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Rule2022-23918

Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Organ Acquisition; Rural Emergency Hospitals: Payment Policies, Conditions of Participation, Provider Enrollment, Physician Self-Referral; New Service Category for Hospital Outpatient Department Prior Authorization Process; Overall Hospital Quality Star Rating; COVID-19

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Published

November 23, 2022

Effective

January 1, 2023

Issuing agencies

Health and Human Services DepartmentCenters for Medicare & Medicaid Services

Abstract

This final rule with comment period revises the Medicare hospital outpatient prospective payment system (OPPS) and the Medicare ambulatory surgical center (ASC) payment system for Calendar Year (CY) 2023 based on our continuing experience with these systems. We describe the changes to the amounts and factors used to determine the payment rates for Medicare services paid under the OPPS and those paid under the ASC payment system. Also, this final rule updates and refines the requirements for the Hospital Outpatient Quality Reporting (OQR) Program; the ASC Quality Reporting (ASCQR) Program; and the Rural Emergency Hospital Quality Reporting (REH) Program. We also make updates to the requirements for Organ Acquisition, REHs, Prior Authorization, and Overall Hospital Quality Star Rating. We are establishing a new provider type for REHs, and we are finalizing proposals regarding payment policy, quality measures, and enrollment policy for REHs. In addition, we are finalizing the Conditions of Participation that REHs must meet in order to participate in the Medicare and Medicaid programs. This rule also finalizes changes to the Critical Access Hospitals (CAH) CoPs for the location and distance requirements, patient's rights requirements, and flexibilities for CAHs that are part of a larger health system. Finally, we are finalizing as implemented a number of provisions included in the COVID-19 interim final rules with comment period (IFCs).

Full Text

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<title>Federal Register, Volume 87 Issue 225 (Wednesday, November 23, 2022)</title>
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[Federal Register Volume 87, Number 225 (Wednesday, November 23, 2022)]
[Rules and Regulations]
[Pages 71748-72310]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-23918]

[[Page 71747]]

Vol. 87

Wednesday,

No. 225

November 23, 2022

Part II

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Parts 405, 410, 411, et al.

Medicare Program: Hospital Outpatient Prospective Payment and
Ambulatory Surgical Center Payment Systems and Quality Reporting
Programs; Organ Acquisition; Rural Emergency Hospitals: Payment
Policies, Conditions of Participation, Provider Enrollment, Physician
Self-Referral; New Service Category for Hospital Outpatient Department
Prior Authorization Process; Overall Hospital Quality Star Rating;
COVID-19; Final Rule

Federal Register / Vol. 87, No. 225 / Wednesday, November 23, 2022 /
Rules and Regulations

[[Page 71748]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405, 410, 411, 412, 413, 416, 419, 424, 485, and 489

[CMS-1772-FC; CMS-1744-F; CMS-3419-F; CMS-5531-F; CMS-9912-F]
RIN 0938-AU82

AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).

ACTION: Final rule with comment period; final rules.

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SUMMARY: This final rule with comment period revises the Medicare
hospital outpatient prospective payment system (OPPS) and the Medicare
ambulatory surgical center (ASC) payment system for Calendar Year (CY)
2023 based on our continuing experience with these systems. We describe
the changes to the amounts and factors used to determine the payment
rates for Medicare services paid under the OPPS and those paid under
the ASC payment system. Also, this final rule updates and refines the
requirements for the Hospital Outpatient Quality Reporting (OQR)
Program; the ASC Quality Reporting (ASCQR) Program; and the Rural
Emergency Hospital Quality Reporting (REH) Program. We also make
updates to the requirements for Organ Acquisition, REHs, Prior
Authorization, and Overall Hospital Quality Star Rating. We are
establishing a new provider type for REHs, and we are finalizing
proposals regarding payment policy, quality measures, and enrollment
policy for REHs. In addition, we are finalizing the Conditions of
Participation that REHs must meet in order to participate in the
Medicare and Medicaid programs. This rule also finalizes changes to the
Critical Access Hospitals (CAH) CoPs for the location and distance
requirements, patient's rights requirements, and flexibilities for CAHs
that are part of a larger health system. Finally, we are finalizing as
implemented a number of provisions included in the COVID-19 interim
final rules with comment period (IFCs).

DATES:
Effective date: The provisions of this rule are effective January
1, 2023.
Comment period: To be assured consideration, comments must be
received at one of the addresses provided below, by January 3, 2023.
Incorporation by reference: The incorporation by reference of
certain publications listed in the rule is approved by the Director of
the Federal Register as of January 1, 2023.

ADDRESSES: In commenting, please refer to file code CMS-1772-FC.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1772-FC; CMS-1744-F; CMS-
3419-F; CMS-5531-FC; CMS-9912-F, P.O. Box 8010, Baltimore, MD 21244-
1810.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1772-FC; CMS-
1744-F; CMS-3419-F; CMS-5531-F; CMS-9912-F, Mail Stop C4-26-05, 7500
Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT:
Elise Barringer, <a href="/cdn-cgi/l/email-protection#07426b6e746229456675756e6960627547646a74296f6f7429606871">[email&#160;protected]</a> or 410-786-9222.
Advisory Panel on Hospital Outpatient Payment (HOP Panel), contact
the HOP Panel mailbox at <a href="/cdn-cgi/l/email-protection#c687968596a7a8a3aa86a5abb5e8aeaeb5e8a1a9b0">[email&#160;protected]</a>.
Ambulatory Surgical Center (ASC) Payment System, contact Scott
Talaga via email at <a href="/cdn-cgi/l/email-protection#4d1e2e22393963192c212c2a2c0d2e203e6325253e632a223b">[email&#160;protected]</a> or Mitali Dayal via email
at <a href="/cdn-cgi/l/email-protection#b4f9ddc0d5d8dd9af0d5cdd5d886f4d7d9c79adcdcc79ad3dbc2">[email&#160;protected]</a>.
Ambulatory Surgical Center Quality Reporting (ASCQR) Program
Administration, Validation, and Reconsideration Issues, contact Anita
Bhatia via email at <a href="/cdn-cgi/l/email-protection#fbba95928f9ad5b9939a8f929abb989688d5939388d59c948d">[email&#160;protected]</a>.
Ambulatory Surgical Center Quality Reporting (ASCQR) Program
Measures, contact Cyra Duncan via email at <a href="/cdn-cgi/l/email-protection#89caf0fbe8a7cdfce7eae8e7c9eae4faa7e1e1faa7eee6ff">[email&#160;protected]</a>.
Blood and Blood Products, contact Josh McFeeters via email at
<a href="/cdn-cgi/l/email-protection#52183d213a27337c1f311437372637202112313f217c3a3a217c353d24">[email&#160;protected]</a>.
Cancer Hospital Payments, contact Scott Talaga via email at
<a href="/cdn-cgi/l/email-protection#4310202c37376d17222f22242203202e306d2b2b306d242c35">[email&#160;protected]</a>.
CMS Web Posting of the OPPS and ASC Payment Files, contact Chuck
Braver via email at <a href="/cdn-cgi/l/email-protection#6e2d061b0d05402c1c0f180b1c2e0d031d4006061d40090118">[email&#160;protected]</a>.
Composite APCs (Multiple Imaging and Mental Health), via email at
Mitali Dayal via email at <a href="/cdn-cgi/l/email-protection#a1ecc8d5c0cdc88fe5c0d8c0cd93e1c2ccd28fc9c9d28fc6ced7">[email&#160;protected]</a>.
Comprehensive APCs (C-APCs), contact Mitali Dayal via email at
<a href="/cdn-cgi/l/email-protection#9dd0f4e9fcf1f4b3d9fce4fcf1afddfef0eeb3f5f5eeb3faf2eb">[email&#160;protected]</a>.
COVID-19 Final Rules, contact Elise Barringer via email at
<a href="/cdn-cgi/l/email-protection#81c4ede8f2e4afc3e0f3f3e8efe6e4f3c1e2ecf2afe9e9f2afe6eef7">[email&#160;protected]</a>.
Hospital Inpatient Quality Reporting Program--Administration
Issues, contact Julia Venanzi at <a href="/cdn-cgi/l/email-protection#cb81bea7a2aae59daea5aaa5b1a28ba8a6b8e5a3a3b8e5aca4bd">[email&#160;protected]</a>.
Hospital Outpatient Quality Reporting (OQR) Program Administration,
Validation, and Reconsideration Issues, contact Shaili Patel via email
<a href="/cdn-cgi/l/email-protection#e3b08b828a8f8acdb38297868fa3808e90cd8b8b90cd848c95">[email&#160;protected]</a>.
Hospital Outpatient Quality Reporting (OQR) Program Measures,
contact Janis Grady via email <a href="/cdn-cgi/l/email-protection#7339121d1a005d340112170a33101e005d1b1b005d141c05">[email&#160;protected]</a>.
Hospital Outpatient Visits (Emergency Department Visits and
Critical Care Visits), contact Elise Barringer via email at
<a href="/cdn-cgi/l/email-protection#692c05001a0c472b081b1b00070e0c1b290a041a4701011a470e061f">[email&#160;protected]</a>.
Inpatient Only (IPO) Procedures List, contact Abigail Cesnik via
email at <a href="/cdn-cgi/l/email-protection#5a1b38333d3b333674193f293433311a39372974323229743d352c">[email&#160;protected]</a>.
Mental Health Services Furnished Remotely by Hospital Staff to
Beneficiaries in Their Homes, contact Emily Yoder via email at
<a href="/cdn-cgi/l/email-protection#eca981858095c2b58388899eac8f819fc284849fc28b839a">[email&#160;protected]</a>.
Method to Control Unnecessary Increases in the Volume of Clinic
Visit Services Furnished in Excepted Off-Campus Provider-Based
Departments (PBDs), contact Elise Barringer via email at
<a href="/cdn-cgi/l/email-protection#47022b2e342269052635352e2920223507242a34692f2f3469202831">[email&#160;protected]</a>.
New Technology Intraocular Lenses (NTIOLs), contact Scott Talaga
via email at <a href="/cdn-cgi/l/email-protection#c89baba7bcbce69ca9a4a9afa988aba5bbe6a0a0bbe6afa7be">[email&#160;protected]</a>.
No Cost/Full Credit and Partial Credit Devices, contact Scott
Talaga via email at <a href="/cdn-cgi/l/email-protection#3063535f44441e64515c51575170535d431e5858431e575f46">[email&#160;protected]</a>.
OPPS Brachytherapy, contact Scott Talaga via email at
<a href="/cdn-cgi/l/email-protection#d281b1bda6a6fc86b3beb3b5b392b1bfa1fcbabaa1fcb5bda4">[email&#160;protected]</a>.
OPPS Data (APC Weights, Conversion Factor, Copayments, Cost-to-
Charge Ratios (CCRs), Data Claims, Geometric Mean Calculation, Outlier
Payments, and Wage Index), contact Erick Chuang

[[Page 71749]]

via email at <a href="/cdn-cgi/l/email-protection#4702352e242c69042f3226292007242a34692f2f3469202831">[email&#160;protected]</a>, or Scott Talaga via email at
<a href="/cdn-cgi/l/email-protection#d380b0bca7a7fd87b2bfb2b4b293b0bea0fdbbbba0fdb4bca5">[email&#160;protected]</a>, or Josh McFeeters via email at
<a href="/cdn-cgi/l/email-protection#c48eabb7acb1a5ea89a782a1a1b0a1b6b784a7a9b7eaacacb7eaa3abb2">[email&#160;protected]</a>.
OPPS Drugs, Radiopharmaceuticals, Biologicals, and Biosimilar
Products, contact Josh McFeeters via email at
<a href="/cdn-cgi/l/email-protection#0943667a617c6827446a4f6c6c7d6c7b7a496a647a2761617a276e667f">[email&#160;protected]</a>, or Gil Ngan via email at
<a href="/cdn-cgi/l/email-protection#7d3a141153331a1c133d1e100e5315150e531a120b">[email&#160;protected]</a>, or Cory Duke via email at <a href="/cdn-cgi/l/email-protection#672408151e4923120c0227040a14490f0f1449000811">[email&#160;protected]</a>,
or Au'Sha Washington via email at <a href="/cdn-cgi/l/email-protection#f1b084829990dfa6908299989f96859e9fb1929c82df999982df969e87">[email&#160;protected]</a>.
OPPS New Technology Procedures/Services, contact the New Technology
APC mailbox at <a href="/cdn-cgi/l/email-protection#561833210233353e1706153726263a3f3537223f39382516353b25783e3e2578313920">[email&#160;protected]</a>.
OPPS Packaged Items/Services, contact Mitali Dayal via email at
<a href="/cdn-cgi/l/email-protection#bef3d7cadfd2d790fadfc7dfd28cfeddd3cd90d6d6cd90d9d1c8">[email&#160;protected]</a> or Cory Duke via email at
<a href="/cdn-cgi/l/email-protection#eaa9859893c4ae9f818faa898799c4828299c48d859c">[email&#160;protected]</a>.
OPPS Pass-Through Devices, contact the Device Pass-Through mailbox
at <a href="/cdn-cgi/l/email-protection#0b4f6e7d62686e5b5f6a7b7b6762686a7f626465784b68667825636378256c647d">[email&#160;protected]</a>.
OPPS Status Indicators (SI) and Comment Indicators (CI), contact
Marina Kushnirova via email at <a href="/cdn-cgi/l/email-protection#0e436f7c67606f20457b7d6660677c61786f4e6d637d2066667d20696178">[email&#160;protected]</a>.
Organ Acquisition Payment Policies, contact Katie Lucas via email
at <a href="/cdn-cgi/l/email-protection#e7ac86938f82958e8982c9ab92848694a7848a94c98f8f94c9808891">[email&#160;protected]</a>, or Mandy Michael via email at
<a href="/cdn-cgi/l/email-protection#57163a36393336791a3e343f36323b17343a24793f3f2479303821">[email&#160;protected]</a>, or Kellie Shannon via email at
<a href="/cdn-cgi/l/email-protection#86cde3eaeaefe3a8d5eee7e8e8e9e8c6e5ebf5a8eeeef5a8e1e9f0">[email&#160;protected]</a>.
Outpatient Department Prior Authorization Process, contact Yuliya
Cook via email at <a href="/cdn-cgi/l/email-protection#85dcf0e9ecfce4abc6eaeaeec5e6e8f6abededf6abe2eaf3">[email&#160;protected]</a>.
Overall Hospital Quality Star Rating, contact Tyson Nakashima via
email at <a href="/cdn-cgi/l/email-protection#47133e3428296909262c26342f2e2a2607242a34692f2f3469202831">[email&#160;protected]</a>.
Partial Hospitalization Program (PHP) and Community Mental Health
Center (CMHC) Issues, contact the PHP Payment Policy Mailbox at
<a href="/cdn-cgi/l/email-protection#702038202011091d151e04201f1c19130930131d035e1818035e171f06">[email&#160;protected]</a>.
Request for Information on Use of CMS Data to Drive Competition in
Healthcare Marketplaces, contact Terri Postma via email at
<a href="/cdn-cgi/l/email-protection#54003126263d7a043b27203935143739277a3c3c277a333b22">[email&#160;protected]</a>.
Rural Emergency Hospital and Critical Access Hospital Conditions of
Participation (CoP) Issues, contact Kianna Banks at
<a href="/cdn-cgi/l/email-protection#612a08000f0f004f23000f0a1221020c124f0909124f060e17">[email&#160;protected]</a>.
Rural Emergency Hospital Provider Enrollment, contact Frank Whelan
via email at <a href="/cdn-cgi/l/email-protection#327440535c591c655a575e535c72515f411c5a5a411c555d44">[email&#160;protected]</a>.
Rural Emergency Hospital Quality Reporting (REHQR) Program Issues,
contact Anita Bhatia via email at <a href="/cdn-cgi/l/email-protection#6a2b04031e0b4428020b1e030b2a09071944020219440d051c">[email&#160;protected]</a>.
Rural Emergency Hospital (REH) Physician Self-Referral Law Update
Issues, contact Lisa O. Wilson via email at <a href="/cdn-cgi/l/email-protection#307c5943511e67595c435f5e0270535d431e5858431e575f46">[email&#160;protected]</a> or
Meredith Larson via email at <a href="/cdn-cgi/l/email-protection#2b664e594e4f425f4305674a595844456b48465805434358054c445d">[email&#160;protected]</a>.
Skin Substitutes, contact Josh McFeeters via email at
<a href="/cdn-cgi/l/email-protection#dd97b2aeb5a8bcf390be9bb8b8a9b8afae9dbeb0aef3b5b5aef3bab2ab">[email&#160;protected]</a>.
Use of the Medicare Outpatient Observation Notice by REHs, contact
Nishamarie Sherry via email at <a href="/cdn-cgi/l/email-protection#d698bfa5beb7bbb7a4bfb3f885beb3a4a4af96b5bba5f8bebea5f8b1b9a0">[email&#160;protected]</a> or Janet
Miller via email at <a href="/cdn-cgi/l/email-protection#8ac0ebe4effea4c7e3e6e6eff8cae9e7f9a4e2e2f9a4ede5fc">[email&#160;protected]</a>.
All Other Issues Related to Hospital Outpatient Payments Not
Previously Identified, contact the OPPS mailbox at
<a href="/cdn-cgi/l/email-protection#85caf0f1f5e4f1ece0ebf1d5d5d6c5e6e8f6abededf6abe2eaf3">[email&#160;protected]</a>.
All Other Issues Related to the Ambulatory Surgical Center Payments
Not Previously Identified, contact the ASC mailbox at
<a href="/cdn-cgi/l/email-protection#adecfeeefdfdfeedcec0de83c5c5de83cac2db">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following
website as soon as possible after they have been received: <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Follow the search instructions on that website to
view public comments. CMS will not post on <a href="http://Regulations.gov">Regulations.gov</a> public
comments that make threats to individuals or institutions or suggest
that the individual will take actions to harm the individual. CMS
continues to encourage individuals not to submit duplicative comments.
We will post acceptable comments from multiple unique commenters even
if the content is identical or nearly identical to other comments.

Addenda Available Only Through the Internet on the CMS Website

In the past, a majority of the Addenda referred to in our OPPS/ASC
proposed and final rules were published in the Federal Register as part
of the annual rulemakings. However, beginning with the CY 2012 OPPS/ASC
proposed rule, all of the Addenda no longer appear in the Federal
Register as part of the annual OPPS/ASC proposed and final rules to
decrease administrative burden and reduce costs associated with
publishing lengthy tables. Instead, these Addenda are published and
available only on the CMS website. The Addenda relating to the OPPS are
available at: <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices</a>. The Addenda relating to the ASC payment system are available
at: <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/ASC-Regulations-and-Notices">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/ASC-Regulations-and-Notices</a>.

Current Procedural Terminology (CPT) Copyright Notice

Throughout this final rule with comment period, we use CPT codes
and descriptions to refer to a variety of services. We note that CPT
codes and descriptions are copyright 2021 American Medical Association
(AMA). All Rights Reserved. CPT is a registered trademark of the AMA.
Applicable Federal Acquisition Regulations and Defense Federal
Acquisition Regulations apply.

Table of Contents

I. Summary and Background
A. Executive Summary of This Document
B. Legislative and Regulatory Authority for the Hospital OPPS
C. Excluded OPPS Services and Hospitals
D. Prior Rulemaking
E. Advisory Panel on Hospital Outpatient Payment (the HOP Panel
or the Panel)
F. Public Comments Received on the CY 2023 OPPS/ASC Proposed
Rule
G. Public Comments Received on the CY 2022 OPPS/ASC Final Rule
With Comment Period
II. Updates Affecting OPPS Payments
A. Recalibration of APC Relative Payment Weights
B. Conversion Factor Update
C. Wage Index Changes
D. Proposed Statewide Average Default Cost-to-Charge Ratios
(CCRs)
E. Adjustment for Rural Sole Community Hospitals (SCHs) and
Essential Access Community Hospitals (EACHs) Under Section
1833(t)(13)(B) of the Act for CY 2023
F. Payment Adjustment for Certain Cancer Hospitals for CY 2023
G. Hospital Outpatient Outlier Payments
H. Calculation of an Adjusted Medicare Payment From the National
Unadjusted Medicare Payment
I. Beneficiary Copayments
III. OPPS Ambulatory Payment Classification (APC) Group Policies
A. OPPS Treatment of New and Revised HCPCS Codes
B. OPPS Changes--Variations Within APCs
C. New Technology APCs
D. Universal Low Volume APC Policy for Clinical and
Brachytherapy APCs
E. APC-Specific Policies
IV. OPPS Payment for Devices
A. Pass-Through Payment for Devices
B. Proposal to Publicly Post OPPS Device Pass-Through
Applications
C. Device-Intensive Procedures
V. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals
A. OPPS Transitional Pass-Through Payment for Additional Costs
of Drugs, Biologicals, and Radiopharmaceuticals
B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals
Without Pass-Through Payment Status

[[Page 71750]]

C. Requirement in the Physician Fee Schedule CY 2023 Proposed
and Final Rule for HOPDs and ASCs To Report Discarded Amounts of
Certain Single-Dose or Single-Use Package Drugs
D. Inflation Reduction Act--Section 11101 Regarding Beneficiary
Co-Insurance
VI. Estimate of OPPS Transitional Pass-Through Spending for Drugs,
Biologicals, Radiopharmaceuticals, and Devices
A. Amount of Additional Payment and Limit on Aggregate Annual
Adjustment
B. Estimate of Pass-Through Spending for CY 2023
VII. OPPS Payment for Hospital Outpatient Visits and Critical Care
Services
VIII. Payment for Partial Hospitalization Services
A. Background
B. PHP APC Update for CY 2023
C. Outpatient Non-PHP Mental Health Services Furnished Remotely
to Partial Hospitalization Patients After the COVID-19 PHE
D. Outlier Policy for CMHCs
IX. Services That Will Be Paid Only as Inpatient Services
A. Background
B. Changes to the Inpatient Only (IPO) List
X. Nonrecurring Policy Changes
A. Mental Health Services Furnished Remotely by Hospital Staff
to Beneficiaries in Their Homes
B. Comment Solicitation on Intensive Outpatient Mental Health
Treatment, Including Substance Use Disorder (SUD) Treatment
Furnished by Intensive Outpatient Programs (IOPs)
C. Direct Supervision of Certain Cardiac and Pulmonary
Rehabilitation Services by Interactive Communications Technology
D. Use of Claims Data for CY 2023 OPPS and ASC Payment System
Ratesetting Due to the PHE
E. Supervision by Nonphysician Practitioners of Hospital and CAH
Diagnostic Services Furnished to Outpatients
F. Coding and Payment for Category B Investigational Device
Exemption Clinical Devices and Studies
G. OPPS Payment for Software as a Service
H. Payment Adjustments Under the IPPS and OPPS for Domestic
NIOSH-Approved Surgical N95 Respirators
I. Exemption of Rural Sole Community Hospitals From the Method
To Control Unnecessary Increases in the Volume of Clinic Visit
Services Furnished in Excepted Off-Campus Provider-Based Departments
(PBDs)
XI. CY 2023 OPPS Payment Status and Comment Indicators
A. CY 2023 OPPS Payment Status Indicator Definitions
B. CY 2023 Comment Indicator Definitions
XII. MedPAC Recommendations
A. OPPS Payment Rates Update
B. ASC Conversion Factor Update
C. ASC Cost Data
XIII. Updates to the Ambulatory Surgical Center (ASC) Payment System
A. Background
B. ASC Treatment of New and Revised Codes
C. Update to the List of ASC Covered Surgical Procedures and
Covered Ancillary Services
D. Update and Payment for ASC Covered Surgical Procedures and
Covered Ancillary Services
E. ASC Payment System Policy for Non-Opioid Pain Management
Drugs and Biologicals That Function as Surgical Supplies
F. New Technology Intraocular Lenses (NTIOLs)
G. ASC Payment and Comment Indicators
H. Calculation of the ASC Payment Rates and the ASC Conversion
Factor
XIV. Requirements for the Hospital Outpatient Quality Reporting
(OQR) Program
A. Background
B. Hospital OQR Program Quality Measures
C. Administrative Requirements
D. Form, Manner, and Timing of Data Submitted for the Hospital
OQR Program
E. Payment Reduction for Hospitals That Fail To Meet the
Hospital OQR Program Requirements for the CY 2023 Payment
Determination
XV. Requirements for the Ambulatory Surgical Center Quality
Reporting (ASCQR) Program
A. Background
B. ASCQR Program Quality Measures
C. Administrative Requirements
D. Form, Manner, and Timing of Data Submitted for the ASCQR
Program
E. Payment Reduction for ASCs That Fail To Meet the ASCQR
Program Requirements
XVI. Requirements for the Rural Emergency Hospital Quality Reporting
(REHQR) Program
A. Background
B. REHQR Program Quality Measures
C. Quality Reporting Requirements Under the REH Quality
Reporting (REHQR) Program
XVII. Organ Acquisition Payment Policy
A. Background of Organ Acquisition Payment Policies
B. Counting Research Organs To Calculate Medicare's Share of
Organ Acquisition Costs
C. Costs of Certain Services Furnished to Potential Deceased
Donors
D. Technical Corrections and Clarifications to 42 CFR 405.1801,
412.100, 413.198, 413.402, 413.404, and 413.420 and Nomenclature
Changes to 42 CFR 412.100 and 42 CFR Part 413, Subpart L
E. Clarification of Allocation of Administrative and General
Costs
F. Organ Payment Policy--Request for Information on Counting
Organs for Medicare's Share of Organ Acquisition Costs, IOPO Kidney
SACs, and Reconciliation of All Organs for IOPOs
XVIII. Rural Emergency Hospitals (REH): Payment Policies, Conditions
of Participation, Provider Enrollment, Use of the Medicare
Outpatient Observation Notice, and Physician Self-Referral Law
Updates
A. Rural Emergency Hospitals (REH) Payment Policies
B. REH Conditions of Participation (CoP) and Critical Access
Hospital (CAH) CoP Updates (CMS-3419-F)
C. REH Provider Enrollment
D. Use of the Medicare Outpatient Observation Notice by REHs
E. Physician Self-Referral Law Update
XIX. Request for Information on Use of CMS Data To Drive Competition
in Healthcare Marketplaces
XX. Addition of a New Service Category for Hospital Outpatient
Department (OPD) Prior Authorization Process
A. Background
B. Controlling Unnecessary Increases in the Volume of Covered
OPD Services
XXI. Overall Hospital Quality Star Rating
A. Background
B. Veterans Health Administration Hospitals
C. Frequency of Publication and Data Used
D. Overall Hospital Quality Star Ratings Suppression
XXII. Finalization of Certain COVID-19 Interim Final Rules With
Comment Period Provisions
A. Medicare and Medicaid Programs; Policy and Regulatory
Revisions in Response to the COVID-19 Public Health Emergency (CMS-
1744-IFC)
B. Medicare and Medicaid Programs, Basic Health Program, and
Exchanges; Additional Policy and Regulatory Revisions in Response to
the COVID-19 Public Health Emergency and Delay of Certain Reporting
Requirements for the Skilled Nursing Facility Quality Reporting
Program (CMS-5531-IFC)
C. OPPS Separate Payment for New COVID-19 Treatments Policy for
the Remainder of the PHE (CMS-9912-IFC)
XXIII. Files Available to the Public via the internet
XXIV. Collection of Information Requirements
A. Statutory Requirement for Solicitation of Comments
B. ICRs for the Hospital OQR Program
C. ICRs for the ASCQR Program
D. ICRs for Rural Emergency Hospitals (REH) Physician Self-
Referral Law Update
E. ICRs for Addition of a New Service Category for Hospital
Outpatient Department (OPD) Prior Authorization Process
F. ICRs for Payment Adjustments for Domestic NIOSH-Approved
Surgical N95 Respirators
G. ICRs for REH Provider Enrollment Requirements
H. ICRs for Rural Emergency Hospitals and CAHs CoPs
XXV. Response to Comments
XXVI. Economic Analyses
A. Statement of Need
B. Overall Impact of Provisions of This Final Rule With Comment
Period
C. Detailed Economic Analyses
D. Regulatory Review Costs
E. Regulatory Flexibility Act (RFA) Analysis
F. Unfunded Mandates Reform Act Analysis
G. Conclusion
H. Federalism Analysis

[[Page 71751]]

I. Congressional Review

I. Summary and Background

A. Executive Summary of This Document

1. Purpose
In this final rule with comment period, we are updating the payment
policies and payment rates for services furnished to Medicare
beneficiaries in hospital outpatient departments (HOPDs) and ambulatory
surgical centers (ASCs), beginning January 1, 2023. Section 1833(t) of
the Social Security Act (the Act) requires us to annually review and
update the payment rates for services payable under the Hospital
Outpatient Prospective Payment System (OPPS). Specifically, section
1833(t)(9)(A) of the Act requires the Secretary of the Department of
Health and Human Services (the Secretary) to review certain components
of the OPPS not less often than annually, and to revise the groups, the
relative payment weights, and the wage and other adjustments that take
into account changes in medical practice, changes in technology, and
the addition of new services, new cost data, and other relevant
information and factors. In addition, under section 1833(i)(D)(v) of
the Act, we annually review and update the ASC payment rates. This
final rule with comment period also includes additional policy changes
made in accordance with our experience with the OPPS and the ASC
payment system and recent changes in our statutory authority. We
describe these and various other statutory authorities in the relevant
sections of this final rule with comment period. In addition, this rule
updates and refines the requirements for the Hospital Outpatient
Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR)
Program. We also make updates to the requirements for Organ
Acquisition, Prior Authorization, and Overall Hospital Quality Star
Rating. We are also proposing new regulatory requirements to codify
payment policy, quality measures, and enrollment policy for REHs. In
addition, we are finalizing the Conditions of Participation that REHs
must meet in order to participate in the Medicare and Medicaid
programs. This rule also finalizes changes to the Critical Access
Hospitals (CAH) CoPs for the location and distance requirements,
patient's rights requirements, and flexibilities for CAHs that are part
of a larger health system. We thank commenters for submitting comment
on the use of CMS data to drive competition in healthcare marketplaces,
and the request for information on an alternative methodology for
counting organs. Finally, we are finalizing as implemented, a number of
provisions included in the COVID-19 interim final rules with comment
period (IFCs).
2. Summary of the Major Provisions
<bullet> OPPS Update: For 2023, we are increasing the payment rates
under the OPPS by an Outpatient Department (OPD) fee schedule increase
factor of 3.8 percent. This increase factor is based on the final
hospital inpatient market basket percentage increase of 4.1 percent for
inpatient services paid under the hospital inpatient prospective
payment system (IPPS) reduced by a final productivity adjustment of 0.3
percentage point. Based on this update, we estimate that total payments
to OPPS providers (including beneficiary cost-sharing and estimated
changes in enrollment, utilization, and case-mix) for calendar year
(CY) 2023 would be approximately $86.5 billion, an increase of
approximately $6.5 billion compared to estimated CY 2022 OPPS payments.
We are continuing to implement the statutory 2.0 percentage point
reduction in payments for hospitals that fail to meet the hospital
outpatient quality reporting requirements by applying a reporting
factor of 0.9807 to the OPPS payments and copayments for all applicable
services.
<bullet> Data used in CY 2023 OPPS/ASC Ratesetting: To set CY 2023
OPPS and ASC payment rates, we would normally use the most updated
claims and cost report data available. The best available claims data
is the most recent set of data which would be from 2 years prior to the
calendar year that is the subject of rulemaking. However, cost report
data usually lags the claims data by a year and we believe that the CY
2020 cost report data are not the best overall approximation of
expected outpatient hospital service costs as the majority of the cost
reports we would typically use for CY 2023 rate setting have cost
reporting periods that overlap with parts of the CY 2020 Public Health
Emergency (PHE). In order to mitigate the impact of some of the
temporary changes in hospitals cost report data from CY 2020, we are
utilizing cost report data from the June 2020 extract from Healthcare
Cost Report Information System (HCRIS), which includes cost report data
from prior to the PHE. This is the same cost report extract we used to
set OPPS rates for CY 2022. We believe using the CY 2021 claims data
with cost reports data through CY 2019 (prior to the PHE) for CY 2023
OPPS ratesetting is the best approximation of expected costs for CY
2023 hospital outpatient service ratesetting purposes. As a result, we
are utilizing the CY 2021 claims data with cost reporting periods prior
to the PHE to set CY 2023 OPPS and ASC payment system rates.
<bullet> Partial Hospitalization Update: For CY 2023, we are using
the hospital-based PHP (HB PHP) geometric mean per diem costs
consistent with our existing methodology. In addition, we are
finalizing our proposal to use the latest available CY 2021 claims data
and to continue to use the cost data that was available for the CY 2021
rulemaking. Based on public comments, and in order to pay appropriately
and protect access to PHP services in CMHCs, for CY 2023 but not for
subsequent years, we are applying an equitable adjustment, under the
authority set forth in section 1833(t)(2)(E) of the Act, to the CY 2023
CMHC APC payment rate. For CY 2023, we are maintaining the CY 2022 CMHC
APC payment rate of $142.70 as the CY 2023 CMHC APC final payment rate.
<bullet> Changes to the Inpatient Only (IPO) List: For 2023, we are
finalizing our proposal, with modification, to remove eleven services
from the Inpatient Only list.
<bullet> 340B-Acquired Drugs: For CY 2023, in light of the Supreme
Court decision in American Hospital Association v. Becerra, 142 S. Ct.
1896 (2022), we are applying the default rate, generally average sales
price (ASP) plus 6 percent, to 340B acquired drugs and biologicals in
this final rule with comment period for CY 2023 and removing the
increase to the conversion factor that was made in CY 2018 to implement
the 340B policy in a budget neutral manner.
We are still evaluating how to apply the Supreme Court's decision
to prior calendar years. In the CY 2023 OPPS/ASC proposed rule, we
solicited public comments on the best way to craft any potential
remedies affecting cost years 2018-2022, and we will take these
comments into consideration for separate rulemaking that will be
published in advance of the CY 2024 OPPS/ASC proposed rule.
<bullet> Device Pass-Through Payment Applications: For CY 2023, we
received 8 applications for device pass-through payments. We solicited
public comment on these applications and are making final
determinations on these applications in this final rule with comment
period. Beginning for OPPS device pass-through applications received on
or after March 1, 2023, we are publicly posting online the completed
application forms and related materials that we receive from
applicants, excluding certain copyrighted or other materials that

[[Page 71752]]

applicants indicate cannot otherwise be released to the public.
<bullet> Cancer Hospital Payment Adjustment: For CY 2023, we are
continuing to provide additional payments to cancer hospitals so that a
cancer hospital's payment-to-cost ratio (PCR) after the additional
payments is equal to the weighted average PCR for the other OPPS
hospitals using the most recently submitted or settled cost report
data. However, section 16002(b) of the 21st Century Cures Act requires
that this weighted average PCR be reduced by 1.0 percentage point.
Based on the data and the required 1.0 percentage point reduction, we
are using a target PCR of 0.89 to determine the CY 2023 cancer hospital
payment adjustment to be paid at cost report settlement. That is, the
payment adjustments will be the additional payments needed to result in
a PCR equal to 0.89 for each cancer hospital.
<bullet> ASC Payment Update: For CYs 2019 through 2023, we adopted
a policy to update the ASC payment system using the hospital market
basket update. Using the hospital market basket methodology, for CY
2023, we are increasing payment rates under the ASC payment system by
3.8 percent for ASCs that meet the quality reporting requirements under
the ASCQR Program. This increase is based on a hospital market basket
percentage increase of 4.1 percent reduced by a productivity adjustment
of 0.3 percentage point. Based on this update, we estimate that total
payments to ASCs (including beneficiary cost-sharing and estimated
changes in enrollment, utilization, and case-mix) for CY 2023 will be
approximately $5.3 billion, an increase of approximately $230 million
compared to estimated CY 2022 Medicare payments.
<bullet> Changes to the List of ASC Covered Surgical Procedures:
For CY 2023, we are finalizing our proposal, with modification, to add
four procedures, to the ASC covered procedures list (CPL) based upon
existing criteria at Sec. 416.166.
<bullet> Hospital Outpatient Quality Reporting (OQR) Program: For
the Hospital OQR Program measure set, we are finalizing our proposals
to: (1) add a data validation targeting criterion to our existing four
targeting criteria that reads: ``Any hospital with a two-tailed
confidence interval that is less than 75 percent, and that had less
than four quarters of data due to receiving an ECE for one or more
quarters,'' beginning with the CY 2023 reporting period/CY 2025 payment
determination; (2) align patient encounter quarters with the calendar
year, beginning with the CY 2024 reporting period/CY 2026 payment
determination; and (3) change the Cataracts: Improvement in Patient's
Visual Function within 90 Days Following Cataract Surgery (OP-31)
Measure from Mandatory to Voluntary Beginning with the CY 2027 Payment
Determination. We also requested comment on the future readoption of
the Hospital Outpatient Volume on Selected Outpatient Surgical
Procedures (OP-26) measure or another volume indicator in the Hospital
OQR Program.
<bullet> Ambulatory Surgical Center Quality Reporting (ASCQR)
Program: For the ASCQR Program measure set, we are finalizing our
proposal to change the Cataracts: Improvement in Patient's Visual
Function within 90 Days Following Cataract Surgery (ASC-11) Measure
from Mandatory to Voluntary Beginning with the CY 2027 Payment
Determination. We also requested comment on: (1) the potential future
implementation of a measures value pathways approach in the ASCQR
Program; (2) the status and feasibility of interoperability initiatives
in the ASCQR Program; and (3) the potential readoption of the ASC
Facility Volume Data on Selected ASC Surgical Procedures (ASC-7)
measure or another volume indicator in the ASCQR Program.
<bullet> Organ acquisition payment policy: We issued a Request for
Information on counting Medicare organs for use in calculating
Medicare's share of organ acquisition costs, rather than making a
proposal, and will use the information to inform potential future
rulemaking. Also, we are finalizing our proposal to exclude research
organs from the ratio used to calculate Medicare's share of organ
acquisition costs and are modifying our requirement to offset costs by
allowing providers to follow their accounting practices of adjusting
costs, offsetting revenue or establishing a non-reimbursable cost
center, which will maintain or lower the cost of procuring and
providing research organs to the research community. Finally, we are
finalizing our proposal to cover as organ acquisition costs certain
hospital services provided to donors whose death is imminent, to
promote organ procurement and enhance equity.
<bullet> Rural Emergency Hospitals (REH) and Critical Access
Hospital Conditions of Participation (CoP): We are finalizing the
Conditions of Participation that REHs must meet in order to participate
in the Medicare and Medicaid programs. This rule also finalizes changes
to the Critical Access Hospitals (CAH) CoPs for the location and
distance requirements, patient's rights requirements, and flexibilities
for CAHs that are part of a larger health system.
<bullet> Rural Emergency Hospitals (REH): Provider Enrollment: We
are outlining provider enrollment requirements for REHs. The most
important of these are that REHs: (1) must comply with all applicable
provider enrollment provisions in 42 CFR part 424, subpart P, in order
to enroll in Medicare; and (2) may submit a Form CMS-855A change of
information application (rather than an initial enrollment application)
to convert to an REH.
<bullet> Rural Emergency Hospitals (REH) Physician Self-Referral
Law Update: We are finalizing revisions to certain existing exceptions
to make them applicable to compensation arrangements to which an REH is
a party. We are not finalizing the proposed exception for ownership or
investment interests in an REH.
<bullet> Rural Emergency Hospital Quality Reporting (REHQR)
Program: For the REHQR Program, we are finalizing our proposal to
require a QualityNet account and Security Official (SO) requirement in
line with other quality programs for purposes of data submission and
access of facility level reports. Also, we requested information on:
(1) measures recommended by the National Advisory Committee on Rural
Health and Human Services and additional suggested measures for the
REHQR Program, and (2) requested comments on rural telehealth,
behavioral and mental health, maternal health services, emergency
services, and health equity.
<bullet> Overall Hospital Quality Star Ratings: For the Overall
Hospital Quality Star Ratings, we are finalizing amending Sec.
412.190(c) to state the use of publicly available measure results on
Hospital Compare or its successor websites from a quarter within the
previous 12 months (instead of the ``previous year'').
<bullet> REH Payment Policy: Section 125 of the Consolidated
Appropriations Act of 2021 (CAA) established a new provider type called
REHs, effective January 1, 2023. REHs are facilities that convert from
either a critical access hospital (CAH) or a rural hospital (or one
treated as such under section 1886(d)(8)(E) of the Social Security Act)
with less than 50 beds, and that do not provide acute care inpatient
services with the exception of post-hospital extended care services
furnished in a unit of the facility that is a distinct part licensed as
a skilled nursing facility. By statute, REH services include emergency
department services and observation care and, at the election of the
REH, other outpatient medical and health

[[Page 71753]]

services furnished on an outpatient basis, as specified by the
Secretary through rulemaking.
By statute, covered outpatient department services provided by REHs
will receive an additional 5 percent payment for each service.
Beneficiaries will not be charged a copayment on the additional 5
percent payment.
We are finalizing all covered outpatient department services, other
than inpatient hospital services as described in section
1833(t)(1)(B)(ii) of the Act, that would otherwise be paid under the
OPPS as REH services. REHs would be paid for furnishing REH services at
a rate that is equal to the OPPS payment rate for the equivalent
covered outpatient department service increased by 5 percent. Also, we
are finalizing our proposal that REHs may provide outpatient services
that are not otherwise paid under the OPPS (such as services paid under
the Clinical Lab Fee Schedule) as well as post-hospital extended care
services furnished in a unit of the facility that is a distinct part of
the facility licensed as a skilled nursing facility; however, these
services would not be considered REH services and therefore would be
paid under the applicable fee schedule and will not receive the
additional 5 percent payment increase that CMS will apply to REH
services.
Finally, we are finalizing that REHs would receive a monthly
facility payment of $272,866. After the initial payment is established
in CY 2023, the monthly facility payment amount will increase in
subsequent years by the hospital market basket percentage increase.
<bullet> Addition of a New Service Category for Hospital Outpatient
Department Prior Authorization Process: We are adding Facet joint
interventions as a category of services to the prior authorization
process for hospital outpatient departments beginning for dates of
service on or after July 1, 2023.
<bullet> Mental Health Services Furnished Remotely by Hospital
Staff to Beneficiaries in Their Homes: For CY 2023, we are considering
mental health services furnished remotely by hospital staff using
communications technology to beneficiaries in their homes as covered
outpatient department services payable under the OPPS and have created
OPPS-specific coding for these services. We are finalizing our proposal
to require an in-person service within 6 months prior to the initiation
of the remote service and then every 12 months thereafter, that
exceptions to the in-person visit requirement may be made based on
beneficiary circumstances (with the reason documented in the patient's
medical record), and that more frequent visits are also allowed under
our policy, as driven by clinical needs on a case-by-case basis. We are
clarifying that the requirement that an in-person visit occur within 6
months prior to the initial mental health telehealth service does not
apply to beneficiaries who began receiving mental health telehealth
services in their homes during the PHE or during the 151-day period
after the end of the PHE. We are also finalizing our proposal that
audio-only interactive telecommunications systems may be used to
furnish these services in instances where the beneficiary is not
capable of, or does not consent to, the use of two-way, audio/video
technology.
<bullet> Supervision by Nonphysician Practitioners of Hospital and
CAH Diagnostic Services Furnished to Outpatients: For CY 2023, to
improve clarity, we are finalizing our proposal to replace cross-
references at Sec. Sec. 410.27(a)(1)(iv)(A) and (B) and 410.28(e) to
the definitions of general and personal supervision at Sec.
410.32(b)(3)(i) and (iii) with the text of those definitions. We also
are finalizing our proposal to revise Sec. 410.28(e) for clarity so
that certain nonphysician practitioners (nurse practitioners, physician
assistants, clinical nurse specialists and certified nurse midwifes)
may supervise the performance of diagnostic tests to the extent they
are authorized to do so under their scope of practice and applicable
State law.
<bullet> Exemption of Rural Sole Community Hospitals (SCH) from the
Method to Control Unnecessary Increases in the Volume of Clinic Visit
Services Furnished in Excepted Off-Campus Provider-Based Departments
(PBDs): We are finalizing our proposal to exempt rural Sole Community
Hospitals (rural SCHs) from the site-specific Medicare Physician Fee
Schedule (PFS)-equivalent payment for the clinic visit service, as
described by Healthcare Common Procedure Coding System (HCPCS) code
G0463, when provided at an off-campus PBD excepted from section
1833(t)(21) of the Act (departments that bill the modifier ``PO'' on
claim lines).
<bullet> Final Payment Adjustments under the IPPS and OPPS for
Domestic National Institute for Occupational Safety and Health (NIOSH)-
Approved Surgical N95 Respirators: As discussed in section X.H of this
final rule with comment period, the Biden-Harris Administration has
made it a priority to ensure America is prepared to continue to respond
to COVID-19, and to combat future pandemics. To improve hospital
preparedness and readiness for future threats, we are finalizing our
proposal to provide payment adjustments to hospitals under the IPPS and
OPPS for the additional resource costs they incur to acquire domestic
NIOSH-approved surgical N95 respirators. These surgical respirators,
which faced severe shortage at the onset of the COVID-19 pandemic, are
essential for the protection of beneficiaries and hospital personnel
that interface with patients. The Department of Health and Human
Services (HHS) recognizes that procurement of domestic NIOSH-approved
surgical N95 respirators, while critical to pandemic preparedness and
protecting health care workers and patients, can result in additional
resource costs for hospitals. The payment adjustments will account for
these additional resource costs.
We believe the payment adjustments will help achieve a strategic
policy goal, namely, sustaining a level of supply resilience for
surgical N95 respirators that is critical to protect the health and
safety of personnel and patients in a public health emergency. We are
finalizing our proposal that the payment adjustments will commence for
cost reporting periods beginning on or after January 1, 2023.
<bullet> Finalization of Certain COVID-19 Interim Final Rules With
Comment Period Provisions: In this final rule with comment period, we
are responding to public comments and stating our final policies for
certain provisions in the IFCs titled ``Medicare and Medicaid Programs;
Policy and Regulatory Revisions in Response to the COVID-19 Public
Health Emergency'' (CMS-5531-IFC), ``Medicare and Medicaid Programs,
Basic Health Program, and Exchanges; Additional Policy and Regulatory
Revisions in Response to the COVID-19 Public Health Emergency and Delay
of Certain Reporting Requirements for the Skilled Nursing Facility
Quality Reporting Program'' (CMS-5531-IFC), and ``Additional Policy and
Regulatory Revisions in Response to the COVID-19 Public Health
Emergency'' (CMS-9912-IFC).
3. Summary of Costs and Benefits
In section XXV of this final rule with comment period, we set forth
a detailed analysis of the regulatory and federalism impacts that the
changes will have on affected entities and beneficiaries. Key estimated
impacts are described below.
a. Impacts of All OPPS Changes
Table 110 in section XXV.C of this final rule with comment period
displays the distributional impact of all the OPPS changes on various
groups of hospitals and CMHCs for CY 2023 compared to all

[[Page 71754]]

estimated OPPS payments in CY 2022. We estimate that the policies in
this final rule with comment period will result in a 4.5 percent
overall increase in OPPS payments to providers. We estimate that total
OPPS payments for CY 2023, including beneficiary cost-sharing, to the
approximately 3,500 facilities paid under the OPPS (including general
acute care hospitals, children's hospitals, cancer hospitals, and
CMHCs) will increase by approximately $3.0 billion compared to CY 2022
payments, excluding our estimated changes in enrollment, utilization,
and case-mix.
We estimated the isolated impact of our OPPS policies on CMHCs
because CMHCs are only paid for partial hospitalization services under
the OPPS. Continuing the provider-specific structure we adopted
beginning in CY 2011, and basing payment fully on the type of provider
furnishing the service, we estimate no change in CY 2023 payments to
CMHCs relative to their CY 2022 payments, based on our final policy of
maintaining the CY 2022 OPPS payment rates in CY 2023.
b. Impacts of the Updated Wage Indexes
We estimate that our update of the wage indexes based on the fiscal
year (FY) 2023 IPPS final rule wage indexes will result in a 0.2
percent increase for urban hospitals under the OPPS and no change for
rural hospitals. These wage indexes include the continued
implementation of the Office of Management and Budget (OMB) labor
market area delineations based on 2010 Decennial Census data, with
updates, as discussed in section II.C of this final rule with comment
period.
c. Impacts of the Rural Adjustment and the Cancer Hospital Payment
Adjustment
There are no significant impacts of our CY 2023 payment policies
for hospitals that are eligible for the rural adjustment or for the
cancer hospital payment adjustment. We are not making any change in
policies for determining the rural hospital payment adjustments. While
we are implementing the reduction to the cancer hospital payment
adjustment for CY 2023 required by section 1833(t)(18)(C) of the Act,
as added by section 16002(b) of the 21st Century Cures Act, the target
payment-to-cost ratio (PCR) for CY 2023 is 0.89, equivalent to the 0.89
target PCR for CY 2022, and therefore has no budget neutrality
adjustment.
d. Impacts of the OPD Fee Schedule Increase Factor
For the CY 2023 OPPS/ASC, we are establishing an OPD fee schedule
increase factor of 3.8 percent and applying that increase factor to the
conversion factor for CY 2023. As a result of the OPD fee schedule
increase factor and other budget neutrality adjustments, we estimate
that urban hospitals will experience an increase in payments of
approximately 5.3 percent and that rural hospitals would experience an
increase in payments of 2.7 percent. Classifying hospitals by teaching
status, we estimate nonteaching hospitals will experience an increase
in payments of 3.4 percent, minor teaching hospitals would experience
an increase in payments of 4.6 percent, and major teaching hospitals
would experience an increase in payments of 7.2 percent. We also
classified hospitals by the type of ownership. We estimate that
hospitals with voluntary ownership would experience an increase of 5.2
percent in payments, while hospitals with government ownership would
experience an increase of 6.3 percent in payments. We estimate that
hospitals with proprietary ownership will experience an increase of 1.6
percent in payments.
We estimate that the effect of paying for drugs acquired under the
340B program at ASP plus 6 percent and removing the increase to the
conversion factor that was added in CY 2018 to implement the 340B
payment policy in a budget neutral manner will have varying effects
across different provider categories. We note that while urban
hospitals are estimated to have a 1.2 percent increase in payments,
rural hospitals overall are estimated to have a 1.0 percent decrease in
payments as a result of these changes.
e. Impacts of the Final ASC Payment Update
For impact purposes, the surgical procedures on the ASC covered
surgical procedure list are aggregated into surgical specialty groups
using CPT and HCPCS code range definitions. The percentage change in
estimated total payments by specialty groups under the CY 2023 payment
rates, compared to estimated CY 2022 payment rates, generally ranges
between an increase of 1 and 6 percent, depending on the service, with
some exceptions. We estimate the impact of applying the hospital market
basket update to ASC payment rates will increase payments by $230
million under the ASC payment system in CY 2023.

B. Legislative and Regulatory Authority for the Hospital OPPS

When Title XVIII of the Act was enacted, Medicare payment for
hospital outpatient services was based on hospital-specific costs. In
an effort to ensure that Medicare and its beneficiaries pay
appropriately for services and to encourage more efficient delivery of
care, the Congress mandated replacement of the reasonable cost-based
payment methodology with a prospective payment system (PPS). The
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) added section
1833(t) to the Act, authorizing implementation of a PPS for hospital
outpatient services. The OPPS was first implemented for services
furnished on or after August 1, 2000. Implementing regulations for the
OPPS are located at 42 CFR parts 410 and 419.
The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of
1999 (BBRA) (Pub. L. 106-113) made major changes in the hospital OPPS.
The following Acts made additional changes to the OPPS: the Medicare,
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000
(BIPA) (Pub. L. 106-554); the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 (MMA) (Pub. L. 108-173); the Deficit
Reduction Act of 2005 (DRA) (Pub. L. 109-171), enacted on February 8,
2006; the Medicare Improvements and Extension Act under Division B of
Title I of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA)
(Pub. L. 109-432), enacted on December 20, 2006; the Medicare,
Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (Pub. L. 110-173),
enacted on December 29, 2007; the Medicare Improvements for Patients
and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), enacted on July
15, 2008; the Patient Protection and Affordable Care Act (Pub. L. 111-
148), enacted on March 23, 2010, as amended by the Health Care and
Education Reconciliation Act of 2010 (Pub. L. 111-152), enacted on
March 30, 2010 (these two public laws are collectively known as the
Affordable Care Act); the Medicare and Medicaid Extenders Act of 2010
(MMEA, Pub. L. 111-309); the Temporary Payroll Tax Cut Continuation Act
of 2011 (TPTCCA, Pub. L. 112-78), enacted on December 23, 2011; the
Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA, Pub. L.
112-96), enacted on February 22, 2012; the American Taxpayer Relief Act
of 2012 (Pub. L. 112-240), enacted January 2, 2013; the Pathway for SGR
Reform Act of 2013 (Pub. L. 113-67) enacted on December

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26, 2013; the Protecting Access to Medicare Act of 2014 (PAMA, Pub. L.
113-93), enacted on March 27, 2014; the Medicare Access and CHIP
Reauthorization Act (MACRA) of 2015 (Pub. L. 114-10), enacted April 16,
2015; the Bipartisan Budget Act of 2015 (Pub. L. 114-74), enacted
November 2, 2015; the Consolidated Appropriations Act, 2016 (Pub. L.
114-113), enacted on December 18, 2015, the 21st Century Cures Act
(Pub. L. 114-255), enacted on December 13, 2016; the Consolidated
Appropriations Act, 2018 (Pub. L. 115-141), enacted on March 23, 2018;
the Substance Use-Disorder Prevention that Promotes Opioid Recovery and
Treatment for Patients and Communities Act (Pub. L. 115-271), enacted
on October 24, 2018; the Further Consolidated Appropriations Act, 2020
(Pub. L. 116-94), enacted on December 20, 2019; the Coronavirus Aid,
Relief, and Economic Security Act (Pub. L. 116-136), enacted on March
27, 2020; the Consolidated Appropriations Act, 2021 (Pub. L. 116-260),
enacted on December 27, 2020; and the Inflation Reduction Act, 2022
(Pub. L. 117-169), enacted on August 16, 2022.
Under the OPPS, we generally pay for hospital Part B services on a
rate-per-service basis that varies according to the APC group to which
the service is assigned. We use the Healthcare Common Procedure Coding
System (HCPCS) (which includes certain Current Procedural Terminology
(CPT) codes) to identify and group the services within each APC. The
OPPS includes payment for most hospital outpatient services, except
those identified in section I.C of this final rule. Section
1833(t)(1)(B) of the Act provides for payment under the OPPS for
hospital outpatient services designated by the Secretary (which
includes partial hospitalization services furnished by CMHCs), and
certain inpatient hospital services that are paid under Medicare Part
B.
The OPPS rate is an unadjusted national payment amount that
includes the Medicare payment and the beneficiary copayment. This rate
is divided into a labor-related amount and a nonlabor-related amount.
The labor-related amount is adjusted for area wage differences using
the hospital inpatient wage index value for the locality in which the
hospital or CMHC is located.
All services and items within an APC group are comparable
clinically and with respect to resource use, as required by section
1833(t)(2)(B) of the Act. In accordance with section 1833(t)(2)(B) of
the Act, subject to certain exceptions, items and services within an
APC group cannot be considered comparable with respect to the use of
resources if the highest median cost (or mean cost, if elected by the
Secretary) for an item or service in the APC group is more than 2 times
greater than the lowest median cost (or mean cost, if elected by the
Secretary) for an item or service within the same APC group (referred
to as the ``2 times rule''). In implementing this provision, we
generally use the cost of the item or service assigned to an APC group.
For new technology items and services, special payments under the
OPPS may be made in one of two ways. Section 1833(t)(6) of the Act
provides for temporary additional payments, which we refer to as
``transitional pass-through payments,'' for at least 2 but not more
than 3 years for certain drugs, biological agents, brachytherapy
devices used for the treatment of cancer, and categories of other
medical devices. For new technology services that are not eligible for
transitional pass-through payments, and for which we lack sufficient
clinical information and cost data to appropriately assign them to a
clinical APC group, we have established special APC groups based on
costs, which we refer to as New Technology APCs. These New Technology
APCs are designated by cost bands which allow us to provide appropriate
and consistent payment for designated new procedures that are not yet
reflected in our claims data. Similar to pass-through payments, an
assignment to a New Technology APC is temporary; that is, we retain a
service within a New Technology APC until we acquire sufficient data to
assign it to a clinically appropriate APC group.

C. Excluded OPPS Services and Hospitals

Section 1833(t)(1)(B)(i) of the Act authorizes the Secretary to
designate the hospital outpatient services that are paid under the
OPPS. While most hospital outpatient services are payable under the
OPPS, section 1833(t)(1)(B)(iv) of the Act excludes payment for
ambulance, physical and occupational therapy, and speech-language
pathology services, for which payment is made under a fee schedule. It
also excludes screening mammography, diagnostic mammography, and
effective January 1, 2011, an annual wellness visit providing
personalized prevention plan services. The Secretary exercises the
authority granted under the statute to also exclude from the OPPS
certain services that are paid under fee schedules or other payment
systems. Such excluded services include, for example, the professional
services of physicians and nonphysician practitioners paid under the
Medicare Physician Fee Schedule (MPFS); certain laboratory services
paid under the Clinical Laboratory Fee Schedule (CLFS); services for
beneficiaries with end-stage renal disease (ESRD) that are paid under
the ESRD prospective payment system; and services and procedures that
require an inpatient stay that are paid under the hospital IPPS. In
addition, section 1833(t)(1)(B)(v) of the Act does not include
applicable items and services (as defined in subparagraph (A) of
paragraph (21)) that are furnished on or after January 1, 2017 by an
off-campus outpatient department of a provider (as defined in
subparagraph (B) of paragraph (21)). We set forth the services that are
excluded from payment under the OPPS in regulations at 42 CFR 419.22.
Under Sec. 419.20(b) of the regulations, we specify the types of
hospitals that are excluded from payment under the OPPS. These excluded
hospitals are:
<bullet> Critical access hospitals (CAHs);
<bullet> Hospitals located in Maryland and paid under Maryland's
All-Payer or Total Cost of Care Model;
<bullet> Hospitals located outside of the 50 States, the District
of Columbia, and Puerto Rico; and
<bullet> Indian Health Service (IHS) hospitals.

D. Prior Rulemaking

On April 7, 2000, we published in the Federal Register a final rule
with comment period (65 FR 18434) to implement a prospective payment
system for hospital outpatient services. The hospital OPPS was first
implemented for services furnished on or after August 1, 2000. Section
1833(t)(9)(A) of the Act requires the Secretary to review certain
components of the OPPS, not less often than annually, and to revise the
groups, the relative payment weights, and the wage and other
adjustments to take into account changes in medical practices, changes
in technology, the addition of new services, new cost data, and other
relevant information and factors.
Since initially implementing the OPPS, we have published final
rules in the Federal Register annually to implement statutory
requirements and changes arising from our continuing experience with
this system. These rules can be viewed on the CMS website at: <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices</a>.html.

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E. Advisory Panel on Hospital Outpatient Payment (the HOP Panel or the
Panel)

1. Authority of the Panel
Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of
Public Law 106-113, and redesignated by section 202(a)(2) of Public Law
106-113, requires that we consult with an expert outside advisory panel
composed of an appropriate selection of representatives of providers to
annually review (and advise the Secretary concerning) the clinical
integrity of the payment groups and their weights under the OPPS. In CY
2000, based on section 1833(t)(9)(A) of the Act, the Secretary
established the Advisory Panel on Ambulatory Payment Classification
Groups (APC Panel) to fulfill this requirement. In CY 2011, based on
section 222 of the Public Health Service Act (the PHS Act), which gives
discretionary authority to the Secretary to convene advisory councils
and committees, the Secretary expanded the panel's scope to include the
supervision of hospital outpatient therapeutic services in addition to
the APC groups and weights. To reflect this new role of the panel, the
Secretary changed the panel's name to the Advisory Panel on Hospital
Outpatient Payment (the HOP Panel or the Panel). The HOP Panel is not
restricted to using data compiled by CMS, and in conducting its review,
it may use data collected or developed by organizations outside the
Department.
2. Establishment of the Panel
On November 21, 2000, the Secretary signed the initial charter
establishing the Panel, and, at that time, named the APC Panel. This
expert panel is composed of appropriate representatives of providers
(currently employed full-time, not as consultants, in their respective
areas of expertise) who review clinical data and advise CMS about the
clinical integrity of the APC groups and their payment weights. Since
CY 2012, the Panel also is charged with advising the Secretary on the
appropriate level of supervision for individual hospital outpatient
therapeutic services. The Panel is technical in nature, and it is
governed by the provisions of the Federal Advisory Committee Act
(FACA). The current charter specifies, among other requirements, that
the Panel--
<bullet> May advise on the clinical integrity of Ambulatory Payment
Classification (APC) groups and their associated weights;
<bullet> May advise on the appropriate supervision level for
hospital outpatient services;
<bullet> May advise on OPPS APC rates for ASC covered surgical
procedures;
<bullet> Continues to be technical in nature;
<bullet> Is governed by the provisions of the FACA;
<bullet> Has a Designated Federal Official (DFO); and
<bullet> Is chaired by a Federal Official designated by the
Secretary.
The Panel's charter was amended on November 15, 2011, renaming the
Panel and expanding the Panel's authority to include supervision of
hospital outpatient therapeutic services and to add critical access
hospital (CAH) representation to its membership. The Panel's charter
was also amended on November 6, 2014 (80 FR 23009), and the number of
members was revised from up to 19 to up to 15 members. The Panel's
current charter was approved on November 20, 2020, for a 2-year period.
The current Panel membership and other information pertaining to
the Panel, including its charter, Federal Register notices, membership,
meeting dates, agenda topics, and meeting reports, can be viewed on the
CMS website at: <a href="https://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/AdvisoryPanelonAmbulatoryPaymentClassificationGroups.html">https://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/AdvisoryPanelonAmbulatoryPaymentClassificationGroups.html</a>.
3. Panel Meetings and Organizational Structure
The Panel has held many meetings, with the last meeting taking
place on August 22, 2022. Prior to each meeting, we publish a notice in
the Federal Register to announce the meeting, new members, and any
other changes of which the public should be aware. Beginning in CY
2017, we have transitioned to one meeting per year (81 FR 31941). In CY
2018, we published a Federal Register notice requesting nominations to
fill vacancies on the Panel (83 FR 3715). CMS is currently accepting
nominations at: <a href="https://mearis.cms.gov">https://mearis.cms.gov</a>. In addition, the Panel has
established an administrative structure that, in part, currently
includes the use of three subcommittee workgroups to provide
preparatory meeting and subject support to the larger panel. The three
current subcommittees include the following:
<bullet> APC Groups and Status Indicator Assignments Subcommittee,
which advises and provides recommendations to the Panel on the
appropriate status indicators to be assigned to HCPCS codes, including
but not limited to whether a HCPCS code or a category of codes should
be packaged or separately paid, as well as the appropriate APC
assignment of HCPCS codes regarding services for which separate payment
is made;
<bullet> Data Subcommittee, which is responsible for studying the
data issues confronting the Panel and for recommending options for
resolving them; and
<bullet> Visits and Observation Subcommittee, which reviews and
makes recommendations to the Panel on all technical issues pertaining
to observation services and hospital outpatient visits paid under the
OPPS.
Each of these workgroup subcommittees was established by a majority
vote from the full Panel during a scheduled Panel meeting, and the
Panel recommended at the August 22, 2022, meeting that the
subcommittees continue. We accepted this recommendation.
For discussions of earlier Panel meetings and recommendations, we
refer readers to previously published OPPS/ASC proposed and final
rules, the CMS website mentioned earlier in this section, and the FACA
database at <a href="https://facadatabase.gov">https://facadatabase.gov</a>.
Comment: One commenter requested that CMS include at least one
representative from the ASC community in the membership of the advisory
Panel. The commenter explained that decisions regarding the clinical
integrity of payment groups and relative payment weights impact ASC
payments and, therefore, are of critical importance to ASCs.
Response: We thank the commenter for their suggestion. This expert
panel is composed of appropriate representatives of providers
(currently employed full-time by hospitals or hospital systems, not as
consultants, in their respective areas of expertise) who review
clinical data and advise CMS about the clinical integrity of the APC
groups and their payment weights. Beginning in 2019, the Panel may also
include a representative of a provider with ASC expertise, who advises
CMS only on OPPS APC rates, as appropriate, impacting ASC covered
procedures within the context and purview of the Panel's scope.
Interested individuals, including those with relevant ASC expertise,
are encouraged to apply to serve on the Panel. Nominations for the
Panel are currently being accepted in the new electronic application
system, Medicare Electronic Application Request Information
SystemTM (MEARIS). Interested individuals may submit
nominations for themselves or others on <a href="https://mearis.cms.gov">https://mearis.cms.gov</a>.

[[Page 71757]]

F. Public Comments Received on the CY 2023 OPPS/ASC Proposed Rule

We received approximately 1,599 timely pieces of correspondence on
the CY 2023 OPPS/ASC proposed rule that appeared in the Federal
Register on July 27, 2022 (87 FR 44502) from individuals, elected
officials, providers and suppliers, practitioners, and advocacy groups.
We provide summaries of the public comments and our responses are set
forth in the various sections of this final rule with comment period
under the appropriate headings.

G. Public Comments Received on the CY 2022 OPPS/ASC Final Rule With
Comment Period

We received approximately 13 timely pieces of correspondence on the
CY 2022 OPPS/ASC final rule with comment period that appeared in the
Federal Register on November 16, 2021 (86 FR 63458).

II. Updates Affecting OPPS Payments

A. Recalibration of APC Relative Payment Weights

1. Database Construction
a. Use of CY 2021 Data in the CY 2023 OPPS Ratesetting
We primarily use two data sources in OPPS ratesetting: claims data
and cost report data. Our goal is always to use the best available data
overall for ratesetting. Ordinarily, the best available full year of
claims data would be the data from the year 2 years prior to the
calendar year that is the subject of the rulemaking. As discussed in
section X.D of the CY 2023 OPPS/ASC proposed rule (87 FR 44680 through
44682), unlike CY 2020 claims data, we do not believe there are
overwhelming concerns with CY 2021 claims data as a result of the
COVID-19 PHE. Therefore, as discussed in further detail in section X.B.
of this final rule with comment period, we are finalizing our proposal
to use CY 2021 claims data and the data components related to it in
establishing the CY 2023 OPPS.
b. Database Source and Methodology
Section 1833(t)(9)(A) of the Act requires that the Secretary review
not less often than annually and revise the relative payment weights
for Ambulatory Payment Classifications (APCs). In the April 7, 2000
OPPS final rule with comment period (65 FR 18482), we explained in
detail how we calculated the relative payment weights that were
implemented on August 1, 2000 for each APC group.
For the CY 2023 OPPS, we proposed to recalibrate the APC relative
payment weights for services furnished on or after January 1, 2023, and
before January 1, 2024 (CY 2023), using the same basic methodology that
we described in the CY 2022 OPPS/ASC final rule with comment period (86
FR 63466), using CY 2021 claims data. That is, we proposed to
recalibrate the relative payment weights for each APC based on claims
and cost report data for hospital outpatient department (HOPD) services
to construct a database for calculating APC group weights.
For the purpose of recalibrating the proposed APC relative payment
weights for CY 2023, we began with approximately 180 million final
action claims (claims for which all disputes and adjustments have been
resolved and payment has been made) for HOPD services furnished on or
after January 1, 2021, and before January 1, 2022, before applying our
exclusionary criteria and other methodological adjustments. After the
application of those data processing changes, we used approximately 93
million final action claims to develop the proposed CY 2023 OPPS
payment weights. For exact numbers of claims used and additional
details on the claims accounting process, we refer readers to the
claims accounting narrative under supporting documentation for the CY
2023 OPPS/ASC proposed rule on the CMS website at: <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index</a>.html.
Addendum N to the CY 2023 OPPS/ASC proposed rule (which is
available via the internet on the CMS website at: <a href="https://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html">https://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html</a>) includes the proposed
list of bypass codes for CY 2023. The proposed list of bypass codes
contains codes that are reported on claims for services in CY 2021 and,
therefore, includes codes that were in effect in CY 2021 and used for
billing. We proposed to retain deleted bypass codes on the proposed CY
2023 bypass list because these codes existed in CY 2021 and were
covered OPD services in that period, and CY 2021 claims data were used
to calculate proposed CY 2023 payment rates. Keeping these deleted
bypass codes on the bypass list potentially allows us to create more
``pseudo'' single procedure claims for ratesetting purposes. ``Overlap
bypass codes'' that are members of the proposed multiple imaging
composite APCs are identified by asterisks (*) in the third column of
Addendum N to the CY 2023 OPPS/ASC proposed rule. HCPCS codes that we
proposed to add for CY 2023 are identified by asterisks (*) in the
fourth column of Addendum N.
We did not receive any public comments on our general proposal to
recalibrate the relative payment weights for each APC based on claims
and cost report data for HOPD services or on our proposed bypass code
process. We are adopting as final the proposed ``pseudo'' single claims
process and the final CY 2023 list of bypass codes, as displayed in
Addendum N to this final rule with comment period (which is available
via the internet on the CMS website). For this final rule with comment
period, for the purpose of recalibrating the final APC relative payment
weights for CY 2023, we used approximately 93 million final actions
claims (claims for which all disputes and adjustments have been
resolved and payment has been made) for HOPD services furnished on or
after January 1, 2021, and before January 1, 2022. For exact numbers of
claims used and additional details on the claims accounting process, we
refer readers to the claims accounting narrative under supporting
documentation for this final rule with comment period on the CMS
website at: <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index</a>.html.
c. Calculation and Use of Cost-to-Charge Ratios (CCRs)
For CY 2023, we proposed to continue to use the hospital-specific
overall ancillary and departmental cost-to-charge ratios (CCRs) to
convert charges to estimated costs through application of a revenue
code-to-cost center crosswalk. However, roughly half of the cost
reports we would typically use for CY 2023 ratesetting purposes are
from cost reporting periods that overlap with parts of CY 2020. When
utilizing this cost report data, more than half of the APC geometric
mean costs increased by more than 10 percent relative to estimates
based on prior ratesetting cycles. While some of this increase may be
attributable to changes that will continue into CY 2023, other aspects
of those changes may be more specific to the COVID-19 PHE. In the CY
2022 OPPS/ASC final rule with comment period (86 FR 63751 through
63754), we described how CY 2020 claims data were too influenced by the
COVID-19 PHE to be utilized for setting CY 2022 OPPS payment rates.
After reviewing the cost report data from the December 2021 HCRIS data
set, we believed cost report data that overlap with CY 2020 are also
too influenced by the COVID-19 PHE for purposes of calculating the CY
2023 OPPS payment rates.

[[Page 71758]]

Therefore, in order to mitigate the impact on our ratesetting process
from the COVID-19 PHE effects in the CY 2020 cost report data we would
typically use for this CY 2023 OPPS/ASC proposed rule, we proposed to
use cost report data from the June 2020 HCRIS data set, which only
includes cost report data through CY 2019, for CY 2023 OPPS/ASC
ratesetting purposes. We discuss this proposal, the public comments we
received, as well as our final policy in Section X.B. of this final
rule with comment period.
To calculate the APC costs on which the CY 2023 APC payment rates
are based, we proposed to calculate hospital-specific overall ancillary
CCRs and hospital-specific departmental CCRs for each hospital for
which we had CY 2021 claims data by comparing these claims data to
hospital cost reports available for the CY 2022 OPPS/ASC final rule
with comment period ratesetting, which, in most cases, are from CY
2019. For the proposed CY 2023 OPPS payment rates, we proposed to use
CY 2021 claims processed through December 31, 2021. We applied the
hospital-specific CCR to the hospital's charges at the most detailed
level possible, based on a revenue code-to-cost center crosswalk that
contains a hierarchy of CCRs used to estimate costs from charges for
each revenue code. To ensure the completeness of the revenue code-to-
cost center crosswalk, we reviewed changes to the list of revenue codes
for CY 2021 (the year of claims data we used to calculate the proposed
CY 2023 OPPS payment rates) and updates to the National Uniform Billing
Committee (NUBC) 2020 Data Specifications Manual. That crosswalk is
available for review and continuous comment on the CMS website at:
<a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index</a>.html.
Comment: One commenter requested that we revise our revenue code-
to-cost center crosswalk to provide consistency with the National
Uniform Billing Committee (NUBC) definitions and to improve the
accuracy of cost data for OPPS ratesetting with respect to chimeric
antigen receptor therapy (CAR-T) administration services. The commenter
suggested the following changes:
<bullet> Revising revenue code 0871 from Reserved to describe
``cell collection'' and that revenue code 0871 be mapped to a primary
cost center 6000 for clinic;
<bullet> Revising revenue codes 0872 and 0873 from Reserved to
describe ``cell processing'' and remapping revenue codes 0872 and 0873
to a primary cost center 3350 for laboratory/hematology;
<bullet> Map revenue codes 0874 or 0875 to cost center 4800 for
intravenous therapy in the revenue code-to-cost center crosswalk;
<bullet> Map revenue code 089x series to cost center 5600 (drugs
charged to patients), or, at the very least, only map revenue codes
0891 and 0892 to cost center 5600.
Response: We appreciate the commenter's recommendation for changes
to our revenue code-to-cost center crosswalk. While we believe the
current APC assignment and payment rate for CPT code 0540T (Chimeric
antigen receptor t-cell (car-t) therapy; car-t cell administration,
autologous) is appropriate, we intend to explore the implications of
the commenter's recommendation further and may revisit these changes in
future rulemaking.
In accordance with our longstanding policy, we proposed to
calculate CCRs for the standard cost centers--cost centers with a
predefined label--and nonstandard cost centers--cost centers defined by
a hospital--accepted by the electronic cost report database. In
general, the most detailed level at which we calculate CCRs is the
hospital-specific departmental level. Additionally, we have
historically not included cost report lines for certain nonstandard
cost centers in the OPPS ratesetting database construction when
hospitals have reported these nonstandard cost centers on cost report
lines that do not correspond to the cost center number. We have
determined that hospitals are routinely reporting a number of
nonstandard cost centers in this way and that including this additional
data could significantly reduce certain APC geometric mean costs. In
particular, we estimate that the additional cost data from nonstandard
cost centers would decrease the geometric mean cost of APC 8004
(Ultrasound Composite) by 20 percent, APC 5863 (Partial
Hospitalizations (3 or more services) for hospital-based PHPs) by 12
percent and APC 5573 (Level 3 Imaging with Contrast) by 11 percent. In
other instances, we note that there are also potential increases in the
geometric mean costs of certain APCs, such as APC 5741 (Level 1
Electronic Analysis of Devices), which would increase by 4 percent, APC
5723 (Level 3 Diagnostic Tests and Related Services), which would
increase by 2.6 percent, and APC 5694 (Level 4 Drug Administration),
which would increase by 2.3 percent.
While we generally view the use of additional cost data as
improving our OPPS ratesetting process, we have historically not
included cost report lines for certain nonstandard cost centers in the
OPPS ratesetting database construction when hospitals have reported
these nonstandard cost centers on cost report lines that do not
correspond to the cost center number. Additionally, we are concerned
about the significant changes in APC geometric mean costs that our
analysis indicates would occur if we were to include such lines. We
believe it is important to further investigate the accuracy of these
cost report data before including such data in the ratesetting process.
Further, we believe it is appropriate to gather additional information
from the public as well before including them in OPPS ratesetting. For
CY 2023, we proposed not to include the nonstandard cost centers
reported in this way in the OPPS ratesetting database construction. We
solicited comment on whether there exist any specific concerns with
regards to the accuracy of the data from these nonstandard cost center
lines that we would need to consider before including them in future
OPPS ratesetting.
For a discussion of the hospital-specific overall ancillary CCR
calculation, we refer readers to the CY 2007 OPPS/ASC final rule with
comment period (71 FR 67983 through 67985). The calculation of blood
costs is a longstanding exception (since the CY 2005 OPPS) to this
general methodology for calculation of CCRs used for converting charges
to costs on each claim. This exception is discussed in detail in the CY
2007 OPPS/ASC final rule with comment period and discussed further in
section II.A.2.a.(1) of this final rule with comment period.
Comment: One commenter supported our proposal and recommended that
we not use current nonstandard lines in determining OPPS payment rates
for CY 2023 without further understanding of the revenues and expenses
going into those nonstandard lines.
Response: We thank the commenter for their support. While we did
not receive any specific concerns from commenters with regards to the
data from these nonstandard cost center lines, we agree that additional
context for and analyses into these nonstandard lines would be
beneficial before including them in OPPS ratesetting.
After consideration of the public comment we received, we are
finalizing our proposal, without modification, not to include
nonstandard cost centers on cost report lines that do not correspond to
the cost center number.
2. Final Data Development and Calculation of Costs Used for Ratesetting
In this section of this final rule with comment period, we discuss
the use of claims to calculate the OPPS payment

[[Page 71759]]

rates for CY 2023. The Hospital OPPS page on the CMS website on which
this final rule with comment period is posted (<a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index</a>.html) provides an accounting of claims used in the development of
the proposed payment rates. That accounting provides additional detail
regarding the number of claims derived at each stage of the process. In
addition, later in this section we discuss the file of claims that
comprises the data set that is available upon payment of an
administrative fee under a CMS data use agreement. The CMS website,
<a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index</a>.html, includes information about obtaining
the ``OPPS Limited Data Set,'' which now includes the additional
variables previously available only in the OPPS Identifiable Data Set,
including ICD-10-CM diagnosis codes and revenue code payment amounts.
This file is derived from the CY 2021 claims that are used to calculate
the proposed payment rates for the final rule with comment period.
Previously, the OPPS established the scaled relative weights on
which payments are based using APC median costs, a process described in
the CY 2012 OPPS/ASC final rule with comment period (76 FR 74188).
However, as discussed in more detail in section II.A.2.f of the CY 2013
OPPS/ASC final rule with comment period (77 FR 68259 through 68271), we
finalized the use of geometric mean costs to calculate the relative
weights on which the CY 2013 OPPS payment rates were based. While this
policy changed the cost metric on which the relative payments are
based, the data process in general remained the same under the
methodologies that we used to obtain appropriate claims data and
accurate cost information in determining estimated service cost.
We used the methodology described in sections II.A.2.a through
II.A.2.c of this final rule with comment period to calculate the costs
we used to establish the proposed relative payment weights used in
calculating the OPPS payment rates for CY 2023 shown in Addenda A and B
to this final rule with comment period (which are available via the
internet on the CMS website at: <a href="https://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html">https://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html</a>). We refer readers to section II.A.4 of
this final rule with comment period for a discussion of the conversion
of APC costs to scaled payment weights.
We note that under the OPPS, CY 2019 was the first year in which
the claims data used for setting payment rates (CY 2017 data) contained
lines with the modifier ``PN'', which indicates nonexcepted items and
services furnished and billed by off-campus provider-based departments
(PBDs) of hospitals. Because nonexcepted items and services are not
paid under the OPPS, in the CY 2019 OPPS/ASC final rule with comment
period (83 FR 58832), we finalized a policy to remove those claim lines
reported with modifier ``PN'' from the claims data used in ratesetting
for the CY 2019 OPPS and subsequent years. For the CY 2023 OPPS, we
will continue to remove claim lines with modifier ``PN'' from the
ratesetting process.
For details of the claims accounting process used in this final
rule with comment period, we refer readers to the claims accounting
narrative under supporting documentation for this final rule with
comment period on the CMS website at: <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index</a>.html.
a. Calculation of Single Procedure APC Criteria-Based Costs
(1) Blood and Blood Products
Since the implementation of the OPPS in August 2000, we have made
separate payments for blood and blood products through APCs rather than
packaging payment for them into payments for the procedures with which
they are administered. Hospital payments for the costs of blood and
blood products, as well as for the costs of collecting, processing, and
storing blood and blood products, are made through the OPPS payments
for specific blood product APCs.
We proposed in the CY 2023 OPPS/ASC proposed rule to continue to
establish payment rates for blood and blood products using our blood-
specific CCR methodology, which utilizes actual or simulated CCRs from
the most recently available hospital cost reports to convert hospital
charges for blood and blood products to costs. This methodology has
been our standard ratesetting methodology for blood and blood products
since CY 2005. It was developed in response to data analysis indicating
that there was a significant difference in CCRs for those hospitals
with and without blood-specific cost centers, and past public comments
indicating that the former OPPS policy of defaulting to the overall
hospital CCR for hospitals not reporting a blood-specific cost center
often resulted in an underestimation of the true hospital costs for
blood and blood products. Specifically, to address the differences in
CCRs and to better reflect hospitals' costs, we proposed to continue to
simulate blood CCRs for each hospital that does not report a blood cost
center by calculating the ratio of the blood-specific CCRs to
hospitals' overall CCRs for those hospitals that do report costs and
charges for blood cost centers. We also proposed to apply this mean
ratio to the overall CCRs of hospitals not reporting costs and charges
for blood cost centers on their cost reports to simulate blood-specific
CCRs for those hospitals. We proposed to calculate the costs upon which
the proposed CY 2023 payment rates for blood and blood products are
based using the actual blood-specific CCR for hospitals that reported
costs and charges for a blood cost center and a hospital-specific,
simulated, blood-specific CCR for hospitals that did not report costs
and charges for a blood cost center.
We continue to believe that the hospital-specific, simulated,
blood-specific CCR methodology better responds to the absence of a
blood-specific CCR for a hospital than alternative methodologies, such
as defaulting to the overall hospital CCR or applying an average blood-
specific CCR across hospitals. Because this methodology takes into
account the unique charging and cost accounting structure of each
hospital, we believe that it yields more accurate estimated costs for
these products. We continue to believe that using this methodology in
CY 2023 would result in costs for blood and blood products that
appropriately reflect the relative estimated costs of these products
for hospitals without blood cost centers and, therefore, for these
blood products in general.
We note that we defined a comprehensive APC (C-APC) as a
classification for the provision of a primary service and all
adjunctive services provided to support the delivery of the primary
service. Under this policy, we include the costs of blood and blood
products when calculating the overall costs of these C-APCs. We
proposed to continue to apply the blood-specific CCR methodology
described in this section when calculating the costs of the blood and
blood products that appear on claims with services assigned to the C-
APCs. Because the costs of blood and blood products would be reflected
in the overall costs of the C-APCs (and, as a result, in the proposed
payment rates of the C-APCs), we proposed not to make

[[Page 71760]]

separate payments for blood and blood products when they appear on the
same claims as services assigned to the C-APCs (we refer readers to the
CY 2015 OPPS/ASC final rule with comment period (79 FR 66795 through
66796) for more information about our policy not to make separate
payments for blood and blood products when they appear on the same
claims as services assigned to a C-APC).
We refer readers to Addendum B to the CY 2023 OPPS/ASC proposed
rule (which is available via the internet on the CMS website) for the
proposed CY 2023 payment rates for blood and blood products (which are
generally identified with status indicator ``R''). For a more detailed
discussion of the blood-specific CCR methodology, we refer readers to
the CY 2005 OPPS proposed rule (69 FR 50524 through 50525). For a full
history of OPPS payment for blood and blood products, we refer readers
to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66807
through 66810).
For CY 2023, we proposed to continue to establish payment rates for
blood and blood products using our blood-specific CCR methodology. We
did not receive any comments on our proposal to establish payment rates
for blood and blood products using our blood-specific CCR methodology
and we are finalizing this policy as proposed. Please refer to Addendum
B to this final rule with comment period (which is available via the
internet on the CMS website) for the final CY 2023 payment rates for
blood and blood products.
(2) Brachytherapy Sources
Section 1833(t)(2)(H) of the Act mandates the creation of
additional groups of covered OPD services that classify devices of
brachytherapy--cancer treatment through solid source radioactive
implants--consisting of a seed or seeds (or radioactive source)
(``brachytherapy sources'') separately from other services or groups of
services. The statute provides certain criteria for the additional
groups. For the history of OPPS payment for brachytherapy sources, we
refer readers to prior OPPS final rules, such as the CY 2012 OPPS/ASC
final rule with comment period (77 FR 68240 through 68241). As we have
stated in prior OPPS updates, we believe that adopting the general OPPS
prospective payment methodology for brachytherapy sources is
appropriate for a number of reasons (77 FR 68240). The general OPPS
methodology uses costs based on claims data to set the relative payment
weights for hospital outpatient services. This payment methodology
results in more consistent, predictable, and equitable payment amounts
per source across hospitals by averaging the extremely high and low
values, in contrast to payment based on hospitals' charges adjusted to
costs. We believe that the OPPS methodology, as opposed to payment
based on hospitals' charges adjusted to cost, also would provide
hospitals with incentives for efficiency in the provision of
brachytherapy services to Medicare beneficiaries. Moreover, this
approach is consistent with our payment methodology for the vast
majority of items and services paid under the OPPS. We refer readers to
the CY 2016 OPPS/ASC final rule with comment period (80 FR 70323
through 70325) for further discussion of the history of OPPS payment
for brachytherapy sources.
For CY 2023, except where otherwise indicated, we proposed to use
the costs derived from CY 2021 claims data to set the proposed CY 2023
payment rates for brachytherapy sources because CY 2021 is the year of
data we proposed to use to set the proposed payment rates for most
other items and services that would be paid under the CY 2023 OPPS.
With the exception of the proposed payment rate for brachytherapy
source C2645 (Brachytherapy planar source, palladium-103, per square
millimeter) and the proposed payment rates for low-volume brachytherapy
APCs discussed in section III.D of the CY 2023 OPPS/ASC proposed rule
(87 FR 44568 through 44569), we proposed to base the payment rates for
brachytherapy sources on the geometric mean unit costs for each source,
consistent with the methodology that we propose for other items and
services paid under the OPPS, as discussed in section II.A.2. of the CY
2023 OPPS/ASC proposed rule (87 FR 44512 through 44513). We also
proposed to continue the other payment policies for brachytherapy
sources that we finalized and first implemented in the CY 2010 OPPS/ASC
final rule with comment period (74 FR 60537). We proposed to pay for
the stranded and nonstranded not otherwise specified (NOS) codes, HCPCS
codes C2698 (Brachytherapy source, stranded, not otherwise specified,
per source) and C2699 (Brachytherapy source, non-stranded, not
otherwise specified, per source), at a rate equal to the lowest
stranded or nonstranded prospective payment rate for such sources,
respectively, on a per-source basis (as opposed to, for example, per
mCi), which is based on the policy we established in the CY 2008 OPPS/
ASC final rule with comment period (72 FR 66785). We also proposed to
continue the policy we first implemented in the CY 2010 OPPS/ASC final
rule with comment period (74 FR 60537) regarding payment for new
brachytherapy sources for which we have no claims data, based on the
same reasons we discussed in the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66786; which was delayed until January 1, 2010,
by section 142 of Pub. L. 110-275). Specifically, this policy is
intended to enable us to assign new HCPCS codes for new brachytherapy
sources to their own APCs, with prospective payment rates set based on
our consideration of external data and other relevant information
regarding the expected costs of the sources to hospitals. The proposed
CY 2023 payment rates for brachytherapy sources are included on
Addendum B to the CY 2023 OPPS/ASC proposed rule (which is available
via the internet on the CMS website) and identified with status
indicator ``U''.
For CY 2018, we assigned status indicator ``U'' (Brachytherapy
Sources, Paid under OPPS; separate APC payment) to HCPCS code C2645
(Brachytherapy planar source, palladium-103, per square millimeter) in
the absence of claims data and established a payment rate using
external data (invoice price) at $4.69 per mm\2\. For CY 2019, in the
absence of sufficient claims data, we continued to establish a payment
rate for C2645 at $4.69 per mm\2\. Our CY 2018 claims data available
for the CY 2020 OPPS/ASC final rule with comment period included two
claims with a geometric mean cost for HCPCS code C2645 of $1.02 per
mm\2\. In response to comments from interested parties, we agreed that,
given the limited claims data available and a new outpatient indication
for C2645, a payment rate for HCPCS code C2645 based on the geometric
mean cost of $1.02 per mm\2\ may not adequately reflect the cost of
HCPCS code C2645. In the CY 2020 OPPS/ASC final rule with comment
period, we finalized our policy to use our equitable adjustment
authority under section 1833(t)(2)(E) of the Act, which states that the
Secretary shall establish, in a budget neutral manner, other
adjustments as determined to be necessary to ensure equitable payments,
to maintain the CY 2019 payment rate of $4.69 per mm\2\ for HCPCS code
C2645 for CY 2020. Similarly, in the absence of sufficient claims data
to establish an APC payment rate, in the CY 2021 and CY 2022 OPPS/ASC
final rules (85 FR 85879 through 85880 and 86 FR 63469) with comment
period, we finalized our policy to use our equitable

[[Page 71761]]

adjustment authority under section 1833(t)(2)(E) of the Act to maintain
the CY 2019 payment rate of $4.69 per mm\2\ for HCPCS code C2645 for CY
2021 and for CY 2022.
We did not receive any CY 2021 claims data for HCPCS code C2645.
Therefore, we proposed to use our equitable adjustment authority under
section 1833(t)(2)(E) of the Act to maintain the CY 2019 payment rate
of $4.69 per mm\2\ for HCPCS code C2645 for CY 2023.
Additionally, for CY 2022 and subsequent calendar years, we adopted
a Universal Low Volume APC policy for clinical and brachytherapy APCs.
As discussed in further detail in section X.C of the CY 2022 OPPS/ASC
final rule with comment period (86 FR 63743 through 63747), we adopted
this policy to mitigate wide variation in payment rates that occur from
year to year for APCs with low utilization. Such volatility in payment
rates from year to year can result in even lower utilization and
potential barriers to access. For these Low Volume APCs, which had
fewer than 100 CY 2021 single claims used for ratesetting purposes in
the CY 2023 OPPS/ASC proposed rule, we used up to four years of claims
data to establish a payment rate for each item or service as we
historically have done for low volume services assigned to New
Technology APCs. Further, we calculated the cost for Low Volume APCs
based on the greatest of the arithmetic mean cost, median cost, or
geometric mean cost using all claims for the APC for up to four years.
For CY 2023, we proposed to designate 4 brachytherapy APCs as Low
Volume APCs as these APCs meet our criteria to be designated as a Low
Volume APC. For more information on the brachytherapy APCs we proposed
to designate as Low Volume APCs, see section III.D of the CY 2023 OPPS/
ASC proposed rule (87 FR 44568 through 44569). In section III.D. of
this final rule with comment period, we are finalizing our proposal to
designate four brachytherapy APCs as Low Volume APCs for CY 2023.
Comment: One commenter supported our proposal to use our equitable
adjustment authority under section 1833(t)(2)(E) of the Act to maintain
the CY 2019 payment rate of $4.69 per mm\2\ for HCPCS code C2645 for CY
2023.
Response: We thank the commenter for their support of our proposal.
After consideration of the public comment we received, we are
finalizing our proposal, without modification, to use our equitable
adjustment authority under section 1833(t)(2)(E) of the Act to maintain
the CY 2019 payment rate of $4.69 per mm\2\ for HCPCS code C2645 for CY
2023. Additionally, we are finalizing our proposal to continue to set
the payment rates for other brachytherapy sources that are not
otherwise assigned to designated Low Volume APCs for CY 2023 using our
established prospective payment methodology.
The final CY 2023 payment rates for brachytherapy sources are
included in Addendum B to this final rule with comment period (which is
available via the internet on the CMS website) and are identified with
status indicator ``U''.
We continue to invite interested parties to submit recommendations
for new codes to describe new brachytherapy sources. Such
recommendations should be directed via email to
<a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="9af5efeeeafbeef3fff4eeeaeae9daf9f7e9b4f2f2e9b4fdf5ec">[email&#160;protected]</a> or by mail to the Division of Outpatient
Care, Mail Stop C4-01-26, Centers for Medicare and Medicaid Services,
7500 Security Boulevard, Baltimore, MD 21244. We will continue to add
new brachytherapy source codes and descriptors to our systems for
payment on a quarterly basis.
b. Comprehensive APCs (C-APCs) for CY 2023
(1) Background
In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861
through 74910), we finalized a comprehensive payment policy that
packages payment for adjunctive and secondary items, services, and
procedures into the most costly primary procedure under the OPPS at the
claim level. The policy was finalized in CY 2014 but the effective date
was delayed until January 1, 2015, to allow additional time for further
analysis, opportunity for public comment, and systems preparation. The
comprehensive APC (C-APC) policy was implemented effective January 1,
2015, with modifications and clarifications in response to public
comments received regarding specific provisions of the C-APC policy (79
FR 66798 through 66810).
A C-APC is defined as a classification for the provision of a
primary service and all adjunctive services provided to support the
delivery of the primary service. We established C-APCs as a category
broadly for OPPS payment and implemented 25 C-APCs beginning in CY 2015
(79 FR 66809 through 66810). We have gradually added new C-APCs since
the policy was implemented beginning in CY 2015, with the number of C-
APCs now totaling 69 (80 FR 70332; 81 FR 79584 through 79585; 83 FR
58844 through 58846; 84 FR 61158 through 61166; 85 FR 85885; and 86 FR
63474).
Under our C-APC policy, we designate a service described by a HCPCS
code assigned to a C-APC as the primary service when the service is
identified by OPPS status indicator ``J1''. When such a primary service
is reported on a hospital outpatient claim, taking into consideration
the few exceptions that are discussed below, we make payment for all
other items and services reported on the hospital outpatient claim as
being integral, ancillary, supportive, dependent, and adjunctive to the
primary service (hereinafter collectively referred to as ``adjunctive
services'') and representing components of a complete comprehensive
service (78 FR 74865 and 79 FR 66799). Payments for adjunctive services
are packaged into the payments for the primary services. This results
in a single prospective payment for each of the primary, comprehensive
services based on the costs of all reported services at the claim
level. One example of a primary service would be a partial mastectomy
and an example of a secondary service packaged into that primary
service would be a radiation therapy procedure.
Services excluded from the C-APC policy under the OPPS include
services that are not covered OPD services, services that cannot by
statute be paid for under the OPPS, and services that are required by
statute to be separately paid. This includes certain mammography and
ambulance services that are not covered OPD services in accordance with
section 1833(t)(1)(B)(iv) of the Act; brachytherapy seeds, which also
are required by statute to receive separate payment under section
1833(t)(2)(H) of the Act; pass-through payment drugs and devices, which
also require separate payment under section 1833(t)(6) of the Act;
self-administered drugs (SADs) that are not otherwise packaged as
supplies because they are not covered under Medicare Part B under
section 1861(s)(2)(B) of the Act; and certain preventive services (78
FR 74865 and 79 FR 66800 through 66801). A list of services excluded
from the C-APC policy is included in Addendum J to this final rule with
comment period (which is available via the internet on the CMS website
at <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices</a>). If
a service does not appear on this list of excluded services, payment
for it will be packaged into the payment for the primary C-APC service
when it appears

[[Page 71762]]

on an outpatient claim with a primary C-APC service.
In the interim final rule with request for comments (IFC) titled
``Additional Policy and Regulatory Revisions in Response to the COVID-
19 Public Health Emergency'', published on November 6, 2020, we stated
that, effective for services furnished on or after the effective date
of the IFC and until the end of the PHE for COVID-19, there is an
exception to the OPPS C-APC policy to ensure separate payment for new
COVID-19 treatments that meet certain criteria (85 FR 71158 through
71160). Under this exception, any new COVID-19 treatment that meets the
following two criteria will, for the remainder of the PHE for COVID-19,
always be separately paid and will not be packaged into a C-APC when it
is provided on the same claim as the primary C-APC service. First, the
treatment must be a drug or biological product (which could include a
blood product) authorized to treat COVID-19, as indicated in section
``I. Criteria for Issuance of Authorization'' of the Food and Drug
Administration (FDA) letter of authorization for the emergency use of
the drug or biological product, or the drug or biological product must
be approved by FDA for treating COVID-19. Second, the emergency use
authorization (EUA) for the drug or biological product (which could
include a blood product) must authorize the use of the product in the
outpatient setting or not limit its use to the inpatient setting, or
the product must be approved by FDA to treat COVID-19 disease and not
limit its use to the inpatient setting. For further information
regarding the exception to the C-APC policy for COVID-19 treatments,
please refer to the November 6, 2020 IFC (85 FR 71158 through 71160).
Please see section XXIII.C. for additional details regarding our
finalized policy, which will end when the PHE ends.
The C-APC policy payment methodology set forth in the CY 2014 OPPS/
ASC final rule with comment period and modified and implemented
beginning in CY 2015 is summarized as follows (78 FR 74887 and 79 FR
66800):
Basic Methodology. As stated in the CY 2015 OPPS/ASC final rule
with comment period, we define the C-APC payment policy as including
all covered OPD services on a hospital outpatient claim reporting a
primary service that is assigned to status indicator ``J1'',\1\
excluding services that are not covered OPD services or that cannot by
statute be paid for under the OPPS. Services and procedures described
by HCPCS codes assigned to status indicator ``J1'' are assigned to C-
APCs based on our usual APC assignment methodology by evaluating the
geometric mean costs of the primary service claims to establish
resource similarity and the clinical characteristics of each procedure
to establish clinical similarity within each APC.
---------------------------------------------------------------------------

\1\ Status indicator ``J1'' denotes Hospital Part B Services
Paid Through a Comprehensive APC. Further information can be found
in CY 2023 Addendum D1.
---------------------------------------------------------------------------

In the CY 2016 OPPS/ASC final rule with comment period, we expanded
the C-APC payment methodology to qualifying extended assessment and
management encounters through the ``Comprehensive Observation
Services'' C-APC (C-APC 8011). Services within this APC are assigned
status indicator ``J2''.\2\ Specifically, we make a payment through C-
APC 8011 for a claim that:
---------------------------------------------------------------------------

\2\ Status indicator ``J2'' denotes Hospital Part B Services
That May Be Paid Through a Comprehensive APC. Further information
can be found in CY 2023 Addendum D1.
---------------------------------------------------------------------------

<bullet> Does not contain a procedure described by a HCPCS code to
which we have assigned status indicator ``T'';
<bullet> Contains 8 or more units of services described by HCPCS
code G0378 (Hospital observation services, per hour);
<bullet> Contains services provided on the same date of service or
one day before the date of service for HCPCS code G0378 that are
described by one of the following codes: HCPCS code G0379 (Direct
admission of patient for hospital observation care) on the same date of
service as HCPCS code G0378; CPT code 99281 (Emergency department visit
for the evaluation and management of a patient (Level 1)); CPT code
99282 (Emergency department visit for the evaluation and management of
a patient (Level 2)); CPT code 99283 (Emergency department visit for
the evaluation and management of a patient (Level 3)); CPT code 99284
(Emergency department visit for the evaluation and management of a
patient (Level 4)); CPT code 99285 (Emergency department visit for the
evaluation and management of a patient (Level 5)) or HCPCS code G0380
(Type B emergency department visit (Level 1)); HCPCS code G0381 (Type B
emergency department visit (Level 2)); HCPCS code G0382 (Type B
emergency department visit (Level 3)); HCPCS code G0383 (Type B
emergency department visit (Level 4)); HCPCS code G0384 (Type B
emergency department visit (Level 5)); CPT code 99291 (Critical care,
evaluation and management of the critically ill or critically injured
patient; first 30-74 minutes); or HCPCS code G0463 (Hospital outpatient
clinic visit for assessment and management of a patient); and
<bullet> Does not contain services described by a HCPCS code to
which we have assigned status indicator ``J1''.
The assignment of status indicator ``J2'' to a specific set of
services performed in combination with each other allows for all other
OPPS payable services and items reported on the claim (excluding
services that are not covered OPD services or that cannot by statute be
paid for under the OPPS) to be deemed adjunctive services representing
components of a comprehensive service and resulting in a single
prospective payment for the comprehensive service based on the costs of
all reported services on the claim (80 FR 70333 through 70336).
Services included under the C-APC payment packaging policy, that
is, services that are typically adjunctive to the primary service and
provided during the delivery of the comprehensive service, include
diagnostic procedures, laboratory tests, and other diagnostic tests and
treatments that assist in the delivery of the primary procedure; visits
and evaluations performed in association with the procedure; uncoded
services and supplies used during the service; durable medical
equipment as well as prosthetic and orthotic items and supplies when
provided as part of the outpatient service; and any other components
reported by HCPCS codes that represent services that are provided
during the complete comprehensive service (78 FR 74865 and 79 FR
66800).
In addition, payment for hospital outpatient department services
that are similar to therapy services, such as speech language
pathology, and delivered either by therapists or nontherapists is
included as part of the payment for the packaged complete comprehensive
service. These services that are provided during the perioperative
period are adjunctive services and are deemed not to be therapy
services as described in section 1834(k) of the Act, regardless of
whether the services are delivered by therapists or other nontherapist
health care workers. We have previously noted that therapy services are
those provided by therapists under a plan of care in accordance with
section 1835(a)(2)(C) and section 1835(a)(2)(D) of the Act and are paid
for under section 1834(k) of the Act, subject to annual therapy caps as
applicable (78 FR 74867 and 79 FR 66800). However, certain other
services similar to therapy services are considered and paid for as
hospital outpatient department services. Payment for these nontherapy

[[Page 71763]]

outpatient department services that are reported with therapy codes and
provided with a comprehensive service is included in the payment for
the packaged complete comprehensive service. We note that these
services, even though they are reported with therapy codes, are
hospital outpatient department services and not therapy services. We
refer readers to the July 2016 OPPS Change Request 9658 (Transmittal
3523) for further instructions on reporting these services in the
context of a C-APC service.
Items included in the packaged payment provided in conjunction with
the primary service also include all drugs, biologicals, and
radiopharmaceuticals, regardless of cost, except those drugs with pass-
through payment status and SADs, unless they function as packaged
supplies (78 FR 74868 through 74869 and 74909 and 79 FR 66800). We
refer readers to Section 50.2M, Chapter 15, of the Medicare Benefit
Policy Manual for a description of our policy on SADs treated as
hospital outpatient supplies, including lists of SADs that function as
supplies and those that do not function as supplies.\3\
---------------------------------------------------------------------------

\3\ <a href="https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c15.pdf">https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c15.pdf</a>.
---------------------------------------------------------------------------

We define each hospital outpatient claim reporting a single unit of
a single primary service assigned to status indicator ``J1'' as a
single ``J1'' unit procedure claim (78 FR 74871 and 79 FR 66801). Line
item charges for services included on the C-APC claim are converted to
line item costs, which are then summed to develop the estimated APC
costs. These claims are then assigned one unit of the service with
status indicator ``J1'' and later used to develop the geometric mean
costs for the C-APC relative payment weights. (We note that we use the
term ``comprehensive'' to describe the geometric mean cost of a claim
reporting ``J1'' service(s) or the geometric mean cost of a C-APC,
inclusive of all of the items and services included in the C-APC
service payment bundle.) Charges for services that would otherwise be
separately payable are added to the charges for the primary service.
This process differs from our traditional cost accounting methodology
only in that all such services on the claim are packaged (except
certain services as described above). We apply our standard data trims,
which exclude claims with extremely high primary units or extreme
costs.
The comprehensive geometric mean costs are used to establish
resource similarity and, along with clinical similarity, dictate the
assignment of the primary services to the C-APCs. We establish a
ranking of each primary service (single unit only) to be assigned to
status indicator ``J1'' according to its comprehensive geometric mean
costs. For the minority of claims reporting more than one primary
service assigned to status indicator ``J1'' or units thereof, we
identify one ``J1'' service as the primary service for the claim based
on our cost-based ranking of primary services. We then assign these
multiple ``J1'' procedure claims to the C-APC to which the service
designated as the primary service is assigned. If the reported ``J1''
services on a claim map to different C-APCs, we designate the ``J1''
service assigned to the C-APC with the highest comprehensive geometric
mean cost as the primary service for that claim. If the reported
multiple ``J1'' services on a claim map to the same C-APC, we designate
the most costly service (at the HCPCS code level) as the primary
service for that claim. This process results in initial assignments of
claims for the primary services assigned to status indicator ``J1'' to
the most appropriate C-APCs based on both single and multiple procedure
claims reporting these services and clinical and resource homogeneity.
Complexity Adjustments. We use complexity adjustments to provide
increased payment for certain comprehensive services. We apply a
complexity adjustment by promoting qualifying paired ``J1'' service
code combinations or paired code combinations of ``J1'' services and
certain add-on codes (as described further below) from the originating
C-APC (the C-APC to which the designated primary service is first
assigned) to the next higher paying C-APC in the same clinical family
of C-APCs. We apply this type of complexity adjustment when the paired
code combination represents a complex, costly form or version of the
primary service according to the following criteria:
<bullet> Frequency of 25 or more claims reporting the code
combination (frequency threshold); and
<bullet> Violation of the 2 times rule, as stated in section
1833(t)(2) of the Act and section III.B.2 of this final rule with
comment period, in the originating C-APC (cost threshold).
These criteria identify paired code combinations that occur
commonly and exhibit materially greater resource requirements than the
primary service. The CY 2017 OPPS/ASC final rule with comment period
(81 FR 79582) included a revision to the complexity adjustment
eligibility criteria. Specifically, we finalized a policy to
discontinue the requirement that a code combination (that qualifies for
a complexity adjustment by satisfying the frequency and cost criteria
thresholds described above) also not create a 2 times rule violation in
the higher level or receiving APC.
After designating a single primary service for a claim, we evaluate
that service in combination with each of the other procedure codes
reported on the claim assigned to status indicator ``J1'' (or certain
add-on codes) to determine if there are paired code combinations that
meet the complexity adjustment criteria. For a new HCPCS code, we
determine initial C-APC assignment and qualification for a complexity
adjustment using the best available information, crosswalking the new
HCPCS code to a predecessor code(s) when appropriate.
Once we have determined that a particular code combination of
``J1'' services (or combinations of ``J1'' services reported in
conjunction with certain add-on codes) represents a complex version of
the primary service because it is sufficiently costly, frequent, and a
subset of the primary comprehensive service overall according to the
criteria described above, we promote the claim including the complex
version of the primary service as described by the code combination to
the next higher cost C-APC within the clinical family, unless the
primary service is already assigned to the highest cost APC within the
C-APC clinical family or assigned to the only C-APC in a clinical
family. We do not create new APCs with a comprehensive geometric mean
cost that is higher than the highest geometric mean cost (or only) C-
APC in a clinical family just to accommodate potential complexity
adjustments. Therefore, the highest payment for any claim including a
code combination for services assigned to a C-APC would be the highest
paying C-APC in the clinical family (79 FR 66802).
We package payment for all add-on codes into the payment for the C-
APC. However, certain primary service add-on combinations may qualify
for a complexity adjustment. As noted in the CY 2016 OPPS/ASC final
rule with comment period (80 FR 70331), all add-on codes that can be
appropriately reported in combination with a base code that describes a
primary ``J1'' service are evaluated for a complexity adjustment.
To determine which combinations of primary service codes reported
in conjunction with an add-on code may

[[Page 71764]]

qualify for a complexity adjustment for CY 2023, we proposed to apply
the frequency and cost criteria thresholds discussed above, testing
claims reporting one unit of a single primary service assigned to
status indicator ``J1'' and any number of units of a single add-on code
for the primary ``J1'' service. If the frequency and cost criteria
thresholds for a complexity adjustment are met and reassignment to the
next higher cost APC in the clinical family is appropriate (based on
meeting the criteria outlined above), we make a complexity adjustment
for the code combination; that is, we reassign the primary service code
reported in conjunction with the add-on code to the next higher cost C-
APC within the same clinical family of C-APCs. As previously stated, we
package payment for add-on codes into the C-APC payment rate. If any
add-on code reported in conjunction with the ``J1'' primary service
code does not qualify for a complexity adjustment, payment for the add-
on service continues to be packaged into the payment for the primary
service and is not reassigned to the next higher cost C-APC. We list
the complexity adjustments for ``J1'' and add-on code combinations for
CY 2023, along with all of the other final complexity adjustments, in
Addendum J to this final rule comment period (which is available via
the internet on the CMS website at <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices</a>).
Addendum J to this final rule with comment period includes the cost
statistics for each code combination that would qualify for a
complexity adjustment (including primary code and add-on code
combinations). Addendum J to this final rule with comment period also
contains summary cost statistics for each of the paired code
combinations that describe a complex code combination that would
qualify for a complexity adjustment and will be reassigned to the next
higher cost C-APC within the clinical family. The combined statistics
for all final reassigned complex code combinations are represented by
an alphanumeric code with the first four digits of the designated
primary service followed by a letter. For example, the final geometric
mean cost listed in Addendum J for the code combination described by
complexity adjustment assignment 3320R, which is assigned to C-APC 5224
(Level 4 Pacemaker and Similar Procedures), includes all paired code
combinations that will be reassigned to C-APC 5224 when CPT code 33208
is the primary code. Providing the information contained in Addendum J
to the CY 2023 OPPS/ASC final rule allows interested parties the
opportunity to better assess the impact associated with the assignment
of claims with each of the paired code combinations eligible for a
complexity adjustment.
Comment: Multiple commenters requested that CMS apply a complexity
adjustment to additional code combinations. The specific C-APC
complexity adjustment code combinations requested by the commenters for
CY 2023 are listed in Table 1 below.
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Response: We reviewed the requested code combinations suggested by
commenters, listed in Table 1, against our complexity adjustment
criteria. The code combination for primary HCPCS code 52000 with
secondary HCPCS code C9738 met our cost and frequency criteria,
qualifying for a complexity adjustment for CY 2023. The remaining code
combinations failed to meet our cost or frequency criteria and do not
qualify for complexity adjustments for CY 2023. Addendum J to the CY
2023 OPPS/ASC final rule with comment period includes the cost
statistics for each code combination that was evaluated for a
complexity adjustment.
We note that one code combination, HCPCS 20902 and HCPCS 28740,
requested by comments was already proposed in the CY 2023 OPPS/ASC
proposed rule and is being finalized in

[[Page 71767]]

this final rule with comment period as a qualifying complexity
adjustment. Additionally, one code combination commenters requested,
HCPCS 37243 and HCPCS C1983, does not qualify for a complexity
adjustment because the secondary code, C1983, is not an add-on code and
does not have a J1 status indicator. Accordingly, this code combination
was not evaluated for a CY 2023 complexity adjustment.
Comment: We also received support from commenters for a variety of
existing and proposed complexity adjustments, including neurostimulator
procedures as well as fusion and bunion surgery procedures.
Response: We thank the commenters for their support.
Comment: Several commenters requested that CMS modify or eliminate
the established C-APC complexity adjustment eligibility criteria of 25
or more claims reporting the code combination (frequency) and a
violation of the 2 times rule in the originating C-APC (cost) to allow
additional code combinations to qualify for complexity adjustments.
Some commenters expressed concern that CMS' methodology for determining
complexity adjustments is unnecessarily restrictive, particularly the
25-claim threshold, and suggested that CMS implement a complexity
adjustment whenever a code pair exceeds the cost threshold.
Several commenters reiterated their request to allow clusters of
procedures, consisting of a ``J1'' code pair and multiple other
associated add-on codes used in combination with that ``J1'' code pair
to qualify for complexity adjustments, stating that this may allow for
more accurate reflection of medical practice when multiple procedures
are performed together or there are certain complex procedures that
include numerous add-on codes. Commenters also requested that CMS
continue to monitor and report on the impact of complexity adjustments.
Response: We appreciate these comments. At this time, we do not
believe changes to the C-APC complexity adjustment criteria are
necessary or that we should make exceptions to the criteria to allow
claims with the code combinations suggested by the commenters to
receive complexity adjustments. As we stated in the CY 2017 OPPS/ASC
final rule (81 FR 79582), we believe that the complexity adjustment
criteria, which require a frequency of 25 or more claims reporting a
code combination and a violation of the 2 times rule in the originating
C-APC, are appropriate to determine if a combination of procedures
represents a complex, costly subset of the primary service that should
qualify for the adjustment and be paid at the next higher paying C-APC
in the clinical family. As we previously stated in the CY 2020 OPPS/ASC
final rule with comment period (84 FR 61161), a minimum of 25 claims is
already a very low threshold for a national payment system. Lowering
the minimum of 25 claims further could lead to unnecessary complexity
adjustments for service combinations that are rarely performed.
As we explained in the CY 2019 OPPS/ASC final rule with comment
period (83 FR 58843), we do not believe that it is necessary to adjust
the complexity adjustment criteria to allow claims that include more
than two ``J1'' procedures or procedures that are not assigned to C-
APCs to qualify for a complexity adjustment. As previously mentioned,
we believe the current criteria are adequate to determine if a
combination of procedures represents a complex, costly subset of the
primary service. We will continue to monitor the application of the
complexity adjustment criteria.
After consideration of the public comments we received on the
proposed complexity adjustment policy, we are finalizing the C-APC
complexity adjustment policy for CY 2023 as proposed. We are also
finalizing the proposed complexity adjustments with the addition of the
one new code combination, primary HCPCS code 52000 with secondary HCPCS
code C9738, that meet our complexity adjustment criteria.
(2) Exclusion of Procedures Assigned to New Technology APCs From the C-
APC Policy
Services that are assigned to New Technology APCs are typically new
procedures that do not have sufficient claims history to establish an
accurate payment for them. Beginning in CY 2002, we retain services
within New Technology APC groups until we gather sufficient claims data
to enable us to assign the service to an appropriate clinical APC. This
policy allows us to move a service from a New Technology APC in less
than 2 years if sufficient data are available. It also allows us to
retain a service in a New Technology APC for more than 2 years if
sufficient data upon which to base a decision for reassignment have not
been collected (82 FR 59277).
The C-APC payment policy packages payment for adjunctive and
secondary items, services, and procedures into the most costly primary
procedure under the OPPS at the claim level. Prior to CY 2019, when a
procedure assigned to a New Technology APC was included on the claim
with a primary procedure, identified by OPPS status indicator ``J1'',
payment for the new technology service was typically packaged into the
payment for the primary procedure. Because the new technology service
was not separately paid in this scenario, the overall number of single
claims available to determine an appropriate clinical APC for the new
service was reduced. This was contrary to the objective of the New
Technology APC payment policy, which is to gather sufficient claims
data to enable us to assign the service to an appropriate clinical APC.
To address this issue and ensure that there are sufficient claims
data for services assigned to New Technology APCs, in the CY 2019 OPPS/
ASC final rule with comment period (83 FR 58847), we finalized
excluding payment for any procedure that is assigned to a New
Technology APC (APCs 1491 through 1599 and APCs 1901 through 1908) from
being packaged when included on a claim with a ``J1'' service assigned
to a C-APC. In the CY 2020 OPPS/ASC final rule with comment period, we
finalized that beginning in CY 2020, payment for services assigned to a
New Technology APC would be excluded from being packaged into the
payment for comprehensive observation services assigned status
indicator ``J2'' when they are included on a claim with a ``J2''
service (84 FR 61167). We proposed to continue to exclude payment for
any procedure that is assigned to a New Technology APC (APCs 1491
through 1599 and APCs 1901 through 1908) from being packaged when
included on a claim with a ``J1'' or ``J2'' service assigned to a C-
APC. We did not receive any public comments on this policy and are
finalizing it as proposed.
(3) Exclusion of Drugs and Biologicals Described by HCPCS Code C9399
(Unclassified Drugs or Biologicals) From the C-APC Policy
Section 1833(t)(15) of the Act, as added by section 621(a)(1) of
the Medicare Prescription Drug, Improvement, and Modernization Act of
2003 (Pub. L. 108-173), provides for payment under the OPPS for new
drugs and biologicals until HCPCS codes are assigned. Under this
provision, we are required to make payment for a covered outpatient
drug or biological that is furnished as part of covered outpatient
department services but for which a HCPCS code has not yet been
assigned in an amount equal to 95 percent of

[[Page 71768]]

average wholesale price (AWP) for the drug or biological.
In the CY 2005 OPPS/ASC final rule with comment period (69 FR
65805), we implemented section 1833(t)(15) of the Act by instructing
hospitals to bill for a drug or biological that is newly approved by
the FDA and that does not yet have a HCPCS code by reporting the
National Drug Code (NDC) for the product along with the newly created
HCPCS code C9399 (Unclassified drugs or biologicals). We explained that
when HCPCS code C9399 appears on a claim, the Outpatient Code Editor
(OCE) suspends the claim for manual pricing by the Medicare
Administrative Contractor (MAC). The MAC prices the claim at 95 percent
of the drug or biological's AWP, using Red Book or an equivalent
recognized compendium, and processes the claim for payment. We
emphasized that this approach enables hospitals to bill and receive
payment for a new drug or biological concurrent with its approval by
the FDA. The hospital does not have to wait for the next quarterly
release or for approval of a product-specific HCPCS code to receive
payment for a newly approved drug or biological or to resubmit claims
for adjustment. We instructed that hospitals would discontinue billing
HCPCS code C9399 and the NDC upon implementation of a product specific
HCPCS code, status indicator, and appropriate payment amount with the
next quarterly update. We also note that HCPCS code C9399 is paid in a
similar manner in the ASC setting, as 42 CFR 416.171(b) outlines that
certain drugs and biologicals for which separate payment is allowed
under the OPPS are considered covered ancillary services for which the
OPPS payment rate, which is 95 percent of AWP for HCPCS code C9399,
applies. Since the implementation of the C-APC policy in 2015, payment
for drugs and biologicals described by HCPCS code C9399 has been
included in the C-APC payment when these products appear on a claim
with a primary C-APC service. Packaging payment for these drugs and
biologicals that appear on a hospital outpatient claim with a primary
C-APC service is consistent with our C-APC packaging policy under which
we make payment for all items and services, including all non-pass-
through drugs, reported on the hospital outpatient claim as being
integral, ancillary, supportive, dependent, and adjunctive to the
primary service and representing components of a complete comprehensive
service, with certain limited exceptions (78 FR 74869). It has been our
position that the total payment for the C-APC with which payment for a
drug or biological described by HCPCS code C9399 is packaged includes
payment for the drug or biological at 95 percent of its AWP.
However, we have determined that in certain instances, drugs and
biologicals described by HCPCS code C9399 are not being paid at 95
percent of their AWPs when payment for them is packaged with payment
for a primary C-APC service. In order to ensure payment for new drugs,
biologicals, and radiopharmaceuticals described by HCPCS code C9399 at
95 percent of their AWP, for CY 2023 and subsequent years, we proposed
to exclude any drug, biological, or radiopharmaceutical described by
HCPCS code C9399 from packaging when the drug, biological, or
radiopharmaceutical is included on a claim with a ``J1'' service, which
is the status indicator assigned to a C-APC, and a claim with a ``J2''
service, which is the status indicator assigned to comprehensive
observation services. Please see OPPS Addendum J for the final CY 2023
comprehensive APC payment policy exclusions.
We also included a corresponding proposal in section XI ``Proposed
CY 2023 OPPS Payment Status and Comment Indicators'' of the CY 2023
OPPS/ASC proposed rule (87 FR 44698), to add a new definition to status
indicator ``A'' to include unclassified drugs and biologicals that are
reportable with HCPCS code C9399. The definition, found in Addendum D1
to the CY 2023 OPPS/ASC proposed rule, would ensure the MAC prices
claims for drugs, biologicals or radiopharmaceuticals billed with HCPCS
code C9399 at 95 percent of the drug or biological's AWP and pays
separately for the drug, biological, or radiopharmaceutical under the
OPPS when it appears on the same claim as a primary C-APC service.
Comment: Interested parties expressed support of the proposal to
exclude C9399 from ``J1'' and ``J2'' claims and to add a new definition
to status indicator ``A'' to include unclassified drugs and biologicals
that are reportable with C9399.
Response: We thank commenters for their support.
After consideration of the public comments we received, to ensure
payment for new drugs, biologicals, and radiopharmaceuticals described
by HCPCS code C9399 at 95 percent of their AWP, for CY 2023 and
subsequent years we are finalizing, without modification, our proposal
to exclude any drug, biological, or radiopharmaceutical described by
HCPCS code C9399 from packaging when the drug, biological, or
radiopharmaceutical is included on a claim with a ``J1'' service, which
is the status indicator assigned to a C-APC, and a claim with a ``J2''
service, which is the status indicator assigned to comprehensive
observation services. Please see the section titled ``CY 2023 OPPS
Payment Status and Comment Indicators'' of this CY 2023 OPPS/ASC final
rule with comment period for details regarding the new definition of
status indicator ``A''.
(4) Additional C-APCs for CY 2023
For CY 2023, we proposed to continue to apply the C-APC payment
policy methodology. We refer readers to the CY 2017 OPPS/ASC final rule
with comment period (81 FR 79583) for a discussion of the C-APC payment
policy methodology and revisions.
Each year, in accordance with section 1833(t)(9)(A) of the Act, we
review and revise the services within each APC group and the APC
assignments under the OPPS. As a result of our annual review of the
services and the APC assignments under the OPPS, we proposed to add one
C-APC under the existing C-APC payment policy in CY 2023: C-APC 5372
(Level 2 Urology and Related Services). This APC was proposed because,
similar to other C-APCs, this APC included primary, comprehensive
services, such as major surgical procedures, that are typically
reported with other ancillary and adjunctive services. Also, similar to
other clinical APCs that have been converted to C-APCs, there are
higher APC levels (Levels 3-8 Urology and Related Services) within the
clinical family or related clinical family of this APC that were
previously converted to C-APCs.
Comment: Commenters supported the creation of the new proposed C-
APC, based on resource cost and clinical characteristics.
Response: We appreciate the commenters' support.
Comment: Several commenters were concerned that the C-APC
methodology lacks the charge capture mechanisms to accurately reflect
the cost of radiation oncology services, particularly the delivery of
brachytherapy for the treatment of cervical cancer. They stated that
this type of cancer disproportionately impacts minorities, women, and
rural populations and that undervaluing brachytherapy procedures risks
exacerbating existing disparities in treatment. These commenters
suggested that CMS discontinue the C-APC payment policy for all
brachytherapy insertion codes and allow these procedures to be reported
through

[[Page 71769]]

traditional APCs, move brachytherapy procedures (CPT codes 57155 and
58346) to higher paying C-APCs, or pay separately for preparation and
planning services to more fully account for the costs associated with
these procedures.
Response: We appreciate the comments. The calculations provided by
commenters as to the cost of these services do not match how we
calculate C-APC costs. We believe that the current C-APC methodology is
appropriately applied to these surgical procedures and is accurately
capturing costs, particularly as the brachytherapy sources used for
these procedures are excluded from C-APC packaging and are separately
payable. This methodology also enables hospitals to manage their
resources with maximum flexibility by monitoring and adjusting the
volume and efficiency of services themselves.
We also reviewed the request by commenters to move brachytherapy
procedures, CPT code 57155 and CPT code 58346, to a higher paying C-
APC. For CPT code 57155, the claims data in the two times rule
evaluation show that this code is being paid at the appropriate level
in C-APC 5415 (Level 5 Gynecologic Procedures). For CPT code 53846,
given that this code has less than 100 claims, it does not meet the
significance threshold of the two times rule evaluation and we do not
believe the few claims available provide an accurate reflection of the
service's cost sufficient to move this procedure to a higher C-APC. We
will continue to examine these concerns and will determine if any
modifications to this policy are warranted in future rulemaking.
After consideration of the public comments we received, we are
finalizing as proposed C-APC 5372 (Level 2 Urology and Related
Services) for CY 2023. Table 2 lists the final C-APCs for CY 2023. All
C-APCs are displayed in Addendum J to this CY 2023 OPPS/ASC final rule
with comment period (which is available via the internet on the CMS
website). Addendum J to this final rule with comment period also
contains all of the data related to the C-APC payment policy
methodology, including the list of complexity adjustments and other
information for CY 2023.
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c. Calculation of Composite APC Criteria-Based Costs
As discussed in the CY 2008 OPPS/ASC final rule with comment period
(72 FR 66613), we believe it is important that the OPPS enhance
incentives for hospitals to provide necessary, high quality care as
efficiently as possible. For CY 2008, we developed composite APCs to
provide a single payment for groups of services that are typically
performed together during a single clinical encounter and that result
in the provision of a complete service. Combining payment for multiple,
independent services into a single OPPS payment in this way enables
hospitals to manage their resources with maximum flexibility by
monitoring and adjusting the volume and efficiency of services
themselves. An additional advantage to the composite APC model is that
we can use data from correctly coded multiple procedure claims to
calculate payment rates for the specified combinations of services,
rather than relying upon single procedure claims which may be low in
volume and/or incorrectly coded. Under the OPPS, we currently have
composite policies for mental health services and multiple imaging
services. We refer readers to the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66611 through 66614 and 66650 through 66652) for
a full discussion of the development of the composite APC methodology,
and the CY 2012 OPPS/ASC final rule with comment period (76 FR 74163)
and the CY 2018 OPPS/ASC final rule with comment period (82 FR 59241
through 59242 and 59246 through 52950) for more recent background.
(1) Mental Health Services Composite APC
We proposed to continue our longstanding policy of limiting the
aggregate payment for specified less resource-intensive mental health
services furnished on the same date to the payment for a day of partial
hospitalization services provided by a hospital, which we consider to
be the most resource-intensive of all outpatient mental health
services. We refer readers to the April 7, 2000 OPPS final rule with
comment period (65 FR 18452 through 18455) for the initial discussion
of this longstanding policy and the CY 2012 OPPS/ASC final rule with
comment period (76 FR 74168) for more recent background.
In the CY 2018 OPPS/ASC proposed rule and final rule with comment
period (82 FR 33580 through 33581 and 59246 through 59247,
respectively), we proposed and finalized the policy for CY 2018 and
subsequent years that, when the aggregate payment for specified mental
health services provided by one hospital to a single beneficiary on a
single date of service, based on the payment rates associated with the
APCs for the individual services, exceeds the maximum per diem payment
rate for partial hospitalization services provided by a hospital, those
specified mental health services will be paid through composite APC
8010 (Mental Health Services Composite). In addition, we set the
payment rate for composite APC 8010 for CY 2018 at the same payment
rate that will be paid for APC 5863, which is the maximum partial
hospitalization per diem payment rate for a hospital, and finalized a
policy that the hospital will continue to be paid the payment rate for
composite APC 8010. Under this policy, the Integrated OCE (I/OCE) will
continue to determine whether to pay for these specified mental health
services individually, or to make a single payment at the same payment
rate established for APC 5863 for all of the specified mental health
services furnished by the hospital on that single date of service. We
continue to believe that the costs associated with administering a
partial hospitalization program at a hospital represent the most
resource intensive of all outpatient mental health services. Therefore,
we do not believe that we should pay more for mental health services
under the OPPS than the highest partial hospitalization per diem
payment rate for hospitals.
We proposed that when the aggregate payment for specified mental
health services provided by one hospital to a single beneficiary on a
single date of service, based on the payment rates associated with the
APCs for the individual services, exceeds the maximum per diem payment
rate for partial hospitalization services provided by a hospital, those
specified mental health services would be paid through composite APC
8010 for CY 2023. In addition, we proposed to set the payment rate for
composite APC 8010 at the same payment rate that we proposed for APC
5863, which is the maximum partial hospitalization per diem payment
rate for a hospital, and that the hospital continue to be paid the
proposed payment rate for composite APC 8010.
Comment: Several commenters recommended that CMS change the status
indicator for two neuropsychological testing codes (HCPCS 96133 and
96137) from SI = N to SI = Q3 to allow separate payment for additional
hours of testing on the same date or increase the payment rate for the
primary testing procedure code. The commenters noted that the payment
rate for Composite APC 8010, which is capped at the maximum per diem
partial hospitalization rate, is lower than the individual HCPCS code
APC payment rates and does not provide sufficient payment for these
procedures.
Response: After reviewing this issue, we believe the Composite APC
methodology is being appropriately applied in this case, as packaging
multiple testing services performed on a single date of service creates
incentives for hospitals to provide these services in the most cost-
efficient manner. We will continue to examine these concerns and will
determine if any modifications to this policy are warranted in future
rulemaking.
After consideration of the public comments we received, we are
finalizing our proposal, without modification, that when the aggregate
payment for specified mental health services provided by one hospital
to a single beneficiary on a single date of service, based on the
payment rates associated with the APCs for the individual services,
exceeds the maximum per diem payment rate for partial hospitalization
services provided by a hospital, those specified mental health services
would be paid through composite APC 8010 for CY 2023. In addition, we
are finalizing our proposal to set the payment rate for composite APC
8010 for CY 2023 at the same payment rate that we set for APC 5863,
which is the maximum partial hospitalization per diem payment rate for
a hospital.
(2) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and
8008)
Effective January 1, 2009, we provide a single payment each time a
hospital submits a claim for more than one imaging procedure within an
imaging family on the same date of service, to reflect and promote the
efficiencies hospitals can achieve when performing multiple imaging
procedures during a single session (73 FR 41448 through 41450). We
utilize three imaging families based on imaging modality for purposes
of this methodology: (1) ultrasound; (2) computed tomography (CT) and
computed tomographic angiography (CTA); and (3) magnetic resonance
imaging (MRI) and magnetic resonance angiography (MRA). The HCPCS codes
subject to the multiple imaging composite policy and their respective
families are listed in Table 3 below.
While there are three imaging families, there are five multiple
imaging

[[Page 71773]]

composite APCs due to the statutory requirement under section
1833(t)(2)(G) of the Act that we differentiate payment for OPPS imaging
services provided with and without contrast. While the ultrasound
procedures included under the policy do not involve contrast, both CT/
CTA and MRI/MRA scans can be provided either with or without contrast.
The five multiple imaging composite APCs established in CY 2009 are:
<bullet> APC 8004 (Ultrasound Composite);
<bullet> APC 8005 (CT and CTA without Contrast Composite);
<bullet> APC 8006 (CT and CTA with Contrast Composite);
<bullet> APC 8007 (MRI and MRA without Contrast Composite); and
<bullet> APC 8008 (MRI and MRA with Contrast Composite).
We define the single imaging session for the ``with contrast''
composite APCs as having at least one or more imaging procedures from
the same family performed with contrast on the same date of service.
For example, if the hospital performs an MRI without contrast during
the same session as at least one other MRI with contrast, the hospital
will receive payment based on the payment rate for APC 8008, the ``with
contrast'' composite APC.
We make a single payment for those imaging procedures that qualify
for payment based on the composite APC payment rate, which includes any
packaged services furnished on the same date of service. The standard
(noncomposite) APC assignments continue to apply for single imaging
procedures and multiple imaging procedures performed across families.
For a full discussion of the development of the multiple imaging
composite APC methodology, we refer readers to the CY 2009 OPPS/ASC
final rule with comment period (73 FR 68559 through 68569).
For CY 2023, we proposed to continue to pay for all multiple
imaging procedures within an imaging family performed on the same date
of service using the multiple imaging composite APC payment
methodology. We continue to believe that this policy would reflect and
promote the efficiencies hospitals can achieve when performing multiple
imaging procedures during a single session.
For CY 2023, except where otherwise indicated, we proposed to use
the costs derived from CY 2021 claims data to set the proposed CY 2023
payment rates. Therefore, for CY 2023, the payment rates for the five
multiple imaging composite APCs (APCs 8004, 8005, 8006, 8007, and 8008)
are based on proposed geometric mean costs calculated from CY 2021
claims available for the CY 2023 OPPS/ASC proposed rule that qualify
for composite payment under the current policy (that is, those claims
reporting more than one procedure within the same family on a single
date of service). To calculate the proposed geometric mean costs, we
have used the same methodology that we use to calculate the geometric
mean costs for these composite APCs since CY 2014, as described in the
CY 2014 OPPS/ASC final rule with comment period (78 FR 74918). The
imaging HCPCS codes referred to as ``overlap bypass codes'' that we
removed from the bypass list for purposes of calculating the proposed
multiple imaging composite APC geometric mean costs, in accordance with
our established methodology as stated in the CY 2014 OPPS/ASC final
rule with comment period (78 FR 74918), are identified by asterisks in
Addendum N to this final rule (which is available via the internet on
the CMS website \4\) and are discussed in more detail in section
II.A.1.b of this final rule with comment period.
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\4\ CY 2023 Medicare Hospital Outpatient Prospective Payment
System and Ambulatory Surgical Center Payment System Proposed Rule
(CMS-1772-P); Notice of Final Rulemaking. Available at: <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices</a>.
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In the CY 2023 OPPS/ASC proposed rule, for CY 2023, we were able to
identify approximately 0.95 million ``single session'' claims out of an
estimated 2.0 million potential claims for payment through composite
APCs from our ratesetting claims data, which represents approximately
47.5 percent of all eligible claims, to calculate the proposed CY 2023
geometric mean costs for the multiple imaging composite APCs. Table 3
of the CY 2023 OPPS/ASC final rule with comment period lists the final
HCPCS codes that would be subject to the multiple imaging composite APC
policy and their respective families and approximate composite APC
proposed geometric mean costs for CY 2023.
We did not receive any public comments on this policy. We are
finalizing continuing the use of multiple imaging composite APCs to pay
for services providing more than one imaging procedure from the same
family on the same date, without modification. Table 3 below lists the
HCPCS codes that will be subject to the multiple imaging composite APC
policy and their respective families and approximate composite APC
final geometric mean costs for CY 2023.

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BILLING CODE 4120-01-C
3. Changes to Packaged Items and Services
a. Background and Rationale for Packaging in the OPPS
Like other prospective payment systems, the OPPS relies on the
concept of averaging to establish a payment rate for services. The
payment may be more or less than the estimated cost of providing a
specific service or a bundle of specific services for a particular
beneficiary. The OPPS packages

[[Page 71778]]

payments for multiple interrelated items and services into a single
payment to create incentives for hospitals to furnish services most
efficiently and to manage their resources with maximum flexibility. Our
packaging policies support our strategic goal of using larger payment
bundles in the OPPS to maximize hospitals' incentives to provide care
in the most efficient manner. For example, where there are a variety of
devices, drugs, items, and supplies that could be used to furnish a
service, some of which are more costly than others, packaging
encourages hospitals to use the most cost-efficient item that meets the
patient's needs, rather than to routinely use a more expensive item,
which may occur if separate payment is provided for the item.
Packaging also encourages hospitals to effectively negotiate with
manufacturers and suppliers to reduce the purchase price of items and
services or to explore alternative group purchasing arrangements,
thereby encouraging the most economical health care delivery.
Similarly, packaging encourages hospitals to establish protocols that
ensure that necessary services are furnished, while scrutinizing the
services ordered by practitioners to maximize the efficient use of
hospital resources. Packaging payments into larger payment bundles
promotes the predictability and accuracy of payment for services over
time. Finally, packaging may reduce the importance of refining service-
specific payment because packaged payments include costs associated
with higher cost cases requiring many ancillary items and services and
lower cost cases requiring fewer ancillary items and services. Because
packaging encourages efficiency and is an essential component of a
prospective payment system, packaging payments for items and services
that are typically integral, ancillary, supportive, dependent, or
adjunctive to a primary service has been a fundamental part of the OPPS
since its implementation in August 2000. As we continue to develop
larger payment groups that more broadly reflect services provided in an
encounter or episode of care, we have expanded the OPPS packaging
policies. Most, but not necessarily all, categories of items and
services currently packaged in the OPPS are listed in 42 CFR 419.2(b).
Our overarching goal is to make payments for all services under the
OPPS more consistent with those of a prospective payment system and
less like those of a per-service fee schedule, which pays separately
for each coded item. As a part of this effort, we have continued to
examine the payment for items and services provided under the OPPS to
determine which OPPS services can be packaged to further achieve the
objective of advancing the OPPS toward a more prospective payment
system.
b. Policy and Comment Solicitation on Packaged Items and Services
For CY 2023, we examined the items and services currently provided
under the OPPS, reviewing categories of integral, ancillary,
supportive, dependent, or adjunctive items and services for which we
believe payment would be appropriately packaged into payment for the
primary service that they support. Specifically, we examined the HCPCS
code definitions (including CPT code descriptors) and hospital
outpatient department billing patterns to determine whether there were
categories of codes for which packaging would be appropriate according
to existing OPPS packaging policies or a logical expansion of those
existing OPPS packaging policies.
For CY 2023, we did not propose any changes to the overall
packaging policy previously discussed. We proposed to continue to
conditionally package the costs of selected newly identified ancillary
services into payment for a primary service where we believe that the
packaged item or service is integral, ancillary, supportive, dependent,
or adjunctive to the provision of care that was reported by the primary
service HCPCS code.
While we did not propose any changes to the overall packaging
policy above, we solicited comments on potential modifications to our
packaging policy, as described in section XIII.E.5 of the CY 2023 OPPS/
ASC proposed rule (87 FR 44717). Specifically, we solicited comments
and data regarding whether to expand the current ASC payment system
policy for non-opioid pain management drugs and biologicals that
function as surgical supplies to the HOPD setting. Details on the
current ASC policy can be found in section XIII.E of this final rule
with comment period.
We did not receive any public comments on our overall OPPS
packaging policy and therefore, we are continuing the OPPS packaging
policy for CY 2023 without modification. Specific packaging concerns
are discussed in detail in their respective sections throughout this
final rule with comment period.
As discussed above and in the proposed rule, we solicited comments
and data regarding whether to expand the current ASC payment system
policy for non-opioid pain management drugs and biologicals that
function as surgical supplies to the HOPD setting. Details on the
current ASC policy can be found in section XIII.E of this final rule
with comment period. Below is a summary of the comments received in
response to the comment solicitation.
Comment: Many commenters suggested CMS extend the policy described
at Sec. 416.174 to also encompass the HOPD setting. Generally,
commenters believed these products serve a valuable clinical purpose
and their use should be encouraged in all settings of care. Several
commenters provided data regarding how packaging negatively impacted
the utilization of their products in the HOPD. Some commenters conceded
that it is reasonable to think that the average hospital outpatient
department would be able to absorb the extra costs; however, they
believe that does not mean that every hospital outpatient department
would be able to do so.
Commenters also presented data showing potential access barriers
affecting underserved communities. Commenters believed that the HOPD
setting is more accessible to vulnerable and underserved populations
relative to the ASC setting. Commenters stated that these are the
populations that are also most negatively impacted by opioids.
Response: We thank commenters for their comments on the comment
solicitation to expand the non-opioid drug or biological payment policy
to the HOPD setting. We will take these comments into consideration for
future rulemaking. We remind interested parties that we are not
modifying our policy at Sec. 416.174 or creating new policies in
response to these comment solicitations. Any change to or expansion of
the policy described at Sec. 416.174 would be done through notice and
comment rulemaking.
4. Calculation of OPPS Scaled Payment Weights
We established a policy in the CY 2013 OPPS/ASC final rule with
comment period (77 FR 68283) of using geometric mean-based APC costs to
calculate relative payment weights under the OPPS. In the CY 2022 OPPS/
ASC final rule with comment period (85 FR 63497 through 63498), we
applied this policy and calculated the relative payment weights for
each APC for CY 2022 that were shown in Addenda A and B of the CY 2022
OPPS/ASC final rule with comment period (which were made available via
the internet on the CMS website) using the APC costs discussed in
sections II.A.1. and II.A.2. of the CY 2022 OPPS/ASC final rule

[[Page 71779]]

with comment period (86 FR 63466 through 63483). For CY 2023, as we did
for CY 2022, we proposed to continue to apply the policy established in
CY 2013 and calculate relative payment weights for each APC for CY 2023
using geometric mean-based APC costs.
For CY 2012 and CY 2013, outpatient clinic visits were assigned to
one of five levels of clinic visit APCs, with APC 0606 representing a
mid-level clinic visit. In the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75036 through 75043), we finalized a policy that created
alphanumeric HCPCS code G0463 (Hospital outpatient clinic visit for
assessment and management of a patient), representing any and all
clinic visits under the OPPS. HCPCS code G0463 was assigned to APC 0634
(Hospital Clinic Visits). We also finalized a policy to use CY 2012
claims data to develop the CY 2014 OPPS payment rates for HCPCS code
G0463 based on the total geometric mean cost of the levels one through
five CPT Evaluation or Assessment and Management (E/M) codes for clinic
visits previously recognized under the OPPS (CPT codes 99201 through
99205 and 99211 through 99215). In addition, we finalized a policy to
no longer recognize a distinction between new and established patient
clinic visits.
For CY 2016, we deleted APC 0634 and reassigned the outpatient
clinic visit HCPCS code G0463 to APC 5012 (Level 2 Examinations and
Related Services) (80 FR 70372). For CY 2023, as we did for CY 2022, we
proposed to continue to standardize all of the relative payment weights
to APC 5012. We believe that standardizing relative payment weights to
the geometric mean of the APC to which HCPCS code G0463 is assigned
maintains consistency in calculating unscaled weights that represent
the cost of some of the most frequently provided OPPS services. For CY
2023, as we did for CY 2022, we proposed to assign APC 5012 a relative
payment weight of 1.00 and to divide the geometric mean cost of each
APC by the geometric mean cost for APC 5012 to derive the unscaled
relative payment weight for each APC. The choice of the APC on which to
standardize the relative payment weights does not affect payments made
under the OPPS because we scale the weights for budget neutrality.
We note that in the CY 2019 OPPS/ASC final rule with comment period
(83 FR 59004 through 59015) and the CY 2020 OPPS/ASC final rule with
comment period (84 FR 61365 through 61369), we discussed our policy,
implemented beginning on January 1, 2019, to control for unnecessary
increases in the volume of covered outpatient department services by
paying for clinic visits furnished at excepted off-campus provider-
based departments (PBDs) at a reduced rate. While the volume associated
with these visits is included in the impact model, and thus used in
calculating the weight scalar, the policy has a negligible effect on
the scalar. Specifically, under this policy, there is no change to the
relativity of the OPPS payment weights because the adjustment is made
at the payment level rather than in the cost modeling. Further, under
this policy, the savings that result from the change in payments for
these clinic visits are not budget neutral. Therefore, the impact of
this policy will generally not be reflected in the budget neutrality
adjustments, whether the adjustment is to the OPPS relative weights or
to the OPPS conversion factor. For a full discussion of this policy, we
refer readers to the CY 2020 OPPS/ASC final rule with comment period
(84 FR 61142).
Section 1833(t)(9)(B) of the Act requires that APC reclassification
and recalibration changes, wage index changes, and other adjustments be
made in a budget neutral manner. Budget neutrality ensures that the
estimated aggregate weight under the OPPS for CY 2023 is neither
greater than nor less than the estimated aggregate weight that would
have been calculated without the changes. To comply with this
requirement concerning the APC changes, we propose to compare the
estimated aggregate weight using the CY 2022 scaled relative payment
weights to the estimated aggregate weight using the proposed CY 2023
unscaled relative payment weights.
For CY 2022, we multiplied the CY 2022 scaled APC relative payment
weight applicable to a service paid under the OPPS by the volume of
that service from CY 2021 claims to calculate the total relative
payment weight for each service. We then added together the total
relative payment weight for each of these services in order to
calculate an estimated aggregate weight for the year. For CY 2023, we
proposed to apply the same process using the estimated CY 2023 unscaled
relative payment weights rather than scaled relative payment weights.
We proposed to calculate the weight scalar by dividing the CY 2022
estimated aggregate weight by the unscaled CY 2023 estimated aggregate
weight.
For a detailed discussion of the weight scalar calculation, we
refer readers to the OPPS claims accounting document available on the
CMS website at: <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index</a>.html. Click on the link labeled
``CY 2023 OPPS/ASC Notice of Proposed Rulemaking'', which can be found
under the heading ``Hospital Outpatient Prospective Payment System
Rulemaking'' and open the claims accounting document link at the bottom
of the page, which is labeled ``2023 NFRM OPPS Claims Accounting
(PDF)''.
We proposed to compare the estimated unscaled relative payment
weights in CY 2023 to the estimated total relative payment weights in
CY 2022 using CY 2021 claims data, holding all other components of the
payment system constant to isolate changes in total weight. Based on
this comparison, we proposed to adjust the calculated CY 2023 unscaled
relative payment weights for purposes of budget neutrality. We proposed
to adjust the estimated CY 2023 unscaled relative payment weights by
multiplying them by a proposed weight scalar of 1.4152 to ensure that
the proposed CY 2023 relative payment weights are scaled to be budget
neutral. The proposed CY 2023 relative payment weights listed in
Addenda A and B to the CY 2023 OPPS/ASC proposed rule (which are
available via the internet on the CMS website) are scaled and
incorporate the recalibration adjustments discussed in sections II.A.1
and II.A.2 of this CY 2023 OPPS/ASC proposed rule (87 FR 44510 through
44525).
Section 1833(t)(14) of the Act provides the payment rates for
certain specified covered outpatient drugs (SCODs). Section
1833(t)(14)(H) of the Act provides that additional expenditures
resulting from this paragraph shall not be taken into account in
establishing the conversion factor, weighting, and other adjustment
factors for 2004 and 2005 under paragraph (9), but shall be taken into
account for subsequent years. Therefore, the cost of those SCODs (as
discussed in section V.B.2 of the CY 2023 OPPS/ASC proposed rule (87 FR
44644 through 44646)) is included in the budget neutrality calculations
for the CY 2023 OPPS.
We did not receive any public comments on the proposed weight
scalar calculation. Therefore, we are finalizing our proposal to use
the calculation process described in the proposed rule, without
modification, for CY 2023. For CY 2023, as we did for CY 2022, we will
continue to apply the policy established in CY 2013 and calculate
relative payment weights for each APC for CY 2023 using geometric mean-
based APC costs. For CY 2023, as we did for CY 2022, we will assign APC

[[Page 71780]]

5012 a relative payment weight of 1.00 and we will divide the geometric
mean cost of each APC by the geometric mean cost for APC 5012 to derive
the unscaled relative payment weight for each APC. To comply with this
requirement concerning the APC changes, we will compare the estimated
aggregate weight using the CY 2022 scaled relative payment weights to
the estimated aggregate weight using the CY 2023 unscaled relative
payment weights.
Using updated final rule claims data, we are updating the estimated
CY 2023 unscaled relative payment weights by multiplying them by a
weight scalar of 1.4122 to ensure that the final CY 2023 relative
payment weights are scaled to be budget neutral. The final CY 2023
relative payments weights listed in Addenda A and B of this final rule
with comment period (which are available via the internet on the CMS
website) were scaled and incorporate the recalibration adjustments
discussed in sections II.A.1 and II.A.2 of this final rule with comment
period.

B. Conversion Factor Update

Section 1833(t)(3)(C)(ii) of the Act requires the Secretary to
update the conversion factor used to determine the payment rates under
the OPPS on an annual basis by applying the OPD rate increase factor.
For purposes of section 1833(t)(3)(C)(iv) of the Act, subject to
sections 1833(t)(17) and 1833(t)(3)(F) of the Act, the OPD rate
increase factor is equal to the hospital inpatient market basket
percentage increase applicable to hospital discharges under section
1886(b)(3)(B)(iii) of the Act. In the FY 2023 IPPS/Long Term Care
Hospital (LTCH) PPS proposed rule (87 FR 28402), consistent with
current law, based on IHS Global, Inc.'s fourth quarter 2021 forecast
of the FY 2023 market basket increase, the proposed FY 2023 IPPS market
basket update was 3.1 percent. We noted in the proposed rule that under
our regular process for the CY 2023 OPPS/ASC final rule, we would use
the market basket update for the FY 2023 IPPS/LTCH PPS final rule,
which would be based on IHS Global, Inc.'s second quarter 2022 forecast
of the FY 2023 market basket increase. If that forecast is different
than the market basket used for the proposed rule, the CY 2023 OPPS/ASC
final rule OPD rate increase factor would reflect that different market
basket estimate.
Section 1833(t)(3)(F)(i) of the Act requires that, for 2012 and
subsequent years, the OPD fee schedule increase factor under
subparagraph (C)(iv) be reduced by the productivity adjustment
described in section 1886(b)(3)(B)(xi)(II) of the Act. Section
1886(b)(3)(B)(xi)(II) of the Act defines the productivity adjustment as
equal to the 10-year moving average of changes in annual economy-wide,
private nonfarm business multifactor productivity (MFP) (as projected
by the Secretary for the 10-year period ending with the applicable
fiscal year, year, cost reporting period, or other annual period) (the
``MFP adjustment''). In the FY 2012 IPPS/LTCH PPS final rule (76 FR
51689 through 51692), we finalized our methodology for calculating and
applying the MFP adjustment, and then revised this methodology, as
discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49509). In the
FY 2023 IPPS/LTCH PPS proposed rule (87 FR 28402), the proposed MFP
adjustment for FY 2023 was 0.4 percentage point.
Therefore, we proposed that the MFP adjustment for the CY 2023 OPPS
would be 0.4 percentage point. We also proposed that if more recent
data become subsequently available after the publication of the CY 2023
OPPS/ASC proposed rule (for example, a more recent estimate of the
market basket increase and/or the MFP adjustment), we would use such
updated data, if appropriate, to determine the CY 2023 market basket
update and the MFP adjustment, which are components in calculating the
OPD fee schedule increase factor under sections 1833(t)(3)(C)(iv) and
1833(t)(3)(F) of the Act.
We note that section 1833(t)(3)(F) of the Act provides that
application of this subparagraph may result in the OPD fee schedule
increase factor under section 1833(t)(3)(C)(iv) of the Act being less
than 0.0 percent for a year, and may result in OPPS payment rates being
less than rates for the preceding year. As described in further detail
below, we proposed for CY 2023 an OPD fee schedule increase factor of
2.7 percent for the CY 2023 OPPS (which is the proposed estimate of the
hospital inpatient market basket percentage increase of 3.1 percent,
less the proposed 0.4 percentage point MFP adjustment).
We proposed that hospitals that fail to meet the Hospital OQR
Program reporting requirements would be subject to an additional
reduction of 2.0 percentage points from the OPD fee schedule increase
factor adjustment to the conversion factor that would be used to
calculate the OPPS payment rates for their services, as required by
section 1833(t)(17) of the Act. For further discussion of the Hospital
OQR Program, we refer readers to section XIV of the CY 2023 OPPS/ASC
proposed rule.
To set the OPPS conversion factor for 2023, we proposed to increase
the CY 2022 conversion factor of $84.177 by 2.7 percent. In accordance
with section 1833(t)(9)(B) of the Act, we proposed further to adjust
the conversion factor for CY 2023 to ensure that any revisions made to
the wage index and rural adjustment are made on a budget neutral basis.
We proposed to calculate an overall budget neutrality factor of 1.0010
for wage index changes by comparing proposed total estimated payments
from our simulation model using the proposed FY 2023 IPPS wage indexes
to those payments using the FY 2022 IPPS wage indexes, as adopted on a
calendar year basis for the OPPS. We further proposed to calculate an
additional budget neutrality factor of 0.9995 to account for our
proposed policy to cap wage index reductions for hospitals at 5 percent
on an annual basis.
We note that we did not include a budget neutrality factor for the
proposed rule to account for the adjustment for drugs purchased under
the 340B Program because we formally proposed to continue paying such
drugs at ASP minus 22.5 percent, which was the same payment rate as in
CY 2022. Given the timing of the Supreme Court's decision in American
Hospital Association v. Becerra, 142 S. Ct. 1896 (2022), we lacked the
necessary time to fully incorporate the adjustments to our budget
neutrality calculations to account for that decision before issuing the
CY 2023 OPPS/ASC proposed rule. Instead, we included alternative files
with the proposed rule that detailed the impact of removing the 340B
policy for CY 2023. The final budget neutrality factor for the 340B
policy is discussed later in this section and section V.B.6. of this
final rule with comment period.
For the CY 2023 OPPS, we proposed to maintain the current rural
adjustment policy, as discussed in section II.E. of the CY 2023 OPPS/
ASC proposed rule. Therefore, the proposed budget neutrality factor for
the rural adjustment was 1.0000.
We proposed to continue previously established policies for
implementing the cancer hospital payment adjustment described in
section 1833(t)(18) of the Act, as discussed in section II.F of the CY
2023 OPPS/ASC proposed rule. We proposed to calculate a CY 2023 budget
neutrality adjustment factor for the cancer hospital payment adjustment
by comparing estimated total CY 2023 payments under section 1833(t) of
the Act, including the proposed CY 2023 cancer hospital payment
adjustment, to estimated CY 2023 total payments using the CY 2022 final
cancer hospital

[[Page 71781]]

payment adjustment, as required under section 1833(t)(18)(B) of the
Act. The proposed CY 2023 estimated payments applying the proposed CY
2023 cancer hospital payment adjustment were the same as estimated
payments applying the CY 2022 final cancer hospital payment adjustment.
Therefore, we proposed to apply a budget neutrality adjustment factor
of 1.0000 to the conversion factor for the cancer hospital payment
adjustment. In accordance with section 1833(t)(18)(C) of the Act, as
added by section 16002(b) of the 21st Century Cures Act (Pub. L. 114-
255), we applied a budget neutrality factor calculated as if the
proposed cancer hospital adjustment target payment-to-cost ratio was
0.90, not the 0.89 target payment-to-cost ratio we applied as stated in
section II.F of the CY 2023 OPPS/ASC proposed rule.
We estimated that proposed pass-through spending for drugs,
biologicals, and devices for CY 2023 would equal approximately $772.0
million, which represents 0.90 percent of total projected CY 2023 OPPS
spending. Therefore, the proposed conversion factor would be adjusted
by the difference between the 1.24 percent estimate of pass-through
spending for CY 2022 and the 0.90 percent estimate of proposed pass-
through spending for CY 2023, resulting in a proposed increase to the
conversion factor for CY 2023 of 0.34 percent.
Proposed estimated payments for outliers would remain at 1.0
percent of total OPPS payments for CY 2023. We estimated for the CY
2023 OPPS/ASC proposed rule that outlier payments would be
approximately 1.29 percent of total OPPS payments in CY 2022; the 1.00
percent for proposed outlier payments in CY 2023 would constitute a
0.29 percent decrease in payment in CY 2023 relative to CY 2022.
We also proposed to make an OPPS budget neutrality adjustment of
0.01 percent of the OPPS for the estimated spending of $8.3 million
associated with the proposed payment adjustment under the CY 2023 OPPS
for domestic NIOSH-approved surgical N95 respirators, as discussed in
section X.H of the CY 2023 OPPS/ASC proposed rule.
For CY 2023, we also proposed that hospitals that fail to meet the
reporting requirements of the Hospital OQR Program would continue to be
subject to a further reduction of 2.0 percentage points to the OPD fee
schedule increase factor. For hospitals that fail to meet the
requirements of the Hospital OQR Program, we proposed to make all other
adjustments discussed above, but use a reduced OPD fee schedule update
factor of 0.7 percent (that is, the proposed OPD fee schedule increase
factor of 2.7 percent further reduced by 2.0 percentage points). This
would result in a proposed reduced conversion factor for CY 2023 of
$85.093 for hospitals that fail to meet the Hospital OQR Program
requirements (a difference of -1.692 in the conversion factor relative
to hospitals that met the requirements).
In summary, for 2023, we proposed to use a reduced conversion
factor of $85.093 in the calculation of payments for hospitals that
fail to meet the Hospital OQR Program requirements (a difference of -
1.692 in the conversion factor relative to hospitals that met the
requirements).
For 2023, we proposed to use a conversion factor of $86.785 in the
calculation of the national unadjusted payment rates for those items
and services for which payment rates are calculated using geometric
mean costs; that is, the proposed OPD fee schedule increase factor of
2.7 percent for CY 2023, the required proposed wage index budget
neutrality adjustment of approximately 1.0010, the proposed 5 percent
annual cap for individual hospital wage index reductions adjustment of
approximately 0.9995, the proposed cancer hospital payment adjustment
of 1.0000, the proposed adjustment to account for the 0.01 percentage
point of OPPS spending associated with the payment adjustment for
domestic NIOSH-approved surgical N95 respirators, and the proposed
adjustment of an increase of 0.34 percentage point of projected OPPS
spending for the difference in pass-through spending, which resulted in
a proposed conversion factor for CY 2023 of $86.785.
Comment: Many commenters believed that the proposed OPD rate
increase of 2.7 percent substantially underestimated the increases in
costs for labor, equipment, and supplies that hospitals are facing.
Commenters also asserted that the adjusted inpatient hospital rate
increase of 3.8 percent that was implemented for the IPPS and
calculated using more current economic data is also inadequate to
address the large cost increases faced by hospitals. Many commenters
raised concerns about sharply rising labor costs, especially the cost
of nursing care. Commenters stated that during the COVID-19 pandemic,
hospitals greatly increased their use of contract nurses whose wages
and support costs were substantially higher than nurses regularly
employed by hospitals. Commenters had serious concerns about whether
the market basket data that measures labor costs were measuring the
increased hospital labor costs. Commenters also were in favor of
eliminating or substantially reducing the productivity adjustment from
the OPD rate update. They believe that disruptions caused by the
pandemic, inflation, and supply-chain issues have inhibited
productivity growth, and that the proposed adjustment overestimates
productivity efficiencies in the hospital sector of the economy.
Commenters had several suggested actions or sources of information
that could be used to measure and compensate for the increased costs
hospitals face. Some commenters suggested using different measures of
changes in costs and of inflation, including Medicare cost reports and
the Consumer Price Index (CPI). Many commenters support a one-time
Medicare payment rate increase in addition to the proposed OPD rate
increase to meet current sharply rising costs and remedy what
commenters said were inadequate increases to OPD rates in prior years.
One commenter contended that we do not have to accept the adjusted
inpatient hospital rate increase for the final OPD rate increase,
pointing out that section 1833(t)(3)(C)(iv) of the Act states that ``.
. . the `OPD fee schedule increase factor' for services furnished in a
year is equal to the market basket percentage increase applicable under
section 1886(b)(3)(B)(iii) . . .'' The commenter explained that section
1886(b)(3)(B)(iii) of the Act defines the IPPS market basket percentage
increase that section 1833(t)(3)(C)(iv) requires to be adopted by the
OPPS. The commenter believes that section 1886(d)(5)(I)(i) of the Act,
which states that ``(t)he Secretary shall provide by regulation for
such other exceptions and adjustments to such payment amounts under
this subsection as the Secretary deems appropriate . . . ,'' gives CMS
flexibility to identify adjustments that could update the IPPS market
basket to better reflect rapidly increasing input costs for hospitals.
Response: Section 1833(t)(3)(C)(iv) of the Act requires that the
OPD fee schedule increase factor equal the IPPS market basket
percentage increase. The IPPS authority in section 1886(d)(5)(I)(i) of
the Act gives the Secretary authority to make exceptions and
adjustments to IPPS payment amounts under subsection (d) of section
1886; it does not give the Secretary authority to adjust OPPS payment
amounts. Section 1833(t)(3)(C)(iv) does give the Secretary discretion
to substitute for the market basket percentage increase an annual
percentage increase that is computed and applied with respect to
covered OPD services furnished in a year in the same manner as the
market basket

[[Page 71782]]

increase is determined and applied to inpatient hospital services for
discharges occurring in a fiscal year, but we did not propose to
substitute a covered OPD services-specific increase for the market
percentage increase factor for CY 2023. Where CMS does not substitute
this alternative, the OPD fee schedule increase factor must equal the
market basket percentage increase. And as we noted in the FY 2023 IPPS/
LTCH PPS final rule, the final IPPS market basket growth rate of 4.1
percent would be the highest market basket update implemented in an
IPPS final rule since FY 1998 (87 FR 49052).
Comment: Several commenters supported our proposed OPD rate
increase of 2.7 percent updated based on more current market basket
information for this final rule. Some of the commenters noted that our
proposed increase was the minimum amount needed to reflect hospitals'
higher costs and they encouraged us to implement an OPD rate increase
larger than the proposed 2.7 percent OPD rate increase.
Response: We appreciate the commenter's support for our proposed
OPD rate increases. After reviewing the public comments that we
received, we are finalizing these proposals with modification.
For CY 2023, we proposed to continue previously established
policies for implementing the cancer hospital payment adjustment
described in section 1833(t)(18) of the Act (discussed in section II.F
of this final rule with comment period). Based on the final rule
updated data used in calculating the cancer hospital payment adjustment
in section II.F. of this final rule with comment period, the target
payment-to-cost ratio for the cancer hospital payment adjustment, which
was 0.90 for CY 2022, is 0.90 for CY 2023. As a result, we are applying
a budget neutrality adjustment factor of 1.0000 to the conversion
factor for the cancer hospital payment adjustment.
For this CY 2023 OPPS/ASC final rule with comment period, based on
more recent data available for the FY 2023 IPPS/LTCH PPS final rule (87
FR 49056) (that is, IHS Global Inc.'s (IGI's) second quarter 2022
forecast of the 2018-based IPPS market basket rate-of-increase with
historical data through the first quarter of 2022), the hospital market
basket update for CY 2023 is 4.1 percent and the productivity
adjustment for FY 2023 is 0.3 percent.
We note that as a result of the modifications in final policy for
the CY 2023 wage index we are also including a change to the wage index
budget neutrality adjustment so that the final overall budget
neutrality factor of 0.9998 would apply for wage index changes. This
adjustment is comprised of a 1.0002 budget neutrality adjustment, using
our standard calculation of comparing proposed total estimated payments
from our simulation model using t

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