.B.1. of this proposed rule, where
we propose to adopt the Emergency Care Access & Timeliness eCQM into
the REHQR Program measure set as an optional measure, beginning with
the CY 2027 reporting period/CY 2029 program determination. If
finalized, the Emergency Care Access & Timeliness eCQM would be the
first eCQM in the REHQR Program measure set. Introducing eCQM reporting
to the REHQR Program involves establishing related policies and
requirements, such as eCQM certification requirements, data standards
and formats, submission methods, and other program-specific
requirements. In the following sections, to reduce reporting burden for
REHs, we propose eCQM reporting and submission policies and
requirements for the REHQR Program, including reporting of the
Emergency Care Access & Timeliness eCQM, that align with those of the
Hospital OQR Program, Hospital Inpatient Quality Reporting Program, and
Medicare Promoting Interoperability Program.
b. General Data Submission Requirements and Reporting Requirements
(1) Proposed eCQM Certification Requirements for eCQM Reporting
In the CY 2025 OPPS/ASC final rule with comment period (89 FR 94418
through 94420), the Hospital OQR Program finalized and codified three
requirements relating to eCQM certification for the submission of eCQM
data, beginning with the CY 2025 reporting period/CY 2027 payment
determination. We propose to adopt the same eCQM certification
requirements in the REHQR Program, beginning with the CY 2027 reporting
period/CY 2029 program determination, and to likewise codify them by
adding new paragraph (h) ``Requirements for submission of electronic
clinical quality measures (eCQMs) under the REHQR Program'' to 42 CFR
419.95. As discussed in section XVI.C.2.c. of this proposed rule, REHs
would be required to meet these eCQM requirements beginning with the CY
2027 reporting period/CY 2029 program determination if the REH chooses
to submit the Emergency Care Access & Timeliness eCQM rather than the
Median Time for Discharged ED Patients measure.
Under this approach, we propose to codify at Sec. 419.95(h)(1) the
requirement for REHs to utilize technology certified to Office of the
National Coordinator for Health Information Technology's (ONC's) health
information technology (IT) certification criteria, as adopted and
updated in 45 CFR 170.315, for reporting eCQMs under the REHQR Program.
Using the most recent certified health IT, which incorporates updated
standards and criteria, is important as it allows the collection of
relevant, accurate, and structured electronic data for electronic
clinical quality measurement.
We also propose to codify at 42 CFR 419.95(h)(2) the requirement
that the health IT used for eCQM reporting by REHs must be certified to
all eCQMs (that is, tested and validated on each individual eCQM)
available to report under the REHQR Program. Additionally, we propose
to codify at Sec. 419.95(h)(3) the requirement that REHs use the most
recent version of the eCQM electronic measure specifications for the
applicable reporting period available on the Electronic Clinical
Quality Improvement (eCQI) Resource Center website at https://ecqi.healthit.gov/ or another website as designated by CMS. We also
propose that certified EHR technology would not need to be recertified
each time the
[[Page 33775]]
eCQMs specifications are updated to a more recent version.
Requiring EHRs to be certified to all available eCQMs under the
REHQR Program would produce greater certainty for REHs that their EHR
systems are capable of accurately calculating the eCQMs under the REHQR
Program because the EHR technology would be up to date and tested on
each eCQM. We believe this would reduce burden on REHs by minimizing
the need to consult with their EHR and other health information
technology vendors each time they report on a new or different eCQM.
Finally, we also propose to codify at Sec. 419.95(h)(4) that the
requirements set forth in paragraphs (h)(1) through (3) apply only
where an REH opts to report an eCQM.
We invite public comment on these proposals.
(2) File Format for EHR Data, Zero Denominator Declarations, and Case
Threshold Exemptions
(a) File Format for EHR Data
Data can be collected in EHRs and health information technology
systems using standardized formats to promote consistent
representation, interpretation, and allowance for systems to compute
data without needing human interpretation. As described in the FY 2016
IPPS/LTCH PPS final rule (80 FR 49701), these standards are referred to
as content exchange standards because the standard details how data
should be represented and the relationships between data elements. This
allows the data to be exchanged across EHRs and health IT systems while
retaining their meaning. Commonly used content exchange standards
include the Quality Reporting Document Architecture (QRDA). The QRDA
standard provides a document format and standard structure to
electronically report quality measure data. We believe electronically
reporting data elements formatted according to the QRDA standard can
promote consistent representation and more efficient calculation of
eCQM measure results.
To utilize the same file format requirements currently applied in
the Hospital IQR, OQR, and Medicare Promoting Interoperability Programs
(85 FR 58940, 86 FR 42262, and 80 FR 49706, respectively), we propose
the file format requirements for the REHQR Program beginning with the
CY 2027 reporting period/CY 2029 program determination. Specifically,
we propose that REHs: (1) must submit eCQM data via the QRDA Category I
(QRDA I) file format; \231\ (2) may use third parties to submit QRDA I
files on their behalf; and (3) may either use abstraction or pull the
data from non-certified sources in order to then input these data into
CEHRT for capture and reporting QRDA I. REHs could meet the reporting
requirements by submitting data via QRDA I files, zero denominator
declaration, or case threshold exemptions. We discuss the zero-
denominator declaration and case threshold exemptions in the subsequent
sections. We also refer readers to section XVI.C.1. of this proposed
rule where we outline the maintenance of technical specifications
including those for eCQMs.
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\231\ QRDA I is an individual patient-level quality report that
contains quality data for one patient for one or more eCQMs. QRDA
creates a standard method to report quality measure results in a
structured, consistent format and can be used to exchange eCQM data
between systems. For further detail on QRDA I, the most recently
available QRDA I specifications and Implementation Guides (IGs) can
be found at: https://ecqi.healthit.gov/qrda?qt-tabs_qrda=versions.
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Under this proposal, we expect QRDA I files to reflect data for one
patient per file per quarter with five key elements necessary to
identify the file: (1) CCN; (2) CMS Program Name; (3) EHR Patient ID;
(4) Reporting period specified in the Reporting Parameters Section; and
(5) EHR Submitter ID.
(b) Zero Denominator Declarations
We understand there may be situations in which an REH does not have
data to report on a particular eCQM. Therefore, we propose if the REH's
EHR is certified to an eCQM, but the REH does not have patients that
meet the denominator criteria of that eCQM, the REH could submit a zero
in the denominator for that eCQM; submission of a zero in the
denominator for an eCQM would qualify as a successful submission for
that eCQM.
(c) Case Threshold Exemptions
As a general matter, we understand that in some cases, particularly
for REHs, an REH may not meet the applicable case threshold of
encounters or discharges for a particular eCQM to reliably calculate
performance on the measure. We propose to align with the case threshold
exemption from the Medicare Promoting Interoperability Program (77 FR
54080), the Hospital IQR Program (79 FR 50324), and the Hospital OQR
Program (86 FR 63869). As stated for the Hospital IQR Program, the case
threshold exemption means that for each quality measure where the
minimum number of patients that meet the patient population denominator
criteria for the relevant reporting period is not met, REHs could
declare a ``case threshold exemption.'' Specifically, for the REHQR
Program, we propose that beginning with the CY 2027 reporting period/CY
2029 program determination, if an REH's EHR system is certified to
report an eCQM and the REH has 5 or fewer outpatient encounters or
discharges per quarter or 20 or fewer outpatient encounters or
discharges per year (Medicare and non-Medicare combined), as defined by
an eCQM's denominator population, that REH would be exempt from
reporting on that eCQM. Case threshold exemptions would be able to be
entered on the Denominator Declaration screen within the Hospital
Quality Reporting (HQR) System (formerly referred to as the QualityNet
Secure Portal) available during the submission period.\232\ The
exemption would not have to be used; REHs could report those individual
cases if they would like to.
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\232\ The Hospital Quality Reporting (HQR) System (formerly
referred to as the QualityNet Secure Portal) is the only CMS-
approved website for secure communications and healthcare quality
data exchange to and within various CMS quality reporting programs.
For more information regarding the HQR System, we refer readers to
the CMS eCQI Resource Center (https://ecqi.healthit.gov/tool/hospital-quality-reporting-hqr-system).
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We invite public comment on these proposals.
(3) Proposed Submission Deadlines for eCQM Data
To align with the Hospital OQR Program, we propose to adopt a
policy to require eCQM data submission by May 15 of the following year
for the applicable CY reporting period, beginning with the CY 2027
reporting period/CY 2029 program determination. For example, if an REH
elects to report the Emergency Care Access & Timeliness eCQM, the first
proposed reporting period would run from January 1, 2027 through
December 31, 2027, with a submission deadline of May 15, 2028. We note
that the submission deadline may be moved to a subsequent day if it
falls on a non-working day for federal employees such as weekends or
Federal holidays.
We invite public comment on this proposal.
c. Proposed Data Submission and Reporting Requirements for the
Emergency Care Access & Timeliness eCQM Beginning With the CY 2027
Reporting Period/CY 2029 Program Determination
In section XVI.B.1. of this proposed rule, we discuss the proposed
adoption of the Emergency Care Access & Timeliness eCQM into the REHQR
Program beginning with the CY 2027 reporting period/CY 2029 program
[[Page 33776]]
determination as an option for REHs to report instead of the Median
Time for Discharged ED Patients measure. In addition to the general
data submission and reporting requirements proposed for eCQMs in
section XVI.C.2. of this proposed rule, we also propose requirements
for reporting the Emergency Care Access & Timeliness eCQM under the
REHQR Program. Specifically, we propose that the Emergency Care Access
& Timeliness eCQM would not be required to be reported by REHs under
the REHQR Program, but that REHs must elect to report either the
Emergency Care Access & Timeliness eCQM or the Median Time for
Discharged ED Patients measure to meet program requirements, beginning
with the CY 2027 reporting period/CY 2029 program determination. We
believe our proposed approach would provide REHs with more flexibility,
including the time to plan and budget for the type of EHR
infrastructure that meets their needs. Additionally, we believe this
approach could contribute to successful participation in the REHQR
Program, while still requiring REHs to report timeliness of ED care
metrics. We note that the Median Time for Discharged ED Patients
measure is reported quarterly through the HQR system, compared to the
Emergency Care Access & Timeliness eCQM, which is reported annually.
Sources of the relevant data for the Median Time for Discharged ED
Patients measure may include claims forms, electronic health care data,
EHRs, or paper records. We refer readers to the CY 2024 OPPS/ASC final
rule with comment period (88 FR 82059 through 82062; 88 FR 82074
through 82075) for additional information on reporting the chart-
abstracted Median Time for Discharged ED Patients measure.\233\
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\233\ For additional information on the Median Time for
Discharged ED Patients measure, we refer readers to the
specifications manuals for the REHQR Program, located at: https://qualitynet.cms.gov/reh/specifications-manuals.
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We propose to report data from the REHQR Program as soon as it is
feasible on CMS websites such as the Compare tool on Medicare.gov
(https://www.medicare.gov/care-compare/) or their successor websites
after a 30-day preview period.
We invite public comment on these proposals.
3. Review and Corrections Period for Measure Data Submitted to the
REHQR Program
In the CY 2024 OPPS/ASC final rule with comment period (88 FR 82075
through 82076), we finalized and codified at Sec. 419.95(c)(3) a
review and corrections period for all measure data submitted to the
REHQR Program, which runs concurrently with the data submission period.
During the review and corrections period, REHs can review, correct, and
change these data up until the close of each submission deadline.
However, after the submission deadline, REHs are not allowed to change
these data. This policy applies to all measure data submitted to the
REHQR Program, so this would include eCQM data.
The review and corrections period is from the time the submission
period opens to the submission deadline. In the HQR System, REHs can
submit QRDA Category I test and production data files and can correct
QRDA Category I test and production data files before production data
is submitted for final reporting. We encourage early testing and the
use of pre-submission testing tools to reduce errors and inaccurate
data submissions in eCQM reporting. We refer readers to the HQR System
website (available at https://hqr.cms.gov/hqrng/login) and the CMS eCQI
Resource Center (available at https://ecqi.healthit.gov/tool/hospital-quality-reporting-hqr-system) for more resources on eCQM reporting.
4. REHQR Program Extraordinary Circumstances Exceptions (ECE) Policy
We refer readers to section XIV.D. of this proposed rule for our
cross-program proposal to codify updates to the Extraordinary
Circumstances Exceptions (ECE) policy for the REHQR Program.
XVII. Ambulatory Surgical Center Quality Reporting (ASCQR) Program
A. Background and History of the ASCQR Program
The Ambulatory Surgical Center Quality Reporting (ASCQR) Program is
a pay-for-reporting program intended to ensure transparency for quality
of care provided at ambulatory surgical centers (ASCs). Section
1833(i)(7)(A) of the Act authorizes the Secretary to reduce any annual
increase under the revised ambulatory surgical center (ASC) payment
system by 2.0-percentage points for such year that an ASC fails to
submit required data on quality measures specified by the Secretary in
accordance with section 1833(i)(7)(B) of the Act. Section 1833(i)(7)(B)
of the Act states that, except as the Secretary may otherwise provide,
several of the statutory provisions governing the Hospital Outpatient
Quality Reporting (OQR) Program, specifically sections 1833(t)(17)(B)
through (E) of the Act, also apply to the services of ASCs under the
ASCQR Program in a similar manner to the manner in which they apply to
the services of hospital outpatient departments under the Hospital OQR
Program.
We refer readers to the CY 2012 OPPS/ASC final rule with comment
period (76 FR 74492 through 74494) for a detailed discussion of the
statutory authority of the ASCQR Program. The ASCQR Program
requirements are codified at 42 CFR part 416, subpart H (Sec. Sec.
416.300 through 416.330). We refer readers to the CMS website at
https://www.cms.gov/medicare/quality/initiatives/asc-quality-reporting
for general background on the ASCQR Program, as well as the CMS
QualityNet ASCQR website at https://qualitynet.cms.gov/asc for current
program requirements and measure specifications.
B. Proposed Changes to the ASCQR Program Measure Set
We propose to adopt the Patient Understanding of Key Information
Related to Recovery After a Facility-Based Outpatient Procedure or
Surgery, Patient Reported Outcome-Based Performance Measure
(Information Transfer PRO-PM) beginning with voluntary reporting for
the CY 2027 and CY 2028 reporting periods followed by mandatory
reporting beginning with the CY 2029 reporting period/CY 2031 payment
determination.
We refer readers to section XIV.C. of this proposed rule for a
discussion of the following proposed measure removals: (1) the COVID-19
Vaccination Coverage Among Healthcare Personnel (HCP) measure,
beginning with the CY 2024 reporting period/CY 2026 payment
determination; (2) the Facility Commitment to Health Equity (FCHE)
measure, beginning with the CY 2025 reporting period/CY 2027 payment
determination; (3) the Screening for Social Drivers of Health (SDOH)
measure, beginning with the CY 2025 reporting period; and (4) the
Screen Positive Rate for SDOH measure, beginning with the CY 2025
reporting period.
1. Proposed Adoption of the Information Transfer PRO-PM Beginning With
Voluntary Reporting for the CY 2027 and CY 2028 Reporting Periods
Followed by Mandatory Reporting Beginning With the CY 2029 Reporting
Period/CY 2031 Payment Determination
a. Background
The volume and complexity of surgical procedures performed in
outpatient settings, including ASCs, have steadily increased for over a
[[Page 33777]]
decade.234 235 236 As patients can benefit from having a
clear understanding of their discharge information to support recovery
from such procedures, the communication of discharge information is an
important quality of care area for assessing facilities, and this
information should be publicly available. A patient's lack of
understanding of clinical care instructions provided after a procedure
and other aspects of health literacy have been linked to poor adherence
to treatment, decreased patient safety, increased return to the
emergency department, and lower levels of patient satisfaction;
disproportionately increased rates of such adverse effects occur to
patients with limited English proficiency and patients over age
65.237 238 Research in the hospital setting indicates that
information provided to patients that is simpler and more complete is
associated with fewer follow-up calls to an associated trauma center
and less frequent hospital readmissions.239 240 A study
comparing discharge instructions provided to patients who had
procedures performed in inpatient and ambulatory settings found that
discharge instructions from the inpatient setting contained more
complete medication lists and pending diagnostic result elements
compared to discharge instructions provided by the hospital ambulatory
setting.\241\
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\234\ DelSole, E.M., Makanji, H.S., & Kurd, M.F. (2019). Current
trends in ambulatory spine surgery: a systematic review. J Spine
Surg. 5(Suppl 2):S124-S132. https://doi.org/10.21037/jss.2019.04.12.
Accessed: April 29, 2025.
\235\ Kondamuri, N.S., Miller, A.L., Rathi, V.K., et al. (2020).
Trends in Ambulatory Surgery Center Utilization for Otolaryngologic
Procedures among Medicare Beneficiaries, 2010-2017. Otolaryngol Head
Neck Surg. 162(6):873-880 https://doi.org/10.1177/0194599820914298.
Accessed: April 29, 2025.
\236\ Shariq, O.A., Bews, K.A., Etzioni, D.A., et al. (2023).
Performance of General Surgical Procedures in Outpatient Settings
Before and After Onset of the COVID-19 Pandemic. JAMA Netw Open.;
6(3):e231198. Doi:10.1001/jamanetworkopen. 2023.1198. Accessed:
April 29, 2025.
\237\ DeSai, C., Janowiak, K., Secheli, B., et al. (2021).
Empowering patients: simplifying discharge instructions. BMJ Open
Quality;10(3)001419. http://doi.org/10.1136/bmjoq-2021-001419.
Accessed: April 8, 2025.
\238\ Malevanchik, L., Wheeler, M., Gagliardi, K., Karliner L.,
& Shah, S. J. (2021). Disparities After Discharge: The Association
of Limited English Proficiency and Postdischarge Patient-Reported
Issues, The Joint Commission Journal on Quality and Patient Safety,
47(12):775-782. https://doi.org/10.1016/j.jcjq.2021.08.013.
Accessed: April 8, 2025.
\239\ Choudhry, A.J., Younis, M., Ray-Zack, M.D., et al. (2019).
Enhanced readability of discharge summaries decreases provider
telephone calls and patient readmissions in the posthospital
setting. Surgery. 165(4):789-794. https://doi.org/10.1016/j.surg.2018.10.014. Accessed: April 8, 2025.
\240\ Becker, C., Zumbrunn, S., Beck, K., et al. (2021).
Interventions to Improve Communication at Hospital Discharge and
Rates of Readmission: A Systematic Review and Meta-analysis. JAMA
Netw Open. 4(8):e2119346. https://doi.org/10.1001/jamanetworkopen.2021.19346. Accessed: April 8, 2025.
\241\ Downey, E., & Olds, D.M. (2021). Comparison of
Documentation on Inpatient Discharge and Ambulatory End-of-Visit
Summaries. J Healthc Qual. 43(3):e43-e52. https://doi.org/10.1097/JHQ.0000000000000269. Accessed: April 8, 2025.
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b. Measure Overview
The Information Transfer PRO-PM assesses patient understanding of
provided discharge information for patients aged 18 years or older who
had a procedure (surgical or non-surgical) at an ASC via a 9-item
survey.\242\ The survey evaluates patient reported understanding of
information received across three domains: applicability to patient
needs, medication, and daily activities. Survey results provide patient
reported outcome (PRO) data measuring ASCs' communication efforts
regarding discharge instructions and enable ASCs to reduce future risk
of patient harm related to patients not fully understanding their
recovery information. The survey was tested and deemed reliable in both
English and Spanish versions; for ease of administration, the survey
can be completed using a translator, proxy, or caregiver. The measure's
testing results are based on data from the hospital outpatient
department (HOPD) setting; however, it is reasonably expected that the
instrument and methodology apply to the ASC setting regarding patients
receiving surgical procedures as both are outpatient surgical settings
providing similar services with the supply of discharge instructions.
We note that the measure specifications for the Information Transfer
PRO-PM require that the survey be administered anonymously to patients,
and that the survey instrument does not collect any identifiable
patient information.
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\242\ A copy of the survey instrument is available at https://www.cms.gov/files/document/patient-understanding-key-information-related-recovery-after-facility-based-outpatient-procedure-or.pdf.
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In monitoring implementation of this measure for the Hospital OQR
Program, we discovered that the anonymous administration requirement
could potentially limit the hospitals' ability to collect data for
their patients without working with a third-party vendor. If the survey
is required to be fully anonymous, hospitals fielding the survey
themselves would not be able to conduct any targeted follow-up with
patients during the 65-day response window or use the information
provided to develop more targeted quality improvement efforts.
While anonymous surveys can be valuable for gathering candid
feedback, these issues of preventing follow-up, targeted action plans,
and deeper investigation of specific issues, as well as leading to less
serious or misleading responses have been documented.\243\
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\243\ Murdoch, M., et. Al. (2014). Impact of different privacy
conditions and incentives on survey response rate, participant
representativeness, and disclosure of sensitive information: a
randomized controlled trial. BMC Med Res Methodol. Jul 16:14-90.
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We invite public comment on the proposal to utilize this measure as
specified with anonymous administration as well as potential data
collection options to address the anonymity requirement in both the
Hospital OQR and ASCQR Programs, where this measure was previously
adopted and is currently proposed for adoption, respectively.
The measure developer conducted pilot testing for this measure in
26 HOPDs in five states and demonstrated that the measure is reliable
and meaningful.\244\ Reliability of the measure was assessed with the
Cronbach alpha score \245\ to determine whether the nine survey
questions reliably measured the same underlying characteristic; that
is, patient's assessment of the clarity and applicability of recovery
instructions. The Cronbach alpha score indicated that the survey items
are reliable.\246\ The measure developer also found the performance
scores among facilities in the pilot study to be moderately reliable
using a signal-to-noise ratio, which estimated variance among
facilities and measured facility-specific standard errors to determine
the extent to which variance in facility scores can be attributed to
variance in actual performance.\247\ More information about
[[Page 33778]]
the testing, feasibility, scientific acceptability, meaningfulness, and
validity of the Information Transfer PRO-PM for the HOPD setting is
available at https://p4qm.org/measures/4210.
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\244\ Centers for Medicare & Medicaid Services. (April 2024).
Patient Understanding of Key Information Related to Recovery After a
Facility-Based Outpatient Procedure or Surgery, Patient Reported
Outcome-Based Performance Measure. Available at https://www.cms.gov/files/document/patient-understanding-key-information-related-recovery-after-facility-based-outpatient-procedure-or.pdf. Accessed:
April 29, 2025.
\245\ For more information on what the Cronbach alpha score
determines and how it is used, we refer readers to: Tavakol, M., &
Dennick, R. (2011). Making sense of Cronbach's alpha. Int J Med
Educ. 27;2: 53-55. https://www.ijme.net/archive/2/cronbachs-alpha.pdf. Accessed: April 30, 2025.
\246\ Centers for Medicare & Medicaid Services. (April 2024).
Patient Understanding of Key Information Related to Recovery After a
Facility-Based Outpatient Procedure or Surgery, Patient Reported
Outcome-Based Performance Measure. Available at https://www.cms.gov/files/document/patient-understanding-key-information-related-recovery-after-facility-based-outpatient-procedure-or.pdf. Accessed:
April 29, 2025.
\247\ Centers for Medicare & Medicaid Services. (April 2024).
Patient Understanding of Key Information Related to Recovery After a
Facility-Based Outpatient Procedure or Surgery, Patient Reported
Outcome-Based Performance Measure. Available at https://www.cms.gov/files/document/patient-understanding-key-information-related-recovery-after-facility-based-outpatient-procedure-or.pdf. Accessed:
April 29, 2025.
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c. Measure Calculation
The measure numerator is the sum of all the individual scores an
ASC receives from eligible respondents, which could be patients or
their caregivers. Individual scores are calculated for each respondent
by taking the sum of items for which the respondent gave the most
positive response (either, ``Yes'' or ``Very Clear'') and dividing by
the number of items the respondent deemed applicable to their procedure
or surgery. Applicable items are calculated by subtracting the sum of
items for which the respondent selected ``Does not apply'' from the
total number of survey items (nine).\248\ The measure denominator is
the total number of patients 18 years or older who had a procedure or
surgery in an ASC, left the ASC alive, and responded to the survey. The
cohort of patients for the Information Transfer PRO-PM is standardized
with the OAS CAHPS cohort to minimize provider burden and to harmonize
between the two surveys. Only fully completed surveys are included in
the measure calculation. For additional details regarding the proposed
measure specifications, we refer readers to the CMS QualityNet
website.\249\
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\248\ Partnership for Quality Measurement. Submission Tool and
Repository Measure Database. https://p4qm.org/measures/4210.
Accessed: April 8, 2025.
\249\ The proposed ASCQR Program measure specifications can be
found at https://qualitynet.cms.gov/asc.
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d. Pre-Rulemaking Measure Review (PRMR)
As required under section 1890A of the Act, the Secretary must
establish and follow a pre-rulemaking process for the selection of
quality and efficiency measures, including for the ASCQR Program. The
pre-rulemaking process, which we refer to as the Pre-Rulemaking Measure
Review (PRMR), includes a review of measures published on the publicly
available list of Measures Under Consideration (MUC List) by one of
several committees convened by the consensus-based entity (CBE), with
which we contract in accordance with section 1890 of the Act, for the
purpose of providing interested parties' input to the Secretary on the
selection of quality and efficiency measures under consideration for
use in certain Medicare quality programs, including the ASCQR Program.
We refer readers to the CY 2025 OPPS/ASC final rule with comment period
(89 FR 94372) for details on the PRMR process, including the voting
procedures used to reach consensus on measure recommendations.
The PRMR Hospital Recommendation Group met on January 15 and 16,
2025 to review measures included by the Secretary on the publicly
available ``2024 Measures Under Consideration List'' (MUC List),
including the Information Transfer PRO-PM, for potential
use.250 251 The voting results of the PRMR Hospital
Recommendation Group for the proposed Information Transfer PRO-PM for
the ASCQR Program were: 5 members recommended adopting the measure; 14
members recommended adoption with conditions; and 8 members voted not
to recommend the measure for adoption. No voting category reached 75
percent or greater, including the combination of the recommend and the
recommend with conditions categories. Thus, the PRMR Hospital
Recommendation Group did not reach consensus and did not recommend
including this measure in the ASCQR Program either with or without
conditions.
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\250\ The Information Transfer PRO-PM is identified on the MUC
List as MUC2024-073.
\251\ Partnership for Quality Measurement. (2025). 2024-2025
Pre-Rulemaking Measure Review (PRMR) Recommendation Group Final
Meeting Summary: Hospital Committee. Available at https://p4qm.org/sites/default/files/2025-02/PRMR-Hospital-Recommendation-Group-Meeting-Summary.pdf. Accessed: April 29, 2025.
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The PRMR Hospital Recommendation Group noted in their deliberations
the importance of measuring patient experience and delivering
personalized and clear discharge instructions to prevent unnecessary
hospital readmissions. However, the PRMR Hospital Recommendation Group
members expressed concerns about lack of testing in the ASC setting
given differences between HOPDs as a hospital setting (where testing of
the Information Transfer PRO-PM was conducted) and ASCs. This group
also highlighted concerns related to patient survey fatigue; potential
overlap with the Outpatient and Ambulatory Surgery Consumer Assessment
of Healthcare Providers and Systems (OAS CAHPS) survey sample
population and content; and the risk of low response rates--
particularly in small or rural facilities, which could impact scoring.
Although the measure was not pilot tested in the ASC setting with
facilities citing resource constraints, we believe that the instrument
and methodology reasonably apply to the ASC setting as the measure
concept was designed for use in both HOPDs and ASCs and many of the
same surgical procedures are performed in both settings.\252\ Measure
harmonization across the Hospital OQR and ASCQR Programs enables
meaningful comparisons of care for patients to assess quality between
settings that offer similar services.
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\252\ Centers for Medicare & Medicaid Services. (April 2024).
Patient Understanding of Key Information Related to Recovery After a
Facility-Based Outpatient Procedure or Surgery, Patient Reported
Outcome-Based Performance Measure. Available at https://www.cms.gov/files/document/patient-understanding-key-information-related-recovery-after-facility-based-outpatient-procedure-or.pdf. Accessed:
April 29, 2025.
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Regarding the PRMR Hospital Recommendation Group's concern about
potential overlap between the Information Transfer PRO-PM and OAS CAHPS
content and target population, the OAS CAHPS survey addresses overall
quality of healthcare facility communication but does not assess
patient understanding of discharge information related to medication,
activity, and applicability/personalization. We believe that both
surveys provide valuable insights into different aspects of a patient's
experience related to discharge instructions. Additionally, to minimize
duplication of patient sampling, resources are available to help
facilities align administration of OAS CAHPS with other surveys.\253\
In consideration of potential population overlap, we selected a
timeframe of 2 to 7 days post-procedure for administration of the
Information Transfer PRO-PM's survey to strike a balance between
patient recovery and mitigated overlap with the initial administration
of OAS CAHPS.
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\253\ OAS CAHPS. (2024). 2024 Introduction to the OAS CAHPS
Survey, Self-Paced Training. Available at https://oascahps.org/Training/Training-Materials. Accessed: April 29, 2025.
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Regarding concerns about patient survey fatigue and risk of low
response rates, the 9-item survey is concise, presenting a low burden
for completion. Further, ASCs would not be penalized for patients'
decisions to not complete the survey. Payment implications under the
ASCQR Program are tied to the successful and timely reporting of
required quality measure data, and an ASC that submits data to CMS in
the form, manner, and timing specified, regardless of the number of
surveys completed by the ASC's patient population, would be considered
[[Page 33779]]
compliant with the measure requirements.
To review the Hospital Recommendation Group's voting summary,
recommendations, and conditions for the Information Transfer PRO-PM
please visit https://p4qm.org/PRMR/Resources.
e. Measure Endorsement
Under section 1833(i)(7)(B) of the Act, requirements for the
development of outpatient measures for the Hospital OQR Program at
section 1833(t)(17)(C) of the Act apply to the ASCQR Program, except as
the Secretary may otherwise provide. Section 1833(t)(17)(C)(i) of the
Act requires measures developed to reflect consensus among affected
parties and, to the extent feasible and practicable, shall include
measures set forth by one or more national consensus-based entities
(not necessarily the contracted CBE). As we have noted in previous
rulemaking, consensus among affected parties can be reflected in ways
other than CBE endorsement, including through the measure development
process, through broad acceptance and use of the measure(s), and
through public comment (76 FR 74494). We have also noted that section
1833(t)(17) of the Act does not require that each measure we adopt for
the ASCQR Program be CBE-endorsed (76 FR 74494).
A Technical Expert Panel consisting of interested parties, experts,
and consumer advocates contributed to the development of the
Information Transfer PRO-PM measure's survey design, measure cohort,
and survey implementation, demonstrating a consensus-based approach to
the measure's development.\254\
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\254\ Centers for Medicare & Medicaid Services. (March 22).
Methodology Report For Public Comment: Patient Understanding of Key
Information Related to Recovery From an Outpatient Surgery or
Procedure. Available at https://www.cms.gov/files/document/methodology-report-public-comment.pdf. Accessed: April 29, 2025.
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While we recognize the value of measures undergoing CBE endorsement
review and prefer to use endorsed measures, at this time, we find no
other CBE-endorsed measures for the ASC setting that address the topic
of patients' understanding of clinical information related to their
recovery for an outpatient procedure or surgery. We note that we
submitted the Information Transfer PRO-PM to the CBE for endorsement
review in the Fall 2023 cycle (CBE #4210) for the Hospital OQR Program,
and the CBE endorsed the measure on January 29, 2024.\255\ The ASC-
specific version of the Information Transfer PRO-PM is designed to use
the same specifications as the Hospital OQR Program CBE-endorsed
measure. We plan to pursue CBE endorsement for the measure's
implementation in the ASC setting in a future measure endorsement
cycle, and we will continue to monitor implementation of the measure as
part of the standard measure maintenance process.
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\255\ Partnership for Quality Measurement. (2024). Fall 2023
Management of Acute and Chronic Events Meeting Summary. Available at
https://p4qm.org/sites/default/files/Management%20of%20Acute%20Events%2C%20Chronic%20Disease%2C%20Surgery%2C%20and%20Behavioral%20Health/material/EM-Acute-Chronic-Events-Fall2023-Endorsement-Meeting-Summary.pdf. Accessed: April 8, 2025.
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f. Data Collection, Submission, and Reporting
We propose that the Information Transfer PRO-PM would be calculated
based on PRO data collected by ASCs directly or through their
authorized third-party vendors through the Information Transfer PRO-PM
survey instrument \256\ distributed to patients or their caregivers by
electronic mail or text. We note that the Information Transfer PRO-PM
survey is nonproprietary and free to use. We propose that the survey be
distributed within 2 to 7 days post-procedure or surgery. This
timeframe minimizes the influence of variables related to the surgery
or procedure, such as medications that could affect comprehension,
fatigue, or acute pain, while ensuring timely reporting of patient
experience related to recovery information.
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\256\ A copy of the survey instrument is available at https://www.cms.gov/files/document/patient-understanding-key-information-related-recovery-after-facility-based-outpatient-procedure-or.pdf.
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In the pilot testing conducted by the measure developer using a
third-party vendor, patients were sent a reminder to complete the
survey 7 days after receipt. The survey remained open until pilot
testing was completed; the mean length of time between the procedure
date to the survey response date was 65 days. Based on these findings,
we propose a 65-day window for patient response to the survey.
We propose to adopt the Information Transfer PRO-PM as a voluntary
measure for the CY 2027 and CY 2028 reporting periods followed by
mandatory reporting beginning with the CY 2029 reporting period/CY 2031
payment determination. We would utilize the voluntary period to monitor
the implementation and operationalization of the measure. We refer
readers to section XVII.C. of this proposed rule for a discussion of
the Information Transfer PRO-PM form, manner, and timing of data
submission and reporting requirements.
We invite public comment on this proposal.
2. Summary of Previously Finalized and Newly Proposed ASCQR Program
Measure Set for CY 2026 to CY 2031 Payment Determinations
Table 86 summarizes the previously finalized and newly proposed
ASCQR Program measure set for the CY 2026 to CY 2031 payment
determinations. Table 86 reflects our proposals to remove the FCHE,
Screening for SDOH, Screen Positive Rate for SDOH, and the COVID-19
Vaccination Coverage Among HCP measures as discussed in section XIV.C.
and add the Information Transfer PRO-PM as discussed in section
XVII.B.1. of this proposed rule.
[[Page 33780]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.156
[[Page 33781]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.157
We refer readers to the QualityNet website at https://qualitynet.cms.gov/asc/ascqr for additional information on the
reporting periods and submission deadlines for each measure finalized
and proposed in the ASCQR Program.
[[Page 33782]]
3. ASCQR Program Measures and Topics for Future Consideration
We refer readers to section XIV.B. of this proposed rule for our
cross-program Request for Information on measure concepts regarding
well-being and nutrition for consideration in the ASCQR Program.
C. Proposed Updates to the Form, Manner, and Timing of ASCQR Program
Data Submission
In this proposed rule, we propose to establish data submission and
reporting requirements for Patient-Reported Outcome-Based Performance
Measures (PRO-PMs) for the ASCQR Program, including for the proposed
Information Transfer PRO-PM.
1. Proposed Data Submission and Reporting Requirements for PRO-PMs
a. Proposed Data Submission Requirement for PRO-PMs
In the CY 2024 OPPS/ASC final rule with comment period (88 FR
82041), we finalized that for the Total Hip Arthroplasty and/or Total
Knee Arthroplasty PRO-PM, ASCs must use the Hospital Quality Reporting
(HQR) system for data submission as specified for a PRO-PM. In this
proposed rule, we propose to apply this submission method to PRO-PMs
generally, including the Information Transfer PRO-PM. Specifically, we
propose that ASCs must use the HQR system for data submission for any
PRO-PM that we adopt for the ASCQR Program measure set. ASCs may choose
to: (1) directly submit their PRO-PM data to CMS using the HQR system;
or (2) utilize a third-party entity, such as a vendor or registry, to
submit their data using the HQR system. The HQR system allows for data
submission using multiple file formats (such as .CSV and .XML) or a
manual data entry option, allowing ASCs additional flexibility in data
submission.
We invite public comment on this proposal.
b. Proposed Data Submission and Reporting Requirements for the
Information Transfer PRO-PM
In section XVII.B.1. of this proposed rule, we discuss the proposed
adoption of the Information Transfer PRO-PM beginning with voluntary
reporting for the CY 2027 and CY 2028 reporting periods followed by
mandatory reporting beginning with the CY 2029 reporting period/CY 2031
payment determination. We propose that the reporting period for this
measure would include data collection for procedures performed from
January 1 through and including December 31 of the year that is 2 years
prior to the applicable payment determination year. Therefore, ASCs
would attribute patient survey responses to the CY reporting period
during which the patient's procedure was completed. For example, if a
patient undergoes a procedure on December 20, 2027, and their survey
response is received on January 4, 2028, that response would be
attributed to the CY 2027 reporting period. We refer readers to section
XVII.B.1. of this proposed rule, where we propose a 65-day response
window for collecting patient survey responses. Under this 65-day
response window policy, ASCs may collect survey responses for a
reporting period as late as March of the year preceding the applicable
payment determination year.
We propose to require ASCs to submit their Information Transfer
PRO-PM data in aggregate numerators and denominators by May 15 of the
year prior to the applicable payment determination year in the HQR
system. As codified at 42 CFR 416.310(f), all deadlines occurring on a
Saturday, Sunday, or legal holiday, or on any other day all or part of
which is declared to be a non-workday for Federal employees by statute
or Executive Order would be extended to the first day thereafter. For
example, for the first voluntary reporting period, data collected for
the Information Transfer PRO-PM from surgical procedures performed
January 1, 2027 through December 31, 2027 would be submitted to CMS's
HQR system by May 15, 2028. For the first mandatory reporting period,
data collected for the Information Transfer PRO-PM from surgical
procedures performed January 1, 2029 through December 31, 2029 would be
submitted to CMS's HQR system by May 15, 2030 for the CY 2031 payment
determination.
We additionally propose to require ASCs to offer all patients
meeting the measure's denominator specifications the opportunity to
complete the survey and to report on all completed surveys received.
For ASCs that anticipate receiving more than 200 completed surveys, we
propose that these facilities would have the option to either: (1)
survey and report data on their entire eligible Information Transfer
PRO-PM patient population, or (2) randomly sample their eligible
Information Transfer PRO-PM patient population to collect and report
data from 200 completed surveys. In other words, to reduce burden,
facilities with large patient populations would have the choice to
randomly sample a sufficient number of patients to yield at least 200
completed surveys in a reporting period. ASCs that are unable to
collect 200 completed surveys would not be able to perform random
sampling and would instead be required to submit data on survey
responses from all completed surveys received.
A minimum random sample size of 200 completed surveys would ensure
the reliability of the measure, consistent with what is required for
the OAS CAHPS measure for ASCs (86 FR 63908 through 63909). We note
that under the Hospital OQR Program, a minimum sample size of 300 is
required for the Information Transfer PRO-PM as this is a recommended
minimum sample size for a population of 1,500 to provide a 95 percent
confidence interval and a 90 percent confidence interval for a
population of over 10,000; this is also generally accepted as a minimum
sample size for stable population estimates.257 258 However,
as ASCs are expected to have less varied populations, we believe the
sample size of 200 completed surveys, as determined to be sufficient
for the OAS CAHPS survey, is appropriate. The 200 surveys would provide
the appropriate balance of ensuring sufficient confidence in the
results of the Information Transfer PRO-PM survey, while reducing the
overall burden of the survey for facilities with large patient
populations.
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\257\ Ahmad, H., & Halim, H. (2017). Determining Sample Size for
Research Activities. Selangor Business Review, 2(1), 20-34. https://sbr.journals.unisel.edu.my/ojs/index.php/sbr/article/view/12.
Accessed: April 8, 2025.
\258\ Voorhis, C., & Morgan, B. (2007). Understanding Power and
Rules of Thumb for Determining Sample Size. Tutorials in
Quantitative Methods for Psychology. 3(2), 43-50. www.doi.org/10.20982/tqmp.03.2.p043. Accessed: April 8, 2025.
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We invite public comment on these proposals.
2. ASCQR Program Extraordinary Circumstances Exception (ECE) Policy
We refer readers to section XIV.D. of this proposed rule for our
cross-program proposal to propose and codify updates to the ECE policy
for the ASCQR Program.
D. Payment Reduction for ASCs That Fail To Meet the ASCQR Program
Requirements
1. Statutory Background
We refer readers to the CY 2012 OPPS/ASC final rule with comment
period (76 FR 74492 through 74493) for a detailed discussion of the
statutory background regarding payment reductions for ASCs that fail to
meet the ASCQR Program requirements.
[[Page 33783]]
2. Policy Regarding Reduction to the ASC Payment Rates for ASCs That
Fail to Meet the ASCQR Program Requirements for a Payment Determination
Year
The national unadjusted payment rates for many services paid under
the ASC payment system are equal to the product of the ASC conversion
factor and the scaled relative payment weight for the APC to which the
service is assigned. For CY 2026, the ASC conversion factor is equal to
the conversion factor calculated for the previous year updated by the
productivity-adjusted hospital market basket update factor. The
productivity adjustment is set forth in section 1833(i)(2)(D)(v) of the
Act. The productivity-adjusted hospital market basket update was the
annual update for the ASC payment system for a 5-year period (CY 2019
through CY 2023), which was extended an additional 2 years (through CY
2025) in the CY 2024 OPPS/ASC final rule with comment period (88 FR
81960). As discussed in section XIII of this proposed rule, we propose
to continue using the productivity-adjusted hospital market basket
update as the update factor for the ASC payment system for CY 2026.
Under the ASCQR Program, in accordance with section 1833(i)(7)(A) of
the Act and as discussed in the CY 2013 OPPS/ASC final rule with
comment period (77 FR 68499), any annual increase in certain payment
rates under the ASC payment system shall be reduced by 2.0-percentage
points for ASCs that fail to meet the reporting requirements of the
ASCQR Program. This reduction applied beginning with the CY 2014
payment rates (77 FR 68500). For a complete discussion of the
calculation of the ASC conversion factor and our finalized proposal to
update the ASC payment rates using the inpatient hospital market basket
update for CYs 2019 through 2023, we refer readers to the CY 2019 OPPS/
ASC final rule with comment period (83 FR 59073 through 59080).
In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68499
through 68500), in order to implement the requirement to reduce the
annual update for ASCs that fail to meet the ASCQR Program
requirements, we finalized the following policies: (1) to calculate a
full update conversion factor and an ASCQR Program reduced update
conversion factor; (2) to calculate reduced national unadjusted payment
rates using the ASCQR Program reduced update conversion factor that
would apply to ASCs that fail to meet their quality reporting
requirements for that calendar year payment determination; and (3) that
application of the 2.0-percentage point reduction to the annual update
may result in the update to the ASC payment system being less than zero
prior to the application of the productivity adjustment. The ASC
conversion factor is used to calculate the ASC payment rate for
services with the following payment indicators (listed in Addenda AA
and BB to this proposed rule, which are available via the internet on
the CMS website): ``A2,'' ``D2,'' ``G2,'' ``P2,'' ``R2'', and ``Z2,''
as well as the service portion of device-intensive procedures
identified by ``J8'' (77 FR 68500). We finalized our proposal that
payment for all services assigned the payment indicators listed would
be subject to the reduction of the national unadjusted payment rates
for applicable ASCs using the ASCQR Program reduced update conversion
factor (77 FR 68500).
The conversion factor is not used to calculate the ASC payment
rates for separately payable services that are assigned status
indicators other than payment indicators ``A2'', ``D2'', ``G2,''
``J8'', ``P2'', ``R2'', and ``Z2.'' These services include separately
payable drugs and biologicals, pass-through devices that are
contractor-priced, brachytherapy sources that are paid based on the
OPPS payment rates, and certain office-based procedures, radiology
services, and diagnostic tests where payment is based on the PFS
nonfacility PE RVU-based amount, and a few other specific services that
receive cost-based payment (77 FR 68500). As a result, we also
finalized our proposal that the ASC payment rates for these services
would not be reduced for failure to meet the ASCQR Program requirements
because the payment rates for these services are not calculated using
the ASC conversion factor and, therefore, are not affected by
reductions to the annual update (77 FR 68500).
Office-based surgical procedures (generally those performed more
than 50 percent of the time in physicians' offices) and separately paid
radiology services (excluding covered ancillary radiology services
involving certain nuclear medicine procedures or involving the use of
contrast agents) are paid at the lesser of the PFS nonfacility PE RVU-
based amounts or the amount calculated under the standard ASC
ratesetting methodology. Similarly, in the CY 2015 OPPS/ASC final rule
with comment period (79 FR 66933 through 66934), we finalized our
proposal that payment for certain diagnostic test codes within the
medical range of CPT codes for which separate payment is allowed under
the OPPS will be at the lower of the PFS nonfacility PE RVU-based (or
technical component) amount or the rate calculated according to the
standard ASC ratesetting methodology when provided integral to covered
ASC surgical procedures. In the CY 2013 OPPS/ASC final rule with
comment period (77 FR 68500), we finalized our proposal that the
standard ASC ratesetting methodology for this type of comparison would
use the ASC conversion factor that has been calculated using the full
ASC update adjusted for productivity. This is necessary so that the
resulting ASC payment indicator, based on the comparison, assigned to
these procedures or services is consistent for each HCPCS code,
regardless of whether payment is based on the full update conversion
factor or the reduced update conversion factor.
For ASCs that receive the reduced ASC payment for failure to meet
the ASCQR Program requirements, we have noted our belief that it is
both equitable and appropriate that a reduction in the payment for a
service should result in proportionately reduced coinsurance liability
for beneficiaries (77 FR 68500). Therefore, in the CY 2013 OPPS/ASC
final rule with comment period (77 FR 68500), we finalized our proposal
that the Medicare beneficiary's national unadjusted coinsurance for a
service to which a reduced national unadjusted payment rate applies
will be based on the reduced national unadjusted payment rate.
In the CY 2013 OPPS/ASC final rule with comment period, we
finalized our proposal that all other applicable adjustments to the ASC
national unadjusted payment rates would apply in those cases when the
annual update is reduced for ASCs that fail to meet the requirements of
the ASCQR Program (77 FR 68500). For example, the following standard
adjustments would apply to the reduced national unadjusted payment
rates: the wage index adjustment; the multiple procedure adjustment;
the interrupted procedure adjustment; and the adjustment for devices
furnished with full or partial credit or without cost (77 FR 68500). We
believe that these adjustments continue to be equally applicable to
payment for ASCs that do not meet the ASCQR Program requirements (77 FR
68500).
In the CY 2015 through CY 2025 OPPS/ASC final rules with comment
period, we did not make any other changes to these policies. We propose
to continue applying these policies for the CY 2026 reporting period/CY
2028 payment determination and for subsequent years.
[[Page 33784]]
XVIII. Overall Hospital Quality Star Rating Modification To Emphasize
the Safety of Care Measure Group
A. Summary
In the CY 2025 OPPS/ASC final rule with comment period (89 FR 94514
through 94521), we summarized broad public input received on a Request
for Information (RFI) discussing potential methodologic modifications
to the Safety of Care measure group within the Overall Hospital Quality
Star Rating that is published on the provider comparison tool on
Medicare.gov (https://www.medicare.gov/care-compare/). The potential
modifications discussed in that RFI aimed to emphasize the contribution
of the Safety of Care measure group to the Overall Hospital Quality
Star Rating. In that RFI, we also noted our intention to potentially
issue additional RFIs or undertake rulemaking on this topic in the
future.
Patient safety constitutes a fundamental component of the CMS
National Quality Strategy, representing a sustained commitment to
fostering optimal health outcomes and ensuring the safest possible care
for all patients.\259\ As we noted in the CY 2025 OPPS/ASC final rule
with comment period (89 FR 94514 through 94521), we believe that
increasing the influence of the Safety of Care measure group is a
necessary and appropriate methodological change. Patient safety is
cornerstone to healthcare delivery and the foundational principle of
professional oaths is to ``do no harm.'' Prioritizing safety for both
patients and healthcare workers align with this fundamental commitment.
Considering the public input received and further internal analyses
conducted, we propose to make the following modifications to the
Overall Hospital Quality Star Rating methodology: (1) implement a 4-
star cap for hospitals in the lowest-performing quartile of the Safety
of Care measure group) for the 2026 Overall Hospital Quality Star
Rating, and (2) implement a blanket 1-star reduction for hospitals in
the lowest-performing quartile of the Safety of Care measure group for
the 2027 Overall Hospital Quality Star Rating and thereafter.
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\259\ https://www.cms.gov/files/document/cms-national-quality-strategy-handout.pdf.
_____________________________________-
B. Background
The Overall Hospital Quality Star Rating provides a summary of
certain existing hospital quality information on Medicare.gov \260\
based on publicly available quality measure results reported through
CMS' hospital quality measurement programs, by assigning hospitals
between 1 and 5 stars, a way that is simple and easy for patients to
understand (85 FR 86193). The Overall Hospital Quality Star Rating
methodology was developed and is maintained according to the guiding
principles of scientific validity, maximizing inclusion of hospitals
and measure information, accounting for heterogeneity of available
measures and hospital reporting, accommodating changes in the
underlying measures, aligning with CMS hospital quality measure
programs to the extent feasible, transparency of the methodology, and
responsiveness to input from stakeholders. The Overall Hospital Quality
Star Rating was first introduced and reported on our Hospital Compare
website in July 2016 (now reported on Care Compare on Medicare.gov) and
has been refreshed multiple times.
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\260\ https://www.medicare.gov/care-compare/resources/hospital/overall-star-rating.
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In the CY 2021 OPPS/ASC final rule with comment period (85 FR
86193), we codified the Overall Hospital Quality Star Rating
methodology, including several methodology refinements, intended to
improve the simplicity and predictability of measure emphasis within
the methodology over time, and comparability of ratings among
hospitals. We also finalized the inclusion of Veterans Health
Administration (VHA) hospitals and Critical Access Hospitals (CAHs) in
the Overall Hospital Quality Star Rating. In the CY 2023 OPPS/ASC final
rule with comment period (87 FR 72233), we provided additional
information on the previously finalized policy to incorporate VHA
hospitals and finalized a proposal to amend 42 CFR 412.190 to revise
how we would refresh the Overall Hospital Quality Star Rating annually.
In the CY 2025 OPPS/ASC final rule with comment period (89 FR 94514
through 94521) we summarized public input received on the following
potential methodological updates to greater emphasize patient safety in
the Overall Hospital Quality Star Rating: (1) Reweighting the Safety of
Care Measure Group, (2) Policy-based 1-Star Reduction for Poor
Performance on Safety of Care, and (3) Reweighting the Safety of Care
measure group combined with a Policy-based Star Rating Cap. We refer
readers to section XXIV. (Overall Hospital Quality Star Rating
Modification to Emphasize the Safety of Care Measure Group: Request for
Information (RFI)) of the CY 2025 OPPS/ASC final rule with comment
period (89 FR 94514 through 94521) for additional information.
C. Current Overall Hospital Quality Star Rating Methodology (Sec.
412.190)
Measures reported on the provider comparison tool on Medicare.gov
\261\ that meet the criteria for inclusion in the Overall Hospital
Quality Star Rating are organized into five conceptually coherent
measure groups: Safety of Care, Mortality, Readmission, Patient
Experience (all of which include outcome measures), and Timely and
Effective Care (which includes a selection of process measures).
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\261\ https://www.medicare.gov/care-compare/.
_____________________________________-
The current Overall Hospital Quality Star Rating methodology
includes eight general steps. First, measures are selected from those
publicly reported on Care Compare on Medicare.gov through certain CMS
hospital inpatient and outpatient quality programs. Second, the
direction of all included measures that indicate better performance
with a lower score are reversed to uniformly reflect that a higher
score indicates better performance for all the measures, and all
measure scores are standardized to a single, common scale to account
for differences in measure score units. Third, measures are arranged
into measure groups. Each measure group contains several publicly
reported measures to produce a robust measure group score, which is
reflective of differences in hospital quality. Fourth, the measure
group scores are calculated as a simple average of the measure scores.
Measure group scores are then standardized to a common scale, making
varying scores comparable. Fifth, the hospital summary score is
calculated as a weighted average of the standardized measure group
scores. Specifically, each measure group score is multiplied by the
assigned weight for that measure group. The weighted measure group
scores are then summed up to generate the hospital summary score. If a
hospital has no measure scores in a measure group (for example, by not
achieving sufficient sample size in any of the measures), the weight is
redistributed proportionally across the remaining measure groups.
Sixth, minimum reporting thresholds are applied. To receive an Overall
Hospital Quality Star Rating, hospitals must report at least three
measures in each of at least three measure groups, one of which must be
either the Mortality or Safety of Care measure groups. Seventh, peer
grouping is applied. Hospitals are grouped into one of three peer
groups based on the number of measure groups for which
[[Page 33785]]
they report at least three measures: a three-measure group peer group,
a four-measure group peer group, and a five-measure group peer group.
Eighth, a clustering algorithm is applied within each peer group to
assign hospital summary scores to Overall Hospital Quality Star Ratings
so that 1 star is the lowest and 5 stars is the highest.
For additional details regarding the current methodology, we refer
readers to Sec. 412.190(d) and the Overall Hospital Quality Star
Rating Methodology Reports, available at https://qualitynet.cms.gov/inpatient/public-reporting/overall-ratings/resources.
D. Proposed Modification to the Overall Hospital Quality Star Rating
Methodology
In the CY 2025 OPPS/ASC final rule with comment period (89 FR 94514
through 94521), we presented three options and analyses (utilizing data
from the July 2023 refresh of the Overall Hospital Quality Star Rating)
for potential methodological updates to emphasize Safety of Care in the
Overall Hospital Quality Star Rating and summarized the public comments
received. The majority of commenters did not support updating the
methodology at that time. While some commenters expressed support for
potential changes, there was no consensus on a preferred option
(reweighting, the policy-based 1-star reduction, or reweighting
combined with the 4-star cap). We refer readers to the CY 2025 OPPS/ASC
RFI (89 FR 94514 through 94521), where we detailed the importance of
prioritizing Safety of Care within the Overall Hospital Quality Star
Rating.
Following the publication of the final rule, we conducted further
internal analyses utilizing updated data from the July 2024 refresh of
the Overall Hospital Quality Star Rating (the most recent publicly
released results as of the writing of this proposal) to reassess the
correlation between the Safety of Care measure group and performance in
the Overall Hospital Quality Star Rating.
To receive an Overall Hospital Quality Star Rating, hospitals must
have at least three measures in each of at least three measure groups,
one of which must be Mortality or Safety of Care. However, because the
application of minimum reporting thresholds and peer grouping
assignment occur strictly after the calculation of measure group scores
and overall summary scores, any hospital with at least one measure in
any group will have a measure group score for that group--that is, once
a hospital meets the Overall Hospital Quality Star Rating reporting
threshold, all measure groups for which it has any measure scores are
included in its rating. In other words, a hospital with one or two
Safety of Care measures can still receive an Overall Hospital Quality
Star Rating if it still has at least three measures in Mortality and in
two of the other measure groups; in this case, the hospital would still
receive a Safety of Care measure group score based on the one or two
measures it does have. Only a hospital qualifying for an Overall
Hospital Quality Star Rating with zero Safety of Care measures would
not have a Safety of Care measure group score.
There were 2,847 hospitals that met the criteria to receive an
Overall Hospital Quality Star Rating in 2024. Among the 2,847 rated
hospitals, 2,803 (99 percent) had at least one Safety of Care measure
and therefore received a Safety of Care measure group score, while
2,475 (87 percent) had at least three Safety of Care measures. Our
analysis showed that hospitals in the lowest-performing quartile of the
Safety of Care measure group tended to receive lower Overall Hospital
Quality Star Ratings (being more likely to receive 1 or 2 stars and
less likely to receive 4 or 5 stars than other hospitals) (Table 87).
However, some hospitals performed in the lowest quartile (lowest-
performing 25 percent, indicating poor Safety of Care performance
relative to other hospitals) of the Safety of Care measure group and
still received a 5-star rating. Of the 2,847 hospitals that received an
Overall Hospital Quality Star Rating, 695 hospitals scored in the
lowest quartile of the Safety of Care measure group, of which 595
hospitals had at least three Safety of Care measures. Of these 595
hospitals, 14 received a 5-star rating, representing 0.5 percent of all
rated hospitals (Table 87). These 14 hospitals attained a 5-star rating
despite having the lowest quartile Safety of Care measure group
performance by achieving high scores across the other measure groups.
[GRAPHIC] [TIFF OMITTED] TP17JY25.158
[[Page 33786]]
As we noted in the CY 2025 OPPS/ASC final rule with comment period
(89 FR 94514 through 94521), we believe that a methodological change to
increase the importance of the Safety of Care measure group is
appropriate. This proposed change is informed by landmark reports on
healthcare quality,262 263 along with the COVID-19 public
health emergency, which revealed persistent patient and workforce
safety risks and system vulnerabilities.\264\ In response, Federal
efforts--such as the National Action Alliance to Advance Patient and
Workforce Safety and recommendations from the President's Council of
Advisors on Science and Technology--are reinforcing patient safety as a
national priority, aligned with CMS' initiatives like the National
Quality Strategy and the Universal Foundation.265 266 267 In
particular, addressing the issue of hospitals receiving a high Overall
Hospital Quality Star Rating despite performing in the lowest quartile
of the Safety of Care measure group is critical to achieving CMS'
vision of emphasizing and aligning the importance of patient safety
across CMS programs. We therefore propose to make the following two-
stage methodologic updates to Sec. 412.190(a)(2) and adding a new
paragraph (a)(3)); the first stage would be a narrow but focused
transitional step to promptly address the most pressing concern that
hospitals in the lowest-performing quartile of the Safety of Care
measure group achieve the highest possible Overall Hospital Quality
Star Rating while allowing hospitals and stakeholders more time to
prepare for the second stage, which will increase the impact of the
Safety of Care measure group across all hospitals more broadly.
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\262\ Institute of Medicine (US) Committee on Quality of Health
Care in America, Kohn, L.T.,Corrigan, J.M., & Donaldson, M.S.
(Eds.). (2000). To Err is Human: Building a Safer Health
System.National Academies Press (US).
\263\ Quality of Health Care in America. (2001). Crossing the
Quality Chasm: A New Health System for the 21st Century. National
Academies Press (US).
\264\ Agency for Healthcare Research and Quality. (February
2021). National Healthcare Quality and Disparities Report chartbook
on patient safety. Rockville, MD. Available at: https://www.ahrq.gov/sites/default/files/wysiwyg/research/findings/nhqrdr/chartbooks/patientsafety/2019qdr-patientsafety-chartbook.pdf.
\265\ AHRQ. (2023). National Action Alliance To Advance Patient
and Workforce Safety. https://www.ahrq.gov/cpi/about/otherwebsites/actionalliance.html.
\266\ https://www.whitehouse.gov/wp-content/uploads/2023/09/PCAST_Patient-Safety-Report-Sept2023.pdf.
\267\ Fleisher, L.A., Schreiber, M., Cardo, D., Srinivasan, A.
(2022). Health Care Safety during the Pandemic and Beyond--Building
a System That Ensures Resilience. The New England Journal of
Medicine, 386(7): 609-611. DOI: 10.1056/NEJMp2118285.
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We also propose changes to paragraphs (b)(1), (e) and (f) to
reflect updates to the regulation text uses of Overall Hospital Quality
Star Rating and Care Compare on Medicare.gov language. In addition, we
propose removing the reference to ``as defined in Sec. 400.200 of this
chapter''.
For the methodologic updates:
Stage 1: Implement a 4-Star Cap for Hospitals in the Lowest Quartile of
the Safety of Care Measure Group Performance Beginning in 2026 (Sec.
412.190(d)(9)(i))
We propose to limit hospitals in the lowest quartile of Safety of
Care (based on at least three measure scores) to a maximum of 4 stars
out of 5. The Overall Hospital Quality Star Rating methodology would be
unchanged through step eight with the exception of redesignating
paragraph (d)(5) as (6), and paragraph (d)(6) as (5) (assignment of
star ratings using K-means clustering as described previously in this
section), with the cap being applied as a new ``step nine'': Any
hospital that is assigned 5 stars in step eight but has a lowest
quartile Safety of Care score (based on at least three Safety of Care
measures) would be reassigned to 4 stars.
Using 2024 Overall Hospital Quality Star Rating data, implementing
a cap of 4 stars in the lowest quartile of Safety of Care with at least
three safety measures would result in 14 hospitals, out of 2,847
hospitals, receiving a lower Overall Hospital Quality Star Rating. This
proposed update provides a targeted, direct, and timely solution to the
acute concern of hospitals receiving the highest possible 5-star rating
despite performing in the lowest quartile of the Safety of Care measure
group. Further, the proposed implementation timeline reflects a
deliberate and proactive effort to act swiftly and strategically,
reinforcing patient safety as a national priority.
We acknowledge in the CY 2025 OPPS/ASC final rule with comment
period that only applying a 4-star maximum to hospitals in the lowest
quartile of Safety of Care with at least three safety measures would
have less impact than other options discussed in that rule. However, to
promptly address the most pressing concern, the proposed 4-star maximum
functions as an interim step, allowing hospitals and stakeholders
additional time to prepare for Stage 2:
Stage 2: Implement a Blanket 1-Star Reduction for Hospitals in the
Lowest Quartile of Safety of Care Measure Group Performance for the
2027 Overall Hospital Quality Star Ratings and Later Years (Sec.
412.190(d)(9)(ii))
We propose to reduce the Overall Hospital Quality Star Rating of
any hospital in the lowest quartile of Safety of Care (based on at
least three measure scores) by 1 star, to a minimum 1-star rating. The
Overall Hospital Quality Star Rating methodology would be unchanged
through step eight (assignment of star ratings using K-means
clustering), with the blanket reduction replacing the 4-star cap in the
new step nine: any hospital assigned a 2, 3, 4, or 5-star rating in
step eight, but that has a lowest quartile Safety of Care score (based
on at least three Safety of Care measures) would be reduced to 1, 2, 3,
or 4 stars, respectively.
Using 2024 Overall Hospital Quality Star Rating data, applying a 1-
star reduction for all hospitals in the lowest quartile of Safety of
Care with at least three safety measures would result in 459 hospitals,
out of 2,847 hospitals, receiving a lower Overall Hospital Quality Star
Rating. This proposed update would emphasize safety by applying a
higher standard for patient safety to hospitals across a broad range of
overall performance, rather than limiting it to the few 5-star
hospitals in the lowest quartile of Safety of Care (with at least three
Safety of Care measures). Since the minimum possible Overall Hospital
Star Rating will remain 1 star, hospitals already getting one star
would not get a further star reduction and therefore would effectively
be exempt from this adjustment consistent with established assignment
of ratings between 1-5 whole stars (85 FR 86193). This approach also
aligns with CMS' overarching objective of advancing patient safety and
reinforcing our commitment to continuous improvement across the
healthcare system.
When determining the quartiles of Safety of Care measure group
scores, we will use the distribution from all hospitals with at least 1
Safety of Care measure whether or not they qualify for an Overall
Hospital Quality Star Rating, in alignment with the guiding principle
of the Overall Hospital Quality Star Rating of inclusiveness of
hospital and measure information.
[[Page 33787]]
Using the data of the July 2024 Overall Hospital Quality Star
Rating, we evaluated the proportion of hospitals that would be impacted
by the proposed methodological changes, stratified by various hospital
characteristics (Table 88). As previously noted, a larger proportion of
hospitals would be impacted by the blanket 1-star reduction (Stage 2
proposed methodological change) compared to the targeted 4-star cap
(Stage 1 proposed methodological change). Our simulation revealed that
teaching hospitals, non-safety-net hospitals, VHA hospitals, non-CAHs,
large hospitals (100+ beds), urban hospitals, and non-specialty
hospitals could be somewhat more likely to observe a change in Overall
Hospital Quality Star Rating by both Stage 1 and Stage 2 proposed
methodological changes than their counterparts. We recognize that with
only 14 hospitals experiencing a change in Overall Hospital Quality
Star Rating by the Stage 1 proposed methodological change, the
generalizability of this observation is limited. In part, this is
because these hospitals are more likely to receive an Overall Hospital
Quality Star Rating and have three or more Safety of Care measures than
their non-teaching, safety-net, non-VHA, CAH, small, rural, and
specialty counterparts (Table 88). However, these differences in
hospital characteristics are not strongly determinative of a hospital's
overall rating, with hospitals of any characteristic being capable of
receiving either high or low ratings.
[[Page 33788]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.159
[[Page 33789]]
We invite public comment on these proposals.
XIX. Updates to Requirements for Hospitals To Make Public a List of
Their Standard Charges
A. Introduction and Overview
1. Statutory Basis and Background
Section 1001 of the Patient Protection and Affordable Care Act
(Pub. L. 111-148), as amended by section 10101 of the Health Care and
Education Reconciliation Act of 2010 (Pub. L. 111-152), amended Title
XXVII of the Public Health Service Act (the PHS Act), in part, by
adding a new section 2718(e). Section 2718 of the PHS Act, entitled
``Bringing Down the Cost of Health Care Coverage,'' requires each
hospital operating within the United States for each year to establish
and update, and make public a list of the hospital's standard charges
for items and services provided by the hospital, including for
diagnosis-related groups established under section 1886(d)(4) of the
Act. Section 2718(b)(3) of the PHS Act requires the Secretary of the
Department of Health and Human Services (``Secretary'' or ``HHS'') to
issue regulations to enforce the provisions of section 2718 of the PHS
Act, and, in so doing, the Secretary may provide for appropriate
penalties.
In the final rule that appeared in the November 27, 2019 Federal
Register (84 FR 65524) titled ``Medicare and Medicaid Programs: CY 2020
Hospital Outpatient PPS Policy Changes and Payment Rates and Ambulatory
Surgical Center Payment System Policy Changes and Payment Rates: Price
Transparency Requirements for Hospitals to Make Standard Charges
Public'' (hereafter referred to as the CY 2020 HPT final rule), we
adopted requirements for hospitals to make public their standard
charges in two ways: (1) as a comprehensive machine-readable file
(MRF); and (2) in a consumer-friendly format. We codified these
requirements at 45 CFR part 180. We also explained our belief that
these two different methods of making hospital standard charges public
are necessary to ensure that such data are available to consumers
through data aggregation methods (for example, via integration into
price transparency tools, electronic health records, and consumer
apps), and direct availability to consumers searching for hospital-
specific charge information. We stated our belief that innovators could
use this information to create more useful data products for healthcare
consumers to effectively compare prices. Moreover, we believe that
employers (that offer or sponsor employee health plans), researchers,
policy officials, and similar members of the public could utilize this
data to promote competition and choice, ultimately helping to improve
healthcare value.
Subsequently, in the CY 2022 OPPS/ASC final rule with comment
period (86 FR 63941), we strengthened the hospital price transparency
(HPT) enforcement process to improve compliance rates and made other
updates to the requirements. Specifically, we: (1) increased the
penalty amount for noncompliance through the use of a scaling factor
based on hospital bed count; (2) deemed State forensic hospitals that
meet certain requirements to be in compliance with the requirements of
45 CFR part 180; and (3) prohibited certain actions that we concluded
were barriers to accessing the standard charge information, including
prohibiting hospitals from designing their MRFs so as to make them
inaccessible to automated searches and direct downloads.
In the CY 2024 OPPS/ASC final rule with comment period (88 FR
82079), we revised several HPT requirements to improve access to, and
the usability of, hospital standard charge information; standardize the
way hospital charges are presented; align, where feasible, certain HPT
requirements and processes with requirements in the Transparency in
Coverage (TiC) initiative; and strengthen and streamline our monitoring
and enforcement capabilities. Specifically, we finalized: (1) a
requirement that hospitals make a good faith effort to ensure standard
charge information is true, accurate, and complete, and include a
statement affirming this in the MRF; (2) new data elements that
hospitals must include in the MRF, as well as a requirement that
hospitals encode standard charge information in a CMS template layout;
(3) a requirement that hospitals include a .txt file in the root folder
that includes a direct link to the MRF and a link in the footer on its
website that links directly to the publicly available web page that
hosts the link to the MRF; and (4) improvements to our enforcement
process by updating our methods to assess hospital compliance,
requiring hospitals to acknowledge receipt of warning notices, and
publicizing more information about CMS enforcement activities related
to individual hospital compliance.
In these final rules, we stated that our policies requiring public
release of hospital standard charge information are a necessary and
important first step in ensuring transparency in prices of healthcare
services for consumers. We also recognized that the release of hospital
standard charge information is not sufficient to achieve our ultimate
price transparency goals. We noted that the regulations are, therefore,
designed to address some of the barriers that limit price transparency,
with a goal of requiring hospitals to make meaningful price information
available to patients and employers to support a more competitive,
innovative, affordable, and higher quality healthcare system.
On February 25, 2025, the White House issued Executive Order 14221,
``Making America Healthy Again by Empowering Patients with Clear,
Accurate, and Actionable Healthcare Pricing Information,'' to empower
patients with clear, accurate, and actionable healthcare pricing
information.\268\ The Executive Order states, in part, that the
Departments of the Treasury, Labor, and HHS (the Departments) shall
take action to:
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\268\ Exec. Order No 14,221 (2025). https://www.govinfo.gov/content/pkg/FR-2025-02-28/pdf/2025-03440.pdf.
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Require disclosure of actual prices of items and services,
not estimates;
Ensure pricing information is standardized and easily
comparable across hospitals and health plans; and
Update their enforcement policies designed to ensure
compliance with transparent reporting of complete, accurate, and
meaningful data.
Executive Order 14221 requires HHS to take actions to continue to
implement and enforce existing statutory requirements for hospitals to
make public a list of standard charges in accordance with guidelines
developed by the Secretary. Consistent with the Executive Order and to
better attain the goals we have articulated in previous HPT
rulemaking--requiring hospitals to make meaningful price information
available to consumers, employers, policymakers, and others to support
a more competitive, innovative, affordable, and higher quality
healthcare system, CMS proposes several updates to the regulations at
45 CFR part 180.
In the CY 2020 HPT final rule at Sec. 180.20, we established a
definition of ``standard charge'' as the regular rate established by
the hospital for an item or service provided to a specific group of
paying patients. In the summary of proposals below, we describe
proposed updates to required data elements to improve the comparison of
standard charge data to enable more meaningful disclosures to the
public.
In the CY 2024 OPPS/ASC final rule with comment period, we
established the requirement for each hospital, beginning July 1, 2024,
to affirm in its
[[Page 33790]]
MRF that the hospital has, to the best of its knowledge and belief,
included all applicable standard charge information in accordance with
the requirements of 45 CFR part 180 and that the information displayed
is true, accurate, and complete as of the date indicated in the file.
As described in the summary of proposals below, we propose to
strengthen this requirement, beginning January 1, 2026, by replacing it
with an attestation in the MRF, and that attestation would also contain
new specifications (relative to existing affirmation requirements).
These specifications would include that the hospital has: (1) included
all applicable payer-specific negotiated charges in dollars that can be
expressed as a dollar amount and for payer-specific negotiated charges
that are not knowable in advance or cannot be expressed as a dollar
amount, the hospital has provided in the MRF all necessary information
available to the hospital for the public to be able to derive the
dollar amount, including, but not limited to the specific fee schedule
or components referenced in such percentage, algorithm, or formula, and
(2) included the name of the hospital's chief executive officer,
president, or senior official designated to oversee the encoding of
true, accurate, and complete data.
In addition, pursuant to section 2718(b)(3) of the PHS Act, we
previously have established regulations for enforcing the provisions of
this section, including appropriate penalties. We propose an additional
change to encourage faster resolution of HPT civil monetary penalties
(CMPs) and to reduce the amount of a CMP, under certain conditions,
when the hospital waives its right to an administrative law judge (ALJ)
hearing.
2. Summary of Proposals
We propose amendments to the HPT regulations to enhance clarity and
standardization in hospital disclosure of standard charges.
Specifically, we propose revisions to Sec. 180.20 to add definitions
for ``tenth (10th) percentile allowed amount,'' ``median allowed
amount,'' and ``ninetieth (90th percentile allowed amount,'' which are
values a hospital would encode when a payer-specific negotiated charge
is based on a percentage or algorithm, to more accurately reflect the
distribution of actual amounts that a hospital has received for an item
or service. In tandem with that, we propose revisions to Sec. 180.50
to remove the requirement for hospitals to disclose the estimated
allowed amount, and, instead, require hospitals, beginning January 1,
2026, to disclose the 10th percentile, median, and 90th percentile
allowed amounts, as well as the count of allowed amounts, in MRFs when
payer-specific negotiated charges are based on percentages or
algorithms. We also propose to require that hospitals use electronic
data interchange (EDI) 835 electronic remittance advice (ERA)
transaction data to calculate and encode these values, and we propose
to require that hospitals comply with specific instructions regarding
the methodology, including the lookback period, that must be used to
calculate those amounts. We propose revisions to Sec. 180.50 to
require hospitals, beginning January 1, 2026, to attest that in the
MRF, the hospital has included all applicable standard charge
information in accordance with the requirements of this section and the
information encoded is true, accurate, and complete as of the date in
the file.
We further propose that hospitals attest in the MRF that the
hospital has included all applicable payer-specific negotiated charges
as dollars that can be expressed as a dollar amount, and for payer-
specific negotiated charges that are not knowable in advance or cannot
be expressed as a dollar amount, the hospital has provided in the MRF
all necessary information available to the hospital for the public to
be able to derive a dollar amount, including, but not limited to, the
specific fee schedule or components referenced in such percentage,
algorithm, or formula.
We also propose that hospitals encode in the MRF the name of the
hospital chief executive officer, president, or senior official
designated to oversee the encoding of true, accurate, and complete
data. In addition, to advance the comparability of HPT data with other
healthcare data, we propose to require that hospitals encode their
National Provider Identifier(s) (NPIs) in the MRFs. Finally, to
encourage faster resolution and payment of CMPs, and in exchange for a
hospital's admission of having violated HPT requirements, we propose to
update Sec. 180.90 to reduce the amount of a CMP by 35 percent, under
certain conditions, when a hospital waives its right to an ALJ hearing.
These proposed changes aim to improve transparency in hospital pricing,
facilitate efficient enforcement of the HPT requirements, and empower
consumers with actionable pricing information.
B. Proposal To Modify the Requirements for Making Public Hospital
Standard Charges at 45 CFR 180.50
1. Background
a. CY 2024 OPPS/ASC Final Rule With Comment Period
This section of the background recites relevant history from the CY
2024 OPPS/ASC final rule with comment period, and all references
pertain to it.
In the CY 2024 OPPS/ASC final rule with comment period (88 FR
82083, 82097, 82184), we indicated we understand that hospitals
establish payer-specific negotiated charges in many ways, ranging from
basic fee schedules (in which dollar amounts for specific items and
services are known) to grouper methodologies (in which a base rate in
dollars has been established but may then be modified depending on
other factors like transfers or outliers), to ``percent of billed
charges'' schemes (in which the dollar amount varies from person to
person and is not known until the services are performed). We
demonstrated in Figure A in the CY 2024 OPPS/ASC final rule with
comment period (88 FR 82098) the components of an MS-DRG algorithm. An
example of how Figure A may translate into an algorithm encoded in the
MRF may be: base rate multiplied by the MS-DRG weight; outlier payment
of $4303 per diem when length of stay is greater than 2 times the
average length of stay. Based on our experiences reviewing MRFs since
the finalization of the CY 2024 OPPS/ASC rule, we have observed factors
included in algorithms such as, but not limited to: weights based on
resources required, mix of services provided within an episode of care,
and thresholds or caps on the overall price of services billed within
an episode of care. Therefore, we reiterate our stance outlined in the
CY 2024 OPPS/ASC final rule that not all hospitals can produce a payer-
specific negotiated charge in dollars that meets the definition of a
`standard charge'.
As indicated in the CY 2024 OPPS/ASC final rule with comment
period, we finalized a requirement for hospitals to display an
estimated allowed amount which would provide needed context, in
dollars, for instances where the hospital's standard charge is based on
a percentage or algorithm for a specified payer's plan. We defined a
new data element, the ``estimated allowed amount,'' at Sec. 180.20, as
the average dollar amount that the hospital has historically received
from a third party payer for an item or service.
We noted that we had heard from interested parties that, when a
hospital
[[Page 33791]]
has negotiated a payer-specific negotiated charge that is based on an
algorithm, an estimate displayed in dollars within the MRF is useful,
particularly for making comparisons across hospitals (88 FR 82099). We
stated, for example, that an estimate displayed in dollars would permit
users to make price comparisons across hospitals when, regarding the
same procedure and payer/plan, one hospital has established a payer-
specific negotiated charge as an algorithm and a second has established
a payer-specific negotiated charge as a dollar amount. After
considering what additional data could be required in the MRF to
provide further needed context for a payer-specific negotiated charge
that is expressed as an algorithm or a percentage, we finalized the
estimated allowed amount as a new data element at Sec. 180.20. We also
required at Sec. 180.50(b)(2)(ii)(C) that hospitals calculate and
encode an estimated allowed amount, in dollars, when hospitals have
established a payer-specific negotiated charge that is based on a
percentage or an algorithm. We stated that the estimated allowed amount
is the average reimbursement in dollars that the hospital has received
from the payer in the past. We further stated that the estimated
allowed amount is therefore not prospective and is also not based on
the hospital's chargemaster, which, as we understand it, contains only
gross charges for itemized items and services, or claims submitted to
the payer. As we explained (88 FR 82099 through 82100), because the
estimated allowed amount data element is meant to provide an estimate
of what the algorithm produces in dollars, across the universe covered
by a particular payer's plan, such an amount should reflect the amount
the hospital expects to be reimbursed for the item or service (or
service package), on average. As such, it is not the final exact amount
in dollars that an individual would pay for an item or service. Even
so, we stated that we believe this information provides context to the
public that is necessary to compare payer-specific negotiated charges
across hospitals and is a valuable benchmark that innovators can use to
develop price estimator tools to estimate an individual's personalized
out-of-pocket costs. We stated that we believed this information, when
paired with the algorithm encoded in the MRF, would promote greater
transparency of hospital standard charges that can be useful to MRF
users.
b. Background Subsequent to the CY2024 OPPS/ASC Final Rule With Comment
Period
Since the CY2024 OPPS/ASC final rule with comment period was
finalized, we have continued to gain experience with the implementation
of the estimated allowed amount data element and received public
feedback and questions requesting that we further clarify its
calculation. Based on our observations through comprehensive audits and
feedback from users of the data, and consistent with Executive Order
14221, we propose to revise the HPT regulations to recast the estimated
allowed amount data element to better require, through new data
elements, disclosure of dollar amounts for items and services in
hospital MRFs, which we believe would enhance transparency and
comparability of payer-specific negotiated charges across hospitals.
Specifically, and as further discussed later in this section, we
propose to require hospitals to report four new data elements when a
standard charge is based on a percentage or algorithm--the median
allowed amount (which would replace the estimated allowed amount data
element), the 10th percentile and 90th percentile allowed amounts, and
the count of allowed amounts used to calculate the median, 10th, and
90th percentile allowed amounts.
2. Definitions
At Sec. 180.20, we propose to add definitions for three new data
elements, the ``median allowed amount,'' the ``tenth (10th) percentile
allowed amount,'' and the ``ninetieth (90th) percentile allowed
amount.'' These data elements would be defined as follows:
``Median allowed amount'' would be defined as the median
of the total allowed amounts the hospital has historically received
from a third party payer for an item or service for a time period no
longer than the 12 months prior to posting the machine-readable file.
Should the calculated median fall between two observed allowed amounts,
the median allowed amount is the next highest observed value.
``Tenth (10th) percentile allowed amount'' would be
defined as the 10th percentile of the total allowed amounts the
hospital has historically received from a third party payer for an item
or service for a time period no longer than the 12 months prior to
posting the machine-readable file. Should the calculated percentile
fall between two observed allowed amounts, the 10th percentile allowed
amount is the next highest observed value.
``Ninetieth (90th) percentile allowed amount'' would be
defined as the 90th percentile of total allowed amounts the hospital
has historically received from a third party payer for an item or
service for a time period no longer than the 12 months prior to posting
the machine-readable file. Should the calculated percentile fall
between two observed allowed amounts, the 90th percentile allowed
amount is the next highest observed value.
We discuss these proposed definitions in more detail in the
following sections.
3. Proposal To Replace the Estimated Allowed Amount With the Allowed
Amounts Data Elements and the Count of Allowed Amounts Data Element
a. Background on Encoding Payer-Specific Negotiated Charges as Dollar
Amounts
[[Page 33792]]
As noted in the CY 2024 OPPS/ASC final rule with comment period (88
FR 82099), we have learned that most commercial contracting methods
allow a hospital to identify and display as a dollar figure the payer-
specific negotiated charges they have established with third party
payers. Accordingly, we expect that, for most contracting scenarios, a
hospital's payer-specific negotiated charges can also be expressed as a
dollar amount.
Hospitals and MRF users have indicated in inquiries to CMS that
they are confused about our current requirements for encoding payer-
specific negotiated charges, so we are clarifying our current policy.
If a dollar amount can be derived from a hospital's payer-specific
negotiated charge, it must be encoded as a dollar value in the MRF. For
items and services encoded in the MRF with a ``standard charge
methodology'' of ``case rate,'' ``per diem,'' or a known ``fee
schedule,'' we expect that hospitals will be able to encode a ``payer-
specific negotiated charge: dollar amount.'' We recognize that there
may be situations where the payer-specific negotiated charge is a
percentage of a fee schedule that is not available to the hospital. In
such instances, under our existing policies, the hospital must encode a
``payer-specific negotiated charge: percentage'' and an estimated
allowed amount (which would be replaced with the median allowed amount
should our proposal be finalized) and may indicate in the additional
notes data element the type of fee schedule. We note that hospitals
encoding a case rate or per diem as the standard charge methodology
must encode the dollar amount for the service package base rate, which
may be coupled with a ``payer-specific negotiated charge: algorithm''
and an estimated allowed amount (which would be replaced with the
median allowed amount should our proposal be finalized) if necessary.
We encourage readers to review the scenarios and examples on the CMS
Hospital Price Transparency--Data Dictionary GitHub Repository website
for examples of how to encode standard charge data,\269\ and additional
guidance on CMS' HPT website.\270\
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\269\ CMS, (2024, June), Hospital-Price-Transparency Examples,
Hospital Price Transparency, GitHub. https://github.com/CMSgov/hospital-price-transparency/tree/master/examples.
\270\ CMS, (2025, May), Resources, Hospital Price Transparency
website https://www.cms.gov/priorities/key-initiatives/hospital-price-transparency/resources.
---------------------------------------------------------------------------
b. Replacing the Estimated Allowed Amount With the Median Allowed
Amount
We propose to revise Sec. 180.50(b)(2)(ii)(C) to require, at new
Sec. 180.50(b)(2)(ii)(C)(2), that, beginning January 1, 2026, if a
payer-specific negotiated charge is based on a percentage or algorithm,
the hospital must calculate and encode the median allowed amount in
dollars for that item or service. As noted above, we propose to define
``median allowed amount'' in Sec. 180.20 as the median of the total
allowed amounts the hospital has historically received from a third
party payer for an item or service for a time period no longer than the
12 months prior to posting the MRF. Should the calculated median fall
between two observed allowed amounts (in other words, where the total
count, n, is an even number), we propose that the median allowed amount
would be the next highest observed value. As discussed in more detail
below, we believe that requiring hospitals to encode the median allowed
amount in the circumstances described in proposed Sec.
180.50(b)(2)(ii)(C), rather than the estimated allowed amount, would
improve the public's ability to better understand, and, therefore, more
meaningfully use, payer-specific negotiated charges, and would make
such charges more comparable across hospitals.
Currently, Sec. 180.50(b)(2)(ii)(C) states that if the payer-
specific negotiated charge is based on a percentage or algorithm, the
MRF must also describe the percentage or algorithm that determines the
dollar amount for the item or service and calculate and encode an
estimated allowed amount in dollars for that item or service. This data
element is intended to improve the public's ability to understand the
actual price of care, particularly when making comparisons across
hospitals. In Sec. 180.20, we define ``estimated allowed amount'' as
the average dollar amount that the hospital has historically received
from a third party payer for an item or service. Since finalizing the
CY 2024 OPPS/ASC final rule with comment period, we have received
feedback from interested parties requesting clarity on how, and the
appropriate data source and lookback period from which, to calculate
this additional contextual data element.
As indicated in the CY 2024 OPPS/ASC final rule with comment
period, we believe that having a contextual data element displayed in
dollars would improve users' ability to make price comparisons across
hospitals when, with respect to the same procedure and payer/plan, one
hospital has established a payer-specific negotiated charge as an
algorithm and a second as a dollar amount. In addition, we agree with
interested parties that have noted that data points with dollar amounts
are necessary to support a better understanding of the costs of care,
especially given the complexities of hospital contractual arrangements
with third party payers.
On February 25, 2025, the President issued Executive Order 14221
requiring that HHS act to require disclosure of actual prices and
ensure pricing information is easily comparable across hospitals.
Consistent with the Executive Order and the feedback we have received
from interested parties, we have considered ways to improve the
requirement for hospitals to make public actual dollar amounts in the
MRF to further transparency and comparability of hospital pricing
information. Specifically, we have further considered the usefulness of
the estimated allowed amount, as defined at Sec. 180.20, in providing
necessary context for the payer-specific negotiated charge and in
facilitating comparisons across hospitals. We now believe that the
payer-specific negotiated charge should be better contextualized and
more precisely encoded to improve the MRF users' ability to understand
and use hospital standard charges.
As set forth in Sec. 180.20, the ``estimated allowed amount''
means the average dollar amount that the hospital has historically
received from a third party payer for an item or service. While we
believe that the estimated allowed amount provides useful additional
context and enhances transparency and comparability of hospital
standard charges, we acknowledge, as indicated in the CY 2024 OPPS/ASC
final rule with comment period, that these average dollar amounts do
not necessarily represent the actual dollar amount an individual would
pay for an item or service. Thus, we propose to revise Sec.
180.50(b)(2)(ii)(C) to require hospitals to encode, beginning January
1, 2026, the median allowed amount, rather than the estimated allowed
amount, if a payer-specific negotiated charge is based on an algorithm
or percentage. As noted above, we propose to define the median allowed
amount as the median of the total allowed amounts the hospital has
historically received from a third party payer for an item or service
for a time period no longer than the 12 months prior to posting the
MRF. Should the calculated median fall between two observed allowed
amounts,
[[Page 33793]]
the median allowed amount is the next highest observed value.
[GRAPHIC] [TIFF OMITTED] TP17JY25.160
For example, in the scenario detailed in Table 89 the mean of the
claim remittances amounts is $35,000, which exceeds all the other
values except for the $200,000 outlier and would not reasonably reflect
the allowed amount for most patients. By contrast, the $20,000 median
would be a more accurate reflection of the allowed amount for many
patients and the amount a hospital typically would be reimbursed for an
item or service. Requiring the median rather than the average is
consistent with generally accepted statistical principles for assessing
the central point of a distribution when there are outliers.\271\ We
recognize there are different methodologies that can be used to
calculate a specific percentile when there is no single value. In this
context, however, we believe that the need to identify an actual dollar
value instead of an average of the two amounts outweighs the use of
this accepted methodology and justifies the deviation. This methodology
would only be applicable in cases, as we stated, when the percentile
falls between two different integers. MRF users would be able to
identify cases in which the methodology has been applied by looking at
the `count of allowed amounts' data element, which is described below.
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\271\ Cooksey RW. Descriptive Statistics for Summarising Data.
Illustrating Statistical Procedures: Finding Meaning in Quantitative
Data. 2020 May 15:61-139.
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We believe that requiring the median allowed amount would provide
greater context and clarity with respect to the payer-specific
negotiated charge and would better enable price estimator tools to
develop and estimate an individual's personalized out-of-pocket cost,
enabling MRF users to more easily compare such standard charges across
hospitals.
c. Proposal To Add the 10th and 90th Percentile Allowed Amounts
We propose to revise Sec. 180.50(b)(2)(ii)(C) to require at new
Sec. 180.50(b)(2)(ii)(C)(2) that, beginning January 1, 2026, if a
payer-specific negotiated charge is based on a percentage or algorithm,
the hospital must calculate and encode a 10th and a 90th percentile
allowed amount in dollars for that item or service. We propose to
define ``tenth (10th) percentile allowed amount'' in Sec. 180.20 as
the 10th percentile of the total allowed amounts the hospital has
historically received from a third party payer for an item or service
for a time period no longer than the 12 months prior to posting the
MRF. If the calculated percentile falls between two observed allowed
amounts, the 10th percentile allowed amount is the next highest
observed value. We propose to define ``ninetieth (90th) percentile
allowed amount'' in Sec. 180.20 as the 90th percentile of total
allowed amounts the hospital has historically received from a third
party payer for an item or service for a time period no longer than the
12 months prior to posting the MRF. Should the calculated percentile
fall between two observed allowed amounts, the 90th percentile allowed
amount is the next highest observed value.
Research demonstrates that healthcare prices for a service can vary
widely even within one insurer, and are not uniformly distributed.\272\
However, requiring a hospital to post every possible value and the
frequency of those values would be highly burdensome to hospitals and
would produce unmanageably large data files that are difficult to
access and interpret. Therefore, our proposals for hospitals to encode
10th and 90th percentile allowed amounts, if a payer-specific
negotiated charge is based on a percentage or algorithm, is to provide
MRF users with useful information about the distribution of allowed
amounts as simply and directly as possible. We considered removing
outlier allowed amounts to provide MRF users a range of expected
allowed amounts that are not distorted by unusually low or high claims,
which are common in healthcare data (for example, we considered the
1st, 5th, and 99th percentile). Along with the median (which is the
50th percentile), the 10th and 90th percentiles convey information
about the likelihood, based on the distribution, of the allowed amounts
that the hospital has actually received for an item or service as, by
definition, 80 percent of observations fall between the 10th and 90th
percentile values. We believe that requiring the display of the 10th
and
[[Page 33794]]
90th percentile allowed amounts provides a means to better convey the
potential range of values for an item or service while reducing
volatility and wide ranges of price dispersion as demonstrated in Table
89. For example, in Table 89, the hospital would report $26,000 as the
90th percentile allowed amount. If we had asked for the 95th percentile
or the 99th percentile the hospital would report the maximum observed
value of $200,000. To identify appropriate statistics for our proposal,
we examined academic research that analyzed price transparency data
containing negotiated rates for in-network services and allowed amounts
for out-of-network services required by the Transparency in Coverage
final rule (85 FR 72158) for payer and group health plans. We observed
that these research studies on payer negotiated rates commonly use the
10th and 90th percentile as the lower and upward bound of their claim
and cost analyses.273 274 275 276 277 278 279 280
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\272\ Whaley C., Radhakrishnan, N., Richards, M., Simon, K.,
Chartock, B. (2025) Understanding health care price variation:
evidence from Transparency-in-Coverage data. Health Affairs Scholar,
3(2). https://pmc.ncbi.nlm.nih.gov/articles/PMC11798183/.
\273\ Xiao, R., Ross, J., Gross, C.P., & et al. (2022).
Hospital-administered cancer therapy prices for patients with
private health insurance. JAMA Internal Medicine, 182(6), 603-611.
\274\ Jiang, J., Makary, M., & Bai, G. (2022). Commercial
negotiated prices for CMS-specified shoppable radiology services in
U.S. hospitals. Radiology, 302(3):625-626.
\275\ Baker Institute for Public Policy. (2024). Price versus
costs: Unpacking hospital profits.
\276\ Rochlin, D.H., Rizk, N.M., Matros, E., Wagner, T.H., &
Sheckter, C.C. (2024). Negotiated rates for surgical cancer care in
the era of price transparency--Prices reflect market competition.
Annals of Surgery, 279(3), 385-391.
\277\ Oseran, A.S., et al. (2023). Price transparency and
cardiovascular spending: An important but incomplete first step.
Journal of the American Society of Echocardiography, 36(6), 578-580.
\278\ Stanton, E.W., Pedreira, R., Rizk, N., Swaminathan, A., &
Sheckter, C. (2024). Burn care funding in the era of price
transparency--Does verification signal bargaining power? Journal of
Burn Care & Research, 45(5), 1117-1123.
\279\ Lee J.Y., Muratov S., Tarride J-E., & Holbrook A.M.
Managing high-cost healthcare users: the international search for
effective evidence-supported strategies. (2018). Journal of the
American Geriatrics Society, 66(5):1002-8.
\280\ Hu, L., Li, L., Ji, J. & et al. Identifying and
understanding determinants of high healthcare costs for breast
cancer: a quantile regression machine learning approach. (2020) BMC
Health Serv Res 20, 1066.
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In the CY2024 OPPS/ASC final rule with comment period (88 FR
82100), we stated that we agreed with commenters that the display of a
maximum allowed amount could provide some clarity about the highest
dollar amount a consumer might be obligated to pay (once the consumer
calculates their own potential out-of-pocket obligation based on the
displayed maximum allowed amount). For example, suppose, with respect
to a particular payer and plan, the maximum allowed amount for an item
or service was displayed as $1,500, the plan featured a 20 percent
coinsurance requirement, and the individual had already met any
applicable annual deductible. In such a scenario, the individual would
likely not be required to pay more than $300 (20 percent of $1,500) for
the indicated item or service.\281\
---------------------------------------------------------------------------
\281\ We note that this scenario is slightly different than we
had portrayed at 88 FR 81540, 82101 that, in retrospect, we realized
was erroneous with respect to the deductible.
---------------------------------------------------------------------------
At that time, however, we elected not to adopt commenters'
suggestions to require hospitals to encode the maximum allowed amount
because, as we stated, a maximum dollar value derived from past
remittances or other data sources could include outliers, thereby
potentially misrepresenting an individual's required payment for an
item or service. The display of the maximum allowed amount could be
skewed to the point where it would not present useful information to
consumers or the public. As opposed to the maximum allowed amount,
however, the 90th percentile of the total allowed amounts for an item
or service would be more representative of the dollar amount the
individual might be responsible for paying, less subject to extreme
outliers, and would provide an additional data point to contextualize
the dollar value when the payer-specific negotiated charge for an item
or service is a percentage or algorithm. Similarly, we believe that
setting a threshold based at the 10th percentile would exclude outliers
on the low end, and, when combined with the other data elements,
provide MRF users with a better understanding of the realistic range of
standard charges.
As with the proposal to require the median allowed amount, we
believe the proposed 10th and 90th percentile allowed amount data
elements would help MRF users to develop patient-level solutions to aid
in patient financial planning and decision-making. The availability of
a range of reference points, including a lower (10th percentile),
median (50th percentile), and upper (90th percentile) allowed amounts,
would better enable healthcare consumers to compare cost information
across hospitals, empowering them to better be able to manage budgets,
avoid unexpected financial burdens, and make more fully informed and
value-conscious health care choices. Likewise, researchers, innovators,
policy officials, employers, and others MRF users would be able to use
the information to improve data analysis and develop more accurate
predictive models, better and more precisely model healthcare costs and
cost estimation algorithms, provide insights into healthcare pricing
dynamics, and gain a deeper understanding of price dispersion across
contracts that might provide a basis for negotiation and advocacy to
more effectively bargain with healthcare providers and payers to yield
more competitive pricing.
Furthermore, the 90th percentile allowed amount would be helpful
for assessing financial risk and identifying cases where costs exceed
typical ranges. This information could assist researchers and
innovators in refining cost predictions and contribute to better risk
management strategies.
We believe that requiring only the median allowed amount may not be
sufficient to provide innovators, researchers, and other MRF users with
a clear basis from which to calculate potential out-of-pocket
obligations. We believe that for consumers with insurance plans that
include coinsurance and deductibles, the 10th percentile allowed amount
and the 90th percentile allowed amount would provide critical potential
lower and upper reference points for estimating out-of-pocket expenses.
Therefore, by virtue of our proposal to require hospitals to provide
these two additional data points, MRF users would have more meaningful
statistics from the actual distribution of real prices, which we
believe would help to further contextualize the standard charge data
that is encoded as a percentage or algorithm, and additional data
points that innovators can use to provide more meaningful context when
creating data products for healthcare consumers to effectively compare
prices.
We note that, in many cases, the 10th percentile allowed amount,
median allowed amount, and 90th percentile allowed amount would fall
between two actual prices; in other words, where the total count n
would be an even number. We recognize that there are different
methodologies that can be used to calculate a specific percentile when
there is no single value. In such instances, we propose the hospital
should identify and display the next highest value for the 10th
percentile, median (50th percentile), and 90th percentile allowed
amounts, which would ensure that the value encoded in these allowed
amount data elements is an actual dollar amount received by the
hospital.
[[Page 33795]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.161
In the scenario detailed in Table 90, the hospital would calculate
the median allowed amount to be $21,000 and then would select the next
highest observed value, $22,000, to encode in the median allowed amount
data element. Similarly, the hospital would calculate the 10th
percentile to be $11,100 and select the next highest observed value,
$12,000, to encode in the 10th percentile allowed amount data element.
Finally, the hospital would calculate the 90th percentile to be $47,600
and select the next highest observed value, $50,000, to encode in the
90th percentile allowed amount data element.
We solicit comment on our proposed revision to Sec.
180.50(b)(2)(ii)(C) requiring hospitals to calculate and encode the
10th percentile, median (50th percentile), and 90th percentile allowed
amounts in dollars when the payer-specific negotiated charge is based
on a percentage or algorithm, as well as our proposed definition at
Sec. 180.20 of ``tenth (10th) percentile allowed amount,'' ``median
allowed amount,'' and ``ninetieth (90th) percentile allowed amount.''
d. Calculation of Allowed Amounts
(1) Determining the ``Total Allowed Amount''
We note that, under the proposed definition of ``median allowed
amount,'' ``10th percentile allowed amount,'' and ``90th percentile
allowed amount'' at Sec. 180.20, hospitals would calculate the allowed
amount considering the ``total allowed amount'' for an item or service.
The ``total allowed amount'' dollar figure would be derived from the
gross charge minus contractual adjustments and consist of the portion
billed to a payer for a particular plan and the portion, if any, billed
to the patient. As with the estimated allowed amount in the current
rule, and as we explained in the CY 2024 OPPS/ASC final rule with
comment period (88 FR 82101), the amount should reflect the total
amount the hospital was reimbursed for the item or service (or service
package). We believe defining the ``total allowed amount'' this way
would help to enhance consistency in how hospitals calculate this
contextual data element, increasing comparability across hospitals. As
described in more detail later in this section, hospitals would
determine the ``total allowed amount'' from EDI 835 ERA transaction
data, which includes information about what the hospital was reimbursed
by the plan, any secondary or other payer payment, and the patient's
cost sharing responsibility for an item or service.
(2) Data Source for Calculating the Allowed Amounts
In the CY 2024 OPPS/ASC final rule with comment period, we stated
our belief at the time that hospitals should retain flexibility, in the
interest of reducing burden, to determine the best data source(s) for
calculating the estimated allowed amount data element, though we agreed
with commenters that using information from EDI 835 ERA transaction
data would appear to meet our requirements (88 FR 82101). To enhance
the consistency of hospital standard charge information and the
comparability of the median allowed amount, and the 10th percentile and
the 90th percentile allowed amounts, and in accord with what commenters
had earlier suggested, we propose to require that hospitals only use
EDI 835 ERA transaction data to calculate and encode the allowed
amounts. As we had indicated, EDI 835 ERA transaction data, the
electronic transaction data that provides claim payment information
that hospitals use to track and analyze their claims and reimbursement
patterns, including any adjustments made to the claim such as denials,
reductions, or increases to the amount charged, and expected patient
co-pays, co-insurance or secondary coverage, would meet the requirement
to calculate an allowed amount (88 FR 82100 through 82101). We seek
comment on the proposal to require that hospitals only use EDI 835 ERA
transaction data to calculate and encode the allowed amounts. We also
seek comment on whether there are instances where a hospital would not
have access to EDI 835 ERA transaction data and whether there are
alternative data sources we should consider requiring hospitals to use
to calculate the allowed amounts and count of allowed amounts.
(3) Lookback Period for Calculating the Allowed Amounts
In the CY 2024 OPPS/ASC final rule with comment period, we also
declined to specify a lookback period for hospitals when calculating
the estimated allowed amount. This flexibility was intended to reflect
the variations in frequency and timing with which hospitals negotiate
contracts with payers. The estimated allowed amount was intended to
reflect the average reimbursement in dollars a hospital received. Our
expectation was that hospitals would calculate the historical amount
they received from a payer for an item or service based on the most
[[Page 33796]]
recent reimbursement under that negotiated algorithm or percentage.
However, we have come to understand that if hospitals use
substantially different lookback periods, particularly across multiple
years, it could distort the allowed amounts, for example, because of
pricing changes over time such as inflation, efficiencies, or the
introduction of new products or services. Additionally, hospitals using
varied lookback periods reduces comparability across MRFs.
As such, to help ensure that all hospitals calculate the allowed
amount data elements consistently and calculate them based on the most
recent reimbursements, we propose to require that hospitals base the
median allowed amount, the 10th and 90th percentile allowed amounts,
and the count of allowed amounts (discussed in a later section) on EDI
835 ERA transaction data from no longer than 12 months prior to posting
the MRF. We propose that if the negotiated percentage or algorithm
associated with the allowed amounts was only used for a portion of the
12-month time period prior to posting the MRF, the hospital would
encode the median allowed amount (and 10th and 90th percentile allowed
amounts, and count of allowed amounts) from the EDI 835 ERA transaction
data for the portion of time that the percentage or algorithm was used.
We propose that if the negotiated percentage or algorithm associated
with the allowed amounts was used for the entire 12-month time period
prior to posting the MRF, the hospital would encode the median allowed
amount (and 10th and 90th percentile allowed amounts, and count of
allowed amounts) from the EDI 835 ERA transaction data for the entire
12-month time period prior to posting the MRF. A hospital may therefore
need to use different lookback periods to calculate the allowed amounts
for each payer, depending on when a contract was negotiated. We
acknowledge that there may be situations where the EDI 835 ERA
transaction data is not yet final or may change after the allowed
amounts are encoded in the MRF due to additional adjustments being
applied to a claim(s), and so we clarify that the allowed amounts
should be based on the EDI 835 ERA transaction data available at the
time the MRF is updated.
We considered the efficacy of various lookback periods to calculate
and encode the allowed amount data elements, and looked to research to
help us gauge potential lookback periods for generating price data
based on historic claims remittances.282 283 As we discuss
below, we considered a 3- or 6-month lookback period, and requiring
hospitals to use a rolling 12-month period prior to when the MRF
posted.
---------------------------------------------------------------------------
\282\ National Academy for State Health Policy Palliative Care
in Medicaid Costing Out the Benefit: Actuarial Analysis of Medicaid
Experience, December 17, 2022 https://nashp.org/palliative-care-in-medicaid-costing-out-the-benefit-actuarial-analysis-of-medicaid-experience/.
\283\ Xie, Q.Y., Schreier, G., Hoy, M., Liu, Y., Neubauer, S.,
Chang, D.C.W., Redmond, S.J., & Lovell, N.H. (2016). Analyzing
health insurance claims on different timescales to predict days in
hospital. Journal of Biomedical Informatics, 60, 187-196. https://www.sciencedirect.com/science/article/pii/S1532046416000034.
---------------------------------------------------------------------------
While a shorter lookback period (3- or 6-month) could be useful for
accounting for recent healthcare trends and identifying quick changes
in allowed amounts, with respect to less frequently provided items and
services, we acknowledge that hospitals may not have any claims
remittance data from such a short time period from which to derive the
allowed amount data elements, which would result in numerous blanks in
the MRF. Additionally, timely filing limits for claims vary by state
and payer, with a typical range of 30 days to 12 months from the date
of service, with some longer claim
periods.284 285 286 287 288 289 Therefore, using a 3-month
or 6-month lookback period to derive the median, 10th, and 90th
percentile allowed amounts, and count of allowed amounts, could result
in numerous blanks in the MRF for some items and services and would not
accomplish our goal of providing MRF users with meaningful and
comparable price data.
---------------------------------------------------------------------------
\284\ National Academy for State Health Policy. Palliative Care
in Medicaid Costing Out the Benefit: Actuarial Analysis of Medicaid
Experience, December 17, 2022 https://nashp.org/palliative-care-in-medicaid-costing-out-the-benefit-actuarial-analysis-of-medicaid-experience/.
\285\ Xie, Q.Y., Schreier, G., Hoy, M., Liu, Y., Neubauer, S.,
Chang, D.C.W., Redmond, S.J., & Lovell, N.H. (2016). Analyzing
health insurance claims on different timescales to predict days in
hospital. Journal of Biomedical Informatics, 60, 187-196. https://www.sciencedirect.com/science/article/pii/S1532046416000034.
\286\ Washington State Office of the Insurance Commissioner.
What medical providers need to know about health insurance. https://www.insurance.wa.gov/what-medical-providers-need-know-about-health-insurance.
\287\ Texas Department of Insurance. (Last Updated on March 25,
2025) Prompt Pay FAQ. https://www.tdi.texas.gov/hprovider/ppsb418faq.html.
\288\ Centers for Medicare & Medicaid Services (CMS). (2011)
Transmittal 2140: Changes to the Time Limits for Filing Medicare
Fee-For-Service Claims. https://www.cms.gov/regulations-and-guidance/guidance/transmittals/downloads/r2140cp.pdf.
\289\ 42 CFR 447.45(d)(1). https://www.ecfr.gov/current/title-42/part-447/section-447.45#p-447.45(d)(1).
---------------------------------------------------------------------------
After considering these alternative options, we propose that the
lookback period for the median allowed amount (and 10th and 90th
percentile allowed amounts, and count of allowed amounts, discussed in
a later section) be based on EDI 835 ERA transaction data from no
longer than 12 months prior to posting the MRF. As discussed
previously, we propose that if the negotiated percentage or algorithm
associated with the allowed amounts was only used for a portion of the
12-month time period prior to posting the file, the hospital would
encode the median allowed amount (and 10th and 90th percentile allowed
amounts and count of allowed amounts) from the EDI 835 ERA transaction
data for the portion of time that the percentage or algorithm was used.
We believe that limiting the lookback period to no more than 12 months
prior to posting the MRF would be consistent with section 2718(e) of
the Public Health Service Act that refers to ``for each year,'' and our
regulations that require the MRF to be updated at least annually (42
CFR 180.50(e) and 180.60(e)). Additionally, for most items and
services, it would allow hospitals the ability to amass sufficient
claims remittance data at the payer and plan level to encode a price.
Where a hospital's payer contracts were initiated or renegotiated in a
lesser period than the previous 12 months, with respect to those
contracts we propose that a hospital would apply whatever period of
applicability existed. As noted above, hospitals may need to employ
different lookback periods for payers and plans, depending on when a
contract was negotiated. Should it be finalized as proposed, this
approach would, we believe, help achieve the purpose of Executive Order
14221 to require disclosure of a real price and help achieve our goal
of ensuring pricing information is standardized and easily comparable
across hospitals when a hospital's payer-specific negotiated charge is
based on a percentage or algorithm. We also would carefully monitor its
implementation and effectuation by hospitals to ensure that is the case
and may in the future consider alternative or additional proposals
should we observe weaknesses or flaws.
We solicit comment on our proposal to require hospitals, beginning
January 1, 2026, to use EDI 835 ERA transaction data to calculate and
encode the median allowed amount, the 10th and 90th percentile allowed
amounts (and count of allowed amounts, discussed in the next section).
We seek comment on any instances where a hospital would not have access
to EDI 835 ERA transaction data and whether there are alternative
[[Page 33797]]
data sources we should consider requiring hospitals to use to calculate
the allowed amounts and count of allowed amounts. Finally, we solicit
comment on our proposal to require that the lookback period for the
median allowed amount, the 10th and 90th percentile allowed amounts
(and count of allowed amounts) be based on EDI 835 ERA transaction data
from no longer than 12 months prior to posting the MRF.
4. Proposal for Hospitals To Encode the Count of Allowed Amounts
Because the percentage or algorithm reported by a hospital is based
on the contract a hospital has with a particular payer for a particular
plan, the median allowed amount would be calculated as the median of
the total allowed amounts (after all adjustments and payments on the
claim) for an item or service under a particular plan, and the 10th and
90th percentile allowed amounts would be calculated as the 10th
percentile and the 90th percentile of the total allowed amounts (after
all adjustments and payments on the claim) for an item or service under
a particular plan. As part of our proposal to require hospitals to
encode the median, 10th percentile, and 90th percentile allowed amounts
if a hospital's payer-specific negotiated charge is based on an
algorithm or percentage, we also propose to require hospitals to encode
the count of allowed amounts that were used to calculate the median,
10th percentile, and 90th percentile allowed amounts when the standard
charge is based on a percentage or algorithm. We propose that the same
count of allowed amounts would be used to calculate the median, 10th
percentile, and 90th percentile allowed amounts. By providing
additional context regarding the number of values used to calculate the
median, 10th, and 90th percentile allowed amounts--because more price
volatility might reasonably be anticipated with respect to a less
frequently performed service--the count of allowed amounts in the EDI
835 ERA transaction data would help MRF users determine whether those
are reasonably good approximations of what typically would be generated
by the payer-specific negotiated charge percentage or algorithm.
Knowing the number of claims used to derive the allowed amounts allows
the MRF user to assess how representative the median, 10th and 90th
percentile allowed amounts are of the overall price distribution for
the item or service. For example an MRF user may question the
reliability of the encoded median, 10th and 90th percentile allowed
amounts for a smaller sample of allowed amounts and may feel greater
reassurance that these values are more statistically valid if a large
number of allowed amounts was used to derive them. We believe this data
element would also help drive understanding of the accuracy and
completeness of the file as, where applicable, we also propose that
hospitals would be required to disclose why they are unable to
calculate a median allowed amount based on a lack of EDI 835 ERA
transaction data.
We propose requiring hospitals to encode this data element based on
the actual number of allowed amounts within the EDI 835 ERA transaction
data utilized to calculate the allowed amount data elements, except
that we also propose that hospitals exclude zero-dollar claims from the
count of allowed amounts. Zero-dollar claims are healthcare claims
submitted by the hospital to a payer organization where the payment
amount is zero, and they arise because of payer contractual situations
where a service is not reimbursed for reasons including, but not
limited to: when provided with a mix of other services, if the service
was performed more than a specified number of times within a specified
time period, lack of prior authorization for services, pre-existing
condition exclusions, services deemed not medically necessary, and
patients not having yet met their deductibles. Hospitals submit claims
that result in no payment for some items and services because they
provide information for the payer to calculate and process payment for
the mix of services furnished, not because it results in a separate
payment for that item or service. We propose to exclude them because
they would result in misleading and skewed calculation of the median,
10th, and 90th percentile allowed amounts. The count of allowed amounts
should be based on the number of allowed amounts used to calculate the
allowed amounts. For example, if 184 allowed amounts were used to
derive the median, 10th, and 90th percentile allowed amounts for a
particular item or service, the hospital would encode ``184'' as the
value for the count of allowed amounts. If a hospital only had 1
allowed amount within the EDI 835 ERA transaction data for an item or
service, the hospital would encode a ``1'' as the value for the count
of allowed amounts.
We also acknowledge that, in certain situations (for example, in
the case of a new hospital, or a hospital contracting with a new payer
organization or a newly renegotiated contract), a hospital may have no
historical claim remittance history from which to derive a median,
10th, or 90th percentile allowed amount for a payer and plan. Should a
hospital have a ``0'' count of allowed amounts from the most recent 12-
month time period from which to derive the allowed amounts for a
particular item or service, we propose that it would encode ``0'' as
the value for the count of allowed amounts for a specific payer and
plan and may leave the median, 10th, and 90th percentile allowed
amounts in the MRF blank. In such cases, we propose to require
hospitals to encode information to explain the hospital's insufficient
claim remittance history in the additional notes data element. In
particular, should a hospital have no claims with the payer because it
is a new or revised payer contract, we propose that a hospital should
encode ``new or recently revised payer contract'' in the additional
notes data element. We also note that nothing would preclude a hospital
from updating its MRF when it has one or more remittances for an item
or service.
We considered proposing an alternative approach of requiring
hospitals to provide the range, or categories, of the count of allowed
amounts, for example less than 10, 10-49, 50-99, 100-149, 150-199, 200-
499, and 500 and over. Requiring hospitals to report ranges for the
count of allowed amounts would have similarly met the objective of
providing the needed context to the allowed amounts and helped inform
users of the volatility of the price, and providing standard ranges
could have improved the ability to compare across MRFs without the
variability of individual counts. Although we believe the policy that
we elected to propose offers greater precision and information value,
we nevertheless believe that such an alternative approach still would
have achieved our goal of providing clarity and context about the
encoded price, as well as providing standard range values that can be
used for comparison across MRFs. We seek comment on whether knowing a
precise count of allowed amounts is helpful to determine the volatility
of the price encoded in allowed amount data elements, or if knowing
that allowed counts fell within a particular range is sufficient.
We also seek comment on particular range criteria, and, were we to
finalize this alternative approach as opposed to our proposed approach,
we might incorporate commenter feedback to provide more guidance on how
the ranges would be encoded and the valid values required in the CMS
Hospital Price Transparency--Data Dictionary GitHub Repository website.
For example, were a hospital to base the
[[Page 33798]]
allowed amount data elements on 184 allowed amounts within the EDI 835
ERA transaction data, the hospital would select a predetermined range,
such as 150-199 allowed amounts.
We solicit comment on our proposed revision to Sec.
180.50(b)(2)(ii)(C) to require hospitals to calculate and encode the
count of allowed amounts used to calculate the median, 10th, and 90th
percentile allowed amounts, as well as on our proposal that hospitals
encode this data element with the actual number of allowed amounts used
within the EDI 835 ERA transaction data. We also solicit comment on the
alternative we considered of encoding the count of allowed amounts
using a standardized range of the number of allowed amounts used within
the EDI 835 ERA transaction data, rather than the actual number of
allowed amounts, and seek comment on standardized range values of
counts of allowed amounts that would be useful.
5. Proposal To Modify the MRF Affirmation Statement
We propose to supplant the existing affirmation requirement by,
instead, specifying at new Sec. 180.50(a)(3)(iii) that, beginning
January 1, 2026, hospitals would be required to attest in their MRFs to
the following statement: ``The hospital has included all applicable
standard charge information in accordance with the requirements of
Sec. 180.50, and the information encoded is true, accurate, and
complete as of the date in the file. The hospital has included all
payer-specific negotiated charges in dollars that can be expressed as a
dollar amount. For payer-specific negotiated charges that cannot be
expressed as a dollar amount in the machine-readable file or not
knowable in advance, the hospital attests that the payer-specific
negotiated charge is based on a contractual algorithm, percentage or
formula that precludes the provision of a dollar amount and has
provided all necessary information available to the hospital for the
public to be able to derive the dollar amount, including, but not
limited to, the specific fee schedule or components referenced in such
percentage, algorithm or formula.'' We also propose at new Sec.
180.50(a)(3)(iv) that, beginning January 1, 2026, the hospital must
encode within the MRF the name of the hospital chief executive officer,
president, or senior official designated to oversee the encoding of
true, accurate and complete data as directed in Sec.
180.50(a)(3)(iii).
We propose to adopt this attestation to make clear to hospitals,
MRF users, and to the public our expectations that the hospital should
accurately and completely encode all available standard charge
information, and if the hospital established a standard charge as a
dollar amount, the hospital would display the standard charge as a
dollar amount, and if the hospital is unable to display standard
charges as a dollar, the hospital would be required to provide all
information necessary to derive a dollar amount. We intend this public
declaration to establish for MRF users and for CMS actionable certainty
on the accuracy and completeness of the standard charge information
displayed. We also intend that this public declaration would increase
hospital accountability to the MRF users that the data is complete as
of the date indicated in the file. We believe demonstrating our
strengthened expectations will result in the public display by
hospitals of more meaningful data for MRF users.
Since the proposed new attestation requirements at Sec.
180.50(a)(3)(iii)-(iv) would supplant, with significantly stronger
provisions, certain existing requirements, we believe those particular
existing requirements would become superfluous and propose to remove
them. Provisions that we propose to remove, effective December 31,
2025, include the affirmation requirement now at Sec. 180.50(a)(3)(ii)
and the requirement at Sec. 180.50(a)(3)(i), which states, beginning
January 1, 2024, that each hospital must make a good faith effort to
ensure that the standard charge information encoded in the MRF is true,
accurate, and complete as of the date indicated in the MRF.
Specifically, we believe the attestation requirement that we propose
would not only incorporate those concepts, but, in fact, would mandate
significantly heightened hospital recognition of their responsibilities
than what we presently require. We believe that our proposed
attestation requirements, if finalized as proposed, would reduce public
confusion related to whether all standard charges for hospital items
and services, where possible, are included within the MRF as dollar
amounts. Additionally, should our proposal be finalized as proposed, it
would establish that the hospital has provided all available
information to enable the public to derive a dollar amount, including,
but not limited to, the specific fee schedule or components referenced
in a percentage, algorithm or formula. We believe this would provide
the necessary reassurance that hospitals have provided in their MRFs
meaningful, accurate information to MRF users about their standard
charges for health care items and services in order for those users to
fully realize the intended use of the MRFs as expressed in the CY 2020
HPT final rule--that is, for enhancing the public's ability to use the
data in, for example, innovator developed consumer tools and in EHRs at
the point of care for value-based referrals, or to aggregate and use
the data to increase competition.
We stated in the CY 2024 OPPS/ASC final rule with comment period
that we believed an affirmation in the hospital's MRF, which we
finalized in that rulemaking, would lessen public confusion related to
the accuracy and completeness of the data in the file and improve CMS'
ability to assess both the completeness and accuracy of the MRF, and
that by improving assessment of compliance, CMS would improve its
enforcement capabilities. Through rulemaking and during subsequent
public engagement and outreach, CMS has received numerous comments and
inquiries from the public and interested parties leading us to question
the sufficiency of the current affirmation requirement. For example, we
have heard from MRF users that they were unsure whether the absence of
standard charge information meant that the hospital had not established
a standard charge or if the hospital had not complied with the
requirement to disclose those charges in the MRF. We have heard from
MRF users that they questioned whether hospitals have included all
items and services they offer or if they included all payer and plan
combinations for the payer-specific standard charges they have
established. We have received complaints that hospitals are obfuscating
standard charge dollar amounts and instead only encoding payer-specific
standard charges as percentages and algorithms. We have also received
questions regarding our assessment of the accuracy and completeness of
the standard charge information displayed by hospitals in their MRFs.
We also noted in the 2024 OPPS/ASC final rule with comment period that,
while we believe enforcement of HPT requirements is CMS's role, the law
places responsibility on hospitals to establish and make public
complete and accurate standard charge information.
We also have received comments from MRF users since the effective
date of the 2024 OPPS/ASC final rule with comment period indicating
that requiring hospitals to make a good faith effort did not go far
enough to convey CMS' intent that all standard charge information
available must be encoded in the MRF, with commenters suggesting our
requirement to allow a good faith estimate may actually deter
[[Page 33799]]
hospitals from providing fully complete and accurate standard charge
data in their MRF. MRF users have also questioned hospitals' inability
to encode dollar amounts for the payer-specific negotiated charge data
elements, and, relatedly, whether the notion that hospitals and payers
use complex contracting methodologies really means the amount for an
item or service could only be expressed as an algorithm or formula and
not a dollar amount. Similarly, MRF users have questioned why specific
contract methodologies, when coupled with an algorithm, preclude a
hospital from specifying a dollar amount, with these MRF users also
indicating they were unsure that all the hospital standard charge data
was, in fact, fully encoded in the MRF. We do not find it surprising
that MRF users, upon finding only a consumer-unfriendly algorithm, may
be unable to easily compare pricing information across hospitals;
efforts to rectify that give rise to some of our proposals here. We
also provided clarification in the 2024 OPPS/ASC final rule with
comment period, (88 FR 82096) and reiterated in recently issued
guidance, that if a hospital can derive a dollar amount for a
hospital's payer-specific negotiated charge, it must encode that dollar
value in the MRF's ``payer-specific negotiated charge: dollar amount''
data element.\290\ Nevertheless, we acknowledge that we do not believe
that all hospitals, in all instances, can produce a payer-specific
negotiated charge in dollars that meets the definition of a ``standard
charge.'' Thus, we clarify that a hospital may display a payer-specific
negotiated charge as a standard algorithm to the extent a standard
algorithm is the manner by which the hospital establishes its standard
charges with third party payers, and in such instances, as provided at
Sec. 180.50(b)(2)(ii)(C), the MRF must also describe the percentage or
algorithm that determines the dollar amount for the item or service. In
the 2024 OPPS/ASC final rule with comment period (88 FR 82098), we
provided direction for hospitals on how to encode standard charges as
an algorithm, stating that descriptions for algorithms could include,
for example, a link to the algorithm used, a descriptor of a commonly
understood algorithm, or a list of factors that would be used to
determine the individualized allowed amount in dollars. Our expectation
is that hospitals will encode the necessary information to enable MRF
users to have all the factors of the algorithm required to be able to
derive a price.
---------------------------------------------------------------------------
\290\ Updated Hospital Price Transparency Guidance Implementing
the President's Executive Order ``Making America Healthy Again by
Empowering Patients with Clear, Accurate, and Actionable Healthcare
Pricing Information,'' May 22, 2025, https://www.cms.gov/files/document/updated-hpt-guidance-encoding-allowed-amounts.pdf.
---------------------------------------------------------------------------
To provide CMS actionable and enforceable certainty, and MRF users
additional assurance, including in situations where the hospital's
payer-specific negotiated charge is based on a contractual algorithm,
percentage, or formula by which a hospital genuinely cannot specify a
dollar amount, we propose at Sec. 180.50(a)(3)(iii) to require that a
hospital attest in its MRF to the accuracy and completeness of the
data, and at Sec. 180.50(a)(3)(iv) to require that a hospital include
the name of the hospital chief executive, president, or other senior
official designated by the hospital's leadership to maintain true,
accurate, and complete MRF data, to establish that the data was
reviewed and verified by the hospital's leadership. Requiring an
individual's name be specified would also, we believe, expedite our
ability to quickly identify an individual at the hospital to obtain,
where necessary, further clarity regarding the MRF data. In connection
with this proposed requirement, we propose to add a new general data
element, attester name, and should the proposal be finalized as
proposed, we would provide, on the CMS Hospital Price Transparency--
Data Dictionary GitHub Repository website, instruction on how to encode
this data element.
We acknowledge that, at Sec. 180.50(d)(6)(i)(D), we already
require hospitals to include in their .txt files a hospital point of
contact. But, that existing requirement was added as part of our
efforts to improve the automated accessibility of MRFs (88 FR 82111).
This point of contact was generally intended to identify for the MRF
users who used the .txt requirement to retrieve hospitals MRF urls an
individual capable of answering technical questions about a hospital's
MRF. We noted in the CY 2024 OPPS/ASC final rule with comment period
that the designation of a primary point of contact to address technical
questions regarding the MRF per that requirement would not in itself
assure accuracy or completeness of an MRF (88 FR 82116). Thus, we
believe that existing requirement is distinct from our proposed
requirement here that a hospital specifically encode within the MRF
file itself the name of a senior official designated by the hospital's
leadership to maintain true, accurate, and complete MRF data, but we
seek comment on whether our current requirement at Sec.
180.50(d)(6)(i)(D) adequately assures all MRF users of the accuracy and
completeness of the data encoded within the hospitals' MRF.
We appreciate the need the public has expressed, as conveyed by
their feedback to us, for greater assurance that MRF standard charge
information is true, accurate, and complete, which is, in part, why we
propose that hospitals include this revised attestation statement in
the MRF. We believe that strengthening this attestation about the
veracity of the MRF data, in lieu of the existing good faith effort
requirement, would better assure us and MRF users that the data encoded
is accurate and complete. Such greater assurance would not, however,
diminish CMS's role as the hospital price transparency enforcer or
alter our view that the False Claims Act is outside the scope of this
proposed rule just as we expressed at 88 FR 82086 that it was outside
the scope of that final rule with comment period, and attestations will
not alter our use of the regulatory alternatives outlined at Sec.
180.70 to monitor and enforce hospital compliance with our
requirements.
In the 2024 OPPS/ASC final rule with comment period, at Sec.
180.70(a)(2)(iv), we extended our compliance authority to require, upon
our request, an authorized hospital official to submit to CMS a
certification as to the accuracy and completeness of the standard
charge information posted in the MRF. Independent of our proposal here,
we continue to believe that it is necessary for CMS to have the
authority, as part of our monitoring processes, to require a formal
certification by an authorized hospital official to resolve any
specific questions related to the standard charges displayed by a
hospital and the items and services for which the hospital has
established a standard charge. As part of that existing authority, we
may also require further assurance that within the hospital's MRF, any
payer-specific negotiated standard charges that cannot be expressed as
a dollar amount in the MRF are based on a contractual algorithm,
percentage, or formula that precludes the provision of a dollar amount.
We expect that the authorized hospital official who is named as the
Attester in the MRF is the same authorized hospital official who would
submit to CMS a certification to the accuracy and completeness of the
MRF data. In the 2024 OPPS/ASC final rule with comment period, we also
finalized at Sec. 180.70(a)(2)(v) that we will require hospitals to
submit to us, upon our request, additional documentation as may be
necessary to make a determination of hospital compliance. In response
to a request from CMS, a
[[Page 33800]]
hospital must supply sufficient source documentation to satisfy CMS
that the hospital has met the regulatory requirements. We believe our
attestation proposal here complements the authority finalized in the
2024 OPPS/ASC final rule with comment period to provide CMS with
adequate documentation to determine the accuracy and completeness of a
hospital's price transparency files.
We considered several alternatives to altering the required
affirmation within the MRF. First, we considered proposing that
hospitals would be required to submit their MRF attestation directly to
CMS, using a CMS-developed template that would provide evidence of the
accuracy and completeness of the MRF. We did not propose such an
alternative because we believe that the attestation statement and the
name of the authorized hospital official should remain within the MRF
to streamline our compliance process and reassure users of the MRF
about the accuracy and completeness of the information. This
alternative would also, we believe, be duplicative of the CMS's
existing authority at Sec. 180.70(a)(2)(iv). In the 2024 OPPS/ASC
final rule with comment period, we noted that many other CMS programs
require the submission of an attestation; for brevity we do not repeat
them here, but refer the reader to that discussion at 88 FR 82085.
Though we did not mention it there, we note that the CMS-1500, the
standard claim form used by non-institutional providers and suppliers
to bill Medicare and other payers, and CMS-1450, the standard claim
form used by institutional healthcare providers to bill for services,
also both contain certification provisions.
We seek comment on whether CMS should require hospitals to post, on
their publicly available websites that host the hospital MRF, a
standalone attestation document that would be signed by a hospital
senior official. We viewed such an alternative as less useful than what
we have proposed because MRF users, innovators, researchers, employers,
other policy makers, and CMS, frequently access hospitals' MRFs from
hospital websites in an automated fashion, and where an attestation
would consist of a separate standalone document it would not ``travel''
inside the MRF like the current affirmation statement, potentially
hindering effective automated retrieval. Moreover, we stated in the CY
2024 OPPS/ASC proposed rule that requiring hospitals to add the then-
proposed affirmation directly in their MRF would make it clear to the
public that it relates directly to that MRF and would mitigate the
potential for confusion if we only required that the affirmation appear
on a website that links to the hospital's MRF, especially if that
website also links to other hospital MRFs. In short, we believe that
separating the attestation from the MRF could add complexity to
existing automation processes, introduce more public confusion about
the intent of the attestation, and defeat one of our primary objectives
of having hospitals better assure the public of the accuracy and
completeness of hospitals' MRFs. However, we acknowledge that MRFs are
not necessarily particularly healthcare consumer friendly and
frequently are very large files, so there may be merit to requiring a
separate, easily retrieved attestation document. We seek comment on
this alternative.
We seek comment on our proposal to add Sec. 180.50(a)(3)(iii)
which, beginning January 1, 2026, would require hospitals to include in
their MRFs the following attestation: ``The hospital has included all
applicable standard charge information in accordance with the
requirements of Sec. 180.50, and the information encoded is true,
accurate, and complete as of the date in the file. The hospital has
included all payer-specific negotiated charges in dollars that can be
expressed as a dollar amount. For payer-specific negotiated charges
that cannot be expressed as a dollar amount in the MRF or not knowable
in advance, the hospital attests that the payer-specific negotiated
charge is based on a contractual algorithm, percentage or formula that
precludes the provision of a dollar amount and has provided all
necessary information available to the hospital for the public to be
able to derive the dollar amount, including, but not limited to, the
specific fee schedule or components referenced in such percentage,
algorithm or formula.'' We also seek comment on our proposal, in Sec.
180.50(a)(3)(iv), to require, beginning January 1, 2026, that hospitals
include a data element in the MRF to encode the name of the hospital
chief executive officer, president, or senior official designated to
oversee the encoding of true, accurate, and complete data as directed
in Sec. 180.50(a)(3)(iii). Finally, we seek comment on our proposal to
remove, as superseded and rendered unnecessary by virtue of these
stronger proposed requirements, effective January 1, 2026, Sec.
180.50(a)(3)(i), which states that beginning January 1, 2024, a
hospital must make a good faith effort to ensure that the standard
charge information encoded in the MRF is true, accurate, and complete
as of the date indicated in the MRF, and the affirmation statement at
Sec. 180.50(a)(3)(ii).
6. Proposal To Report Hospital National Provider Identifier (NPI)
Information in the Machine Readable File
We propose to revise Sec. 180.50(b)(2)(i)(A) to require hospitals,
beginning January 1, 2026, to report a unique identifier, specifically
their NPI(s), in their MRFs. We believe that having hospitals add their
NPI(s) to the MRF would improve the comparability of HPT and other
healthcare data, including health plan transparency data from the
Transparency in Coverage (TiC) MRFs. Below, we explain the details of
this proposal, including how we propose that hospitals would encode
their NPI(s) in their MRFs.
An NPI is a unique 10-digit number used to identify healthcare
providers and organizations, including hospitals.\291\ All healthcare
providers that are Health Insurance Portability and Accountability Act
(HIPAA)-covered entities must obtain an NPI.\292\ Healthcare providers
who are individuals are assigned a Type 1 NPI and healthcare providers
that are organizations are assigned a Type 2 NPI (69 FR 3440). Type 2
NPIs are also known as organizational NPIs. ``Subparts'' of
organizations--which are components of the same organization that may
be separately licensed or identified \293\--may also obtain a Type 2
NPI (69 FR 3441) if they conduct HIPAA standard transactions separately
\294\ from the main organization (45 CFR 162.410(a)(1)). Entities and
individuals maintain NPIs unless they are deactivated upon request,
death, or dissolution (45 CFR 162.408(c)), and NPIs do not change if
provider name, EIN, or state licensure changes (69 FR 3441). There are
several internet-based NPI lookup tools available online, including
CMS's National Plan & Provider Enumeration System (NPPES) NPI
registry.\295\ NPIs are commonly used in other CMS systems for
financial transactions, and for other health care
[[Page 33801]]
data sets, including claims, utilization, and quality data sets.
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\291\ https://www.cms.gov/regulations-and-guidance/administrative-simplification/nationalprovidentstand.
\292\ Ibid.
\293\ Guidance on NPI Enumeration; 45 CFR 162.412(b). https://www.cms.gov/files/document/guidance-national-provider-identifier-npi-enumeration-pdf.pdf.
\294\ https://www.cms.gov/regulations-and-guidance/administrative-simplification/nationalprovidentstand/downloads/medsubparts01252006.pdf.
\295\ CMS's NPPES registry is available online at the following
website address: https://npiregistry.cms.hhs.gov/.
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In the CY 2020 HPT final rule (84 FR 65555), we stated that, by
ensuring accessibility to all hospital standard charge data for all
items and services, these data would be available for use by the public
in price transparency tools, to be integrated into electronic health
records (EHRs) for purposes of clinical decision making and referrals,
or to be used by researchers and policy officials to help bring more
value to healthcare. Similarly, in the TiC final rule (85 FR 72160), we
indicated that the release of standard charge data would strengthen
America's health care system by giving health care consumers,
researchers, regulators, lawmakers, health innovators, and other
interested parties in health care the information they need to make or
assist others in making informed decisions about health care purchases.
In the CY 2024 OPPS/ASC final rule with comment period (88 FR 82027),
we further advanced standardization of the MRF to reduce data coding
inconsistencies that hindered the machine-readability of the data in
the files, which at the time presented a barrier to the intended use of
the data and reinforced our goal to advance the utility of the MRF
data. With this proposal, we take additional steps to remove barriers
to effective use of this data.
Under the current HPT regulations at Sec. 180.50, hospitals must
provide identifying information, including hospital name, address,
license number, and the Employer Identification Number (EIN) either in
the MRF file name or the file itself. While these elements help to
identify the hospital, interested parties have told us that they are
inadequate to facilitate comparing hospital MRF data with other
datasets that include hospital-related information and that a standard
identifier would bolster these efforts. In particular, we are told that
the MRF's lack of a standard identifier hinders efforts to compare
standard charge data across MRFs and limits opportunities to automate
the comparison and analysis of HPT and TiC MRF data. Innovators,
researchers and other MRF users have stressed to us the importance of
including standard identifiers to streamline data and reduce the
complexity of analyzing numerous and different disclosures. The
currently required hospital license number is useful to help crosswalk
the name of the hospital with the state license number, but because it
differs from the identifier required in the TiC files, innovators and
researchers have noted that they find it difficult to compare across
files. We also note that EINs, while required as part of the naming
convention for the hospital MRF and included in the TiC MRF, are
generally not included in CMS datasets or other public financial and
claims datasets. Therefore, we believe it is important to propose to
require hospitals to report a standard identifier, specifically the
NPI, which is used in other CMS systems such as the Provider
Enrollment, Chain, and Ownership System (PECOS), and the TiC MRFs, to
maximize comparability across data and files.
Moreover, Executive Order 14221 requires HHS to ensure that pricing
information is standardized and easily comparable across hospitals and
health plans.\296\ To this end, we believe it is important to align the
HPT MRF and the TiC identifier data element. Under the TiC final rule
(85 FR 72158), and as described in the TiC GitHub schemas for the ``In-
Network File,'' ``Out-Of-Network Allowed Amount File,'' and the
optional ``Provider Reference File,'' most group health plans and
health insurance issuers must post pricing information, and such
pricing information must be associated with a provider's NPI to ensure
that consumers have reliable data and can make informed healthcare
purchasing decisions.\297\ We believe that aligning the NPI across the
HPT and TiC MRFs would support improved cross-comparison among hospital
data and health plan data, providing users of both MRFs further context
about hospital standard charges.
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\296\ https://www.whitehouse.gov/presidential-actions/2025/02/making-america-healthy-again-by-empowering-patients-with-clear-accurate-and-actionable-healthcare-pricing-information/.
\297\ https://github.com/CMSgov/price-transparency-guide.
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We believe this proposal would increase data researchers' ability
to automate research as they would be better able to match on a common
hospital numeric unique identifier across multiple datasets.
Additionally, inclusion of the NPI(s) in the MRF could enable the
development of products that combine price, claims, and quality data to
stimulate additional hospital price competition. Including identifiers
used for financial transactions (like the Type 2 NPI(s)) in the MRF
would also make it easier for key participants in price negotiations
(for example, employers and payers) to programmatically identify
hospitals in their internal financial databases, such as claims
databases, enabling them to better conduct in-depth payment and volume
analyses to support contract negotiations and potentially reduce
healthcare costs for consumers. A standard identifier could also help
CMS, researchers, and innovators reduce dependence on manual processes
for identifying a hospital and hospital locations and increase
opportunities for automated processes.
We specifically propose to require, beginning January 1, 2026, that
hospitals report, in a newly created general data element in the MRF,
any Type 2 NPI(s) that has a primary taxonomy code starting with `28'
(indicating hospital) or `27' (indicating hospital unit) and that is
active as of the date of the most recent update to the standard charge
information. We propose to limit the Type 2 NPI(s) that hospitals would
report to only those that meet this taxonomy criteria, because while
hospitals may have more NPIs beyond these criteria for other
departments or units, these taxonomy codes limit the number of NPIs to
only those indicating hospital or hospital unit. In the case that
hospitals have more than one NPI that meet the proposed criteria above,
we propose that hospitals would be required to report in the general
data element all active Type 2 NPIs meeting the criteria. Should the
proposal be finalized as proposed, we would include additional
technical instructions in the CMS data dictionary and JSON schema in
the Hospital Price Transparency--Data Dictionary GitHub Repository
available at https://github.com/CMSgov/hospital-price-transparency. We
seek comment on our proposal and any additional taxonomy codes that
would be necessary or helpful to consider.
We considered, as an alternative, that should a hospital have
multiple NPIs, it would be required to report only one NPI. With this
alternative, MRF users could crosswalk the NPI to identify additional
NPIs. A review of the publicly available January 2025 data from PECOS,
the online Medicare enrollment system, found that only approximately 10
percent of hospital enrollment applications reported multiple
NPIs.\298\ This data was cross-walked with NPPES data to find the
provider taxonomy code (a 10-digit code that designates classification
or specialization), whether the NPI was still active in the system, and
whether an NPI was classified as an organization subpart. The majority
of reported NPIs for applications with multiple NPIs were active. Some
applications reported as many as 27 NPIs with a hospital or hospital
unit taxonomy. However, the median number of NPIs with a hospital
[[Page 33802]]
or hospital unit taxonomy was 2 and the average number of NPIs with a
hospital or hospital unit taxonomy was 1.9. For this reason, we believe
that requiring hospitals to include NPIs that meet our proposed
criteria would not pose a significant burden or, for most hospitals,
significantly increase the amount of data stored in the MRFs.
---------------------------------------------------------------------------
\298\ CMS Hospital Enrollments and Hospital Additional NPIs
datasets https://data.cms.gov/provider-characteristics/hospitals-and-other-facilities/hospital-enrollments.
---------------------------------------------------------------------------
We also considered proposing to require that hospitals include in
the MRF a Place of Service code and the Taxpayer Identification Number
(TIN), as the TiC final rule also requires them. Place of Service Codes
are used on professional claims to indicate the setting where an item
or service was rendered. Because the HPT requirements already require
hospitals to indicate the setting of the item or service in the MRF, we
do not believe the Place of Service Codes would provide any additional
information that is not already included in the MRF. Similarly, we do
not believe there would be a benefit to requiring hospitals to encode
their TIN within the MRF; rather, we believe that would be duplicative
since the HPT MRF naming convention already requires the EIN (typically
a hospital's TIN), thus innovators and researchers could extract it
from the naming convention.
We also considered proposing to require that hospitals include
other identifiers in their MRF, such as the CMS Certification Number
(CCN). CCNs are assigned by CMS and used to identify health care
facilities participating in the Medicare Part A and Medicaid
programs.299 300 Hospitals primarily have assigned CCNs as
entities, but CCNs can also be used to identify specific hospital
locations or units, especially when those units operate under the same
organizational umbrella but at different sites. CCNs do not change when
hospital ownership changes, but hospital mergers, acquisitions, and
consolidations can result in CCN changes. We elected not to propose to
require that hospitals encode CCNs because CCNs are limited to
Medicare- or Medicaid-participating hospitals, while the HPT
regulations apply to all hospitals in the United States (with
exceptions listed at Sec. 180.30(b)), and, also, the inclusion of CCNs
would not align with the TiC provider identifier requirements.
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\299\ https://www.cms.gov/files/document/provider-enrollment-certification-roadmap.pdf.
\300\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/pim83c10.pdf.
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We seek comment on our proposal, as well as any additional, or
alternative, taxonomy codes that commenters believe would be necessary
or helpful to consider. We also seek comment on other standard
identifiers that may be useful in providing needed context and
streamlining the alignment of price transparency data.
C. Proposal To Improve and Enhance Enforcement
1. Background
In the CY 2020 HPT final rule (84 FR 65524), we established actions
that would address hospital noncompliance with the requirements under
Sec. Sec. 180.50 and 180.60, which may include issuing a written
warning notice, requesting a CAP, and imposing CMPs on noncompliant
hospitals and publicizing these penalties on a CMS website. In the CY
2022 OPPS/ASC final rule with comment period (86 FR 63941), we
increased the amount of CMP to which a hospital could be subject to a
minimum total penalty of $300/day that applies to smaller hospitals
with a bed count of 30 or fewer, and a penalty of $10/bed/day for
hospitals with a bed count greater than 30, not to exceed a maximum
daily dollar amount of $5,500.
In the CY 2024 OPPS/ASC final rule with comment period (88 FR
82113), we finalized several improvements to our enforcement process by
updating our methods to assess hospital compliance, requiring hospitals
to acknowledge receipt of warning notices, working with health system
officials to address noncompliance issues in one or more hospitals that
are part of a health system, and publicizing more information about CMS
enforcement activities related to individual hospital compliance. We
also finalized revisions to Sec. 180.70(a)(2) to add activities that
CMS may use to monitor and assess for compliance. Specifically, we
revised Sec. 180.70(a)(2)(iii) to indicate that we may conduct an
audit and comprehensive compliance review of a hospital's standard
charge information posted on a publicly available website. We stated
that we believed that provision was necessary to clarify the methods we
may use to determine a hospital's compliance with HPT requirements. In
addition, we added new provisions at Sec. 180.70(a)(2)(iv)-(v), to
require, upon our request, an authorized hospital official to submit to
CMS a certification as to the accuracy and completeness of the standard
charge information posted in the MRF, and to require submission of
additional documentation as may be necessary to determine hospital
compliance. Further, we finalized at Sec. 180.70(b)(1) a requirement
that a hospital submit an acknowledgement of receipt of a warning
notice in the form and manner, and by the deadline, specified in the
notice of violation issued by CMS to the hospital (88 FR 82117, 82185),
which requirement we thought was necessary to provide an appropriate
compliance contact earlier in the enforcement process.
We also, in the CY 2024 OPPS/ASC final rule with comment period (88
FR 82119, 82185), finalized at Sec. 180.70(d) that CMS may publicize
on its website information related to CMS' assessment of a hospital's
compliance; any compliance action(s) taken against a hospital, the
status of such compliance action(s), or the outcome of such compliance
action(s); and notifications sent to health system leadership. We
indicated that, should CMS decide to publicize this information on its
website, it would apply uniformly to all hospitals. We further noted
that, similar to other such assessments, the information we make public
would only be relevant as of the date indicated and should not be taken
to suggest any ongoing state of compliance or noncompliance. We stated
that we believed such information: (1) would improve the public's
understanding of CMS' enforcement process by allowing interested
parties to view compliance actions and determinations made by CMS,
increasing transparency; (2) might reduce repetitive complaints to CMS
regarding a hospital's compliance assessment; \301\ and (3) might
increase the likelihood that hospitals would more quickly come into
compliance due to public scrutiny.
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\301\ Information on enforcement actions as a result of CMS'
assessment of a hospital's compliance with the HPT regulations may
be found here https://data.cms.gov/provider-characteristics/hospitals-and-other-facilities/hospital-price-transparency-enforcement-activities-and-outcomes.
---------------------------------------------------------------------------
We are aware that there are still instances of egregious violations
of the HPT requirements, such as failure to post an MRF or a shoppable
services file. Over a 3-year period, as shown in Table 91, violations
related to not having posted an MRF and/or a shoppable service file
accounted for nearly 20 percent of all enforcement actions (including
warning notices, CAP request letters, and all other).\302\
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\302\ Data is gathered from the CMS Hospital Price Transparency
database and encompasses compliance actions from August 29, 2022,
through March 10, 2025.
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In a fact sheet, ``Hospital Price Transparency Enforcement
Updates'' (https://www.cms.gov/newsroom/fact-sheets/hospital-price-transparency-enforcement-updates), that we posted on April 26, 2023, we
provided updates
[[Page 33803]]
we have implemented regarding our enforcement process, including
streamlining the process to no longer issue a warning notice to a
hospital that has not posted an MRF or shoppable services list/price
estimator tool. This was intended to incentivize hospitals to more
quickly comply with our HPT requirements, and especially the basic HPT
requirements to post an MRF and a consumer-friendly display of
shoppable services. Consistent with Executive Order 14221, we continue
to believe that it is critically important that all hospitals subject
to the HPT regulations be compliant with them. As CMS identifies
hospitals without an MRF and/or shoppable services file, we will
continue to prioritize those cases for immediate compliance by sending
them a CAP request letter.
[GRAPHIC] [TIFF OMITTED] TP17JY25.162
2. Civil Money Penalties: Waiver of Hearing, Automatic Reduction of
Penalty Amount
In prior HPT rulemaking,\303\ we issued regulations that
established processes to enforce the HPT requirements, including
issuance of CMPs when a noncompliant hospital fails to respond to our
request to submit a corrective action plan (CAP) or comply with the
requirements of the CAP (Sec. 180.90(a)). The HPT regulations set
forth the criteria we use to determine the CMP amount (Sec. 180.90(c))
and permit hospitals to appeal a CMP imposed by us within 30 days of
issuance of the notice of imposition of a CMP (Sec. Sec. 180.100 and
180.110). As of May 2025, we have issued CMP notices to 27 hospitals,
20 of which have exercised their right to appeal the CMP to an
administrative law judge (ALJ).\304\ Hospitals may elect to mount an
appeal for many reasons, including disagreeing with our assessment of
the law or facts underlying our determination, seeking to protect their
reputation and/or avoid other civil or state regulatory actions, or
other reasons.
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\303\ The CY 2020 HPT final rule, CY 2022 OPPS/ASC final rule,
and CY 2024 OPPS/ASC final rule with comment period.
\304\ CMS (2025, June) Enforcement Actions. https://www.cms.gov/priorities/key-initiatives/hospital-price-transparency/enforcement-actions.
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We are aware that some other CMS enforcement programs offer
entities subject to CMPs the ability to waive appeal rights in exchange
for a 35 percent discount in the amount of the CMP owed.\305\ For
example, in the FY 2024 Skilled Nursing Facility Prospective Payment
System final rule (88 FR 53200, 53326), we discussed our experience
over the years with the CMP reduction pertaining to LTC facilities. We
noted there how, between CYs 2016 and 2022 (but for CY 2017 that was
not referenced), around 80 percent of LTC facilities submitted waivers,
with the figure rising to 91 percent in CY 2021 but retreating to 81
percent in CY 2022, while also a considerable percentage of the
remaining facilities did not submit a waiver but also not did not
contest the penalty and its basis. Most significantly, throughout the
period only between 2 to 6 percent of facilities availed themselves of
the full hearing process.
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\305\ See, for example, 42 CFR 488.1245(c)(2)(ii) (Hospice); 42
CFR 488.845(c)(2)(ii) (Home Health Agency); 42 CFR 488.436(b) (Long-
Term Care (LTC) Facility).
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Given respondents' widespread invocation of the LTC facility
enforcement appeal waiver provision, we considered whether offering
hospitals the opportunity to receive a reduced penalty--in some
circumstances, and in exchange for their acknowledging their HPT
noncompliance--could expedite timely payment of CMPs. Among our
considerations, we believe that hospitals that might elect such a
waiver opportunity pursuant to such a proposal would be demonstrating
their acceptance of responsibility for HPT noncompliance, and,
concomitantly, their corresponding commitment to timely achieving
future compliance, which would be key to helping us achieve our
overarching HPT goal of ensuring this information, in compliant form,
is accessible to healthcare consumers.
We therefore propose at new Sec. 180.90(c)(4), and subject to the
exceptions discussed below, that the amount of a CMP would be reduced
by 35 percent should a hospital submit to CMS a written notice
requesting to waive its right to a hearing under Sec. 180.100 within
30 calendar days of the date of the notice of imposition of the CMP. We
also propose that if a hospital waives its right to appeal a CMP and
receives a 35 percent reduction in accordance with Sec. 180.90(c)(4),
the hospital: (1) would not be eligible to receive a 35 percent
reduction under Sec. 180.90(c)(4) on any CMPs issued under Sec.
180.90(f) that result from the same instance(s) of noncompliance (that
is, continuing violations); and (2) would waive its right to appeal
CMPs for any such continuing violations. As discussed above, and if our
proposal is finalized as proposed, in waiving its right to appeal and
receiving a 35 percent reduction with respect to the initial CMP, we
believe a hospital would be demonstrating acceptance of responsibility
for HPT noncompliance and a commitment to achieving future compliance;
as such, we do not believe it would be necessary or appropriate to
[[Page 33804]]
provide further appeal rights or CMP reductions for continuing
violations.
At Sec. 180.90(c)(4), we propose that, in certain situations, CMS
would decline to make available to hospitals the opportunity to have a
CMP amount reduced. First, we propose that, should a hospital not
affirmatively waive its right to a hearing in accordance with the
procedures specified at proposed Sec. 180.90(c)(4), a CMP amount would
not be reduced. We believe the proposed timeframe (within 30 calendar
days of the date of notice of imposition of the CMP) would provide a
hospital ample opportunity to elect whether to exercise its option to
waive a hearing. Second, we propose that, should CMS impose upon a
hospital a CMP for HPT noncompliance going to the core of the HPT
requirements--for example, failing to make public either an MRF as
required in Sec. 180.40(a) or any shoppable services in a consumer-
friendly format (either in the form of a shoppable services file or an
internet price estimator tool) as required in Sec. 180.40(b)--the
hospital would be ineligible to avail itself of such an opportunity. As
reflected in Table 91, through the compliance review process CMS has
encountered instances where hospitals have not made public an MRF and/
or a consumer-friendly list of shoppable services (either a shoppable
services file or internet price estimator tool). We believe that a
hospital that fails to abide by such core HPT requirements--effectively
entirely depriving the public access to these important tools--would
forfeit the opportunity to avail itself of a penalty reduction and
would be required to pay in full a CMP. For example, should CMS impose
upon a hospital a CMP for failing to make public an MRF as required by
Sec. 180.40(a), even if it did have a shoppable services file or
internet price estimator tool as required by Sec. 180.40(b), such
hospital would not be eligible for a reduction to its CMP by waiving
its appeal rights (and the same would pertain were a hospital to have
an MRF as required by Sec. 180.40(a), but not a shoppable services
file or internet price estimator tool as required by Sec. 180.40(b)).
We believe this exception would be appropriate given that we finalized,
and codified at 42 CFR part 180, the requirement that hospitals make
public their standard charges in two ways (as an MRF and in a consumer-
friendly format), effective beginning January 1, 2021; in other words,
hospitals have been subject to this requirement for more than 4 years.
We believe that excluding hospitals that fail to make public either an
MRF or a consumer-friendly list of standard charges from the
opportunity to avail themselves of a CMP reduction would incentivize
hospitals to abide by our requirements to appropriately post such
files.
We note that our proposal would not preclude a hospital, so long as
it did not seek a waiver, from requesting a hearing, nor would waiving
the right to a hearing remove from the hospital's record the fact of
its HPT noncompliance. Rather, should our proposal be finalized as
proposed, should a hospital choose to waive its right to a hearing, it
would accept CMS' determination that it was noncompliant.
Significantly, whether or not a hospital would elect to waive the right
to a hearing, it would still be required to achieve compliance to avoid
the potential imposition of additional CMPs pursuant to Sec.
180.90(f). We expect that this proposal, if finalized as proposed,
would benefit both CMS and the hospital by reducing or eliminating the
time, resources, expenses, and other potential burden otherwise
attributable to prosecuting or defending the administrative appeals
processes.
Finally, we also propose to make conforming revisions to Sec.
180.90(d)(1) and to add a new Sec. 180.90(d)(2) to take into account
the proposed provisions at Sec. 180.90(c)(4), which would allow for a
reduction to the CMP amount were certain criteria to be met, as
discussed above. We propose to redesignate current Sec. 180.90(d)(2)
and (3) as Sec. 180.90(d)(3) and (4), respectively.
We solicit comment on these proposals.
XX. Proposed Market-Based Medicare Severity-Diagnosis Related Groups
(MS-DRG) Relative Weight Data Collection and Change in Methodology for
Calculating MS-DRG Relative Weights Under the Inpatient Prospective
Payment System
A. Overview
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58873 through
58892), we discussed the need for Medicare to reduce its reliance on
the hospital chargemaster and develop market-based approaches to
payment under the Medicare FFS system. We continue to believe this is
the case.
In that rulemaking (85 FR 58891), we adopted a policy that required
hospitals to report on the Medicare cost report the median payer-
specific negotiated charge that the hospital had negotiated with all of
its Medicare Advantage Organizations (MAOs), by MS-DRG, effective for
cost reporting periods ending on or after January 1, 2021. In the same
final rule, we adopted the use of the median payer-specific negotiated
charge by MS-DRG for MAOs in the market-based MS-DRG relative weight
methodology finalized for relative weight calculations beginning in FY
2024. In the FY 2022 IPPS/LTCH PPS final rule (86 FR 45319), we
repealed both the collection of market-based rate information on the
Medicare cost report and the market-based MS-DRG relative weight
methodology and stated that we would continue to evaluate and consider
the usefulness and appropriateness of market-based data for ratesetting
purposes. After further consideration, as discussed in section XX.C. of
this proposed rule, we once again propose, with modifications (as
discussed in section XX.C.2), to require that hospitals report on the
Medicare cost report, beginning January 1, 2026, the median \306\ of
the payer-specific negotiated charges (hereinafter referred to as the
``median payer-specific negotiated charge'') that the hospital has
negotiated with all of its MAOs, by MS-DRG, for use in a market-based
MS-DRG relative weight methodology, effective for the relative weights
calculated for FY 2029.
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\306\ More precisely as discussed later in this section, the
weighted median MAO payer-specific negotiated charges where the MAO
payer-specific negotiated charges are weighted by the number of
inpatient discharges for each of those payers that occurred during
the cost reporting period. We simply refer to the median for ease of
discussion.
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In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58885), we discussed
our authority for adopting a market-based MS-DRG relative weight data
collection and MS-DRG relative weight methodology. Sections 1815(a) and
1833(e) of the Act provide authority to collect data for purposes of
determining the amount of payments due to a provider under the Medicare
program. Specifically, sections 1815(a) and 1833(e) of the Act state
that no Medicare payments will be made to a provider unless it has
furnished information requested by the Secretary to determine payment
amounts due under the Medicare program and pertain to CMS's authority
to collect information on the Medicare cost report. We also discussed
CMS' authority under section 1886(d)(4) of the Act to assign and update
MS-DRG weighting factors to reflect relative resource use. In
particular, section 1886(d)(4)(B) of the Act requires that for each
diagnosis-related group the Secretary shall assign an appropriate
weighting factor which reflects the relative hospital resources used
with respect to discharges classified within that group compared to
discharges classified within other groups, and
[[Page 33805]]
section 1886(d)(4)(C)(i) of the Act requires that the weighting factors
be adjusted at least annually to reflect changes in treatment patterns,
technology, and other factors which may change the relative use of
hospital resources.
In this proposed rule, we propose for cost reporting periods ending
on or after January 1, 2026, to collect on the Medicare cost report the
median payer-specific negotiated charge that the hospital has
negotiated with all of its MAOs, by MS-DRG. We propose to utilize this
data within a proposed methodology for calculating the IPPS MS-DRG
relative weights to reflect relative market-based pricing, effective in
FY 2029. This proposal reflects certain modifications to the policy as
finalized in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58873 through
58892), as discussed further in section XX.C. of this proposed rule. As
stated previously, we continue to believe there is a need for Medicare
to reduce its reliance on the hospital chargemaster and develop market-
based approaches to payment under the Medicare FFS system. We discuss
in further detail in this section our evaluation and reconsideration of
the usefulness and appropriateness of market-based data for ratesetting
purposes since the FY 2022 IPPS/LTCH PPS final rule. As discussed in
greater detail in section XX.C.2. of this proposed rule, this proposal
provides instruction on how hospitals would calculate the median of the
payer-specific negotiated charges for an MS-DRG using data from the
machine-readable file (MRF) that hospitals are required to disclose
under the hospital price transparency regulations at 45 CFR part 180.
This proposal also addresses circumstances when hospitals use something
other than MS-DRGs as a basis for reporting under those hospital price
transparency requirements.
As described further in section XX.C.2. of this proposed rule, we
specifically propose that for the purposes of reporting the data on the
cost report, hospitals would report the median of the payer-specific
negotiated charges for an MS-DRG that the hospital has disclosed for
all of its MAOs on the most recent version of the MRF that the hospital
is required to disclose under 45 CFR 180.40(a). If the hospital
disclosed the payer-specific negotiated charge for an MS-DRG as a
dollar amount, the hospital would use the dollar amount disclosed on
its MRF under 45 CFR 180.50(b)(2)(ii)(C) in determining the median of
the payer-specific negotiated charges to be reported on its Medicare
cost report, as discussed further in section XX.C.2. If the hospital
disclosed the payer-specific negotiated charge as a percentage or
algorithm on the MRF, we propose that the hospital would instead use
the proposed ``median allowed amount'' (as proposed in section XIX. of
this proposed rule) to calculate the median of the payer-specific
negotiated charges.\307\ The hospital would then report the median
payer-specific negotiated charge on its Medicare cost report, as also
discussed further in section XX.C.2. of this proposed rule. We believe
this proposed approach of utilizing data required for disclosure on the
MRF under 45 CFR 180.50(b)(2)(ii)(C) in determining the median of the
payer-specific negotiated charges would help streamline requirements
for hospitals and result in less administrative burden overall because
hospitals would already be required to calculate and disclose these
data in compliance with the hospital price transparency requirements.
For additional details on hospital price transparency requirements,
including MRF requirements and the proposed modifications to the
hospital price transparency requirements, we refer readers to section
XIX. of this proposed rule and https://www.cms.gov/priorities/key-initiatives/hospital-price-transparency/hospitals.
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\307\ As discussed further in section XX.C.2. of this proposed
rule, if CMS does not finalize to amend 45 CFR 180.50(b)(2)(ii)(C),
hospitals would use the ``estimated allowed amount'' as required
under the current hospital price transparency regulations for
purposes of calculating the median payer-specific negotiated charge
that is reported on the cost report.
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As described in greater detail in section XX.C. of this proposed
rule, the median payer-specific negotiated charges as reported on the
Medicare cost report would be used in a proposed market-based
methodology to calculate IPPS MS-DRG relative weights beginning in FY
2029 to reflect the relative hospital resources used to provide
inpatient services to patients. The use of the median payer-specific
negotiated charges would replace the current use of gross charges that
are reflected on a hospital's chargemaster and cost information from
Medicare cost reports for the development of the IPPS MS-DRG relative
weights.
B. Factors Considered
As discussed in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58873
through 58892), to reduce the Medicare program's reliance on the
hospital chargemaster and to support the development of a market-based
approach to payment under the Medicare FFS system, we finalized our
proposal to require that hospitals report certain market-based payment
rate information on their Medicare cost report for cost reporting
periods ending on or after January 1, 2021. In that same rulemaking, we
also adopted a market-based MS-DRG relative weight methodology using
that information. In the FY 2022 IPPS/LTCH PPS final rule (86 FR
45319), we repealed both the collection of market-based rate
information on the Medicare cost report and the market-based MS-DRG
relative weight methodology and stated that we would continue to
evaluate and consider the usefulness and appropriateness of market-
based data for ratesetting purposes.
As noted in the FY 2022 IPPS/LTCH PPS rulemaking, we have continued
to consider the use of market-based rate information for purposes of
the IPPS relative weight methodology, including for the reasons
discussed in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58874 through
58875) regarding reducing the Medicare program's reliance on the
hospital chargemaster and supporting the development of a market-based
approach to payment under the Medicare FFS system, as well as
additional factors since the repeal of the prior policies.
For example, in the FY 2021 IPPS/LTCH PPS proposed rule we
described research that chargemasters are usually highly inflated and
that these inflated charges have been used to secure higher payments
from Medicare and private payers (85 FR 32790). We indicated that some
hospitals' charges do not reflect market rates. Hospital bills that are
generated off these chargemaster rates can be inherently unreasonable
when judged against prevailing market rates. We stated that recognizing
that chargemaster (gross) rates rarely reflect true market costs, we
believed that by reducing our reliance on the hospital chargemaster we
could adjust Medicare payment rates so that they reflect the relative
market value for inpatient items and services. As part of our efforts
since the FY 2022 repeal, we have examined more recent research on
hospital chargemasters, which is generally consistent with the
discussion in the FY 2021 rulemaking regarding whether hospital
chargemasters reflect true market costs. Recent research by Linde and
Egede \308\ concluded that higher chargemaster markups are associated
with higher hospital profitability. They delineated four potential
causal pathways that may connect chargemaster markups to hospital
profitability. First, chargemaster prices
[[Page 33806]]
are commonly billed to uninsured patients and therefore may increase
profits via higher payments (or payment settlements) with uninsured
patients. Second, higher chargemasters may yield higher payments from
insured individuals that seek care out-of-network, or who receive care
at in-network facilities but are cared for by out-of-network providers.
Third, chargemaster prices do in many cases serve as reference prices
for the contractual payments between private insurers and hospitals. As
such, higher chargemaster prices may yield increased profits by
increasing payments from private payors. Fourth, higher chargemaster
prices may allow hospitals to increase the cost-saving value of
liabilities that end up being written off as bad debt, and therefore
increased hospital profits.
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\308\ Linde S, Egede LE. Do Chargemaster Prices Matter?: An
Examination of Acute Care Hospital Profitability. Med Care. 2022 Aug
1;60(8):623-630.
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We have also continued to consider the available research comparing
Medicare, MAO, and commercial payment rates since the repeal. As
discussed in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58874 through
58877), we reviewed available literature to compare Medicare FFS and
MAO payment rates and how those MAO rates may reflect the relative
hospital resources used within an MS-DRG differently than our current
cost-based methodology.
As discussed in the FY 2021 rulemaking, Berenson et al.\309\
surveyed senior hospital and health plan executives and found that MA
plans nominally pay only 100 to 105 percent of traditional Medicare
rates and, in real economic terms, possibly less. Respondents broadly
identified three primary reasons for near payment equivalence:
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\309\ Berenson RA, Sunshine JH, Helms D, Lawton E. Why Medicare
Advantage plans pay hospitals traditional Medicare prices. Health
Aff (Millwood). 2015;34(8):1289-1295.
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Statutory and regulatory provisions that limit out-of-
network payments to traditional Medicare rates,
De facto budget constraints that MA plans face because of
the need to compete with traditional Medicare and other MA plans, and
A market equilibrium that permits relatively lower MA
rates as long as commercial rates remain well above the traditional
Medicare rates.
As also discussed in the FY 2021 rulemaking, Baker et al.\310\ used
data from Medicare and the Health Care Cost Institute (HCCI) to
identify the prices paid for hospital services by FFS Medicare, MA
plans, and commercial insurers in 2009 and 2012. They calculated the
average price per admission, and its trend over time, in each of the
three types of insurance for fixed baskets of hospital admissions
across metropolitan areas. After accounting for differences in hospital
networks, geographic areas, and case-mix between MA and FFS Medicare,
they found that MA plans paid 5.6 percent less for hospital services
compared to FFS Medicare. For the time period studied, the authors
suggest that at least one channel through which MA plans paid lower
prices was by obtaining greater discounts on types of FFS Medicare
admissions that were known to have very short lengths-of-stay. They
also found that the rates paid by commercial plans were much higher
than those of either MA or FFS Medicare, and that this differential was
growing. At least some of this difference they indicated came from the
much higher prices that commercial plans paid for certain service
lines.
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\310\ Baker LC, Bundorf MK, Devlin AM, Kessler DP. Medicare
Advantage plans pay less than traditional Medicare pays. Health Aff
(Millwood). 2016;35(8):1444-1451.
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Maeda and Nelson \311\ also analyzed data from the HCCI in their
research. They compared the hospital prices paid by MA organizations
and commercial plans with Medicare FFS prices using 2013 claims from
the HCCI. The HCCI claims were used to calculate hospital prices for
private insurers, and Medicare's payment rules were used to estimate
Medicare FFS prices. The authors focused on stays at acute care
hospitals in metropolitan statistical areas (MSAs). They found MA
prices to be roughly equal to Medicare FFS prices, on average, but
commercial prices were 89 percent higher than FFS prices. In addition,
commercial prices varied greatly across and within MSAs, but MA prices
varied much less. Although they noted that they used slightly different
methods to calculate Medicare FFS prices, the authors considered their
results generally consistent with the Baker et al. study findings in
that hospital payments by MA plans were much more similar to Medicare
FFS levels than they were to commercial payment levels.
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\311\ Maeda JLK, Nelson L. How Do the Hospital Prices Paid by
Medicare Advantage Plans and Commercial Plans Compare with Medicare
Fee-for-Service Prices? The Journal of Health Care Organization,
Provision, and Financing. 2018;55(1-8).
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In their study, Maeda and Nelson also examined whether the ratio of
MA prices to FFS prices varied across DRGs to assess whether there were
certain DRGs for which MA plans tended to pay more or less than FFS.
They ranked the ratio of MA prices to FFS prices and adjusted for
outlier payments. The authors found that ``there were some DRGs where
the average MA price was much higher than FFS and there were some DRGs
where the average MA price was a bit lower than FFS.'' For example, for
the time period in question, on average, MA plans paid 129 percent more
than FFS for rehabilitation stays (DRG 945), 33 percent more for
depressive neuroses (DRG 881), and 27 percent more for stays related to
psychoses (DRG 885). But MA plans paid an average of 9 percent less
than FFS for stays related to pathological fractures (DRG 542) and
wound debridement and skin graft (DRG 464) (see Online Appendix Table 5
from their study). The authors state these results suggest that there
may be certain services where MA plans pay more than FFS possibly
because the FFS rates for those services are too low, but that there
may be other services where MA plans pay less than FFS possibly because
the FFS rates for those DRGs are too high (Maeda, Nelson, 2018 p. 5).
In addition to this research discussed in the FY 2021 rulemaking,
we have also considered more recent research comparing Medicare FFS
rates, MAO rates, and rates of other commercial payers, some of which
used data that was made public under the provisions of the Hospital
Price Transparency regulations. Meiselbach et al.\312\ used 2022 price
information disclosed by hospitals to examine the ratio of commercial-
to-MA prices negotiated by the same insurer and found that median
prices were two to three times higher for commercial plans than MA
plans in the same hospital for the same service. They attributed the
relatively lower MA prices to the same reasons outlined by Berenson et
al. Based on price transparency data from 22 dyads of large hospitals
and insurers, Randall and Duffy \313\ found that, for a market basket
of inpatient services, prices for health insurance exchange plans were
143.3 percent of those for MA organizations and about 89 percent of
those for commercial group insurance plans.
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\312\ Meiselbach MK, Wang Y, Xu Jianhui, Bai G, Anderson GF.
Hospital Prices for Commercial Plans Are Twice Those For Medicare
Advantage Plans When Negotiated By The Same Insurer. Health Aff.
2023;42(8):1110-1118.
\313\ Randall S, Duffy EL. Insurers Negotiate Lower Hospital
Prices for HIX Than for Commercial Groups. The American Journal of
Managed Care. 2022;28(9): e347-e350.
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This more recent research does not directly address the
relationship between payer-specific charges negotiated between
hospitals and MAOs and Medicare IPPS payment rates, but it is generally
consistent in other respects to the earlier research we cited in the FY
[[Page 33807]]
2021 IPPS/LTCH PPS final rule (85 FR 58876 through 58877) indicating
that hospital payments by MAOs are much more similar to Medicare FFS
levels than they are to commercial payment levels. We continue to
believe that payer-specific charges negotiated between hospitals and
MAOs and Medicare IPPS payment rates are generally well-correlated. In
the FY 2022 IPPS/LTCH PPS final rule we indicated that we agreed with
commenters that we needed to further consider the questions raised by
commenters regarding the ability of the payer-specific charges
negotiated between hospitals and MAOs to represent market-based pricing
given the relationship between Medicare FFS and MAO rates. After
considering this issue further since the FY 2022 rulemaking, we do not
believe that the current general correlation between the two precludes
the ability of this data over time to reflect market-based pricing for
at least some services. As discussed in the FY 2021 IPPS/LTCH PPS final
rule (85 FR 58883), MA rates to MA contracted inpatient hospitals are
not required to be the same as (or based on) Medicare FFS rates; the
Medicare statute only requires MAOs to pay FFS rates to a health care
provider for services furnished to an MA enrollee when the MAO does not
have a contract with the health care provider. We believe that to the
extent hospitals and MAOs over time negotiate different relative
relationships for some services than the relationships that exist under
the IPPS, this information adds value to the IPPS and should be
incorporated. For example, in the FY 2021 IPPS final rule we stated
that we believe the rates that hospitals negotiate with MAOs capture
the relative resource use to provide services to patients in order to
maximize profits (or, in the case of not-for-profit hospitals, net
income), subject to market constraints and conditions (supply and
demand, community benefit requirements, etc.). Therefore, we stated we
believed that payer-specific negotiated charges provide greater insight
into the resource use of a hospital (85 FR 58886). After further
consideration, recognizing that there is currently general correlation
between the Medicare FFS and MAO rates, we believe that the ability of
the payer specific negotiated charges to provide these insights over
time still holds true.
Another factor that we considered in our current proposal is the
experience hospitals have gained through the process of disclosing the
payer-specific negotiated charge information for the purpose of the
hospital price transparency requirements. In calculating the median
payer-specific negotiated charges to be reported on the Medicare cost
report for use in the proposed market-based relative weight
methodology, hospitals would use the same payer-specific negotiated
charge information that hospitals are required to disclose under the
requirements (45 CFR 180.40(a)) that we initially finalized in the
Hospital Price Transparency final rule (84 FR 65524), beginning January
1, 2021. Over the last four years, hospitals have become increasingly
familiar with the hospital price transparency requirements and
procedures necessary to disclose payer-specific negotiated charges. CMS
has also taken enforcement actions against hospitals that have failed
to comply with the price transparency requirements.\314\ We believe
that this increased familiarity, experience, and enforcement has
improved the data integrity of this information, simplified the initial
administrative burden in disclosing this data, and means that this data
is now more robust for Medicare ratesetting purposes than it was when
we repealed the prior market-based policies.
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\314\ For example, see https://www.cms.gov/priorities/key-initiatives/hospital-price-transparency/enforcement-actions.
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An additional factor we considered was the ending of the COVID-19
public health emergency (PHE). To the extent commenters previously
raised concerns regarding the need for additional flexibilities as
hospitals continue to recover from the COVID-19 PHE, as summarized in
the FY 2022 IPPS/LTCH final rule (86 FR 45319), the COVID-19 PHE
expired on May 11, 2023.
Taking into account these factors, we propose to require that
hospitals report on the Medicare cost report the median payer-specific
negotiated charge that the hospital has negotiated with all of its MAO
payers, by MS-DRG, effective for cost reporting periods ending on or
after January 1, 2026, and to use this data in a new market-based MS-
DRG relative weight methodology, beginning in FY 2029.
If finalized, we would intend to make our analysis of this market-
based data available for public review prior to the proposed effective
date of this market-based relative weight methodology in FY 2029,
including the estimated potential payment impact on the MS-DRG relative
weights. As under the current methodology, the impact of any MS-DRG
relative weight changes on an individual hospital would depend on the
mix of services provided by that particular hospital.
C. Market-Based MS-DRG Relative Weight Estimation
1. Overview
Section 1886(d)(4)(A) of the Act states that the Secretary shall
establish a classification of inpatient hospital discharges by
diagnosis-related groups and a methodology for classifying specific
hospital discharges within these groups. Section 1886(d)(4)(B) of the
Act states that for each such diagnosis-related group the Secretary
shall assign an appropriate weighting factor which reflects the
relative hospital resources used with respect to discharges classified
within that group compared to discharges classified within other
groups. For the reasons previously discussed, we believe the use of
median payer-specific negotiated charge data for a hospital's MAOs, to
be collected on the Medicare cost report, may support the development
of an appropriate market-based approach to payment under the Medicare
FFS system by incorporating such data into the estimation of the
relative hospital resources used with respect to discharges classified
within a single MS-DRG compared to discharges classified within other
MS-DRGs, as required by statute.
As discussed, since the FY 2022 IPPS/LTCH PPS final rule, we have
continued to evaluate and consider the usefulness and appropriateness
of market-based data for ratesetting purposes. Based on this review, we
believe it would be appropriate to propose the use of hospitals' median
payer-specific negotiated charges for MAOs, to be collected on the
Medicare cost report as described previously, within a proposed new
methodology for calculating the MS-DRG relative weights to reflect a
more market-based approach, using our authority under sections
1886(d)(4)(A), 1886(d)(4)(B), and 1886(d)(4)(C) of the Act.
2. Proposed Market-Based Data Collection
In order to support the development of a relative market-based
payment methodology under the IPPS, we propose to collect market-based
payment rate data on the Medicare cost report for cost reporting
periods ending on or after January 1, 2026. This proposed data
collection is similar to the market-based data collection as finalized
in the FY 2021 IPPS/LTCH PPS final rule (85 FR 558873 through 58892),
with additional modifications to use the payer-specific negotiated
charges from the hospital's most recent MRF published prior to the
submission of its cost report, to reflect proposed
[[Page 33808]]
revisions to the hospital price transparency regulations at 45 CFR 180,
and to better address when the payer-specific negotiated charge is
based on a percentage or algorithm, in response to previous concerns
(85 FR 58884).
Specifically, we propose that hospitals would report on their cost
report the median of the payer-specific negotiated charges that the
hospital negotiated with its MAOs, by MS-DRG, beginning with cost
reporting periods ending on or after January 1, 2026. Sections 1815(a)
and 1833(e) of the Act provide that no Medicare payments will be made
to a provider unless it has furnished the information, as may be
requested by the Secretary, to determine the amount of payments due to
the provider under the Medicare program. We require that providers
follow reasonable cost principles under section 1861(v)(1)(A) of the
Act when completing the Medicare cost report. Under the regulations at
42 CFR 413.20 and 413.24, we define adequate cost data and require cost
reports from providers on an annual basis. As previously discussed, the
collection of this market-based data on the Medicare cost report would
allow for the adoption of a market-based strategy to determine the
appropriate weighting factors to reflect the relative hospital
resources used with respect to hospital discharges, as required under
sections 1886(d)(4)(B) and 1886(d)(4)(C) of the Act.
As discussed in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58877),
Medicare certified providers, such as Medicare certified hospitals, are
required to submit an annual cost report to their Medicare
Administrative Contractor (MAC). The Medicare cost report contains
provider information such as facility characteristics, cost and charges
by cost center, in total and for Medicare, Medicare settlement data,
and financial statement data. The cost report must be submitted in a
standard (ASCII) electronic cost report (ECR) format. CMS maintains the
cost report data in the Healthcare Cost Report Information System
(HCRIS) data set. The HCRIS data supports our payment policymaking,
congressional studies, legislative health care reimbursement
initiatives, Medicare profit margin analysis, and relative weight
updates. As such, data from hospital cost reports beginning on or after
May 1, 2010 is reflected on the HCRIS dataset, and available for public
access and use.
If we were to finalize this proposal to collect the proposed
market-based information (specifically, the median payer-specific
negotiated charges negotiated between a hospital and all its MAOs, by
MS-DRG) on the cost report, this data would become publicly accessible
on the HCRIS dataset in a de-identified manner and would be usable for
analysis by third parties. The data would, by definition, be de-
identified since we propose that the hospital calculate the median rate
(that is, the specific rate that is negotiated between a hospital and a
specific MAO for an MS-DRG would not be reported and need to be de-
identified). For more information or to obtain HCRIS data we refer
readers to https://www.cms.gov/data-research/statistics-trends-and-reports/cost-reports/cost-reports-fiscal-year.
We propose that the hospital would determine the weighted median of
the payer-specific negotiated charges that the hospital negotiated with
its MAOs, by MS-DRG, as follows:
Step 1. Using the hospital's most recent MRF as of the hospital's
cost report filing date identify the following information: (a) each
MAO payer-specific negotiated charge under 45 CFR 180.50(b)(2)(ii) that
the hospital has negotiated with its MAOs for inpatient items or
services (for example, discharges), and (b) the code under 45 CFR
180.50(b)(2)(iv)(A) for each payer-specific negotiated charge. If the
payer-specific negotiated charge is based on a percentage or algorithm,
the hospital would identify and substitute the dollar amount in the MRF
required under 45 CFR 180.50(b)(2)(ii)(C) for the percentage or
algorithm. Exclude any payer-specific negotiated charges that represent
capitated payment.
Step 2. For the cost reporting period, sum the number of inpatient
discharges for each MAO for each MS-DRG. Exclude inpatient discharges
where payment was made on a capitated basis.
Step 3. For each MS-DRG, list each MAO payer-specific negotiated
charge (from Step 1) the number of times as there were inpatient
discharges that occurred during the cost reporting period for that MAO
(from Step 2).
Step 4. For each MS-DRG, compute the median \315\ of the MAO payer-
specific negotiated charge in the list from Step 3. To compute the
median, using the list in Step 3, order the list in Step 3 from the
lowest MAO payer-specific negotiated charge to the highest; if the list
contains an odd number of charges the median is the middle value in the
list, or if the list contains an even number of charges the median is
the mean of the two middle values. For each MS-DRG, this median is the
weighted median MAO payer-specific negotiated charge for that MS-DRG.
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\315\ The middle number; found by ordering all data points and
selecting the one in the middle (or if there are two middle numbers,
taking the mean of those two numbers).
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As we discussed in the FY 2021 rulemaking, we recognize that the
payer-specific negotiated charges negotiated between MAOs and hospitals
may in some cases be based on a system other than MS-DRGs. If there are
codes identified in (b) of Step 1 that are not MS-DRG codes, or
discharges in Step 2 that are not classified to MS-DRGs, the hospital
would crosswalk those codes or classify those discharges to MS-DRGs.
Hospitals can utilize the CMS GROUPER and associated definitions manual
for this purpose. Hospitals have access to the publicly available
version of the CMS Grouper used to group ICD-10 diagnosis and procedure
codes to MS-DRGs.\316\ This software and associated definitions manual
can be used to crosswalk the code(s) in the MRF or classify the
discharge to an MS-DRG code.
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\316\ https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software.
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We note that, in section XIX. of this proposed rule, we propose to
amend the regulations at 45 CFR 180 as they relate to a standard charge
that is based on a percentage or algorithm. Specifically, we propose in
section XIX. of this proposed rule, that, beginning January 1, 2026,
hospitals would be required to report a new data element, the ``median
allowed amount,'' instead of the ``estimated allowed amount'' reported
at present, and that the median allowed amount would be defined as the
median of the total allowed amount that the hospital has historically
received from a third-party payer (including MAOs) for an item or
service. We also propose in section XIX. of this rule that if a payer-
specific negotiated charge is based on a percentage or algorithm, the
hospital's MRF would have to describe the percentage or algorithm that
determines the dollar amount for the item or service and the hospital
would have to calculate and encode the median allowed amount in dollars
for that item or service. We propose in section XIX. of this rule that,
to calculate the `median allowed amount,' hospitals would be required
to use electronic remittance advice transaction data, and that the
dollar amount would reflect no longer than a 12-month time period prior
to the posting of the most recent MRF. We refer readers to section XIX.
in this proposed rule for more information regarding the specific
proposal. Accordingly, the dollar amount in the MRF required under 45
CFR 180.50(b)(2)(ii)(C) for the percentage or algorithm in Step 1 would
be the
[[Page 33809]]
``median allowed amount'' if this proposed amendment is finalized. If
CMS does not finalize changes to 45 CFR 180.50(b)(2)(ii)(C), the dollar
amount would be the ``estimated allowed amount'' under the current
regulations.
A simplified example for the purpose of illustrating this process
is as follows:
For its cost reporting period ending on September 30, 2026, a
hospital had MAO payer-specific negotiated charges for MS-DRG 123 for
five MAOs: MA1, MA2, MA3, MA4, and MA5.
The hospital filed its cost report on February 28, 2027.
The hospital made available to the public its MRF on January 1,
2027. This MRF did not contain MAO payer-specific negotiated charges
for MA5 because the hospital stopped contracting with MA5 and began
contracting with a new MAO, MA6.
Step 1. The hospital identified the following MAO payer-specific
negotiated charge information for MS-DRG 123 from its January 1, 2027
MRF:
MA1: $7,400
MA2: $7,200
MA3: $7,500
MA4: $7,300 (algorithm-based)
MA6: $7,400
Note, as the payer-specific negotiated charge for MA4 was based on
an algorithm, the hospital substituted the dollar amount in the MRF
required under 45 CFR 180.50(b)(2)(ii)(C) for the algorithm.
Step 2. The hospital summed the number of inpatient discharges that
occurred during the cost report period ending September 30, 2026, for
each MAO for MS-DRG 123.
MA1: 2 discharges
MA2: 1 discharge
MA3: 1 discharge
MA4: 3 discharges
MA5: 2 discharges
Step 3. The hospital listed each MAO payer-specific negotiated
charge (from Step 1) the number of times as there were inpatient
discharges that occurred during the cost reporting period for that MAO
(from Step 2).
MA1: $7,400, $7,400
MA2: $7,200
MA3: $7,500
MA4: $7,300, $7,300, $7,300
For example, the $7,400 MA1 charge from Step 1 was listed two times
because there were two discharges for MS-DRG 123 that occurred during
the cost report period ending September 30, 2026, for MA1; the MRF
charge of $7,200 for MA2 was listed once because there was one
discharge; the MRF charge of $7,500 for MA3 was listed once because
there was one discharge; the MRF charge of $7,300 for MA4 was listed
three times because there were three discharges, there is no MRF charge
for MA5 as the hospital no longer contracted with that MAO, and the MRF
charge of $7,400 for MA6 was not listed as there were no discharges
during the cost reporting period for that MAO.
Step 4. The median charge for MS-DRG 123 is $7,300 because that is
the median of the charges in the list from Step 3.\317\ (Note that if
the list had contained an even number of charges, the median would have
been the mean of the two middle numbers).\318\
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\317\ Ordering the payer-specific negotiated charges from Step 3
from lowest to highest as {$7,200, $7,300, $7,300, $7,300, $7,400,
$7,400, $7,500{time} the median, or middle, charge in that list is
the fourth charge of $7,300.
\318\ For example, if the list had been {$7,300, $7,300, $7,400,
$7,500{time} the median would have been $7,350, the mean of $7,300
and $7,400 (the two middle values are the second and third charges
of $7,300 and $7,400.)
$7,200--MA2
$7,300--MA4
$7,300--MA4
$7,300--MA4
$7,400--MA1
$7,400--MA1
$7,500--MA3
For purposes of this calculation, we propose to define the term
``payer-specific negotiated charge'' as the charge that a hospital has
negotiated with a MAO for an item or service. We propose to use this
definition of payer-specific negotiated charge because it would capture
the charges that are negotiated between hospitals and MAOs and be able
to provide the data needed to support the use of market-based
information for payment purposes within the MS-DRG relative weight
calculation. For consistency, the definition of ``payer-specific
negotiated charge'' that we propose here is the same as the definition
at 45 CFR 180.20 for purposes of our requirements for hospitals to make
their standard charges available to the public. We also propose to
define ``items and services'' as all items and services, including
individual items and services and service packages, that could be
provided by a hospital to a patient in connection with an inpatient
admission for which the hospital has established a standard
charge.\319\ (With respect to service packages, we note that an MS-DRG,
as established by CMS under the MS-DRG classification system, is a type
of service package consisting of items and services based on patient
diagnosis and other characteristics.) We propose this definition of
``items and services'' because we believe it captures the types of
items and services, including service packages, that a hospital would
use to calculate and report the median payer-specific negotiated charge
for each MS-DRG to support the use of market-based rate information by
MS-DRG within the MS-DRG relative weight calculation. For purposes of
this calculation, an MAO is defined as in 42 CFR 422.2 and means a
public or private entity organized and licensed by a State as a risk-
bearing entity (with the exception of provider-sponsored organizations
receiving waivers) that is certified by CMS as meeting the MA contract
requirements. We note that these proposed definitions are the same as
those finalized in the FY 2021 IPPS/LTCH PPS final rule.
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\319\ Our proposed definition here of ``items and services'' is
the same as the definition at 45 CFR 180.20, but for the examples
included there and omitting the reference to outpatient department
visits, as here we would not require hospitals to calculate the
median of their payer-specific negotiated charges for items and
services provided in the hospital outpatient setting.
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As finalized in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58888),
we propose that subsection (d) hospitals in the 50 states and DC, as
defined at section 1886(d)(1)(B) of the Act, and subsection (d) Puerto
Rico hospitals, as defined under section 1886(d)(9)(A) of the Act,
would be required to report the median payer-specific negotiated charge
information. We note that hospitals that do not negotiate payment rates
and only receive non-negotiated payments for service would be exempted
from this proposed data collection. Examples of subsection (d)
hospitals that only receive non-negotiated payment rates include
hospitals operated by an Indian Health Program as defined in section
4(12) of the Indian Health Care Improvement Act or federally owned and
operated facilities. We note that this proposed data collection
requirement would apply to a smaller subset of hospitals as compared to
the public reporting requirements under the hospital price transparency
regulations. We recognize that Critical Access Hospitals (CAHs) may, in
some instances, negotiate payment rates; however, because CAHs are not
subsection (d) hospitals and are not paid on the basis of MS-DRGs, CAHs
would not be subject to this proposed data collection requirement. We
also note that rural emergency hospitals would not be subject to this
proposed data collection requirement given that they do not provide
inpatient services.
On March 12, 2025, CMS announced the intention to end the Maryland
Total
[[Page 33810]]
Cost of Care Model.\320\ We propose that hospitals in Maryland, which
are currently paid under the Maryland Total Cost of Care Model, would
be exempted from this data collection requirement during the
performance period of that Model. Following the end of the performance
period of the Maryland Total Cost of Care Model, Maryland hospitals
would no longer be exempt from this data collection requirement.
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\320\ https://www.cms.gov/priorities/innovation/innovation-models/md-tccm.
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Further instructions for the reporting of this proposed market-
based data collection requirement on the Medicare cost report will be
discussed in a forthcoming new Information Collection Request, which is
currently under development.
We believe that the administrative burden for this proposal is
reduced by utilizing data that hospitals would disclose under existing
and proposed hospital price transparency requirements relative to if
hospitals did not already have this data compiled. Please refer to
section XXII.E. of this proposed rule where we discuss the estimated
burden for hospitals as a result of this proposed policy.
We also propose to amend 42 CFR 413.20(d)(3) to reflect this
proposed requirement. Specifically, we propose to amend Sec.
413.20(d)(3) to require hospitals to report the median payer-specific
negotiated charge by MS-DRG for MAOs on the Medicare cost report. We
propose to capture this proposed data collection requirement in
regulation at Sec. 413.20(d)(3)(i)(B). This proposed requirement would
be effective for cost reporting periods ending on or after January 1,
2026.
3. Proposed Market Based MS-DRG Relative Weight Methodology
As previously discussed, we propose a new market-based methodology
for estimating the MS-DRG relative weights, beginning in FY 2029. We
note that this proposed market-based MS-DRG relative weight methodology
would be the same market-based MS-DRG relative weight methodology that
was initially adopted in the FY 2021 IPPS/LTCH PPS final rule (85 FR
58879 through 58881). Specifically, we propose to implement a
methodology for calculating the MS-DRG relative weights using the
median payer-specific negotiated charge for MAOs for each MS-DRG, as
described in this section and reported on the cost report. For the
reasons discussed in section XX.B. of this proposed rule, based on our
further review, we believe that using the median payer-specific
negotiated charge for MAOs within the MS-DRG relative weight
calculation would allow for a more market-based approach to determining
Medicare FFS reimbursement.
Below is a description of the steps for a proposed MS-DRG relative
weight methodology change using the payer-specific negotiated charge
data. We refer readers to the FY 2021 IPPS/LTCH PPS final rule (85 FR
58880 through 58881) for additional discussion of the finalized
methodology which we are reproposing.
Step One: Standardize the Median Payer-Specific Negotiated
Charges: In order to make the median payer-specific negotiated charges
from the cost reports more comparable among hospitals, we would
standardize the median payer-specific negotiated charges reported on
the cost report by removing the effects of differences in area wage
levels, and cost-of living adjustments for hospital claims from Alaska
and Hawaii, in the same manner as under the current MS-DRG relative
weight calculation for those effects.
Step Two: Create a Single Weighted Average Standardized
Median MAO Payer-Specific Negotiated Charge by MS-DRG Across Hospitals:
For each MS-DRG, we would create a single weighted average across
hospitals of the standardized median payer-specific negotiated charges.
We would weight the standardized payer-specific negotiated charge for
each MS-DRG for each hospital using that hospital's Medicare transfer-
adjusted case count for that MS-DRG, with transfer adjusted case counts
calculated the same way as under the current MS-DRG relative weight
methodology. We note that, as discussed in the FY 2025 IPPS/LTCH PPS
final rule (89 FR 69109), the current MS-DRG relative weight
methodology does not include MA cases as discharges for Medicare
beneficiaries enrolled in a MA managed care plan are excluded from the
relative weight methodology. We believe that using the Medicare
transfer-adjusted case counts would be a reasonable approach to
combining the data across hospitals because it would reflect relative
volume and transfer activity (that is, larger hospitals responsible for
more discharges would be weighted more heavily in the calculation,
hospitals that transfer more often would be weighted less heavily).
Step Three: Create a Single National Weighted Average
Standardized MAO Payer-Specific Negotiated Charge Across all MS-DRGs:
We would create a single national weighted average across MS-DRGs of
the results of Step Two, where the weights are the national Medicare
transfer adjusted case counts by MS-DRG.
Step Four: Calculate the Market-based Relative Weights:
For each MS-DRG, the market-based relative weight would be calculated
as the ratio of the single weighted average standardized median MAO
payer-specific negotiated charge for that MS-DRG across hospitals from
Step Two to the single national weighted average standardized median
MAO payer-specific negotiated charge across all MS-DRGs from Step
Three.
Step Five: Normalize the Market-based Relative Weights: We
note that as under the current cost-based MS-DRG relative weight
methodology, the market-based relative weights would be normalized by
an adjustment factor so that the average case weight after
recalibration would be equal to the average case weight before
recalibration. As under the current cost-based relative weight
estimation methodology, the normalization adjustment is intended to
help ensure that recalibration by itself neither increases nor
decreases total payments under the IPPS, as required by section
1886(d)(4)(C)(iii) of the Act.
We believe initially there would be minimal impacts to the relative
weights calculated under this proposed market based MS-DRG relative
weight methodology (which would utilize the median payer-specific
negotiated charge data negotiated between hospitals and their MAOs)
beginning in FY 2029, given the relationship between the MAO rates and
Medicare FFS rates (as evidenced by feedback from commenters as
discussed in the FY 2021 IPPS/LTCH PPS final rule and the results of
our literature review). If finalized, we would expect, for some period
of time following implementation of this proposed market-based MS-DRG
relative weight methodology, to continue to estimate and publicly
provide, for informational purposes, the MS-DRG relative weights as
calculated using our current cost-based estimation methodology.
In addition, similar to our discussion in the FY 2021 IPPS/LTCH PPS
final rule (85 FR 58886 through 58887), if finalized, we would intend
to provide additional opportunity for the public to review the MAO
median payer-specific negotiated charge data received prior to the
utilization of this data in the market-based MS-DRG relative weight
methodology beginning in FY 2029. We continue to believe this would
allow for additional discussions, public review, and conversation about
utilizing this market-based data in the MS-DRG relative weight
methodology.
We seek comment on all elements of this proposed market-based data
[[Page 33811]]
collection for cost reporting periods ending on or after January 1,
2026, and market-based methodology for estimating the MS-DRG relative
weights beginning in FY 2029. We also seek comments on potential
unintended consequences of this proposal, if any, including special
considerations if needed to mitigate those potential consequences for
certain hospitals. We also seek comment on how these or other market-
based strategies could be utilized in additional Medicare FFS payment
systems and the benefits of these market-based approaches.
XI. Graduate Medical Education Accreditation
A. Executive Order 14279
Executive Order 14279 (April 23, 2025), entitled ``Reforming
Accreditation to Strengthen Higher Education,'' directs the Attorney
General, in consultation with the Secretary of Health and Human
Services, to ``investigate and take appropriate action to terminate
unlawful discrimination by American medical schools or graduate medical
education entities that is advanced by the Liaison Committee on Medical
Education or the Accreditation Council for Graduate Medical Education
or other accreditors of graduate medical education, including unlawful
`diversity, equity, and inclusion' requirements under the guise of
accreditation standards.'' \321\ The Executive Order further directs
that standards for training doctors should focus solely on providing
the highest quality care, and should not require or encourage
educational institutions to discriminate unlawfully on the basis of
race.
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\321\ 90 FR 17529. https://www.federalregister.gov/documents/2025/04/28/2025-07376/reforming-accreditation-to-strengthen-higher-education.
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The Accreditation Council for Graduate Medical Education (`ACGME')
is the primary organization in the United States that currently
conducts accreditation for Graduate Medical Education (`GME') Programs.
While ACGME accreditation is a voluntary process, programs that are not
accredited by the ACGME generally do not receive Medicare funding from
CMS for Direct Graduate Medical Education (DGME) and Indirect Medical
Education (IME). Additionally, if the ACGME withdraws accreditation,
residents generally must receive assistance to continue their education
from other ACGME-accredited programs.\322\
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\322\ https://www.acgme.org/about/acgme-frequently-asked-questions/.
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For a number of years, the ACGME has identified `diversity, equity,
and inclusion' as a primary value of the organization and a central
component of its vision for graduate medical education.\323\ The
ACGME's Common Program Requirements require that institutions ``must
engage in practices that focus on mission-driven, ongoing, systematic
recruitment and retention of a diverse and inclusive workforce of
residents, fellows (if present), faculty members, senior administrative
staff members,'' and that organizations' ``programs implement, policies
and procedures related to recruitment and retention of individuals
underrepresented in medicine and medical leadership.'' \324\ In
practice, many such diversity, equity, and inclusion programs
unlawfully discriminate against Americans on the basis of race. In
Students for Fair Admissions v. President and Fellows of Harvard
College (2023), the U.S. Supreme Court held that race-based admissions
policies, even when focused on the goal of diversity, violate the Equal
Protection Clause of the Fourteenth Amendment unless they satisfy
strict scrutiny.\325\ While the ruling applies specifically to
admissions decisions at institutions of higher education, its broader
reasoning--especially the requirement that any use of race be narrowly
tailored to a compelling interest--strongly suggests that race-
conscious elements in Diversity, Equity, and Inclusion (DEI)
initiatives in federally funded education programs are generally
impermissible. These programs raise particular concerns in the medical
context, where patients and the larger society have a compelling need
for medical education to be focused primarily on excellence and
delivering the best possible care to patients.
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\323\ ACGME, Policies and Procedures, February 2, 2025. https://www.acgme.org/globalassets/pdfs/ab_acgmepoliciesprocedures.pdf.
\324\ ACGME, Guide to the Common Program Requirements, March
2024, https://www.acgme.org/globalassets/pdfs/guide-to-the-common-program-requirements-residency.pdf?utm_source=chatgpt.com.
\325\ Students for Fair Admissions, Inc. v. President and
Fellows of Harvard College, June 2023. https://www.supremecourt.gov/opinions/22pdf/20-1199_hgdj.pdf.
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B. Definition of ``Approved Medical Residency Programs''
Section 1886(h) of the Act, as added by section 9202 of the
Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 (Pub. L.
99-272), and as currently implemented in CMS regulations at 42 CFR
413.75 through 413.83, establishes a methodology for determining
payments to hospitals for the direct costs of approved graduate medical
education (GME) programs. Section 1886(h)(2) of the Act sets forth a
methodology for the determination of a hospital-specific base-period
per resident amount (PRA) that is calculated by dividing a hospital's
allowable direct costs of GME in a base period by its number of full-
time equivalent (FTE) residents in the base period. In general,
Medicare direct GME payments are calculated by multiplying the
hospital's updated PRA by the weighted number of FTE residents working
in all areas of the hospital complex (and at non-provider sites, when
applicable), and the hospital's Medicare share of total inpatient days.
Section 1886(d)(5)(B) of the Act provides for a payment adjustment
known as the indirect medical education (IME) adjustment under the IPPS
for hospitals that have residents in an approved GME program, to
account for the higher indirect patient care costs of teaching
hospitals relative to nonteaching hospitals. The regulations regarding
the calculation of this additional payment are located at 42 CFR
412.105. The hospital's IME adjustment applied to the DRG payments is
calculated based on the ratio of the hospital's number of FTE residents
training in either the inpatient or outpatient departments of the IPPS
hospital (and, for discharges occurring on or after October 1, 1997, at
nonprovider sites, when applicable) to the number of inpatient hospital
beds.
Hospitals may receive direct GME and IME payments for residents in
``approved medical residency training programs.'' Section 1886(h)(5)(A)
of the Act defines an ``approved medical residency training program''
as ``a residency or other postgraduate medical training program
participation in which may be counted toward certification in a
specialty or subspecialty and includes formal postgraduate training
programs in geriatric medicine approved by the Secretary.''
The regulations at Sec. 413.75(b) define an ``approved medical
residency program'' for purposes of direct GME payment as a program
that meets one of four criteria: (1) is approved by one of the national
organizations specified in the regulations at Sec. 415.152; (2) may
count towards certification of the participant in a specialty or
subspecialty listed in the current edition of certain publications
specified in the regulations; (3) is approved by the ACGME as a
fellowship program in geriatric medicine; or (4) is a program that
would be accredited except for the accrediting agency's reliance upon
an
[[Page 33812]]
accreditation standard that involves induced abortions, regardless of
whether the standard provides exceptions or exemptions. The regulations
at Sec. 412.105(f)(1)(i) define an ``approved teaching program''
similarly for purposes of IME payment.
The regulations at Sec. 415.152 define an ``approved graduate
medical education program'' as a residency program approved by one of
the following national organizations (or their predecessors): The
Accreditation Council for Graduate Medical Education (ACGME), the
American Osteopathic Association (AOA), the Commission on Dental
Accreditation (CODA) of the American Dental Association, and the
Council on Podiatric Medical Education (CPME) of the American Podiatric
Medical Association. Thus, in general, under Sec. Sec. 413.75(b) and
412.105(f)(1)(i), an ``approved'' program can be a program that is
accredited by one of these national organizations, or one that leads
toward board certification by the American Board of Medical Specialties
(ABMS).
The statute gives CMS authority to specify additional criteria for
approved GME programs. Therefore, to ensure that accreditation for
approved medical residency programs is in compliance with applicable
laws related to race-based admission policies and to improve the
accreditation process, the agency proposes that accreditors may not
require as part of accreditation, or otherwise encourage institutions
to put in place, diversity, equity, and inclusion programs that
encourage unlawful discrimination on the basis of race or other
violations of Federal law. The effective date of this proposal would be
January 1, 2026. Additionally, we note that the Secretary may recognize
other organizations that meet or exceed Medicare's requirements as
accreditors to increase the potential for competition in the
accreditation space and improve the quality of the accreditation
process.
This proposal is intended to ensure that accreditors of academic
medical institutions are focused on the mission of ensuring excellence
in graduate medical education, of improving the potential for
competition in the accreditation space, and of eliminating unlawful and
discriminatory DEI programs. We welcome commenters' feedback on this
proposal.
XXII. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We are soliciting public comment on each of these issues for the
following sections of this document that contain information collection
requirements (ICRs):
A. ICRs for the Hospital Outpatient Quality Reporting (OQR) Program
1. Background
In sections XIV. and XV. of this proposed rule, we discuss the
proposed requirements for the Hospital OQR Program. The Hospital OQR
Program is generally aligned with the CMS quality reporting program for
hospital inpatient services known as the Hospital Inpatient Quality
Reporting (IQR) Program. We refer readers to the CY 2025 OPPS/ASC final
rule with comment period (89 FR 94522 through 94530) for detailed
discussions of the previously finalized Hospital OQR Program ICRs which
are currently approved under OMB control number 0938-1109 (expiration
date January 31, 2026).
In this proposed rule, we propose to: (1) remove the COVID-19
Vaccination Coverage Among Healthcare Personnel (HCP) measure beginning
with the CY 2024 reporting period/CY 2026 payment determination; (2)
remove the Hospital Commitment to Health Equity (HCHE) measure
beginning with the CY 2025 reporting period/CY 2027 payment
determination; (3) remove the Screening for Social Drivers of Health
(SDOH) measure beginning with the CY 2025 reporting period; (4) remove
the Screen Positive Rate for SDOH measure beginning with the CY 2025
reporting period; (5) modify the Excessive Radiation Dose or Inadequate
Image Quality for Diagnostic Computed Tomography (CT) in Adults
(Hospital Level--Outpatient) eCQM (Excessive Radiation eCQM) from
mandatory reporting beginning with the CY 2027 reporting period to
continue voluntary reporting in the CY 2027 reporting period and
subsequent years; (6) adopt the Emergency Care Access & Timeliness
electronic clinical quality measure (eCQM) with voluntary reporting for
the CY 2027 reporting period, followed by mandatory reporting beginning
with the CY 2028 reporting period/CY 2030 payment determination; (7)
remove the Median Time from Emergency Department (ED) Arrival to ED
Departure for Discharged ED Patients measure beginning with the CY 2028
reporting period/CY 2030 payment determination; and (8) remove the Left
Without Being Seen (LWBS) measure beginning with the CY 2028 reporting
period/CY 2030 payment determination.
In section XIV.D. of this proposed rule, we also propose to update
our Extraordinary Circumstances Exception (ECE) Policy for the Hospital
OQR Program. This proposed update would explicitly include extensions
as a type of extraordinary circumstances relief option, in addition to
exceptions. Because the process for requesting or granting an ECE would
remain the same as the current ECE process, these updates would not
affect burden associated with the submission of the ECE form.
In the CY 2025 OPPS/ASC final rule with comment period, we
calculated reporting burden estimates for the Hospital OQR Program by
utilizing the Bureau of Labor Statistics (BLS) mean hourly wage rate
for Medical Records Specialists (89 FR 94522 through 94523).
Specifically, we used the industry-specific wage for Medical Records
Specialists working in ``general medical and surgical hospitals,'' as
this categorization aligns the closest with the Hospital OQR Program
care setting. The most recent data from BLS' May 2024 National
Occupational Employment and Wage Estimates reflects a median hourly
wage of $27.53 per hour for Medical Records Specialists working in
``general medical and surgical hospitals'' (SOC 29-2072).\326\ We
calculated the cost of overhead, including fringe benefits, at 100
percent of the median hourly wage, consistent with previous years. This
is a rough adjustment, both because fringe benefits and overhead costs
vary significantly by employer and methods of estimating these costs
vary widely in the literature. Nonetheless, we believe that doubling
the hourly wage rate ($27.53 x 2 = $55.06) to estimate total cost
burden is reasonably accurate. Accordingly, unless otherwise specified,
[[Page 33813]]
we calculate cost burden to hospitals using a wage plus benefits
estimate of $55.06 per hour throughout the discussion in this section
of this proposed rule for the Hospital OQR Program.
---------------------------------------------------------------------------
\326\ U.S. Bureau of Labor Statistics. (2025). Occupational
Outlook Handbook, Medical Records Specialists. Available at: https://data.bls.gov/oes/#/industry/622100. Accessed: April 8, 2025.
---------------------------------------------------------------------------
In the CY 2025 OPPS/ASC final rule with comment period, our burden
estimates assumed that approximately 3,200 hospital outpatient
departments (HOPDs) would report data to the Hospital OQR Program (89
FR 94523). For this proposed rule, based on the most recent available
data from the CY 2024 Hospital OQR Program payment determination, we
estimate that 3,200 HOPDs would report data to the Hospital OQR Program
for the CY 2026 reporting period/CY 2028 payment determination and
future years.
2. Information Collection Burden Estimate for the Proposed Removal of
the COVID-19 Vaccination Coverage Among HCP Measure Beginning With CY
2024 Reporting Period/CY 2026 Payment Determination
As discussed in section XIV.C.1. of this proposed rule, we propose
to remove the COVID-19 Vaccination Coverage Among HCP measure beginning
with the CY 2024 reporting period/CY 2026 payment determination. The
information collection burden associated with this measure is currently
approved under OMB control number 0920-1317. To report this measure,
HOPDs have the option to manually enter data directly into the Centers
for Disease Control and Prevention (CDC) National Healthcare Safety
Network (NHSN) web-based application or by uploading a CSV file. CDC
estimates that each HOPD requires between 40 minutes (0.67 hours) to
upload a CSV file and 45 minutes (0.75 hours) monthly to enter the data
manually. CDC assumes that manual data entry would be completed by a
Microbiologist with a wage rate of $58.60/hour and uploading of a CSV
file would be completed by an Information Technologist with a wage rate
of $56.50/hour. Therefore, we estimate that this proposal would result
in a decrease in burden of between 25,600 hours (0.67 hours x 12 months
x 3,200 HOPDs) at a savings of $1,446,400 (25,600 hours x $56.50/hour)
and 28,800 hours (0.75 hours x 12 months x 3,200 HOPDs) at a savings of
$1,687,680 (28,800 hours x $58.60/hour) annually across all 3,200 HOPDs
under OMB control number 0920-1317.
3. Information Collection Burden Estimate for the Proposed Removal of
the HCHE Measure Beginning With the CY 2025 Reporting Period/CY 2027
Payment Determination
As discussed in section XIV.C.2. of this proposed rule, we propose
to remove the HCHE measure beginning with the CY 2025 reporting period/
CY 2027 payment determination. The information collection burden
associated with this measure is currently approved under OMB control
number 0938-1109. The currently approved information collection burden
estimate for this measure assumes HOPDs spend approximately 10 minutes
(0.167 hours) annually to report measure data. Therefore, for all
participating HOPDs, we estimate removal of this measure would decrease
burden by approximately 533 hours (0.167 hours x 3,200 HOPDs) at a
savings of $29,347 (533 hours x $55.06/hour).
4. Information Collection Burden Estimate for the Proposed Removal of
the Screening for SDOH Measure Beginning With the CY 2025 Reporting
Period
In section XIV.C.3. of this proposed rule, we propose to remove the
Screening for SDOH measure beginning with the CY 2025 reporting period.
There are two components to this measure: patient screening for five
health related social needs domains and hospital submission of
aggregated hospital-level measure data. We have previously estimated
each patient requires 2 minutes (0.033 hours) to complete the screening
and each hospital requires 10 minutes (0.167 hours) annually to report
this measure.
We determine the cost for patients (or their representative) to
complete the screening using a post-tax wage of $25.63/hour based on
assumptions from the report ``Valuing Time in U.S. Department of Health
and Human Services Regulatory Impact Analyses: Conceptual Framework and
Best Practices,'' which identifies an approach for valuing time when
individuals undertake administrative and other tasks on their own
time.\327\ To derive the costs for patients (or their representatives),
a measurement of the usual weekly earnings of wage and salary workers
of $1,192 is divided by 40 hours to calculate an hourly pre-tax wage
rate of $29.80/hour.\328\ This rate is adjusted downwards by an
estimate of the effective tax rate for median income households of
about 14 percent calculated by comparing pre- and post-tax income,\329\
resulting in the post-tax hourly wage rate of $25.63/hour. Unlike our
State and private sector wage adjustments, we are not adjusting
beneficiary wages for fringe benefits and other indirect costs because
the individuals' activities, if any, would occur outside the scope of
their employment.
---------------------------------------------------------------------------
\327\ Office of the Assistant Secretary for Planning and
Evaluation. (2017). Valuing Time in U.S. Department of Health and
Human Services Regulatory Impact Analyses: Conceptual Framework and
Best Practices. Available at https://aspe.hhs.gov/reports/valuing-time-us-department-health-human-services-regulatory-impact-analyses-conceptual-framework. Accessed: June 24, 2025.
\328\ Bureau of Labor and Statistics. (2025). Usual Weekly
Earnings of Wage and Salary Workers, Fourth Quarter 2025. Available
at https://www.bls.gov/news.release/pdf/wkyeng.pdf. Accessed: March
3, 2025.
\329\ Guzman, G. & Kollatr, M. (2024). Income in the United
States: 2023. Available at https://www2.census.gov/library/publications/2024/demo/p60-282.pdf. Accessed: June 24, 2025.
---------------------------------------------------------------------------
Under OMB control number 0938-1109, we estimate 206,325,645 HOPD
visits annually that will result in screening once the measure becomes
mandatory. Therefore, for all participating HOPDs, we estimate removal
of this measure would decrease burden for voluntary reporting for the
CY 2025 reporting period by approximately 1,719,380 hours for
51,581,411 patients (0.033 hours x 206,325,645 patients x 50 percent
response rate x 50 percent of HOPDs) at a savings of $44,067,709
(1,719,380 hours x $25.63/hour). For mandatory reporting beginning with
the CY 2026 reporting period, we estimate a decrease in burden of
6,877,522 hours (206,325,645 patients x 0.033 hours per patient) at a
savings of $176,270,889 (6,877,522 hours x $25.63/hour). With regard to
measure reporting, we estimate a decrease in burden of 267 hours (3,200
HOPDs x 50 percent of HOPDs x 0.167 hours per HOPD) at a savings of
$14,701 (267 hours x $55.06/hour) for voluntary reporting for the CY
2025 reporting period and 533 hours annually (0.167 hours x 3,200
HOPDs) at a savings of $29,347 (533 hours x $55.06/hour) for mandatory
reporting beginning with the CY 2026 reporting period.
5. Information Collection Burden Estimate for the Proposed Removal of
the Screen Positive Rate for SDOH Measure Beginning With the CY 2025
Reporting Period
In section XIV.C.3. of this proposed rule, we propose to remove the
Screen Positive Rate for SDOH measure beginning with the CY 2025
reporting period. For this measure, HOPDs are required to report on an
annual basis the number of patients who screen positive
[[Page 33814]]
for one or more of the five SDOH domains divided by the total number of
patients screened (reported as five separate rates). We previously
estimated each HOPD requires 10 minutes (0.167 hours) annually to
report this measure. Therefore, we estimate removal of this measure
would decrease burden by 267 hours (3,200 HOPDs x 50 percent of HOPDs x
0.167 hours per HOPD) at a savings of $14,701 (267 hours x $55.06/hour)
for voluntary reporting for the CY 2025 reporting period and 533 hours
annually (0.167 hours x 3,200 HOPDs) at a savings of $29,347 (533 hours
x $55.06/hour) for mandatory reporting beginning with the CY 2026
reporting period.
6. Information Collection Burden Estimate for the Proposed Adoption of
the Emergency Care Access & Timeliness eCQM With Voluntary Reporting
for the CY 2027 Reporting Period, Followed by Mandatory Reporting
Beginning With the CY 2028 Reporting Period/CY 2030 Payment
Determination
As discussed in section XV.B.1. of this proposed rule, we propose
to adopt the Emergency Care Access & Timeliness eCQM beginning with
voluntary reporting for the CY 2027 reporting period, followed by
mandatory reporting beginning with the CY 2028 reporting period/CY 2030
payment determination. Similar to the information collection burden for
the Appropriate Treatment for ST-Segment Elevation Myocardial
Infarction (STEMI) and Excessive Radiation Dose or Inadequate Image
Quality for Diagnostic CT in Adults eCQMs currently approved under OMB
control number 0938-1109, we assume a Medical Records Specialist would
require 10 minutes (0.167 hours) to submit the data required per
quarter for each HOPD or 40 minutes (0.67 hours; 10 minutes x 4
quarters) annually. For voluntary reporting for the CY 2027 reporting
period, HOPDs would be able to voluntarily submit at least one quarter
and up to four quarters of data. For estimation purposes, similar to
the assumptions previously used for the STEMI and Excessive Radiation
Dose or Inadequate Image Quality for Diagnostic CT in Adults eCQMs, we
estimate 20 percent of HOPDs would voluntarily report one quarter of
data for the measure in the CY 2027 reporting period, with 100 percent
of HOPDs reporting the measure as required in subsequent years (86 FR
63962 and 63963, and 88 FR 82134). For voluntary reporting for the CY
2027 reporting period, we estimate an annual burden for voluntarily
participating HOPDs of 107 hours (3,200 HOPDs x 20 percent x 0.167
hours x 1 quarter) at a cost of $5,891 (107 hours x $55.06/hour).
Beginning with the CY 2028 reporting period, we estimate the annual
burden for all participating HOPDs to be 2,133 hours (0.67 hours x
3,200 HOPDs) at a cost of $117,443 (2,133 hours x $55.06/hour). With
respect to any costs/burdens unrelated to data submission, we refer
readers to the Regulatory Impact Analysis in section XXV. of this
proposed rule.
7. Information Collection Burden Estimate for the Proposed Removal of
the Median Time From ED Arrival to ED Departure for Discharged ED
Patients Measure Beginning With the CY 2028 Reporting Period/CY 2030
Payment Determination
As discussed in section XV.B.2. of this proposed rule, we propose
to remove the Median Time from ED Arrival to ED Departure for
Discharged ED Patients measure beginning with the CY 2028 reporting
period/CY 2030 payment determination, when reporting for the Emergency
Care Access & Timeliness eCQM is proposed to become mandatory. The
information collection burden associated with this measure is currently
approved under OMB control number 0938-1109. The currently approved
information collection burden estimate for this measure assumes an
average of 289 cases are reported annually per HOPD, and HOPDs require
approximately 2.9 minutes (0.049 hours) per case to perform the
necessary chart abstraction and report measure data. Therefore, we
estimate removal of this measure would decrease burden by approximately
14.2 hours (0.049 hours x 289 cases) at a savings of $782 per HOPD
(14.2 hours x $55.06/hour). Therefore, for all participating HOPDs, we
estimate a decrease in annual burden of 45,440 hours (14.2 hours per
HOPD x 3,200 HOPDs) at a savings of $2,501,926 (45,440 hours x $55.06/
hour).
8. Information Collection Burden Estimate for the Proposed Removal of
the Left Without Being Seen Measure Beginning With the CY 2028
Reporting Period/CY 2030 Payment Determination
As discussed in section XV.B.2. of this proposed rule, we propose
to remove the Left Without Being Seen measure beginning with the CY
2028 reporting period/CY 2030 payment determination, when reporting for
the Emergency Care Access & Timeliness eCQM is proposed to become
mandatory. The information collection burden associated with this
measure is currently approved under OMB control number 0938-1109. The
currently approved information collection burden estimate for this
measure assumes HOPDs spend approximately 10 minutes (0.167 hours)
annually to report measure data. Therefore, for all participating
HOPDs, we estimate removal of this measure would decrease burden by
approximately 533 hours (0.167 hours x 3,200 HOPDs) at a savings of
$29,347 (533 hours x $55.06/hour).
9. Information Collection Burden Estimate for the Proposal To Modify
the Excessive Radiation eCQM From Mandatory Reporting Beginning With
the CY 2027 Reporting Period To Continue Voluntary Reporting in the CY
2027 Reporting Period and Subsequent Years
As discussed in section XV.B.3. of this proposed rule, we propose
to modify the reporting requirements for the Excessive Radiation eCQM
by maintaining voluntary reporting instead of mandatory reporting of
the measure, beginning with the CY 2027 reporting period. The
information collection burden associated with this measure is currently
approved under OMB control number 0938-1109 and estimates HOPDs spend
approximately 10 minutes (0.167 hours) per quarter annually to report
measure data. In the CY 2024 OPPS/ASC final rule, where we adopted the
Excessive Radiation eCQM beginning with voluntary reporting in the CY
2026 reporting period, we estimated that 20 percent of hospitals would
voluntarily report one quarter of data for the measure and 100 percent
of hospitals would report data for the measure once mandatory reporting
began with the CY 2027 reporting period/CY 2029 payment determination.
We also finalized to gradually increase the number of quarters of data
hospitals would be required to report on the measure starting with two
self-selected quarters for the CY 2027 reporting period/CY 2029 payment
determination, and all four quarters for the CY 2028 reporting period/
CY 2030 payment determination (88 FR 82134).
Because 80 percent of HOPDs would no longer be required to report
this measure under the proposed modification to extend voluntary
reporting beginning with the CY 2027 reporting period, we estimate the
revised data submission burden would be 107 hours (3,200 HOPDs x 20
percent x 0.167 hours x 1 quarter) at a cost of $5,891 (107 hours x
$55.06/hour) annually. This updated burden estimate is a decrease of
960 hours [(3,200 HOPDs x 0.167 hours x 2 quarters) -
[[Page 33815]]
(3,200 HOPDs x 20 percent x 0.167 hours x 1 quarter)] at a savings of
$52,858 (960 hours x $55.06) for the CY 2027 reporting period, and a
decrease of 2,027 hours [(3,200 HOPDs x 20 percent x 0.167 hours x 3
quarters) + (3,200 HOPDs x 80 percent x 0.167 hours x 4 quarters)] at a
savings of $111,607 (2,027 hours x $55.06/hour) annually beginning with
the CY 2028 reporting period.
In addition, for this measure as described under OMB control number
0938-1109, participating HOPDs must follow the process for running
their chosen vendor's translation software prior to sending data to its
EHR for measure calculation and reporting. We estimate participating
HOPDs spend approximately 15 minutes (0.25 hours) annually to conduct
these activities prior to data submission. Therefore, for all
participating HOPDs, we estimate removal of this measure would decrease
annual burden associated with these activities by approximately 640
hours (0.25 hours x 80 percent x 3,200 HOPDs) at a savings of $35,238
(640 hours x $55.06/hour) beginning with the CY 2027 reporting period.
10. Summary of Proposed Information Collection Burden Estimates for the
Hospital OQR Program
Tables 92 through 96 summarizes the information collection burden
changes under OMB control number 0938-1109 (expiration date January 1,
2026). We estimate that the proposals in this proposed rule would
result in a decrease in information collection burden of 6,924,988
hours at a savings of $178,884,367 annually for all 3,200 program-
eligible HOPDs from the CY 2025 reporting period/CY 2027 payment
determination through the CY 2028 reporting period/CY 2030 payment
determination. We also estimate that the proposals in this proposed
rule would result in a decrease in information collection burden of
between 25,600 hours at a savings of $1,446,400 and 28,800 hours at a
savings of $1,687,680 under OMB control number 0920-1317. We will
submit the revised information collection estimates to OMB for approval
under OMB control number 0938-1109. With respect to any costs/burdens
unrelated to data submission, we refer readers to the Regulatory Impact
Analysis (section XXVI.A. of this proposed rule).
We invite public comments on the information collection
requirements and whether our estimated burden is a reasonable estimate.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP17JY25.163
[[Page 33816]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.164
[[Page 33817]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.165
[[Page 33818]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.166
[[Page 33819]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.167
BILLING CODE 4120-01-C
B. ICRs for the Rural Emergency Hospital Quality Reporting (REHQR)
Program
1. Background
In sections XIV. and XVI. of this proposed rule, we discuss the
proposed changes to requirements for the REHQR Program. The REHQR
Program is generally aligned with the CMS quality reporting program for
HOPDs, known as the Hospital OQR Program. We refer readers to the CY
2025 OPPS/ASC final rule with comment period (89 FR 94530 through
94533) for detailed discussions of the previously finalized REHQR
Program ICRs, which have been submitted for OMB approval under OMB
control number 0938-1454 (expiration date April 30, 2027).
In this proposed rule, we propose to: (1) remove the HCHE measure
beginning with the CY 2025 reporting period/CY 2027 program
determination; (2) remove the Screening for SDOH measure beginning with
the CY 2025 reporting period; (3) remove the Screen Positive Rate for
SDOH measure beginning with the CY 2025 reporting period; and (4) adopt
the Emergency Care Access & Timeliness eCQM beginning with the CY 2027
reporting period/CY 2029 program determination as an optional measure.
In section XIV.D. of this proposed rule, we also propose to update our
Extraordinary Circumstances Exception (ECE) Policy for the REHQR
Program. This proposed update would explicitly include extensions as a
type of extraordinary circumstances relief option, in addition to
exceptions. Because the process for requesting or granting an ECE would
remain the same as the current ECE process, these updates would not
affect burden associated with the submission of the ECE form.
In the CY 2025 OPPS/ASC final rule with comment period, we
calculated reporting burden estimates for the REHQR Program by
utilizing the BLS mean hourly wage rate for Medical Records Specialists
(89 FR 94530). Specifically, we used the industry-specific wage for
Medical Records Specialists working in ``general medical and surgical
hospitals,'' as this categorization aligns the closest with the REHQR
Program care setting. The most recent data from BLS' May 2024 National
Occupational Employment and Wage Estimates reflects a median hourly
wage of $27.53 per hour for Medical Records Specialists working in
``general medical and surgical hospitals'' (SOC 29-2072).\330\ We
calculated the cost of overhead, including fringe benefits, at 100
percent of the median hourly wage, consistent with previous years. This
is necessarily a rough adjustment, both because fringe benefits and
overhead costs vary significantly by employer and methods of estimating
these costs vary widely in the literature. Nonetheless, we believe that
doubling the hourly wage rate ($27.53 x 2 = $55.06) to estimate total
cost is a reasonably accurate estimation method. Accordingly, unless
otherwise specified, we will calculate cost burden to REHs using a wage
plus benefits estimate of $55.06 per hour throughout the discussion in
this section of this rule for the REHQR Program.
---------------------------------------------------------------------------
\330\ U.S. Bureau of Labor Statistics. (2025). Occupational
Outlook Handbook, Medical Records Specialists. Available at https://data.bls.gov/oes/#/industry/622100. Accessed: June 24, 2025.
---------------------------------------------------------------------------
In the CY 2025 OPPS/ASC final rule with comment period, our burden
estimates were based on the 33 acute care and critical access hospital
conversions to REH status as of September 27, 2024 (89 FR 94530). For
this proposed rule, based on the actual number of acute care and
critical access hospital conversions to REH status as of April 11,
2025, we estimate that 38 REHs will report data to the REHQR Program
during the CY 2026 reporting period unless otherwise noted. While the
exact number of REHs required to submit data may vary due to status
changes to and from an REH, as reiterated in section XVI. of this
proposed rule, REHs are required by statute to submit quality data.
Therefore, for purposes of estimating burden, we assume that all 38
REHs will submit data under the REHQR Program for the CY 2026 reporting
period and future years.
2. Information Collection Burden Estimate for the Proposed Removal of
the HCHE Measure Beginning With the CY 2025 Reporting Period/CY 2027
Program Determination
As discussed in section XIV.C.2. of this proposed rule, we propose
to remove the HCHE measure beginning with the CY 2025 reporting period/
CY 2027 program determination. The information collection burden
associated with this measure is currently approved under OMB control
number 0938-1454. The currently approved information collection burden
[[Page 33820]]
estimate for this measure assumes REHs spend approximately 10 minutes
(0.167 hours) annually to report measure data. Therefore, for all
participating REHs, we estimate removal of this measure would decrease
burden by approximately 6 hours (0.167 hours x 38 REHs) at a savings of
$349 (6 hours x $55.06/hour).
3. Information Collection Burden Estimate for the Proposed Removal of
the Screening for SDOH Measure Beginning With the CY 2025 Reporting
Period
In section XIV.C.3. of this proposed rule, we propose to remove the
Screening for SDOH measure beginning with the CY 2025 reporting period.
There are two components to this measure: patient screening for five
health related social needs domains and hospital submission of
aggregated hospital-level measure data. We have previously estimated
each patient requires 2 minutes (0.033 hours) to complete the screening
and each hospital requires 10 minutes (0.167 hours) annually to report
this measure.
We determine the cost for patients (or their representative) to
complete the screening using a post-tax wage of $25.63/hour based on
assumptions from the report ``Valuing Time in U.S. Department of Health
and Human Services Regulatory Impact Analyses: Conceptual Framework and
Best Practices,'' which identifies an approach for valuing time when
individuals undertake administrative and other tasks on their own
time.\331\ To derive the costs for patients (or their representatives),
a measurement of the usual weekly earnings of wage and salary workers
of $1,192 is divided by 40 hours to calculate an hourly pre-tax wage
rate of $29.80/hour.\332\ This rate is adjusted downwards by an
estimate of the effective tax rate for median income households of
about 14 percent calculated by comparing pre- and post-tax income,\333\
resulting in the post-tax hourly wage rate of $25.63/hour. Unlike our
State and private sector wage adjustments, we are not adjusting
beneficiary wages for fringe benefits and other indirect costs because
the individuals' activities, if any, would occur outside the scope of
their employment.
---------------------------------------------------------------------------
\331\ Office of the Assistant Secretary for Planning and
Evaluation. (2017). Valuing Time in U.S. Department of Health and
Human Services Regulatory Impact Analyses: Conceptual Framework and
Best Practices. Available at https://aspe.hhs.gov/reports/valuing-time-us-department-health-human-services-regulatory-impact-analyses-conceptual-framework. Accessed: June 24, 2025.
\332\ Bureau of Labor and Statistics. (2025). Usual Weekly
Earnings of Wage and Salary Workers, Fourth Quarter 2025. Available
at https://www.bls.gov/news.release/pdf/wkyeng.pdf. Accessed: March
3, 2025.
\333\ Guzman, G. & Kollatr, M. (2024). Income in the United
States: 2023. Available at https://www2.census.gov/library/publications/2024/demo/p60-282.pdf. Accessed: June 24, 2025.
---------------------------------------------------------------------------
Under OMB control number 0938-1454, we estimate 11,798 patients
annually will be screened per REH when reporting on the measure becomes
mandatory. For voluntary reporting in the CY 2025 reporting period, we
estimate that 50 percent of REHs will survey 50 percent of patients.
Therefore, for all participating REHs with regard to patient screening,
we estimate removal of this measure would decrease burden for voluntary
reporting for the CY 2025 reporting period by 3,699 hours for 112,081
patients (0.033 hours x 11,798 patients x 50 percent response rate x 19
REHs) at a savings of $94,797 (3,699 hours x $25.63/hour). For
mandatory reporting beginning with the CY 2026 reporting period, we
estimate a decrease in burden of 14,795 hours (448,324 patients x 0.033
hours per patient) at a savings of $379,188 (14,795 hours x $25.63/
hour). With regard to measure reporting, we estimate a decrease in
burden of 3 hours (38 REHs x 50 percent of REHs x 0.167 hours per REH)
at a savings of $175 (3 hours x $55.06/hour) for voluntary reporting
for the CY 2025 reporting period and 6 hours annually (38 REHs x 0.167
hours) at a savings of $349 (6 hours x $55.06/hour) for mandatory
reporting beginning with the CY 2026 reporting period.
4. Information Collection Burden Estimate for the Proposed Removal of
the Screen Positive Rate for SDOH Measure Beginning With the CY 2025
Reporting Period
In section XIV.C.3. of this proposed rule, we propose to remove the
Screen Positive Rate for SDOH measure beginning with the CY 2025
reporting period. For this measure, REHs are required to report on an
annual basis the number of patients who screen positive for one or more
of the five SDOH domains divided by the total number of patients
screened (reported as five separate rates). We previously estimated
each REH requires 10 minutes (0.167 hours) annually to report this
measure. Therefore, we estimate the removal of this measure would
decrease burden by 3 hours (38 REHs x 50 percent of REHs x 0.167 hours)
at a savings of $175 (3 hours x $55.06/hour) for voluntary reporting
for the CY 2025reporting period and 6 hours (38 REHs x 0.167 hours) at
a savings of $349 (6 hours x $55.06/hour) annually for mandatory
reporting beginning with the CY 2026 reporting period.
5. Information Collection Burden Estimate for the Proposed Adoption of
the Emergency Care Access & Timeliness eCQM Beginning With the CY 2027
Reporting Period/CY 2029 Program Determination
As discussed in section XVI.B.1. of this proposed rule, we propose
to adopt the Emergency Care Access & Timeliness eCQM beginning with the
CY 2027 reporting period/CY 2029 program determination. We refer
readers to the discussion of information collection burden associated
with the proposal to adopt a similar measure for the Hospital OQR
Program in section XXIII.A.6. of this proposed rule. Because this would
be the first eCQM adopted in the REHQR Program, we also propose that
REHs be provided with the option of reporting either the Median Time
for Discharged ED Patients measure or the Emergency Care Access &
Timeliness eCQM to meet program requirements. We assume a Medical
Records Specialist would require 10 minutes (0.167 hours) to submit the
data required per quarter for each REH, therefore, for each REH that
elects to report the Emergency Care Access & Timeliness eCQM, we
estimate an annual burden of 40 minutes (0.67 hours; 10 minutes x 4
quarters) annually at a cost of $36.92 (0.67 hours x $55.06/hour).
Because we are currently unable to estimate the number of REHs that
would elect to report the Emergency Care Access & Timeliness eCQM
instead of the Median Time for Discharged ED Patients measure, we
propose to base our estimate of total burden for the REHQR Program
solely on the time to report the Median Time for Discharged ED Patients
measure. For reporting the Median Time for Discharged ED Patients
measure, we have previously estimated that a Medical Records Specialist
would require 12.2 hours per REH annually or 464 hours (12.2 hours x 38
REHs) at a cost of $25,526 (464 hours x $55.06/hour) across all REHs.
6. Summary of Information Collection Burden Estimates for the REHQR
Program
Tables 97 through 99 summarizes the information collection burden
changes for the REHQR Program. We estimate that the proposals in this
proposed rule would result in a decrease of 14,813 hours at a savings
of $380,235 for 38 REHs annually from the CY 2025 reporting period
through the CY 2027 reporting period. We will submit these information
collection estimates to OMB for approval under OMB control number 0938-
1454. With respect to any costs/burdens unrelated to data submission,
[[Page 33821]]
we refer readers to the Regulatory Impact Analysis in section XXVI. of
this proposed rule).
We invite public comments on the information collection
requirements and whether our estimated burden is a reasonable estimate.
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C. ICRs for the Ambulatory Surgical Center Quality Reporting (ASCQR)
Program
1. Background
In sections XIV. and XVII. of this proposed rule, we discuss the
proposed requirements for the ASCQR Program. We refer readers to the CY
2025 OPPS/ASC final rule with comment period (89 FR 94533 through
94537) for detail regarding the previously finalized ASCQR Program ICRs
which are currently approved under OMB control number 0938-1270
(expiration date July 31, 2027).
In this proposed rule, we propose to: (1) remove the COVID-19
Vaccination Coverage Among HCP measure beginning with the CY 2024
reporting period/CY 2026 payment determination; (2) remove the Facility
Commitment to Health Equity (FCHE) measure beginning with the CY 2025
reporting period/CY 2027 payment determination; (3) remove the
Screening for SDOH measure beginning with the CY 2025 reporting period;
(4) remove the Screen Positive Rate for SDOH measure beginning with the
CY 2025 reporting period; and (5) adopt the Patient Understanding of
Key Information Related to Recovery After a Facility-Based Outpatient
Procedure or Surgery, Patient Reported Outcome-Based Performance
measure (Information Transfer PRO-PM) beginning with voluntary
reporting for the CY 2027 and CY 2028 reporting periods, followed by
mandatory reporting beginning with the CY 2029 reporting period/CY 2031
payment determination.
In section XIV.D. of this proposed rule, we also propose to update
our Extraordinary Circumstances Exception (ECE) Policy for the ASCQR
Program. This proposed update would explicitly include extensions as a
type of extraordinary circumstances relief option, in addition to
exceptions. Because the process for requesting or granting an ECE would
remain the same as the current ECE process, these updates would not
affect burden associated with the submission of the ECE form.
[[Page 33824]]
In the CY 2025 OPPS/ASC final rule with comment period, we
calculated reporting burden estimates for the ASCQR Program by
utilizing the BLS mean hourly wage rate for Medical Records Specialists
(89 FR 94534). Specifically, we used the industry-specific wage for
Medical Records Specialists working in the ``general medical and
surgical hospitals'' industry, as this categorization aligns the
closest with the ASCQR Program care setting. The most recent data from
BLS' May 2024 National Occupational Employment and Wage Estimates
reflects a median hourly wage of $27.53 per hour for Medical Records
Specialists working in ``general medical and surgical hospitals'' (SOC
29-2072).\334\ We calculated the cost of overhead, including fringe
benefits, at 100 percent of the median hourly wage, consistent with
previous years. This is necessarily a rough adjustment, both because
fringe benefits and overhead costs vary significantly by employer and
methods of estimating these costs vary widely in the literature.
Nonetheless, doubling the hourly wage rate ($27.53 x 2 = $55.06) to
estimate total cost is a reasonably accurate estimation method.
Accordingly, unless otherwise specified, we will calculate cost burden
to ASCs using a wage plus benefits estimate of $55.06 per hour
throughout the discussion in this section of this rule for the ASCQR
Program.
---------------------------------------------------------------------------
\334\ U.S. Bureau of Labor Statistics. (2025). Occupational
Outlook Handbook, Medical Records Specialists. Available at: https://data.bls.gov/oes/#/industry/622100. Accessed: April 8, 2025.
---------------------------------------------------------------------------
Based on the most recent analysis of the CY 2025 payment
determination data, we found that, of the 6,012 ASCs that were actively
billing Medicare, 4,271 were required to participate in the ASCQR
Program. Of the 1,741 ASCs not required to participate in the program,
319 ASCs did so and met full requirements. On this basis, we estimate
that 4,590 ASCs (4,271 + 319) would submit data for the ASCQR Program
for the CY 2026 reporting period/CY 2028 payment determination and
future years.
2. Information Collection Burden Estimate for the Proposed Removal of
the COVID-19 Vaccination Coverage Among HCP Measure Beginning With CY
2024 Reporting Period/CY 2026 Payment Determination
As discussed in section XIV.C.1. of this proposed rule, we propose
to remove the COVID-19 Vaccination Coverage Among HCP measure beginning
with the CY 2024 reporting period/CY 2026 payment determination. The
information collection burden associated with this measure is currently
approved under OMB control number 0920-1317.
To report this measure, ASCs have the option to manually enter data
directly into CDC's NHSN web-based application or to upload a CSV file.
CDC estimates that each ASC requires between 40 minutes (0.67 hours) to
upload a CSV file and 45 minutes (0.75 hours) monthly to enter the data
manually. CDC assumes that manual data entry would be completed by a
Microbiologist with a wage rate of $58.60/hour and uploading of a CSV
file would be completed by an Information Technologist with a wage rate
of $56.50/hour. Therefore, we estimate that this proposal would result
in a decrease in burden of between 36,720 hours (0.67 hours x 12 months
x 4,590 ASCs) at a savings of $2,074,680 (36,720 hours x $56.50/hour)
and 41,310 hours (0.75 hours x 12 months x 4,590 ASCs) at a savings of
$2,420,766 (41,310 hours x $58.60/hour) annually across all 4,590 ASCs
under OMB control number 0920-1317.
3. Information Collection Burden Estimate for the Proposed Removal of
the FCHE Measure Beginning With the CY 2025 Reporting Period/CY 2027
Payment Determination
As discussed in section XIV.C.2. of this proposed rule, we propose
to remove the FCHE measure beginning with the CY 2025 reporting period/
CY 2027 payment determination. The information collection burden
associated with this measure is currently approved under OMB control
number 0938-1270.
The currently approved information collection burden estimate for
this measure assumes ASCs spend approximately 10 minutes (0.167 hours)
annually to report measure data. Therefore, for all participating ASCs,
we estimate removal of this measure would decrease burden by
approximately 765 hours (0.167 hours x 4,590 ASCs) at a savings of
$42,121 (765 hours x $55.06/hour).
4. Information Collection Burden Estimate for the Proposed Removal of
the Screening for SDOH Measure Beginning With the CY 2025 Reporting
Period
In section XIV.C.3. of this proposed rule, we propose to remove the
Screening for SDOH measure beginning with the CY 2025 reporting period.
There are two components to this measure's burden calculation: patient
screening for five health related social needs domains and ASC
submission of aggregated ASC-level measure data. We previously
estimated each patient requires 2 minutes (0.033 hours) to complete the
screening and each ASC requires 10 minutes (0.167 hours) annually to
report this measure. We determine the cost for patients (or their
representative) to complete the screening using a post-tax wage of
$25.63/hour based on assumptions from the report ``Valuing Time in U.S.
Department of Health and Human Services Regulatory Impact Analyses:
Conceptual Framework and Best Practices,'' which identifies the
approach for valuing time when individuals undertake administrative and
other tasks on their own time.\335\ To derive the costs for patients
(or their representatives), a measurement of the usual weekly earnings
of wage and salary workers of $1,192 is divided by 40 hours to
calculate an hourly pre-tax wage rate of $29.80/hour.\336\ This rate is
adjusted downwards by an estimate of the effective tax rate for median
income households of about 14 percent calculated by comparing pre- and
post-tax income,\337\ resulting in the post-tax hourly wage rate of
$25.63/hour. Unlike our State and private sector wage adjustments, we
are not adjusting beneficiary wages for fringe benefits and other
indirect costs because the individuals' activities, if any, would occur
outside the scope of their employment.
---------------------------------------------------------------------------
\335\ Office of the Assistant Secretary for Planning and
Evaluation. (2017). Valuing Time in U.S. Department of Health and
Human Services Regulatory Impact Analyses: Conceptual Framework and
Best Practices. Available at https://aspe.hhs.gov/reports/valuing-time-us-department-health-human-services-regulatory-impact-analyses-conceptual-framework. Accessed: June 24, 2025.
\336\ Bureau of Labor and Statistics. (2025). Usual Weekly
Earnings of Wage and Salary Workers, Fourth Quarter 2025. Available
at https://www.bls.gov/news.release/pdf/wkyeng.pdf. Accessed: March
3, 2025.
\337\ Guzman, G. & Kollatr, M. (2024). Income in the United
States: 2023. Available at https://www2.census.gov/library/publications/2024/demo/p60-282.pdf. Accessed: June 24, 2025.
---------------------------------------------------------------------------
Under OMB control number 0938-1270, we estimate an average of 4,765
patients per ASC annually will be screened once the measure becomes
mandatory. Therefore, consistent with the burden estimates for this
measure under OMB control number 0938-1270, for all participating ASCs
with regard to patient screening, we estimate removal of this measure
would decrease burden for voluntary reporting for the CY 2025 reporting
period by approximately 182,262 hours for 5,467,838 patients (0.033
hours x 4,765 patients x 50 percent response rate x 4,590 ASCs x 50
percent of ASCs) at a savings of $4,671,375 (182,262 hours x $25.63/
[[Page 33825]]
hour). Beginning with the mandatory reporting for the CY 2026 reporting
period, we estimate a decrease in burden of approximately 729,045 hours
for 21,871,350 patients (4,765 patients x 4,590 ASCs x 0.033 hours per
patient) at a savings of $18,685,423 (729,045 hours x $25.63/hour).
With regard to measure reporting, we estimate the removal of this
measure would decrease burden for voluntary reporting for the CY 2025
reporting period by 383 hours (4,590 ASCs x 50 percent of ASCs x 0.167
hours per ASC) at a savings of $21,088 (383 hours x $55.06/hour) and
765 hours annually (0.167 hours x 4,590 ASCs) at a savings of $42,121
(765 hours x $55.06/hour) for mandatory reporting beginning with the CY
2026 reporting period.
5. Information Collection Burden Estimate for the Proposed Removal of
the Screen Positive Rate for SDOH Measure Beginning With the CY 2025
Reporting Period
In section XIV.C.3. of this proposed rule, we propose to remove the
Screen Positive Rate for SDOH measure beginning with the CY 2025
reporting period. For this measure, ASCs are required to report on an
annual basis the number of patients who screen positive for one or more
of the five SDOH domains divided by the total number of patients
screened (reported as five separate rates). We previously estimated
each ASC requires 10 minutes (0.167 hours) annually to report this
measure. Therefore, consistent with the burden estimates for this
measure under OMB control number 0938-1270, we estimate the removal of
this measure would decrease burden for voluntary reporting for the CY
2025 reporting period by 383 hours (4,590 ASCs x 50 percent of ASCs x
0.167 hours per ASC) at a savings of $21,088 (383 hours x $55.06/hour)
and 765 hours annually (0.167 hours x 4,590 ASCs) at a savings of
$42,121 (765 hours x $55.06/hour) for mandatory reporting beginning
with the CY 2026 reporting period.
6. Information Collection Burden for the Proposed Adoption of the
Information Transfer PRO-PM Beginning With Voluntary Reporting for the
CY 2027 and CY 2028 Reporting Periods Followed by Mandatory Reporting
Beginning With the CY 2029 Reporting Period/CY 2031 Payment
Determination
As discussed in section XVII.B.1. of this proposed rule, we propose
to adopt the Information Transfer PRO-PM with voluntary reporting for
the CY 2027 and CY 2028 reporting periods followed by mandatory
reporting beginning with the CY 2029 reporting period/CY 2031 payment
determination. In the CY 2025 OPPS/ASC final rule with comment period,
we finalized a similar measure for the Hospital OQR Program (89 FR
94406 through 94413) and discussed our estimates for information
collection burden (89 FR 94525); the associated information collection
burden is approved under OMB control number 0938-1109 (expiration date
January 31, 2026).
The Information Transfer PRO-PM would use patient reported outcome
(PRO) data regarding recovery instructions, collected by ASCs through a
nine-item survey instrument administered to patients post-operatively.
The modes of PRO data collection can include completion of the post-
operative surveys electronically. In section XVII.C.1.b, we propose
that, for ASCs that anticipate receiving more than 200 completed
surveys, these ASCs would have the option to either: (1) survey and
report data on their entire eligible Information Transfer PRO-PM
patient population, or (2) randomly sample their eligible Information
Transfer PRO-PM patient population to collect and report data from 200
completed surveys. As submission rates among facilities may vary, we
conservatively estimate that, for voluntary reporting for the CY 2027
and CY 2028 reporting periods, 50 percent of ASCs (or their third-party
vendors) would obtain responses from 30 percent of patients and,
beginning with mandatory reporting for the CY 2029 reporting period,
ASCs (or their third-party vendors) would obtain responses from 30
percent of patients. To provide an estimate of patient volume for the
purposes of calculating the information collection burden associated
with this measure, we utilized data derived from the ASC Quality
Collaborative (ASCQC) related to ASC patient fall benchmarking data as
this metric applies to all patients rather than a subset. Since we
expect that ASCs reporting data to the ASCQC will tend to be larger
facilities with larger patient populations than non-reporting ASCs, we
conservatively estimate that each year approximately 22,326,000
patients (10,433,448 admissions \338\ / 2,145 ASCs reporting) x 4,590
ASCs) with an average of 4,864 patients per ASC (22,326,000 admissions
/ 4,590 ASCs) would be eligible to be screened annually when reporting
on the measure becomes mandatory.
---------------------------------------------------------------------------
\338\ ASC Quality Collaboration. ASC Quality Collaboration
Quality Report. Available at https://ascquality.org/benchmarking/.
Accessed: March 3, 2025.
---------------------------------------------------------------------------
We determine the cost for patients (or their representative)
undertaking administrative and other tasks, such as filling out a
survey or intake form, using a post-tax wage of $25.63/hr based on the
report ``Valuing Time in U.S. Department of Health and Human Services
Regulatory Impact Analyses: Conceptual Framework and Best Practices,''
which identifies the approach for valuing time when individuals
undertake activities on their own time.\339\ To derive the costs for
patients (or their representatives), a measurement of the usual weekly
earnings of wage and salary workers of $1,192 is divided by 40 hours to
calculate an hourly pre-tax wage rate of $29.80/hr.\340\ This rate is
adjusted downwards by an estimate of the effective tax rate for median
income households of about 14 percent calculated by comparing pre- and
post-tax income,\341\ resulting in the post-tax hourly wage rate of
$25.63/hr. Unlike our State and private sector wage adjustments, we are
not adjusting beneficiary wages for fringe benefits and other indirect
costs because the individuals' activities, if any, would occur outside
the scope of their employment.
---------------------------------------------------------------------------
\339\ Office of the Assistant Secretary for Planning and
Evaluation. (2017). Valuing Time in U.S. Department of Health and
Human Services Regulatory Impact Analyses: Conceptual Framework and
Best Practices. Available at https://aspe.hhs.gov/reports/valuing-time-us-department-health-human-services-regulatory-impact-analyses-conceptual-framework. Accessed: June, 24, 2025.
\340\ Bureau of Labor and Statistics. (2025). Usual Weekly
Earnings of Wage and Salary Workers, Fourth Quarter 2025. Available
at https://www.bls.gov/news.release/pdf/wkyeng.pdf. Accessed: March
3, 2025.
\341\ Guzman, G. & Kollatr, M. (2024). Income in the United
States: 2023. Available at https://www2.census.gov/library/publications/2024/demo/p60-282.pdf. Accessed: June, 24, 2025.
---------------------------------------------------------------------------
We estimate each patient would require an average of 5 minutes
(0.083 hours) to complete the survey. For voluntary reporting for the
CY 2027 and CY 2028 reporting periods, we estimate a total burden for
patients of 279,075 hours (22,326,000 patients x 30 percent response
rate x 50 percent of ASCs x 0.083 hours per patient surveyed) at a cost
of $7,152,692 (279,075 hours x $25.63/hour). For mandatory reporting
beginning with the CY 2029 reporting period, we estimate an annual
total burden for patients of 558,150 hours (22,326,000 patients x 30
percent response rate x 0.083 hours per patient) at a cost of
$14,305,385 (558,150 hours x $25.63/hour) or $3,117 per ASC
($14,305,385 / 4,590 ASCs).
Measure data would be submitted via the HQR system annually.
Similar to the currently approved burden estimate for
[[Page 33826]]
other web-based measures reported via the HQR system for the ASCQR
Program, we estimate a burden of 10 minutes (0.167 hours) per ASC to
report measure data. For voluntary reporting for the CY 2027 and CY
2028 reporting periods, we estimate an annual burden for participating
ASCs of 383 hours (4,590 HOPDs x 50 percent of ASCs x 0.167 hours) at a
cost of $21,088 (383 hours x $55.06/hour). For mandatory reporting
beginning with the CY 2029 reporting period, we estimate an annual
burden for all ASCs of 765 hours (4,590 ASCs x 0.167 hours) at a cost
of $42,121 (765 hours x $55.06/hour).
7. Summary of Information Collection Burden Estimates for the ASCQR
Program
Tables 100 through 104 summarizes the information collection burden
changes for under OMB control number 0938-1270 (expiration date July
31, 2027). We estimate that the proposals in this proposed rule would
result in an overall decrease in information collection burden of
172,425 hours at a savings of $4,464,280 annually for all 4,590
program-eligible ASCs from the CY 2025 reporting period/CY 2027 payment
determination through the CY 2029 reporting period/CY 2031 payment
determination. We also estimate that the proposals in this proposed
rule would result in a decrease in information collection burden of
between 36,720 hours at a savings of $2,074,680 and 41,310 hours at a
savings of $2,420,766 under OMB control number 0920-1317. We will
submit the revised information collection estimates to OMB for approval
under OMB control number 0938-1270. With respect to any costs/burdens
unrelated to data submission, we refer readers to the Regulatory Impact
Analysis (section XXVI.A. of this proposed rule).
We invite public comments on the information collection
requirements and whether our estimated burden is a reasonable estimate.
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D. Summary of Information Collection Burden Estimates for the Overall
Hospital Quality Star Rating
The Overall Hospital Quality Star Rating uses measures that are
publicly reported on Hospital Compare or its successor websites under
the public reporting authority of each individual hospital program
furnishing measure data. The burden associated with measures included
in the Overall Hospital Quality Star Rating, including requesting
withholding of measures from public reporting, is already captured in
the respective hospital programs' ICRs and represents no increased
information collection burden to hospitals.
Therefore, as the Overall Hospital Quality Star Rating utilizes
output data from CMS hospital quality and payment programs, there is no
additional information collection burden. The burden is accounted for
under OMB control numbers 0938-1109, 0938-1022, 0938-1352, 0920-0666,
0938-0981, 0938-1240 and 0938-1197.
E. ICRs for Payer-Specific Negotiated Charges Data Collection
Section XX. of this proposed rule discusses the proposed collection
of market-based payment rate information by MS-DRG on the Medicare cost
report for cost reporting periods ending on or after January 1, 2026.
Hospitals would report the median payer-specific negotiated charge by
MS-DRG for payers that are Medicare Advantage Organization (MAOs). We
propose to collect this market-based information on new worksheet
Supplemental to Form CMS-2552-10, Weighted Median MAO Payer-Specific
Negotiated Charge Data Worksheet. The required cost report reporting
changes to accomplish this collection will be described in more detail
in a new Information Collection Request, which is currently under
development. However, upon completion of the ICR, we will publish the
required 60-day and 30-day notices to solicit public comments in
accordance with the requirements of the PRA.
As described further in section XX.C.3. of this proposed rule, for
the purposes of reporting the data on the cost report, we propose that
hospitals would report the median of the payer-specific negotiated
charges for an MS-DRG that the hospital has disclosed for all of its
MAOs on the most recent version of the MRF that the hospital is
required to disclose under the hospital price transparency regulations.
We believe reporting this market-based information would result in less
burden for hospitals given that hospitals are required to make public
their payer-specific negotiated charges for the same service packages
under the requirements we finalized in the Hospital Price Transparency
final rule, which became effective January 1, 2021. We refer readers to
the Hospital Price Transparency final rule for the full burden
assessment analysis for the requirements set forth within that final
rule (84 FR 65524). We also refer readers to section XIX. of this
proposed rule, where we propose to amend the hospital price
transparency regulations at 45 CFR 180 to require that, beginning
January 1, 2026, hospitals would report a new data element, the
``median allowed amount,'' instead of the ``estimated allowed amount''
reported at present, and that the median allowed amount would be
defined as the median of the total allowed amounts that the hospital
has historically received from a third-party payer (including MAOs) for
an item or service. We refer readers to section XIX. in this proposed
rule for more information regarding the specific proposal. For purposes
of the market-based rate information we propose to collect on the
Medicare cost report, in determining the median of the payer-specific
negotiated charges to report on its cost report, if the proposal to
amend the regulations at 45 CFR 180 is finalized, the ``median allowed
amount'' would be used for instances in which the payer-specific
negotiated charge reported on the MRF is based on a percentage or
algorithm. Otherwise, the ``estimated allowed amount'' (as defined
under current regulations) would be used in determining the median of
the payer-specific negotiated charges for instances in which the payer-
specific negotiated charge is based on a percentage or algorithm. We
believe that because hospitals would already be required to publicly
report the payer-specific negotiated charge information that they would
use to calculate these medians, the additional calculation and
reporting of the median payer-specific negotiated charge would result
in less burden for hospitals than if hospitals did not already have
this information
[[Page 33831]]
compiled to disclose on the MRF under the hospital price transparency
requirements. For additional details on hospital price transparency
requirements, including MRF requirements and the proposed modifications
to the hospital price transparency requirements, we refer readers to
section XIX. of this proposed rule and https://www.cms.gov/priorities/key-initiatives/hospital-price-transparency/hospitals.
Burden hours estimate the time (number of hours) required for each
IPPS hospital to complete ongoing data gathering and recordkeeping
tasks, search existing data resources, review instructions, and
complete the Supplemental to Form CMS-2552-10, Weighted Median MAO
Payer-Specific Negotiated Charge Data Worksheet. The most recent data
from the System for Tracking Audit and Reimbursement, an internal CMS
data system maintained by the Office of Financial Management (OFM),
reports that 3,038 hospitals, the current number of Medicare certified
IPPS hospitals, file Form CMS-2552-10 annually.
In section XX.C.2. of this proposed rule, we propose that
subsection (d) hospitals in the 50 states and DC, as defined at section
1886(d)(1)(B) of the Act, and subsection (d) Puerto Rico hospitals, as
defined under section 1886(d)(9)(A) of the Act, would be required to
report the median payer-specific negotiated charge information.
Hospitals that do not negotiate payment rates and only receive non-
negotiated payments for service would be exempted from this definition.
We note that this proposed data collection requirement would apply to a
smaller subset of hospitals as compared to the public reporting
requirements under the hospital price transparency regulations. Under
our proposal, hospitals that would be exempted from this policy
include, Critical Access Hospitals (CAHs), hospitals in Maryland, which
are currently paid under the Maryland Total Cost of Care Model, during
the performance period of that Model, hospitals operated by an Indian
Health Program as defined in section 4(12) of the Indian Health Care
Improvement Act, and Federally owned and operated facilities, and non-
subsection (d) hospitals. We also note that rural emergency hospitals
would not be subject to this proposed data collection requirement given
that they do not provide inpatient services. Based on this proposal, we
estimate that 3,038 hospitals (which excludes hospitals described
earlier as being exempted from this proposal) would be required to
comply with this market-based data collection requirement.
Based on our understanding of the resources necessary to report
this information, we estimate an average annual burden per hospital of
20 hours (5 hours for recordkeeping and 15 hours for reporting) for the
Supplemental to Form CMS-2552-10: Weighted Median MAO Payer-Specific
Negotiated Charge Data Worksheet. This estimate includes effort that
would be necessary to crosswalk inpatient discharges to an MS-DRG,
specifically if a hospital is not familiar with the MS-DRG
classification system, for use in calculating the median payer-specific
negotiated charges. The burden is minimized because the median payer-
specific negotiated charge data that we propose to collect on the
Supplemental to Form CMS-2552-10: Weighted Median MAO Payer-Specific
Negotiated Charge Data Worksheet is based on payer-specific data that
would already be maintained by the hospital, the data from the MRF that
hospitals are required to disclose under the hospital price
transparency regulations at 45 CFR part 180. We believe that since
hospitals assign the underlying ICD-10-CM principal diagnosis, and any
other secondary diagnosis codes and ICD-10-PCS procedure codes, which
determine how patients are assigned to an MS-DRG, hospitals are able to
associate those items and services to MS-DRGs for each discharge.
Additionally, hospitals that are not as familiar with MS-DRGs have
access to the most current publicly available version of the CMS
Grouper used to group ICD-10 codes to MS-DRGs, and are able to use this
software to uniformly group inpatient items and services to MS-DRGs,
either initially by proactively using the same Grouper version used by
CMS, or retrospectively after an inpatient hospital stay, but prior to
submitting this information on the hospital cost report.
We estimate the total annual burden hours as follows: 3,038
hospitals times 20 hours per hospital equals 60,760 annual burden
hours.
The 5 hours for recordkeeping include hours for bookkeeping,
accounting and auditing clerks; the 15 hours for reporting include
accounting and audit professionals' activities. We believe the basic
median calculation would be captured within the recordkeeping portion
of this assessment.
Based on the most recent Bureau of Labor Statistics (BLS) in its
2024 Occupation Outlook Handbook, the mean hourly wage for Category 43-
3031 (bookkeeping, accounting and auditing clerks) is $25.01 (https://www.bls.gov/oes/current/oes433031.htm). We added 100 percent of the
mean hourly wage to account for fringe and overhead benefits, which
calculates to $50.02 ($25.01 + $25.01) and multiplied it by 5 hours, to
determine the annual recordkeeping costs per hospital to be $250.10
($50.02 x 5 hours).
The mean hourly wage for Category 13-2011 (accounting and audit
professionals) is $44.96 (www.bls.gov/oes/current/oes132011.htm). We
added 100 percent of the mean hourly wage to account for fringe and
overhead benefits, which calculates to $89.92 ($44.96 + $44.96) and
multiplied it by 15 hours, to determine the annual reporting costs per
hospital to be $1,348.80 ($89.92 x 15 hours). We have calculated the
total annual cost per hospital of $1,598.90 by adding the recordkeeping
costs of $250.10 plus the reporting costs of $1,348.80 (Table 105). We
estimated the total annual cost to be $4,857,458.20 ($1,598.90 x 3,038
IPPS hospitals) (Table 106).
[[Page 33832]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.176
[GRAPHIC] [TIFF OMITTED] TP17JY25.177
Further instructions for the reporting and complying with this
proposed market-based data collection requirement on the Medicare cost
report will be discussed in a forthcoming ICR request.
F. ICRs for Medicare OPPS Drug Acquisition Cost Survey
a. Background
In section V.C. of this proposed rule, we discuss our intent to
conduct a survey of hospitals' drug acquisition costs. Section
1833(t)(14)(A)(iii) of the Act required the Secretary to set payment
rates for specified covered outpatient drugs (SCODs) \342\ beginning in
2006 at the amount the Secretary determined to be the average
acquisition cost for the drug for that year, at least when certain
hospital acquisition cost survey data is available. To collect the cost
survey data for the Secretary to use for 2006 payment rates, section
1833(t)(14)(D)(i)(I) of the Act required the Comptroller General of the
United States to conduct a survey in each of 2004 and 2005 to determine
the hospital acquisition cost for each SCOD. To inform payment rates in
later years, section 1833(t)(14)(D)(ii) requires the Secretary
periodically to conduct surveys of hospital acquisition costs for each
SCOD.
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\342\ For the definition of a SCOD, see section 1833(t)(14)(B)
of the Act at https://www.ssa.gov/OP_Home/ssact/title18/1833.htm.
---------------------------------------------------------------------------
The GAO conducted the required surveys in 2004 and 2005, and, in
reporting the results in 2006, recommended that the Secretary
thereafter validate, ``on an occasional basis--possibly every 5 or 10
years--average sales price (ASP)data that manufacturers report to CMS
for developing SCOD payment rates.'' \343\ CMS has not, however,
conducted its own survey of the acquisition costs for each SCOD for all
hospitals paid under the OPPS. Accordingly, under section
1833(t)(14)(D)(ii) of the Act, we will be conducting a survey, with the
survey submission window opening by early CY 2026, of the acquisition
costs for each separately payable drug acquired by all hospitals paid
under the OPPS. We intend for the survey to be completed in time for
the survey results to be used to inform policy making beginning with
the CY 2027 OPPS/ASC proposed rule.
---------------------------------------------------------------------------
\343\ https://www.gao.gov/assets/gao-06-372.pdf.
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Additionally, on April 18, 2025, President Trump signed Executive
Order (E.O.) 14273, ``Lowering Drug Prices by Once Again Putting
Americans First.'' \344\ Section 5 of the E.O., ``Appropriately
Accounting for Acquisition Costs of Drugs in Medicare,'' directs the
Secretary of HHS to publish in the Federal Register a plan to conduct a
survey under section 1833(t)(14)(D)(ii) of the Act so he can determine
the hospital acquisition cost for covered outpatient drugs at hospital
outpatient departments.
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\344\ https://www.govinfo.gov/content/pkg/FR-2025-04-18/pdf/2025-06837.pdf.
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b. OPPS Drug Acquisition Cost Survey Description and Burden Calculation
From January 1, 2026, through March 31, 2026, we intend to survey
hospitals paid under the OPPS for their drug acquisition costs,
including for SCODs, and drugs and biologicals CMS historically treats
as SCODs. The survey is designed to impose the least amount of burden
on hospitals as possible while ensuring we capture the required data to
inform payment rates as required by statute. As part of this data
collection, we will survey hospitals only about drugs that are
separately paid under the OPPS and will ask hospitals to report the
total acquisition cost, net of all rebates and discounts, of each drug
by National Drug Code (NDC) purchased during the 1-year timeframe of
July 1, 2024, through June 30, 2025. We are asking hospitals to
incorporate all rebates and discounts in their acquisition cost for
each NDC, including discounts directly applicable to an individual NDC,
but also those discounts that are not necessarily linked to a single
NDC, but could be a discount linked to a certain invoice, or discounts
linked to purchases made over a certain time period, such as prompt pay
discounts, wholesaler discounts, or other discounts. We understand that
certain discounts may depend on whether an eligible patient receives
the drug. That is true, for example, for drugs acquired through the
340B program. We are therefore asking for hospitals to separately list
their acquisition costs for drug NDCs acquired through the 340B program
and those drug NDCs acquired
[[Page 33833]]
outside of the 340B program in order to ensure that all of the
discounts are accurately captured and represent the hospital's
acquisition costs. We welcome comments on whether other common drug
discount programs have a similar structure or should otherwise also be
separately noted.
There are approximately 700 drug HCPCS codes that will be subject
to the survey, with most HCPCS codes having multiple NDCs per HCPCS
code. With the proposed PRA package, we will publish a draft list of
the NDCs that will be included in the survey, if finalized, so
hospitals will have ample opportunity to review and prepare to report
their acquisition costs for those NDCs. We note there may be slight
adjustments to this NDC list, but we expect the final list will be
similar to the draft list. We recognize that hospitals may not have
acquired all drugs on this list, and hospitals are not expected to
provide data for NDCs for which they do not have acquisition cost data.
We are collecting acquisition cost data by NDC as we understand most
hospitals acquire drugs from wholesalers and manufacturers based on
NDCs rather than other identifiers, such as HCPCS billing codes. We
expect this method will likely reduce hospital burden, as hospitals can
simply report the cost at which they acquired the drug without
significant calculations. Additionally, we have designed the survey so
that only the total cost and the total units of the drug acquired need
to be reported. This means that only two fields of information are
required per NDC: total net acquisition cost--non-340B and total units
purchased -non-340B. If the same drug NDC is purchased multiple times
throughout the given timeframe, only the total cost of all of the drug
acquired during the given timeframe plus the total number of units
purchased is needed. As we previously discussed, for each NDC, we are
asking hospitals to report the total acquisition cost, net of all
rebates and discounts, which includes all discounts attributable to
each specific NDC as well as those discounts attributable to multiple
NDCs. For those discounts received for drugs acquired through the 340B
Program, since those discounts may be dependent on whether a 340B
eligible patient receives the drug, we are asking for hospitals to
separately list their acquisition costs for those drug NDCs acquired
through the 340B program and those drug NDCs acquired outside of the
340B program. This means for 340B covered entity hospitals that acquire
NDCs through the 340B program, they are to submit up to four fields of
information for each NDC depending on their acquisition patterns: total
net acquisition cost--non-340B, total units purchased--non-340B, total
net acquisition cost 340B, total units purchased 340B.
We will assume the burden of performing any additional
calculations. We believe this collection of information is based on
common information that the hospital already has in its records from
its drug purchase history.
This survey will apply to all hospitals paid under the OPPS, which
for purposes of our burden calculations we estimate to be 3,500
hospitals. Based on our understanding of hospital practices, we have
estimated the total time for each hospital to respond to this survey to
be 73.5 hours, which includes time required to review instructions,
gather data (including potentially from hospital wholesalers), perform
basic addition calculations, and enter data. As previously mentioned,
we will take every practical step to streamline the data collection for
each hospital.
We estimated 73.5 hours to complete the survey by aggregating time
from the four roles that are most likely to be responsible. These roles
are described below:
A Top Executive (11-1000) will likely review the survey
request and designate a Submitter prior to survey distribution.
A Lawyer (23-1011) will likely review the survey request,
the survey, and requirements for compliance.
A Pharmacy Technician (29-1051) will likely register for
the module and apply to fill out the survey. Once the survey is
distributed, the Pharmacy Technician will review the survey. Then, the
Pharmacy Technician will request data from suppliers, and/or pull data
from internal systems, ensure data are in the appropriate format,
manually enter data OR upload data into system, review data, make
corrections as needed, and certify data.
A Pharmacist (29-2052) will likely review the survey
request and data that are pulled by the Pharmacy Technician.
[GRAPHIC] [TIFF OMITTED] TP17JY25.178
[[Page 33834]]
As described in Table 107, we estimate the total burden hours as
follows: 3,500 hospitals times 73.5 hours per hospital equals 257,250
hours. We used data from the Occupational Employment and Wage
Statistics (Hospital-Specific Wages) for all salary estimates. In this
regard, the previous table presents the mean hourly wage, the cost of
fringe benefits, and the adjusted hourly wage for providers that are
responsible for completing the survey. We added 100 percent of the mean
hourly wage to account for fringe and overhead benefits.
G. ICRs for Hospital Price Transparency
In a final rule published in November 2019 (84 FR 65524) (herein
referred to as the CY 2020 HPT final rule), we adopted requirements for
hospitals to make public their standard charges in two ways: (1) as a
comprehensive machine-readable file (MRF); and (2) in a consumer-
friendly format. We codified these requirements at 45 CFR 180.50 and
180.60, respectively.
The proposed changes to the information collection request will be
submitted to OMB for review under control number 0938-1369 (CMS-10707).
The previously approved requirements and burden associated with 0938-
1369 lapsed due to administrative oversight. Specifically, CMS failed
to submit the revisions to 0938-1369 that pertained to the 2024
hospital price transparency requirements in the CY 2024 OPPS/ASC final
rule (88 FR 81540). Therefore, we have included the finalized burden
mentioned in the CY 2024 OPPS/ASC final rule and the new proposed 2026
OPPS rule in the request for reinstatement.
In the CY 2020 HPT final rule, we originally estimated the number
of hospitals to be 6,002. We finalized an initial one-time burden of
150 hours and cost of $11,898.60 per hospital, resulting in a total
national burden of 900,300 hours (150 hours x 6,002 hospitals) and
$71,415,397 ($11,898.60 x 6,002 hospitals) for hospitals to build
processes and make required system updates to make their standard
charge information publicly available: (1) as a comprehensive MRF and
(2) in a consumer-friendly format. Additionally, we estimated an
ongoing annual burden of 46 hours per hospital with a cost of $3,610.88
per hospital, resulting in a total national burden of 276,092 hours (46
hours x 6,002 hospitals) and total cost of $21,672,502 ($3,610.88 x
6,002 hospitals), to make required annual updates to the hospitals'
standard charge information. For a detailed discussion of the cost
estimates for the requirements related to hospitals making their
standard charge information publicly available, we refer readers to our
discussion in the collection of information section in the CY 2020 HPT
final rule (84 FR 65591 through 65596).
In the CY 2024 OPPS/ASC final rule (88 FR 82080 through 82114), we
finalized revisions to the regulations at 45 CFR 180.50 related to
making public hospital standard charges in an MRF. First, we finalized
adding data elements to be included in the hospital's MRF and to
require hospitals to conform to a CMS template layout. Second, to
enhance automated access to the MRF, we finalized that hospitals
include a .txt file in the root folder of the public website it selects
to host its MRF in the form and manner specified by CMS that includes a
standardized set of fields, and a link in the footer on its website
that is labeled ``Hospital Price Transparency'' and links directly to
the publicly available web page that hosts the link to the MRF.
As explained in the CY 2024 OPPS/ASC final rule, we increased the
number of hospitals that we believed to be subject to these
requirements from 6,002 to 7,098, which, in turn, increased the
estimated national burden. The reason for this increase is because in
the CY 2020 HPT final rule (84 FR 65591), we relied on data from the
American Hospital Association (AHA).\345\ For the collection of
information estimates in the CY 2024 OPPS/ASC final rule we used
updated hospital numbers based on the publicly available dataset from
the Homeland Infrastructure Foundation-Level Data (HIFLD) \346\
hospital dataset. The HIFLD dataset compiles a directory of hospital
facilities based on data acquired directly from state hospital
licensure information and federal sources and validates this data
annually. Thus, we stated our belief that the HIFLD dataset is more
comprehensive than the AHA Directory. To estimate the number of
hospitals subject to these requirements in the CY 2024 OPPS/ASC
proposed rule, we leveraged the HIFLD hospital dataset to identify
8,013 total hospitals. We then subtracted 379 hospitals HIFLD
identified as ``closed'' as well as hospitals that are deemed under the
regulation to have met requirements (see 45 CFR 180.30) which included
339 federally owned non-military and military hospitals, and 197 state,
local, and district run forensic hospitals. We therefore estimated that
the CY 2024 OPPS/ASC final rule would apply to 7,098 hospitals
operating within the U.S that meet the HPT regulation's definition of
``hospital'' at 45 CFR 180.20.
---------------------------------------------------------------------------
\345\ American Hospital Association. Fast Facts on U.S.
Hospitals, 2019. Available at https://www.aha.org/statistics/fast-facts-us-hospitals.
\346\ Homeland Infrastructure Foundation-Level Data hospital
dataset accessed on May 3, 2023, located at https://hifld-geoplatform.hub.arcgis.com/maps/9e318142490c4884bf74932af437c6c2/about.
---------------------------------------------------------------------------
In the CY 2024 OPPS/ASC final rule (88 FR 82151) we estimated the
total initial one-time burden to implement the CMS standard template
and conform to the data dictionary to be 120 hours (5 hours for a
Lawyer + 5 hours for a General and Operations Manager + 80 hours for a
Business Operations Specialist + 30 hours for a Network and Computer
System Administrator) per hospital with a cost of $10,587.10 ($787.40
for a Lawyer + $590.70 for a General and Operations Manager + $6,406.40
for a Business Operations Specialist + $2,802.60 for a Network and
Computer System Administrator) per hospital. The initial one-time
national burden was calculated to be $75,147,235.80 dollars ($10,587.10
per hospital x 7,098 hospitals). We still believe this estimate to be
an accurate estimate of the one-time burden for a new hospital to
implement the CMS standard template and conform to the data dictionary.
However, CMS is not presently aware of any new hospitals that are
beginning operations. We find it challenging to determine the number of
new hospitals that are opened each year because distinguishing brand-
new hospitals from expansions, new locations, or mergers is inherently
arduous. Many hospitals open satellite facilities or rebrand existing
ones under similar names, creating ambiguity in identifying independent
entities. Additionally, there is no standardized or centralized
database that categorizes hospitals based on their origin, and
regulatory processes often overlap for new openings, expansions, and
mergers, making it difficult to rely on licensing data alone. Complex
ownership structures within healthcare systems further blur the lines
between new hospitals and extensions of existing networks. Marketing
strategies and naming conventions can also mislead public perception,
as hospitals often promote new locations as ``new'' regardless of their
operational independence. Finally, data inconsistencies and delays in
reporting further complicate efforts to verify whether a hospital is
truly new. Because we find it difficult to determine a new hospital, we
will still account for the original one-time burden to implement the
CMS standard template that we calculated in the CY 2024 OPPS/ASC
[[Page 33835]]
final rule, but we will no longer account for this one-time burden
moving forward.
Additionally, we finalized an estimated ongoing annual national
burden of 383,292 hours (54 hours x 7,098 hospitals) and an annual
national cost of $32,370,571 dollars ($4,560.52 per respondent x 7,098
hospitals), which represented a $10,698,069 ($32,370,571-$21,672,502)
increase over our previous estimated ongoing national annual burden for
subsequent years for hospitals to update their standard charge
information in the CMS standard template and conform to the data
dictionary.
We still believe these hourly estimates are accurate estimates of
the ongoing annual burden for hospitals to update their standard charge
information in the CMS standard template and conform to the data
dictionary. In this proposed rule, we are updating the number of
hospitals estimated to be subject to the HPT requirements, providing
updated estimates for hospitals to implement new proposed data
elements, and updating wage rates for the annual ongoing estimates.
For this proposed rule, we updated the number of hospitals
estimated to be subject to the HPT requirements using the same
methodology as we did in the CY 2024 OPPS/ASC final rule. There were
8,340 hospitals most recently identified in the HIFLD hospital dataset.
We subtracted 374 hospitals HIFLD identified as ``closed'' as well as
hospitals that are deemed under the regulation to have met requirements
which included 352 Federally owned non-military and military hospitals,
and 198 state, local, and district run forensic hospitals. We therefore
estimate that, for this proposed rule, 7,416 hospitals would meet the
HPT regulation's definition of ``hospital'' at 45 CFR 180.2.
We estimated the hourly cost for each labor category used in this
analysis by referencing the Bureau of Labor Statistics report on
Occupational Employment and Wages (May 2024).\347\ We included labor
categories for General and Operations Managers, Business Operations
Specialists, and Network and Computer Systems Administrators for this
proposed rule as we believe these labor categories are associated with
the one-time and annual burden related to the implementation of
hospital price transparency policies. (See Table 108.)
---------------------------------------------------------------------------
\347\ U.S. Bureau of Labor Statistics, May 2024 National
Occupational Employment and Wage Estimates United States,
Occupational Employment and Wage Statistics. Accessed at https://www.bls.gov/oes/tables.htm.
[GRAPHIC] [TIFF OMITTED] TP17JY25.179
As discussed in section XIX. of this proposed rule, the ``estimated
allowed amount'' (defined at Sec. 180.20) means the average dollar
amount that the hospital has historically received from a third-party
payer for an item or service. While we believe that the estimated
allowed amount provides useful additional context and enhances
transparency and comparability of hospital standard charges, we
acknowledge that these average dollar amounts do not necessarily apply
to any particular individual, nor do they necessarily represent the
actual dollar amount an individual would pay for an item or service.
Therefore, we propose to require hospitals to report four new data
elements when the standard charge is based on a percentage or
algorithm--the median allowed amount (which would replace the estimated
allowed amount data element), the tenth percentile allowed amount, the
ninetieth percentile allowed amount, and the count of allowed amounts.
We also propose to require that hospitals use electronic data
interchange (EDI) 835 electronic remittance advice (ERA) transaction
data to calculate and encode these values, and we propose to require
that hospitals abide by specific instructions regarding the
methodology, including the lookback period, that should be used to
calculate the median, tenth and ninetieth percentile allowed amounts.
We believe that the median, tenth and ninetieth percentile allowed
amounts would provide greater context and clarity with respect to the
payer-specific negotiated charge, would be a better consumer benchmark
than the estimated allowed amount, and better enable price estimator
tools to develop and estimate an individual's personalized out-of-
pocket cost, enabling MRF users to more easily compare such standard
charges across hospitals.
We also propose that beginning January 1, 2026, hospitals must
attest in their MRF that they have included all applicable standard
charge information in accordance with the requirements of 45 CFR
180.50, and the information encoded is true, accurate, and complete as
of the date in the file, and the hospital has included all payer-
specific negotiated charges in dollars that can be expressed as a
dollar amount. For payer-specific negotiated charges that cannot be
expressed as a dollar amount in the MRF, or are not knowable in
advance, the hospital would attest that the payer-specific negotiated
charge is based on a contractual algorithm, percentage or formula that
precludes the provision of a dollar amount and has provided all
necessary information available to the hospital for the public to be
able to derive the dollar amount, including, but
[[Page 33836]]
not limited to, the specific fee schedule or components referenced in
such percentage, algorithm or formula. Additionally, we propose that,
beginning January 1, 2026, the hospital must encode within the MRF the
name of the chief executive officer, president, or senior official
designated to oversee the encoding of true, accurate and complete data
in the MRF. We believe these proposed requirements would provide the
necessary reassurance that hospitals have provided in their MRFs
meaningful, accurate information to users of the MRF about their
standard charges for health care items and services.
We also propose adding a standard identifier, specifically the
National Provider Identifiers (NPIs) to the MRFs. We believe that
adding a standard identifier to the file would advance the
comparability of the HPT data with other healthcare data, including
health plan transparency data from the Transparency in Coverage (TiC)
MRFs.
We believe that, by now, hospitals have largely developed
standardized processes and procedures for encoding the existing
estimated allowed amount and general data elements, like hospital
license number, in the MRF and that modifying their existing processes
to include the four new data elements related to the proposed allowed
amounts and hospital NPI would not entail a significant amount of
additional work for hospitals. Furthermore, hospitals are required to
encode the affirmation statement in the MRF currently, therefore we
believe the additional burden related to the proposed attestation
statement is the requirement for hospitals to encode the name of the
senior official making the attestation.
We believe hospitals would incur an initial one-time cost to update
their processes and systems to (1) identify and collect the newly
proposed data elements, and (2) encode the standard charge information
for the newly proposed data elements in the CMS standard template. To
implement the proposed requirements, we estimate that it would take a
Business Operations Specialist (BLS 13-1000), on average, 4 hours (at a
cost of $87.52 per hour) to develop and update the necessary processes
and procedures and develop the requirements to implement the proposed
data elements and a General and Operations Managers (BLS 11-1021), on
average, 1 hour (at a cost of $128.00 per hour) to review the updates.
Therefore, we believe the one-time burden estimate to be 37,080
hours for all hospitals (5 hours x 7,416 hospitals) at a cost of
$3,545,441.28 (7,416 hospitals x [($87.52 x 4 hours) + ($128.00 x 1
hour)]); see Table 109. We believe the benefits to users of the MRF of
having this additional information would justify the initial one-time
burden to hospitals to update their processes and systems to identify
and collect the newly proposed data elements and encode the standard
charge information for the newly proposed data elements in the CMS
standard template.
[GRAPHIC] [TIFF OMITTED] TP17JY25.180
For the annual burden estimate we rely on our previous assumptions
related to labor categories and number of hours as we did in the CY
2024 OPPS/ASC final rule (88 FR 82153). As we previously indicated, we
estimate it will take a General and Operations manager 2 hours, per
hospital, to review and determine updates in compliance with
requirements. We estimate the ongoing time for a Business Operations
Specialist to be 40 hours per hospital, to identify and gather the
required data elements on an annual basis. We believe that it will take
a Computer System Administrator 12 hours to maintain and post the MRF
in a manner that conforms to the CMS standard template, which brings
the total burden per hospital to 54 hours. Therefore, we estimate a
total annual burden of 400,464 hours for all hospitals (7,416 hospitals
x 54 hours) at a cost of $36,519,350.40 (7,416 hospitals x [($128/hour
x 2 hours) + ($87.52/hour x 40 hours) + ($97.30/hour x 12 hours)]); see
Table 110.
[GRAPHIC] [TIFF OMITTED] TP17JY25.181
[[Page 33837]]
XXIII. Files Available to the Public Via the Internet
The Addenda to the OPPS/ASC proposed rules and final rules with
comment period are published and available via the internet on the CMS
website. In the CY 2019 OPPS/ASC final rule with comment period (83 FR
59154), for CY 2019, we changed the format of the OPPS Addenda A, B,
and C by adding a column titled ``Copayment Capped at the Inpatient
Deductible of $1,364.00'' where we flag, through use of an asterisk,
those items and services with a copayment that is equal to or greater
than the inpatient hospital deductible amount for any given year (the
copayment amount for a procedure performed in a year cannot exceed the
amount of the inpatient hospital deductible established under section
1813(b) of the Act for that year). In the CY 2022 OPPS/ASC final rule
with comment period (85 FR 86266), we updated the format of the OPPS
Addenda A, B, and C by adding a column titled ``Drug Pass-Through
Expiration during Calendar Year'' where we flagged, through the use of
an asterisk, each drug for which pass-through payment was expiring
during the calendar year on a date other than December 31. For CY 2026
and subsequent years, we propose to retain these columns that are
updated to reflect the drug codes for which pass-through payment is
expiring in the applicable year.
In the CY 2023 OPPS/ASC final rule with comment period (87 FR
72250) for CY 2023, we changed the format of the OPPS Addenda A, B, and
C by adding a column titled ``Drug Pass-Through Expiration during
Calendar Year'' to include devices, so that the column reads: ``Drug
and Device Pass-Through Expiration during Calendar Year'' where we
flagged, through the use of an asterisk, each drug and device for which
pass-through payment was expiring during the calendar year on a date
other than December 31.
For CY 2024, we deleted the column titled ``Copayment Capped at the
Inpatient Deductible'' and instead added a new column for ``Adjusted
Beneficiary Copayment'' to identify any copayment adjustment due to
either the inpatient deductible amount copayment cap or the inflation-
adjusted copayment of a Part B rebatable drug per section 1833(t)(8)(F)
and section 1833(i)(9) of the Act, as added by section 11101 of the
Inflation Reduction Act (IRA). We also added another column for notes.
The ``Note'' column contains multiple messages including, but not
limited to, inflation-adjusted copayment of a Part B rebatable drug,
the copayment for a code capped at the inpatient deductible, or 8
percent of the reference product add-on applied for a biosimilar.
In addition, for CY 2024, we updated the format of the OPPS Addenda
A, B, and C by adding another column for ``IRA Coinsurance Percentage''
to identify the percentage for the inflation-adjusted copayment of a
Part B rebatable drug per section 1833(t)(8)(F) and section 1833(i)(9)
of the Act, as added by section 11101 of the Inflation Reduction Act
(IRA).
For CY 2026 and subsequent years, we propose to keep the same
format for the addenda A, B, and C, and we do not propose any
additional changes for CY 2026.
To view the Addenda to this proposed rule pertaining to CY 2026
payments under the OPPS, we refer readers to the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices; select ``CMS-1834-P'' from the list of
regulations. All OPPS Addenda to this proposed rule are contained in
the zipped folder titled ``2026 NPRM OPPS Addenda'' in the related
links section at the bottom of the page. To view the Addenda to this
proposed rule pertaining to CY 2026 payments under the ASC payment
system, we refer readers to the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/ambulatory-surgical-center-asc/asc-regulations-and-notices.; select ``CMS-1834-P'' from the
list of regulations. The ASC Addenda to this proposed rule are
contained in a zipped folder titled ``2026 NPRM Addendum AA, BB, DD1,
DD2, EE, and FF'' in the related links section at the bottom of the
page.
If you comment on these information collections, that is,
reporting, recordkeeping or third-party disclosure requirements, please
submit your comments electronically as specified in the ADDRESSES
section of this proposed rule.
Comments must be received by the date and time specified in the
DATES section of this rule.
XXIV. Response to Comments
Because of the large number of public comments, we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble;
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.
XXV. Economic Analyses
A. Statement of Need
This proposed rule is necessary to make updates to the Medicare
hospital OPPS rates. It is also necessary to make changes to the
payment policies and rates for outpatient services furnished by
hospitals and CMHCs in CY 2026. We are required under section
1833(t)(3)(C)(ii) of the Act to update annually the OPPS conversion
factor used to determine the payment rates for APCs. We also are
required under section 1833(t)(9)(A) of the Act to review, not less
often than annually, and revise the groups, the relative payment
weights, and the wage and other adjustments described in section
1833(t)(2) of the Act. We must review the clinical integrity of payment
groups and relative payment weights at least annually. We propose to
revise the APC relative payment weights using claims data for services
furnished on and after January 1, 2024, through and including December
31, 2024, and processed through June 30, 2025, and updated HCRIS cost
report information.
This proposed rule is also necessary to make updates to the ASC
payment rates for CY 2026, enabling CMS to make changes to payment
policies and payment rates for covered surgical procedures and covered
ancillary services that are performed in ASCs in CY 2026. Because ASC
payment rates are based on the OPPS relative payment weights for most
of the procedures performed in ASCs, the ASC payment rates are updated
annually to reflect annual changes to the OPPS relative payment
weights. In addition, we are required under section 1833(i)(1) of the
Act to review and update the list of surgical procedures that can be
performed in an ASC, not less frequently than every 2 years.
In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59075
through 59079), we finalized a policy to update the ASC payment system
rates using the hospital market basket update instead of the CPI-U for
CY 2019 through 2023. In the CY 2024 OPPS/ASC final rule with comment
period, we finalized a policy to extend the 5-year interim period by an
additional 2 years, through CY 2024 and CY 2025, to enable us to more
accurately analyze whether the application of the hospital market
basket update to the ASC payment system resulted in a migration of
services from the hospital setting to the ASC setting (88 FR 81960). As
discussed in section XIII. of this proposed rule, we propose to extend
our utilization of the hospital market basket update as the update
factor for the ASC payment
[[Page 33838]]
system for one additional year (through CY 2026). The ASC impacts
discussed below reflect our application of the hospital market basket
update for CY 2026.
In addition, this proposed rule is necessary to make policy changes
under rural emergency hospitals (REHs), ASCs reporting data under the
Hospital OQR, REHQR, and ASCQR Programs, respectively. The primary
objective of these quality reporting programs is to promote higher
quality, more efficient health care for Medicare beneficiaries by
collection and reporting on quality-of-care metrics. This information
is made available to consumers, both to empower Medicare beneficiaries
and inform decision making, as well as to incentivize healthcare
facilities to make continued improvements. This rule is also necessary
to modify the methodology for the Overall Hospital Quality Star Ratings
to emphasize and align the importance of patient safety across CMS
programs. The Overall Hospital Quality Star Ratings information is
publicly available.
Also, this proposed rule is necessary to enhance clarity and
standardization in hospital disclosure of standard charges. The
Hospital Price Transparency regulations requiring public release of
hospital standard charge information are a necessary and important
first step in ensuring transparency in prices of healthcare services
for consumers.
B. Overall Impact of Provisions of This Proposed Rule
We have examined the impacts of this rule as required by Executive
Order 12866, ``Regulatory Planning and Review''; Executive Order 13132,
``Federalism''; Executive Order 13563, ``Improving Regulation and
Regulatory Review''; Executive Order 14192, ``Unleashing Prosperity
Through Deregulation''; the Regulatory Flexibility Act (RFA) (Pub. L.
96-354); section 1102(b) of the Social Security Act; and section 202 of
the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select those regulatory approaches that
maximize net benefits (including potential economic, environmental,
public health and safety, and other advantages; distributive impacts;
and equity).). Section 3(f) of Executive Order 12866 defines a
``significant regulatory action'' as any regulatory action that is
likely to result in a rule that may: (1) have an annual effect on the
economy of $100 million or more or adversely affect in a material way
the economy, a sector of the economy, productivity, competition, jobs,
the environment, public health or safety, or State, local, or tribal
governments or communities; (2) create a serious inconsistency or
otherwise interfere with an action taken or planned by another agency;
(3) materially alter the budgetary impact of entitlements, grants, user
fees, or loan programs or the rights and obligations of recipients
thereof; or (4) raise novel legal or policy issues arising out of legal
mandates, or the President's priorities.
A regulatory impact analysis (RIA) must be prepared for a
regulatory action that is significant under section 3(f)(1) of E.O.
12866. Based on our estimates, the Office of Management and Budget's
(OMB) Office of Information and Regulatory Affairs (OIRA) has
determined this rulemaking is significant per section 3(f)(1).
Accordingly, we have prepared a Regulatory Impact Analysis that to the
best of our ability presents the costs and benefits of the rulemaking.
Therefore, OMB has reviewed these proposed regulations, and the
Departments have provided the following assessment of their impact.
We estimate that the total increase in Federal Government
expenditures under the OPPS for CY 2026, compared to CY 2025, due to
the changes to the OPPS in this proposed rule, would be approximately
$1.61 billion. Taking into account our estimated changes in enrollment,
utilization, and case-mix for CY 2026 we estimate that the OPPS
expenditures, including beneficiary cost-sharing, for CY 2026 would be
approximately $100.0 billion, which is approximately $8.1 billion
higher than estimated OPPS expenditures in CY 2025. Table 112 of this
proposed rule displays the distributional impact of the CY 2026 changes
in OPPS payment to various groups of hospitals and for CMHCs.
We note that under our proposed CY 2026 policy, drugs and
biologicals are generally paid at ASP plus 6 percent, WAC plus 6
percent, or 95 percent of AWP, as applicable.
We estimate that the proposed update to the conversion factor will
increase total OPPS payments by 2.4 percent in CY 2026. The proposed
changes to the APC relative payment weights, the proposed changes to
the wage indexes, the proposed continuation of a payment adjustment for
rural SCHs, including EACHs, and the proposed payment adjustment for
cancer hospitals would not increase total OPPS payments because these
changes to the OPPS are budget neutral. However, these updates would
change the distribution of payments within the budget neutral system.
We estimate that the total change in payments between CY 2025 and CY
2026, considering all budget-neutral payment adjustments, changes in
estimated total outlier payments, the application of the frontier State
wage adjustment, the proposed payment adjustment for drug
administration services furnished at excepted off campus PBDs, in
addition to the application of the OPD fee schedule increase factor
after all adjustments required by sections 1833(t)(3)(F),
1833(t)(3)(G), and 1833(t)(17) of the Act will increase total estimated
OPPS payments by 1.9 percent. We note that, as previously discussed in
section V.B.7 of this proposed rule, we propose to reduce payments for
non-drug items and services for hospitals for whom the annual reduction
to payment amounts under Sec. 419.32(b)(1)(iv)(B)(12) applies by 2
percentage points in CY 2026. We estimate that this proposed reduction
would reduce OPPS spending by $1.1 billion in CY 2026.
We estimate the total increase (from changes to the ASC provisions
in this proposed rule, as well as from enrollment, utilization, and
case-mix changes) in Medicare expenditures (not including beneficiary
cost-sharing) under the ASC payment system for CY 2026 compared to CY
2025, to be approximately $480 million. Tables 113 and 114 of this
proposed rule display the redistributive impact of the CY 2026 changes
regarding ASC payments, grouped by specialty area and then grouped by
procedures with the greatest ASC expenditures, respectively.
C. Detailed Economic Analyses
1. Estimated Effects of OPPS Changes in This Proposed Rule With Comment
Period
a. Limitations of Our Analysis
The distributional impacts presented here are the projected effects
of the proposed CY 2026 policy changes on various hospital groups. We
post our hospital-specific estimated payments for CY 2026 on the CMS
website with the other supporting documentation for this proposed rule.
To view the hospital-specific estimates, we refer readers to the CMS
website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient. On the website, select ``Regulations and
Notices'' from the left side of the page and then select ``CMS-1834-P''
from the list of regulations and notices. The hospital-specific file
layout and the hospital-specific file are listed
[[Page 33839]]
with the other supporting documentation for this proposed rule. We show
hospital-specific data only for hospitals whose claims were used for
modeling the impacts shown in Table 112 of this proposed rule. We do
not show hospital-specific impacts for hospitals whose claims we were
unable to use. We refer readers to section II.A. of this proposed rule
for a discussion of the hospitals whose claims we do not use for
ratesetting or impact purposes.
We estimate the effects of the individual policy changes by
estimating payments per service, while holding all other payment
policies constant. We use the best data available but do not attempt to
predict behavioral responses to our policy changes in order to isolate
the effects associated with specific policies or updates, but any
policy that changes payment could have a behavioral response. In
addition, we have not made any adjustments for future changes in
variables, such as service volume, service-mix, or number of
encounters.
b. Estimated Effects of the Proposal To Control Unnecessary Increases
in the Volume of Outpatient Services Furnished in Excepted Off-Campus
Provider Based Departments (PBDs)
In section X.A. of this proposed rule, we discuss our CY 2026
proposal to control for unnecessary increases in the volume of
outpatient services by paying for drug administration services
furnished at an off-campus PBD at an amount equal to the site-specific
PFS payment rate for nonexcepted items and services furnished by a
nonexcepted off- campus PBD (the PFS payment rate). Specifically, we
propose to pay for HCPCS codes billed with modifier ``PO'' and assigned
to and paid through drug administration APCs 5691 through 5694 at an
amount equal to the site-specific PFS payment rate for nonexcepted
items and services furnished by a nonexcepted off-campus PBD (the PFS
payment rate). For a discussion of the PFS relativity adjuster that
used to pay for all drug administration services provided at all off-
campus PBDs, we refer readers to the CY 2018 PFS final rule with
comment period discussion (82 FR 53023 through 53024), as well as the
CY 2019 PFS proposed rule.
To develop an estimated impact of this proposal, we began with CY
2024 outpatient claims data used, for claim lines with HCPCS codes
assigned for payment through drug administration APCs 5691 through 5694
that contained modifier ``PO'' because the presence of this modifier
indicates that such claims were billed for services furnished by an
off-campus department of a hospital paid under the OPPS. We then
simulated payment for the remaining claim lines as if they were paid at
the PFS- equivalent rate, removing a portion of the payment associated
with rural Sole Community Hospitals based on our proposed exception for
those hospitals. An estimate of the proposed policy that includes the
effects of estimated changes in enrollment, utilization, and case-mix
based on the FY 2026 Mid-Session review budget approximates the
estimated decrease in total payments at $280 million, with Medicare
OPPS payments decreasing by $210 million and beneficiary copayments
decreasing by $70 million in CY 2026.
This estimate is utilized for the accounting statement displayed in
Table 115 of this proposed rule because the impact of this proposed CY
2026 policy, which is not budget neutral, is combined with the impact
of the OPD update, which is also not budget neutral, to estimate
changes in Medicare spending under the OPPS as a result of the changes
proposed in this rule.
We note our estimates may differ from the actual effect of the
proposed policy due to offsetting factors, such as changes in provider
behavior. We note that by removing this payment differential that may
influence site-of-service decision-making, we anticipate an associated
decrease in the volume of drug administration services provided in the
excepted off-campus PBD setting. We remind readers that this estimate
could change in the final rule based on a number of factors such as the
availability of updated data, changes in the final payment policy, and/
or the method of assessing the payment impact in the final rule. As
discussed in more detail in section X.A. of this proposed rule, we are
seeking public comment on both our proposed payment policy for drug
administration services furnished at off-campus provider-based
departments as well as how to apply methods for controlling
overutilization of services more broadly.
[GRAPHIC] [TIFF OMITTED] TP17JY25.182
c. Estimated Effects of OPPS Changes on Hospitals
Table 112 shows the estimated impact of the proposed rule on
hospitals. Historically, the first line of the impact table, which
estimates the change in payments to all facilities, has always included
cancer and children's hospitals, which are held harmless to their pre-
Balanced Budget Act (BBA) amount. We also include CMHCs in the first
line that includes all providers. We include a second line for all
hospitals, excluding permanently held harmless hospitals and CMHCs.
We present separate impacts for CMHCs in Table 112, and we discuss
them separately below, because CMHCs
[[Page 33840]]
are paid only for partial hospitalization and intensive outpatient
program services under the OPPS and are a different provider type from
hospitals. In the CY 2025 OPPS/ASC final rule with comment period (89
FR 94269 through 94270), we finalized paying CMHCs for partial
hospitalization services and intensive outpatient services under APCs
5851 through 5854. For CY 2026, we propose to maintain the same APC
structure and revise our methodology for calculating APC payment rates.
Specifically, we propose to apply the 40 percent Medicare Physician Fee
Schedule (MPFS) Relativity Adjuster to calculate PHP and IOP payment
rates for CMHCs.
The estimated increase in the total payments made under the OPPS is
determined largely by the increase to the conversion factor under the
statutory methodology. The distributional impacts presented do not
include assumptions about changes in volume and service-mix. The
conversion factor is updated annually by the OPD fee schedule increase
factor, as discussed in detail in section II.B. of this proposed rule.
Section 1833(t)(3)(C)(iv) of the Act provides that the OPD fee
schedule increase factor is equal to the market basket percentage
increase applicable under section 1886(b)(3)(B)(iii) of the Act, which
we refer to as the IPPS market basket percentage increase. The proposed
IPPS market basket percentage increase applicable to the OPD fee
schedule for CY 2026 is 3.2 percent. Section 1833(t)(3)(F)(i) of the
Act reduces that 3.2 percent by the productivity adjustment described
in section 1886(b)(3)(B)(xi)(II) of the Act, which is a proposed 0.8
percentage point for CY 2026 (which is also the productivity adjustment
for FY 2026 in the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18257))
resulting in the proposed CY 2026 OPD fee schedule increase factor of
2.4 percent. We are using the OPD fee schedule increase factor of 2.4
percent in the calculation of the proposed CY 2026 OPPS conversion
factor. Section 10324 of the Affordable Care Act, as amended by HCERA,
further authorized additional expenditures outside budget neutrality
for hospitals in certain frontier States that have a wage index less
than 1.0000. The amounts attributable to this frontier State wage index
adjustment are incorporated in the estimates in Table 112 of this
proposed rule.
To illustrate the impact of the CY 2026 changes, our analysis
begins with a baseline simulation model that uses the CY 2025 relative
payment weights, the CY 2025 final OPPS wage indexes that include
reclassifications, and the final CY 2025 conversion factor. Table 112
shows the estimated redistribution of the increase or decrease in
payments for CY 2026 over CY 2025 payments to hospitals and CMHCs as a
result of the following factors: the impact of the APC reconfiguration
and recalibration changes between CY 2025 and CY 2026 (Column 2); the
wage indexes and the provider adjustments (Column 3); the combined
impact of all of the changes described in the preceding columns plus
the 2.4 percent OPD fee schedule increase factor update to the
conversion factor (Column 4); the additional estimated impact for the
proposed payment adjustment for drug administration furnished at
excepted off campus PBDs (Column 5); the estimated impact taking into
account all payments for CY 2026 relative to all payments for CY 2025,
including the impact of changes in estimated outlier payments and
changes to the pass-through payment estimate (Column 6).
We did not model an explicit budget neutrality adjustment for the
rural adjustment for SCHs because we propose to maintain the current
adjustment percentage for CY 2026. Because the proposed updates to the
conversion factor (including the update of the OPD fee schedule
increase factor), the estimated cost of the rural adjustment, and the
estimated cost of projected pass-through payment for CY 2026 are
applied uniformly across services, observed redistributions of payments
in the impact table for hospitals largely depend on the mix of services
furnished by a hospital (for example, how the APCs for the hospital's
most frequently furnished services would change), and the impact of the
wage index changes on the hospital. However, total payments made under
this system and the extent to which this proposed rule would
redistribute money during implementation also will depend on changes in
volume, practice patterns, and the mix of services billed between CY
2025 and CY 2026 by various groups of hospitals, which CMS cannot
forecast.
Overall, we estimate that the proposed rates for CY 2026 would
increase Medicare OPPS payments by an estimated 1.9 percent. Removing
payments to cancer and children's hospitals because their payments are
held harmless to the pre-OPPS ratio between payment and cost and
removing payments to CMHCs results in an estimated 2.0 percent increase
in Medicare payments to all other hospitals. These estimated payments
would not significantly impact other providers. We note that providers
not considered ``new providers'' for purposes of the 340b remedy offset
would receive an adjustment to their OPPS payment rates.
Column 1: Total Number of Hospitals
The first line in Column 1 in Table 112 shows the total number of
facilities (3,496), including designated cancer and children's
hospitals and CMHCs, for which we were able to use CY 2024 hospital
outpatient and CMHC claims data to model CY 2025 and CY 2026 payments,
by classes of hospitals, for CMHCs and for dedicated cancer hospitals.
We excluded all hospitals and CMHCs for which we could not plausibly
estimate CY 2025 or CY 2026 payment and entities that are not paid
under the OPPS. The latter entities include CAHs, IHS and tribal
hospitals, and hospitals located in Guam, the U.S. Virgin Islands,
Northern Mariana Islands, American Samoa, and the State of Maryland.
This process is discussed in greater detail in section II.A. of this
proposed rule. At this time, we are unable to calculate a DSH variable
for hospitals that are not also paid under the IPPS because DSH
payments are only made to hospitals paid under the IPPS. Hospitals for
which we do not have a DSH variable are grouped separately and
generally include freestanding psychiatric hospitals, rehabilitation
hospitals, and long-term care hospitals. We show the total number of
OPPS hospitals (3,398), excluding the hold harmless cancer and
children's hospitals and CMHCs, on the second line of the table. We
excluded cancer and children's hospitals because section 1833(t)(7)(D)
of the Act permanently holds harmless cancer hospitals and children's
hospitals to their ``pre-BBA amount'' as specified under the terms of
the statute, and therefore, we removed them from our impact analyses.
We show the isolated impact on the 31 CMHCs at the bottom of the impact
table (Table 112) and discuss that impact separately below.
Column 2: APC Recalibration--All Changes
Column 2 shows the estimated effect of APC recalibration. Column 2
also reflects any changes in multiple procedure discount patterns or
conditional packaging that occur as a result of the changes in the
relative magnitude of payment weights. As a result of APC
recalibration, we estimate that urban hospitals would experience a 0.1
increase, with the impact ranging from no change to an increase of 0.2,
depending on the number of beds. Rural hospitals will experience a
decrease of
[[Page 33841]]
0.4 percent overall. Major teaching hospitals would experience an
estimated decrease of 0.1 percent.
Column 3: Wage Indexes and the Effect of the Provider Adjustments
Column 3 demonstrates the combined budget neutral impact of the APC
recalibration, the updates for the wage indexes with the FY 2026 IPPS
post-reclassification wage indexes, the rural adjustment, the frontier
adjustment, and the cancer hospital payment adjustment. We modeled the
independent effect of the budget neutrality adjustments and the OPD fee
schedule increase factor by using the relative payment weights and wage
indexes for each year and using a CY 2025 conversion factor that
included the OPD fee schedule increase and a budget neutrality
adjustment for differences in wage indexes.
Column 3 reflects the independent effects of the updated wage
indexes, including the application of budget neutrality for the rural
floor policy on a nationwide basis, as well as the proposed CY 2026
changes in wage index policy, discussed in section II.C. of this
proposed rule. We did not model a budget neutrality adjustment for the
rural adjustment for SCHs because we propose to continue the rural
payment adjustment of 7.1 percent to rural SCHs for CY 2026, as
described in section II.E. of this proposed rule. We modeled a budget
neutrality adjustment for the proposed cancer hospital payment
adjustment because the proposed payment-to-cost ratio target for the
cancer hospital payment adjustment in CY 2025 is 0.87, which is the
same PCR target adopted in the CY 2025 OPPS/ASC final rule with comment
period (89 FR 93979). We note that, in accordance with section 16002 of
the 21st Century Cures Act, we propose to apply a budget neutrality
factor calculated as if the cancer hospital adjustment target payment-
to-cost ratio was 0.88, not the 0.87 target payment-to-cost ratio we
propose in section II.F. of this proposed rule with comment period.
We modeled the independent effect of updating the wage indexes by
varying only the wage indexes, holding APC relative payment weights,
service-mix, and the rural adjustment constant and using the CY 2026
scaled weights and a CY 2025 conversion factor that included a budget
neutrality adjustment for the effect of the changes to the wage indexes
between CY 2025 and CY 2026.
Column 4: All Budget Neutrality Changes Combined With the Market Basket
Update
Column 4 demonstrates the combined impact of all the proposed
changes previously described and the update to the conversion factor of
2.4 percent. Overall, these changes would increase payments to urban
hospitals by 2.6 percent and to rural hospitals by 2.5 percent. Rural
sole community hospitals would receive an estimated increase of 2.7
percent while other rural hospitals would receive an estimated increase
of 2.1 percent.
Column 5--Proposed Off-Campus PBD Drug Administration Payment Policy
Column 5 displays the estimated effect of our proposed CY 2026
policy to pay for drug administration services assigned to APCs 5691
through 5694 when billed with modifier ``PO'' at a PFS-equivalent rate.
We note that the numbers provided in this column isolate the estimated
effect of this proposed policy adjustment relative to the numerator of
Column 4. Therefore, the numbers reported in Column 5 show how much of
the difference between the estimates in Column 4 and the estimates in
Column 6 are a result of the proposed off-campus PBD visits policy.
Column 6: All Changes With Outlier--Proposed CY 2026 Update
Column 6 depicts the full impact of the proposed CY 2026 policies
on each hospital group by including the effect of all changes for CY
2026 and comparing them to all estimated payments in CY 2025. Column 6
shows the combined budget neutral effects of Columns 2 and 3; the
effect of the proposed off-campus provider-based department drug
administration policy; the OPD fee schedule increase; the impact of
estimated OPPS outlier payments, as discussed in section II.G of
proposed rule; the Hospital OQR Program payment reduction for the small
number of hospitals in our impact model that failed to meet the
reporting requirements (discussed in section XV. of this proposed
rule); and other rule adjustments to the CY 2026 OPPS payments.
Of those hospitals that failed to meet the Hospital OQR Program
reporting requirements for the full CY 2025 update (and assumed, for
modeling purposes, to be the same number for CY 2026), we included 79
hospitals in our model because they had both CY 2024 claims data and
recent cost report data. We estimate that the cumulative effect of all
changes for CY 2026 would increase payments to all facilities by 1.9
percent for CY 2026. We modeled the independent effect of all changes
in Column 6 using the final relative payment weights for CY 2025 and
the proposed relative payment weights for CY 2026. We used the final
conversion factor for CY 2025 of $89.169 and a CY 2026 conversion
factor of $91.747 discussed in section II.B. of this proposed rule.
Column 6 contains simulated outlier payments for each year. We used
the 1-year charge inflation factor used in the FY 2026 IPPS/LTCH PPS
final rule (90 FR 18434) of 5.4 percent (1.05440) to increase charges
on the CY 2024 claims, and we used the overall CCR in the April 2025
Outpatient Provider-Specific File (OPSF) to estimate outlier payments
for CY 2025. Using the CY 2024 claims and a 5.4 percent charge
inflation factor, we currently estimate that outlier payments for CY
2025, using a multiple threshold of 1.75 and a fixed-dollar threshold
of $7,750, would be approximately 0.92 percent of total payments. The
estimated current outlier payments of 0.92 percent are incorporated in
the comparison in Column 5. We used the same set of claims and a charge
inflation factor of 11.2 percent (1.1118) and the CCRs in the April
2025 OPSF, with an adjustment of 0.970113 (90 FR 18435), to reflect
relative changes in cost and charge inflation between CY 2025 and CY
2026, to model the proposed CY 2026 outliers at 1.0 percent of
estimated total payments using a multiple threshold of 1.75 and a fixed
dollar threshold of $6,450. The charge inflation and CCR inflation
factors are discussed in detail in the FY 2026 IPPS/LTCH PPS proposed
rule (90 FR 18434 through 18435).
Overall, we estimate that facilities would experience an increase
of 1.9 percent under this proposed rule in CY 2026 relative to total
spending in CY 2025. This projected increase (shown in Column 6) of
Table 112 of this proposed rule reflects the proposed 2.4 percent OPD
fee schedule increase factor, adding the 0.08 difference in estimated
outlier payments between CY 2025 (0.92 percent) and CY 2026 (1.0
percent), minus 0.22 percent for the change in the pass-through payment
estimate between CY 2025 and CY 2026. We estimate that the combined
effect of all changes for CY 2026 would increase payments to urban
hospitals by 2.0 percent. Overall, we estimate that rural hospitals
would experience a 2.0 percent increase as a result of the combined
effects of all the changes for CY 2026.
Among hospitals, by teaching status, we estimate that the impacts
resulting from the combined effects of all changes include an increase
of 1.7 percent for major teaching hospitals and an increase of 2.2
percent for nonteaching hospitals. Minor teaching hospitals would
experience an estimated increase of 2.2 percent.
[[Page 33842]]
In our analysis, we also have categorized hospitals by type of
ownership. Based on this analysis, we estimate that voluntary hospitals
would experience an increase of 2.0 percent, proprietary hospitals
would experience an increase of 2.6 percent, and governmental hospitals
would experience an increase of 2.0 percent.
Reduction for Providers Subject to the 340B Remedy Offset
In column 7 we have included additional information to account for
estimated changes in the CY 2026 OPPS for providers subject to the 340B
Remedy Offset.
BILLING CODE 4120-01-P
[[Page 33843]]
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[[Page 33844]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.184
[[Page 33845]]
[GRAPHIC] [TIFF OMITTED] TP17JY25.185
[[Page 33846]]
BILLING CODE 4120-01-C
d. Estimated Effects of OPPS Changes on CMHCs
The last line of Table 112 demonstrates the isolated impact on
CMHCs, which furnished only partial hospitalization and intensive
outpatient program services under the OPPS during CY 2024. As discussed
in section VIII.C. of this proposed rule, we propose for CY 2026 to
continue paying CMHCs using APCs 5851 through 5854. We modeled the
impact of this APC policy, assuming CMHCs will continue to provide the
same PHP and IOP care as seen in the CY 2024 claims used for
ratesetting in the proposed rule. We did not exclude days with one or
two services from our modeling for CY 2026, because our proposed rule
policy would pay the per diem rate for APC 5853 for such days in CY
2026. As a result of the proposed PHP APC changes for CMHCs, we
estimate that CMHCs would experience a 0.6 percent decrease in CY 2026
payments relative to their CY 2025 payments (shown in Column 2). For a
detailed discussion of our proposed PHP and IOP policies, please see
section VIII. of this proposed rule.
Column 3 shows the estimated impact of adopting the proposed FY
2026 wage index values, which result in an estimated decrease of 1.0
percent to CMHCs.
Column 4 shows that combining the OPD fee schedule increase factor,
along with the proposed changes in APC policy for CY 2026 and the
proposed FY 2026 wage index updates, would result in an estimated
increase of 0.8 percent.
e. Estimated Effect of OPPS Changes on Beneficiaries
For services for which the beneficiary pays a copayment of 20
percent of the payment rate, the beneficiary's payment would increase
for services for which the OPPS payments would rise and decrease for
services for which the OPPS payments would fall. For further discussion
of the calculation of the national unadjusted copayments and minimum
unadjusted copayments, we refer readers to section II.H of this
proposed rule. In all cases, section 1833(t)(8)(C)(i) of the Act limits
beneficiary liability for copayment for a procedure performed in a year
to the hospital inpatient deductible for the applicable year.
We estimate that the aggregate beneficiary coinsurance percentage
would be approximately 18 percent for all services paid under the OPPS
in CY 2026. The estimated aggregate beneficiary coinsurance reflects
general system adjustments. We note that the individual payments, and
therefore copayments, associated with services may differ based on the
setting in which they are furnished. However, at the aggregate system
level, we do not currently observe significant impact on beneficiary
coinsurance as a result of those policies.
f. Estimated Effects of OPPS Changes on Other Providers
The relative payment weights and payment amounts established under
the OPPS affect the payments made to ASCs, as discussed in section
XIII. of this proposed rule. Hospitals, CMHCs, and ASCs would be
affected by the changes in this proposed rule. Additionally, the
payment policies we established for IOP services affect RHCs and FQHCs.
These providers of IOP are not paid under the OPPS and are not included
in the impact analysis shown in Table 112. However, the proposed
payment amount for OPPS APC 5861 would affect payments to RHCs and
FQHCs since under sections 1834(o)(5)(A) and 1834(y)(3)(A) of the Act
payment for IOP services in these settings is required to be equal to
the payment determined for IOP services in the hospital outpatient
department.
g. Estimated Effects of OPPS Changes on the Medicare and Medicaid
Programs
The effect of the update on the Medicare program is expected to be
an increase of $1.61 billion in program payments for OPPS services
furnished in CY 2026. The effect on the Medicaid program is expected to
be limited to copayments that Medicaid may make on behalf of Medicaid
recipients who are also Medicare beneficiaries. We estimate that the
changes in this proposed rule would increase these Medicaid beneficiary
payments by approximately $130 million in CY 2026. Currently, there are
approximately 11.5 million dual-eligible beneficiaries, which represent
approximately 40 percent of Medicare Part B fee-for-service
beneficiaries. The impact on Medicaid was determined by taking 40
percent of the beneficiary cost-sharing impact. The national average
split of Medicaid payments is 58 percent Federal payments and 42
percent State payments. Therefore, for the estimated $130 million
Medicaid increase, approximately $75 million would be from the Federal
Government and $55 million will be from State governments.
h. Alternative OPPS Policies Considered
Alternatives to the OPPS changes we proposed and the reasons for
our selected alternatives are discussed throughout this proposed rule.
Alternatives Considered for the Proposed Payment Policy for Skin
Substitute Products
We considered several alternatives to our proposal to group skin
substitute products based on FDA regulatory category. For example, we
considered grouping skin substitute products based on their composition
(for example, whether they are non-synthetic or synthetic) or by graft
type (e.g. allograft or xenograft). We also considered grouping all
products together to set a single payment rate or creating new
categories reflecting product cost, similar to our current payment
policy. All of these alternatives considered would be implemented in a
budget neutral manner and would involve unpackaging the current costs
of skin substitute products from the application procedures, resulting
in separate payments for skin substitute products under the OPPS and
ASC.
2. Estimated Effects of CY 2026 ASC Payment System Changes
Most ASC payment rates are calculated by multiplying the ASC
conversion factor by the ASC relative payment weight. As discussed
fully in section XIII. of this proposed rule, we are setting the CY
2026 ASC relative payment weights by scaling the proposed CY 2026 OPPS
relative payment weights by the proposed CY 2026 ASC scalar of 0.842.
The estimated effects of the updated relative payment weights on
payment rates are varied and are reflected in the estimated payments
displayed in Tables 113 and 114.
Beginning in CY 2011, section 3401 of the Affordable Care Act
requires that the annual update to the ASC payment system after
application of any quality reporting reduction be reduced by a
productivity adjustment. In CY 2019, we adopted a policy for the annual
update to the ASC payment system to be the hospital market basket
update for CY 2019 through CY 2023. In the CY 2024 OPPS/ASC final rule
with comment period, we extended this 5-year interim period an
additional 2 years through CYs 2024 and 2025. As discussed in further
detail in section XIII. of this proposed rule, we propose to extend our
utilization of the hospital market basket update as the update factor
to the ASC payment system one additional year (through CY 2026).
Section 1886(b)(3)(B)(xi)(II) of the Act defines the productivity
adjustment to be equal to the 10-year moving average of changes in
annual economy-wide private nonfarm business multifactor productivity
(as projected by the Secretary for the 10-year period, ending
[[Page 33847]]
with the applicable fiscal year, year, cost reporting period, or other
annual period). For ASCs that fail to meet their quality reporting
requirements, the CY 2026 payment determinations would be based on the
application of a 2.0 percentage point reduction to the hospital market
basket update for CY 2026. We calculated the proposed CY 2026 ASC
conversion factor by adjusting the CY 2025 ASC conversion factor by
0.9999 to account for changes in the pre-floor and pre-reclassified
hospital wage indexes between CY 2025 and CY 2026, which includes our
policy to limit wage index declines of greater than 5 percent, and by
applying the CY 2026 hospital market basket update factor of 2.4
percent (which is equal to the proposed inpatient hospital market
basket percentage increase of 3.2 percent reduced by a proposed
productivity adjustment of 0.8 percentage point). The proposed CY 2026
ASC conversion factor is $56.207 for ASCs that successfully meet the
quality reporting requirements.
a. Limitations of Our Analysis
Presented here are the projected effects of the proposed changes
for CY 2026 on Medicare payment to ASCs. A key limitation of our
analysis is our inability to predict changes in ASC service-mix between
CY 2024 and CY 2026 with precision. We believe the net effect on
Medicare expenditures resulting from the proposed CY 2026 changes would
be small in the aggregate for all ASCs. However, such changes may have
differential effects across surgical specialty groups, as ASCs continue
to adjust to the payment rates based on the policies of the revised ASC
payment system. We are unable to accurately project such changes at a
disaggregated level. Clearly, individual ASCs would experience changes
in payment that differ from the aggregated estimated impacts presented
below.
b. Estimated Effects of ASC Payment System Policies on ASCs
Some ASCs are multispecialty facilities that perform a wide range
of surgical procedures from excision of lesions to hernia repair to
cataract extraction; others focus on a single specialty and perform
only a limited range of surgical procedures, such as ophthalmology,
digestive system, or orthopedic procedures. The combined effect of the
proposed update to the payments on an individual ASC would depend on a
number of factors, including, but not limited to, the mix of services
the ASC provides, the volume of specific services provided by the ASC,
the percentage of its patients who are Medicare beneficiaries, and the
extent to which an ASC provides different services in the coming year.
The following discussion includes tables that display estimates of the
impact of the proposed CY 2026 updates to the ASC payment system on
Medicare payments to ASCs, assuming the same mix of services, as
reflected in our CY 2024 claims data. Table 113 depicts the estimated
aggregate percent change in payment by surgical specialty or ancillary
items and services group by comparing estimated CY 2025 payments to
estimated CY 2026 payments, and Table 114 shows a comparison of
estimated CY 2025 payments to estimated CY 2026 payments for items and
procedures that we estimate would receive the most Medicare payment in
CY 2025.
In Table 113, we have aggregated the surgical HCPCS codes by
specialty group, grouped all HCPCS codes for covered ancillary items
and services into a single group, and then estimated the effect on
aggregated payment for surgical specialty and ancillary items and
services groups. The groups are sorted for display in descending order
by estimated Medicare program payment to ASCs. The following is an
explanation of the information presented in Table 113.
Column 1--Surgical Specialty or Ancillary Items and
Services Group indicates the surgical specialty into which ASC
procedures are grouped and the ancillary items and services group,
which includes all HCPCS codes for covered ancillary items and
services. To group surgical procedures by surgical specialty, we used
the CPT code range definitions and Level II HCPCS codes and Category
III CPT codes, as appropriate, to account for all surgical procedures
to which the Medicare program payments are attributed.
Column 2--Estimated CY 2025 ASC Payments were calculated
using CY 2024 ASC utilization data (the most recent full year of ASC
utilization) and CY 2025 ASC payment rates. The surgical specialty
groups are displayed in descending order based on estimated CY 2025 ASC
payments.
Column 3--Estimated CY 2026 Percent Change is the
aggregate percentage increase or decrease in Medicare program payment
to ASCs for each surgical specialty or ancillary items and services
group that is attributable to proposed updates to ASC payment rates for
CY 2026 compared to CY 2025.
As shown in Table 113, for the six specialty groups that account
for the most ASC utilization and spending, we estimate that the
proposed update to ASC payment rates for CY 2026 would result in a 2
decrease in aggregate payment amounts for eye and ocular adnexa
procedures, a 1 percent increase in aggregate payment amounts for
musculoskeletal system procedures, a 3 percent increase in aggregate
payment amounts for nervous system procedures, a 3 percent increase in
aggregate payment amounts for digestive system procedures, a 12 percent
increase in aggregate payment amounts for cardiovascular system
procedures, and an 18 percent increase in aggregate payment amounts for
genitourinary system procedures. We note that these changes can be a
result of different factors, including updated data, payment weight
changes, and changes in policy. In general, spending in each of these
categories of services is increasing due to the 2.4 percent payment
rate update. After the payment rate update is accounted for, aggregate
payment increases or decreases for a category of services can be higher
or lower than a 2.4 percent increase, depending on if payment weights
in the OPPS APCs that correspond to the applicable services increased
or decreased or if the most recent data show an increase or a decrease
in the volume of services performed in an ASC for a category. For
example, we estimate a 2 percent decrease in eye surgical procedure
payments. The decrease in expenditures for eye surgical procedures is
largely a result of a relative decline in the OPPS relative weights for
the Level 1 Intraocular Procedures APC which is attributable to the
relative decline in hospital geometric mean costs for procedures
assigned to this APC. The large increase in cardiovascular and
genitourinary procedures is a result of higher APC level assignment in
the OPPS of newer peripheral vascular procedures and prostate biopsy
procedure codes compared to prior vascular and prostate biopsy
procedure codes. For estimated changes for selected procedures, we
refer readers to Table 113.
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Table 114 shows the estimated impact of the updates to the revised
ASC payment system on aggregate ASC payments for selected surgical
procedures during CY 2026. The table displays 30 of the procedures
receiving the greatest estimated CY 2025 aggregate Medicare payments to
ASCs. The HCPCS codes are sorted in descending order by estimated CY
2025 program payment.
Column 1-CPT/HCPCS code.
Column 2-Short Descriptor of the HCPCS code.
Column 3-Estimated CY 2025 ASC Payments were calculated
using CY 2024 ASC utilization (the most recent full year of ASC
utilization) and the CY 2025 ASC payment rates. The estimated CY 2025
payments are expressed in millions of dollars.
Column 4-Estimated CY 2026 Percent Change reflects the
percent differences between the estimated ASC payment for CY 2025 and
the estimated payment for CY 2026 based on the proposed update.
[[Page 33849]]
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c. Estimated Effects of ASC Payment System Policies on Beneficiaries
We estimate that the CY 2026 update to the ASC payment system will
be generally positive (that is, result in lower cost-sharing) for
beneficiaries with respect to the procedures we are propose to add to
the ASC CPL for CY 2026. First, other than certain preventive services
where coinsurance and the Part B deductible are waived to comply with
sections 1833(a)(1) and (b) of the Act, the ASC coinsurance rate for
all procedures is 20 percent. This contrasts with procedures performed
in HOPDs under the OPPS, where the beneficiary is responsible for
copayments that range from 20 percent to 40 percent of the procedure
payment (other than for certain preventive services), although the
majority of HOPD procedures have a 20-percent copayment. Second, in
almost all cases, the ASC payment rates under the ASC payment system
are lower than payment rates for the same procedures under the OPPS.
Therefore, the beneficiary coinsurance amount under the ASC payment
system will usually be less than the OPPS copayment amount for the same
services. (The only exceptions will be if the ASC coinsurance amount
exceeds the hospital inpatient deductible since the statute requires
that OPPS copayment amounts not exceed the hospital inpatient
deductible. Therefore, in limited circumstances, the ASC coinsurance
amount may exceed the hospital inpatient deductible and, therefore, the
OPPS copayment amount for similar services.) Beneficiary coinsurance
for services migrating from physicians' offices to ASCs may decrease or
increase under the ASC payment system, depending on the particular
service and the relative payment amounts under the MPFS compared to the
ASC. While the ASC payment system bases most of its payment rates on
hospital cost data used to set OPPS relative payment weights, services
that are performed a majority of the time in a physician office are
generally paid the lesser of the ASC amount according to the standard
ASC ratesetting methodology or at the nonfacility practice expense-
based amount payable under the PFS. For those additional procedures
that we propose to designate as office-based in
[[Page 33850]]
CY 2026, the beneficiary coinsurance amount under the ASC payment
system generally will be no greater than the beneficiary coinsurance
under the PFS because the coinsurance under both payment systems
generally is 20 percent (except for certain preventive services where
the coinsurance is waived under both payment systems).
Accounting Statements and Tables for OPPS and ASC Payment System
As required by OMB Circular A-4 (available on the Office of
Management and Budget website at https://trumpwhitehouse.archives.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf), we have prepared
accounting statements to illustrate the impacts of the OPPS and ASC
changes in this proposed rule with comment period. The first accounting
statement, Table 115, illustrates the classification of expenditures
for the CY 2026 estimated hospital OPPS incurred benefit impacts
associated with the proposed CY 2026 OPD fee schedule increase and the
proposed policy for drug administration services furnished at excepted
off-campus PBDs. The second accounting statement, Table 116,
illustrates the classification of expenditures associated with the 2.4
percent CY 2026 update to the ASC payment system, based on the
provisions of the proposed rule and the baseline spending estimates for
ASCs. Both tables classify most estimated impacts as transfers.
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3. Effects of Changes in Requirements for the Hospital Outpatient
Quality Reporting (OQR) Program
3. Effects of Changes in Requirements for the Hospital Outpatient
Quality Reporting (OQR) Program
a. Background
We refer readers to the CY 2025 OPPS/ASC final rule with comment
period (89 FR 94561 and 94562) for the previously estimated effects of
changes to the Hospital OQR Program for the CY 2025 reporting period
and subsequent years. Of the 3,014 hospital outpatient departments
(HOPDs) that met eligibility requirements for the CY 2025 payment
determination for the Hospital OQR Program, we determined that 42 HOPDs
did not meet the program requirements to receive the full annual
Outpatient Department (OPD) fee schedule increase factor while an
additional 54 HOPDs elected not to participate.
b. Impact of CY 2026 OPPS/ASC Proposed Rule Policies
In this proposed rule, we propose: (1) to remove the COVID-19
Vaccination Coverage Among Healthcare Personnel (HCP) measure beginning
with the CY 2024 reporting period/CY 2026 payment determination; (2) to
remove the Hospital Commitment to Health Equity (HCHE) measure
beginning with the CY 2025 reporting period/CY 2027 payment
determination; (3) to remove the Screening for Social Drivers of Health
(SDOH) measure beginning with the CY 2025 reporting period; (4) to
remove the Screen Positive Rate for SDOH measure beginning with the CY
2025 reporting period; (5) to adopt the Emergency Care Access &
Timeliness electronic clinical quality measure (eCQM) with voluntary
reporting for the CY 2027 reporting period followed by mandatory
reporting beginning with the CY 2028 reporting period/CY 2030 payment
determination; (6) to remove the Median Time from Emergency Department
(ED) Arrival to ED Departure for Discharged ED Patients (Median Time
for Discharged ED Patients) measure beginning with the CY 2028
reporting period/CY 2030 payment determination; (7) to remove the Left
Without Being Seen (LWBS)
[[Page 33851]]
measure beginning with the CY 2028 reporting period/CY 2030 payment
determination; and (8) to modify the Excessive Radiation Dose or
Inadequate Image Quality for Diagnostic Computed Tomography (CT) in
Adults (Hospital Level--Outpatient) eCQM (Excessive Radiation eCQM)
from mandatory reporting beginning with the CY 2027 reporting period to
continue voluntary reporting in the CY 2027 reporting period and
subsequent years.
In section XV.D. of this proposed rule, we also propose to update
our Extraordinary Circumstances Exception (ECE) policy for the Hospital
OQR Program. This proposed update would explicitly include extensions
as a type of extraordinary circumstances relief option, in addition to
exceptions. Because the process for requesting or granting an ECE would
remain the same as the current ECE process, these updates would not
affect burden associated with the submission of the ECE form.
We refer readers to section ``XXII.A. Collection of Information''
of this proposed rule for a detailed discussion of the calculations
estimating the changes to the information collection and reporting
burden for proposed data requirements under the Hospital OQR Program
for the estimated 3,200 program-eligible HOPDs. As shown in summary
tables in section XXII.A.10, we estimate a total information collection
and reporting burden decrease of 6,924,988 hours at a savings of
$178,884,367 annually associated with our proposals for the CY 2028
reporting period/CY 2030 payment determination and subsequent years
compared to our currently approved information collection burden
estimates under OMB control number 0938-1109 (expiration date January
31, 2026). We also estimate a decrease of between 25,600 hours at a
savings of $1,446,400 and 28,800 hours at a savings of $1,687,680 in
information collection burden associated with the proposal to remove
the COVID-19 Vaccination Coverage Among HCP measure compared to the
currently approved information collection burden estimates and under
OMB control number 0920-1317 (expiration date January 31, 2028).
In section XV.B.1. of this proposed rule, we proposed to adopt the
Emergency Care Access & Timeliness eCQM. Similar to the effects
associated with the ST-Segment Elevation Myocardial Infarction (STEMI)
eCQM finalized in the CY 2022 OPPS/ASC final rule with comment period
(86 FR 63984 and 63985), we believe that costs associated with adoption
of eCQMs are multifaceted and include not only the burden associated
with reporting but also the costs associated with implementing and
maintaining program requirements, such as maintaining measure
specifications in hospitals' electronic health record (EHR) systems for
the eCQMs used in the Hospital OQR Program.
In section XV.B.2. of this proposed rule, we proposed to remove the
Median Time from ED Arrival to ED Departure for Discharged ED Patients
and LWBS measures if the proposed Emergency Care Access & Timeliness
eCQM is adopted. Because these measures would be replaced by the
Emergency Care Access & Timeliness eCQM, we believe HOPDs will be
positively impacted by the decreased effort required to report one eCQM
rather than one chart-abstracted measure and one web-based measure.
In section XV.B.3 of this proposed rule, we proposed to modify the
reporting requirements for the Excessive Radiation eCQM by maintaining
voluntary reporting instead of mandatory reporting of the measure,
beginning with the CY 2027 reporting period. In the CY 2024 OPPS/ASC
final rule with comment period, we finalized that for the Excessive
Radiation eCQM, HOPDs may incur costs associated with implementing and
maintaining program requirements, such as maintaining measure
specifications in hospitals' electronic health record (EHR) systems. We
also finalized that HOPDs would be required to create a secure account
through the measure developer's website and link their EHR and PACS
data to their chosen vendor's translation software for CMS Measure
Compliance. We estimated this one-time activity would require no more
than 1 hour to complete (88 FR 82167). In section XXII.A.9., we
estimate that 20 percent of HOPDs would report this measure annually.
Because some HOPDs may only elect to report this eCQM for some
reporting periods, we are unable to assume that 80 percent of HOPDs
would not report this measure in any reporting period. However, for
HOPDs who elect not to report this eCQM in any reporting period, the
proposed modification would result in a savings of no more than 1 hour
and $55 (1 hour x $55.06) as well as any costs that would be associated
with implementing and maintaining program requirements specific to this
eCQM.
Regarding the remaining proposals, we do not believe these
proposals would result in any additional economic impact beyond those
discussed in section ``XXII.A. Collection of Information'' of this
proposed rule.
4. Effects of Proposed Changes in Requirements for the Rural Emergency
Hospital Quality Reporting (REHQR) Program
a. Background
We refer readers to the CY 2025 OPPS/ASC final rule with comment
period (89 FR 94562 and 94563) for the previously estimated effects of
changes to the REHQR Program for the CY 2025 reporting period and
subsequent years. For the CY 2026 reporting period, we have estimated
there will be 38 REHs required to report under the REHQR Program based
on hospital conversions as of April 11, 2025. We use this number of
REHs for our impact analyses knowing that more jurisdictions will pass
or amend necessary legislation enabling transitions, acknowledging that
the number of conversions could be less than or significantly greater
than this estimate with time.
b. Impact of CY 2026 OPPS/ASC Proposed Rule Policies
In this proposed rule, we propose: (1) to remove the HCHE measure
beginning with the CY 2025 reporting period/CY 2027 program
determination; (2) to remove the Screening for SDOH measure beginning
with the CY 2025 reporting period/CY 2027 program determination; (3) to
remove the Screen Positive Rate for SDOH measure beginning with the CY
2025 reporting period/CY 2027 program determination; and (4) to adopt
the Emergency Care Access & Timeliness eCQM beginning with the CY 2027
reporting period/CY 2029 program determination as optional in lieu of
reporting the chart-abstracted Median Time for Discharged ED Patients.
In section XVI.D. of this proposed rule, we also propose to update our
ECE policy for the REHQR Program. This proposed update would explicitly
include extensions as a type of extraordinary circumstances relief
option, in addition to exceptions. Because the process for requesting
or granting an ECE would remain the same as the current ECE process,
these updates would not affect burden associated with the submission of
the ECE form.
We refer readers to section ``XXII.B. Collection of Information''
of this proposed rule for a detailed discussion of the calculations
estimating the changes to the information collection and reporting
burden for proposed data requirements under the REHQR Program for the
estimated 38 REHs. As shown in summary tables in section XXII.B.6., we
estimate a total information collection and reporting burden decrease
of 14,813 hours at a savings of $380,235 annually
[[Page 33852]]
associated with our proposals for the CY 2027 reporting period/CY 2029
program determination and subsequent years compared to our currently
approved information collection burden estimates under OMB control
number 0938-1454 (expiration date April 30, 2027).
In section XVI.B.1. of this proposed rule, we proposed to adopt the
Emergency Care Access & Timeliness eCQM. Similar to the effects
associated with the STEMI eCQM finalized for the Hospital OQR Program
in the CY 2022 OPPS/ASC final rule with comment period (86 FR 63984 and
63985), we believe that costs associated with adoption of eCQMs are
multifaceted and include not only the burden associated with reporting
but also the costs associated with implementing and maintaining program
requirements, such as maintaining measure specifications in REHs' EHR
systems for the eCQMs used in the REHQR Program. Because REHs would
have the option to report the Emergency Care Access & Timeliness eCQM
or the more burdensome Median Time for Discharged ED Patients measure,
we believe REHs would be positively impacted by the decreased effort
required to report the Emergency Care Access & Timeliness eCQM in the
long-term following initial implementation in the EHR.
Regarding the remaining proposals, we do not believe these
proposals would result in any additional economic impact beyond those
discussed in section ``XXII.B. Collection of Information'' of this
proposed rule.
5. Effects of Proposed Changes in Requirements for the Ambulatory
Surgical Center Quality Reporting (ASCQR) Program
a. Background
We refer readers to the CY 2025 OPPS/ASC final rule with comment
period (89 FR 94563) for the previously estimated effects of changes to
the ASCQR Program for the CY 2025 reporting period and subsequent
years. Based on the most recent analysis of the CY 2025 payment
determination data, we found that, of the 6,012 ambulatory surgical
centers (ASCs) that were actively billing Medicare, 4,271 were required
to participate in the ASCQR Program. Of the 1,741 ASCs not required to
participate in the program, 319 ASCs did so and met full requirements.
On this basis, we estimate that 4,590 ASCs (4,271 + 319) will submit
data for the ASCQR Program for the CY 2026 reporting period and
subsequent years unless otherwise noted. We note that this estimate is
an increase of 115 ASCs from our estimate of 4,475 provided in the CY
2025 OPPS/ASC final rule with comment period (89 FR 94563) due to more
recent data analysis regarding numbers of eligible ASCs.
b. Impact of CY 2025 OPPS/ASC Proposed Rule Policies
In this proposed rule, we propose (1) to remove the COVID-19
Vaccination Coverage Among HCP Measure beginning with the CY 2024
reporting period/CY 2026 payment determination; (2) to remove the
Facility Commitment to Health Equity (FCHE) measure beginning with the
CY 2025 reporting period/CY 2027 payment determination; (3) to remove
the Screening for SDOH measure beginning with the CY 2025 reporting
period/CY 2027 payment determination; (4) to remove the Screen Positive
Rate for SDOH measure beginning with the CY 2025 reporting period/CY
2027 payment determination; and (5) to adopt the Patient Understanding
of Key Information Related to Recovery After a Facility-Based
Outpatient Procedure or Surgery, Patient Reported Outcome-Based
Performance (Information Transfer PRO-PM) measure beginning with
voluntary reporting for the CY 2027 and CY 2028 reporting periods
followed by mandatory reporting beginning with the CY 2029 reporting
period/CY 2031 payment determination.
In section XVII.D. of this proposed rule, we also propose to update
our ECE policy for the ASCQR Program. This proposed update would
explicitly include extensions as a type of extraordinary circumstances
relief option, in addition to exceptions. Because the process for
requesting or granting an ECE would remain the same as the current ECE
process, these updates would not affect burden associated with the
submission of the ECE form.
We refer readers to section ``XXII.C. Collection of Information''
of this proposed rule for a detailed discussion of the calculations
estimating the changes to the information collection and reporting
burden for proposed data requirements under the ASCQR Program for the
estimated 4,590 program-eligible ASCs. As shown in summary tables in
section XXII.C.7., we estimate a total information collection and
reporting burden decrease of 172,425 hours at a cost of $4,464,280
annually associated with our proposals for the CY 2029 reporting
period/CY 2031 payment determination and subsequent years compared to
our currently approved information collection burden estimates under
OMB control number 0938-1270 (expiration date July 31, 2027) We also
estimate a decrease of between 36,720 hours at a savings of $2,074,680
and 41,310 hours at a savings of $2,420,766 in information collection
burden associated with the proposal to remove the COVID-19 Vaccination
Among HCP measure compared to the currently approved information
collection burden estimates and under OMB control number 0920-1317
(expiration date January 31, 2028).
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\348\ Becker C, Zumbrunn S, Beck K, et al. (2021). Interventions
to Improve Communication at Hospital Discharge and Rates of
Readmission: A Systematic Review and Meta-analysis. JAMA Netw Open.
4(8):e2119346. doi:10.1001/jamanetworkopen.2021.19346.
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In section XVII.B.1. of this proposed rule, we proposed to adopt
the Information Transfer PRO-PM. Similar to the effects associated with
the Information Transfer PRO-PM finalized for the Hospital OQR Program
in the CY 2025 OPPS/ASC final rule with comment period (89 FR 94562),
for ASCs that are not currently collecting these data and elect to
begin doing so as a result of this measure there would be some costs
associated with changes in workflow and information systems to collect
the data. The extent of these costs is difficult to quantify as ASCs
may utilize different modes of data collection (collected by facilities
or authorized third-party vendors post-discharge through a web-based
survey instrument, distributed electronically) and have differing
response rates influencing data volume. While we assume the majority of
ASCs would report data for this measure directly to CMS, we assume some
ASCs may elect to submit measure data via a third-party survey vendor,
for which there are associated costs. Under OMB control number 0938-
1240 for the Outpatient and Ambulatory Surgery Consumer Assessment of
Healthcare Providers and Systems (OAS CAHPS) Survey (expiration date
November 30, 2026), an estimate of approximately $4,000 per hospital is
used to account for these costs. Communication interventions have been
associated with increased adherence to treatment regimen and improved
patient satisfaction, which are positively related to better health
outcomes, such as reduced hospital readmission, mortality, morbidity,
or improved quality of life, as well as potentially reducing complaints
and malpractice claims.\348\ Additional research indicates enhanced
readability of discharge instructions is associated with a decrease in
the proportion of patients calling after hospital discharge, a decrease
in the proportion of hospital readmissions per 100 patients
[[Page 33853]]
discharged, and a decrease in the proportion of patients calling and
readmissions for poor pain control.\349\ Therefore, while we are unable
to quantify the benefits associated with the measure, we believe the
potential improvements in post-operative recovery, patient
satisfaction, and quality of life outweigh the estimated burden for
patients of $10,389 per ASC.
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\349\ Choudhry AJ, Younis M, Ray-Zack MD, et al. (2019).
Enhanced readability of discharge summaries decreases provider
telephone calls and patient readmissions in the posthospital
setting. Surgery. 165(4):789-794. https://doi.org/10.1016/j.surg.2018.10.014.
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Regarding the remaining proposals, we do not believe these
proposals would result in any additional economic impact beyond those
discussed in section ``XII.C. Collection of Information'' of this
proposed rule.
6. Effects of Requirements for the Overall Hospital Quality Star
Ratings
a. Background
In section XVIII. Overall Hospital Quality Star Rating Modification
to Emphasize the Safety of Care Measure Group of this proposed rule, we
discussed our proposal as it relates to the Overall Hospital Quality
Star Rating methodology. The Overall Hospital Quality Star Rating uses
measures that are publicly reported on the provider comparison tool on
Medicare.gov (https://www.medicare.gov/care-compare/) under the public
reporting authority of each individual hospital program furnishing
measure data. The burden associated with measures included in the
Overall Hospital Quality Star Rating, including forms used to request
withholding of publicly reported measure data and the Overall Hospital
Quality Star Rating (for CAHs), is already captured in respective
hospital programs' burden estimates and represents no increased
information collection burden to hospitals.
b. Impact of CY 2026 OPPS/ASC Proposed Rule Policies
In this CY 2026 OPPS/ASC proposed rule, we are using the most
recent data from the Bureau of Labor Statistics, which reflects a
median hourly wage of $24.16 per hour for a Medical Records and Health
Information Technician professional.\350\ We calculate the cost of
overhead, including fringe benefits, at 100 percent of the hourly wage
estimate, consistent with the previous year. This is necessarily a
rough adjustment, both because fringe benefits and overhead costs vary
significantly from employer- to-employer and because methods of
estimating these costs vary widely from study-to-study. Therefore, we
believe that doubling the hourly wage rate ($24.16 x 2 = $48.32) to
estimate total cost is a reasonably accurate estimation method.
Accordingly, we calculate the cost burden to hospitals using a wage
plus benefits estimate of $48.32 per hour. We estimate that the non-
information collection burden associated with all non-Veterans Health
Administration (VHA) hospitals reviewing their Overall Hospital Quality
Star Rating preview report prior to public reporting to be 2 hours per
hospital, which includes time to review the report and ask any
questions about the calculation necessary to increase comprehension.
Estimating that approximately 4,600 hospitals would receive an Overall
Hospital Quality Star Rating hospital specific report (HSR), regardless
of if they meet the reporting thresholds to be assigned a star rating,
we estimate the overall non- information collection burden to be
$444,544 annually ($48.32 x 2 hours per preview report x once per year
x 4,600 hospitals). For CAHs specifically, which are included in the
estimate above, we estimate that 1,300 CAHs would be eligible for an
Overall Hospital Quality Star Rating, which represents a burden of
$125,632 annually (1,300 CAHs x 2 hours per preview report x once per
year x $48.32).
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\350\ Bureau of Labor Statistics, U.S. Department of Labor,
Occupational Outlook Handbook, Medical Records Specialists, at
https://www.bls.gov/ooh/healthcare/medical-records-and-health-information-technicians.htm.
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Within this rule, for CY 2026 Overall Hospital Quality Star Rating
and subsequent years, we propose to make the following two-stage
methodological updates to emphasize the importance of the Safety of
Care measure group to the Overall Hospital Quality Star Rating
methodology: (1) implement a 4-star cap for poor performance in the
Safety of Care measure group (lowest performing quartile) for the 2026
Star Rating, and (2) implement a blanket 1-star reduction for poor
performance in the Safety of Care measure group (lowest performing
quartile) for the 2027 Star Rating and thereafter.
To simulate the impact of the proposed Overall Hospital Quality
Star Rating methodology, we used the July 2024 refresh of the Overall
Hospital Quality Star Rating (the most recent publicly released results
as of the writing of this proposal) to describe the overall
distribution and reclassification of the Overall Hospital Quality Star
Rating across different types of hospitals. The proposed update to the
Overall Hospital Quality Star Rating methodology in CY 2026 that will
limit hospitals in the lowest quartile of Safety of Care (based on at
least three measure scores) to a maximum of 4 out of 5 stars (Stage 1
methodological change) would have resulted in 14 (0.30 percent)
hospitals receiving a lower Overall Hospital Quality Star Rating in the
July 2024 simulation. While the proposed update to the Overall Hospital
Quality Star Rating methodology beginning in CY 2027 that will reduce
the Overall Hospital Quality Star Rating of any hospital in the lowest
quartile of Safety of Care (based on at least three measure scores) by
1 star, to a minimum 1-star rating (Stage 2 methodological change)
would have resulted in 459 (9.90 percent) hospitals receiving a lower
Overall Hospital Quality Star Rating.
Utilizing the Stage 1 methodology update, fewer hospitals would
have received a different Overall Hospital Quality Star Rating and
changes in the Overall Hospital Quality Star Rating are less easily
attributed to specific hospital characteristics, as very few hospitals
of any type would be affected. In contrast, the Stage 2 methodological
update resulted in teaching hospitals, non-safety-net hospitals, VHA
hospitals, non-CAHs, large hospitals (100+ beds), and non-specialty
hospitals being more likely to receive a lower Overall Hospital Quality
Star Rating in the July 2024 simulation. (Table 118).
BILLING CODE 4120-01-P
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[GRAPHIC] [TIFF OMITTED] TP17JY25.191
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BILLING CODE 4120-01-C
7. Effects of a Proposed Market-Based MS-DRG Relative Weight
Methodology
In section XX. of the preamble of this proposed rule, we propose to
adopt a market-based methodology for determining the MS-DRG relative
weights beginning in FY 2029 utilizing the median payer-specific
negotiated charge information we are proposing to collect on the cost
report. That is, our proposal to collect on the Medicare cost report
the median of the payer-specific negotiated charge that the hospital
has negotiated with all of its MAOs, by MS-DRG, effective cost
reporting periods ending on or after January 1, 2026.
We note that the estimated total annual burden hours for this
proposal are as follows: 3,038 hospitals times 20 hours per hospital
equals 60,760 annual burden hours and $4,857,458.20. We refer readers
to section XXII.E. of this proposed rule for further analysis of this
assessment.
If CMS were to finalize a change to the MS-DRG relative weight
methodology, we would apply a budget neutrality factor to ensure that
the overall payment impact of any MS-DRG relative weight changes was
budget neutral, as required by section 1886(d)(4)(C)(iii) of the Act
and consistent with our current practice.
Similar to our discussion in the economic analysis section of the
FY 2021 IPPS/LTCH PPS final rule (85 FR 59089 through 59090) regarding
the market-based MS-DRG relative weight methodology, if our current
proposal is finalized then once we have access to the weighted payer-
specific negotiated charge information at the MS-DRG level from the
cost reports we would be able to more precisely estimate the payment
impact of adopting this market-based MS-DRG relative weight methodology
for payments beginning in FY 2029. If our proposal is finalized, we
intend to provide these more precise estimates prior to the FY 2029
effective date. However, to explore the potential impacts more
generally, we conducted a literature search to compare the payment
rates of Medicare FFS, MA organizations, and other commercial payers,
which is discussed in section XX.B. of this proposed rule. As discussed
in that section, the payer-specific charges negotiated between
hospitals and MAOs are generally well-correlated with Medicare IPPS
payment rates, although in the future this may change over time for
some services. As under the current methodology, the impact of any MS-
DRG relative weight changes on an individual hospital would depend on
the mix of services provided by that particular hospital.
8. Graduate Medical Education Accreditation
In section XXI. of this proposed rule, we discuss that, effective
January 1, 2026, we propose that accreditors may not require as part of
accreditation or otherwise encourage institutions to put in place
diversity, equity, and inclusion programs that encourage unlawful
discrimination on the basis of race or other violations of Federal law.
We believe there is no financial impact associated with this proposed
change because, as of our proposed effective date, we do not expect
that current or future accrediting organizations would continue to or
newly require or otherwise encourage institutions to put in place
diversity, equity, and inclusion programs that encourage unlawful
discrimination on the basis of race or other violations of Federal law.
We also note that the Secretary may recognize other organizations
that meet or exceed Medicare's requirements as accreditors to increase
the potential for competition in the accreditation space and improve
the quality of the accreditation process. We believe there is no
financial impact associated with the potential recognition of other
accrediting organizations because we do not expect that an increase in
competition or an improvement in the quality of the accreditation
process would change the total number of approved programs
significantly. It would only potentially change the organization that
accredits some of those approved programs.
9. Effects of Proposals Relating to Hospital Price Transparency
a. Background
Since the January 1, 2021, effective date of the CY 2020 Hospital
Price Transparency (HPT) final rule, hospitals have been required to
make their standard charges available to the public. Consistent with
Executive Order 14221, and to further advance the goals articulated in
previous HPT rulemaking of requiring hospitals to make meaningful price
information available to consumers, employers, policymakers, and others
to support a more competitive, innovative, and affordable healthcare
system, we are proposing several updates to the HPT regulations to
enhance the clarity and standardization of hospital disclosure of
standard charges. Specifically, we propose: (1) revisions to 45 CFR
180.20 to add definitions for ``tenth (10th) percentile allowed
amount,'' ``median allowed amount,'' and ``ninetieth (90th) percentile
allowed amount''; (2) revisions to 45 CFR 180.50 to require hospitals,
beginning January 1, 2026, to disclose the 10th percentile, median, and
90th percentile allowed amounts in machine-readable files (MRFs) when
standard charges are based on percentages or algorithms, as well as the
count of allowed amounts, to more accurately reflect the distribution
of actual amounts that the hospital has received for an item or
service; (3) to require that hospitals use electronic data interchange
(EDI) 835 electronic remittance advice (ERA) transaction data to
calculate and encode these allowed amount data elements, and to require
that hospitals comply with specific instructions regarding the
methodology, including the lookback period, that must be used to
calculate the 10th percentile, median, and 90th percentile allowed
amounts; (4) revisions to Sec. 180.50(a)(3) to replace the affirmation
statement in the MRF with an attestation statement that would also
contain new specifications (relative to existing affirmation
requirements) and to require hospitals to encode the name of the chief
executive officer, president or senior official designated to oversee
the encoding of true, accurate and complete data in the MRF; (5)
revisions to Sec. 180.50(b)(2)(i)(A) to require hospitals to include
their National Provider Identifier(s) (NPIs) in the MRFs to advance the
comparability of HPT data with other healthcare data; and (6) revisions
to Sec. 180.90 to reduce the amount of a civil monetary penalty (CMP)
by 35 percent, in certain circumstances and under certain conditions,
when a hospital waives its right to an administrative law judge (ALJ)
hearing, to encourage faster resolution and payment of CMPs in exchange
for the hospital's acceptance of responsibility for failing to meet HPT
requirements. These proposed changes aim to improve price transparency,
facilitate efficient enforcement, and empower consumers with actionable
information.
b. Overall Estimated Burden on Hospitals Due to HPT Requirements
To analyze the costs of the proposed requirements, we used an
updated baseline that assumes the existing requirements (those adopted
in the CY 2020 HPT final rule, the CY 2022 OPPS/ASC final rule with
comment period and the CY 2024 OPPS/ASC final rule with comment period
and still codified at 45 CFR part 180) remain in place over the time
horizon of this RIA.
In the CY 2024 OPPS/ASC final rule with comment period, we
estimated that
[[Page 33856]]
the annual burden of the HPT regulations would be 54 hours per hospital
with a cost of $4,560.52 per hospital, resulting in a total national
annual burden of 383,292 hours and $32,370,571 (88 FR 82171). As
described in section ``XXII. Collection of Information'' of this
proposed rule, we still believe these hourly estimates are accurate
estimates of the ongoing annual burden for hospitals to update their
standard charge information in the CMS standard template and conform to
the data dictionary.
For this proposed rule, we updated the number of hospitals
estimated to be subject to the HPT requirements using the same
methodology as we did in the CY 2024 OPPS/ASC final rule with comment
period. There were 8,340 hospitals most recently identified in the
HIFLD hospital dataset. We subtracted 374 hospitals HIFLD identified as
``closed'' as well as hospitals that are deemed under the regulation to
have met requirements which included 352 Federally owned non-military
and military hospitals, and 198 state, local, and district run forensic
hospitals. We therefore estimate that, for this proposed rule, 7,416
hospitals would meet the HPT regulation's definition of ``hospital'' at
45 CFR 180.20, increasing the national annual burden to 400,464 hours
and $36,519,350.40.
We estimate that hospitals will incur an additional one-time cost
to update their processes and systems to (1) identify and collect six
new data elements and (2) encode the standard charge information for
the newly proposed elements in the CMS standard template. This one-time
burden estimate, as demonstrated in section ``XXII. Collection of
Information'' of this proposed rule is 37,080 hours for all hospitals
(5 hours x 7,416 hospitals) at a cost of $3,545,441.28 (7,416 hospitals
x [($87.52 x 4 hours) + ($128.00 x 1 hour)]). We note that hospitals
have been required to publicize their standard charges in a
standardized template since July 1, 2024, as specified in the CY 2024
OPPS/ASC final rule with comment period, and therefore expect minimal
hospital burden to modify the existing template. In addition, four of
the new proposed data elements, the median, 10th percentile, and 90th
percentile allowed amounts, as well as the count of allowed amounts,
are applicable only in the limited instances when a hospital's payer-
specific negotiated charge for an item or service is based on an
algorithm or a percentage. The fifth and sixth new data elements, the
hospital NPI and the name of name of the chief executive officer,
president or senior official designated to oversee the encoding of
true, accurate and complete data in the MRF, would be required at the
hospital level, not a separate entry for each item or service. CMS
therefore believes this estimate to be an accurate estimate of the one-
time burden for a hospital to collect the new data elements and encode
them in the CMS standard template.
c. Benefit of Proposals
Although we cannot quantify the benefits of including additional
data elements and encoding such data in the CMS required MRF template,
we believe any opportunity to provide further context about standard
charges, including through the addition of contextual information when
the payer-specific negotiated charge is based on a percentage or
algorithm, would be helpful to all consumers of the MRF as they analyze
the data to identify cost savings and ways to stimulate market
competition. We believe strengthening the existing affirmation
statement and requiring a senior official to publicly attest to the
accuracy and completeness of the data encoded within the file will
reduce public confusion related to whether all standard charges for
hospital items and services are included within the MRF as dollar
amounts, if possible, and the hospital has provided all necessary
information available to the hospital for the public to be able to
derive the dollar amount, including, but not limited to, the specific
fee schedule or components referenced in such percentage, algorithm or
formula. We also believe the addition of the NPI data element would
catalyze more fulsome HPT and Transparency in Coverage (TiC) analysis.
(1) Benefits to Hospitals
Hospitals, either directly or through management or actuarial
consultants, are consuming the data released in the MRFs for their own
operational purposes. Hospitals consume and analyze MRF data to improve
negotiation strategies with employers and third party payers, improve
contracting strategies, and demonstrate value in the negotiation
process.351 352 Hospitals also use the MRF data to determine
pricing strategies and to identify and hone their competitive
advantage,\353\ as well as to improve their revenue cycle
efficiency.\354\ Further, we believe that, for those hospitals that are
assessed a CMP, the proposed reduction of the CMP if the hospital
elects not to appeal CMS' findings, would offset some of the hospital
financial burden, including legal fees and costs associated with
challenging the imposition--including requesting and defending a
hearing before an Administrative Law Judge (ALJ) and any subsequent
appeals.
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\351\ Clarify Insights Center. (2023, August 15). How hospitals
can use price transparency data to negotiate better contracts with
payers. Retrieved from https://clarifyhealth.com/insights/blog/how-hospitals-can-use-price-transparency-data-to-negotiate-better-contracts-with-payers/.
\352\ Gomes, C. (2023, July 31). Why healthcare providers should
harness price transparency data. Medlyze--Price Transparency Data
and Analysis for the Healthcare Industry Insights. Retrieved from
https://www.medlyze.com/blog/why-healthcare-providers-should-harness-the-power-of-price-transparency-data.
\353\ Xiao, F. (2024, October 25). Is price transparency
helping? Here are three ways to tell: Let's explore our biggest
indicators of change: competition, pricing, and power. Turquoise
Health Blog. Retrieved from https://blog.turquoise.health/is-price-transparency-helping-heres-three-ways-to-tell/.
\354\ Healthcare Financial Management Association. (2023, August
28). Leverage healthcare price transparency data to promote
financial sustainability. Retrieved from https://www.hfma.org/price-transparency/leverage-healthcare-price-transparency-data-to-promote-financial-sustainability/.
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(2) Benefits to Other Interested Parties
As discussed in the CY 2020 HPT final rule (84 FR 65538), we
believe public access to hospital standard charge information can be
useful to the public, including patients who need to obtain services
from a hospital, consumers of healthcare who wish to view hospital
standard charge information prior to selecting a hospital, employers
and state governments searching for lower cost options for health care
coverage, and other users of the MRF who may develop consumer-friendly
price transparency tools or perform price analyses to uncover
disparities or drive value-based policy development. Since the
effective date of the HPT regulations, innovators have been compiling
HPT data sets and making them available for employers, researchers, and
journalists to perform cost comparison studies and publish findings.
Feedback from interested parties, specifically innovators and
researchers, has illuminated the need to detangle complex hospital
contracting methods through the provision of data elements that help
define the algorithm or percentage set forth in hospital MRFs. The
proposed allowed amount data elements would support a better
understanding of the range of payer-specific negotiated charge
dispersion, which would further assist employers and consumers to
understand a hospital's value as compared to other hospitals,
stimulating competition and potentially resulting in price
[[Page 33857]]
convergence to drive more predictable and consistent health care
costs.\355\
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\355\ Xiao, F. (2024, October 25). Is price transparency
helping? Here are three ways to tell. Turquoise Health. Retrieved
from https://blog.turquoise.health/is-price-transparency-helping-heres-three-ways-to-tell/.
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With regard to the proposals to strengthen the affirmation
statement requirement, beginning January 1, 2026, by replacing it with
an attestation in the MRF that would contain new specifications
(relative to existing affirmation requirements) and to require
hospitals to encode the name of the chief executive officer, president
or senior official designated to oversee the encoding of true, accurate
and complete data in the MRF, we believe this will provide the
necessary reassurance that hospitals have provided in their MRFs
meaningful, accurate information to users of the MRF about their
standard charges for health care items and services.
With regard to the NPI data element, including identifiers used for
financial transactions in the MRF would make it easier for key
participants in price negotiations (for example, employers and payers)
to programmatically identify hospitals in their internal financial
databases, such as claims data, to conduct more in-depth payment and
volume analyses to support contract negotiations and potentially reduce
healthcare costs for consumers. A standard identifier could also help
CMS, researchers, and innovators reduce dependence on manual processes
for identifying the hospital and the hospital locations and increase
opportunities for automated processes.
d. Limitations of Our Analysis
As stated in the CY2024 OPPS/ASC final rule with comment period (88
FR 82174), it would be difficult for us to conduct a detailed
quantitative analysis of the impact of requiring hospitals to make HPT
information publicly available, given the lack of studies at the
national level on the impact of the HPT regulations. Thus, in assessing
the impact of our proposals, we rely on qualitative evidence of, and
experiences with, the use of the public HPT data and feedback from
consumers of the MRFs as well as our own experiences reviewing the
MRFs. Specifically, we have noted through our own reviews that many
hospital MRFs lack dollar values when the standard charge for an item
or service is based on an algorithm or percentage and have heard from
interested parties the limitations of drawing meaningful comparisons
without necessary context to help understand the standard charge in
dollars for such items or services. We also have received comments from
MRF users since the effective date of the 2024 OPPS/ASC final rule with
comment period indicating that requiring hospitals to make a good faith
effort did not go far enough to convey CMS' intent that all standard
charge information available must be encoded in the MRF, with
commenters suggesting our requirement to allow a good faith estimate
may actually deter hospitals from providing fully complete and accurate
standard charge data in their MRF. We also heard users of the MRFs who
questioned a hospital's inability to encode dollar amounts for the
payer-specific negotiated charge data elements, and whether the complex
contracting methodologies used by hospitals and payer organizations
could only be expressed through an algorithm or formula, and not a
dollar amount. We understand that users of the MRF may find the
addition of algorithms make price comparisons among hospitals
challenging when only an algorithm is available because the algorithms
may not be consumer friendly. We believe that our proposal to require
an attestation, as opposed to merely requiring an affirmation
statement, may enhance users' confidence that the data encoded is
accurate and complete.
In addition, in discussions with innovators and researchers, we
have heard that the addition of an NPI as a hospital unique identifier
would allow more effective data crosswalking between hospital HPT MRFs
and TiC MRFs, as well as to other CMS datasets that contain hospital
quality data. We believe this regulation would provide the additional
context needed for consumers of the MRFs to create meaningful dollar
comparisons that would ultimately benefit consumers through development
of cost comparison tools, increased competition, or improved price
negotiations with employers.
e. Alternatives Considered
The proposed revisions to the HPT regulations are designed to
further address some of the barriers identified that limit price
transparency, with a goal of increasing competition among healthcare
providers to bring down costs. Specifically, this proposed rule aims to
make meaningful price information via hospital standard charges more
readily available to the public by providing additional contextual
information, displayed as a dollar value, in those instances where
standard charges are based on a percentage or an algorithm, as well as
provide needed hospital identifier values to enable innovators and
researchers to combine the HPT data with other claims and quality data
to further empower consumer decision-making. We considered a number of
alternative approaches, including other methodologies and lookback
periods for calculating the allowed amount data elements, and whether
to display specific counts of allowed amounts or ranges. We discuss
these alternatives in section XIX. of this proposed rule. Specifically,
we considered EDI 835 ERA transaction data lookback period alternatives
of 3 months, 6 months, as well as requiring hospitals to use a rolling
12-month period prior to when the MRF posted. We sought comment on data
sources other than the EDI 835 ERA transaction data to use to derive
the allowed amount data elements. We also considered whether hospitals
could encode a range of allowed amounts, as opposed to the exact count
of allowed amounts, to achieve our objective of providing needed
context to the allowed amount data element values.
We considered several alternative options to updating the required
affirmation within the MRF, as discussed in section XIX. of this
proposed rule. We considered asking the official to submit their MRF
attestation directly to CMS, using a CMS developed template that would
provide evidence of the accuracy and completeness of the MRF, and we
also considered requiring the hospitals to post a more detailed
attestation document that is signed by a senior official on the
publicly available website that hosts the MRF. However, we believe
these alternatives to be less useful than our proposals as they would
either not meet the stated need to alert the public to the hospital's
declaration of the accuracy and completeness of the data encoded within
the MRF, or the attestation would not ``travel'' inside the MRF like
the affirmation statement.
In addition, we considered different types of hospital identifiers,
specifically the Employer identification Number and the CMS
Certification Number. Ultimately, however, we determined that the
alternatives would either limit the usefulness of hospital standard
charge information or increase burden for hospitals without any
additional benefit for users of MRF standard charge information.
D. Regulatory Review Cost Estimation
Due to the uncertainty involved with accurately quantifying the
number of entities that will review the rule, we assume that the total
number of unique commenters on last year's proposed rule will be the
number of reviewers of this
[[Page 33858]]
proposed rule. We acknowledge that this assumption may understate or
overstate the costs of reviewing this rule. It is possible that not all
commenters reviewed last year's rule in detail, and it is also possible
that some reviewers chose not to comment on the proposed rule. For
these reasons we believe that the number of past commenters would be a
fair estimate of the number of reviewers of this rule. We welcome any
comments on the approach in estimating the number of entities which
will review this proposed rule.
We also recognize that different types of entities are in many
cases affected by mutually exclusive sections of this proposed rule,
and therefore for the purposes of our estimate we assume that each
reviewer reads approximately 50 percent of the rule. We seek comments
on this assumption.
Using the wage information from the Bureau of Labor Statistics
(BLS) for medical and health service managers (Code 11-9111), we
estimate that the cost of reviewing this rule is $113.42 per hour,
including overhead and fringe benefits (https://www.bls.gov/oes/current/oes_nat.htm). Assuming an average reading speed, we estimate
that it would take approximately 8 hours for the staff to review half
of this proposed rule. For each entity that reviews the rule, the
estimated cost is $907.36 (8 hours x $113.42). Therefore, we estimate
that the total cost of reviewing this regulation is $3,175,760 ($907.36
x 3,500).
E. Regulatory Flexibility Act (RFA) Analysis
The RFA requires agencies to analyze options for regulatory relief
of small entities, if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, we estimate that
many hospitals and CAHs are considered small businesses either by the
Small Business Administration's size standards with total revenues of
$41.5 million or less in any single year or by the hospital's not-for-
profit status. Most ASCs and most CMHCs are considered small businesses
with total revenues of $16.5 million or less in any single year. While
we note the limited availability of certain information for OPPS
providers, we estimate that approximately 3,000 OPPS providers included
in the impact analysis would be considered small entities. As the small
entity category would represent the majority of the providers in the
table, the individual impact table categories would provide more
specific estimated hospital impacts. While the estimated impacts of the
proposed rule vary by OPPS provider category, many of those categories
will be within the range of 1.5 to 2.5 percent. For details, we refer
readers to the Small Business Administration's ``Table of Size
Standards'' at http://www.sba.gov/content/small-business-size-standards.
Individuals and States are not included in the definition of a
small entity. As its measure of significant economic impact on a
substantial number of small entities, HHS uses a change in revenue of
more than 3 to 5 percent. We believe that this threshold would not be
reached by the requirements in this proposed rule, since as noted
earlier in this section, most estimated changes would be below that
range. Therefore, the Secretary has certified that this proposed rule
would not have a significant economic impact on a substantial number of
small entities.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 603 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a metropolitan
statistical area and has 100 or fewer beds. We estimate that this
proposed rule would increase payments to small rural hospitals by
approximately 1.9 percent; therefore, it should have a negligible
impact on approximately 528 small rural hospitals. We note that the
estimated payment impact for any category of small entity will depend
on both the services that they provide as well as the payment policies
and/or payment systems that may apply to them. Therefore, the most
applicable estimated impact may be based on the specialty, provider
type, or payment system.
The analysis above, together with the remainder of this preamble,
provides a regulatory flexibility analysis and a regulatory impact
analysis.
F. Unfunded Mandates Reform Act (UMRA)
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2025, that
threshold is approximately $187 million. This proposed rule would not
impose a mandate that will result in the expenditure by State, local,
and Tribal Governments, in the aggregate, or by the private sector, of
more than $187 million in any 1 year.''
G. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. We have examined the OPPS and ASC provisions included in
this proposed rule in accordance with Executive Order 13132,
Federalism, and have determined that they would not have a substantial
direct effect on State, local, or tribal governments, preempt State
law, or otherwise have a federalism implication. As reflected in Table
111 of this proposed rule, we estimate that OPPS payments to
governmental hospitals (including State and local governmental
hospitals) would increase by 2.0 percent under this proposed rule.
While we do not know the number of ASCs or CMHCs with government
ownership, we anticipate that it is small. The analyses we have
provided in this section of this proposed rule, in conjunction with the
remainder of this document, demonstrate that this rule is consistent
with the regulatory philosophy and principles identified in Executive
Order 12866, the RFA, and section 1102(b) of the Act.
This proposed rule would affect payments to a substantial number of
small rural hospitals and a small number of rural ASCs, as well as
other classes of hospitals, CMHCs, and ASCs, and some effects may be
significant. However, as noted in section XXV. of this proposed rule,
this rule should not have a significant effect on small rural
hospitals.
H. E.O. 14192, ``Unleashing Prosperity Through Deregulation''
Executive Order 14192, entitled ``Unleashing Prosperity Through
Deregulation'' was issued on January 31, 2025, and requires that ``any
new incremental costs associated with new regulations shall, to the
extent permitted by law, be offset by the elimination of existing costs
associated with at least 10 prior regulations.'' This proposed rule, if
finalized as proposed, is expected to be an E.O. 14192 deregulatory
action. We estimate that this proposed rule would generate $2.54
million in annualized cost savings at a 7 percent discount rate,
discounted relative to year 2024 over a perpetual time horizon.
Mehmet Oz, Administrator of the Centers for Medicare & Medicaid
[[Page 33859]]
Services, approved this document on July 10, 2025.
List of Subjects
42 CFR Part 410
Diseases, Health facilities, Health professions, Laboratories,
Medicare, Reporting and recordkeeping requirements, Rural areas, X-
rays.
42 CFR Part 412
Administrative practice and procedure, Health facilities, Medicare,
Puerto Rico, Reporting and recordkeeping requirements.
42 CFR Part 413
Diseases, Health facilities, Medicare, Puerto Rico, Reporting and
recordkeeping requirements.
42 CFR Part 415
Health facilities, Health professions, Medicare, Reporting and
recordkeeping requirements.
42 CFR Part 416
Health facilities, Health professions, Medicare, Reporting and
recordkeeping requirements.
42 CFR Part 419
Hospitals, Medicare, Reporting and recordkeeping requirements.
45 CFR Part 180
Hospital Price Transparency.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services proposes to amend 42 CFR chapter IV as follows:
PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS
0
1. The authority citation for part 410 continues to read as follows:
Authority: 42 U.S.C. 1302, 1395m, 1395hh, 1395rr, and 1395ddd.
0
2. Section 410.27 is amended by revising paragraph (a)(1)(iv)(B)(1) to
read as follows:
Sec. 410.27 Therapeutic outpatient hospital or CAH services and
supplies incident to a physician's or nonphysician practitioner's
service: Conditions.
(a) * * *
(1) * * *
(iv) * * *
(B) * * *
(1) For purposes of this section, direct supervision means that the
physician or nonphysician practitioner must be immediately available to
furnish assistance and direction throughout the performance of the
procedure. It does not mean that the physician or nonphysician
practitioner must be present in the room when the procedure is
performed. For pulmonary rehabilitation, cardiac rehabilitation, and
intensive cardiac rehabilitation services, direct supervision must be
furnished as specified in Sec. Sec. 410.47 and 410.49, respectively.
The presence of the physician or nonphysician practitioner for the
purpose of the supervision of pulmonary rehabilitation, cardiac
rehabilitation, and intensive cardiac rehabilitation services includes
virtual presence through audio/video real-time communications
technology (excluding audio-only); and
* * * * *
0
3. Section 410.28 is amended by revising paragraph (e)(2)(iii) to read
as follows:
Sec. 410.28 Hospital or CAH diagnostic services furnished to
outpatients: Conditions.
* * * * *
(e) * * *
(2) * * *
(iii) The presence of the physician or nonphysician practitioner
under paragraphs (e)(2)(i) and (ii) of this section includes virtual
presence through audio/video real-time communications technology
(excluding audio-only) for services without a 010 or 090 global surgery
indicator.
* * * * *
PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL
SERVICES
0
4. The authority citation for part 412 continues to read as follows:
Authority: 42 U.S.C. 1302 and 1395hh.
0
5. Section 412.3 is amended by revising paragraph (d)(2) to read as
follows:
Sec. 412.3 Admissions.
* * * * *
(d) * * *
(2) An inpatient admission for a surgical procedure specified by
Medicare as inpatient only under Sec. 419.22(n) of this chapter is
generally appropriate for payment under Medicare Part A regardless of
the expected duration of care. Procedures no longer specified as
inpatient only under Sec. 419.22(n) of this chapter are appropriate
for payment under Medicare Part A in accordance with paragraph (d)(1)
or (3) of this section. Claims for services and procedures removed from
the inpatient only list under Sec. 419.22 of this chapter on or after
January 1, 2021 are exempt from certain medical review activities until
the Secretary determines that the service or procedure is more commonly
performed in the outpatient setting than the inpatient setting.
* * * * *
0
6. Section 412.105 is amended by--
0
a. Revising paragraphs (f)(1)(i)(A), (B), and (C); and
0
b. Adding paragraph (f)(1)(i) (E).
The revisions and addition read as follows:
Sec. 412.105 Special treatment: Hospitals that incur indirect costs
for graduate medical education programs.
* * * * *
(f) * * *
(1) * * *
(i) * * *
(A) Is approved by one of the national organizations listed in
Sec. 415.152 of this chapter, provided that the national organization
does not use accreditation criteria that promote or emphasize
diversity, equity, inclusion, or awareness based on race, color, sex,
sexual orientation or identity, national origin, or any other
characteristic which serves as a proxy to achieve the same ends.
(B) May count towards certification of the participant in a
specialty or subspecialty listed in the current edition of either of
the following publications:
(1) The Directory of Graduate Medical Education Programs published
by the American Medical Association.
(2) The Annual Report and Reference Handbook published by the
American Board of Medical Specialties.
Provided that listing in either of those publications, or in
successor information sources, does not require the program to promote
or emphasize diversity, equity, inclusion, or awareness based on race,
color, sex, sexual orientation or identity, national origin, or any
other characteristic which serves as a proxy to achieve the same ends.
(C) Is approved by the Accreditation Council for Graduate Medical
Education (ACGME), or other organization designated by the Secretary,
as a fellowship program in geriatric medicine, provided that the
Council or other organization does not use accreditation criteria that
promote or emphasize diversity, equity, inclusion, or awareness based
on race, color, sex, sexual orientation or identity, national origin,
or any other characteristic which serves as a proxy to achieve the same
ends.
* * * * *
(E) Is a program that would be accredited except for the
accrediting agency's reliance upon an accreditation standard that
requires an entity to promote or emphasize diversity, equity,
inclusion, or awareness based on race,
[[Page 33860]]
color, sex, sexual orientation or identity, national origin, or any
other characteristic which serves as a proxy to achieve the same ends.
* * * * *
0
7. Section 412.190 is amended by--
0
a. Revising paragraph (a)(2);
0
b. Adding paragraph (a)(3);
0
c. Redesignating paragraph (a)(5) as (6), and paragraph (a)(6) as (5);
0
d. Revising paragraph (b)(1);
0
e. Adding paragraph (d)(9); and
0
f. Revising paragraphs (e) and (f).
The revisions and additions read as follows:
Sec. 412.190 Overall Hospital Quality Star Rating.
(a) * * *
(2) To update the methodology that will be used to calculate the
Overall Hospital Quality Star Ratings to emphasize the contribution of
the Safety of Care measure group to the Overall Hospital Quality Star
Rating. This change aims to address the issue of hospitals receiving a
high Star Rating despite performance in the lowest quartile of the
Safety of Care measure group.
(3) The guiding principles of the Overall Hospital Quality Star
Rating are as follows. In developing and maintaining the Overall
Hospital Quality Star Ratings, we strive to:
(i) Use scientifically valid methods that are inclusive of
hospitals and measure information and able to accommodate underlying
measure changes;
(ii) Align with Care Compare on Medicare.gov and CMS programs;
(iii) Provide transparency of the methods for calculating the
Overall Hospital Quality Star Rating; and
(iv) Be responsive to stakeholder input.
* * * * *
(b) * * *
(1) * * * Measures are selected from those publicly reported on
Care Compare on Medicare.gov through certain CMS hospital inpatient and
outpatient quality programs:
* * * * *
(d) * * *
(9) Emphasize Safety of Care.
(i) Apply a 4-star cap for hospitals in the lowest quartile of the
Safety of Care measure group performance in Calendar Year 2026. Any
hospital that is assigned 5 stars in step eight but has a lowest
quartile Safety of Care score (based on at least three Safety of Care
measures) would be reassigned to 4 stars.
(ii) Apply a blanket 1-Star reduction for hospitals in the lowest
quartile of Safety of Care measure group performance beginning in
Calendar Year 2027 and later years. Any hospital assigned a 2, 3, 4, or
5-star rating in step eight, but with a lowest quartile Safety of Care
score (based on at least three Safety of Care measures) would be
reduced to 1, 2, 3, or 4 stars, respectively.
(e) Preview period prior to publication. CMS provides hospitals the
opportunity to preview their Overall Hospital Quality Star Rating prior
to publication. Hospitals have at least 30 days to preview their
results, and if necessary, can reach out to CMS with questions.
(f) Suppression of Overall Hospital Quality Star Rating--
(1) Subsection (d) hospitals. CMS may consider suppressing Overall
Hospital Quality Star Rating for subsection (d) hospitals only under
extenuating circumstances that affect numerous hospitals (as in, not an
individualized or localized issue) as determined by CMS, or when CMS is
at fault, including but not limited to when:
(i) There is an Overall Hospital Quality Star Rating calculation
error by CMS;
(ii) There is a systemic error at the CMS quality program level
that substantively affects the Overall Hospital Quality Star Rating
calculation; or;
(iii) If a Public Health Emergency substantially affects the
underlying measure data.
(2) CAHs.
(i) CAHs may request to withhold their Overall Hospital Quality
Star Rating from publication on Care Compare on Medicare.gov so long as
the request for withholding is made, at the latest, during the Overall
Hospital Quality Star Rating preview period.
(ii) CAHs may request to have their Overall Hospital Quality Star
Rating withheld from publication on Care Compare on Medicare.gov, as
well as their data from the public input file, so long as the request
is made during the CMS quality program-level 30-day confidential
preview period for the Care Compare refresh data used to calculate the
Overall Hospital Quality Star Ratings.
PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR
END-STAGE RENAL DISEASE SERVICES; PROSPECTIVELY DETERMINED PAYMENT
RATES FOR SKILLED NURSING FACILITIES; PAYMENT FOR ACUTE KIDNEY
INJURY DIALYSIS
0
8. The authority citation for part 413 continues to read as follows:
Authority: 42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a),
(i), and (n), 1395m, 1395x(v), 1395x(kkk), 1395hh, 1395rr, 1395tt,
and 1395ww.
0
9. Section 413.20 is amended by revising paragraph (d)(3) to read as
follows:
Sec. 413.20 Financial data and reports.
* * * * *
(d) * * *
(3)(i) The provider must furnish the contractor--
(A) Upon request, copies of patient service charge schedules and
changes thereto as they are put into effect; and
(B) Its median payer-specific negotiated charge by MS-DRG for
payers that are Medicare Advantage (MA) organizations, as applicable,
and changes thereto as they are put into effect.
(ii) The contractor evaluates the charge schedules as specified in
paragraph (d)(3)(i) of this section to determine the extent to which
they may be used for determining program payment.
* * * * *
0
10. Section 413.75 is amended in paragraph (b)--
0
a. By revising the definition of ``Approved geriatric program''; and
0
b. In the definition of ``Approved medical residency program'' by
revising paragraphs (1), (2), and (3), and adding paragraph (5).
The revisions and addition read as follows:
Sec. 413.75 Direct GME payments: General requirements.
* * * * *
(b) * * *
* * * * *
Approved geriatric program means a fellowship program of one or
more years in length that is approved by one of the national
organizations listed in Sec. 415.152 of this chapter under that
respective organization's criteria for geriatric fellowship programs,
provided that the national organization does not use accreditation
criteria that promote or emphasize diversity, equity, inclusion, or
awareness based on race, color, sex, sexual orientation or identity,
national origin, or any other characteristic which serves as a proxy to
achieve the same ends.
Approved medical residency program means a program that meets one
of the following criteria:
(1) Is approved by one of the national organizations listed in
Sec. 415.152 of this chapter, provided that the national organization
does not use accreditation criteria that promote or emphasize
diversity, equity, inclusion, or
[[Page 33861]]
awareness based on race, color, sex, sexual orientation or identity,
national origin, or any other characteristic which serves as a proxy to
achieve the same ends.
(2) May count towards certification of the participant in a
specialty or subspecialty listed in the current edition of either of
the following publications:
(i) The Directory of Graduate Medical Education Programs published
by the American Medical Association, and available from American
Medical Association, Department of Directories and Publications, 515
North State Street, Chicago, Illinois 60610; or
(ii) The Annual Report and Reference Handbook published by the
American Board of Medical Specialties, and available from American
Board of Medical Specialties, One Rotary Center, Suite 805, Evanston,
Illinois 60201.
Provided that listing in either of those publications, or in
successor information sources, does not require the program to promote
or emphasize diversity, equity, inclusion, or awareness based on race,
color, sex, sexual orientation or identity, national origin, or any
other characteristic which serves as a proxy to achieve the same ends.
(3) Is approved by the Accreditation Council for Graduate Medical
Education (ACGME), or other organization designated by the Secretary,
as a fellowship program in geriatric medicine, or other organization
designated by the Secretary, provided that the Council or other
organization does not use accreditation criteria that promote or
emphasize diversity, equity, inclusion, or awareness based on race,
color, sex, sexual orientation or identity, national origin, or any
other characteristic which serves as a proxy to achieve the same ends.
* * * * *
(5) Is a program that would be accredited except for the
accrediting agency's reliance upon an accreditation standard that
requires an entity to promote or emphasize diversity, equity,
inclusion, or awareness based on race, color, sex, sexual orientation
or identity, national origin, or any other characteristic which serves
as a proxy to achieve the same ends.
* * * * *
PART 415--SERVICES FURNISHED BY PHYSICIANS IN PROVIDERS,
SUPERVISING PHYSICIANS IN TEACHING SETTINGS, AND RESIDENTS IN
CERTAIN SETTINGS
0
11. The authority citation for part 415 continues to read as follows:
Authority: 42 U.S.C. 1302 and 1395h(h).
0
12. In Sec. 415.152 amend the definition of ``Approved graduate
medical education (GME) program'' by revising paragraph (1) to read as
follows:
Sec. 415.152 Definitions.
* * * * *
Approved graduate medical education (GME) program * * *
(1) A residency program approved by the Accreditation Council for
Graduate Medical Education, by the American Osteopathic Association, by
the Commission on Dental Accreditation of the American Dental
Association, or by the Council on Podiatric Medical Education of the
American Podiatric Medical Association, or other organization
determined by the Secretary, provided that the applicable organization
does not use accreditation criteria that promote or emphasize
diversity, equity, inclusion, or awareness based on race, color, sex,
sexual orientation or identity, national origin, or any other
characteristic which serves as a proxy to achieve the same ends.
* * * * *
PART 416--AMBULATORY SURGICAL SERVICES
0
13. The authority citation for part 416 is revised to read as follows:
Authority: 42 U.S.C. 273, 1302, 1320b-8, and 1395hh.
0
14. Section 416.164 is amended by--
0
a. Revising paragraphs (a)(5), (b)(5) and (6);
0
c. Adding paragraph (b)(7).
The revisions and addition read as follows:
Sec. 416.164 Scope of ASC services.
(a) * * *
(5) Medical and surgical supplies not on pass-through status under
subpart G of part 419 of this subchapter and not covered ancillary skin
substitute supplies under paragraph (b) of this section;
* * * * *
(b) * * *
(5) Certain radiology services and certain diagnostic tests for
which separate payment is allowed under the OPPS;
(6) Non-opioid pain management drugs, biologicals, and medical
devices as determined by CMS under Sec. 416.174; and
(7) Groups of skin substitute supply products.
* * * * *
0
15. Section 416.166 is revised to read as follows:
Sec. 416.166 Covered surgical procedures.
(a) Covered surgical procedures. (1) Effective for services
furnished on or after January 1, 2008, through December 31, 2025,
covered surgical procedures are those procedures that meet the general
standards described in paragraph (b)(1) of this section (whether
commonly furnished in an ASC or a physician's office) and are not
excluded under paragraph (c) of this section; and
(2) Effective for services furnished on or after January 1, 2026,
covered surgical procedures are those procedures that meet the
requirements described in paragraph (b)(2) of this section (whether
commonly furnished in an ASC or a physician's office).
(b) Requirements for covered surgical procedures. (1) General
Standards. Effective for services furnished on or after January 1, 2008
through December 21, 2025, subject to the exclusions in paragraph (c)
of this section, covered surgical procedures are surgical procedures
specified by the Secretary and published in the Federal Register and/or
via the internet on the CMS website that are separately paid under the
OPPS, that would not be expected to pose a significant safety risk to a
Medicare beneficiary when performed in an ASC, and for which standard
medical practice dictates that the beneficiary would not typically be
expected to required active medical monitoring and care at midnight
following the procedure.
(2) Effective for services furnished on or after January 1, 2026,
covered surgical procedures are surgical procedures specified by the
Secretary that are published in the Federal Register and/or via the
internet on the CMS website and that:
(i) Are separately paid under the OPPS; and
(ii) Are not:
(A) Currently designated as requiring inpatient care under Sec.
419.22(n) of this subchapter;
(B) Only able to be reported using a CPT unlisted surgical
procedure code; or
(C) Otherwise excluded under Sec. 411.15 of this chapter.
(c) General exclusions effective January 1, 2008, through December
31, 2025. Notwithstanding paragraph (b)(1) of this section, covered
surgical procedures do not include those surgical procedures that:
(1) Generally result in extensive blood loss;
(2) Require major or prolonged invasion of body cavities;
(3) Directly involve major blood vessels;
[[Page 33862]]
(4) Are generally emergent or life-threatening in nature;
(5) Commonly require systemic thrombolytic therapy;
(6) Are designated as requiring inpatient care under Sec.
419.22(n) of this subchapter;
(7) Can only be reported using a CPT unlisted surgical procedure
code; or
(8) Are otherwise excluded under Sec. 411.15 of this chapter.
(d) Physician considerations beginning January 1, 2026. Physicians
consider the following safety factors as to a specific beneficiary when
determining whether to perform a covered surgical procedure. The
covered procedure:
(1) Is not expected to pose a significant safety risk when
performed in an ASC;
(2) Is one of which standard medical practice dictates the
beneficiary would not typically be expected to required active medical
monitoring and care at midnight following the procedure;
(3) Generally results in extensive blood loss;
(4) Requires major or prolonged invasion of body cavities;
(5) Directly involves major blood vessels;
(6) Is generally emergent or life-threatening in nature; and
(7) commonly requires systemic thrombolytic therapy.
(e) Additions to the list of ASC covered surgical procedures
beginning January 1, 2026. On or after January 1, 2026, CMS adds
surgical procedures to the list of ASC covered procedures as follows:
(1) CMS identifies a surgical procedure that meets the requirements
at paragraph (b)(2) of this section.
(2) CMS is notified of a surgical procedure that could meet the
requirements at paragraph (b)(2) of this section and CMS confirms that
such surgical procedure meets those requirements.
0
16. Section 416.171 is amended by revising paragraphs (a)(2)(iii)
through (viii) to read as follows:
Sec. 416.171 Determination of payment rates for ASC services.
(a) * * *
(2) * * *
(iii) For CY 2019 through CY 2026, the update is the hospital
inpatient market basket percentage increase applicable under section
1886(b)(3)(B)(iii) of the Act.
(iv) For CY 2027 and subsequent years, the update is the Consumer
Price Index for All Urban Consumers (U.S. city average) as estimated by
the Secretary for the 12-month period ending with the midpoint of the
year involved.
(v) For CY 2014 through CY 2018, the Consumer Price Index for All
Urban Consumers update determined under paragraph (a)(2)(ii) of this
section is reduced by 2.0 percentage points for an ASC that fails to
meet the standards for reporting of ASC quality measures as established
by the Secretary for the corresponding calendar year.
(vi) For CY 2019 through CY 2026, the hospital inpatient market
basket percentage increase determined under paragraph (a)(2)(iii) of
this section is reduced by 2.0 percentage points for an ASC that fails
to meet the standards for reporting of ASC quality measures as
established by the Secretary for the corresponding calendar year.
(vii) For CY 2027 and subsequent years, the Consumer Price Index
for All Urban Consumers update determined under paragraph (a)(2)(iv) of
this section is reduced by 2.0 percentage points for an ASC that fails
to meet the standards for reporting of ASC quality measures as
established by the Secretary for the corresponding calendar year.
(viii)(A) For CY 2011 through CY 2018, the Consumer Price Index for
All Urban Consumers determined under paragraph (a)(2)(ii) of this
section, after application of any reduction under paragraph (a)(2)(iv)
of this section, is reduced by the productivity adjustment described in
section 1886(b)(3)(B)(xi)(II) of the Act.
(B) For CY 2019 through CY 2026, the hospital inpatient market
basket percentage increase determined under paragraph (a)(2)(iii) of
this section, after application of any reduction under paragraph
(a)(2)(v) of this section, is reduced by the productivity adjustment
described in section 1886(b)(3)(B)(xi)(II) of the Act.
(C) For CY 2027 and subsequent years, the Consumer Price Index for
All Urban Consumers determined under paragraph (a)(2)(iv) of this
section, after application of any reduction under paragraph (a)(2)(vii)
of this section, is reduced by the productivity adjustment described in
section 1886(b)(3)(B)(xi)(II) of the Act.
* * * * *
0
17. Section 416.174 is amended by revising paragraph (c)(1) to read as
follows:
Sec. 416.174 Payment for non-opioid pain management drugs,
biologicals, and medical devices.
* * * * *
(c) * * *
(1) For a qualifying medical device as defined in paragraph (b) of
this section, the amount of payment is the amount of the hospital's
charges for the device, adjusted to cost, that exceeds the portion of
the otherwise applicable Medicare OPD fee schedule amount, subject to
paragraph (c)(3) of this section.
* * * * *
0
18. Section 416.310 is amended by revising paragraph (d) to read as
follows:
Sec. 416.310 Data collection and submission requirements under the
ASCQR Program.
* * * * *
(d) Extraordinary circumstance exception (ECE).
(1) General rule. CMS may grant an ECE with respect to the
reporting requirements under this section in the event of extraordinary
circumstances beyond the control of the ASC. For purposes of this
paragraph (d), an extraordinary circumstance is an event beyond the
control of an ASC (for example, a natural or man-made disaster such as
a hurricane, tornado, earthquake, terrorist attack, or bombing) that
affected the ability of the ASC to comply with one or more applicable
reporting requirements with respect to a calendar year.
(2) Process for requesting an ECE.
(i) An ASC may request an ECE within 30 calendar days of the date
that the extraordinary circumstance occurred by submitting the
information specified by CMS at QualityNet or a successor website.
(ii) CMS notifies the ASC of its decision on the request, in
writing, via email. In the event that CMS grants an ECE to the ASC, the
written decision specifies whether the ASC is exempted from one or more
reporting requirements or whether CMS has granted the ASC an extension
of time to comply with one or more reporting requirements.
(3) Authority to Grant an ECE. CMS may grant an ECE to one or more
ASCs that have not requested an ECE if CMS determines that--
(i) A systemic problem with a CMS data collection system directly
impacted the ability of the ASC to comply with a quality data reporting
requirement; or
(ii) An extraordinary circumstance has affected an entire region or
locale. Any ECE granted under this paragraph (d)(3) specifies whether
the affected ASCs are exempted from one or more reporting requirements
or whether CMS has granted the ASCs an extension of time to comply with
one or more reporting requirements.
* * * * *
[[Page 33863]]
PART 419--PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT
DEPARTMENT SERVICES
0
19. The authority citation for part 419 continues to read as follows:
Authority: 42 U.S.C. 1302, 1395l(t), and 1395hh.
0
20. Section 419.2 is amended by revising paragraph (b)(16) to read as
follows:
Sec. 419.2 Basis of payment.
* * * * *
(b) * * *
(16) Drugs and biologicals that function as supplies when used in a
surgical procedure including, but not limited to, products, excluding
skin substitutes, that aid wound healing.
* * * * *
0
21. Section 419.22 is amended by revising paragraph (n) to read as
follows:
Sec. 419.22 Hospital services excluded from payment under the
hospital outpatient prospective payment system.
* * * * *
(n) Services and procedures that the Secretary designates as
requiring inpatient care. Effective beginning on January 1, 2026, the
Secretary shall eliminate the list of services and procedures
designated as requiring inpatient care through a 3-year transition,
with the list eliminated in its entirety by January 1, 2029.
* * * * *
0
22. Section 419.23 is removed.
Sec. 419.23 [Removed].
0
23. Section 419.32 is amended by revising paragraph (b)(1)(iv)(B)(12)
to read as follows:
Sec. 419.32 Calculation of prospective payment rates for hospital
outpatient services.
* * * * *
(b) * * *
(1) * * *
(iv) * * *
(B) * * *
(12) Beginning in calendar year 2026, a multifactor productivity
adjustment (as determined by CMS), and 2.0-percentage point reduction,
except that the 2.0-percentage point reduction shall not apply to
hospital outpatient items and services furnished by a hospital with a
CMS certification number (CCN) effective date of January 2, 2018, or
later. This reduction and associated exception to the reduction will be
in effect until the estimated payment reduction reaches $7.769 billion,
as further described in each calendar year's rule.
* * * * *
0
24. Section 419.46 is amended by revising paragraph (e) to read as
follows:
Sec. 419.46 Requirements under the Hospital Outpatient Quality
Reporting (OQR) Program.
* * * * *
(e) Extraordinary circumstance exception (ECE).
(1) General rule. CMS may grant an ECE with respect to the
reporting requirements under this section in the event of extraordinary
circumstances beyond the control of the hospital. For purposes of this
paragraph (e), an extraordinary circumstance is an event beyond the
control of a hospital (for example, a natural or man-made disaster such
as a hurricane, tornado, earthquake, terrorist attack, or bombing) that
affected the ability of the hospital to comply with one or more
applicable reporting requirements with respect to a calendar year.
(2) Process for requesting an ECE.
(i) A hospital may request an ECE within 30 calendar days of the
date that the extraordinary circumstance occurred by submitting the
information specified by CMS at QualityNet or a successor website.
(ii) CMS notifies the hospital of its decision on the request, in
writing, via email. In the event that CMS grants an ECE to the
hospital, the written decision specifies whether the hospital is
exempted from one or more reporting requirements or whether CMS has
granted the hospital an extension of time to comply with one or more
reporting requirements.
(3) Authority to Grant an ECE. CMS may grant an ECE to one or more
hospitals that have not requested an ECE if CMS determines that--
(i) A systemic problem with a CMS data collection system directly
impacted the ability of the hospital to comply with a quality data
reporting requirement; or
(ii) An extraordinary circumstance has affected an entire region or
locale. Any ECE granted under this paragraph (e)(3) specifies whether
the affected hospitals are exempted from one or more reporting
requirements or whether CMS has granted the hospitals an extension of
time to comply with one or more reporting requirements.
* * * * *
0
25. Section 419.49 is added to read as follows:
Sec. 419.49 Additional payment for technetium-99m (Tc-99m) derived
from domestically produced molybdenum-99 (Mo-99).
(a) General rule. CMS provides for an additional payment (as
specified in this section Sec. 419.49) beyond the standard payment to
a hospital for a dose of Tc-99m derived from Mo-99, if at least 50
percent of the Mo-99 in the Tc-99m generator that produced the dose was
both irradiated and processed in the United States.
(1) Domestically produced Mo-99 refers to Mo-99 that was both
irradiated and processed in the United States.
(2) Irradiated refers to the process of bombarding a uranium or
molybdenum target with radiation in order to produce Mo-99. Irradiation
is typically performed with a nuclear reactor or particle accelerator.
(3) Processed refers to the purification of Mo-99 from irradiated
material.
(b) Exclusions. A dose of Tc-99m does not qualify for the add-on
payment if more than 50 percent of the Mo-99 in the Tc-99m generator
was irradiated or processed outside the United States, even if the Mo-
99 has been loaded into a Tc-99m generator in the United States or if
the Tc-99m has been eluted at a radiopharmacy in the United States.
(1) Eluted refers to the process by which Tc-99m is chemically
separated from Mo-99 within the generator and collected in an elution
vial.
(2) [Reserved].
0
26. Section 419.64 is amended by removing paragraph (a)(4)(iv).
Sec. 419.64 Transitional pass-through payments: Drugs and
biologicals. [Amended]
0
27. Section 419.95 is amended by revising paragraph (g) and adding
paragraph (h) to read as follows:
Sec. 419.95 Requirements under the Rural Emergency Hospital Quality
Reporting (REHQR) Program.
* * * * *
(g) Extraordinary circumstance exception (ECE).
(1) General rule. CMS may grant an ECE with respect to the
reporting requirements under this section in the event of extraordinary
circumstances beyond the control of the REH. For purposes of this
paragraph (g), an extraordinary circumstance is an event beyond the
control of an REH (for example, a natural or man-made disaster such as
a hurricane, tornado, earthquake, terrorist attack, or bombing) that
affected the ability of the REH to comply with one or more applicable
reporting requirements with respect to a calendar year.
(2) Process for requesting an ECE.
(i) An REH may request an ECE within 30 calendar days of the date
that the extraordinary circumstance occurred by submitting the
information specified by CMS at QualityNet or a successor website.
[[Page 33864]]
(ii) CMS notifies the REH of its decision on the request, in
writing, via email. In the event that CMS grants an ECE to the REH, the
written decision specifies whether the REH is exempted from one or more
reporting requirements or whether CMS has granted the REH an extension
of time to comply with one or more reporting requirements.
(3) Authority to Grant an ECE. CMS may grant an ECE to one or more
REHs that have not requested an ECE if CMS determines that--
(i) A systemic problem with a CMS data collection system directly
impacted the ability of the REH to comply with a quality data reporting
requirement; or
(ii) An extraordinary circumstance has affected an entire region or
locale. Any ECE granted under this paragraph (g)(3) specifies whether
the affected REHs are exempted from one or more reporting requirements
or whether CMS has granted the REHs an extension of time to comply with
one or more reporting requirements.
(h) Requirements for submission of electronic clinical quality
measures (eCQMs) under the REHQR Program.
When reporting eCQMs under the REHQR Program, REHs must adhere to
the following requirements:
(1) REHs must utilize technology certified to the Office of the
National Coordinator for Health Information Technology's (ONC's) health
information technology (IT) certification criteria, as adopted and
updated in 45 CFR 170.315, for reporting eCQMs under the REHQR Program.
(2) REHs must use health IT certified to all eCQMs that are
available to report under the REHQR Program.
(3) REHs must use the most recent version of the eCQM electronic
measure specifications for the applicable reporting period available on
the Electronic Clinical Quality Improvement Resource Center website at
https://ecqi.healthit.gov/, or another website as designated by CMS.
(4) The requirements set forth in paragraphs (h)(1) through (3) of
this section apply only where an REH opts to report an eCQM.
For the reasons set forth in the preamble, the Department of Health
and Human Services proposes to amend 45 CFR part 180 as set forth
below:
PART 180--HOSPITAL PRICE TRANSPARENCY
0
28. The authority citation for part 180 continues to read as follows:
Authority: 42 U.S.C. 300gg-18, 42 U.S.C. 1302.
0
29. Section 180.20 is amended by adding definitions for ``Median
allowed amount'', ``Ninetieth (90th) percentile allowed amount'', and
``Tenth (10th) percentile allowed amount'' in alphabetical order to
read as follows.
Sec. 180.20 Definitions.
* * * * *
Median allowed amount means the median of the total allowed amounts
the hospital has historically received from a third party payer for an
item or service for a time period no longer than the 12 months prior to
posting the machine-readable file. Should the calculated median fall
between two observed allowed amounts, the median allowed amount is the
next highest observed value.
Ninetieth (90th) percentile allowed amount means the 90th
percentile of the total allowed amounts the hospital has historically
received from a third party payer for an item or service for a time
period no longer than the 12 months prior to posting the machine-
readable file. Should the calculated percentile fall between two
observed allowed amounts, the 90th percentile allowed amount is the
next highest observed value.
Tenth (10th) percentile allowed amount means the 10th percentile of
the total allowed amounts the hospital has historically received from a
third party payer for an item or service for a time period no longer
than the 12 months prior to posting the machine-readable file. Should
the calculated percentile fall between two observed allowed amounts,
the 10th percentile allowed amount is the next highest observed value.
* * * * *
0
30. Section 180.50 is amended by revising paragraphs (a)(3),
(b)(2)(i)(A), and (b)(2)(ii)(C) to read as follows:
Sec. 180.50 Requirements for making public hospital standard charges
for all items and services.
(a) * * *
(3) Each hospital must:
(i) Prior to January 1, 2026, make a good faith effort to ensure
that the standard charge information encoded in the machine-readable
file is true, accurate, and complete as of the date indicated in the
machine-readable file.
(ii) Prior to January 1, 2026, affirm in its machine-readable file
that, to the best of its knowledge and belief, the hospital has
included all applicable standard charge information in accordance with
the requirements of this section, and that the information encoded is
true, accurate, and complete as of the date indicated in the machine-
readable file.
(iii) Beginning January 1, 2026, attest in its machine-readable
file the following: This hospital has included all applicable standard
charge information in accordance with the requirements of 45 CFR
180.50, and the information encoded is true, accurate, and complete as
of the date in the file. This hospital has included all payer-specific
negotiated charges in dollars that can be expressed as a dollar amount.
For payer-specific negotiated charges that cannot be expressed as a
dollar amount in the machine-readable file or not knowable in advance,
the hospital attests that the payer-specific negotiated charge is based
on a contractual algorithm, percentage or formula that precludes the
provision of a dollar amount and has provided all necessary information
available to the hospital for the public to be able to derive the
dollar amount, including, but not limited to, the specific fee schedule
or components referenced in such percentage, algorithm or formula.
(iv) Beginning January 1, 2026, encode the name of the hospital
chief executive officer, president or senior official designated to
oversee the encoding of true, accurate, and complete data as directed
in in paragraph (a)(3)(iii) of this section.
(b) * * *
(2) * * *
(i) * * *
(A) Hospital name, license number, location name(s) and address(es)
under the single hospital license to which the list of standard charges
applies, and beginning January 1, 2026, Type 2 (organizational)
National Provider Identifier(s) (NPI). Location name(s) and address(es)
must include, at minimum, all inpatient facilities and stand-alone
emergency departments; and
* * * * *
(ii) * * *
(C) Whether the standard charge indicated should be interpreted by
the user as a dollar amount, or if the standard charge is based on a
percentage or algorithm. If the standard charge is based on a
percentage or algorithm, the machine-readable file (MRF) must also
describe the percentage or algorithm that determines the dollar amount
for the item or service, and
(1) Beginning January 1, 2025 through December 31, 2025, calculate
and encode an estimated allowed amount in dollars for that item or
service; and
(2) Beginning January 1, 2026, calculate and encode the tenth
(10th) percentile allowed amount, the median allowed amount, and the
ninetieth (90th) percentile allowed amount in dollars for that item or
service. Hospitals must also calculate and encode the total number of
allowed
[[Page 33865]]
amount remittances that were used to calculate the 10th percentile
allowed amount, median allowed amount, and 90th percentile allowed
amount.
* * * * *
0
31. Section 180.90 is amended by--
0
a. Adding new paragraph (c)(4);
0
b. Revising paragraph (d)(1);
0
c. Redesignating paragraphs (d)(2) and (3) as paragraphs (d)(3) and
(4), respectively; and
0
d. Adding new paragraph (d)(2).
The additions and revision read as follows:
Sec. 180.90 Civil monetary penalties.
* * * * *
(c) * * *
(4) Except as provided in this paragraph, the amount of a civil
monetary penalty is reduced by 35 percent if the hospital submits a
written notice to CMS requesting to waive its right to a hearing under
Sec. 180.100 within 30-calendar days of the date of the notice of
imposition of the civil monetary penalty. A hospital that receives a 35
percent reduction in a civil monetary penalty under this paragraph is
not eligible to receive a 35 percent reduction for any civil monetary
penalties imposed pursuant to continuing violations according to Sec.
180.90(f) and also waives its right to appeal under Sec. 180.100 any
civil monetary penalties imposed for such continuing violations. A
hospital is not eligible to request that CMS reduce the amount of a
civil monetary penalty imposed by CMS upon the hospital if--
(i) The hospital does not request to waive its right to a hearing
in accordance with this paragraph; or
(ii) CMS imposed the CMP because the hospital failed to make public
an MRF as required at Sec. 180.40(a) or failed to make public a
consumer-friendly list of standard charges as required at Sec.
180.40(b).
(d) * * *
(1) A hospital that does not meet the criteria to receive a
reduction to the civil monetary penalty that had been imposed upon it
as set forth in paragraph (c)(4) of this section must pay the civil
monetary penalty in full within 60 calendar days after the date of the
notice of imposition of a civil monetary penalty from CMS under
paragraph (b) of this section.
(2) A hospital that meets the criteria to receive a reduction to
the civil monetary penalty that had been imposed upon it as set forth
in paragraph (c)(4) of this section must pay the civil monetary
penalty, as reduced in accordance with paragraph (c)(4) of this
section, within 60 calendar days after the date of the notice of
imposition of a civil monetary penalty from CMS under paragraph (b) of
this section.
* * * * *
Robert F. Kennedy, Jr.,
Secretary, Department of Health and Human Services.
[FR Doc. 2025-13360 Filed 7-15-25; 4:15 pm]
BILLING CODE 4120-01-P