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Rule2021-16519

Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Policy Changes and Fiscal Year 2022 Rates; Quality Programs and Medicare Promoting Interoperability Program Requirements for Eligible Hospitals and Critical Access Hospitals; Changes to Medicaid Provider Enrollment; and Changes to the Medicare Shared Savings Program

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Published

August 13, 2021

Effective

October 1, 2021

Issuing agencies

Health and Human Services DepartmentCenters for Medicare & Medicaid Services

Abstract

This final rule revises the Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital-related costs of acute care hospitals to implement changes arising from our continuing experience with these systems for FY 2022 and to implement certain recent legislation. The final rule also updates the payment policies and the annual payment rates for the Medicare prospective payment system (PPS) for inpatient hospital services provided by long- term care hospitals (LTCHs) for FY 2022. It also finalizes a May 10, 2021 interim final rule with comment period regarding rural reclassification through the Medicare Geographic Classification Review Board (MGCRB). The final rule also implements changes and updates for the Medicare Promoting Interoperability, Hospital Value-Based Purchasing, Hospital Readmissions Reduction, Hospital Inpatient Quality Reporting, Hospital-Acquired Condition Reduction, the PPS-Exempt Cancer Hospital Reporting, and the Long-Term Care Hospital Quality Reporting programs. It also finalizes provisions that alleviate a longstanding problem related to claiming Medicare bad debt and provide a participation opportunity for eligible accountable care organizations (ACOs).

Full Text

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[Federal Register Volume 86, Number 154 (Friday, August 13, 2021)]
[Rules and Regulations]
[Pages 44774-45615]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-16519]

[[Page 44773]]

Vol. 86

Friday,

No. 154

August 13, 2021

Part II

Book 2 of 2 Books

Pages 44773-45620

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Parts 412, 413, 425, et al.

Medicare Program; Hospital Inpatient Prospective Payment Systems for
Acute Care Hospitals and the Long-Term Care Hospital Prospective
Payment System and Policy Changes and Fiscal Year 2022 Rates; Quality
Programs and Medicare Promoting Interoperability Program Requirements
for Eligible Hospitals and Critical Access Hospitals; Changes to
Medicaid Provider Enrollment; and Changes to the Medicare Shared
Savings Program; Final Rule

Federal Register / Vol. 86, No. 154 / Friday, August 13, 2021 / Rules
and Regulations

[[Page 44774]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 412, 413, 425, 455, and 495

[CMS-1752-F and CMS-1762-F]
RINs 0938-AU44 and 0938-AU56

Medicare Program; Hospital Inpatient Prospective Payment Systems
for Acute Care Hospitals and the Long-Term Care Hospital Prospective
Payment System and Policy Changes and Fiscal Year 2022 Rates; Quality
Programs and Medicare Promoting Interoperability Program Requirements
for Eligible Hospitals and Critical Access Hospitals; Changes to
Medicaid Provider Enrollment; and Changes to the Medicare Shared
Savings Program

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Final rule.

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SUMMARY: This final rule revises the Medicare hospital inpatient
prospective payment systems (IPPS) for operating and capital-related
costs of acute care hospitals to implement changes arising from our
continuing experience with these systems for FY 2022 and to implement
certain recent legislation. The final rule also updates the payment
policies and the annual payment rates for the Medicare prospective
payment system (PPS) for inpatient hospital services provided by long-
term care hospitals (LTCHs) for FY 2022. It also finalizes a May 10,
2021 interim final rule with comment period regarding rural
reclassification through the Medicare Geographic Classification Review
Board (MGCRB). The final rule also implements changes and updates for
the Medicare Promoting Interoperability, Hospital Value-Based
Purchasing, Hospital Readmissions Reduction, Hospital Inpatient Quality
Reporting, Hospital-Acquired Condition Reduction, the PPS-Exempt Cancer
Hospital Reporting, and the Long-Term Care Hospital Quality Reporting
programs. It also finalizes provisions that alleviate a longstanding
problem related to claiming Medicare bad debt and provide a
participation opportunity for eligible accountable care organizations
(ACOs).

DATES: This final rule is effective October 1, 2021.

FOR FURTHER INFORMATION CONTACT:
Donald Thompson, (410) 786-4487, and Michele Hudson, (410) 786-
4487, Operating Prospective Payment, MS-DRG Relative Weights, Wage
Index, Hospital Geographic Reclassifications, Capital Prospective
Payment, Excluded Hospitals, Medicare Disproportionate Share Hospital
(DSH) Payment Adjustment, Sole Community Hospitals (SCHs), Medicare-
Dependent Small Rural Hospital (MDH) Program, Low-Volume Hospital
Payment Adjustment, and Critical Access Hospital (CAH) Issues.
Emily Lipkin, (410) 786-3633 and Jim Mildenberger, (410) 786-4551,
Long-Term Care Hospital Prospective Payment System and MS-LTC-DRG
Relative Weights Issues.
Emily Forrest, (202) 205-1922, Market-Based Data Collection and
Market-Based MS-DRG Relative Weight Methodology Issues.
Allison Pompey, (410) 786-2348, New Technology Add On Payments and
New COVID-19 Treatments Add-on Payments Issues.
Mady Hue, (410) 786-4510, and Andrea Hazeley, (410) 786-3543, MS-
DRG Classifications Issues.
Mollie Knight, (410) 786-7948, and Bridget Dickensheets, (410) 786-
8670, Rebasing and Revising the Hospital Market Baskets Issues.
Siddhartha Mazumdar, (410) 786-6673, Rural Community Hospital
Demonstration Program Issues.
Jeris Smith, (410) 786-0110, Frontier Community Health Integration
Project Demonstration Issues.
Pamela Brown, <a href="/cdn-cgi/l/email-protection#3343525e565f521d51415c445d73505e401d5b5b401d545c45">[email&#160;protected]</a>, Hospital Readmissions
Reduction Program--Administration Issues.
Jim Poyer, <a href="/cdn-cgi/l/email-protection#cca6ada1a9bfe2bca3b5a9be8cafa1bfe2a4a4bfe2aba3ba">[email&#160;protected]</a>, Hospital Readmissions Reduction
Program--Readmissions--Measures Issues.
Jennifer Tate, <a href="/cdn-cgi/l/email-protection#741e111a1a1d1211065a00150011341719075a1c1c075a131b02">[email&#160;protected]</a>, Hospital-Acquired
Condition Reduction Program--Administration Issues.
Yuling Li, (410) 786-8421, Hospital-Acquired Condition Reduction
Program--Measures Issues.
Julia Venanzi, <a href="/cdn-cgi/l/email-protection#f19b849d9890df87949f909f8b98b1929c82df999982df969e87">[email&#160;protected]</a>, Hospital Inpatient
Quality Reporting and Hospital Value-Based Purchasing Programs--
Administration Issues
Katrina Hoadley, <a href="/cdn-cgi/l/email-protection#81eae0f5f3e8efe0afe9eee0e5ede4f8c1e2ecf2afe9e9f2afe6eef7">[email&#160;protected]</a>, Hospital Inpatient
Quality Reporting and Hospital Value-Based Purchasing Programs--
Measures Issues Except Hospital Consumer Assessment of Healthcare
Providers and Systems Issues.
Elizabeth Goldstein, (410) 786-6665, Hospital Inpatient Quality
Reporting and Hospital Value-Based Purchasing--Hospital Consumer
Assessment of Healthcare Providers and Systems Measures Issues.
Annie Hollis, <a href="/cdn-cgi/l/email-protection#6e0f0000070b4006010202071d2e0d031d4006061d40090118">[email&#160;protected]</a>, PPS-Exempt Cancer Hospital
Quality Reporting--Administration Issues.
Katrina Hoadley, <a href="/cdn-cgi/l/email-protection#066d6772746f6867286e6967626a637f46656b75286e6e7528616970">[email&#160;protected]</a>, PPS-Exempt Cancer
Hospital Quality Reporting Program-Measure Issues
Christy Hughes, (410) 786-5662, Long-Term Care Hospital Quality
Reporting Program--Data Reporting Issues.
Jessica Warren, <a href="/cdn-cgi/l/email-protection#741e1107071d17155a03150606111a341719075a1c1c075a131b02">[email&#160;protected]</a> and Elizabeth Holland,
<a href="/cdn-cgi/l/email-protection#aacfc6c3d0cbc8cfdec284c2c5c6c6cbc4ceeac9c7d984c2c2d984cdc5dc">[email&#160;protected]</a>, Promoting Interoperability Programs.
Candace Anderson, (410) 786-1553, Medicaid Enrollment of Medicare
Providers and Suppliers for Purposes of Processing Claims for Cost-
Sharing for Services Furnished to Dually Eligible Beneficiaries.
Naseem Tarmohamed, (410) 786-0814, or
<a href="/cdn-cgi/l/email-protection#50033831223534033126393e372300223f3722313d10333d237e3838237e373f26">[email&#160;protected]</a>, for issues related to the Shared
Savings Program.

SUPPLEMENTARY INFORMATION:

Tables Available Through the Internet on the CMS Website

The IPPS tables for this FY 2022 final rule are available through
the internet on the CMS website at: <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index</a>.html. Click on
the link on the left side of the screen titled, ``FY 2022 IPPS Final
rule Home Page'' or ``Acute Inpatient--Files for Download.'' The LTCH
PPS tables for this FY 2022 final rule are available through the
internet on the CMS website at: <a href="http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/LongTermCareHospitalPPS/index.html">http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/LongTermCareHospitalPPS/index.html</a> under the
list item for Regulation Number CMS-1752-F. For further details on the
contents of the tables referenced in this final rule, we refer readers
to section VI. of the Addendum to this FY 2022 IPPS/LTCH PPS final
rule.
Readers who experience any problems accessing any of the tables
that are posted on the CMS websites, as previously identified, should
contact Michael Treitel at (410) 786-4552.

Table of Contents

I. Executive Summary and Background
A. Executive Summary
B. Background Summary
C. Summary of Provisions of Recent Legislation Implemented in
This Final Rule
D. Issuance of Proposed and Interim Final Rulemakings

[[Page 44775]]

E. Advancing Health Information Exchange
F. Use of FY 2020 or FY 2019 Data in the FY 2022 IPPS and LTCH
PPS Ratesetting
II. Changes to Medicare Severity Diagnosis-Related Group (MS-DRG)
Classifications and Relative Weights
A. Background
B. Adoption of the MS-DRGs and MS-DRG Reclassifications
C. FY 2022 MS-DRG Documentation and Coding Adjustment
D. Changes to Specific MS-DRG Classifications
E. Recalibration of the FY 2022 MS-DRG Relative Weights
F. Add-On Payments for New Services and Technologies for FY 2022
III. Changes to the Hospital Wage Index for Acute Care Hospitals
A. Background
B. Worksheet S-3 Wage Data for the Proposed FY 2022 Wage Index
C. Verification of Worksheet S-3 Wage Data
D. Method for Computing the Proposed FY 2022 Unadjusted Wage
Index
E. Occupational Mix Adjustment to the FY 2022 Wage Index
F. Analysis and Implementation of the Occupational Mix
Adjustment and the Proposed FY 2022 Occupational Mix Adjusted Wage
Index
G. Application of the Rural Floor, Application of the State
Frontier Floor, and Continuation of the Low Wage Index Hospital
Policy, and Budget Neutrality Adjustment
H. FY 2022 Wage Index Tables
I. Revisions to the Wage Index Based on Hospital Redesignations
and Reclassifications
J. Out-Migration Adjustment Based on Commuting Patterns of
Hospital Employees
K. Reclassification From Urban to Rural Under Section
1886(d)(8)(E) of the Act Implemented at 42 CFR 412.103
L. Process for Requests for Wage Index Data Corrections
M. Labor-Related Share for the FY 2022 Wage Index
IV. Rebasing and Revising of the Hospital Market Baskets for Acute
Care Hospitals
A. Background
B. Rebasing and Revising the IPPS Market Basket
C. Market Basket for Certain Hospitals Presently Excluded From
the IPPS
D. Rebasing and Revising the Capital Input Price Index (CIPI)
V. Other Decisions and Changes to the IPPS for Operating System
A. Changes in the Inpatient Hospital Updates for FY 2021 (Sec.
412.64(d))
B. Rural Referral Centers (RRCs)--Annual Updates to Case-Mix
Index and Discharge Criteria (Sec. 412.96)
C. Payment Adjustment for Low-Volume Hospitals (Sec. 412.101)
D. Indirect Medical Education (IME) Payment Adjustment Factor
(Sec. 412.105)
E. Payment Adjustment for Medicare Disproportionate Share
Hospitals (DSHs) for FY 2022 (Sec. 412.106)
F. Counting Days Associated With Section 1115 Demonstration
Projects in the Medicaid Fraction
G. Hospital Readmissions Reduction Program: Updates and Changes
(Sec. Sec. [thinsp]412.150 through 412.154)
H. Hospital Value-Based Purchasing (VBP) Program: Updates and
Changes (Sec. Sec. [thinsp]412.160 through 412.167)
I. Hospital-Acquired Conditions (HAC) Reduction Program: Updates
and Changes (Sec. 412.170)
J. Proposed Payments for Indirect and Direct Graduate Medical
Education Costs (Sec. Sec. 412.105 and 413.75 through 413.83)
K. Rural Community Hospital Demonstration Program
L. Market-Based MS-DRG Relative Weight--Policy Changes (Sec.
413.20)
M. Payment Adjustment for CAR T-cell Clinical Trial and Expanded
Use for Immunotherapy Cases (Sec. Sec. 412.85 and 412.312)
VI. Changes to the IPPS for Capital-Related Costs
A. Overview
B. Additional Provisions
C. Annual Update for FY 2022
VII. Changes for Hospitals Excluded From the IPPS
A. Rate-of-Increase in Payments to Excluded Hospitals for FY
2022
B. Critical Access Hospitals (CAHs)
VIII. Changes to the Long-Term Care Hospital Prospective Payment
System (LTCH PPS) for FY 2022
A. Background of the LTCH PPS
B. Medicare Severity Long-Term Care Diagnosis-Related Group (MS-
LTC-DRG) Classifications and Relative Weights for FY 2021
C. Changes to the LTCH PPS Payment Rates and Other Proposed
Changes to the LTCH PPS for FY 2022
IX. Quality Data Reporting Requirements for Specific Providers and
Suppliers
A. Advancing to Digital Quality Measurement and the Use of Fast
Healthcare Interoperability Resources (FHIR) in Hospital Quality
Programs--Request for Information
B. Closing the Health Equity Gap in CMS Hospital Quality
Programs--Request For Information
C. Hospital Inpatient Quality Reporting (IQR) Program
D. Changes to the PPS-Exempt Cancer Hospital Quality Reporting
(PCHQR) Program
E. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
F. Changes to the Medicare Promoting Interoperability Programs
X. Changes for Hospitals and Other Providers and Suppliers
A. Medicaid Enrollment of Medicare Providers and Suppliers for
Purposes of Processing Claims for Cost-Sharing for Services
Furnished to Dually Eligible Beneficiaries--Policy Changes (Sec.
455.410)
B. Medicare Shared Savings Program--Policy Changes (Sec.
425.600)
XI. MedPAC Recommendations
XII. Other Required Information
A. Publicly Available Files
B. Collection of Information Requirements
Regulation Text

Addendum--Schedule of Standardized Amounts, Update Factors, and Rate-
of-Increase Percentages Effective With Cost Reporting Periods Beginning
on or After October 1, 2021 and Payment Rates for LTCHs Effective for
Discharges Occurring on or After October 1, 2021

I. Summary and Background
II. Changes to Prospective Payment Rates for Hospital Inpatient
Operating Costs for Acute Care Hospitals for FY 2022
A. Calculation of the Proposed Adjusted Standardized Amount
B. Adjustments for Area Wage Levels and Cost-of-Living
C. Calculation of the Prospective Payment Rates
III. Changes to Payment Rates for Acute Care Hospital Inpatient
Capital-Related Costs for FY 2022
A. Determination of the Federal Hospital Inpatient Capital-
Related Prospective Payment Rate Update for FY 2022
B. Calculation of the Inpatient Capital-Related Prospective
Payments for FY 2022
C. Capital Input Price Index
IV. Changes to Payment Rates for Excluded Hospitals: Rate-of-
Increase Percentages for FY 2022
V. Changes to the Payment Rates for the LTCH PPS for FY 2022
A. LTCH PPS Standard Federal Payment Rate for FY 2022
B. Adjustment for Area Wage Levels Under the LTCH PPS for FY
2022
C. Cost-of-Living Adjustment (COLA) for LTCHs Located in Alaska
and Hawaii
D. Adjustment for LTCH PPS High-Cost Outlier (HCO) Cases
E. Update to the IPPS Comparable/Equivalent Amounts To Reflect
the Statutory Changes to the IPPS DSH Payment Adjustment Methodology
F. Computing the Adjusted LTCH PPS Federal Prospective Payments
for FY 2022
VI. Tables Referenced in This Rule Generally Available Through the
internet on the CMS website

Appendix A--Economic Analyses

I. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Objectives of the IPPS and the LTCH PPS
D. Limitations of Our Analysis
E. Hospitals Included in and Excluded From the IPPS
F. Effects on Hospitals and Hospital Units Excluded From the
IPPS
G. Quantitative Effects of the Policy Changes Under the IPPS for
Operating Costs
H. Effects of Other Policy Changes
I. Effects of Changes in the Capital IPPS
J. Effects of Payment Rate Changes and Policy Changes Under the
LTCH PPS
K. Effects of Requirements for Hospital Inpatient Quality
Reporting (IQR) Program

[[Page 44776]]

L. Effects of Requirements for the PPS-Exempt Cancer Hospital
Quality Reporting (PCHQR) Program
M. Effects of Requirements for the Long-Term Care Hospital
Quality Reporting Program (LTCH QRP)
N. Effects of Requirements Regarding the Promoting
Interoperability Program
O. Alternatives Considered
P. Overall Conclusion
Q. Regulatory Review Costs
II. Accounting Statements and Tables
A. Acute Care Hospitals
B. LTCHs
III. Regulatory Flexibility Act (RFA) Analysis
IV. Impact on Small Rural Hospitals
V. Unfunded Mandate Reform Act (UMRA) Analysis
VI. Executive Order 13175
VII. Executive Order 12866

Appendix B: Recommendation of Update Factors for Operating Cost Rates
of Payment for Inpatient Hospital Services

I. Background
II. Inpatient Hospital Update for FY 2022
A. FY 2022 Inpatient Hospital Update
B. Update for SCHs and MDHs for FY 2022
C. FY 2022 Puerto Rico Hospital Update
D. Update for Hospitals Excluded from the IPPS for FY 2022
E. Update for LTCHs for FY 2022
III. Secretary's Recommendation
IV. MedPAC Recommendation for Assessing Payment Adequacy and
Updating Payments in Traditional Medicare

I. Executive Summary and Background

A. Executive Summary

1. Purpose and Legal Authority
This FY 2022 IPPS/LTCH PPS final rule makes payment and policy
changes under the Medicare inpatient prospective payment systems (IPPS)
for operating and capital-related costs of acute care hospitals as well
as for certain hospitals and hospital units excluded from the IPPS. In
addition, it makes payment and policy changes for inpatient hospital
services provided by long-term care hospitals (LTCHs) under the long-
term care hospital prospective payment system (LTCH PPS). This final
rule also makes policy changes to programs associated with Medicare
IPPS hospitals, IPPS-excluded hospitals, and LTCHs. In this FY 2022
final rule, we are continuing policies to address wage index
disparities impacting low wage index hospitals. We are finalizing our
implementation of Section 9831 of the American Rescue Plan Act of 2021,
which permanently established the imputed floor wage index policy. In
addition, we are finalizing the regulations implemented in CMS-1762-IFC
(86 CFR 24735-24739), which allowed hospitals with a rural
redesignation under the Act to reclassify through the MGCRB using the
rural reclassified area as the geographic area in which the hospital is
located. This final rule includes policies related to new technology
add-on payments. We are also finalizing our proposal to repeal the
collection of market-based rate information on the Medicare cost report
and the market-based MS-DRG relative weight methodology.
We are establishing new requirements and revising existing
requirements for eligible hospitals and CAHs participating in the
Medicare Promoting Interoperability Program.
We are providing estimated and newly established performance
standards for the Hospital Value-Based Purchasing (VBP) Program, and
updated policies for the Hospital Readmissions Reduction Program,
Hospital Inpatient Quality Reporting (IQR) Program, Hospital VBP
Program, Hospital-Acquired Condition (HAC) Reduction Program, Long-Term
Care Hospital Quality Reporting Program (LTCH QRP), and the PPS-Exempt
Cancer Hospital Reporting (PCHQR) Program. Additionally, due to the
impact of the COVID-19 PHE on measure data used in our value-based
purchasing programs, we are finalizing our proposal to suppress several
measures in the Hospital VBP, HAC Reduction, and Hospital Readmissions
Reduction Programs. As a result of these measure suppressions for the
Hospital VBP Program we are also implementing a special scoring
methodology for FY 2022 that results in a value-based incentive payment
amount that matches the 2-percent reduction to the base operating DRG
payment amount.
We note that the FY 2022 IPPS/LTCH PPS proposed rule included our
proposals related to the implementation of the provisions of the
Consolidated Appropriations Act (CAA) of 2021 related to payments to
hospitals for direct graduate medical education (GME) and indirect
medical education (IME) costs. Please refer to the proposed rule (86 FR
25502 through 25524) for additional background information on these
proposals. Due to the number and nature of the comments that we
received on the implementation of sections 126, 127 and 131 of the CAA
of 2021 relating to payments to hospitals for direct GME and IME costs,
we will address public comments associated with these issues in future
rulemaking.
In addition, we note that the FY 2022 IPPS/LTCH PPS proposed rule
included our proposals related to the organ acquisition payment policy
for transplant hospitals, donor community hospitals and organ
procurement organizations. Please refer to the proposed rule (86 FR
25656 through 25676) for additional background information on these
proposals. Due to the number and nature of the comments that we
received on the organ acquisition payment policy proposals we will
address public comments associated with these issues in future
rulemaking.
Under various statutory authorities, we either discuss continued
program implementation or are making changes to the Medicare IPPS, to
the LTCH PPS, other related payment methodologies and programs for FY
2022 and subsequent fiscal years, and other policies and provisions
included in this rule. These statutory authorities include, but are not
limited to, the following:
<bullet> Section 1886(d) of the Social Security Act (the Act),
which sets forth a system of payment for the operating costs of acute
care hospital inpatient stays under Medicare Part A (Hospital
Insurance) based on prospectively set rates. Section 1886(g) of the Act
requires that, instead of paying for capital-related costs of inpatient
hospital services on a reasonable cost basis, the Secretary use a
prospective payment system (PPS).
<bullet> Section 1886(d)(1)(B) of the Act, which specifies that
certain hospitals and hospital units are excluded from the IPPS. These
hospitals and units are: Rehabilitation hospitals and units; LTCHs;
psychiatric hospitals and units; children's hospitals; cancer
hospitals; extended neoplastic disease care hospitals, and hospitals
located outside the 50 States, the District of Columbia, and Puerto
Rico (that is, hospitals located in the U.S. Virgin Islands, Guam, the
Northern Mariana Islands, and American Samoa). Religious nonmedical
health care institutions (RNHCIs) are also excluded from the IPPS.
<bullet> Sections 123(a) and (c) of the BBRA (Public Law (Pub. L.)
106-113) and section 307(b)(1) of the BIPA (Pub. L. 106-554) (as
codified under section 1886(m)(1) of the Act), which provide for the
development and implementation of a prospective payment system for
payment for inpatient hospital services of LTCHs described in section
1886(d)(1)(B)(iv) of the Act.
<bullet> Sections 1814(l), 1820, and 1834(g) of the Act, which
specify that payments are made to critical access hospitals (CAHs)
(that is, rural hospitals or facilities that meet certain statutory
requirements) for inpatient and outpatient services and that these
payments are generally based on 101 percent of reasonable cost.
<bullet> Section 1886(a)(4) of the Act, which specifies that costs
of approved

[[Page 44777]]

educational activities are excluded from the operating costs of
inpatient hospital services. Hospitals with approved graduate medical
education (GME) programs are paid for the direct costs of GME in
accordance with section 1886(h) of the Act.
<bullet> Section 1886(b)(3)(B)(viii) of the Act, which requires the
Secretary to reduce the applicable percentage increase that would
otherwise apply to the standardized amount applicable to a subsection
(d) hospital for discharges occurring in a fiscal year if the hospital
does not submit data on measures in a form and manner, and at a time,
specified by the Secretary.
<bullet> Section 1866(k) of the Act, which provides for the
establishment of a quality reporting program for hospitals described in
section 1886(d)(1)(B)(v) of the Act, referred to as ``PPS-exempt cancer
hospitals.''
<bullet> Section 1886(o) of the Act, which requires the Secretary
to establish a Hospital Value-Based Purchasing (VBP) Program, under
which value-based incentive payments are made in a fiscal year to
hospitals meeting performance standards established for a performance
period for such fiscal year.
<bullet> Section 1886(p) of the Act, which establishes a Hospital-
Acquired Condition (HAC) Reduction Program, under which payments to
applicable hospitals are adjusted to provide an incentive to reduce
hospital-acquired conditions.
<bullet> Section 1886(q) of the Act, as amended by section 15002 of
the 21st Century Cures Act, which establishes the Hospital Readmissions
Reduction Program. Under the program, payments for discharges from an
applicable hospital as defined under section 1886(d) of the Act will be
reduced to account for certain excess readmissions. Section 15002 of
the 21st Century Cures Act directs the Secretary to compare hospitals
with respect to the number of their Medicare-Medicaid dual-eligible
beneficiaries (dual-eligibles) in determining the extent of excess
readmissions.
<bullet> Section 1886(r) of the Act, as added by section 3133 of
the Affordable Care Act, which provides for a reduction to
disproportionate share hospital (DSH) payments under section
1886(d)(5)(F) of the Act and for a new uncompensated care payment to
eligible hospitals. Specifically, section 1886(r) of the Act requires
that, for fiscal year 2014 and each subsequent fiscal year, subsection
(d) hospitals that would otherwise receive a DSH payment made under
section 1886(d)(5)(F) of the Act will receive two separate payments:
(1) 25 percent of the amount they previously would have received under
section 1886(d)(5)(F) of the Act for DSH (``the empirically justified
amount''), and (2) an additional payment for the DSH hospital's
proportion of uncompensated care, determined as the product of three
factors. These three factors are: (1) 75 percent of the payments that
would otherwise be made under section 1886(d)(5)(F) of the Act; (2) 1
minus the percent change in the percent of individuals who are
uninsured; and (3) a hospital's uncompensated care amount relative to
the uncompensated care amount of all DSH hospitals expressed as a
percentage.
<bullet> Section 1886(m)(5) of the Act, which requires the
Secretary to reduce by two percentage points the annual update to the
standard Federal rate for discharges for a long-term care hospital
(LTCH) during the rate year for LTCHs that do not submit data in the
form, manner, and at a time, specified by the Secretary.
<bullet> Section 1886(m)(6) of the Act, as added by section
1206(a)(1) of the Pathway for Sustainable Growth Rate (SGR) Reform Act
of 2013 (Pub. L. 113-67) and amended by section 51005(a) of the
Bipartisan Budget Act of 2018 (Pub. L. 115-123), which provided for the
establishment of site neutral payment rate criteria under the LTCH PPS,
with implementation beginning in FY 2016. Section 51005(b) of the
Bipartisan Budget Act of 2018 amended section 1886(m)(6)(B) by adding
new clause (iv), which specifies that the IPPS comparable amount
defined in clause (ii)(I) shall be reduced by 4.6 percent for FYs 2018
through 2026.
<bullet> Section 1899B of the Act, as added by section 2(a) of the
Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT
Act) (Pub. L. 113-185), which provides for the establishment of
standardized data reporting for certain post-acute care providers,
including LTCHs.
<bullet> Section 1899 of the Act which established the Medicare
Shared Savings Program (Shared Savings Program) to facilitate
coordination and cooperation among providers and suppliers to improve
the quality of care for Medicare fee-for-service (FFS) beneficiaries
and reduce the rate of growth in expenditures under Medicare Parts A
and B.
<bullet> Section 1902(kk)(3) of the Act, as amended by section
6401(b) of the Affordable Care Act, which mandates that states require
providers and suppliers to comply with the same disclosure requirements
established by the Secretary under section 1866(j)(5) of the Act.
<bullet> Section 2107(e)(1) of the Act, as amended by section
6401(c) of the Affordable Care Act, which makes the requirements of
section 1902(kk) of the Act, including the disclosure requirements,
applicable to CHIP.
2. Summary of the Major Provisions
The following is a summary of the major provisions in this final
rule. In general, these major provisions are being finalized as part of
the annual update to the payment policies and payment rates, consistent
with the applicable statutory provisions. A general summary of the
changes in this final rule is presented in section I.D. of the preamble
of this final rule.
a. MS-DRG Documentation and Coding Adjustment
Section 631 of the American Taxpayer Relief Act of 2012 (ATRA, Pub.
L. 112- 240) amended section 7(b)(1)(B) of Public Law 110-90 to require
the Secretary to make a recoupment adjustment to the standardized
amount of Medicare payments to acute care hospitals to account for
changes in MS-DRG documentation and coding that do not reflect real
changes in case-mix, totaling $11 billion over a 4-year period of FYs
2014, 2015, 2016, and 2017. The FY 2014 through FY 2017 adjustments
represented the amount of the increase in aggregate payments as a
result of not completing the prospective adjustment authorized under
section 7(b)(1)(A) of Public Law 110-90 until FY 2013. Prior to the
ATRA, this amount could not have been recovered under Public Law 110-
90. Section 414 of the Medicare Access and CHIP Reauthorization Act of
2015 (MACRA) (Pub. L. 114-10) replaced the single positive adjustment
we intended to make in FY 2018 with a 0.5 percent positive adjustment
to the standardized amount of Medicare payments to acute care hospitals
for FYs 2018 through 2023. (The FY 2018 adjustment was subsequently
adjusted to 0.4588 percent by section 15005 of the 21st Century Cures
Act.) Therefore, for FY 2022, we are making an adjustment of +0.5
percent to the standardized amount.
b. Extension of the New COVID-19 Treatments Add-on Payment (NCTAP)
In response to the COVID-19 PHE, we established the New COVID-19
Treatments Add-on Payment (NCTAP) under the IPPS for COVID-19 cases
that meet certain criteria (85 FR 71157 and 71158). We believe that as
drugs and biological products become available and are authorized for
emergency use or approved by Food and Drug Administration (FDA) for the
treatment

[[Page 44778]]

of COVID-19 in the inpatient setting, it is appropriate to increase the
current IPPS payment amounts to mitigate any potential financial
disincentives for hospitals to provide new COVID-19 treatments during
the PHE. Therefore, effective for discharges occurring on or after
November 2, 2020 and until the end of the PHE for COVID-19, CMS
established the NCTAP.
We anticipate that there might be inpatient cases of COVID-19,
beyond the end of the PHE, for which payment based on the assigned MS-
DRG may not adequately reflect the additional cost of new COVID-19
treatments. In order to continue to mitigate potential financial
disincentives for hospitals to provide these new treatments, and to
minimize any potential payment disruption immediately following the end
of the PHE, we believe that the NCTAP should remain available for cases
involving eligible treatments for the remainder of the fiscal year in
which the PHE ends (for example, until September 30, 2022). After
review of public comments received, and for the reasons discussed in
section II.F. of the preamble of this final rule, we are finalizing to
extend the NCTAP through the end of the fiscal year in which the PHE
ends for all eligible products, including those approved for new
technology add-on payments for FY 2022, with any new technology add-on
payment reducing the amount of the NCTAP.
c. Use of FY 2020 or FY 2019 Data in the FY 2022 IPPS and LTCH PPS
Ratesetting
For the IPPS and LTCH PPS ratesetting, our longstanding goal is
always to use the best available data overall. In section I.F. of the
preamble of this final rule, we discuss our analysis of the best
available data for use in the development of this FY 2022 IPPS/LTCH PPS
final rule given the potential impact of the public health emergency
(PHE) for the Coronavirus Disease (COVID-19). As discussed in section
I.F. of the preamble of this final rule, we are using the FY 2019 data,
such as the FY 2019 MedPAR file, for the FY 2022 ratesetting for
circumstances where the FY 2020 data is significantly impacted by the
COVID-19 PHE, primarily in that the utilization of inpatient services
reflect generally markedly different utilization for certain types of
services in FY 2020 than would have been expected in the absence of the
PHE.
d. Continuation of the Low Wage Index Hospital Policy
To help mitigate wage index disparities between high wage and low
hospitals, in the FY 2020 IPPS/LTCH PPS rule (84 FR 42326 through
42332), we adopted a policy to increase the wage index values for
certain hospitals with low wage index values (the low wage index
hospital policy). This policy was adopted in a budget neutral manner
through an adjustment applied to the standardized amounts for all
hospitals. We also indicated that this policy will be effective for at
least 4 years, beginning in FY 2020, in order to allow employee
compensation increases implemented by these hospitals sufficient time
to be reflected in the wage index calculation. Therefore, for FY 2022,
we are continuing the low-wage index hospital policy, and are also
applying this policy in a budget neutral manner by applying an
adjustment to the standardized amounts.
e. Implementation of Section 9831 of the American Rescue Plan Act of
2021 (Pub. L. 117-2) Imputed Floor Wage Index Policy for All-Urban
States
Section 9831 of the American Rescue Plan Act of 2021 (Pub. L. 117-
2) amended section 1886(d)(3)(E) of the Act (42 U.S.C. 1395ww(d)(3)(E))
to establish a minimum area wage index for hospitals in all-urban
States. Specifically, section 1886(d)(3)(E)(iv) of the Act (as added by
section 9831(a)(2) of Pub. L. 117-2) reinstates the imputed floor wage
index policy for all-urban States effective for discharges on or after
October 1, 2021 (FY 2022) with no expiration date using the methodology
described in 42 CFR 412.64(h)(4)(vi) as in effect for FY 2018.
Furthermore, section 1886(d)(3)(E)(iv)(III) of the Act provides that
the imputed floor wage index shall not be applied in a budget neutral
manner. We refer readers to section III.G.2. of this final rule for a
summary of the provisions of section 9831 of Public Law 117-2 that we
are implementing in this final rule.
f. DSH Payment Adjustment and Additional Payment for Uncompensated Care
Section 3133 of the Affordable Care Act modified the Medicare
disproportionate share hospital (DSH) payment methodology beginning in
FY 2014. Under section 1886(r) of the Act, which was added by section
3133 of the Affordable Care Act, starting in FY 2014, Medicare DSHs
receive 25 percent of the amount they previously would have received
under the statutory formula for Medicare DSH payments in section
1886(d)(5)(F) of the Act. The remaining amount, equal to 75 percent of
the amount that otherwise would have been paid as Medicare DSH
payments, is paid as additional payments after the amount is reduced
for changes in the percentage of individuals that are uninsured. Each
Medicare DSH will receive an additional payment based on its share of
the total amount of uncompensated care for all Medicare DSHs for a
given time period.
In this final rule, we are updating our estimates of the three
factors used to determine uncompensated care payments for FY 2022. We
are also continuing to use uninsured estimates produced by CMS' Office
of the Actuary (OACT) as part of the development of the National Health
Expenditure Accounts (NHEA) in the calculation of Factor 2. Consistent
with the policy adopted in the FY 2021 IPPS/LTCH PPS final rule for FY
2022 and subsequent fiscal years, we are using a single year of data on
uncompensated care costs from Worksheet S-10 of the FY 2018 cost
reports to calculate Factor 3 in the FY 2022 methodology for all
eligible hospitals with the exception of Indian Health Service (IHS)
and Tribal hospitals and Puerto Rico hospitals. For IHS and Tribal
hospitals and Puerto Rico hospitals we are finalizing our proposal to
continue to use the low-income insured days proxy to calculate Factor 3
for these hospitals for FY 2022. We are also finalizing certain
methodological changes for calculating Factor 3 for FY 2022.
g. Modification of Limitations on Redesignation by the Medicare
Geographic Classification Review Board (MGCRB)
In May 10, 2021 Federal Register (86 FR 24735), concurrent with the
FY 2022 IPPS/LTCH PPS proposed rule, we published an interim final rule
with comment period (IFC) (CMS-1762-IFC) that amended our current
regulations to allow hospitals with a rural redesignation under the Act
to reclassify through the Medicare MGCRB using the rural reclassified
area as the geographic area in which the hospital is located. These
regulatory changes align our policy with the decision in Bates County
Memorial Hospital v. Azar, effective with reclassifications beginning
with fiscal year (FY) 2023. We respond to the public comments on CMS-
1762-IFC in this final rule, and finalize the regulatory changes made
therein.
h. Reduction of Hospital Payments for Excess Readmissions
We are making changes to policies for the Hospital Readmissions
Reduction Program, which was established under section 1886(q) of the
Act, as amended by section 15002 of the 21st Century

[[Page 44779]]

Cures Act. The Hospital Readmissions Reduction Program requires a
reduction to a hospital's base operating DRG payment to account for
excess readmissions of selected applicable conditions. For FY 2017 and
subsequent years, the reduction is based on a hospital's risk-adjusted
readmission rate during a 3-year period for acute myocardial infarction
(AMI), heart failure (HF), pneumonia, chronic obstructive pulmonary
disease (COPD), elective primary total hip arthroplasty/total knee
arthroplasty (THA/TKA), and coronary artery bypass graft (CABG)
surgery. In this FY 2022 IPPS/LTCH PPS final rule, we are finalizing
the following policies: (1) To adopt a cross-program measure
suppression policy for the duration of the public health emergency for
COVID-19; (2) to suppress the Hospital 30-Day, All-Cause, Risk-
Standardized Readmission Rate (RSRR) following Pneumonia
Hospitalization measure (NQF #0506) for the FY 2023 program year; (3)
to modify the remaining five condition-specific readmission measures to
exclude COVID-19 diagnosed patients from the measure denominators,
beginning with the FY 2023 program year; (4) to use the MedPAR data
that aligns with the applicable period for FY 2022; (5) to
automatically adopt the use of MedPAR data corresponding to the
applicable period beginning with the FY 2023 program year and all
subsequent program years, unless otherwise specified by the Secretary;
and (6) to update the regulatory text to reflect that our Hospital
Compare website has been renamed and is now referred to as Care
Compare. We are clarifying our Extraordinary Circumstances Exceptions
(ECE) policy, and we also requested public comment on opportunities to
advance health equity through possible future stratification of results
by race and ethnicity for condition/procedure-specific readmission
measures and by expansion of standardized data collection to additional
social factors, such as language preference and disability status. We
also sought comment on mechanisms of incorporating other demographic
characteristics into analyses that address and advance health equity,
such as the potential to include administrative and self-reported data
to measure co-occurring disability status.
i. Hospital Value-Based Purchasing (VBP) Program
Section 1886(o) of the Act requires the Secretary to establish a
Hospital VBP Program under which value-based incentive payments are
made in a fiscal year to hospitals based on their performance on
measures established for a performance period for such fiscal year. In
this final rule, we are finalizing our proposals to: (1) Establish a
measure suppression policy for the duration of the public health
emergency for COVID-19; (2) suppress the Hospital Consumer Assessment
of Healthcare Providers and Systems (HCAHPS), Medicare Spending Per
Beneficiary (MSPB), and five Healthcare-Associated Infection (HAI)
measures, for the FY 2022 program year; and (3) suppress the Hospital
30-Day, All-Cause, Risk-Standardized Mortality Rate Following Pneumonia
(PN) Hospitalization (MORT-30-PN) measure for the FY 2023 program year.
We are also finalizing our proposal to revise the scoring and payment
methodology for the FY 2022 program year such that hospitals will not
receive Total Performance Scores. We believe that awarding a TPS to any
hospital based off the remaining measures that are not suppressed would
not result in a fair national comparison and, as a result, are not
awarding a TPS to any hospital for the FY 2022 program year. Instead,
we are finalizing our proposal to award each hospital a payment
incentive multiplier that results in a value-based incentive payment
that is equal to the amount withheld for the fiscal year (2 percent).
We are finalizing our proposal to remove the CMS Patient Safety and
Adverse Events Composite (CMS PSI 90) measure beginning with FY 2023
because the costs associated with the measure outweigh the benefit of
its use in the program. We are also finalizing our proposal to update
the baseline periods for certain measures affected by the ECE granted
in response to the COVID-19 PHE and making a technical update to our
terminology used in the Hospital VBP Program regulations.
j. Hospital-Acquired Condition (HAC) Reduction Program
Section 1886(p) of the Act establishes an incentive to hospitals to
reduce the incidence of hospital-acquired conditions by requiring the
Secretary to make an adjustment to payments to applicable hospitals,
effective for discharges beginning on October 1, 2014. This 1-percent
payment reduction applies to hospitals that rank in the worst-
performing quartile (25 percent) of all applicable hospitals, relative
to the national average, of conditions acquired during the applicable
period and on all of the hospital's discharges for the specified fiscal
year. In this FY 2022 IPPS/LTCH PPS final rule, we are: (1) Clarifying
our ECE policy; (2) finalizing our proposal to adopt a cross-program
measure suppression policy for the duration of the public health
emergency for COVID-19; (3) finalizing our proposal to apply that
measure suppression policy to suppress certain program data from FY
2022, FY 2023, and FY 2024 HAC Reduction Programs; and (4) finalizing
our proposal to update the regulatory text to reflect that the Hospital
Compare website has been renamed and is now referred to as Care
Compare.
k. Hospital Inpatient Quality Reporting (IQR) Program
Under section 1886(b)(3)(B)(viii) of the Act, subsection (d)
hospitals are required to report data on measures selected by the
Secretary for a fiscal year in order to receive the full annual
percentage increase that would otherwise apply to the standardized
amount applicable to discharges occurring in that fiscal year.
In this FY 2022 IPPS/LTCH PPS final rule, we are making several
changes. We are finalizing the adoption of five new measures: (1) A new
structural measure--Maternal Morbidity Structural Measure--beginning
with a shortened reporting period from October 1, 2021 through December
31, 2021 affecting the CY 2021 reporting period/FY 2023 payment
determination; (2) the Hybrid Hospital-Wide All-Cause Risk Standardized
Mortality (Hybrid HWM) measure in a stepwise fashion, beginning with a
voluntary reporting period from July 1, 2022 through June 30, 2023, and
followed by mandatory reporting from July 1, 2023 through June 30,
2024, affecting the FY 2026 payment determination and for subsequent
years; (3) the COVID-19 Vaccination Coverage among Health Care
Personnel (HCP) measure beginning with a shortened reporting period
from October 1, 2021 through December 31, 2021, affecting the CY 2021
reporting period/FY 2023 payment determination and with quarterly
reporting beginning with the FY 2024 payment determination and for
subsequent years; and two medication-related adverse event eCQMs
beginning with the CY 2023 reporting period/FY 2025 payment
determination; (4) Hospital Harm-Severe Hypoglycemia eCQM (NQF #3503e);
and (5) Hospital Harm-Severe Hyperglycemia eCQM (NQF #3533e).
We are also finalizing the removal of three measures: (1) Exclusive
Breast Milk Feeding (PC-05) (NQF #0480) beginning with the FY 2026
payment determination; (2) Admit Decision Time to ED Departure Time for
Admitted Patients (ED-2) (NQF #0497) beginning with the FY 2026 payment
determination; and (3) the Discharged on Statin Medication eCQM (STK-
06)

[[Page 44780]]

(NQF #0439), beginning with the FY 2026 payment determination. We are
not finalizing our proposals to remove the following two measures: (1)
Death Among Surgical Inpatients with Serious Treatable Complications
(CMS PSI-04); and (2) Anticoagulation Therapy for Atrial Fibrillation/
Flutter eCQM (STK-03) (NQF #0436).
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25070), we
requested comment from stakeholders on the potential future development
and inclusion of two measures: (1) A mortality measure for patients
admitted with COVID-19; and (2) a patient-reported outcomes measure
following elective total hip and/or total knee arthroplasty (THA/TKA).
We also requested comment from stakeholders on ways we can leverage
measures to address gaps in existing health equity generally as well as
comment on: (1) Potential future confidential stratified reporting for
the Hospital-Wide All-Cause Unplanned Readmission (HWR) measure using
both dual eligibility and race/ethnicity; and (2) potential future
reporting of a structural measure to assess the degree of hospital
leadership engagement in health equity performance data. We also
requested feedback across programs on potential actions and priority
areas that would enable the continued transformation of our quality
measurement toward greater digital capture of data and use of the FHIR
standard.
In addition, we are finalizing our proposal that beginning with the
CY 2023 reporting period/FY 2025 payment determination, hospitals will
be required to use certified technology that has been updated
consistent with the 2015 Edition Cures Update and clarifying that
certified technology must support the reporting requirements for all
available eCQMs. We also are finalizing our provision that hybrid
measures comply with the same certification requirements as eCQMs,
specifically that EHR technology must be certified to the 2015 Edition
Cures Update. We are revising 42 CFR 412.140(a)(2) and 42 CFR
412.140(e)(2)(iii) to replace the terms ``Security Administrator'' and
``System Administrator'' with the term ``security official'' in
alignment with other CMS quality programs. Due to an updated URL for
the QualityNet website from <a href="http://QualityNet.org">QualityNet.org</a> to <a href="http://QualityNet.cms.gov">QualityNet.cms.gov</a>, we
are also revising Hospital IQR Program regulations at 42 CFR
412.140(a)(1) and 42 CFR 412.140(c)(2)(i) to reflect updates to the
QualityNet website. Lastly, we are finalizing our proposal to extend
the effects of the educational review process for chart-abstracted
measures beginning with validations affecting the FY 2024 payment
determination.
l. PPS-Exempt Cancer Hospital Quality Reporting Program
Section 1866(k)(1) of the Act requires, for purposes of FY 2014 and
each subsequent fiscal year, that a hospital described in section
1886(d)(1)(B)(v) of the Act (a PPS-exempt cancer hospital, or a PCH)
submit data in accordance with section 1866(k)(2) of the Act with
respect to such fiscal year. There is no financial impact to PCH
Medicare payment if a PCH does not participate.
In this final rule, we are removing the Oncology: Plan of Care for
Pain--Medical Oncology and Radiation Oncology (NQF #0383) (PCH-15)
measure beginning with the FY 2024 program year, adopting the COVID-19
Vaccination Coverage among Healthcare Personnel measure beginning with
the FY 2023 program year, making a technical update to the terminology
we use in the program, and codifying existing PCHQR Program policies in
our regulations.
m. Medicare Promoting Interoperability Program
For purposes of reducing the burden on eligible hospitals and CAHs,
we are making several changes to the Medicare Promoting
Interoperability Program. Specifically, we are: (1) Continuing the EHR
reporting period of a minimum of any continuous 90-day period for new
and returning eligible hospitals and CAHs for CY 2023 and increasing
the EHR reporting period to a minimum of any continuous 180-day period
for new and returning eligible hospitals and CAHs for CY 2024; (2)
maintaining the Electronic Prescribing Objective's Query of PDMP
measure as optional while increasing its available bonus from 5 points
to 10 points for the EHR reporting period in CY 2022; (3) adding a new
Health Information Exchange (HIE) Bi-Directional Exchange measure as a
yes/no attestation to the HIE objective as an optional alternative to
the two existing measures beginning with the EHR reporting period in CY
2022; (4) requiring reporting a ``yes'' on four of the existing Public
Health and Clinical Data Exchange Objective measures (Syndromic
Surveillance Reporting, Immunization Registry Reporting, Electronic
Case Reporting, and Electronic Reportable Laboratory Result Reporting)
or requesting the applicable exclusion(s); (5) adding a new measure to
the Protect Patient Health Information objective that requires eligible
hospitals and CAHs to attest to having completed an annual assessment
of SAFER Guides beginning with the EHR reporting period in CY 2022; (6)
removing attestation statements 2 and 3 from the Promoting
Interoperability Program's prevention of information blocking
requirement; (7) increasing the minimum required score for the
objectives and measures from 50 points to 60 points (out of 100 points)
in order to be considered a meaningful EHR user; and (8) adopting two
new eCQMs to the Medicare Promoting Interoperability Program's eCQM
measure set beginning with the reporting period in CY 2023, in addition
to removing three eCQMs from the measure set beginning with the
reporting period in CY 2024, which updates are in alignment with the
eCQM updates being finalized for the Hospital IQR Program. We are
amending our regulation texts as necessary to incorporate several of
these changes. We are not finalizing our proposal to remove the
Anticoagulation Therapy for Atrial Fibrillation/Flutter eCQM (STK-03)
(NQF #0436) in alignment with the Hospital IQR Program. We are also not
finalizing our proposal to modify the Provide Patients Electronic
Access to Their Health Information measure by requiring eligible
hospitals and CAHs to ensure that patient health information remains
available to the patient (or patient-authorized representative). We
will consider the feedback we received for future rulemaking.
n. Repeal of Market-Based Data Collection and Market-Based MS-DRG
Relative Weight Methodology
As discussed in section V.L. of the preamble of this final rule, we
are finalizing our proposal, without modification, to repeal the
requirement that a hospital report on the Medicare cost report the
median payer-specific negotiated charge that the hospital has
negotiated with all of its MA organization payers, by MS-DRG, for cost
reporting periods ending on or after January 1, 2021. We are also
finalizing our proposal, without modification, to repeal the market-
based MS-DRG relative weight methodology adopted for calculating the
MS-DRG relative weights effective in FY 2024, and to continue using the
existing cost-based methodology for calculating the MS-DRG relative
weights for FY 2024 and subsequent fiscal years. Lastly, we solicited
comment on alternative approaches or data sources that could be used in
Medicare fee-for-service (FFS) ratesetting. We will continue to
consider these comments as applicable.

[[Page 44781]]

o. Medicare Shared Savings Program
We are making changes to policies for the Shared Savings Program,
which was established under section 1899 of the Act, to allow eligible
ACOs participating in the BASIC track's glide path the option to elect
to forgo automatic advancement along the glide path's increasing levels
of risk and potential reward for performance year (PY) 2022. Under the
policy we are adopting in this final rule, prior to the automatic
advancement for PY 2022, an eligible ACO may elect to remain in the
same level of the BASIC track's glide path in which it participated
during PY 2021. For PY 2023, an ACO that elects this advancement
deferral option will be automatically advanced to the level of the
BASIC track's glide path in which it would have participated during PY
2023 if it had advanced automatically to the required level for PY 2022
(unless the ACO elects to advance more quickly before the start of PY
2023).
3. Summary of Costs and Benefits
The following table provides a summary of the costs, savings,
benefits associated with the major provisions described in section
I.A.3. of the preamble of this final rule.
BILLING CODE 4120-01-P

[[Page 44782]]

[GRAPHIC] [TIFF OMITTED] TR13AU21.000

[[Page 44783]]

[GRAPHIC] [TIFF OMITTED] TR13AU21.001

[[Page 44784]]

[GRAPHIC] [TIFF OMITTED] TR13AU21.002

BILLING CODE 4120-01-C

[[Page 44785]]

B. Background Summary

1. Acute Care Hospital Inpatient Prospective Payment System (IPPS)
Section 1886(d) of the Act sets forth a system of payment for the
operating costs of acute care hospital inpatient stays under Medicare
Part A (Hospital Insurance) based on prospectively set rates. Section
1886(g) of the Act requires the Secretary to use a prospective payment
system (PPS) to pay for the capital-related costs of inpatient hospital
services for these ``subsection (d) hospitals.'' Under these PPSs,
Medicare payment for hospital inpatient operating and capital-related
costs is made at predetermined, specific rates for each hospital
discharge. Discharges are classified according to a list of diagnosis-
related groups (DRGs).
The base payment rate is comprised of a standardized amount that is
divided into a labor-related share and a nonlabor-related share. The
labor-related share is adjusted by the wage index applicable to the
area where the hospital is located. If the hospital is located in
Alaska or Hawaii, the nonlabor-related share is adjusted by a cost-of-
living adjustment factor. This base payment rate is multiplied by the
DRG relative weight.
If the hospital treats a high percentage of certain low-income
patients, it receives a percentage add-on payment applied to the DRG-
adjusted base payment rate. This add-on payment, known as the
disproportionate share hospital (DSH) adjustment, provides for a
percentage increase in Medicare payments to hospitals that qualify
under either of two statutory formulas designed to identify hospitals
that serve a disproportionate share of low-income patients. For
qualifying hospitals, the amount of this adjustment varies based on the
outcome of the statutory calculations. The Affordable Care Act revised
the Medicare DSH payment methodology and provides for a new additional
Medicare payment beginning on October 1, 2013, that considers the
amount of uncompensated care furnished by the hospital relative to all
other qualifying hospitals.
If the hospital is training residents in an approved residency
program(s), it receives a percentage add-on payment for each case paid
under the IPPS, known as the indirect medical education (IME)
adjustment. This percentage varies, depending on the ratio of residents
to beds.
Additional payments may be made for cases that involve new
technologies or medical services that have been approved for special
add-on payments. In general, to qualify, a new technology or medical
service must demonstrate that it is a substantial clinical improvement
over technologies or services otherwise available, and that, absent an
add-on payment, it would be inadequately paid under the regular DRG
payment. In addition, certain transformative new devices and certain
antimicrobial products may qualify under an alternative inpatient new
technology add-on payment pathway by demonstrating that, absent an add-
on payment, they would be inadequately paid under the regular DRG
payment.
The costs incurred by the hospital for a case are evaluated to
determine whether the hospital is eligible for an additional payment as
an outlier case. This additional payment is designed to protect the
hospital from large financial losses due to unusually expensive cases.
Any eligible outlier payment is added to the DRG-adjusted base payment
rate, plus any DSH, IME, and new technology or medical service add-on
adjustments.
Although payments to most hospitals under the IPPS are made on the
basis of the standardized amounts, some categories of hospitals are
paid in whole or in part based on their hospital-specific rate, which
is determined from their costs in a base year. For example, sole
community hospitals (SCHs) receive the higher of a hospital-specific
rate based on their costs in a base year (the highest of FY 1982, FY
1987, FY 1996, or FY 2006) or the IPPS Federal rate based on the
standardized amount. SCHs are the sole source of care in their areas.
Specifically, section 1886(d)(5)(D)(iii) of the Act defines an SCH as a
hospital that is located more than 35 road miles from another hospital
or that, by reason of factors such as an isolated location, weather
conditions, travel conditions, or absence of other like hospitals (as
determined by the Secretary), is the sole source of hospital inpatient
services reasonably available to Medicare beneficiaries. In addition,
certain rural hospitals previously designated by the Secretary as
essential access community hospitals are considered SCHs.
Under current law, the Medicare-dependent, small rural hospital
(MDH) program is effective through FY 2022. For discharges occurring on
or after October 1, 2007, but before October 1, 2022, an MDH receives
the higher of the Federal rate or the Federal rate plus 75 percent of
the amount by which the Federal rate is exceeded by the highest of its
FY 1982, FY 1987, or FY 2002 hospital-specific rate. MDHs are a major
source of care for Medicare beneficiaries in their areas. Section
1886(d)(5)(G)(iv) of the Act defines an MDH as a hospital that is
located in a rural area (or, as amended by the Bipartisan Budget Act of
2018, a hospital located in a State with no rural area that meets
certain statutory criteria), has not more than 100 beds, is not an SCH,
and has a high percentage of Medicare discharges (not less than 60
percent of its inpatient days or discharges in its cost reporting year
beginning in FY 1987 or in two of its three most recently settled
Medicare cost reporting years).
Section 1886(g) of the Act requires the Secretary to pay for the
capital-related costs of inpatient hospital services in accordance with
a prospective payment system established by the Secretary. The basic
methodology for determining capital prospective payments is set forth
in our regulations at 42 CFR 412.308 and 412.312. Under the capital
IPPS, payments are adjusted by the same DRG for the case as they are
under the operating IPPS. Capital IPPS payments are also adjusted for
IME and DSH, similar to the adjustments made under the operating IPPS.
In addition, hospitals may receive outlier payments for those cases
that have unusually high costs.
The existing regulations governing payments to hospitals under the
IPPS are located in 42 CFR part 412, subparts A through M.
2. Hospitals and Hospital Units Excluded From the IPPS
Under section 1886(d)(1)(B) of the Act, as amended, certain
hospitals and hospital units are excluded from the IPPS. These
hospitals and units are: Inpatient rehabilitation facility (IRF)
hospitals and units; long-term care hospitals (LTCHs); psychiatric
hospitals and units; children's hospitals; cancer hospitals; extended
neoplastic disease care hospitals, and hospitals located outside the 50
States, the District of Columbia, and Puerto Rico (that is, hospitals
located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands,
and American Samoa). Religious nonmedical health care institutions
(RNHCIs) are also excluded from the IPPS. Various sections of the
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33), the Medicare,
Medicaid and SCHIP [State Children's Health Insurance Program] Balanced
Budget Refinement Act of 1999 (BBRA, Pub. L. 106-113), and the
Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act
of 2000 (BIPA, Pub. L. 106-554) provide for the implementation of PPSs
for IRF hospitals and units, LTCHs, and psychiatric hospitals and units
(referred to as inpatient psychiatric facilities (IPFs)). (We note that
the annual updates to the LTCH PPS are included

[[Page 44786]]

along with the IPPS annual update in this document. Updates to the IRF
PPS and IPF PPS are issued as separate documents.) Children's
hospitals, cancer hospitals, hospitals located outside the 50 States,
the District of Columbia, and Puerto Rico (that is, hospitals located
in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and
American Samoa), and RNHCIs continue to be paid solely under a
reasonable cost-based system, subject to a rate-of-increase ceiling on
inpatient operating costs. Similarly, extended neoplastic disease care
hospitals are paid on a reasonable cost basis, subject to a rate-of-
increase ceiling on inpatient operating costs.
The existing regulations governing payments to excluded hospitals
and hospital units are located in 42 CFR parts 412 and 413.
3. Long-Term Care Hospital Prospective Payment System (LTCH PPS)
The Medicare prospective payment system (PPS) for LTCHs applies to
hospitals described in section 1886(d)(1)(B)(iv) of the Act, effective
for cost reporting periods beginning on or after October 1, 2002. The
LTCH PPS was established under the authority of sections 123 of the
BBRA and section 307(b) of the BIPA (as codified under section
1886(m)(1) of the Act). Section 1206(a) of the Pathway for SGR Reform
Act of 2013 (Pub. L. 113-67) established the site neutral payment rate
under the LTCH PPS, which made the LTCH PPS a dual rate payment system
beginning in FY 2016. Under this statute, effective for LTCH's cost
reporting periods beginning in FY 2016 cost reporting period, LTCHs are
generally paid for discharges at the site neutral payment rate unless
the discharge meets the patient criteria for payment at the LTCH PPS
standard Federal payment rate. The existing regulations governing
payment under the LTCH PPS are located in 42 CFR part 412, subpart O.
Beginning October 1, 2009, we issue the annual updates to the LTCH PPS
in the same documents that update the IPPS.
4. Critical Access Hospitals (CAHs)
Under sections 1814(l), 1820, and 1834(g) of the Act, payments made
to critical access hospitals (CAHs) (that is, rural hospitals or
facilities that meet certain statutory requirements) for inpatient and
outpatient services are generally based on 101 percent of reasonable
cost. Reasonable cost is determined under the provisions of section
1861(v) of the Act and existing regulations under 42 CFR part 413.
5. Payments for Graduate Medical Education (GME)
Under section 1886(a)(4) of the Act, costs of approved educational
activities are excluded from the operating costs of inpatient hospital
services. Hospitals with approved graduate medical education (GME)
programs are paid for the direct costs of GME in accordance with
section 1886(h) of the Act. The amount of payment for direct GME costs
for a cost reporting period is based on the hospital's number of
residents in that period and the hospital's costs per resident in a
base year. The existing regulations governing payments to the various
types of hospitals are located in 42 CFR part 413.

C. Summary of Provisions of Recent Legislation Implemented in This
Final Rule

1. The Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L.
114-10)
Section 414 of the Medicare Access and CHIP Reauthorization Act of
2015 (MACRA, Pub. L. 114-10) specifies a 0.5 percent positive
adjustment to the standardized amount of Medicare payments to acute
care hospitals for FYs 2018 through 2023. These adjustments follow the
recoupment adjustment to the standardized amounts under section 1886(d)
of the Act based upon the Secretary's estimates for discharges
occurring from FYs 2014 through 2017 to fully offset $11 billion, in
accordance with section 631 of the ATRA. The FY 2018 adjustment was
subsequently adjusted to 0.4588 percent by section 15005 of the 21st
Century Cures Act.
2. The American Rescue Plan Act of 2021 (Pub. L. 117-2)
Section 9831 of the American Rescue Plan Act of 2021 (Pub. L. 117-
2) amended section 1886(d)(3)(E) of the Act (42 U.S.C. 1395ww(d)(3)(E))
to establish a minimum area wage index for hospitals in all-urban
States. Specifically, section 1886(d)(3)(E)(iv) of the Act (as added by
section 9831(a)(2) of Pub. L. 117-2) reinstates the imputed floor wage
index policy for all-urban states effective for discharges on or after
October 1, 2021 (FY 2022) with no expiration date using the methodology
described in 42 CFR 412.64(h)(4)(vi) as in effect for FY 2018.

D. Issuance of Proposed and Interim Final Rulemakings

1. FY 2022 IPPS/LTCH PPS Proposed Rule
In the FY 2022 IPPS/LTCH PPS proposed rule appearing in the May 10,
2021 Federal Register (86 FR 25070), we set forth proposed payment and
policy changes to the Medicare IPPS for FY 2022 operating costs and
capital-related costs of acute care hospitals and certain hospitals and
hospital units that are excluded from IPPS. In addition, we set forth
proposed changes to the payment rates, factors, and other payment and
policy-related changes to programs associated with payment rate
policies under the LTCH PPS for FY 2022.
The following is a general summary of the changes that we proposed
to make.
a. Proposed Changes to MS-DRG Classifications and Recalibrations of
Relative Weights
In section II. of the preamble of the proposed rule, we include--
<bullet> Proposed changes to MS-DRG classifications based on our
yearly review for FY 2022.
<bullet> Proposed adjustment to the standardized amounts under
section 1886(d) of the Act for FY 2022 in accordance with the
amendments made to section 7(b)(1)(B) of Public Law 110-90 by section
414 of the MACRA.
<bullet> Proposed recalibration of the MS-DRG relative weights.
<bullet> A discussion of the proposed FY 2022 status of new
technologies approved for add-on payments for FY 2022, a presentation
of our evaluation and analysis of the FY 2022 applicants for add-on
payments for high-cost new medical services and technologies (including
public input, as directed by Pub. L. 108-173, obtained in a town hall
meeting) for applications not submitted under an alternative pathway,
and a discussion of the proposed status of FY 2022 new technology
applicants under the alternative pathways for certain medical devices
and certain antimicrobial products.
<bullet> A proposal to extend the New COVID-19 Treatments Add-on
Payment (NCTAP) through the end of the fiscal year in which the PHE
ends for certain products and discontinue NCTAP for products approved
for new technology add-on payments in FY 2022.
b. Proposed Changes to the Hospital Wage Index for Acute Care Hospitals
In section III. of the preamble of the proposed rule, we proposed
to revise to the wage index for acute care hospitals and the annual
update of the wage data. Specific issues addressed include, but were
not limited to, the following:
<bullet> The proposed FY 2022 wage index update using wage data
from cost reporting periods beginning in FY 2018.
<bullet> Calculation, analysis, and implementation of the proposed
occupational mix adjustment to the wage index for acute care hospitals
for

[[Page 44787]]

FY 2022 based on the 2019 Occupational Mix Survey.
<bullet> Proposed application of the rural floor and the frontier
State floor, and continuation of the low wage index hospital policy.
<bullet> Proposed implementation of the imputed floor wage index
policy for all-urban States under section 9831 of the American Rescue
Plan Act of 2021 (Pub. L. 117-2).
<bullet> Proposed revisions to the wage index for acute care
hospitals, based on hospital redesignations and reclassifications under
sections 1886(d)(8)(B), (d)(8)(E), and (d)(10) of the Act.
<bullet> Proposed revisions to the regulations at Sec. 412.278
regarding the Administrator's Review of MGCRB decisions.
<bullet> Proposed changes to rural reclassification cancellation
requirements at Sec. 412.103(g).
<bullet> Proposed adjustment to the wage index for acute care
hospitals for FY 2022 based on commuting patterns of hospital employees
who reside in a county and work in a different area with a higher wage
index.
<bullet> Proposed labor-related share for the proposed FY 2022 wage
index.
c. Proposed Rebasing and Revising of the Hospital Market Baskets
In section IV. of the preamble of the proposed rule, we proposed to
rebase and revise the hospital market baskets for acute care hospitals
and update the labor-related share.
d. Other Decisions and Proposed Changes to the IPPS for Operating Costs
In section V. of the preamble of the proposed rule, we discussed
proposed changes or clarifications of a number of the provisions of the
regulations in 42 CFR parts 412 and 413, including the following:
<bullet> Proposed inpatient hospital update for FY 2022.
<bullet> Proposed updated national and regional case-mix values and
discharges for purposes of determining RRC status.
<bullet> The statutorily required IME adjustment factor for FY
2022.
<bullet> Proposed changes to the methodologies for determining
Medicare DSH payments and the additional payments for uncompensated
care.
<bullet> Proposed requirements for payment adjustments under the
Hospital Readmissions Reduction Program for FY 2022.
<bullet> The provision of estimated and newly established
performance standards for the calculation of value-based incentive
payments, as well as a proposal to suppress multiple measures and
provide net-neutral payment adjustments under the Hospital Value-Based
Purchasing Program.
<bullet> Proposed requirements for payment adjustments to hospitals
under the HAC Reduction Program for FY 2022.
<bullet> Discussion of and proposed changes relating to the
implementation of the Rural Community Hospital Demonstration Program in
FY 2022.
<bullet> Proposed revisions to the regulations regarding the
counting of days associated with section 1115 demonstration projects in
the Medicaid fraction.
<bullet> Proposals to implement provisions of the Consolidated
Appropriations Act relating to payments to hospitals for direct
graduate medical education (GME) and indirect medical education (IME)
costs.
<bullet> Proposed repeal of the market-based data collection
requirement and market-based MS-DRG relative weight methodology
e. Proposed FY 2022 Policy Governing the IPPS for Capital-Related Costs
In section VI. of the preamble to the proposed rule, we discussed
the proposed payment policy requirements for capital-related costs and
capital payments to hospitals for FY 2022.
f. Proposed Changes to the Payment Rates for Certain Excluded
Hospitals: Rate-of-Increase Percentages
In section VII. of the preamble of the proposed rule, we discussed
the following:
<bullet> Proposed changes to payments to certain excluded hospitals
for FY 2022.
<bullet> Proposed continued implementation of the Frontier
Community Health Integration Project (FCHIP) Demonstration.
g. Proposed Changes to the LTCH PPS
In section VIII. of the preamble of the proposed rule, we set forth
proposed changes to the LTCH PPS Federal payment rates, factors, and
other payment rate policies under the LTCH PPS for FY 2022.
h. Proposed Changes Relating to Quality Data Reporting for Specific
Providers and Suppliers
In section IX. of the preamble of the proposed rule, we addressed
the following:
<bullet> We requested information on CMS's future plans to define
digital quality measures (dQMs) in CMS Hospital Quality Programs and on
CMS' continued efforts to close the health equity gap in CMS Hospital
Quality Programs.
<bullet> Proposed requirements for the Hospital Inpatient Quality
Reporting (IQR) Program.
<bullet> Proposed changes to the requirements for the quality
reporting program for PPS-exempt cancer hospitals (PCHQR Program).
<bullet> Proposed changes to the requirements under the LTCH
Quality Reporting Program (QRP). We also sought information on CMS's
future plans to define digital quality measures (dQMs) for the LTCH QRP
and on CMS' continued efforts to close the health equity gap.
<bullet> Proposed changes to requirements pertaining to eligible
hospitals and CAHs participating in the Medicare Promoting
Interoperability Program.
i. Other Proposals Included in the Proposed Rule
Section X. of the preamble of the proposed rule included the
following proposals:
<bullet> Proposed changes pertaining to Medicaid enrollment of
Medicare-enrolled providers and suppliers to 42 CFR part 455.410 and
request for comment on provider experiences where State Medicaid
agencies apply the Medicaid payment and coverage rules to a claim for a
Medicare service rather than adjudicating the claim for Medicare cost-
sharing liability.
<bullet> Proposed changes pertaining to Medicare's share of organ
acquisition costs transplanted into Medicare beneficiaries and the
charges for services provided to cadaveric organ donors by donor
community hospitals and transplants hospitals.
<bullet> Proposed changes pertaining to the Shared Savings Program
that would allow eligible ACOs participating in the BASIC track's glide
path to maintain their current level of participation for PY 2022.
j. Other Provisions of the Proposed Rule
Section XI. of the preamble to the proposed rule included our
discussion of the MedPAC Recommendations.
Section XII. of the preamble to the proposed rule includes the
following:
<bullet> A descriptive listing of the public use files associated
with the proposed rule.
<bullet> The collection of information requirements for entities
based on our proposals.
<bullet> Information regarding our responses to public comments.
k. Determining Prospective Payment Operating and Capital Rates and
Rate-of-Increase Limits for Acute Care Hospitals
In sections II. and III. of the Addendum to the proposed rule, we
set

[[Page 44788]]

forth proposed changes to the amounts and factors for determining the
proposed FY 2022 prospective payment rates for operating costs and
capital-related costs for acute care hospitals. We proposed to
establish the threshold amounts for outlier cases. In addition, in
section IV. of the Addendum to the proposed rule, we addressed the
proposed update factors for determining the rate-of-increase limits for
cost reporting periods beginning in FY 2022 for certain hospitals
excluded from the IPPS.
l. Determining Prospective Payment Rates for LTCHs
In section V. of the Addendum to the proposed rule, we set forth
proposed changes to the amounts and factors for determining the
proposed FY 2022 LTCH PPS standard Federal payment rate and other
factors used to determine LTCH PPS payments under both the LTCH PPS
standard Federal payment rate and the site neutral payment rate in FY
2022. We are proposing to establish the adjustments for the wage index,
labor-related share, the cost-of-living adjustment, and high-cost
outliers, including the applicable fixed-loss amounts and the LTCH
cost-to-charge ratios (CCRs) for both payment rates.
m. Impact Analysis
In Appendix A of the proposed rule, we set forth an analysis of the
impact the proposed changes would have on affected acute care
hospitals, CAHs, LTCHs, PCHs and other entities.
n. Recommendation of Update Factors for Operating Cost Rates of Payment
for Hospital Inpatient Services
In Appendix B of the proposed rule, as required by sections
1886(e)(4) and (e)(5) of the Act, we provide our recommendations of the
appropriate percentage changes for FY 2022 for the following:
<bullet> A single average standardized amount for all areas for
hospital inpatient services paid under the IPPS for operating costs of
acute care hospitals (and hospital-specific rates applicable to SCHs
and MDHs).
<bullet> Target rate-of-increase limits to the allowable operating
costs of hospital inpatient services furnished by certain hospitals
excluded from the IPPS.
<bullet> The LTCH PPS standard Federal payment rate and the site
neutral payment rate for hospital inpatient services provided for LTCH
PPS discharges.
o. Discussion of Medicare Payment Advisory Commission Recommendations
Under section 1805(b) of the Act, MedPAC is required to submit a
report to Congress, no later than March 15 of each year, in which
MedPAC reviews and makes recommendations on Medicare payment policies.
MedPAC's March 2021 recommendations concerning hospital inpatient
payment policies address the update factor for hospital inpatient
operating costs and capital-related costs for hospitals under the IPPS.
We addressed these recommendations in Appendix B of the proposed rule.
For further information relating specifically to the MedPAC March 2021
report or to obtain a copy of the report, contact MedPAC at (202) 220-
3700 or visit MedPAC's website at: <a href="http://www.medpac.gov">http://www.medpac.gov</a>.
2. Medicare Geographic Classification Review Board (MGCRB) Interim
Final Rule With Comment Period
In the interim final rule with comment period appearing in the May
10, 2021 Federal Register (86 FR 25735) (hereinafter referred to as
CMS-1762-IFC), we implemented regulations which allowed hospitals with
a rural redesignation under the section XXXX of the Act to reclassify
through the Medicare Geographic Classification Review Board (MGCRB)
using the rural reclassified area as the geographic area in which the
hospital is located.

E. Advancing Health Information Exchange

The Department of Health and Human Services (HHS) has a number of
initiatives designed to encourage and support the adoption of
interoperable health information technology and to promote nationwide
health information exchange to improve health care and patient access
to their health information.
To further interoperability in post-acute care settings, CMS and
the Office of the National Coordinator for Health Information
Technology (ONC) participate in the Post-Acute Care Interoperability
Workgroup (PACIO <a href="http://pacioproject.org/">http://pacioproject.org/</a>) to facilitate collaboration
with industry stakeholders to develop FHIR standards. These standards
could support the exchange and reuse of patient assessment data derived
from the Minimum Data Set (MDS), Inpatient Rehabilitation Facility-
Patient Assessment Instrument (IRF-PAI), LTCH Continuity Assessment
Record and Evaluation (CARE Data Set (LCDS), Outcome and Assessment
Information Set (OASIS), and other sources. The PACIO Project has
focused on FHIR implementation guides for functional status, cognitive
status and new use cases on advance directives and speech language
pathology. We encourage post-acute care (PAC) provider and health
information technology (IT) vendor participation as the efforts
advance.
The CMS Data Element Library (DEL) continues to be updated and
serves as the authoritative resource for PAC assessment data elements
and their associated mappings to health IT standards, such as Logical
Observation Identifiers Names and Codes (LOINC) and Systematized
Nomenclature of Medicine Clinical Terms (SNOMED). The DEL furthers CMS'
goal of data standardization and interoperability. These interoperable
data elements can reduce provider burden by allowing the use and
exchange of healthcare data; supporting provider exchange of electronic
health information for care coordination, person-centered care; and
supporting real-time, data driven, clinical decision-making. Standards
in the Data Element Library (<a href="https://del.cms.gov/DELWeb/pubHome">https://del.cms.gov/DELWeb/pubHome</a>) can be
referenced on the CMS website and in the ONC Interoperability Standards
Advisory (ISA). The 2021 ISA is available at <a href="https://www.healthit.gov/isa">https://www.healthit.gov/isa</a>.
The 21st Century Cures Act (Cures Act) (Pub. L. 114-255, enacted
December 13, 2016) requires HHS to take new steps to enable the
electronic sharing of health information ensuring interoperability for
providers and settings across the care continuum. The Cures Act
includes a trusted exchange framework and common agreement (TEFCA)
provision \1\ that will enable the nationwide exchange of electronic
health information across health information networks and provide an
important way to enable bi-directional health information exchange in
the future. For more information on current developments related to
TEFCA, we refer readers to <a href="https://www.healthit.gov/topic/interoperability/trusted-exchange-framework-and-common-agreement">https://www.healthit.gov/topic/interoperability/trusted-exchange-framework-and-common-agreement</a> and
<a href="https://rce.sequoiaproject.org/">https://rce.sequoiaproject.org/</a>.
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\1\ ONC, Draft 2 Trusted Exchange Framework and Common
Agreement, <a href="https://www.healthit.gov/sites/default/files/page/2019-04/FINALTEFCAQTF41719508version.pdf">https://www.healthit.gov/sites/default/files/page/2019-04/FINALTEFCAQTF41719508version.pdf</a>.
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The ONC final rule entitled ``21st Century Cures Act:
Interoperability, Information Blocking, and the ONC Health IT
Certification Program'' (85 FR 25642) published in the May 1, 2020
Federal Register, (hereinafter referred to as ``ONC Cures Act Final
Rule'')

[[Page 44789]]

implemented policies related to information blocking as authorized
under section 4004 of the 21st Century Cures Act. Information blocking
is generally defined as a practice by a health IT developer of
certified health IT, health information network, health information
exchange, or health care provider that, except as required by law or
specified by the HHS Secretary as a reasonable and necessary activity,
is likely to interfere with access, exchange, or use of electronic
health information. For a health care provider (as defined in 45 CFR
171.102), the definition of information blocking (see 45 CFR 171.103)
specifies that the provider knows that the practice is unreasonable, as
well as likely to interfere with access, exchange, or use of electronic
health information.\2\ To deter information blocking, health IT
developers of certified health IT, health information networks and
health information exchanges whom the HHS Inspector General determines,
following an investigation, have committed information blocking, are
subject to civil monetary penalties of up to $1 million per violation.
Appropriate disincentives for health care providers need to be
established by the Secretary through rulemaking. Stakeholders can learn
more about information blocking at <a href="https://www.healthit.gov/curesrule/final-rule-policy/information-blocking">https://www.healthit.gov/curesrule/final-rule-policy/information-blocking</a>. ONC has posted information
resources including fact sheets (<a href="https://www.healthit.gov/curesrule/resources/fact-sheets">https://www.healthit.gov/curesrule/resources/fact-sheets</a>), frequently asked questions (<a href="https://www.healthit.gov/curesrule/resources/information-blocking-faqs">https://www.healthit.gov/curesrule/resources/information-blocking-faqs</a>), and
recorded webinars (<a href="https://www.healthit.gov/curesrule/resources/webinars">https://www.healthit.gov/curesrule/resources/webinars</a>).
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\2\ For other types of actors (health IT developers of certified
health IT and health information network or health information
exchange, as defined in 45 CFR 171.102), the definition of
``information blocking'' (see 45 CFR 171.103) specifies that the
actor ``knows, or should know, that such practice is likely to
interfere with access, exchange, or use of electronic health
information.''
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We invite providers to learn more about these important
developments and how they are likely to affect LTCHs.

F. Use of FY 2020 or FY 2019 Data in the FY 2022 IPPS and LTCH PPS
Ratesetting

We primarily use two data sources in the IPPS and LTCH PPS
ratesetting: Claims data and cost report data. The claims data source
is the MedPAR file, which includes fully coded diagnostic and procedure
data for all Medicare inpatient hospital claims for discharges in a
fiscal year. Our goal is always to use the best available data overall
for ratesetting. Ordinarily, the best available MedPAR data would be
the most recent MedPAR file that contains claims from discharges for
the fiscal year that is 2 years prior to the fiscal year that is the
subject of the rulemaking. For FY 2022 ratesetting, under ordinary
circumstances, the best available data would be the FY 2020 MedPAR
file. The cost report data source is the Medicare hospital cost report
data files from the most recent quarterly HCRIS release. For example,
ordinarily, the best available cost report data used in relative weight
calculations would be based on the cost reports beginning 3 fiscal
years prior to the fiscal year that is the subject of the rulemaking.
For the FY 2022 ratesetting, under ordinary circumstances, that would
be the FY 2019 cost report data from HCRIS, which would contain many
cost reports ending in FY 2020 based on each hospital's cost reporting
period.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25086 through
25090), we discussed that the FY 2020 MedPAR claims file and the FY
2019 HCRIS dataset both contain data significantly impacted by the
COVID-19 PHE, primarily in that the utilization of inpatient services
was generally markedly different for certain types of services in FY
2020 than would have been expected in the absence of the PHE.
Accordingly, we questioned whether these data sources are the best
available data to use for the FY 2022 ratesetting. In the proposed
rule, we identified two factors for assessing whether these data
sources represent the best available data. The first factor is to what
extent the FY 2019 data from before the COVID-19 PHE is a better
overall approximation of FY 2022 inpatient experience (for example,
whether the share of total inpatient utilization for elective surgeries
will be more similar to FY 2019 than to FY 2020), or alternatively, to
what extent the FY 2020 data which include the COVID-19 PHE time period
is a better overall approximation of FY 2022 inpatient experience (for
example, whether the share of total inpatient utilization for
respiratory infections will be more similar to FY 2020 than to FY
2019). The second factor is to what extent the decision to use the FY
2019 or FY 2020 data differentially impacts the FY 2022 IPPS
ratesetting.
In the proposed rule, in order to help assess likely inpatient
utilization in FY 2022, we examined the trend in the number of COVID-19
vaccinations in the United States as reported to the Centers for
Disease Control (CDC) (see <a href="https://www.cdc.gov/coronavirus/2019-ncov/covid-data/covidview/index.html">https://www.cdc.gov/coronavirus/2019-ncov/covid-data/covidview/index.html</a>, accessed April 16, 2021).
The U.S. COVID-19 Vaccination Program began December 14, 2020. As
of April 15, 2021, 198.3 million vaccine doses had been administered.
Overall, about 125.8 million people, or 37.9 percent of the U.S.
population, had received at least one dose of vaccine as of this date.
About 78.5 million people, or 23.6 percent of the U.S. population had
been fully vaccinated.\3\ As of April 15, the 7-day average number of
administered vaccine doses reported to CDC per day was 3.3 million, a
10.3 percent increase from the previous week. As of April 15, 80
percent of people 65 or older had received at least one dose of
vaccine; 63.7 percent were fully vaccinated. Nearly one-half (48.3
percent) of people 18 or older had received at least one dose of
vaccine; 30.3 percent were fully vaccinated. Nationally, COVID-19-
related emergency department visits as well as both hospital admissions
and current hospitalizations had risen among patients ages 18 to 64
years in recent weeks, but emergency department visits and
hospitalizations among people ages 65 years and older had decreased,
likely demonstrating the important role vaccination plays in protecting
against COVID-19.
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\3\ People who are fully vaccinated (formerly receiving 2 doses)
represents the number of people who have received the second dose in
a two-dose COVID-19 vaccine series or one dose of the single-dose
J&J/Janssen COVID-19 vaccine.
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As indicated by the CDC, COVID-19 vaccines are effective at
preventing COVID-19.\4\ For example, a CDC report on the effectiveness
of the Pfizer-BioNTech and Moderna COVID-19 vaccines when administered
in real-world conditions found that after being fully vaccinated with
either of these vaccines a person's risk of infection is reduced by up
to 90 percent. With respect to inpatient utilization in FY 2020, in the
proposed rule we stated our belief that COVID-19 and the risk of
disease were drivers of the different utilization patterns observed.
Therefore, the continuing rapid increase in vaccinations coupled with
the overall effectiveness of the vaccines led us to conclude based on
the information

[[Page 44790]]

available at the time of the proposed rule that there will be
significantly lower risk of COVID-19 in FY 2022 and fewer
hospitalizations for COVID-19 for Medicare beneficiaries in FY 2022
than there were in FY 2020. This called into question the applicability
of inpatient data from FY 2020 to the FY 2022 time period for hospitals
paid under the IPPS and LTCH PPS.
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\4\ Interim Estimates of Vaccine Effectiveness of BNT162b2 and
mRNA-1273 COVID-19 Vaccines in Preventing SARS-CoV-2 Infection Among
Health Care Personnel, First Responders, and Other Essential and
Frontline Workers--Eight U.S. Locations, December 2020-March 2021,
available at <a href="https://www.cdc.gov/mmwr/volumes/70/wr/mm7013e3.htm?s_cid=mm7013e3_e&ACSTrackingID=USCDC_921-DM53321&ACSTrackingLabel=MMWR%20Early%20Release%20-%20Vol.%2070%2C%20March%2029%2C%202021&deliveryName=USCDC_921-DM53321">https://www.cdc.gov/mmwr/volumes/70/wr/mm7013e3.htm?s_cid=mm7013e3_e&ACSTrackingID=USCDC_921-DM53321&ACSTrackingLabel=MMWR%20Early%20Release%20-%20Vol.%2070%2C%20March%2029%2C%202021&deliveryName=USCDC_921-DM53321</a>, accessed April 2, 2021).
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In the proposed rule, we also reviewed CDC guidance to healthcare
facilities during the COVID-19 PHE (see <a href="https://www.cdc.gov/coronavirus/2019-ncov/hcp/guidance-hcf.html">https://www.cdc.gov/coronavirus/2019-ncov/hcp/guidance-hcf.html</a>). In its most recent
guidance available at the time of the proposed rule, the CDC described
how the COVID-19 pandemic has changed how health care is delivered in
the United States and has affected the operations of healthcare
facilities. Effects cited by the CDC include increases in patients
seeking care for respiratory illnesses, patients deferring and delaying
non-COVID-19 care, disruptions in supply chains, fluctuations in
facilities' occupancy, absenteeism among staff because of illness or
caregiving responsibilities, and increases in mental health concerns.
In the proposed rule, in order to investigate the effects cited by
the CDC, we examined the claims data from the FY 2020 MedPAR compared
to the FY 2019 MedPAR. Overall, in FY 2020, inpatient admissions under
the IPPS dropped by approximately 14 percent compared to FY 2019.
Elective surgeries declined significantly, and the share of admissions
for MS-DRGs associated with the treatment of COVID-19 increased. For
example, the number of inpatient admissions for MS-DRG 470 (Major Hip
and Knee Joint Replacement or Reattachment of Lower Extremity without
MCC) dropped by 40 percent in FY 2020. Its share of inpatient
admissions dropped from 4.0 percent in FY 2019 to 2.8 percent in FY
2020. The number of inpatient admissions for MS-DRG 177 (Respiratory
Infections and Inflammations with MCC) increased by +133 percent. Its
share of inpatient admissions increased from 0.8 percent in FY 2019 to
2.2 percent in FY 2020. This data analysis from the proposed rule was
consistent with the observations in the CDC's guidance that COVID-19
increased the number of patients seeking care for respiratory
illnesses, and caused patients to defer and delay non-COVID-19 care. In
the proposed rule, we noted that these observed changes in the claims
data also extend to the cost reports submitted by hospitals that
include the COVID-19 PHE time period, since those cost reports that
extend into the COVID-19 PHE are based in part on the discharges that
occurred during that time.
In the proposed rule, we concluded that the effects noted by the
CDC are specific to the pandemic and to the extent that the effects on
healthcare facilities noted by the CDC are not expected to continue
into FY 2022, it would suggest that the inpatient data from FY 2020
impacted by the COVID-19 PHE may be less suitable for use in the FY
2022 ratesetting.
In the proposed rule, we also considered the analysis of 2020 IPPS
real case-mix included in the notice titled ``CY 2021 Inpatient
Hospital Deductible and Hospital and Extended Care Services Coinsurance
Amounts'' that appeared in the Federal Register on November 12, 2020
(85 FR 71916). Section 1813(b) of the Act prescribes the method for
computing the amount of the inpatient hospital deductible. The
inpatient hospital deductible is an amount equal to the inpatient
hospital deductible for the preceding CY, adjusted by the best estimate
of the payment-weighted average of the applicable percentage increases
used for updating the payment rates to hospitals, and adjusted to
reflect changes in real case-mix.
To develop the adjustment to reflect changes in real case-mix, we
first calculated an average case-mix for each hospital that reflected
the relative costliness of that hospital's mix of cases compared to
those of other hospitals. We then computed the change in average case-
mix for hospitals paid under the IPPS in FY 2020 compared to FY 2019,
using Medicare claims from IPPS hospitals received as of July 2020.
Those claims represented a total of about 6.1 million Medicare
discharges for FY 2020 and provided the most recent case-mix data
available at the time of that analysis. Based on these claims, the
change in average case-mix in FY 2020 was 2.8 percent. Based on these
claims and past experience, we expected the overall case-mix change to
be 3.8 percent as the year progressed and more FY 2020 data became
available.
Real case-mix is that portion of case-mix that is due to changes in
the mix of cases in the hospital and not due to coding optimization. As
stated in the November 2020 notice, COVID-19 has complicated the
determination of real case-mix increase. COVID-19 cases typically group
to higher-weighted MS-DRGs, and hospitals have experienced a concurrent
reduction in cases that group to lower weighted MS-DRGs. Both of these
factors cause a real increase in case-mix. We compared the average
case-mix for February 2020 through July 2020 (COVID-19 period) with
average case-mix for October 2019 through January 2020 (pre-COVID-19
period). Since this increase applies for only a portion of CY 2020, we
allocated this increase by the estimated discharges over the 2
periods--a 2.5 percent increase for FY 2020. The 1.3-percent residual
case-mix increase is a mixture of real case-mix and coding
optimization. Over the past several years, we have observed total case-
mix increases of about 0.5 percent per year and have assumed that they
are real. Thus, based on the information available, we expect that 0.5
percent of the residual 1.3 percent change in average case-mix for FY
2020 will be real. The combination of the 2.5 percent COVID-19 effect
and the remaining residual 0.5-percent real case-mix increase results
in an estimated 3.0 percent increase in real case-mix for FY 2020.
Because this analysis was based on Medicare claims from IPPS
hospitals received as of July 2020, in the proposed rule, we calculated
case-mix values for FY 2019 and FY 2020 based on the full year FY 2019
and FY 2020 MedPAR files to help assess the change in case-mix based on
more complete data. For FY 2019 we calculated a case-mix value of 1.813
and for FY 2020 we calculated a case-mix value of 1.883, an increase in
total case-mix of 3.9 percent. These were calculated using the MS-DRG
relative weights in effect for those time periods.\5\ This was
consistent with the estimate in the Notice of the CY 2021 Inpatient
Hospital Deductible and Hospital and Extended Care Services Coinsurance
Amounts that the change in total case-mix for FY 2020 would be 3.8
percent when more complete data was available.
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\5\ Section 3710 of the Coronavirus Aid, Relief, and Economic
Security (CARES) Act directs the Secretary of HHS to increase the
weighting factor of the assigned DRG by 20 percent for an individual
diagnosed with COVID-19 discharged during the COVID-19 PHE period.
In order to make the case-mix values more comparable, the 20 percent
increase is not included.
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The increases in patients seeking care for respiratory illnesses
and patients deferring and delaying non-COVID-19 care during FY 2020,
the increasing number of vaccinations for COVID-19, and the high
estimate of FY 2020 real case-mix growth all led us to believe that FY
2020 is not the best overall approximation of inpatient experience in
FY 2022 and that FY 2019 as the most recent complete FY prior to the
COVID-19 PHE is a better approximation of FY 2022 inpatient experience.
As we indicated in the proposed rule, whether the data is a better
overall

[[Page 44791]]

approximation of FY 2022 inpatient experience is one factor in
assessing which data source represents the best available data for the
FY 2022 rulemaking. Another factor is to what extent the decision to
use the FY 2019 or FY 2020 data differentially impacts the FY 2022
ratesetting. One way to assess this factor is to model the change in
the total case-mix, which is a driver of spending, if our assumption
regarding the FY 2022 inpatient experience used in calculating the MS-
DRG relative weights turns out to be less accurate based on actual FY
2022 experience. In the proposed rule, we estimated the difference in
the total case-mix if we calculated the MS-DRG relative weights based
on the FY 2019 claims data and the actual utilization is ultimately
more similar to the FY 2020 data, as compared to if we calculated the
MS-DRG relative weights based on the FY 2020 data and the actual
utilization is ultimately more similar to the FY 2019 data.
We first calculated a set of MS-DRG relative weights using an
assumption that the FY 2022 inpatient experience would be similar to
the FY 2019 data. Specifically, we used the proposed version 39 GROUPER
(which would be applicable to discharges occurring in FY 2022) and the
FY 2019 MedPAR data to calculate MS-DRG relative weights. We refer to
these MS-DRG relative weights as the FY 2019-based weights.
We next calculated a set of MS-DRG relative weights using an
assumption that the FY 2022 inpatient experience would be more similar
to the FY 2020 data. Specifically, we used the proposed version 39
GROUPER and the FY 2020 MedPAR data to calculate MS-DRG relative
weights. This is how we would ordinarily calculate the proposed FY 2022
MS-DRG relative weights. We refer to these MS-DRG relative weights as
the FY 2020-based weights.
We then estimated the difference in case-mix under the FY 2019-
based weights and the FY 2020-based weights if the FY 2022 inpatient
experience ended up being the reverse of the assumption made when
calculating that set of relative weights. In other words, we compared
estimated case-mix calculated under four different scenarios. For the
FY 2019-based weights, we calculated the case-mix using claims from the
FY 2019 MedPAR as an approximation of the actual FY 2022 experience
(Scenario A), and using claims from the FY 2020 MedPAR as an
approximation of the actual FY 2022 experience (Scenario B). For the FY
2020-based weights, we calculated the case-mix using claims from the FY
2020 MedPAR as an approximation of the actual FY 2022 experience
(Scenario C), and using claims from the FY 2019 MedPAR as an
approximation of the actual FY 2022 experience (Scenario D).
The results are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.003

In Scenario A and Scenario C, there is by definition no
differential impact on total case-mix due to a less accurate assumption
made when the MS-DRG relative weights were calculated: The FY 2022
inpatient experience matches the assumption used when the MS-DRG
relative weights were calculated. In Scenario B and Scenario D, it is
the reverse of the assumption used when the MS-DRG relative weights
were calculated.
In the proposed rule, we explained that in Scenario B, when the FY
2019-based weights were used, but the FY 2022 inpatient experience
turns out to be more similar to FY 2020 data, the less accurate
assumption does not differentially impact the modelled case-mix. This
can be seen by comparing the modelled case-mix under Scenario B (1.885)
with the modelled case-mix under Scenario C (also 1.885). In other
words, if the FY 2019-based weights and inpatient experience turn out
to be more similar to the FY 2020 data, then the modelled case-mix is
approximately the same as if we had used the FY 2020-based weights. The
results show that use of the FY 2019-based weights did not impact the
modelled case-mix compared to using the FY 2020-based weights.
In the proposed rule, we explained that the same conclusion is not
true of Scenario D where the FY 2020-based weights were used, but the
FY 2022 inpatient experience turns out to be more similar to FY 2019
data. Here the less accurate assumption does differentially impact the
modelled case-mix, by -0.2 percent. This can be seen by comparing the
modelled case-mix under Scenario D (1.816) with the modelled case-mix
under Scenario A (1.820). In other words, if we use the FY 2020-based
weights, and FY 2022 inpatient experience turns out to be more similar
to FY 2019 data, the modelled case-mix is -0.2 percent lower than if we
had used the FY 2019-based weights. This shows that use of the FY 2020-
based weights does impact the modelled case-mix compared to a result
from using the FY 2019-based weights.
Putting aside that we believe FY 2019 is a more likely
approximation of the FY 2022 inpatient experience for the reasons
discussed earlier, the previous analysis from the proposed rule
indicates that the differential effect of the FY 2022 MS-DRG relative
weights is more limited if the FY 2019-based weights are used than it
is if the FY 2020-based weights are used, should the FY 2022 inpatient
experience not match the assumption used to calculate the MS-DRG
relative weights.

[[Page 44792]]

Another payment factor that is impacted by the use of the FY 2019
or FY 2020 data in the FY 2022 ratesetting is the outlier fixed-loss
threshold. As discussed in section II.A.4.j. of the proposed rule,
section 1886(d)(5)(A) of the Act provides for payments in addition to
the basic prospective payments for ``outlier'' cases involving
extraordinarily high costs. To qualify for outlier payments, a case
must have costs greater than the sum of certain payments and the
``outlier threshold'' or ``fixed-loss'' amount (a dollar amount by
which the costs of a case must exceed payments in order to qualify for
an outlier payment). In accordance with section 1886(d)(5)(A)(iv) of
the Act, outlier payments for any year are projected to be not less
than 5 percent nor more than 6 percent of total operating DRG payments
plus outlier payments. We target 5.1 percent within this range. Section
1886(d)(3)(B) of the Act requires the Secretary to reduce the average
standardized amount by a factor to account for the estimated proportion
of total DRG payments made to outlier cases. In other words, outlier
payments are prospectively estimated to be budget neutral overall under
the IPPS.\6\
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\6\ More information on outlier payments may be found on the CMS
website at: <a href="http://www.cms.gov/Medicare/Medicare-Fee-forService-Payment/AcuteInpatientPPS/outlier.html">http://www.cms.gov/Medicare/Medicare-Fee-forService-Payment/AcuteInpatientPPS/outlier.html</a>.
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In the proposed rule, under an assumption that the FY 2022
inpatient experience will be more similar to FY 2019 data, we estimated
an outlier fixed-loss amount of $30,967. Under an assumption that FY
2022 inpatient experience will be more similar to FY 2020 data, we
estimated an outlier fixed-loss amount of $36,843, a difference of
$5,876 or approximately 20 percent higher. Again, putting aside that we
believe FY 2019 is a better approximation of the FY 2022 inpatient
experience for the reasons discussed earlier, we concluded in the
proposed rule that the difference between the two estimated outlier
fixed-loss amounts means there is a consequence to making a decision as
to the best available data for estimating the FY 2022 outlier fixed-
loss amount in the form of potentially exceeding or falling short of
the targeted 5.1 percent of total operating DRG payments plus outlier
payments.
In summary, in the proposed rule, we highlighted two factors in the
decision regarding the best available data to use in the FY 2022
ratesetting. The first factor was to what extent the FY 2019 data from
before the COVID-19 PHE is a better overall approximation of FY 2022
inpatient experience, or alternatively, to what extent the FY 2020 data
including the COVID-19 PHE time period is a better overall
approximation of FY 2022 inpatient experience. After analyzing this
issue and for the reasons discussed, in the proposed rule we stated our
belief that FY 2019 is generally a better overall approximation of FY
2022. The second factor was to what extent the decision to use the FY
2019 or FY 2020 data differentially impacts the FY 2022 IPPS
ratesetting. After analyzing this issue, in the proposed rule we
determined that the decision does differentially impact the overall FY
2022 IPPS ratesetting in two primary ways. First, a decision to base
the MS-DRG relative weights on the FY 2020 data has an impact of -0.2
percent if the FY 2022 inpatient experience is more like FY 2019 data.
Second, the decision to use the FY 2019 or FY 2020 data results in an
approximately 20 percent difference in the estimate of the outlier
fixed-loss amount.
Taking these factors into account, in the FY 2022 IPPS/LTCH PPS
proposed rule (86 FR 25089) we proposed to use the FY 2019 data for the
FY 2022 ratesetting for circumstances where the FY 2020 data is
significantly impacted by the COVID-19 PHE, primarily in that the data
reflect generally markedly different utilization for certain types of
services in FY 2020 than would have been expected in the absence of the
PHE, as discussed previously. For example, we proposed to use the FY
2019 MedPAR claims data for purposes where we ordinarily would have
used the FY 2020 MedPAR claims data, such as in our analysis of changes
to MS-DRG classifications (as discussed in greater detail in section
II.D. of the preamble of the proposed rule). Similarly, we proposed to
use cost report data from the FY 2018 HCRIS file for purposes where we
ordinarily would have used the FY 2019 HCRIS file, such as in
determining the FY 2022 IPPS MS-DRG relative weights (as discussed in
greater detail in section II.E. of the preamble of the proposed rule).
(As noted previously, the FY 2019 HCRIS data would contain many cost
reports ending in FY 2020 based on each hospital's cost reporting
period.)
In section I.O. of Appendix A of the proposed rule, we stated that
we were considering, as an alternative to this proposal, the use of the
same FY 2020 data that we would ordinarily use for purposes of FY 2022
ratesetting, and which we may consider finalizing based on
consideration of comments received. To facilitate comment on this
alternative for FY 2022, we made data and other supplemental files
available. We refer the reader to section I.O. of Appendix A of the FY
2022 IPPS/LTCH PPS proposed rule (86 FR 25784) for more information on
these supplemental files and where they may be found.
Comment: The vast majority of commenters were fully supportive of
our proposal to use the FY 2019 data for the FY 2022 ratesetting for
circumstances where the FY 2020 data is significantly impacted by the
COVID-19 PHE. A commenter was supportive of our proposal but noted that
transplant volume was higher in 2020 than 2019. However, the commenter
stated that it recognized that due to the nature of hospital admissions
during 2020 and the number and types of procedures provided in the
hospital during the PHE, use of 2019 data is necessary.
A commenter who stated they did not disagree with our proposal,
expressed a concern that surges in COVID-19 cases could still occur in
the future, making it impossible to predict what FY 2022 will look
like. The commenter mentioned the slowing COVID-19 vaccination rate in
many areas and the emergence of new COVID-19 variants that the COVID-19
vaccines were not tested against as reasons to support this concern.
Some commenters were supportive of our proposal, but urged CMS to
make or consider certain technical adjustments when calculating the FY
2022 relative weights. We refer readers to section II.E. of the
preamble to this final rule for a complete discussion of these
comments. A few commenters objected to CMS not using FY 2020 data to
calculate the payment adjustment for CAR T-cell clinical trial and
expanded access use immunotherapy cases. We refer readers to section
V.M. of the preamble to this final rule for a complete discussion of
these comments. A commenter expressed concern about not using FY 2020
data in FY 2022 ratesetting for the LTCH PPS, in particular with
respect to how the additional costs LTCHs incurred in 2020 will be
reflected in future years' rates. We believe this commenter may have
misunderstood the role of the market basket update and refer readers to
section VIII.A.4. of the preamble to this final rule for a complete
discussion of this comment.
Response: We appreciate the commenters' support of our proposal to
use the FY 2019 data for the FY 2022 ratesetting for circumstances
where the FY 2020 data is significantly impacted by the COVID-19 PHE.
In response to the commenter who expressed concerns about the
possibility of future surges in COVID-19 making it impossible to
predict what FY 2022 will look like, we appreciate the feedback.
However, we believe the most recent vaccination and

[[Page 44793]]

hospitalization data reported by the CDC, discussed later in this
section, support our assumption that there will be significantly lower
risk of COVID-19 in FY 2022 and fewer hospitalizations for COVID-19 for
Medicare beneficiaries in FY 2022 than there were in FY 2020. To
address to the extent possible the commenter's concerns about the
efficacy of the COVID-19 vaccines against new variants, we refer the
reader to the June 25th weekly summary report from the CDC that states
``recent studies have shown that the vaccines available in the United
States are effective against variants currently circulating, including
B.1.617.2.'' \7\
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\7\ Keep Variants at Bay. Get Vaccinated Today., available at
<a href="https://www.cdc.gov/coronavirus/2019-ncov/covid-data/covidview/past-reports/06252021.html">https://www.cdc.gov/coronavirus/2019-ncov/covid-data/covidview/past-reports/06252021.html</a> accessed July 6, 2021).
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Since the publication of the proposed rule, we have continued to
monitor the vaccination and hospitalization data reported by the CDC
(see <a href="https://www.cdc.gov/coronavirus/2019-ncov/covid-data/covidview/past-reports/07022021.html">https://www.cdc.gov/coronavirus/2019-ncov/covid-data/covidview/past-reports/07022021.html</a>, accessed July 6, 2021). As of July 1, 2021,
328.2 million vaccine doses have been administered. Overall, about
181.3 million people, or 54.6 percent of the U.S. population, have
received at least one dose of vaccine as of this date. About 155.9
million people, or 47.0 percent of the U.S. population have been fully
vaccinated. As of July 1, the 7-day average number of administered
vaccine doses reported to CDC per day was 334,816, a 45.3 percent
decrease from the previous week. As of July 1, 2021, 88.2 percent of
people 65 or older have received at least one dose of vaccine; 78.3
percent are fully vaccinated. Two-thirds (66.7 percent) of people 18 or
older have received at least one dose of vaccine; 57.7 percent are
fully vaccinated. Nationally, the COVID-19-related 7-day moving average
for new hospital admissions has been generally decreasing since
publication of the proposed rule, demonstrating the important role
vaccination is playing in protecting against COVID-19. As of July 3,
2021 (the most recent date with data available at the time of writing),
the 7-day moving average for new hospital admissions was 1,821, down
significantly from the 7-day moving average peak of 16,492 recorded on
January 9th, 2021 and the 7-day moving average of 5,075 recorded on
April 27, 2021, the date the proposed rule was issued.\8\
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\8\ New Admissions of Patients with Confirmed COVID-19.,
available at <a href="https://covid.cdc.gov/covid-data-tracker/#new-hospital-admissions">https://covid.cdc.gov/covid-data-tracker/#new-hospital-admissions</a> accessed July 3, 2021).
---------------------------------------------------------------------------

In the proposed rule, we analyzed the significant growth in real-
case mix observed in the FY 2020 MedPAR claims data. This analysis was
consistent with the observations in the CDC's guidance that COVID-19
increased the number of patients seeking care for respiratory
illnesses, and caused patients to defer and delay non-COVID-19 care.
While we acknowledge that the rate of vaccination for the U.S.
population has slowed considerably since we released the proposed rule,
the total number of vaccines administered, especially for people 65 or
older, along with the latest hospitalization trends, lead us to
continue to believe that there will be a significantly lower risk of
COVID-19 in FY 2022 and fewer hospitalizations for COVID-19 for
Medicare beneficiaries in FY 2022 than there were in FY 2020. For these
reasons, we continue to believe that FY 2020 is not the best overall
approximation of inpatient experience in FY 2022 and that FY 2019 as
the most recent complete FY prior to the COVID-19 PHE is a better
approximation of FY 2022 inpatient experience.
Therefore, after considering the comments received and evaluating
the most recent vaccination and hospitalization data from the CDC, we
are finalizing our proposal to use the FY 2019 data for the FY 2022
ratesetting for circumstances where the FY 2020 data is significantly
impacted by the COVID-19 PHE, primarily in that the data reflect
generally markedly different utilization for certain types of services
in FY 2020 than would have been expected in the absence of the PHE, as
discussed previously. For example, in this final rule we used the FY
2019 MedPAR claims data for purposes where we ordinarily would have
used the FY 2020 MedPAR claims data, such as in our analysis of changes
to MS-DRG classifications (as discussed in greater detail in section
II.D. of the preamble of this final rule). Similarly, we used cost
report data from the FY 2018 HCRIS file for purposes where we
ordinarily would have used the FY 2019 HCRIS file, such as in
determining the FY 2022 IPPS MS-DRG relative weights (as discussed in
greater detail in section II.E. of the preamble of this final rule).
(As noted previously, the FY 2019 HCRIS data would contain many cost
reports ending in FY 2020 based on each hospital's cost reporting
period.)
We note that MedPAR claims data and cost report data from the HCRIS
file are examples of the data sources for which we discuss the use of
the FY 2019 data for the FY 2022 ratesetting in this final rule. We
have clearly identified throughout this final rule where and how we are
using alternative data than what ordinarily would be used for the FY
2022 IPPS and LTCH PPS ratesetting, including certain provider specific
information.

II. Changes to Medicare Severity Diagnosis-Related Group (MS-DRG)
Classifications and Relative Weights

A. Background

Section 1886(d) of the Act specifies that the Secretary shall
establish a classification system (referred to as diagnosis-related
groups (DRGs) for inpatient discharges and adjust payments under the
IPPS based on appropriate weighting factors assigned to each DRG.
Therefore, under the IPPS, Medicare pays for inpatient hospital
services on a rate per discharge basis that varies according to the DRG
to which a beneficiary's stay is assigned. The formula used to
calculate payment for a specific case multiplies an individual
hospital's payment rate per case by the weight of the DRG to which the
case is assigned. Each DRG weight represents the average resources
required to care for cases in that particular DRG, relative to the
average resources used to treat cases in all DRGs.
Section 1886(d)(4)(C) of the Act requires that the Secretary adjust
the DRG classifications and relative weights at least annually to
account for changes in resource consumption. These adjustments are made
to reflect changes in treatment patterns, technology, and any other
factors that may change the relative use of hospital resources.

B. Adoption of the MS-DRGs and MS-DRG Reclassifications

For information on the adoption of the MS-DRGs in FY 2008, we refer
readers to the FY 2008 IPPS final rule with comment period (72 FR 47140
through 47189).
For general information about the MS-DRG system, including yearly
reviews and changes to the MS-DRGs, we refer readers to the previous
discussions in the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR
43764 through 43766) and the FYs 2011 through 2021 IPPS/LTCH PPS final
rules (75 FR 50053 through 50055; 76 FR 51485 through 51487; 77 FR
53273; 78 FR 50512; 79 FR 49871; 80 FR 49342; 81 FR 56787 through
56872; 82 FR 38010 through 38085, 83 FR 41158 through 41258, 84 FR
42058 through 42165, and 85 FR 58445 through 58596 respectively).

[[Page 44794]]

C. FY 2022 MS-DRG Documentation and Coding Adjustment

1. Background on the Prospective MS-DRG Documentation and Coding
Adjustments for FY 2008 and FY 2009 Authorized by Public Law 110-90 and
the Recoupment or Repayment Adjustment Authorized by Section 631 of the
American Taxpayer Relief Act of 2012 (ATRA).
In the FY 2008 IPPS final rule with comment period (72 FR 47140
through 47189), we adopted the MS-DRG patient classification system for
the IPPS, effective October 1, 2007, to better recognize severity of
illness in Medicare payment rates for acute care hospitals. The
adoption of the MS-DRG system resulted in the expansion of the number
of DRGs from 538 in FY 2007 to 745 in FY 2008. By increasing the number
of MS-DRGs and more fully taking into account patient severity of
illness in Medicare payment rates for acute care hospitals, MS-DRGs
encourage hospitals to improve their documentation and coding of
patient diagnoses.
In the FY 2008 IPPS final rule with comment period (72 FR 47175
through 47186), we indicated that the adoption of the MS-DRGs had the
potential to lead to increases in aggregate payments without a
corresponding increase in actual patient severity of illness due to the
incentives for additional documentation and coding. In that final rule
with comment period, we exercised our authority under section
1886(d)(3)(A)(vi) of the Act, which authorizes us to maintain budget
neutrality by adjusting the national standardized amount, to eliminate
the estimated effect of changes in coding or classification that do not
reflect real changes in case mix. Our actuaries estimated that
maintaining budget neutrality required an adjustment of -4.8 percentage
points to the national standardized amount. We provided for phasing in
this -4.8 percentage point adjustment over 3 years. Specifically, we
established prospective documentation and coding adjustments of -1.2
percentage points for FY 2008, -1.8 percentage points for FY 2009, and
-1.8 percentage points for FY 2010.
On September 29, 2007, Congress enacted the TMA [Transitional
Medical Assistance], Abstinence Education, and QI [Qualifying
Individuals] Programs Extension Act of 2007 (Pub. L. 110-90). Section
7(a) of Public Law 110-90 reduced the documentation and coding
adjustment made as a result of the MS- DRG system that we adopted in
the FY 2008 IPPS final rule with comment period to -0.6 percentage
point for FY 2008 and -0.9 percentage point for FY 2009.
As discussed in prior year rulemakings, and most recently in the FY
2017 IPPS/LTCH PPS final rule (81 FR 56780 through 56782), we
implemented a series of adjustments required under sections 7(b)(1)(A)
and 7(b)(1)(B) of Public Law 110-90, based on a retrospective review of
FY 2008 and FY 2009 claims data. We completed these adjustments in FY
2013 but indicated in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53274
through 53275) that delaying full implementation of the adjustment
required under section 7(b)(1)(A) of Public Law 110-90 until FY 2013
resulted in payments in FY 2010 through FY 2012 being overstated, and
that these overpayments could not be recovered under Public Law 110-90.
In addition, as discussed in prior rulemakings and most recently in the
FY 2018 IPPS/LTCH PPS final rule (82 FR 38008 through 38009), section
631 of the American Taxpayer Relief Act of 2012 (ATRA) amended section
7(b)(1)(B) of Public Law 110-90 to require the Secretary to make a
recoupment adjustment or adjustments totaling $11 billion by FY 2017.
This adjustment represented the amount of the increase in aggregate
payments as a result of not completing the prospective adjustment
authorized under section 7(b)(1)(A) of Public Law 110-90 until FY 2013.
2. Adjustments Made for FYs 2018, 2019, 2020, and 2021 as Required
Under Section 414 of Public Law 114-10 (MACRA) and Section 15005 of
Public Law 114-255
As stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56785),
once the recoupment required under section 631 of the ATRA was
complete, we had anticipated making a single positive adjustment in FY
2018 to offset the reductions required to recoup the $11 billion under
section 631 of the ATRA. However, section 414 of the MACRA (which was
enacted on April 16, 2015) replaced the single positive adjustment we
intended to make in FY 2018 with a 0.5 percentage point positive
adjustment for each of FYs 2018 through 2023. In the FY 2017
rulemaking, we indicated that we would address the adjustments for FY
2018 and later fiscal years in future rulemaking. Section 15005 of the
21st Century Cures Act (Pub. L. 114-255), which was enacted on December
13, 2016, amended section 7(b)(1)(B) of the TMA, as amended by section
631 of the ATRA and section 414 of the MACRA, to reduce the adjustment
for FY 2018 from a 0.5 percentage point positive adjustment to a 0.4588
percentage point positive adjustment. As we discussed in the FY 2018
rulemaking, we believe the directive under section 15005 of Public Law
114-255 is clear. Therefore, in the FY 2018 IPPS/LTCH PPS final rule
(82 FR 38009) for FY 2018, we implemented the required +0.4588
percentage point adjustment to the standardized amount. In the FY 2019
IPPS/LTCH PPS final rule (83 FR 41157), the FY 2020 IPPS/LTCH PPS final
rule (84 FR 42057), and the FY 2021 IPPS/LTCH PPS final rule (85 FR
58444 and 58445), consistent with the requirements of section 414 of
the MACRA, we implemented 0.5 percentage point positive adjustments to
the standardized amount for FY 2019, FY 2020, and FY 2021,
respectively. We indicated the FY 2018, FY 2019, FY 2020, and FY 2021
adjustments were permanent adjustments to payment rates. We also stated
that we plan to propose future adjustments required under section 414
of the MACRA for FYs 2022 and 2023 in future rulemaking.
3. Adjustment for FY 2022
Consistent with the requirements of section 414 of the MACRA, we
proposed to implement a 0.5 percentage point positive adjustment to the
standardized amount for FY 2022. We stated that this proposed
adjustment would constitute a permanent adjustment to payment rates. We
also stated that we plan to propose the final adjustment required under
section 414 of the MACRA for FY 2023 in future rulemaking.
Comment: A commenter reiterated their position from prior year
comments that CMS misinterpreted the relevant statutory authority,
which they believe explicitly assumes that the ATRA recoupment would
result in negative adjustments totaling -3.2 percentage points
completed through FY 2017, rather than the cumulative -3.9 percentage
point adjustment made by CMS. The commenter stated that CMS should have
made an additional 0.7 percent positive adjustment to the standardized
amount in FY 2018. The commenter stated that the failure to make this
adjustment resulted in an incorrect reduction in the standardized
amount for all subsequent years. We also received multiple comments
recommending that CMS commit to use its authority (a commenter
specifically citing CMS's authority under Sec. 1886(d)(5)(I) of the
Act) to restore the full amount of the cumulative -3.9 percentage point
adjustment made to achieve the $11 billion targeted by the ATRA. A
commenter requested CMS

[[Page 44795]]

specify the method for full repayment of this reduction to all
providers by FY 2023 in the final rule, instead of waiting until future
rulemaking to propose the final adjustment for FY 2023.
Response: As we discussed in response to a similar comment in the
FY 2021 IPPS/LTCH PPS final rule (85 FR 58444 through 58445) and in
prior rules, we believe section 414 of the MACRA and section 15005 of
the 21st Century Cures Act set forth the levels of positive adjustments
for FYs 2018 through 2023. We are not convinced that the adjustments
prescribed by MACRA were predicated on a specific adjustment level
estimated or implemented by CMS in previous rulemaking. We see no
evidence that Congress enacted these adjustments with the intent that
CMS would make an additional +0.7 percentage point adjustment in FY
2018 to compensate for the higher than expected final ATRA adjustment
made in FY 2017, nor are we persuaded that it would be appropriate to
use the Secretary's exceptions and adjustments authority under section
1886(d)(5)(I) of the Act to adjust payments in FY 2022 to restore any
additional amount of the original 3.9 percentage point reduction, given
Congress' prescriptive adjustment levels under section 414 of the MACRA
and section 15005 of the 21st Century Cures Act. CMS did not propose
the specific level of adjustment to be made in FY 2023, and therefore
we will proceed as planned to discuss the future (and final) adjustment
under section 414 of the MACRA in FY 2023 rulemaking.
After consideration of the public comments we received, we are
finalizing our proposal to implement a 0.5 percentage point adjustment
to the standardized amount for FY 2022.

D. Changes to Specific MS-DRG Classifications

1. Discussion of Changes to Coding System and Basis for FY 2022 MS-DRG
Updates
a. Conversion of MS-DRGs to the International Classification of
Diseases, 10th Revision (ICD-10)
As of October 1, 2015, providers use the International
Classification of Diseases, 10th Revision (ICD-10) coding system to
report diagnoses and procedures for Medicare hospital inpatient
services under the MS-DRG system instead of the ICD-9-CM coding system,
which was used through September 30, 2015. The ICD-10 coding system
includes the International Classification of Diseases, 10th Revision,
Clinical Modification (ICD-10-CM) for diagnosis coding and the
International Classification of Diseases, 10th Revision, Procedure
Coding System (ICD-10-PCS) for inpatient hospital procedure coding, as
well as the ICD-10-CM and ICD-10-PCS Official Guidelines for Coding and
Reporting. For a detailed discussion of the conversion of the MS-DRGs
to ICD-10, we refer readers to the FY 2017 IPPS/LTCH PPS final rule (81
FR 56787 through 56789).
b. Basis for FY 2022 MS-DRG Updates
Given the need for more time to carefully evaluate requests and
propose updates, as discussed in the FY 2018 IPPS/LTCH PPS final rule
(82 FR 38010), we changed the deadline to request updates to the MS-
DRGs to November 1 of each year, which provided an additional five
weeks for the data analysis and review process. In the FY 2021 IPPS/
LTCH PPS proposed rule (85 FR 32472), we stated that with the continued
increase in the number and complexity of the requested changes to the
MS-DRG classifications since the adoption of ICD-10 MS-DRGs, and in
order to consider as many requests as possible, more time is needed to
carefully evaluate the requested changes, analyze claims data, and
consider any proposed updates. We further stated we were changing the
deadline to request changes to the MS-DRGs to October 20 of each year
to allow for additional time for the review and consideration of any
proposed updates. However, in the FY 2021 IPPS/LTCH PPS final rule (85
FR 58445), due to the unique circumstances for the FY 2021 IPPS/LTCH
PPS final rule for which we waived the delayed effective date, we
maintained the deadline of November 1, 2020 for FY 2022 MS-DRG
classification change requests. We also noted that we expected to
reconsider a change in the deadline beginning with comments and
suggestions submitted for FY 2023. We stated in the proposed rule that
while we continue to believe that a change in the deadline from
November 1 to October 20 will provide hospitals sufficient time to
assess potential impacts and inform future MS-DRG recommendations, we
are maintaining the deadline of November 1 for FY 2023 MS-DRG
classification change requests.
Comment: Commenters expressed support for a future change to the
deadline for requesting updates to the MS-DRG classifications from
November 1 to October 20. The commenters also recommended that CMS
consider implementing an additional submission deadline, such as
earlier in the calendar year. According to the commenters, while the
current process to submit requests for changes to the MS-DRG
classifications may be submitted at any time prior to the fall
deadline, a second target submission date may encourage interested
parties to submit requests earlier in the year and enable additional
time for CMS to carefully evaluate requested changes, analyze claims
data and consider proposed changes.
Response: We appreciate the commenters feedback and support for our
discussion regarding a future change to the deadline for requesting
updates to the MS-DRG classifications from November 1 to October 20. We
also thank the commenters for the suggestion to add a second submission
date, and may consider any changes to the deadline and/or the frequency
for submissions of requests for MS-DRG classification changes for
future fiscal years.
Interested parties had to submit MS-DRG classification change
requests for FY 2022 by November 1, 2020, and the comments that were
submitted in a timely manner for FY 2022 are discussed in this section
of the preamble of this final rule. As we discuss in the sections that
follow, we may not be able to fully consider all of the requests that
we receive for the upcoming fiscal year. We have found that, with the
implementation of ICD-10, some types of requested changes to the MS-DRG
classifications require more extensive research to identify and analyze
all of the data that are relevant to evaluating the potential change.
We note in the discussion that follows those topics for which further
research and analysis are required, and which we will continue to
consider in connection with future rulemaking. Interested parties
should continue to submit any comments and suggestions for FY 2023 by
November 1, 2021 via the CMS MS-DRG Classification Change Request
Mailbox located at: <a href="/cdn-cgi/l/email-protection#eaa7b9aeb8ada9868b9999838c83898b9e838584a9828b848d8faa898799c4828299c48d859c">[email&#160;protected]</a>.
We provided a test version of the ICD-10 MS-DRG GROUPER Software,
Version 39, in connection with the FY 2022 IPPS/LTCH PPS proposed rule
so that the public could better analyze and understand the impact of
the proposals included in the proposed rule. We noted that this test
software reflected the proposed GROUPER logic for FY 2022. Therefore,
it included the new diagnosis and procedure codes that are effective
for FY 2022 as reflected in Table 6A.--New Diagnosis Codes--FY 2022 and
Table 6B.--New Procedure Codes--FY 2022 that were associated with the
proposed rule and did not include the diagnosis codes that are invalid
beginning in FY 2022 as reflected in Table 6C.--Invalid Diagnosis
Codes--

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FY 2022 and Table 6D.--Invalid Procedure Codes--FY 2022 that was
associated with the proposed rule. Those tables were not published in
the Addendum to the proposed rule, but are available via the internet
on the CMS website at: <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index</a>.html as described in section
VI. of the Addendum to the proposed rule. Because the diagnosis and
procedure codes no longer valid for FY 2022 are not reflected in the
test software, we made available a supplemental file in Table 6P.1a
that included the mapped Version 39 FY 2022 ICD-10-CM codes and the
deleted Version 38 FY 2021 ICD-10-CM codes that should be used for
testing purposes with users' available claims data. In addition, we
made available a supplemental file in Table 6P.1b that included the
mapped Version 39 FY 2022 ICD-10-PCS codes and the deleted Version 38
FY 2021 ICD-10-PCS codes that should be used for testing purposes with
users' available claims data. Therefore, users had access to the test
software allowing them to build case examples that reflect the
proposals that were included in the proposed rule. In addition, users
were able to view the draft version of the ICD-10 MS-DRG Definitions
Manual, Version 39.
The test version of the ICD-10 MS-DRG GROUPER Software, Version 39,
the draft version of the ICD-10 MS-DRG Definitions Manual, Version 39,
and the supplemental mapping files in Table 6P.1a and Table 6P.1b of
the FY 2021 and FY 2022 ICD-10-CM diagnosis and ICD-10-PCS procedure
codes are available at <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software</a>.
Following are the changes that we proposed to the MS-DRGs for FY
2022. We invited public comments on each of the MS-DRG classification
proposed changes, as well as our proposals to maintain certain existing
MS-DRG classifications discussed in the proposed rule. In some cases,
we proposed changes to the MS-DRG classifications based on our analysis
of claims data and consultation with our clinical advisors. In other
cases, we proposed to maintain the existing MS-DRG classifications
based on our analysis of claims data and consultation with our clinical
advisors. As discussed in section I.F of the preamble of the proposed
rule, we proposed to use claims data from the March 2020 update of the
FY 2019 MedPAR file in our analysis of proposed MS-DRG classification
changes for FY 2022, consistent with our goal of using the best
available data overall for ratesetting. Alternatively, we also provided
the results of our analysis of proposed MS-DRG classification changes
using claims data from the September 2020 update of the FY 2020 MedPAR
file. As a result, for the FY 2022 IPPS/LTCH PPS proposed rule, our MS-
DRG analysis was based on ICD-10 claims data from the March 2020 update
of the FY 2019 MedPAR file, which contains hospital claims received
from October 1, 2018 through March 31, 2020, for discharges occurring
through September 30, 2019. In addition, we also analyzed ICD-10 claims
data from the September 2020 update of the FY 2020 MedPAR file, which
contains hospital claims received from October 1, 2019 through
September 30, 2020, for discharges occurring through September 30,
2020. In our discussion of the proposed MS-DRG reclassification
changes, we referred to these claims data as the ``March 2020 update of
the FY 2019 MedPAR file'' and ``the September 2020 update of the FY
2020 MedPAR file.''
In this FY 2022 IPPS/LTCH PPS final rule, we summarize the public
comments we received on our proposals, present our responses, and state
our final policies. For this FY 2022 final rule, we generally did not
perform any further MS-DRG analysis of claims data. Therefore, the MS-
DRG analysis is based on ICD-10 claims data from both the March 2020
update of the FY 2019 MedPAR file and the September 2020 update of the
FY 2020 MedPAR file, as set forth in the proposed rule, except as
otherwise noted. As explained in previous rulemaking (76 FR 51487), in
deciding whether to propose to make further modifications to the MS-
DRGs for particular circumstances brought to our attention, we consider
whether the resource consumption and clinical characteristics of the
patients with a given set of conditions are significantly different
than the remaining patients represented in the MS-DRG. We evaluate
patient care costs using average costs and lengths of stay and rely on
the judgment of our clinical advisors to determine whether patients are
clinically distinct or similar to other patients represented in the MS-
DRG. In evaluating resource costs, we consider both the absolute and
percentage differences in average costs between the cases we select for
review and the remainder of cases in the MS-DRG. We also consider
variation in costs within these groups; that is, whether observed
average differences are consistent across patients or attributable to
cases that are extreme in terms of costs or length of stay, or both.
Further, we consider the number of patients who will have a given set
of characteristics and generally prefer not to create a new MS-DRG
unless it would include a substantial number of cases.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58448), we finalized
our proposal to expand our existing criteria to create a new
complication or comorbidity (CC) or major complication or comorbidity
(MCC) subgroup within a base MS-DRG. Specifically, we finalized the
expansion of the criteria to include the NonCC subgroup for a three-way
severity level split. We stated we believed that applying these
criteria to the NonCC subgroup would better reflect resource
stratification as well as promote stability in the relative weights by
avoiding low volume counts for the NonCC level MS-DRGs. We noted that
in our analysis of MS-DRG classification requests for FY 2021 that were
received by November 1, 2019, as well as any additional analyses that
were conducted in connection with those requests, we applied these
criteria to each of the MCC, CC, and NonCC subgroups. We also noted
that the application of the NonCC subgroup criteria going forward may
result in modifications to certain MS-DRGs that are currently split
into three severity levels and result in MS-DRGs that are split into
two severity levels. We stated that any proposed modifications to the
MS-DRGs would be addressed in future rulemaking consistent with our
annual process and reflected in Table 5--Proposed List of Medicare
Severity Diagnosis Related Groups (MS-DRGs), Relative Weighting
Factors, and Geometric and Arithmetic Mean Length of Stay for the
applicable fiscal year.
In our analysis of the MS-DRG classification requests for FY 2022
that we received by November 1, 2020, as well as any additional
analyses that were conducted in connection with those requests, we
applied these criteria to each of the MCC, CC, and NonCC subgroups, as
described in the following table.

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[GRAPHIC] [TIFF OMITTED] TR13AU21.004

In general, once the decision has been made to propose to make
further modifications to the MS-DRGs as described previously, such as
creating a new base MS-DRG, or in our evaluation of a specific MS-DRG
classification request to split (or subdivide) an existing base MS-DRG
into severity levels, all five criteria must be met for the base MS-DRG
to be split (or subdivided) by a CC subgroup. We note that in our
analysis of requests to create a new MS-DRG, we typically evaluate the
most recent year of MedPAR claims data available. For example, in the
FY 2022 IPPS/LTCH PPS proposed rule we stated our MS-DRG analysis was
based on ICD-10 claims data from both the March 2020 update of the FY
2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR
file. However, in our evaluation of requests to split an existing base
MS-DRG into severity levels, as noted in prior rulemaking (80 FR
49368), we typically analyze the most recent two years of data. This
analysis includes 2 years of MedPAR claims data to compare the data
results from 1 year to the next to avoid making determinations about
whether additional severity levels are warranted based on an isolated
year's data fluctuation and also, to validate that the established
severity levels within a base MS-DRG are supported. The first step in
our process of evaluating if the creation of a new CC subgroup within a
base MS-DRG is warranted is to determine if all the criteria is
satisfied for a three way split. If the criteria fail, the next step is
to determine if the criteria are satisfied for a two way split. If the
criteria for both of the two way splits fail, then a split (or CC
subgroup) would generally not be warranted for that base MS-DRG. If the
three way split fails on any one of the five criteria and all five
criteria for both two way splits (1_23 and 12_3) are met, we would
apply the two way split with the highest R2 value. We note that if the
request to split (or subdivide) an existing base MS-DRG into severity
levels specifies the request is for either one of the two way splits
(1_23 or 12_3), in response to the specific request, we will evaluate
the criteria for both of the two way splits, however we do not also
evaluate the criteria for a three way split.
In the FY 2022 IPPS/LTCH PPS proposed rule, we stated that using
the March 2020 update of the FY 2019 MedPAR file and the September 2020
update of the FY 2020 MedPAR file, we analyzed how applying the NonCC
subgroup criteria to all MS-DRGs currently split into three severity
levels would affect the MS-DRG structure beginning in FY 2022. We noted
that findings from our analysis indicated that approximately 32 MS-DRGs
would be subject to change based on the three-way severity level split
criterion finalized in FY 2021. Specifically, we found that applying
the NonCC subgroup criteria to all MS-DRGs currently split into three
severity levels would result in the deletion of 96 MS-DRGs (32 MS-DRGs
x 3 severity levels = 96) and the creation of 58 new MS-DRGs. We
further noted that these updates would also involve a redistribution of
cases, which would impact the relative weights, and, thus, the payment
rates proposed for particular types of cases. We referred the reader to
Table 6P.1c associated with the proposed rule for the list of the 96
MS-DRGs that would be subject to deletion and the list of the 58 new
MS-DRGs that would be proposed for creation for FY 2022 under this
policy if the NonCC subgroup criteria were applied.
We stated in the proposed rule that in light of the public health
emergency (PHE), we had concerns about the impact of implementing this
volume of MS-DRG changes at this time, and our belief that it may be
appropriate to delay application of the NonCC subgroup criteria to
existing MS-DRGs in order to maintain more stability in the current MS-
DRG structure. Therefore, we proposed to delay the application of the
NonCC subgroup criteria to existing MS-DRGs with a three-way severity
level split until FY 2023, and proposed for FY 2022 to maintain the
current structure of the 32 MS-DRGs that currently have a three-way
severity level split (total of 96 MS-DRGs) that would otherwise be
subject to these criteria.
Comment: Several commenters expressed support for our proposal to
delay the application of the expanded three-way severity level split
criteria to the NonCC subgroup until fiscal year 2023 in light of the
PHE, and to maintain the current structure of the MS-DRGs. Many
commenters also recommended that a complete analysis of the MS-DRG
changes to be proposed for fiscal year 2023 in connection with the
expanded three-way severity split criteria be conducted and made
available to enable the public an opportunity to review and consider
the redistribution of cases, the impact to the relative weights (for
example, Table 5--Proposed List of Medicare Severity

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Diagnosis Related Groups (MS-DRGs), Relative Weighting Factors, and
Geometric and Arithmetic Mean Length of Stay), payment rates and
hospital case mix to allow meaningful comment prior to implementation.
A few commenters suggested delaying the application of the expanded
three-way severity split NonCC subgroup criteria until fiscal year 2024
to allow analysis of claims data from FY 2022 that may better reflect
post pandemic utilization. Another commenter recommended delaying any
changes until FY 2025.
A commenter expressed concern that changes to the underlying MS-DRG
structure may inadvertently exacerbate payment differentials between
different types of hospitals (e.g., urban versus rural) based on the
types of services they provide, which may negatively impact Medicare
beneficiary access to some services. Another commenter stated it
reviewed its hospital specific data and had concerns that the ``with
cc'' level will be reduced on several MS-DRGs. This commenter stated
that if its case mix remains the same it would continue to treat many
patients with comorbid conditions and receive payment consistent with a
MS-DRG at the ``without CC'' level. The commenter identified the
following four MS-DRGs that appeared to be impacted the most with
respect to lost revenue, MS-DRG 617 (Amputation of Lower Limb for
Endocrine, Nutritional and Metabolic Disorder with CC); MS-DRG 847
(Chemotherapy without Acute Leukemia as Secondary Diagnosis with CC);
MS-DRG 854 (Infectious and Parasitic Diseases with O.R. Procedure with
CC) and MS-DRG 958 (Other O.R. Procedures for Multiple Significant
Trauma with CC). Lastly, the commenter recommended that CMS also
further assess other proposed groupings, such as the maternity MS-DRGs,
due to historically low volumes in these MS-DRGs and to determine if it
would be appropriate to combine any of them.
Another commenter requested that CMS provide data transparency to
illustrate volumes by MS-DRG that support the proposal for changes to
the 96 MS-DRGs discussed in the FY 2022 IPPS/LTCH PPS proposed rule and
to also consider patient mix for the obstetric MS-DRGs. This commenter
also suggested that CMS examine the impact for surgical versus medical
MS-DRGs with respect to redistribution and associated impacts to the
relative weights. According to the commenter, the impact appears to be
greater for surgical MS-DRGs.
Finally, a commenter who expressed support for CMS' proposal to
delay implementation of the expanded three-way severity split criteria
to the NonCC subgroup recommended that any proposed changes to the
structure of the MS-DRGs should consist of the impact of the proposed
CC/MCC redesign and not the current CC/MCC structure that is scheduled
to be changed.
Response: We appreciate the commenters' support. In response to the
recommendation that a complete analysis of the MS-DRG changes to be
proposed for FY 2023 in connection with the application of the expanded
three-way severity split criteria to the NonCC subgroup be conducted
and made publicly available, we plan to perform and make publicly
available a more detailed analysis in connection with any future
proposed changes, consistent with our annual claims analysis for MS-DRG
classification change proposals. With respect to the commenters who
suggested delaying the application of the expanded three-way severity
split NonCC subgroup criteria until fiscal year 2024 or later,
including to allow the use of FY 2022 claims data, we appreciate the
feedback and will take these suggestions under consideration.
In response to the commenters who expressed concern that changes to
the underlying MS-DRG structure may inadvertently exacerbate payment
differentials between different types of hospitals based on the types
of services they provide, or would have the greatest impacts with
respect to particular MS-DRGs, we note that generally, changes to the
MS-DRG classifications and related policies under the IPPS that are
implemented on an annual basis may affect payment for different types
of hospitals depending on the services they provide, and, note that we
intend to conduct and make publicly available analysis of the
application of the NonCC subgroup criteria in connection with any
future proposed changes, consistent with our annual MS-DRG analysis,
including with respect to particular MS-DRGs.
We appreciate the commenters' feedback suggesting further review of
the maternity (obstetric) MS-DRGs and agree that these groupings
warrant special consideration. As discussed in prior rulemaking (83 FR
41210), we cannot adopt the same approach to refine the maternity and
newborn MS-DRGs because of the extremely low volume of Medicare
patients there are in these DRGs.
In response to the commenter who requested that CMS provide data
transparency to illustrate volumes by MS-DRG that support the proposal
for changes to the 96 MS-DRGs discussed in the FY 2022 IPPS/LTCH PPS
proposed rule, we refer the reader to Table 6P.1l associated with this
final rule and available via the internet at <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS</a>. This table
displays the volume (case counts) by each MS-DRG based on claims data
from the March 2020 update of the FY 2019 MedPAR file and the September
2020 update of the FY 2020 MedPAR file.
We also thank the commenter for its suggestion to examine the
impact for surgical versus medical MS-DRGs and agree that type of
information can be useful for stakeholders.
With respect to the commenter who recommended that any proposed
changes to the structure of the MS-DRGs should consist of the impact of
the proposed CC/MCC redesign and not the current CC/MCC structure that
is scheduled to be changed, it is not clear to us from the limited
comment if the commenter is referring to the potential changes in
connection with the comprehensive CC/MCC analysis that is currently in
progress. We note that any proposed modifications to the MS-DRGs would
be addressed in future rulemaking, including any proposed changes to
the severity level designation of diagnosis codes, and would be
considered and taken into account with application of the NonCC
subgroup criteria.
After consideration of the public comments we received, we are
finalizing our proposal to delay the application of the NonCC subgroup
criteria to existing MS-DRGs with a three-way severity level split
until FY 2023 or later, and are finalizing for FY 2022 to maintain the
current structure of the 32 MS-DRGs that currently have a three-way
severity level split.
We are making the FY 2022 ICD-10 MS-DRG GROUPER and Medicare Code
Editor (MCE) Software Version 39, the ICD-10 MS-DRG Definitions Manual
files Version 39 and the Definitions of Medicare Code Edits Manual
Version 39 available to the public on our CMS website at: <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software</a>.
2. Pre-MDC: MS-DRG 018 Chimeric Antigen Receptor (CAR) T-Cell Therapy
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58451 through
58453), we finalized our proposal to create Pre-MDC MS-DRG 018
(Chimeric Antigen Receptor (CAR) T-cell Immunotherapy) and to reassign
cases reporting ICD-10-PCS procedure codes XW033C3 (Introduction of
engineered autologous chimeric antigen receptor t-cell

[[Page 44799]]

immunotherapy into peripheral vein, percutaneous approach, new
technology group 3) or XW043C3 (Introduction of engineered autologous
chimeric antigen receptor t-cell immunotherapy into central vein,
percutaneous approach, new technology group 3) from Pre-MDC MS-DRG 016
(Autologous Bone Marrow Transplant with CC/MCC or T-cell
Immunotherapy), to new Pre-MDC MS-DRG 018 effective with discharges on
and after October 1, 2020. We also finalized our proposal to revise the
title for MS-DRG 016 from ``Autologous Bone Marrow Transplant with CC/
MCC or T-cell Immunotherapy'' to ``Autologous Bone Marrow Transplant
with CC/MCC'' to reflect these changes.
Additionally, in the FY 2021 IPPS/LTCH PPS final rule in response
to public comments expressing concern that Pre-MDC MS-DRG 018 is
specific to one mechanistic approach to cellular therapy, and in
response to commenters who sought clarification on how future CAR T-
cell and non-CAR T-cell therapy products would be assigned, we stated
that if additional cellular therapies should become available, we would
use our established process to determine the MS-DRG assignment. The
commenters requested that CMS provide flexibility for future cellular
therapies, as they are made available and not restrict Pre-MDC MS-DRG
018 to CAR T-cell therapies alone. In this section of this rule, we
discuss the assignment of these therapies in more detail.
As discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25094), during the September 8-9, 2020 ICD-10 Coordination and
Maintenance Committee meeting, several topics involving requests for
new procedure codes related to CAR T-cell therapies, non-CAR T-cell
therapies and other immunotherapies were discussed. We referred the
reader to the CMS website at: <a href="https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials">https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials</a> for additional detailed information
regarding these requests for new procedure codes.
As noted in prior rulemaking (85 FR 32543), for new procedure codes
that have been finalized through the ICD-10 Coordination and
Maintenance Committee meeting process and are proposed to be classified
as O.R. procedures or non-O.R. procedures affecting the MS-DRG, our
clinical advisors recommend the MS-DRG assignment which is then made
available in association with the proposed rule (Table 6B.--New
Procedure Codes) and subject to public comment. These proposed
assignments are generally based on the assignment of predecessor codes
or the assignment of similar codes. As discussed in section II.D.13 of
the preamble of the proposed rule and this final rule, Table 6B.--New
Procedure Codes, lists the new procedure codes that have been approved
to date that will be effective with discharges on and after October 1,
2021. Included in Table 6B are the following new procedure codes that
describe the administration of CAR T-cell and non-CAR T-cell therapies
and other immunotherapies. As stated in the proposed rule, consistent
with our established process, we examined the MS-DRG assignment for the
predecessor codes to determine the most appropriate MS-DRG assignment
and, consistent with the assignment of those predecessor codes, we
proposed to classify the following new procedure codes as non-O.R.
procedures affecting Pre-MDC MS-DRG 018, as shown in Table 6B.--New
Procedure Codes associated with the proposed rule and available via the
internet on the CMS website at <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index/">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index/</a>.
BILLING CODE 4120-01-P

[[Page 44800]]

[GRAPHIC] [TIFF OMITTED] TR13AU21.005

BILLING CODE 4120-01-C
In connection with our proposed assignment of the listed procedure
codes to Pre-MDC MS-DRG 018, we also proposed to revise the title for
Pre-MDC MS-DRG 018 ``Chimeric Antigen Receptor (CAR) T-cell
Immunotherapy'' to ``Chimeric Antigen Receptor (CAR) T-cell and Other
Immunotherapies'' to better reflect the cases reporting the
administration of non-CAR T-cell therapies and other immunotherapies
that would also be assigned to this MS-DRG (for example, Introduction
of lifileucel immunotherapy into peripheral vein, percutaneous
approach, new technology group 7), in addition to CAR T-cell therapies.
Comment: Several commenters agreed with the proposal to assign the
listed ICD-10-PCS procedure codes to Pre-MDC MS-DRG 018 and to revise
the title to include ``Other Immunotherapies.'' A commenter who
expressed support for the change to Pre-MDC MS-DRG 018 stated its view
that the domain of cellular therapeutics will become increasingly
important in the care of Medicare beneficiaries with cancer in the
future and that creating sufficient plasticity in the diagnostic coding
system to permit the continued integration of new and innovative
therapeutics into the evidence-based care of Medicare beneficiaries is
essential. Another commenter stated they appreciated the recognition of
the differentiated nature of cancer care, as well as the importance of
innovation in

[[Page 44801]]

the domain of immune-oncology, which it stated was a necessary part of
effective, equitable cancer care delivery to CMS beneficiaries who
receive their care at both PPS and PPS-Exempt centers to ensure
equitable access. A commenter stated the proposed change to Pre-MDC MS-
DRG 018 furthers the goal of securing expedited access for Medicare
beneficiaries to innovative therapies. Another commenter stated the
proposal responds to stakeholder concerns that currently, Pre-MDC MS-
DRG 018 is specific to one mechanistic approach to cellular therapy.
This same commenter and other commenters stated the proposal is also
responsive to stakeholder requests that CMS provide flexibility for
future cellular therapies as they are made available, and not restrict
Pre-MDC MS-DRG 018 to CAR T-cell therapies alone.
However, some commenters who expressed appreciation of CMS'
recognition of non-CAR T-cell immunotherapy and a need to revise the
description for Pre-MDC MS-DRG 018 requested further clarification from
CMS on what the ``Other Immunotherapies'' terminology is intended to
include. The commenters stated the term ``Other Immunotherapies'' is
very general and may lead to confusion since ``immunotherapy'' is a
broad term that is applied across several therapeutic areas (for
example Diabetes, Rheumatoid Arthritis, Cancer, etc.) to describe
treatments that stimulate an immune response within patients. A
commenter stated that the National Cancer Institute differentiates
immunotherapy for cancer patients into several types (for example,
Immune checkpoint inhibitors, T-cell transfer therapy, Monoclonal
antibodies, etc.). This commenter stated their belief that CMS is not
intending to refer to a broad array of immunotherapy and suggested that
more precise language in the descriptor of Pre-MDC MS-DRG 018 may be
beneficial. Some commenters recommended that CMS consider using
terminology such as ``Immune Effector Cells'' in place of ``Other
Immunotherapies'' with respect to the description of the MS-DRG. Other
commenters suggested that CMS consider revising the title for Pre-MDC
MS-DRG 018 to ``Autologous T-cell Immunotherapies''. Another commenter
stated they recognized the intent of the proposed change and commended
the effort by CMS to ensure that future cellular and CAR T-cell
therapies are rapidly assigned to a MS-DRG to allow for proper payment,
however, similar to other commenters, this commenter requested
clarification as to whether the proposed revision to the title of Pre-
MDC MS-DRG 18 is intended to incorporate solely cellular and CAR T-cell
therapies, or whether the goal is to include all cancer
immunotherapeutic agents since the term ``immunotherapy'' is broad and
future novel cancer immunotherapeutic agents may have different
resource utilization.
A commenter acknowledged that CMS is faced with a challenging
landscape in incorporating the administration of new gene and cell
therapies into the IPPS and recognized that CMS' proposed assignment of
procedure codes describing the administration of tumor-infiltrating
lymphocyte (TIL) therapies to MS-DRG 018 is to the most similar MS-DRG
that covers similar clinical characteristics and comorbidities.
However, whether for TIL therapies or other products in the pipeline,
the commenter recommended that CMS consider the following factors when
determining a permanent payment mechanism:

<bullet> Patient diagnosis and product indication (solid vs. blood
cancers)
<bullet> Cell collection methodologies (tissue biopsy, pheresis, etc.)
<bullet> Product administration methodologies
<bullet> Patient clinical care regimes and durations
<bullet> Product safety and toxicity profiles that impact inpatient
care and follow-up

According to the commenter, society experts state there are
distinct and important differences in these factors between TIL
therapies and CAR T-cell therapies that may support reconsideration of
the MS-DRG assignment after a product is approved by the FDA and is
used to treat Medicare beneficiaries. The commenter recommended further
consideration of the appropriateness and patient access implications,
based on these factors, before grouping the two types of therapies
together on a long-term basis. This commenter also suggested that if
CMS finalized a change to the title of MS-DRG 018 to include TIL
therapies upon their initial approval, as proposed, that the title of
the MS-DRG more clearly reflect the specialized products assigned to
it.
A few commenters urged CMS to finalize the proposal while
continuing to work with stakeholders on ways to improve the
predictability and stability of hospital payment for these complex,
novel cell therapies that provide options for patients who so
desperately need them. Other commenters stated that if the proposed
revision to the title for Pre-MDC MS-DRG 018 is finalized, that CMS
should continue to monitor and assess the appropriateness of therapies
assigned to MS-DRG 018, if they continue to be aligned on resource use,
and whether additional refinements or MS-DRGs may be warranted in the
future. The commenters also suggested that CMS consider and detail a
process for creating new Pre-MDC MS-DRGs that reflect utilization and
clinical similarity consistent with the current overall IPPS
infrastructure while maintaining important resource and clinical
differences to maintain relative weight stability.
Other commenters opposed or expressed strong concerns with the
proposal to assign the procedure codes describing non-CAR T-cell and
other immunotherapies to Pre-MDC MS-DRG 018 and to revise the title of
the MS-DRG. These commenters stated that assigning therapies that are
clinically distinct from CAR T-cell therapies and may vary in resource
use has the potential to distort future rate setting and will disrupt
the Agency's measured multi-year approach in establishing a MS-DRG
dedicated to CAR T-cell therapy. According to the commenters, expanding
the MS-DRG to other immunotherapies one year after it has been
implemented holds the risk of creating additional payment uncertainty
around CAR T-cell therapies. The commenters urged CMS to maintain Pre-
MDC MS-DRG 018 specifically for autologous CAR T-cell therapies only,
as a long-term solution for reliable and predictable payments that will
enable hospitals to provide access to CAR T-cell therapies for Medicare
beneficiaries.
Some commenters recommended that CMS publicly propose MS-DRG
mappings in advance of making a final assignment decision and provide
an opportunity for stakeholders to submit comments with respect to
proposed mappings. Other commenters stated the new technology add-on
payment process should be independent of the process for obtaining a
MS-DRG assignment for a new code.
A few commenters provided specific information relating to the
process that is involved for patients undergoing treatment with CAR T-
cell therapy. The commenters outlined the stage of leukapheresis where
T-cells are separated and removed from the blood and the remaining
blood is returned to the body, followed by the T-cells being sent to a
manufacturing facility where they are genetically engineered and grown
in a laboratory until millions of T-cells are produced. These
commenters did not agree with the assignment of procedure codes
describing non-CAR T-cell therapies and other

[[Page 44802]]

immunotherapies to Pre-MDC MS-DRG 018 stating the treatment processes
are distinctly different and that some products have yet to be approved
by the FDA.
A commenter who specifically opposed the modification of Pre-MDC
MS-DRG 018 for FY 2022 stated that there are not any non-CAR T-cell
therapy FDA approved products that are anticipated in the near term.
This commenter further stated that CMS' proposal to include ``other
immunotherapies'' in the description for Pre-MDC MS-DRG 018 is overly
broad and risks inclusion of therapeutics which are not well aligned
with CAR T-cell cases being mapped to this MS-DRG. According to the
commenter, CMS has not provided sufficient detail about the rationale
and supporting evidence for assignment of non-CAR T-cell products to
MS-DRG 018. The commenter also stated that the term ``immunotherapy''
could describe products that treat a range of conditions, and those
products may have different experience with potential complications and
expected length of stay than CAR T-cell products as well as different
costs for the product itself. This same commenter recommended that CMS
provide evidence of clinical consistency and resource use alignment in
future rulemaking when proposing therapies that may map to Pre-MDC MS-
DRG-018 and allow for public comments. Another commenter expressed
concern that the proposed change to encompass ``other immunotherapies''
in Pre-MDC MS-DRG 018 could set a precedent for creating ``generic''
MS-DRGs for gene therapies, which, according to the commenter, could
hamper timely beneficiary access to needed treatment. This commenter
urged CMS to limit Pre-MDC MS-DRG 018 to all types of CAR T-cell
therapies and to consider creating new MS-DRGs for therapies, such as
gene therapies, outside the CAR T-cell space.
Response: We thank the commenters for their support of our proposal
to assign the listed procedure codes describing CAR T-cell, non-CAR T-
cell and other immunotherapies to Pre-MDC MS-DRG 018 and to modify the
title for Pre-MDC MS-DRG 018 to reflect this assignment. As previously
noted, we used our established process to examine the MS-DRG assignment
for the predecessor codes to determine the most appropriate MS-DRG
assignment. Specifically, we reviewed the predecessor code and MS-DRG
assignment most closely associated with the new procedure code, and in
the absence of claims data, we considered other factors that may be
relevant to the MS-DRG assignment, including the severity of illness,
treatment difficulty, complexity of service and the resources utilized
in the diagnosis and/or treatment of the condition. We have noted in
prior rulemaking that this process does not automatically result in the
new procedure code being assigned to the same MS-DRG or to have the
same designation (O.R. versus Non-O.R.) as the predecessor code. As
stated in the preamble of the proposed rule and discussed in this final
rule, we proposed to classify the new procedure codes as Non-O.R.
procedures affecting Pre-MDC MS-DRG 018, as shown in Table 6B.--New
Procedure Codes that was associated with the proposed rule and
available via the internet on the CMS website at <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index/">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index/</a>,
providing the opportunity for public comment on the MDC, MS-DRG
assignment and designation.
The predecessor code and associated MS-DRG assignment (if
applicable) for the listed codes are as follows:
BILLING CODE 4120-01-P

[[Page 44803]]

[GRAPHIC] [TIFF OMITTED] TR13AU21.006

[[Page 44804]]

[GRAPHIC] [TIFF OMITTED] TR13AU21.007

BILLING CODE 4120-01-C
As shown in the table, all the procedure codes have a predecessor
code that was previously assigned to Pre-MDC MS-DRG 018 with the

[[Page 44805]]

exception of four procedure codes (XW033G7, XW033L7, XW043G7, and
XW043L7) that have a predecessor code that was designated Non-O.R. and
did not impact any MS-DRG assignment. Two of the four codes describe
the introduction (administration) of an allogeneic CAR T-cell therapy
and are intended to capture any allogeneic CAR T-cell products that may
become available and do not yet have a unique procedure code. The other
two codes specifically describe the product lifileucel. We believe that
at this time, as the field of cellular and gene immunotherapies is
continuing to evolve very rapidly, that it is appropriate to initially
classify the procedure codes describing allogeneic CAR T-cell therapy
and lifileucel to Pre-MDC MS-DRG 018 because there are clinical
similarities with respect to the administration of these products, the
complexity of the conditions in which they are treating, and resource
utilization that are consistent with other CAR T-cell products
currently assigned to the MS-DRG. As a commenter specifically noted in
its support to assign the procedure codes describing the introduction
of lifileucel (XW033L7 and XW043L7) to Pre-MDC MS-DRG 018, both
lifileucel (a tumor-infiltrating lymphocyte or TIL therapy) and CAR T-
cell therapies require collection of a patient's lymphocyte cells which
are a key component of a complicated manufacturing process to produce a
patient-specific therapeutic dose, both are primarily administered in
the inpatient setting due to risk of significant but treatable adverse
events and the resources are anticipated to be comparable with respect
to the intensity of patient care that includes the treatment phase,
monitoring, management of any adverse events, and length of stay. While
for TIL therapy the source of the lymphocyte is the patient's tumor and
is obtained through surgical resection, and for CAR T-cell therapy the
source of the lymphocyte is the patient's blood, obtained through
apheresis, both therapies require a patient's lymphocytes. We also
appreciate another commenter's recognition of the challenges involved
with incorporating the administration of new gene and cellular
therapies into the IPPS and the view that assignment of procedure codes
describing the administration of tumor-infiltrating lymphocyte (TIL)
therapies to Pre-MDC MS-DRG 018 is to the most similar MS-DRG that
reflects similar clinical characteristics and comorbidities. With
respect to allogeneic CAR T-cell therapies, it is understood that these
therapies are not derived from a patient's own cells and therefore are
not ``autologous'', however, the resources and complexity in the care
and clinical management of these patients may be considered comparable
when taking into account diagnosis, prognosis, and treatment difficulty
(for example, frequent adjustments in dosing regimens in efforts to
prevent rejection of the new cells and susceptibility to infection). We
note that the definition of a MS-DRG will not be so specific that every
patient is identical, rather, the level of variation is known and
predictable. Thus, while the precise resource intensity of a patient
cannot be predicted, the average pattern of resource intensity of a
group of patients in a MS-DRG can be accurately predicted.
We also appreciate the commenter's feedback on factors to consider
for products that are in the pipeline with respect to MS-DRG assignment
as a permanent payment mechanism. We agree that there may be
distinctions to account for as we continue to gain more experience in
the utilization of these therapies and have additional claims data to
analyze.
We acknowledge the commenters' concerns that the term ``Other
Immunotherapies'' that was proposed for the title of Pre-MDC MS-DRG 018
may be considered broad. While, as several commenters stated in their
comments, cellular therapies and gene therapies are an evolving field,
the term ``Other Immunotherapies'' is intended to encompass the group
of therapies that are currently available and being utilized today (for
which codes have been created for reporting in response to industry
requests or are being considered for implementation), and to enable
appropriate MS-DRG assignment for any future therapies that may also
fit into this category and are not specifically identified as a CAR T-
cell product, that may become available (for example receive marketing
authorization or a newly established procedure code in the ICD-10-PCS
classification) during FY 2022. We appreciate the suggestions to
consider alternative terminology for the title (description) of Pre-MDC
MS-DRG 018 and look forward to continuing to work with stakeholders on
this issue in the future. At this time, for FY 2022, we believe it is
premature to finalize any of the suggested title revisions by
commenters to Pre-MDC MS-DRG 018 that may not fully reflect the various
types of therapies and products described by the different procedure
codes that are currently assigned or may be considered for assignment
there in FY 2022. We also note that any proposed changes to modify the
logic for case assignment and/or the title to Pre-MDC MS-DRG 018 would
be considered in future rulemaking. We further note that the process of
code creation and proposed assignment to the most appropriate MS-DRG
exists independently, regardless of whether there is an associated
application for a new technology add-on payment for a product or
technology submitted for consideration in a given fiscal year.
Specifically, requests for a new code(s) or updates to existing codes
are addressed through the ICD-10 Coordination and Maintenance Committee
meetings where code proposals are presented and the public is provided
the opportunity to comment. All codes finalized after the September
meeting must be reviewed and are subsequently proposed for assignment
under the ICD-10 MS-DRGs through notice and comment rulemaking. Codes
that are finalized after the March meeting are also reviewed and
subject to our established process of initially reviewing the
predecessor codes MS-DRG assignment and designation, while considering
other relevant factors as previously described. The codes that are
finalized after the March meeting are specifically identified with a
footnote in Tables 6A.--New Diagnosis Codes and Table 6B.--New
Procedure Codes that are made publicly available in association with
the final rule via the internet on the CMS website at <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS</a>. The public may provide feedback on these finalized
assignments which are then taken into consideration for the following
fiscal year. We refer the reader to section II.D.16 of the preamble of
this final rule for additional information regarding the ICD-10
Coordination and Maintenance Committee meeting process. Lastly, we note
that while some of the commenters opposed the revision to the title and
assignment of the new ICD-10-PCS procedure codes to Pre-MDC MS-DRG 018,
these commenters did not provide any alternative MS-DRGs for CMS to
consider.
In response to concerns involving payment uncertainty, we disagree
that modifying Pre-MDC MS-DRG 018 to include other immunotherapies one
year after it has been implemented carries a risk of creating
additional payment uncertainty around CAR T-cell therapies and
volatility in the relative weight for Pre-MDC MS-DRG 018. As stated in
section II.E.2.b. of the preamble of the proposed rule and this

[[Page 44806]]

final rule, we proposed and are finalizing to maintain the methodology
for the relative weight calculation for Pre-MDC MS-DRG 018. We refer
the reader to section II.E.2.b. of the preamble of this final rule for
the detailed discussion. Since the new procedure codes describing CAR
T-cell, non-CAR T-cell or other immunotherapies are effective with
discharges on and after October 1, 2021 and based on our understanding
that the administration of these therapies continues to be in clinical
trials, any claims reporting these new procedure codes containing
diagnosis code Z00.6 or having standardized drug charges of less than
$373,000 would be excluded from the calculation of the relative weight
for Pre-MDC MS-DRG 018. During this timeframe, as additional claims
data is made available, we will be better positioned to further
evaluate if changes to the current methodology or other modifications
to the procedure code assignments and MS-DRG are warranted.
We appreciate the unique process that is involved with the
development and production of CAR T-cell therapies, however, under the
IPPS, when evaluating appropriate MS-DRG assignment for technologies
(for example devices) that are utilized in the performance of a
procedure we do not take into consideration how a specific device is
manufactured compared to how other similar devices are manufactured.
Rather, we analyze and consider the procedure(s) for which the
technology is utilized for or in, and the resources involved in the
performance of the procedure. As discussed, based on the information to
date, we believe that the initial assignment of the listed procedure
codes is appropriate. Based on the nature of some comments, it appears
commenters were suggesting that CMS apply the criteria that is utilized
for the new technology add-on application process when suggesting what
factors CMS should consider for MS-DRG assignment of CAR T-cell, non-
CAR T-cell, and other immunotherapies. We note that the new technology
add-on application criteria is separate and distinct from the code
request process and subsequent MS-DRG assignment process.
In response to the commenter who stated there are not any non-CAR
T-cell therapy FDA approved products that are anticipated in the near
term, we wish to clarify that the proposed and final assignment of a
procedure code to a MS-DRG is not dependent upon a products FDA
approval. Similarly, the creation of a code to describe a technology
that is utilized in the performance of a procedure or service does not
require FDA approval of the technology.
With respect to the commenters' recommendation for CMS to continue
to assess the appropriateness of the therapies being proposed or
finalized to group to Pre-MDC MS-DRG 018, we note that, as discussed in
the preamble of the proposed rule and this final rule we use our
established process to examine the MS-DRG assignment for the
predecessor codes to determine the most appropriate MS-DRG assignment
and, consistent with the assignment of those predecessor codes, we
propose to classify new procedure codes as shown Table 6B.--New
Procedure Codes in association with the proposed rule each year. The
procedure codes describing CAR T-cell, non-CAR T-cell or other
immunotherapies are effective with discharges on and after October 1,
2021 as shown in Table 6B.--New Procedure Codes associated with this
final rule and available via the internet on the CMS website at:
https://www.cms.gov/medicare/medicare-fee-for-service-payment/
acuteinpatientpps. In connection with the creation of new procedure
codes (and diagnosis codes), the MS-DRGs are reviewed and recalibrated
on an annual basis to specifically identify changes in utilization and
resources, and to allow the opportunity for public comment on proposed
changes under the IPPS.
In response to the comment that the term ``immunotherapy'' could
describe products that treat a range of conditions, we note that for FY
2022 we are addressing an immediate need to account for any upcoming
therapies that may be made available that are not specifically
classified as a CAR T-cell therapy to enable appropriate payment and
predictability. We note that the ICD-10-CM diagnosis codes identify
specific conditions and are available for tracking indications and
other purposes. We also note that because MS-DRG 018 is a Pre-MDC, the
logic for case assignment is dependent on the procedure codes that are
specifically assigned to the logic of the MS-DRG. Therefore, if a
particular type of immunotherapy is not specifically described by one
of the procedure codes that are listed in the definition (logic) for
Pre-MDC MS-DRG 018, then the logic for case assignment to this MS-DRG
would not be satisfied and another MS-DRG would be appropriately
assigned based on the GROUPER logic (the definition of the MS-DRG).
After consideration of the public comments received, for FY 2022,
we are finalizing our proposal to assign the listed procedure codes
describing CAR T-cell, non-CAR T-cell and other immunotherapies to Pre-
MDC MS-DRG 018 and to modify the title to ``Chimeric Antigen Receptor
(CAR) T-cell and Other Immunotherapies'' to better reflect the cases
reporting the administration of non-CAR T-cell therapies and other
immunotherapies.
When additional claims data becomes available for the CAR T-cell,
non-CAR T-cell therapies and other immunotherapies for which new
procedure codes have been created and are effective October 1, 2021 or
that may be created and become effective during FY 2022, we can
evaluate that data to determine if further modifications to Pre-MDC MS-
DRG 018 are warranted. We plan to continue engaging with stakeholders
on additional options for consideration in this field of cellular and
gene therapies, such as the creation of new and distinct MS-DRGs and to
determine if the creation of a new MDC (Major Diagnostic Category) may
be warranted to which unique MS-DRGs could be established and the
appropriate corresponding procedure codes could be proposed for
assignment.
3. MDC 03 (Diseases and Disorders of Ear, Nose, Mouth and Throat)
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58462 through
58471), we finalized our proposal to create two new base MS-DRGs, 140
and 143, with a three-way severity level split for new MS-DRGs 140,
141, and 142 (Major Head and Neck Procedures with MCC, with CC, and
without CC/MCC, respectively) and new MS-DRGs 143, 144, and 145 (Other
Ear, Nose, Mouth and Throat O.R. Procedures with MCC, with CC, and
without CC/MCC, respectively). We provided the list of procedure codes
that were finalized to define the logic for the new MS-DRGs in Tables
6P.2a, 6P.2b, and 6P.2c associated with the final rule and available
via the internet on the CMS website at <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index/">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index/</a>. As discussed
in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25095 through 25098),
we received two separate but related requests to review and reconsider
the MS-DRG assignments for a subset of the procedure codes listed in
Table 6P.2a (procedure codes assigned to MS-DRGs 140, 141, and 142) and
Table 6P.2b (procedure codes assigned to MS-DRGs 143, 144, and 145). In
this section of this rule, we discuss each of these separate, but
related requests.

[[Page 44807]]

a. Major Head and Neck Procedures
The requestor provided the following procedure codes from Table
6P.2a associated with the FY 2021 IPPS/LTCH PPS final rule for CMS to
examine.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR13AU21.008

BILLING CODE 4120-01-C
The requestor stated that the listed procedure codes do not appear
appropriately assigned to MS-DRGs 140, 141, and 142. According to the
requestor, if any one of the five procedure codes describing a
procedure performed on the cranial cavity (0W9100Z, 0W910ZZ, 0WC10ZZ,
0WC13ZZ, or 0WX14ZZ) is assigned in conjunction with a principal
diagnosis from MDC 03 (Diseases and Disorders of Ear, Nose, Mouth, and
Throat), it appears more appropriate that cases reporting the diagnosis
and procedure combination would group to MS-DRGs 25, 26, and 27
(Craniotomy and Endovascular Intracranial Procedures with MCC, with CC,
and without CC/MCC, respectively) (for example, ``craniotomy'' MS-DRGs)
in MDC 01 (Diseases and Disorders of the Central Nervous System) or to
MS-DRGs 981, 982, and 983 (Extensive O.R. Procedures Unrelated to
Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively). The requestor stated that drainage and extirpation from
the cranial cavity always involves drilling or cutting through the
skull regardless of the approach, therefore the five procedure codes
identified warrant assignment to the ``craniotomy'' MS-DRGs. For the
three procedure codes describing excision of subcutaneous tissue of
chest, back, or abdomen (0JB60ZZ, 0JB70ZZ, and 0JB80ZZ), the requestor
stated those codes should group to MS-DRGs 987, 988, and 989 (Non-
extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC,
with CC, and without CC/MCC, respectively) because they are not
pertinent to the ear, nose, mouth, or throat.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25096 through
25097), we stated that we reviewed this request and noted that the five
procedure codes describing procedures performed on the cranial cavity
are already assigned to MDC 01 and group to the ``craniotomy'' MS-DRGs
(25, 26, and 27) when reported with a principal diagnosis from MDC 01,
and are also currently classified as Extensive O.R. procedures,
resulting in assignment to MS-DRGs 981, 982, and 983 when any one of
the five procedure codes is reported on the claim and is unrelated to
the MDC to which the case was assigned based on the principal
diagnosis. We also noted that in addition to MS-DRGs 25, 26, and 27,
MS-DRG 23 (Craniotomy with Major Device Implant or Acute Complex CNS
Principal Diagnosis with MCC or Chemotherapy Implant or Epilepsy with
Neurostimulator) and MS-DRG 24 (Craniotomy with Major Device Implant or
Acute Complex CNS Principal Diagnosis without MCC) include procedures
performed on structures located within the cranial cavity, are included
in the range of MS-DRGs known as the ``craniotomy'' MS-DRGs in MDC 01,
and the five procedure codes submitted by the requestor describing
procedures performed on the cranial cavity are also assigned to these
MS-DRGs. We referred the requestor to Appendix E of the ICD-10 MS-DRG
Definitions Manual for further discussion of how each procedure code
may be assigned to multiple MDCs and MS-DRGs under the IPPS. The ICD-10
MS-DRG Definitions Manual is located on the CMS website at <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software</a>. We also noted
that these five procedure codes were previously assigned to MS-DRGs 131
and 132 (Cranial and Facial Procedures with and without CC/MCC,
respectively) in MDC 03 under version 37 of the ICD-10 MS-DRGs prior to
the restructuring that was finalized effective FY 2021 for MS-DRG 129
(Major Head and Neck Procedures with CC/MCC or Major Device) and MS-DRG
130 (Major Head and Neck Procedures without CC/MCC), MS-DRGs 131 and
132, and MS-DRGs 133 and 134 (Other Ear, Nose, Mouth and Throat O.R.
Procedures with and without CC/MCC, respectively).
With regard to the three procedure codes describing excision of
subcutaneous tissue of chest, back, or abdomen (0JB60ZZ, 0JB70ZZ, and
0JB80ZZ), the requestor suggested that the codes should group to MS-
DRGs 987, 988, and 989 (Non-extensive O.R. Procedures Unrelated to
Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) specifically because they are not pertinent to the ear,
nose, mouth, or throat, however, we noted it is unclear if the
requestor was concerned more broadly that the three procedure codes
should not group to any MS-DRGs in MDC 03 (Diseases and Disorders of
Ear, Nose, Mouth and Throat), given the stated rationale for the
request.
We stated in the proposed rule that, upon our review, we believed
that the three procedure codes describing excision of subcutaneous
tissue of chest, back, and abdomen (0JB60ZZ, 0JB70ZZ, and 0JB80ZZ),
which do not describe major head and neck procedures, were
inadvertently included in Table 6P.2a for assignment to MS-DRGs 140,
141, and 142. However, we also stated we believe that the codes are
appropriate for assignment in MDC 03 and noted that the three procedure
codes were previously assigned to MS-DRGs 133 and 134 (Other Ear, Nose,
Mouth and

[[Page 44808]]

Throat O.R. Procedures with and without CC/MCC, respectively) in MDC 03
prior to the restructuring that was finalized effective FY 2021 for MS-
DRGs 129, 130, 131, 132, 133, and 134. We also provided the following
clarification in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58470), as
stated in the ICD-10 MS-DRG Definitions Manual, ``In each MDC there is
usually a medical and a surgical class referred to as ``other medical
diseases'' and ``other surgical procedures,'' respectively. The
``other'' medical and surgical classes are not as precisely defined
from a clinical perspective. The other classes would include diagnoses
or procedures, which were infrequently encountered or not well defined
clinically. For example, the ``other'' medical class for the
Respiratory System MDC would contain the diagnoses ``other somatoform
disorders'' and ``congenital malformation of the respiratory system,''
while the ``other'' surgical class for the female reproductive MDC
would contain the surgical procedures ``excision of liver'' (liver
biopsy in ICD-9-CM) and ``inspection of peritoneal cavity''
(exploratory laparotomy in ICD-9-CM). The ``other'' surgical category
contains surgical procedures which, while infrequent, could still
reasonably be expected to be performed for a patient in the particular
MDC.''
In the proposed rule, we noted that during our review of procedure
codes 0JB60ZZ, 0JB70ZZ, and 0JB80ZZ (describing excision of
subcutaneous tissue of chest, back, and abdomen, respectively) we also
confirmed that these procedures are currently designated as Extensive
O.R. procedures. Consistent with other procedure codes on the Non-
extensive procedure code list, we stated we do not believe the
procedures described by these procedure codes necessarily utilize the
resources or have the level of technical complexity as the procedures
on the Extensive O.R. procedures list. Therefore, we agreed that the
procedure codes describing these procedures would be more appropriately
designated as Non-extensive procedures and group to MS-DRGs 987, 988,
and 989 (Non-extensive O.R. Procedures Unrelated to Principal Diagnosis
with MCC, with CC, and without CC/MCC, respectively) when any one of
the three procedure codes is reported on a claim and is unrelated to
the MDC to which the case was assigned based on the principal
diagnosis. We referred the reader to section II.D.10. of the preamble
of the proposed rule for further discussion regarding our proposal to
reassign these procedure codes from MS-DRGs 981, 982, and 983
(Extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC,
with CC, and without CC/MCC, respectively) to MS-DRGs 987, 988, and 989
(Non-extensive O.R. Procedures Unrelated to Principal Diagnosis with
MCC, with CC, and without CC/MCC, respectively) for FY 2022.
Therefore, we proposed to reassign the three procedure codes
describing excision of subcutaneous tissue of chest, back, or abdomen
(0JB60ZZ, 0JB70ZZ, and 0JB80ZZ) from MS-DRGs 140, 141, and 142 (Major
Head and Neck Procedures with MCC, with CC, and without CC/MCC,
respectively) to MS-DRGs 143, 144, and 145 (Other Ear, Nose, Mouth and
Throat O.R. Procedures with MCC, with CC, and without CC/MCC,
respectively) in MDC 03 for FY 2022. We refer the reader to section
II.D.10. of the preamble of this final rule for further discussion
regarding the designation of these codes as Extensive O.R. procedures
versus Non-extensive O.R. procedures and our finalized reassignment of
these codes from MS-DRGs 981, 982, and 983 to MS-DRGs 987, 988, and 989
for FY 2022.
Comment: Commenters supported the proposed reassignment of the
three procedure codes describing excision of subcutaneous tissue of
chest, back, or abdomen from MS-DRGs 140, 141, and 142 to MS-DRGs 143,
144, and 145.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to reassign procedure codes 0JB60ZZ, 0JB70ZZ,
and 0JB80ZZ describing excision of subcutaneous tissue

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