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DEPARTMENT OF HEALTH AND PPS wage index, and new requirements a comment. We post all comments HUMAN SERVICES for the competitive bidding of diabetic received before the close of the testing strips. comment period on the following Centers for Medicare & Medicaid DATES: To be assured consideration, website as soon as possible after they Services comments must be submitted at one of have been received: http:// the addresses provided below, no later www.regulations.gov. Follow the search 42 CFR Parts 405, 410, 413 and 414 than September 27, 2019. instructions on that website to view [CMS–1713–P] ADDRESSES: In commenting, please refer public comments. to file code CMS–1713–P. Because of RIN 0938–AT70 Table of Contents staff and resource limitations, we cannot To assist readers in referencing accept comments by facsimile (FAX) Medicare Program; End-Stage Renal sections contained in this preamble, we transmission. Disease Prospective Payment System, are providing a Table of Contents. Some Comments, including mass comment Payment for Renal Dialysis Services of the issues discussed in this preamble submissions, must be submitted in one Furnished to Individuals With Acute affect the payment policies, but do not of the following three ways (please Kidney Injury, End-Stage Renal require changes to the regulations in the choose only one of the ways listed): Disease Quality Incentive Program, Code of Federal Regulations (CFR). Durable Medical Equipment, 1. Electronically. You may submit I. Executive Summary Prosthetics, Orthotics and Supplies electronic comments on this regulation to http://www.regulations.gov. Follow A. Purpose (DMEPOS) Fee Schedule Amounts, B. Summary of the Major Provisions DMEPOS Competitive Bidding (CBP) the ‘‘Submit a comment’’ instructions. 2. By regular mail. You may mail C. Summary of Cost and Benefits Proposed Amendments, Standard II. Calendar Year (CY) 2020 End-Stage Renal Elements for a DMEPOS Order, and written comments to the following Disease (ESRD) Prospective Payment Master List of DMEPOS Items address ONLY: Centers for Medicare & System (PPS) Potentially Subject to a Face-to-Face Medicaid Services, Department of A. Background Encounter and Written Order Prior to Health and Human Services, Attention: B. Provisions of the Proposed Rule CMS–1713–P, P.O. Box 8010, Baltimore, III. CY 2020 Payment for Renal Dialysis Delivery and/or Prior Authorization Services Furnished to Individuals With Requirements MD 21244–8010. Please allow sufficient time for mailed Acute Kidney Injury (AKI) A. Background AGENCY: comments to be received before the Centers for Medicare & B. Proposed Annual Payment Rate Update Medicaid Services (CMS), HHS. close of the comment period. for CY 2020 ACTION: Proposed rule. 3. By express or overnight mail. You IV. End-Stage Renal Disease Quality may send written comments to the Incentive Program (ESRD QIP) SUMMARY: This proposed rule would following address ONLY: Centers for A. Background and Proposed Regulation update and make revisions to the End- Medicare & Medicaid Services, Text Update Stage Renal Disease (ESRD) Prospective Department of Health and Human B. Proposed Update to Requirements Payment System (PPS) for calendar year Services, Attention: CMS–1713–P, Mail Beginning With the PY 2022 ESRD QIP (CY) 2020. This rule also proposes to Stop C4–26–05, 7500 Security C. Proposals for the PY 2023 ESRD QIP Boulevard, Baltimore, MD 21244–1850. V. Establishing Payment Amounts for New update the payment rate for renal Durable Medical Equipment, Prosthetics, dialysis services furnished by an ESRD For information on viewing public Orthotics and Supplies (DMEPOS) Items facility to individuals with acute kidney comments, see the beginning of the and Services (Gap-Filling) injury (AKI). This proposed rule also SUPPLEMENTARY INFORMATION section. A. Background proposes to update requirements for the FOR FURTHER INFORMATION CONTACT: B. Current Issues ESRD Quality Incentive Program (QIP). [email protected], for C. Provisions of the Proposed Rule In addition, this rule proposes a issues related to the ESRD PPS and VI. Standard Elements for a Durable Medical methodology for calculating fee coverage and payment for renal dialysis Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Order; Master List schedule payment amounts for new services furnished to individuals with of DMEPOS Items Potentially Subject to Durable Medical Equipment, AKI. a Face-to-Face Encounter and Written Prosthetics, Orthotics and Supplies Delia Houseal, (410) 786–2724, for Order Prior to Delivery and/or Prior (DMEPOS) items and services and issues related to the ESRD QIP. Authorization Requirements making adjustments to the fee schedule [email protected], for issues A. Background amounts established using supplier or related to DMEPOS payment policy. B. Provisions of the Proposed Regulations commercial prices if such prices Julia Howard, (410) 786–8645, for VII. DMEPOS Competitive Bidding Program decrease within 5 years of establishing issues related to DMEPOS CBP (CBP) Amendments the initial fee schedule amounts. This Amendments A. Background Jennifer Phillips, (410) 786–1023; B. Proposed Amendments rule also proposes to revise existing VIII. Requests for Information regulations related to the competitive Olufemi Shodeke, (410) 786–1649; A. Data Collection bidding program for DMEPOS. This Maria Ciccanti, (410) 786–3107; and B. Wage Index Comment Solicitation proposed rule also would streamline the Emily Calvert, (410) 786–4277, for C. Comment Solicitation on Sources of requirements for ordering DMEPOS issues related to the DMEPOS written Market-Based Data Measuring Sales of items, and develop a new list of order, face-to-face encounter, and prior Diabetic Testing Strips to Medicare DMEPOS items potentially subject to a authorization requirements. Beneficiaries (Section 50414 of the face-to-face encounter, written orders SUPPLEMENTARY INFORMATION: Bipartisan Budget Act of 2018) prior to delivery and/or prior Inspection of Public Comments: All IX. Collection of Information Requirements A. Legislative Requirement for Solicitation authorization requirements. Finally, this comments received before the close of of Comments proposed rule includes requests for the comment period are available for B. Requirements in Regulation Text information on data collection resulting viewing by the public, including any C. Additional Information Collection from the ESRD PPS technical expert personally identifiable or confidential Requirements panel, changing the basis for the ESRD business information that is included in X. Response to Comments

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XI. Economic Analyses 2. Coverage and Payment for Renal 5. Conditions of Payment To Be Applied A. Regulatory Impact Analysis Dialysis Services Furnished to to the Proposed Master List of DMEPOS B. Detailed Economic Analysis Individuals With Acute Kidney Injury Items C. Accounting Statement (AKI) D. Regulatory Flexibility Act Analysis This proposed rule would streamline E Unfunded Mandates Reform Act On June 29, 2015, the President the requirements for ordering DMEPOS Analysis signed the Trade Preferences Extension items. It would also develop one Master F. Federalism Analysis Act of 2015 (TPEA) (Pub. L. 114–27). List of DMEPOS items potentially G. Reducing Regulation and Controlling Section 808(a) of TPEA amended subject to a face-to-face encounter, Regulatory Costs section 1861(s)(2)(F) of the Act to written orders prior to delivery and/or H. Congressional Review Act provide coverage for renal dialysis prior authorization requirements under XII. Files Available to the Public via the services furnished on or after January 1, the authority provided under sections Internet 2017, by a renal dialysis facility or a 1834(a)(1)(E)(iv), 1834(a)(11)(B), and Regulations Text provider of services paid under section 1834(a)(15) of the Act. I. Executive Summary 1881(b)(14) of the Act to an individual B. Summary of the Major Provisions with acute kidney injury (AKI). Section A. Purpose 808(b) of the TPEA amended section 1. ESRD PPS 1834 of the Act by adding a new • Update to the ESRD PPS base rate This proposed rule contains proposals subsection (r) that provides for payment for CY 2020: The proposed CY 2020 related to the End-Stage Renal Disease for renal dialysis services furnished by ESRD PPS base rate is $240.27. This (ESRD) Prospective Payment System renal dialysis facilities or providers of proposed amount reflects a (PPS), payment for renal dialysis services paid under section 1881(b)(14) productivity-adjusted market basket services furnished to individuals with of the Act to individuals with AKI at the increase as required by section acute kidney injury (AKI), the ESRD ESRD PPS base rate beginning January 1881(b)(14)(F)(i)(I) of the Act (1.7 Quality Incentive Program (QIP), the 1, 2017. This rule proposes to update percent), and application of the wage Durable Medical Equipment, the AKI payment rate for CY 2020. index budget-neutrality adjustment Prosthetics, Orthotics and Supplies factor (1.004180), equaling $240.27 (DMEPOS) Fee Schedule Amounts, 3. End-Stage Renal Disease Quality × × Incentive Program (ESRD QIP) ($235.27 1.017 1.004180 = $240.27). DMEPOS Competitive Bidding Program • Annual update to the wage index: (CBP) proposed amendments, and the The End-Stage Renal Disease Quality We adjust wage indices on an annual regulations governing DMEPOS orders, Incentive Program (ESRD QIP) is basis using the most current hospital face-to-face encounters, and prior authorized by section 1881(h) of the wage data and the latest core-based authorization. Act. The Program fosters improved statistical area (CBSA) delineations to In future rulemaking years, the patient outcomes by establishing account for differing wage levels in DMEPOS provisions will be in a incentives for dialysis facilities to meet areas in which ESRD facilities are separate rule from the ESRD PPS, AKI or exceed performance standards located. For CY 2020, we are proposing and ESRD QIP provisions. established by the Centers for Medicare to update the wage index values based & Medicaid Services (CMS). This on the latest available data. 1. End-Stage Renal Disease (ESRD) proposed rule proposes several updates • Update to the outlier policy: We are Prospective Payment System (PPS) for the ESRD QIP. proposing to update the outlier policy using the most current data, as well as On January 1, 2011, we implemented 4. DMEPOS Fee Schedule Payment update the outlier services fixed-dollar the End-Stage Renal Disease (ESRD) Rules loss (FDL) amounts for adult and Prospective Payment System (PPS), a a. Establishing Payment Amounts for pediatric patients and Medicare case-mix adjusted, bundled PPS for New DMEPOS Items and Services (Gap- Allowable Payment (MAP) amounts for renal dialysis services furnished by Filling) adult and pediatric patients for CY 2020 ESRD facilities as required by section using CY 2018 claims data. Based on the 1881(b)(14) of the Social Security Act This rule proposes to establish a gap- use of the latest available data, the (the Act), as added by section 153(b) of filling methodology in regulations for proposed FDL amount for pediatric the Medicare Improvements for Patients pricing new items and services in beneficiaries would decrease from and Providers Act of 2008 (MIPPA) accordance with sections 1834(a), (h), (i) $57.14 to $44.91, and the MAP amount (Pub. L. 110–275). Section 1881(b)(14) and 1833(o) of the Act for DME, would decrease from $35.18 to $33.82, (F) of the Act, as added by section prosthetic devices, orthotics, as compared to CY 2019 values. For 153(b) of MIPPA, and amended by prosthetics, surgical dressings, and adult beneficiaries, the proposed FDL section 3401(h) of the Patient Protection custom molded shoes, extra-depth amount would decrease from $65.11 to and Affordable Care Act (the Affordable shoes, and inserts, and section 1842(b) $52.50, and the MAP amount would Care Act) (Pub. L. 111–148), established for parental and enteral nutrients (PEN) decrease from $38.51 to $36.60. The 1.0 that beginning calendar year (CY) 2012, and medical supplies, including splints percent target for outlier payments was and each subsequent year, the Secretary and casts and intraocular lenses inserted not achieved in CY 2018. Outlier of the Department of Health and Human in a physician’s office. payments represented approximately Services (the Secretary) shall annually b. Adjusting Payment Amounts for 0.5 percent of total payments rather than increase payment amounts by an ESRD DMEPOS Items and Services Gap-Filled 1.0 percent. We believe using CY 2018 market basket increase factor, reduced Using Supplier or Commercial Prices claims data to update the outlier MAP by the productivity adjustment and FDL amounts for CY 2020 would described in section 1886(b)(3)(B)(xi)(II) This rule proposes a one-time increase payments for ESRD of the Act. This rule proposes updates adjustment to the gap-filled fee schedule beneficiaries requiring higher resource and revisions to the ESRD PPS for CY amounts in cases where prices decrease utilization in accordance with a 1.0 2020. by less than 15 percent. percent outlier percentage.

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• Eligibility criteria for the that product. We would no longer apply ESRD PPS: We are proposing to transitional drug add-on payment the TDAPA for a new renal dialysis drug discontinue the application of the adjustment (TDAPA): We are proposing or biological product beginning no later erythropoiesis-stimulating agent (ESA) revisions to the drug designation than 2-calendar quarters after we monitoring policy (EMP) under the process regulation at 42 CFR 413.234 for determine a full calendar quarter of ASP ESRD PPS. Prior to implementation of new renal dialysis drugs and biological data is not available. We are also the ESRD PPS, ESAs were paid products that fall within an existing proposing to no longer apply the separately, which resulted in gross ESRD PPS functional category. TDAPA for a new renal dialysis drug or overutilization. We continued to apply Specifically, we are proposing to biological product if CMS does not the EMP edits when we implemented exclude drugs approved by the Food receive the latest full calendar quarter of the ESRD PPS so that we did not and Drug Administration (FDA) under ASP data for the product, beginning no overvalue these biological products in section 505(j) of the Federal Food, Drug, later than 2-calendar quarters after CMS determining eligibility for outlier and Cosmetic Act (FD&C Act) and drugs determines that the latest full calendar payments. Since we bundled ESAs into for which the new drug application quarter of ASP data is not available. We the per treatment payment amount, (NDA) is classified by FDA as NDA believe it is important to balance overutilization and the incentive for Types 3, 5, 7 and 8, Type 3 in supporting ESRD facilities in their overutilization have been eliminated combination with Type 2 or Type 4, uptake of innovative new renal dialysis from the ESRD PPS; therefore we Type 5 in combination with Type 2, or drugs and biological products with believe the EMP is no longer necessary. Type 9 when the ‘‘parent NDA’’ is a limiting increases to Medicare 2. Payment for Renal Dialysis Services Type 3, 5, 7 or 8—from being eligible for expenditures, and conditioning the Furnished to Individuals With AKI the transitional drug add-on payment TDAPA on the availability of ASP data adjustment (TDAPA), effective January would help us achieve that balance. We are proposing to update the AKI 1, 2020. • New and innovative renal dialysis payment rate for CY 2020. The proposed • Proposal to change the basis of equipment and supplies under the CY 2020 payment rate is $240.27, which payment for the TDAPA for ESRD PPS: We are proposing to pay a is the same as the base rate proposed calcimimetics: We are continuing to pay transitional add-on payment adjustment under the ESRD PPS for CY 2020. the TDAPA for calcimimetics for a third to support the use of certain new and 3. ESRD QIP year in CY 2020 in order to collect innovative renal dialysis equipment or sufficient claims data for rate setting supplies furnished by ESRD facilities. This proposed rule proposes several analysis, but are proposing to reduce the We are proposing to include renal new requirements for the ESRD QIP basis of payment for the TDAPA for dialysis equipment and supplies (with beginning with payment year (PY) 2022, calcimimetics for CY 2020 from the the exception of capital-related assets) including but not limited to the following: average sales price plus 6 percent that are: (1) Granted marketing • (ASP+6) methodology to 100 percent of authorization by FDA on or after Updates to the scoring methodology ASP. We believe that in paying the January 1, 2020, (2) commercially for the National Healthcare Safety TDAPA for these products since 2018, available, (3) have a Healthcare Network (NHSN) Dialysis Event we have provided sufficient time for Common Procedure Coding System reporting measure to allow new ESRD facilities to address any (HCPCS) application submitted in facilities and facilities that are eligible administrative complexities and accordance with the official Level II to report data on the measure for less overhead costs that may have arisen HCPCS coding procedures, and (4) meet than 12 months to be able to receive a score on that measure. with regard to furnishing the the substantial clinical improvement • calcimimetics. We also believe we need criteria specified in the Inpatient A proposal to convert the STrR to take into account the financial burden Prospective Payment System (IPPS) clinical measure (NQF #2979) to a that increased payments place on regulations at 42 CFR 412.87(b)(1). reporting measure while we examine beneficiaries and Medicare Specifically, under our proposal, the concerns raised by stakeholders expenditures. equipment or supply must represent an regarding the measure’s validity. • Average sales price (ASP) advance that substantially improves, We are not proposing any new conditional policy for application of the relative to technologies previously requirements beginning with the PY TDAPA: Under the policy finalized in available, the diagnosis or treatment of 2023 ESRD QIP. the CY 2019 ESRD PPS final rule, Medicare beneficiaries. CMS would We are also proposing to make effective January 1, 2020, the basis of evaluate the application to determine updates to our regulation text so that it payment for the TDAPA for all new eligibility for a transitional add-on better informs the public of the renal dialysis drugs and biological payment adjustment. We are proposing Program’s requirements. products except calcimimetics is that the payment adjustment for these 4. DMEPOS Fee Schedule Payment ASP+0, but if ASP data is not available, new and innovative renal dialysis Rules then we use Wholesale Acquisition Cost equipment and supplies would be based a. Establishing Payment Amounts for (WAC) +0, and if WAC is not available, on 65 percent of the price established by New DMEPOS Items and Services (Gap- then we use invoice pricing. We are the Medicare Administrative Filling) concerned that if ASP data is not Contractors (MACs), using the available to CMS, WAC or invoice information from the invoice and other This rule proposes a specific pricing would likely increase Medicare relevant sources of information. We methodology for calculating fee expenditures more than the value of the would pay the adjustment for 2-calendar schedule amounts for new DMEPOS ASP. We are proposing to no longer years, after which the equipment or items. The fiscal impact of establishing apply the TDAPA for a new renal supply would qualify as an outlier payment amounts for new items based dialysis drug or biological product if service and no change to the ESRD PPS on our proposal cannot be estimated as CMS does not receive a full calendar base rate would be made. these new items are not identified and quarter of ASP data within 30 days of • Discontinue the application of the would vary in uniqueness and costs. the last day of the 3rd calendar quarter erythropoiesis-stimulating agent (ESA) However, there is some inherent risk after we begin applying the TDAPA for monitoring policy (EMP) under the that the proposed methodology could

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result in fee schedule amounts for new condition the TDAPA on the availability schedule amounts for new DMEPOS items that greatly exceed the costs of of ASP data, and provide a transitional items. The fiscal impact of establishing furnishing the items. add-on payment adjustment for new and payment amounts for new items based innovative renal dialysis equipment and on our proposal cannot be estimated as b. Adjusting Payment Amounts for supplies. The fiscal impact of these these new items are not identified and DMEPOS Items and Services Gap-Filled proposals cannot be determined because would vary in uniqueness and costs. Using Supplier or Commercial Prices these new renal dialysis drugs and However, there is some inherent risk In cases where fee schedule amounts biological products and new renal that the proposed methodology could for new DMEPOS items and services are dialysis equipment and supplies are not result in fee schedule amounts for new gap-filled using supplier or commercial yet identified and would vary in items that greatly exceed the costs of prices, these prices may decrease over uniqueness and costs. As a result of the furnishing the items. time. In cases where such prices projected 1.6 percent overall payment b. Adjusting Gap-Filled Payment decrease by less than 15 percent within increase, we estimate that there would Amounts for DMEPOS Items and 5 years of establishing the initial fee be an increase in beneficiary co- Services Using Supplier or Commercial schedule amounts, this rule proposes a insurance payments of 1.6 percent in CY Prices one-time adjustment to the gap-filled fee 2020, which translates to approximately schedule amounts. We are not $50 million. We are proposing a one-time proposing these price adjustments in adjustment to the gap-filled fee schedule 2. Impacts of the Proposed Payment for cases where prices increase. amounts in cases where fee schedule Renal Dialysis Services Furnished to amounts for new DMEPOS items and 5. Conditions of Payment To Be Applied Individuals With AKI services are gap-filled using supplier or to Certain DMEPOS Items The impact chart in section XI of this commercial prices, and these prices This proposed rule would streamline proposed rule displays the estimated decrease by less than 15 percent within the requirements for ordering DMEPOS change in proposed payments to ESRD 5 years of establishing the initial fee items. It would also develop one Master facilities in CY 2020 compared to schedule amounts. The one-time List of DMEPOS items potentially estimated payments in CY 2019. The adjustment should generate savings subject to a face-to-face encounter, overall impact of the proposed CY 2020 although it would probably be a small written orders prior to delivery and/or changes is projected to be a 1.7 percent offset to the potential increase in costs prior authorization requirements under increase in payments. Hospital-based of establishing fee schedule amounts the authority provided under sections ESRD facilities have an estimated 1.8 based on supplier invoices or prices 1834(a)(1)(E)(iv), 1834(a)(11)(B), and percent increase in payments compared from commercial payers. The fiscal 1834(a)(15) of the Act. with freestanding facilities with an impact for this provision is therefore estimated 1.7 percent increase. considered negligible. C. Summary of Costs and Benefits We estimate that the aggregate In section XI of this proposed rule, we payments made to ESRD facilities for 5. Conditions of Payment To Be Applied set forth a detailed analysis of the renal dialysis services furnished to AKI to Certain DMEPOS Items impacts that the proposed changes patients at the proposed CY 2020 ESRD This rule proposes to streamline the would have on affected entities and PPS base rate would increase by less requirements for ordering DMEPOS beneficiaries. The impacts include the than $1 million in CY 2020 compared to items, and to identify the process for following: CY 2019. subjecting certain DMEPOS items to a face-to-face encounter and written order 1. Impacts of the Proposed ESRD PPS 3. Impacts of the Proposed ESRD QIP prior to delivery and/or prior The impact chart in section XI of this We estimate that the overall economic authorization as a condition of payment. proposed rule displays the estimated impact of the PY 2022 ESRD QIP would The fiscal impact of these requirements change in payments to ESRD facilities in be approximately $219 million as a cannot be estimated as this rule only CY 2020 compared to estimated result of the policies we have previously identifies all items that are potentially payments in CY 2019. The overall finalized and the proposals in this subject to the face-to-face encounter and impact of the proposed CY 2020 proposed rule. The $219 million figure written order prior to delivery changes is projected to be a 1.6 percent for PY 2022 includes costs associated requirements and/or prior authorization. increase in payments. Hospital-based with the collection of information ESRD facilities have an estimated 1.9 requirements, which we estimate would II. Calendar Year (CY) 2020 End-Stage percent increase in payments compared be approximately $205 million. We also Renal Disease (ESRD) Prospective with freestanding facilities with an estimate that the overall economic Payment System (PPS) estimated 1.5 percent increase. impact of the PY 2023 ESRD QIP would A. Background We estimate that the aggregate ESRD be approximately $219 million as a PPS expenditures would increase by result of the policies we have previously 1. Statutory Background approximately $210 million in CY 2020 finalized. The $219 million figure for PY On January 1, 2011, we implemented compared to CY 2019. This reflects a 2023 includes costs associated with the the End-Stage Renal Disease (ESRD) $230 million increase from the payment collection of information requirements, Prospective Payment System (PPS), a rate update and a $40 million increase which we estimate would be case-mix adjusted bundled PPS for renal due to the updates to the outlier approximately $205 million. dialysis services furnished by ESRD threshold amounts, and a $60 million 4. Impacts of the Proposed DMEPOS Fee facilities, as required by section decrease from the proposal to change Schedule Payment Rules 1881(b)(14) of the Social Security Act the basis of payment for the TDAPA for (the Act), as added by section 153(b) of calcimimetics from ASP+6 percent to a. Establishing Payment Amounts for the Medicare Improvements for Patients ASP+0 percent. These figures do not New DMEPOS Items and Services (Gap- and Providers Act of 2008 (MIPPA). reflect estimated increases or decreases Filling) Section 1881(b)(14)(F) of the Act, as in expenditures based on our proposals This rule proposes a specific added by section 153(b) of MIPPA and to refine the TDAPA eligibility criteria, methodology for calculating fee amended by section 3401(h) of the

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Patient Protection and Affordable Care most recent year available. Section PPS bundled payment, meaning a Act (the Affordable Care Act), 217(c) of PAMA provided that as part of product that is used to treat or manage established that beginning with calendar the CY 2016 ESRD PPS rulemaking, the a condition for which there is not an year (CY) 2012, and each subsequent Secretary shall establish a process for (1) existing ESRD PPS functional category year, the Secretary of the Department of determining when a product is no (§ 413.234). In the CY 2019 ESRD PPS Health and Human Services (the longer an oral-only drug; and (2) final rule (83 FR 56929 through 56949), Secretary) shall annually increase including new injectable and we expanded the TDAPA policy. payment amounts by an ESRD market intravenous products into the ESRD PPS Effective January 1, 2020, the TDAPA is basket increase factor, reduced by the bundled payment. available for all new renal dialysis drugs productivity adjustment described in Finally, on December 19, 2014, the and biological products, not just those section 1886(b)(3)(B)(xi)(II) of the Act. President signed the Stephen Beck, Jr., in new ESRD PPS functional categories. Section 632 of the American Taxpayer Achieving a Better Life Experience Act Relief Act of 2012 (ATRA) (Pub. L. 112– of 2014 (ABLE) (Pub. L. 113–295). 3. Updates to the ESRD PPS 240) included several provisions that Section 204 of ABLE amended section Policy changes to the ESRD PPS are apply to the ESRD PPS. Section 632(a) 632(b)(1) of ATRA, as amended by proposed and finalized annually in the of ATRA added section 1881(b)(14)(I) to section 217(a)(1) of PAMA, to provide Federal Register. The CY 2011 ESRD the Act, which required the Secretary, that payment for oral-only renal dialysis PPS final rule was published on August by comparing per patient utilization services cannot be made under the 12, 2010 in the Federal Register (75 FR data from 2007 with such data from ESRD PPS bundled payment prior to 49030 through 49214). That rule 2012, to reduce the single payment for January 1, 2025. implemented the ESRD PPS beginning renal dialysis services furnished on or on January 1, 2011 in accordance with 2. System for Payment of Renal Dialysis after January 1, 2014 to reflect the section 1881(b)(14) of the Act, as added Services Secretary’s estimate of the change in the by section 153(b) of MIPPA, over a 4- utilization of ESRD-related drugs and Under the ESRD PPS, a single, per- year transition period. Since the biologicals (excluding oral-only ESRD- treatment payment is made to an ESRD implementation of the ESRD PPS, we related drugs). Consistent with this facility for all of the renal dialysis have published annual rules to make requirement, in the CY 2014 ESRD PPS services defined in section routine updates, policy changes, and final rule we finalized $29.93 as the 1881(b)(14)(B) of the Act and furnished clarifications. total drug utilization reduction and to individuals for the treatment of ESRD On November 14, 2018, we published finalized a policy to implement the in the ESRD facility or in a patient’s a final rule in the Federal Register amount over a 3- to 4-year transition home. We have codified our definitions titled, ‘‘Medicare Program; End-Stage period (78 FR 72161 through 72170). of renal dialysis services at § 413.171, Renal Disease Prospective Payment Section 632(b) of ATRA prohibited which is in 42 CFR part 413, subpart H, System, Payment for Renal Dialysis the Secretary from paying for oral-only along with other ESRD PPS payment Services Furnished to Individuals With ESRD-related drugs and biologicals policies. The ESRD PPS base rate is Acute Kidney Injury, End-Stage Renal under the ESRD PPS prior to January 1, adjusted for characteristics of both adult Disease Quality Incentive Program, 2016. And section 632(c) of ATRA and pediatric patients and accounts for Durable Medical Equipment, required the Secretary, by no later than patient case-mix variability. The adult Prosthetics, Orthotics and Supplies January 1, 2016, to analyze the case-mix case-mix adjusters include five (DMEPOS) Competitive Bidding payment adjustments under section categories of age, body surface area, low Program (CBP) and Fee Schedule 1881(b)(14)(D)(i) of the Act and make body mass index, onset of dialysis, four Amounts, and Technical Amendments appropriate revisions to those comorbidity categories, and pediatric To Correct Existing Regulations Related adjustments. patient-level adjusters consisting of two to the CBP for Certain DMEPOS’’ (83 FR On April 1, 2014, the Protecting age categories and two dialysis 56922 through 57073) (referred to as the Access to Medicare Act of 2014 (PAMA) modalities (§ 413.235(a) and (b)). CY 2019 ESRD PPS final rule). In that (Pub. L. 113–93) was enacted. Section The ESRD PPS provides for three rule, we updated the ESRD PPS base 217 of PAMA included several facility-level adjustments. The first rate for CY 2019, the wage index, the provisions that apply to the ESRD PPS. payment adjustment accounts for ESRD outlier policy, and we finalized Specifically, sections 217(b)(1) and (2) facilities furnishing a low volume of revisions to the drug designation of PAMA amended sections dialysis treatments (§ 413.232). The process and the low-volume payment 1881(b)(14)(F) and (I) of the Act and second adjustment reflects differences adjustment. For further detailed replaced the drug utilization adjustment in area wage levels developed from core information regarding these updates, see that was finalized in the CY 2014 ESRD based statistical areas (CBSAs) 83 FR 56922. PPS final rule (78 FR 72161 through (§ 413.231). The third payment 72170) with specific provisions that adjustment accounts for ESRD facilities B. Provisions of the Proposed Rule dictated the market basket update for furnishing renal dialysis services in a 1. Eligibility Criteria for the Transitional CY 2015 (0.0 percent) and how the rural area (§ 413.233). Drug Add-On Payment Adjustment market basket should be reduced in CY The ESRD PPS provides a training (TDAPA) 2016 through CY 2018. add-on for home and self-dialysis Section 217(a)(1) of PAMA amended modalities (§ 413.235(c)) and an a. Background section 632(b)(1) of ATRA to provide additional payment for high cost Section 217(c) of PAMA provided that that the Secretary may not pay for oral- outliers due to unusual variations in the as part of the CY 2016 ESRD PPS only ESRD-related drugs under the type or amount of medically necessary rulemaking, the Secretary shall establish ESRD PPS prior to January 1, 2024. care when applicable (§ 413.237). a process for (1) determining when a Section 217(a)(2) of PAMA further The ESRD PPS also provides for a product is no longer an oral-only drug; amended section 632(b)(1) of ATRA by transitional drug add-on payment and (2) including new injectable and requiring that in establishing payment adjustment (TDAPA) to pay for a new intravenous products into the ESRD PPS for oral-only drugs under the ESRD PPS, injectable or intravenous product that is bundled payment. Therefore, in the CY the Secretary must use data from the not considered included in the ESRD 2016 ESRD PPS final rule (80 FR 69013

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through 69027), we finalized a process eligible as an outlier service. Following primary focus of the regulation we that allows us to recognize when an payment of the TDAPA, the ESRD PPS adopted at § 413.234. We explained that oral-only renal dialysis service drug or base rate will be modified, if we did not codify our full policy in the biological product is no longer oral- appropriate, to account for the new CY 2016 ESRD PPS final rule for other only, and a process to include new injectable or intravenous product in the renal dialysis drugs, such as drugs and injectable and intravenous products into ESRD PPS bundled payment. biological products with other forms of the ESRD PPS bundled payment, and After the publication of the CY 2016 administration, including oral, which by when appropriate, modify the ESRD ESRD PPS final rule, we continued to law are included under the ESRD PPS PPS payment amount. hear from the dialysis industry and (though oral-only renal dialysis drugs In accordance with section 217(c)(1) other stakeholders with suggestions for are excluded from the ESRD PPS of PAMA, we established § 413.234(d), improving the drug designation process. bundled payment until CY 2025). which provides that an oral-only drug is Therefore, in CY 2019 ESRD PPS Commenters were generally supportive no longer considered oral-only if an rulemaking, we revisited the drug of the proposal, and we finalized the injectable or other form of designation process to consider their changes to codify our drug designation administration of the oral-only drug is concerns and we proposed policies that policy with regard to all drugs. approved by the Food and Drug would mitigate these issues. Second, as part of our updates to the Administration (FDA). Additionally, in In the CY 2019 ESRD PPS final rule drug designation process regulation in accordance with section 217(c)(2) of (83 FR 56929 through 56949), we the CY 2019 ESRD PPS final rule (83 FR PAMA, we codified the drug finalized several provisions related to 56929 through 56932), we replaced the designation process at § 413.234(b). We the drug designation process and the definition of ‘‘new injectable or finalized a policy in the CY 2016 ESRD TDAPA under § 413.234, with an intravenous product’’ with a definition PPS final rule (80 FR 69017 through effective date of January 1, 2020. In for ‘‘new renal dialysis drug or 69022) that, effective January 1, 2016, if particular, we finalized changes to the biological product.’’ Under the final a new injectable or intravenous product drug designation process regulation to: definition, effective January 1, 2020, a is used to treat or manage a condition (1) Reflect that the process applies for ‘‘new renal dialysis drug or biological for which there is an ESRD PPS all new renal dialysis drugs and product’’ is an ‘‘injectable, intravenous, functional category, the new injectable biological products; (2) establish a oral or other form or route of or intravenous product is considered definition for ‘‘new renal dialysis drug administration drug or biological included in the ESRD PPS bundled or biological product’’; (3) expand the product that is used to treat or manage payment and no separate payment is eligibility criteria for the TDAPA; (4) a condition(s) associated with ESRD. It available. The new injectable or change the TDAPA’s basis of payment; must be approved by the [FDA] on or intravenous product qualifies as an and (5) extend the TDAPA to composite after January 1, 2020 under section 505 outlier service. The ESRD bundled rate drugs and biological products that of the [FD&C Act] or section 351 of the market basket updates the PPS base rate are furnished for the treatment of ESRD. Public Health Service Act, commercially annually and accounts for price changes We discuss these changes in detail in available, have an HCPCS application of the drugs and biological products the next several paragraphs. submitted in accordance with the reflected in the base rate. First, we revised the drug designation official HCPCS Level II coding In the CY 2016 ESRD PPS final rule, process regulation at § 413.234 to reflect procedures, and designated by CMS as we also established in § 413.234(b)(2) that the drug designation process a renal dialysis service under § 413.171. that, if the new injectable or intravenous applies for all new renal dialysis drugs Oral-only drugs are excluded until product is used to treat or manage a and biological products that are January 1, 2025.’’ condition for which there is not an approved by FDA, regardless of the form Third, we expanded the eligibility ESRD PPS functional category, the new or route of administration, that are used criteria for the TDAPA to include all injectable or intravenous product is not to treat or manage a condition new renal dialysis drugs and biological considered included in the ESRD PPS associated with ESRD. In the CY 2019 products, not just those in new ESRD bundled payment and the following ESRD PPS proposed rule (83 FR 34309 PPS functional categories, in the CY steps occur. First, an existing ESRD PPS through 34312), we described the prior 2019 ESRD PPS final rule (83 FR 56942 functional category is revised or a new rulemakings in which we addressed through 56843). In the CY 2019 ESRD ESRD PPS functional category is added how new drugs and biological products PPS proposed rule (83 FR 34312 for the condition that the new injectable are implemented under the ESRD PPS through 34314), we discussed a number or intravenous product is used to treat and how we have accounted for renal of reasons why we were reconsidering or manage. Next, the new injectable or dialysis drugs and biological products our previous policy to limit the TDAPA intravenous product is paid for using in the ESRD PPS base rate since its to products for which there is not an the TDAPA described in § 413.234(c). implementation on January 1, 2011. We ESRD PPS functional category. We Then, the new injectable or intravenous explained that the drug designation described the concerns that commenters product is added to the ESRD PPS process is dependent upon the ESRD had raised during the CY 2016 ESRD bundled payment following payment of PPS functional categories we developed, PPS rulemaking regarding the eligibility the TDAPA. and is consistent with the policy we criteria for the TDAPA, including In the CY 2016 ESRD PPS final rule, have followed since the inception of the concerns about inadequate payment for we finalized a policy in § 413.234(c) to ESRD PPS. renal dialysis services and hindrance of base the TDAPA on pricing However, we noted in the CY 2019 high-value innovation, and noted that methodologies under section 1847A of ESRD PPS proposed rule (83 FR 34311 these are important issues that we the Act and pay the TDAPA until through 34312) that, because section contemplate while determining sufficient claims data for rate setting 217(c)(2) of PAMA only required the appropriate payment policies. We analysis for the new injectable or Secretary to establish a process for discussed that when new drugs and intravenous product are available, but including new injectable and biological products are introduced to not for less than 2 years. During the time intravenous drugs and biological the market, ESRD facilities need to a new injectable or intravenous product products in the ESRD PPS bundled analyze their budget and engage in is eligible for the TDAPA, it is not payment, such new products were the contractual agreements to accommodate

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the new therapies into their care plans. only if they substantially improve products in the market, which could We recognized that newly launched beneficiaries’ outcomes. mean lower prices for all such products. drugs and biological products can be Other commenters had similar We also noted our belief that unpredictable with regard to their concerns and recommended that we categorically limiting or excluding any uptake and pricing, which makes these require that the TDAPA apply for new group of drugs from the TDAPA would decisions challenging for ESRD renal dialysis drugs and biological reduce the competitiveness because facilities. Furthermore, we stated that products that have clinical superiority there would be less incentive for practitioners should have the ability to over the existing products in the manufacturers to develop lower-priced evaluate the appropriate use of a new existing functional categories, and they drugs, such as generic drugs, to be able product and its effect on patient provided suggestions on clinical value to compete with higher priced drugs outcomes. criteria. In addition, some commenters during the TDAPA period. In addition, We explained in the CY 2019 ESRD believed that the TDAPA should not the question of whether one drug is PPS proposed rule that this uptake apply to generic drugs and biosimilar more effective than another can be period would be best supported by the biological products. Commenters impacted by characteristics that vary TDAPA pathway because it would help asserted that generic drugs and across patients such as age, gender, race, ESRD facilities transition or test new biosimilar biological products seek to genetic pre-disposition and drugs and biological products in their provide the same type of treatment and comorbidities. We stated that businesses under the ESRD PPS. We patient outcomes as existing drugs in innovation can provide options for stated that the TDAPA could provide the ESRD PPS bundled payment. those patients who do not respond to a flexibility and target payment for the Commenters further believed that these certain preferred treatment regimen the use of new renal dialysis drugs and types of drugs and biological products same way the majority of patients biological products during the period have no clinically meaningful respond. when a product is new to the market so differences and that they should be In response to commenters who that we can evaluate if resource use can treated equally in payment and coverage recommended that we not apply the be aligned with payment. We further policies. We also received several TDAPA to generic drugs and biosimilar explained that we believe we need to be comments on our proposal to apply the biological products, we explained in the conscious of ESRD facility resource use TDAPA for a new renal dialysis drug or CY 2019 ESRD PPS final rule (83 FR and the financial barriers that may be biological product that is considered 56938) that the purpose of this policy is preventing uptake of innovative new included in the ESRD PPS base rate for to foster a competitive marketplace in drugs and biological products. Thus, we 2 years, and to not modify the ESRD which all drugs within a functional proposed to revise § 413.234(c) to reflect PPS base rate following payment of the category would compete for market that the TDAPA would apply for all new TDAPA (83 FR 56934 through 56943). share. We stated that we believed renal dialysis drugs and biological After considering the public including generic drugs and biosimilar products regardless of whether they fall comments, we finalized the expansion biological products under the TDAPA within an ESRD PPS functional of the eligibility criteria for the TDAPA expansion would mitigate or discourage category, and, for those products that to reflect the proposed policy in the CY high launch prices. We further fall within an existing functional 2019 ESRD PPS final rule (83 FR 56943). explained that we believed including category, the payment would apply for In that rule we explained that there are these products would foster innovation only 2 years and there would be no two purposes of providing the TDAPA. of drugs within the current functional subsequent modification to the ESRD For renal dialysis drugs and biological categories. We also noted that we PPS base rate (83 FR 34314). At the end products that fall into an existing ESRD believed including these products of the 2 years, the product would be PPS functional category, the purpose of would give a financial boost to support eligible for outlier payment unless it is the TDAPA is to help ESRD facilities to their utilization, and ultimately lower a renal dialysis composite rate drug or incorporate new drug and biological overall drug costs since these products biological product. products and make appropriate changes generally have lower prices. Because of As we discussed in the CY 2019 ESRD in their businesses to adopt such this, we stated that we believed that PPS final rule (83 FR 56934 through products; provide additional payment generic drugs and biosimilar biological 56943), we received a variety of for such associated costs, as well as products would provide cost-based feedback from stakeholders on this promote competition among drugs and competition for new higher priced drugs proposal. Some commenters biological products within the ESRD during the TDAPA period and also recommended delaying the expansion of PPS functional categories. For new renal afterward when they are bundled into the TDAPA and some urged CMS to dialysis drugs and biological products the ESRD PPS. consider different policy proposals. that do not fall within an existing ESRD In response to ESRD facilities that Some commenters were supportive of PPS functional category and that are not expressed concern regarding operational revising the drug designation process considered to be reflected in the ESRD difficulties and patient access issues regulation to allow more drugs to be PPS base rate, the purpose of the experienced for current drugs paid for eligible for the TDAPA, while others TDAPA is to be a pathway toward a using the TDAPA, we elected to make expressed that the process needs to be potential base rate modification (83 FR all of the changes to the drug further evaluated before any expansion. 56935). designation process under § 413.234 and The Medicare Payment Advisory In response to commenters that the expansion of the TDAPA eligibility Commission (MedPAC) recommended recommended clinical superiority of effective January 1, 2020, as opposed to that we not finalize the policy because new renal dialysis drugs and biological January 1, 2019, to address as many of it did not require that a new drug be products, we explained in the CY 2019 those concerns as possible (83 FR more effective than current treatment ESRD PPS final rule (83 FR 56938) that 56937). We explained in the CY 2019 and could undermine competition with we believed allowing all new drugs and ESRD PPS final rule that the additional existing drugs; or, if we do move biological products to be eligible for the year provides us with the opportunity to forward with the policy, that we narrow TDAPA would provide an ability for address issues such as transitioning eligibility to new drugs that fall into an new drugs and biological products to payment from Part D to Part B, existing ESRD PPS functional category compete with other drugs and biological coordinating issues involving Medicaid

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and new Medicare Advantage policies, For new renal dialysis drugs and available under section 1847A of the and working with the current HCPCS biological products that do not fall Act (which includes ASP+6). We process as it applies to the ESRD PPS to within an existing functional category, explained that we believe ASP+0 is accommodate the initial influx of new we continued the existing policy that reasonable for new renal dialysis drugs drugs and biological products. We also application of the TDAPA will begin and biological products that fall within indicated that the additional year would with the effective date of subregulatory an existing functional category because allow more time for ESRD facility and billing guidance and end after we there are already dollars in the per beneficiary education about this new determine through notice-and-comment treatment base rate for a new drug’s policy. rulemaking how the drug will be respective category. We also explained In addition, with regard to the HCPCS recognized in the ESRD PPS bundled that we believe ASP+0 is a reasonable process, we explained the additional payment. basis for payment for the TDAPA for year would help us operationally in Fourth, in the CY 2019 ESRD PPS new renal dialysis drugs and biological working with the HCPCS workgroup final rule, we changed the TDAPA’s products that do not fall within the that manages the HCPCS process as it basis of payment (83 FR 34314 through existing functional category because the applies to the ESRD PPS to 34316). We explained that if we adopted ESRD PPS base rate has dollars built in accommodate the initial influx of new the proposals to expand the TDAPA for administrative complexities and renal dialysis drugs and biological eligibility criteria using the current basis overhead costs for drugs and biological products. We explained that in of payment for the TDAPA—the pricing products (83 FR 56946). collaboration with the HCPCS methodologies available under section Fifth and finally, in the CY 2019 workgroup we would make the 1847A of the Act—Medicare ESRD PPS final rule (83 FR 56948 determination of whether a drug or expenditures would increase, which through 56949), we finalized a policy to biological product is a renal dialysis would result in increases of cost sharing extend the TDAPA to composite rate service. We would also determine if the for ESRD beneficiaries, since we had not drugs and biological products that are new renal dialysis drug or biological previously provided the TDAPA for all furnished for the treatment of ESRD. product falls within an existing new renal dialysis drugs and biological Specifically, beginning January 1, 2020, functional category or if it represents a products. We also discussed other if a new renal dialysis drug or biological new functional category (83 FR 56937 reasons why we believed it may not be product as defined in § 413.234(a) is through 56938). appropriate to base the TDAPA strictly considered to be a composite rate drug on section 1847A of the Act or biological product and falls within an With regard to our proposal to not methodologies (83 FR 34315). existing ESRD PPS functional category, modify the ESRD PPS base rate for new Therefore, we proposed to base the it will be eligible for the TDAPA. renal dialysis drugs and biological TDAPA on 100 percent of ASP (ASP+0) We explained that we believed by products that fall within existing ESRD instead of the pricing methodologies allowing all new renal dialysis drugs PPS functional categories, we explained available under section 1847A of the and biological products to be eligible for that we believe the intent of the TDAPA Act (which includes ASP+6). For the TDAPA, we would provide an for these products is to provide a circumstances when ASP data is not ability for a new drug to compete with transition period for the unique available, we proposed that the TDAPA other similar drugs in the market which circumstances experienced by ESRD would be based on 100 percent of could mean lower prices for all drugs. facilities and to allow time for the Wholesale Acquisition Cost (WAC) and, We further explained that we believed uptake of the new product. We further when WAC is not available, the TDAPA that new renal dialysis composite rate explained that we did not believe it would be based on the drug drugs and biological products could would be appropriate to add dollars to manufacturer’s invoice. benefit from this policy as well. the ESRD PPS base rate for new renal In the CY 2019 ESRD PPS final rule Additionally, we explained that we dialysis drugs and biological products (83 FR 56943 through 56948), we continue to believe that the same unique that fall within existing functional discussed several comments received on consideration for innovation and cost categories and that doing such would be this proposal. MedPAC supported the exists for drugs that are considered in conflict with the fundamental proposal to use ASP+0, stating that the composite rate drugs. That is, the ESRD principles of a PPS. ESRD PPS accounts for storage and PPS base rate dollars allocated for these We also explained that the proposal administration costs and that ESRD types of drugs may not directly address would strike a balance of maintaining facilities do not have acquisition price the costs associated with drugs in this the existing functional category scheme variation issues when compared to category when they are newly launched of the drug designation process and not physicians. Conversely, industry and are finding their place in the adding dollars to the ESRD PPS base stakeholders recommended the basis of market. We noted that we had not rate when the base rate may already payment remain at ASP+6 since they proposed to change the outlier policy reflect costs associated with such believe it assists with the administrative and therefore these products will not be services, while still supporting high- costs of packaging, handling, and staff. eligible for an outlier payment after the value innovation and allowing facilities Commenters also recommended that TDAPA period. to adjust or factor in new drugs through CMS consider the impact of bad debt a short-term transitional payment. recovery and sequestration on payment b. Basis for Proposed Refinement of the We stated in the CY 2019 ESRD PPS when determining the basis of payment. TDAPA Eligibility Criteria final rule (83 FR 56940) that under our After considering public comments, Based on feedback received during final policy, beginning January 1, 2020, in the CY 2019 ESRD PPS final rule (83 and after the CY 2019 ESRD PPS for new renal dialysis drugs and FR 56948), we finalized the policy as rulemaking, we are proposing to make biological products that fall within an proposed, with one revision to change further refinements to the TDAPA existing functional category, the the effective date to CY 2020, and eligibility criteria. As we discussed in application of the TDAPA will begin another revision to reflect that the basis the CY 2019 ESRD PPS final rule (83 FR with the effective date of subregulatory of payment for the TDAPA for 56935) and in section II.B.1.a of this billing guidance and end 2 years from calcimimetics would continue to be proposed rule, we received many that date. based on the pricing methodologies comments from all sectors of the

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dialysis industry and other stakeholders be eligible for the TDAPA, have a the drug itself. For example, on our proposal to expand the TDAPA clinical superiority over existing drugs commenters noted that section 505 of eligibility to all new renal dialysis drugs in the ESRD PPS bundled payment and the FD&C Act is broad and includes and biological products, and each had provided suggestions on clinical value FDA approval of new drug applications their view on the direction the policy criteria. A dialysis facility organization (NDA), which is the vehicle through needed to go to support innovation. expressed concern that the proposed which drug sponsors formally propose Commenters generally agreed that more policy would encourage promotion of so that FDA approve a new pharmaceutical drugs and biological products should be called ‘‘me too’’ drugs and higher for sale and marketing in the U.S.1 eligible for the TDAPA, that is, they launch prices, even if moderated after 2 Section 505 of the FD&C Act includes agreed that drugs and biological years (83 FR 56938). A drug FDA approval of NDAs for drugs that products that fall within an ESRD PPS manufacturer recommended that CMS have a new dosage form, a functional category should be eligible consider when FDA may re-profile a reformulation, or a re-engineering of an for a payment adjustment when they are drug (83 FR 56939). The commenter existing product. These types of drugs new to the market. However, further explained that re-profiling a are referred to in the pharmaceutical commenters also had specific policy drug may occur when its utility and industry as line extensions, follow-on recommendations for each element of efficacy are further elucidated or products, or me-too drugs. the drug designation process, including expanded once on-market. The Due to the feedback received which drugs should qualify for the commenter recommended that CMS following publication of the CY 2019 TDAPA. establish a pathway as part of the drug ESRD PPS final rule, we continued to In the CY 2019 ESRD PPS final rule designation process that would allow analyze certain aspects of the policies (83 FR 56938) some commenters for manufacturers or other stakeholders finalized in the CY 2019 ESRD PPS final recommended, among other suggestions, to request that CMS reconsider how a rule and are revisiting these issues as that CMS not apply the TDAPA to particular drug is classified with regard part of this proposed rule. Specifically, generic drugs or to biosimilar biological to the functional categories. since ESRD facilities and other dialysis products. The commenters explained MedPAC recommended that CMS not stakeholders have expressed concern that they believe the rationale for the proceed with its proposal to apply the about the broad nature of including all TDAPA is to allow the community and TDAPA policy to new renal dialysis new renal dialysis drugs and biological CMS to better understand the drugs that fit into an existing functional products as eligible for the TDAPA, we appropriate utilization of new products category for several reasons (83 FR are reconsidering whether all new renal and their pricing. Commenters asserted 56936). For example, MedPAC stated dialysis drugs and biological products that generic drugs and biosimilar that paying the TDAPA for new dialysis that fall within an existing ESRD PPS biological products seek to provide the drugs that fit into a functional category functional category should be eligible same type of treatment and patient would be duplicative of the payment for the TDAPA. outcomes as existing drugs in the ESRD that is already made as part of the ESRD As noted previously, in the CY 2019 PPS bundled payment. Thus, they PPS bundle. MedPAC also asserted that ESRD PPS final rule (83 FR 56932) we expressed that the additional time for applying the TDAPA to new dialysis finalized that effective January 1, 2020, uptake is unnecessary for these drugs drugs that fit into an existing functional a new renal dialysis drug or biological and biological products. category undermines competition with product is defined in § 413.234 as ‘‘[a]n In addition, a drug manufacturer existing drugs included in the PPS injectable, intravenous, oral or other commented that a generic drug is not payment bundle since the TDAPA form or route of administration drug or innovative because it must have the would effectively unbundle all new biological product that is used to treat same active ingredient, strength, dosage dialysis drugs, removing all cost or manage a condition(s) associated form, and route of administration as the constraints during the TDAPA period with ESRD. It must be approved by the innovator drug it references in its and encouraging the establishment of FDA on or after January 1, 2020, under abbreviated new drug application high launch prices. section 505 of the [FD&C Act] or section (ANDA). Further, a biosimilar biological Since publishing the CY 2019 ESRD 351 of the [PHS Act], commercially product is not innovative because it is PPS final rule, we have continued to available, have an HCPCS application required under the Public Health hear concerns about expanding the submitted in accordance with the Service Act (the PHS Act) to be highly TDAPA policy from numerous official Level II HCPCS coding similar and have no clinically stakeholders, including ESRD facilities procedures, and designated by CMS as meaningful differences to the reference and their professional associations, a renal dialysis service under § 413.171. product and cannot be licensed for a beneficiaries and their related Oral-only drugs are excluded until condition of use that has not been associations, drug manufacturers, and January 1, 2025.’’ While there are previously approved for the reference beneficiary groups. several parts of this definition, in this Also, our data contractor held a product or for a dosage form, strength, proposed rule we are focusing on the Technical Expert Panel (TEP) in or route of administration that differs requirement that the product be December 2018, and gathered input from that of the reference product. The approved by FDA ‘‘under section 505 of regarding the expanded TDAPA policy commenter stated that because they the [FD&C Act] or section 351 of the at that time. More information about the have no clinically meaningful [PHS Act].’’ Specifically, we are TEP is discussed in section VIII.A of differences, biosimilar biological proposing that certain new renal this proposed rule. Some ESRD facility products and reference products should dialysis drugs approved by FDA under associations participating in the TEP be treated equally in payment and those authorities would not be eligible generally expressed concern that the coverage policies; a biosimilar biological for the TDAPA under § 413.234(c)(1). product should not be eligible for the TDAPA policy, as finalized in the CY Section 505 of the FD&C Act and TDAPA when its reference product 2019 ESRD PPS final rule, would section 351 of the PHS Act provide the would not qualify for the payment. inappropriately direct Medicare dollars Some commenters recommended that to drugs and biological products that 1 FDA. New Drug Application (NDA). Available CMS require that the new renal dialysis may be new to the market but not new at: https://www.fda.gov/drugs/types-applications/ drug or biological product, in order to with regard to certain characteristics of new-drug-application-nda.

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authority to FDA for approving drugs Classification Codes’’, the code evolved approved drug product, that is, the and biological products, respectively, from both a management and a reference listed drug, is safe and and provide several pathways for drug regulatory need to identify and group effective. manufacturers to submit NDAs and product applications based on certain Biological products are approved by biologics license applications (BLAs). characteristics, including their FDA under section 351 of the PHS Act. Therefore, we have consulted with FDA relationships to products already There are two pathways for biological and studied the different categories of approved or marketed in the U.S. FDA products, one under section 351(a) and NDAs and the different biological tentatively assigns an NDA the other under section 351(k) of the product pathways to consider whether classification code (that is, Type 1 NDA PHS Act. A BLA submitted under the full breadth of these authorities through Type 10 NDA) by the filing date section 351(a) of the PHS Act is the aligned with our goals for the TDAPA for an NDA and reassesses the code at pathway for ‘‘stand-alone BLAs’’ that policy under the ESRD PPS. As we the time of approval. The reassessment contains all information and data explained in the CY 2019 ESRD PPS is based upon relationships of the drug necessary to demonstrate that (among final rule (83 FR 56935), the purpose of product seeking approval to products other things) the proposed biological the TDAPA for new renal dialysis drugs already approved or marketed in the product is safe, pure and potent. The and biological products that fall within U.S. at the time of approval. FDA may 351(k) BLA pathway requires that the an existing functional category is to also reassess the code after approval. application contain information support innovation and help ESRD The NDA classification code is not demonstrating that the biological facilities to incorporate new products indicative of the extent of innovation or product is biosimilar to or and make appropriate changes in their therapeutic value that a particular drug interchangeable with an FDA-licensed businesses to adopt such products; represents. More information regarding reference product. FDA does not assign provide additional payment for such the NDA classification code is available classification codes for BLAs like it does associated costs, as well as promote in FDA/CDER MAPP 5018.2 on FDA for NDAs. competition among drugs and biological website at: https://www.fda.gov/ In addition to consulting with FDA, products within the ESRD PPS downloads/aboutfda/centersoffices/ pharmaceutical statisticians within CMS functional categories. officeofmedicalproductsandtobacco/ have provided insight on the potential FDA approves certain new drugs cder/manualofpoliciesprocedures/ outcomes of providing payment under section 505(c) of the FD&C Act, ucm470773.pdf and summarized in incentives for promoting competition which includes NDAs submitted Table 1. among drugs and biological products pursuant to section 505(b)(1) or within the ESRD PPS functional 505(b)(2) of the FD&C Act. Section TABLE 1—NDA CLASSIFICATION categories. Specifically, we have learned 505(b)(1) of the FD&C Act is a pathway that certain unintended consequences CODES for ‘‘stand-alone’’ applications and is could arise from providing payment used for drugs that have been Classification Meaning incentives for drugs with innovative discovered and developed with studies qualities (for example, new molecular conducted by or for the applicant or for Type 1 ...... New molecular entity. entities) in the same way as drugs with Type 2 ...... New active ingredient. which the applicant has a right of Type 3 ...... New dosage form. non-innovative qualities (for example, reference, and are sometimes for new Type 4 ...... New combination. generic drugs). For example, more molecular entities and new chemical Type 5...... New formulation or other dif- attention might be diverted to the less entities that have not been previously ferences. costly duplication of drugs that are Type 6 ...... New indication or claim, same ap- approved in the U.S. plicant [no longer used]. already available rather than those that Section 505(b)(2) of the FD&C Act is Type 7 ...... Previously marketed but without an may be more expensive to develop and another pathway for NDAs, but where at approved NDA. bring to market. This could cause an least some of the information for an Type 8 ...... Prescription to Over-the-Counter. influx of non-innovative drugs to the Type 9 ...... New indication or claim, drug not approved drug comes from studies not to be marketed under type 9 dialysis space, potentially crowding out conducted by or for the applicant and NDA after approval. innovative drugs. for which the applicant has not obtained Type 10 ...... New indication or claim, drug to be c. Proposed Refinement of the TDAPA a right of reference. A 505(b)(2) marketed under type 10 NDA after approval. Eligibility Criteria application may rely on FDA’s finding Type 1/4 ...... Type 1, New molecular entity, and of safety and/or effectiveness for a listed Type 4, New combination. We analyzed the information we drug (an approved drug product) or Type 2/3 ...... Type 2, New active ingredient, and gathered since the publication of the CY published literature provided that such Type 3, New dosage form. 2019 ESRD PPS final rule and reliance is scientifically justified and Type 2/4 ...... Type 2, New active ingredient and contemplated the primary goal of the Type 4, New combination. the 505(b)(2) applicant complies with Type 3/4 ...... Type 3, New Dosage Form, and TDAPA policy for new renal dialysis the applicable statutory and regulatory Type 4, New combination. drugs and biological products that fall requirements, including patent within ESRD PPS functional categories, certification if appropriate. (See section An ANDA is an application submitted which is to support innovation and 505(b)(2) of the FD&C Act and 21 CFR by drug manufacturers and approved by encourage development of these 314.54.) NDAs submitted pursuant to FDA under section 505(j) of the FD&C products. We continue to believe that section 505(b)(1) or 505(b)(2) of the Act for a ‘‘duplicate’’ 2 of a previously this is accomplished by providing FD&C Act are then subdivided into approved drug product. ANDAs are payment to ESRD facilities during the categories by FDA. used for generic drugs. An ANDA relies uptake period for a new renal dialysis The Office of Pharmaceutical Quality on FDA’s finding that the previously drug or biological product to help the in FDA’s Center for Drug Evaluation and facilities incorporate new drugs and Research’s (CDER) has an NDA 2 The term duplicate generally refers to a ‘‘drug make appropriate changes in their categorizing system that utilizes NDA product that has the same active ingredient(s), businesses to adopt such drugs. We also dosage form, strength, route of administration, and classification codes. As explained in conditions of use as a listed drug,’’ that is, a continue to believe that the TDAPA FDA/CDER Manual of Policies and previously approved drug product. See 54 FR 28872 provides additional payment for costs Procedures (MAPP) 5018.2, ‘‘NDA (July 10, 1989). associated with these changes.

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In addition to supporting innovation, biological products that fall within an As discussed in section II.B.1.b of this we are mindful of the increase in existing functional category. For proposed rule, the classification code Medicare expenditures associated with example, there may be new renal assigned to an NDA generally describes the expanded TDAPA policy. We note dialysis drugs approved by FDA under FDA’s classification of the relationship that the first year in which we paid the section 505 of the FD&C Act that may of the drug to drugs already marketed or TDAPA, CY 2018, resulted in an not be innovative. approved in the U.S. If FDA makes estimated $1.2 billion increase in ESRD We also acknowledge that while changes to the NDA classification code PPS expenditures for two calcimimetic dialysis industry stakeholders in FDA/CDER MAPP 5018.2, we are drugs used by approximately 25 percent recommended that we adopt significant proposing that we would assess FDA of the Medicare ESRD population. We clinical improvement standards for the changes at the time they are publicly recognized that the policy we finalized TDAPA eligibility, we believe that available and we would analyze those in the CY 2019 ESRD PPS final rule unlike many Medicare beneficiaries, the changes with regard to their would mean that each new renal Medicare ESRD beneficiary is implications for the TDAPA policy dialysis drug and biological product significantly complex, with each patient under the ESRD PPS. We would plan to eligible for the TDAPA would result in having a unique and challenging profile propose in the next rulemaking cycle, an increase in Medicare expenditures. for medical management of drugs and any necessary revisions to the However, we were balancing an increase biological products. Practitioners should exclusions set forth in proposed in Medicare expenditures with the have the opportunity to evaluate the § 413.234(e). We are soliciting comment rationale for fostering a competitive appropriate use of a new drug or on the proposal to rely on, as a proxy, marketplace. In the CY 2019 ESRD PPS biological product and its effect on the NDA classification code, as it exists final rule (83 FR 56937), we stated that patient outcomes and interactions with as of November 4, 2015, which is part we believed that by expanding the other medications the patient is of the FDA/CDER MAPP 5018.2. We are eligibility to all new drugs and currently taking. Further, the question also soliciting comments on the biological products we would promote of whether one drug is more effective proposal that we would assess FDA competition among drugs and biological than another can be impacted by changes to the NDA classification code products within the ESRD PPS characteristics that vary across patients at the time they are publicly available to functional categories which could result such as age, gender, race, genetic pre- analyze the changes with regard to their in lower prices for all drugs. disposition and comorbidities. implications for the TDAPA policy and In response to ESRD facility and other Innovation of drugs and biological propose in the next rulemaking cycle, dialysis stakeholders’ concerns raised products can provide options for those any necessary revisions to the proposed during and after the CY 2019 ESRD PPS patients who do not respond to a certain exclusions. Currently, stakeholders must notify rulemaking, and after conducting a preferred treatment regimen the same closer study of FDA’s NDA process, we the Division of Chronic Care way the majority of patients respond. are reconsidering the eligibility criteria Management in our Center for Medicare In section II.B.1.c.i of this proposed that we finalized effective January 1, of the interest for eligibility for the 2020. Since there are not unlimited rule we discuss categories of drugs that TDAPA and provide the information Medicare resources, we believe those we are proposing to exclude from requested (83 FR 56932) for CMS to resources should not be expended on eligibility for the TDAPA under make a determination as to whether the additional payments to ESRD facilities § 413.234(b)(1)(ii) and our proposed new renal dialysis drug or biological for drugs and biological products that revisions to the drug designation product is eligible for the adjustment. are not truly innovative, and may process regulation in § 413.234 to reflect With regard to operationalizing the facilitate perverse incentives for those categories. proposed exclusions, in addition to the facilities to choose new products simply We are also proposing to rely on, as information currently described on the for financial gain. Since we have the a proxy, the NDA classification code, as CMS ESRD PPS TDAPA web page under ability to be more selective, through it exists as of November 4, 2015, which the Materials Required for CMS FDA’s NDA classification codes, with is part of FDA/CDER MAPP 5018.2. The Determination Purposes, we would the categories of renal dialysis drugs FDA/CDER MAPP 5018.2 is available at request that the stakeholder provide the that would be eligible for the TDAPA for FDA website https://www.fda.gov/ FDA NDA Type classified at FDA products in existing ESRD PPS media/94381/download. We recognize approval or state if the drug was functional categories, we believe that we that FDA’s NDA classification codes do approved by FDA under section 505(j) can balance supporting innovation, not necessarily reflect the extent of of the FD&C Act.3 If the FDA NDA Type incentivizing facilities with uptake of innovation or therapeutic advantage that classified at FDA approval changes new and innovative renal dialysis a particular drug product represents. subsequently to the submission of the products, and fostering competition for However, we believe FDA’s NDA TDAPA application into CMS, we renal dialysis drugs and biological classification codes would provide an would expect that the submitter would products that are new and innovative, objective basis that we can use to resubmit the TDAPA request, and we rather than just new. distinguish innovative from non- would re-evaluate the submission. We We acknowledge that the definition innovative renal dialysis service drugs. note that we plan to have quarterly finalized in the CY 2016 ESRD PPS final We believe that distinguishing drugs meetings with FDA to discuss new renal rule (80 FR 69015 through 69027), would help us in our effort to support dialysis drugs and biological products which includes products ‘‘approved by innovation by directing Medicare that are eligible for the TDAPA. [FDA] . . . under section 505 of the resources to renal dialysis drugs and As we discuss in the CY 2019 ESRD [FD&C Act] or section 351 of the [PHS biological products that are not PPS final rule (83 FR 56932), once the Act]’’ has been part of the TDAPA reformulations or new dosage forms, information requested by CMS is eligibility criteria since the inception of while simultaneously balancing our goal the policy. We also acknowledge that to foster competition within the ESRD 3 CMS. ESRD PPS Transitional Drug Add-on this may be too expansive for purposes PPS functional categories by supporting Payment Adjustment. Available at: https:// www.cms.gov/Medicare/Medicare-Fee-for-Service- of determining eligibility for the TDAPA products that advance the treatment for Payment/ESRDpayment/ESRD-Transitional- for new renal dialysis drugs and ESRD beneficiaries at a lower cost. Drug.html.

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received and reviewed, for new renal oral dosage forms, time-release forms, streams.4 We do not believe these dialysis drugs and biological products chewable or effervescent pills, orally products should be eligible for the eligible for the TDAPA, we will issue a disintegrating granules or adsorptive TDAPA because we do not want to change request with billing guidance changes, or routes of administration. In provide perverse incentives for facilities that will provide notice that the product response to these concerns, we are to choose a new dosage form in order to is eligible for the TDAPA as of a certain proposing to exclude Type 3 NDAs, obtain the TDAPA. In addition, we do date and guidance on how to report the which is for a new dosage form of an not want to encourage the practice of new drug or biological product on the active ingredient that has been approved companies moving drug research and ESRD claim. The effective date of this or marketed in the U.S. by the same or development dollars from one branded change request will initiate the TDAPA another applicant but has a different drug to another, very similar drug with payment period and, for drugs that do dosage form, as well as Type 3 in a longer patent life, thus increasing its not fall within a functional category, the combination with Type 2 or Type 4, market exclusivity for many years. This data collection period. from being eligible for the TDAPA practice is counter to our goal of not For new renal dialysis drugs and under § 413.234(b)(1). In addition, we only increasing competition among biological products that are not eligible are proposing to exclude Type 9 NDAs, drugs in the ESRD functional categories for the TDAPA, we indicated that a as discussed in section II.B.1.ii.(d), so there are better drugs at lower cost, change request would be issued that when the ‘‘parent NDA’’ is a Type 3 but also making the best use of Medicare will provide notice that the drug is NDA. resources and directing of those included in the ESRD PPS bundle, FDA’s regulation defines an active resources to payment for the utilization qualifies as an outlier service, and is ingredient as a component of the drug of high value, innovative drugs. For available for use, allowing patients to product that is intended to furnish these reasons we are proposing to have access to the new product. pharmacological activity or other direct exclude Type 3 NDA drugs as being effect in the diagnosis, cure, mitigation, i. Proposed Exclusions From the eligible for the TDAPA. treatment, or prevention of disease, or to TDAPA Eligibility affect the structure or any function of (b) Type 5 NDA—New Formulation or Using the current categories in FDA/ the body of man or other animals (21 Other Differences CDER MAPP 5018.2 effective November CFR 314.3(b), which is incorporated in We are proposing to exclude Type 5 4, 2015, we are proposing to exclude FDA/CDER MAPP 5018.2). NDA drugs, which can be a new Types 3, 5, 7 and 8, Type 3 in FDA’s regulation defines dosage form formulation or new manufacturer, from combination with Type 2 or Type 4, as the physical manifestation containing being eligible for the TDAPA. In Type 5 in combination with Type 2, and the active and inactive ingredients that addition, we are proposing to exclude Type 9 when the ‘‘parent NDA’’ is a delivers a dose of the drug product (21 Type 9 NDAs, as discussed in section Type 3, 5, 7 or 8 from being eligible for CFR 314.3(b), which is incorporated in II.B.1.ii.(d) of this proposed rule, when the TDAPA under § 413.234(c)(1). A FDA/CDER MAPP 5018.2). This the ‘‘parent NDA’’ is a Type 5 NDA. Type 9 NDA is for a new indication or includes such factors as: (1) The Drugs that are classified as a Type 5 claim for a drug product that is physical appearance of the drug NDA are sometimes referred to as currently being reviewed under a product, (2) the physical form of the reformulations or follow-on products. different NDA (the ‘‘parent NDA’’), and drug product prior to dispensing to the Specifically, a Type 5 NDA is for a the applicant does not intend to market patient, (3) the way the product is product, other than a new dosage form, this drug product under the Type 9 administered, and (4) the design that differs from a product already NDA after approval. We would use the features that affect the frequency of approved or marketed in the U.S. NDA classification code Type identified dosing. because of one of the seven following at FDA approval. If FDA changes the For Type 3 NDA drugs, the indication product characteristics. classification type after we start does not need to be the same as that of The first characteristic involves applying the TDAPA with respect to a the already approved drug product. changes in inactive ingredients that particular new renal dialysis drug, we Once the new dosage form has been require either bioequivalence studies or would re-evaluate TDAPA eligibility. approved for an active ingredient, clinical studies for approval and the We are also proposing to exclude subsequent applications for the same product is submitted as an original NDA generic drugs from being eligible for the dosage form and active ingredient rather than as a supplement by the TDAPA under § 413.234(c)(1). In the should be classified as Type 5 NDA. applicant of the approved product. following paragraphs we describe each For purposes of the ESRD PPS, we do The second characteristic is that the NDA Type, as distinguished by FDA not want to incentivize the use of one product is a ‘‘duplicate’’ of a drug through the NDA classification code, dosage form of the drug over another. In product by another applicant (same and generic drugs proposed for addition to not being innovative, these active ingredient, same dosage form, exclusion and explain why we believe drugs that are new to the market may same or different indication, or same these products should not be eligible for not be innovative with regard to certain combination, and requires one of the the TDAPA for new renal dialysis drugs characteristics of the drug itself. following 4 items: (a) Bioequivalence and biological products that fall within Although these drugs may provide an testing, including bioequivalence an existing ESRD PPS functional expansion of patient treatment options, studies with clinical endpoints, but is category. we believe these changes are not not eligible for submission as a section innovative and these drugs should not 505(j) application; (b) safety or (a) Type 3 NDA—New Dosage Form be paid for using the TDAPA. However, effectiveness testing because of novel Some dialysis stakeholders expressed these drugs are still accounted for in the inactive ingredients; (c) full safety or concern that we would be paying the ESRD PPS base rate and would be effectiveness testing because the TDAPA for changes that did not reflect eligible for an outlier payment. This a product being significantly innovative, type of research, development and 4 Reed F. Beall et al. New Drug Formulations and Their Respective Generic Entry Dates, JMCP. such as a pill size, pill scoring, oral marketing activity has been termed February, 2019, 25(2): 218–224. Available at: solutions and suspensions of drugs that ‘‘product hopping’’ and can help https://www.jmcp.org/doi/pdf/10.18553/ were previously only approved as solid manufacturers prolong revenue jmcp.2019.25.2.218.

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product is one of the following four The seventh characteristic is that the for new renal dialysis drugs and items: (i) Is subject to exclusivity held product involves a new plastic biological products that fall within an by another applicant; (ii) is a product of container that requires safety studies existing functional category. While Type biotechnology and its safety and/or beyond limited confirmatory testing (see 5 NDA drugs may have clinical benefits effectiveness are not assessable through 21 CFR 310.509, Parenteral drugs in to patients over previously approved bioequivalence testing, (iii) it is a crude plastic containers, and FDA/CDER products, we do not make that natural product, or, (iv) it is ineligible MAPP 6020.2, Applications for assessment as part of ESRD PPS for submission under section 505(j) of Parenteral Products in Plastic payment policy. We do not believe that the FD&C Act because it differs in Immediate Containers). the types of changes represented by bioavailability, for example, products Some commenters have characterized Type 5 NDAs enhance our goal of with different release patterns or (d) the the types of drugs that are often increased competition with the applicant has a right of reference to the approved in Type 5 NDAs as overarching goal of lowering drug application. reformulations or line extensions. A line prices. To the contrary, it seems that a extension is a variation of an existing The third characteristic is that the goal of line extensions can be to thwart product.5 The variation can be a new product contains an active ingredient or competition. Studies indicate that there formulation (reformulation) of an active moiety that has been previously is no lowering of prices through existing product, or a new modification approved or marketed in the U.S. only competition from line extensions. as part of a combination. This applies to of an existing molecular entity.6 A line Rather, it has been reported that prices active ingredients previously approved extension has been defined as a branded remain rigid and are not lowered. In or marketed as part of a physical or pharmaceutical product that: (1) fact, not only can product line chemical combination, or as part of a Includes the same active ingredient extensions thwart competition, but they mixture derived from recombinant (either alone or in combination with deoxyribonucleic acid technology or other active ingredients) as an original inherit the market success of the natural sources. An active moiety is the product, (2) is manufactured by the original brand, sometimes with little molecule or ion, excluding those same pharmaceutical company that quality improvement over the original 10 appended portions of the molecule that makes the original product, or by one of brand. For these reasons, we do not cause the drug to be an ester, salt its partners or subsidiaries, and, (3) is believe that providing a payment (including a salt with hydrogen or launched after the original product.7 An adjustment to ESRD facilities to support coordination bonds), or other NME is discussed in section the uptake of a drug that is a line noncovalent derivative (such as a II.B.1.c.ii.(a) of this proposed rule. Line extension in their business model is a complex, chelate, or clathrate) of the extensions were few in number prior to judicious use of Medicare resources. In molecule, responsible for the 1984, when the Drug Price Competition addition, a study published in February physiological or pharmacological action and Patent Term Restoration Act was 2019, concluded that the pattern of a of the drug substance (21 CFR 314.3(b)). passed following public outcry over considerable subset of reformulations The fourth characteristic is that the high drug prices and rising drug prolonged the consumption of costly product is a combination product that expenditures, and following passage of brand-name products at the expense of differs from a previous combination that law, line extensions became timely market entry of low cost product by removal of one or more prevalent in the pharmaceutical drug generics.11 This and other recent active ingredients or by substitution of industry. We are aware that one of the publications this past year have been a new ester or salt or other noncovalent acknowledged criticisms of helpful to inform policy proposals by derivative of an active ingredient for one pharmaceutical line extensions is their demonstrating that reformulations of more of the active ingredients. In the use as a strategy to extend the patent frequently kept drug prices high, which case of a substitution of a noncovalent protections for products that have does not meet our goal of increased derivative of an active ingredient for one patents that are about to expire, by competition assisting in the lowering of or more of the active ingredients, the developing a new formulation and drug prices, at the expense of Medicare NDA would be classified as a Type 2, taking out new patents for the new resources being directed to innovative 5 combination and we would propose to formulation.8 It has been noted that line drugs that advance the treatment of exclude it from eligibility for the extensions through new formulations ESRD. Consequently, we believe it is TDAPA under § 413.234(b)(1). are not being developed for significant important to propose to install The fifth characteristic is that the therapeutic advantage, but rather for the guardrails to ensure that sufficient 9 product contains a different strength of company’s economic advantage. incentives exist for timely innovative one or more active ingredients in a We do not believe that the drugs for the ESRD patients, that previously approved or marketed characteristics of Type 5 NDA drugs competition for lowering drug prices is combination. A Type 5 NDA would would advance the intent of the TDAPA not thwarted, and that perverse generally be submitted by an applicant incentives do not exist for patients to other than the holder of the approved 5 V. Kadiyali et al. Product line extensions and competitive market interactions: An empirical receive a drug because it is financially application for the approved product. A analysis. J Econometrics. 1998, 89 (1–2): 339–63. rewarding, through the TDAPA, for the similar change in an approved product 6 S.H. Hong et al. Product Line Extensions and ESRD facilities. For these reasons, we do by the applicant of the approved Pricing Strategies of Brand-Name Drugs Facing not believe Type 5 NDA drugs should be Patent Expirations, J MCP. 2005, 11(9): 746–754. product would usually be submitted as eligible for the TDAPA, and we are a supplemental application. 7 A.C. Fowler, October 6, 2017, White Paper— Pharmaceutical Line Extensions in the United The sixth characteristic is that the States, http://www.nber.org/aging/valmed/ 10 S.H. Hong et al. Product Line Extensions and product differs in bioavailability (for WhitePaper-Fowler10.2017.pdf. Pricing Strategies of Brand-Name Drugs Facing example, superbioavailable or different 8 S.H. Hong et al. Product Line Extensions and Patent Expirations, J MCP. 2005, 11(9): 746–754. controlled-release pattern) and, Pricing Strategies of Brand-Name Drugs Facing 11 Reed F. Beall et al. New Drug Formulations and Patent Expirations, J MCP. 2005, 11(9): 746–754. Their Respective Generic Entry Dates, JMCP. therefore, is ineligible for submission as 9 R. Collier Drug patents: The evergreening February, 2019, 25(2): 218–224. Available at: an ANDA under section 505(j) of the problem. CMAJ. 2013 Jun11; 185(9):E385–6. doi: https://www.jmcp.org/doi/pdf/10.18553/ FD&C Act. 10.1503/cmaj.109–4466. Epub 2013 Apr 29. jmcp.2019.25.2.218.

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proposing to exclude them in new research and development in areas of previously prescription drugs and their § 413.234(e). high value innovation. end-point physiologic activity had been Therefore, we do not consider Type 7 recognized and documented. Therefore, (c) Type 7 NDA—Previously Marketed NDA drugs to be eligible for the TDAPA. the newness is a reflection of but Without an Approved NDA accessibility to the general public We are proposing to exclude Type 7 (d) Type 8 NDA—Prescription to Over- the-Counter (OTC) without having to obtain a prescription NDA, which is for a drug product that through a licensed practitioner. We contains an active moiety that has not We are proposing to exclude Type 8 believe that these drugs, though new to been previously approved in an NDA, which is when a prescription drug the market, are not sufficiently application but has been marketed in product changes to an over-the-counter innovative to qualify for TDAPA the U.S., from being eligible for the (OTC) drug product, from being eligible eligibility. TDAPA for renal dialysis drugs and for the TDAPA. In addition, we are biological products in existing proposing to exclude Type 9 NDAs, as (e) Generic Drugs functional categories. In addition, we discussed in section II.B.1.ii.(d) of this We are proposing to exclude drugs are proposing to exclude Type 9 NDAs, proposed rule, when the ‘‘parent NDA’’ approved by FDA under section 505(j) as discussed in section II.B.1.ii.(d) of is a Type 8 NDA. A Type 8 NDA is for of the FD&C Act, which are generic this proposed rule, when the ‘‘parent a drug product intended for OTC drugs, from being eligible for the NDA’’ is a Type 7 NDA. This marketing that contains an active TDAPA. As discussed previously in classification only applies to the first ingredient that has been approved section II.B.1.b of this proposed rule, an NDA approved for a drug product previously or marketed in the U.S. only ANDA is an application submitted by containing this (these) active for dispensing by prescription. A Type drug manufacturers and approved by moiety(ies). They include, but are not 8 NDA may provide for a different FDA under section 505(j) of the FD&C limited to the following four items: (1) dosing regimen, different strength, Act for a duplicate of a previously The first post-1962 application for an different dosage form, or different approved drug product. active moiety marketed prior to 1938; indication from the product approved An ANDA generally must contain (2) The first application for an active previously for prescription sale. information to show that the proposed moiety first marketed between 1938 and If the proposed OTC switch would generic product: (1) Is the same as the 1962 that is identical, related or similar apply to all indications, uses, and reference listed drug (RLD) with respect (IRS) to a drug covered by a Drug strengths of an approved prescription to the active ingredient(s), conditions of Efficacy Study Implementation (DESI) dosage form (leaving no prescription- use, route of administration, dosage notice (FDA’s regulation at 21 CFR only products of that particular dosage form, strength, and labeling (with 310.6(b)(1) states that, ‘‘[a]n identical, form on the market), then FDA indicates certain permissible differences) and (2) related, or similar drug includes other that the application holder should is bioequivalent to the RLD. See section brands, potencies, dosage forms, salts, submit the change as a supplement to 505(j)(2)(A) of the FD&C Act. An ANDA and esters of the same drug moiety as the approved application. If the may not be submitted if clinical well as any of drug moiety related in applicant intends to switch only some investigations are necessary to establish chemical structure or known indications, uses, or strengths of the the safety and effectiveness of the pharmacological properties’’); (3) The dosage form to OTC status (while proposed product. A drug product first application for an IRS drug product continuing to market other indications, approved in an ANDA is presumed to be first marketed after 1962; and (4) The uses, or strengths of the dosage form for therapeutically equivalent to its RLD. A first application for an active moiety prescription-only sale), FDA indicates drug product that is therapeutically that was first marketed without an NDA that the applicant should submit a new equivalent to an RLD can be substituted after 1962. NDA for the OTC products, which with the full expectation that the We do not believe that the would be classified as Type 8 NDA. substituted product will produce the characteristics of Type 7 NDA drugs We do not believe that the same clinical effect and safety profile as would advance the intent of the TDAPA characteristics of Type 8 NDA drugs the RLD when administered to patients policy because these drugs were already would advance the intent of the TDAPA under the conditions specified in the on the market. For example, FDA policy for renal dialysis drugs and labeling. received an application for calcium biological products in existing In the CY 2019 ESRD PPS final rule gluconate, which is on the Consolidated functional categories because Type 8 (83 FR 56931), we included generic Billing List and is already recognized as NDAs are for drugs transitioning from drugs in the definition of a new renal a renal dialysis service included in the prescription to OTC, and Medicare does dialysis drug or biological product ESRD PPS base rate. The NDA for not provide coverage of OTC drugs. eligible for the TDAPA because we calcium gluconate was classified by Although certain innovative approaches believed this would foster both a FDA in 2017 to be a Type 7 NDA. This may help increase access to a broader competitive marketplace and innovation drug is not innovative and does not selection of nonprescription drugs for of drugs within functional categories, significantly advance the treatment ESRD beneficiaries, we do not consider mitigate high launch prices, and provide options for ESRD. If the Type 7 NDA the transition from prescription to OTC a financial boost to support utilization. drug is determined to be a renal dialysis to be innovative for purposes of the During the CY 2019 ESRD PPS service, it is likely it is already being TDAPA policy. We believe that making rulemaking, we were aware of the used by the facility, so paying the the TDAPA available for Type 8 NDAs pricing strategies being used by certain TDAPA for it does not assist the may defeat the intent of lowering overall pharmaceutical companies to block the facilities in uptake for their business costs for both the ESRD beneficiary and entry of generic drugs into the market in model, which was one of the goals of for Medicare, is not needed by the order to keep drug prices high. Though the TDAPA. In addition, paying the facilities to provide additional support generic drugs are not considered TDAPA for Type 7 NDA drugs uses during an uptake period so they can be innovative products, our primary intent Medicare resources that ultimately incorporated into the business model. in making generic drugs eligible for the could be used to pay for innovative Over the counter drugs have already TDAPA was to increase competition so drugs and services that result from gone through safety trials if they were that drug prices would be lower for the

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beneficiary. However, we have since of the Medicare trust fund would better regulation at § 413.234 to reflect that learned that bringing more generic drugs enable us to achieve our goals for the certain new renal dialysis drugs would to market, though a significant TDAPA policy. be excluded from eligibility for the component in lowering drug prices, is Therefore, we are proposing to revise TDAPA. not in and of itself the solution. the drug designation process regulation For example, in June 2018, a report at § 413.234 by revising paragraph ii. Examples of New Renal Dialysis examined increased generic drug (b)(1)(ii) and adding paragraph (e), Drugs and Biological Products That competition as the primary impetus to effective January 1, 2020, to specify that Would Remain Eligible for the TDAPA curtail skyrocketing drug prices, and a new renal dialysis drug used to treat Under our proposal, any new renal found that though it is helpful, there is or manage a condition for which there dialysis drug or biological product that a ceiling on its impact. It found that is an ESRD PPS functional category is we are not proposing for exclusion in generic competition would not affect 46 not eligible for payment using the section II.B.1.c.i of this proposed rule, percent of the estimated sales revenue of TDAPA if it is a generic drug or if the would continue to be eligible for the the top 100 drugs through 2023.12 NDA for the drug is classified by FDA TDAPA. In the following paragraphs we In June 2018, an article noted that as a certain type—specifically, if the provide some examples of the types of competition has a limited impact on drug is approved under section 505(j) of renal dialysis drugs and biological American health care, particularly when the FD&C Act or the NDA for the drug products that we believe would it comes to expensive interventions like is classified by FDA as Type 3, 5, 7 or continue to be eligible for the TDAPA prescription drugs. Notably, when an 8, Type 3 in combination with Type 2 under our proposal, using the expensive drug’s competition within the or Type 4, or Type 5 in combination descriptions in the NDA classification same family of drugs came on the with Type 2, or Type 9 when the code referenced in section II.B.1.c of market the prices did not go down. ‘‘parent NDA’’ is a Type 3, 5, 7 or 8. this proposed rule. We note that under Rather, the prices increased We are soliciting comments as to our proposal, FDA approvals under approximately 675 percent. Each new whether any NDA Types that would section 351 of the PHS Act, which entrant cost more than its predecessors, remain eligible for the TDAPA under includes biological products and and their makers then increased their our proposal should be excluded, and biological products that are biosimilar prices to match the newcomer’s. When whether any NDA Types that we are to, or interchangeable with, a reference the first generic finally entered the proposing to exclude should be biological product, also would continue market, its list price was only slightly included, for example, within the NDA to be eligible for the TDAPA. less at 539 percent above the original Type 3 (new dosage form) the inclusion entrant. Economists call this ‘‘sticky of intravenous to oral route of (a) Type 1 NDA—New Molecular Entity pricing’’ and the article notes that this administration. Type 1 NDA refers to drugs is common in pharmaceuticals, and has We are also proposing a technical containing an NME. An NME is an raised the prices in the U.S. of drugs for change to § 413.234(a) to revise the active ingredient that contains no active serious conditions even when there are definitions ‘‘ESRD PPS functional moiety that has been previously multiple competing drugs. category’’ and ‘‘Oral-only drug’’ to be approved by FDA in an application Compounding this problem, the article consistent with FDA nomenclature. We submitted under section 505(b) of the states that companies have decided it is are proposing to change the definition of FD&C Act or has been previously not in their interest to compete.13 ‘‘ESRD PPS functional category’’ to marketed as a drug in the U.S. For purposes of the ESRD PPS, we replace ‘‘biologicals’’ with ‘‘biological We believe the new renal dialysis believe that we need to strike a balance products.’’ We are also proposing to drugs that are classified by FDA as a between enhancing significant renal change the definition of ‘‘Oral-only Type 1 NDA should continue to be dialysis drug innovation and drug’’ to replace ‘‘biological’’ with eligible for the TDAPA because they encouraging competition through ‘‘biological product.’’ generally fall within the 505(b)(1) support of innovative drugs that would As compared to the TDAPA policy pathway typically used for novel drugs, become optimal choices for ESRD finalized in the CY 2019 ESRD PPS final meaning they have not been previously patients and advance their care through rule, we believe that these proposed studied or approved, and their improved treatment choices. Our goal in revisions would reduce CY 2020 development requires the sponsor to supporting competition among drugs in Medicare expenditures for new renal conduct all studies needed to the ESRD PPS functional categories was dialysis drugs and biological products, demonstrate the safety and efficacy of to ultimately affect the launch price of which would also have a better the drug. Unlike the drugs proposed to new drugs. We now questions whether downstream impact for beneficiary be excluded from the TDAPA as including all new renal dialysis drugs coinsurance. Specifically, in the CY described above, these drugs are and biological products as eligible for 2019 ESRD PPS final rule (83 FR 56932), generally not line extensions of the TDAPA would help us meet that we finalized that, effective January 1, previously existing drugs. There will be goal. Rather, we believe reining in 2020, the TDAPA would apply for all expenses with uptake by ESRD facilities launch prices by placing guardrails on new renal dialysis drugs and biological of Type 1 NDA drugs, and one of the line extensions, reformulations and products. Since the proposed policy goals of the TDAPA is to provide ‘‘sticky pricing’’ while staying mindful would carve out certain drug types from additional support to ESRD facilities being eligible for the TDAPA and would during the uptake period for these 12 B. Isgur et al., Health Research Institute, The be more limited than the expansive innovative drugs and help incorporate FDA is approving more generic drugs than ever policy finalized in the CY 2019 ESRD before. Faster than ever before. Is it enough to lower them into their business model. PPS final rule for CY 2020, there would drug costs? June 2018. Available at: https:// (b) Type 2 NDA—New Active Ingredient www.pwc.com/us/en/health-industries/health- be lower Medicare expenditures in CY research-institute/pdf/pwc-health-research- 2020. Further, the downstream effect of Type 2 NDA is for a drug product that institute-generic-drug-pricing-june-2018.pdf. lower Medicare expenditures is lower contains a new active ingredient, but 13 E. Rosenthal, New York Times, Why Competition Won’t Bring Down Drug Prices. June coinsurance for beneficiaries. not an NME. A new active ingredient 21, 2018. Available at: https://www.nytimes.com/ We solicit comment on the proposals includes those products whose active 2018/06/21/opinion/competition-drug-prices.html. to revise the drug designation process moiety has been previously approved or

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marketed in the U.S., but whose eligible for the TDAPA if at least one of to provide better pharmacologic care for particular ester, salt, or noncovalent the components is a Type 1 NDA (NME) vulnerable ESRD patients with complex derivative of the unmodified parent or a Type 2 NDA (new active medical needs, and we consider this to molecule has not been approved by FDA ingredient), both of which merit the be sufficiently innovative to warrant or marketed in the U.S., either alone, or TDAPA as previously discussed. An TDAPA eligibility. as part of a combination product. added advantage is that while We believe renal dialysis drugs that Similarly, if any ester, salt, or introducing an innovative product, are classified as NDA Types 1, 2, and 4 noncovalent derivative has been which is not the case for Type 3 NDA are all innovative and therefore we marketed first, the unmodified parent drugs, it reduces the pill burden to a propose that these drugs should molecule would also be considered a patient population challenged with continue be eligible for the TDAPA as new active ingredient, but not an NME. multiple medications and a complex discussed in sections II.B.1.c.ii.(a), Furthermore, if the active ingredient is drug regimen. Medication adherence is II.B.1.c.ii.(b), and II.B.1.c.ii.(c), of this a single enantiomer and a racemic thought to be around 50 percent in the proposed rule. When the ‘‘parent NDA’’ mixture (the name for a 50:50 mixture dialysis population and reducing this is Type 1, 2, or 4, Type 9 NDA would of 2 enantiomers) containing that burden can improve adherence and be a new indication of those innovative enantiomer has been previously should lead to improvement in drugs. Therefore we believe Type 9 approved by FDA or marketed in the treatment outcomes.15 NDA, when the ‘‘parent’’ is Type 1, 2, U.S., or if the active ingredient is a We believe the advantages of Type 1 or 4, is just as innovative as Type 1, 2, racemic mixture containing an NDA and Type 2 NDA drugs, coupled or 4 and therefore should also be enantiomer that has been previously with the possibility of improved eligible for the TDAPA. We believe approved by FDA or marketed in the adherence, merits eligibility for the applying the TDAPA with respect to U.S., the NDA will be classified as a TDAPA in that it encourages both Type 9 NDA new renal dialysis drugs Type 2 NDA. Enantiomers are chiral innovators to develop competitive drugs would assist ESRD facilities in adopting molecules that are non-superimposable, at lower prices for this NDA these drugs into their treatment mirror images of one another. classification code, and ESRD facilities protocols for patients, when these drugs We believe the new renal dialysis to use the products with the boost that are warranted for use in that subset of drugs classified by FDA as Type 2 NDAs the TDAPA will provide in facilitating patients. uptake of these new products. should be eligible for the TDAPA (e) Type 10 NDA—New Indication or because, in part, it covers a single (d) Type 9 NDA—New Indication or Claim, Drug To Be Marketed Under enantiomer active ingredient for which Claim, Drug Not To Be Marketed Under Type 10 NDA After Approval a racemic mixture containing that Type 9 NDA After Approval enantiomer has been approved by FDA. Type 10 NDA is for a drug product Single enantiomer drugs can lead to Type 9 NDA is for a new indication that is a duplicate of a drug product that fewer drug interactions in the ESRD or claim for a drug product that is is the subject of either a pending or population, which already has a currently being reviewed under a approved NDA, and the applicant significant medication burden.14 We different NDA (the ‘‘parent NDA’’), and intends to market the drug product believe these drugs are innovative and the applicant does not intend to market under this separate Type 10 NDA after it is important to support their this drug product under the Type 9 approval. A Type 10 NDA is typically development because of their lower NDA after approval. Generally, a Type for a drug product that has a new development cost burden, coupled with 9 NDA is submitted as a separate NDA indication or claim, and it may have enhancement of patient choice, which so as to be in compliance with the labeling and/or a proprietary name that supports not only innovation, but the guidance for industry on Submitting is distinct from that of the original NDA. ability of the product to successfully Separate Marketing Applications and When the Type 10 NDA is submitted, it Clinical Data for Purposes of Assessing would be given the same NDA launch and compete. We believe having 16 the Type 2 NDA drugs be eligible for the User Fees. When the Type 9 NDA is classification code as the original NDA TDAPA would support our goal of submitted, it is given the same NDA unless that NDA is already approved. providing support to the ESRD facilities classification code as the pending NDA. When one application is approved, the for 2 years while the drug is being When one application is approved, the other would be reclassified as Type 10 incorporated into their business model. other application will be reclassified as NDA regardless of whether it was the a Type 9 NDA regardless of whether it first or second NDA actually submitted. (c) Type 4 NDA—New Combination was the first or second NDA actually We believe renal dialysis drugs with Type 4 NDA is a new drug-drug submitted. After the approval of a Type the Type 10 NDA classification code are combination of two or more active 9 NDA, FDA will ‘‘administratively sufficiently innovative and should be ingredients. An application for a new close’’ the Type 9 NDA and thereafter eligible for the TDAPA because a new drug-drug combination product may only accept submissions to the ‘‘parent’’ indication for a previously submitted have more than one classification code NDA. drug that is applicable to renal dialysis if at least one component of the Since Type 9 NDA is a new clinical advances the field and suggests the drug combination is an NME or a new active indication, this suggests that a drug company is pioneering a new approach ingredient. company is pioneering a new approach to provide better pharmacologic care for We are proposing that new renal vulnerable ESRD patients with complex dialysis drugs that are classified as a 15 K Parker et al., Medication Burden in CKD–5D: medical needs. We believe this could Impact of dialysis modality and setting, Clin Kidney provide savings in terms of time-to- Type 4 NDA should continue to be J. 2014, 7: 557–561. Available at: https:// www.ncbi.nlm.nih.gov/pmc/articles/PMC4389130/ market and research and development, 14 A Calcaterra and I D’Acquarica, J pdf/sfu091.pdf. which could be reflected in the launch Pharmaceutical and Biomedical Analysis, ‘‘The 16 FDA. Guidance for Industry. Submitting price of the drug. We further believe market of chiral drugs: Chiral switches versus de Separate Marketing Applications and Clinical Data applying the TDAPA with respect to novo enantiomerically pure compounds,’’ for Purposes of Assessing User Fees. Available at: 147(2018). Pages 323–340. Available at: https:// https://www.fda.gov/downloads/Drugs/Guidance Type 10 NDA new renal dialysis drugs www.sciencedirect.com/science/article/pii/ ComplianceRegulatoryInformation/Guidances/ will assist ESRD facilities in adopting S0731708517314838?via%3Dihub. UCM079320.pdf. these drugs into their treatment

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protocols for patients when these drugs biosimilar biological products is to monitor future costs of biosimilar are warranted for use in that subset of available on the FDA website.17 18 19 biological products as they pertain to patients. CMS continues to support the renal dialysis, the TDAPA, and the development and the utilization of these ESRD PPS. (f) FDA Approvals Under Section 351 of products that contain innovative In summary, with regard to new renal the PHS Act technology for the treatment of ESRD. dialysis drugs and biological products The approval process for biosimilar Under our proposal, products that that fall within an existing ESRD PPS biological products is a different functional category, we believe that receive FDA approval under section 351 pathway than that for generic drugs and of the PHS Act, which occurs for new continuing to include these drugs and has different requirements. We believe biological products as eligible for the biological products and biological that a categorical exclusion from TDAPA focuses payment to those products that are biosimilar to, or TDAPA eligibility for all biological products that are innovative in a way interchangeable with, a reference products that are biosimilar to or that meets the intent of the adjustment. biological product, would continue to interchangeable with a reference That is, our intention is to support be eligible for the TDAPA. biological product, would disadvantage innovation by helping ESRD facilities A BLA submitted under section 351(a) this sector of biological products in a make appropriate changes in their of the PHS Act is a ‘‘stand-alone BLA’’ space where we are trying to support businesses to adopt such products, that contains all information and data technological innovation. While the provide additional payment for such necessary to demonstrate that (among products themselves may not be associated costs, incorporate these drugs other things) the proposed biological innovative, CMS believes the and biological products into their product is safe, pure, and potent. technology used to develop the products beneficiaries’ care plans and potentially is sufficiently new and innovative to An application for licensure of a promote competition among drugs and warrant TDAPA payment at this time. biological products within the ESRD proposed biosimilar biological product However, unlike NDAs submitted submitted in a BLA under section 351(k) PPS functional categories. We plan to pursuant to sections 505(b)(1) or continue to monitor the use of the of the PHS Act must contain 505(b)(2) of the FD&C Act, we do not TDAPA for new renal dialysis drugs and information demonstrating that the have a categorical system to use as a biological products that fall within an biological product is biosimilar to a proxy for assistance in determining existing functional category and will reference product. ‘Biosimilar’ means which types of applications would meet carefully evaluate the products that ‘‘that the biological product is highly the intent of the TDAPA policy. qualify for the payment adjustment. We similar to the reference product Therefore, we are proposing to continue note that for new renal dialysis drugs notwithstanding minor differences in to allow all biosimilar to or and biological products that do not fall clinically inactive components’’ and interchangeable with a reference within an existing ESRD PPS functional that ‘‘there are no clinically meaningful biological products to remain eligible category, the purpose of the TDAPA differences between the biological for the TDAPA instead of proposing to continues to be a pathway toward a product and the reference product in exclude all of them. potential base rate modification. terms of the safety, purity, and potency We are aware, however, that there are Based on our past experience and our of the product’’ (see section 351(i)(2) of similar concerns about providing the expectation of detailed analysis of the PHS Act). TDAPA for these products that there are future drug product utilization, pricing with generics. Specifically, according to An application for licensure of a and payment, CMS anticipates a recent report, increased drug class proposing further refinements to the proposed interchangeable product competition for biosimilar biological submitted in a BLA under section 351(k) TDAPA policy through notice and products did not translate into pricing comment rulemaking in the future. of the PHS Act must meet the standards reductions, and there was a market of ‘‘interchangeability.’’ To meet the failure contributing to the rising costs of d. Proposal To Modify the Basis of additional standard of prescription drugs. The researchers Payment for the TDAPA for ‘‘interchangeability,’’ an applicant must noted that the increases were borne Calcimimetics in CY 2020 provide sufficient information to 20 solely by Medicare. We will continue In the CY 2016 ESRD PPS final rule demonstrate biosimilarity, and also to (80 FR 69025 through 69026), we demonstrate that the biological product 17 FDA. Guidance for Industry—Questions and Answers on Biosimilar Development and the BPCI finalized an exception to the drug can be expected to produce the same designation process for calcimimetics. clinical result as the reference product Act. December, 2018. Available at: https:// www.fda.gov/regulatory-information/search-fda- Specifically, we identified phosphate in any given patient and, if the guidance-documents/questions-and-answers- binders and calcimimetics as oral-only biological product is administered more biosimilar-development-and-bpci-act-guidance- drugs and, in accordance with than once to an individual, the risk in industry. 18 FDA. Draft guidance for industry—New and § 413.234(d), an oral-only drug is no terms of safety or diminished efficacy of Revised Draft Q&As on Biosimilar Development and longer considered oral-only if an alternating or switching between use of the BPCI Act (Revision 2) (when final, this guidance injectable or other form of the biological product and the reference will represent FDA’s current thinking on this topic). administration of the oral-only drug is product is not greater than the risk of Available at: https://www.fda.gov/regulatory- information/search-fda-guidance-documents/new- approved by FDA. We stated that under using the reference product without and-revised-draft-qas-biosimilar-development-and- § 413.234(b)(1), if injectable or such alternation or switch (see section bpci-act-revision-2. intravenous forms of phosphate binders 351(k)(4) of the PHS Act). 19 FDA. Webinar. Overview of the Regulatory or calcimimetics are approved by FDA, Interchangeable products may be Framework and FDA’s Guidance for the Development and Approval of Biosimilar and these drugs would be considered substituted for the reference product Interchangeable Products in the US. Available at: reflected in the ESRD PPS bundled without the intervention of the https://www.fda.gov/drugs/biosimilars/fda-webinar- prescribing healthcare provider (see overview-regulatory-framework-and-fdas-guidance- Inhibitors After the Market Entry of Competitors.’’ section 351(i)(3) of the PHS Act). development-and-approval-biosimilar-and. JAMA Intern Med 2019. Feb18 https:// 20 A San-Juan-Rodriguez et al. ‘‘Assessment of jamanetwork.com/journals/jamainternalmedicine/ Further information regarding Price Changes of Existing Tumor Necrosis Factor fullarticle/2724390.

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payment because these drugs are provided the TDAPA for calcimimetics any applicable outlier payment, training included in an existing functional for 2-full years, and we believe that is add-on adjustment, or the TDAPA. category, so no additional payment sufficient time for ESRD facilities to In CY 2016 ESRD PPS rulemaking, we would be available for inclusion of these address any administrative complexities did not propose a corresponding drugs. and overhead costs that may have arisen revision to § 413.230 to reflect that the However, we recognized the with regard to furnishing the TDAPA is a component in the uniqueness of these drugs and finalized calcimimetics. We also believe this determination of the per treatment in the CY 2016 ESRD PPS final rule that proposal strikes a balance between we will not apply this process to supporting ESRD facilities in their payment amount. In this proposed rule, injectable or intravenous forms of uptake of these products and limiting we are proposing a revision to § 413.230 phosphate binders and calcimimetics the financial burden that increased to add paragraph (d) to reflect the when they are approved because payments place on beneficiaries and TDAPA. We believe this modification is payment for the oral forms of these Medicare expenditures. Finally, this necessary so the regulation drugs was delayed and dollars were policy is consistent with the policy appropriately reflects all inputs in the never included in the base rate to finalized for all other new renal dialysis calculation of the per treatment account for these drugs. We further drugs and biological products in the CY payment amount. This revision to the stated that we intend to use notice-and- 2019 ESRD PPS final rule (83 FR 56948). regulation would not change how the comment rulemaking to include the oral We therefore propose that the basis of ESRD PPS per treatment payment and non-oral forms of calcimimetics and payment for the TDAPA for amount is currently calculated. We are phosphate binders in the ESRD PPS calcimimetics, beginning in CY 2020, also proposing to revise § 413.230 to bundled payment after the payment of will be 100 percent of ASP. That is, we include, as part of the calculation of the the TDAPA. We explained that when propose to modify § 413.234(c) by per treatment payment amount, any these drugs are no longer oral-only removing the clause ‘‘except that for Transitional Add-on Payment drugs, we will pay for them under the calcimimetics it is based on the pricing Adjustment for New and Innovative ESRD PPS using the TDAPA based on methodologies under section 1847A of Equipment and Supplies (TPNIES) as the payment methodologies in section the Social Security Act.’’ proposed in section II.B.3.b.iii of this 1847A of the Act for a period of at least In addition, under the proposal proposed rule. 2 years. discussed in section II.B.2.c of this Change Request 10065, Transmittal proposed rule, since we currently We are also proposing a technical 1889 issued August 4, 2017, replaced by receive ASP data for calcimimetics, change to § 413.230(c) to replace Transmittal 1999 issued January 10, beginning January 1, 2020, we would no ‘‘§ 414.335(b)’’ with a more appropriate 2018, implemented the TDAPA for longer apply the TDAPA for reference to the training adjustment calcimimetics effective January 1, 2018. calcimimetics if we stop receiving the add-on requirement, which is As discussed previously, calcimimetics latest full calendar quarter of ASP data ‘‘§ 413.235(c).’’ In the CY 2011 ESRD will be paid using the TDAPA for a for calcimimetics during the TDAPA PPS final rule (75 FR 49202) we minimum of 2 years. Since payments payment period. inadvertently referred to § 414.335(b), have been made beginning January 1, which states, ‘‘After January 1, 2011, a e. Proposed Revision to 42 CFR 413.230 2018, a 2-year period would end home and self-training amount is added December 31, 2019. We are still in the In the CY 2011 ESRD PPS final rule to the per treatment base rate for adult process of collecting utilization claims (75 FR 49200), we added § 413.230 to 42 and pediatric patients as defined in data for both the oral and non-oral form CFR part 413, subpart H to codify that § 413.230’’ when finalizing § 413.230. of calcimimetics, which will be used for the per treatment payment amount is Section 413.235(c) similarly states a rate setting analysis. Therefore, we the sum of the per treatment base rate ‘‘CMS provides a wage-adjusted add-on will continue to pay for calcimimetics established in § 413.220, adjusted for per treatment adjustment for home and using the TDAPA in CY 2020. wages as described in § 413.231, and self-dialysis training.’’ However, We stated in the CY 2019 ESRD PPS adjusted for facility-level and patient- § 414.335(b) describes the training level characteristics described in final rule (83 FR 56943) that we would adjustment add-on when erythropoietin continue to pay the TDAPA using the §§ 413.232 and 413.235; any outlier (EPO) is furnished to home dialysis pricing methodologies under section payment under § 413.237; and any patients, whereas § 413.235(c) describes 1847A of the Act (which includes training adjustment add-on under the training adjustment add-on ASP+6 percent) until sufficient claims § 414.335(b). The per treatment payment data for rate setting analysis for the new amount is Medicare’s payment to ESRD applicable, generally, even when EPO is injectable or intravenous product are facilities under the ESRD PPS for not furnished. When we finalized available, but not for less than 2 years. furnishing renal dialysis services to § 413.230 in the CY 2011 ESRD PPS Calcimimetics were the first drugs for Medicare ESRD beneficiaries. final rule, we intended for the training which we paid the TDAPA (83 FR In the CY 2016 ESRD PPS final rule adjustment to apply more generally, 56931), and this increased Medicare (80 FR 69024), we codified the drug rather than just when EPO is furnished expenditures by $1.2 billion in CY 2018. designation process regulation in and therefore, we are proposing to refer It is clear, therefore, that ESRD facilities § 413.234, which provides a TDAPA to § 413.235(c). We solicit comment on are furnishing these innovative drugs. under § 413.234(c) when certain these proposed changes to § 413.230 to We explained in the CY 2019 ESRD PPS eligibility criteria are met. We apply the (1) add paragraph (d) to reflect that the final rule (83 FR 56943) that one of the TDAPA at the end of the calculation of TDAPA is a component in the rationales for the 6 percent add-on to the ESRD PPS payment, which is determination of the per treatment ASP has been to cover administrative similar to the application of the outlier payment amount and (2) replace the and overhead costs. We explained that payment (§ 413.237(c)) and the training reference to ‘‘§ 414.335(b)’’ in the ESRD PPS base rate has dollars built add-on adjustment (§ 413.235(c)). That § 413.230(c) with a more appropriate in for administrative complexities and is, once the ESRD PPS base rate is reference to the training adjustment overhead costs for drugs and biological adjusted by any applicable patient- and add-on requirement, which is products (83 FR 56944). We have facility-level adjustments we add to it ‘‘§ 413.235(c).’’

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2. Proposed Average Sales Price (ASP) price guides or other publications of (WAC+0) and, when WAC is not Conditional Policy for the TDAPA drug or biological pricing data. available, the payment is based on the Section 1847A(c)(4) of the Act further a. Background drug manufacturer’s invoice. We also provides a payment methodology in modified § 413.234(c) to reflect that the In the CY 2005 Physician Fee cases where the ASP during 1st quarter basis of payment for the TDAPA for Schedule (PFS) final rule, published on of sales is unavailable, stating that in the calcimimetics would continue to be November 15, 2004 (69 FR 66299 case of a drug or biologicals during an based on the pricing methodologies through 66302) in the Federal Register, initial period (not to exceed a full available under section 1847A of the we discussed that section 303(c) of the calendar quarter) in which data on the Act (which includes ASP+6). We Medicare Prescription Drug, prices for sales for the drug or biological specified that these changes to Improvement, and Modernization Act of product are not sufficiently available § 413.234(c) would be effective January, 2003 (MMA) added section 1847A to the from the manufacturer to compute an 1, 2020. Act and established a payment ASP for the biological product, the In the CY 2019 ESRD PPS final rule methodology for certain drugs and Secretary may determine the amount (83 FR 56943), we discussed that the biological products not paid on a cost or payable under this section for the drug TDAPA is a payment adjustment under prospective payment basis furnished on or biological product based on the WAC the ESRD PPS and is not intended to be or after January 1, 2005. Payments made or the methodologies in effect under a mechanism for payment for new drugs under this methodology are primarily Medicare Part B on November 1, 2003, and biological products under Medicare based on quarterly data submitted to to determine payment amounts for Part B. We further explained that we CMS by drug manufacturers, and most drugs or biological products. For further believe it may not be appropriate under payments under this methodology are guidance on how Medicare Part B pays section 1881(b)(14)(D)(iv) of the Act to based on the ASP. ASP-based payments for certain drugs and biological base the TDAPA strictly on the pricing are determined from manufacturer’s products, see Medicare Claims methodologies under section 1847A of sales to all purchasers (with certain Processing Manual (Pub. L. 100–04) the Act. We explained that, in the CY exceptions) net of manufacturer rebates, (chapter 17, section 20) (https:// 2019 ESRD PPS proposed rule (83 FR discounts, and price concessions. Sales www.cms.gov/Regulations-and- 34315), we considered options on which that are nominal in amount are Guidance/Guidance/Manuals/ to base payment under the TDAPA, for exempted from the ASP calculation, as Downloads/clm104c17.pdf.). example, maintaining the policy as is or are sales excluded from the We have used the payment potentially basing payments on the determination of ‘‘best price’’ in the methodology under section 1847A of facility cost of acquiring drugs and Medicaid Drug Rebate Program. ASP- the Act since the implementation of the biological products. We found that based payments are determined for ESRD PPS when pricing ESRD related while the pricing methodologies under individual HCPCS codes. To allow time drugs and biological products 1847A of the Act, and specifically ASP, for manufacturers to submit quarterly previously paid separately under Part B could encourage certain unintended data and for CMS to determine, check (prior to the ESRD PPS) for purposes of consequences, ASP data continues to be and disseminate payment limits to ESRD PPS policies or calculations (82 the best data available since it is contractors that pay claims, the ASP- FR 50742 through 50743). In the CY commonly used to facilitate Medicare based payment limits are subject to a 2 2016 ESRD PPS final rule (80 FR 69024), payment across care settings and is quarter lag, which means that sales from we adopted § 413.234(c), which requires based on the manufacturer’s sales to all January to March are used to determine that the TDAPA is based on payment purchasers (with certain exceptions) payment limits in effect from July to methodologies available under section and is net of manufacturer rebates, September.21 1847A of the Act (including 106 percent discounts, and price concessions (83 FR Section 1847A(b)(1)(A) of the Act of ASP). We also use such payment 34315). requires that the Medicare payment for methodologies for Part B ESRD related drugs or biological products that qualify b. Basis for Conditioning the TDAPA on a multiple source drug included within the Availability of ASP Data the same HCPCS code be equal to 106 as an outlier service (82 FR 50745). For As noted previously, under the percent of the ASP for the drug products the purposes of the ESRD PPS, we use change to § 413.234(c) finalized in the included in the HCPCS code. Section ‘‘payment methodology’’ CY 2019 ESRD PPS final rule (83 FR 1847A(b)(1)(B) of the Act also requires interchangeably with ‘‘pricing 56948), effective January 1, 2020, the that the Medicare payment for a single methodology.’’ In the CY 2019 ESRD PPS final rule basis of payment for the TDAPA is source drug HCPCS code be equal to the (83 FR 56948) we finalized a revision to ASP+0, but if ASP is not available, then lesser of 106 percent of the ASP for the § 413.234(c) under the authority of it is WAC+0, and if WAC is not HCPCS code or 106 percent of the section 1881(b)(14)(D)(iv) of the Act, to available, then it is based on the drug Wholesale Acquisition Cost (WAC) of base the TDAPA on 100 percent of ASP manufacturer’s invoice. We also the HCPCS code (83 FR 56929). The (ASP+0) instead of the pricing modified § 413.234(c) to reflect that the WAC is defined in section methodologies available under section basis of payment for the TDAPA for 1847A(c)(6)(B) of the Act as the 1847A of the Act (which includes calcimimetics would continue to be manufacturer’s list price for the drug or ASP+6). We also explained in the CY based on the pricing methodologies biological to wholesalers or direct 2019 ESRD PPS final rule (83 FR 56944) available under section 1847A of the purchasers in the U.S., not including that there are times when the ASP is not Act (which includes ASP+6). We also prompt pay or other discounts, rebates available. For example, when a new note that as discussed in section II.B.1.d or reductions in price, for the most drug or biological product is brought to of this proposed rule, we are now recent month for which the information the market, sales data is not sufficiently proposing to modify the basis of is available, as reported in wholesale available from the manufacturer to payment for the TDAPA for compute an ASP. Therefore, we calcimimetics for CY 2020 to ASP+0. 21 ASPE. Issue Brief. Medicare Part B Drugs: Pricing and Incentives. March 2016. Available at: finalized a change to § 413.234(c) to Following publication of the CY 2019 https://aspe.hhs.gov/system/files/pdf/187581/ specify that if ASP is not available, the ESRD PPS final rule, we have continued PartBDrug.pdf. TDAPA is based on 100 percent of WAC to assess our policy allowing for WAC

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or invoice pricing if ASP is not about manufacturers not reporting ASP order for ESRD facilities to receive an available, and we have become data for Part B drugs. As discussed in increased TDAPA for their products. As concerned that it could lead to drug MedPAC’s June 2017 Report to noted in section II.B.2.a of this proposed manufacturers who are not otherwise Congress,23 the OIG found that for the rule, under § 413.234(c), effective required to submit ASP data to CMS to 3rd quarter of 2012, out of 45 drug January 1, 2020, if ASP is not available delay submission or withhold ASP data manufacturers who were not required to to CMS, the basis of payment for the from CMS so that ESRD facilities would submit ASP for Part B drugs, only 22 TDAPA is WAC+0 and when WAC is receive a higher basis of payment for the voluntarily submitted ASP data.24 not available, then the TDAPA is based TDAPA and be incentivized to purchase We point out that even for those drug on invoice pricing. As MedPAC drugs from those manufacturers. manufacturers who are required to discussed in its June 2017 Report to Calcimimetics were the first drugs for submit ASP data into CMS, not all may Congress, WAC-based payments would which we paid the TDAPA (83 FR fully comply. For the same 3rd quarter likely increase Medicare expenditures 56931), and this increased Medicare of 2012, the OIG found that at least 74 as compared to ASP-based payments. As expenditures by $1.2 billion in CY 2018. out of the 207 drug manufacturers with stated in section 1847A(c)(5) of the Act, We note that the TDAPA for one form Medicaid Drug Rebate Agreements in ASP is calculated to include discounts of the calcimimetics was based on WAC place did not submit all of their and rebates. WAC is ultimately for 2 quarters, and was more expensive required ASP data for their Part B controlled by the manufacturer, and its 25 than ASP. In addition, there were delays drugs. MedPAC’s recommendations in statutory definition in section 26 in the submission of ASP data for that its June 2017 report would require 1847A(c)(6)(B) of the Act does not drug, but we are now receiving ASP that all Part B drug manufacturers include the discounts that ASP data for both calcimimetics. We are submit ASP data into CMS, whether or includes.28 Similarly, invoice pricing concerned about the significant increase not those manufacturers have a may not reliably capture all available 27 in Medicare expenditures that resulted Medicaid Drug Rebate Agreement. discounts and thus may be inflated. from paying the TDAPA for Based on this data and our own This means if a drug manufacturer calcimimetics, and about this trend experience with the calcimimetics, we chooses not to submit ASP data into continuing with new renal dialysis are concerned that manufacturers may CMS, the TDAPA would be based on an drugs and biological products that not voluntarily report ASP data into inflated amount beyond what the become eligible for the TDAPA in the CMS. We continue to believe that ASP average cost to ESRD facilities to acquire future. We therefore believe we need to is the best data currently available for those drugs. This additional amount limit the use of WAC (or invoice the basis of payment for the TDAPA, would also then increase the pricing) as the basis of the TDAPA to as because it is commonly used to facilitate coinsurance for the beneficiaries who few quarters as practicable to help limit Medicare payment across care settings receive those drugs. We believe increases to Medicare expenditures and is based on the manufacturer’s sales conditioning the TDAPA on the while maintaining our goals for the to all purchasers (with certain availability of ASP data is necessary to TDAPA policy—namely, supporting exceptions) net of all manufacturer mitigate this potential incentive and ESRD facilities in their uptake of rebates, discounts, and price limit increases to Medicare innovative new renal dialysis drugs and concessions (83 FR 56943). Therefore, expenditures. biological products for those products we believe conditioning the TDAPA on that fall within a functional category the availability of ASP data is c. Proposal To Condition the TDAPA and providing a pathway towards a appropriate and necessary to ensure that Application on the Availability of ASP potential base rate modification for we are basing the amount of the TDAPA Data those products that do not fall within a on the best data available. functional category. In addition to our concerns about ASP We are proposing to revise Further, we are concerned that ASP data reporting generally, we are § 413.234(c) to address the following will not be made available to CMS by concerned that the TDAPA policy concerns: (1) Increases to Medicare drug manufacturers not currently finalized in the CY 2019 ESRD PPS final expenditures by the calcimimetics; (2) required by statute to do so. Drug rule effective January 1, 2020, could drug manufacturers not reporting ASP manufacturers who have Medicaid Drug potentially incentivize drug data; and (3) our TDAPA policy Rebate Agreements as part of the manufacturers who do not have a potentially incentivizing drug Medicaid Drug Rebate Program are Medicaid Drug Rebate Agreement to manufacturers to withhold ASP data required by section 1927(b)(3) of the Act delay or to never submit ASP data in from CMS. Under our proposed to submit ASP sales data into CMS revisions, we would no longer apply the quarterly. However, we anticipate there 23 Report to Congress, MedPAC, June 2017, page TDAPA for a new renal dialysis drug or could be drugs marketed in the future 42. Available at: http://www.medpac.gov/docs/ biological product if CMS does not that are eligible for the TDAPA, but may default-source/reports/jun17_reporttocongress_ receive a full calendar quarter of ASP not be associated with ASP reporting sec.pdf. data within 30 days of the last day of the 24 Limitations in Manufacturer Reporting of requirements under section 1927(b) of Average Sales Price Data for Part B Drugs, Office of 3rd calendar quarter after we begin the Act. While manufacturers that do the Inspector General, page 7. Available at: https:// paying the TDAPA for the product. We not have Medicaid Drug Rebate oig.hhs.gov/oei/reports/oei-12-13-00040.pdf. note that we are not proposing to Agreements may voluntarily submit 25 Limitations in Manufacturer Reporting of modify the current ASP reporting ASP data into CMS,22 we are concerned Average Sales Price Data for Part B Drugs, Office of 29 the Inspector General, pages 7–8, Available at: process and our proposals are manufacturers may not elect to do so. https://oig.hhs.gov/oei/reports/oei-12-13-00040.pdf. MedPAC and the Office of the Inspector 26 Report to Congress, MedPAC, June 2017, pages 28 MedPAC. Part B Drugs Payment Systems. General (OIG) have both noted concerns 10–12. Available at: http://www.medpac.gov/docs/ October 2017. Pages 43–44. Available at: http:// default-source/reports/jun17_reporttocongress_ www.medpac.gov/docs/default-source/reports/ _ _ 22 MedPAC. Part B Drugs Payment Systems. sec.pdf. jun17 reporttocongress sec.pdf. October 2017. Page 2. Available at: http:// 27 OMB. A Budget for a Better America. Fiscal 29 CMS. Medicare Part B Drug Average Sales www.medpac.gov/docs/default-source/payment- Year 2020, page 41. Available at: https:// Price. Available at: https://www.cms.gov/Medicare/ basics/medpac_payment_basics_17_partb_ www.whitehouse.gov/wp-content/uploads/2019/03/ Medicare-Fee-for-Service-Part-B-Drugs/ final.pdf?sfvrsn=0. budget-fy2020.pdf. McrPartBDrugAvgSalesPrice/index.html.

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consistent with this process. Since it is period as set forth in § 413.234(c). We computing the ESRD PPS base rate. possible for a drug manufacturer to continue to believe that basing the These are identified in Table 19 of the begin sales of its product in the middle TDAPA on ASP+0, as compared to CY 2011 ESRD PPS final rule (75 FR of a calendar quarter, it may take WAC+0 or invoice pricing, is the most 49075) as ‘‘Composite Rate Services’’. approximately 2 to 3 quarters for CMS appropriate choice for the ESRD PPS, Sections 1881(b)(14)(A)(i) and to obtain a full calendar quarter of ASP and strikes the right balance of 1881(b)(14)(B) of the Act specify the data. We believe that 3-calendar supporting ESRD facilities in their renal dialysis services that must be quarters is a reasonable amount of time uptake of innovative new renal dialysis included in the ESRD PPS bundled for drug manufacturers to submit a full drugs and biological products and payment, which includes items and calendar quarter of ASP data to CMS; limiting increases to Medicare services that were part of the composite therefore, we are proposing to allow 3- expenditures. If drug manufacturers rate for renal dialysis services as of calendar quarters for drug were to stop submitting full quarters of December 31, 2010. As we indicated in manufacturers to make ASP available to ASP data for products that are eligible the CY 2011 ESRD PPS proposed rule CMS to enable ESRD facilities to for the TDAPA, and we had to revert to (74 FR 49928), the case-mix adjusted continue to receive the TDAPA for a basing the TDAPA on WAC or invoice composite payment system represents a product. pricing, we believe we would be limited PPS for a bundle of outpatient As discussed in section II.B.2.a of the overpaying for the TDAPA for those renal dialysis services that includes proposed rule, there is a 2 quarter lag products. maintenance dialysis treatments and all between the sales period for which ASP Therefore, we are also proposing to associated services including is reported and the effective date of the revise the regulatory text at § 413.234(c) historically defined dialysis-related rate based on that ASP data. During this to no longer apply the TDAPA for a new drugs, laboratory tests, equipment, period between when the TDAPA is renal dialysis drug or biological product supplies and staff time (74 FR 49928). initiated for a product and the effective if a drug manufacturer submits a full In the CY 2011 ESRD PPS final rule (75 date of the rate based on the full quarter calendar quarter of ASP data into CMS FR 49062), we noted that total of ASP data made available to CMS, within 30 days after the close last day composite rate costs in the per treatment consistent with the policy finalized in of the 3rd calendar quarter after the calculation included costs incurred for the CY 2019 ESRD PPS final rule (83 FR TDAPA is initiated for the product, but training expenses, as well as all home 56948), the basis of the TDAPA would at a later point during the applicable dialysis costs. Currently, ESRD facilities be WAC+0, and if WAC is not available, TDAPA period specified in are required to report their use of then invoice pricing. Once the drug § 413.234(c)(1) or (c)(2), stops syringes on claims in order to receive manufacturer begins submitting ASP submitting a full calendar quarter of separate payment, as discussed in the data, the basis of the TDAPA would be ASP data into CMS. We assess pricing CY 2011 final rule (75 FR 49141). ASP+0. We are proposing that if we for new renal dialysis drugs and However, historically, ESRD facilities have not received a full calendar quarter biological products eligible for the were not required to report any other of ASP data for a new renal dialysis TDAPA on a quarterly basis. Once we renal dialysis equipment and supplies drug or biological product by 30 days determine that the latest full calendar on claims (with the exception of after the last day of the 3rd calendar quarter of ASP is not available, we syringes) because these items were paid quarter of applying the TDAPA for that would stop applying the TDAPA for the through the composite rate and did not product, we would stop applying the new renal dialysis drug or biological receive separate payment. As discussed TDAPA within the next 2-calendar product within the next 2-calendar in the Medicare Claims Processing quarters. For example, if we begin quarters. For example, if we begin Manual (chapter 8, section 50.3), CMS applying the TDAPA on January 1, 2021 paying the TDAPA on January 1, 2021 directs ESRD facilities to report a for an eligible new renal dialysis drug for an eligible new renal dialysis drug dialysis treatment and their charge for or biological product, and a full or biological product, and a full the treatment. That charge is intended to calendar quarter of ASP data for that calendar quarter of ASP data is made reflect the cost of the dialysis treatment product has not been made available to available to CMS by October 30, 2021 (equipment, supplies, and staff time) as CMS by October 30, 2021 (30 days after (30 days after the close of the 3rd well as routine drugs and laboratory the last day of the 3rd quarter of paying quarter of paying the TDAPA), but a full tests. This manual is available on the the TDAPA), we would stop applying calendar quarter of ASP data is not CMS website at https://www.cms.gov/ the TDAPA for that product no later made available to CMS as of January 30, than March 31, 2022 (2 quarters after the Regulations-and-Guidance/Guidance/ 2022 (30 days after the close of the 4th 3rd quarter of paying the TDAPA). Manuals/Downloads/clm104c08.pdf. We are therefore proposing to revise quarter of paying the TDAPA), we In the CY 2019 ESRD PPS final rule the regulatory text at § 413.234(c) to would stop applying the TDAPA for the (83 FR 56942 through 56943), we provide that, notwithstanding the time product no later than June 30, 2022 (2 finalized an expansion of the TDAPA to periods for payment of the TDAPA quarters after the 4th quarter of paying all new renal dialysis drugs and specified in paragraphs (c)(1) and (c)(2), the TDAPA). biological products, not just those in we would no longer apply the TDAPA 3. New and Innovative Renal Dialysis new ESRD PPS functional categories, for a new renal dialysis drug or Equipment and Supplies Under the including composite rate drugs and biological product if CMS has not ESRD PPS biological products that fall within an received a full calendar quarter of ASP ESRD PPS functional category. A data for the product within 30 days after a. Background on Renal Dialysis detailed discussion of the TDAPA the last day of the 3rd calendar quarter Equipment and Supplies Under the policy is found in section II.B.1.a of this after the TDAPA is initiated for the ESRD PPS proposed rule. As part of the CY 2019 product. In the CY 2011 ESRD PPS final rule ESRD PPS rulemaking, we received We expect that once drug (75 FR 49075), we stated that when we several comments regarding payment manufacturers begin submitting ASP computed the ESRD PPS base rate, we under the ESRD PPS for certain new, data into CMS, they would continue to used the composite rate payments made innovative equipment and supplies do so for the duration of the TDAPA under Part B in 2007 for dialysis in used in the treatment of ESRD. For

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example, as we described in the CY commenters’ thoughts regarding new technology add-on payment 2019 ESRD PPS final rule (83 FR 56972), payment for new and innovative (NTAP) and its substantial clinical a device manufacturer and device devices, and stated that we did not improvement (SCI) criteria. We believe manufacturer association asked CMS to include any proposals regarding this a process similar to the IPPS process for establish a transitional add-on payment issue in the CY 2019 ESRD PPS establishing SCI for the NTAP described adjustment for new FDA approved proposed rule, so we considered these in section II.B.3.a.ii of this proposed devices. They commented on the lack of suggestions to be beyond the scope of rule could be used to identify the FDA approved or authorized new that rule. innovative renal dialysis equipment and devices for use in an ESRD facility, Also, in the CY 2019 ESRD PPS supplies for which commenters were highlighting the need to promote proposed rule, we solicited comment on requesting additional payment under dialysis device innovation. The whether we should expand the outlier the ESRD PPS. We believe an NTAP-like commenters indicated they believed the policy to include composite rate drugs payment adjustment under the ESRD same rationale CMS used to propose and supplies (83 FR 34332). We noted PPS would be appropriate in order to broadening the TDAPA eligibility also that under the proposed expansion to support innovation while being would apply to new medical devices. the drug designation process, such responsive to stakeholders. Specifically, the commenters noted that expansion of the outlier policy could CMS has discretionary authority under support appropriate payment for i. Add-On Payments for New section 1881(b)(14)(D)(iv) of the Act to composite rate drugs once the TDAPA Technology Under the Inpatient adopt payment adjustments determined period has ended. Additionally, with Prospective Payment System appropriate by the Secretary, and stated regard to composite rate supplies, an In the CMS Innovators’ Guide to that precedent supports CMS’ authority expansion of the outlier policy could Navigating Medicare,30 we explain that to use non-budget neutral additions to support use of new innovative devices the hospital IPPS makes payments to the ESRD PPS base rate for adjustments or items that would otherwise be acute care hospitals for each Medicare under specific circumstances. considered in the ESRD PPS bundled patient or case treated. Hospitals are A professional association urged CMS payment. We stated that if commenters paid based on the average national and other relevant policymakers to believe such an approach is appropriate, resource use for treating patients in prioritize the development of a clear we requested they provide input on how similar circumstances, not the specific pathway to add new devices to the we would effectuate such a shift in cost of treating each individual patient. ESRD PPS bundled payment (83 FR policy. For example, we noted, the With few exceptions, Medicare does not 56973). The association stated that reporting of these services may be pay separately for individual items or additional money should be made challenging since they have never been services. Physicians and hospital staff available to appropriately reflect the reported on ESRD claims previously. determine the appropriate course of costs of new devices under the ESRD We specifically requested feedback treatment, and hospitals receive a PPS bundled payment. A national about how such items might work under bundled payment for the covered dialysis organization and a large dialysis the existing ESRD PPS outlier inpatient facility services provided to organization (LDO) asked CMS to clarify framework or whether specific changes the Medicare patient. Hospitals receive how it incentivizes the development of to the policy to accommodate such one IPPS payment per Medicare case at new dialysis devices. The organization items are needed. discharge that equates to the total We received mixed feedback in asked CMS to describe how such a Medicare payment for the facility costs response to the comment solicitation, device would be included in the ESRD of caring for that Medicare patient. More which was summarized in the CY 2019 PPS bundle, and suggested the initial information on determining IPPS ESRD PPS final rule (83 FR 56969 application of a pass-through payment, payment is located on the CMS website: through 56970). Some LDOs and which would be evaluated later, based https://www.cms.gov/Medicare/ national dialysis organizations stated on the data. The organization stated that Medicare-Fee-for-Service-Payment/ this evaluation would determine if the that they would prefer a smaller outlier AcuteInpatientPPS/index.html. device should be included in the ESRD pool with more money in the per Also as discussed in the CMS PPS base rate and whether or not treatment base rate while other ESRD Innovators’ Guide to Navigating additional funds should be added to the facilities agreed that the outlier policy Medicare,31 ESRD PPS bundled payment. should be more comprehensive and the IPPS is designed to In addition, as we discussed in the CY expanded to include more items and adapt to changing technology through 2019 ESRD PPS final rule (83 FR 56973), services. In our response, we stated we year-to-year adjustments in Medicare an LDO requested CMS plan recognized that the commenters’ Severity—Diagnosis Related Groups appropriately for innovative devices or concerns regarding the expansion of (MS–DRG) weights based on historical other new innovative products and outlier eligibility to include composite cost data. In theory, if new technologies asked CMS to work with the kidney care rate drugs and supplies are inextricably lead to better care but are more community to consider if and how new linked to their views on the expensive, or if they lead to more devices or other new innovative effectiveness of our broader outlier efficient care and are less expensive, products delivering high clinical value, policy or other payment adjustments. hospitals will eventually receive can be made available to beneficiaries, We indicated we would take these appropriate payment as the MS–DRG whether through the ESRD PPS or views into account as we consider the weights are adjusted over time to reflect through other payment systems. A home outlier policy and payment adjustments the impact of fluctuating costs. In dialysis patient group also expressed for future rulemaking. practice, however, there are concerns concern regarding the absence of a In light of these comments, we are that the system may be slow to react to pathway for adding new devices to the considering whether additional ESRD PPS bundled payment, stating payment may be warranted for certain 30 https://www.cms.gov/Medicare/Coverage/ that it left investors and industry wary new and innovative renal dialysis CouncilonTechInnov/Downloads/Innovators-Guide- Master-7-23-15.pdf. of investing in the development of new equipment and supplies. In sections 31 https://www.cms.gov/Medicare/Coverage/ devices for patients. In response, we II.B.3.a.i and II.B.3.a.ii of this proposed CouncilonTechInnov/Downloads/Innovators-Guide- expressed appreciation for the rule is a general description of the IPPS Master-7-23-15.pdf.

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rapidly evolving technological costs of the patient discharge exceed the than allowed by currently available advancements. MS–DRG payment of the case (including methods. There must also be evidence Hospitals may experience a financial adjustments for indirect medical that use of the device to make a disadvantage as they provide more education (IME) and disproportionate diagnosis affects the management of the expensive products and services to share hospital (DSH), but excluding patient. Medicare beneficiaries while waiting for outlier payments). The total covered • Use of the device significantly MS–DRG payments to reflect the higher costs are calculated by applying the improves clinical outcomes for a patient costs. Sections 1886(d)(5)(K) and (L) of cost-to-charge ratio (that is used for population as compared to currently the Act establish a process of identifying inpatient outlier purposes) to the total available treatments. We also noted and ensuring adequate payment for new covered charges of the discharge. examples of outcomes that are medical services and technologies under Under § 412.88, if the costs of the frequently evaluated in studies of the IPPS. As an incentive for hospitals discharge exceed the full MS–DRG medical devices. For example, to adopt new technologies during the payment, the additional payment ++ Reduced mortality rate with use of period before their costs are recognized amount equals the lesser of the the technology. in the MS–DRG weights, certain new following: (1) 50 percent of the costs of ++ Reduced rate of technology medical services or technologies may be the new medical service or technology; related complications. eligible for new technology add-on (2) or 50 percent of the amount by ++ Decreased rate of subsequent payments. The new technology add-on which the total covered costs of the case diagnostic or therapeutic interventions payment policy provides additional (as determined above) exceed the (for example, due to reduced rate of payments for eligible high cost cases standard MS–DRG payment, plus any recurrence of the disease process). without significantly eroding the applicable outlier payments if the costs ++ Decreased number of future incentives provided by a payment of the case exceed the MS–DRG, plus hospitalizations or physician visits. system based on averages. To qualify for adjustments for IME and DSH. More More rapid beneficial resolution of the add-on payments, the regulations at information on IPPS new technology disease process treatment because of the § 412.87 specify a service or technology add-on payments, including the use of the device. must be: (1) New, (2) demonstrate a SCI deadline to submit an application, is ++ Decreased pain, bleeding, or other over existing technology, and (3) be high located on the CMS website at http:// quantifiable symptom. cost such that the MS–DRG payment www.cms.gov/Medicare/Medicare-Fee- ++ Reduced recovery time. that would normally be paid is for-Service-Payment/ In the FY 2001 IPPS final rule (66 FR inadequate. For a complete discussion AcuteInpatientPPS/newtech.html. 46913), we stated that we believed the on the new technology add-on payment special payments for new technology ii. SCI Criteria for the New Technology criteria, we refer readers to the fiscal should be limited to those new Add-On Payment Under the IPPS year (FY) 2012 IPPS/LTCH PPS final technologies that have been rule (76 FR 51572 through 51574). Under section 1886(d)(5)(K)(vi) of the demonstrated to represent a substantial Since it can take 2 to 3 years for Act, a medical service or technology improvement in caring for Medicare reflection of cost data in the calculation will be considered a ‘‘new medical beneficiaries, such that there is a clear of the MS–DRG weights, technologies service or technology’’ if the service or advantage to creating a payment generally are considered new for 2 to 3 technology meets criteria established by incentive for physicians and hospitals to years after they become available. the Secretary after notice and an utilize the new technology. We also Applicants must demonstrate that their opportunity for public comment. For a stated that where such an improvement product offers SCI and the other NTAP more complete discussion of the is not demonstrated, we continued to requirements. establishment of the current criteria for believe the incentives of the DRG Under the cost criterion, consistent the new technology add-on payment, we system would provide a useful balance with the formula specified in section refer readers to the IPPS final rule to the introduction of new technologies. 1886(d)(5)(K)(ii)(I) of the Act, to assess published on September 7, 2001 in the In that regard, we also pointed out that the adequacy of payment for a new Federal Register (66 FR 46913), referred various new technologies introduced technology paid under the applicable to as ‘‘FY 2001 IPPS final rule,’’ where over the years have been demonstrated MS–DRG prospective payment rate, we we finalized the ‘‘substantial to have been less effective than initially evaluate whether the charges for cases improvement’’ criterion to limit new thought, or in some cases even involving the new technology exceed technology add-on payments under the potentially harmful. We stated that we the threshold amount for the MS–DRG IPPS to those technologies that afford believe that it is in the best interest of (or the case-weighted average of all clear improvements over the use of Medicare beneficiaries to proceed very relevant MS–DRGs, if the new previously available technologies. carefully with respect to the incentives technology could be assigned to many Specifically, we stated that we would created to quickly adopt new different MS–DRGs). evaluate a request for new technology technology. Although any interested party may add-on payments against the following We noted in the FY 2020 IPPS submit an application for a new criteria to determine if the new medical proposed rule (84 FR 19274 through technology add-on payment, service or technology would represent a 19275), that applicants for add-on applications often come from the SCI over existing technologies: payments for new medical services or manufacturer of a new drug or device. • The device offers a treatment option technologies must submit a formal Preliminary discussions on whether or for a patient population unresponsive request, including a full description of not new technologies qualify for add-on to, or ineligible for, currently available the clinical applications of the medical payments are published in the annual treatments. service or technology and the results of IPPS proposed rules and are open to • The device offers the ability to any clinical evaluations demonstrating public comment. diagnose a medical condition in a that the new medical service or The actual add-on payments are based patient population where that medical technology represents a SCI, along with on the cost to hospitals for the new condition is currently undetectable or a significant sample of cost data to technology. A new technology add-on offers the ability to diagnose a medical demonstrate that the medical service or payment is made if the total covered condition earlier in a patient population technology meets the cost criterion.

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Complete application information, along regarding composite rate equipment and kidney disease, at the beginning stages with final deadlines for submitting a full supplies. Discussions of the key of the development of an innovative application, is posted on the CMS findings from the TEP meeting can be product, while our proposals in this website at http://www.cms.gov/ found in section VIII.A of this proposed section are intended to support uptake Medicare/Medicare-Fee-for-Service- rule. In addition, some manufacturers of new and innovative renal dialysis Payment/AcuteInpatientPPS/ have informed us that there is little products after they have been newtech.html. incentive for them to develop authorized for marketing by FDA and Per section 1886(d)(5)(K)(i) of the Act, innovative equipment and supplies for meet other requirements, all of which the Secretary is required to establish a the treatment of ESRD primarily because happen after the development stage. mechanism to recognize the costs of ESRD facilities have no incentive to In addition, on July 10, 2019, the new medical services and technologies adopt innovative dialysis equipment President signed an Executive Order 32 under the payment system after notice and supplies since they are included in aimed at transforming kidney care in and opportunity for public comment. the ESRD PPS bundled payment and America. The executive order The payment rate updates and policy currently no additional payment is established many initiatives, including changes including new technology add- made. the launch of a public awareness on payments under the IPPS are In addition we believe innovations in campaign to prevent patients from going completed through the annual notice- kidney care are likely as a result of the into kidney failure and proposals for the and-comment rulemaking process with Kidney Innovation Accelerator (known Secretary to support research regarding an October 1 effective date. In the as KidneyX). KidneyX is a public- preventing, treating, and slowing proposed rule, CMS reviews each private partnership between the progression of kidney disease and application and the information and Department of Health and Human encouraging the development of clinical evidence provided by the Services and the American Society of breakthrough technologies to provide applicant on how it meets each of the Nephrology to accelerate innovation in patients suffering from kidney disease new technology add-on payment the prevention, diagnosis, and treatment with better options for care than those criteria. Regarding substantial clinical of kidney diseases. that are currently available. improvement, we work with our KidneyX seeks to improve the lives of medical officers to evaluate whether a dialysis patients by accelerating the i. Proposed Eligibility Criteria for technology represents a substantial development of drugs, devices, biologics Additional Payment for New and clinical improvement. Under the IPPS, and other therapies across the spectrum Innovative Renal Dialysis Equipment public input before publication of a of kidney care including prevention, and Supplies notice of proposed rulemaking on add- diagnostics, and treatment. KidneyX’s In consideration of the feedback we on payments is required by section first round of prize funding focused on have received, we agree that additional 1886(d)(5)(K)(viii) of the Act, as accelerating the commercialization of payment for certain renal dialysis amended by section 503(b)(2) of Public next-generation dialysis products, equipment and supplies may be Law 108–173, and provides for a aiming to reduce the risk of innovation warranted under specific circumstances mechanism for public input before by streamlining processes, reducing outlined in this section of the proposed publication of a notice of proposed regulatory barriers, and modernizing the rule. We are proposing to provide rulemaking regarding whether a medical way we pay for treatment. More than additional payment for new and service or technology represents a SCI or 150 applications were reviewed, innovative renal dialysis equipment and advancement. In the final rule, we make covering a full-range of innovative supplies furnished by ESRD facilities a determination whether an applicant proposals, including advances in access, (with the exception of capital-related has met the new technology add-on home hemodialysis and peritoneal assets), through a transitional add-on payment criteria and is eligible for the dialysis, adjuncts to current in-center payment adjustment as described add-on payment. dialysis, and proposals for implantable further in this proposed rule. The IPPS proposed and final rules go devices, externally-worn devices and Renal dialysis equipment and on display around April and August, prototypes for an artificial kidney. More supplies are medically necessary respectively, each year. The FY 2020 information regarding KidneyX is equipment and supplies used to furnish IPPS proposed rule is available on the available at the following link: http:// renal dialysis services in a facility or in CMS website at https://www.cms.gov/ www.kidneyx.org/. a patient’s home. We are proposing that Medicare/Medicare-Fee-for-Service- We believe some of the prototypes ‘‘new’’ renal dialysis equipment and Payment/AcuteInpatientPPS/IPPS- developed as part of the KidneyX will supplies are those that are granted Regulations-and-Notices-Items/CMS– be the type of innovation the marketing authorization by FDA on or 1716.html?DLPage=1&DLEntries= commenters requested and we want to after January 1, 2020. By including FDA 10&DLSort=2&DLSortDir=descending. incentivize ESRD facility use of those marketing approvals on or after January products. We note that in order for 1, 2020, we intend to support ESRD b. Proposed Additional Payment for equipment and supplies awarded facility use and beneficiary access to the New and Innovative Renal Dialysis through the KidneyX to be eligible for latest technological improvements to Equipment and Supplies Under the the additional payment under the ESRD renal dialysis equipment and supplies. ESRD PPS PPS proposals in this section of the We solicit comment on this aspect of Following publication of the CY 2019 proposed rule, the items would also our proposal and whether a different ESRD PPS final rule (83 FR 56969 need to be determined by CMS to be a FDA marketing approval date—for through 56970), which discussed the renal dialysis service and meet other example, on or after January 1, 2019— comment solicitation on expanding the eligibility criteria described in section might be appropriate. outlier policy to include composite rate II.B.3.b.i of this proposed rule. We also For new and innovative equipment drugs and supplies, we have received note that the goals for KidneyX and our and supplies, we believe the IPPS SCI additional information from dialysis proposal in this section are different but equipment and supply manufacturers complementary; KidneyX is focused on 32 https://www.whitehouse.gov/presidential- and a Technical Expert Panel (TEP) accelerating innovation in the actions/executive-order-advancing-american- meeting held in December 2018 prevention, diagnosis, and treatment of kidney-health/.

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criteria and the process used to evaluate the ESRD PPS, the basis of payment is the requirements for both CMS and SCI can be used as a proxy for the per treatment payment amount that provider billing systems. Information identifying new and innovative items is updated annually by the ESRD regarding the HCPCS process is worthy of additional payment under the bundled market basket and the available on the CMS website at https:// ESRD PPS. Under the IPPS, CMS has multifactor productivity adjustment. www.cms.gov/medicare/coding/ been assessing new technologies for Since the elements of the IPPS payment MedHCPCSGenInfo/Index.html. many years to assure that the additional system differ from that of the ESRD PPS, Under our proposal, we would model new technology add-on payments to we are only proposing to adopt the SCI our determination process similar to hospitals are made only for truly criteria in § 412.87(b)(1) at this time. that of IPPS’s NTAP. That is, innovative and transformative products. We are proposing to exclude capital- manufacturers would submit all CMS is proposing to adopt the IPPS SCI related assets from the additional information necessary for determining criteria under the ESRD PPS for the payment, which we would define based that the renal dialysis equipment or same reason. We want to ensure that on the Provider Reimbursement Manual supply meets the eligibility criteria additional payments made under the (Pub. L. 15–1) (chapter 1, section 104.1) listed in § 413.236(b). That would ESRD PPS are limited to new equipment as assets that a provider has an include FDA marketing authorization and supplies that are truly innovative. economic interest in through ownership information, the HCPCS application In addition, since renal dialysis services (regardless of the manner in which they information, and studies submitted as are routinely furnished to hospital were acquired). The Provider part of these two standardized inpatients and outpatients, we believe Reimbursement Manual is available on processes, an approximate date of the same SCI criteria should be used to the CMS website at https:// commercial availability, and any assess whether a new renal dialysis www.cms.gov/NoRegulations-and- information necessary for SCI criteria equipment or supply warrants Guidance/Guidance/Manuals/Paper- evaluation. For example, clinical trials, additional payment under Medicare. Based-Manuals-Items/CMS021929.html. peer reviewed journal articles, study Therefore, we are proposing to adopt This would include certain renal results, meta-analyses, systematic IPPS’s SCI criteria specified in dialysis equipment and supplies. literature reviews, and any other § 412.87(b)(1) including modifications Examples of capital-related assets for appropriate information sources can be finalized in future IPPS final rules, to ESRD facilities are dialysis machines, considered. We would provide a determine when a new and innovative water purification systems and systems description of the equipment or supply renal dialysis equipment or supply is designed to clean dialysis filters for and pertinent facts related to it that can eligible for additional payment under reuse. We do not believe that we should be evaluated through notice-and- the ESRD PPS. That is, we would adopt provide additional payment for capital- comment rulemaking. We would IPPS’s SCI criteria in § 412.87(b)(1) and related assets because the cost of these consider whether a new renal dialysis any supporting policy around this items are captured in cost reports, equipment or supply meets the criteria as discussed in IPPS preamble depreciate over time, and are generally eligibility criteria specified in newly language. We believe that by used for multiple patients. Since the added § 413.236(b) and announce the incorporating the SCI criteria for new costs of these items are reported in the results in the Federal Register as part of and innovative renal dialysis equipment aggregate, there is considerable our annual updates and changes to the under the ESRD PPS, we would be complexity in establishing a cost on a ESRD PPS. We would only consider, for consistent with IPPS and innovators per treatment basis. We therefore additional payment for a particular would have a standard for criteria to believe capital-related assets should be calendar year, an application for which meet for both settings. We are also excluded from additional payment at the renal dialysis equipment or supply proposing to establish a process this time, and we have proposed an is considered new by February 1 prior modeled after IPPS’s process of exclusion to the eligibility criteria in to the particular calendar year. determining if a new medical new § 413.236(b)(2). However, we note For example, in order to receive technology meets the SCI criteria that capital-related cost data from cost additional payment under the ESRD specified in § 412.87(b)(1) discussed in reports are used by CMS in regression PPS in CY 2022 we would require that section II.B.3.a.ii of this proposed rule. analyses to refine the ESRD PPS so that a complete application meeting our That is, we propose that CMS would the cost of any new capital-related requirements be received by CMS no determine whether the renal dialysis assets is accounted for in the ESRD PPS later than February 1, 2021. Then, we equipment or supply meets the payment adjustments. would include a discussion of the renal eligibility criteria proposed in newly Under our proposal, in addition to dialysis equipment or supply requesting added § 413.236(b). Similar to how we having marketing authorization by FDA additional payment in the CY 2022 evaluate whether a new drug or on or after January 1, 2020, and meeting ESRD PPS proposed rule. The biological product is eligible for the SCI criteria as determined under evaluation of the eligibility criteria TDAPA as discussed in the CY 2016 § 412.87(b)(1) as described in section would be in the CY 2022 ESRD PPS ESRD PPS final rule (80 FR 69019), we II.B.3.a.ii of this proposed rule, the final rule. If the renal dialysis would need to determine whether the equipment or supply must be equipment or supply qualifies for the renal dialysis equipment and supply commercially available, have a HCPCS additional payment, payment would meets our eligibility criteria. application submitted in accordance begin January 1, 2022. We note that as described in section with the official Level II HCPCS coding Alternatively, we considered an II.B.3.a.i of this proposed rule, IPPS has procedures, and have been designated application deadline of September 1, additional criteria that is specific to its by CMS as a renal dialysis service under however, we are proposing an earlier payment system, that is, a high cost § 413.171. Following FDA marketing timeframe so that this additional policy criteria relative to the MS–DRG authorization, in order to establish a would be implemented sooner. payment. We would not adopt the mechanism for payment, the equipment However, a September 1 deadline would specific IPPS high cost criteria or supply would then go through a provide more time initially for requirements under § 412.87(b)(3) under process to establish a billing code, manufacturers to submit applications. the ESRD PPS since the basis of specifically a HCPCS code. This We solicit comment on the proposed payment is different. Specifically, under information is necessary to conform to deadline date for the application.

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We also solicit comment on the services to which they apply and are application of allowances and discounts proposed criteria to determine new and uniformly applied. In addition, the deductions. We believe the MAC- innovative renal dialysis equipment and Provider Reimbursement Manual determined price should reflect the supplies that would be eligible for (chapter 22, section 2202.4) specifies discounts, rebates and other allowances additional payment. In addition, we are that charges refer to the regular rates the ESRD facility (or parent company) soliciting comment on the use of established by the provider for services receives. These terms are defined in the different evaluative criteria and, where rendered to both beneficiaries and to Provider Reimbursement Manual applicable, payment methodologies, for other paying patients. Charges should be (chapter 8).33 If the MAC-determined renal dialysis supplies and equipment related consistently to the cost of the price does not reflect discounts, rebates that may be eligible for an additional services and uniformly applied to all and other allowances, the price would payment under the ESRD PPS. These patients whether inpatient or outpatient. likely exceed the facility’s cost for the criteria could include cost thresholds All patients’ charges used in the item and result in higher coinsurance for high cost items. We solicit comment development of apportionment ratios obligations for beneficiaries. For this on whether any of the IPPS SCI criteria should be recorded at the gross value; reason, we believe it is important for would not be appropriate for the ESRD that is, charges before the application of MACs to develop a payment rate taking facility setting and whether there should allowances and discounts deductions. into consideration the invoice amount, be additional criteria specific to ESRD. Since we require charges to be the facility’s charge for the item on the We seek comment on whether to use reported at the gross value, we are not claim, discounts, allowances, rebates, FDA’s pre-market approval and De Novo proposing to use charges as the basis of the price established for the item by pathways as a proxy for or in place of payment. The ESRD PPS does not have other MACs and the sources of the proposed SCI criteria. In addition, a charge structure or a gap-filling policy information used to establish that price, we are soliciting comment on potential similar to the DMEPOS policy. We are payment amounts from other payers and implementation challenges, such as proposing to obtain a pricing indicator the information used to establish those what sources of data that CMS should that requires the item to be priced by payment amounts, and information on utilize to assess SCI. We are also Medicare Administrative Contractors pricing for similar items used to develop soliciting comment on the proposed (MACs). We propose to adopt a process a payment rate. We believe the process that would be used to determine that utilizes invoiced-based pricing. We information that ESRD facilities would SCI. Also, we are soliciting comment on note that there are instances that invoice supply to the MACs should be the benefits and drawbacks of the SCI pricing is also used for DMEPOS. verifiable, so that we can more criteria proposed in this rulemaking. Specifically, in the Medicare Claims appropriately establish the actual Processing Manual, (chapter 23, section facility cost of the items. ii. Pricing of New and Innovative Renal 60.3), we state that ‘‘potential Dialysis Equipment and Supplies The specific amounts would be appropriate sources for such established for the new and innovative With respect to the new and commercial pricing information can renal dialysis equipment or supply innovative renal dialysis equipment and . . . include verifiable information from HCPCS code using verifiable supplies discussed in section II.B.3.b.i supplier invoices.’’ information from the following sources of this proposed rule, we are not aware In addition, in the CY 2019 Physician of information, if available: The invoice of pricing compendia currently Fee Schedule final rule (83 FR 59663), amount, facility charges for the item, available to price these items for the we discuss that invoice based pricing is discounts, allowances, and rebates; the transitional add-on payment adjustment used to pay for Part B drugs and price established for the item by other proposal discussed in this section. We biologicals in certain circumstances as MACs and the sources of information also note that, unlike for new renal described in the Medicare Claims used to establish that price; payment dialysis drugs and biological products Processing Manual (chapter 17, section amounts determined by other payers eligible for the TDAPA, ASP and WAC 20.1.3). For example, if a payment and the information used to establish pricing do not exist for renal dialysis allowance limit for a drug or biological those payment amounts; and charges equipment and supplies. Unlike the is not included in the quarterly ASP and payment amounts, required for IPPS NTAP methodology, which uses Drug Pricing File or Not Otherwise MS–DRG payment and cost-to-charge Classified Pricing File, MACs are other equipment and supplies that may ratios in their high cost criteria payment permitted to use invoice pricing. MACs be comparable or otherwise relevant. Once there is sufficient payment data calculation, the ESRD PPS has a single may also use invoice based pricing for across MACs, we would consider per treatment payment amount. new drugs and biologicals that are not establishing a national price for the item Therefore, we must propose a pricing included in the ASP Medicare Part B method in the absence of data indicating Drug Pricing File or Not Otherwise through notice and comment a true market price. Classified Pricing File. The new drug rulemaking. We are inviting public In accordance with ESRD billing provision may be applied during the comment on this proposed approach for instructions of the Medicare Claims period just after a drug is marketed, that pricing new and innovative renal Processing Manual (chapter 8, section is before ASP data has been reported to dialysis equipment and supplies for the 50.3), we are proposing that ESRD CMS. We believe using invoices for new transitional add-on payment adjustment facilities would report the HCPCS code, drugs and drugs without national proposal discussed in section II.B.3.b.iii when available, and their corresponding pricing is a similar situation to dealing of this proposed rule. We also solicit charge for the item. In accordance with with new and innovative renal dialysis comment on other pricing criteria and the Provider Reimbursement Manual equipment and supplies that do not other verifiable sources of information (chapter 22, section 2203), Medicare have a national price. that should be considered. does not dictate a provider’s charge We believe that an invoice-based As discussed in section II.B.3.a.i of structure or how it itemizes charges but approach could be applied to the renal this proposed rule, under the IPPS’s it does determine whether charges are dialysis equipment and supplies that are 33 Medicare Provider Reimbursement Manual. acceptable for Medicare purposes. the focus of our proposal. As noted Chapter 8. Available at: https://www.cms.gov/ Charges should be reasonably and previously, ESRD facility charges are Regulations-and-Guidance/Guidance/Transmittals/ consistently related to the cost of gross values; that is, charges before the Downloads/R450PR1.pdf.

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NTAP payment policy, the additional this proposed rule. That is, the payment seamless access to the new and payment for cases with high costs adjustment would only be available for innovative equipment and supplies. In involving eligible new technologies renal dialysis equipment and supplies addition, historically when we have preserves some of the incentives under that meet the proposed eligibility implemented policy changes whereby the average-based payment system. The criteria discussed in section II.B.3.b.i of facilities need to adjust their system payment mechanism is based on the this proposed rule. We would refer to modifications or protocols, we have cost to hospitals for the new technology. the adjustment as the Transitional Add- provided a transition period. We believe Under § 412.88, Medicare pays a on Payment Adjustment for New and that this 2-year timeframe is similar in marginal cost factor of 50 percent for the Innovative Equipment and Supplies that facilities are making changes to costs of the new technology in excess of (TPNIES). their systems and care plans to the full DRG payment. If the costs of the We would establish the TPNIES based incorporate the new renal dialysis discharge exceed the full MS–DRG on our authority under section equipment and supplies into their payment, the additional payment 1881(b)(14)(D)(iv) of the Act, which standards of care and this could be amount equals the lesser of the provides in relevant part that the ESRD supported by a transition period. following: 50 percent of the costs of the PPS may include such other payment We further believe providing the new medical service or technology; or adjustments as the Secretary determines TPNIES for 2 years would address the 50 percent of the amount by which the appropriate. We believe this authority is stakeholders’ concerns regarding total covered costs of the case (as broad enough to support the creation of additional payment to account for determined above) exceed the standard the TPNIES. higher cost of more new and innovative MS–DRG payment, plus any applicable We acknowledge that ESRD facilities equipment and supplies that they outlier payments if the costs of the case have unique challenges with regard to believe may not be adequately captured exceed the MS–DRG, plus adjustments implementing new renal dialysis drugs by the dollars allocated in the ESRD PPS for IME and DSH. and biological products as discussed in base rate. That is, this transitional add- To mitigate the Medicare section II.B.1.a of this proposed rule, on payment adjustment would give the expenditures incurred as a result of the and we believe that the same issues new and innovative equipment and transitional add-on payment adjustment would apply with respect to supplies a foothold in the market so that proposal discussed later in this section incorporating new and innovative when the timeframe is complete, they of the proposed rule, we are proposing equipment and supplies into their are able to compete with the other to base the additional payment on 65 standards of care. For example, when equipment and supplies also accounted percent of the MAC-determined price. new and innovative equipment and for in the ESRD PPS base rate. Once the We noted in the FY 2020 IPPS proposed supplies are introduced to the market, 2-year timeframe is complete, we rule (84 FR 19162) a 50 percent capped ESRD facilities would need to analyze propose that the equipment or supply add-on amount was considered low their budgets and engage in contractual would then qualify as an outlier service, with regard to providing hospitals with agreements to accommodate the new if applicable, and the facility would no a sufficient incentive to use the new items into their care plans. Newly longer receive the TPNIES for that technology. In that rule, we proposed to marketed equipment and supplies can particular item. Instead, in the outlier modify the current payment mechanism be unpredictable with regard to their policy space, there is a level playing to increase the amount of the maximum uptake and pricing, which makes these field where products could gain market add-on payment amount to 65 percent. decisions challenging for ESRD share by offering the best practicable We believe that we have the same goal facilities. Furthermore, practitioners combination of price and quality. as IPPS with regard to supporting ESRD should have the ability to evaluate the We note that this proposal would facility use of new and innovative renal appropriate use of a product and its increase Medicare expenditures, which dialysis equipment and supplies. effect on patient outcomes. We believe would result in increases to ESRD Therefore, we are proposing to base the this uptake period would be supported beneficiary coinsurance, since we have transitional add-on payment adjustment by the proposed TPNIES because it not previously provided a payment for new and innovative equipment and would help facilities transition or test adjustment for renal dialysis equipment supplies on 65 percent of the MAC- new and innovative equipment and and supplies in the past. However, to determined price. We are also soliciting supplies in their businesses under the support agency initiatives and to be comment on whether we should ESRD PPS. The proposed TPNIES consistent with both our TDAPA policy explicitly link to the IPPS NTAP would target payment for the use of new and inpatient hospital payment policies, mechanism’s maximum add-on and innovative renal dialysis equipment we believe that the proposed TPNIES payment amount percentage so that any and supplies during the period when a would be appropriate to support ESRD change in that percentage would also product is new to the market. facility uptake in furnishing new and change for the proposed transitional We are proposing to apply the innovative renal dialysis equipment and add-on payment adjustment paid to TPNIES for 2-calendar years from the supplies. ESRD facilities for furnishing new and effective date of the change request, The intent of the TPNIES for new and innovative renal dialysis equipment and which would coincide with the effective innovative equipment and supplies supplies. date of the CY ESRD PPS final rule. We would be to provide a transition period would monitor renal dialysis service for the unique circumstances iii. Proposed Use of a Transitional Add- utilization trends, after which we are experienced by ESRD facilities when On Payment Adjustment for New and proposing that the item would become incorporating certain new and Innovative Renal Dialysis Equipment an eligible outlier service as provided in innovative equipment and supplies into and Supplies § 413.237. Therefore, we are proposing their businesses and to allow time for We are proposing to provide a revisions to § 413.237(a)(1) to reflect the uptake of the new and innovative transitional add-on payment adjustment outlier eligibility once the TPNIES equipment and supplies. At this time, for new and innovative renal dialysis period ends. We believe that 2 years we do not believe that it would be equipment and supplies furnished by would be a sufficient timeframe for appropriate to add dollars to the ESRD ESRD facilities that meet the eligibility ESRD facilities to set up or adjust PPS base rate for new and innovative criteria described in section II.B.3.b.i of business practices so that there is renal dialysis equipment and supplies

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because, as noted previously, the ESRD only consider a complete application panel are excluded from the definition PPS base rate includes the cost of received by CMS by February 1 prior to of outlier services.’’ We are proposing equipment and supplies used to furnish the particular calendar year. this technical edit to reflect an order in a dialysis treatment. As we have stated We also propose to add § 413.236(d) the definition of ESRD outlier services in CY 2019 ESRD PPS proposed rule (83 to provide a payment adjustment for a as first, items and services included and FR 34314), we believe that increasing new and innovative renal dialysis second, items and services that are the base rate for these items could be in equipment or supply based on 65 excluded. conflict with the fundamentals of a PPS. percent of the MAC-determined price, We are also proposing technical That is, under a PPS, Medicare makes as described in proposed § 413.236(e). changes to § 413.237(a)(1)(i) through (iv) payments based on a predetermined, The TPNIES would be paid for 2- to replace the phrases ‘‘ESRD-related’’ fixed amount that reflects the average calendar years. Following payment of and ‘‘used in the treatment of ESRD’’ cost and the facility retains the profit or the TPNIES, the ESRD PPS base rate with ‘‘renal dialysis’’ to reflect the suffers a loss resulting from the would not be modified and the new and current terminology used under the difference between the payment rate innovative renal dialysis equipment or ESRD PPS and to replace the word and the facility’s resource use which supply would be an eligible outlier ‘‘biologicals’’ with ‘‘biological products’’ creates an incentive for facilities to service as provided in § 413.237. to reflect FDA’s preferred terminology. control their costs. It is not the intent of We also propose to add § 413.236(e) to a PPS to add dollars to the base require that the MAC on behalf of CMS c. Comment Solicitation on Payment for whenever something new is made would establish prices for the new and Renal Dialysis Humanitarian Use available. innovative renal dialysis equipment and Devices (HUD) Therefore, we propose to add supplies described in newly added Medical devices and related § 413.236, Transitional Add-on Payment § 413.236(b), and that we would use innovations are integral in meeting the Adjustment for New and Innovative these prices for the purposes of needs of patients, especially the most Equipment and Supplies. We propose to determining the TPNIES. The specific vulnerable patients, such as ESRD add § 413.236(a) to state that the basis amounts would be established for the patients and those with rare medical for the TPNIES is to establish a payment new and innovative renal dialysis conditions. While FDA determines adjustment to support ESRD facilities in equipment or supply HCPCS code using which devices are authorized for the uptake of new and innovative renal verifiable information from the marketing, public healthcare programs dialysis equipment and supplies under following sources of information, if such as Medicare determine how these the ESRD PPS under the authority of available: The invoice amount, facility products will be covered and paid, section 1881(b)(14)(D)(iv) of the Act. We charges for the item, discounts, which affects patient access to new and also propose to add § 413.236(b) to allowances, and rebates; the price innovative products. We are soliciting require that a renal dialysis equipment established for the item by other MACs comments on Medicare payment for or supply meet the following eligibility and the sources of information used to renal dialysis services that have a criteria in order to receive the TPNIES: establish that price; payment amounts Humanitarian Use Device (HUD) (1) Has been designated by CMS as a determined by other payers and the designation. Under FDA regulations (21 renal dialysis service under § 413.171, information used to establish those CFR 814.3(n)), a HUD is a ‘‘medical (2) is new, meaning it is granted payment amounts; and charges and device intended to benefit patients in marketing authorization by FDA on or payment amounts, required for other the treatment or diagnosis of a disease after January 1, 2020, (3) is equipment and supplies that may be or condition that affects or is manifested commercially available, (4) has a comparable or otherwise relevant. in not more than 8,000 individuals in We are also proposing to add Healthcare Common Procedure Coding the United States per year.’’ Medicare paragraph (e) to § 413.230 to reflect the System (HCPCS) application submitted has no specific rules, regulations or TPNIES. We believe this modification is in accordance with the official Level II instructions with regard to HUDs. We necessary so the regulation HCPCS coding procedures, (5) is are particularly interested in receiving appropriately reflects all inputs in the innovative, meaning it meets the criteria comments on HUDs that would be calculation of the per treatment specified in § 412.87(b)(1) and related considered renal dialysis services under guidance in that it represents an payment amount. Since we are adding paragraphs (d) the ESRD PPS, any barriers to payment advance that substantially improves, encountered, and past experience in relative to technologies previously (discussed in section II.B.1.e of this obtaining Medicare payment for these available, the diagnosis or treatment of proposed rule) and (e) to § 413.230, we items through the MACs. Medicare beneficiaries, and (6) is not a also propose a technical change to capital-related asset that an ESRD remove ‘‘and’’ from the end of 4. Proposal To Discontinue the ESA facility has an economic interest in § 413.230(b). We propose that the ‘‘and’’ Monitoring Policy (EMP) Under the through ownership (regardless of the would be added to the end of ESRD PPS § 413.230(d). manner in which it was acquired). a. Background We also propose to add § 413.236(c) to In addition, we are proposing to establish a process for SCI revise the definition of ESRD outlier In the CY 2011 ESRD PPS final rule determination and deadline for services at § 413.237(a)(1) by adding a (75 FR 49067, 49145 through 49147), consideration of new renal dialysis new paragraph (a)(1)(v) to include renal CMS adopted the ESA monitoring equipment or supply applications under dialysis equipment and supplies that policy (EMP) under the ESRD PPS for the ESRD PPS. That is, we propose that receive the TPNIES as specified in purposes of calculating the base rate and we would consider whether a new renal § 413.236 after the payment period has for establishing the outlier policy’s dialysis supply or equipment meets the ended. We propose to redesignate percentage and thresholds. eligibility criteria specified in existing paragraph (a)(1)(v) as paragraph For purposes of calculating the CY § 413.236(b) and announce the results in (a)(1)(vi) and revise the paragraph to 2011 ESRD PPS base rate, payments for the Federal Register as part of our state ‘‘As of January 1, 2012, the ESAs were capped based on determined annual updates and changes to the laboratory tests that comprise the dose limits as discussed in the Medicare ESRD PPS. We propose that we would Automated Multi-Channel Chemistry Claims Processing Manual (chapter 8,

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section 60.4.1). Payments for epoetin b. Proposal To Discontinue the We request public comments on our alfa in excess of 500,000 units per Application of the EMP to Outlier proposal to discontinue the application month in 2007 were capped at 500,000 Payments Under the ESRD PPS of the EMP under the ESRD PPS. units and a similar cap was applied to 5. Proposed CY 2020 ESRD PPS Update claims for darbepoetin alfa, in which the Effective January 1, 2020, CMS is caps were based on 1500 mcg per month proposing to no longer apply the EMP a. Proposed CY 2020 ESRD Bundled under the ESRD PPS. Since the in 2007 (75 FR 49067). (ESRDB) Market Basket Update, implementation of the ESRD PPS, ESA Productivity Adjustment, and Labor- With regard to the application of the utilization has decreased significantly Related Share for ESRD PPS outlier policy, since ESAs are because the structure of the PPS In accordance with section considered to be an ESRD outlier service removed the incentives to overuse these under § 413.237(a)(1)(i), covered units 1881(b)(14)(F)(i) of the Act, as added by biological products. ESRD facilities section 153(b) of MIPPA and amended are priced and considered toward the would no longer be required to report by section 3401(h) of the Affordable eligibility for outlier payment consistent the EMP-related modifiers and Medicare Care Act, beginning in 2012, the ESRD with § 413.237(b). That is, we apply contractors would no longer apply PPS payment amounts are required to be dosing reductions and ESA dose limits dosing reduction or dose limit edits to annually increased by an ESRD market consistent with the EMP prior to any ESA dosing. Therefore, these edits basket increase factor and reduced by calculation of outlier eligibility. would no longer be applied prior to the productivity adjustment described Medicare contractors apply a 25 percent calculation of outlier eligibility and in section 1886(b)(3)(B)(xi)(II) of the reduction in the reported ESA dose on would no longer be reflected in outlier Act. The application of the productivity the claim when the hemoglobin (or payments. adjustment may result in the increase hematocrit) level exceeded a certain We would continue to require ESRD factor being less than 0.0 for a year and value, unless the ESRD facility reported facilities to report all necessary may result in payment rates for a year a modifier to indicate the dose was information for the ESRD Quality being less than the payment rates for the being decreased. Also under the EMP, Incentive Program. As part of managing preceding year. The statute also ESRD facilities are required to report the ESRD PPS, CMS has a monitoring provides that the market basket increase other modifiers to indicate a patient’s 3- program in place that studies the trends factor should reflect the changes over month rolling average hemoglobin (or and behaviors of ESRD facilities under time in the prices of an appropriate mix hematocrit) level so that the Medicare the ESRD PPS and the health outcomes of goods and services used to furnish contractor knows when to apply a 50 of the beneficiaries who receive their renal dialysis services. percent reduction in the reported ESA care.34 If we finalize this proposal, we As required under section dose on the claim. In addition to these would continue to monitor the 1881(b)(14)(F)(i) of the Act, CMS dosing reductions, we also apply ESA utilization of ESAs to determine if developed an all-inclusive ESRD dose limits as discussed in the Medicare additional medically unlikely edits are Bundled (ESRDB) input price index (75 Claims Processing Manual (chapter 8, necessary. In addition, with the FR 49151 through 49162). In the CY section 60.4.1) prior to any calculation increased use of certain phosphate 2015 ESRD PPS final rule we rebased and revised the ESRDB input price of outlier eligibility. binders that have the secondary effect of anemia management, CMS would index to reflect a 2012 base year (79 FR When we adopted the EMP for the closely monitor ESA usage in 66129 through 66136). Subsequently, in ESRD PPS in the CY 2011 ESRD PPS conjunction with phosphate binder the CY 2019 ESRD PPS final rule, we final rule, we explained that we prescribing and usage. finalized a rebased ESRDB input price believed that the continued application index to reflect a 2016 base year (83 FR We believe that discontinuing this of the EMP would help ensure the 56951 through 56962). policy would reduce burden for ESRD proper dosing of ESAs and provide a Although ‘‘market basket’’ technically facilities because the EMP provides an describes the mix of goods and services safeguard against the overutilization of opportunity for appeal to address those used for ESRD treatment, this term is ESAs, particularly where the situations where there might be medical also commonly used to denote the input consumption of other separately billable justification for higher hematocrit or price index (that is, cost categories, their services may be high, in order to obtain hemoglobin levels. Beneficiaries, respective weights, and price proxies outlier payments (75 FR 49146). Due to physicians, and ESRD facilities are combined) derived from a market implementation of the ESRD PPS and required to submit additional basket. Accordingly, the term ‘‘ESRDB FDA relabeling of epoetin alfa, which documentation to justify medical market basket,’’ as used in this stated that the individualized dosing necessity, and any outlier payment document, refers to the ESRDB input should be that which would achieve reduction amounts are subsequently price index. and maintain hemoglobin levels within reinstated when documentation We propose to use the CY 2016-based the range of 10 to 12 g/dL, we no longer supports the higher hematocrit or ESRDB market basket as finalized and believe application of the EMP is hemoglobin levels. Thus, we believe described in the CY 2019 ESRD PPS necessary to control utilization of ESAs this proposal would reduce the final rule (83 FR 56951 through 56962) documentation burden on ESRD in the ESRD population. That is, the to compute the CY 2020 ESRDB market facilities because they would no longer impact of no longer paying separately basket increase factor based on the best have to go through the EMP appeal for ESAs, which discourages available data. Consistent with process and submit additional overutilization, along with practitioners historical practice, we propose to documentation regarding medical prescribing the biological product to estimate the ESRDB market basket necessity. maintain a lower hemoglobin level, has update based on IHS Global Inc.’s (IGI), resulted in a decline in its utilization forecast using the most recently and a stringent monitoring of the 34 ESRD PPS Claims-Based Monitoring Program. Available at: https://www.cms.gov/Medicare/ available data. IGI is a nationally biological product’s levels in patients. Medicare-Fee-for-Service-Payment/ESRDpayment/ recognized economic and financial ESRD-Claims-Based-Monitoring.html. forecasting firm that contracts with CMS

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to forecast the components of the market PPS final rule (75 FR 49200), we 72173), and we apply the wage index for baskets. Using this methodology and the finalized an adjustment for wages at Guam to American Samoa and the IGI first quarter 2019 forecast of the CY § 413.231. Specifically, CMS adjusts the Northern Mariana Islands (78 FR 2016-based ESRDB market basket (with labor-related portion of the base rate to 72172). Beginning in CY 2020, we are historical data through the fourth account for geographic differences in proposing that the statewide urban quarter of 2018), the proposed CY 2020 the area wage levels using an average based on the average of all ESRDB market basket increase factor is appropriate wage index which reflects urban areas within the state also be 2.1 percent. the relative level of hospital wages and applied to the Carson City, Nevada Under section 1881(b)(14)(F)(i) of the wage-related costs in the geographic CBSA. Act, for CY 2012 and each subsequent area in which the ESRD facility is A wage index floor value is applied year, the ESRD market basket percentage located. We use the Office of under the ESRD PPS as a substitute increase factor shall be reduced by the Management and Budget’s (OMB’s) wage index for areas with very low wage productivity adjustment described in core-based statistical area (CBSA)-based index values. Currently, all areas with section 1886(b)(3)(B)(xi)(II) of the Act. geographic area designations to define wage index values that fall below the The multifactor productivity (MFP) is urban and rural areas and their floor are located in Puerto Rico. derived by subtracting the contribution corresponding wage index values (75 FR However, the wage index floor value is of labor and capital input growth from 49117). OMB publishes bulletins applicable for any area that may fall output growth. We finalized the detailed regarding CBSA changes, including below the floor. methodology for deriving the MFP changes to CBSA numbers and titles. In the CY 2011 ESRD PPS final rule projection in the CY 2012 ESRD PPS The bulletins are available online at (75 FR 49116 through 49117), we final rule (76 FR 40503 through 40504). https://www.whitehouse.gov/omb/ finalized a policy to reduce the wage The most up-to-date MFP projection bulletins/. index floor by 0.05 for each of the methodology is available on the CMS For CY 2020, we would update the remaining years of the ESRD PPS website at https://www.cms.gov/ wage indices to account for updated transition, that is, until CY 2014. We Research-Statistics-Data-and-Systems/ wage levels in areas in which ESRD applied a 0.05 reduction to the wage Statistics-Trends-and-Reports/ facilities are located using our existing index floor for CYs 2012 and 2013, MedicareProgramRatesStats/ methodology. We use the most recent resulting in a wage index floor of 0.5500 Downloads/MFPMethodology.pdf. Using pre-floor, pre-reclassified hospital wage and 0.5000, respectively (CY 2012 ESRD this methodology and the IGI first data collected annually under the PPS final rule, 76 FR 70241). We quarter 2019 forecast, the proposed MFP inpatient PPS. The ESRD PPS wage continued to apply and reduce the wage adjustment for CY 2020 (the 10-year index values are calculated without index floor by 0.05 in CY 2013 (77 FR moving average of MFP for the period regard to geographic reclassifications 67459 through 67461). Although we ending CY 2020) is projected to be 0.4 authorized under sections 1886(d)(8) only intended to provide a wage index percent. and (d)(10) of the Act and utilize pre- floor during the 4-year transition in the As a result of these provisions, the floor hospital data that are unadjusted CY 2014 ESRD PPS final rule (78 FR proposed CY 2020 ESRD market basket for occupational mix. The proposed CY 72173), we decided to continue to apply adjusted for MFP is 1.7 percent. This 2020 wage index values for urban areas the wage index floor and reduce it by market basket increase is calculated by are listed in Addendum A (Wage 0.05 per year for CY 2014 and for CY starting with the proposed CY 2020 Indices for Urban Areas) and the 2015. ESRDB market basket percentage proposed CY 2020 wage index values In the CY 2016 ESRD PPS final rule increase factor of 2.1 percent and for rural areas are listed in Addendum (80 FR 69006 through 69008), however, reducing it by the proposed MFP B (Wage Indices for Rural Areas). we decided to maintain a wage index adjustment (the 10-year moving average Addenda A and B are located on the floor of 0.4000, rather than further of MFP for the period ending CY 2020) CMS website at https://www.cms.gov/ reduce the floor by 0.05. We stated that of 0.4 percent. Medicare/Medicare-Fee-for-Service- we needed more time to study the wage As is our general practice, if more Payment/ESRDpayment/End-Stage- indices that are reported for Puerto Rico recent data are subsequently available Renal-Disease-ESRD-Payment- to assess the appropriateness of (for example, a more recent estimate of Regulations-and-Notices.html. discontinuing the wage index floor (80 the market basket update or MFP We have also adopted methodologies FR 69006). adjustment), we propose to use such for calculating wage index values for In the CY 2017 ESRD PPS proposed data to determine the final CY 2020 ESRD facilities that are located in urban rule (81 FR 42817), we presented the market basket update and/or MFP and rural areas where there is no findings from analyses of ESRD facility adjustment. hospital data. For a full discussion, see cost report and claims data submitted by For the CY 2020 ESRD payment CY 2011 and CY 2012 ESRD PPS final facilities located in Puerto Rico and update, we propose to continue using a rules at 75 FR 49116 through 49117 and mainland facilities. We solicited public labor-related share of 52.3 percent for 76 FR 70239 through 70241, comments on the wage index for CBSAs the ESRD PPS payment, which was respectively. For urban areas with no in Puerto Rico as part of our continuing finalized in the CY 2019 ESRD PPS final hospital data, we compute the average effort to determine an appropriate rule (83 FR 56963). wage index value of all urban areas policy. We did not propose to change within the state and use that value as the wage index floor for CBSAs in b. The Proposed CY 2020 ESRD PPS the wage index. For rural areas with no Puerto Rico, but we requested public Wage Indices hospital data, we compute the wage comments in which stakeholders could Section 1881(b)(14)(D)(iv)(II) of the index using the average wage index provide useful input for consideration Act provides that the ESRD PPS may values from all contiguous CBSAs to in future decision-making. Specifically, include a geographic wage index represent a reasonable proxy for that we solicited comment on the payment adjustment, such as the index rural area. We apply the statewide urban suggestions that were submitted in the referred to in section 1881(b)(12)(D) of average based on the average of all CY 2016 ESRD PPS final rule (80 FR the Act, as the Secretary determines to urban areas within the state to 69007). After considering the public be appropriate. In the CY 2011 ESRD Hinesville-Fort Stewart, Georgia (78 FR comments we received regarding the

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wage index floor, we finalized a wage care, including variability in the amount efforts items and services that are either index floor of 0.4000 in the CY 2017 of ESAs necessary for anemia incorrectly being identified as eligible ESRD PPS final rule (81 FR 77858). management. Some examples of the outlier services or any new items and In the CY 2018 ESRD PPS final rule patient conditions that may be reflective services that may require an update to (82 FR 50747), we finalized a policy to of higher facility costs when furnishing the list of renal dialysis items and permanently maintain the wage index dialysis care would be frailty, obesity, services that qualify as outlier services, floor of 0.4000, because we believed it and comorbidities, such as cancer. The which are made through administrative was appropriate and provided ESRD PPS recognizes high cost patients, issuances. additional payment support to the and we have codified the outlier policy Under § 413.237, an ESRD facility is lowest wage areas. It also obviated the and our methodology for calculating eligible for an outlier payment if its need for an additional budget-neutrality outlier payments at § 413.237. The actual or imputed MAP amount per adjustment that would reduce the ESRD policy provides that the following ESRD treatment for ESRD outlier services PPS base rate, beyond the adjustment outlier items and services are included exceeds a threshold. The MAP amount needed to reflect updated hospital wage in the ESRD PPS bundle: (1) ESRD- represents the average incurred amount data, in order to maintain budget related drugs and biologicals that were per treatment for services that were or neutrality for wage index updates. or would have been, prior to January 1, would have been considered separately In the CY 2019 ESRD PPS final rule 2011, separately billable under billable services prior to January 1, (83 FR 56964 through 56967), we Medicare Part B; (2) ESRD-related 2011. The threshold is equal to the finalized an increase to the wage index laboratory tests that were or would have ESRD facility’s predicted ESRD outlier floor from 0.4000 to 0.5000 for CY 2019 been, prior to January 1, 2011, services MAP amount per treatment and subsequent years. We explained separately billable under Medicare Part (which is case-mix adjusted and that we revisited our evaluation of B; (3) medical/surgical supplies, described in the following paragraphs) payments to ESRD facilities located in including syringes, used to administer plus the FDL amount. In accordance the lowest wage areas to be responsive ESRD-related drugs that were or would with § 413.237(c) of our regulations, to stakeholder comments and to ensure have been, prior to January 1, 2011, facilities are paid 80 percent of the per payments under the ESRD PPS are separately billable under Medicare Part treatment amount by which the imputed appropriate. We provided statistical B; and (4) renal dialysis services drugs MAP amount for outlier services (that is, analyses that supported a higher wage that were or would have been, prior to the actual incurred amount) exceeds index floor and finalized an increase January 1, 2011, covered under this threshold. ESRD facilities are from 0.4000 to 0.5000 to safeguard Medicare Part D, including ESRD- eligible to receive outlier payments for access to care in those areas. We further related oral-only drugs effective January treating both adult and pediatric explained that we believe a wage index 1, 2025. dialysis patients. floor of 0.5000 strikes an appropriate In the CY 2011 ESRD PPS final rule In the CY 2011 ESRD PPS final rule balance between providing additional (75 FR 49142), we stated that for and at § 413.220(b)(4), using 2007 data, payments to areas that fall below the purposes of determining whether an we established the outlier percentage, wage floor while minimizing the impact ESRD facility would be eligible for an which is used to reduce the per on the ESRD PPS base rate. Currently, outlier payment, it would be necessary treatment base rate to account for the all areas with wage index values that for the facility to identify the actual proportion of the estimated total fall below the floor are located in Puerto ESRD outlier services furnished to the payments under the ESRD PPS that are Rico. However, the wage index floor patient by line item (that is, date of outlier payments, at 1.0 percent of total value is applicable for any area that may service) on the monthly claim. Renal payments (75 FR 49142 through 49143). fall below the floor. dialysis drugs, laboratory tests, and We also established the FDL amounts A facility’s wage index is applied to medical/surgical supplies that are that are added to the predicted outlier the labor-related share of the ESRD PPS recognized as outlier services were services MAP amounts. The outlier base rate. In the CY 2019 ESRD PPS originally specified in Attachment 3 of services MAP amounts and FDL final rule (83 FR 56963), we finalized a Change Request 7064, Transmittal 2033 amounts are different for adult and labor-related share of 52.3 percent, issued August 20, 2010, rescinded and pediatric patients due to differences in which is based on the 2016-based replaced by Transmittal 2094, dated the utilization of separately billable ESRDB market basket. Thus, for CY November 17, 2010. Transmittal 2094 services among adult and pediatric 2020, the labor-related share to which a identified additional drugs and patients (75 FR 49140). As we explained facility’s wage index would be applied laboratory tests that may also be eligible in the CY 2011 ESRD PPS final rule (75 is 52.3 percent. for ESRD outlier payment. Transmittal FR 49138 through 49139), the predicted We were recently made aware of a 2094 was rescinded and replaced by outlier services MAP amounts for a minor calculation error in the file used Transmittal 2134, dated January 14, patient are determined by multiplying to compute the ESRD PPS wage index 2011, which included one technical the adjusted average outlier services values for this proposed rule. We are correction. MAP amount by the product of the posting the corrected wage index values Furthermore, we use administrative patient-specific case-mix adjusters on the ESRD PPS payment page and we issuances and guidance to continually applicable using the outlier services will correct this error when computing update the renal dialysis service items payment multipliers developed from the the ESRD PPS wage index values and available for outlier payment via our regression analysis to compute the payment rates for the final rule. quarterly update CMS Change Requests, payment adjustments. when applicable. We use this separate For CY 2020, we propose that the c. Proposed CY 2020 Update to the guidance to identify renal dialysis outlier services MAP amounts and FDL Outlier Policy service drugs that were or would have amounts would be derived from claims Section 1881(b)(14)(D)(ii) of the Act been covered under Medicare Part D for data from CY 2018. Because we believe requires that the ESRD PPS include a outlier eligibility purposes and in order that any adjustments made to the MAP payment adjustment for high cost to provide unit prices for calculating amounts under the ESRD PPS should be outliers due to unusual variations in the imputed outlier services. In addition, based upon the most recent data year type or amount of medically necessary we also identify through our monitoring available in order to best predict any

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future outlier payments, we propose the proposed rule, as discussed in section claims data. We note that, beginning in outlier thresholds for CY 2020 would be II.B.5.c.ii of this proposed rule, CY 2018 CY 2020, the total expenditure amount based on utilization of renal dialysis claims data show outlier payments includes payments made for items and services furnished under the represented approximately 0.5 percent calcimimetics under the TDAPA policy ESRD PPS in CY 2018. We recognize of total payments. (calculated to be $21.15 per treatment). that the utilization of ESAs and other The impact of this update is shown in i. CY 2020 Update to the Outlier outlier services have continued to Table 2, which compares the outlier Services MAP Amounts and FDL decline under the ESRD PPS, and that services MAP amounts and FDL Amounts we have lowered the MAP amounts and amounts used for the outlier policy in FDL amounts every year under the For CY 2020, we propose to update CY 2019 with the updated proposed ESRD PPS. the outlier services MAP amounts and estimates for this rule. The estimates for In the CY 2019 ESRD PPS final rule FDL amounts to reflect the utilization of the proposed CY 2020 outlier policy, (83 FR 56968), we stated that based on outlier services reported on 2018 claims. which are included in Column II of the CY 2017 claims data, outlier For this proposed rule, the outlier Table 2, were inflation adjusted to payments represented approximately services MAP amounts and FDL reflect projected 2020 prices for outlier 0.80 percent of total payments. For this amounts were updated using 2018 services.

TABLE 2—OUTLIER POLICY: IMPACT OF USING UPDATED DATA TO DEFINE THE OUTLIER POLICY

Column I Column II Final outlier policy for CY 2019 Proposed outlier policy for (based on 2017 data, price CY 2020 inflated to 2019) * (based on 2018 data, price inflated to 2020) Age < 18 Age >= 18 Age < 18 Age >= 18

Average outlier services MAP amount per treatment ...... $34.18 $40.18 $32.27 $38.15 Adjustments: Standardization for outlier services ...... 1.0503 0.9779 1.0692 0.9789 MIPPA reduction ...... 0.98 0.98 0.98 0.98 Adjusted average outlier services MAP amount ...... $35.18 $38.51 $33.82 $36.60 FDL amount that is added to the predicted MAP to determine the outlier threshold...... $57.14 $65.11 $44.91 $52.50 Patient-months qualifying for outlier payment ...... 7.2% 8.2% 10.8% 9.9% * Note that Column I was obtained from Column II of Table 11 from the CY 2019 ESRD PPS final rule (83 FR 56968).

As demonstrated in Table 2, the treatment base rate by 1 percent to payments, as well as co-insurance estimated FDL amount per treatment account for the proportion of the obligations for beneficiaries with renal that determines the CY 2020 outlier estimated total payments under the dialysis services eligible for outlier threshold amount for adults (Column II; ESRD PPS that are outlier payments as payments. $52.50) is lower than that used for the described in § 413.237. Based on the d. Proposed Impacts to the CY 2020 CY 2019 outlier policy (Column I; 2018 claims, outlier payments ESRD PPS Base Rate $65.11). The lower threshold is represented approximately 0.5 percent accompanied by a decrease in the of total payments, which is below the 1 i. ESRD PPS Base Rate adjusted average MAP for outlier percent target due to declines in the use In the CY 2011 ESRD PPS final rule services from $38.51 to $36.60. For of outlier services. Recalibration of the pediatric patients, there is a decrease in (75 FR 49071 through 49083), we thresholds using 2018 data is expected established the methodology for the FDL amount from $57.14 to $44.91. to result in aggregate outlier payments There is a corresponding decrease in the calculating the ESRD PPS per-treatment close to the 1 percent target in CY 2020. base rate, that is, ESRD PPS base rate, adjusted average MAP for outlier We believe the update to the outlier services among pediatric patients, from and the determination of the per- MAP and FDL amounts for CY 2020 treatment payment amount, which are $35.18 to $33.82. would increase payments for ESRD We estimate that the percentage of codified at § 413.220 and § 413.230. The beneficiaries requiring higher resource patient months qualifying for outlier CY 2011 ESRD PPS final rule also payments in CY 2020 would be 9.9 utilization and move us closer to provides a detailed discussion of the percent for adult patients and 8.2 meeting our 1 percent outlier policy methodology used to calculate the ESRD percent for pediatric patients, based on because we are using more current data PPS base rate and the computation of the 2018 claims data. The pediatric for computing the MAP and FDL which factors used to adjust the ESRD PPS outlier MAP and FDL amounts continue is more in line with current outlier base rate for projected outlier payments to be lower for pediatric patients than services utilization rates. We note that and budget neutrality in accordance adults due to the continued lower use recalibration of the FDL amounts in this with sections 1881(b)(14)(D)(ii) and of outlier services (primarily reflecting proposed rule would result in no change 1881(b)(14)(A)(ii) of the Act, lower use of ESAs and other injectable in payments to ESRD facilities for respectively. Specifically, the ESRD PPS drugs). beneficiaries with renal dialysis items base rate was developed from CY 2007 and services that are not eligible for claims (that is, the lowest per patient ii. Outlier Percentage outlier payments, but would increase utilization year as required by section In the CY 2011 ESRD PPS final rule payments to ESRD facilities for 1881(b)(14)(A)(ii) of the Act), updated to (75 FR 49081) and under beneficiaries with renal dialysis items CY 2011, and represented the average § 413.220(b)(4), we reduced the per and services that are eligible for outlier per treatment MAP for composite rate

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and separately billable services. In wage-adjusted expenditures for all and the amendments to section accordance with section 1881(b)(14)(D) ESRD facilities. The wage index budget- 1881(s)(2)(F) of the Act, including the of the Act and our regulation at neutrality factor is calculated as the payment rate for AKI dialysis (81 FR § 413.230, the per-treatment payment target amount divided by the new CY 77866 through 77872, and 77965). We amount is the sum of the ESRD PPS base 2020 amount. When we multiplied the interpret section 1834(r)(1) of the Act as rate, adjusted for the patient specific wage index budget-neutrality factor by requiring the amount of payment for case-mix adjustments, applicable the applicable CY 2020 estimated AKI dialysis services to be the base rate facility adjustments, geographic payments, aggregate payments to ESRD for renal dialysis services determined differences in area wage levels using an facilities would remain budget neutral for a year under the ESRD base rate as area wage index, any applicable outlier when compared to the target amount of set forth in § 413.220, updated by the payment and training adjustment add- expenditures. That is, the wage index ESRD bundled market basket percentage on, the TDAPA (as proposed in section budget-neutrality adjustment factor increase factor minus a productivity II.B.1.e of this proposed rule), and the ensures that wage index adjustments do adjustment as set forth in TPNIES (as proposed in section not increase or decrease aggregate § 413.196(d)(1), adjusted for wages as set II.B.3.b.iii of this proposed rule). Medicare payments with respect to forth in § 413.231, and adjusted by any ii. Annual Payment Rate Update for CY changes in wage index updates. other amounts deemed appropriate by 2020 The CY 2020 proposed wage index the Secretary under § 413.373. We budget-neutrality adjustment factor is codified this policy in § 413.372 (81 FR We are proposing an ESRD PPS base 1.004180. This application would yield 77965). rate for CY 2020 of $240.27. This update a CY 2020 ESRD PPS proposed base rate B. Proposed Annual Payment Rate reflects several factors, described in of $240.27 ($239.27 × 1.004180 = Update for CY 2020 more detail as follows: $240.27). • Market Basket Increase: Section In summary, we are proposing a CY 1. CY 2020 AKI Dialysis Payment Rate 1881(b)(14)(F)(i)(I) of the Act provides 2020 ESRD PPS base rate of $240.27. The payment rate for AKI dialysis is that, beginning in 2012, the ESRD PPS This amount reflects a proposed market the ESRD PPS base rate determined for payment amounts are required to be basket increase of 1.7 percent and the a year under section 1881(b)(14) of the annually increased by the ESRD market proposed CY 2020 wage index budget- Act, which is the finalized ESRD PPS basket percentage increase factor. The neutrality adjustment factor of 1.004180. latest CY 2020 projection for the base rate, including market basket proposed ESRDB market basket is 2.1 III. CY 2020 Payment for Renal Dialysis adjustments, wage adjustments and any percent. In CY 2020, this amount must Services Furnished to Individuals With other discretionary adjustments, for be reduced by the productivity Acute Kidney Injury (AKI) such year. We note that ESRD facilities adjustment described in section have the ability to bill Medicare for non- A. Background 1886(b)(3)(B)(xi)(II) of the Act, as renal dialysis items and services and required by section 1881(b)(14)(F)(i)(II) The Trade Preferences Extension Act receive separate payment in addition to of the Act. As discussed previously, the of 2015 (TPEA) (Pub. L. 114–27) was the payment rate for AKI dialysis. proposed MFP adjustment for CY 2020 enacted on June 29, 2015, and amended As discussed in section II.B.5.d of this is 0.4 percent, thus yielding a proposed the Act to provide coverage and proposed rule, the CY 2020 proposed update to the base rate of 1.7 percent for payment for dialysis furnished by an ESRD PPS base rate is $240.27, which CY 2020. Therefore, the proposed ESRD ESRD facility to an individual with reflects a proposed market basket PPS base rate for CY 2020 before acute kidney injury (AKI). Specifically, increase of 2.1 percent reduced by the application of the wage index budget- section 808(a) of the TPEA amended multifactor productivity adjustment of neutrality adjustment factor would be section 1861(s)(2)(F) of the Act to 0.4 percentage points, that is, 1.7 $239.27 ($235.27 × 1.017 = $239.27). provide coverage for renal dialysis percent, and application of the proposed • Wage Index Budget-Neutrality services furnished on or after January 1, CY 2020 wage index budget-neutrality Adjustment Factor: We compute a wage 2017, by a renal dialysis facility or a adjustment factor of 1.004180. index budget-neutrality adjustment provider of services paid under section Accordingly, we are proposing a CY factor that is applied to the ESRD PPS 1881(b)(14) of the Act to an individual 2020 per treatment payment rate of base rate. For CY 2020, we are not with AKI. Section 808(b) of the TPEA $240.27 for renal dialysis services proposing any changes to the amended section 1834 of the Act by furnished by ESRD facilities to methodology used to calculate this adding a new paragraph (r) to provide individuals with AKI. This payment rate factor, which is described in detail in payment, beginning January 1, 2017, for is further adjusted by the wage index as the CY 2014 ESRD PPS final rule (78 FR renal dialysis services furnished by discussed below. 72174). We computed the proposed CY renal dialysis facilities or providers of 2020 wage index budget-neutrality services paid under section 1881(b)(14) 2. Geographic Adjustment Factor adjustment factor using treatment of the Act to individuals with AKI at the Under section 1834(r)(1) of the Act counts from the 2018 claims and ESRD PPS base rate, as adjusted by any and § 413.372, the amount of payment facility-specific CY 2019 payment rates applicable geographic adjustment for AKI dialysis services is the base rate to estimate the total dollar amount that applied under section for renal dialysis services determined each ESRD facility would have received 1881(b)(14)(D)(iv)(II) of the Act and for a year under section 1881(b)(14) of in CY 2019. The total of these payments adjusted (on a budget neutral basis for the Act (updated by the ESRD bundled became the target amount of payments under section 1834(r) of the market basket and multifactor expenditures for all ESRD facilities for Act) by any other adjustment factor productivity adjustment), as adjusted by CY 2020. Next, we computed the under section 1881(b)(14)(D) of the Act any applicable geographic adjustment estimated dollar amount that would that the Secretary elects. factor applied under section have been paid for the same ESRD In the CY 2017 ESRD PPS final rule, 1881(b)(14)(D)(iv)(II) of the Act. facilities using the ESRD wage index for we finalized several coverage and Accordingly, we apply the same wage CY 2020. The total of these payments payment policies in order to implement index under § 413.231 that is used becomes the new CY 2020 amount of subsection (r) of section 1834 of the Act under the ESRD PPS and discussed in

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section II.B.5.b of this proposed rule. codified many of our policies for the through (d)(7), we are proposing to The AKI dialysis payment rate is ESRD QIP at 42 CFR 413.177 and 178. codify requirements for the adjusted by the wage index for a As we discuss in section IV.C.2 of this Extraordinary Circumstances Exception particular ESRD facility in the same way proposed rule, we are proposing to (ECE) process, including a new option that the ESRD PPS base rate is adjusted adopt the baseline period and for facilities to reject an extraordinary by the wage index for that facility (81 performance period for each payment circumstance exception granted by CMS FR 77868). Specifically, we apply the year automatically by advancing each under certain circumstances. This new wage index to the labor-related share of period by 1 year from the baseline and option will provide facilities with the ESRD PPS base rate that we utilize performance period that were adopted flexibility under the ECE process. We for AKI dialysis to compute the wage for the previous payment year. are proposing this provision to provide We propose to revise the requirements adjusted per-treatment AKI dialysis clear guidance to the public on the at § 413.178 by redesignating paragraphs scope of our ECE process. payment rate. As stated above, we are (d) through (f) as paragraphs (e) through proposing a CY 2020 AKI dialysis We invite public comments on these (g), respectively. In addition, we proposals. payment rate of $240.27, adjusted by the propose to add a new paragraph (d) to ESRD facility’s wage index. specify the data submission B. Proposed Update to Requirements IV. End-Stage Renal Disease Quality requirements for calculating measure Beginning With the PY 2022 ESRD QIP Incentive Program (ESRD QIP) scores. Specifically, we are proposing to 1. PY 2022 ESRD QIP Measure Set codify the requirement that facilities A. Background and Proposed must submit measure data to CMS on all The PY 2022 ESRD QIP measure set Regulation Text Update measures. This proposed regulation text includes 14 measures, which are codifies previously finalized policies described in Table 3. For more For a detailed discussion of the ESRD and will make it easier for the public to information on these measures, QIP’s background and history, including locate and understand the Program’s including the two measures that are new a description of the Program’s quality data submission requirements. beginning with PY 2022 (the Percentage authorizing statute and the policies that Additionally, the proposed text in of Prevalent Patients Waitlisted (PPPW) we have adopted in previous final rules, new paragraph (d)(2) would codify our clinical measure and the Medication we refer readers to the following final proposed policy to adopt the Reconciliation for Patients Receiving rules: 75 FR 49030, 76 FR 628, 76 FR performance period and baseline period Care at Dialysis Facilities (MedRec) 70228, 77 FR 67450, 78 FR 72156, 79 FR for each payment year automatically by reporting measure), please see the CY 66120, 80 FR 68968, 81 FR 77834, 82 FR advancing 1 year from the previous 2019 ESRD QIP final rule (83 FR 57003 50738, and 83 FR 56922. We have also payment year. At § 413.178(d)(3) through 57010).

TABLE 3—PY 2022 ESRD QIP MEASURE SET

NQF No. Measure title and description

0258 ...... In-Center Hemodialysis Consumer Assessment of Healthcare Providers and Systems (ICH CAHPS) Survey Adminis- tration, a clinical measure. Measure assesses patients’ self-reported experience of care through percentage of patient responses to multiple testing tools. 2496 ...... Standardized Readmission Ratio (SRR), a clinical measure. Ratio of the number of observed unplanned 30-day hospital readmissions to the number of expected unplanned 30- day readmissions. 2979 ...... Standardized Transfusion Ratio (STrR), a clinical measure. Risk-adjusted STrR for all adult Medicare dialysis patients. Ratio of the number of observed eligible red blood cell transfusion events occurring in patients dialyzing at a facility to the number of eligible transfusions that would be expected. N/A ...... (Kt/V) Dialysis Adequacy Comprehensive, a clinical measure. A measure of dialysis adequacy where K is dialyzer clearance, t is dialysis time, and V is total body water volume. Percentage of all patient months for patients whose delivered dose of dialysis (either hemodialysis or peritoneal di- alysis) met the specified threshold during the reporting period. 2977 ...... Hemodialysis Vascular Access: Standardized Fistula Rate clinical measure. Measures the use of an AV fistula as the sole means of vascular access as of the last hemodialysis treatment ses- sion of the month. 2978 ...... Hemodialysis Vascular Access: Long-Term Catheter Rate clinical measure. Measures the use of a catheter continuously for 3 months or longer as of the last hemodialysis treatment session of the month. 1454 ...... Hypercalcemia, a clinical measure. Proportion of patient-months with 3-month rolling average of total uncorrected serum or plasma calcium greater than 10.2 mg/dL. 1463* ...... Standardized Hospitalization Ratio (SHR), a clinical measure. Risk-adjusted SHR of the number of observed hospitalizations to the number of expected hospitalizations. Based on NQF #0418 ..... Clinical Depression Screening and Follow-Up, a reporting measure. Facility reports in CROWNWeb one of six conditions for each qualifying patient treated during performance period. N/A ...... Ultrafiltration Rate, a reporting measure. Number of months for which a facility reports elements required for ultrafiltration rates for each qualifying patient. Based on NQF #1460 ..... NHSN Bloodstream Infection (BSI) in Hemodialysis Patients, a clinical measure. The Standardized Infection Ratio (SIR) of BSIs will be calculated among patients receiving hemodialysis at outpatient hemodialysis centers. N/A ...... NHSN Dialysis Event reporting measure. Number of months for which facility reports NHSN Dialysis Event data to CDC. N/A ...... Percentage of Prevalent Patients Waitlisted (PPPW), a clinical measure.

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TABLE 3—PY 2022 ESRD QIP MEASURE SET—Continued

NQF No. Measure title and description

Percentage of patients at each dialysis facility who were on the kidney or kidney-pancreas transplant waitlist aver- aged across patients prevalent on the last day of each month during the performance period. 2988 ...... Medication Reconciliation for Patients Receiving Care at Dialysis Facilities (MedRec), a reporting measure. Percentage of patient-months for which medication reconciliation was performance and documented by an eligible professional.

2. Estimated Performance Standards for readers to the CY 2013 ESRD PPS final 2018. In this proposed rule, we are the PY 2022 ESRD QIP rule (76 FR 70277) for a discussion of estimating in Table 4 the achievement Section 1881(h)(4)(A) of the Act the achievement and improvement thresholds, 50th percentiles of the requires the Secretary to establish standards that we have established for national performance, and benchmarks performance standards with respect to clinical measures used in the ESRD QIP. for the PY 2022 clinical measures using the measures selected for the ESRD QIP We recently codified definitions for the data from 2016 and 2017. We intend to for a performance period with respect to terms ‘‘achievement threshold,’’ update these standards, using CY 2018 a year. The performance standards must ‘‘benchmark,’’ ‘‘improvement data, in the CY 2019 ESRD PPS final include levels of achievement and threshold,’’ and ‘‘performance standard’’ rule. We also note that we are proposing improvement, as required by section in our regulations at § 413.178(a)(1), (3), in this proposed rule to convert the 1881(h)(4)(B) of the Act, and must be (7), and (12), respectively. STrR measure from a clinical measure to established prior to the beginning of the In the CY 2019 ESRD PPS final rule a reporting measure and that if that performance period for the year (83 FR 57010), we set the performance proposal is finalized, we would not involved, as required by section period for the PY 2022 ESRD QIP as CY update these standards for the STrR 1881(h)(4)(C) of the Act. We refer 2020 and the baseline period as CY measure.

TABLE 4—ESTIMATED PERFORMANCE STANDARDS FOR THE PY 2022 ESRD QIP CLINICAL MEASURES USING THE MOST RECENTLY AVAILABLE DATA

Achievement threshold Median Benchmark Measure (15th percentile of (50th percentile of (90th percentile of national performance) national performance) national performance)

Vascular Access Type: Standardized Fistula Rate ...... 52.61% ...... 63.69% ...... 76.11%. Catheter Rate ...... 18.24% ...... 11.15% ...... 5.02%. Kt/V Comprehensive ...... 92.98% (92.75%) * ...... 96.88% (96.83%) * ...... 99.14% (99.10%). * Hypercalcemia ...... 1.81% ...... 0.57% ...... 0.00%. Standardized Readmission Ratio ...... 1.268 (1.273) * ...... 0.998 ...... 0.629 (0.642). * Standardized Transfusion Ratio ...... 1.684 (1.695) * ...... 0.840 ...... 0.194. NHSN Bloodstream Infection ...... 1.477 ...... 0.694 (0.698) * ...... 0. Standardized Hospitalization Ratio ...... 1.248 ...... 0.967 (0.971) * ...... 0.670 (0.687). * PPPW ...... 8.75% ...... 17.77% ...... 34.29%. ICH CAHPS: Nephrologists’ Communication and Caring .. 58.09% ...... 67.81% ...... 78.53%. ICH CAHPS: Quality of Dialysis Center Care and Oper- 54.16% ...... 62.34% ...... 72.03%. ations. ICH CAHPS: Providing Information to Patients ...... 73.90% (73.89%) * ...... 80.38% ...... 87.08%. ICH CAHPS: Overall Rating of Nephrologists ...... 49.33% (47.85%) * ...... 62.22% (60.37%) * ...... 76.57% (74.50%).* ICH CAHPS: Overall Rating of Dialysis Center Staff ...... 49.12% (49.10%) * ...... 63.04% (63.03%) * ...... 77.48%. ICH CAHPS: Overall Rating of the Dialysis Facility ...... 53.98% (53.97%) * ...... 67.93% ...... 82.48% (82.34%). * * If the PY 2022 final numerical value is worse than the PY 2021 finalized value, we will substitute the PY 2022 final numerical value for the PY 2021 finalized value. We have provided the PY 2021 finalized value as a reference for clinical measures whose PY 2022 estimated value is worse than the PY 2021 finalized value. Data sources: VAT measures: 2017 CROWNWeb; SRR, STrR, SHR: 2017 Medicare claims; Kt/V: 2017 CROWNWeb; Hypercalcemia: 2017 CROWNWeb; NHSN: 2017 CDC; ICH CAHPS: CMS 2017; PPPW: 2017 CROWNWeb and 2017 OPTN.

3. Proposed Changes to the Scoring measure, and (2) the NHSN Dialysis NHSN, complete any required training, Methodology Previously Finalized for Event reporting measure. For the NHSN and report monthly dialysis event data the PY 2022 ESRD QIP BSI clinical measure, facilities must be on a quarterly basis to the NHSN. The a. Proposed Update to the Scoring eligible to report 12 months of data to current scoring methodology for the Methodology for the National the NHSN on a quarterly basis in order NHSN Dialysis Event reporting measure Healthcare Safety Network (NHSN) to receive a score on the measure, and was finalized in the CY 2017 ESRD PPS Dialysis Event Reporting Measure are scored based on whether they final rule, and it was selected for two There are currently two similar submitted data for that 12-month period reasons. First, due to the seasonal measures in the ESRD QIP that assess and how many dialysis events they variability of bloodstream infection dialysis events: (1) The National reported during that 12-month period. rates, we stated that we wanted to Healthcare Safety Network (NHSN) For the NHSN Dialysis Event reporting incentivize facilities to report the full 12 Bloodstream Infection (BSI) clinical measure, facilities must enroll in the months of data and reward reporting

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consistency over the course of the entire For example, if a facility had 10 eligible months of data in order to receive a performance period. Second, we stated reporting months because it was granted score on that measure. that from the perspective of national an ECE for 2 months of the performance We seek comment on these proposals. prevention strategies and internal period, and reported data for those 10 b. Proposal To Convert the Standardized quality improvement initiatives, there eligible months, the facility would Transfusion Ratio (STrR) Clinical was still value in collecting fewer than receive a score, whereas under the Measure to a Reporting Measure 12 months of data from facilities. For current policy, the facility would not those reasons, we finalized a policy in receive a score. To accommodate this In the CY 2015 ESRD PPS final rule the CY 2017 ESRD PPS final rule to proposed change and to ensure that our (79 FR 66192 through 66197) we award facilities 10 points for submitting scoring methodology appropriately finalized the adoption of the 12 months of data, 2 points for reporting incentivizes facilities to report data on Standardized Transfusion Ratio (STrR) between 6 and 11 months of dialysis the NHSN Dialysis Event reporting clinical measure to address gaps in the event data, and 0 points for reporting measure, even if they are not eligible to quality of anemia management, fewer than 6 months of data. See Table report data for all 12 months of a beginning with the PY 2018 ESRD QIP. 5 for the current scoring distribution. performance period, we also propose to We also finalized policies to score assign scores for reporting different facility performance on the STrR TABLE 5—CURRENT SCORING DIS- quantities of data as summarized in clinical measure based on achievement and improvement in the PY 2018 ESRD TRIBUTION FOR THE NHSN DIALYSIS Table 6. QIP (79 FR 66209). We finalized EVENT REPORTING MEASURE identical scoring policies for the STrR TABLE 6—PROPOSED SCORING DIS- clinical measure in the PY 2019 ESRD Points TRIBUTION FOR THE NHSN DIALYSIS QIP and the PY 2020 ESRD QIP in the Number of reporting months awarded VENT EPORTING EASURE to facility E R M CY 2016 ESRD PPS final rule (80 FR 69060 through 69061) and the CY 2017 12 months ...... 10 Percentage of eligible months * Points ESRD PPS final rule (81 FR 77916), 6–11 months ...... 2 awarded reported to facility respectively. 0–5 months ...... 0 After finalizing the STrR clinical 100% of eligible months ...... 10 measure in the CY 2015 ESRD PPS final As we have accumulated experience Less than 100% but no less rule, we submitted the measure to the with this policy, we are concerned that than 50% of eligible months 2 NQF for consensus endorsement, but new facilities and facilities for which Less than 50% of eligible the Renal Standing Committee did not CMS grants an ECE for part of the months ...... 0 recommend it for endorsement, in part performance period that applies for a due to concerns that variability in payment year are not eligible to receive * We define the term ‘‘eligible months’’ to mean the months in which dialysis facilities hospital coding practices with respect to a score on the NHSN Dialysis Event are required to report dialysis event data to the use of 038 and 039 revenue codes reporting measure because they are not NHSN per the measure eligibility criteria. This might unduly bias the measure rates. eligible to report data for the full 12- includes facilities that offer in-center hemo- Upon reviewing the committee’s month period. As a result, we do not dialysis and facilities that treat at least 11 eligi- ble in-center hemodialysis patients during the feedback, we revised the STrR clinical believe that this policy appropriately performance period. measure’s specifications to address accounts for the effort made by these those concerns. The updated measure facilities to report these data for the We believe that it is important to specifications for the STrR clinical months in which they are eligible to encourage new facilities and facilities measure contain a more restricted report. For example, for PY 2020, the with an approved ECE to report definition of transfusion events than number of new facilities certified during complete and accurate dialysis event was previously used in the STrR clinical the performance year (CY 2018) was 390 data to the NHSN for all the months in measure. Specifically, the revised and the number of facilities granted an which they are eligible to submit data so definition excludes inpatient ECE during CY 2018 was 31, but none that we have as comprehensive as transfusion events for claims that of those facilities was eligible to receive possible a view of these facilities’ include only 038 or 039 revenue codes a score on the measure. In addition, if performance on this important clinical without an accompanying International a facility is aware that it will not be topic. We continue to believe that Statistical Classification of Diseases and eligible to receive a score on the NHSN complete and accurate reporting of Related Health Problems—9 (ICD–9) or Dialysis Event reporting measure, we NHSN data is critical to maintaining the ICD—10 procedure code or value code. are concerned that the facility will not integrity of the NHSN surveillance As a result, the measure can identify be incentivized to report data at all for system, enables facilities to implement transfusion events more specifically and that payment year. their own quality improvement with less bias related to regional coding We have therefore reconsidered our initiatives, and enables the Centers for variation, which means that the measure previous policy. We propose to remove Disease Control and Prevention (CDC) to assesses a smaller number of events as the NHSN Dialysis Event reporting design and disseminate prevention well as a smaller range of total events. measure’s exclusion of facilities with strategies. We believe the fairest way to Following this revision, we fewer than 12 eligible reporting months. balance these goals is to adopt a new resubmitted the STrR clinical measure Beginning with the PY 2022 ESRD QIP, NHSN Dialysis Event reporting measure (NQF #2979) to NQF for consensus we propose to assess successful policy focused more specifically on endorsement. The NQF endorsed the reporting based on the number of considering reporting successful based revised STrR clinical measure in 2016, months facilities are eligible to report on the number of months that a facility and in the CY 2018 ESRD PPS final rule the measure. Under this proposal, is eligible to report the measure. We are (82 FR 50771 through 50774), we facilities would receive credit for not proposing changes to the NHSN BSI finalized changes to the STrR clinical scoring purposes based on the number clinical measure’s scoring methodology measure that aligned the measure of months they successfully report data and will continue to require that specifications used for the ESRD QIP out of the number of eligible months. facilities report data for the full 12 with the measure specifications that

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NQF endorsed in 2016 (NQF #2979), measure rates. We are in the process of dialysis facilities’ TPS and possible beginning with the PY 2021 ESRD QIP. evaluating the concern raised by payment reductions. We believe that the We also finalized policies to score commenters to the CY 2019 ESRD PPS most appropriate way to continue facility performance on the revised STrR proposed rule, and we intend present fulfilling the statutory requirement to clinical measure based on achievement our analyses and measure changes to the include a measure of anemia and improvement (82 FR 50779 through NQF under an ad hoc review of the management in the Program while 50780), and we subsequently finalized STrR clinical measure later this year ensuring that dialysis facilities are not that those policies would continue for before making a final decision regarding adversely affected during our continued PY 2022 and in subsequent payment implementation in the ESRD QIP. examination of the measure is to convert years (83 FR 57011). Additionally, any substantive changes the STrR clinical measure to a reporting Commenters to the CY 2019 ESRD to the STrR that result from this process measure for the reasons discussed PPS proposed rule raised concerns may require a MAP review prior to any above. about the validity of the modified STrR future implementation effort. Under the We are also proposing that, beginning measure (NQF #2979) finalized for first policy alternative, the Program with PY 2022, we would score the STrR adoption beginning with PY 2021. would continue use of a measure reporting measure as follows: facilities Commenters specifically stated that due endorsed by NQF, and if a facility does that meet previously finalized minimum to the new level of coding specificity receive a payment reduction, it would data and eligibility requirements will required under the ICD–10–CM/PCS not be due to its performance on the receive a score on the STrR reporting coding system, many hospitals are no STrR clinical measure. Facilities would measure based on the successful longer accurately coding blood have to score below the median score transfusions. The commenters further used in the minimum TPS (mTPS) for reporting of data, not on the values stated that because the STrR measure is a different measure in order to receive actually reported. We are proposing that calculated using hospital data, the rise a payment reduction. If a facility scores in order to receive 10 points on the of inaccurate blood transfusion coding at the median used in the mTPS measure, a facility would need to report by hospitals has negatively affected the calculation for all measures, it will the data required to determine the validity of the STrR measure (83 FR receive the same TPS as the mTPS and number of eligible patient-years at risk 56993 through 56994). therefore not receive a payment and have at least 10 eligible patient- We are currently in the process of reduction. However, we rejected the years at risk. A patient-year at risk is a examining the concern raised by first policy alternative because it would period of 12-month increments during commenters about the validity of the score facilities based on their which a single patient is treated at a modified STrR measure, and we performance on a measure whose given facility. A patient-year at risk can considered three alternatives for scoring validity we are currently examining. be comprised of more than 1 patient if, the measure until we complete that Under the third policy alternative, we when added together, their time in process: (1) Assign the score that a would be using a reporting measure that treatment equals a year. For example, if facility would need to earn if it is based on an NQF-endorsed measure, 1 patient is treated at the same facility performed at the 50th percentile of but we would not be scoring facilities for 4 months and a second patient is national ESRD performance during the on the measure based on their treated at a facility for 8 months, then baseline year to every facility that performance. While the current the two patients would combine to form would otherwise earn a score during the concerns regarding measure validity a full patient year. performance period below that median may call into question the capacity for We believe this scoring adjustment score, (2) align the measure current data to adequately capture policy would enable us to retain an specifications with those used for the transfusion rates attributable to anemia management measure in the measure prior to the PY 2021 ESRD QIP, facilities, we believe that the ESRD QIP measure set while we and (3) convert the STrR clinical transfusions captured by the measure continue to examine the measure’s measure to a reporting measure. are a conservative estimate of the validity concerns raised by We considered the second alternative number of events that actually occur, stakeholders. because the previously adopted measure and that those events represent an We seek comments on these specifications for the STrR clinical undesirable health outcome for patients proposals. measure include a more expansive that is potentially modifiable by the definition of transfusions. However, we dialysis facility through appropriate c. Proposed Update to the MedRec rejected the second policy alternative anemia management. Reporting Measure’s Scoring because that version of the STrR clinical In light of the concerns raised about Methodology measure was not endorsed by the NQF the validity of the STrR clinical due to the concern expressed by the measure, we are continuing to examine In the CY 2019 ESRD PPS final rule Renal Standing Committee that this issue. We would like to ensure that (83 FR 57011), we finalized a policy to variability in hospital coding practices the Program’s scoring methodology score the MedRec reporting measure with respect to the use of 038 and 039 results in fair and reliable STrR measure using the following equation, beginning revenue codes might unduly bias the scores because those scores are linked to with the PY 2022 ESRD QIP.

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We also stated that this equation was Ultrafiltration reporting measure (81 FR similar to the equation used for the 77917):

However, we inadvertently used the because they assess the proportion of Serum Phosphorus reporting measure term ‘‘patient-months’’ in the MedRec months in a year that a facility reported (finalized for removal beginning with reporting measure’s scoring equation. to CMS the data necessary to calculate the PY 2021 ESRD QIP measure), and We calculate a subset of our clinical the measure. the Ultrafiltration reporting measure. measures using patient-months (the Kt/ The use of facility-months for the We are therefore proposing to revise V Comprehensive clinical measure, the MedRec reporting measure is also the scoring equation for the MedRec Standard Fistula Rate clinical measure, consistent with the scoring methodology the Catheter Rate clinical measure, and we have used for all other reporting reporting measure so that the scoring the Hypercalcemia clinical measure) measures which require monthly methodology accurately describes our because patient-months is the unit of reporting, including the Anemia intended policy. We propose to score analysis based on their measure Management reporting measure the MedRec reporting measure using the specifications. Facility-months are (finalized for removal beginning with following equation, beginning with the generally used for a reporting measure the PY 2021 ESRD QIP measure), the PY 2022 ESRD QIP.

We seek public comment on this eligibility requirements finalized in period to be eligible to receive a score, proposal. section IV.C.4.c of the CY 2019 ESRD beginning with the PY 2021 ESRD QIP Additionally, in section IV.B.4 of the PPS final rule. We specified in Table 23 (83 FR 56999 through 57000). In section CY 2019 ESRD PPS final rule, we of the CY 2019 ESRD PPS final rule that IV.B.3.a of this proposed rule, we are finalized a requirement for PY 2021 and facilities with a CCN Open Date before proposing to remove the NHSN Dialysis October 1, 2019 would meet the beyond for facilities to begin collecting Event reporting measure’s exclusion of eligibility requirements for the MedRec data for purposes of the ESRD QIP facilities with fewer than 12 eligible reporting measure. reporting months and to assess beginning with services furnished on In order to ensure that there is no the first day of the month that is 4 successful reporting based on the confusion regarding these requirements, number of months facilities are eligible months after the month in which the we are clarifying that for the MedRec to report the measure, beginning with CMS Certification Number (CCN) reporting measure, facilities with a CCN the PY 2022 ESRD QIP. To becomes effective (83 FR 56999 through Open Date before the October 1st prior 57000). In section IV.C.4.c of the CY to the performance period (which, for accommodate this proposed policy, we 2019 ESRD PPS final rule, we also the PY 2022 ESRD QIP, would be a CCN are proposing to remove the finalized a policy for the MedRec Open Date before October 1, 2019) must requirement that, to be eligible to reporting measure to begin scoring begin collecting data on that measure. receive a score on the NHSN Dialysis facilities with a CCN Open Date before Event reporting measure, new facilities the January 1st of the performance 4. Proposed Update to the Eligibility must have a CCN Open Date before period (83 FR 57011). In section IV.C.6 Requirements for the PY 2022 ESRD QIP October 1 prior to the performance of the CY 2019 ESRD PPS final rule (83 In the CY 2019 ESRD PPS final rule, period that applies to the payment year. FR 57013 through 57014), we applied we finalized a policy where, with Table 7 summarizes the ESRD QIP’s the updated reporting requirement for respect to the NHSN Dialysis Event minimum eligibility requirements for new facilities finalized in section IV.B.4 reporting measure, facilities are required scoring, including the proposed change of the CY 2019 ESRD PPS final rule to to have a CCN Open Date on or before to the eligibility requirement for the the MedRec reporting measure the October 1 prior to the performance NHSN Dialysis Event reporting measure.

TABLE 7—PROPOSED ELIGIBILITY REQUIREMENTS FOR SCORING ON ESRD QIP MEASURES

Measure Minimum data requirements CCN open date Small facility adjuster

Kt/V Comprehensive (Clinical) ...... 11 qualifying patients ...... N/A ...... 11–25 qualifying patients. Vascular Access Type: Long-term 11 qualifying patients ...... N/A ...... 11–25 qualifying patients. Catheter Rate (Clinical). Vascular Access Type: Standardized 11 qualifying patients ...... N/A ...... 11–25 qualifying patients. Fistula Rate (Clinical). Hypercalcemia (Clinical) ...... 11 qualifying patients ...... N/A ...... 11–25 qualifying patients.

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TABLE 7—PROPOSED ELIGIBILITY REQUIREMENTS FOR SCORING ON ESRD QIP MEASURES—Continued

Measure Minimum data requirements CCN open date Small facility adjuster

NHSN BSI (Clinical) ...... 11 qualifying patients ...... Before October 1 prior to the per- 11–25 qualifying patients. formance period that applies to the program year. NHSN Dialysis Event (Reporting) ..... 11 qualifying patients ...... N/A as proposed ...... 11–25 qualifying patients. SRR (Clinical) ...... 11 index discharges ...... N/A ...... 11–41 index discharges. STrR (Clinical) ...... 10 patient-years at risk ...... N/A ...... 10–21 patient-years at risk. SHR (Clinical) ...... 5 patient-years at risk ...... N/A ...... 5–14 patient-years at risk. ICH CAHPS (Clinical) ...... Facilities with 30 or more survey-eli- Before October 1 prior to the per- N/A. gible patients during the calendar formance period that applies to year preceding the performance the program year. period must submit survey re- sults. Facilities will not receive a score if they do not obtain a total of at least 30 completed surveys during the performance period. Depression Screening and Follow-Up 11 qualifying patients ...... Before April 1 of the performance N/A. (Reporting). period that applies to the program year. Ultrafiltration (Reporting) ...... 11 qualifying patients ...... Before April 1 of the performance N/A. period that applies to the program year. MedRec (Reporting) ...... 11 qualifying patients ...... Before October 1 prior to the per- N/A. formance period that applies to the program year. PPPW (Clinical) ...... 11 qualifying patients ...... N/A ...... 11–25 qualifying patients.

5. Estimated Payment Reduction for the For PY 2022, we estimate using 6. Data Validation Proposals for PY 2022 PY 2022 ESRD QIP available data that a facility must meet and Beyond Under our current policy, a facility or exceed a minimum TPS of 53 in order One of the critical elements of the will not receive a payment reduction in to avoid a payment reduction. We note ESRD QIP’s success is ensuring that the connection with its performance the that the mTPS estimated in this data submitted to calculate measure ESRD QIP for a payment year if it proposed rule is based on data from CY scores and TPSs are accurate. The ESRD achieves a TPS that is at or above the 2017 instead of the PY 2022 baseline QIP currently includes two validation minimum TPS that we establish for the period (CY 2018) because CY 2018 data studies for this purpose: the payment year. We have defined the are not yet available. We will update CROWNWeb data validation study minimum TPS in our regulations at and finalize the mTPS using CY 2018 (OMB Control Number 0938–1289) and § 413.178(a)(8) as, with respect to a data in the CY 2020 ESRD PPS final the NHSN validation study (OMB payment year, the TPS that an ESRD rule. Control Number 0938–1340). In the CY facility would receive if, during the 2019 ESRD PPS final rule, we adopted baseline period, it performed at the 50th We refer the reader to Table 4 for the estimated values of the 50th percentile the CROWNWeb data validation study percentile of national performance on as a permanent feature of the Program all clinical measures and the median of of national performance for each clinical measure. Under our current policy, a (83 FR 57003). Under that policy, we national ESRD facility performance on will continue validating CROWNWeb 35 facility that achieves a TPS below 53 all reporting measures. data in PY 2022 and subsequent would receive a payment reduction Our current policy, which is codified payment years, and we will deduct 10 based on the TPS ranges indicated in at § 413.177 of our regulations, is also to points from a facility’s TPS if it is implement the payment reductions on a Table 8. selected for validation but does not sliding scale using ranges that reflect submit the requested records. payment reduction differentials of 0.5 TABLE 8—PAYMENT REDUCTION We also adopted a methodology for percent for each 10 points that the SCALE FOR PY 2022 BASED ON THE the PY 2022 NHSN validation study, facility’s TPS falls below the minimum MOST RECENTLY AVAILABLE DATA which targets facilities for NHSN TPS (76 FR 634 through 635). validation by identifying facilities that Reduction are at risk for under-reporting. A sample 35 We recently codified definitions for the terms Total performance score (%) ‘‘achievement threshold,’’ ‘‘benchmark,’’ of 300 facilities will be selected, and ‘‘improvement threshold,’’ and ‘‘performance 100–53 ...... 0 each facility will be required to submit standard’’ in our regulations at 42 CFR 20 patient records covering 2 quarters of 413.178(a)(1), (3), (7), and (12), respectively. When 52–43 ...... 0.5 we codified the definition of the ‘‘performance 42–33 ...... 1.0 data reported in the performance year standard,’’ we declined to include a reference to the 32–23 ...... 1.5 (for PY 2022, this would be CY 2020). 50th percent of national performance in that For additional information on this definition because the term ‘‘performance 22–0 ...... 2.0 standards’’ applies more broadly to levels of methodology, we refer readers to the CY 2018 ESRD PPS final rule (82 FR 50766 achievement and improvement and is not a specific We intend to update the minimum reference to the 50th percentile of national through 50767). performance. Instead, we have incorporated the TPS for PY 2022, as well as the payment We are proposing to continue using concept of the 50th percentile of national reduction ranges for that payment year, performance into recently codified definition of the this methodology for the NHSN minimum TPS. in the CY 2020 ESRD PPS final rule. validation study for PY 2023 and

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subsequent years because based on a minimum TPS, and CY 2020 as the Follow-Up reporting measure, the recent statistical analysis conducted by baseline period for the PY 2023 ESRD Ultrafiltration Rate reporting measure, the CDC, we have concluded that to QIP for purposes of calculating the the NHSN Dialysis Event reporting achieve the most reliable results for a improvement threshold. Beginning with measure, and the MedRec reporting payment year, we would need to review PY 2024, we propose to adopt measure (83 FR 57010 through 57011). approximately 6,072 charts submitted automatically a performance and We will continue use of these by 303 facilities. This sample size baseline period for each year that is 1- performance standards in PY 2023. year advanced from those specified for would produce results with a 95 percent 4. Scoring the PY 2023 ESRD QIP confidence level and a 1 percent margin the previous payment year. For of error. Based on those results and our example, under this policy, we would a. Scoring Facility Performance on desire to ensure that dialysis event data automatically adopt CY 2022 as the Clinical Measures reported to the NHSN for purposes of performance period for the PY 2024 In the CY 2014 ESRD PPS final rule, the ESRD QIP are accurate, we are ESRD QIP. We would also automatically we finalized policies for scoring proposing to continue use of this adopt CY 2020 as the baseline period for performance on clinical measures based methodology in the PY 2023 NHSN purposes of calculating the achievement on achievement and improvement (78 validation study and for subsequent threshold, benchmark, and minimum FR 72215 through 72216). In the CY years. TPS and CY 2021 as the baseline period 2019 ESRD PPS final rule, we finalized Additionally, as we finalized for for purposes of calculating the a policy to continue use of this CROWNWeb validation, we are improvement threshold, for the PY 2024 methodology for future payment years proposing to adopt NHSN validation as ESRD QIP. (83 FR 57011) and we codified these a permanent feature of the ESRD QIP We welcome comment on these scoring policies at § 413.178(d).36 with the methodology we first finalized proposals. We are not proposing to change our for PY 2022 and are proposing to 3. Performance Standards for the PY scoring policies. continue for PY 2023 and subsequent 2023 ESRD QIP and Subsequent Years b. Scoring Facility Performance on years. We continue to believe that the Reporting Measures purpose of our validation programs is to Section 1881(h)(4)(A) of the Act ensure the accuracy and completeness requires the Secretary to establish In the CY 2019 ESRD PPS final rule, of data that are scored under the ESRD performance standards with respect to we codified our policy for scoring QIP, and we believe that validating the measures selected for the ESRD QIP performance on reporting measures at NHSN data using this methodology for a performance period with respect to § 413.178(d), 37 and we finalized the achieves that goal. Now that we have a year. The performance standards must continued use of existing policies for adopted a larger sample size of 300 include levels of achievement and scoring performance on the facilities for the NHSN validation study improvement, as required by section Ultrafiltration Rate reporting measure and have thus ensured enough precision 1881(h)(4)(B) of the Act, and must be and the MedRec reporting measure (83 within the study, we believe that established prior to the beginning of the FR 57011). We will continue use of the making the validation study permanent performance period for the year Ultrafiltration Rate reporting measure’s will signal our commitment to accurate involved, as required by section scoring policy in PY 2023. In section reporting of the important clinical 1881(h)(4)(C) of the Act. We refer IV.B.3.c of this proposed rule, we topics covered by the NHSN measures readers to the CY 2013 ESRD PPS final propose to use facility-months instead that we have adopted. rule (76 FR 70277) for a discussion of of patient-months when scoring the We welcome public comments on the achievement and improvement MedRec reporting measure and clarify these proposals. standards that we have established for our intention to begin scoring new clinical measures used in the ESRD QIP. facilities with a CCN Open date before C. Proposals for the PY 2023 ESRD QIP We recently codified definitions for the the October 1st of the year prior to the 1. Continuing Measures for the PY 2023 terms ‘‘achievement threshold,’’ performance period rather than before ESRD QIP ‘‘benchmark,’’ ‘‘improvement the January 1st of the performance threshold,’’ and ‘‘performance standard’’ period. Those proposals, if finalized, Under our previously-adopted policy, in our regulations at § 413.178(a)(1), (3), would apply to PY 2023 and subsequent we are continuing all measures from the (7), and (12), respectively. payment years. PY 2022 ESRD QIP for PY 2023. We are not proposing to adopt any new a. Performance Standards for Clinical 5. Proposals for Weighting the Measure measures beginning with the PY 2023 Measures in the PY 2023 ESRD QIP Domains, and for Weighting the TPS for ESRD QIP. At this time, we do not have the PY 2023 Under our current policy, we assign 2. Proposed Performance Period for the necessary data to assign numerical values to the achievement thresholds, the Patient & Family Engagement PY 2023 ESRD QIP and Subsequent Measure Domain a weight of 15 percent Years benchmarks, and 50th percentiles of national performance for the clinical of TPS, the Care Coordination Measure We continue to believe that 12-month measures because we do not have CY Domain a weight of 30 percent of TPS, performance and baseline periods 2019 data. We intend to publish these the Clinical Care Measure Domain a provide us sufficiently reliable quality numerical values, using CY 2019 data, weight of 40 percent of TPS, and the measure data for the ESRD QIP. We in the CY 2021 ESRD PPS final rule. Safety Measure domain a weight of 15 therefore propose to establish CY 2021 percent of TPS, for the PY 2022 ESRD as the performance period for the PY b. Performance Standards for the QIP (83 FR 57011 through 57012). 2023 ESRD QIP for all measures. Reporting Measures in the PY 2023 Additionally, we propose to establish ESRD QIP 36 Please note that we are proposing to CY 2019 as the baseline period for the In the CY 2019 ESRD PPS final rule, redesignate paragraph (d) as subparagraph (e) in PY 2023 ESRD QIP for all measures for we finalized the continued use of this proposed rule. 37 As noted above, we are proposing to purposes of calculating the achievement existing performance standards for the redesignate paragraph (d) as subparagraph (e) in threshold, benchmark, and the Screening for Clinical Depression and this proposed rule.

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In the CY 2019 ESRD PPS final rule, casts and intraocular lenses inserted in from which reasonable charge data is we finalized a policy to assign weights a physician’s office. The fee schedule used to calculate the fee schedule to individual measures and a policy to amounts established for these items and amounts, or the fee schedule ‘‘base redistribute the weight of unscored services are based on payments made period’’ (for example, 1986 and 1987 for measures in the PY 2022 ESRD QIP (83 previously under the reasonable charge DME). Various methods have been used FR 57011 through 57012). We are payment methodology, which is set by CMS and its contractors to gap-fill proposing to continue use of the PY forth in section 1842(b) of the Act and DMEPOS fee schedule amounts 2022 measure weights for the PY 2023 in our regulations at 42 CFR 405.502. including use of fees for comparable ESRD QIP and subsequent payment Generally, reasonable charge items, supplier prices, manufacturer’s years. We also proposing to continue determinations are based on customary suggested retail prices (MSRPs), use of the PY 2022 measure weight and prevailing charges derived from wholesale prices plus a markup redistribution policy in the PY 2023 historic charge data. The fee schedule percentage to convert the prices to retail ESRD QIP and subsequent payment amounts for DME, prosthetic devices, prices, or other methods. In any case years. orthotics, prosthetics, and custom where prices are used for gap-filling, the We welcome comments on these molded shoes, extra-depth shoes, and prices are deflated to the fee schedule proposals. inserts are based on average reasonable base period by the percentage change in Under our current policy, a facility charges from 1986 and 1987. The fee the consumer price index for all urban must be eligible to be scored on at least schedule amounts for surgical dressings consumers (CPI–U) from the mid-point one measure in two of the four measures are based on average reasonable charges of the year the price is in effect to the domains in order to be eligible to from 1992. The fee schedule amounts mid-point of the fee schedule base receive a TPS (83 FR 57012). for PEN are calculated on a nationwide period. Program guidance containing V. Establishing Payment Amounts for basis and are the lesser of the reasonable instructions for contractors (mainly for New Durable Medical Equipment, charges for 1995, or the reasonable use by the Durable Medical Equipment Prosthetics, Orthotics and Supplies charges that would have been used in Medicare Administrative Contractors (DMEPOS) Items and Services (Gap- determining payment for these items in (DME MACs)) for gap-filling DMEPOS Filling) 2002 under the former reasonable fee schedule amounts is found at section charge payment methodology A. Background 60.3 of chapter 23 of the Medicare (§ 414.104(b)). The fee schedule Claims Processing Manual (Pub. L. 100– 1. Calculating Fee Schedule Amounts amounts for splints and casts are based 04). The instructions indicate that the for DMEPOS Items and Services on reasonable charges for 2013 and the DMEPOS fee schedule for items for Section 1834(a) of the Act mandates fee schedule amounts for intraocular which reasonable charge data were payment based on the lesser of the lenses inserted in a physician’s office unavailable during the fee schedule base supplier’s actual charge or a fee are based on reasonable charges for period are to be gap-filled using the fee schedule amount for DME other than 2012. In accordance with sections schedule amounts for comparable items customized items defined at 42 CFR 1834(a)(14)(L), 1834(h)(4)(xi), and or supplier price lists with prices in 414.224 and items included in a 1842(s)(1)(B)(ii) of the Act, the DMEPOS effect during the fee schedule base competitive bidding program in a fee schedule amounts are generally period. The instructions specify that competitive bidding area under section adjusted annually by the percentage supplier price lists include catalogs and 1847(a) of the Act. Section 1834(h) of increase in the CPI–U for the 12-month other retail price lists (such as internet the Act mandates payment based on the period ending with June 30 of the retail prices) that provide information lesser of the supplier’s actual charge or preceding year reduced by a on commercial pricing for the item. a fee schedule amount for most productivity adjustment. The Medicare Potential appropriate sources for such prosthetic devices, orthotics, and payment amount for a DMEPOS item is commercial pricing information can also prosthetics other than off-the-shelf generally equal to 80 percent of the include verifiable information from orthotics included in a competitive lesser of the actual charge or the fee supplier invoices and non-Medicare bidding program in a competitive schedule amount for the item, less any payer data (for example, fee schedule bidding area under section 1847(a) of unmet Medicare Part B deductible. The amounts comprised of the median of the the Act. Section 1834(i) of the Act beneficiary coinsurance for such items commercial pricing information mandates payment based on the lesser is generally equal to 20 percent of the adjusted as described below). Mail order of the supplier’s actual charge or a fee lesser of the actual charge or the fee catalogs are suitable sources of routinely schedule amount for surgical dressings. schedule amount for the item once the available price information for items Section 1833(o)(2)(A) of the Act deductible is met. such as urological and ostomy supplies mandates payment based on the lesser The statute does not specify how to which require frequent replacement. We of the supplier’s actual charge or a fee calculate fee schedule amounts when issued Transmittal 4130, Change schedule amount in accordance with the base reasonable charge data does not Request 10924 dated September 14, section 1834(h) of the Act for custom exist. As discussed later on, since 1989, 2018 which updated the manual molded shoes, extra-depth shoes, and we have used a process referred to as instruction to clarify that supplier price inserts. Section 1842(s) of the Act ‘‘gap-filling’’ to fill the gap in the lists can include internet retail prices or authorizes payment based on the lesser reasonable charge data for new verifiable information from supplier of the supplier’s actual charge or a fee DMEPOS items, which are newly invoices and non-Medicare payer data. schedule amount for parenteral and covered items or technology or items Prior to 2018, non-Medicare payer data enteral nutrients, equipment, and paid under Healthcare Common had not been included to establish gap- supplies (PEN), other than enteral Procedure Coding System (HCPCS) filled DMEPOS fee schedule amounts. nutrients, equipment, and supplies codes for miscellaneous items. The gap- CMS and its contractors have used included in a competitive bidding filling process is used to estimate what internet retail prices in the past in program in a competitive bidding area Medicare would have paid for the item addition to catalogue prices, as well as under section 1847(a) of the Act, and under the reasonable charge payment wholesale prices plus a retail price mark medical supplies, including splints and methodology during the period of time up, and on one occasion hospital

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invoices plus a 10 percent markup as a Manual until the fee schedule amounts MedHCPCSGenInfo/HCPCS source for commercial pricing on the national files are available. PublicMeetings.html. information. Typically, more than 100 applications In 2015, in revising the DME MAC 2. Coding for New DMEPOS Items are submitted to the CMS HCPCS statement of work, CMS clarified to the The HCPCS is a standardized coding Workgroup each year, with DME MACs that manufacturer’s system used to process claims submitted approximately one-third requesting new suggested retail prices (MSRP) should to Medicare, Medicaid, and other health or revised DMEPOS codes. The number not be used for gap-filling due to CMS’s insurance programs. Level I of the of approved new DMEPOS codes is not concerns that MSRPs may not represent HCPCS codes is comprised of Current finalized until shortly before the release routinely available supplier price lists, Procedural Terminology (CPT) codes of the HCPCS dataset, which in some which are incorporated for supplier identifying primarily medical services cases, leaves very short timeframes to charges in calculating fee schedule and procedures furnished by physicians prepare and release the updated amounts that the statute mandates be and other health care practitioners, DMEPOS fee schedule. based on historic reasonable charges. published and maintained by the 3. Continuity of Pricing Although MSRPs were used in certain American Medical Association. Level II cases in the past to gap-fill DMEPOS fee of the HCPCS codes primarily identifies Instructions for contractors addressing schedule amounts, our experience has items, supplies, services and certain how to establish DMEPOS payment revealed the retail prices suggested by drugs used outside the practitioner amounts following updates to HCPCS manufacturers often are inflated and do setting. Assignment of a HCPCS code is codes are contained at section 60.3.1 of not reflect commercial competitive not a coverage determination and does chapter 23 of the Medicare Claims pricing, or a price that is paid to a not imply that any payer will cover the Processing Manual. When an item supplier for furnishing items and items in the code category. receives a new HCPCS code, it does not services. Using MSRPs to gap-fill In 2001, section 531(b) of the necessarily mean that Medicare DMEPOS fee schedule amounts led to Medicare, Medicaid, and SCHIP payment on a fee schedule basis has excessive fee schedule amounts Benefits Improvement and Protection never been made for the item described compared to fees established for other Act of 2000 (BIPA) (Pub. L. 106–554) by the new code. If a new code is DMEPOS items paid for in 1986, 1987, mandated procedures that permit public established, contractors are instructed to 1992, 2001, or other fee schedule base consultation for coding and payment make every effort to determine whether periods. In many cases, a single determinations for new DMEPOS items the item has a pricing history and manufacturer may produce a new item, under Medicare Part B in a manner profile. If there is a pricing history, that and pricing information may therefore consistent with the procedures is, the items and services described by be limited to the MSRP. In these established for implementing ICD–9– the new code were paid for in the past situations, unlike other items and CM coding modifications. As a result, under other codes based on the fee services paid for under Medicare, there beginning in 2002, after the HCPCS schedule amounts for the other codes, is not yet independently substantiated Workgroup’s preliminary decision has the fee schedule amounts used to pay pricing information. In addition, similar been developed, the preliminary for the item previously are mapped or items are not available to create decisions are made available to the cross walked to the new code(s) for the competition and to potentially limit the public via our website and public item to ensure continuity of pricing. price a sole source manufacturer charges meetings are scheduled to receive Since there are different kinds of coding for the new item. We believe the MSRP public comment on the preliminary changes, there are various ways pricing may represent the amount the decisions. is cross walked from old codes to new manufacturer charges to Medicare and Following the HCPCS public codes, which is addressed in our other health insurance payers before meetings, we make a final decision on program instructions at section 60.3.1 of pricing is established in a competitive each new DMEPOS code request and chapter 23 of the Medicare Claims market by suppliers furnishing the payment category. Then, we prepare Processing Manual. For example, when product and competitor products. and release the HCPCS and DMEPOS fee the code for an item is divided into Currently, when we release our schedule files and program instructions multiple codes for the components of program instruction to the DME MACs for the next applicable update (annual that item, the total of the separate fee to update the DMEPOS fee schedule, we or quarterly) to our contractors and via schedule amounts established for the include a list of new HCPCS codes, our website. Also, a summary of the components must not be higher than the which are then added to the DMEPOS final coding and payment category fee schedule amount for the original fee schedule. Also, we release updated decisions is made available on our item. However, when there is a single DMEPOS fee schedule amounts in fee website. See the following websites for code that describes two or more distinct schedule files to our contractors and more information: complete items (for example, two available online at: https:// • HCPCS Files: https://www.cms.gov/ different but related or similar items), www.cms.gov/Medicare/Medicare-Fee- Medicare/Coding/ and separate codes are subsequently for-Service-Payment/ HCPCSReleaseCodeSets/Alpha- established for each item, the fee DMEPOSFeeSched/DMEPOS-Fee- Numeric-HCPCS.html; schedule amounts for the single code Schedule.html. • DMEPOS Fee Schedule Files: are applied to each of the new codes. If a HCPCS code for a new item is https://www.cms.gov/Medicare/ Conversely, when the codes for the added and takes effect, and the fee Medicare-Fee-for-Service-Payment/ components of a single item are schedule amounts for the new code DMEPOSFeeSched/DMEPOS-Fee- combined in a single global code, the fee have not yet been added to the DMEPOS Schedule.html; schedule amounts for the new code are fee schedule file, our contractors • Program Instructions: https:// established by totaling the fee schedule establish payment on an interim basis www.cms.gov/Regulations-and- amounts used for the components (that using local fee schedule amounts gap- Guidance/Guidance/Transmittals/ is, use the total of the fee schedule filled in accordance with the program index.html; and amounts for the components as the fee instructions at section 60.3 of chapter 23 • Public Meeting Summaries: https:// schedule amount for the global code). of the Medicare Claims Processing www.cms.gov/Medicare/Coding/ However, when the codes for several

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different items are combined into a requirements under sections 1842(b)(8) Under § 405.502(g)(2), the factors we single code, the fee schedule amounts and (9) of the Act regarding ‘‘inherent may consider in establishing a payment for the new code are established using reasonableness’’ adjustments are limit include the following: the average (arithmetic mean), weighted applicable to special payment limits • Price markup. The relationship by allowed services, of the fee schedule established in cases where supplier or between the retail and wholesale prices amounts for the formerly separate codes. commercial prices used for gap-filling or manufacturer’s costs of a category of These instructions are used to ensure decrease by more than 15 percent. items and services. If information on a continuity of pricing under the Examples of factors that may result in particular category of items and services Medicare program, but do not apply to grossly excessive or grossly deficient is not available, we may consider the items when a pricing history does not payment amounts are set forth at price markup on a similar category of exist, that is, in situations where an item § 405.502(g)(1)(vii) and include, but are items and services and information on was not paid for under a HCPCS code not limited to, the following: general industry pricing trends. or codes with an established DMEPOS • The market place is not • Differences in charges. The fee schedule amount(s). The gap-filling competitive. differences in charges for a category of process only applies to items not • Medicare and Medicaid are the sole items and services made to non- assigned to existing HCPCS codes with or primary sources of payment for a Medicare and Medicare patients or to established fee schedule amounts and category of items and services. institutions and other large volume items that were not previously paid for • The payment amounts for a purchasers. by Medicare under either a deleted or category of items and services do not • Costs. Resources (for example, revised HCPCS code. reflect changing technology, increased overhead, time, acquisition costs, facility with that technology, or changes production costs, and complexity) 4. Authority for Establishing Special in acquisition, production, or supplier required to produce a category of items Payment Limits costs. and services. Section 1842(b)(8) of the Act • The payment amounts for a • Use. Imputing a reasonable rate of authorizes CMS to adjust payment category of items or services in a use for a category of items or services amounts if, subject to the factors particular locality are grossly higher or and considering unit costs based on described in the statute and the lower than payment amounts in other efficient use. regulations, CMS determines that such comparable localities for the category of • Payment amounts in other payment amounts are grossly excessive items or services. localities. Payment amounts for a or grossly deficient, and therefore are • Payment amounts for a category of category of items and services furnished not inherently reasonable. CMS may items and services are grossly higher or in another locality. make a determination that would result lower than acquisition or production In determining whether a payment in an increase or decrease of more than costs for the category of items and amount is grossly excessive or grossly 15 percent of the payment amount for a services. deficient, and in establishing an year only if it follows all of the • There have been increases in appropriate payment amount, we use requirements under paragraphs (B), (C), payment amounts for an item or service valid and reliable data. To ensure the and (D) of section 1842(b)(8) of the Act. that cannot be explained by inflation or use of valid and reliable data, we must Under these requirements, CMS must technology. meet the criteria set forth at take certain factors into account, such as • Payment amounts for a category of § 405.502(g)(4), to the extent applicable. whether the payment amount does not items or services are grossly higher or This includes, but is not limited to, reflect changing technology. In addition, lower than payments made for the same considering the cost of the services section 1842(b)(9) of the Act mandates category of items or services by other necessary to furnish a product to a specific process that CMS must follow purchasers in the same locality. beneficiaries if wholesale costs are used. when using this ‘‘inherent • A new technology exists which is If we make a determination that a reasonableness’’ authority (IR authority) not reflected in the existing payment special payment limit is warranted to to adjust payment amounts by more allowances. adjust a grossly excessive or grossly than 15 percent a year. CMS has Prior to making a determination deficient payment amount for a category established the methodology and pursuant to section 1842(b)(8) of the Act of items and services by more than 15 process for using the IR authority at that would result in an increase or percent within a year, CMS must §§ 405.502(g) and (h). Use of the IR decrease of more than 15 percent in a publish in the Federal Register a authority involves many steps mandated payment amount for a year, CMS is proposed and final notice of any special under sections 1842(b)(8) and (9) of the required to consult with representatives payment limits before we adopt the Act, which can include consulting with of suppliers or other individuals who limits, with at least a 60-day period for supplier representatives before making a furnish an item or service. In addition, public comments on the proposed determination that a payment amount is section 1842(b)(8)(D) of the Act notice. The proposed notice must not inherently reasonable; publishing a mandates that CMS consider the explain the factors and data considered notice of a proposed determination in potential impact of a determination in determining the payment amount is the Federal Register which explains the pursuant to section 1842(b)(8) that grossly excessive or deficient and the factors and data taken into account; a would result in a payment amount factors and data considered in 60-day comment period; and publishing increase or decrease of more than 15 determining the special payment limits. a final notice, again explaining the percent for a year on quality, access, The final notice must explain the factors factors and data taken into account in beneficiary liability, assignment rates, and data considered and respond to making the determination. Medicare can and participation of suppliers. In public comment. only make payment adjustments for establishing a payment limit for a ‘‘inherent reasonableness’’ that would category of items or services, we 5. The 2006 Proposed Rule and 2018 result in a change of more than 15 consider the available information Solicitation of Comments on Gap-Filling percent per year by going through the relevant to the category of items or On May 1, 2006, we published several process outlined in the statute and at services in order to establish a payment proposed changes for the gap-filling §§ 405.502(g) and (h). As a result, the amount that is realistic and equitable. process in our rule titled ‘‘Medicare

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Program; Competitive Acquisition for filling process in future rulemaking (72 determining whether a Medicare Certain Durable Medical Equipment, FR 17994). covered DMEPOS item is comparable to Prosthetics, Orthotics, and Supplies In our CY 2019 ESRD PPS proposed a new item for the purpose of assigning (DMEPOS) and Other Issues’’ (71 FR rule titled ‘‘Medicare Program; End- a fee schedule amount to a new item. 25687 through 25689). The May 2006 Stage Renal Disease Prospective The commenters elaborated that in proposed rule discussed the existing Payment System, Payment for Renal order for an item to be comparable to gap-filling process and the results of Dialysis Services Furnished to another item, both should have similar pilot assessments conducted by two Individuals With Acute Kidney Injury, features and function, should be CMS contractors to assess the benefits, End-Stage Renal Disease Quality intended for the same patient effectiveness, and costs of several Incentive Program, Durable Medical population, for the same clinical products. The purpose of the pilot Equipment, Prosthetics, Orthotics and indicators, and to fill the same medical assessments was to compile the Supplies (DMEPOS) Competitive need. In addition, some commenters technical information necessary to Bidding Program (CBP) and Fee endorsed the addition of a weighting evaluate the technologies of the studied Schedule Amounts, and Technical calculation to apply to a median price products with the objective of making Amendments To Correct Existing that would factor in the existing market payment and HCPCS coding decisions Regulations Related to the CBP for demand/share/utilization of each for new items. The contractors Certain DMEPOS’’, we issued a request product and price included in the array evaluated the products based on: (1) A for information on the gap-filling of retail prices used for gap-filling using functional assessment; (2) a price process for establishing fees for newly supplier price lists. The commenters comparison analysis; and (3) a medical covered DMEPOS items paid on a fee expressed concern that the current benefit assessment. The functional schedule basis. We solicited comments gap-filling methodology assumes that all assessment involved evaluating a for information on how the gap-filling products within a given HCPCS code have equal characteristics, minimum device’s operations, safety, and user process could be revised in terms of specifications, and the gap-filling documentation relative to the Medicare what data sources or methods could be method does not account for relative population. The price comparison used to estimate historic allowed quality, durability, clinical preference, analysis involved determining how the charges for new technologies in a way and overall market demand. Thus, the cost of the product compared with that satisfies the exclusive payment commenters were concerned that the similar products on the market or rules for DMEPOS items and services, calculation of a gap-filled amount for a alternative treatment modalities. The while preventing excessive new item does not reflect the utilization medical benefit assessment focused on overpayments or underpayments for of an existing item. the effectiveness of the product in doing new technology items and services. In what it claims to do. the final rule, we summarized the B. Current Issues comments received and stated we As a result of the pilot studies, we would consider these comments Concerns have been raised by proposed to use what we referred to as carefully as we contemplate future manufacturers and stakeholders about the ‘‘functional technology assessment’’ policies (83 FR 57046 through 57047). CMS’ processes for establishing fees for process, in part or in whole, to establish The majority of the comments focused new DMEPOS items. In particular, our payment amounts for new items (71 FR on the aspects of transparency, sources process for reviewing information and 25688). We also suggested that we of information, and comparable items in data when establishing fee schedule would make every effort to use existing the gap filling process. Overall, the amounts for new DMEPOS items in fee schedule amounts or historic commenters recommended that CMS some instances has led to confusion Medicare payment amounts for new increase transparency for stakeholders among some stakeholders. For example, HCPCS codes; that we would retain the during the gap-filling process for some manufacturers have been confused method of using payment amounts for establishing fees for new DMEPOS items in the past about why fee schedule comparable items (properly calculated and revise the process for filling the gap amounts for comparable items are fee schedule amounts, or supplier price in the data due to the lack of historic sometimes used to establish fee lists); but that we would discontinue the reasonable charge payments by schedule amounts for new items and practice of deflating supplier prices and estimating what the historic reasonable what CMS considers when determining manufacturer suggested retail prices to charge payments would have been for whether new items are comparable to the fee schedule base period. In the items from a base year of 1986 and other DMEPOS items. Some have asked response to our proposal, many 1987 and inflating to the current year. for a process that is more predictable in commenters recommended a delay for Also, some commenters did not want determining what sources of data CMS finalizing regulations for the gap-filling CMS to include internet or catalog would use to establish fee schedule process due to an overwhelming pricing in the gap-filling process unless amounts for new DMEPOS items and number of new proposals in the rule, there is evidence that the price meets all services, given the amount of time and including the DMEPOS competitive Medicare criterion and includes all money associated with investing in the bidding program. In our final rule Medicare required services. The development of new technology for published on April 10, 2007 in the commenters stated that internet and DMEPOS items and services. Federal Register titled ‘‘Medicare catalog prices do not reflect the costs to Major stakeholder concerns related to Program; Competitive Acquisition for suppliers of compliance with the many gap-filling DMEPOS fee schedule Certain Durable Medical Equipment, Medicare requirements such as supplier amounts have been: (1) How CMS Prosthetics, Orthotics, and Supplies accreditation, in-the-home assessment, determines that items and services are (DMEPOS) and Other Issues,’’ we did beneficiary training, and comparable; (2) sources of pricing data not finalize our proposals for documentation, and thereby do not other than fees for comparable items; (3) regulations for the gap-filling process, as contribute to a reasonable payment timing of fee schedule calculations and a result of commenters feedback. We level. Furthermore, commenters use of interim fees; (4) public stated that we would address comments suggested developing additional consultation; (5) pricing data and and address regulations for the gap- guidelines and definitions for information integrity; and (6)

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adjustment of newly established fees during the fee schedule base period, is used to establish fees for new items. We over time. that average reasonable charge data or identified five main categories upon pricing data that is closer to the fee 1. Code or Item Comparability which new DMEPOS items can be schedule base period is used in Determinations compared to older DMEPOS items: establishing the fee schedule amounts, Physical components; mechanical We have heard frequently from and this better reflects the requirements components; electrical components (if manufacturers that do not agree that of the statute than using more recent applicable); function and intended use; their newly developed DMEPOS item is supplier prices as a proxy for reasonable and additional attributes and features. comparable to older technology charge data from the past. In addition, As shown in Table 9, a comparison DMEPOS items and services. Using fee establishing fees for a new item that are schedule amounts for comparable items significantly higher than fees for can be based on, but not limited to, to establish fee schedule amounts for comparable items based on reasonable these five main components and various new items can involve a number of charge data can result in a competitive attributes falling under the five main pricing combinations including, but not advantage for the new item because the components. When examining whether limited to: (1) A one to one mapping suppliers of the older item are paid an item is comparable to another item, where the fees for one code are used to considerably less than the suppliers of the analysis can be based on the items establish the fees for a new code, (2) the the new item even though the new item as a whole or its subcomponents. A new use of fees for a combination of codes is comparable to the older item. This product does not need to be comparable with established fee schedule amounts; could create an incentive for suppliers within each category, and there is no (3) the use of fees for one or more codes to furnish the new item more often than prioritization of the categories. The minus the fees for one or more other the older item, which would create an attributes listed in Table 9 under the codes identifying a missing feature(s) unfair advantage for the manufacturer(s) five main components are examples of the newer item does not include; or (4) of the new item. various attributes CMS evaluates within the use of one or more codes plus We undertook a review of the major each category. We believe that additional amounts for the costs of an components and attributes of DMEPOS establishing a set framework and basis additional feature(s) the newer items items that we evaluate when for identifying comparable items in has that the older item(s) does not determining whether items are regulation would improve the include. The benefit of using fee comparable in order to develop and transparency and predictability of schedule amounts for comparable items, propose a standard for when and how establishing fees for new DMEPOS especially items that CMS paid for fees for comparable items would be items.

TABLE 9—COMPARABLE ITEM ANALYSIS [Any combination of, but not limited to, the categories below for a device or its subcomponents]

Components Attributes

Physical Components ...... Aesthetics, Design, Customized vs. Standard, Material, Portable, Size, Temperature Range/ Tolerance, Weight. Mechanical Components ...... Automated vs. Manual, Brittleness, Ductility, Durability, Elasticity, Fatigue, Flexibility, Hard- ness, Load Capacity, Flow-Control, Permeability, Strength. Electrical Components ...... Capacitance, Conductivity, Dielectric Constant, Frequency, Generator, Impedance, Piezo- electric, Power, Power Source, Resistance. Function and Intended Use ...... Function, Intended Use. Additional Attributes and Features ...... ‘‘Smart’’, Alarms, Constraints, Device Limitations, Disposable Parts, Features, Invasive vs. Non-Invasive.

We believe that by establishing a basis CMS is unable to identify comparable filling purposes is that supplier price for comparability, stakeholders would items with existing fee schedule lists provide the best estimate of what be better informed on how these amounts, other sources of pricing data suppliers would have routinely charged analyses are performed, creating a more must be used to calculate the DMEPOS for furnishing DMEPOS items during transparent process that stakeholders fee schedule amount for the new item. the fee schedule base period (if would better understand and which Current program instructions in section reasonable charge data for the new item would facilitate a more efficient 60.3 of chapter 23 of the Medicare is not available and comparable items exchange of information between Claims Processing Manual specify that with existing fee schedule amounts are stakeholders and CMS on the various supplier price lists may be used in these not identified). When using supplier DMEPOS items and services, both old cases, and that supplier price lists can price lists to estimate what reasonable and new. We believe this would also include catalogs and other retail price charge amounts would have been during help avoid situations where comparable lists (such as internet retail prices) that the base period, CMS deflates the prices DMEPOS items have vastly different fee provide information on commercial listed in supplier price lists to the fee schedule amounts or where items that pricing for the item. In 2018, we schedule base period. For example, are not comparable have equal fee clarified in the instructions in section section 1834(a)(2)(B) of the Act schedule amounts. 60.3 of the Medicare Claims Processing mandates fee schedule amounts for 2. Sources of Pricing Data Other Than Manual that potential appropriate inexpensive DME items based on the Fees for Comparable Items sources for such commercial pricing average reasonable charges for the information can also include verifiable item(s) from July 1, 1986 through June When CMS is establishing the fee information from supplier invoices and 30, 1987. If supplier price lists are used schedule amount for a new item that non-Medicare payer data. Our rationale to estimate what these average lacks a Medicare pricing history and for using supplier price lists for gap- reasonable charges would have been

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during the base period of 1986/87, the cannot be determined without obtaining appear to represent a reasonable relative 2018 (for example) prices listed in the samples. For more complex items, it difference in supplier costs of supplier price lists are converted to may be necessary to use a separate furnishing the new DMEPOS item 1986/87 dollars by multiplying the 2018 technology assessment contractor in relative to the supplier costs of prices by a deflation factor (.439 in this addition to skilled CMS and contractor furnishing DMEPOS items from the fee example) that is listed in section 60.3 of personnel such as biomedical engineers schedule base period. For example, if a chapter 23 of the Medicare Claims to conduct the technology assessment. code is added for a new type of manual Processing Manual. The deflation factor To clarify, this option is not the same as hospital bed and supplier or commercial is equal to the percentage change in the using fees for comparable items, where prices are 20 times higher than the fee consumer price index for all urban existing fee schedule amounts for older schedule amounts for all other types of consumers (CPI–U) from the mid-point items are used for newer items manual hospital beds, we would use a of the year the price is in effect (June of determined to be comparable to the technology assessment of the supplier 2018 in this example) to the mid-point older items. If new items are not costs of furnishing different types of of the fee schedule base period comparable to older items with existing manual hospital beds to determine the (December of 1986 in this example). So, fee schedule amounts, the supplier cost relative supplier costs of furnishing the if the 2018 price is $100, this price is of furnishing the new item(s) can be new type of manual hospital bed, which multiplied by .439 to compute a1986/87 compared to the supplier cost of in turn would be used to establish the price of $43.90. CMS then applies the furnishing an older item(s) with fee schedule amounts for the new type covered items update factors mandated established fee schedule amounts and of manual hospital bed. The technology by section 1834(a)(14) of the Act for use the relative difference in the cost of the assessment is a tool for obtaining more in updating the data from the base new item versus the older item(s) can be information about the costs of the new period to establish current fee schedule determined using a technology item relative to the older items. amounts. In the example above, the assessment. To summarize, we propose to add a provision to the regulations at § 414.236 $43.90 base fee is updated to $66.80 for Once the relative cost of the new item that addresses the continuity of pricing 2019 if the device is a class II device or is determined, a pricing percentage when items are re-designated from one $74.16 if it is a class III device, after would be established based on the HCPCS code to another. For new items applying the update factors mandated results of the technology assessment to by section 1834(a)(14) of the Act. without a pricing history, we propose to establish the fee schedule amount for add a provision to the regulations at In addition to using information from the new DMEPOS item. For example, if §§ 414.112 and 414.238 to establish five supplier or commercial price lists, CMS it is determined that the cost of a new main categories of components or can determine the relative supplier costs DMEPOS item is approximately twice attributes of DMEPOS items that would of furnishing new DMEPOS items the cost of existing DMEPOS item(s), the be evaluated to determine if a new item compared to other DMEPOS items with pricing percentage would equal 200. is comparable to older existing item(s) existing fee schedule amounts by using Thus, if the fee schedule amount for an for gap-filling purposes. If it is technology assessments to determine existing DMEPOS item is $500, then the determined that the new item is the relative cost of a new DMEPOS item fee schedule amount for the new comparable to the older existing item(s), versus older items for which Medicare DMEPOS item would be $1,000 (200 we are proposing to use the fee schedule fee schedule amounts have been percent of $500 or $500 multiplied by amounts for the older existing item(s) to established. Under this option for two). Another example is when it is establish the fee schedule amounts for obtaining pricing information, the cost determined that the cost of the new the new item. We also propose that if it of new DMEPOS items relative to the DMEPOS item is approximately 75 is determined that there are no cost of items with existing fee schedule percent of the cost of the old DMEPOS comparable items to use for gap-filling amounts would be assessed and used to item(s). For example, if the fee schedule purposes, the fee schedule amounts for establish fee schedule amounts for the amount for the old DMEPOS item is a new item would generally be based on new DMEPOS items. The assessment $500, then the fee schedule amount for supplier or commercial price lists, would be made by biomedical the new DMEPOS item would be $375 deflated to the fee schedule base period engineers, certified orthotists/ (75 percent of $500 or $500 multiplied and updated by the covered item update prosthetists and other experts at CMS by 0.75). We believe using the relative factors. If supplier or commercial price and its contractors. Payment amounts cost of new items versus older items lists are not available or verifiable or do for new items and services under the keeps all DMEPOS items (old and new) not appear to represent a reasonable old reasonable charge payment on a level playing field and priced in relative difference in supplier costs of methodology were sometimes gap-filled accordance with the historic reasonable furnishing the new DMEPOS item using relative value scales, which filled charges for DMEPOS in general. We relative to the supplier costs of gaps in charge data for an item based on believe this method also helps foster furnishing DMEPOS items from the fee the relative value or cost of the item innovation since new items that cost schedule base period, we propose to use compared to other items with charge more would be priced based on these technology assessments that determine data. This same concept can be used to higher costs relative to older items with the relative costs of the newer DMEPOS price new DMEPOS items relative to lower costs. We propose that technology items compared to older DMEPOS existing DMEPOS items under the fee assessments would be used whenever item(s) to establish the fee schedule schedule. In the past, we have we believe it is necessary to determine amounts for the newer DMEPOS items. contracted with companies to conduct the relative cost of a new DMEPOS item technology assessments, and the process compared to DMEPOS items that CMS 3. Timing of Fee Schedule Calculations involved analyzing samples of the paid for during the fee schedule base and Interim Pricing product(s) being priced as well as older period. CMS would use these In some cases, HCPCS codes for new technology items. Under this option, it technology assessments to gap-fill fees DMEPOS items may take effect before may be necessary for us to obtain for the new DMEPOS item when the DMEPOS fee schedule amounts have samples of new items as well as existing supplier or commercial price lists are been calculated and added to the items if the relative cost of the items not available or verifiable or do not national DMEPOS fee schedule files. In

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these cases, the DME MACs and other CMS to review our process for to adjust using the inherent contractors establish interim local fee establishing fee schedule amounts for reasonableness authority, which schedule amounts in order to allow for new DMEPOS items. We have concerns requires numerous time consuming and payment of claims in accordance with with using supplier invoices and resource-intensive steps. These are just fee schedule payment rules. We information for commercial pricing such a few of the reasons why we believe it anticipate the need to continue the as internet and manufacturer-submitted is always best to use established fee establishment of interim fees and in pricing. Our experience with reviewing schedule amounts for older items, if certain cases, an interim fee could be manufacturer submitted prices and possible, and compare those older items effective as long as 6 months to a year available information on the internet for to the newer items, rather than using if complex technology assessments are new DMEPOS has caused CMS to have supplier invoices and information for needed in order to establish a fee the following concerns about using commercial pricing such as internet and schedule amount for the new item. invoices and information for manufacturer-submitted pricing to Changes to the national DMEPOS fee commercial pricing: establish the fee schedule amounts for schedule files can be made on a • Internet prices may not be available new items. This is also why we believe quarterly basis, and this can include or reliable, especially if the posted price we should use technology assessments corrections of errors made in calculating is the manufacturer’s suggested price or to price newer items if the newer items fee schedule amounts (see section 60.2 some other price that does not represent are not comparable to older items and of chapter 23 of the Medicare Claims prices that are actually paid in the available supplier invoices and/or Processing Manual). Corrections to commercial markets. commercial pricing information is either errors in fee schedule amounts are made • New products are often only not verifiable or appears to be on a quarterly basis due to limited available from one manufacturer that unreasonable. resources and the need to test changes controls the market and price. 6. Adjustment of Fees Over Time to the fee schedule files and claims • Current invoices from suppliers processing edits and systems. may not represent the entire universe of We have been consistent in applying As explained in section V.B.4 of this prices and typically do not reflect the following guidelines once fee proposed rule, the time during which volume discounts, manufacturer rebates, schedule amounts have been established temporary, local fee schedule amounts or other discounts that reduce the actual using the gap-filling process and may be necessary for payment purposes cost of the items. included in the DMEPOS fee schedule: could be affected by the process used to • Prices from other payers may not (1) Fee schedule amounts are not obtain public consultation and feedback reflect the unique costs and program changed by switching from one gap- from stakeholders on the pricing of new requirements applicable to Medicare filling method (such as using supplier items. payment for DMEPOS and may be price lists) to another gap-filling method excessive if they represent the (such as using fees for comparable 4. Public Consultation and Stakeholder manufacturer suggested retail prices items); and (2) fee schedule amounts are Input rather than negotiated lower rates. not changed as new items falling under Consistent with section 531(b) of • If the prices result in excessive the same HCPCS code. However, we BIPA, CMS obtains public consultation payment amounts, it may be difficult to have revised fee schedule amounts on preliminary coding and payment determine a realistic and equitable established using the gap-filling process determinations for new DME items and payment amount using the inherent when we determined that an error was services each year at public meetings reasonableness authority or lower the made in the initial gap-filling of the fee held at CMS headquarters in Baltimore, payment amounts by, for example, schedule amounts or when adjustments Maryland. These meetings are also held including the items in a competitive were made to the fee schedule amounts to obtain public consultation on bidding program. based on the payments determined preliminary coding and payment • Using excessive prices to calculate under the DMEPOS competitive bidding determinations for other DMEPOS items fee schedule amounts for new items program. If fee schedule amounts were in addition to DME. The public would be unfair to manufacturers and gap-filled using supplier price lists, and meetings for preliminary coding and suppliers of older, competitor products the prices subsequently decrease or payment determinations could be used not priced using the same inflated increase, the gap-filled fee schedule to obtain public consultation on gap- commercial prices. amounts are not revised to reflect the filling issues such as the comparability Numerous challenges exist including changes in the prices. of new items versus older items, the the significant number of sources of However, we recognize that this gap- relative cost of new items versus older pricing information: Medicare filling method of using supplier prices items, and additional information on the Advantage (MA) plans, private insurers, could result in excessive fee schedule pricing of new DMEPOS items. In the Veterans Benefits Administration, amounts in cases where the market for addition, manufacturers of new items Tricare, Federal Employee Health Plans, the new category of items is not yet often request meetings with CMS to Medicaid state agencies, internet prices, competitive due to a limited number of provide information about their catalog prices, retail store prices, and manufacturers and suppliers. We now products, and CMS can reach out to other sources. Prices for a particular believe that if supplier or commercial manufacturers and other stakeholders item or service can vary significantly prices are used to establish fee schedule for additional information that may be depending on the source used. If the amounts for new items, and the prices necessary in the future for pricing new median price paid by one group of decrease within 5 years (once the DMEPOS items. payers (for example, non-Medicare market for the new items is more payers) is significantly higher than the established), that CMS should gap-fill 5. Pricing Data and Information Integrity median price paid by another group of those prices again in an effort to reflect Our concerns about the integrity of payers (for example, MA plans), not supplier prices from a market that is the data and information submitted by using or factoring in the prices from the more established, stable, and manufacturers for the purpose of group of payers with the lower prices competitive than the market and prices assisting CMS to establish new could result in grossly excessive fee for the item at the time CMS initially DMEPOS fee schedule amounts have led schedule amounts that are then difficult gap-filled the fee schedule amounts. For

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example, most DME items furnished for a new DMEPOS item decrease by period of time after the item comes on during the applicable 1986/87 fee any amount below 15 percent within 5 the market and fee schedule amounts schedule base period, such as years of establishing the initial fee are initially established for the item wheelchairs, hospital beds, ventilators, schedule amounts, and fee schedule would be common. We therefore are not and oxygen equipment, were covered by amounts calculated using the new proposing similar one-time increases in Medicare in 1986/87 and paid for on a supplier or commercial prices would be fee schedule amounts established using reasonable charge basis for many years no more than 15 percent lower than the supplier or commercial prices, however, (20 years in many cases). Thus the fee initial fee schedule amounts, we believe we invite comments on this issue. schedule amounts calculated using gap-filling should be conducted a We do not believe gap-filling fee average reasonable charges from the second time to reduce the fee schedule schedule amounts for new items should 1986/87 fee schedule base period(s) amounts by up to 14.99 percent as a be conducted a second time in reflected prices from stable, competitive result of using new, lower prices from situations where the prices decrease by markets. In contrast, new items that are a more stable and competitive market. 15 percent or more within 5 years of the not comparable to older items are often We do not believe that a similar initial gap-filling of the fee schedule made by one or a few manufacturers, so adjustment is necessary to account for amounts. In cases where supplier or the market for a new item is not yet increases in supplier or commercial commercial prices used to establish stable or competitive, especially as prices within 5 years of establishing original gap-filled fee schedule amounts compared to the market for most initial fee schedule amounts since the increase or decrease by 15 percent or DMEPOS items that have fee schedule fee schedule calculation methodology more after the initial fee schedule amounts that were established based on already includes an annual covered item amounts are established, this would reasonable charges during the fee update to address increases in costs of generally mean that the fee schedule schedule base period. During the furnishing items and services over time. amounts would be grossly excessive or various fee schedule base periods such Thus we are proposing a one-time deficient within the meaning of section as 1986/87 for DME, prosthetic devices, adjustment to gap-filled fee schedule 1842(b)(8)(A)(i)(I) of the Act. In such prosthetics and orthotics, most items amounts based on decreases in supplier circumstances we believe that CMS had been on the market for many years, or commercial prices. The statute could consider making an adjustment to were made by multiple competing requires CMS to establish fee schedule the fee schedule amounts in accordance manufacturers, and were furnished by amounts for DMEPOS items and with regulations at § 405.502(g). We can multiple competing suppliers in services based on average reasonable also consider whether changes to the different localities throughout the charges from a past period of time, regulations at § 405.502(g) should be nation. Therefore, the average generally when the market for most made in the future to specifically reasonable charges from the fee items was stable and competitive. In address situations where supplier or schedule base period generally reflect many cases, fee schedule amounts may commercial prices change by 15 percent supplier charges for furnishing items in be gap-filled using manufacturer prices or more and how this information could a stable and competitive market. or prices from other payers for new potentially be used to adjust fee We believe that if supplier or technology items that may only be made schedule amounts established using commercial prices used to gap-fill fee by one manufacturer with limited supplier or commercial prices. schedule amounts for a new item competition. In these situations, C. Provisions of the Proposed Rule decrease within 5 years of the initial competition from other manufacturers gap-filling exercise, that the new, lower or increases in the volume of items paid 1. Continuity of Pricing When HCPCS prices likely represent prices from a for by Medicare and other payers could Codes Are Divided or Combined more stable and competitive market. We bring down the market prices for the We propose to add § 414.110 under also believe that supplier prices from a item within a relatively short period of subpart C for fee schedule amounts for stable and competitive market better time after the initial fee schedule PEN and medical supplies, including represent the prices in the market for amounts are established, creating a more splints and casts and intraocular lenses DMEPOS items covered during the fee stable and competitive market for the inserted in a physician’s office, and schedule base period and therefore are item, we believe that gap-filling using § 414.236 under subpart D for DME, a better proxy for average reasonable prices from a stable, competitive market prosthetic devices, prosthetics, charges from a fee schedule base period is a better reflection of average orthotics, surgical dressings, and (as specified in the statute) as compared reasonable charges for the item from the therapeutic shoes and inserts to address to supplier or commercial prices when fee schedule base period. While the fee the continuity of pricing when HCPCS an item is brand new to the market. We schedule covered item update as codes are divided or combined. If a believe that gap-filling a second time described in sections 1834(a)(14), DMEPOS item is assigned a new HCPCS once the market for the item has become 1834(h)(4), 1834(i)(1)(B), and code, it does not necessarily mean that more stable and competitive would 1842(s)(1)(B)(ii) of the Act allow for Medicare payment on a fee schedule result in fee schedule amounts that are increases to the fees schedule amounts basis has never been made for the item more reflective of average reasonable that can address increases in cost of and service described by the new code. charges for DMEPOS items from the fee furnishing items and services over time For example, Medicare payment on a fee schedule base period. We believe CMS or track increases in supplier or schedule basis may have been made for should conduct gap-filling the second commercial prices, there is no the item under a different code. We time within a relatively short period of corresponding covered item update that propose that if a new code is added, time after the fees are initially results in a decrease in fee schedule CMS or contractors would make every established (5 years) and only in cases amounts when the market for a new effort to determine whether the item and where the result of the second gap- item becomes more mature and service has a fee schedule pricing filling is a decrease in the fee schedule competitive following the initial gap- history. If there is a fee schedule pricing amounts of less than 15 percent. Thus, filling of the fee schedule amounts. We history, the previous fee schedule if the supplier or commercial prices also do not believe that a situation in amounts for the old code(s) would be used to establish fee schedule amounts which prices increase within a short associated with, or cross walked to the

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new code(s), to ensure continuity of propose that if there are no items with 1834(a)(14) of the Act. We propose that, pricing. Since there are different kinds existing fee schedule amounts that are if within 5 years of establishing fee of coding changes, the way the proposed comparable to the items and services schedule amounts using supplier or rule would be applied varies. For under the new code, the fee schedule commercial prices, the supplier or example, when the code for an item is amounts for the new code would be commercial prices decrease by less than divided into several codes for the established using supplier or 15 percent, a one-time adjustment to the components of that item, the total of the commercial price lists or technology fee schedule amounts would be made separate fee schedule amounts assessments if supplier or commercial using the new prices. As a result of the established for the components would price lists are not available or verifiable market for the new item becoming more not be higher than the fee schedule or do not appear to represent a established over time, the new prices amount for the original item. However, reasonable relative difference in would be used to establish the new fee when there is a single code that supplier costs of furnishing the new schedule amounts in the same way that describes two or more distinct complete DMEPOS item relative to the supplier the older prices were used, including items (for example, two different but costs of furnishing DMEPOS items from application of the deflation formula. related or similar items), and separate the fee schedule base period. Again, supplier price lists can include codes are subsequently established for We propose that if items with existing catalogs and other retail price lists (such each item, the fee schedule amounts fee schedule amounts that are as internet retail prices) that provide that applied to the single code would comparable to the new item are not information on commercial pricing for continue to apply to each of the items identified, the fee schedule amounts for the item. Potential appropriate sources described by the new codes. When the the new item would be established for such commercial pricing information codes for the components of a single using supplier or commercial price lists. can also include verifiable information item are combined in a single global However, if the supplier or commercial from supplier invoices and non- code, the fee schedule amounts for the price lists are not available or verifiable Medicare payer data. We are not new code would be established by or do not appear to represent a proposing a similar adjustment if adding the fee schedule amounts used reasonable relative difference in supplier or commercial prices increase for the components (that is, use the total supplier costs of furnishing the new by less than 15 percent, but we invite of the fee schedule amounts for the DMEPOS item relative to the supplier comments on this issue. components as the fee schedule amount costs of furnishing DMEPOS items from We propose that fee schedule for the global code). However, when the the fee schedule base period, we amounts for items and services codes for several different items are propose that the fee schedule amounts described by new HCPCS codes without combined into a single code, the fee for the new item would be established a fee schedule pricing history that are schedule amounts for the new code using technology assessments. We not comparable to items and services would be established using the average propose that supplier or commercial with existing fee schedule amounts may (arithmetic mean), weighted by allowed price lists would include catalogs and also be established using technology services, of the fee schedule amounts for other retail price lists (such as internet assessments. We propose that these the formerly separate codes. retail prices) that provide information technology assessments would be 2. Establishing Fee Schedule Amounts on commercial pricing for the item, performed by biomedical engineers, for New HCPCS Codes for Items and which could include payments made by certified orthotists and prosthetists, and Services Without a Fee Schedule Pricing Medicare Advantage plans, as well as CMS, and others knowledgeable about History verifiable information from supplier DMEPOS items and services, to invoices and non-Medicare payer data. We are proposing to add § 414.112 determine the relative cost of the items We propose that if the only available under subpart C for fee schedule and services described by the new codes price information is from a period other amounts for PEN and medical supplies, to items and services with existing fee than the fee schedule base period, including splints and casts and schedule amounts. We propose that a deflation factors would be applied intraocular lenses inserted in a pricing percentage would be established physician’s office, and § 414.238 under against current pricing in order to based on the results of the technology subpart D for DME, prosthetic devices, approximate the base period price. We assessment and would be used to prosthetics, orthotics, surgical dressings, propose that the annual deflation factors establish the fee schedule amounts for and therapeutic shoes and inserts to would be specified in program the new code(s). For example, if it is address the calculation of fee schedule instructions and would be based on the determined that the cost of the item and amounts for new HCPCS codes for items percentage change in the consumer services described by the new code(s) is and services without a fee schedule price index for all urban consumers approximately twice the cost of the pricing history. We propose that if a (CPI–U) from the mid-point of the year items and services described by the HCPCS code is new and describes items the prices are in effect to the mid-point code(s) with existing fee schedule and services that do not have a fee of the fee schedule base period, as amounts, the pricing percentage would schedule pricing history, the fee calculated using the following formula: be 200, and the current fee schedule schedule amounts for the new code ((base CPI–U minus current CPI–U) amount for the old code(s) would be would be established whenever possible divided by current CPI–U) plus one multiplied by two to establish the fee using fees for comparable items with The deflated amounts would then be schedule amounts for the new code(s). existing fee schedule amounts. We considered an approximation to average Or, if it is determined that the cost of propose that items with existing fee reasonable charges from the fee the items and services described by the schedule amounts are determined to be schedule base period and would be new code(s) is approximately 75 percent comparable to the new items and increased by the annual covered item of the cost of the items and services services based on a comparison of: update factors specified in statute for described by the code(s) with existing Physical components; mechanical use in updating average reasonable fee schedule amounts, the pricing components; electrical components; charges from the fee schedule base percentage would be 75. The pricing function and intended use; and period, such as the covered item update percentages would be applied to the additional attributes and features. We factors specified for DME at section current fee schedule amounts for

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HCPCS codes with existing fee schedule in the programs and operations of the devices (PMDs) in section amounts to calculate the fee schedule HHS. HHS–OIG’s mission is to protect 1834(a)(1)(E)(iv) of the Social Security amounts for new HCPCS codes without the integrity of HHS programs and is Act (the Act), that specify payment may a fee schedule pricing history. carried out through a network of audits, not be made for a covered item We propose that technology investigations, and inspections. consisting of a motorized or power assessments would be used when we The Government Accountability wheelchair unless a physician (as believe it is necessary to determine the Office (GAO) audits the Centers for defined in section 1861(r)(1) of the Act), relative cost of a new item compared to Medicare & Medicaid Services’ (CMS’) physician assistant (PA), nurse items that were available and had operations to determine whether federal practitioner (NP), or clinical nurse established fee schedule amounts using funds are being spent efficiently and specialist (CNS) (as such non-physician data from the fee schedule base period effectively, as well as to identify areas practitioners are defined in section in order to gap-fill fees for the new item where Medicare and other CMS 1861(aa)(5) of the Act) has conducted a when supplier or commercial price lists programs may be vulnerable to fraud face-to-face examination of the are not available or verifiable or do not and/or improper payments. individual and written a prescription for appear to represent a reasonable relative A number of HHS–OIG and GAO the item. difference in supplier costs of reports have focused on waste, fraud, On April 5, 2006, we published a final furnishing the new DMEPOS item and abuse within the DMEPOS sector, rule in the Federal Register titled relative to the supplier costs of which has led to the enactment of ‘‘Medicare Program; Conditions for furnishing DMEPOS items from the fee legislation (as outlined in the Payment of Power Mobility Devices, schedule base period. Technology background section of this proposed including Power Wheelchairs and assessments are a tool for obtaining regulation) to safeguard beneficiaries Power-Operated Vehicles’’ (71 FR more information about the relative and the Medicare Trust Funds. In an 17021), hereinafter referred to as ‘‘April costs of the new item to the older items. effort to reduce improper payments, 2006 final rule,’’ to implement the We are soliciting comments on these CMS has issued regulations and sub- requirements for a face-to-face proposals. regulatory guidance to clarify the examination and written prescription in payment rules for Medicare DMEPOS VI. Standard Elements for a Durable accordance with the authorizing suppliers rendering items and Medical Equipment, Prosthetics, legislation. In § 410.38(c)(2)(ii), we submitting claims for payment. required that prescriptions for PMDs Orthotics, and Supplies (DMEPOS) Currently, the scope of payment for Order; Master List of DMEPOS Items must be in writing, signed and dated by medical supplies, appliances, and the treating practitioner who performed Potentially Subject to Face-to-Face devices, including prosthetics and Encounter and Written Order Prior to the face-to-face examination, and orthotics, are defined at 42 CFR received by the supplier within 45 days Delivery and/or Prior Authorization 410.36(a) and the scope and certain Requirements after the face-to-face examination. The conditions for payment of durable April 2006 final rule mandated that the A. Background medical equipment (DME) are described supplier receive supporting The Comprehensive Error Rate at § 410.38. Medicare pays for DMEPOS documentation, including pertinent Testing (CERT) program measures items only if the beneficiary’s medical parts of the beneficiary’s medical record improper payments in the Medicare record contains sufficient to support the medical necessity for the Fee-For-Service (FFS) program. CERT is documentation of the beneficiary’s PMD, within 45 days after the face-to- designed to comply with the Improper medical condition to support the need face examination. It provided that the Payments Information Act of 2002 for the type and quantity of items PMD prescription must include a 7- (IPIA) (Pub. L. 107–300), as amended by ordered. In addition, other conditions of element order composed of—(1) The the Improper Payments Elimination and payment must be satisfied for the claim beneficiary’s name; (2) the date of the Recovery Act of 2010 (IPERA) (Pub. L. to be paid. These conditions of payment face-to-face examination; (3) the 111–204), as updated by the Improper vary by item, but are specified in statute diagnoses and conditions that the PMD Payments Elimination and Recovery and in our regulations. They are further is expected to modify; (4) a description Improvement Act of 2012 (IPERIA) (Pub. detailed in our manuals and in local and of the item (for example, a narrative L. 112–248). As stated in the CERT 2018 national coverage determinations. description of the specific type of PMD; Medicare FFS Supplemental Improper The purpose of this rule is to simplify (5) the length of need; (6) the physician Payment Data report, Durable Medical and revise conditions of payment aimed or treating practitioner’s signature; and Equipment, Prosthetics, Orthotics, and at reducing unnecessary utilization and (7) the date the prescription is written. Supplies (DMEPOS) claims had an aberrant billing for items described in § 410.36(a) and § 410.38. To avoid 2. Face-to-Face and Prescription improper payment rate of 35.5 percent, Requirements for Specified DMEPOS accounting for approximately 8.2 differing conditions of payment for Section 6407 of the Patient Protection percent of the overall Medicare FFS different items paid under the DMEPOS and Affordable Care Act of 2010 (Pub. improper payment rate.38 Fee Schedule, we propose the The Department of Health and Human conditions of payment described in L. 111–148) amended section Services Office of Inspector General proposed § 410.38(d), would also be 1834(a)(11)(B) of the Act, which already (HHS–OIG) provides independent and applied to items specified under required a written order, to also require objective oversight that promotes § 410.36(a). that a physician, PA, NP, or CNS have economy, efficiency, and effectiveness a face-to-face encounter with the 1. Face-to-Face and Prescription beneficiary within a 6-month period Requirements for Power Mobility preceding the written order for certain 38 2018 Medicare Fee-for-Service Supplemental Devices (PMDs) Improper Payment Data: https://www.cms.gov/ DMEPOS, or other reasonable timeframe Research-Statistics-Data-and-Systems/Monitoring- Section 302(a)(2) of the Medicare as determined by the Secretary of the Programs/Medicare-FFS-Compliance-Programs/ Prescription Drug, Improvement, and Department of Health and Human CERT/CERT-Reports-Items/2018MedicareFFS SupplementalImproperPaymentData.html? Modernization Act of 2003 (MMA) (Pub. Services (the Secretary). DLPage=1&DLEntries=10&DLSort=0&DLSortDir= L. 108–173), in part, added conditions On November 16, 2012, we published descending. Accessed January 8, 2019. of coverage specific to power mobility a final rule with comment period in the

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Federal Register titled ‘‘Medicare specified covered items, as selected per (adjusted annually for inflation using Program; Revisions to Payment Policies the regulatory instruction in CPI–U) or greater, that also met one of Under the Physician Fee Schedule, DME § 410.38(g)(2), to contain 5 elements: (1) the following two criteria: (1) The item Face-to-Face Encounters, Elimination of The beneficiary’s name; (2) the item of has been identified as having a high rate the Requirement for Termination of DME ordered; (3) the signature of the of fraud or unnecessary utilization in a Non-Random Prepayment Complex prescribing practitioner; (4) the report that is national in scope from Medical Review and Other Revisions to prescribing practitioner National 2007 or later, as published by the OIG Part B for CY 2013’’ (77 FR 68892) Provider Identifier (NPI); and (5) the or the GAO; or (2) the item was listed hereinafter referred to as ‘‘November date of the order. in the 2011 or later CERT program’s 2012 final rule,’’ that established a list Annual Medicare FFS Improper 3. Subregulatory Requirements for of DME items subject to the face-to-face Payment Rate DME and/or DMEPOS Orders and Face-to-Face Encounters for encounter and written order prior to Service Specific Report(s). Section Other DMEPOS delivery requirements as a condition of 414.234(b) lists DMEPOS items that met payment. CMS selected items for this CMS through subregulatory guidance these criteria on a ‘‘Master List of Items list based on an item having met one of developed standards for orders for Frequently Subject to Unnecessary the following four criteria: (1) Items that DMEPOS items not included on the list Utilization.’’ Placement on the Master required a written order prior to of specified covered items requiring a List makes an item eligible for CMS to delivery per instructions in the written order prior to delivery and a require prior authorization as a Medicare Program Integrity Manual (at face-to-face encounter. In addition, condition of payment. CMS selects the time of rulemaking); (2) items that certain items of DMEPOS require face- items from the Master List to require cost more than $1,000 (at the time of to-face encounters in item-specific prior authorization as a condition of rulemaking in 2012); (3) items CMS, coverage requirements, such as those in payment and publishes notice of such based on experience and the MAC-developed local coverage items in the Federal Register. Items on recommendations from the DME MACs, determinations. the Master List are updated annually, believed were particularly susceptible to 4. Prior Authorization based on payment thresholds and fraud, waste, and abuse; and (4) items changes in vulnerability reports, as well determined by CMS as vulnerable to The Medicare Prior Authorization of as other factors described in § 414.234. fraud, waste and abuse based on reports PMDs Demonstration was initially We note that burden estimates of the OIG, GAO, or other oversight implemented in 2012 in 7 states and associated with prior authorization are entities. subsequently extended in 2014 to 12 related to the time and effort necessary Section 504 of the Medicare Access additional states (for 19 states in total) for the submitter to locate and obtain and Children’s Health Insurance until its completion in August of 2018. the supporting documentation for the Program (CHIP) Reauthorization Act of For additional information about this prior authorization request and to 2015 (MACRA) (Pub. L. 114–10) demonstration, see the notice we forward the materials to the contractor amended section 1834(a)(11)(B)(ii) of published in the Federal Register on for medical review. Prior authorization the Act to eliminate the requirement August 3, 2012 (77 FR 46439). does not change documentation that only physicians could document Based on early signs of the requirements specified in policy or who face-to-face encounters, including those demonstration’s promising results, on originates the documentation. The conducted by NPs, PAs, or CNSs. In December 30, 2015 we published a final associated information collection (OMB effect, this change in the law permits rule in the Federal Register titled Control number 0938–1293) was revised NPs, PAs, or CNSs to document their ‘‘Medicare Program; Prior Authorization and OMB approved the revision on face-to-face encounter, without the co- Process for Certain Durable Medical March 6, 2019. signature of a physician. For the Equipment, Prosthetics, Orthotics, and 5. Overview purpose of this proposed rule, we use Supplies’’ (80 FR 81674), hereinafter the term ‘‘practitioner’’ as an all- referred to as the ‘‘December 2015 final Over time, the implementation of the inclusive term to capture physicians rule,’’ that established a permanent aforementioned overlapping rules and and non-physician practitioners (that is, prior authorization program nationally. guidance may have created unintended NPs, PAs, and CNSs). The December 2015 final rule was based confusion for some providers and Section 1834(a)(11)(B)(ii) of the Act, on the authority outlined in section suppliers and contributed to unintended as amended by section 504 of MACRA, 1834(a)(15) of the Act, which permits noncompliance. We continue to believe mandates that the Secretary require for the Secretary to develop and that practitioner involvement in the certain items of DMEPOS (as identified periodically update a list of DMEPOS DMEPOS ordering process, through the by the Secretary) a written order items that the Secretary determines, on face-to-face and written order pursuant to a physician, a PA, an NP, the basis of prior payment experience, requirements assists in limiting waste, or a CNS (as these three terms are are frequently subject to unnecessary fraud, and abuse. We believe defined in section 1861 of the Act) utilization and to develop a prior practitioner involvement also helps to documenting that such a physician, PA, authorization process for these items. ensure that beneficiaries can access NP, or CNS has had a face-to-face Specifically, the December 2015 final DMEPOS items to meet their specific encounter (including through use of rule established a new provision at needs. In addition, we maintain that the telehealth under section 1834 (m) of the § 414.234 that specified a process for the explicit identification of information to Act and other than with respect to prior authorization of DMEPOS items. be included in a written order/ encounters that are incident to services The provision interpreted ‘‘frequently prescription, for payment purposes, involved) with the individual involved subject to unnecessary utilization’’ to promotes uniformity among during the 6-month period preceding include items on the DMEPOS fee practitioners and precision in rendering such written order, or other reasonable schedule with an average purchase fee intended items. It also supports our timeframe as determined by the of $1,000 (adjusted annually for program integrity goals of limiting Secretary. inflation using consumer price index for improper payments and fraudulent or Our regulations at § 410.38(g)(4) all urban consumers (CPI–U)) or greater, abusive activities by having require written orders for certain or an average rental fee schedule of $100 documentation of practitioner oversight

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and standardized ordering DMEPOS benefit and consequently, DMEPOS. We are proposing this requirements. Likewise, prior increase understanding of DMEPOS definition as paragraph (c)(5). authorization supports ongoing efforts payment requirements, and may result • Power Mobility Device (PMD) to safeguard beneficiaries’ access to in increased compliance. means a covered item of DME that is in medically necessary items and services, We propose at § 410.38(c) to include a class of wheelchairs that includes a while reducing improper Medicare the following terms: power wheelchair (a four-wheeled • billing and payments. This is important Physician means a practitioner motorized vehicle whose steering is because documentation of practitioner defined in section 1861(r)(1) of the Act. operated by an electronic device or a involvement, including their orders for We are proposing this definition as joystick to control direction and DMEPOS items and documented paragraph (c)(1) and we note that it is turning) or a power-operated vehicle (a medical necessity (as assessed under same as our current definition of three or four-wheeled motorized scooter prior authorization), are all used to ‘‘physician’’ in § 410.38. that is operated by a tiller) that a support proper Medicare payment for • Treating practitioner means both beneficiary uses in the home. Our DMEPOS items. physicians, as defined in section proposal is the same as our current The purpose of this subsequent 1861(r)(1) of the Act, and non-physician regulatory definition of this term. proposal is to streamline the existing practitioners (that is, PAs, NPs, and Section 410.38(c)(1) required requirements and reduce provider or CNSs) defined in section 1861(aa)(5) of reformatting to accommodate the supplier confusion, while maintaining the Act. This definition is consistent proposed unified conditions of payment the concepts of practitioner with the practitioners permitted to and therefore, we are proposing this involvement, order requirements, and a perform and document the face-to-face prior authorization process. We believe encounter pursuant to section definition as paragraph (c)(6). streamlining our requirements would 1834(a)(11)(B) of the Act. We are • Master List of DMEPOS Items further our efforts to reduce waste, proposing this definition as paragraph Potentially Subject to Face-To-Face fraud, and abuse by promoting a better (c)(2). Encounter and Written Orders Prior to understanding of our conditions of • DMEPOS supplier means an entity Delivery and/or Prior Authorization payment, which may result in increased with a valid Medicare supplier number Requirements, referred to as the ‘‘Master compliance. that furnishes durable medical List’’ means items of DMEPOS that CMS B. Provisions of the Proposed equipment prosthetics orthotics and/or has identified in accordance with Regulations supplies including an entity that sections 1834(a)(11)(B) and 1834(a)(15) furnishes these items through the mail. of the Act. The criteria for this list are 1. Technical Corrections to § 410.38(a) We have a similar definition in our specified in proposed § 414.234(b). The and (b) current regulation but § 410.38 required Master List shall serve as a library of We propose to make technical revisions to accommodate the proposed DMEPOS items from which items may changes to § 410.38 by adding headings unified conditions of payment. We are be selected for inclusion on the for paragraphs (a) and (b), and to update proposing this definition as paragraph Required Face-to-Face Encounter and obsolete language under paragraph (a). (c)(3). Written Order Prior to Delivery List For paragraphs (a) and (b), we propose • Written order/prescription means and/or the Required Prior Authorization the headings as ‘‘General scope’’ and an order/prescription that is a written List. We are proposing this definition as ‘‘Institutions that may not qualify as the communication from a treating paragraph (c)(7). practitioner that documents the need for patient’s home,’’ respectively. Paragraph • Required Face-to-Face Encounter a beneficiary to be provided an item of (a) addresses the general scope of the and Written Order Prior to Delivery List DMEPOS. All DMEPOS items require a DME benefit, but includes outdated means a list of DMEPOS items selected written order/prescription to be language related to the Medicare from the Master List and subject to the payment rules for DME, which are more communicated to the supplier prior to claim submission. In the case of items requirements of a Face-to-Face appropriately addressed under Encounter and Written Order Prior to §§ 414.210 and 414.408. In addition, the appearing on the Required Face-to-Face Encounter and Written Order Prior to Delivery, and communicated to the terms ‘‘iron lungs’’ and ‘‘oxygen tents’’ public via a 60-day Federal Register refer to obsolete DME technology that is Delivery List, the written order/ notice. When selecting items from the no longer in use. We are therefore prescription must additionally be Master List for inclusion on the proposing to revise § 410.38(a) to communicated to the supplier before the Required Face-to-Face Encounter and remove language related to payment delivery of the item. As discussed Written Order Prior to Delivery List, rules for DME and to replace the terms further in this proposed rule, we would CMS may consider factors such as ‘‘iron lungs’’ and ‘‘oxygen tents’’ with standardize the elements of written ‘‘ventilators’’ and ‘‘oxygen equipment,’’ orders/prescriptions provided for operational limitations, item utilization, respectively. DMEPOS. We are proposing this cost-benefit analysis (for example, definition as paragraph (c)(4). comparing the cost of review versus the 2. Definitions • Face-to-face encounter means an in- anticipated amount of improper We are proposing to update person or telehealth encounter between payment identified), emerging trends § 410.38(c) to include definitions related the treating practitioner and the (for example, billing patterns, medical to certain requirements for the DMEPOS beneficiary. The face-to-face encounter review findings,) vulnerabilities benefit. is used for the purpose of gathering identified in official agency reports, or We are proposing to add new subjective and objective information other analysis. We are proposing this definitions, redesignate existing associated with diagnosing, treating, or definition as paragraph (c)(8). We note definitions within the regulatory text, managing a clinical condition for which that Required Face-to-Face Encounter and amend existing definitions. We the DMEPOS is ordered. As discussed and Written Order Prior to Delivery List believe these changes would promote further in this proposed rule, we would is distinct from the ‘‘Required Prior transparency and create uniform standardize the face-to-face and Authorization List,’’ as defined in definitions applicable across the documentation requirements for certain existing § 414.234(c)(1)(i).

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3. Master List Act apply to prosthetic devices, • Any DMEPOS items included in the a. Creating the Master List orthotics, and prosthetics in the same DMEPOS Fee Schedule that have an manner as it applies to items of DME. average purchase fee of $500 (adjusted In the April 2006 final rule, we Therefore, we are proposing the items annually for inflation using CPI–U, and established face-to-face examination and identified in § 410.36(a) would be reduced by the 10-year moving average written order prior to delivery subject to the requirements identified in of changes in annual economy-wide requirements for PMDs. proposed § 410.38. private nonfarm business multifactor In the November 2012 final rule (77 While the regulatory requirements productivity (MFP) (as projected by the FR 68892), we created a list of Specified used to create the resultant three lists Secretary for the 10-year period ending Covered Items always subject to face-to- (outlined in the April 2006, November with the applicable fiscal year (FY), face encounter and written order prior 2012, and December 2015 final rules) year, cost reporting period, or other to delivery requirements based on were inherently distinct and conformed annual period)) or greater, or an average separate inclusion criteria currently to different legislative mandates, we monthly rental fee schedule of $50 outlined in § 410.38. nonetheless assessed the items captured (adjusted annually for inflation using In the December 2015 final rule (80 by those individual lists to determine CPI–U, and reduced by the 10-year FR 81674), we created a ‘‘Master List of whether the items are included in the moving average of changes in annual Items Frequently Subject to new proposed inclusion criteria and economy-wide private nonfarm business Unnecessary Utilization’’ based on resultant Master List. We compared the MFP (as projected by the Secretary for inclusion criteria found at § 414.234 that proposed Master List to both those items the 10-year period ending with the would potentially be subject to prior of DME that require a face-to-face applicable FY, year, cost reporting authorization upon selection. We encounter and written order prior to period, or other annual period)) or propose to create one list of items delivery due to (i) the statutory greater, or are identified as accounting known as the ‘‘Master List of DMEPOS requirements for all PMDs or (ii) the list for at least 1.5 percent of Medicare Items Potentially Subject to Face-To- of specified covered items of DME that expenditures for all DMEPOS items over Face Encounter and Written Order Prior we established in accordance with a recent 12-month period, that are: to Delivery and/or Prior Authorization section 1834(a)(11)(B) of the Act. We ++ Identified as having a high rate of Requirements,’’ or the ‘‘Master List,’’ found that 103 items currently captured potential fraud or unnecessary and specify the criteria for this list in as either a PMD or included in the list utilization in an OIG or GAO report that § 414.234. published in the November 2012 rule is national in scope and published in Our proposal would harmonize the would not be included in the proposed 2015 or later, or resultant three lists created by the Master List. We further identified there ++ Listed in the CERT 2018 or later former rules and develop one master list are 306 items potentially subject to a Medicare FFS Supplemental Improper of items potentially subject to prior face-to-face encounter and a written Payment Data report as having a high authorization and/or the face-to-face order prior to delivery under the improper payment rate. encounter and written order prior to proposed Master List that do not require • The annual Master List updates delivery requirement. In determining it under our current conditions of shall include any items with at least DMEPOS appropriate for inclusion in payment. The remainder of items on the 1,000 claims and 1 million dollars in the Master List, we believe there to be proposed Master List are both currently payments during a recent 12-month inherent similarities in those items subject to a face-to-face encounter and a period that are determined to have posing vulnerabilities mitigated by written order prior to delivery aberrant billing patterns and lack additional practitioner oversight (face- requirements as a condition of payment, explanatory contributing factors (for to-face encounters and written orders and potentially would be subject to example, new technology or coverage prior to delivery) and those items posing these conditions of payment under our policies). Items with aberrant billing vulnerabilities mitigated by prior proposal. All 135 items on the current patterns would be identified as those authorization. Therefore, we believe it is list potentially subject to prior items with payments during a 12-month appropriate for the Master List to authorization are also included in our timeframe that exceed payments made include both those items that may proposed Master List. This proposal during the preceding 12-months, by the potentially be subject to the face-to-face would outline the inclusion criteria that greater of: encounter and written order prior to developed the proposed Master List of ++ Double the percent change of all delivery requirements as conditions of 413 items potentially subject to these DMEPOS claim payments for items that payment upon selection, and those conditions of payment. meet the above claim and payment items that may potentially be subject to While the Master List created by this criteria, from the preceding 12-month prior authorization as a condition of proposed rule would increase the period, or payment upon selection. As such, we number of DMEPOS items potentially ++ exceeding a 30 percent increase in propose to have a single Master List of eligible to be selected and added to the payments for the item from the items potentially subject to face-to-face Required Prior Authorization list (which preceding 12-month period. and written order prior to delivery and/ requires a technical update to • Any item statutorily requiring a or prior authorization requirements. Paperwork Reduction Act Information face-to-face encounter, a written order (See Table 10: Proposed Master List Of Collection CMS–10524; OMB–0938– prior to delivery, or prior authorization. DMEPOS Items Potentially Subject to a 1293,) there is no newly identified The following hypothetical data Face-To-Face Encounter and Written burden, no change in the required patterns are not factual, but rather Order Prior To Delivery and/or Prior documentation associated with prior provided for exemplary purposes, to Authorization Requirements.) We note authorization and no plans to demonstrate how data would be that prosthetic devices and orthotic and exponentially increase the number of assessed in coordination with our new prosthetic items have the same items subject to required prior criteria for identifying items, subject to requirements under section 1834(a)(11) authorization in the near future. aberrant billing patterns and having a of the Act as other items of DME have We propose at § 414.234(b)(1) that lack of explanatory contributing factors, in statute. Section 1834(h)(3) of the Act items that meet the following criteria that would be appropriate for inclusion requires that section 1834(a)(11) of the would be added to the Master List: in the Master List:

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Example 1: After removing any item us to specify covered items for the face- creating an overly inclusive list. for which there are less than 1,000 to-face and written order prior to However, we recognize that item(s) may claims billed or less than $1 million delivery requirements, and section fail to meet the $500 purchase, $50 paid from CY 2018, there were $6.2 1834(a)(15) of the Act, which provides rental, or cumulative cost thresholds billion in total payments for all discretion for the Secretary to develop identified in this proposed rule; DMEPOS items. There were $5.6 billion and periodically update a list of items nonetheless, such items may in total payments for all DMEPOS items that on the basis of prior payment demonstrate aberrant billing patterns in the prior 12-month period (CY 2017). experience, are frequently subject to inconsistent with predictable claim The percent change in payments unnecessary utilization. volumes. between CY 2017 and CY 2018 is 10.7 We also note that under our proposal, We use the CERT Medicare FFS percent. The doubled percent change is any item that by statute requires a face- Supplemental Improper Payment Data 21.4 percent. to-face encounter, a written order prior to identify DMEPOS service-specific —DMEPOS Item X had $3.2 million in to delivery, or prior authorization would rates of improper payments; and the payments in CY 2018 and $2.4 be added to the Master List and OIG and GAO reports to identify million in payments in CY 2017. This potentially subject to any of these DMEPOS items as having a high rate of is a 33.3 percent change in payment requirements. For example, in fraud or unnecessary utilization. for DMEPOS Item X. Therefore, Item accordance with section Inclusion of an item in these reports are X would be added to the Master List 1834(a)(1)(E)(iv) of the Act, payment indications that the item is frequently since it exceeds a 30 percent increase may not be made for motorized or subject to unnecessary utilization. We in payments, which is greater than power wheelchairs unless there is a recognize that there are inherent delays double the percent change of all face-to-face encounter and a written from the time aberrant billing patterns DMEPOS claim payments, for items order prior to delivery. Under our are identified and the publication of that meet the claim and payment proposal, motorized and power CERT, OIG, and GAO reports. We criteria (more than 1,000 claims billed wheelchairs would also potentially be previously captured reports dating as far or $1 million paid), from the subject to the prior authorization back as 2007; however, we have learned preceding 12-month period. requirement. We think this is that billing practices may be subject to —DMEPOS Item Y had $17.1 million in appropriate because any item statutorily shifts as a result of changed policies payments in CY 2018 and $13.4 subject to additional program integrity from CMS, new technologies and other million in payments in CY 2017. This measures can reasonably be assumed to emerging trends. is a 27.6 percent change in payment be ‘‘frequently subject to unnecessary Our objective is to focus on more for DMEPOS Item Y. Therefore, Item utilization’’ (the standard for prior current data, and in this proposed rule, Y would not be added to the Master authorization in section 1834(a)(15)) we propose to redefine the timeframe List since it is less than 30 percent. and therefore should be included on the for identifying items in OIG and GAO reports to 2015 or later, in CERT Example 2: After removing any item Master List. In addition, we believe that proposing Medicare FFS Supplemental Improper for which there are less than 1,000 criteria based on (1) cost, (2) spending Payment Data reports to 2018 or later, claims billed or less than $1 million thresholds, and (3) data conveying and add a new Master List inclusion paid from CY 2018, there were $6.5 possible overutilization and/or abuse criteria to capture current aberrant billion in total payments for all allows us to more effectively focus our billing patterns. We believe the Master DMEPOS items. There were $5.5 billion program integrity efforts. While the List, as it appears in this proposed rule, in total payments for all DMEPOS items November 2012 and December 2015 is a good representation of those items in the prior 12-month period (CY 2017). final rules included higher cost that may pose risk to the Medicare Trust The percent change in payments thresholds ($1,000 purchase/$100 rental Funds. If this proposed rule is finalized between CY 2017 and CY 2018 is 18.2 thresholds), we note that programmatic as proposed, in future years, we would percent. The doubled percent change is changes, including competitive bidding, apply the new criteria on billing 36.4 percent. had the overall impact of lowering the patterns occurring over a 12-month —DMEPOS Item X had $20.4 million in payment amount for certain items, period to allow CMS to be nimble to payments in CY 2018 and $14.3 which is the reason we are proposing to industry change. million in payments in CY 2017. This lower these cost thresholds. We are We propose the identification of is a 42.7 percent change in payment proposing the $500 purchase/$50 rental aberrant billing patterns to be limited to for DMEPOS Item X. Therefore, Item thresholds based on analysis of the those instances in which the total X would be added to the Master List current fee schedule cost of DMEPOS payment is at least 1 million dollars and since it exceeds a 36.4 percent items when compared with known at least 1,000 claims in a recent 12- increase in payments which is more vulnerabilities. This threshold captures month period prior to CMS updating the than double the percent change in items of known vulnerability, as list annually. This avoids us targeting payment in the preceding 12-month previously identified and included in items with very low payments or very period, and is greater than 30 percent. the Master List of items potentially few claims, when considered overall. —DMEPOS Item Y had $3.2 million in subject to prior authorization, while payments in CY 2018 and $2.4 remaining cognizant of the overall b. Notice and Maintenance of the Master million in payments in CY 2017. This impact to DMEPOS items. To select the List is a 33.3 percent change in payment cumulative threshold, we identified low We propose at § 414.234(b)(2) that the for DMEPOS Item Y. Therefore, Item cost items with a significant cumulative Master List would be self-updating, at a Y does not meet the inclusion criteria impact on the Trust Fund. We then minimum, annually. The current ‘‘self- since it is less than 36.4 percent or found that approximately the top 10 updating’’ process remains unchanged double the percent change in payment items individually account for at least and includes applying the criteria to in the preceding 12-month period. 1.5 percent of DMEPOS allowed costs. items that appear on the DMEPOS fee- The proposed criteria adheres to the We accordingly are proposing 1.5 for-service payment schedule. That is, statutory language in section percent to capture the items with the items on the DMEPOS Fee Schedule 1834(a)(11)(B) of the Act, which allows highest allowed amounts, while not that meet the payment threshold (for

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monthly rentals, purchases, or delivery for other specified covered requirements, but this list is not cumulative impacts) are added to the items of DMEPOS, as identified by the exhaustive. We note that we have not list when the item is also listed in a Secretary. Analysis of a 1-year snapshot proposed an all-inclusive list of factors future CERT, OIG, or GAO reports, and of claims indicates that approximately to account for the fluidity of program items not meeting the cost thresholds 97 percent of beneficiaries receiving operations and associated would be added based on findings of DMEPOS have had a recent face-to-face vulnerabilities, and believe this is aberrant billing patterns (meeting the encounter (either before or after the critical to protect beneficiaries, the above inclusion criteria in section DMEPOS date of service). This data was program, and industry. We solicit VI.B.3.a of this proposed rule) that are drawn without regard for the item’s comments on both our underlying not otherwise explained. We believe the presence on the existing DME List of presumption that the list should not be proposed inclusion criteria are capable Specified Covered Items, which requires exhaustive, as well as the factors we of capturing more current a face-to-face encounter and a written should consider when selecting an item vulnerabilities. However, we also order prior to delivery. While we from the Master List and including it on believe that the current standard process believe this information helps provide the Required Face-to-Face Encounter in which items on the list expire after important context, we note that this rule and Written Order Prior to Delivery List. 10 years if they have not otherwise been requires that face-to-face encounters We also note that this notice and removed is appropriate to achieve occur prior to the delivery of DMEPOS comment rulemaking provides the behavioral change (such as compliance for those items selected for inclusion on forum for stakeholders to comment on with Medicare coverage instructions the Required Face-to-Face Encounter the proposed Master List from which and the correction of behaviors and Written Order Prior to Delivery List. items may be selected in the future to previously resulting in improper We propose to revise § 410.38(d)(1) and be subject to the Face-to-Face Encounter payments) and protect the Medicare § 410.38(d)(2) to limit the face-to-face and Written Order Prior to Delivery Trust Funds. To that end, we propose to encounter and written order prior to requirement. keep this timeframe, and further clarify delivery conditions of payment to only As previously stated, we propose at that if we identify any item currently on those items selected from the Master § 410.38(c)(5) to define the term ‘‘face- the Master List as being included in a List and included on the ‘‘Required to-face encounter’’ as an in-person or subsequent OIG or GAO report, as Face-to-Face Encounter and Written telehealth encounter between the having a high rate of fraud or Order Prior to Delivery List.’’ In this treating practitioner and the beneficiary. unnecessary utilization, or as having a way, we have a broader list of potential We further propose at § 410.38(d)(2) that high improper payment rate in the items that could be selected, but expect any telehealth encounter must meet the CERT Medicare FFS Supplemental only a subset of items from the Master existing telehealth requirements of Improper Payment Data report, the item List to be subject to the Required Face- § 410.78 and § 414.65. Telehealth would be maintained on the Master List to-Face Encounter and Written Order services currently are permitted to be for 10 years from the date of the most Prior to Delivery List, based on those used to satisfy the DME face-to-face recent report’s publication. items identified to be of highest risk. encounter requirements. Proposed All other list maintenance processes Tailoring the lists in this way § 410.38(d)(2) emphasizes that significantly reduces any potential currently specified in § 414.234(b) telehealth services used to meet provider impact—and could even would be maintained with two DMEPOS face-to-face encounter decrease the scope of impacted items exceptions: (1) First, we propose to requirements must meet the and providers. allow the Master List to be updated as requirements found at § 410.78 and needed and more frequently than Since the face-to-face encounter and written order are statutorily required for § 414.65 to support payment of the annually (for example, to address DMEPOS claim. emerging billing trends). (2) Second, we PMDs, they would be included on the Master List and the Required Face-to- Additionally, the face-to-face are also making technical changes to the Face Encounter and Written Order Prior encounter must be used for the purpose language in § 414.234(b) to reflect the Delivery List in accordance with our of gathering subjective and objective proposed new cost thresholds and statutory obligation, and would remain information associated with diagnosing, report years discussed in this proposed there. The Master List would include treating, or managing a clinical rule. We would maintain our current statutorily-identified items, as well as condition for which the DMEPOS is process and publish any additions or any other items posing potential ordered and must occur within the 6 deletions to the Master List, for any of vulnerability to the Trust Fund, as months preceding the date of the order/ the reasons and conditions discussed, in identified via the proposed Master List prescription. We propose at a Federal Register notice and on the inclusion criteria. § 410.38(d)(3) to clarify the CMS website. We propose at § 410.38(c), in the documentation necessary to support the 4. Required Face-to-Face Encounter and definition of the Required Face-to-Face face-to-face encounter and associated Written Order Prior to Delivery List Encounter and Written Order Prior to claims for payment. This documentation Delivery List, the factors that we may includes the written order/prescription a. Creating the Required Face-to-Face consider when determining which items and documentation to support medical Encounter and Written Order Prior to may be appropriate to require a face-to- necessity, which may include the Delivery List face encounter and written order prior beneficiary’s medical history, physical Section 1834(a)(1)(E)(iv) of the Act to delivery. Specifically, we may examination, diagnostic tests, findings, prohibits payment for motorized or consider: operational limitations, item progress notes, and plans for treatment. power wheelchairs unless a practitioner utilization, cost-benefit analysis, We believe our proposed definition in conducts a face-to-face examination and emerging trends, vulnerabilities § 410.38(c)(5) of a face-to-face encounter writes an order for the item. Section identified in official agency reports, or and required documentation in 1834(a)(11)(B) of the Act requires that a other analysis. We developed factors § 410.38(d)(3) are reflective of clinical practitioner have a face-to-face that we believe to be indicative of the practice and the information necessary encounter and written order need for the face-to-face encounter and to demonstrate medical necessity and communicated to the supplier prior to written order prior to delivery the appropriateness of claim payment.

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Section 1834(h)(5) of the Act states b. Notice and Application of the unnecessary utilization of the selected that for purposes of determining the Required Face-to-Face Encounter and item(s) is concentrated among certain reasonableness and medical necessity of Written Order Prior to Delivery List suppliers or in certain locations or orthotics and prosthetics, We propose at § 410.38(c)(8) that CMS regions. Similar to the requirements at documentation created by orthotists and would publish a 60-day Federal current § 414.234(c)(1)(ii), we propose prosthetists shall be considered part of Register notice and post on the CMS’ that we may decide to select and the individual’s medical record to website any item on the Master List that implement prior authorization of an support documentation created by is selected for inclusion on the Required item(s) nationally or, in collaboration eligible professionals as described in Face-to-Face Encounter and Written with the DME MACs locally. We section 1848(k)(3)(B) of the Act. Order Prior to Delivery List. This is propose to revise § 414.234(c)(1)(ii) to Documentation from a face-to-face consistent with our current practices for state that all suppliers (either nationally encounter conducted by a treating items selected from the Master list of or within a contractor jurisdiction) practitioner, as well as documentation items frequently subject to unnecessary would initially be subject to prior created by an orthotist or prosthetist, utilization. Any DMEPOS item included authorization for items identified becomes part of the medical records and on this list would be subject to the face- through a Federal Register notice and posted to CMS’ website. However, CMS if the notes corroborate, together they to-face encounter and written order may later elect to exempt suppliers can be used to support medical prior to delivery requirement as a demonstrating compliance from such necessity of an ordered DMEPOS item. national condition of payment, and claims for those items would be denied requirements through the prior Our regulations currently require that if the condition of payment is not met. authorization process. We believe this the written order be communicated We propose at § 410.38(e) to allow the proposal meets our fiduciary obligation prior to delivery for certain specified face-to-face encounter and written order to protect the Medicare Trust Funds covered items, within 6 months of the prior to delivery requirements to be while remaining cognizant of contractor face-to-face encounter, and for PMDs, nationally suspended by CMS for any resource limitations and provider/ within 45 days of the face-to-face items at any time, without undertaking supplier burden. examination. We propose to revise a separate rulemaking, except for those We specify at § 414.234 that we may § 410.38 to apply the items whose inclusion on the Master consider factors such as geographic 6-month timeframe to all items on the List (and subsequently, the Required location, item utilization or cost, system capabilities, emerging trends, Required Face-to-Face Encounter and Face-to-Face Encounter and Written vulnerabilities identified in official Written Order Prior to Delivery List Order Prior to Delivery List) was agency reports, or other analysis in (including PMDs, which previously required by statute. For example, we selecting items for national or local required a 45-day timeframe) for may need to suspend or cease the face- implementation. For example, items uniformity purposes. Since the industry to-face encounter and written order that are the focus of law enforcement has become accustomed to the 6-month prior to delivery requirements for a investigations may require additional timeframe, we believe this timeframe is particular item(s) for which we oversight and be appropriate for prior relevant, and changing it would create determine the face-to-face encounter authorization. Likewise, when assessing unnecessary confusion. Therefore, if and written order prior to delivery cost we may prior authorize low dollar finalized as proposed, a face-to-face requirements are unnecessary to meet items for which the prior authorization encounter would be consistently our previously described objective of decision is applied to duplicates of the required within 6 months of a written limiting waste, fraud, and abuse. If we same items rendered to the same order prior to delivery for those items suspend or cease the face-to-face beneficiary (for example, items for which a face-to-face encounter is encounter and the written order prior to dispensed in units or billed monthly for required. delivery requirement for any item(s), we which the initial decision would remain The 6-month timing requirement does would provide stakeholder notification appropriate), but would not prior not supplant other policies that may of the suspension on the CMS website. authorize a single low cost item for require more frequent face-to-face 5. Required Prior Authorization List which the cost of the review would encounters for specific items. For outweigh the anticipated amount of a. Creation and Application of the improper payments identified. example, the National Coverage Required Prior Authorization List Determination 240.2 titled ‘‘Home Use We solicit comments on the proposed of Oxygen’’ requires a face-to-face In order to balance minimizing factors to be considered when selecting examination within a month of starting provider and supplier burden with our an item from the Master List and home oxygen therapy. need to protect the Medicare Trust including it on the Required Prior Funds, we propose to continue to limit Authorization List, such as whether the The Paperwork Reduction Act Record prior authorization to a subset of items factors could be over-inclusive or under- of Information Collection for medical on the Master List as currently specified inclusive. We also note that this notice review (CMS–10417; OMB–0938–0969) at § 414.234(a)(4). The subset of items and comment rulemaking provides the covers the burden for responding to requiring prior authorization are forum for stakeholders to comment on documentation requests, generally. referred to as the Required Prior the proposed Master List from which Medical review requests require the Authorization List. items may be selected in the future to provider or supplier to submit all OIG and GAO reports, as well as the be placed on the Required Prior documentation necessary to CERT Medicare FFS Supplemental Authorization List. demonstrate compliance with coverage Improper Payment Data reports, provide We note that despite the proposed and payment requirements, including national summary data and also often changes in the Master List inclusion the face-to-face encounter. We do not include regional data. Utilization trends criteria, the prior authorization program believe this proposed rule would create within Medicare Contractor localities would continue to apply in all any new burdens for the medical review may show aberrant billing patterns or competitive bidding areas because CMS process, but we ask commenters for other identifiable vulnerabilities. At conditions of payment apply under the feedback on this assumption. times, claims data analysis shows that Medicare DMEPOS Competitive Bidding

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Program. We recognize that there may administrative and stakeholder burdens items are placed on the Required Prior be accessories for which stakeholders associated with the termination of the Authorization List. would like to request prior current prior authorization program and 6. Standardizing the Written Order/ authorization that may not always the implementation of a revised Prescription appear on the Master List and would not program created under this rule, if be eligible to include on the Required finalized as proposed. We would We note that through subregulatory Prior Authorization List. Any accessory maintain the current process, as guidance and the implementation of included on a prior authorization described in § 414.234, of publishing in several regulations, we have adopted request submitted for an item on the the Federal Register and on the CMS different requirements for orders for Required Prior Authorization List, may website the Required Prior different items of DMEPOS. To simplify nonetheless receive a prior Authorization List at least 60 days prior order/prescription requirements and to authorization decision for operational to the effective date. reduce confusion, we propose at simplicity even if the accessory is not We propose to retain the § 410.38(d)(1) to adopt one set of on the Required Prior Authorization documentation requirements for required written order/prescription List. The inclusion of such items is submitting prior authorization requests elements for orders/prescriptions for all voluntary and does not create a at § 414.234(d); however, we are DMEPOS items. condition of payment for items not proposing to add a reference to We believe that the process to obtain present on the Required Prior encompass the payment requirements DMEPOS items is sufficiently similar Authorization List. An example of when proposed at § 410.38. In addition, we across the healthcare environment, and this occurs is accessories for certain propose to retain the process for that a standardized order requirement is PMDs subject to prior authorization. If submitting prior authorization requests appropriate and would help promote this proposed rule is finalized as and receiving responses, but propose compliance and reduce the confusion proposed, the effective date of the final restructuring § 414.234(e) to conform to associated with complying with rule may precede shared systems the formatting of the preceding multiple, different order/prescription changes that are required to support the paragraphs. requirements for DMEPOS items. addition of accessories that are not on We propose to maintain the authority However, we note that the required the Master List and Required Prior to suspend or cease the prior timing for the order to be provided Authorization List. Accordingly, there authorization requirement generally or (from the treating practitioner to the may be a delay in the adoption of this for a particular item or items at any time supplier) would continue to vary for proposed operational change from the without undertaking a separate DMEPOS items. We propose at date of publication. rulemaking, as described in current § 410.38(d) that for those items on the As previously stated in the November § 414.234(f). For example, we may need Required Face-to-Face Encounter and 2015 final rule, CMS established a prior Written Order Prior to Delivery List, the authorization process for certain to suspend or cease the prior authorization program due to new written order/prescription must be DMEPOS items. In 2017, CMS communicated to the supplier prior to operationalized a prior authorization payment policies, which may render the prior authorization requirement obsolete delivery of the item (per statutory program, based on the regulatory requirement); for all other DMEPOS process codified in 2015, which was or remove the item from Medicare coverage. If we suspend or cease the items, a written order/prescription must initially established in four states for be communicated to the supplier prior certain PMDs and subsequently prior authorization requirement, we would publish a notice in the Federal to claim submission. expanded nationally (81 FR 93636). The We believe the proposed requirements Register and post notification of the DMEPOS items currently subject to the of the standardized DMEPOS orders/ suspension on the CMS website and prior authorization requirement also prescriptions are commonly included in include the date of suspension. meet the proposed Master List inclusion orders/prescriptions rendered in clinical criteria, in this rule, and would b. Notice of the Required Prior practice. We believe consistent continue to be eligible for prior Authorization List requirements for all items would prove authorization if the proposed criteria are useful as electronic vendors develop finalized as proposed. To date, feedback Section § 414.234 currently requires us to inform the public of items programs in support of electronic related to the DMEPOS prior records for provider and supplier use. authorization process has been largely included on the Required Prior Authorization List in the Federal We propose at § 410.38(d)(1)(i) that the positive; however, the majority of standardized order/prescription require comments have been from suppliers. We Register with 60-day notice before implementation. We are not proposing the elements listed here: encourage all stakeholders, including • Beneficiary Name or Medicare any changes to this section. In addition, those representing beneficiaries and Beneficiary Identifier (MBI). Medicare consumer advocacy all other prior authorization processes • General Description of the Item. organizations, to submit their comments described in § 414.234 not mentioned in • Quantity To Be dispensed, if about prior authorization during the this proposed rule remain unchanged. applicable. public comment period, as specified in We believe that it is important that • Date. the ADDRESSES section of this proposed CMS have the authority to require prior • Practitioner Name or National rule. authorization for an eligible item(s) (that Provider Identifier. We propose that the items currently is, on the Master List) locally to • Practitioner Signature. subject to prior authorization would be encourage immediate response to shifts Traditionally, these required grandfathered into the prior in billing patterns, which may be related standardized order elements are written authorization program, if this rule is to potential fraud or abuse, or on a prescription/order; however, we finalized as proposed, until the nationally, as the situation may so recognize that these required elements implementation of the first Required dictate. We would maintain our current may be found in the beneficiary’s Prior Authorization List (which would process, as outlined in § 414.234, and medical record. We propose at be published subsequent to the rule). publish a 60-day Federal Register notice § 410.38(d)(1) that if the rule is finalized This proposal would avoid the and post on the CMS website when as proposed, DME MACs shall consider

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the totality of the medical records when as whether oxygen is delivered via nasal documentation requirements outlined in reviewing for compliance with cannula or face mask is not required as this proposed rule. In addition, we standardized order/prescription a condition of payment, but may be believe item-specific coverage elements. indicated for good clinical practice. requirements may be included in While the above standardized Current § 410.38(d), (e) and (f) contain national or local coverage documents, as elements are conditions of payment, we written order and documentation appropriate. Therefore, we propose to recognize that additional information requirements specific to equipment that delete the coverage requirements might be helpful on the order/ is used for treatment of decubitus currently outlined in § 410.38(d), (e) and prescription for clinical practice and ulcers, seat-lifts, and transcutaneous (f), and to replace sections § 410.38(d) quality of care. Information may be electrical nerve stimulator units. We and (e), with our proposed conditions of added to the order/prescription or found believe the requirements found at payment and process for suspending the in the beneficiary’s medical records but § 410.38(d), (e) and (f) are appropriate face-to-face encounter and written order are not conditions of payment. For for inclusion in the standardized written prior to delivery requirements, example, route of administration—such order/prescription and medical record respectively.

TABLE 10—PROPOSED MASTER LIST OF DMEPOS ITEMS POTENTIALLY SUBJECT TO FACE-TO-FACE ENCOUNTER AND WRITTEN ORDER PRIOR TO DELIVERY AND/OR PRIOR AUTHORIZATION REQUIREMENTS

HCPCS Long description

A4253 ...... Blood Glucose Test Or Reagent Strips For Home Blood Glucose Monitor, Per 50 Strips. A4351 ...... Intermittent Urinary Catheter; Straight Tip, With Or Without Coating (Teflon, Silicone, Silicone Elastomer, Or Hydrophilic, Etc.), Each. A7025 ...... High Frequency Chest Wall Oscillation System Vest, Replacement For Use With Patient Owned Equipment, Each. E0170 ...... Commode Chair With Integrated Seat Lift Mechanism, Electric, Any Type. E0193 ...... Powered Air Flotation Bed (Low Air Loss Therapy). E0194 ...... Air Fluidized Bed. E0250 ...... Hospital Bed, Fixed Height, With Any Type Side Rails, With Mattress. E0251 ...... Hospital Bed, Fixed Height, With Any Type Side Rails, Without Mattress. E0255 ...... Hospital Bed, Variable Height, Hi-Lo, With Any Type Side Rails, With Mattress. E0256 ...... Hospital Bed, Variable Height, Hi-Lo, With Any Type Side Rails, Without Mattress. E0260 ...... Hospital Bed, Semi-Electric (Head And Foot Adjustment), With Any Type Side Rails, With Mattress. E0261 ...... Hospital Bed, Semi-Electric (Head And Foot Adjustment), With Any Type Side Rails, Without Mattress. E0265 ...... Hospital Bed, Total Electric (Head, Foot And Height Adjustments), With Any Type Side Rails, With Mattress. E0266 ...... Hospital Bed, Total Electric (Head, Foot And Height Adjustments), With Any Type Side Rails, Without Mattress. E0277 ...... Powered Pressure-Reducing Air Mattress. E0290 ...... Hospital Bed, Fixed Height, Without Side Rails, With Mattress. E0292 ...... Hospital Bed, Variable Height, Hi-Lo, Without Side Rails, With Mattress. E0293 ...... Hospital Bed, Variable Height, Hi-Lo, Without Side Rails, Without Mattress. E0294 ...... Hospital Bed, Semi-Electric (Head And Foot Adjustment), Without Side Rails, With Mattress. E0295 ...... Hospital Bed, Semi-Electric (Head And Foot Adjustment), Without Side Rails, Without Mattress. E0296 ...... Hospital Bed, Total Electric (Head, Foot And Height Adjustments), Without Side Rails, With Mattress. E0297 ...... Hospital Bed, Total Electric (Head, Foot And Height Adjustments), Without Side Rails, Without Mattress. E0300 ...... Pediatric Crib, Hospital Grade, Fully Enclosed, With Or Without Top Enclosure. E0301 ...... Hospital Bed, Heavy Duty, Extra Wide, With Weight Capacity Greater Than 350 Pounds, But Less Than Or Equal To 600 Pounds, With Any Type Side Rails, Without Mattress. E0302 ...... Hospital Bed, Extra Heavy Duty, Extra Wide, With Weight Capacity Greater Than 600 Pounds, With Any Type Side Rails, Without Mattress. E0303 ...... Hospital Bed, Heavy Duty, Extra Wide, With Weight Capacity Greater Than 350 Pounds, But Less Than Or Equal To 600 Pounds, With Any Type Side Rails, With Mattress. E0304 ...... Hospital Bed, Extra Heavy Duty, Extra Wide, With Weight Capacity Greater Than 600 Pounds, With Any Type Side Rails, With Mattress. E0316 ...... Safety Enclosure Frame/Canopy For Use With Hospital Bed, Any Type. E0371 ...... Nonpowered Advanced Pressure Reducing Overlay For Mattress, Standard Mattress Length And Width. E0372 ...... Powered Air Overlay For Mattress, Standard Mattress Length And Width. E0373 ...... Nonpowered Advanced Pressure Reducing Mattress. E0424 ...... Stationary Compressed Gaseous Oxygen System, Rental; Includes Container, Contents, Regulator, Flowmeter, Humidifier, Nebulizer, Cannula Or Mask, And Tubing. E0431 ...... Portable Gaseous Oxygen System, Rental; Includes Portable Container, Regulator, Flowmeter, Humidifier, Cannula Or Mask, And Tubing. E0433 ...... Portable Liquid Oxygen System, Rental; Home Liquefier Used To Fill Portable Liquid Oxygen Containers, Includes Portable Containers, Regulator, Flowmeter, Humidifier, Cannula Or Mask And Tubing, With Or Without Supply Reservoir And Con- tents Gauge. E0434 ...... Portable Liquid Oxygen System, Rental; Includes Portable Container, Supply Reservoir, Humidifier, Flowmeter, Refill Adaptor, Contents Gauge, Cannula Or Mask, And Tubing. E0439 ...... Stationary Liquid Oxygen System, Rental; Includes Container, Contents, Regulator, Flowmeter, Humidifier, Nebulizer, Cannula Or Mask, & Tubing. E0462 ...... Rocking Bed With Or Without Side Rails. E0465 ...... Home Ventilator, Any Type, Used With Invasive Interface, (For Example, Tracheostomy Tube). E0466 ...... Home Ventilator, Any Type, Used With Non-Invasive Interface, (For Example, Mask, Chest Shell). E0470 ...... Respiratory Assist Device, Bi-Level Pressure Capability, Without Backup Rate Feature, Used With Noninvasive Interface, (For Example, Nasal Or Facial Mask (Intermittent Assist Device With Continuous Positive Airway Pressure Device)). E0471 ...... Respiratory Assist Device, Bi-Level Pressure Capability, With Back-Up Rate Feature, Used With Noninvasive Interface, (For Example, Nasal Or Facial Mask (Intermittent Assist Device With Continuous Positive Airway Pressure Device)).

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TABLE 10—PROPOSED MASTER LIST OF DMEPOS ITEMS POTENTIALLY SUBJECT TO FACE-TO-FACE ENCOUNTER AND WRITTEN ORDER PRIOR TO DELIVERY AND/OR PRIOR AUTHORIZATION REQUIREMENTS—Continued

HCPCS Long description

E0472 ...... Respiratory Assist Device, Bi-Level Pressure Capability, With Backup Rate Feature, Used With Invasive Interface, (For Exam- ple, Tracheostomy Tube (Intermittent Assist Device With Continuous Positive Airway Pressure Device)). E0483 ...... High Frequency Chest Wall Oscillation Air-Pulse Generator System, (Includes Hoses And Vest), Each. E0550 ...... Humidifier, Durable For Extensive Supplemental Humidification During Ippb Treatments Or Oxygen Delivery. E0575 ...... Nebulizer, Ultrasonic, Large Volume. E0600 ...... Respiratory Suction Pump, Home Model, Portable Or Stationary, Electric. E0601 ...... Continuous Positive Airway Pressure (Cpap) Device. E0617 ...... External Defibrillator With Integrated Electrocardiogram Analysis. E0620 ...... Skin Piercing Device For Collection Of Capillary Blood, Laser, Each. E0630 ...... Patient Lift, Hydraulic Or Mechanical, Includes Any Seat, Sling, Strap(s) Or Pad(s). E0635 ...... Patient Lift, Electric With Seat Or Sling. E0636 ...... Multipositional Patient Support System, With Integrated Lift, Patient Accessible Controls. E0639 ...... Patient Lift, Moveable From Room To Room With Disassembly And Reassembly, Includes All Components/Accessories. E0640 ...... Patient Lift, Fixed System, Includes All Components/Accessories. E0747 ...... Osteogenesis Stimulator, Electrical, Non-Invasive, Other Than Spinal Applications. E0748 ...... Osteogenesis Stimulator, Electrical, Non-Invasive, Spinal Applications. E0760 ...... Ostogenesis Stimulator, Low Intensity Ultrasound, Non-Invasive. E0781 ...... Ambulatory Infusion Pump, Single Or Multiple Channels, Electric Or Battery Operated, With Administrative Equipment, Worn By Patient. E0784 ...... External Ambulatory Infusion Pump, Insulin. E0791 ...... Parenteral Infusion Pump, Stationary, Single Or Multi-Channel. E0912 ...... Trapeze Bar, Heavy Duty, For Patient Weight Capacity Greater Than 250 Pounds, Free Standing, Complete With Grab Bar. E0983 ...... Manual Wheelchair Accessory, Power Add-On To Convert Manual Wheelchair To Motorized Wheelchair, Joystick Control. E0986 ...... Manual Wheelchair Accessory, Push-Rim Activated Power Assist System. E0988 ...... Manual Wheelchair Accessory, Lever-Activated, Wheel Drive, Pair. E1002 ...... Wheelchair Accessory, Power Seating System, Tilt Only. E1003 ...... Wheelchair Accessory, Power Seating System, Recline Only, Without Shear Reduction. E1004 ...... Wheelchair Accessory, Power Seating System, Recline Only, With Mechanical Shear Reduction. E1005 ...... Wheelchair Accessory, Power Seating System, Recline Only, With Power Shear Reduction. E1006 ...... Wheelchair Accessory, Power Seating System, Combination Tilt And Recline, Without Shear Reduction. E1007 ...... Wheelchair Accessory, Power Seating System, Combination Tilt And Recline, With Mechanical Shear Reduction. E1008 ...... Wheelchair Accessory, Power Seating System, Combination Tilt And Recline, With Power Shear Reduction. E1010 ...... Wheelchair Accessory, Addition To Power Seating System, Power Leg Elevation System, Including Leg Rest, Pair. E1012 ...... Wheelchair Accessory, Addition To Power Seating System, Center Mount Power Elevating Leg Rest/Platform, Complete Sys- tem, Any Type, Each. E1030 ...... Wheelchair Accessory, Ventilator Tray, Gimbaled. E1035 ...... Multi-Positional Patient Transfer System, With Integrated Seat, Operated By Care Giver, Patient Weight Capacity Up To And Including 300 Pounds. E1036 ...... Multi-Positional Patient Transfer System, Extra-Wide, With Integrated Seat, Operated By Caregiver, Patient Weight Capacity Greater Than 300 Pounds. E1037 ...... Transport Chair, Pediatric Size. E1161 ...... Manual Adult Size Wheelchair, Includes Tilt In Space. E1232 ...... Wheelchair, Pediatric Size, Tilt-In-Space, Folding, Adjustable, With Seating System. E1233 ...... Wheelchair, Pediatric Size, Tilt-In-Space, Rigid, Adjustable, Without Seating System. E1234 ...... Wheelchair, Pediatric Size, Tilt-In-Space, Folding, Adjustable, Without Seating System. E1235 ...... Wheelchair, Pediatric Size, Rigid, Adjustable, With Seating System. E1236 ...... Wheelchair, Pediatric Size, Folding, Adjustable, With Seating System. E1237 ...... Wheelchair, Pediatric Size, Rigid, Adjustable, Without Seating System. E1238 ...... Wheelchair, Pediatric Size, Folding, Adjustable, Without Seating System. E1390 ...... Oxygen Concentrator, Single Delivery Port, Capable Of Delivering 85 Percent Or Greater Oxygen Concentration At The Pre- scribed Flow Rate. E1391 ...... Oxygen Concentrator, Dual Delivery Port, Capable Of Delivering 85 Percent Or Greater Oxygen Concentration At The Pre- scribed Flow Rate, Each. E1392 ...... Portable Oxygen Concentrator, Rental. E1405 ...... Oxygen And Water Vapor Enriching System With Heated Delivery. E1406 ...... Oxygen And Water Vapor Enriching System Without Heated Delivery. E2000 ...... Gastric Suction Pump, Home Model, Portable Or Stationary, Electric. E2100 ...... Blood Glucose Monitor With Integrated Voice Synthesizer. E2204 ...... Manual Wheelchair Accessory, Nonstandard Seat Frame Depth, 22 To 25 Inches. E2227 ...... Manual Wheelchair Accessory, Gear Reduction Drive Wheel, Each. E2228 ...... Manual Wheelchair Accessory, Wheel Braking System And Lock, Complete, Each. E2310 ...... Power Wheelchair Accessory, Electronic Connection Between Wheelchair Controller And One Power Seating System Motor, Including All Related Electronics, Indicator Feature, Mechanical Function Selection Switch, And Fixed Mounting Hardware. E2311 ...... Power Wheelchair Accessory, Electronic Connection Between Wheelchair Controller And Two Or More Power Seating Sys- tem Motors, Including All Related Electronics, Indicator Feature, Mechanical Function Selection Switch, And Fixed Mounting Hardware. E2312 ...... Power Wheelchair Accessory, Hand Or Chin Control Interface, Mini-Proportional Remote Joystick, Proportional, Including Fixed Mounting Hardware. E2321 ...... Power Wheelchair Accessory, Hand Control Interface, Remote Joystick, Nonproportional, Including All Related Electronics, Mechanical Stop Switch, And Fixed Mounting Hardware.

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TABLE 10—PROPOSED MASTER LIST OF DMEPOS ITEMS POTENTIALLY SUBJECT TO FACE-TO-FACE ENCOUNTER AND WRITTEN ORDER PRIOR TO DELIVERY AND/OR PRIOR AUTHORIZATION REQUIREMENTS—Continued

HCPCS Long description

E2322 ...... Power Wheelchair Accessory, Hand Control Interface, Multiple Mechanical Switches, Nonproportional, Including All Related Electronics, Mechanical Stop Switch, And Fixed Mounting Hardware. E2325 ...... Power Wheelchair Accessory, Sip And Puff Interface, Nonproportional, Including All Related Electronics, Mechanical Stop Switch, And Manual Swingaway Mounting Hardware. E2327 ...... Power Wheelchair Accessory, Head Control Interface, Mechanical, Proportional, Including All Related Electronics, Mechanical Direction Change Switch, And Fixed Mounting Hardware. E2328 ...... Power Wheelchair Accessory, Head Control Or Extremity Control Interface, Electronic, Proportional, Including All Related Electronics And Fixed Mounting Hardware. E2329 ...... Power Wheelchair Accessory, Head Control Interface, Contact Switch Mechanism, Nonproportional, Including All Related Electronics, Mechanical Stop Switch, Mechanical Direction Change Switch, Head Array, And Fixed Mounting Hardware. E2330 ...... Power Wheelchair Accessory, Head Control Interface, Proximity Switch Mechanism, Nonproportional, Including All Related Electronics, Mechanical Stop Switch, Mechanical Direction Change Switch, Head Array, And Fixed Mounting Hardware. E2351 ...... Power Wheelchair Accessory, Electronic Interface To Operate Speech Generating Device Using Power Wheelchair Control Interface. E2368 ...... Power Wheelchair Component, Drive Wheel Motor, Replacement Only. E2369 ...... Power Wheelchair Component, Drive Wheel Gear Box, Replacement Only. E2370 ...... Power Wheelchair Component, Integrated Drive Wheel Motor And Gear Box Combination, Replacement Only. E2373 ...... Power Wheelchair Accessory, Hand Or Chin Control Interface, Compact Remote Joystick, Proportional, Including Fixed Mounting Hardware. E2374 ...... Power Wheelchair Accessory, Hand Or Chin Control Interface, Standard Remote Joystick (Not Including Controller), Propor- tional, Including All Related Electronics And Fixed Mounting Hardware, Replacement Only. E2375 ...... Power Wheelchair Accessory, Non-Expandable Controller, Including All Related Electronics And Mounting Hardware, Re- placement Only. E2376 ...... Power Wheelchair Accessory, Expandable Controller, Including All Related Electronics And Mounting Hardware, Replacement Only. E2377 ...... Power Wheelchair Accessory, Expandable Controller, Including All Related Electronics And Mounting Hardware, Upgrade Provided At Initial Issue. E2378 ...... Power Wheelchair Component, Actuator, Replacement Only. E2402 ...... Negative Pressure Wound Therapy Electrical Pump, Stationary Or Portable. E2614 ...... Positioning Wheelchair Back Cushion, Posterior, Width 22 Inches Or Greater, Any Height, Including Any Type Mounting Hard- ware. E2616 ...... Positioning Wheelchair Back Cushion, Posterior-Lateral, Width 22 Inches Or Greater, Any Height, Including Any Type Mount- ing Hardware. E2620 ...... Positioning Wheelchair Back Cushion, Planar Back With Lateral Supports, Width Less Than 22 Inches, Any Height, Including Any Type Mounting Hardware. E2621 ...... Positioning Wheelchair Back Cushion, Planar Back With Lateral Supports, Width 22 Inches Or Greater, Any Height, Including Any Type Mounting Hardware. E2626 ...... Wheelchair Accessory, Shoulder Elbow, Mobile Arm Support Attached To Wheelchair, Balanced, Adjustable. E2627 ...... Wheelchair Accessory, Shoulder Elbow, Mobile Arm Support Attached To Wheelchair, Balanced, Adjustable Rancho Type. E2628 ...... Wheelchair Accessory, Shoulder Elbow, Mobile Arm Support Attached To Wheelchair, Balanced, Reclining. E2629 ...... Wheelchair Accessory, Shoulder Elbow, Mobile Arm Support Attached To Wheelchair, Balanced, Friction Arm Support (Fric- tion Dampening To Proximal And Distal Joints). E2630 ...... Wheelchair Accessory, Shoulder Elbow, Mobile Arm Support, Monosuspension Arm And Hand Support, Overhead Elbow Forearm Hand Sling Support, Yoke Type Suspension Support. K0002 ...... Standard Hemi (Low Seat) Wheelchair. K0003 ...... Lightweight Wheelchair. K0004 ...... High Strength, Lightweight Wheelchair. K0005 ...... Ultralightweight Wheelchair. K0006 ...... Heavy Duty Wheelchair. K0007 ...... Extra Heavy Duty Wheelchair. K0009 ...... Other Manual Wheelchair/Base. K0455 ...... Infusion Pump Used For Uninterrupted Parenteral Administration Of Medication, (For example, Epoprostenol Or Treprostinol). K0606 ...... Automatic External Defibrillator, With Integrated Electrocardiogram Analysis, Garment Type. K0609 ...... Replacement Electrodes For Use With Automated External Defibrillator, Garment Type Only, Each. K0730 ...... Controlled Dose Inhalation Drug Delivery System. K0738 ...... Portable Gaseous Oxygen System, Rental; Home Compressor Used To Fill Portable Oxygen Cylinders; Includes Portable Containers, Regulator, Flowmeter, Humidifier, Cannula Or Mask, And Tubing. K0800 ...... Power Operated Vehicle, Group 1 Standard, Patient Weight Capacity Up To And Including 300 Pounds. K0801 ...... Power Operated Vehicle, Group 1 Heavy Duty, Patient Weight Capacity, 301 To 450 Pounds. K0802 ...... Power Operated Vehicle, Group 1 Very Heavy Duty, Patient Weight Capacity 451 To 600 Pounds. K0806 ...... Power Operated Vehicle, Group 2 Standard, Patient Weight Capacity Up To And Including 300 Pounds. K0807 ...... Power Operated Vehicle, Group 2 Heavy Duty, Patient Weight Capacity 301 To 450 Pounds. K0808 ...... Power Operated Vehicle, Group 2 Very Heavy Duty, Patient Weight Capacity 451 To 600 Pounds. K0813 ...... Power Wheelchair, Group 1 Standard, Portable, Sling/Solid Seat And Back, Patient Weight Capacity Up To And Including 300 Pounds. K0814 ...... Power Wheelchair, Group 1 Standard, Portable, Captains Chair, Patient Weight Capacity Up To And Including 300 Pounds. K0815 ...... Power Wheelchair, Group 1 Standard, Sling/Solid Seat And Back, Patient Weight Capacity Up To And Including 300 Pounds. K0816 ...... Power Wheelchair, Group 1 Standard, Captains Chair, Patient Weight Capactiy Up To And Including 300 Pounds. K0820 ...... Power Wheelchair, Group 2 Standard, Portable, Sling/Solid Seat/Back, Patient Weight Capacity Up To And Including 300 Pounds. K0821 ...... Power Wheelchair, Group 2 Standard, Portable, Captains Chair, Patient Weight Capacity Up To And Including 300 Pounds.

VerDate Sep<11>2014 18:36 Aug 05, 2019 Jkt 247001 PO 00000 Frm 00061 Fmt 4701 Sfmt 4702 E:\FR\FM\06AUP2.SGM 06AUP2 jbell on DSK3GLQ082PROD with PROPOSALS2 38390 Federal Register / Vol. 84, No. 151 / Tuesday, August 6, 2019 / Proposed Rules

TABLE 10—PROPOSED MASTER LIST OF DMEPOS ITEMS POTENTIALLY SUBJECT TO FACE-TO-FACE ENCOUNTER AND WRITTEN ORDER PRIOR TO DELIVERY AND/OR PRIOR AUTHORIZATION REQUIREMENTS—Continued

HCPCS Long description

K0822 ...... Power Wheelchair, Group 2 Standard, Sling/Solid Seat/Back, Patient Weight Capacity Up To And Including 300 Pounds. K0823 ...... Power Wheelchair, Group 2 Standard, Captains Chair, Patient Weight Capacity Up To And Including 300 Pounds. K0824 ...... Power Wheelchair, Group 2 Heavy Duty, Sling/Solid Seat/Back, Patient Weight Capacity 301 To 450 Pounds. K0825 ...... Power Wheelchair, Group 2 Heavy Duty, Captains Chair, Patient Weight Capacity 301 To 450 Pounds. K0826 ...... Power Wheelchair, Group 2 Very Heavy Duty, Sling/Solid Seat/Back, Patient Weight Capacity 451 To 600 Pounds. K0827 ...... Power Wheelchair, Group 2 Very Heavy Duty, Captains Chair, Patient Weight Capacity 451 To 600 Pounds. K0828 ...... Power Wheelchair, Group 2 Extra Heavy Duty, Sling/Solid Seat/Back, Patient Weight Capacity 601 Pounds Or More. K0829 ...... Power Wheelchair, Group 2 Extra Heavy Duty, Captains Chair, Patient Weight Capacity 601 Pounds Or More. K0835 ...... Power Wheelchair, Group 2 Standard, Single Power Option, Sling/Solid Seat/Back, Patient Weight Capacity Up To And In- cluding 300 Pounds. K0836 ...... Power Wheelchair, Group 2 Standard, Single Power Option, Captains Chair, Patient Weight Capacity Up To And Including 300 Pounds. K0837 ...... Power Wheelchair, Group 2 Heavy Duty, Single Power Option, Sling/Solid Seat/Back, Patient Weight Capacity 301 To 450 Pounds. K0838 ...... Power Wheelchair, Group 2 Heavy Duty, Single Power Option, Captains Chair, Patient Weight Capacity 301 To 450 Pounds. K0839 ...... Power Wheelchair, Group 2 Very Heavy Duty, Single Power Option, Sling/Solid Seat/Back, Patient Weight Capacity 451 To 600 Pounds. K0840 ...... Power Wheelchair, Group 2 Extra Heavy Duty, Single Power Option, Sling/Solid Seat/Back, Patient Weight Capacity 601 Pounds Or More. K0841 ...... Power Wheelchair, Group 2 Standard, Multiple Power Option, Sling/Solid Seat/Back, Patient Weight Capacity Up To And In- cluding 300 Pounds. K0842 ...... Power Wheelchair, Group 2 Standard, Multiple Power Option, Captains Chair, Patient Weight Capacity Up To And Including 300 Pounds. K0843 ...... Power Wheelchair, Group 2 Heavy Duty, Multiple Power Option, Sling/Solid Seat/Back, Patient Weight Capacity 301 To 450 Pounds. K0848 ...... Power Wheelchair, Group 3 Standard, Sling/Solid Seat/Back, Patient Weight Capacity Up To And Including 300 Pounds. K0849 ...... Power Wheelchair, Group 3 Standard, Captains Chair, Patient Weight Capacity Up To And Including 300 Pounds. K0850 ...... Power Wheelchair, Group 3 Heavy Duty, Sling/Solid Seat/Back, Patient Weight Capacity 301 To 450 Pounds. K0851 ...... Power Wheelchair, Group 3 Heavy Duty, Captains Chair, Patient Weight Capacity 301 To 450 Pounds. K0852 ...... Power Wheelchair, Group 3 Very Heavy Duty, Sling/Solid Seat/Back, Patient Weight Capacity 451 To 600 Pounds. K0853 ...... Power Wheelchair, Group 3 Very Heavy Duty, Captains Chair, Patient Weight Capacity, 451 To 600 Pounds. K0854 ...... Power Wheelchair, Group 3 Extra Heavy Duty, Sling/Solid Seat/Back, Patient Weight Capacity 601 Pounds Or More. K0855 ...... Power Wheelchair, Group 3 Extra Heavy Duty, Captains Chair, Patient Weight Capacity 601 Pounds Or More. K0856 ...... Power Wheelchair, Group 3 Standard, Single Power Option, Sling/Solid Seat/Back, Patient Weight Capacity Up To And In- cluding 300 Pounds. K0857 ...... Power Wheelchair, Group 3 Standard, Single Power Option, Captains Chair, Patient Weight Capacity Up To And Including 300 Pounds. K0858 ...... Power Wheelchair, Group 3 Heavy Duty, Single Power Option, Sling/Solid Seat/Back, Patient Weight Capacity 301 To 450 Pounds. K0859 ...... Power Wheelchair, Group 3 Heavy Duty, Single Power Option, Captains Chair, Patient Weight Capacity 301 To 450 Pounds. K0860 ...... Power Wheelchair, Group 3 Very Heavy Duty, Single Power Option, Sling/Solid Seat/Back, Patient Weight Capacity 451 To 600 Pounds. K0861 ...... Power Wheelchair, Group 3 Standard, Multiple Power Option, Sling/Solid Seat/Back, Patient Weight Capacity Up To And In- cluding 300 Pounds. K0862 ...... Power Wheelchair, Group 3 Heavy Duty, Multiple Power Option, Sling/Solid Seat/Back, Patient Weight Capacity 301 To 450 Pounds. K0863 ...... Power Wheelchair, Group 3 Very Heavy Duty, Multiple Power Option, Sling/Solid Seat/Back, Patient Weight Capacity 451 To 600 Pounds. K0864 ...... Power Wheelchair, Group 3 Extra Heavy Duty, Multiple Power Option, Sling/Solid Seat/Back, Patient Weight Capacity 601 Pounds Or More. L0631 ...... Lumbar-Sacral Orthosis, Sagittal Control, With Rigid Anterior And Posterior Panels, Posterior Extends From Sacrococcygeal Junction To T–9 Vertebra, Produces Intracavitary Pressure To Reduce Load On The Intervertebral Discs, Includes Straps, Closures, May Include Padding, Shoulder Straps, Pendulous Abdomen Design, Prefabricated Item That Has Been Trimmed, Bent, Molded, Assembled, Or Otherwise Customized To Fit A Specific Patient By An Individual With Expertise. L0635 ...... Lumbar-Sacral Orthosis, Sagittal-Coronal Control, Lumbar Flexion, Rigid Posterior Frame/Panel(S), Lateral Articulating Design To Flex The Lumbar Spine, Posterior Extends From Sacrococcygeal Junction To T–9 Vertebra, Lateral Strength Provided By Rigid Lateral Frame/Panel(S), Produces Intracavitary Pressure To Reduce Load On Intervertebral Discs, Includes Straps, Closures, May Include Padding, Anterior Panel, Pendulous Abdomen Design, Prefabricated, Includes Fitting And Adjustment. L0636 ...... Lumbar Sacral Orthosis, Sagittal-Coronal Control, Lumbar Flexion, Rigid Posterior Frame/Panels, Lateral Articulating Design To Flex The Lumbar Spine, Posterior Extends From Sacrococcygeal Junction To T–9 Vertebra, Lateral Strength Provided By Rigid Lateral Frame/Panels, Produces Intracavitary Pressure To Reduce Load On Intervertebral Discs, Includes Straps, Closures, May Include Padding, Anterior Panel, Pendulous Abdomen Design, Custom Fabricated. L0637 ...... Lumbar-Sacral Orthosis, Sagittal-Coronal Control, With Rigid Anterior And Posterior Frame/Panels, Posterior Extends From Sacrococcygeal Junction To T–9 Vertebra, Lateral Strength Provided By Rigid Lateral Frame/Panels, Produces Intracavitary Pressure To Reduce Load On Intervertebral Discs, Includes Straps, Closures, May Include Padding, Shoulder Straps, Pen- dulous Abdomen Design, Prefabricated Item That Has Been Trimmed, Bent, Molded, Assembled, Or Otherwise Customized To Fit A Specific Patient By An Individual With Expertise.

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TABLE 10—PROPOSED MASTER LIST OF DMEPOS ITEMS POTENTIALLY SUBJECT TO FACE-TO-FACE ENCOUNTER AND WRITTEN ORDER PRIOR TO DELIVERY AND/OR PRIOR AUTHORIZATION REQUIREMENTS—Continued

HCPCS Long description

L0638 ...... Lumbar-Sacral Orthosis, Sagittal-Coronal Control, With Rigid Anterior And Posterior Frame/Panels, Posterior Extends From Sacrococcygeal Junction To T–9 Vertebra, Lateral Strength Provided By Rigid Lateral Frame/Panels, Produces Intracavitary Pressure To Reduce Load On Intervertebral Discs, Includes Straps, Closures, May Include Padding, Shoulder Straps, Pen- dulous Abdomen Design, Custom Fabricated. L0639 ...... Lumbar-Sacral Orthosis, Sagittal-Coronal Control, Rigid Shell(S)/Panel(S), Posterior Extends From Sacrococcygeal Junction To T–9 Vertebra, Anterior Extends From Symphysis Pubis To Xyphoid, Produces Intracavitary Pressure To Reduce Load On The Intervertebral Discs, Overall Strength Is Provided By Overlapping Rigid Material And Stabilizing Closures, Includes Straps, Closures, May Include Soft Interface, Pendulous Abdomen Design, Prefabricated Item That Has Been Trimmed, Bent, Molded, Assembled, Or Otherwise Customized To Fit A Specific Patient By An Individual With Expertise. L0640 ...... Lumbar-Sacral Orthosis, Sagittal-Coronal Control, Rigid Shell(S)/Panel(S), Posterior Extends From Sacrococcygeal Junction To T–9 Vertebra, Anterior Extends From Symphysis Pubis To Xyphoid, Produces Intracavitary Pressure To Reduce Load On The Intervertebral Discs, Overall Strength Is Provided By Overlapping Rigid Material And Stabilizing Closures, Includes Straps, Closures, May Include Soft Interface, Pendulous Abdomen Design, Custom Fabricated. L0648 ...... Lumbar-Sacral Orthosis, Sagittal Control, With Rigid Anterior And Posterior Panels, Posterior Extends From Sacrococcygeal Junction To T–9 Vertebra, Produces Intracavitary Pressure To Reduce Load On The Intervertebral Discs, Includes Straps, Closures, May Include Padding, Shoulder Straps, Pendulous Abdomen Design, Prefabricated, Off-The-Shelf. L0650 ...... Lumbar-Sacral Orthosis, Sagittal-Coronal Control, With Rigid Anterior And Posterior Frame/Panel(S), Posterior Extends From Sacrococcygeal Junction To T–9 Vertebra, Lateral Strength Provided By Rigid Lateral Frame/Panel(S), Produces Intracavitary Pressure To Reduce Load On Intervertebral Discs, Includes Straps, Closures, May Include Padding, Shoulder Straps, Pendulous Abdomen Design, Prefabricated, Off-The-Shelf. L0651 ...... Lumbar-Sacral Orthosis, Sagittal-Coronal Control, Rigid Shell(S)/Panel(S), Posterior Extends From Sacrococcygeal Junction To T–9 Vertebra, Anterior Extends From Symphysis Pubis To Xyphoid, Produces Intracavitary Pressure To Reduce Load On The Intervertebral Discs, Overall Strength Is Provided By Overlapping Rigid Material And Stabilizing Closures, Includes Straps, Closures, May Include Soft Interface, Pendulous Abdomen Design, Prefabricated, Off-The-Shelf. L1680 ...... Hip Orthosis, Abduction Control Of Hip Joints, Dynamic, Pelvic Control, Adjustable Hip Motion Control, Thigh Cuffs (Rancho Hip Action Type), Custom Fabricated. L1685 ...... Hip Orthosis, Abduction Control Of Hip Joint, Postoperative Hip Abduction Type, Custom Fabricated. L1686 ...... Hip Orthosis, Abduction Control Of Hip Joint, Postoperative Hip Abduction Type, Prefabricated, Includes Fitting And Adjust- ment. L1690 ...... Combination, Bilateral, Lumbo-Sacral, Hip, Femur Orthosis Providing Adduction And Internal Rotation Control, Prefabricated, Includes Fitting And Adjustment. L1700 ...... Legg Perthes Orthosis, (Toronto Type), Custom-Fabricated. L1710 ...... Legg Perthes Orthosis, (Newington Type), Custom Fabricated. L1720 ...... Legg Perthes Orthosis, Trilateral, (Tachdijan Type), Custom-Fabricated. L1730 ...... Legg Perthes Orthosis, (Scottish Rite Type), Custom-Fabricated. L1755 ...... Legg Perthes Orthosis, (Patten Bottom Type), Custom-Fabricated. L1832 ...... Knee Orthosis, Adjustable Knee Joints (Unicentric Or Polycentric), Positional Orthosis, Rigid Support, Prefabricated Item That Has Been Trimmed, Bent, Molded, Assembled, Or Otherwise Customized To Fit A Specific Patient By An Individual With Expertise. L1833 ...... Knee Orthosis, Adjustable Knee Joints (Unicentric Or Polycentric), Positional Orthosis, Rigid Support, Prefabricated, Off-The Shelf. L1834 ...... Knee Orthosis, Without Knee Joint, Rigid, Custom-Fabricated. L1840 ...... Knee Orthosis, Derotation, Medial-Lateral, Anterior Cruciate Ligament, Custom Fabricated. L1843 ...... Knee Orthosis, Single Upright, Thigh And Calf, With Adjustable Flexion And Extension Joint (Unicentric Or Polycentric), Me- dial-Lateral And Rotation Control, With Or Without Varus/Valgus Adjustment, Prefabricated Item That Has Been Trimmed, Bent, Molded, Assembled, Or Otherwise Customized To Fit A Specific Patient By An Individual With Expertise. L1844 ...... Knee Orthosis, Single Upright, Thigh And Calf, With Adjustable Flexion And Extension Joint (Unicentric Or Polycentric), Me- dial-Lateral And Rotation Control, With Or Without Varus/Valgus Adjustment, Custom Fabricated. L1845 ...... Knee Orthosis, Double Upright, Thigh And Calf, With Adjustable Flexion And Extension Joint (Unicentric Or Polycentric), Me- dial-Lateral And Rotation Control, With Or Without Varus/Valgus Adjustment, Prefabricated Item That Has Been Trimmed, Bent, Molded, Assembled, Or Otherwise Customized To Fit A Specific Patient By An Individual With Expertise. L1846 ...... Knee Orthosis, Double Upright, Thigh And Calf, With Adjustable Flexion And Extension Joint (Unicentric Or Polycentric), Me- dial-Lateral And Rotation Control, With Or Without Varus/Valgus Adjustment, Custom Fabricated. L1847 ...... Knee Orthosis, Double Upright With Adjustable Joint, With Inflatable Air Support Chamber(S), Prefabricated Item That Has Been Trimmed, Bent, Molded, Assembled, Or Otherwise Customized To Fit A Specific Patient By An Individual With Exper- tise. L1848 ...... Knee Orthosis, Double Upright With Adjustable Joint, With Inflatable Air Support Chamber(S), Prefabricated, Off-The-Shelf. L1851 ...... Knee Orthosis (Ko), Single Upright, Thigh And Calf, With Adjustable Flexion And Extension Joint (Unicentric Or Polycentric), Medial-Lateral And Rotation Control, With Or Without Varus/Valgus Adjustment, Prefabricated, Off-The-Shelf. L1852 ...... Knee Orthosis (Ko), Double Upright, Thigh And Calf, With Adjustable Flexion And Extension Joint (Unicentric Or Polycentric), Medial-Lateral And Rotation Control, With Or Without Varus/Valgus Adjustment, Prefabricated, Off-The-Shelf. L1860 ...... Knee Orthosis, Modification Of Supracondylar Prosthetic Socket, Custom-Fabricated (Sk). L1907 ...... Ankle Orthosis, Supramalleolar With Straps, With Or Without Interface/Pads, Custom Fabricated. L1932 ...... Afo, Rigid Anterior Tibial Section, Total Carbon Fiber Or Equal Material, Prefabricated, Includes Fitting And Adjustment. L1940 ...... Ankle Foot Orthosis, Plastic Or Other Material, Custom-Fabricated. L1945 ...... Ankle Foot Orthosis, Plastic, Rigid Anterior Tibial Section (Floor Reaction), Custom-Fabricated. L1950 ...... Ankle Foot Orthosis, Spiral, (Institute Of Rehabilitative Medicine Type), Plastic, Custom-Fabricated. L1951 ...... Ankle Foot Orthosis, Spiral, (Institute Of Rehabilitative Medicine Type), Plastic Or Other Material, Prefabricated, Includes Fit- ting And Adjustment. L1960 ...... Ankle Foot Orthosis, Posterior Solid Ankle, Plastic, Custom-Fabricated. L1970 ...... Ankle Foot Orthosis, Plastic With Ankle Joint, Custom-Fabricated.

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TABLE 10—PROPOSED MASTER LIST OF DMEPOS ITEMS POTENTIALLY SUBJECT TO FACE-TO-FACE ENCOUNTER AND WRITTEN ORDER PRIOR TO DELIVERY AND/OR PRIOR AUTHORIZATION REQUIREMENTS—Continued

HCPCS Long description

L2000 ...... Knee Ankle Foot Orthosis, Single Upright, Free Knee, Free Ankle, Solid Stirrup, Thigh And Calf Bands/Cuffs (Single Bar Ak Orthosis), Custom-Fabricated. L2005 ...... Knee Ankle Foot Orthosis, Any Material, Single Or Double Upright, Stance Control, Automatic Lock And Swing Phase Re- lease, Any Type Activation, Includes Ankle Joint, Any Type, Custom Fabricated. L2010 ...... Knee Ankle Foot Orthosis, Single Upright, Free Ankle, Solid Stirrup, Thigh And Calf Bands/Cuffs (Single Bar Ak Orthosis), Without Knee Joint, Custom-Fabricated. L2020 ...... Knee Ankle Foot Orthosis, Double Upright, Free Ankle, Solid Stirrup, Thigh And Calf Bands/Cuffs (Double Bar Ak Orthosis), Custom-Fabricated. L2030 ...... Knee Ankle Foot Orthosis, Double Upright, Free Ankle, Solid Stirrup, Thigh And Calf Bands/Cuffs, (Double Bar Ak Orthosis), Without Knee Joint, Custom Fabricated. L2034 ...... Knee Ankle Foot Orthosis, Full Plastic, Single Upright, With Or Without Free Motion Knee, Medial Lateral Rotation Control, With Or Without Free Motion Ankle, Custom Fabricated. L2036 ...... Knee Ankle Foot Orthosis, Full Plastic, Double Upright, With Or Without Free Motion Knee, With Or Without Free Motion Ankle, Custom Fabricated. L2037 ...... Knee Ankle Foot Orthosis, Full Plastic, Single Upright, With Or Without Free Motion Knee, With Or Without Free Motion Ankle, Custom Fabricated. L2038 ...... Knee Ankle Foot Orthosis, Full Plastic, With Or Without Free Motion Knee, Multi-Axis Ankle, Custom Fabricated. L2050 ...... Hip Knee Ankle Foot Orthosis, Torsion Control, Bilateral Torsion Cables, Hip Joint, Pelvic Band/Belt, Custom-Fabricated. L2060 ...... Hip Knee Ankle Foot Orthosis, Torsion Control, Bilateral Torsion Cables, Ball Bearing Hip Joint, Pelvic Band/Belt, Custom- Fabricated. L2106 ...... Ankle Foot Orthosis, Fracture Orthosis, Tibial Fracture Cast Orthosis, Thermoplastic Type Casting Material, Custom-Fab- ricated. L2108 ...... Ankle Foot Orthosis, Fracture Orthosis, Tibial Fracture Cast Orthosis, Custom-Fabricated. L2114 ...... Ankle Foot Orthosis, Fracture Orthosis, Tibial Fracture Orthosis, Semi-Rigid, Prefabricated, Includes Fitting And Adjustment. L2116 ...... Ankle Foot Orthosis, Fracture Orthosis, Tibial Fracture Orthosis, Rigid, Prefabricated, Includes Fitting And Adjustment. L2126 ...... Knee Ankle Foot Orthosis, Fracture Orthosis, Femoral Fracture Cast Orthosis, Thermoplastic Type Casting Material, Custom- Fabricated. L2128 ...... Knee Ankle Foot Orthosis, Fracture Orthosis, Femoral Fracture Cast Orthosis, Custom-Fabricated. L2132 ...... Kafo, Fracture Orthosis, Femoral Fracture Cast Orthosis, Soft, Prefabricated, Includes Fitting And Adjustment. L2134 ...... Kafo, Fracture Orthosis, Femoral Fracture Cast Orthosis, Semi-Rigid, Prefabricated, Includes Fitting And Adjustment. L2136 ...... Kafo, Fracture Orthosis, Femoral Fracture Cast Orthosis, Rigid, Prefabricated, Includes Fitting And Adjustment. L2350 ...... Addition To Lower Extremity, Prosthetic Type, (Bk) Socket, Molded To Patient Model, (Used For Ptb Afo Orthoses). L2510 ...... Addition To Lower Extremity, Thigh/Weight Bearing, Quadri-Lateral Brim, Molded To Patient Model. L2525 ...... Addition To Lower Extremity, Thigh/Weight Bearing, Ischial Containment/Narrow M–L Brim Molded To Patient Model. L2526 ...... Addition To Lower Extremity, Thigh/Weight Bearing, Ischial Containment/Narrow M–L Brim, Custom Fitted. L2570 ...... Addition To Lower Extremity, Pelvic Control, Hip Joint, Clevis Type Two Position Joint, Each. L2627 ...... Addition To Lower Extremity, Pelvic Control, Plastic, Molded To Patient Model, Reciprocating Hip Joint And Cables. L2628 ...... Addition To Lower Extremity, Pelvic Control, Metal Frame, Reciprocating Hip Joint And Cables. L3330 ...... Lift, Elevation, Metal Extension (Skate). L3671 ...... Shoulder Orthosis, Shoulder Joint Design, Without Joints, May Include Soft Interface, Straps, Custom Fabricated, Includes Fitting And Adjustment. L3674 ...... Shoulder Orthosis, Abduction Positioning (Airplane Design), Thoracic Component And Support Bar, With Or Without Nontor- sion Joint/Turnbuckle, May Include Soft Interface, Straps, Custom Fabricated, Includes Fitting And Adjustment. L3720 ...... Elbow Orthosis, Double Upright With Forearm/Arm Cuffs, Free Motion, Custom-Fabricated. L3730 ...... Elbow Orthosis, Double Upright With Forearm/Arm Cuffs, Extension/Flexion Assist, Custom-Fabricated. L3740 ...... Elbow Orthosis, Double Upright With Forearm/Arm Cuffs, Adjustable Position Lock With Active Control, Custom-Fabricated. L3761 ...... Elbow Orthosis (Eo), With Adjustable Position Locking Joint(S), Prefabricated, Off-The-Shelf. L3763 ...... Elbow Wrist Hand Orthosis, Rigid, Without Joints, May Include Soft Interface, Straps, Custom Fabricated, Includes Fitting And Adjustment. L3764 ...... Elbow Wrist Hand Orthosis, Includes One Or More Nontorsion Joints, Elastic Bands, Turnbuckles, May Include Soft Interface, Straps, Custom Fabricated, Includes Fitting And Adjustment. L3765 ...... Elbow Wrist Hand Finger Orthosis, Rigid, Without Joints, May Include Soft Interface, Straps, Custom Fabricated, Includes Fit- ting And Adjustment. L3766 ...... Elbow Wrist Hand Finger Orthosis, Includes One Or More Nontorsion Joints, Elastic Bands, Turnbuckles, May Include Soft Interface, Straps, Custom Fabricated, Includes Fitting And Adjustment. L3900 ...... Wrist Hand Finger Orthosis, Dynamic Flexor Hinge, Reciprocal Wrist Extension/Flexion, Finger Flexion/Extension, Wrist Or Finger Driven, Custom-Fabricated. L3901 ...... Wrist Hand Finger Orthosis, Dynamic Flexor Hinge, Reciprocal Wrist Extension/Flexion, Finger Flexion/Extension, Cable Driv- en, Custom-Fabricated. L3904 ...... Wrist Hand Finger Orthosis, External Powered, Electric, Custom-Fabricated. L3905 ...... Wrist Hand Orthosis, Includes One Or More Nontorsion Joints, Elastic Bands, Turnbuckles, May Include Soft Interface, Straps, Custom Fabricated, Includes Fitting And Adjustment. L3960 ...... Shoulder Elbow Wrist Hand Orthosis, Abduction Positioning, Airplane Design, Prefabricated, Includes Fitting And Adjustment. L3961 ...... Shoulder Elbow Wrist Hand Orthosis, Shoulder Cap Design, Without Joints, May Include Soft Interface, Straps, Custom Fab- ricated, Includes Fitting And Adjustment. L3962 ...... Shoulder Elbow Wrist Hand Orthosis, Abduction Positioning, Erbs Palsey Design, Prefabricated, Includes Fitting And Adjust- ment. L3967 ...... Shoulder Elbow Wrist Hand Orthosis, Abduction Positioning (Airplane Design), Thoracic Component And Support Bar, With- out Joints, May Include Soft Interface, Straps, Custom Fabricated, Includes Fitting And Adjustment. L3971 ...... Shoulder Elbow Wrist Hand Orthosis, Shoulder Cap Design, Includes One Or More Nontorsion Joints, Elastic Bands, Turn- buckles, May Include Soft Interface, Straps, Custom Fabricated, Includes Fitting And Adjustment.

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TABLE 10—PROPOSED MASTER LIST OF DMEPOS ITEMS POTENTIALLY SUBJECT TO FACE-TO-FACE ENCOUNTER AND WRITTEN ORDER PRIOR TO DELIVERY AND/OR PRIOR AUTHORIZATION REQUIREMENTS—Continued

HCPCS Long description

L3973 ...... Shoulder Elbow Wrist Hand Orthosis, Abduction Positioning (Airplane Design), Thoracic Component And Support Bar, In- cludes One Or More Nontorsion Joints, Elastic Bands, Turnbuckles, May Include Soft Interface, Straps, Custom Fabricated, Includes Fitting And Adjustment. L3975 ...... Shoulder Elbow Wrist Hand Finger Orthosis, Shoulder Cap Design, Without Joints, May Include Soft Interface, Straps, Cus- tom Fabricated, Includes Fitting And Adjustment. L3976 ...... Shoulder Elbow Wrist Hand Finger Orthosis, Abduction Positioning (Airplane Design), Thoracic Component And Support Bar, Without Joints, May Include Soft Interface, Straps, Custom Fabricated, Includes Fitting And Adjustment. L3977 ...... Shoulder Elbow Wrist Hand Finger Orthosis, Shoulder Cap Design, Includes One Or More Nontorsion Joints, Elastic Bands, Turnbuckles, May Include Soft Interface, Straps, Custom Fabricated, Includes Fitting And Adjustment. L3978 ...... Shoulder Elbow Wrist Hand Finger Orthosis, Abduction Positioning (Airplane Design), Thoracic Component And Support Bar, Includes One Or More Nontorsion Joints, Elastic Bands, Turnbuckles, May Include Soft Interface, Straps, Custom Fab- ricated, Includes Fitting And Adjustment. L3981 ...... Upper Extremity Fracture Orthosis, Humeral, Prefabricated, Includes Shoulder Cap Design, With Or Without Joints, Forearm Section, May Include Soft Interface, Straps, Includes Fitting And Adjustments. L4010 ...... Replace Trilateral Socket Brim. L4020 ...... Replace Quadrilateral Socket Brim, Molded To Patient Model. L4030 ...... Replace Quadrilateral Socket Brim, Custom Fitted. L4130 ...... Replace Pretibial Shell. L4631 ...... Ankle Foot Orthosis, Walking Boot Type, Varus/Valgus Correction, Rocker Bottom, Anterior Tibial Shell, Soft Interface, Cus- tom Arch Support, Plastic Or Other Material, Includes Straps And Closures, Custom Fabricated. L5000 ...... Partial Foot, Shoe Insert With Longitudinal Arch, Toe Filler. L5010 ...... Partial Foot, Molded Socket, Ankle Height, With Toe Filler. L5020 ...... Partial Foot, Molded Socket, Tibial Tubercle Height, With Toe Filler. L5050 ...... Ankle, Symes, Molded Socket, Sach Foot. L5060 ...... Ankle, Symes, Metal Frame, Molded Leather Socket, Articulated Ankle/Foot. L5100 ...... Below Knee, Molded Socket, Shin, Sach Foot. L5105 ...... Below Knee, Plastic Socket, Joints And Thigh Lacer, Sach Foot. L5150 ...... Knee Disarticulation (Or Through Knee), Molded Socket, External Knee Joints, Shin, Sach Foot. L5160 ...... Knee Disarticulation (Or Through Knee), Molded Socket, Bent Knee Configuration, External Knee Joints, Shin, Sach Foot. L5200 ...... Above Knee, Molded Socket, Single Axis Constant Friction Knee, Shin, Sach Foot. L5210 ...... Above Knee, Short Prosthesis, No Knee Joint (Stubbies), With Foot Blocks, No Ankle Joints, Each. L5220 ...... Above Knee, Short Prosthesis, No Knee Joint (Stubbies), With Articulated Ankle/Foot, Dynamically Aligned, Each. L5230 ...... Above Knee, For Proximal Femoral Focal Deficiency, Constant Friction Knee, Shin, Sach Foot. L5250 ...... Hip Disarticulation, Canadian Type; Molded Socket, Hip Joint, Single Axis Constant Friction Knee, Shin, Sach Foot. L5270 ...... Hip Disarticulation, Tilt Table Type; Molded Socket, Locking Hip Joint, Single Axis Constant Friction Knee, Shin, Sach Foot. L5280 ...... Hemipelvectomy, Canadian Type; Molded Socket, Hip Joint, Single Axis Constant Friction Knee, Shin, Sach Foot. L5301 ...... Below Knee, Molded Socket, Shin, Sach Foot, Endoskeletal System. L5312 ...... Knee Disarticulation (Or Through Knee), Molded Socket, Single Axis Knee, Pylon, Sach Foot, Endoskeletal System. L5321 ...... Above Knee, Molded Socket, Open End, Sach Foot, Endoskeletal System, Single Axis Knee. L5331 ...... Hip Disarticulation, Canadian Type, Molded Socket, Endoskeletal System, Hip Joint, Single Axis Knee, Sach Foot. L5341 ...... Hemipelvectomy, Canadian Type, Molded Socket, Endoskeletal System, Hip Joint, Single Axis Knee, Sach Foot. L5400 ...... Immediate Post Surgical Or Early Fitting, Application Of Initial Rigid Dressing, Including Fitting, Alignment, Suspension, And One Cast Change, Below Knee. L5420 ...... Immediate Post Surgical Or Early Fitting, Application Of Initial Rigid Dressing, Including Fitting, Alignment And Suspension And One Cast Change Ak Or Knee Disarticulation. L5430 ...... Immediate Post Surgical Or Early Fitting, Application Of Initial Rigid Dressing, Incl. Fitting, Alignment And Supension, Ak Or Knee Disarticulation, Each Additional Cast Change And Realignment. L5460 ...... Immediate Post Surgical Or Early Fitting, Application Of Non-Weight Bearing Rigid Dressing, Above Knee. L5500 ...... Initial, Below Knee Ptb Type Socket, Non-Alignable System, Pylon, No Cover, Sach Foot, Plaster Socket, Direct Formed. L5505 ...... Initial, Above Knee—Knee Disarticulation, Ischial Level Socket, Non-Alignable System, Pylon, No Cover, Sach Foot, Plaster Socket, Direct Formed. L5510 ...... Preparatory, Below Knee Ptb Type Socket, Non-Alignable System, Pylon, No Cover, Sach Foot, Plaster Socket, Molded To Model. L5520 ...... Preparatory, Below Knee Ptb Type Socket, Non-Alignable System, Pylon, No Cover, Sach Foot, Thermoplastic Or Equal, Di- rect Formed. L5530 ...... Preparatory, Below Knee Ptb Type Socket, Non-Alignable System, Pylon, No Cover, Sach Foot, Thermoplastic Or Equal, Molded To Model. L5535 ...... Preparatory, Below Knee Ptb Type Socket, Non-Alignable System, No Cover, Sach Foot, Prefabricated, Adjustable Open End Socket. L5540 ...... Preparatory, Below Knee Ptb Type Socket, Non-Alignable System, Pylon, No Cover, Sach Foot, Laminated Socket, Molded To Model. L5560 ...... Preparatory, Above Knee- Knee Disarticulation, Ischial Level Socket, Non-Alignable System, Pylon, No Cover, Sach Foot, Plaster Socket, Molded To Model. L5570 ...... Preparatory, Above Knee—Knee Disarticulation, Ischial Level Socket, Non-Alignable System, Pylon, No Cover, Sach Foot, Thermoplastic Or Equal, Direct Formed. L5580 ...... Preparatory, Above Knee—Knee Disarticulation Ischial Level Socket, Non-Alignable System, Pylon, No Cover, Sach Foot, Thermoplastic Or Equal, Molded To Model. L5585 ...... Preparatory, Above Knee—Knee Disarticulation, Ischial Level Socket, Non-Alignable System, Pylon, No Cover, Sach Foot, Prefabricated Adjustable Open End Socket. L5590 ...... Preparatory, Above Knee—Knee Disarticulation Ischial Level Socket, Non-Alignable System, Pylon No Cover, Sach Foot, Laminated Socket, Molded To Model.

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TABLE 10—PROPOSED MASTER LIST OF DMEPOS ITEMS POTENTIALLY SUBJECT TO FACE-TO-FACE ENCOUNTER AND WRITTEN ORDER PRIOR TO DELIVERY AND/OR PRIOR AUTHORIZATION REQUIREMENTS—Continued

HCPCS Long description

L5595 ...... Preparatory, Hip Disarticulation-Hemipelvectomy, Pylon, No Cover, Sach Foot, Thermoplastic Or Equal, Molded To Patient Model. L5600 ...... Preparatory, Hip Disarticulation-Hemipelvectomy, Pylon, No Cover, Sach Foot, Laminated Socket, Molded To Patient Model. L5610 ...... Addition To Lower Extremity, Endoskeletal System, Above Knee, Hydracadence System. L5611 ...... Addition To Lower Extremity, Endoskeletal System, Above Knee—Knee Disarticulation, 4 Bar Linkage, With Friction Swing Phase Control. L5613 ...... Addition To Lower Extremity, Endoskeletal System, Above Knee-Knee Disarticulation, 4 Bar Linkage, With Hydraulic Swing Phase Control. L5614 ...... Addition To Lower Extremity, Exoskeletal System, Above Knee-Knee Disarticulation, 4 Bar Linkage, With Pneumatic Swing Phase Control. L5616 ...... Addition To Lower Extremity, Endoskeletal System, Above Knee, Universal Multiplex System, Friction Swing Phase Control. L5617 ...... Addition To Lower Extremity, Quick Change Self-Aligning Unit, Above Knee Or Below Knee, Each. L5626 ...... Addition To Lower Extremity, Test Socket, Hip Disarticulation. L5628 ...... Addition To Lower Extremity, Test Socket, Hemipelvectomy. L5638 ...... Addition To Lower Extremity, Below Knee, Leather Socket. L5639 ...... Addition To Lower Extremity, Below Knee, Wood Socket. L5640 ...... Addition To Lower Extremity, Knee Disarticulation, Leather Socket. L5642 ...... Addition To Lower Extremity, Above Knee, Leather Socket. L5643 ...... Addition To Lower Extremity, Hip Disarticulation, Flexible Inner Socket, External Frame. L5644 ...... Addition To Lower Extremity, Above Knee, Wood Socket. L5645 ...... Addition To Lower Extremity, Below Knee, Flexible Inner Socket, External Frame. L5646 ...... Addition To Lower Extremity, Below Knee, Air, Fluid, Gel Or Equal, Cushion Socket. L5647 ...... Addition To Lower Extremity, Below Knee Suction Socket. L5648 ...... Addition To Lower Extremity, Above Knee, Air, Fluid, Gel Or Equal, Cushion Socket. L5649 ...... Addition To Lower Extremity, Ischial Containment/Narrow M–L Socket. L5650 ...... Additions To Lower Extremity, Total Contact, Above Knee Or Knee Disarticulation Socket. L5651 ...... Addition To Lower Extremity, Above Knee, Flexible Inner Socket, External Frame. L5653 ...... Addition To Lower Extremity, Knee Disarticulation, Expandable Wall Socket. L5661 ...... Addition To Lower Extremity, Socket Insert, Multi-Durometer Symes. L5665 ...... Addition To Lower Extremity, Socket Insert, Multi-Durometer, Below Knee. L5671 ...... Addition To Lower Extremity, Below Knee/Above Knee Suspension Locking Mechanism (Shuttle, Lanyard Or Equal), Excludes Socket Insert. L5673 ...... Addition To Lower Extremity, Below Knee/Above Knee, Custom Fabricated From Existing Mold Or Prefabricated, Socket In- sert, Silicone Gel, Elastomeric Or Equal, For Use With Locking Mechanism. L5677 ...... Additions To Lower Extremity, Below Knee, Knee Joints, Polycentric, Pair. L5679 ...... Addition To Lower Extremity, Below Knee/Above Knee, Custom Fabricated From Existing Mold Or Prefabricated, Socket In- sert, Silicone Gel, Elastomeric Or Equal, Not For Use With Locking Mechanism. L5681 ...... Addition To Lower Extremity, Below Knee/Above Knee, Custom Fabricated Socket Insert For Congenital Or Atypical Trau- matic Amputee, Silicone Gel, Elastomeric Or Equal, For Use With Or Without Locking Mechanism, Initial Only (For Other Than Initial, Use Code L5673 Or L5679). L5682 ...... Addition To Lower Extremity, Below Knee, Thigh Lacer, Gluteal/Ischial, Molded. L5683 ...... Addition To Lower Extremity, Below Knee/Above Knee, Custom Fabricated Socket Insert For Other Than Congenital Or Atypi- cal Traumatic Amputee, Silicone Gel, Elastomeric Or Equal, For Use With Or Without Locking Mechanism, Initial Only (For Other Than Initial, Use Code L5673 Or L5679). L5700 ...... Replacement, Socket, Below Knee, Molded To Patient Model. L5701 ...... Replacement, Socket, Above Knee/Knee Disarticulation, Including Attachment Plate, Molded To Patient Model. L5702 ...... Replacement, Socket, Hip Disarticulation, Including Hip Joint, Molded To Patient Model. L5703 ...... Ankle, Symes, Molded To Patient Model, Socket Without Solid Ankle Cushion Heel (Sach) Foot, Replacement Only. L5704 ...... Custom Shaped Protective Cover, Below Knee. L5705 ...... Custom Shaped Protective Cover, Above Knee. L5706 ...... Custom Shaped Protective Cover, Knee Disarticulation. L5707 ...... Custom Shaped Protective Cover, Hip Disarticulation. L5711 ...... Additions Exoskeletal Knee-Shin System, Single Axis, Manual Lock, Ultra-Light Material. L5716 ...... Addition, Exoskeletal Knee-Shin System, Polycentric, Mechanical Stance Phase Lock. L5718 ...... Addition, Exoskeletal Knee-Shin System, Polycentric, Friction Swing And Stance Phase Control. L5722 ...... Addition, Exoskeletal Knee-Shin System, Single Axis, Pneumatic Swing, Friction Stance Phase Control. L5724 ...... Addition, Exoskeletal Knee-Shin System, Single Axis, Fluid Swing Phase Control. L5726 ...... Addition, Exoskeletal Knee-Shin System, Single Axis, External Joints Fluid Swing Phase Control. L5728 ...... Addition, Exoskeletal Knee-Shin System, Single Axis, Fluid Swing And Stance Phase Control. L5780 ...... Addition, Exoskeletal Knee-Shin System, Single Axis, Pneumatic/Hydra Pneumatic Swing Phase Control. L5781 ...... Addition To Lower Limb Prosthesis, Vacuum Pump, Residual Limb Volume Management And Moisture Evacuation System. L5782 ...... Addition To Lower Limb Prosthesis, Vacuum Pump, Residual Limb Volume Management And Moisture Evacuation System, Heavy Duty. L5785 ...... Addition, Exoskeletal System, Below Knee, Ultra-Light Material (Titanium, Carbon Fiber Or Equal). L5790 ...... Addition, Exoskeletal System, Above Knee, Ultra-Light Material (Titanium, Carbon Fiber Or Equal). L5795 ...... Addition, Exoskeletal System, Hip Disarticulation, Ultra-Light Material (Titanium, Carbon Fiber Or Equal). L5810 ...... Addition, Endoskeletal Knee-Shin System, Single Axis, Manual Lock. L5811 ...... Addition, Endoskeletal Knee-Shin System, Single Axis, Manual Lock, Ultra-Light Material. L5812 ...... Addition, Endoskeletal Knee-Shin System, Single Axis, Friction Swing And Stance Phase Control (Safety Knee). L5814 ...... Addition, Endoskeletal Knee-Shin System, Polycentric, Hydraulic Swing Phase Control, Mechanical Stance Phase Lock. L5816 ...... Addition, Endoskeletal Knee-Shin System, Polycentric, Mechanical Stance Phase Lock.

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TABLE 10—PROPOSED MASTER LIST OF DMEPOS ITEMS POTENTIALLY SUBJECT TO FACE-TO-FACE ENCOUNTER AND WRITTEN ORDER PRIOR TO DELIVERY AND/OR PRIOR AUTHORIZATION REQUIREMENTS—Continued

HCPCS Long description

L5818 ...... Addition, Endoskeletal Knee-Shin System, Polycentric, Friction Swing, And Stance Phase Control. L5822 ...... Addition, Endoskeletal Knee-Shin System, Single Axis, Pneumatic Swing, Friction Stance Phase Control. L5824 ...... Addition, Endoskeletal Knee-Shin System, Single Axis, Fluid Swing Phase Control. L5826 ...... Addition, Endoskeletal Knee-Shin System, Single Axis, Hydraulic Swing Phase Control, With Miniature High Activity Frame. L5828 ...... Addition, Endoskeletal Knee-Shin System, Single Axis, Fluid Swing And Stance Phase Control. L5830 ...... Addition, Endoskeletal Knee-Shin System, Single Axis, Pneumatic/Swing Phase Control. L5840 ...... Addition, Endoskeletal Knee/Shin System, 4-Bar Linkage Or Multiaxial, Pneumatic Swing Phase Control. L5845 ...... Addition, Endoskeletal, Knee-Shin System, Stance Flexion Feature, Adjustable. L5848 ...... Addition To Endoskeletal Knee-Shin System, Fluid Stance Extension, Dampening Feature, With Or Without Adjustability. L5856 ...... Addition To Lower Extremity Prosthesis, Endoskeletal Knee-Shin System, Microprocessor Control Feature, Swing And Stance Phase, Includes Electronic Sensor(S), Any Type. L5857 ...... Addition To Lower Extremity Prosthesis, Endoskeletal Knee-Shin System, Microprocessor Control Feature, Swing Phase Only, Includes Electronic Sensor(S), Any Type. L5858 ...... Addition To Lower Extremity Prosthesis, Endoskeletal Knee Shin System, Microprocessor Control Feature, Stance Phase Only, Includes Electronic Sensor(S), Any Type. L5859 ...... Addition To Lower Extremity Prosthesis, Endoskeletal Knee-Shin System, Powered And Programmable Flexion/Extension As- sist Control, Includes Any Type Motor(S). L5920 ...... Addition, Endoskeletal System, Above Knee Or Hip Disarticulation, Alignable System. L5930 ...... Addition, Endoskeletal System, High Activity Knee Control Frame. L5940 ...... Addition, Endoskeletal System, Below Knee, Ultra-Light Material (Titanium, Carbon Fiber Or Equal). L5950 ...... Addition, Endoskeletal System, Above Knee, Ultra-Light Material (Titanium, Carbon Fiber Or Equal). L5960 ...... Addition, Endoskeletal System, Hip Disarticulation, Ultra-Light Material (Titanium, Carbon Fiber Or Equal). L5961 ...... Addition, Endoskeletal System, Polycentric Hip Joint, Pneumatic Or Hydraulic Control, Rotation Control, With Or Without Flex- ion And/Or Extension Control. L5962 ...... Addition, Endoskeletal System, Below Knee, Flexible Protective Outer Surface Covering System. L5964 ...... Addition, Endoskeletal System, Above Knee, Flexible Protective Outer Surface Covering System. L5966 ...... Addition, Endoskeletal System, Hip Disarticulation, Flexible Protective Outer Surface Covering System. L5968 ...... Addition To Lower Limb Prosthesis, Multiaxial Ankle With Swing Phase Active Dorsiflexion Feature. L5973 ...... Endoskeletal Ankle Foot System, Microprocessor Controlled Feature, Dorsiflexion And/Or Plantar Flexion Control, Includes Power Source. L5976 ...... All Lower Extremity Prostheses, Energy Storing Foot (Seattle Carbon Copy Ii Or Equal). L5979 ...... All Lower Extremity Prosthesis, Multi-Axial Ankle, Dynamic Response Foot, One Piece System. L5980 ...... All Lower Extremity Prostheses, Flex Foot System. L5981 ...... All Lower Extremity Prostheses, Flex-Walk System Or Equal. L5982 ...... All Exoskeletal Lower Extremity Prostheses, Axial Rotation Unit. L5984 ...... All Endoskeletal Lower Extremity Prosthesis, Axial Rotation Unit, With Or Without Adjustability. L5986 ...... All Lower Extremity Prostheses, Multi-Axial Rotation Unit (Mcp Or Equal). L5987 ...... All Lower Extremity Prosthesis, Shank Foot System With Vertical Loading Pylon. L5988 ...... Addition To Lower Limb Prosthesis, Vertical Shock Reducing Pylon Feature. L5990 ...... Addition To Lower Extremity Prosthesis, User Adjustable Heel Height. L8035 ...... Custom Breast Prosthesis, Post Mastectomy, Molded To Patient Model. V2531 ...... Contact Lens, Scleral, Gas Permeable, Per Lens (For Contact Lens Modification, See 92325).

VII. DMEPOS Competitive Bidding B. Proposed Amendments to remove paragraph (d)(1) in its Program (CBP) Amendments In § 414.422(d) we propose to revise entirety. We are also proposing changes to the rest of paragraph (d). A. Background the following amendments: • We propose to add the acronym • We propose to remove the Medicare pays for certain DMEPOS ‘‘CHOW’’ after the title of the paragraph distinction of a ‘‘new entity’’ from items and services furnished within and use the acronym throughout the paragraph (d)(2)(ii) in its entirety, and competitive bidding areas based on the section where we previously wrote out retain the successor entity requirements payment rules that are set forth in in full text ‘‘change of ownership’’. in paragraph (d)(2)(i) with changes, as • section 1847 of the Social Security Act We propose to remove the we are aligning the CHOW requirements (the Act) and 42 CFR part 414, subpart notification requirement at paragraph for all entities, regardless of whether a F. We propose to revise the existing (d)(1) because we no longer believe it is ‘‘new’’ entity is formed as a result of the DMEPOS Competitive Bidding Program necessary for CMS to be notified 60 days CHOW. We also propose to revise the in advance when a contract supplier is requirement to submit the (CBP) regulations in § 414.422(d) on negotiating a CHOW. In past rounds of documentation described in change of ownership (CHOW) in the CBP, there have been situations in § 414.414(b) through (d) from 30 days recognition of the fact that CHOWs may which contract suppliers have prior to the anticipated effective date of occur on shorter timeframes than our undergone CHOWs within the 60-day the CHOW to instead require regulations previously contemplated. timeframe and they were unable to meet submission prior to the effective date of We also propose to revise § 414.423(f) the 60-day notice requirement due to the CHOW. We further propose to for the submission of a hearing request circumstances that were not fully within change the requirement on submission in notices of breach of contract. their control. We now recognize that the of a signed novation agreement 30 days 60-day notice requirement is a bit before the CHOW to instead require that onerous and as such we are proposing the novation agreement be submitted by

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the successor entity no later than 10 the request for a hearing must be b. Summary of the Data Contractor’s days after the effective date of the ‘‘submitted to’’ the CBIC rather than Presentation to the TEP CHOW. We want to allow flexibility for ‘‘received by’’ the CBIC. Previously, the i. Components of Dialysis Treatment the timing of submission of documents CBIC was only able to receive a written Costs and Limitations of Current Data since it may not always be possible for request via mail or fax for a hearing Collection the successor entity to submit the from a contract supplier, however, now The data contractor’s pre-TEP analysis applicable documentation 30 days contract suppliers have a secure online before the anticipated effective date of of CY 2016 cost report data showed that method to submit hearing requests. Now composite rate costs comprise nearly 90 the CHOW. Through our education and that hearing requests can be submitted outreach efforts, we will encourage the percent of average total treatment costs, online, it will be apparent to all parties successor entity to work with CMS to with capital, direct patient care labor, when the request for a hearing is submit draft documentation as far in and administrative costs representing advance as possible for CMS to review submitted, as the date on which the approximately 88 percent of total to ensure that the novation agreement is request was received by the CBIC was average composite rate cost per acceptable to CMS. We believe not apparent to suppliers in the past. treatment. Nevertheless, under current shortening the timeframe for submission Furthermore, this revision aligns with reporting practices, there are no data on from 30 days to 10 days would expedite language used throughout § 414.423. the patient- and treatment-level CMS’s determination on whether to We solicit public comments on these variation in the cost of composite rate allow transfer of the contract to the amendments and request that when items and services. These findings successor entity. We also propose that commenting on this section, underscore the importance of the successor entity must submit a commenters reference ‘‘DMEPOS CBP identifying variation in these costs to novation agreement that states that it Proposed Amendments.’’ inform the development of a refined assumes all obligations under the case-mix adjustment model. VIII. Requests for Information contract. ii. Data Collection Options • We propose to remove the phrase ‘‘new qualified’’ before ‘‘entity’’ and A. Data Collection The data contractor presented the replace it with the term ‘‘successor’’ in 1. Technical Expert Panel on Improving participants in the TEP with several paragraph (d)(3) as this is applicable to the Reporting of Composite Rate Costs options for optimizing data collection all successor entities. We also propose Under the ESRD PPS on composite rate items and services, to add the term ‘‘may’’ to make it clear and each option was specifically that the transfer of the entire contract to a. Background formulated to minimize reporting a successor entity is at CMS’ discretion burden for ESRD facilities where A Technical Expert Panel (TEP) was upon CMS’ review of all required possible. Feedback on these options and held on December 6, 2018 to discuss documentation. The revision would input on alternative approaches, as align with existing language in options for improving data collection to provided by the participants, would be paragraph (d)(4), which specifies that refine the ESRD PPS case-mix used to further develop practical CMS may transfer the portion of the adjustment model. CMS contracted with approaches for more accurate data contract if certain conditions are met. a data contractor to convene this TEP collection. • We propose to revise paragraph and conduct research and analysis to Among the options presented for (d)(4) by removing the ‘‘e.g.’’ refine the case-mix adjustment model. optimizing the collection of composite parenthetical after ‘‘distinct company’’ This TEP represented the first step in rate cost data were (1) improving the to retain only the example of a acquiring stakeholder and expert input accuracy of charges and/or itemizing the subsidiary, and noting it as ‘‘for to inform these refinements. The final use of composite rate services on claims; example’’ as we realized that it is the TEP report and other materials can be (2) reporting duration of each dialysis clearest example. In addition, some of found at: https://www.cms.gov/ treatment session on claims (3) the other examples were not accurate Medicare/Medicare-Fee-for-Service- identifying and allocating costs to (for example, a sole proprietor) and this Payment/ESRDpayment/Educational_ discrete categories of patients or patient could lead to confusion. We also Resources.html. characteristics that are associated with propose to remove the reference to ‘‘new high cost of treatment; and (4) qualified’’ before ‘‘entity’’ and replace it The TEP was comprised of 16 expert improving the reporting of facility-level with the term ‘‘successor,’’ as the stakeholders, including ESRD facilities, costs. Each of these options is described resulting entity in a transfer of a portion representatives of professional in the following sections. The TEP of the contract may not result in a associations, independent academic participants’ responses to these ‘‘new’’ entity but would always result in clinical researchers, and patient approaches are summarized in the Key a ‘‘successor’’ entity. In addition, we advocates. In addition, a select number Findings section at the end of this propose to remove the phrase ‘‘new of observers attended, including section. We note that our summary of qualified owner who’’ in paragraph representatives of governmental the key findings is based on a review of (d)(4)(i) and replace it with ‘‘successor agencies and independent policy the individual comments and is not entity that’’ to align with the language advisory groups. The TEP was organized meant to represent a consensus view used throughout § 414.422(d). We also into seven sessions, including an shared by all TEP participants, but propose to remove the acronym ‘‘i.e.’’ overview of the ESRD PPS and the cost rather to consolidate related suggestions and replace it with ‘‘that is.’’ components of dialysis treatment, four made by one or more participant. In § 414.423(f)(2), we currently topical sessions corresponding to iii. Improving the Accuracy of Charges require that a request for a hearing be potential data collection strategies, and ‘‘received by’’ the Competitive Bidding a final summary session. The data contractor presented two Implementation Contractor (CBIC) approaches for directly collecting data within 30 days from the date of the on the utilization of composite rate notice of breach of contract. We propose items and services. The first was to to revise paragraph (f)(2) to specify that require more accurate reporting of

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charges for each dialysis session. Recent likely have higher average per-treatment dependency; and (7) treatment and care analysis of charge data revealed little supply costs. for home dialysis patients. variation in charges for any given The data contractor proposed two During the TEP, participants approaches to collect treatment duration revenue center code associated with a identified additional factors associated data: (1) Use existing data from dialysis treatment, indicating that with higher treatment costs. These Consolidated Renal Operations in a facilities are using standardized charges. included hemodynamic instability, dual The second approach was to require Web-Enabled Network (CROWNWeb) on eligibility for Medicare and Medicaid, itemized reporting of all or a limited delivered dialysis minutes during the depression or mental illness, poor number of high cost composite rate monthly session when a laboratory functional status, no primary caregiver, items and services. Beginning in 2015,39 specimen is drawn to measure blood ESRD facilities were required to report urea nitrogen (BUN) or (2) have ESRD and institutionalized status or selected composite rate services that facilities report treatment duration on incarcerated or residence in a skilled were included on the Consolidated Medicare claims. For the latter, nursing facility. Billing List (CBL), however, the data treatment duration data could be A common thread among these factors contractor’s analysis of reporting on use reported by using a new HCPCS or is that they all require more intense use of these items showed that compliance revenue center code to indicate units of of labor, especially direct patient care has been minimal. Participants noted treatment time for each dialysis staff and highly specialized nursing or that these two options would be treatment or by updating the definition social work care or other intervention, burdensome for ESRD facilities. of the existing revenue center code for such as would be provided by staff to dialysis treatments so that the units iv. Collection of Data on Duration of assist in transfer for non-ambulatory correspond to treatment time instead of patients. Dialysis Treatment the number of treatments. ESRD A singular option that would provide facilities already report to CMS a single The data contractor described sufficient data to develop a refined case- monthly treatment time in CROWNWeb alternative approaches for collecting mix adjustment model is the collection for in-facility treatments, indicating that sufficient data on these composite rate of dialysis treatment duration for each facilities currently collect treatment costs to inform a refined case-mix session. If dialysis session time were duration.40 Moreover, many ESRD adjustment model. The first would reported for each dialysis treatment, facilities’ electronic health records entail reporting such items and services cost report and treatment-level data (EHR) systems automatically collect this as line items on the claim. The second could be integrated to infer differences information for every dialysis treatment, would involve grouping patients into a in composite rate costs across patients. minimizing additional burden of set of ‘‘high-risk’’ or ‘‘high-cost’’ patient In this paradigm, patient-level reporting this metric on claims. types, in a hierarchical fashion and apportioning costs to each patient differences in composite rate costs v. Capturing Variation in Costs grouping based on known use of could be attributed to two discrete Associated With Complex Patients categories: Differences due to dialysis services. treatment duration (measured in units of Participants on the TEP also vi. Facility-Level Costs time) and differences unrelated to discussed the variation in composite rate costs that is independent of treatment duration. Treatment duration The TEP also included discussion of treatment duration and associated with would not be used to directly adjust facility-level costs, identifying drivers of severity of illness or disability in the payment, rather, it would be used to these costs, and the ESRD facility dialysis patient population. In apportion composite rate costs that are characteristics that may result in cost currently only observable at the facility preparation for the TEP, the data contractor interviewed a number of differences across facility types and level to the patient or treatment level for potential revisions to the cost reports to use in the case-mix adjustment. Data on ESRD facilities to identify sources of composite rate cost variation associated better capture these costs. Participants the duration of dialysis session would on the TEP indicated that drivers of allow for a proportionately higher with the provision of care to more facility-level costs include: (1) Facility proportion of composite rate costs to be complex patients. Patient level-factors size (treatment volume and treatment allocated to patients with longer dialysis identified during the course of these capacity), which affects economies of treatment times. interviews and during the TEP included scale; (2) geographic location, which The data contractor provided seven points: (1) Maintenance of examples of ways that longer duration isolation rooms and use of dedicated affects both input prices and wages; (3) of dialysis time might be associated nurses to attend patients with active hospital versus freestanding status; (4) with increased treatment costs, hepatitis B infection; (2) treatment and ownership type; and (5) whether the including utility costs, accelerated care for incident dialysis patients (first facility offers specialized services, such depreciation on equipment, and lower 120 days); (3) treatment and care for as pediatric or home dialysis treatment. daily census counts, which, among catheterized patients; (4) pre- and post- These facility characteristics can affect other things, would result in increased dialysis session care for non-ambulatory both capital and labor costs, as well as per-treatment capital costs. Additional patients; (5) treatment and care for the costs for drugs, laboratory tests and labor hours for a patient with longer pediatric patients; (6) treatment of supplies. patients exhibiting behavioral problems treatments on average could increase c. Key Findings per-treatment labor costs, and patients related to mental illness/drug with increased use of dialysate and Based on a review of the individual water treatment supplies or equipment 40 Centers for Medicare & Medicaid Services (CMS) End-Stage Renal Disease Quality Incentive participant responses to each of the data Program (ESRD QIP) Payment Year (PY) 2021 collection options, CMS has 39 Department of Health and Human Services. Measure Technical Specifications. Page 23. summarized key conclusions in the Centers for Medicare and Medicaid Services. Available at: https://www.cms.gov/Medicare/ following sections. The sections are Change Request 8978. December 2, 2014 (pp 3–4). Quality-Initiatives-Patient-Assessment-Instruments/ https://www.cms.gov/Regulations-and-Guidance/ ESRDQIP/Downloads/PY-2021-Technical- arranged in the order of the topical Guidance/Transmittals/Downloads/R200BP.pdf. Specifications-.pdf. sessions, as they were presented earlier.

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i. Components of Dialysis Treatment resource use associated with complex invite comment on all of the options Costs and Limitations of Current Data patients, such as classifying resource proposed during this TEP and discussed Collection use by intensity of care provided or as part of this comment solicitation. We During this session, the participants tracking staff time across patients. agree with the participants on the TEP that the benefits of improving the ESRD agreed that capital, labor, and iv. Facility-Level Costs administrative costs make up the PPS case-mix adjustment model must be The participants stated that there are weighed against any additional ESRD majority of composite rate costs. They differences in cost at the facility level facility burden that could result from stated that the level of complexity of associated with the characteristics changes to claims and cost reporting. dialysis patients has been increasing presented in the Facility-level Drivers of over time, and noted some costs at the Cost session. They noted EHR practices e. Solicitation for Input and Comment: margins (for example, information are also associated with variation in Improving Data Collection on technology costs) that are not reflected facility-level cost. In addition, they Composite Rate Costs in cost reports. Participants were averse emphasized that treatment volume CMS seeks input on options for to reporting individualized charges to relative to capacity has a significant improving the reporting of composite reflect treatment-level variation in the financial impact on dialysis facilities; rate costs for the ESRD PPS. We believe items and services provided, unless this however, these costs currently are not improved reporting of both patient level reporting was somehow linked to reflected in cost reports. They also costs, as reported on claims, and facility payment. suggested that it might be beneficial to level costs, as reported on cost reports, ii. Duration of Dialysis Treatment reflect missed treatments through a is needed in order to obtain sufficient, capacity utilization measure on the cost high quality data to inform a refined To record time on dialysis, report and this could distinguish case mix adjusted model for the ESRD participants preferred that the data be between more costly missed treatments PPS. We are seeking comments on, or collected on Medicare claims. They did and less costly planned absences, as the elaborations of, the options presented not support using existing CROWNWeb latter can be adjusted so that the facility and discussed during the TEP, data on treatment duration, as there chair is filled. The participants also described previously in section were too many questions about its indicated that rural facilities have costs VIII.A.1.b.ii of this proposed rule, as completeness and timeliness. They not incurred by non-rural facilities, even well as novel approaches for improving agreed that if duration of dialysis among facilities with similar treatment the reporting of patient-level and treatment time is collected on claims volume, and do not believe the low facility-level costs that are not described that it should be reported in actual volume payment adjustment and rural here. CMS will consider new input from minutes dialyzed and not, for example, adjuster to be redundant. stakeholders as we develop in 15-minute increments. The methodologies for implementing select d. Summary participants cautioned that reporting changes to claims and cost reports that time on dialysis on the claims would This TEP focused on data collection serve to elucidate composite rate costs. place additional burden on facilities, on composite rate costs to inform the CMS has not endorsed any particular but for facilities with EHRs, the burden development of a more refined case-mix method or option at this time. associated with the collection of dialysis adjustment model for the ESRD PPS. treatment time is expected to be small Currently two equations are used to i. Input Sought on Identifying and temporary because the information calculate the base rate for payment: (1) Components of Composite Rate Costs is already collected. Collecting time on One at the facility level and, (2) one at During the TEP, the data contractor dialysis could be difficult to accomplish the patient or treatment level—because identified six cost components for ESRD facilities that do not use EHRs. items in the composite rate are not comprising composite rate costs for the Some participants maintained that collected at the patient level.41 ESRD PPS. These include: (1) Capital, certain factors related to patient While formerly separately billable (2) administrative, (3) labor, (4) drug, (5) complexity—such as comorbidities and items and services are itemized at the laboratory and, (6) supply costs. Options mental health status—that are treatment level on claims and also were presented to improve the precision associated with treatment costs are reflected in cost reports, composite rate and accuracy of reporting costs for each unrelated to treatment duration. services, which comprise the bulk of the component. Data on costs of some total costs for dialysis treatment are not components, including capital, iii. Identifying Costs Associated With itemized and can only be estimated at administrative and labor, are found Complex Patients the facility level from cost reports. chiefly in facility cost reports and reflect The participants expressed support Charges for these services, as reported spending at the facility level. These for improving consistency in cost on claims, show little variation across facility-level costs, in combination with reporting across facilities. They facilities and cannot be used for treatment counts can be used to estimate recommended clarifying cost report estimating patient- or treatment-level patient or treatment level composite rate instructions to ensure comparable variation in cost. Solutions for costs. Data on other cost components, reporting across facilities. They agreed optimizing data collection on individual including drugs, laboratory tests and that labor is the major source of patient- use of composite rate services were supplies, can be found both on the cost level cost variation, but expressed proposed by the data contractor and reports and on claims, however concern that allocating labor costs to the discussed by the participants. CMS’ composite rate laboratory and supply patient level or even the patient type current goal, as emphasized throughout costs are not specified on the cost would pose significant challenges. The the TEP, is to explore options to report. Basic treatment charges are seen participants noted that certain high-cost improve the identification of per- to vary little across patients or across items and services used to treat complex treatment composite rate costs, and we facilities. Cost report data were patients, such as isolation rooms or lifts, questioned by the participants with could be easily itemized on claims and 41 Medicare Claims Processing Manual. Chapter 8—Outpatient ESRD Hospital, Independent Facility, regard to their accuracy and reliability. reported in cost reports. They proposed and Physician/Supplier Claims. (Rev. 4202, 01–18– Therefore, CMS seeks further input on alternative approaches for quantifying 19). Page 7/143. ways to improve (1) the accuracy of

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charges and (2) the precision and services as capital equipment use, water include the following: First, to the reliability with which cost composite treatment and dialysate are allocated. extent labor is the dominant source of rate costs are identified and reported in We invite comments on the option of variation in cost in providing dialysis cost reports. collecting duration of treatments data, services to complex patients, please Commenters are invited to submit including responses to the following describe the amount and type of labor their responses to the following questions: required to care for patients with the questions and requests: • Which of the six composite rate cost conditions described above or any other • Do the six cost components include components (capital, administrative, conditions which complicate the all aspects of dialysis treatment costs labor, drug, laboratory, and supply provision of basic dialysis treatment. covered by Medicare? costs) are most likely to vary with Second, please describe other treatment duration? dimensions of dialysis care and ++ If not, please describe any further • component costs within each Should new information for these treatment for which composite rate costs component? cost components be collected on cost vary independent of treatment duration. ++ Within each component, are there reports, for use in better inferring the Third, are there discrete, high-cost significant costs that are not currently composite rate costs associated with composite rate items and services that captured in cost reports? treatment duration? If yes, please vary at the patient level that could be • The data contractor found that most describe the additional information that feasibly itemized on claims? Fourth, composite rate costs are embedded in would be needed and how this how could a set of mutually exclusive, the capital, administrative and labor information could be used. exhaustive patient groups be • Describe any challenges that would components. Given the relatively small constructed to incorporate patients with be encountered by ESRD facilities in contribution of drugs, laboratory tests, common patterns of resource use? Fifth, reporting treatment duration, using a and supplies to composite rate costs, is what challenges might be faced in line item corresponding to units of time there a justification for any further implementing the proposed reporting as a new revenue center code on the consideration of composite rate costs solutions (a) on claims and (b) on cost claim. reports? Sixth, are pediatric and home from capital, labor and administrative • Describe any alternatives to the use dialysis costs accurately apportioned components? of dialysis treatment duration that could across cost components in cost reports? • Why is there such limited variation be used as a proxy for intensity of If not, please describe. in reported charges? Would it be useful resource utilization and which can be to focus on improving reporting of these reported at the patient/treatment level. iv. Input Sought on Collection of charges instead of collecting new • Do facilities record the total time Facility-Level Data information on cost reports or claims? the patient spends in the facility before During the TEP the data contractor Why is there such limited reporting of and after the actual dialysis treatment presented a framework for considering costs for items and services included in time, as well as the duration of the facility-level drivers of cost, which meet the CBL? Are there subsets of composite actual dialysis treatment? If so, please two criteria: (i) They are independent of rate items and services that could be describe any obstacles to reporting this patient-level factors, and (ii) they affect successfully reported on claims? information on the claim. the cost of dialysis treatment. The TEP debated each criterion for facility-level ii. Input Sought on Collection of iii. Input Sought on Collection of Data Duration of Treatment Data cost drivers, including facility size and To Identify Sources of Variation in realized treatment capacity. Geographic During the TEP, the data contractor Treatment Costs Associated With location affects wages and prices of proposed a paradigm by which to Complex Patients goods and services. While some consider select changes to cost reporting The data contractor presented a list of commenters have suggested that rural that would reveal patient-level variation conditions, identified during pre-TEP ESRD facilities incur higher costs, the in costs, differentiating costs by those interviews with ESRD facilities, data contractor’s analysis of 2016 cost which can be attributed to dialysis associated with higher cost treatment for report data for the December 2018 TEP treatment duration and those unrelated dialysis patients. During the TEP, the indicates that overall composite rate to treatment duration. Capturing data on participants added to this list. The costs for rural facilities may be lower these two types of differences was the combined list of these conditions is than for urban facilities. Further thrust of the discussion during much of described in section VIII.A.1.b.v of this analysis by cost component suggests the TEP. CMS seeks further input on proposed rule. that with the exception of drug costs, these two elements of cost differential. The data contractor also presented urban facilities incur higher costs for Dialysis session duration data could alternative approaches for collecting each composite rate cost component. be used to refine calculations of per- sufficient data on these composite rate Ownership and other organizational treatment costs by increasing specificity costs so as to inform a refined case-mix factors, such as whether the facility in the allocation of composite rate costs. model. One approach would entail administers a home dialysis program or Applying this change only to current reporting such items and services as line serves the pediatric population also data collection practices would suffice items on the claim. The second would have a bearing on cost. to account for treatment level involve grouping patients into a set of CMS seeks input from stakeholders differences in costs due to length of ‘‘high risk’’ or ‘‘high cost’’ patient types, regarding the further identification of treatment. Duration data would allow in a hierarchical fashion, and facility-level drivers of cost, especially for the distribution of composite rate apportioning costs to each patient those that affect the cost of composite component costs in such a way that a grouping based on known use of rate services. Please consider the higher proportion of a facility’s services. There was no consensus following questions: First, what facility composite rate costs could be attributed among participants with regard to the level factors should be added or further to patients with longer dialysis best way to capture these costs. specified in the cost report to better treatment times. This would improve CMS solicits comments and reflect actual facility costs for the the precision with which costs for the suggestions about how to best capture provision of composite rate items and use of such composite rate items and these costs. Some questions to consider services? Second, what are costs

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incurred by pediatric dialysis units that commenters reference ‘‘RFI—Data Register titled ‘‘Medicare Program; do not vary at the patient-level? Third, Collection.’’ Changes to the Competitive Acquisition what types of costs do facilities of Certain Durable Medical Equipment, B. Wage Index Comment Solicitation providing home dialysis services incur Prosthetics, Orthotics and Supplies that do not vary at the patient-level? As discussed in section II.B.5.b of this (DMEPOS) by Certain Provisions of the Fourth, how do variations in drivers of proposed rule, historically, we have Medicare Improvements for Patients and facility costs affect composite rate costs calculated the ESRD PPS wage index Providers Act of 2008 (MIPPA)’’ that at the facility level? Fifth, to what extent values using unadjusted wage index implemented certain changes to the are these composite rate costs outside values from another provider setting. DMEPOS CBP (74 FR 2873). the facility’s control? Sixth, what are the Stakeholders have frequently Specifically, the rule implemented challenges or barriers to reporting commented on certain aspects of the section 154 of MIPPA (Pub. L. 110–275), missed treatments on claims and/or cost ESRD PPS wage index values and their which delayed implementation of reports? impact on payments. We are soliciting Round One of the program, required comments on concerns stakeholders v. Other Input Needed CMS to conduct a second Round One may have regarding the wage index used competition in 2009, and mandated We also seek to gather responses to to adjust the labor-related portion of the certain changes for both the Round One the following questions that arose ESRD PPS base rate and suggestions for Rebid and subsequent rounds of the during the TEP. Answers to these possible updates and improvements to program. In the January 2009 interim questions from the stakeholder the geographic wage index payment final rule, we indicated that we would community will help us to develop and adjustment under the ESRD PPS. be considering alternatives for refine reporting options for composite We solicit public comments for the competition of diabetic testing supplies rate costs. request for information regarding the in future notice and comment Beginning January 1, 2015, ESRD wage index and request that when rulemaking. facilities have been required to itemize commenting on this section, On July 13, 2010 we published a on claims the use of composite rate commenters reference ‘‘RFI—Wage 42 proposed rule in the Federal Register drugs listed on the CBL. As presented Index.’’ titled ‘‘Medicare Program; Payment at the TEP, the data contractor’s analysis Policies Under the Physician Fee of 2016 claims data revealed that C. Comment Solicitation on Sources of Market-Based Data Measuring Sales of Schedule and Other Revisions to Part B approximately 40 percent of facilities for CY 2011’’ (75 FR 40211), in which were not reporting these items. We are Diabetic Testing Strips to Medicare Beneficiaries (Section 50414 of the we discussed alternatives for requesting that commenters identify any competition of diabetic testing supplies obstacles that might be preventing ESRD Bipartisan Budget Act of 2018) and proposed the implementation of a facilities from reporting the use of these 1. Background revised national mail order CBP for composite rate drugs. Also, are there diabetic testing supplies. Under the any drugs listed in the most recent CBL Section 1847(a)(2)(A) of the Act proposed mail order DMEPOS CBP, we that are particularly challenging to mandates competitive bidding programs would award contracts to suppliers to report? If there are, please describe for ‘‘covered items’’ and supplies used furnish these items across the nation to those challenges. in conjunction with DME such as blood The participants mentioned that glucose monitors used by beneficiaries beneficiaries who elect to have Medicare Advantage and other with diabetes. The supplies used with replacement diabetic testing supplies secondary payers will sometimes reject these blood glucose monitors (such as delivered to their residence. Suppliers claims that include billing for certain blood glucose test strips and lancets) are wishing to furnish these items through items and services, such as oral referred to under the DMEPOS CBP as the mail to Medicare beneficiaries medications. We are requesting diabetic supplies or diabetic testing would be required to submit bids to comments on the specific billing supplies. In the April 10, 2007 final rule participate in the national mail order practices that lead to such claims being published in the Federal Register titled CBP for diabetic testing supplies. Section 154(d) of MIPPA modified rejected, along with the specific items ‘‘Medicare Program; Competitive section 1847(b)(10) of the Act to and services that are rejected by payers. Acquisition for Certain Durable Medical The participants expressed Equipment, Prosthetics, Orthotics, and prohibit CMS from awarding a contract reservations about the reliability of cost Supplies (DMEPOS) and Other Issues’’ to a supplier of diabetes test strips if the report data and also about the (72 FR 17992), which implemented the supplier’s bid does not cover at least 50 comparability of cost reports between DMEPOS CBP, we established percent, by volume, of all types of freestanding and hospital-based ESRD regulations to implement competitions diabetes test strips on the market. With facilities. on a regional or national level for respect to any competition for diabetic We are also soliciting comments certain items such as diabetic testing testing strips after the first round of regarding suggested specific changes to supplies that are furnished on a mail competition, a supplier must the cost reports or cost report order basis. We explained our rationale demonstrate that its bid to furnish instructions that would be most useful for establishing a national DMEPOS CBP diabetic testing strips covers the types of to improve the consistency of reporting for items furnished on a mail order basis diabetic testing strip products that, in across facilities. in the May 1, 2006 proposed rule the aggregate and taking into account We solicit public comments for the published in the Federal Register titled volume for the different products, cover request for information regarding data ‘‘Medicare Program; Competitive at least 50 percent of all such types of collection and request that when Acquisition for Certain Durable Medical products on the market. CMS and the commenting on this section, Equipment, Prosthetics, Orthotics, and CBIC refer to this rule as the ‘‘50 percent 43 Supplies (DMEPOS) and Other Issues’’ rule.’’ Section 1847(a)(10)(A) of the 42 Department of Health and Human Services. (71 FR 25669) and in the April 2007 Centers for Medicare and Medicaid Services. 43 https://www.dmecompetitivebid.com/Palmetto/ Change Request 8978. December 2, 2014 (pp 3–4). final rule (72 FR 18018). Cbic.nsf/files/R2_Fact_Sheet_Mail-Order_Diabetic_ https://www.cms.gov/Regulations-and-Guidance/ On January 16, 2009, we published an Supplies.pdf/$FIle/R2_Fact_Sheet_Mail-Order_ Guidance/Transmittals/Downloads/R200BP.pdf. interim final rule in the Federal Diabetic_Supplies.pdf.

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Act also specified that the volume for available to Medicare beneficiaries (75 section 1847(b)(10)(A) of the Act to the different products may be FR 40214). We said we would apply this establish additional rules for the determined in accordance with data rule to non-mail order competitions competition for diabetic testing strips. (which may include market based data) and/or local competitions conducted for Section 1847(b)(10)(A) of the Act now recognized by the Secretary. diabetic testing strips after Round One requires that for bids to furnish diabetic Section 1847(b)(10)(B) of the Act of the DMEPOS CBP (75 FR 40214). testing strips on or after January 1, 2019, mandated that the Office of Inspector In the November 29, 2010 final rule the volume for such products be General (OIG) conduct a study before with comment period published in the determined by the Secretary through the 2011 to determine the types of diabetic Federal Register titled ‘‘Medicare use of multiple sources of data (from testing strips by volume that could be Program; Payment Policies Under the mail order and non-mail order Medicare used by CMS for the purpose of Physician Fee Schedule and Other markets), including market-based data evaluating bidders in the national mail Revisions to Part B for CY 2011’’ (75 FR measuring sales of diabetic testing strip order CBP for diabetic testing supplies. 73567), we established requirements for products that are not exclusively sold by Under the DMEPOS CBP, bidding the national mail order CBP for diabetic a single retailer from such markets. suppliers are required to provide testing supplies. We finalized the The OIG reports to CMS the Medicare information on the products they plan proposed special 50 percent rule Part B market share of mail order to furnish if awarded a contract. We mandated by section 1847(b)(10)(A) of diabetic test strips before each round of proposed in the July 2010 proposed rule the Act (75 FR 73611). We finalized our the Medicare national mail order CBP, proposal to require each bidder in the (75 FR 40211) to use information and pursuant to section 1847(b)(10)(A) national mail order CBP for diabetic submitted by bidding suppliers and of the Act, the OIG will now report on testing supplies to demonstrate that its information on the market share the non-mail order diabetic test strip bid covers types of diabetic testing strip (volume) of the various diabetic testing Medicare Part B market. On January 19, products that, in the aggregate and strip products to educate suppliers on 2019, the OIG released a report that taking into account volume for the meeting the requirements of this special documented the Medicare Part B market different products, cover 50 percent (or 50 percent rule. We noted that it may be share of mail order diabetic test strips such higher percentage as the Secretary necessary to obtain additional for the 3-month period of April through may specify) of all such types of 45 information from suppliers such as June 2018. On March 19, 2019, the products (75 FR 73611). We said that invoices or purchase orders to verify OIG released another report that the 50 percent threshold would ensure that the requirements in the statute have documented the Medicare Part B market that beneficiaries have access to mail been met (75 FR 40214). We proposed share of non-mail-order diabetic test order delivery of the top selling diabetic 46 that suppliers be required to strip for the same 3-month period. test strip products from every contract demonstrate that their bids cover the These data briefs represent OIG’s third supplier, and we adopted the 50 percent minimum 50-percent threshold round of diabetic test strip Medicare rule because we believed this was provided in the statute, but we invited market share reports since 2010, but this reflective of what suppliers were comments on whether a higher is the first series of reports that includes currently doing and ensured appropriate 47 threshold should be used (75 FR 40214). non-mail-order diabetic test strip data. access for beneficiaries (75 FR 73611). We proposed the 50 percent threshold Because section 1847(b)(10)(A) of the We also said that the OIG was in part because we believed that all Act now requires the use of ‘‘multiple conducting a study to generate volume suppliers have an inherent incentive to sources of data,’’ we are requesting data for various diabetic testing strip furnish a wide variety of types of public comments on other potential products furnished on a mail order basis diabetic testing products to generate a sources of data (sources other than the (75 FR 73572). We said that we would wider customer referral base (75 FR OIG), that fulfill the data requirements use this data as guidance to implement 40214). The 50 percent threshold would set forth in section 1847(b)(10)(A) of the this special rule for mail order contract ensure that beneficiaries have access to Act. We are requesting comments on suppliers and ensure that their bids mail order delivery of the top-selling other potential sources of data because cover at least 50 percent of the volume diabetic test strip products (75 FR the word ‘‘multiple’’ in the phrase of testing strip products currently 40214). In addition, we proposed an ‘‘multiple sources of data’’ could mean furnished to beneficiaries via mail order ‘‘anti-switching provision’’ that we said that we should use more than one (75 FR 73572). The OIG was required to would obviate the need to establish a source of data, and that the OIG is one complete their study before 2011 and threshold of greater than 50 percent for source of data. We are therefore we said we would make their data the purpose of implementing this requesting comments from the public on available to the public (75 FR 73572). special rule because the contract other potential sources of data regarding The OIG released its study in 2010, the mail order and non-mail order suppliers would not be able to carry a and the OIG has since determined the limited variety of products and switch Medicare markets for diabetic testing market shares of the types of diabetes strips through this request for beneficiaries to those products (75 FR test strips before each round of 40214). For purposes of implementing information. In particular, we are competitive bidding.44 The data from the special rule in section seeking data that: this series of reports informs CMS about • 1847(b)(10)(A) of the Act, we proposed Has a sufficient sample size, and is the types of diabetes test strips that to define ‘‘diabetic testing strip unbiased and credible; suppliers provide to Medicare • product’’ as a specific brand and model Separately provides the market beneficiaries via mail order. of test strip, as we said that was the best shares of the mail-order Medicare Part B way to distinguish among different 2. Current Issues market, and the non-mail order products (75 FR 40214). Therefore, we Medicare Part B market (does not The Bipartisan Budget Act of 2018 combine the two markets into one); and planned to use market based data for (BBA) was enacted on February 9, 2018, specific brands and models of diabetic and section 50414 of the BBA amended 45 https://oig.hhs.gov/oei/reports/oei-04-18- test strips to determine the relative 00440.pdf. market share or volume of the various 44 https://oig.hhs.gov/reports-and-publications/ 46 https://oig.hhs.gov/oei/reports/oei-04-18- products on the market that are workplan/summary/wp-summary-0000311.asp. 00441.pdf.

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• Includes market-based data final rule (80 FR 69069), we stated that (83 FR 57001 through 57002). Under measuring sales of diabetic testing strip it was reasonable to assume that this methodology, 300 facilities would products that are not exclusively sold by Medical Records and Health be selected each year to submit to CMS a single retailer from such markets. Information Technicians, who are not more than 10 records, and we would responsible for organizing and managing reimburse these facilities for the costs IX. Collection of Information health information data, are the associated with copying and mailing the Requirements individuals tasked with submitting requested records. The burden A. Legislative Requirement for measure data to CROWNWeb and associated with these validation Solicitation of Comments NHSN, as well as compiling and requirements is the time and effort Under the Paperwork Reduction Act submitting patient records for purpose necessary to submit the requested of 1995, we are required to provide 60- of the data validation studies, rather records to a CMS contractor. We day notice in the Federal Register and than a Registered Nurse, whose duties estimated that the aggregate cost of the solicit public comment before a are centered on providing and CROWNWeb data validation each year collection of information requirement is coordinating care for patients. The mean will be approximately $30,885 (750 × submitted to the Office of Management hourly wage of a Medical Records and hours $41.18), or an annual total of Health Information Technician is $21.16 approximately $103 ($30,885/300 and Budget (OMB) for review and 48 approval. In order to fairly evaluate per hour. Fringe benefit and overhead facilities) per facility in the sample. In whether an information collection are calculated at 100 percent. Therefore, this proposed rule, we are updating using these assumptions, we estimate an requirement should be approved by these estimates using a newly available hourly labor cost of $42.32 as the basis OMB, section 3506(c)(2)(A) of the wage estimate of a Medical Records and of the wage estimates for all collections Paperwork Reduction Act of 1995 Health Information Technician and have of information calculations in the ESRD requires that we solicit comment on the made no other changes to our QIP. We have adjusted these employee following issues: methodology for calculating the annual • The need for the information hourly wage estimates by a factor of 100 burden associated with the CROWNWeb collection and its usefulness in carrying percent to reflect current HHS validation study. We estimate that it out the proper functions of our agency. department-wide guidance on would take each facility approximately • The accuracy of our estimate of the estimating the cost of fringe benefits and 2.5 hours to comply with this information collection burden. overhead. These are necessarily rough requirement. If 300 facilities are asked • The quality, utility, and clarity of adjustments, both because fringe to submit records, we estimate that the the information to be collected. benefits and overhead costs vary total combined annual burden for these • Recommendations to minimize the significantly from employer to employer facilities would be 750 hours (300 information collection burden on the and because methods of estimating facilities × 2.5 hours). Since we affected public, including automated these costs vary widely from study to anticipate that Medical Records and collection techniques. study. Nonetheless, there is no practical Health Information Technicians or We are soliciting public comment on alternative and we believe that these are similar administrative staff would each of these issues for the following reasonable estimation methods. submit these data, we estimate that the sections of this document that contain We used this updated wage estimate, aggregate cost of the CROWNWeb data information collection requirements along with updated facility and patient validation each year would be (ICRs): counts as well as a refined estimate of approximately $31,740 (750 hours × Using the following format describe the time spent completing data entry for $42.32), or an annual total of the information collection requirements reporting data, to re-estimate the total approximately $105.80 ($31,740/300 that are in each section. information collection burden in the facilities) per facility in the sample. The ESRD QIP for PY 2022 that we B. Requirements in Regulation Text increase in our burden estimate is due discussed in the CY 2019 ESRD QIP to an updated wage estimate for Medical In sections II.B.1, II.B.2 and II.B.3 of final rule (83 FR 57050 through 57052) Records and Health Information this proposed rule, we are proposing and to estimate the total information Technicians or similar staff and is not changes to regulatory text for the ESRD collection burden in the ESRD QIP for the result of any policies proposed in PPS in CY 2020. However, the changes PY 2023. We provide the re-estimated this proposed rule. The burden that are being proposed do not impose information collection burden associated with these requirements is any new information collection associated with the PY 2022 ESRD QIP captured in an information collection requirements. and the newly estimated information request (OMB control number 0938– C. Additional Information Collection collection burden associated with the 1289). PY 2023 ESRD QIP in sections IV.C.2 Requirements In section IV.B.7 of this proposed and IV.C.3 of this proposed rule. This proposed rule does not impose rule, we propose to continue in PY 2023 any new information collection 2. Estimated Burden Associated With and subsequent payment years the requirements in the regulation text, as the Data Validation Requirements for PY NHSN data validation study using the specified above. However, there are 2022 and PY 2023 methodology finalized in the CY 2019 changes in some currently approved In the CY 2019 ESRD PPS final rule, ERD PPS final rule for PY 2022 (83 FR information collections. The following we finalized a policy to adopt the 57001 through 57002) and to adopt the is a discussion of these information CROWNWeb data validation NHSN validation study as a permanent collections. methodology that we previously feature of the ESRD QIP. Under this methodology, we would select 300 1. ESRD QIP—Wage Estimates adopted for the PY 2016 ESRD QIP as the methodology we would use to facilities for participation in the PY To derive wages estimates, we used validate CROWNWeb data for all 2023 validation study. A CMS data from the U.S. Bureau of Labor payment years, beginning with PY 2021 contractor would send these facilities Statistics’ May 2018 National requests for 20 patients’ records for each Occupational Employment and Wage 48 https://www.bls.gov/oes/current/ of the first 2 quarters of CY 2021 (for a Estimates. In the CY 2016 ESRD PPS oes292071.htm. total of 40 patient records per facility).

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The burden associated with these data estimated that the amount of time governments or communities (also validation requirements is the time and required to submit measure data to referred to as ‘‘economically effort necessary to submit the requested CROWNWeb was 2.5 minutes per significant’’); (2) creating a serious records to a CMS contractor. Using the element and used a rounded estimate of inconsistency or otherwise interfering newly available wage estimate of a 0.042 hours in our calculations. In this with an action taken or planned by Medical Records and Health proposed rule, we did not use a rounded another agency; (3) materially altering Information Technician, we estimate estimate of the time needed to complete the budgetary impacts of entitlement that it would take each facility data entry for CROWNWeb reporting. As grants, user fees, or loan programs or the approximately 10 hours to comply with a result of these changes in the rights and obligations of recipients this requirement. If 300 facilities are methodology, we estimate that the PY thereof; or (4) raising novel legal or asked to submit records, we estimate 2022 burden is $205 million (or 4.8 policy issues arising out of legal that the total combined annual burden million hours), and the net incremental mandates, the President’s priorities, or for these facilities would be 3,000 hours burden from PY 2022 to PY 2023 is $0 the principles set forth in the Executive (300 facilities × 10 hours). Since we (or 0 hours). Order. anticipate that Medical Records and A regulatory impact analysis (RIA) X. Response to Comments Health Information Technicians or must be prepared for major rules with similar staff would submit these data, Because of the large number of public economically significant effects ($100 we estimate that the aggregate cost of comments we normally receive on million or more in any 1 year). We the NHSN data validation each year Federal Register documents, we are not estimate that this rulemaking is would be approximately $126,960 able to acknowledge or respond to them ‘‘economically significant’’ as measured (3,000 hours × $42.32), or a total of individually. We will consider all by the $100 million threshold, and approximately $423.20 ($126,960/300 comments we receive by the date and hence also a major rule under the facilities) per facility in the sample. The time specified in the DATES section of Congressional Review Act. Accordingly, increase in our burden estimate is due this preamble, and, when we proceed we have prepared a RIA that to the best to an updated wage estimate for Medical with a subsequent document, we will of our ability presents the costs and Records and Health Information respond to the comments in the benefits of the rulemaking. Technicians or similar staff and is not preamble to that document. We solicit comments on the regulatory impact analysis provided. the result of any policies proposed in XI. Economic Analyses this proposed rule. The burden 2. Statement of Need associated with these requirements is A. Regulatory Impact Analysis a. ESRD PPS captured in an information collection 1. Introduction request (OMB control number 0938– This rule proposes a number of 1340). We have examined the impacts of this routine updates and several policy rule as required by Executive Order changes to the ESRD PPS in CY 2020. 3. CROWNWeb Reporting Requirements 12866 on Regulatory Planning and for PY 2022 and PY 2023 The proposed routine updates include Review (September 30, 1993), Executive the CY 2020 wage index values, the To determine the burden associated Order 13563 on Improving Regulation wage index budget-neutrality with the CROWNWeb reporting and Regulatory Review (January 18, adjustment factor, and outlier payment requirements, we look at the total 2011), the Regulatory Flexibility Act threshold amounts. Failure to publish number of patients nationally, the (RFA) (September 19, 1980, Pub. L. 96– this proposed rule would result in ESRD number of data elements per patient- 354), section 1102(b) of the Social facilities not receiving appropriate year that the facility would be required Security Act, section 202 of the payments in CY 2020 for renal dialysis to submit to CROWNWeb for each Unfunded Mandates Reform Act of 1995 services furnished to ESRD patients. measure, the amount of time required (March 22, 1995; Pub. L. 104–4), for data entry, the estimated wage plus Executive Order 13132 on Federalism b. AKI benefits applicable to the individuals (August 4, 1999), the Congressional This rule also proposes routine within facilities who are most likely to Review Act (5 U.S.C. 804(2) and updates to the payment for renal be entering data into CROWNWeb, and Executive Order 13771 on Reducing dialysis services furnished by ESRD the number of facilities submitting data Regulation and Controlling Regulatory facilities to individuals with AKI. to CROWNWeb. In the CY 2019 ESRD Costs (January 30, 2017). Failure to publish this proposed rule PPS final rule, we estimated that the Executive Orders 12866 and 13563 would result in ESRD facilities not burden associated CROWNWeb direct agencies to assess all costs and receiving appropriate payments in CY reporting requirements for the PY 2022 benefits of available regulatory 2020 for renal dialysis services ESRD QIP was approximately $202 alternatives and, if regulation is furnished to patients with AKI in million. We are not proposing any necessary, to select regulatory accordance with section 1834(r) of the changes that would affect the burden approaches that maximize net benefits Act. associated with CROWNWeb reporting (including potential economic, requirements for PY 2022 or PY 2023. environmental, public health and safety c. ESRD QIP However, we have re-calculated the effects, distributive impacts, and This rule proposes to implement burden estimate for PY 2022 using equity). Section 3(f) of Executive Order requirements for the ESRD QIP, updated estimates of the total number of 12866 defines a ‘‘significant regulatory including proposals to modify the dialysis facilities, the total number of action’’ as an action that is likely to scoring methodology for the NHSN patients nationally, and wages for result in a rule: (1) Having an annual Dialysis Event reporting measure Medical Records and Health effect on the economy of $100 million beginning with the PY 2022 ESRD QIP; Information Technicians or similar staff or more in any 1 year, or adversely and a proposal to convert the STrR clinical as well as a refined estimate of the materially affecting a sector of the measure to a reporting measure; and a number of hours needed to complete economy, productivity, competition, proposal to convert the NHSN data entry for CROWNWeb reporting. In jobs, the environment, public health or validation study into a permanent the CY 2019 ESRD PPS final rule, we safety, or state, local or tribal feature of the program using the

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methodology finalized for the PY 2022 dialysis equipment and supplies and million in estimated payment NHSN validation study. In addition, we their costs. reductions across all facilities. are proposing to establish CY 2021 and b. AKI d. DMEPOS CY 2019 as the performance period and baseline period, respectively, for the PY We are estimating approximately $42 i. Establishing Payment Amounts for 2023 ESRD QIP for all measures. For million that would now be paid to ESRD New DMEPOS Items and Services future ESRD QIP payment years, we facilities for dialysis treatments This rule proposes to establish a gap- propose to adopt automatically a provided to AKI beneficiaries. filling methodology for new items and performance and baseline period for c. ESRD QIP services. The fiscal impact of each year that is 1 year advanced from establishing payment amounts of new those specified for the previous For PY 2022, we have re-estimated the costs associated with information items based on the proposed gap-filling payment year. collection requirements under the methodology cannot be determined due d. DMEPOS Program with updated estimates of the to the uniqueness of new items and their costs. i. Establishing Payment Amounts for total number of dialysis facilities, the New DMEPOS Items and Services (Gap- total number of patients nationally, ii. Adjusting Payment Amounts for Filling) wages for Medical Records and Health DMEPOS Items and Services Gap-Filled Information Technicians or similar staff, Using Supplier or Commercial Prices This rule proposes to establish a gap- and a refined estimate of the number of filling methodology. While these adjustments would hours needed to complete data entry for decrease fee schedule amounts that have ii. Adjusting Payment Amounts for CROWNWeb reporting. We have made been established using supplier or DMEPOS Items and Services Gap-Filled no other changes to our methodology for commercial prices by less than 15 Using Supplier or Commercial Prices calculating the annual burden percent, the savings are considered a associated with the information This rule proposes a method for small offset to the potential increase in collection requirements for with the costs of establishing fee schedule making a one-time adjustment to the CROWNWeb validation study, the gap-filled fee schedule amounts in cases amounts based on supplier invoices or NHSN validation study, and prices from commercial payers. The where prices decrease by less than 15 CROWNWeb reporting. None of the percent within 5 years of establishing fiscal impact for this provision is policies proposed in this proposed rule therefore considered negligible. the initial fee schedule amounts. would affect our estimates of the annual e. Conditions of Payment To Be Applied burden associated with the Program’s e. Conditions of Payment To Be Applied to Certain DMEPOS Items information collection requirements. to Certain DMEPOS Items We also re-estimated the payment This rule proposes to streamline the This proposed rule would streamline reductions under the ESRD QIP to the requirements for ordering DMEPOS requirements for ordering DMEPOS correct an error in the way the weights items, and to identify the process for items. It would also develop one Master were redistributed when estimating the List of DMEPOS items potentially subjecting certain DMEPOS items to a PY 2022 payment reductions for the CY face-to-face encounter and written order subject to a face-to-face encounter, 2019 ESRD PPS final rule (83 FR 57060) written orders prior to delivery and/or prior to delivery and/or prior and in accordance with the proposed authorization as a condition of payment. prior authorization requirements under policy changes described earlier, The fiscal impact of these requirements the authority provided under sections including the proposed changes to the cannot be estimated as this rule only 1834(a)(1)(E)(iv), 1834(a)(11)(B), and scoring methodology for the NHSN identifies all items that are potentially 1834(a)(15) of the Act. Dialysis Event reporting measure and subject to the face-to-face encounter and 3. Overall Impact the proposed conversion of the STrR written order prior to delivery measure from a clinical measure to a requirements and/or prior authorization. a. ESRD PPS reporting measure. We also updated the We estimate that the proposed payment reduction estimates using 4. Regulatory Review Cost Estimation revisions to the ESRD PPS would result newly available data for the PPPW If regulations impose administrative in an increase of approximately $210 clinical measure and the Ultrafiltration costs on private entities, such as the million in payments to ESRD facilities reporting measure and more recent data time needed to read and interpret this in CY 2020, which includes the amount for the other measures in the ESRD QIP proposed rule, we should estimate the associated with updates to the outlier measure set. We estimate that these cost associated with regulatory review. thresholds, payment rate update, updates would result in an overall Due to the uncertainty involved with updates to the wage index, and the impact of $219 million as a result of the accurately quantifying the number of proposal to change the basis of payment policies we have previously finalized entities that will review the rule, we for the TDAPA for calcimimetics from and the policies we have proposed in assume that the total number of unique ASP+6 percent to ASP+0 percent. These this proposed rule, which includes an commenters on last year’s proposed rule figures do not reflect estimated estimated $205 million in information will be the number of reviewers of this increases or decreases in expenditures collection burden and an additional $14 proposed rule. We acknowledge that based on our proposals to refine the million in estimated payment this assumption may understate or TDAPA eligibility criteria, condition the reductions across all facilities, for PY overstate the costs of reviewing this TDAPA on ASP data availability, and 2022. rule. It is possible that not all provide a transitional add-on payment For PY 2023, we estimate that the commenters reviewed last year’s rule in adjustment for new and innovative renal proposed revisions to the ESRD QIP detail, and it is also possible that some dialysis equipment and supplies. The would result in an overall impact of reviewers chose not to comment on the fiscal impact of these proposals cannot $219 million as a result of the policies proposed rule. For these reasons we be determined due to the uniqueness of we have previously finalized and the thought that the number of past the new renal dialysis drugs and policies we have proposed in this commenters would be a fair estimate of biological products and new renal proposed rule, which includes a $14 the number of reviewers of this rule. We

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welcome any comments on the is $687.50 (6.25 hours × $110.00). categories of ESRD facilities, it is approach in estimating the number of Therefore, we estimate that the total cost necessary to compare estimated entities which will review this proposed of reviewing this regulation rounds to payments in CY 2019 to estimated rule. $107,250. ($687.50 × 156 reviewers). payments in CY 2020. To estimate the We also recognize that different types For manufacturers of DMEPOS impact among various types of ESRD of entities are in many cases affected by products, DMEPOS suppliers, and other facilities, it is imperative that the mutually exclusive sections of this DMEPOS industry representatives, we estimates of payments in CY 2019 and proposed rule, and therefore for the calculate a different cost of reviewing CY 2020 contain similar inputs. purposes of our estimate we assume that this rule. Assuming an average reading Therefore, we simulated payments only each reviewer reads approximately 50 speed, we estimate that it would take for those ESRD facilities for which we percent of the rule. We seek comments approximately 1 hour for the staff to are able to calculate both current on this assumption. review this proposed rule. For each payments and new payments. Using the wage information from the entity that reviews this proposed rule, For this proposed rule, we used CY Bureau of Labor Statistics (BLS) (https:// the estimated cost is $110.00. Therefore, 2018 data from the Part A and Part B www.bls.gov/oes/2018/may/naics4_ we estimate that the total cost of Common Working Files as of February 621100.htm) for medical and health reviewing this proposed rule is $71,500 15, 2019, as a basis for Medicare dialysis service managers (Code 11–9111), we ($110.00 × 650 reviewers). treatments and payments under the estimate that the cost of reviewing this ESRD PPS. We updated the 2018 claims rule is $110.00 per hour, including B. Detailed Economic Analysis to 2019 and 2020 using various updates. overhead and fringe benefits. Assuming 1. CY 2020 End-Stage Renal Disease The updates to the ESRD PPS base rate an average reading speed, we estimate Prospective Payment System are described in section II.B.5.d of this that it would take approximately 6.25 proposed rule. Table 11 shows the a. Effects on ESRD Facilities hours for the staff to review half of this impact of the estimated CY 2020 ESRD proposed rule. For each ESRD facility To understand the impact of the payments compared to estimated that reviews the rule, the estimated cost changes affecting payments to different payments to ESRD facilities in CY 2019. TABLE 11—IMPACT OF PROPOSED CHANGES IN PAYMENT TO ESRD FACILITIES FOR CY 2020 PROPOSED RULE

Effect of Effect of Effect of Effect of Number of 2020 changes 2020 changes 2020 changes Effect of total 2020 Facility type Number of treatments in outlier in wage in payment 2020 changes proposed facilities (in millions) policy index rate update in TDAPA changes (%) (%) (%) (%) (%)

(A) (B) (C) (D) (E) (F) (G)

All Facilities ...... 7,386 44.6 0.3 0.0 1.7 ¥0.4 1.6 Type: Freestanding ...... 6,995 42.7 0.3 0.0 1.7 ¥0.4 1.5 Hospital based ...... 391 1.9 0.6 0.0 1.7 ¥0.3 1.9 Ownership Type: Large dialysis organization ...... 5,603 34.5 0.3 0.0 1.7 ¥0.4 1.5 Regional chain ...... 927 5.7 0.3 0.1 1.7 ¥0.5 1.6 Independent ...... 512 2.9 0.3 ¥0.1 1.7 ¥0.4 1.5 Hospital based 1 ...... 305 1.5 0.6 0.0 1.7 ¥0.3 1.9 Unknown ...... 39 0.0 0.5 0.0 1.7 ¥0.5 1.7 Geographic Location: Rural ...... 1,285 6.5 0.3 0.3 1.7 ¥0.4 1.8 Urban ...... 6,101 38.2 0.3 0.0 1.7 ¥0.4 1.5 Census Region: East North Central ...... 1,188 6.1 0.3 ¥0.1 1.7 ¥0.4 1.5 East South Central ...... 587 3.3 0.3 0.1 1.7 ¥0.5 1.5 Middle Atlantic ...... 806 5.4 0.3 ¥0.2 1.7 ¥0.4 1.4 Mountain ...... 409 2.3 0.2 0.1 1.7 ¥0.3 1.7 New England ...... 198 1.4 0.3 ¥0.4 1.7 ¥0.4 1.2 Pacific 2 ...... 870 6.4 0.3 0.0 1.7 ¥0.3 1.7 Puerto Rico and Virgin Islands ...... 47 0.3 0.1 0.3 1.7 ¥0.3 1.7 South Atlantic ...... 1,699 10.5 0.3 ¥0.1 1.7 ¥0.5 1.4 West North Central ...... 508 2.2 0.4 0.4 1.7 ¥0.4 2.1 West South Central ...... 1,074 6.6 0.3 0.1 1.7 ¥0.5 1.6 Facility Size: Less than 4,000 treatments ...... 1,206 2.5 0.3 0.1 1.7 ¥0.4 1.7 4,000 to 9,999 treatments ...... 2,644 11.9 0.3 0.1 1.7 ¥0.4 1.6 10,000 or more treatments ...... 3,159 29.8 0.3 0.0 1.7 ¥0.5 1.5 Unknown ...... 377 0.5 0.4 0.0 1.7 ¥0.4 1.7 Percentage of Pediatric Patients: Less than 2% ...... 7,288 44.3 0.3 0.0 1.7 ¥0.4 1.6 Between 2% and 19% ...... 38 0.2 0.3 0.0 1.7 ¥0.4 1.6 Between 20% and 49% ...... 14 0.0 0.2 ¥0.1 1.7 ¥0.1 1.8 More than 50% ...... 46 0.0 0.2 ¥0.1 1.7 0.0 1.8 1 Includes hospital-based ESRD facilities not reported to have large dialysis organization or regional chain ownership. 2 Includes ESRD facilities located in Guam, American Samoa, and the Northern Mariana Islands.

Column A of the impact table treatments (in millions). The overall shown in column C. For CY 2020, the indicates the number of ESRD facilities effect of the proposed changes to the impact on all ESRD facilities as a result for each impact category and column B outlier payment policy described in of the changes to the outlier payment indicates the number of dialysis section II.B.5.c of this proposed rule is policy would be a 0.3 percent increase

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in estimated payments. Nearly all ESRD c. Effects on the Medicare Program dialysis equipment and supplies by facilities are anticipated to experience a We estimate that Medicare spending ESRD facilities. With regard to pricing positive effect in their estimated CY (total Medicare program payments) for mechanisms for equipment and 2020 payments as a result of the ESRD facilities in CY 2020 would be supplies, we considered alternatives proposed outlier policy changes. approximately $11.1 billion. This such as those used in the DMEPOS Column D shows the effect of the estimate takes into account a projected program and consultation with the proposed CY 2020 wage indices and the increase in fee-for-service Medicare Pricing, Data, and Analysis Contractor. wage index floor of 0.50. The categories dialysis beneficiary enrollment of 1.7 However, methodologies such as of types of facilities in the impact table percent in CY 2020. reasonable charges and use of fee show changes in estimated payments schedules was lacking for many items ranging from a 0.4 percent decrease to d. Effects on Medicare Beneficiaries and did not address the upcoming new a 0.4 percent increase due to these Under the ESRD PPS, beneficiaries are and innovative renal dialysis equipment proposed updates in the wage indices. responsible for paying 20 percent of the and supplies that we expect to be forthcoming with the KidneyX program. Column E shows the effect of the ESRD PPS payment amount. As a result proposed CY 2020 ESRD PPS payment of the projected 1.6 percent overall 2. Proposed Payment for Renal Dialysis rate update. The proposed ESRD PPS increase in the proposed CY 2020 ESRD Services Furnished to Individuals With payment rate update is 1.7 percent, PPS payment amounts, we estimate that AKI there would be an increase in which reflects the proposed ESRDB a. Effects on ESRD Facilities market basket percentage increase factor beneficiary co-insurance payments of for CY 2020 of 2.1 percent and the 1.6 percent in CY 2020, which translates To understand the impact of the proposed MFP adjustment of 0.4 to approximately $50 million. changes affecting payments to different percent. e. Alternatives Considered categories of ESRD facilities for renal dialysis services furnished to Column F reflects the change in the i. Eligibility Criteria for the TDAPA individuals with AKI, it is necessary to payment of the TDAPA from ASP+6 compare estimated payments in CY percent to ASP+0 percent. In section II.B.1 of this proposed rule, we proposed revisions to the drug 2019 to estimated payments in CY 2020. Column G reflects the overall impact, designation process regulation for new To estimate the impact among various that is, the effects of the proposed renal dialysis drugs and biological types of ESRD facilities for renal outlier policy changes, the proposed products that fall within an existing dialysis services furnished to wage index floor, payment rate update, ESRD PPS functional category. In an individuals with AKI, it is imperative and proposed TDAPA payment changes. effort to support innovation in the renal that the estimates of payments in CY We expect that overall ESRD facilities dialysis space, while simultaneously 2019 and CY 2020 contain similar would experience a 1.6 percent increase considering the cost to Medicare, for the inputs. Therefore, we simulated in estimated payments in CY 2020. The refinement of the TDAPA eligibility we payments only for those ESRD facilities categories of types of facilities in the considered limiting it to only the Type for which we are able to calculate both impact table show impacts ranging from 1 NDA classification code, section current payments and new payments. an increase of 1.2 percent to 2.1 percent 351(a) biological products and section For this proposed rule, we used CY in their CY 2020 estimated payments. 351(k) biosimilar or interchangeable 2018 data from the Part A and Part B b. Effects on Other Providers biological products. However, we Common Working Files as of February wanted to support other innovative 15, 2019, as a basis for Medicare for Under the ESRD PPS, Medicare pays changes of drugs and biological renal dialysis services furnished to ESRD facilities a single bundled products in the renal dialysis space and individuals with AKI. We updated the payment for renal dialysis services, acknowledge that innovation may occur 2018 claims to 2019 and 2020 using which may have been separately paid to incrementally. various updates. The updates to the AKI other providers (for example, payment amount are described in laboratories, durable medical equipment ii. New and Innovative Renal Dialysis section III.B of this proposed rule. Table suppliers, and pharmacies) by Medicare Equipment and Supplies Under the 12 shows the impact of the estimated prior to the implementation of the ESRD ESRD PPS CY 2020 payments for renal dialysis PPS. Therefore, in CY 2020, we estimate In section II.B.3 of this proposed rule, services furnished to individuals with that the proposed ESRD PPS would we proposed to provide a transitional AKI compared to estimated payments have zero impact on these other add-on payment adjustment to support for renal dialysis services furnished to providers. the use of new and innovative renal individuals with AKI in CY 2019.

TABLE 12—IMPACT OF PROPOSED CHANGES IN PAYMENT FOR RENAL DIALYSIS SERVICES FURNISHED TO INDIVIDUALS WITH AKI FOR CY 2020 PROPOSED RULE

Effect of Effect of Effect of Number of 2020 changes 2020 changes total 2020 Facility type Number of treatments in wage in payment proposed facilities (in thousands) index rate update changes (%) (%) (%)

(A) (B) (C) (D) (E)

All Facilities ...... 4,372 172.7 ¥0.1 1.7 1.7 Type: Freestanding ...... 4,257 168.8 ¥0.1 1.7 1.7 Hospital based ...... 115 3.9 0.1 1.7 1.8 Ownership Type: Large dialysis organization ...... 3,600 135.0 ¥0.0 1.7 1.7

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TABLE 12—IMPACT OF PROPOSED CHANGES IN PAYMENT FOR RENAL DIALYSIS SERVICES FURNISHED TO INDIVIDUALS WITH AKI FOR CY 2020 PROPOSED RULE—Continued

Effect of Effect of Effect of Number of 2020 changes 2020 changes total 2020 Facility type Number of treatments in wage in payment proposed facilities (in thousands) index rate update changes (%) (%) (%)

(A) (B) (C) (D) (E)

Regional chain ...... 526 25.5 ¥0.1 1.7 1.6 Independent ...... 171 9.9 ¥0.1 1.7 1.6 Hospital based 1 ...... 68 2.2 0.1 1.7 1.8 Unknown ...... 7 0.1 0.3 1.7 2.0 Geographic Location: Rural ...... 772 30.5 0.3 1.7 2.0 Urban ...... 3,600 142.2 ¥0.1 1.7 1.6 Census Region: East North Central ...... 790 33.0 ¥0.0 1.7 1.7 East South Central ...... 372 16.2 0.2 1.7 1.9 Middle Atlantic ...... 452 20.0 ¥0.3 1.7 1.4 Mountain ...... 267 11.0 0.0 1.7 1.7 New England ...... 138 5.0 ¥0.4 1.7 1.3 Pacific 2 ...... 513 21.5 ¥0.1 1.7 1.6 Puerto Rico and Virgin Islands ...... 2 0.0 0.4 1.7 2.1 South Atlantic ...... 1,008 41.3 ¥0.1 1.7 1.6 West North Central ...... 278 8.3 0.4 1.7 2.1 West South Central ...... 552 16.4 0.0 1.7 1.8 Facility Size: Less than 4,000 treatments ...... 493 15.9 ¥0.1 1.7 1.6 4,000 to 9,999 treatments ...... 1,646 61.4 0.0 1.7 1.7 10,000 or more treatments ...... 2,108 92.0 ¥0.1 1.7 1.6 Unknown ...... 125 3.4 0.1 1.7 1.8 Percentage of Pediatric Patients: Less than 2% ...... 4,371 172.7 ¥0.1 1.7 1.7 Between 2% and 19% ...... 0 0.0 0.0 0.0 0.0 Between 20% and 49% ...... 0 0.0 0.0 0.0 0.0 More than 50% ...... 1 0.0 ¥1.6 1.7 0.1 1 Includes hospital-based ESRD facilities not reported to have large dialysis organization or regional chain ownership. 2 Includes ESRD facilities located in Guam, American Samoa, and the Northern Mariana Islands.

Column A of the impact table an increase of 0.0 percent to 2.1 percent prospective payment system, where indicates the number of ESRD facilities in their CY 2020 estimated payments. services were required to be for each impact category and column B administered prior to the TPEA. b. Effects on Other Providers indicates the number of AKI dialysis d. Effects on Medicare Beneficiaries treatments (in thousands). Under section 1834(r) of the Act, as Column C shows the effect of the added by section 808(b) of TPEA, we are Currently, beneficiaries have a 20 proposed CY 2020 wage indices and the proposing to update the payment rate percent co-insurance obligation when wage index floor of 0.50. The categories for renal dialysis services furnished by they receive AKI dialysis in the hospital of types of facilities in the impact table ESRD facilities to beneficiaries with outpatient setting. When these services show changes in estimated payments of AKI. The only two Medicare providers are furnished in an ESRD facility, the a 0.1 percent decrease due to these and suppliers authorized to provide patients would continue to be proposed updates in the wage indices. these outpatient renal dialysis services responsible for a 20 percent co- are hospital outpatient departments and insurance. Because the AKI dialysis Column D shows the effect of the ESRD facilities. The decision about payment rate paid to ESRD facilities is proposed CY 2020 ESRD PPS payment where the renal dialysis services are lower than the outpatient hospital PPS’s rate update. The proposed ESRD PPS furnished is made by the patient and his payment amount, we would expect payment rate update is 1.7 percent, or her physician. Therefore, this beneficiaries to pay less co-insurance which reflects the proposed ESRDB proposal will have zero impact on other when AKI dialysis is furnished by ESRD market basket percentage increase factor Medicare providers. facilities. for CY 2020 of 2.1 percent and the MFP adjustment of 0.4 percent. c. Effects on the Medicare Program e. Alternatives Considered Column E reflects the overall impact, We estimate approximately $42 As we discussed in the CY 2017 ESRD that is, the effects of the proposed wage million would be paid to ESRD facilities PPS proposed rule (81 FR 42870), we index floor and payment rate update. in CY 2020 as a result of AKI patients considered adjusting the AKI payment We expect that overall ESRD facilities receiving renal dialysis services in the rate by including the ESRD PPS case- would experience a 1.7 percent increase ESRD facility at the lower ESRD PPS mix adjustments, and other adjustments in estimated payments in CY 2020. The base rate versus receiving those services at section 1881(b)(14)(D) of the Act, as categories of types of facilities in the only in the hospital outpatient setting well as not paying separately for AKI impact table show impacts ranging from and paid under the outpatient specific drugs and laboratory tests. We

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ultimately determined that treatment for Any reductions in the ESRD PPS TABLE 13—ESTIMATED DISTRIBUTION AKI is substantially different from payments as a result of a facility’s OF PY 2022 ESRD QIP PAYMENT treatment for ESRD and the case-mix performance under the PY 2022 ESRD REDUCTIONS adjustments applied to ESRD patients QIP would apply to the ESRD PPS may not be applicable to AKI patients payments made to the facility for Payment reduction Number of Percent of (%) facilities facilities * and as such, including those policies services furnished in CY 2022, as and adjustment would be inappropriate. codified in our regulations at § 413.177. 0.0 ...... 5,370 78.10 We continue to monitor utilization and 0.5 ...... 1,116 16.23 trends of items and services furnished to For the PY 2022 ESRD QIP, we 1.0 ...... 325 4.73 estimate that, of the 7,099 dialysis 1.5 ...... 56 0.81 individuals with AKI for purposes of 2.0 ...... 9 0.13 refining the payment rate in the future. facilities (including those not receiving This monitoring would assist us in a TPS) enrolled in Medicare, * 223 facilities not scored due to insufficient data. approximately 21.9 percent or 1,506 of developing knowledgeable, data-driven To estimate whether a facility would the facilities that have sufficient data to proposals. receive a payment reduction for PY calculate a TPS would receive a 3. ESRD QIP 2022, we scored each facility on payment reduction for PY 2022. The achievement and improvement on a. Effects of the PY 2022 ESRD QIP on total payment reductions for all the several clinical measures we have ESRD Facilities 1,506 facilities expected to receive a previously finalized and for which there The ESRD QIP is intended to prevent payment reduction is approximately were available data from CROWNWeb possible reductions in the quality of $13,905,923.02. Facilities that do not and Medicare claims. Payment ESRD dialysis facility services provided receive a TPS do not receive a payment reduction estimates are calculated using to beneficiaries. We are proposing in reduction. the most recent data available (specified this proposed rule to convert the STrR Table 13 shows the overall estimated in Table 14) in accordance with the clinical measure to a reporting measure, distribution of payment reductions policies proposed in this proposed rule. and also to change the way the NHSN resulting from the PY 2022 ESRD QIP. Measures used for the simulation are Dialysis Event reporting measure is shown in Table 14. We also note that we scored. The general methodology that are proposing in section IV.B.3.b of this we are using to determine a facility’s proposed rule to convert the STrR TPS is described in our regulations at measure from a clinical measure to a § 413.178(d).49 reporting measure.

TABLE 14—DATA USED TO ESTIMATE PY 2022 ESRD QIP PAYMENT REDUCTIONS

Period of time used to calculate achievement thresholds, Measure 50th percentiles of the national performance, bench- Performance period marks, and improvement thresholds

ICH CAHPS Survey ...... Jan 2016–Dec 2016 ...... Jan 2017–Dec 2017. SRR ...... Jan 2016–Dec 2016 ...... Jan 2017–Dec 2017. STrR ...... Jan 2016–Dec 2016 ...... Jan 2017–Dec 2017. SHR ...... Jan 2016–Dec 2016 ...... Jan 2017–Dec 2017. PPPW ...... Jan 2016–Dec 2016 ...... Jan 2017–Dec 2017. Kt/V Dialysis Adequacy Comprehensive ...... Jan 2016–Dec 2016 ...... Jan 2017–Dec 2017. VAT: Standardized Fistula Ratio ...... Jan 2016–Dec 2016 ...... Jan 2017–Dec 2017. %Catheter ...... Jan 2016–Dec 2016 ...... Jan 2017–Dec 2017. Hypercalcemia ...... Jan 2016–Dec 2016 ...... Jan 2017–Dec 2017.

For all measures except SHR and measure in at least two domains to reductions to all ESRD facilities for PY STrR, clinical measure topic areas with receive a TPS. 2022. The table details the distribution less than 11 cases for a facility were not To estimate the total payment of ESRD facilities by size (both among included in that facility’s TPS. For SHR reductions in PY 2022 for each facility facilities considered to be small entities and STrR, facilities were required to resulting from this proposed rule, we and by number of treatments per have at least 5 at risk patients and 10 at multiplied the total Medicare payments facility), geography (both rural and risk patients, respectively, in order to be to the facility during the 1-year period urban and by region), and by facility included in the facility’s TPS. Each between January 2017 and December type (hospital based and freestanding facility’s TPS was compared to an 2017 by the facility’s estimated payment facilities). Given that the performance estimated minimum TPS and an reduction percentage expected under period used for these calculations estimated payment reduction table that the ESRD QIP, yielding a total payment differs from the performance period we were consistent with the proposals reduction amount for each facility: Total are using for the PY 2022 ESRD QIP, the outlined in section IV.B of this proposed ESRD payment in January 2017 through actual impact of the PY 2022 ESRD QIP rule. Facility reporting measure scores December 2017 times the estimated were estimated using available data payment reduction percentage. may vary significantly from the values from CY 2017 and CY 2018. Facilities Table 15 shows the estimated impact provided here. were required to have at least one of the finalized ESRD QIP payment

49 We are proposing to redesignate paragraph (d) as paragraph (e) in this proposed rule.

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TABLE 15—IMPACT OF PROPOSED ESRD QIP PAYMENT REDUCTIONS TO ESRD FACILITIES FOR PY 2022

Number of Payment Number of Number of facilities reduction Number of treatments facilities expected (percent facilities 2017 with QIP to receive change in (in millions) score a payment total ESRD reduction payments)

All Facilities ...... 7,099 45.1 6,876 1,506 ¥0.14 Facility Type: Freestanding ...... 6,681 43.0 6,510 1,407 ¥0.13 Hospital-based ...... 418 2.2 366 99 ¥0.22 Ownership Type: Large Dialysis ...... 5,400 34.9 5,290 1,068 ¥0.12 Regional Chain ...... 881 5.7 848 192 ¥0.14 Independent ...... 485 2.9 454 165 ¥0.26 Hospital-based (non-chain) ...... 327 1.7 284 81 ¥0.24 Unknown ...... 6 0.0 0 0 ¥ Facility Size: Large Entities ...... 6,281 40.6 6,138 1,260 ¥0.12 Small Entities 1 ...... 812 4.6 738 246 ¥0.25 Unknown ...... 6 0.0 0 0 ¥ Rural Status: (1) Yes ...... 1,271 6.5 1,231 119 ¥0.05 (2) No ...... 5,828 38.6 5,645 1,387 ¥0.16 Census Region: Northeast ...... 968 7.0 930 205 ¥0.15 Midwest ...... 1,642 8.6 1,584 347 ¥0.14 South ...... 3,193 20.5 3,099 763 ¥0.15 West ...... 1,237 8.6 1,205 166 ¥0.08 U.S. Territories 2 ...... 59 0.4 58 25 ¥0.30 Census Division: Unknown ...... 8 0.1 7 4 ¥0.42 East North Central ...... 1,145 6.3 1,107 286 ¥0.17 East South Central ...... 572 3.3 562 116 ¥0.13 Middle Atlantic ...... 777 5.5 745 184 ¥0.16 Mountain ...... 400 2.3 390 39 ¥0.06 New England ...... 191 1.5 185 21 ¥0.07 Pacific ...... 837 6.4 815 127 ¥0.09 South Atlantic ...... 1,622 10.6 1,571 405 ¥0.16 West North Central ...... 497 2.3 477 61 ¥0.08 West South Central ...... 999 6.6 966 242 ¥0.16 U.S. Territories 2 ...... 51 0.3 51 21 ¥0.28 Facility Size (# of total treatments): Less than 4,000 treatments ...... 1,246 2.1 1,060 193 ¥0.14 4,000–9,999 treatments ...... 2,666 11.9 2,656 439 ¥0.10 Over 10,000 treatments ...... 3,147 31.0 3,144 866 ¥0.17 Unknown ...... 40 0.2 16 8 ¥0.37 1 Small Entities include hospital-based and satellite facilities, and non-chain facilities based on DFC self-reported status. 2 Includes American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and Virgin Islands.

b. Effects of the PY 2023 ESRD QIP on Table 16 shows the overall estimated To estimate whether a facility would ESRD Facilities distribution of payment reductions receive a payment reduction in PY 2023, resulting from the PY 2023 ESRD QIP. we scored each facility on achievement For the PY 2023 ESRD QIP, we and improvement on several clinical estimate that, of the 7,099 dialysis TABLE 16—ESTIMATED DISTRIBUTION measures we have previously finalized facilities (including those not receiving OF PY 2023 ESRD QIP PAYMENT and for which there were available data a TPS) enrolled in Medicare, REDUCTIONS from CROWNWeb and Medicare claims. approximately 21.9 percent or 1,506 of Payment reduction estimates are the facilities that have sufficient data to Payment reduction Number of Percent of calculated using the most recent data calculate a TPS would receive a (%) facilities facilities * available (specified in Table 16) in payment reduction for PY 2023. The 0.0 ...... 5,370 78.10 accordance with the policies proposed total payment reductions for all the 0.5 ...... 1,116 16.23 in this proposed rule. Measures used for 1,506 facilities expected to receive a 1.0 ...... 325 4.73 the simulation are shown in Table 17. payment reduction is approximately 1.5 ...... 56 0.81 We also note that we are proposing in $13,905,923.02. Facilities that do not 2.0 ...... 9 0.13 section IV.B.3.b of this proposed rule to receive a TPS do not receive a payment * 223 facilities not scored due to insufficient data. convert the STrR measure from a reduction. clinical measure to a reporting measure.

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TABLE 17—DATA USED TO ESTIMATE PY 2023 ESRD QIP PAYMENT REDUCTIONS

Period of time used to calculate achievement thresholds, Measure 50th percentiles of the national performance, bench- Performance period marks, and improvement thresholds

ICH CAHPS Survey ...... Jan 2016–Dec 2016 ...... Jan 2017–Dec 2017. SRR ...... Jan 2016–Dec 2016 ...... Jan 2017–Dec 2017. STrR ...... Jan 2016–Dec 2016 ...... Jan 2017–Dec 2017. SHR ...... Jan 2016–Dec 2016 ...... Jan 2017–Dec 2017. PPPW ...... Jan 2016–Dec 2016 ...... Jan 2017–Dec 2017. Kt/V Dialysis Adequacy Comprehensive ...... Jan 2016–Dec 2016 ...... Jan 2017–Dec 2017. VAT: Standardized Fistula Ratio ...... Jan 2016–Dec 2016 ...... Jan 2017–Dec 2017. %Catheter ...... Jan 2016–Dec 2016 ...... Jan 2017–Dec 2017. Hypercalcemia ...... Jan 2016–Dec 2016 ...... Jan 2017–Dec 2017.

For all measures except SHR and least one measure in at least two reductions to all ESRD facilities for PY STrR, clinical measure topic areas with domains to receive a TPS. 2023. The table details the distribution less than 11 cases for a facility were not To estimate the total payment of ESRD facilities by size (both among included in that facility’s TPS. For SHR reductions in PY 2023 for each facility facilities considered to be small entities and STrR, facilities were required to resulting from this proposed rule, we and by number of treatments per have at least 5 at-risk patients and 10 at- multiplied the total Medicare payments facility), geography (both rural and risk patients, respectively, in order to be to the facility during the 1-year period urban and by region), and by facility included in the facility’s TPS. Each between January 2017 and December type (hospital based and freestanding facility’s TPS was compared to an 2017 by the facility’s estimated payment facilities). Given that the performance estimated minimum TPS and an reduction percentage expected under period used for these calculations estimated payment reduction table that the ESRD QIP, yielding a total payment differs from the performance period we were consistent with the proposals reduction amount for each facility: Total are proposing to use for the PY 2023 outlined in section IV.B and IV.C of this ESRD payment in January 2017 through ESRD QIP, the actual impact of the PY proposed rule. Facility reporting December 2017 times the estimated measure scores were estimated using Payment reduction percentage. 2023 ESRD QIP may vary significantly available data from CY 2017 and CY Table 18 shows the estimated impact from the values provided here. 2018. Facilities were required to have at of the finalized ESRD QIP payment

TABLE 18—IMPACT OF PROPOSED QIP PAYMENT REDUCTIONS TO ESRD FACILITIES FOR PY 2023

Number of Payment Number of Number of facilities reduction Number of treatments facilities expected (percent facilities 2017 with QIP to receive change in (in millions) score a payment total ESRD reduction payments)

All Facilities ...... 7,099 45.1 6,876 1,506 ¥0.14 Facility Type: Freestanding ...... 6,681 43.0 6,510 1,407 ¥0.13 Hospital-based ...... 418 2.2 366 99 ¥0.22 Ownership Type: Large Dialysis ...... 5,400 34.9 5,290 1,068 ¥0.12 Regional Chain ...... 881 5.7 848 192 ¥0.14 Independent ...... 485 2.9 454 165 ¥0.26 Hospital-based (non-chain) ...... 327 1.7 284 81 ¥0.24 Unknown ...... 6 0.0 0 0 ...... Facility Size: Large Entities ...... 6,281 40.6 6,138 1,260 ¥0.12 Small Entities 1 ...... 812 4.6 738 246 ¥0.25 Unknown ...... 6 0.0 0 0 ...... Rural Status: (1) Yes ...... 1,271 6.5 1,231 119 ¥0.05 (2) No ...... 5,828 38.6 5,645 1,387 ¥0.16 Census Region: Northeast ...... 968 7.0 930 205 ¥0.15 Midwest ...... 1,642 8.6 1,584 347 ¥0.14 South ...... 3,193 20.5 3,099 763 ¥0.15 West ...... 1,237 8.6 1,205 166 ¥0.08 U.S. Territories 2 ...... 59 0.4 58 25 ¥0.30 Census Division: Unknown ...... 8 0.1 7 4 ¥0.42 East North Central ...... 1,145 6.3 1,107 286 ¥0.17 East South Central ...... 572 3.3 562 116 ¥0.13 Middle Atlantic ...... 777 5.5 745 184 ¥0.16 Mountain ...... 400 2.3 390 39 ¥0.06

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TABLE 18—IMPACT OF PROPOSED QIP PAYMENT REDUCTIONS TO ESRD FACILITIES FOR PY 2023—Continued

Number of Payment Number of Number of facilities reduction Number of treatments facilities expected (percent facilities 2017 with QIP to receive change in (in millions) score a payment total ESRD reduction payments)

New England ...... 191 1.5 185 21 ¥0.07 Pacific ...... 837 6.4 815 127 ¥0.09 South Atlantic ...... 1,622 10.6 1,571 405 ¥0.16 West North Central ...... 497 2.3 477 61 ¥0.08 West South Central ...... 999 6.6 966 242 ¥0.16 U.S. Territories 2 ...... 51 0.3 51 21 ¥0.28 Facility Size (# of total treatments): Less than 4,000 treatments ...... 1,246 2.1 1,060 193 ¥0.14 4,000–9,999 treatments ...... 2,666 11.9 2,656 439 ¥0.10 Over 10,000 treatments ...... 3,147 31.0 3,144 866 ¥0.17 Unknown ...... 40 0.2 16 8 ¥0.37 1 Small Entities include hospital-based and satellite facilities, and non-chain facilities based on DFC self-reported status. 2 Includes American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and Virgin Islands.

c. Effects on Other Providers TABLE 19—ESTIMATED PAYMENT RE- aligning the STrR measure’s specifications with those used for the The ESRD QIP is applicable to DUCTIONS PAYMENT YEARS 2018 measure prior to the PY 2021 ESRD QIP. dialysis facilities. We are aware that THROUGH 2023—Continued However, that version of the STrR several of our measures impact other Payment year Estimated payment reductions clinical measure was not endorsed by providers. For example, with the the NQF due to the concern expressed introduction of the SRR clinical PY 2020 ...... 31,581,441 (81 FR 77960). by the Renal Standing Committee about measure in PY 2017 and the SHR PY 2019 ...... 15,470,309 (80 FR 69074). variability in hospital coding practices. clinical measure in PY 2020, we PY 2018 ...... 11,576,214 (79 FR 66257). anticipate that hospitals may experience 4. DMEPOS e. Effects on Medicare Beneficiaries financial savings as dialysis facilities a. Establishing Payment Amounts for work to reduce the number of The ESRD QIP is applicable to New DMEPOS Items and Services (Gap- unplanned readmissions and dialysis facilities. Since the Program’s Filling) hospitalizations. We are exploring inception, there is evidence on various methods to assess the impact improved performance on ESRD QIP (1) Effects on Other Providers these measures have on hospitals and measures. As we stated in the CY 2018 We believe that establishing payment other facilities, such as through the ESRD PPS final rule, one objective amounts for new DMEPOS items and impacts of the Hospital Readmission measure we can examine to demonstrate services would have a positive Reduction Program and the Hospital- the improved quality of care over time economic impact on suppliers by Acquired Conditions Reduction is the improvement of performance making the pricing of new items more Program, and we intend to continue standards (82 FR 50795). As the ESRD easily understood and encourage examining the interactions between our QIP has refined its measure set and as innovation. The cost of this proposal quality programs to the greatest extent facilities have gained experience with cannot be estimated as these new items feasible. the measures included in the Program, are not identified. performance standards have generally d. Effects on the Medicare Program continued to rise. We view this as (2) Effects on the Medicare Program For PY 2023, we estimate that the evidence that facility performance (and ESRD QIP would contribute therefore the quality of care provided to This proposal has an indeterminable approximately $13,905,923.02 in Medicare beneficiaries) is objectively cost to the Medicare program associated Medicare savings. For comparison, improving. We are in the process of with it due to the unpredictable nature Table 19 shows the payment reductions monitoring and evaluating trends in the of future new items. that we estimate will be applied by the quality and cost of care for patients (3) Effects on Medicare Beneficiaries ESRD QIP from PY 2018 through PY under the ESRD QIP, incorporating both 2023. We note that Table 19 contains a existing measures and new measures as This proposal has an indeterminable lower estimated payment reduction for they are implemented in the Program. cost to the Medicare beneficiary due to PY 2022 than we included in Table 49 We will provide additional information the unpredictable nature of future new of the CY 2019 ESRD PPS final rule (83 about the impact of the ESRD QIP on items. Likewise, this proposal has an FR 57061). beneficiaries as we learn more. indeterminable cost to the dual-eligible However, in future years we are beneficiary who is enrolled in the TABLE 19—ESTIMATED PAYMENT RE- interested in examining these impacts Medicare and the Medicaid programs DUCTIONS PAYMENT YEARS 2018 through the analysis of available data for the same reason as indicated above. THROUGH 2023 from our existing measures. (4) Alternatives Considered Payment year Estimated payment reductions f. Alternatives Considered One alternative we considered was to PY 2023 ...... $13,905,923.02. In response to the concern raised by continue the process for establishing PY 2022 ...... 13,905,923.02. commenters about the validity of the payment amounts for new items on a PY 2021 ...... 32,196,724 (83 FR 57062). modified STrR measure, we considered sub-regulatory basis. This would have

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no economic impact on the Medicare a004_a-4), in Table 20, we have included in this estimated RFA analysis. program or its beneficiaries. prepared an accounting statement Individuals and states are not included showing the classification of the in the definition of a small entity. b. Adjusting Payment Amounts for transfers and costs associated with the For purposes of the RFA, we estimate DMEPOS Items and Services Gap-Filled various provisions of this proposed rule. that approximately 11 percent of ESRD Using Supplier or Commercial Prices facilities are small entities as that term (1) Effects on Other Providers TABLE 20—ACCOUNTING STATEMENT: is used in the RFA (which includes We believe that adjusting payment CLASSIFICATION OF ESTIMATED small businesses, nonprofit amounts for new DMEPOS items and TRANSFERS AND COSTS/SAVINGS organizations, and small governmental services when initially set based on jurisdictions). This amount is based on supplier or commercial prices would ESRD PPS and AKI the number of ESRD facilities shown in have a negative economic impact on Category Transfers the ownership category in Table 11. suppliers by lowering fees. The savings Using the definitions in this ownership Annualized Monetized $160 million. of this proposal cannot be estimated as category, we consider 512 facilities that Transfers. are independent and 305 facilities that these new items are not identified. From Whom to Whom .... Federal government to ESRD providers. are shown as hospital-based to be small (2) Effects on the Medicare Program Increased Beneficiary $50 million. entities. The ESRD facilities that are We believe that adjusting payment Co-insurance Pay- owned and operated by Large Dialysis ments. Organizations (LDOs) and regional amounts for new DMEPOS items and From Whom to Whom .... Beneficiaries to ESRD services when initially set based on providers. chains would have total revenues of supplier or commercial prices would more than $38.5 million in any year have a positive economic impact on the ESRD QIP for PY 2022 when the total revenues for all locations Medicare Program by lowering fees and Annualized Monetized ¥$14 million. are combined for each business achieving savings. The savings of this Transfers. (individual LDO or regional chain), and proposal cannot be estimated as these From Whom to Whom .... Federal government to are not, therefore, included as small ESRD providers. new items are not identified. entities. ESRD QIP for PY 2023 For the ESRD PPS updates proposed (3) Effects on Medicare Beneficiaries in this rule, a hospital-based ESRD We believe that adjusting payment Annualized Monetized ¥$14 million. facility (as defined by type of Transfers. ownership, not by type of dialysis amounts for new DMEPOS items and From Whom to Whom .... Federal government to services when initially set based on ESRD providers. facility) is estimated to receive a 1.9 supplier or commercial prices would percent increase in payments for CY have a positive economic impact on In accordance with the provisions of 2020. An independent facility (as Medicare beneficiaries by lowering fees, Executive Order 12866, this proposed defined by ownership type) is also therefore resulting in lower coinsurance rule was reviewed by the Office of estimated to receive a 1.5 percent for such items. The savings of this Management and Budget. increase in payments for CY 2020. For AKI dialysis, we are unable to proposal cannot be estimated as these D. Regulatory Flexibility Act Analysis new items are not identified. estimate whether patients would go to The Regulatory Flexibility Act ESRD facilities, however, we have (4) Alternatives Considered (September 19, 1980, Pub. L. 96–354) estimated there is a potential for $42 An alternative we considered was to (RFA) requires agencies to analyze million in payment for AKI dialysis continue not adjusting payment options for regulatory relief of small treatments that could potentially be amounts for new items based on revised entities, if a rule has a significant impact furnished in ESRD facilities. supplier and commercial price lists. on a substantial number of small For the ESRD QIP, we estimate that of This would have created, in some cases, entities. For purposes of the RFA, small the 1,506 ESRD facilities expected to what we consider to be unreasonable fee entities include small businesses, receive a payment reduction as a result schedule amounts and a cost to the nonprofit organizations, and small of their performance on the PY 2023 program and beneficiaries. governmental jurisdictions. ESRD QIP, 246 are ESRD small entity Approximately 11 percent of ESRD facilities. We present these findings in 5. Conditions of Payment To Be Applied dialysis facilities are considered small Table 16 (‘‘Estimated Distribution of PY to Certain DMEPOS Items entities according to the Small Business 2023 ESRD QIP Payment Reductions’’) This rule proposes to streamline the Administration’s (SBA) size standards, and Table 18 (‘‘Impact of Proposed QIP requirements for ordering DMEPOS which classifies small businesses as Payment Reductions to ESRD Facilities items, and to identify the process for those dialysis facilities having total for PY 2023’’). We estimate that the subjecting certain DMEPOS items to a revenues of less than $38.5 million in payment reductions would average face-to-face encounter and written order any 1 year. Individuals and states are approximately $9,233.68 per facility prior to delivery and/or prior not included in the definitions of a across the 1,506 facilities receiving a authorization as a condition of payment. small entity. For more information on payment reduction, and $8,850.82 for The fiscal impact of these requirements SBA’s size standards, see the Small each small entity facility. We also cannot be estimated as this rule only Business Administration’s website at estimate that there are 812 small entity identifies all items that are potentially http://www.sba.gov/content/small- facilities in total, and that the aggregate subject to the face-to-face encounter and business-size-standards (Kidney ESRD PPS payments to these facilities written order prior to delivery Dialysis Centers are listed as 621492 would decrease 0.25 percent in CY requirements and/or prior authorization. with a size standard of $38.5 million). 2023. We do not believe ESRD facilities are The DMEPOS provisions in this C. Accounting Statement operated by small government entities proposed rule, Establishing Payment As required by OMB Circular A–4 such as counties or towns with Amounts for New DMEPOS Items and (available at http:// populations of 50,000 or less, and Services and Gap-Filling and Adjusting www.whitehouse.gov/omb/circulars_ therefore, they are not enumerated or Payment Amounts for DMEPOS Items

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and Services Gap-Filled Using Supplier annually for inflation. In 2019, that Research-Statistics-Data-and-Systems/ or Commercial Prices in section V of threshold is approximately $154 Files-for-Order/LimitedDataSets/End this proposed rule, are not considered to million. These proposed rules do not StageRenalDiseaseSystemFile.html. have a significant impact on a number include any mandates that would Readers who experience any problems of small suppliers. We note that the impose spending costs on state, local, or accessing the Addenda or LDS files, fiscal impact of the Conditions of Tribal governments in the aggregate, or should contact ESRDPayment@ Payment to be applied to Certain by the private sector, of $154 million. cms.hhs.gov. DMEPOS Items in section VI of this Moreover, HHS interprets UMRA as List of Subjects proposed rule cannot be estimated as applying only to unfunded mandates. this rule only identifies all items that We do not interpret Medicare payment 42 CFR Part 405 are potentially subject to the face-to-face rules as being unfunded mandates, but Federal health insurance for the aged encounter and written order prior to simply as conditions for the receipt of and disabled, Administrative practice delivery requirements and/or prior payments from the federal government and procedure, Diseases, Health authorization. for providing services that meet federal facilities, Health professions, Medical Therefore, the Secretary has standards. This interpretation applies determined that these proposed rules devices, Medicare, Reporting and whether the facilities or providers are recordkeeping requirements, Rural would not have a significant economic private, state, local, or tribal. impact on a substantial number of small areas, X-rays. entities. The economic impact F. Federalism Analysis 42 CFR Part 410 assessment is based on estimated Executive Order 13132 on Federalism Health facilities, Health professions, Medicare payments (revenues) and (August 4, 1999) establishes certain Diseases, Laboratories, Medicare, HHS’s practice in interpreting the RFA requirements that an agency must meet Reporting and recordkeeping is to consider effects economically when it promulgates a proposed rule requirements, Rural areas, X-rays. ‘‘significant’’ only if greater than 5 (and subsequent final rule) that imposes percent of providers reach a threshold of substantial direct requirement costs on 42 CFR Part 413 3 to 5 percent or more of total revenue state and local governments, preempts Health facilities, Diseases, Medicare, or total costs. state law, or otherwise has Federalism We solicit comment on the RFA Reporting and recordkeeping implications. We have reviewed these requirements. analysis provided. proposed rules under the threshold In addition, section 1102(b) of the Act criteria of Executive Order 13132, 42 CFR Part 414 requires us to prepare a regulatory Federalism, and have determined that it Administrative practice and impact analysis if a rule may have a would not have substantial direct effects significant impact on the operations of procedure, Biologicals, Drugs, Health on the rights, roles, and responsibilities facilities, Health professions, Medicare, a substantial number of small rural of states, local or Tribal governments. hospitals. Any such regulatory impact Reporting and recordkeeping analysis must conform to the provisions G. Reducing Regulation and Controlling requirements. of section 603 of the RFA. For purposes Regulatory Costs For the reasons set forth in the of section 1102(b) of the Act, we define Executive Order 13771, entitled preamble, the Centers for Medicare & a small rural hospital as a hospital that Reducing Regulation and Controlling Medicaid Services proposes to amend is located outside of a metropolitan Regulatory Costs (82 FR 9339), was 42 CFR chapter IV as follows: statistical area and has fewer than 100 issued on January 30, 2017. It has been PART 410—SUPPLEMENTARY beds. We do not believe this proposed determined that this is a transfer rule, MEDICAL INSURANCE (SMI) rule would have a significant impact on which imposes no more than de BENEFITS operations of a substantial number of minimis costs. As a result, this rule is small rural hospitals because most not considered a regulatory or ■ 1. The authority citation for part 410 dialysis facilities are freestanding. deregulatory action under Executive continues to read as follows: While there are 126 rural hospital-based Order 13771. dialysis facilities, we do not know how Authority: 42 U.S.C. 1302, 1395m, many of them are based at hospitals H. Congressional Review Act 1395hh, 1395rr, and 1395ddd. with fewer than 100 beds. However, These proposed rules are subject to ■ 2. Section 410.36 is amended by overall, the 126 rural hospital-based the Congressional Review Act revising paragraph (b) to read as follows: dialysis facilities will experience an provisions of the Small Business estimated 2.2 percent increase in Regulatory Enforcement Fairness Act of § 410.36 Medical supplies, appliances, and devices: Scope. payments. 1996 (5 U.S.C. 801 et seq.) and has been Therefore, the Secretary has transmitted to the Congress and the * * * * * determined that these proposed rules Comptroller General for review. (b) The conditions of payment would not have a significant impact on described in § 410.38(d) also apply to XII. Files Available to the Public via the the operations of a substantial number medical supplies, appliances, and Internet of small rural hospitals. devices. The Addenda for the annual ESRD ■ 3. Section 410.38 is amended— E. Unfunded Mandates Reform Act PPS proposed and final rulemakings ■ a. By revising section heading; Analysis will no longer appear in the Federal ■ b. By revising paragraph (a); Section 202 of the Unfunded Register. Instead, the Addenda will be ■ c. In paragraph (b), by adding a Mandates Reform Act of 1995 (UMRA) available only through the internet and paragraph heading; also requires that agencies assess is posted on the CMS website at http:// ■ d. By revising paragraphs (c), (d), and anticipated costs and benefits before www.cms.gov/ESRDPayment/PAY/ (e); and issuing any rule whose mandates list.asp. In addition to the Addenda, ■ e. By removing paragraphs (f) and (g). require spending in any 1 year of $100 limited data set files are available for The revisions and addition read as million in 1995 dollars, updated purchase at http://www.cms.gov/ follows:

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§ 410.38 Durable medical equipment, Encounter and Written Order Prior to (3) Documentation: A supplier must prosthetics, orthotics and supplies Delivery. The list of items would be maintain the written order/prescription (DMEPOS): Scope and conditions. communicated to the public via a 60- and the supporting documentation (a) General scope. Medicare Part B day Federal Register document and provided by the treating practitioner pays for durable medical equipment, posted to the CMS website. When and make them available to CMS and its including ventilators, oxygen selecting items from the Master List, agents upon request. equipment, hospital beds, and CMS may consider factors such as (i) Upon request by CMS or its agents, wheelchairs, if the equipment is used in operational limitations, item utilization, a supplier must submit additional the patient’s home or in an institution cost-benefit analysis, emerging trends, documentation to CMS or its agents to that is used as a home. vulnerabilities identified in official support and/or substantiate the medical (b) Institutions that may not qualify as agency reports, or other analysis. necessity for the DMEPOS item. the patient’s home. *** (d) Conditions of payment. The (ii) The face-to-face encounter must be (c) Definitions. As used in this requirements described in this documented in the pertinent portion of section: paragraph (d) are conditions of payment the medical record (for example, (1) Physician has the same meaning as applicable to DMEPOS items. history, physical examination, in section 1861(r)(1) of the Act. (1) Written Order/Prescription. All diagnostic tests, summary of findings, (2) Treating practitioner means DMEPOS items require a written order/ progress notes, treatment plans or other physician as defined in section prescription for Medicare payment. sources of information that may be 1861(r)(1) of the Act, or physician Medicare Contractors shall consider the appropriate). The supporting assistant, nurse practitioner, or clinical totality of the medical records when documentation must include subjective nurse specialist, as those terms are reviewing for compliance with and objective beneficiary specific defined in section 1861(aa)(5) of the standardized written order/prescription information used for diagnosing, Act. elements. treating, or managing a clinical (3) DMEPOS supplier means an entity condition for which the DMEPOS is with a valid Medicare supplier number, (i) Elements. A written order/ ordered. including an entity that furnishes items prescription must include the following (e) Suspension of face-to-face through the mail. elements: (4) Written Order/Prescription is a (A) Beneficiary Name or Medicare encounter and written order prior to written communication from a treating Beneficiary Identifier (MBI). delivery requirements. CMS may practitioner that documents the need for (B) General Description of the item. suspend face-to-face encounter and a beneficiary to be provided an item of (C) Quantity to be dispensed, if written order prior to delivery DMEPOS. applicable. requirements generally or for a (5) Face-to-face encounter is an in- (D) Date. particular item or items at any time and person or telehealth encounter between (E) Practitioner Name or National without undertaking rulemaking, except the treating practitioner and the Provider Identifier (NPI). those items for which inclusion on the beneficiary. (F) Practitioner Signature. Master List was statutorily imposed. (6) Power mobility device (PMD) (ii) Timing of the Written Order/ PART 413—PRINCIPLES OF means a covered item of durable Prescription. (A) For PMDs and other REASONABLE COST medical equipment that is in a class of DMEPOS items selected for inclusion on REIMBURSEMENT; PAYMENT FOR wheelchairs that includes a power the Required Face-to-Face Encounter END-STAGE RENAL DISEASE wheelchair (a four-wheeled motorized and Written Order Prior to Delivery List, SERVICES; PROSPECTIVELY vehicle whose steering is operated by an the written order/prescription must be DETERMINED PAYMENT RATES FOR electronic device or a joystick to control communicated to the supplier prior to SKILLED NURSING FACILITIES; direction and turning) or a power- delivery. PAYMENT FOR ACUTE KIDNEY operated vehicle (a three or four- (B) For all other DMEPOS, the written INJURY DIALYSIS wheeled motorized scooter that is order/prescription must be operated by a tiller) that a beneficiary communicated to the supplier prior to ■ 4. The authority citation for part 413 uses in the home. claim submission. continues to read as follows: (7) Master List of DMEPOS items (2) Items requiring a Face-to-Face Encounter. For PMDs and other Authority: 42 U.S.C. 1302, 1395d(d), Potentially Subject to Face-to-Face 1395f(b), 1395g, 1395l(a), (i), and (n), Encounter and Written Orders Prior to DMEPOS items selected for inclusion on 1395x(v), 1395hh, 1395rr, 1395tt, and Delivery and/or Prior Authorization the Required Face-to-Face Encounter 1395ww; and sec. 124 of Public Law 106– Requirements, also referred to as and Written Order Prior to Delivery List, 113, 113 Stat. 1501A–332; sec. 3201 of Public ‘‘Master List’’ are items of DMEPOS that the treating practitioner must document Law 112–96, 126 Stat. 156; sec. 632 of Public CMS has identified in accordance with and communicate to the DMEPOS Law 112–240, 126 Stat. 2354; sec. 217 of sections 1834(a)(11)(B) and 1834(a)(15) supplier that the treating practitioner Public Law 113–93, 129 Stat. 1040; and sec. of the Act. The criteria for this list are has had a face-to-face encounter with 204 of Public Law 113–295, 128 Stat. 4010; specified in § 414.234. The Master List the beneficiary within the 6 months and sec. 808 of Public Law 114–27, 129 Stat. 362. shall serve as a library of DMEPOS preceding the date of the written order/ items from which items may be selected prescription. ■ 5. Section 413.178 is amended— for inclusion on Required Face-to-Face (i) The encounter must be used for the ■ a. In paragraph (a)(4) by removing the Encounter and Written Order Prior to purpose of gathering subjective and reference ‘‘paragraphs (d)(1)(i) through Delivery List and/or the Required Prior objective information associated with (v)’’ and adding in its place the Authorization List. diagnosing, treating, or managing a reference ‘‘paragraphs (e)(1)(i) through (8) Required Face-to-Face Encounter clinical condition for which the (v)’’; and Written Order Prior to Delivery List DMEPOS is ordered. ■ b. In paragraph (a)(13) by removing is a list of DMEPOS items selected from (ii) If it is a telehealth encounter, the the reference to ‘‘paragraph (d)(1)(vi)’’ the Master List and subject to the requirements of §§ 410.78 and 414.65 and adding in its place the reference requirements of a Face-to-Face must be met. ‘‘paragraph (e)(1)(vi)’’;

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■ c. By redesignating paragraphs (d) (vii) Date the facility will start ■ d. By adding paragraph (e). through (f) as paragraphs (e) through (g), submitting data again, with justification The revisions and addition read as respectively; for this date. follows: ■ d. By adding a new paragraph (d); (viii) Evidence of the impact of the ■ e. In newly redesignated paragraph extraordinary circumstances, including § 413.234 Drug designation process. (e)(2)(i) by removing the reference but not limited to photographs, (a) * * * ‘‘paragraph (d)(1)’’ and adding in its newspaper, and other media articles. ESRD PPS functional category. A place the reference ‘‘paragraph (e)(1)’’; (5) CMS will not consider an distinct grouping of drugs or biological and exception request unless the facility products, as determined by CMS, whose ■ f. In newly redesignated paragraph requesting such exception has complied end action effect is the treatment or (f)(2) by removing the cross-reference to fully with the requirements in management of a condition or ‘‘paragraph (e)(1)’’ and adding in its paragraph (d) of this section. conditions associated with ESRD. place ‘‘paragraph (f)(1)’’. (6) CMS may grant exceptions to * * * * * The addition reads as follows: facilities without a request if it Oral-only drug. A drug or biological determines that one or more of the product with no injectable equivalent or § 413.178 ESRD quality incentive program. following has occurred: other form of administration other than * * * * * (i) An extraordinary circumstance an oral form. (d) Data submission requirement. (1) affects an entire region or locale. (b) * * * Except as provided in paragraph (d)(3) (ii) An unresolved issue with a CMS (1) * * * and (4) of this section, and for a data system affected the ability of a (ii) Except as provided in paragraph payment year, facilities must submit to facility to submit data in accordance (e) of this section, the new renal dialysis CMS data on each measure specified by with paragraph (d)(1) of this section and drug or biological product is paid for CMS under paragraph (c) of this section. CMS was unable to provide the facility using the transitional drug add-on Facilities must submit these data in the with an alternative method of data payment adjustment described in form, manner, and at a time specified by submission. paragraph (c)(1) of this section. CMS. (7) A facility that has been granted an * * * * * (2) For purposes of paragraph (d)(1) of exception to the data submission (c) Transitional drug add-on payment this section, the baseline period that requirements under paragraph (d)(6) of adjustment. A new renal dialysis drug applies to the 2023 payment year is this section may notify CMS that it will or biological product is paid for using a calendar year 2019 for purposes of continue to submit data under transitional drug add-on payment calculating the achievement threshold, paragraph (d)(1) of this section by adjustment, which is based on 100 benchmark and minimum total sending an email signed by the CEO or percent of average sales price (ASP). If performance score, and calendar year another designated contact to the ESRD ASP is not available then the 2020 for purposes of calculating the QIP mailbox at [email protected]. transitional drug add-on payment improvement threshold, and the Upon receipt of an email under this adjustment is based on 100 percent of performance period that applies to the clause, CMS will notify the facility in wholesale acquisition cost (WAC) and, 2023 payment year is calendar year writing that CMS is withdrawing the when WAC is not available, the 2021. Beginning with the 2024 payment exception it previously granted to the payment is based on the drug year, the performance period and facility. manufacturer’s invoice. corresponding baseline periods are each * * * * * Notwithstanding the provisions in advanced 1 year for each successive ■ 6. Section 413.230 is amended by paragraphs (c)(1) and (2) of this section, payment year. revising paragraphs (b) and (c) and if CMS does not receive a full calendar (3) A facility may request and CMS adding paragraph (d) and (e) to read as quarter of ASP data for a new renal may grant exceptions to the reporting follows: dialysis drug or biological product requirements under paragraph (d)(1) of § 413.230 Determining the per treatment within 30 days of the last day of the 3rd this section for one or more calendar payment amount. calendar quarter after we begin applying days, when there are certain * * * * * the transitional drug add-on payment extraordinary circumstances beyond the (b) Any outlier payment under adjustment for the product, CMS will no control of the facility. § 413.237; (4) A facility may request an longer apply the transitional drug add- (c) Any training adjustment add-on on payment adjustment for that product exception within 90 days of the date under § 413.235(c); that the extraordinary circumstances beginning no later than 2-calendar (d) Any transitional drug add-on quarters after we determine a full occurred by submitting the payment adjustment under § 413.234(c); Extraordinary Circumstances Exception calendar quarter of ASP data is not and available. If CMS stops receiving the request form, which is available on the (e) Any transitional add-on payment latest full calendar quarter of ASP data QualityNet website (https:// adjustment for new and innovative for a new renal dialysis drug or www.qualitynet.org/), to CMS via email equipment and supplies under biological product during the applicable to the ESRD QIP mailbox at ESRDQIP@ § 413.236(d). cms.hhs.gov. Facilities must provide the ■ 7. Section 413.234 is amended— time period specified in paragraph (c)(1) following information on the form: ■ a. In paragraph (a) by revising the or (2) of this section, CMS will no longer (i) Facility CCN. definitions of ‘‘ESRD PPS functional apply the transitional drug add-on (ii) Facility name. category’’ and ‘‘Oral only drug;’’ payment adjustment for the product (iii) CEO name and contact ■ b. By revising paragraph (b)(1)(ii), as beginning no later than 2-calendar information. amended November 14, 2018, at 83 FR quarters after CMS determines that the (iv) Additional contact name and 57070, and effective January 1, 2020; latest full calendar quarter of ASP data contact information. ■ c. By revising paragraph (c) is not available. (v) Reason for requesting an introductory text, as amended * * * * * exception. November 14, 2018, at 83 FR 57070, and (e) Exclusion criteria for the (vi) Dates affected. effective January 1, 2020; and transitional drug add-on payment

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adjustment. A new renal dialysis drug (iii) A crude natural product, or moiety(ies). Type 7 NDAs include, but used to treat or manage a condition for (iv) Ineligible for submission under are not limited to: which there is an ESRD PPS functional section 505(j) of the FD&C Act because (A) The first post-1962 application for category is not eligible for payment it differs in bioavailability (for example, an active moiety marketed prior to 1938. using the transitional drug add-on products with different release (B) The first application for an active payment adjustment described in patterns); or moiety first marketed between 1938 and paragraph (c)(1) of this section if the (4) The applicant has a right of 1962 that is identical, related or similar drug is approved by FDA under section reference to the application. (IRS) to a drug covered by a Drug 505(j) of the Federal Food, Drug, and (C) The product contains an active Efficacy Study Implementation notice. Cosmetic Act (FD&C Act) or the new ingredient or active moiety that has The regulation at 21 CFR 310.6(b)(1) drug application (NDA) for the drug is been previously approved or marketed states that an identical, related, or classified by FDA as Type 3, 5, 7, or 8, in the U.S. only as part of a similar drug includes other brands, Type 3 in combination with Type 2 or combination. This applies to active potencies, dosage forms, salts, and Type 4, or Type 5 in combination with ingredients previously approved or esters of the same drug moiety as well Type 2, or Type 9 when the parent NDA marketed as part of a physical or as any of drug moiety related in is a Type 3, 5, 7 or 8 as described in chemical combination, or as part of a chemical structure or known paragraphs (e)(1) through (7) of this mixture derived from recombinant pharmacological properties. section, respectively: deoxyribonucleic acid technology or (C) The first application for an IRS (1) Type 3 NDA—New Dosage Form. natural sources. drug product first marketed after 1962. (D) The first application for an active (i) A Type 3 NDA is for a new dosage (D) The product is a combination moiety that was first marketed without form of an active ingredient that has product that differs from a previously an NDA after 1962. been approved or marketed in the marketed combination by the removal of United States (U.S.) by the same or (ii) [Reserved] one or more active ingredients or by (4) Type 8 NDA—Prescription to another applicant but in a different substitution of a new ester or salt or Over-the-Counter (OTC). (i) A Type 8 dosage form. The indication for the drug other noncovalent derivative of an NDA is for a drug product intended for product does not need to be the same as active ingredient for one or more of the OTC marketing that contains an active that of the already marketed drug active ingredients. In the latter case, the ingredient that has been approved product. Once a new dosage form has NDA would be classified as a previously or marketed in the U.S. only been approved for an active ingredient, combination of a Type 2 NDA as for dispensing by prescription (OTC subsequent applications for the same described in paragraph (e)(5)(i) of this switch). A Type 8 NDA may provide for dosage form and active ingredient section, with a Type 5 NDA as described a different dosing regimen, different should be classified as a Type 5 NDA, in this paragraph (e)(2). strength, different dosage form, or as described in paragraph (e)(2) of this (E) The product contains a different different indication from the product section. strength of one or more active approved previously for prescription (ii) [Reserved] ingredients in a previously approved or (2) Type 5 NDA—New Formulation or sale. marketed combination. A Type 5 NDA, (ii) If the proposed OTC switch will Other Differences. (i) A Type 5 NDA is as described in this paragraph (e)(2), for a product, other than a new dosage apply to all indications, uses, and would generally be submitted by an strengths of an approved prescription form, that differs from a product already applicant other than the holder of the approved or marketed in the U.S. dosage form (leaving no prescription- approved application for the approved only products of that particular dosage because of one of the following: product. A similar change in an (A) The product involves changes in form on the market), the application approved product by the applicant of holder should submit the change as a inactive ingredients that require either the approved product would usually be bioequivalence studies or clinical supplement to the approved submitted as a supplemental application. If the applicant intends to studies for approval and is submitted as application. an original NDA rather than as a switch only some indications, uses, or (F) The product differs in supplement by the applicant of the strengths of the dosage form to OTC bioavailability (for example, approved product; status (while continuing to market other superbioavailable or different (B) The product is a duplicate of a indications, uses, or strengths of the controlled-release pattern) and, drug product by another applicant dosage form for prescription-only sale), therefore, is ineligible for submission as (same active ingredient, same dosage the applicant should submit a new NDA an abbreviated new drug application form, same or different indication, or for the OTC products, which would be (ANDA) under section 505(j) of the same combination), and classified as a Type 8 NDA. (1) Requires bioequivalence testing FD&C Act. (5) Combination of Type 3 NDA. Type (including bioequivalence studies with (G) The product involves a new 3 NDA, as described in paragraph (e)(1) clinical endpoints), but is not eligible plastic container that requires safety of this section, in combination with a for submission as a section 505(j) of the studies beyond limited confirmatory Type 2 NDA, as described in paragraph FD&C Act application; or testing (see 21 CFR 310.509, Parenteral (e)(5)(i) of this section, or in (2) Requires safety or effectiveness drug products in plastic containers). combination with a Type 4 NDA, as testing because of novel inactive (ii) [Reserved] described in paragraph (e)(5)(ii) of this ingredients; or (3) Type 7 NDA—Previously Marketed section; (3) Requires full safety or But Without an Approved NDA. (i) A (i) Type 2 NDA—New Active effectiveness testing because it is: Type 7 NDA is for a drug product that Ingredient. (A) A Type 2 NDA is for a (i) Subject to exclusivity held by contains an active moiety that has not drug product that contains a new active another applicant, or been previously approved in an ingredient, but not a new molecular (ii) A product of biotechnology and its application, but has been marketed in entity (NME). A new active ingredient safety and/or effectiveness are not the U.S. This classification applies only includes those products whose active assessable through bioequivalence to the first NDA approved for a drug moiety has been previously approved or testing, or product containing this (these) active marketed in the U.S., but whose

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particular ester, salt, or noncovalent (ii) An NDA for a drug product Type 9 NDA after Approval. (A) A Type derivative of the unmodified parent containing an active moiety that has 9 NDA is for a new indication or claim molecule has not been approved by FDA been marketed as a drug in the U.S., but for a drug product that is currently or marketed in the U.S., either alone, or never approved in an application being reviewed under a different NDA as part of a combination product. submitted under section 505 of the (the ‘‘parent NDA’’), and the applicant Similarly, if any ester, salt, or FD&C Act, would be considered a Type does not intend to market this drug noncovalent derivative has been 7 NDA as described in paragraph (e)(3) product under the Type 9 NDA after marketed first, the unmodified parent of this section, not a Type 1 NDA. approval. Generally, a Type 9 NDA is molecule would also be considered a (iii) An NDA for a drug-drug submitted as a separate NDA so as to be new active ingredient, but not an NME. combination product containing an in compliance with the guidance for The indication for the drug product active moiety that is an NME in industry on Submitting Separate does not need to be the same as that of combination with another active moiety Marketing Applications and Clinical the already marketed product that had already been approved by FDA Data for Purposes of Assessing User containing the same active moiety. would be classified as a new Fees. (B) If the active ingredient is a single combination containing an NME (that is, (B) When the Type 9 NDA is enantiomer and a racemic mixture Type 1,4 NDA, as described in submitted, it will be given the same containing that enantiomer has been paragraph (e)(5)(ii) of this section). For NDA classification as the pending NDA. previously approved by FDA or example, a drug-drug combination can When one application is approved, the marketed in the U.S., or if the active include a fixed-combination drug other will be reclassified as Type 9 ingredient is a racemic mixture product or a co-packaged drug product regardless of whether it was the first or containing an enantiomer that has been with two or more active moieties. second NDA actually submitted. After (iv) An active moiety in a previously approved by FDA or the approval of a Type 9 NDA, FDA will radiopharmaceutical (or radioactive marketed in the U.S., the NDA will be ‘‘administratively close’’ the Type 9 classified as a Type 2 NDA. drug product) which has not been approved by the FDA or marketed in the NDA and thereafter only accept (ii) Type 4 NDA—New Combination. U.S. is classified as an NME. submissions to the ‘‘parent’’ NDA. (A) A Type 4 NDA is for a new drug- (v) In addition, if a change in isotopic (ii) [Reserved] drug combination of two or more active form results in an active moiety that has ■ 8. Section 413.236 is added to read as ingredients. An application for a new never been approved by the FDA or follows: drug-drug combination product may marketed in the U.S., the active have more than one classification code ingredient is classified as an NME. § 413.236 Transitional Add-on Payment if at least one component of the (C) An NDA for an active ingredient Adjustment for New and Innovative Equipment and Supplies. combination is an NME or a new active that is a chemical combination of two or ingredient. The new product may be a more previously approved or marketed (a) Basis. This section establishes a physical or chemical (for example, active moieties that are linked by an payment adjustment to support ESRD covalent ester or noncovalent ester bond is classified as a combination facilities in the uptake of new and derivative) combination of two or more of a Type 2 NDA as described in innovative renal dialysis equipment and active moieties. paragraph (e)(5)(i) of this section, with supplies under the ESRD prospective (B) A new physical combination may a Type 4 NDA as described in paragraph payment system under the authority of be two or more active ingredients (e)(5)(ii) of this section, if the active section 1881(b)(14)(D)(iv) of the Social combined into a single dosage form, or moieties have not been previously Security Act. two or more drugs packaged together marketed or approved as a physical (b) Eligibility criteria. For dates of with combined labeling. When at least combination. If the physical service occurring on or after January 1, one of the active moieties is classified combination has been previously 2020, CMS provides for a transitional as an NME, the NDA is classified as a marketed or approved, however, such a add-on payment adjustment for new and combination of a Type 1 NDA, as product would no longer be considered innovative equipment and supplies (as described in paragraph (e)(5)(ii)(B)(1) of a new combination and the NDA would specified in paragraph (d) of this this section, with a Type 4 NDA, as thus be classified as a Type 2 NDA, as section) that is added to the per described in paragraph (e)(5)(ii) of this described in paragraph (e)(5)(i) of this treatment base rate established in section. When none of the active section. § 413.220, adjusted for wages as moieties is an NME, but at least one is (6) Combination of Type 5 NDA. Type described in § 413.231, and adjusted for a new active ingredient, the NDA is 5 NDA, as described in paragraph (e)(2) facility-level and patient-level classified as a combination of a Type 2 of this section, in combination with a characteristics as described in NDA, as described in paragraph (e)(5)(i) Type 2 NDA, as described in paragraph §§ 413.232 and 413.235 to an ESRD of this section, with a Type 4 NDA, as (e)(5)(i) of this section. facility for furnishing a covered described in paragraph (e)(5)(ii) of this (7) Type 9 NDA when the parent NDA equipment or supply only if the item: section. is a Type 3, Type 5, Type 7, or a Type (1) Has been designated by CMS as a (1) Type 1 NDA—New Molecular 8. A Type 9 NDA, as described in renal dialysis service under § 413.171; Entity. (i) A Type 1 NDA is for a drug paragraph (e)(7)(i) of this section when product that contains an NME. An NME the parent NDA is a Type 3 NDA as (2) Is new, meaning it is granted is an active ingredient that contains no described in paragraph (e)(1) of this marketing authorization by the Food active moiety that has been previously section or a Type 5 NDA as described and Drug Administration (FDA) on or approved by FDA in an application in paragraph (e)(2) of this section or after January 1, 2020; submitted under section 505 of the Type 7 NDA as described in paragraph (3) Is commercially available; FD&C Act or has been previously (e)(3) of this section or a Type 8 NDA (4) Has a Healthcare Common marketed as a drug in the U.S. A pure as described in paragraph (e)(4) of this Procedure Coding System (HCPCS) enantiomer or a racemic mixture is an section. application submitted in accordance NME only when neither has been (i) Type 9 NDA—New Indication or with the official Level II HCPCS coding previously approved or marketed. Claim, Drug Not to be Marketed under procedures;

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(5) Is innovative, meaning it meets the ■ 9. Section 413.237 is amended by— (b) Mapping fee schedule amounts criteria specified in § 412.87(b)(1) of this ■ a. Revising paragraphs (a)(1)(i) based on different kinds of coding chapter and related guidance; and through (iv); changes. When the code for an item is (6) Is not a capital-related asset that an ■ b. Redesignating paragraph (a)(1)(v) as divided into several codes for the ESRD facility has an economic interest paragraph (a)(1)(vi); components of that item, the total of the in through ownership (regardless of the ■ c. Adding new paragraph (a)(1)(v); separate fee schedule amounts manner in which it was acquired). and established for the components must not ■ (c) Announcement of determinations d. Revising newly redesignated be higher than the fee schedule amount and deadline for consideration of new paragraph (a)(1)(vi). for the original item. When there is a renal dialysis equipment or supply The revisions and addition read as single code that describes two or more applications. CMS will consider follows: distinct complete items (for example, whether a new renal dialysis supply or § 413.237 Outliers. two different but related or similar equipment meets the eligibility criteria (a) * * * items), and separate codes are specified in paragraph (b) of this section (1) * * * subsequently established for each item, and announce the results in the Federal (i) Renal dialysis drugs and biological the fee schedule amounts that applied to Register as part of its annual updates products that were or would have been, the single code continue to apply to and changes to the ESRD prospective prior to January 1, 2011, separately each of the items described by the new payment system. CMS will only billable under Medicare Part B; codes. When the codes for the consider a complete application (ii) Renal dialysis laboratory tests that components of a single item are received by CMS by February 1 prior to were or would have been, prior to combined in a single global code, the fee the particular calendar year. January 1, 2011, separately billable schedule amounts for the new code are (d) Transitional add-on payment under Medicare Part B; established by totaling the fee schedule adjustment for new and innovative (iii) Renal dialysis medical/surgical amounts used for the components (that equipment and supplies. A new and supplies, including syringes, used to is, use the total of the fee schedule innovative renal dialysis equipment or administer renal dialysis drugs and amounts for the components as the fee supply will be paid for using a biological products that were or would schedule amount for the global code). transitional add-on payment adjustment have been, prior to January 1, 2011, When the codes for several different for new and innovative equipment and separately billable under Medicare Part items are combined into a single code, supplies based on 65 percent of the B; the fee schedule amounts for the new MAC-determined price, as specified in (iv) Renal dialysis drugs and code are established using the average paragraph (e) of this section. biological products that were or would (arithmetic mean), weighted by allowed (1) The transitional add-on payment have been, prior to January 1, 2011, services, of the fee schedule amounts for adjustment for new and innovative covered under Medicare Part D, the formerly separate codes. equipment and supplies is paid for 2- including renal dialysis oral-only drugs ■ calendar years. 12. Section 414.112 is added to effective January 1, 2025; and subpart C to read as follows: (2) Following payment of the (v) Renal dialysis equipment and transitional add-on payment adjustment supplies that receive the transitional § 414.112 Establishing fee schedule for new and innovative equipment and add-on payment adjustment as specified amounts for new HCPCS codes for items supplies, the ESRD PPS base rate will in § 413.236 after the payment period and services without a fee schedule pricing not be modified and the new and has ended. history. innovative renal dialysis equipment or (vi) As of January 1, 2012, the (a) General rule. If a HCPCS code is supply will be an eligible outlier service laboratory tests that comprise the new and describes items and services as provided in § 413.237. Automated Multi-Channel Chemistry that do not have a fee schedule pricing (e) Pricing of new and innovative panel are excluded from the definition history (classified and paid for renal dialysis equipment and supplies. of outlier services. previously under a different code), the (1) The Medicare Administrative * * * * * fee schedule amounts for the new code Contractors (MACs) on behalf of CMS are established based on the process will establish prices for new and PART 414—PAYMENT FOR PART B described in paragraphs (b) through (d) innovative renal dialysis equipment and MEDICAL AND OTHER HEALTH of this section. supplies that meet the eligibility criteria SERVICES (b) Comparability. Fee schedule specified in paragraph (b) of this section ■ using verifiable information from the 10. The authority citation for part 414 amounts for new HCPCS codes for items following sources of information, if continues to read as follows: and services without a fee schedule available: Authority: 42 U.S.C. 1302, 1395hh, and pricing history are established using (i) The invoice amount, facility 1395rr(b)(l). existing fee schedule amounts for charges for the item, discounts, ■ 11. Section 414.110 is added to comparable items when items with allowances, and rebates; subpart C to read as follows: existing fee schedule amounts are (ii) The price established for the item determined to be comparable to the new by other MACs and the sources of § 414.110 Continuity of pricing when items and services based on a information used to establish that price; HCPCS codes are divided or combined. comparison of: Physical components; (iii) Payment amounts determined by (a) General rule. If a new HCPCS code mechanical components; electrical other payers and the information used is added, CMS or contractors make components; function and intended use; to establish those payment amounts; every effort to determine whether the and additional attributes and features. If and item and service has a fee schedule there are no items with existing fee (iv) Charges and payment amounts pricing history. If there is a fee schedule schedule amounts that are comparable required for other equipment and pricing history, the previous fee to the items and services under the new supplies that may be comparable or schedule amounts for the old code(s) are code, the fee schedule amounts for the otherwise relevant. mapped to the new code(s) to ensure new code are established in accordance (2) [Reserved] continuity of pricing. with paragraph (c) or (d) of this section.

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(c) Use of supplier or commercial purpose of establishing the fee schedule annual period)) or greater, or an average price lists. (1) Fee schedule amounts for amounts for the new code. monthly rental fee schedule of $50 items and services without a fee (2) A pricing percentage is established (adjusted annually for inflation using schedule pricing history described by based on the results of the technology consumer price index for all urban new HCPCS codes that are not assessment and is used to establish the consumers (CPI–U), and reduced by the comparable to items and services with fee schedule amounts for the new 10-year moving average of changes in existing fee schedule amounts may be code(s). The pricing percentages are annual economy-wide private nonfarm established using supplier price lists, applied to the fee schedule amounts for business multifactor productivity (MFP) including catalogs and other retail price HCPCS codes with existing fee schedule (as projected by the Secretary for the 10- lists (such as internet retail prices) that amounts to calculate the fee schedule year period ending with the applicable provide information on commercial amounts for new HCPCS codes without FY, year, cost reporting period, or other pricing for the item. Potential a fee schedule pricing history. annual period)) or greater, or are appropriate sources for such Technology assessments would be used identified as accounting for at least 1.5 commercial pricing information can also whenever it is necessary to determine percent of Medicare expenditures for all include payments made by Medicare the relative cost of a new item compared DMEPOS items over a 12-month period Advantage plans, as well as verifiable to items from the fee schedule base that are: information from supplier invoices and period in order to establish fee schedule (A) Identified as having a high rate of non-Medicare payer data. If the only amounts for the new item when potential fraud or unnecessary available price information is from a supplier or commercial price lists are utilization in an Office of Inspector period other than the fee schedule base not available or verifiable or do not General (OIG) or Government period, deflation factors are applied appear to represent a reasonable relative Accountability Office (GAO) report that against current pricing in order to difference in supplier costs of is national in scope and published in approximate the base period price. furnishing the new DMEPOS item 2015 or later, or (i) The annual deflation factors are relative to the supplier costs of (B) Listed in the 2018 or later specified in program instructions and furnishing DMEPOS items from the fee Comprehensive Error Rate Testing are based on the percentage change in schedule base period. (CERT) Medicare Fee-for-Service (FFS) the consumer price index for all urban ■ 13. Section 414.234 is amended— Supplemental Improper Payment Data consumers (CPI–U) from the mid-point ■ a. In paragraph (a) by adding in report as having a high improper of the year the prices are in effect to the alphabetical order a definition for payment rate, or mid-point of the fee schedule base ‘‘Required Prior Authorization List’’; (ii) The annual Master List updates period, as calculated using the following ■ b. By revising the heading of shall include any items with at least formula: paragraph (b) and revising paragraphs 1,000 claims and 1 million dollars in ((base CPI–U minus current CPI–U) (b)(1) and (2), (b)(3)(i) through (iii), and payments during a recent 12-month divided by current CPI–U) plus one (b)(4) and (6); period that are determined to have ■ c. By revising paragraphs (c)(1)(i) and aberrant billing patterns and lack (ii) The deflated amounts are then (ii), (d)(1) introductory text and (d)(1)(i), explanatory contributing factors (for increased by the update factors and (e)(3) and (4); and example, new technology or coverage specified in § 414.102(c). ■ d. By adding paragraph (e)(5). policies). Items with aberrant billing (2) If within 5 years of establishing fee The revisions and addition read as patterns would be identified as those schedule amounts using supplier or follows: items with payments during a 12-month commercial prices, the supplier or timeframe that exceed payments made commercial prices decrease by less than § 414.234 Prior authorization for items during the preceding 12-months, by the 15 percent, a one-time adjustment to the frequently subject to unnecessary greater of: fee schedule amounts is made using the utilization. (A) Double the percent change of all new prices. The new supplier or (a) * * * DMEPOS claim payments for items that commercial prices would be used to Required Prior Authorization List is a meet the above claim and payment establish the new fee schedule amounts list of DMEPOS items selected from the criteria, from the preceding 12-month in the same way that the older prices Master List and subject to the requirements of prior authorization as a period, or were used, including application of the (B) Exceeding a 30 percent increase in condition of payment. deflation formula in paragraph (c)(1) of payment, or this section. * * * * * (iii) Any item statutorily requiring a (d) Use of technology assessments. (1) (b) Master List of Items Potentially face-to-face encounter, a written order Fee schedule amounts for items and Subject to Face-to-Face Encounter and prior to delivery, or prior authorization. services without a fee schedule pricing Written Order Prior to Delivery and/or (2) The Master List is self-updating at history described by new HCPCS codes Prior Authorization Requirements. (1) a minimum annually, and is published that are not comparable to items and Master List Inclusion Criteria are as in the Federal Register. services with existing fee schedule follows: (3) * * * amounts may be established using (i) Any DMEPOS items included in (i) OIG reports published after 2020. technology assessments, performed by the DMEPOS Fee Schedule that have an (ii) GAO reports published after 2020. biomedical engineers, certified average purchase fee of $500 (adjusted (iii) Listed in the CERT Medicare FFS orthotists and prosthetists, and others annually for inflation using consumer Supplemental Improper Payment Data knowledgeable about the cost of price index for all urban consumers report(s) published after 2020 as having DMEPOS items and services, to (CPI–U), and reduced by the 10-year a high improper payment rate. determine the relative cost of the items moving average of changes in annual (4) Items are removed from the Master and services described by the new codes economy-wide private nonfarm business List after 10 years from the date the item to items and services with existing fee multifactor productivity (MFP) (as was added to the Master List, unless the schedule amounts to determine a projected by the Secretary for the 10- item was identified in an OIG report, pricing percentage as described in year period ending with the applicable GAO report, or having been identified in paragraph (d)(2) of this section for the FY, year, cost reporting period, or other the CERT Medicare FFS Supplemental

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Improper Payment Data report as having function, then CMS or its contractor described in paragraphs (b) through (d) a high improper payment rate, within expedites the review of the prior of this section. the 5-year period preceding the authorization request and (b) Comparability. Fee schedule anticipated date of expiration. communicates the decision following amounts for new HCPCS codes for items * * * * * the receipt of all applicable Medicare and services without a fee schedule (6) An item is removed from the list required documentation. pricing history are established using if the cost drops below the payment * * * * * existing fee schedule amounts for threshold criteria set forth in paragraph ■ 14. Section 414.236 is added to comparable items when items with (b)(1)(i) of this section. subpart D to read as follows: existing fee schedule amounts are * * * * * determined to be comparable to the new (c) * * * § 414.236 Continuity of pricing when items and services based on a (1) * * * HCPCS codes are divided or combined. comparison of: Physical components; (i) The Required Prior Authorization (a) General rule. If a new HCPCS code mechanical components; electrical List specified in paragraph (c)(1) of this is added, CMS or contractors make components; function and intended use; section is selected from the Master List. every effort to determine whether the and additional attributes and features. If CMS may consider factors such as item and service has a fee schedule there are no items with existing fee geographic location, item utilization or pricing history. If there is a fee schedule schedule amounts that are comparable cost, system capabilities, emerging pricing history, the previous fee to the items and services under the new trends, vulnerabilities identified in schedule amounts for the old code(s) are code, the fee schedule amounts for the official agency reports, or other analysis mapped to the new code(s) to ensure new code are established in accordance and may implement prior authorization continuity of pricing. with paragraph (c) or (d) of this section. (c) Use of supplier or commercial nationally or locally. (b) Mapping fee schedule amounts price lists. (1) Fee schedule amounts for (ii) CMS may elect to limit the prior based on different kinds of coding items and services without a fee authorization requirement to a changes. When the code for an item is schedule pricing history described by particular region of the country if claims divided into several codes for the new HCPCS codes that are not data analysis shows that unnecessary components of that item, the total of the comparable to items and services with utilization of the selected item(s) is separate fee schedule amounts existing fee schedule amounts may be concentrated in a particular region. CMS established for the components must not established using supplier price lists, may elect to exempt suppliers from be higher than the fee schedule amount including catalogs and other retail price prior authorization upon demonstration for the original item. When there is a lists (such as internet retail prices) that of compliance with Medicare coverage, single code that describes two or more provide information on commercial coding, and payment rules through such distinct complete items (for example, pricing for the item. Potential prior authorization process. two different but related or similar appropriate sources for such * * * * * items), and separate codes are commercial pricing information can also (d) * * * subsequently established for each item, include payments made by Medicare (1) Include all relevant documentation the fee schedule amounts that applied to Advantage plans, as well as verifiable necessary to show that the item meets the single code continue to apply to information from supplier invoices and applicable Medicare coverage, coding, each of the items described by the new non-Medicare payer data. If the only and payment rules, including those codes. When the codes for the available price information is from a outlined in § 410.38 and all of the components of a single item are period other than the fee schedule base following: combined in a single global code, the fee period, deflation factors are applied (i) Written order/prescription. schedule amounts for the new code are against current pricing in order to * * * * * established by totaling the fee schedule approximate the base period price. (e) * * * amounts used for the components (that (i) The annual deflation factors are (3) If applicable Medicare coverage, is, use the total of the fee schedule specified in program instructions and coding, and payment rules are not met, amounts for the components as the fee are based on the percentage change in CMS or its contractor issues a non- schedule amount for the global code). the consumer price index for all urban affirmation decision to the requester. When the codes for several different consumers (CPI–U) from the mid-point (4) If the requester receives a non- items are combined into a single code, of the year the prices are in effect to the affirmation decision, the requester may the fee schedule amounts for the new mid-point of the fee schedule base resubmit a prior authorization request code are established using the average period, as calculated using the following before the item is furnished to the (arithmetic mean), weighted by allowed formula: beneficiary and before the claim is services, of the fee schedule amounts for submitted for processing. the formerly separate codes. ((base CPI–U minus current CPI–U) divided by current CPI–U) plus one (5) A prior authorization request for ■ 15. Section 414.238 is added to an expedited review must include subpart D to read as follows: (ii) The deflated amounts are then documentation that shows that increased by the update factors processing a prior authorization request § 414.238 Establishing fee schedule specified in section 1834(a)(14) of the using a standard timeline for review amounts for new HCPCS codes for items Act for DME, section 1834(h)(4) of the could seriously jeopardize the life or and services without a fee schedule pricing Act for prosthetic devices, prosthetics, health of the beneficiary or the history. orthotics, and therapeutic shoes and beneficiary’s ability to regain maximum (a) General rule. If a HCPCS code is inserts, and section 1834(i)(1)(B) of the function. If CMS or its contractor agrees new and describes items and services Act for surgical dressings. that processing a prior authorization that do not have a fee schedule pricing (2) If within 5 years of establishing fee request using a standard timeline for history (classified and paid for schedule amounts using supplier or review could seriously jeopardize the previously under a different code), the commercial prices, the prices decrease life or health of the beneficiary or the fee schedule amounts for the new code by less than 15 percent, a one-time beneficiary’s ability to regain maximum are established based on the process adjustment to the fee schedule amounts

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is made using the new prices. The new ■ 16. Section 414.422 is amended by that meets all competitive bidding prices would be used to establish the revising paragraph (d) to read as requirements; that is, financial, new fee schedule amounts in the same follows: accreditation, and licensure; way that the older prices were used, § 414.422 Terms of contracts. (ii) All CBAs and product categories including application of the deflation in the original contract that are not formula in paragraph (c)(1) of this * * * * * explicitly transferred by CMS remain (d) Change of ownership (CHOW). (1) section. unchanged in that original contract for CMS may transfer a contract to a (d) Use of technology assessments. (1) the duration of the contract period successor entity that merges with, or Fee schedule amounts for items and unless transferred by CMS pursuant to acquires, a contract supplier if the services without a fee schedule pricing a subsequent CHOW; history described by new HCPCS codes successor entity— (i) Meets all requirements applicable (iii) All requirements of paragraph that are not comparable to items and (d)(1) of this section are met; services with existing fee schedule to contract suppliers for the applicable (iv) The sale of the distinct company amounts may be established using competitive bidding program; (ii) Submits to CMS the includes all of the contract supplier’s technology assessments, performed by documentation described under assets associated with the CBA and/or biomedical engineers, certified § 414.414(b) through (d) if product category(s); and orthotists and prosthetists, and others documentation has not previously been knowledgeable about the cost of (v) CMS determines that transfer of submitted by the successor entity or if part of the original contract will not DMEPOS items and services, to the documentation is no longer determine the relative cost of the items result in disruption of service or harm sufficient for CMS to make a financial to beneficiaries. and services described by the new codes determination. A successor entity is not * * * * * to items and services with existing fee required to duplicate previously ■ schedule amounts to determine a submitted information if the previously 17. Section 414.423 is amended by pricing percentage as described in submitted information is not needed to revising paragraph (f)(2) to read as paragraph (d)(2) of this section for the make a financial determination. This follows: purpose of establishing the fee schedule documentation must be submitted prior § 414.423 Appeals process for breach of a amounts for the new code. to the effective date of the CHOW; and (2) A pricing percentage is established DMEPOS competitive bidding program (iii) Submits to CMS a signed contract actions. based on the results of the technology novation agreement acceptable to CMS * * * * * assessment and is used to establish the stating that it assumes all obligations fee schedule amounts for the new under the contract. This documentation (f) * * * code(s). The pricing percentages are must be submitted no later than 10 days (2) A supplier that wishes to appeal applied to the fee schedule amounts for after the effective date of the CHOW. the breach of contract action(s) specified HCPCS codes with existing fee schedule (2) Except as specified in paragraph in the notice of breach of contract must amounts to calculate the fee schedule (d)(3) of this section, CMS may transfer submit a written request to the CBIC. amounts for new HCPCS codes without the entire contract, including all The request for a hearing must be a fee schedule pricing history. product categories and competitive submitted to the CBIC within 30 days Technology assessments would be used bidding areas, to a successor entity. from the date of the notice of breach of whenever it is necessary to determine (3) For contracts issued in the Round contract. the relative cost of a new item compared 2 Recompete and subsequent rounds in * * * * * to items from the fee schedule base the case of a CHOW where a contract Dated: June 21, 2019. period in order to establish fee schedule supplier sells a distinct company (for Seema Verma, amounts for the new item when example, a subsidiary) that furnishes a supplier or commercial price lists are specific product category or services a Administrator, Centers for Medicare & Medicaid Services. not available or verifiable or do not specific CBA, CMS may transfer the appear to represent a reasonable relative portion of the contract performed by Dated: July 24, 2019. difference in supplier costs of that company to a successor entity, if Alex M. Azar II, furnishing the new DMEPOS item the following conditions are met: Secretary, Department of Health and Human relative to the supplier costs of (i) Every CBA, product category, and Services. furnishing DMEPOS items from the fee location of the company being sold must [FR Doc. 2019–16369 Filed 7–29–19; 4:15 pm] schedule base period. be transferred to the successor entity BILLING CODE 4120–01–P

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