Highlights of the Medicare OPPS Final Rule 2017 Julie Hall, Director - PowerPoint Presentation

Highlights of the Medicare OPPS Final Rule 2017 Julie Hall, DirectorConsulting Division

I. Summary and Background of the 2017 Final Rule 2

Executive Summary OPPS payment rate increase factor of 1.65% (up from 1.55% in the proposed rule) Continuation of 2% payment reduction for hospitals failing outpatient quality reporting requirements Continuation of 7.1% Rural Hospital adjustment and Cancer Hospital adjustments to result in a PCR equal to 0.91 3

Executive Summary Expansion of comprehensive APCs (C-APCs) with the creation of 25 additional C-APCs, bringing the total to 62 for 2017. Minor changes to Chronic Care Management (CCM) furnished to hospital outpatients Revision of device intensive procedure policy to calculate offsets at the HCPCS level rather than the APC level 4

Executive Summary Discontinuation of L1 modifier and “unrelated” lab test exclusion from packaging, plus expansion of packaging exclusion to exclude advanced diagnostic lab tests (ADLTs) from packaging, as well as molecular pathology tests Revision of conditional packaging logic to package items at the claim level rather than date of service level 5

Executive Summary Payment modifier “FX” to reduce payment rate of X-rays taken using film by 20% Payment for Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus Departments of a Provider under MPFS via the institutional claim form Updates to the Hospital Outpatient Quality Reporting (OQR) program 6

Executive Summary Summary of Costs and BenefitsEstimated 1.7% overall increase in OPPS payments to providers (up from 1.6% in the PR), an increase of approximately $773 million compared to CY 2016 payments Update of wage indexes based on IPPS final rule results in no change for urban hospitals and a 0.3% increase for rural hospitals under the OPPS Implementation of section 603 of the Bipartisan Budget Act of 2015 under this Interim Rule is estimated to be a net Medicare Part B payment reduction of $50 million, significantly less than the $330 million estimated in the proposed rule, due to changes in technical assumptions 7

B. Legislative and Regulatory Authority for the Hospital OPPS What is included under the OPPS? Most hospital outpatient servicesHospital outpatient services are paid based on the APC group that the service is assigned to APCs are assigned unadjusted national payment rates 8

B. Legislative and Regulatory Authority for the Hospital OPPS What is included under the OPPS? APC groups are comprised of services that are comparable clinically and in terms of resource use Services grouped together must pass the “2 times rule” (with certain exceptions) Highest cost item in an APC group cannot exceed 2 times the lowest cost item in the group New technology items and services are paid either as transitional pass-through payments or via new technology APCs 9

C. Excluded OPPS Services and Hospitals What is excluded under the OPPS? Ambulance services Physical and occupational therapy and speech language pathology Mammography Annual wellness visits 10

C. Excluded OPPS Services and Hospitals What is excluded under the OPPS? Services paid under other fee schedules or payment systems Professional services paid under the Medicare Physician Fee Schedule (MPFS) Certain lab tests paid under the Clinical Laboratory Fee Schedule (CLFS) (e.g., molecular pathology) ESRD services paid under the ESRD prospective payment system Services and procedure which require an inpatient stay and are paid under the IPPS NEW - Services furnished by nonexcepted off-campus provider based departments 11

C. Excluded OPPS Services and Hospitals What is excluded under the OPPS? Provider types which are excluded from payment under the OPPS include: Critical Access Hospitals (CAHs ) Maryland hospitals paid under the Maryland All-Payer Model Hospitals outside of the 50 states, DC and Puerto Rico Indian Health Service (IHS) hospitals 12

D. Prior Rulemaking CMS makes many references to prior year’s rules throughout the 2017 OPPS Final Rule. Every final rule published since the inception of the OPPS can be viewed on the CMS website: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-/ HospitalOutpatientPPS/index.html 13

E. Advisory Panel on Hospital Outpatient Payment (HOP Panel or the Panel) CMS is required by law to consult with an external advisory panel of experts annually to review the clinical integrity of payment groups and their weights under the OPPS. In 2011 the panel’s scope was expanded to include the supervision of hospital outpatient therapeutic services and the name was changed to the Advisory Panel on Hospital Outpatient Payment (HOP Panel). The panel is composed of up to 15 providers (full time, not consultants, now including CAH representatives). 14

F. Public Comments Received on the CY 2016 OPPS/ASC Proposed Rule with Comment Period CMS received over 2,500 timely pieces of correspondence on the CY 2017 Proposed Rule. Summaries of these comments will be included in the CY 2017 Final Rule. 15

II. Updates Affecting OPPS Payments 16

Recalibration of APC Relative Payment Weights There are no changes to the payment calculation process for 2017. CMS uses claims data combined with cost report data to determine payment weights. For 2017, payment rates are recalibrated using the most recent full calendar year of claims data (1/1/15 through 12/31/15) and the most recently available cost report data. 17

Recalibration of APC Relative Payment Weights The charges reported on these claims are converted to estimated costs by utilizing hospital specific cost-to-charge ratios (CCRs) at the most detailed level possible (e.g., department-specific CCRs ). Payment rates are calculated using the geometric mean cost across all facilities. 18

Recalibration of APC Relative Payment Weights Certain claims are excluded from OPPS calculations :Claims with zero costs (including claims with condition codes 04, 20, 21, and 77) Claims with a token charge (less than $1.01) for a major procedure (status indicator “S” or “T ”) Claims for which charges equaled the Medicare payment Line item exclusions including NCCI edit denials and Medical Necessity denials 19

Recalibration of APC Relative Payment Weights Certain HCPCS codes for procedures which do not have significant packaged costs (e.g., CPT 71010 chest x-ray) are excluded from cost calculations in order to allow CMS to create “pseudo” single procedure claims for rate setting purposes Approximately 86 million final action claims for HOPD services were used for CY 2017 rate setting. 20

Recalibration of APC Relative Payment Weights Certain HCPCS codes for procedures which do not have significant packaged costs (e.g., CPT 71010 chest x-ray) are excluded from cost calculations in order to allow CMS to create “pseudo” single procedure claims for rate setting purposes Approximately 86 million final action claims for HOPD services were used for CY 2017 rate setting. 21

Blood and Blood Products CMS will continue to establish payment rates for blood and blood products using blood-specific cost-to-charge ratios (CCRs) for those hospitals with blood-specific cost centers and simulated blood-specific CCRs for those hospitals without a blood-specific cost center. CMS will continue to simulate blood CCRs for hospitals that do not report blood-specific cost centers. Simulating a blood-specific CCR more accurately captures the true costs of blood and blood products . The following table will show CY 16 to CY 17 rate comparisons 22

HCPCS Code Short Descriptor 2016 Payment Rate Final 2017 Payment Rate %Diff P9010 Whole blood for transfusion $221.62 $155.44 -29.86% P9011 Blood split unit $102.50 $131.93 28.71% P9012 Cryoprecipitate each unit $59.64 $53.00 -11.13% P9016 Rbc leukocytes reduced $184.34 $185.75 0.76% P9017 Plasma 1 donor frz w/in 8 hr $72.56 $73.70 1.57% P9019 Platelets, each unit $118.03 $96.45 -18.28% P9020 Platelet rich plasma unit $120.16 $131.63 9.55% P9021 Red blood cells unit $145.79 $142.30 -2.39% P9022 Washed red blood cells unit $307.46 $344.22 11.96% P9023 Frozen plasma, pooled, sd $75.90 $66.80 -11.99% P9031 Platelets leukocytes reduced $116.32 $125.68 8.05% P9032 Platelets, irradiated $159.09 $167.34 5.19%P9033Platelets leukoreduced irrad$162.08 $162.02 -0.04%P9034Platelets, pheresis$425.15 $411.92 -3.11%P9035Platelet pheres leukoreduced$488.29 $499.74 2.34%P9036Platelet pheresis irradiated$528.11 $556.35 5.35%P9037Plate pheres leukoredu irrad$641.85 $647.12 0.82%P9038Rbc irradiated$205.82 $218.85 6.33%P9039Rbc deglycerolized$380.32 $383.42 0.82%P9040Rbc leukoreduced irradiated$267.63 $266.17 -0.55%P9043Plasma protein fract,5%,50ml$28.28 $19.76 -30.13%P9044Cryoprecipitatereducedplasma$51.12 $63.26 23.75%P9048Plasmaprotein fract,5%,250ml$40.33 $92.63 129.68%P9050*Granulocytes, pheresis unit$1,518.48 $0.00 -100.00%P9051Blood, l/r, cmv-neg$200.46 $206.39 2.96%P9052Platelets, hla-m, l/r, unit$704.98 $737.83 4.66%P9053Plt, pher, l/r cmv-neg, irr$590.97 $618.63 4.68%P9054Blood, l/r, froz/degly/wash$321.28 $275.46 -14.26%P9055Plt, aph/pher, l/r, cmv-neg$462.48 $421.82 -8.79%P9056Blood, l/r, irradiated$127.41 $124.32 -2.43%P9057Rbc, frz/deg/wsh, l/r, irrad$203.35 $207.37 1.98%P9058Rbc, l/r, cmv-neg, irrad$249.23 $249.99 0.30%P9059Plasma, frz between 8-24hour$73.08 $73.97 1.22%P9060Fr frz plasma donor retested$51.42 $67.16 30.61%P9070Pathogen reduced plasma pool$73.08 $73.97 1.22%P9071Pathogen reduced plasma sing$72.56 $73.70 1.57%P9072Pathogen reduced platelets$641.85 $647.12 0.82% 23

Blood and Blood Products CMS solicited public comments regarding the adequacy and necessity of the current codes and descriptions. Some recommendations included: CMS convene a stakeholder workgroup Retain individual HCPCS and not implement modifiers to append to existing codes Create a “NOC” HCPCS code for blood products Create broader descriptions for P-codes CMS will take these under consideration for updating P-codes for blood products. 24

Blood and Blood Products Rapid Bacterial Testing for Platelets In March 2016 the FDA recommended the use of rapid bacterial testing of platelets. The HCPCS workgroup has decided to change the following code description to include the use of rapid bacterial testing. P9072 (Platelets, pheresis, pathogen reduced or rapid bacterial tested, each unit). The payment for this will be cross walked to P9037 (platelets, pheresis, leukocyte reduced, irradiated, each unit) until claims data becomes available to be able to use the blood-specific CCR methodology. 25

Brachytherapy Sources For CY 2017, brachytherapy sources priced with the same methodology. The Status Indicator will continue to be “U”. CMS will continue the current payment policies for brachytherapy sources : Both stranded and nonstranded “not otherwise specified” (NOS) codes, C2698 and C2699, will be paid at the lowest stranded or nonstranded payment rate . 26

Brachytherapy Sources CMS will continue the current payment policies for brachytherapy sources : Payment for new brachytherapy sources for which there is no claims data will continue to be based on external data and other relevant information regarding the expected costs of the sources to hospitals . If no claim data is available, new SI “E2” (Items and services for which pricing information and claims data are not available) will be assigned for existing codes. For 2017, C2644 Brachytherapy cesium-131 chloride will be assigned SI “E2 ” 27

Brachytherapy Sources HCPCS Code Short Descriptor 2016 Payment Rate Final 2017 Payment Rate %Diff A9527 Iodine i-125 sodium iodide $7.14 $29.93 319.19% C1716 Brachytx, non-str, gold-198 $45.54 $135.25 196.99% C1717 Brachytx, non-str,hdr ir-192 $294.04 $281.46 -4.28% C1719 Brachytx, ns, non-hdrir-192 $93.11 $33.81 -63.69% C2616 Brachytx, non-str,yttrium-90 $16,021.70 $16,500.76 2.99% C2634 Brachytx, non-str, ha, i-125 $85.18 $120.47 41.43% C2635 Brachytx, non-str, ha, p-103 $35.24 $25.68 -27.13% C2636 Brachy linear, non-str,p-103 $14.24 $18.64 30.90% C2638 Brachytx, stranded, i-125 $38.09 $37.96 -0.34% C2639 Brachytx, non-stranded,i-125 $36.64 $35.69 -2.59% C2640 Brachytx, stranded, p-103 $68.78 $73.19 6.41% C2641 Brachytx, non-stranded,p-103 $66.23 $65.43 -1.21%C2642Brachytx, stranded, c-131$86.59 $87.57 1.13%C2643Brachytx, non-stranded,c-131$52.18 $59.16 13.38%C2644*Brachytx cesium-131 chloride$12.41 $0.00 -100.00%C2645Brachytx planar, p-103$4.69 $4.69 0.00%C2698Brachytx, stranded, nos$38.09 $37.96 -0.34%C2699Brachytx, non-stranded, nos$14.24 $18.64 30.90%28

Comprehensive APCs (C-APCs) for CY 2017 Comprehensive APC: provision of a primary service and all adjunctive services provided to support delivery of the primary service Adjunctive Services: all other items and services reported on the hospital outpatient claim which are integral, ancillary, supportive, dependent and adjunctive to the primary service and representing components of a complete comprehensive service. 29

Comprehensive APCs (C-APCs) for CY 2017 Excluded from packaging are services that: • Are not covered services• Cannot be paid under the OPPS by statute • Are required to be separately paid by statute 30

Comprehensive APCs (C-APCs) for CY 2017 Complexity Adjustments: Certain combinations of J1 procedures or certain combinations of add-on codes reported with J1 procedures result in the assignment of a higher paying APC via a complexity adjustment. In 2016 complexity adjustments apply when: There is a minimum of 25 claims submitted with the same code pair combination (frequency threshold) Promotion to a higher paying C-APC would not result in a violation of the 2 times rule in the higher level APC (cost threshold) 31

Comprehensive APCs (C-APCs) for CY 2017 Complexity Adjustments: Complexity adjustment promotes the comprehensive service to the next higher APC within the same clinical family, unless it is already assigned to the highest ranked APC. If so, no adjustment will be made . For CY 2017, CMS is eliminating the requirement that a code combination must not create a 2 times rule violation in the higher level APC. 32

Comprehensive APCs (C-APCs) for CY 2017 C-APCs for CY 2017 CMS continues to apply the current C-APC payment policy for CY 2017 and subsequent years. For 2017, CMS is creating 25 additional C-APCs. As of January 1, 2017, there are 2,750 HCPCS codes classified as comprehensive services, compared to just 888 in 2016 . The table on the following slides includes all C-APCs for CY 2017 33

    Clinical New C-APC CY 2017 APC Title Family C-APC 5072 Level 2 Excision/ Biopsy/ Incision and Drainage EBIDX * 5073 Level 3 Excision/ Biopsy/ Incision and Drainage EBIDX * 5091 Level 1 Breast/Lymphatic Surgery and Related Procedures BREAS * 5092 Level 2 Breast/Lymphatic Surgery and Related Procedures BREAS * 5093 Level 3 Breast/Lymphatic Surgery & Related Procedures BREAS   5094 Level 4 Breast/Lymphatic Surgery & Related Procedures BREAS   5112 Level 2 Musculoskeletal Procedures ORTHO * 5113 Level 3 Musculoskeletal Procedures ORTHO * 5114 Level 4 Musculoskeletal Procedures ORTHO   5115 Level 5 Musculoskeletal Procedures ORTHO   5116 Level 6 Musculoskeletal Procedures ORTHO   5153 Level 3 Airway Endoscopy AENDO * 5154 Level 4 Airway Endoscopy AENDO * 5155 Level 5 Airway Endoscopy AENDO * 5164 Level 4 ENT ProceduresENTXX*5165Level 5 ENT ProceduresENTXX 5166Cochlear Implant ProcedureCOCHL 5191Level 1 Endovascular ProceduresVASCX*5192Level 2 Endovascular ProceduresVASCX 5193Level 3 Endovascular ProceduresVASCX 5194Level 4 Endovascular ProceduresVASCX 5200Implantation Wireless PA Pressure MonitorWPMXX*5211Level 1 Electrophysiologic ProceduresEPHYS 5212Level 2 Electrophysiologic ProceduresEPHYS 5213Level 3 Electrophysiologic ProceduresEPHYS 34

    Clinical New C-APC CY 2017 APC Title Family C-APC 5222 Level 2 Pacemaker and Similar Procedures AICDP   5223 Level 3 Pacemaker and Similar Procedures AICDP   5224 Level 4 Pacemaker and Similar Procedures AICDP   5231 Level 1 ICD and Similar Procedures AICDP   5232 Level 2 ICD and Similar Procedures AICDP   5244 Level 4 Blood Product Exchange and Related Services SCTXX * 5302 Level 2 Upper GI Procedures GIXXX * 5303 Level 3 Upper GI Procedures GIXXX * 5313 Level 3 Lower GI Procedures GIXXX * 5331 Complex GI Procedures GIXXX   5341 Abdominal/Peritoneal/Biliary and Related Procedures GIXXX * 5361 Level 1 Laparoscopy & Related Services LAPXX   5362 Level 2 Laparoscopy & Related Services LAPXX   5373 Level 3 Urology & Related Services UROXX * 5374 Level 4 Urology & Related ServicesUROXX*5375Level 5 Urology & Related ServicesUROXX 5376Level 6 Urology & Related ServicesUROXX 5377Level 7 Urology & Related ServicesUROXX 5414Level 4 Gynecologic ProceduresGYNXX*5415Level 5 Gynecologic ProceduresGYNXX 5416Level 6 Gynecologic ProceduresGYNXX 5431Level 1 Nerve ProceduresNERVE*5432Level 2 Nerve ProceduresNERVE*5462Level 2 Neurostimulator & Related ProceduresNSTIM 5463Level 3 Neurostimulator & Related ProceduresNSTIM 5464Level 4 Neurostimulator & Related ProceduresNSTIM 5471Implantation of Drug Infusion DevicePUMPS 5491Level 1 Intraocular ProceduresINEYE*5492Level 2 Intraocular ProceduresINEYE 5493Level 3 Intraocular ProceduresINEYE 5494Level 4 Intraocular ProceduresINEYE 5495Level 5 Intraocular ProceduresINEYE 5503Level 3 Extraocular, Repair, and Plastic Eye ProceduresEXEYE*5504Level 4 Extraocular, Repair, and Plastic Eye ProceduresEXEYE*5627Level 7 Radiation TherapyRADTX 5881Ancillary Outpatient Services When Patient DiesN/A 8011Comprehensive Observation ServicesN/A 35

Comprehensive APCs (C-APCs) for CY 2017 New Allogeneic Hematopoietic Stem Cell Transplantation (HSCT) C-APC Allogeneic HSCT involves IV infusion of hematopoietic stem cells derived from the bone marrow, umbilical cord blood, or peripheral blood of a donor to a recipient. Donor costs include but are not limited to: National Marrow Donor Program fees, tissue typing, donor evaluation, pre-procedure services, costs associated with collection procedure, post-op evaluation of donor, and the preparation and processing of stem cells and are reported under revenue code 819 Organ Acquisition: Other Donor 36

Comprehensive APCs (C-APCs) for CY 2017 New Allogeneic Hematopoietic Stem Cell Transplantation (HSCT) C-APC Original Proposal New C-APC 5244 for CY 2017 with payment rate of $15,267 New cost center 112.50 “Allogeneic Stem Cell Acquisition” Required to report allogeneic donor costs with newly established revenue code 815 37

Comprehensive APCs (C-APCs) for CY 2017 New Allogeneic Hematopoietic Stem Cell Transplantation (HSCT) C-APC Many comments received such as : Proposed payment rate was set too low Claims for rate setting should only include the transplant CPT (38240) and the revenue code for donor acquisition cost (0819) Request to require an edit to ensure revenue code 0815 (new for 2017) is present on claims with CPT 38240 to ensure costs are recorded accurately Proposed line 112.50 for cost report center is for solid organ acquisition costs which are paid at cost and would not flow to Worksheet C to calculate a CCR 38

Comprehensive APCs (C-APCs) for CY 2017 New Allogeneic Hematopoietic Stem Cell Transplantation (HSCT) C-APC Final for CY 2017 1. CMS is creating a new C-APC 5244 (Level 4 Blood Product Exchange and Related Services ) and assigning procedures for allogeneic HSCT to this APC. This allows all costs related to this procedure, including donor acquisition costs, to be included on the claim and packaged into the APC payment. 2 . In order to most accurately calculate payment rates (for CY 2017) for this new APC, CMS will exclude claims that do not include donor acquisition costs reported with revenue code 0819. 39

Comprehensive APCs (C-APCs) for CY 2017 New Allogeneic Hematopoietic Stem Cell Transplantation (HSCT) C-APC Final for CY 2017 3. Beginning in 2017, will require use of new revenue code 0815 (Allogeneic Stem Cell Acquisition Services). Edit will be implemented 1/1/17 to require revenue code 0815 to be on a claim with CPT 38240. 4. Updating the hospital cost report with a new standard cost center 77 -“Allogeneic Stem Cell Acquisition” on Worksheet A with the standard cost center code of “07700” to record any acquisition costs related to allogeneic stem cell transplants. 5. Final payment rate for C-APC 5244 is $27,752 for CY 2017. 40

Composite APCs Composite APCs – groups of services typically performed together during a single clinical encounter resulting in provision of a complete service; paid under one Composite APC which provides a payment rate higher than the sole service APC payment rate but lower than the aggregate sum of the sole service APC rates. CMS is continuing composite APC payment policies for low dose rate (LDR) prostate brachytherapy services, mental health services, and multiple imaging services. 41

Composite APCs At the August 22, 2016 HOP Panel meeting a recommendation was made to create a multiple pathology composite APC. Several commenters on the Proposed Rule also recommended creation of composite APCs for X-ray services, respiratory services, cardiology services and allergy testing services. However , there was no mention of creating new composite APCs in the proposed rule, so no new composite APCs will be made for CY2017. The recommendations will be considered in future rule making. 42

Composite APCs Low Dose Rate (LDR) Prostate Brachytherapy Composite APC CMS will continue to pay for LDR prostate brachytherapy services using the Composite APC payment methodology under Composite APC 8001. Composite Rule: Claims containing both CPT 55875 (Placement of needle for interstitial radioelement application) and 77778 (Interstitial radiation source application; complex) will be paid a single composite APC payment. Using a partial year of CY 2015 claims data CMS utilized 224 claims containing both of these codes to calculate a geometric mean cost of approximately $3,598 (up from the proposed $3,581). 43

Composite APCs Low Dose Rate (LDR) Prostate Brachytherapy Composite APC Final 2017 Payment:The tables below show final payment rates for the individual APCs and the LDR composite APC for 2017. HC P CS Co d e APC CY 2016 P a y me n t Final 2017 P a y me n t P e r c e n t Di ff ere n ce 55875 5374 $2243.49 $2541.49 13.28% 77778 5624 $696.21 $738.32 6.04% C o m p osi t e A P C CY 2016 P a y me ntFinal 2017PaymentPercentDifference8001 – LDR ProstateBrachytherapy Composite$3385.44$3498.773.34%44

Composite APCs Mental Health Services Composite APC CMS is continuing to set the maximum payment amount for multiple outpatient mental health services provided in a single day equal to the payment amount for a day of partial hospitalization services. CMS considers partial hospitalization to be the most resource intensive mental health service furnished on an outpatient basis, and therefore believes that individual mental health services should not be paid at a higher rate than partial hospitalization per diem payments. 45

Composite APCs Mental Health Services Composite APC Composite Rule: If the total payment amount for multiple mental health services provided to a beneficiary on a single date of service exceeds the maximum per diem rate for partial hospitalization services (APC 5863), a single payment of composite APC 8010 will be made for all mental health services. 46

Composite APCs Mental Health Services Composite APC The table below shows the 2017 mental health composite payment rate compared to the current 2016 payment rate. The 2.54% payment reduction is significantly less than the 13.36% reduction in the Proposed Rule. C o m p osi t e A P C CY 2016 P a y me n t Final 2017 P a y me n t P e r c e n t Di ff ere n ce 0034 (8010)– Mental Health Services C omposite $212.67 $207.27 -2.54% 47

Composite APCs Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and 8008) Composite Rule:A single payment will be made each time more than one imaging procedure within the same imaging “family” is billed on the same date of service. There are three OPPS imaging families which are divided into five composite APCs to allow payment for exams performed with or without contrast. If one or more exam is performed with contrast and others are performed without, the composite APC for with contrast is assigned. 48

Composite APCs Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and 8008) Family 1 – Ultrasound – Composite APC 8004 Family 2 – CT and CTA w/o contrast – Composite APC 8005 CT and CTA with contrast – Composite APC 8006 Family 3 – MRI and MRA w/o contrast – Composite APC 8007 MRI and MRA with contrast – Composite APC 8008 49

Composite APCs Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and 8008) 2017 Payment:The table below shows the final multiple imaging composite payment rates compared to the current 2016 payment rates. Composite APC CY 2016 Payment Final 2017 Payment Percent Difference 8004 – Ultrasound Composite $287.26 $288.24 0.34% 8005 – CT and CTA without Contrast Composite $284.12 $272.98 -3.92% 8006 – CT and CTA with Contrast Composite $493.91 $489.17 -0.96% 8007 – MRI and MRA without Contrast Composite $566.06 $551.52 -2.57% 8008 – MRI and MRA with Contrast Composite $862.24 $851.33 -1.27% 50

Changes to Packaged Items and Services Background and Rationale for Packaging in the OPPS The OPPS packages payments for multiple interrelated items and services into a single payment in order to incentivize providers to furnish services in the most efficient and effective manner, and to negotiate with suppliers to reduce the price of items or services. Unconditional packaging: HCPCS codes that are always integral to the performance of the primary procedure – SI “N” Conditional packaging: HCPCS codes that when provided without other services of similarity are separately payable but when provided with services of similar category are packaged together and paid under one APC. 51

Changes to Packaged Items and Services Background and Rationale for Packaging in the OPPS Types of conditional packaging include: STV-packaged codes (SI = Q1) - payment is packaged for certain ancillary services when one or more separately payable primary services with an SI of “S”, “T”, OR “V” are furnished during the same outpatient encounter T-packaged codes (SI = Q2) - payment is packaged for certain services when one or more separately paid surgical procedure assigned SI “T” is provided during an outpatient encounter 52

Changes to Packaged Items and Services Background and Rationale for Packaging in the OPPS Types of conditional packaging include: Composite APCs (SI = Q3) - if certain combinations of HCPCS codes are reported together during the same outpatient encounter, a single composite payment is made which is less than the sum of the aggregate payment rate for each individual code Laboratory Tests (SI = Q4) – most laboratory tests are packaged when reported on the same claim as any HCPCS code assigned to SI “J1”, “J2”, “S”, “T”, “V”, “Q1”, “Q2”, or “Q3” 53

Changes to Packaged Items and Services New packaging for 2017 Clinical Diagnostic Laboratory Test Packaging Policy Current Policy for CY 2016 Most clinical laboratory tests are packaged under the OPPS. They are only separately payable under the clinical laboratory fee schedule (CLFS) when: They are the only service provided to the beneficiary on a claim; They are “unrelated” laboratory tests, specifically, they are on the same claim as other hospital outpatient services but ordered by a different provider for a different diagnosis; They are molecular pathology tests; or The lab tests are considered preventive services 54

Changes to Packaged Items and Services New packaging for 2017 Clinical Diagnostic Laboratory Test Packaging Policy Current Policy for CY 2016 Laboratory tests which are the only services provided on the claim (including on TOB 14X for non-patient lab tests) are reimbursed under the CLFS Laboratory tests reported with other services on the same claim are packaged, unless reported with modifier L1 (or excepted from packaging) Use of modifier L1 attests that the lab tests provided were “unrelated” to other services on the same claim (i.e. ordered by different provider for different diagnosis) 55

Changes to Packaged Items and Services New packaging for 2017 Clinical Diagnostic Laboratory Test Packaging Policy Final Policy “ Unrelated” Laboratory Test Exception CMS is discontinuing the L1 modifier CMS believes “ unrelated” lab tests are not significantly different than most other packaged lab tests Hospitals have commented that the exception process is not useful, as they are unable to determine when a lab test has been ordered by a different provider for a different diagnosis CMS believes that most lab tests are related in some way to other services being provided Claims with laboratory services only, TOB 131 or 141, will be paid separately via the CLFS. 56

Changes to Packaged Items and Services New packaging for 2017 Molecular Pathology Test Exception Since lab packaging was introduced in 2014, CMS has excluded molecular pathology tests from packaging (CPT codes 81200-81383, 81400-81408, and 81479). These are relatively new tests which have a different pattern of clinical use than more conventional laboratory tests, which CMS believes makes them generally less tied to a primary service in the outpatient hospital setting. Commenters have expressed to CMS that this same rationale should apply to certain other CPT codes such as multianalyte assays with algorithmic analyses (MAAAs). 57

Changes to Packaged Items and Services New packaging for 2017 Molecular Pathology Test Exception CMS has finalized without modification the packaging exception to apply to all advanced diagnostic laboratory tests (ADLTs) that meet the criteria of section 1834A(d)(5)(A) of the Act. ADLTs and molecular pathology tests which are excluded from the laboratory packaging policy are assigned status indicator “ A” and can be found in Addendum B. 58

Changes to Packaged Items and Services New packaging for 2017 Conditional Packaging Status Indicators “Q1” and “Q2 ” CY 2016 Currently, some conditional packaging status indicators package based on the date of service, while others package at the claim level. 59

Changes to Packaged Items and Services New packaging for 2017 Conditional Packaging Status Indicators “Q1” and “Q2 ” Final CY 2017 CMS believes that all conditional packaging logic should package at the claim level. CMS will convert logic for status indicators “Q1” and “Q2” from date of service to claim level packaging This will increase packaging, by ensuring that items and services provided during a hospital stay that may span more than one day are appropriately packaged according to OPPS packaging policies 60

Calculation of OPPS Scaled Payment Weights CMS will use the same methodology as in CY 2016 to calculate OPPS scaled payment weights for CY 2017. CMS did not receive any comments regarding the methodology proposed. Using updated final rule claims data, CMS is updating the estimated CY 2017 unscaled relative payment weights by multiplying them by a weight scaler of 1.4208 to ensure that the final CY 2017 relative payment weights are scaled to be budget neutral. 61

Conversion Factor Update The conversion factor is used to determine payment rates under OPPS and is required to be updated annually by applying the OPD fee schedule increase factor. The OPD fee schedule increase factor for CY 2017 OPPS is 1.65%. This reflects the 2.7% estimate of the hospital IP market basket increase, less the 0.3 percentage point MFP adjustment and less the 0.75% point additional adjustment. 62

Conversion Factor Update The 2017 conversion factor is $75.001 and includes: OPD fee schedule increase factor of 1.65% for CY 2017 Wage index budget neutrality adjustment of approximately 0.9999 Cancer Center adjustment of 1.0003 Packaging of unrelated laboratory test adjustment factor of 1.0004 Adjustment of 0.02% percentage point of projected OPPS spending for the difference in the pass-through spending and outlier payments 63

Conversion Factor Update Below is the history of OPPS conversion factor updates: 2 01 0 : $ 6 7 .241 2 00 9 : $ 6 6 .059 2 00 8 : $ 6 3 .693 2 00 7 : $ 6 1 .468 2 00 6 : $ 5 9 .110 2 00 5 : $ 5 6 .983 2 00 4 : $ 5 4 .561 2 00 3 : $ 5 2 .1212002:$50.9042016:$73.7252015:$74.1762014:$72.6722013:$71.3132012:$70.0162011:$68.876Final 2017 $75.00164

Conversion Factor Update Hospitals that fail to meet the Hospital OQR Program requirements will continue to be subject to an additional 2% reduction, which would result in an increase factor of -0.35%. This results in a conversion factor of $73.411 65

Hospital Outpatient Outlier Payments CMS will continue to use the same methodology for calculating outpatient outlier payments. Outliers are provided on a service by service basis when the cost of the service: 1. exceeds 1.75 times the APC payment amount (multiplier threshold) and 2. exceeds the sum of the APC payment amount plus a fixed dollar threshold When both conditions are met, an outlier payment equaling 50% of the amount by which the service exceeds 1.75 times the APC payment amount is made. For CY 2017 CMS determined a fixed dollar threshold of $3,825 – an increase of $575 from the current 2016 threshold of $3,250. 66

Calculation of an Adjusted Medicare Payment from the National Unadjusted Medicare Payment The method for calculating adjusted Medicare payment rates will remain the same for CY 2017. Labor adjustments will apply to services assigned any of the status indicators listed below: “ J1,” “J2,” “P,” “Q1,” “Q2,” “Q3,” “Q4,”, “S,” “T,” or “V ” The labor adjusted rate is calculated by multiplying 60% of the APC reimbursement amount by the wage index and then adding this number to the remaining 40% of the APC reimbursement amount. 67

Calculation of an Adjusted Medicare Payment from the National Unadjusted Medicare Payment Example of Adjustment Calculation ABC Hospital Wage Index = 1.2043CPT 76811 – OB Ultrasound detailed single fetus Unadjusted payment CY 2017 $ 112.69 60% of unadjusted APC $ 67.61 40% of unadjusted APC $ 45.08 Wage index x 60% of unadjusted APC $ 81.42 ($67.61 x 1.2043) Adjusted APC = $45.08 + 81.42 $ 126.50 (increase of $13.81) 68

Beneficiary Copayments There are no changes to the methodology for calculating beneficiary copayments in CY 2017. Copayments may not exceed 40 percent of the APC payment rate Copayments cannot be less than 20 percent of the APC payment rate Beneficiary copayment for a procedure cannot exceed the amount of the inpatient deductible for that year Copayments are waived for certain preventive services The continued consolidation of more services under single APCs should continue to result in reductions to beneficiary copayments. 69

III. OPPS Ambulatory Payment Classification (APC) Group Policies 70

A. OPPS Treatment of New CPT and Level II HCPCS Codes CMS recognizes the following three types of codes on OPPS claims: Category I CPT codes – describe surgical procedures and medical services, maintained by the AMA, updated annually in January (plus in July for certain vaccine codes) Category III CPT codes – describe new and emerging technologies, services, and procedures, maintained by the AMA, updated semi-annually in January and July Level II HCPCS codes – describe products, supplies, temporary procedures, and services not described by CPT codes, maintained by the CMS HCPCS workgroup, updated quarterly in January, April, July, and October 71

A. OPPS Treatment of New CPT and Level II HCPCS Codes CMS implements new codes throughout the year via the quarterly OPPS update transmittals. New codes are assigned interim status indicators and payment rates and comments regarding their assignments are solicited from the public during either the Proposed Rule or the Final Rule comment periods, depending on when the codes are released. 72

A. OPPS Treatment of New CPT and Level II HCPCS Codes Treatment of New CY 2016 Level II HCPCS and CPT Codes Effective April 1, 2016 and July 1, 2016 Ten new HCPCS codes were released in the April 2016 OPPS update. Several temporary HCPCS C-codes have since been replaced with permanent J- codes, but the SI assignments remain the same as what was proposed. 73

A. OPPS Treatment of New CPT and Level II HCPCS Codes TABLE 7.—FINAL CY 2017 STATUS INDICATOR (SI) AND APC ASSIGNMENTS FOR THE NEW LEVEL II HCPCS CODES THAT WERE IMPLEMENTED ON APRIL 1, 2016 CY 2016 HCPCS Code CY 2017 HCPCS Code CY 2017 Long Descriptor Final CY 2017 SI Final CY 2017 APC C9137 J7207 Injection, factor viii, (antihemophilic factor, recombinant), PEGylated, 1 i.u. G 1844 C9138 J7209 Injection, factor viii, (antihemophilic factor, recombinant), (Nuwiq), 1 i.u. G 1846 C9461 A9515 Choline c-11, diagnostic, per study dose up to 20 millicuries G 9461 C9470 J1942 Injection, aripiprazole lauroxil, 1 mg G 9470 C9471 J7322 Hyaluronan or derivative, Hymovis, for intra-articular injection, 1 mg G 9471 C9472 J9325 Injection, talimogene laherparepvec, per 1 million plaque forming units G 9472 C9473 J2182 Injection, mepolizumab, 1 mg G 9473 C9474 J9205 Injection, irinotecan liposome, 1 mg G 9474 C9475 J9295 Injection, necitumumab, 1 mg G 9475 J7503 J7503 Tacrolimus, extended release, (Envarsus XR), oral, 0.25 mg G 184574

A. OPPS Treatment of New CPT and Level II HCPCS Codes Treatment of New CY 2016 Level II HCPCS and CPT Codes Effective April 1, 2016 and July 1, 2016 Eighteen additional codes were released in the July 2016 OPPS update. CPT code 0443T was changed from SI “T” to “N” because this is an add-on code Several temporary HCPCS C-codes have since been replaced with permanent J- codes, but the SI assignments remain the same as what was proposed. These codes can be found in Table #8 in the Final Rule. 75

A. OPPS Treatment of New CPT and Level II HCPCS Codes Process for New Level II HCPCS Codes That Became Effective October 1, 2016 and New Level II HCPCS Codes That Will Be Effective January 1, 2017 for Which We Are Soliciting Public Comments in This CY 2017 OPPS/ASC Final Rule with Comment Period CMS will assign interim payment assignments for Level II HCPCS codes which are released in October 2016 and January 2017. These codes can be found in Addendum B with comment indicator “NI”. The assignments will be finalized in the CY 2018 Final Rule. 76

A. OPPS Treatment of New CPT and Level II HCPCS Codes Treatment of New and Revised CY 2017 Category I and III CPT Codes That Will Be Effective January 1, 2017, for Which We Solicited Public Comments in the CY 2017OPPS/ASC Proposed Rule In the CY 2015 Final Rule, CMS finalized a major change to the process for assigning APCs and status indicators to new CPT codes released each January. If the AMA released the new codes timely: CMS would include them in the proposed rule 5 digit placeholder code is assigned CMS would accept comments on the new CPT codes and APC and payment rates would be in finalized in the Final Rule. 77

A. OPPS Treatment of New CPT and Level II HCPCS Codes Treatment of New and Revised CY 2017 Category I and III CPT Codes That Will Be Effective January 1, 2017, for Which We Solicited Public Comments in the CY 2017OPPS/ASC Proposed Rule Previously, interim payment rates were assigned and comments were solicited in the Final Rule. APC and payment rate assignments were not finalized until the following year’s Final Rule, after a full year’s use of the new codes. If CMS does not receive the codes for the following year in time for the proposed rule, they would implement duplicative G-codes for all deleted or significantly revised codes and not accept the new codes for the first year. 78

A. OPPS Treatment of New CPT and Level II HCPCS Codes Treatment of New and Revised CY 2017 Category I and III CPT Codes That Will Be Effective January 1, 2017, for Which We Solicited Public Comments in the CY 2017OPPS/ASC Proposed Rule CMS received the new CY 2017 CPT codes from the AMA timely. The new CY 2017 codes are included in Addendum B of this final rule with final status indicator and APC assignments. CMS has provided the complete long description of all new CPT codes with their “placeholder” codes in Addendum O to this Final Rule. 79

B. OPPS Changes--Variations within APCs CMS is required to review and revise APC groups, relative payment weights, and the wage and other adjustments at least annually. The purpose is to account for: Changes in medical practice Changes in technology New services New cost data Other relevant information and factors This is to ensure that APC groupings of HCPCS codes are reasonable based upon similarity of costs, taking into account the 2 times rule. 80

B. OPPS Changes--Variations within APCs Exceptions to the 2 Times Rule CMS is authorized to make exceptions to the 2 times rule in unusual cases, such as low-volume items and services. CMS used the following criteria to evaluate whether or not to propose exceptions to the 2 times rule: Resource homogeneity Clinical homogeneity Hospital outpatient setting utilization Frequency of service (volume) Opportunity for upcoming and code fragments 81

B. OPPS Changes--Variations within APCs Exceptions to the 2 Times Rule In the proposed rule there were 4 APCs proposed to be exceptions to the 2 times rule. However, APC 5841 Psychotherapy no longer meets the criteria for the exception and therefore has been removed. Also, based on updated CY2015 claims data 4 additional APCs were found to violate the 2 times rule. 82

B. OPPS Changes--Variations within APCs Exceptions to the 2 Times Rule Table 9 below lists 7 APCs which CMS will make exceptions to the 2 times rule for 2017. 83

C. New Technology APCs New technology services are placed in New Technology APCs until there is sufficient claims data available for assignment into a clinically appropriate APC group. For CY 2016 there are 48 levels of New Technology APCsEach level is assigned a cost band which new technology procedures can fall under (from Level 1 $0-$10 to Level 48 $90,001-$100,000) There are two parallel sets of Level 1-48 New Technology APCs, one set assigned to status indicator “S” (Significant Procedures, Not Discounted when Multiple) and the other assigned to status indicator “T” (Significant Procedure, Multiple Reduction Applies) Payment for each APC is made at the mid-point of the APC’s cost band (e.g., APC 1507 “New Technology - Level 7 $501-$600” is paid at approximately $550) 84

C. New Technology APCs CY 2017 For CY 2017, CMS proposed to add three more levels of New Technology APCs (Levels 49-51) with cost bands ranging from $100,001 to $160,000. This is to accommodate the assignment of retinal prosthesis implantation procedures to a New Technology APC. No comments were received and therefore CMS finalized without modification. 85

C. New Technology APCs CY 2017 86

C. New Technology APCs Retinal Prosthesis Implant Procedure –CPT 0100T - (Placement of a subconjunctival retinal prosthesis receiver and pulse generator, and implantation of intra-ocular retinal electrode array, with vitrectomy) Procedures involving use of the Argus® II Retinal Prosthesis System . Approved by the FDA in 2013 and granted pass-through status under HCPCS C1841 (Retinal prosthesis, includes all internal and external components ) Pass-through status expired 12/31/2015 CY 2016 CPT 0100T is assigned to APC 1599 (New Technology – Level 48 ($90,001-$100,000) CY 2017 assignment is to newly created APC 1906 (New Technology – Level 51 ($140,001-$160,000) which has a payment rate of approximately $150,000. 87

D. OPPS APC-Specific Policies 1. Cardiovascular Procedures/Services: Cardiac Event Recorder (APC 5071) CMS has finalized without modification assignment of CPT 33284 “Removal of an implantable, patient –activated cardiac event recorder” to APC 5071 (Level 1 Excision/Biopsy/Incision and Drainage). 88

D. OPPS APC-Specific Policies 1. Cardiovascular Procedures/Services: Cardiac Telemetry (APC 5733 ) CMS originally proposed to move CPT Code 93229 “Remote 30 day ecg tech sup” from APC 5722 (Level 2 Diagnostic Tests and Related Services) to APC 5734 (Level 4 Minor Procedures) with a payment rate of $95.66 . Comments received indicated that this rate is too low and due to confusion on how to appropriately charge for this service the, claims data was not accurate and the costs were higher. 89

D. OPPS APC-Specific Policies 1. Cardiovascular Procedures/Services: Cardiac Telemetry (APC 5733 ) CMS reviewed updated CY 2015 claims data and determined the average cost to be $71, even lower than the $77 stated in the proposed rule. CMS is has modifier their proposal and is moving CPT 93299 to APC 5733 ( Level 3 Minor Procedures ). CPT Description CY 16 APC CY 16 Rate CY 17 APC CY 17 Rate % Chg 93229 Remote 30 day ecg. Tech sup 5722 220.35 $5733 $54.53 -75% 90

D. OPPS APC-Specific Policies 2.Eye Related Services 0465T Suprachoroidal injection of a pharmacologic agentCommenters requested CMS to move this from the proposed APC 5693 (Level 3 Drug Administration) to APC 5694 (Level 4 Drug Administration) due to resource homogeneity of this procedure to other like procedures. Although there isn’t claim data for this service, based on clinical and resource similarities of other procedures in APC 5694 CMS believes this is appropriate. CPT Description Proposed CY 17 APC Proposed CY 17 Rate Final CY 17 APC Final CY 17 Rate 0465T Supchrdl njx rxw/o supply 5693 $179.69 5694 $279.33 91

D. OPPS APC-Specific Policies 3.Gastrointestinal Procedures and Services Esophageal Sphincter Augmentation (APC 5362) 43284 Laparoscopy, surgical esophageal sphincter augmentation procedure , placement of sphincter augmentation device (i.e., magnetic band), including cruroplasty when performed . Commenters requested that CMS create a new APC for Level 3 within the laparoscopy related service series to account for this new 2017 CPT code. 92

D. OPPS APC-Specific Policies 3.Gastrointestinal Procedures and Services Esophageal Sphincter Augmentation (APC 5362) CMS disagreed; after reviewing updated claims information for codes 0392T and C9737 (codes replaced by the new CPT) CMS states no need for an additional level for laparoscopy services. CMS is finalizing without modification assignment of CPT 43284 to APC 5362. CPT Description CY 17 APC CY 17 Rate 43284 Laps esophgl sphnctr agmntj 5362 $6,966.89 93

D. OPPS APC-Specific Policies 3.Gastrointestinal Procedures and Services Esophagogastroduodenoscopy: Transmural Drainage of Pseudocyst (APC 5303) Commenters requested to move CPT 43240 to APC 5331 (Complex GI Procedures) with a payment rate of $3,938.95 similar to other GI procedures with stent placements. 94

D. OPPS APC-Specific Policies 3.Gastrointestinal Procedures and Services Esophagogastroduodenoscopy: Transmural Drainage of Pseudocyst (APC 5303) CMS disagreed and is finalizing without modification the assignment of CPT 43240 to C-APC 5303 CPT Description CY 16 APC CY 16 SI CY 16 Rate CY 17 APC CY 17 SI CY 17 Rate % Chg 43240 Egd w/transmural drain cyst   5303 T 1980.43 5303 J1 2509.64 27% 95

D. OPPS APC-Specific Policies 3.Gastrointestinal Procedures and Services Colonoscopy Services One commenter requested that CMS create a new APC for colonoscopy services represented by the following codes : G0105 Colorectal cancer screening; colonoscopy on individual at high risk G0121 Colorectal cancer screening; colonoscopy on individual not meeting criteria for high risk 44388 Colonoscopy through stoma; diagnostic, including collection of specimen(s) by brushing or washing, when performed ( separate procedure) 45378 Colonoscopy , flexible; diagnostic, including collection of specimen(s ) by brushing or washing, when performed ( separate procedure) 96

D. OPPS APC-Specific Policies 3.Gastrointestinal Procedures and Services Colonoscopy Services CMS disagreed with the commenter stating there would be no advantage to having another APC for these four services. CMS has assigned these services to APC 5311 for CY 2017 . HCPCS Code Short Descriptor CY 2016 APC CY 2017 APC CY 2016 Payment Rate CY 2017 Payment Rate %Diff 44388 Colonoscopy thru stoma spx 5312 5311 752.76 667.40 -11% 45378 Diagnostic colonoscopy 5312 5311 752.76 667.40 -11% G0105 Colorectal scrn; hi risk ind 5312 5311 752.76 667.40 -11% G0121 Colon ca scrn not hi rsk ind 5312 5311 752.76 667.40 -11% 97

D. OPPS APC-Specific Policies 3.Gastrointestinal Procedures and Services Tube and Catheter Placement Procedures Commenters requested reassignment of APCs from the proposed rule for certain procedures because they did not think the procedures were clinically similar to the endoscopy procedures that are assigned to APC 5301 (Level 1 Upper GI Procedures). CMS also recognized the need to change the description of Vascular APCs 5181 thru 5183 Levels 1 through 3 to “Vascular Procedures and Related Services” Manual Page # 70-71 98

D. OPPS APC-Specific Policies TABLE 11.--TUBE AND CATHETER CODES REASSIGNED FROM APC 5301 CPT Code Descriptor Final CY 2017 APC Final CY 2017 SI 32552 Removal of indwelling tunneled pleural catheter with cuff 5181 Q2 32554 Thoracentesis, needle or catheter, aspiration of the pleural space; without imaging guidance 5181 T 32555 Thoracentesis, needle or catheter, aspiration of the pleural space; with imaging guidance 5181 T 32560 Instillation, via chest tube/catheter, agent for pleurodesis (eg, talc for recurrent or persistent pneumothorax) 5181 T 32561 Installation(s), via chest tube/catheter agent for fibrinolysis (eg, fibrinolytic agent for break up of multiloculated effusion); initial day 5181 T 32562 (Installation(s), via chest tube/catheter agent for fibrinolysis (eg, fibrinolytic agent for break up of multiloculated effusion); subsequent day 5181 T 32960 Pneumothorax, therapeutic, intrapleural injection of air 5181 T 36575 Repair of tunneled or non-tunneled central venous access catheter, without subcutaneous port or pump, central or peripheral insertion site 5181 T 36589 Removal of tunneled central venous catheter, without subcutaneous port or pump 5181 Q2 61070 Puncture of shunt tubing or reservoir for aspiration or injection procedure 5442 T 99

D. OPPS APC-Specific Policies 4.Musculoskeletal Procedures/Services Auditory Osseointegrated Implants/Bone-Anchored Hearing Systems (APCs 5114, 5115, and 5116)CMS recommended re-assigning 4 CPT codes for auditory osseointegrated implant procedures to new APCs. After reviewing the updated claims for CY 2015, along with commenter’s feedback, CMS has finalized with modifications their APC reassignments for Auditory Osseointegrated Procedures these can be found in Addendum B. 100

D. OPPS APC-Specific Policies 4.Musculoskeletal Procedures/Services Bunion Correction/Foot Fusion (APC 5114) One commenter stated the costs of equipment for this service is higher than the APC payment rate and the complexity of the procedure is not aligned with the proposed APC 5114. The commenter also thought there should be another APC that was not comprehensive for musculoskeletal. CMS disagreed and is finalizing without modification the reassignment of the following CPT codes. 101

D. OPPS APC-Specific Policies 4.Musculoskeletal Procedures/Services Bunion Correction/Foot Fusion (APC 5114) CPT Code Long Descriptors CY 2016 OPPS SI CY 2016 OPPS APC CY 2016 OPPS Payment Rate Final CY 2017 OPPS SI Final CY 2017 OPPS APC Final CY 2017 OPPS Payment Rate 28297 Correction, hallux valgus (bunion), with or without sesamoidectomy; lapidus-type procedure J1 5124 $7,064.07 J1 5114 $5,219.36 28740 Arthrodesis, midtarsal or tarsometatarsal, single joint J1 5124 $7,064.07 J1 5114 $5,219.36 TABLE 14.—FINAL CY 2017 STAUS INDICATOR (SI), APC ASSIGNMENTS, AND PAYMENT RATES FOR CPT CODES 28297 and 28740 102

D. OPPS APC-Specific Policies 4.Musculoskeletal Procedures/Services Intervertebral Biomechanical Devices For CY 2017 the AMA deleted CPT 22851 “Apply Spine Prosthetic Device” and replaced it with three new codes. One commenter stated that the spinal instrumentation procedures described by these codes should be paid separately as New Technology so CMS could collect cost information and determine if the codes should be paid separately. 103

D. OPPS APC-Specific Policies 4.Musculoskeletal Procedures/Services Intervertebral Biomechanical Devices CMS disagreed, as they do not feel that these are new services and stated add-on codes have been packaged since CY 2014 and will continue to be packaged. CMS is finalizing without modification to assign CPT codes 22853, 22854 and 22859 to SI= N for CY 2017. 104

TABLE 15.—CY 2017 STATUS INDICATOR (SI) ASSIGNMENTS FOR THEAPPLICATION/INSERTION OF THE INTERVERTEBRAL BIOMECHANICAL DEVICES P r o p osed CY 2017 C P T Code   F i n al CY 2017 C P T Code   Lo n g D e s cr i p to r s   P r o p osed CY 2017 OP P S S I   F i n al CY 2017 OP P S S I   22851   22851 Applic a t i on of intervertebralbiomechanical device(s) (eg, synthetic cage(s), methylmethacrylate) to vertebral defect or interspace (List separately in addition to code for primary procedure) D D 22X81 22853Insertion of interbodybiomechanical device(s) (eg, synthetic cage, mesh) with integral anterior instrumentation for device anchoring (eg, screws, flanges), when performed, to intervertebral disc space in conjunction with interbody arthrodesis, each interspace (List separately in addition to code for primary procedure) N N 22X82 22854Insertion of intervertebralbiomechanical device(s) (eg, synthetic cage, mesh) with integral anterior instrumentation for device anchoring (eg, screws, flanges), when performed, to vertebral corpectomy(ies) (vertebral body resection, partial or complete) defect, in conjunction with interbody arthrodesis, each contiguous defect (List separately in addition to code for primary procedure) N N 22X83 22859Insertion of intervertebralbiomechanical device(s) (eg, synthetic cage, mesh, methylmethacrylate) to intervertebral disc space or vertebral body defect without interbody arthrodesis, each contiguous defect (List separately in addition to code for primary procedure) N N105

D. OPPS APC-Specific Policies 4.Musculoskeletal Procedures/Services Percutaneous Vertebral Augmentation/Kyphoplasty (APC 5114) CMS received comments concerning the re-assignment of codes 22513 “percutaneous vertebral augmentation, single cavity” and 22514 “percutaneous vertebral augmentation, single cavity with biopsy,” feeling this would cause significant underpayments for these services. 106

D. OPPS APC-Specific Policies 4.Musculoskeletal Procedures/Services Percutaneous Vertebral Augmentation/Kyphoplasty (APC 5114) In August, a presenter at the HOP Panel meeting also recommended review of the musculoskeletal APCs due to a perceived reduction of 26% in reimbursement in CY 2017. However, despite the presenter’s recommendation, the HOP Panel made no recommendations related to the issue. CMS is finalizing without modification to assign CPT codes 22513 and 22514 to APC 5114. 107

D. OPPS APC-Specific Policies 4.Musculoskeletal Procedures/Services Strapping and Casting Applications (APCs 5101 and 5102) APCs 5101 and 5102 for strapping and cast application are currently assigned to status indicator “S” (Procedure or Service, not Discounted when Multiple). For CY 2017, CMS has finalized without modification reassignment to status indicator “T” (Procedure or Service, Multiple Procedure Reduction Applies) 108

D. OPPS APC-Specific Policies 5.Nervous System Procedures/Services Transcranial Magnetic Stimulation Therapy (TMS) (APCs 5721 and 5722) CMS is finalizing without modification the following SI and APC assignments . CPT Short Descriptors CY CY CY Final Final Final Code   2016 2016 2016 CY CY CY     OPPS OPPS OPPS 2017 2017 2017     SI APC RATE SI APC RATE 90867 Tcranial magn stim tx plan S 5722 $220.35 S 5722 $232.21 90868 Tcranial magn stim tx deli S 5722 $220.35 S 5722 $232.21 90869 Tcran magn stim redetemine S 5722 $220.35 S 5721 $127.05 109

D. OPPS APC-Specific Policies 5.Nervous System Procedures/Services Percutaneous Epidural Adhesiolysis (APC 5443)One commenter expressed concerned about the decline in payment for these services and recommended CMS reevaluate the APC structure. The commenter stated these procedures should be aligned with like procedures in APC 5431 (Level 1 Nerve Procedure) with a higher reimbursement of $1,557. CMS disagreed and stated the resources for these procedures are similar to others in APC 5443. CMS also reviewed updated claims information for CY 2015 which confirmed their initial proposal to keep these codes in APC 5443 for CY 2017. No changes will be made. 110

D. OPPS APC-Specific Policies 5.Nervous System Procedures/Services Percutaneous Epidural Adhesiolysis (APC 5443 ) HCPCS Code Short Descriptor APC CY 2016 SI Final CY 2017 SI CY 2016 Payment Rate Final CY 2017 Payment Rate 62263 Epidural lysis mult sessions 5443 T T 822.10 638.66 62264 Epidural lysis on single day 5443 T T 822.10 638.66 111

D. OPPS APC-Specific Policies 5.Nervous System Procedures/Services Neurostimulator (APC 5463)CMS proposed to assign CPT code 0268T “Implantation or replacement of a carotid sinus baroreflex activation device, pulse generator only (includes intraoperative interrogation, programming and repositioning when performed)” to APC 5643 - Level 3 Neurostimulator and Related Procedures. Commenters disagreed and indicated this service should be assigned APC 5464 Level 4 Neurostimulator Related Procedures. Based on available claims data for this service, CMS is finalizing without modification the assignment of CPT 0268T to APC 5463 with a payment rate of $17,796. 112

D. OPPS APC-Specific Policies 6.Radiologic Procedures and Services CMS proposed to consolidate the existing 17 imaging APCs into 8 APCs for CY 2017. CMS listened to commenters regarding their concerns about restructuring the Imaging APCs. CMS has finalized further restructuring by eliminating the Level 5 Radiology without Contrast APC . CY 2017 APC CY 2017 APC Title 5521 Level 1 Imaging without Contrast 5522 Level 2 Imaging without Contrast 5523 Level 3 Imaging without Contrast 5524 Level 4 Imaging without Contrast 5571 Level 1 Imaging with Contrast 5572 Level 2 Imaging with Contrast 5573 Level 3 Imaging with Contrast 113

D. OPPS APC-Specific Policies 6.Radiologic Procedures and Services We will discuss the many concerns and CMS responses. First, many commenters responded that services other than radiology were assigned to these APCs and therefore they did not think the groupings were appropriate. CMS agreed and changed the descriptions of the APCs. Second, many comments were received on specific radiological procedures and services that were proposed to have their APC reassigned. The following table shows CPT codes where the final APC assignment was changed from the proposed rule. 114

D. OPPS APC-Specific Policies 6.Radiologic Procedures and Services CPT / HCPCS Code CY 2017 Short Descriptor Proposed CY 2017 APC Proposed CY 2017 SI Proposed CY 2017 Rate Final CY 2017 APC Final CY 2017 SI Final CY 2017 Rate 77080 Dxa bone density axial 5521 S $63.33 5522 S $112.69 G0296 Visit to determ ldct elig 5821 S $25.09 5822 S $70.23 75559 Cardiac MRI w/stress img 5592 Q3 $431.04 5523 Q3 $225.81 70559 MRI brain stem w/o dye 5181 T $867.68 5571 Q3 $225.81 C8929 TTE w or w/o fol wcon,dop 5572 S $467.39 5573 S $656.63 73722 MRI Joint of lwr ext w/dye 5572 Q3 $467.39 5573 Q3 $656.63 73222 MRI Joint upper ext w/dye 5572 Q3$467.395573Q3$656.63G0105Colorectal scrn; hi risk ind5525S$687.345311T$667.40G0121Colon ca scrn not hi rsk ind5525S$687.345311T$667.4093312Echo Transesophageal5525S$687.345524S$449.5093313Echo Transesophageal5525S$687.345524S$449.5093315Echo Transesophageal5525S$687.345524S$449.5093318Echo Transesophageal5525S$687.345524S$449.50115

D. OPPS APC-Specific Policies 7.Skin Substitutes (APCs 5053 through 5055 CMS reviewed comments related to APC classifications for skin substitute procedures along with requests for creating an additional level to the APC series for skin substitute procedures, however they did not agree with the commenters. Therefore, they are finalizing the proposals without modification. The table that follows includes codes with a change in SI or APC for CY 2017. 116

HCPCS Code Short Descriptor CY 2016 APC CY 2016 SI CY 2017 APC CY 2017 SI CY 2016 Payment Rate CY 2017 Payment Rate %Diff 12037 Intmd rpr s/tr/ext >30.0 cm 5054 T 5055 T 1411.21 2503.63 77% 12044 Intmd rpr n-hf/genit7.6-12.5 5052 T 5053 T 225.55 452.91 101% 12045 Intmd rpr n-hf/genit12.6-20 5052 T 5053 T 225.55 452.91 101% 12047 Intmd rpr n-hf/genit >30.0cm 5053 T 5054 T 428.67 1427.16 233% 13100 Cmplx rpr trunk 1.1-2.5 cm 5054 T 5053 T 1411.21 452.91 -68% 15040 Harvest cultured skin graft 5053 T 5054 T 428.67 1427.16 233% 15100 Skin splt grft trnk/arm/leg 5055T5054T2137.491427.16-33%15277Skn sub grft f/n/hf/g child5055T5054T2137.491427.16-33%15570Skin pedicle flap trunk5055T5054T2137.491427.16-33%15736Muscle-skin graft arm5054T5055T1411.212503.6377%15760Composite skin graft5055T5054T2137.491427.16-33%15789Chemical peel face dermal5052T5053T225.55452.91101%15821Revision of lower eyelid5054T5055T1411.212503.6377%15824Removal of forehead wrinkles5055T5054T2137.491427.16-33%15850Remove sutures same surgeon5054T5053T1411.21452.91-68%15851Remove sutures diff surgeon5053T5054T428.671427.16233%15878Suction lipectomy upr extrem5055T5054T2137.491427.16-33%15934Remove sacrum pressure sore5054T5055T1411.212503.6377%15936Remove sacrum pressure sore5054T5054T1411.211427.161%17284Destruction of skin lesions5052T5053T225.55452.91101%17286Destruction of skin lesions5052T5053 T 225.55 452.91 101% 43887 Remove gastric port open 5055 Q2 5054 Q2 2137.49 1427.16 -33% 0446T Insj impltbl glucose sensor     5053 T   452.91   0448T Remvl insj impltbl gluc sens     5053 T   452.91   C5273 Low cost skin substitute app 5055 T 5054 T 2137.49 1427.16 -33% C5277 Low cost skin substitute app 5054 T 5053 T 1411.21 452.91 -68% G0429 Dermal filler injection(s)   B 5054 T   1427.16   117

D. OPPS APC-Specific Policies 8.Urology System Procedures and Services Chemodenervation of the Bladder (APC 5373) CMS proposed to change the SI for CPT code 52287 Cystoscopy chemodenervation from T to J1 for CY 2017. Commenters felt the BOTOX used during this procedure should continue to be paid separately and not be included in the proposed C-APC. Also, if CMS were to make this a C-APC then a new higher paying APC should be created to include the BOTOX cost. 118

D. OPPS APC-Specific Policies 8.Urology System Procedures and Services Chemodenervation of the Bladder (APC 5373) CMS disagreed stating that drugs that are adjunct to a service should be included in the payment for the service. CMS also noted that if this service is performed with another procedure then there could potentially be a complexity adjustment made . HCPCS Code Short Descriptor CY 2016 SI CY 2017 SI CY 2016 Payment CY 2017 Payment % Diff 52287 Cystoscopy chemodenervation T J1 $1,506.42 $1,643.96 9% 119

D. OPPS APC-Specific Policies 8.Urology System Procedures and Services Temporary Prostatic Urethral Stent (APC 5373) CMS proposed CPT 53855 (Insertion of a temporary prostatic urethral stent, including urethral measurement) to be assigned to APC 5372 (Level 2 Urology and Related Services). Commenters disagreed, stating the proposed payment rate was inadequate to cover costs. 120

D. OPPS APC-Specific Policies 8.Urology System Procedures and Services Temporary Prostatic Urethral Stent (APC 5373) CMS reviewed updated CY 2015 claims information and agrees with the commenters . CPT / HCPCS CODE CY 2017 Short Descriptor Proposed CY 2017 APC Proposed CY 2017 SI Proposed CY 2017 Rate Final CY 2017 APC Final CY 2017 SI Final CY 2017 Rate 53855 Insert Prost urethra stent 5372 T $524.48 5373 J1 $1643.96 121

D. OPPS APC-Specific Policies 8.Urology System Procedures and Services Transprostatic Urethral Implant Procedure (TUIP) (APCs 5375 and 5376)C9739 Cystourethroscopy, with insertion of transprostatic implant; 1 to 3 implants C9740 Cystourethroscopy, with insertion of transprostatic implant; 4 or more implants 52441 Cystourethroscopy, with insertion of permanent adjustable transprostatic implant; single implant 52442 Cystourethroscopy, with insertion of permanent adjustable transprostatic implant; each additional permanent adjustable transprostatic implant (list separately in addition to code for primary procedure 122

D. OPPS APC-Specific Policies 8.Urology System Procedures and Services Transprostatic Urethral Implant Procedure (TUIP) (APCs 5375 and 5376)CMS proposed to: Keep C9739 in APC 5375 (Level 5 Urology and Related Services) Reassign C9740 to APC 5376 (Level 6 Urology and Related Services) Keep 52441 and 52442 as SI = B CMS disagreed with commenters who stated the costs were not adequately supported with the APC assignments and has finalized their proposals without modification. 123

D. OPPS APC-Specific Policies 9. Other Procedures and Services Cryoablation Procedures (APCs 5114, 5361, 5362 and 5432) CMS was proposing to delete APC 5352 Level 2 Percutaneous Abdominal/Biliary Procedures and Related Procedures and reassign cryoablation procedures to APC 5361 Level 1 Laparoscopy and Related Services. Commenters were concerned that the reassignment was not appropriate based on other services in APC 5361 and requested CMS create new APCs for cryoablation and radiofrequency procedures. 124

D. OPPS APC-Specific Policies 9. Other Procedures and Services Cryoablation Procedures (APCs 5114, 5361, 5362 and 5432) CMS agreed that the other procedures should be reassigned to more appropriate APCs. CMS is finalizing their proposal with modification, Table 25 shows the final APCs for CY 2017. CPT Short Descriptors CY CY CY Final Final Final Code   2016 2016 2016 CY CY CY     OPPS OPPS OPPS 2017 2017 2017     SI APC RATE SI APC RATE 20983 Ablate bone tumor(s) perq T 5352 $4,118.23 J1 5114 $5,219.36 47383 Perq abltj lvr cryoablation T 5352 $4,118.23 J1 5361 $4,197.36 50593 Perc cryo ablate renal tum T 5352 $4,118.23 J1 5362 $6,966.89 0340T Ablate pulm tumors + extnsn T5352$4,118.23 J15361$4,197.36 0440TAbltj perc uxtr/perph nrvJ15361$4,001.15 J15432$4,150.11 0441TAbltj perc lxtr/perph nrvJ15361$4,001.15 J15432$4,150.11 0442TAbltj perc plex/trncl nrvT5352$4,118.23 J15432$4,150.11 125

D. OPPS APC-Specific Policies 9. Other Procedures and Services Comprehensive Dialysis Circuit Procedures (APCs 5181, 5192, and 5193) The AMA CPT Editorial Panel deleted CPT codes 36147 and 36148 and replaced them with nine new codes, effective January 1, 2017. CMS proposed packaging payment for some of the new codes and assigning some of them to APC 5181 Level 1 Vascular Procedures, 5192 Level 2 Endovascular Procedures, 5193 Level 3 Endovascular Procedures, or 5194 Level 2 Endovascular Procedures. 126

D. OPPS APC-Specific Policies 9. Other Procedures and Services Comprehensive Dialysis Circuit Procedures (APCs 5181, 5192, and 5193) CMS reviewed commenter’s concerns such as Clinical complexity and resource costs associated with performing these procedures Packaging of payments due to substantial device costs CMS did not agree with these concerns and has finalized their proposals without modifications . 127

D. OPPS APC-Specific Policies 9. Other Procedures and Services Blood Product Exchange and Related Services (APCs 5241 and 5242)CMS proposed to reassign the following CPT codes to APC 5242 (Level 2 Blood Product Exchange and Related Services ) 38230 (Bone marrow harvesting for transplantation; allogeneic) 38241 (Hematopoietic progenitor cell (HPC); autologous transplantation 38242 (Allogeneic lymphocyte infusions) 38243 (HPC Boost) 128

D. OPPS APC-Specific Policies 9. Other Procedures and Services Blood Product Exchange and Related Services (APCs 5241 and 5242)CMS is finalizing this proposal and will monitor claims to determine if future adjustments are warranted . HCPCS Code Short Descriptor CY 2016 APC CY 2017 APC CY 2016 Payment Rate CY 2017 Payment Rate %Diff 38230 Bone marrow harvest allogen 5281 5242 $ 3,015.06 $ 1,098.22 -64% 38241 Transplt autol hct/donor 5281 5242 $ 3,015.06 $ 1,098.22 -64% 38242 Transplt allo lymphocytes 5271 5242 $ 1,047.76 $ 1,098.22 5% 38243 Transplj hematopoietic boost 5271 5242 $ 1,047.76 $ 1,098.22 5% 129

D. OPPS APC-Specific Policies 9. Other Procedures and Services Magnetic Resonance-Guided Focused Ultrasound Surgery (MRgFUS) (APCs 1537, 5114, and 5414) There are four CPT codes that represent MRgFUS. The table below summarizes the original proposal . HCPCS Code Short Descriptor CY 2016 SI Proposed CY 2017 SI CY 2016 APC Proposed CY 2017 APC 0071T Us leiomyomata ablate <200 T J1 5414 5414 0072T Us leiomyomata ablate >200 T J1 5414 5414 0398T MRgFUS strtctc les abltj E J1   5462 C9734 U/s trtmt, not leiomyomata T J1 5122 5114 130

D. OPPS APC-Specific Policies 9. Other Procedures and Services Magnetic Resonance-Guided Focused Ultrasound Surgery (MRgFUS) (APCs 1537, 5114, and 5414) Commenters disagreed with the proposed assignments because: 0398T is much more resource intensive than C9734 Cost of equipment for each of these procedures is drastically different as well. Concern was raised that inadequate payments would lead to limited access for this service. 131

D. OPPS APC-Specific Policies 9. Other Procedures and Services Magnetic Resonance-Guided Focused Ultrasound Surgery (MRgFUS) (APCs 1537, 5114, and 5414) CMS Response CPT code 0398T is new for CY 2016 and no claims data is available, however they do have manufacturer cost information . CPT code 0398T is similar to code 77371 (Radiation treatment delivery, stereotactic radiosurgery (SRS), with regard to capital equipment, supplies and staffing resources, which has a mean cost of $10,105 . CMS has revised the proposed APC assignment for 0398T and assigned it to APC 1537. 132

D. OPPS APC-Specific Policies 9. Other Procedures and Services Neulasta® On-Body InjectorCPT code 96377 “Application of on-body injector (includes cannula insertion) for timed subcutaneous injection)” was proposed to be SI=N. Commenters disagreed, stating this was a primary service and should not be packaged. CMS responded stating no separate payment is warranted because the related service (i.e., chemo administration, clinic visit, etc.) would be the primary service. CMS has finalized their proposal without modification for CPT code 96377 to be SI=N. 133

D. OPPS APC-Specific Policies 9. Other Procedures and Services Smoking and Tobacco Use Cessation Counseling (APC 5821) Effective 10/1/16, Transmittal 3602 changed how Smoking Cessation Counseling is reported. CMS has finalized without modification the proposed APC assignments. 134

TABLE 32.—FINAL CY 2017 STATUS INDICATOR (SI), APC ASSIGNMENT, AND PAYMENT RATE FOR THE SMOKING AND TOBACCO USE CESSATION COUNSELING SERVICES CPT/ HCPCS Code Long Descriptors CY 2016 OPPS SI CY 2016 OPPS APC CY 2016 OPPS Payment Rate Final CY 2017 OPPS SI Final CY 2017 OPPS APC Final CY 2017 OPPS Payment Rate 99406 Smoking and tobacco use cessation counseling visit; intermediate, greater than 3 minutes up to 10 minutes S 5821 $27.12 S 5821 $25.22 99407 Smoking and tobacco use cessation counseling visit; intensive, greater than 10 minutes S 5821 $27.12 S 5821 $25.22 G0436 Smoking and tobacco cessation counseling visit for the asymptomatic patient; intermediate, greater than 3 minutes, up to 10 minutes S 5821 $27.12 D     G0437 Smoking and tobacco cessation counseling visit for the asymptomatic patient; intensive, greater than 10 minutes S 5822 $69.65 D     135

D. OPPS APC-Specific Policies 9. Other Procedures and Services Radiofrequency Ablation of Uterine Fibroids (APC 5362) New CPT for 2017 58674 Laparoscopic ablation of uterine fibroids CMS is finalizing without modification the APC assignment and payment rates as proposed, APC 5362 with SI=J1 and payment rate of $6,966.89. 136

D. OPPS APC-Specific Policies 9. Other Procedures and Services Intrapulmonary Surfactant Administration (APC 5791) 94610 Surfactant admin thru tube CMS is finalizing without modification the APC assignment and payment rates as proposed, APC 5791, SI=Q1 and payment rate of $162.02. 137

D. OPPS APC-Specific Policies 9. Other Procedures and Services Non-Contact Low Frequency Ultrasound (NLFU) Therapy (APC 5051) 97610 Low frequency non-thermal us CMS is finalizing without modification the APC assignment and payment rates as proposed, APC 5051, SI=Q1 and payment rate of $153.05. 138

D. OPPS APC-Specific Policies 9. Other Procedures and Services Pulmonary Rehabilitation Services (APCs 5732 and 5733) CMS proposed to reassign four pulmonary rehabilitation HCPCS to new APCs and continue to use SI=Q1 to indicate these are conditionally packaged services. Commenters disagreed and stated these services were primary services and should be paid separately, requesting the SI=S. Commenters also stated the increase in the proposed payment rates better reflected hospital costs for these services and agreed with the new rates. 139

D. OPPS APC-Specific Policies 9. Other Procedures and Services Pulmonary Rehabilitation Services (APCs 5732 and 5733) CMS agreed that pulmonary rehabilitation is generally not ancillary to other HOPD services and is typically a course of treatment prescribed. However, after reviewing updated CY 2015 claims data and changing the SI from Q1 to S, the geometric mean cost for each service dropped due to reduced packaging. CMS has finalized with modification the APC and SI assignments for these codes, see Table 34. 140

TABLE 34.—FINAL CY 2017 STATUS INDICATOR (SI), APC ASSIGNMENTS, AND PAYMENT RATES FOR THE PULMONARY REHABILITATION SERVICES HCPCS Code Long Descriptors CY 2016 OPPS SI CY 2016 OPPS APC CY 2016 OPPS Payment Final CY 2017 OPPS SI Final CY 2017 OPPS APC Final CY 2017 OPPS Payment G0237 Therapeutic procedures to increase strength or endurance of respiratory muscles, face to face, one on one, each 15 minutes (includes monitoring) Q1 5734 $91.18 S 5732 $28.37 G0238 Therapeutic procedures to improve respiratory function, other than described by g0237, one on one, face to face, per 15 minutes (includes monitoring) Q1 5733 $55.94 S 5732 $28.37 G0239 Therapeutic procedures to improve respiratory function or increase strength or endurance of respiratory muscles, two or more individuals (includes monitoring) Q1 5732 $30.51 S 5732 $28.37 G0424 Pulmonary rehabilitation, including exercise (includes monitoring), one hour, per session, up to two sessions per day Q1 5733 $55.94 S 5733 $54.53 141

IV. OPPS Payment for Devices 142

A. Pass-Through Payments for Devices 1. Expiration of Transitional Pass-Through Payments for DevicesCurrent Policy: Pass-through device eligibility begins on the date that CMS establishes a new pass-through category (new codes can be established during any quarter) Eligibility period is for at least two years, but no longer than three years Pass-through expiration is finalized during the annual rulemaking process 143

A. Pass-Through Payments for Devices 1. Expiration of Transitional Pass-Through Payments for DevicesCurrent Pass-Through Devices: C2624 - Implantable wireless pulmonary artery pressure sensor with delivery catheter, including all system components (effective 1/1/15) C2623 - Catheter, transluminal angioplasty, drug-coated, non-laser (effective 4/1/15 ) C2613 - Lung biopsy plug with delivery system (effective 7/1/15) C1822 - Generator, neurostimulator (implantable), high frequency, with rechargeable battery and charging system (effective 1/1/16) 144

A. Pass-Through Payments for Devices 1. Expiration of Transitional Pass-Through Payments for DevicesThe pass-through status of C2624 expires December 31, 2016. Beginning January 1, 2017 the costs of this device will be packaged into the related procedure. The other three devices will retain pass-through status in CY 2017. No comments were received and CMS is finalizing without modification to expire the device pass-through statuses as described. 145

A. Pass-Through Payments for Devices 2. New Device Pass-Through Applications Applications Received for Device Pass-Through Payment for CY 20171. BioBag® (Larval Debridement Therapy in a Contained Dressing 2. ENCORE™ Suspension System 3. Endophys Pressure Sensing System (Endophys PSS) or Endophys Pressure Sensing Kit Comments and additional documentation were submitted by each manufacturer and the public, however, even with the additional documentation CMS states these devices do not meet all of the criteria for determining pass-through status. 146

A. Pass-Through Payments for Devices 3. Beginning Eligibility Date for Device Pass-Through Payment Status Current regulation provides that pass-through payment eligibility begins on the date that CMS establishes a category of devices. CMS proposed to revise this regulation to instead specify that pass-through eligibility begins on the first date on which pass-through payment is made. CMS has finalized that the pass-through eligibility period begins on the first date on which pass-through payment is made. 147

A. Pass-Through Payments for Devices 4. Policy to Make the Transitional Pass-Through Payment Period 3 Years for All Pass-Through Devices and Expire Pass-Through Status on a Quarterly Rather Than Annual Basis Current Policy: Pass-through payment status lasts for a period of at least two years, but no longer than three years . Pass-through payment applications are accepted on a quarterly basis Payment periods are started through the release of quarterly OPPS updates Device pass-through status currently expires at the end of a calendar year, when at least two years of pass-through payments have been made, regardless of the quarter in which it was initially approved. 148

A. Pass-Through Payments for Devices 4. Policy to Make the Transitional Pass-Through Payment Period 3 Years for All Pass-Through Devices and Expire Pass-Through Status on a Quarterly Rather Than Annual Basis Finalized Policy for CY 2017 : CMS will allow for a quarterly expiration of pass-through status for devices to afford a pass-through period that is a full 3 years, beginning with newly approved devices in CY 2017. 149

A. Pass-Through Payments for Devices 5. Changes to Cost-to-Charge Ratios (CCRs) That Are Used to Determine Device Pass-Through Payment Current Policy: Calculate pass-through payments by using the average CCR for all outpatient departments Subtract amount representing the device cost contained in the APC for procedures involving that device 150

A. Pass-Through Payments for Devices 5. Changes to Cost-to-Charge Ratios (CCRs) That Are Used to Determine Device Pass-Through Payment Final Policy for CY 2017: CMS will use the more specific “Implantable Devices Charged to Patients” CCR, which has been available since 2009, instead of the less specific average hospital-wide CCR to calculate transitional pass-through payments for devices. If the implantable device CCR is not available, CMS will use the overall outpatient CCR CCR data used for this proposal had shown that the median hospital-wide CCR is $0.2035, whereas the median “Implantable Devices Charged to Patients” CCR is 0.3911 – a considerable increase. 151

A. Pass-Through Payments for Devices 6. Provisions for Reducing Transitional Pass-Through Payments to Offset Costs Packaged into APC Groups Current Policy : CMS estimates the portion of each APC payment rate that could be attributed to the cost of associated devices. When pass-through devices are reported on claims with these APCs, the pass-through payment amount is reduced by the amount of the APC rate determined to be attributed to the device (this is to prevent the device from being paid for twice ). 152

A. Pass-Through Payments for Devices 6. Provisions for Reducing Transitional Pass-Through Payments to Offset Costs Packaged into APC Groups Current Policy: For example: APC has payment rate of $1,000 45% ($450) is attributed to the cost of associated device(s) If a pass-through device with a payment rate of $600 was reported with this APC, the payment would be reduced by $450, as this cost is already factored into the procedure, and a pass-through payment of $150 would be received. 153

A. Pass-Through Payments for Devices 6. Provisions for Reducing Transitional Pass-Through Payments to Offset Costs Packaged into APC Groups Final Policy for CY 2017:CMS will calculate the device offset amount at the HCPCS level rather than at the APC level (which is an average of all codes assigned to an APC). CMS will continue reviewing each new pass-through device category to determine whether device costs associated with the new category are already packaged into the device implantation procedure. If device costs that are packaged into the procedure are related to the new category, CMS will continue to deduct the device offset amount from the pass-through payment for the device category. 154

B. Device-Intensive Procedures HCPCS Code-Level Device-Intensive Determination CMS will assign device-intensive status at the HCPCS level, rather than the APC level for 2017. For new HCPCS codes without claims data that describe procedures which require the implantation of medical devices, CMS will apply an offset of 41 percent until claims data are available . For CY 2017 there are 213 HCPCS codes which are classified as device-intensive. See Addendum P for the complete list of HCPCS codes. 155

B. Device-Intensive Procedures Changes to Device Edit Policy CMS will modify the device edit policy to coincide with the HCPCS-level device-intensive determinations. device coding requirements will be based on individual HCPCS code and any device code would satisfy the edit NOTE : For CY 2017 there is a new HCPCS code C1889 (Implantable/insertable device for device intensive procedure, not otherwise classified). 156

B. Device-Intensive Procedures Adjustment to OPPS Payment for No Cost/Full Credit and Partial Credit Devices Hospitals must report devices used in conjunction with device-intensive procedures which have been received at no cost or have been provided full or partial credit. CY 2008 FB (no cost/full credit) and FC (50%> credit) modifiers CY 2014 Value code FD (dollar amount of credit) CY 2016 Applied to any device 157

B. Device-Intensive Procedures Adjustment to OPPS Payment for No Cost/Full Credit and Partial Credit Devices CMS will continue current policy for reporting no-cost/full credit and partial credit devices for 2017, modified to be applicable to HCPCS codes classified as device-intensive, rather than APCs. Continue to report value code FD Continue to reduce OPPS payment when full or partial credit is received 158

B. Device-Intensive Procedures Payment Policy for Low Volume Device-Intensive Procedures CMS finalized that the payment rate for any device-intensive procedure that is assigned to a clinical APC with fewer than 100 total claims for all procedures in the APC be calculated using the median cost instead of the geometric mean cost. This makes the payment rate less susceptible to major changes due to extreme cases. For CY 2017, this policy would only apply code 0308T “Insertion of Ocular Telescope Prosthesis.” The CY 2017 payment rate based on updated claims data (calculated using the median cost) is $18,984. 159

V. OPPS Payment Changes for Drugs, Biologicals, and Radiopharmaceuticals 160

A. OPPS Transitional Pass-Through Payment for Additional Costs of Drugs, Biologicals, and Radiopharmaceuticals Policy Change to Make the Transitional Pass-Through Payment Period 3 Years for All Pass-Through Drugs, Biologicals and Radiopharmaceuticals and Expire Pass-Through Status on a Quarterly Rather Than Annual Basis For CY 2017 and subsequent calendar years, CMS will allow for a quarterly expiration of pass-through payment status for drugs and biologicals, rather than annual. For example, for a drug with pass-through status first effective on July 1, 2017, pass-through status would expire on June 30, 2020. This approach would allow for the maximum pass-through period for each pass-through drug without exceeding the statutory limit of 3 years. 161

A. OPPS Transitional Pass-Through Payment for Additional Costs of Drugs, Biologicals, and Radiopharmaceuticals Drugs and Biologicals with Expiring Pass-Through Payment Status in CY 2016The pass-through status of 15 drugs and biologicals will expire on December 31, 2016, as listed in Table 35. Nine will be assigned status indicator N and packaged Six will be paid separately under status indicator K 162

TABLE 35.—DRUGS AND BIOLOGICALS FOR WHICH PASS-THROUGH PAYMENT STATUS EXPIRES DECEMBER 31, 2016 CY 2017 HCPCS Code CY 2017 Long Descriptor Final CY 2017 Status Indicator Final CY 2017 APC C9497 Loxapine, inhalation powder, 10 mg K 9497 J1322 Injection, elosulfase alfa, 1mg K 1480 J1439 Injection, ferric carboxymaltose, 1 mg N N/A J1447 Injection, TBO-Filgrastim, 1 microgram N N/A J3145 Injection, testosterone undecanoate, 1 mg N N/A J3380 Injection, vedolizumab, 1 mg K 1489 J7181 Injection, factor xiii a-subunit, (recombinant), per iu N N/A J7200 Factor ix (antihemophilic factor, recombinant), Rixubus, per i.u. N N/A J7201 Injection, factor ix, fc fusion protein (recombinant), per iu N N/A J7205 Injection, factor viii fc fusion (recombinant), per iu K 1656 J7508 Tacrolimus, extended release, (astagraf xl), oral, 0.1 mg N N/A J9301 Injection, obinutuzumab, 10 mg N N/A J9308 Injection, ramucirumab, 5 mg K 1488 J9371 Injection, Vincristine Sulfate Liposome, 1 mg K 1466 Q4121 Theraskin, per square centimeter N N/A 163

A. OPPS Transitional Pass-Through Payment for Additional Costs of Drugs, Biologicals, and Radiopharmaceuticals Drugs , Biologicals, and Radiopharmaceuticals with New or Continuing Pass-Through Status in CY 2017 For CY 2017 there are 47 drugs and biologicals that will continue to have pass-through payment status. Addendum B provides a complete list of Pass-through drugs for CY 2017, identified by the Status Indicator assignment of “G” 164

B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals without Pass-Through Status Packaging Payment for Drugs, Biologicals, and Radiopharmaceuticals Drug packaging threshold for CY 2017 is $110, up from $100 in CY 2016 . If the estimated per day cost of a drug is > threshold, drug will be paid separately (ASP +6%) If per day cost is < threshold, drug will be packaged Final packaging determinations and payment rates will be determined in the Final Rule using ASP data from the third quarter of 2016. 165

B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals without Pass-Through Status High Cost/Low Cost Threshold for Packaged Skin SubstitutesCMS will continue to classify skin substitute products as high cost or low cost based upon the mean unit cost (MUC) or the per day cost (PDC). Skin substitute products that exceed the MUC or PDC cost thresholds will be classified as high cost, while products that do not exceed either threshold will be classified as low cost. CMS identified an error in the MUC and PDC thresholds that were published in the proposed rule . MUC $ 33 per sq. cm ( up $6 from proposed) PDC $716.00 (down $13.00 from proposed) 166

B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals without Pass-Through Status Packaging Determination for HCPCS Codes That Describe the Same Drug or Biological But Different Dosages CMS will continue drug specific packaging for CY 2017. Drugs with multiple HCPCS codes (differing by dosage) will be priced specific to the drug rather than the HCPCS code. 167

B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals without Pass-Through Status Packaging Determination for HCPCS Codes That Describe the Same Drug or Biological But Different Dosages The following drugs did not have pricing information available but based upon mean unit cost from CY 2015 claims data they are to be packaged in CY 2017 J1840 Injection kanamycin sulfate, up to 500 mg J1850 Injection, kanamycin sulfate, up to 75 mg J3472 Injection, hyaluronidase, ovine, preservative free, per 1000 usp units 168

B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals without Pass-Through Status Payment Adjustment Policy for Radioisotopes Derived From Non-Highly Enriched Uranium Sources CMS will continue to provide an additional $10 payment for radioisotopes produced by non-highly enriched uranium (HEU) sources, as they have since 2013 . Use HCPCS code Q9969 This is intended to reduce US reliance on HEU sources from outside of the US. 169

B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals without Pass-Through Status Payment for Blood Clotting FactorsFor CY 2017, CMS will continue payment of blood clotting factors at ASP +6% plus a furnishing fee. 2017 clotting factor furnishing fee = $0.209 per unit 170

B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals without Pass-Through Status Payment for Non Pass-Through Drugs, Biologicals, and Radiopharmaceuticals with HCPCS Codes but without OPPS Hospital Claims Data For CY 2017, CMS will continue to use same payment policy These codes will be assigned a non-covered SI until payment information becomes available 171

VI. Estimate of OPPS Transitional Pass-Through Spending for Drugs, Biologicals, Radiopharmaceuticals, and Devices 172

Pass-Through Spending Proposed pass-through spending will remain limited to 2.0% of total OPPS spending Estimated total pass-through spending for CY 2017 is $150.6 million which represents 0.24% of the total projected OPPS payments for CY 2017 173

VII. OPPS Payment for Hospital Outpatient Visits and Critical Care Services 174

Hospital Outpatient Visits and Critical Care Services For CY 2017, CMS is not making any changes to current hospital outpatient visit and emergency department (ED) visit payment policies . CMS also is not making changes to current payment policy for critical care services. 175

VIII. Payment for Partial Hospitalization Services 176

PHP APC Update for CY 2017 Changes to PHP APCsCMS will consolidate the two PHP APCs for hospitals and the two PHP APCs for community mental health centers (CMHCs) into a single APC for each provider type. Significant decreases in reporting Level 1 services along with an increase in Level II services over the last several years. 177

PHP APC Update for CY 2017 Changes to PHP APCs TABLE 41.—CY 2017 PHP APC GEOMETRIC MEAN PER DIEM COSTS CY 2017 APC Group Title PHP APC Geometric Mean Per Diem Costs 5853 Partial Hospitalization (3 or more services per day) for CMHCs $124.92 5863 Partial Hospitalization (3 or more services per day) for hospital-based PHPs $213.14 178

PHP APC Update for CY 2017 Changes to PHP APCs Current CY 2016 PHP APCs PHP APCs for CY 2017 APC Group Title Payment Rate 5851 Level 1 Partial Hospitalization (3 services) for CMHCs $94.49 5852 Level 2 Partial Hospitalization (4 or more services) for CMHCs $143.00 5861 Level 1 Partial Hospitalization (3 services) for Hospital-based PHPs $183.41 5862 Level 2 Partial Hospitalization (4 or more services) for Hospital-based PHPs $212.67 APC Group Title Payment Rate 5853 Partial Hospitalization (3 or more services) for CMHCs $121.48 5863 Partial Hospitalization (3 or more services) for Hospital-based PHPs $207.27 179

PHP APC Update for CY 2017 Changes to PHP APCs NOTE: Because PHP services are intensive outpatient services, CMS regulations at § 410.43(c)(1) require that PHPs provide each beneficiary at least 20 hours of services each week. Also, CMS is seeing very low frequency of individual therapy being provided and will be monitoring this because they believe individual therapy is appropriate treatment for PHP patients. 180

IX. Procedures That Would Be Paid Only as Inpatient Procedures 181

Changes to the Inpatient Only (IPO) List Changes to Inpatient Only Procedures For CY 2017, CMS proposed to remove six codes (four spine procedure codes and two laryngoplasty codes) and in the Final Rule added one more code, 22585, to be removed from the IPO list. Codes Removed from IPO List CY 2017 HCPCS Code Short Descriptor SI 22585 Additional spinal fusion N 22840 Insert spine fixation device N 22842 Insert spine fixation device N 22845 Insert spine fixation device N 22858 Second level cer diskectomy N 31584 Laryngoplasty fx rdctj fixj J1 31587 Laryngoplasty cricoid split J1 182

Changes to the Inpatient Only (IPO) List Response to Solicitation of Public Comments on Possible Removal of Total Knee Arthroplasty (TKA) Procedures from the IPO List CMS sought public comments on whether or not they should remove total knee arthroplasty (TKA) described by CPT 27447 from the inpatient-only list. 27447 Arthroplasty , knee, condyle and plateau; medical and lateral compartments with or without patella resurfacing (total knee arthroplasty) No change in CY 2017 for this, CMS will take feedback into consideration in future rule making. 183

X. Nonrecurring Policy Changes 184

A. Implementation of Section 603 of the Bipartisan Budget Act of 2015 Relating to Payment for Certain Items and Services Furnished by Certain Off-Campus Departments of a Provider Background CMS is required to establish a new payment policy to implement this Act. This policy will apply to off-campus provider-based departments established subsequent to the enactment of this law on November 2, 2015. Excepted from the requirements of this new rule are provider-based departments that were billing under PBD guidelines prior to the enactment of this law of November 2, 2015 (unless excepted PBDs lose their excepted status ). 185

A. Implementation of Section 603 of the Bipartisan Budget Act of 2015 Relating to Payment for Certain Items and Services Furnished by Certain Off-Campus Departments of a Provider Original Proposal The three main components of the proposal were to : Define “applicable items and services” for purposes of determining whether such items and services are covered OPD services paid under the OPPS or whether payment for such items and services shall instead be made under “the applicable payment system” Define off-campus provider-based department Establish policies for payment for applicable items and services furnished by an off-campus PBD (nonexcepted items and services) 186

A. Implementation of Section 603 of the Bipartisan Budget Act of 2015 Relating to Payment for Certain Items and Services Furnished by Certain Off-Campus Departments of a Provider Original Proposal CMS also proposed certain items and services furnished by off-campus PBDs may be considered excepted, and thus, continue to be paid under the OPPS requirements for off-campus PBDs to maintain excepted status (both for the PBD department itself as well as the items or services furnished by the PBD ) the “applicable payment system” for nonexcepted items and services as the MPFS. 187

A. Implementation of Section 603 of the Bipartisan Budget Act of 2015 Relating to Payment for Certain Items and Services Furnished by Certain Off-Campus Departments of a Provider And the outcome is……. CMS will not delay the implementation of Section 603; however it will be modified from the originally proposed language. 188

A. Implementation of Section 603 of the Bipartisan Budget Act of 2015 Relating to Payment for Certain Items and Services Furnished by Certain Off-Campus Departments of a Provider Defining Applicable Items and Services and an Off-Campus Outpatient Department of a Provider To have provider-based status, as defined as of November 2, 2015, an outpatient department must meet certain criteria including: located within a 35-mile radius of the campus of the main hospital financial operations must be fully integrated within those of the main provider clinical services must be integrated with those of the main hospital identified to the public as part of the main hospital 189

A. Implementation of Section 603 of the Bipartisan Budget Act of 2015 Relating to Payment for Certain Items and Services Furnished by Certain Off-Campus Departments of a Provider Defining Applicable Items and Services and an Off-Campus Outpatient Department of a Provider When hospitals add provider-based departments they: Must submit an amended provider enrollment form w/in 90 days May provide an attestation to the CMS regional office for review If no attestation is submitted and a facility bills under PBD rules and it is later determined not to qualify, CMS will recover all overpayments and could re-open cost reports. 190

A. Implementation of Section 603 of the Bipartisan Budget Act of 2015 Relating to Payment for Certain Items and Services Furnished by Certain Off-Campus Departments of a Provider Exemption of Items and Services Furnished in a Dedicated Emergency Department or an On-Campus PBD as Defined at Sections 1833(t)(21)(B)(i)(I) and (II) of the Act (Excepted Off-Campus PBD )CMS identifies three locations where items and services are to be excepted from new PBD regulations and thus continue to be paid under the OPPS. Dedicated Emergency Departments (EDs) On-campus Locations Within the Distance from Remote Locations 191

A. Implementation of Section 603 of the Bipartisan Budget Act of 2015 Relating to Payment for Certain Items and Services Furnished by Certain Off-Campus Departments of a Provider Applicability of Exception at Section 1833(t)(21)(B)(ii) of the Act CMS-1656-P CMS interprets the Act to except off-campus PBDs as they existed at the time the law was enacted, and has proposed strict limits regarding the scope of their exception. 1. Relocation of Excepted Off-Campus PBDs CMS originally proposed no relocation from physical location and no expansion into other units or lose excepted status 192

A. Implementation of Section 603 of the Bipartisan Budget Act of 2015 Relating to Payment for Certain Items and Services Furnished by Certain Off-Campus Departments of a Provider Applicability of Exception at Section 1833(t)(21)(B)(ii) of the Act CMS-1656-P Final for CY 2017 CMS will allow on a case by case basis certain relocations, i.e., natural disaster, significant building code requirements and/or public health and safety issues. CMS also provided clarification that if an existing on-campus PBD as of November 2, 2015 subsequently moved off campus, that move would result in the PBD no longer being paid under OPPS. 193

A. Implementation of Section 603 of the Bipartisan Budget Act of 2015 Relating to Payment for Certain Items and Services Furnished by Certain Off-Campus Departments of a Provider Applicability of Exception at Section 1833(t)(21)(B)(ii) of the Act CMS-1656-P 2 . Expansion of Clinical Family of Services at an Excepted PBD CMS originally proposed limiting services if they were not already part of a clinical family of services being performed and created 19 clinical families. Many commenters did not agree with CMS, stating they exceeded their authority, there would be administrative burdens on hospitals, and this would limit evolution of new services. 194

A. Implementation of Section 603 of the Bipartisan Budget Act of 2015 Relating to Payment for Certain Items and Services Furnished by Certain Off-Campus Departments of a Provider Applicability of Exception at Section 1833(t)(21)(B)(ii) of the Act CMS-1656-P Final for CY 2017 CMS has decided not to finalize this proposal for CY 2017. Excepted off-campus PBDs will be paid under OPPS for all billed items and services regardless of whether it furnished those services prior to November 2, 2015. CMS will continue to monitor service line growth and may adopt expansion limitations in future rule making. 195

A. Implementation of Section 603 of the Bipartisan Budget Act of 2015 Relating to Payment for Certain Items and Services Furnished by Certain Off-Campus Departments of a Provider Applicability of Exception at Section 1833(t)(21)(B)(ii) of the Act CMS-1656-P Other Related Public Comments CMS clarified off-campus PBDs in development, “ mid-build” or “under development ”, etc. as of November 2, 2015 State of PBD Payment Methodology Not yet treating patients on or before November 2, 2015 New Applicable payment system Treating patients on or before November 2, 2015, but billing department not yet fully functional OPPS Treating patients on or before November 2, 2015, but internal process for billing claims includes a standard review period before the claims are submitted to Medicare OPPS 196

A. Implementation of Section 603 of the Bipartisan Budget Act of 2015 Relating to Payment for Certain Items and Services Furnished by Certain Off-Campus Departments of a Provider Change of Ownership and Excepted Status Original Proposal Main provider must be transferred along with the PBD Individual excepted PBD cannot be transferred Final CY 2017 CMS is finalizing their original proposal without modification. An excepted off-campus PBD can be transferred to new ownership only if the main provider is also transferred and the Medicare agreement is accepted by the new owner. 197

A. Implementation of Section 603 of the Bipartisan Budget Act of 2015 Relating to Payment for Certain Items and Services Furnished by Certain Off-Campus Departments of a Provider Comment Solicitation for Data Collection under Section 1833(t)(21)(D) of the Act Original Request be required to separately identify all individual excepted off-campus PBD locations; and the date that each excepted off-campus PBD began billing; and the clinical families of services that were provided prior to November 2, 2015. Commenters thought this would be too burdensome and CMS should wait and monitor CY 2016 claims that contained the PO Modifier. 198

A. Implementation of Section 603 of the Bipartisan Budget Act of 2015 Relating to Payment for Certain Items and Services Furnished by Certain Off-Campus Departments of a Provider Comment Solicitation for Data Collection under Section 1833(t)(21)(D) of the Act Final CY 2017Hospitals will be expected to maintain documentation sufficient to prove that an off-campus PBD is an excepted off-campus PBD; i.e., was billing as an off-campus PBD for covered services prior to November 2, 2015. CMS plans to issue instructions to the Medicare contractors to update their systems using enrollment data that would identify each off-campus PBD by physical address and by the date it was added to the hospital’s enrollment. CMS is implementing a new modifier “PN” that will be required to be billed with nonexcepted items and services. 199

A. Implementation of Section 603 of the Bipartisan Budget Act of 2015 Relating to Payment for Certain Items and Services Furnished by Certain Off-Campus Departments of a Provider Payment for Services Furnished in Off-Campus PBDs to Which Sections 1833(t)(1)(B)(v) and 1833(t)(21) of the Act Apply (Nonexcepted Off-Campus PBDs )Background and Original Proposal Temporary payment system, MPFS Physician/practitioner would bill and be paid No separate payment for hospital Laboratory services would be paid separately Non-excepted PBD w/PHP could enroll as CMHC to be paid OPPS rates 200

A. Implementation of Section 603 of the Bipartisan Budget Act of 2015 Relating to Payment for Certain Items and Services Furnished by Certain Off-Campus Departments of a Provider Payment for Services Furnished in Off-Campus PBDs to Which Sections 1833(t)(1)(B)(v) and 1833(t)(21) of the Act Apply (Nonexcepted Off-Campus PBDs )Comments Received MPFS should not be the applicable payment system MPFS should be the payment system for nonexcepted services ASC payment system should be used A combination of MPFS and ASC should be used Create a whole new payment system that incorporates MPFS/ASC/OPPS MedPAC did not recommend creating a new provider/supplier type 201

A. Implementation of Section 603 of the Bipartisan Budget Act of 2015 Relating to Payment for Certain Items and Services Furnished by Certain Off-Campus Departments of a Provider Payment for Services Furnished in Off-Campus PBDs to Which Sections 1833(t)(1)(B)(v) and 1833(t)(21) of the Act Apply (Nonexcepted Off-Campus PBDs )CMS reviewed preliminary data for services billed with the “PO” modifier and the most commonly billed services are: E&M visit Diagnostic and imaging services Drugs or biologicals Drug administration 202

A. Implementation of Section 603 of the Bipartisan Budget Act of 2015 Relating to Payment for Certain Items and Services Furnished by Certain Off-Campus Departments of a Provider Definition of Applicable Items and Services and Section 603 Amendment to Section 1833(t)(1)(B) of the Act and Payment for Nonexcepted Items and Services for CY 2017 CMS proposed the MPFS at the non-facility rate for payment and an off-campus PBD could enroll as another provider type if they wanted to be paid as such. Concerns with this included no payment for hospitals, inability to bill for these services, fraud and abuse laws, anti-kickback laws, inability to establish contractual arrangements with providers in such a short period of time, 340B implications, just to name a few. 203

A. Implementation of Section 603 of the Bipartisan Budget Act of 2015 Relating to Payment for Certain Items and Services Furnished by Certain Off-Campus Departments of a Provider Definition of Applicable Items and Services and Section 603 Amendment to Section 1833(t)(1)(B) of the Act and Payment for Nonexcepted Items and Services for CY 2017 Final CY 2017 (more detail provided later under Section B Interim Final Rule) Interim Final Rule Hospitals will receive payments Hospitals will bill with modifier “PN” on a UB04 Therapy, preventative services and drugs will be paid the same Laboratory services may be paid separately or bundled Nonexcepted PBDs will be reported on hospital cost reports Physician services will be paid at MPFS facility rate 204

B. Interim Final Rule with Comment Period: Establishment of Payment Rates under the Medicare Physician Fee Schedule for Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus Provider-Based Departments of a Hospital Background CMS is issuing this interim final rule with comment period to establish payment policies under the MPFS for nonexcepted items and services furnished by nonexcepted provider based departments on or after January 1, 2017. CMS will make adjustments as necessary to the payment mechanisms and rates through rulemaking that could be effective in CY 2017. 205

B. Interim Final Rule with Comment Period: Establishment of Payment Rates under the Medicare Physician Fee Schedule for Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus Provider-Based Departments of a Hospital Operational Considerations CMS determined (agreed with commenters) I t is not possible to implement new billing provisions for CY 2017 There could be potential issues with the physician self-referral and anti-kickback laws There needs to be a mechanism for hospitals to be paid for the technical component of services performed. 206

B. Interim Final Rule with Comment Period: Establishment of Payment Rates under the Medicare Physician Fee Schedule for Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus Provider-Based Departments of a Hospital General MPFS Coding and Billing Mechanisms Major provisions: These new payment rates under the interim rule are specifically for nonexcepted PBDs and not other types of providers and suppliers that are paid under the MPFS. Nonexcepted off-campus PBDs will continue to bill on the institutional claim that will pass through the Outpatient Code Editor and into the OPPS PRICER for calculation of payment under the MPFS. CMS will apply the hospital wage index to the off-campus PBD nonexcepted items and services. 207

B. Interim Final Rule with Comment Period: Establishment of Payment Rates under the Medicare Physician Fee Schedule for Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus Provider-Based Departments of a Hospital Establishment of Payment Rates There will be specific policies and adjustments that currently apply under OPPS that will be incorporated into MPFS exclusively for site-specific payment rate. CMS reviewed claims from January 1, 2016 through August 26, 2016 (TOB 131, contained modifier “ PO”, SI = ” J1”, “J2”, “Q1”, “Q2”, “Q3”, “S”, “T”, or “V ”, exclude separately payable drugs and biologicals and SI=A (lab, therapies, preventative services )). CMS then compared the CY 2016 OPPS payment rate to the MPFS payment rate. 208

B. Interim Final Rule with Comment Period: Establishment of Payment Rates under the Medicare Physician Fee Schedule for Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus Provider-Based Departments of a Hospital Establishment of Payment Rates CMS is adopting a technical component rate for nonexcepted items and services furnished by nonexcepted off-campus PBDs which will be paid under the MPFS at a rate of 50% of the OPPS payment amount. CMS has indicated this reduction may be too small and has indicated this is a transitional policy for CY 2017 until they have more precise data. 209

B. Interim Final Rule with Comment Period: Establishment of Payment Rates under the Medicare Physician Fee Schedule for Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus Provider-Based Departments of a Hospital Establishment of Payment Rates There are exceptions to this standard adjustment: Services that are already paid at a fee schedule rate on an institutional claim will not have adjustments to that rate. SI = A in OPPS Addendum B that are paid under MPFS, CLFS or Ambulance Fee Schedule SI = G or K in OPPS will be paid at ASP +6 % Unconditionally packaged services, SI=N will be packaged into the MPFS rate 210

B. Interim Final Rule with Comment Period: Establishment of Payment Rates under the Medicare Physician Fee Schedule for Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus Provider-Based Departments of a Hospital MPFS Relativity Adjuster For CY 2017 the MPFS relativity adjuster will be 50% and CMS will continue to review and seek feedback regarding future adjustments . Geographic Adjustments CMS is establishing class-specific geographic practice cost indices (GPCIs) under the MPFS exclusively used to adjust these site-specific, technical component rates for nonexcepted items and services furnished in nonexcepted off-campus PBDs which will be equal to the hospital wage index. 211

B. Interim Final Rule with Comment Period: Establishment of Payment Rates under the Medicare Physician Fee Schedule for Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus Provider-Based Departments of a Hospital Coding Consistency There are two exceptions with billing under OPPS and MPFS that are different: Clinic Outpatient Visits In CY 2017 clinic visits will be billed using the HCPCs code G0463 and will be paid at 50% of the OPPS rate. 212

B. Interim Final Rule with Comment Period: Establishment of Payment Rates under the Medicare Physician Fee Schedule for Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus Provider-Based Departments of a Hospital Coding Consistency There are two exceptions with billing under OPPS and MPFS that are different: Radiation Treatment Delivery For radiation treatment delivery, under MPFS there are Level II HCPCS codes (G6003 thru G6015) used to describe this service when performed in a physician office, however these codes are not recognized under OPPS. These G codes will be used in CY 2017 for nonexcepted PBDs. Modifier “PN” needs to be appended to these HCPCS codes to indicate the service was provided in a nonexcepted PBD 213

B. Interim Final Rule with Comment Period: Establishment of Payment Rates under the Medicare Physician Fee Schedule for Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus Provider-Based Departments of a Hospital OPPS Payment Adjustments Claims processing logic that is used for payments under the OPPS and will be incorporated into the newly established MPFS rates : Comprehensive APCs (C-APCs) Conditionally and unconditionally packaged items and services, and major procedures 214

B. Interim Final Rule with Comment Period: Establishment of Payment Rates under the Medicare Physician Fee Schedule for Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus Provider-Based Departments of a Hospital OPPS Payment Adjustments The following OPPS payment adjustments will not be used under MPFS for nonexcepted PBDs because they are specific to the OPPS: Outlier payments Rural Sole Community Hospital Adjustment Cancer Hospital Adjustment Transitional outpatient payments Hospital Outpatient Quality Reporting Adjustment Inpatient deductible cap to the cost sharing liability for hospital outpatient single service 215

B. Interim Final Rule with Comment Period: Establishment of Payment Rates under the Medicare Physician Fee Schedule for Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus Provider-Based Departments of a Hospital Partial Hospitalization Services PHP services provided in a nonexcepted PBD will be paid at the CMHC per diem rate. Nonexcepted off-campus PBDs will not be required to enroll as CMHC in order to bill and be paid for providing partial hospitalization services. A nonexcepted off-campus PBD that wishes to provide PHP services may still enroll as a CMHC if it chooses to do so and meets the relevant requirements. 216

B. Interim Final Rule with Comment Period: Establishment of Payment Rates under the Medicare Physician Fee Schedule for Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus Provider-Based Departments of a Hospital Supervision Rules The supervision rules that apply for hospitals will continue to apply for off-campus PBDs that furnish nonexcepted items and services and are defined in 42 CFR 410.27. Beneficiary Cost-Sharing All cost-sharing rules that apply under the MPFS will continue to apply for all nonexcepted items and services furnished by off-campus PBDs, regardless of the cost-sharing obligation under the OPPS. 217

B. Interim Final Rule with Comment Period: Establishment of Payment Rates under the Medicare Physician Fee Schedule for Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus Provider-Based Departments of a Hospital CY 2018, CY 2019, and Future Years CMS is finalizing MPFS payment amounts for nonexcepted off-campus PBDs--for CY 2017 and seeking public comments on this new payment mechanism. Unless significant modifications are made, CMS plans to continue with this payment methodology for nonexcepted PBDs in CY 2018. For CY 2019 and beyond CMS plans to adjust the MPFS payment rates for nonexcepted PBDs to reflect the relative resources involved with furnishing the services. 218

B. Interim Final Rule with Comment Period: Establishment of Payment Rates under the Medicare Physician Fee Schedule for Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus Provider-Based Departments of a Hospital CY 2018, CY 2019, and Future Years Ultimately, CMS anticipates the payment amounts under this approach will cover facility overhead if the same service was provided in a physician office . For most services the MPFS base rate would equal the non-facility MPFS For some services not currently paid under MPFS, but paid under OPPS , the rate will equal the MPFS non-facility rate. For some services the technical component of MPFS would equal the MPFS base-rate. 219

B. Interim Final Rule with Comment Period: Establishment of Payment Rates under the Medicare Physician Fee Schedule for Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus Provider-Based Departments of a Hospital CY 2018, CY 2019, and Future Years There are benefits and concerns with this approach. Pros: Hospitals continue to bill using the facility claim form Packaging of services will continue Nonexcepted PBDs will continue to be on the hospital cost report Cons: Specific service lines may continue to be paid differently based on site of service which could still provide incentive to hospitals to purchase practices and bill as nonexcepted PBDs 220

B. Interim Final Rule with Comment Period: Establishment of Payment Rates under the Medicare Physician Fee Schedule for Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus Provider-Based Departments of a Hospital CY 2018, CY 2019, and Future Years The estimated impact to implementing this interim final rule is $50 million in CY 2017. CMS has indicated that not implementing the applicable payment system effective January 1, 2017 would be impractical, contrary to public interest and section 603 requirements, therefore the comment period will be waived. CMS is seeking public comments on continuing this payment methodology for future years. Comments must be received by December 31, 2016. 221

C. Changes for Payment for Film X-Ray For CY 2017, CMS will reduce OPPS payment for any X-rays taken using film (including the X-ray component of a packaged service) by 20 percent For X-rays taken by film, providers will be required to report modifier “FX” in CY 2017 which will result in the 20% reduction 222

D. Changes to Certain Scope of Services Elements for Chronic Care Management The CY 2017 MPFS Final Rule contains some minor changes to certain CCM scope of service elements. All fundamental scope of service requirements are remaining intact . CMS is finalizing without modification to apply the changes for CY 2017 OPPS. HCPCS Code Short Descriptor CY 2016 SI CY 2017 SI CY 2016 Payment Rate CY 2017 Payment Rate 99487 Cmplx chron care w/o pt vsit N S n/a $70.23 99489 Cmplx chron care addl 30 min N N n/a n/a 223

E. Appropriate Use Criteria for Advanced Diagnostic Imaging Services The CY 2016 Medicare Physician Fee Schedule (MPFS) final rule established the initial component of the AUC program .The program’s criteria are being updated as appropriate through the MPFS rulemaking process. The CDSM is the electronic tool through which the ordering provider consults AUC. We recommend that necessary parties review the CY 2017 MPFS Final Rule which can be found at: https:// www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html 224

XI. CY 2017 OPPS Payment Status and Comment Indicators 225

A. CY 2017 OPPS Payment Status Indicator Definitions CMS will replace existing status indicator “E” with two new status indicators “E1” and “E2” to differentiate between non-covered items/services and items/services for which pricing information or claims data is unavailable. E1 – Items and Services: Not covered by any Medicare outpatient benefit category Statutorily excluded by Medicare Not reasonable and necessary E2 – Items and Services: For which pricing information and claims data are not available 226

B. CY 2017 Comment Indicator Definitions CMS proposed no changes to the three current comment indicators in use in 2016:“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 . “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. 227

B. CY 2017 Comment Indicator Definitions CMS added a fourth comment indicator. The new comment indicator is to help providers identify codes in the Final Rule which have a final payment assignment effective January 1, 2017 and therefore are not able to be commented upon. “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. 228

XIII. Requirements for the Hospital Outpatient Quality Reporting (OQR) Program 229

Hospital OQR Program CMS finalized without modification to add seven new measures to the Hospital OQR program. The claims-based measures: ( 1) OP-35: Admissions and Emergency Department Visits for Patients Receiving Outpatient Chemotherapy; and ( 2) OP-36: Hospital Visits after Hospital Outpatient Surgery (NQF #2687). 230

Hospital OQR Program Proposed Payment Reduction for Hospitals That Fail to Meet the Hospital Outpatient Quality Reporting (OQR) Program Requirements for the CY 2017 Payment Determination CMS is proposing to continue to reduce payments for any hospital that does not meet the HOQR measures by 2%. 231

Questions? ContactJulie.Hall@theroi.com 232