Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Policy Changes and Fiscal Year 2019 Rates; Quality Reporting Requirements for Specific Providers; Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs (Promoting Interoperability Programs) Requirements for Eligible Hospitals, Critical Access Hospitals, and Eligible Professionals; Medicare Cost Reporting Requirements; and Physician Certification and Recertification of Claims

AGENCY:

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

ACTION:

Final rule.

SUMMARY:

We are revising the Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital-related costs of acute care hospitals to implement changes arising from our continuing experience with these systems for FY 2019. Some of these changes implement certain statutory provisions contained in the 21st Century Cures Act and the Bipartisan Budget Act of 2018, and other legislation. We also are making changes relating to Medicare graduate medical education (GME) affiliation agreements for new urban teaching hospitals. In addition, we are providing the market basket update that will apply to the rate-of-increase limits for certain hospitals excluded from the IPPS that are paid on a reasonable cost basis, subject to these limits for FY 2019. We are updating the payment policies and the annual payment rates for the Medicare prospective payment system (PPS) for inpatient hospital services provided by long-term care hospitals (LTCHs) for FY 2019.

In addition, we are establishing new requirements or revising existing requirements for quality reporting by specific Medicare providers (acute care hospitals, PPS-exempt cancer hospitals, and LTCHs). We also are establishing new requirements or revising existing requirements for eligible professionals (EPs), eligible hospitals, and critical access hospitals (CAHs) participating in the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs (now referred to as the Promoting Interoperability Programs). In addition, we are finalizing modifications to the requirements that apply to States operating Medicaid Promoting Interoperability Programs. We are updating policies for the Hospital Value-Based Purchasing (VBP) Program, the Hospital Readmissions Reduction Program, and the Hospital-Acquired Condition (HAC) Reduction Program.

We also are making changes relating to the required supporting documentation for an acceptable Medicare cost report submission and the supporting information for physician certification and recertification of claims.

DATES:

This final rule is effective on October 1, 2018.

FOR FURTHER INFORMATION CONTACT:

Donald Thompson, (410) 786-4487, and Michele Hudson, (410) 786-4487, Operating Prospective Payment, MS-DRGs, Wage Index, New Medical Service and Technology Add-On Payments, Hospital Geographic Reclassifications, Graduate Medical Education, Capital Prospective Payment, Excluded Hospitals, Sole Community Hospitals, Medicare Disproportionate Share Hospital (DSH) Payment Adjustment, Medicare-Dependent Small Rural Hospital (MDH) Program, and Low-Volume Hospital Payment Adjustment Issues.

Michele Hudson, (410) 786-4487, Mark Luxton, (410) 786-4530, and Emily Lipkin, (410) 786-3633, Long-Term Care Hospital Prospective Payment System and MS-LTC-DRG Relative Weights Issues.

Siddhartha Mazumdar, (410) 786-6673, Rural Community Hospital Demonstration Program Issues.

Jeris Smith, (410) 786-0110, Frontier Community Health Integration Project Demonstration Issues.

Cindy Tourison, (410) 786-1093, Hospital Readmissions Reduction Program—Readmission Measures for Hospitals Issues.

James Poyer, (410) 786-2261, Hospital Readmissions Reduction Program—Administration Issues.

Elizabeth Bainger, (410) 786-0529, Hospital-Acquired Condition Reduction Program Issues.

Joseph Clift, (410) 786-4165, Hospital-Acquired Condition Reduction Program—Measures Issues.

Grace Snyder, (410) 786-0700 and James Poyer, (410) 786-2261, Hospital Inpatient Quality Reporting and Hospital Value-Based Purchasing—Program Administration, Validation, and Reconsideration Issues.

Reena Duseja, (410) 786-1999 and Cindy Tourison, (410) 786-1093, Hospital Inpatient Quality Reporting—Measures Issues Except Hospital Consumer Assessment of Healthcare Providers and Systems Issues; and Readmission Measures for Hospitals Issues.

Kim Spalding Bush, (410) 786-3232, Hospital Value-Based Purchasing Efficiency Measures Issues.

Elizabeth Goldstein, (410) 786-6665, Hospital Inpatient Quality Reporting and Hospital Value-Based Purchasing—Hospital Consumer Assessment of Healthcare Providers and Systems Measures Issues.

Joel Andress, (410) 786-5237 and Caitlin Cromer, (410) 786-3106, PPS-Exempt Cancer Hospital Quality Reporting Issues.

Mary Pratt, (410) 786-6867, Long-Term Care Hospital Quality Data Reporting Issues.

Elizabeth Holland, (410) 786-1309, Promoting Interoperability Programs Clinical Quality Measure Related Issues.

Kathleen Johnson, (410) 786-3295 and Steven Johnson (410) 786-3332, Promoting Interoperability Programs Nonclinical Quality Measure Related Issues.

Kellie Shannon, (410) 786-0416, Acceptable Medicare Cost Report Submissions Issues.

Thomas Kessler, (410) 786-1991, Physician Certification and Recertification of Claims.

SUPPLEMENTARY INFORMATION:

Electronic Access

This Federal Register document is available from the Federal Register online database through Federal Digital System (FDsys), a service of the U.S. Government Printing Office. This database can be accessed via the internet at: http://www.gpo.gov/fdsys.

Tables Available Through the Internet on the CMS Website

In the past, a majority of the tables referred to throughout this preamble and in the Addendum to the proposed rule and the final rule were published in the Federal Register as part of the annual proposed and final rules. However, beginning in FY 2012, the majority of the IPPS tables and LTCH PPS tables are no longer published in the Federal Register. Instead, these tables, generally, will be available only through the internet. The IPPS tables for this final rule are available through the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. Click on the link on the left side of the screen titled, “FY 2019 IPPS Final Rule Home Page” or “Acute Inpatient—Files for Download.” The LTCH PPS tables for this FY 2019 final rule are available through the internet on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/LongTermCareHospitalPPS/index.html under the list item for Regulation Number CMS-1694-F. For further details on the contents of the tables referenced in this final rule, we refer readers to section VI. of the Addendum to this final rule.

Readers who experience any problems accessing any of the tables that are posted on the CMS websites identified above should contact Michael Treitel at (410) 786-4552.

Table of Contents

I. Executive Summary and Background

A. Executive Summary

B. Background Summary

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

D. Issuance of Notice of Proposed Rulemaking

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

A. Background

B. MS-DRG Reclassifications

C. Adoption of the MS-DRGs in FY 2008

D. FY 2019 MS-DRG Documentation and Coding Adjustment

E. Refinement of the MS-DRG Relative Weight Calculation

F. Changes to Specific MS-DRG Classifications

G. Recalibration of the FY 2019 MS-DRG Relative Weights

H. Add-On Payments for New Services and Technologies for FY 2019

III. Changes to the Hospital Wage Index for Acute Care Hospitals

A. Background

B. Worksheet S-3 Wage Data for the FY 2019 Wage Index

C. Verification of Worksheet S-3 Wage Data

D. Method for Computing the FY 2019 Unadjusted Wage Index

E. Occupational Mix Adjustment to the FY 2019 Wage Index

F. Analysis and Implementation of the Occupational Mix Adjustment and the FY 2019 Occupational Mix Adjusted Wage Index

G. Application of the Rural, Imputed, and Frontier Floors

H. FY 2019 Wage Index Tables

I. Revisions to the Wage Index Based on Hospital Redesignations and Reclassifications

J. Out-Migration Adjustment Based on Commuting Patterns of Hospital Employees

K. Reclassification From Urban to Rural under Section 1886(d)(8)(E) of the Act Implemented at 42 CFR 412.103

L. Process for Requests for Wage Index Data Corrections

M. Labor-Related Share for the FY 2019 Wage Index

IV. Other Decisions and Changes to the IPPS for Operating System

A. Changes to MS-DRGs Subject to Postacute Care Transfer and MS-DRG Special Payment Policies

B. Changes in the Inpatient Hospital Updates for FY 2019 (§ 412.64(d))

C. Rural Referral Centers (RRCs) Annual Updates to Case-Mix Index and Discharge Criteria (§ 412.96)

D. Payment Adjustment for Low-Volume Hospitals (§ 412.101)

E. Indirect Medical Education (IME) Payment Adjustment (§ 412.105)

F. Payment Adjustment for Medicare Disproportionate Share Hospitals (DSHs) for FY 2019 (§ 412.106)

G. Sole Community Hospitals (SCHs) and Medicare-Dependent, Small Rural Hospitals (MDHs) (§§ 412.90, 412.92, and 412.108)

H. Hospital Readmissions Reduction Program: Updates and Changes (§§ 412.150 Through 412.154)

I. Hospital Value-Based Purchasing (VBP) Program: Policy Changes

J. Changes to the Hospital-Acquired Condition (HAC) Reduction Program

K. Payments for Indirect and Direct Graduate Medical Education Costs (§§ 412.105 and 413.75 Through 413.83)

L. Rural Community Hospital Demonstration Program

M. Revision of Hospital Inpatient Admission Orders Documentation Requirements Under Medicare Part A

V. Changes to the IPPS for Capital-Related Costs

A. Overview

B. Additional Provisions

C. Annual Update for FY 2019

VI. Changes for Hospitals Excluded From the IPPS

A. Rate-of-Increase in Payments to Excluded Hospitals for FY 2019

B. Revisions to Regulations Governing Satellite Facilities

C. Revisions to Regulations Governing Excluded Units of Hospitals

D. Report on Adjustment (Exceptions) Payments

E. Critical Access Hospitals (CAHs)

VII. Changes to the Long-Term Care Hospital Prospective Payment System (LTCH PPS) for FY 2019

A. Background of the LTCH PPS

B. Medicare Severity Long-Term Care Diagnosis-Related Group (MS-LTC-DRG) Classifications and Relative Weights for FY 2019

C. Modifications to the Application of the Site Neutral Payment Rate (§ 412.522)

D. Changes to the LTCH PPS Payment Rates and Other Proposed Changes to the LTCH PPS for FY 2019

E. Elimination of the “25-Percent Threshold Policy” Adjustment (§ 412.538)

VIII. Quality Data Reporting Requirements for Specific Providers and Suppliers

A. Hospital Inpatient Quality Reporting (IQR) Program

B. PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program

C. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)

D. Changes to the Medicare and Medicaid EHR Incentive Programs (Now Referred to as the Medicare and Medicaid Promoting Interoperability Programs)

IX. Revisions of the Supporting Documentation Required for Submission of an Acceptable Medicare Cost Report

X. Requirements for Hospitals To Make Public a List of Their Standard Charges via the Internet

XI. Revisions Regarding Physician Certification and Recertification of Claims

XII. Request for Information on Promoting Interoperability and Electronic Healthcare Information Exchange through Possible Revisions to the CMS Patient Health and Safety Requirements for Hospitals and Other Medicare- and Medicaid-Participating Providers and Suppliers

XIII. MedPAC Recommendations

XIV. Other Required Information

A. Publicly Available Data

B. Collection of Information Requirements

C. Response to Public Comments

Regulation Text

Addendum—Schedule of Standardized Amounts, Update Factors, Rate-of-Increase Percentages Effective With Cost Reporting Periods Beginning on or After October 1, 2018 and Payment Rates for LTCHs Effective for Discharges Occurring on or After October 1, 2018

I. Summary and Background

II. Changes to the Prospective Payment Rates for Hospital Inpatient Operating Costs for Acute Care Hospitals for FY 2019

A. Calculation of the Adjusted Standardized Amount

B. Adjustments for Area Wage Levels and Cost-of-Living

C. Calculation of the Prospective Payment Rates

III. Changes to Payment Rates for Acute Care Hospital Inpatient Capital-Related Costs for FY 2019

A. Determination of Federal Hospital Inpatient Capital-Related Prospective Payment Rate Update

B. Calculation of the Inpatient Capital-Related Prospective Payments for FY 2019

C. Capital Input Price Index

IV. Changes to Payment Rates for Excluded Hospitals: Rate-of-Increase Percentages for FY 2019

V. Changes to the Payment Rates for the LTCH PPS for FY 2019

A. LTCH PPS Standard Federal Payment Rate for FY 2019

B. Adjustment for Area Wage Levels Under the LTCH PPS for FY 2019

C. LTCH PPS Cost-of-Living Adjustment (COLA) for LTCHs Located in Alaska and Hawaii

D. Adjustment for LTCH PPS High-Cost Outlier (HCO) Cases

E. Update to the IPPS Comparable/Equivalent Amounts To Reflect the Statutory Changes to the IPPS DSH Payment Adjustment Methodology

F. Computing the Adjusted LTCH PPS Federal Prospective Payments for FY 2019

VI. Tables Referenced in This Rule Generally Available Through the Internet on the CMS Website

Appendix A—Economic Analyses

I. Regulatory Impact Analysis

A. Statement of Need

B. Overall Impact

C. Objectives of the IPPS and the LTCH PPS

D. Limitations of Our Analysis

E. Hospitals Included in and Excluded From the IPPS

F. Effects on Hospitals and Hospital Units Excluded From the IPPS

G. Quantitative Effects of the Policy Changes Under the IPPS for Operating Costs

H. Effects of Other Policy Changes

I. Effects of Changes in the Capital IPPS

J. Effects of Payment Rate Changes and Policy Changes Under the LTCH PPS

K. Effects of Requirements for Hospital Inpatient Quality Reporting (IQR) Program

L. Effects of Requirements for the PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program

M. Effects of Requirements for the Long-Term Care Hospital Quality Reporting Program (LTCH QRP)

N. Effects of Requirements Regarding the Medicare and Medicaid Promoting Interoperability Programs

O. Alternatives Considered

P. Reducing Regulation and Controlling Regulatory Costs

Q. Overall Conclusion

R. Regulatory Review Costs

II. Accounting Statements and Tables

A. Acute Care Hospitals

B. LTCHs

III. Regulatory Flexibility Act (RFA) Analysis

IV. Impact on Small Rural Hospitals

V. Unfunded Mandate Reform Act (UMRA) Analysis

VI. Executive Order 13175

VII. Executive Order 12866

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

I. Background

II. Inpatient Hospital Update for FY 2019

A. FY 2019 Inpatient Hospital Update

B. Update for SCHs and MDHs for FY 2019

C. FY 2019 Puerto Rico Hospital Update

D. Update for Hospitals Excluded From the IPPS

E. Update for LTCHs for FY 2019

III. Secretary's Recommendation

IV. MedPAC Recommendation for Assessing Payment Adequacy and Updating Payments in Traditional Medicare

I. Executive Summary and Background

A. Executive Summary

1. Purpose and Legal Authority

This final rule makes payment and policy changes under the Medicare inpatient prospective payment systems (IPPS) for operating and capital-related costs of acute care hospitals as well as for certain hospitals and hospital units excluded from the IPPS. In addition, it makes payment and policy changes for inpatient hospital services provided by long-term care hospitals (LTCHs) under the long-term care hospital prospective payment system (LTCH PPS). This final rule also makes policy changes to programs associated with Medicare IPPS hospitals, IPPS-excluded hospitals, and LTCHs.

We are establishing new requirements and revising existing requirements for quality reporting by specific providers (acute care hospitals, PPS-exempt cancer hospitals, and LTCHs) that are participating in Medicare. We also are establishing new requirements and revising existing requirements for eligible professionals (EPs), eligible hospitals, and CAHs participating in the Medicare and Medicaid Promoting Interoperability Programs. We are updating policies for the Hospital Value-Based Purchasing (VBP) Program, the Hospital Readmissions Reduction Program, and the Hospital-Acquired Condition (HAC) Reduction Program.

We are making changes relating to the supporting documentation required for an acceptable Medicare cost report submission and the supporting information for physician certification and recertification of claims.

Under various statutory authorities, we are making changes to the Medicare IPPS, to the LTCH PPS, and to other related payment methodologies and programs for FY 2019 and subsequent fiscal years. These statutory authorities include, but are not limited to, the following:

• Section 1886(d) of the Social Security Act (the Act), which sets forth a system of payment for the operating costs of acute care hospital inpatient stays under Medicare Part A (Hospital Insurance) based on prospectively set rates. Section 1886(g) of the Act requires that, instead of paying for capital-related costs of inpatient hospital services on a reasonable cost basis, the Secretary use a prospective payment system (PPS).
• Section 1886(d)(1)(B) of the Act, which specifies that certain hospitals and hospital units are excluded from the IPPS. These hospitals and units are: Rehabilitation hospitals and units; LTCHs; psychiatric hospitals and units; children's hospitals; cancer hospitals; extended neoplastic disease care hospitals, and hospitals located outside the 50 States, the District of Columbia, and Puerto Rico (that is, hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa). Religious nonmedical health care institutions (RNHCIs) are also excluded from the IPPS.
• Sections 123(a) and (c) of the BBRA (Pub. L. 106-113) and section 307(b)(1) of the BIPA (Pub. L. 106-554) (as codified under section 1886(m)(1) of the Act), which provide for the development and implementation of a prospective payment system for payment for inpatient hospital services of LTCHs described in section 1886(d)(1)(B)(iv) of the Act.
• Sections 1814(l), 1820, and 1834(g) of the Act, which specify that payments are made to critical access hospitals (CAHs) (that is, rural hospitals or facilities that meet certain statutory requirements) for inpatient and outpatient services and that these payments are generally based on 101 percent of reasonable cost.
• Section 1866(k) of the Act, as added by section 3005 of the Affordable Care Act, which establishes a quality reporting program for hospitals described in section 1886(d)(1)(B)(v) of the Act, referred to as “PPS-exempt cancer hospitals.”
• Section 1886(a)(4) of the Act, which specifies that costs of approved educational activities are excluded from the operating costs of inpatient hospital services. Hospitals with approved graduate medical education (GME) programs are paid for the direct costs of GME in accordance with section 1886(h) of the Act.
• Section 1886(b)(3)(B)(viii) of the Act, which requires the Secretary to reduce the applicable percentage increase that would otherwise apply to the standardized amount applicable to a subsection (d) hospital for discharges occurring in a fiscal year if the hospital does not submit data on measures in a form and manner, and at a time, specified by the Secretary.
• Section 1886(o) of the Act, which requires the Secretary to establish a Hospital Value-Based Purchasing (VBP) Program, under which value-based incentive payments are made in a fiscal year to hospitals meeting performance standards established for a performance period for such fiscal year.
• Section 1886(p) of the Act, as added by section 3008 of the Affordable Care Act, which establishes a Hospital-Acquired Condition (HAC) Reduction Program, under which payments to applicable hospitals are adjusted to provide an incentive to reduce hospital-acquired conditions.
• Section 1886(q) of the Act, as added by section 3025 of the Affordable Care Act and amended by section 10309 of the Affordable Care Act and section 15002 of the 21st Century Cures Act, which establishes the “Hospital Readmissions Reduction Program.” Under the program, payments for discharges from an “applicable hospital” under section 1886(d) of the Act will be reduced to account for certain excess readmissions. Section 15002 of the 21st Century Cures Act requires the Secretary to compare cohorts of hospitals to each other in determining the extent of excess readmissions.
• Section 1886(r) of the Act, as added by section 3133 of the Affordable Care Act, which provides for a reduction to disproportionate share hospital (DSH) payments under section 1886(d)(5)(F) of the Act and for a new uncompensated care payment to eligible hospitals. Specifically, section 1886(r) of the Act requires that, for fiscal year 2014 and each subsequent fiscal year, subsection (d) hospitals that would otherwise receive a DSH payment made under section 1886(d)(5)(F) of the Act will receive two separate payments: (1) 25 Percent of the amount they previously would have received under section 1886(d)(5)(F) of the Act for DSH (“the empirically justified amount”), and (2) an additional payment for the DSH hospital's proportion of uncompensated care, determined as the product of three factors. These three factors are: (1) 75 Percent of the payments that would otherwise be made under section 1886(d)(5)(F) of the Act; (2) 1 minus the percent change in the percent of individuals who are uninsured (minus 0.2 percentage point for FY 2018 and FY 2019); and (3) a hospital's uncompensated care amount relative to the uncompensated care amount of all DSH hospitals expressed as a percentage.
• Section 1886(m)(6) of the Act, as added by section 1206(a)(1) of the Pathway for Sustainable Growth Rate (SGR) Reform Act of 2013 (Pub. L. 113-67) and amended by section 51005(a) of the Bipartisan Budget Act of 2018 (Pub. L. 115-123), which provided for the establishment of site neutral payment rate criteria under the LTCH PPS, with implementation beginning in FY 2016, and provides for a 4-year transitional blended payment rate for discharges occurring in LTCH cost reporting periods beginning in FYs 2016 through 2019. Section 51005(b) of the Bipartisan Budget Act of 2018 amended section 1886(m)(6)(B) by adding new clause (iv), which specifies that the IPPS comparable amount defined in clause (ii)(I) shall be reduced by 4.6 percent for FYs 2018 through 2026.
• Section 1886(m)(6) of the Act, as amended by section 15009 of the 21st Century Cures Act (Pub. L. 114-255), which provides for a temporary exception to the application of the site neutral payment rate under the LTCH PPS for certain spinal cord specialty hospitals for discharges in cost reporting periods beginning during FYs 2018 and 2019.
• Section 1886(m)(6) of the Act, as amended by section 15010 of the 21st Century Cures Act (Pub. L. 114-255), which provides for a temporary exception to the application of the site neutral payment rate under the LTCH PPS for certain LTCHs with certain discharges with severe wounds occurring in cost reporting periods beginning during FY 2018.
• Section 1886(m)(5)(D)(iv) of the Act, as added by section 1206(c) of the Pathway for Sustainable Growth Rate (SGR) Reform Act of 2013 (Pub. L. 113-67), which provides for the establishment of a functional status quality measure in the LTCH QRP for change in mobility among inpatients requiring ventilator support.
• Section 1899B of the Act, as added by section 2(a) of the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act, Pub. L. 113-185), which provides for the establishment of standardized data reporting for certain post-acute care providers, including LTCHs.

2. Improving Patient Outcomes and Reducing Burden Through Meaningful Measures

Regulatory reform and reducing regulatory burden are high priorities for CMS. To reduce the regulatory burden on the healthcare industry, lower health care costs, and enhance patient care, in October 2017, we launched the Meaningful Measures Initiative. This initiative is one component of our agency-wide Patients Over Paperwork Initiative, which is aimed at evaluating and streamlining regulations with a goal to reduce unnecessary cost and burden, increase efficiencies, and improve beneficiary experience. The Meaningful Measures Initiative is aimed at identifying the highest priority areas for quality measurement and quality improvement, in order to assess the core quality of care issues that are most vital to advancing our work to improve patient outcomes. The Meaningful Measures Initiative represents a new approach to quality measures that will foster operational efficiencies and will reduce costs, including collection and reporting burden while producing quality measurement that is more focused on meaningful outcomes.

The Meaningful Measures framework has the following objectives:

• Address high-impact measure areas that safeguard public health;
• Patient-centered and meaningful to patients;
• Outcome-based where possible;
• Fulfill each program's statutory requirements;
• Minimize the level of burden for health care providers (for example, through a preference for EHR-based measures, where possible, such as electronic clinical quality measures;

• Significant opportunity for improvement;
• Address measure needs for population based payment through alternative payment models; and
• Align across programs and/or with other payers.

In order to achieve these objectives, we have identified 19 Meaningful Measures areas and mapped them to six overarching quality priorities, as shown in the following table:

By including Meaningful Measures in our programs, we believe that we can also address the following cross-cutting measure criteria:

• Eliminating disparities;
• Tracking measurable outcomes and impact;
• Safeguarding public health;
• Achieving cost savings;
• Improving access for rural communities; and
• Reducing burden.

We believe that the Meaningful Measures Initiative will improve outcomes for patients, their families, and health care providers, while reducing burden and costs for clinicians and providers, as well as promoting operational efficiencies.

We received numerous comments from stakeholders regarding the Meaningful Measures Initiative and the impact of its implementation in CMS' quality programs. Many of these comments pertained to specific program proposals, and are discussed in the appropriate program-specific sections of this final rule. However, commenters also provided insights and recommendations for the ongoing development of the Meaningful Measures Initiative generally, including: ensuring transparency in public reporting and usability of publicly reported data; evaluating the benefit of individual measures to patients via use in quality programs weighed against the burden to providers of collecting and reporting that measure data; and identifying additional opportunities for alignment across CMS quality programs. We look forward to continuing to work with stakeholders to refine and further implement the Meaningful Measures Initiative, and will take commenters' insights and recommendations into account moving forward.

3. Summary of the Major Provisions

Below we provide a summary of the major provisions in this final rule. In general, these major provisions are as part of the annual update to the payment policies and payment rates, consistent with the applicable statutory provisions. A general summary of the proposed changes that we included in the proposed rule issued prior to this final rule is presented in section I.D. of the preamble of this final rule.

a. MS-DRG Documentation and Coding Adjustment

Section 631 of the American Taxpayer Relief Act of 2012 (ATRA, Pub. L. 112-240) amended section 7(b)(1)(B) of Public Law 110-90 to require the Secretary to make a recoupment adjustment to the standardized amount of Medicare payments to acute care hospitals to account for changes in MS-DRG documentation and coding that do not reflect real changes in case-mix, totaling $11 billion over a 4-year period of FYs 2014, 2015, 2016, and 2017. The FY 2014 through FY 2017 adjustments represented the amount of the increase in aggregate payments as a result of not completing the prospective adjustment authorized under section 7(b)(1)(A) of Public Law 110-90 until FY 2013. Prior to the ATRA, this amount could not have been recovered under Public Law 110-90. Section 414 of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114-10) replaced the single positive adjustment we intended to make in FY 2018 with a 0.5 percent positive adjustment to the standardized amount of Medicare payments to acute care hospitals for FYs 2018 through 2023. (The FY 2018 adjustment was subsequently adjusted to 0.4588 percent by section 15005 of the 21st Century Cures Act.) Therefore, for FY 2019, we are making an adjustment of +0.5 percent to the standardized amount.

b. Expansion of the Postacute Care Transfer Policy

Section 53109 of the Bipartisan Budget Act of 2018 amended section 1886(d)(5)(J)(ii) of the Act to also include discharges to hospice care by a hospice program as a qualified discharge, effective for discharges occurring on or after October 1, 2018. Accordingly, we are making conforming amendments to § 412.4(c) of the regulation, effective for discharges on or after October 1, 2018, to specify that if a discharge is assigned to one of the MS-DRGs subject to the postacute care transfer policy and the individual is transferred to hospice care by a hospice program, the discharge is subject to payment as a transfer case.

c. DSH Payment Adjustment and Additional Payment for Uncompensated Care

Section 3133 of the Affordable Care Act modified the Medicare disproportionate share hospital (DSH) payment methodology beginning in FY 2014. Under section 1886(r) of the Act, which was added by section 3133 of the Affordable Care Act, starting in FY 2014, DSHs receive 25 percent of the amount they previously would have received under the statutory formula for Medicare DSH payments in section 1886(d)(5)(F) of the Act. The remaining amount, equal to 75 percent of the amount that otherwise would have been paid as Medicare DSH payments, is paid as additional payments after the amount is reduced for changes in the percentage of individuals that are uninsured. Each Medicare DSH will receive an additional payment based on its share of the total amount of uncompensated care for all Medicare DSHs for a given time period.

In this FY 2019 IPPS/LTCH PPS final rule, we are updating our estimates of the three factors used to determine uncompensated care payments for FY 2019. We are continuing to use uninsured estimates produced by CMS' Office of the Actuary (OACT) as part of the development of the National Health Expenditure Accounts (NHEA) in the calculation of Factor 2. We also are continuing to incorporate data from Worksheet S-10 in the calculation of hospitals' share of the aggregate amount of uncompensated care by combining data on uncompensated care costs from Worksheet S-10 for FYs 2014 and 2015 with proxy data regarding a hospital's share of low-income insured days for FY 2013 to determine Factor 3 for FY 2019. In addition, we are using only data regarding low-income insured days for FY 2013 to determine the amount of uncompensated care payments for Puerto Rico hospitals, Indian Health Service and Tribal hospitals, and all-inclusive rate providers. For this final rule, we are establishing the following policies: (1) For providers with multiple cost reports, beginning in the same fiscal year, to use the longest cost report and annualize Medicaid data and uncompensated care data if a hospital's cost report does not equal 12 months of data; (2) in the rare case where a provider has multiple cost reports, beginning in the same fiscal year, but one report also spans the entirety of the following fiscal year, such that the hospital has no cost report for that fiscal year, the cost report that spans both fiscal years will be used for the latter fiscal year; and (3) to apply statistical trim methodologies to potentially aberrant cost-to-charge ratios (CCRs) and potentially aberrant uncompensated care costs reported on the Worksheet S-10.

d. Changes to the LTCH PPS

In this final rule, we set forth changes to the LTCH PPS Federal payment rates, factors, and other payment rate policies under the LTCH PPS for FY 2019. In addition, we are eliminating the 25-percent threshold policy, and under this policy, we are applying a one-time adjustment of approximately 0.9 percent to the LTCH PPS standard Federal payment rate in FY 2019 to ensure this elimination of the 25-percent threshold policy is budget neutral.

e. Reduction of Hospital Payments for Excess Readmissions

We are making changes to policies for the Hospital Readmissions Reduction Program, which was established under section 1886(q) of the Act, as added by section 3025 of the Affordable Care Act, as amended by section 10309 of the Affordable Care Act and further amended by section 15002 of the 21st Century Cures Act. The Hospital Readmissions Reduction Program requires a reduction to a hospital's base operating DRG payment to account for excess readmissions of selected applicable conditions. For FY 2018 and subsequent years, the reduction is based on a hospital's risk-adjusted readmission rate during a 3-year period for acute myocardial infarction (AMI), heart failure (HF), pneumonia, chronic obstructive pulmonary disease (COPD), total hip arthroplasty/total knee arthroplasty (THA/TKA), and coronary artery bypass graft (CABG). In this final rule, we are establishing the applicable periods for FY 2019, FY 2020, and FY 2021. We also are codifying the definitions of dual-eligible patients, the proportion of dual-eligibles, and the applicable period for dual-eligibility.

f. Hospital Value-Based Purchasing (VBP) Program

Section 1886(o) of the Act requires the Secretary to establish a Hospital VBP Program under which value-based incentive payments are made in a fiscal year to hospitals based on their performance on measures established for a performance period for such fiscal year. As part of agency-wide efforts under the Meaningful Measures Initiative to use a parsimonious set of the most meaningful measures for patients, clinicians, and providers in our quality programs and the Patients Over Paperwork Initiative to reduce costs and burden and program complexity, as discussed in section I.A.2. of the preamble of this final rule, we are removing a total of 4 measures from the Hospital VBP Program, all of which will continue to be used in the Hospital IQR Program, in order to reduce the costs and complexity of tracking these measures in multiple programs. Specifically, we are removing one measure, beginning with the FY 2021 program year: (1) Elective Delivery (NQF #0469) (PC-01). We also are removing three measures from the Hospital VBP Program, effective with the effective date of this FY 2019 IPPS/LTCH PPS final rule: (1) Hospital-Level, Risk-Standardized Payment Associated With a 30-Day Episode-of-Care for Acute Myocardial Infarction (NQF #2431) (AMI Payment); (2) Hospital-Level, Risk-Standardized Payment Associated With a 30-Day Episode-of-Care for Heart Failure (NQF #2436) (HF Payment); and (3) Hospital-Level, Risk-Standardized Payment Associated With a 30-Day Episode-of-Care for Pneumonia (PN Payment) (NQF #2579). In addition, we are renaming the Clinical Care domain as the Clinical Outcomes domain, beginning with the FY 2020 program year. We also are adopting measure removal factors for the Hospital VBP Program.

We are not finalizing our proposals to remove of the following six patient safety measures: (1) National Healthcare Safety Network (NHSN) Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure (NQF #0138); (2) National Healthcare Safety Network (NHSN) Central Line-Associated Bloodstream Infection (CLABSI) Outcome Measure (NQF #0139); (3) American College of Surgeons-Centers for Disease Control and Prevention (ACS-CDC) Harmonized Procedure Specific Surgical Site Infection (SSI) Outcome Measure (NQF #0753); (4) National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus Bacteremia (MRSA) Outcome Measure (NQF #1716); (5) National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome Measure (NQF #1717); and (6) Patient Safety and Adverse Events (Composite) (NQF #0531) (PSI 90). We are not finalizing our proposal to remove the Safety domain from the Hospital VBP Program, as we are not finalizing our proposals to remove all of the measures in this domain, and therefore we also are not finalizing changes to the domain weighting.

g. Hospital-Acquired Condition (HAC) Reduction Program

Section 1886(p) of the Act, as added under section 3008(a) of the Affordable Care Act, establishes an incentive to hospitals to reduce the incidence of hospital-acquired conditions by requiring the Secretary to make an adjustment to payments to applicable hospitals effective for discharges beginning on October 1, 2014. This 1-percent payment reduction applies to a hospital whose ranking in the worst-performing quartile (25 percent) of all applicable hospitals, relative to the national average, of conditions acquired during the applicable period and on all of the hospital's discharges for the specified fiscal year. As part of our agency-wide Patients over Paperwork and Meaningful Measures Initiatives, discussed in section I.A.2. of the preamble of this final rule, we are retaining the measures currently included in the HAC Reduction Program because the measures address a performance gap in patient safety and reduce harm caused in the delivery of care. In this final rule, we are: (1) Establishing administrative policies to collect, validate, and publicly report NHSN healthcare-associated infection (HAI) quality measure data that facilitate a seamless transition, independent of the Hospital IQR Program, beginning with January 1, 2020 infectious events; (2) changing the scoring methodology by removing domains and assigning equal weighting to each measure for which a hospital has a measure; and (3) establishing the applicable period for FY 2021. In addition, we are summarizing comments we received regarding the potential future inclusion of additional measures, including eCQMs.

h. Hospital Inpatient Quality Reporting (IQR) Program

Under section 1886(b)(3)(B)(viii) of the Act, subsection (d) hospitals are required to report data on measures selected by the Secretary for a fiscal year in order to receive the full annual percentage increase that would otherwise apply to the standardized amount applicable to discharges occurring in that fiscal year.

In this final rule, we are making several changes. As part of agency-wide efforts under the Meaningful Measures Initiative to use a parsimonious set of the most meaningful measures for patients and clinicians in our quality programs and the Patients Over Paperwork initiative to reduce burden, cost, and program complexity, as discussed in section I.A.2. of the preamble of this final rule, we are adding a new measure removal factor and removing a total of 39 measures from the Hospital IQR Program. We are finalizing a modified version of our proposal to remove 5 of those measures such that removal is delayed by 1 year. For a full list of measures being removed, we refer readers to section VIII.A.5.c. of the preamble of this final rule. Beginning with the CY 2018 reporting period/FY 2020 payment determination and subsequent years, we are removing 17 claims-based measures and two structural measures. Beginning with the CY 2019 reporting period/FY 2021 payment determination and subsequent years, we are removing three chart-abstracted measures and two claims-based measures. Beginning with the CY 2020 reporting period/FY 2022 payment determination and subsequent years, we are removing six chart-abstracted measures, one claims-based measure, and seven eCQMs from the Hospital IQR Program measure set. Beginning with the CY 2021 reporting period/FY 2023 payment determination, we are removing one claims-based measure.

In addition, for the CY 2019 reporting period/FY 2021 payment determination, we are: (1) Requiring the same eCQM reporting requirements that were adopted for the CY 2018 reporting period/FY 2020 payment determination (82 FR 38355 through 38361), such that hospitals submit one, self-selected calendar quarter of 2019 data for 4 eCQMs in the Hospital IQR Program measure set; and (2) requiring that hospitals use the 2015 Edition certification criteria for CEHRT. These changes are in alignment with changes or current established policies under the Medicare and Medicaid Promoting Interoperability Programs (previously known as the Medicare and Medicaid EHR Incentive Programs). In addition, we are summarizing public comments we received on two measures we are considering for potential future inclusion in the Hospital IQR Program, as well as on the potential future development and adoption of electronic clinical quality measures generally.

i. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)

The LTCH QRP is authorized by section 1886(m)(5) of the Act and applies to all hospitals certified by Medicare as long-term care hospitals (LTCHs). Under the LTCH QRP, the Secretary reduces by 2 percentage points the annual update to the LTCH PPS standard Federal rate for discharges for an LTCH during a fiscal year if the LTCH fails to submit data in accordance with the LTCH QRP requirements specified for that fiscal year. As part of agency-wide efforts under the Meaningful Measures Initiative to use a parsimonious set of the most meaningful measures for patients and clinicians in our quality programs and the Patients Over Paperwork Initiative to reduce cost and burden and program complexity, as discussed in section I.A.2. of the preamble of this final rule, we are removing three measures from the LTCH QRP. We also are adopting a new measure removal factor and are codifying the measure removal factors in our regulations. In addition, we are updating our regulations to expand the methods by which an LTCH is notified of noncompliance with the requirements of the LTCH QRP for a program year and how CMS will notify an LTCH of a reconsideration decision.

j. Medicare and Medicaid Promoting Interoperability Programs (Previously Referred to as Medicare and Medicaid EHR Incentive Programs)

In this final rule, we are finalizing several changes to reduce burden, increase interoperability and improve patient electronic access to their health information under the Medicare and Medicaid Promoting Interoperability Programs (previously referred to as Medicare and Medicaid EHR Incentive Programs). Specifically, we are finalizing: (1) An EHR reporting period of a minimum of any continuous 90 days in CYs 2019 and 2020 for new and returning participants attesting to CMS or their State Medicaid agency; (2) modifications to our proposed performance-based scoring methodology, which consists of a smaller set of objectives as well as a smaller set of new and modified measures; (3) the removal of certain CQMs beginning with the reporting period in CY 2020 as well as the CY 2019 reporting requirements we proposed to align the CQM reporting requirements for the Promoting Interoperability Programs with the Hospital IQR Program; (4) the codification of policies for subsection (d) Puerto Rico hospitals; (5) amendments to the prior approval policy applicable in the Medicaid Promoting Interoperability Program to align with the prior approval policy for MMIS and ADP systems and to minimize burden on States; and (6) deadlines for funding availability for States to conclude the Medicaid Promoting Interoperability Program.

4. Summary of Costs and Benefits

• Adjustment for MS-DRG Documentation and Coding Changes. Section 414 of the MACRA replaced the single positive adjustment we intended to make in FY 2018 once the recoupment required by section 631 of the ATRA was complete with a 0.5 percent positive adjustment to the standardized amount of Medicare payments to acute care hospitals for FYs 2018 through 2023. (The FY 2018 adjustment was subsequently adjusted to 0.4588 percent by section 15005 of the 21st Century Cures Act.) For FY 2019, we are making an adjustment of +0.5 percent to the standardized amount consistent with the MACRA.
• Expansion of the Postacute Care Transfer Policy. Section 53109 of the Bipartisan Budget Act of 2018 amended section 1886(d)(5)(J)(ii) of the Act to also include discharges to hospice care by a hospice program as a qualified discharge, effective for discharges occurring on or after October 1, 2018. Accordingly, we are making conforming amendments to § 412.4(c) of the regulation to specify that, effective for discharges on or after October 1, 2018, if a discharge is assigned to one of the MS-DRGs subject to the postacute care transfer policy, and the individual is transferred to hospice care by a hospice program, the discharge will be subject to payment as a transfer case. We estimate that this statutory expansion to the postacute care transfer policy will reduce Medicare payments under the IPPS by approximately $240 million in FY 2019.
• Medicare DSH Payment Adjustment and Additional Payment for Uncompensated Care. Under section 1886(r) of the Act (as added by section 3133 of the Affordable Care Act), DSH payments to hospitals under section 1886(d)(5)(F) of the Act are reduced and an additional payment for uncompensated care is made to eligible hospitals, beginning in FY 2014. Hospitals that receive Medicare DSH payments receive 25 percent of the amount they previously would have received under the statutory formula for Medicare DSH payments in section 1886(d)(5)(F) of the Act. The remainder, equal to an estimate of 75 percent of what otherwise would have been paid as Medicare DSH payments, is the basis for determining the additional payments for uncompensated care after the amount is reduced for changes in the percentage of individuals that are uninsured and additional statutory adjustments. Each hospital that receives Medicare DSH payments will receive an additional payment for uncompensated care based on its share of the total uncompensated care amount reported by Medicare DSHs. The reduction to Medicare DSH payments is not budget neutral.

For FY 2019, we are updating our estimates of the three factors used to determine uncompensated care payments. We are continuing to use uninsured estimates produced by OACT as part of the development of the NHEA in the calculation of Factor 2. We also are continuing to incorporate data from Worksheet S-10 in the calculation of hospitals' share of the aggregate amount of uncompensated care by combining data on uncompensated care costs from Worksheet S-10 for FY 2014 and FY 2015 with proxy data regarding a hospital's share of low-income insured days for FY 2013 to determine Factor 3 for FY 2019. To determine the amount of uncompensated care for Puerto Rico hospitals, Indian Health Service and Tribal hospitals, and all-inclusive rate providers, we are using only the data regarding low-income insured days for FY 2013. In addition, in this final rule, we are establishing the following policies: (1) For providers with multiple cost reports beginning in the same fiscal year, to use the longest cost report and annualize Medicaid data and uncompensated care data if a hospital's cost report does not equal 12 months of data; (2) in the rare case where a provider has multiple cost reports beginning in the same fiscal year, but one report also spans the entirety of the following fiscal year such that the hospital has no cost report for that fiscal year, the cost report that spans both fiscal years will be used for the latter fiscal year; and (3) to apply statistical trim methodologies to potentially aberrant CCRs and potentially aberrant uncompensated care costs.

We project that the amount available to distribute as payments for uncompensated care for FY 2019 will increase by approximately $1.5 billion, as compared to the estimate of overall payments, including Medicare DSH payments and uncompensated care payments, that will be distributed in FY 2018. The payments have redistributive effects, based on a hospital's uncompensated care amount relative to the uncompensated care amount for all hospitals that are estimated to receive Medicare DSH payments, and the calculated payment amount is not directly tied to a hospital's number of discharges.

• Update to the LTCH PPS Payment Rates and Other Payment Policies. Based on the best available data for the 409 LTCHs in our database, we estimate that the changes to the payment rates and factors that we present in the preamble and Addendum of this final rule, which reflect the continuation of the transition of the statutory application of the site neutral payment rate, the update to the LTCH PPS standard Federal payment rate for FY 2019, and the one-time permanent adjustment of approximately 0.9 percent to the LTCH PPS standard Federal payment rate to ensure the elimination of the 25-percent threshold policy is budget neutral, will result in an estimated increase in payments in FY 2019 of approximately $39 million.
• Changes to the Hospital Readmissions Reduction Program. For FY 2019 and subsequent years, the reduction is based on a hospital's risk-adjusted readmission rate during a 3-year period for acute myocardial infarction (AMI), heart failure (HF), pneumonia, chronic obstructive pulmonary disease (COPD), total hip arthroplasty/total knee arthroplasty (THA/TKA), and coronary artery bypass graft (CABG). Overall, in this final rule, we estimate that 2,610 hospitals will have their base operating DRG payments reduced by their determined proxy FY 2019 hospital-specific readmission adjustment. As a result, we estimate that the Hospital Readmissions Reduction Program will save approximately $566 million in FY 2019.
• Value-Based Incentive Payments under the Hospital VBP Program. We estimate that there will be no net financial impact to the Hospital VBP Program for the FY 2019 program year in the aggregate because, by law, the amount available for value-based incentive payments under the program in a given year must be equal to the total amount of base operating MS-DRG payment amount reductions for that year, as estimated by the Secretary. The estimated amount of base operating MS-DRG payment amount reductions for the FY 2019 program year and, therefore, the estimated amount available for value-based incentive payments for FY 2019 discharges is approximately $1.9 billion.
• Changes to the HAC Reduction Program. A hospital's Total HAC score and its ranking in comparison to other hospitals in any given year depend on several different factors. Any significant impact due to the HAC Reduction Program changes for FY 2019, including which hospitals will receive the adjustment, will depend on actual experience.

The removal of NHSN HAI measures from the Hospital IQR Program and the subsequent cessation of its validation processes for NHSN HAI measures and the creation of a validation process for the HAC Reduction program represent no net change in reporting burden across CMS hospital quality programs. However, with the finalization of our proposal to remove HAI chart-abstracted measures from the Hospital IQR Program, we anticipate a total burden shift of 43,200 hours and approximately $1.6 million, as a result of no longer needing to validate those HAI measures under the Hospital IQR Program and beginning the validation process under the HAC Reduction Program.

• Changes to the Hospital Inpatient Quality Reporting (IQR) Program. Across 3,300 IPPS hospitals, we estimate that our finalized requirements for the Hospital IQR Program in this final rule will result in the following changes to costs and burdens related to information collection for this program, compared to previously adopted requirements: (1) A total collection of information burden reduction of 1,046,138 hours and a total cost reduction of approximately $38.3 million for the CY 2019 reporting period/FY 2021 payment determination, due to the removal of ED-1, IMM-2, and VTE-6 measures; and (2) a total collection of information burden reduction of 858,000 hours and a total cost reduction of $31.3 million for the CY 2020 reporting period/FY 2022 payment determination due to the removal of ED-2; and (3) a total collection of information burden reduction of 43,200 hours and a total of $1.6 million for the CY 2021 reporting period/FY 2023 payment determination due to validation of the NHSN HAI measures no longer being conducted under the Hospital IQR Program once the HAC Reduction Program begins validating these measures, as discussed in the preamble of this final rule for the HAC Reduction Program.

Further, we anticipate that the removal of 39 measures will result in a reduction in costs unrelated to information collection. For example, it may be costly for health care providers to track the confidential feedback, preview reports, and publicly reported information on a measure where we use the measure in more than one program. Also, when measures are in multiple programs, maintaining the specifications for those measures, as well as the tools we need to collect, validate, analyze, and publicly report the measure data may result in costs to CMS. In addition, beneficiaries may find it confusing to see public reporting on the same measure in different programs. We anticipate that our finalized policies will reduce the above-described costs.

• Changes Related to the LTCH QRP. In this final rule, we are removing two measures beginning with the FY 2020 LTCH QRP and one measure beginning with the FY 2021 LTCH QRP, for a total of three measures. We also are adopting a new quality measure removal factor for the LTCH QRP. We estimate that the impact of these changes is a reduction in costs of approximately $1,148 per LTCH annually or approximately $482,469 for all LTCHs annually.
• Changes to the Medicare and Medicaid Promoting Interoperability Programs. We believe that, overall, the finalized proposals in this final rule will reduce burden, as described in detail in section XIV.B.9. of the preamble and Appendix A, section I.N. of this final rule.

B. Background Summary

1. Acute Care Hospital Inpatient Prospective Payment System (IPPS)

Section 1886(d) of the Social Security Act (the Act) sets forth a system of payment for the operating costs of acute care hospital inpatient stays under Medicare Part A (Hospital Insurance) based on prospectively set rates. Section 1886(g) of the Act requires the Secretary to use a prospective payment system (PPS) to pay for the capital-related costs of inpatient hospital services for these “subsection (d) hospitals.” Under these PPSs, Medicare payment for hospital inpatient operating and capital-related costs is made at predetermined, specific rates for each hospital discharge. Discharges are classified according to a list of diagnosis-related groups (DRGs).

The base payment rate is comprised of a standardized amount that is divided into a labor-related share and a nonlabor-related share. The labor-related share is adjusted by the wage index applicable to the area where the hospital is located. If the hospital is located in Alaska or Hawaii, the nonlabor-related share is adjusted by a cost-of-living adjustment factor. This base payment rate is multiplied by the DRG relative weight.

If the hospital treats a high percentage of certain low-income patients, it receives a percentage add-on payment applied to the DRG-adjusted base payment rate. This add-on payment, known as the disproportionate share hospital (DSH) adjustment, provides for a percentage increase in Medicare payments to hospitals that qualify under either of two statutory formulas designed to identify hospitals that serve a disproportionate share of low-income patients. For qualifying hospitals, the amount of this adjustment varies based on the outcome of the statutory calculations. The Affordable Care Act revised the Medicare DSH payment methodology and provides for a new additional Medicare payment that considers the amount of uncompensated care beginning on October 1, 2013.

If the hospital is training residents in an approved residency program(s), it receives a percentage add-on payment for each case paid under the IPPS, known as the indirect medical education (IME) adjustment. This percentage varies, depending on the ratio of residents to beds.

Additional payments may be made for cases that involve new technologies or medical services that have been approved for special add-on payments. To qualify, a new technology or medical service must demonstrate that it is a substantial clinical improvement over technologies or services otherwise available, and that, absent an add-on payment, it would be inadequately paid under the regular DRG payment.

The costs incurred by the hospital for a case are evaluated to determine whether the hospital is eligible for an additional payment as an outlier case. This additional payment is designed to protect the hospital from large financial losses due to unusually expensive cases. Any eligible outlier payment is added to the DRG-adjusted base payment rate, plus any DSH, IME, and new technology or medical service add-on adjustments.

Although payments to most hospitals under the IPPS are made on the basis of the standardized amounts, some categories of hospitals are paid in whole or in part based on their hospital-specific rate, which is determined from their costs in a base year. For example, sole community hospitals (SCHs) receive the higher of a hospital-specific rate based on their costs in a base year (the highest of FY 1982, FY 1987, FY 1996, or FY 2006) or the IPPS Federal rate based on the standardized amount. SCHs are the sole source of care in their areas. Specifically, section 1886(d)(5)(D)(iii) of the Act defines an SCH as a hospital that is located more than 35 road miles from another hospital or that, by reason of factors such as an isolated location, weather conditions, travel conditions, or absence of other like hospitals (as determined by the Secretary), is the sole source of hospital inpatient services reasonably available to Medicare beneficiaries. In addition, certain rural hospitals previously designated by the Secretary as essential access community hospitals are considered SCHs.

Under current law, the Medicare-dependent, small rural hospital (MDH) program is effective through FY 2022. Through and including FY 2006, an MDH received the higher of the Federal rate or the Federal rate plus 50 percent of the amount by which the Federal rate was exceeded by the higher of its FY 1982 or FY 1987 hospital-specific rate. For discharges occurring on or after October 1, 2007, but before October 1, 2022, an MDH receives the higher of the Federal rate or the Federal rate plus 75 percent of the amount by which the Federal rate is exceeded by the highest of its FY 1982, FY 1987, or FY 2002 hospital-specific rate. MDHs are a major source of care for Medicare beneficiaries in their areas. Section 1886(d)(5)(G)(iv) of the Act defines an MDH as a hospital that is located in a rural area (or, as amended by the Bipartisan Budget Act of 2018, a hospital located in a State with no rural area that meets certain statutory criteria), has not more than 100 beds, is not an SCH, and has a high percentage of Medicare discharges (not less than 60 percent of its inpatient days or discharges in its cost reporting year beginning in FY 1987 or in two of its three most recently settled Medicare cost reporting years).

Section 1886(g) of the Act requires the Secretary to pay for the capital-related costs of inpatient hospital services in accordance with a prospective payment system established by the Secretary. The basic methodology for determining capital prospective payments is set forth in our regulations at 42 CFR 412.308 and 412.312. Under the capital IPPS, payments are adjusted by the same DRG for the case as they are under the operating IPPS. Capital IPPS payments are also adjusted for IME and DSH, similar to the adjustments made under the operating IPPS. In addition, hospitals may receive outlier payments for those cases that have unusually high costs.

The existing regulations governing payments to hospitals under the IPPS are located in 42 CFR part 412, subparts A through M.

2. Hospitals and Hospital Units Excluded From the IPPS

Under section 1886(d)(1)(B) of the Act, as amended, certain hospitals and hospital units are excluded from the IPPS. These hospitals and units are: Inpatient rehabilitation facility (IRF) hospitals and units; long-term care hospitals (LTCHs); psychiatric hospitals and units; children's hospitals; cancer hospitals; extended neoplastic disease care hospitals, and hospitals located outside the 50 States, the District of Columbia, and Puerto Rico (that is, hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa). Religious nonmedical health care institutions (RNHCIs) are also excluded from the IPPS. Various sections of the Balanced Budget Act of 1997 (BBA, Pub. L. 105-33), the Medicare, Medicaid and SCHIP [State Children's Health Insurance Program] Balanced Budget Refinement Act of 1999 (BBRA, Pub. L. 106-113), and the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA, Pub. L. 106-554) provide for the implementation of PPSs for IRF hospitals and units, LTCHs, and psychiatric hospitals and units (referred to as inpatient psychiatric facilities (IPFs)). (We note that the annual updates to the LTCH PPS are included along with the IPPS annual update in this document. Updates to the IRF PPS and IPF PPS are issued as separate documents.) Children's hospitals, cancer hospitals, hospitals located outside the 50 States, the District of Columbia, and Puerto Rico (that is, hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa), and RNHCIs continue to be paid solely under a reasonable cost-based system, subject to a rate-of-increase ceiling on inpatient operating costs. Similarly, extended neoplastic disease care hospitals are paid on a reasonable cost basis, subject to a rate-of-increase ceiling on inpatient operating costs.

The existing regulations governing payments to excluded hospitals and hospital units are located in 42 CFR parts 412 and 413.

3. Long-Term Care Hospital Prospective Payment System (LTCH PPS)

The Medicare prospective payment system (PPS) for LTCHs applies to hospitals described in section 1886(d)(1)(B)(iv) of the Act, effective for cost reporting periods beginning on or after October 1, 2002. The LTCH PPS was established under the authority of sections 123 of the BBRA and section 307(b) of the BIPA (as codified under section 1886(m)(1) of the Act). During the 5-year (optional) transition period, a LTCH's payment under the PPS was based on an increasing proportion of the LTCH Federal rate with a corresponding decreasing proportion based on reasonable cost principles. Effective for cost reporting periods beginning on or after October 1, 2006 through September 30, 2015 all LTCHs were paid 100 percent of the Federal rate. Section 1206(a) of the Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) established the site neutral payment rate under the LTCH PPS, which made the LTCH PPS a dual rate payment system beginning in FY 2016. Under this statute, based on a rolling effective date that is linked to the date on which a given LTCH's Federal FY 2016 cost reporting period begins, LTCHs are generally paid for discharges at the site neutral payment rate unless the discharge meets the patient criteria for payment at the LTCH PPS standard Federal payment rate. The existing regulations governing payment under the LTCH PPS are located in 42 CFR part 412, subpart O. Beginning October 1, 2009, we issue the annual updates to the LTCH PPS in the same documents that update the IPPS (73 FR 26797 through 26798).

4. Critical Access Hospitals (CAHs)

Under sections 1814(l), 1820, and 1834(g) of the Act, payments made to critical access hospitals (CAHs) (that is, rural hospitals or facilities that meet certain statutory requirements) for inpatient and outpatient services are generally based on 101 percent of reasonable cost. Reasonable cost is determined under the provisions of section 1861(v) of the Act and existing regulations under 42 CFR part 413.

5. Payments for Graduate Medical Education (GME)

Under section 1886(a)(4) of the Act, costs of approved educational activities are excluded from the operating costs of inpatient hospital services. Hospitals with approved graduate medical education (GME) programs are paid for the direct costs of GME in accordance with section 1886(h) of the Act. The amount of payment for direct GME costs for a cost reporting period is based on the hospital's number of residents in that period and the hospital's costs per resident in a base year. The existing regulations governing payments to the various types of hospitals are located in 42 CFR part 413.

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

1. Pathway for SGR Reform Act of 2013 (Pub. L. 113-67)

The Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) introduced new payment rules in the LTCH PPS. Under section 1206 of this law, discharges in cost reporting periods beginning on or after October 1, 2015, under the LTCH PPS, receive payment under a site neutral rate unless the discharge meets certain patient-specific criteria. In this final rule, we are continuing to update certain policies that implemented provisions under section 1206 of the Pathway for SGR Reform Act.

2. Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) (Pub. L. 113-185)

The Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) (Pub. L. 113-185), enacted on October 6, 2014, made a number of changes that affect the Long-Term Care Hospital Quality Reporting Program (LTCH QRP). In this final rule, we are continuing to implement portions of section 1899B of the Act, as added by section 2(a) of the IMPACT Act, which, in part, requires LTCHs, among other post-acute care providers, to report standardized patient assessment data, data on quality measures, and data on resource use and other measures.

3. The Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L. 114-10)

Section 414 of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA, Pub. L. 114-10) specifies a 0.5 percent positive adjustment to the standardized amount of Medicare payments to acute care hospitals for FYs 2018 through 2023. These adjustments follow the recoupment adjustment to the standardized amounts under section 1886(d) of the Act based upon the Secretary's estimates for discharges occurring from FYs 2014 through 2017 to fully offset $11 billion, in accordance with section 631 of the ATRA. The FY 2018 adjustment was subsequently adjusted to 0.4588 percent by section 15005 of the 21st Century Cures Act.

4. The 21st Century Cures Act (Pub. L. 114-255)

The 21st Century Cures Act (Pub. L. 114-255), enacted on December 13, 2016, contained the following provision affecting payments under the Hospital Readmissions Reduction Program, which we are continuing to implement in this final rule:

• Section 15002, which amended section 1886(q)(3) of the Act by adding subparagraphs (D) and (E), which requires the Secretary to develop a methodology for calculating the excess readmissions adjustment factor for the Hospital Readmissions Reduction Program based on cohorts defined by the percentage of dual-eligible patients (that is, patients who are eligible for both Medicare and full-benefit Medicaid coverage) cared for by a hospital. In this final rule, we are continuing to implement changes to the payment adjustment factor to assess penalties based on a hospital's performance, relative to other hospitals treating a similar proportion of dual-eligible patients.

5. The Bipartisan Budget Act of 2018 (Pub. L. 115-123)

The Bipartisan Budget Act of 2018 (Pub. L. 115-123), enacted on February 9, 2018, contains provisions affecting payments under the IPPS and the LTCH PPS, which we are implementing or continuing to implement in this final rule:

• Section 50204 amended section 1886(d)(12) of the Act to provide for certain temporary changes to the low-volume hospital payment adjustment policy for FYs 2018 through 2022. For FY 2018, this provision extends the qualifying criteria and payment adjustment formula that applied for FYs 2011 through 2017. For FYs 2019 through 2022, this provision modifies the discharge criterion and payment adjustment formula. In FY 2023 and subsequent fiscal years, the qualifying criteria and payment adjustment revert to the requirements that were in effect for FYs 2005 through 2010.
• Section 50205 extends the MDH program through FY 2022. It also provides for an eligible hospital that is located in a State with no rural area to qualify for MDH status under an expanded definition if the hospital satisfies any of the statutory criteria at section 1886(d)(8)(E)(ii)(I), (II) (as of January 1, 2018), or (III) of the Act to be reclassified as rural.
• Section 51005(a) modified section 1886(m)(6) of the Act by extending the blended payment rate for site neutral payment rate LTCH discharges for cost reporting periods beginning in FY 2016 by an additional 2 years (FYs 2018 and 2019). In addition, section 51005(b) reduces the LTCH IPPS comparable per diem amount used in the site neutral payment rate for FYs 2018 through 2026 by 4.6 percent. In this final rule, we are making conforming changes to the existing regulations.
• Section 53109 modified section 1886(d)(5)(J) of the Act to require that, beginning in FY 2019, discharges to hospice care also qualify as a postacute care transfer and are subject to payment adjustments.

D. Issuance of a Notice of Proposed Rulemaking

In the proposed rule that appeared in the Federal Register on May 7, 2018 (83 FR 20164), we set forth proposed payment and policy changes to the Medicare IPPS for FY 2019 operating costs and for capital-related costs of acute care hospitals and certain hospitals and hospital units that are excluded from IPPS. In addition, we set forth proposed changes to the payment rates, factors, and other payment and policy-related changes to programs associated with payment rate policies under the LTCH PPS for FY 2019.

Below is a general summary of the major changes that we proposed to make in the proposed rule.

1. Proposed Changes to MS-DRG Classifications and Recalibrations of Relative Weights

In section II. of the preamble of the proposed rule, we included—

• Proposed changes to MS-DRG classifications based on our yearly review for FY 2019.
• Proposed adjustment to the standardized amounts under section 1886(d) of the Act for FY 2019 in accordance with the amendments made to section 7(b)(1)(B) of Public Law 110-90 by section 414 of the MACRA.
• Proposed recalibration of the MS-DRG relative weights.
• A discussion of the proposed FY 2019 status of new technologies approved for add-on payments for FY 2018 and a presentation of our evaluation and analysis of the FY 2019 applicants for add-on payments for high-cost new medical services and technologies (including public input, as directed by Pub. L. 108-173, obtained in a town hall meeting).

2. Proposed Changes to the Hospital Wage Index for Acute Care Hospitals

In section III. of the preamble to the proposed rule, we proposed to make revisions to the wage index for acute care hospitals and the annual update of the wage data. Specific issues addressed include, but are not limited to, the following:

• The proposed FY 2019 wage index update using wage data from cost reporting periods beginning in FY 2015.
• Proposal regarding other wage-related costs in the wage index.
• Calculation of the proposed occupational mix adjustment for FY 2019 based on the 2016 Occupational Mix Survey.
• Analysis and implementation of the proposed FY 2019 occupational mix adjustment to the wage index for acute care hospitals.
• Proposed application of the rural floor and the frontier State floor and the proposed expiration of the imputed floor.
• Proposals to codify policies regarding multicampus hospitals.
• Proposed revisions to the wage index for acute care hospitals, based on hospital redesignations and reclassifications under sections 1886(d)(8)(B), (d)(8)(E), and (d)(10) of the Act.
• The proposed adjustment to the wage index for acute care hospitals for FY 2019 based on commuting patterns of hospital employees who reside in a county and work in a different area with a higher wage index.
• Determination of the labor-related share for the proposed FY 2019 wage index.
• Public comment solicitation on wage index disparities.

3. Other Decisions and Proposed Changes to the IPPS for Operating Costs

In section IV. of the preamble of the proposed rule, we discussed proposed changes or clarifications of a number of the provisions of the regulations in 42 CFR parts 412 and 413, including the following:

• Proposed changes to MS-DRGs subject to the postacute care transfer policy and special payment policy and implementation of the statutory changes to the postacute care transfer policy.
• Proposed changes to the inpatient hospital update for FY 2019.
• Proposed changes related to the statutory changes to the low-volume hospital payment adjustment policy.
• Proposed updated national and regional case-mix values and discharges for purposes of determining RRC status.
• The statutorily required IME adjustment factor for FY 2019.
• Proposed changes to the methodologies for determining Medicare DSH payments and the additional payments for uncompensated care.
• Proposed changes to the effective date of SCH and MDH classification status determinations.
• Proposed changes related to the extension of the MDH program.
• Proposed changes to the rules for payment adjustments under the Hospital Readmissions Reduction Program based on hospital readmission measures and the process for hospital review and correction of those rates for FY 2019.
• Proposed changes to the requirements and provision of value-based incentive payments under the Hospital Value-Based Purchasing Program.
• Proposed requirements for payment adjustments to hospitals under the HAC Reduction Program for FY 2019.
• Proposed changes to Medicare GME affiliation agreements for new urban teaching hospitals.
• Discussion of and proposals relating to the implementation of the Rural Community Hospital Demonstration Program in FY 2019.
• Proposed revisions of the hospital inpatient admission orders documentation requirements.

4. Proposed FY 2019 Policy Governing the IPPS for Capital-Related Costs

In section V. of the preamble to the proposed rule, we discussed the proposed payment policy requirements for capital-related costs and capital payments to hospitals for FY 2019.

5. Proposed Changes to the Payment Rates for Certain Excluded Hospitals: Rate-of-Increase Percentages

In section VI. of the preamble of the proposed rule, we discussed—

• Proposed changes to payments to certain excluded hospitals for FY 2019.
• Proposed changes to the regulations governing satellite facilities.
• Proposed changes to the regulations governing excluded units of hospitals.
• Proposed continued implementation of the Frontier Community Health Integration Project (FCHIP) Demonstration.

6. Proposed Changes to the LTCH PPS

In section VII. of the preamble of the proposed rule, we set forth—

• Proposed changes to the LTCH PPS Federal payment rates, factors, and other payment rate policies under the LTCH PPS for FY 2019.
• Proposed changes to the blended payment rate for site neutral payment rate cases.
• Proposed elimination of the 25-percent threshold policy.

7. Proposed Changes Relating to Quality Data Reporting for Specific Providers and Suppliers

In section VIII. of the preamble of the proposed rule, we address—

• Proposed requirements for the Hospital Inpatient Quality Reporting (IQR) Program.
• Proposed changes to the requirements for the quality reporting program for PPS-exempt cancer hospitals (PCHQR Program).
• Proposed changes to the requirements under the LTCH Quality Reporting Program (LTCH QRP).
• Proposed changes to requirements pertaining to the clinical quality measurement for eligible hospitals and CAHs participating in the Medicare and Medicaid Promoting Interoperability Programs.

8. Proposed Revision to the Supporting Documentation Requirements for an Acceptable Medicare Cost Report Submission

In section IX. of the preamble of the proposed rule, we set forth proposed revisions to the supporting documentation required for an acceptable Medicare cost report submission.

9. Requirements for Hospitals To Make Public List of Standard Charges

In section X. of the preamble of the proposed rule, we discussed our efforts to further improve the public accessibility of hospital standard charge information, effective January 1, 2019, in accordance with section 2718(e) of the Public Health Service Act.

10. Proposed Revisions Regarding Physician Certification and Recertification of Claims

In section XI. of the preamble of the proposed rule, we set forth proposed revisions to the requirements for supporting information used for physician certification and recertification of claims.

11. Request for Information

In section XII. of the preamble of the proposed rule, we included a request for information on the possible establishment of CMS patient health and safety requirements for hospitals and other Medicare- and Medicaid-participating providers and suppliers for interoperable electronic health records and systems for electronic health care information exchange.

12. Determining Prospective Payment Operating and Capital Rates and Rate-of-Increase Limits for Acute Care Hospitals

In sections II. and III. of the Addendum to the proposed rule, we set forth the proposed changes to the amounts and factors for determining the proposed FY 2019 prospective payment rates for operating costs and capital-related costs for acute care hospitals. We proposed to establish the threshold amounts for outlier cases. In addition, in section IV. of the Addendum to the proposed rule, we addressed the update factors for determining the rate-of-increase limits for cost reporting periods beginning in FY 2019 for certain hospitals excluded from the IPPS.

13. Determining Prospective Payment Rates for LTCHs

In section V. of the Addendum to the proposed rule, we set forth proposed changes to the amounts and factors for determining the proposed FY 2019 LTCH PPS standard Federal payment rate and other factors used to determine LTCH PPS payments under both the LTCH PPS standard Federal payment rate and the site neutral payment rate in FY 2019. We proposed to establish the adjustments for wage levels, the labor-related share, the cost-of-living adjustment, and high-cost outliers, including the applicable fixed-loss amounts and the LTCH cost-to-charge ratios (CCRs) for both payment rates.

14. Impact Analysis

In Appendix A of the proposed rule, we set forth an analysis of the impact the proposed changes would have on affected acute care hospitals, CAHs, LTCHs, and PCHs.

15. Recommendation of Update Factors for Operating Cost Rates of Payment for Hospital Inpatient Services

In Appendix B of the proposed rule, as required by sections 1886(e)(4) and (e)(5) of the Act, we provided our recommendations of the appropriate percentage changes for FY 2019 for the following:

• A single average standardized amount for all areas for hospital inpatient services paid under the IPPS for operating costs of acute care hospitals (and hospital-specific rates applicable to SCHs and MDHs).
• Target rate-of-increase limits to the allowable operating costs of hospital inpatient services furnished by certain hospitals excluded from the IPPS.
• The LTCH PPS standard Federal payment rate and the site neutral payment rate for hospital inpatient services provided for LTCH PPS discharges.

16. Discussion of Medicare Payment Advisory Commission Recommendations

Under section 1805(b) of the Act, MedPAC is required to submit a report to Congress, no later than March 15 of each year, in which MedPAC reviews and makes recommendations on Medicare payment policies. MedPAC's March 2018 recommendations concerning hospital inpatient payment policies addressed the update factor for hospital inpatient operating costs and capital-related costs for hospitals under the IPPS. We addressed these recommendations in Appendix B of the proposed rule. For further information relating specifically to the MedPAC March 2018 report or to obtain a copy of the report, contact MedPAC at (202) 220-3700 or visit MedPAC's website at: http://www.medpac.gov.

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

A. Background

Section 1886(d) of the Act specifies that the Secretary shall establish a classification system (referred to as diagnosis-related groups (DRGs)) for inpatient discharges and adjust payments under the IPPS based on appropriate weighting factors assigned to each DRG. Therefore, under the IPPS, Medicare pays for inpatient hospital services on a rate per discharge basis that varies according to the DRG to which a beneficiary's stay is assigned. The formula used to calculate payment for a specific case multiplies an individual hospital's payment rate per case by the weight of the DRG to which the case is assigned. Each DRG weight represents the average resources required to care for cases in that particular DRG, relative to the average resources used to treat cases in all DRGs.

Section 1886(d)(4)(C) of the Act requires that the Secretary adjust the DRG classifications and relative weights at least annually to account for changes in resource consumption. These adjustments are made to reflect changes in treatment patterns, technology, and any other factors that may change the relative use of hospital resources.

B. MS-DRG Reclassifications

For general information about the MS-DRG system, including yearly reviews and changes to the MS-DRGs, we refer readers to the previous discussions in the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43764 through 43766) and the FYs 2011 through 2018 IPPS/LTCH PPS final rules (75 FR 50053 through 50055; 76 FR 51485 through 51487; 77 FR 53273; 78 FR 50512; 79 FR 49871; 80 FR 49342; 81 FR 56787 through 56872; and 82 FR 38010 through 38085, respectively).

C. Adoption of the MS-DRGs in FY 2008

For information on the adoption of the MS-DRGs in FY 2008, we refer readers to the FY 2008 IPPS final rule with comment period (72 FR 47140 through 47189).

D. FY 2019 MS-DRG Documentation and Coding Adjustment

1. Background on the Prospective MS-DRG Documentation and Coding Adjustments for FY 2008 and FY 2009 Authorized by Public Law 110-90 and the Recoupment or Repayment Adjustment Authorized by Section 631 of the American Taxpayer Relief Act of 2012 (ATRA)

In the FY 2008 IPPS final rule with comment period (72 FR 47140 through 47189), we adopted the MS-DRG patient classification system for the IPPS, effective October 1, 2007, to better recognize severity of illness in Medicare payment rates for acute care hospitals. The adoption of the MS-DRG system resulted in the expansion of the number of DRGs from 538 in FY 2007 to 745 in FY 2008. By increasing the number of MS-DRGs and more fully taking into account patient severity of illness in Medicare payment rates for acute care hospitals, MS-DRGs encourage hospitals to improve their documentation and coding of patient diagnoses.

In the FY 2008 IPPS final rule with comment period (72 FR 47175 through 47186), we indicated that the adoption of the MS-DRGs had the potential to lead to increases in aggregate payments without a corresponding increase in actual patient severity of illness due to the incentives for additional documentation and coding. In that final rule with comment period, we exercised our authority under section 1886(d)(3)(A)(vi) of the Act, which authorizes us to maintain budget neutrality by adjusting the national standardized amount, to eliminate the estimated effect of changes in coding or classification that do not reflect real changes in case-mix. Our actuaries estimated that maintaining budget neutrality required an adjustment of −4.8 percentage points to the national standardized amount. We provided for phasing in this −4.8 percentage point adjustment over 3 years. Specifically, we established prospective documentation and coding adjustments of −1.2 percentage points for FY 2008, −1.8 percentage points for FY 2009, and −1.8 percentage points for FY 2010.

On September 29, 2007, Congress enacted the TMA [Transitional Medical Assistance], Abstinence Education, and QI [Qualifying Individuals] Programs Extension Act of 2007 (Pub. L. 110-90). Section 7(a) of Public Law 110-90 reduced the documentation and coding adjustment made as a result of the MS-DRG system that we adopted in the FY 2008 IPPS final rule with comment period to −0.6 percentage point for FY 2008 and −0.9 percentage point for FY 2009.

As discussed in prior year rulemakings, and most recently in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56780 through 56782), we implemented a series of adjustments required under sections 7(b)(1)(A) and 7(b)(1)(B) of Public Law 110-90, based on a retrospective review of FY 2008 and FY 2009 claims data. We completed these adjustments in FY 2013 but indicated in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53274 through 53275) that delaying full implementation of the adjustment required under section 7(b)(1)(A) of Public Law 110-90 until FY 2013 resulted in payments in FY 2010 through FY 2012 being overstated, and that these overpayments could not be recovered under Public Law 110-90.

In addition, as discussed in prior rulemakings and most recently in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38008 through 38009), section 631 of the ATRA amended section 7(b)(1)(B) of Public Law 110-90 to require the Secretary to make a recoupment adjustment or adjustments totaling $11 billion by FY 2017. This adjustment represented the amount of the increase in aggregate payments as a result of not completing the prospective adjustment authorized under section 7(b)(1)(A) of Public Law 110-90 until FY 2013.

2. Adjustment Made for FY 2018 as Required Under Section 414 of Public Law 114-10 (MACRA) and Section 15005 of Public Law 114-255

As stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56785), once the recoupment required under section 631 of the ATRA was complete, we had anticipated making a single positive adjustment in FY 2018 to offset the reductions required to recoup the $11 billion under section 631 of the ATRA. However, section 414 of the MACRA (which was enacted on April 16, 2015) replaced the single positive adjustment we intended to make in FY 2018 with a 0.5 percentage point positive adjustment for each of FYs 2018 through 2023. In the FY 2017 rulemaking, we indicated that we would address the adjustments for FY 2018 and later fiscal years in future rulemaking. Section 15005 of the 21st Century Cures Act (Pub. L. 114-255), which was enacted on December 13, 2016, amended section 7(b)(1)(B) of the TMA, as amended by section 631 of the ATRA and section 414 of the MACRA, to reduce the adjustment for FY 2018 from a 0.5 percentage point to a 0.4588 percentage point. As we discussed in the FY 2018 rulemaking, we believe the directive under section 15005 of Public Law 114-255 is clear. Therefore, in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38009) for FY 2018, we implemented the required +0.4588 percentage point adjustment to the standardized amount. This is a permanent adjustment to payment rates. While we did not address future adjustments required under section 414 of the MACRA and section 15005 of Public Law 114-255 at that time, we stated that we expected to propose positive 0.5 percentage point adjustments to the standardized amounts for FYs 2019 through 2023.

3. Adjustment for FY 2019

In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20176 and 20177), consistent with the requirements of section 414 of the MACRA, we proposed to implement a positive 0.5 percentage point adjustment to the standardized amount for FY 2019. We indicated that this would be a permanent adjustment to payment rates. We stated in the proposed rule that we plan to propose future adjustments required under section 414 of the MACRA for FYs 2020 through 2023 in future rulemaking.

Comment: Several commenters stated that CMS has misinterpreted the Congressional directives regarding the level of positive adjustment required for FY 2018 and FY 2019. The commenters contended that, while the positive adjustments required under section 414 of the MACRA would only total 3.0 percentage points by FY 2023, the levels of these adjustments were determined using an estimated positive “3.2 percent baseline” adjustment that otherwise would have been made in FY 2018. The commenters believed that because CMS implemented an adjustment of −1.5 percentage points instead of the expected −0.8 percentage points in FY 2017, totaling −3.9 percentage points overall, CMS has imposed a permanent −0.7 percentage point negative adjustment beyond its statutory authority, contravening what the commenters asserted was Congress' clear instructions and intent. A majority of the commenters requested that CMS reverse its previous position and implement additional 0.7 percentage point adjustments for both FY 2018 and FY 2019. Some of the commenters requested that CMS use its statutory discretion to ensure that all 3.9 percentage points in negative adjustment be restored. In addition, some of the commenters, while acknowledging that CMS may be bound by law, expressed opposition to the permanent reductions and requested that CMS refrain from making any additional coding adjustments in the future.

Response: As we discussed in the FY 2019 IPPS/LTCH PPS proposed rule, we believe section 414 of the MACRA and section 15005 of the 21st Century Cures Act clearly set forth the levels of positive adjustments for FYs 2018 through 2023. We are not convinced that the adjustments prescribed by MACRA were predicated on a specific “baseline” adjustment level. While we had anticipated making a positive adjustment in FY 2018 to offset the reductions required to recoup the $11 billion under section 631 of the ATRA, section 414 of the MACRA required that we implement a 0.5 percentage point positive adjustment for each of FYs 2018 through 2023, and not the single positive adjustment we intended to make in FY 2018. As noted by the commenters, and discussed in the FY 2017 IPPS/LTCH PPS final rule, by phasing in a total positive adjustment of only 3.0 percentage points, section 414 of the MACRA would not fully restore even the 3.2 percentage points adjustment originally estimated by CMS in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50515). Moreover, as discussed in the FY 2018 IPPS/LTCH PPS final rule, Public Law 114-255, which further reduced the positive adjustment required for FY 2018 from 0.5 percentage point to 0.4588 percentage point, was enacted on December 13, 2016, after CMS had proposed and finalized the final negative −1.5 percentage points adjustment required under section 631 of the ATRA. We see no evidence that Congress enacted these adjustments with the intent that CMS would make an additional +0.7 percentage point adjustment in FY 2018 to compensate for the higher than expected final ATRA adjustment made in FY 2017.

After consideration of the public comments we received, we are finalizing the +0.5 percentage point adjustment to the standardized amount for FY 2019, as required under section 414 of the MACRA.

E. Refinement of the MS-DRG Relative Weight Calculation

1. Background

Beginning in FY 2007, we implemented relative weights for DRGs based on cost report data instead of charge information. We refer readers to the FY 2007 IPPS final rule (71 FR 47882) for a detailed discussion of our final policy for calculating the cost-based DRG relative weights and to the FY 2008 IPPS final rule with comment period (72 FR 47199) for information on how we blended relative weights based on the CMS DRGs and MS-DRGs. We also refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56785 through 56787) for a detailed discussion of the history of changes to the number of cost centers used in calculating the DRG relative weights. Since FY 2014, we have calculated the IPPS MS-DRG relative weights using 19 CCRs, which now include distinct CCRs for implantable devices, MRIs, CT scans, and cardiac catheterization.

2. Discussion of Policy for FY 2019

Consistent with our established policy, we calculated the final MS-DRG relative weights for FY 2019 using two data sources: the MedPAR file as the claims data source and the HCRIS as the cost report data source. We adjusted the charges from the claims to costs by applying the 19 national average CCRs developed from the cost reports. The description of the calculation of the 19 CCRs and the MS-DRG relative weights for FY 2019 is included in section II.G. of the preamble to this FY 2019 IPPS/LTCH PPS final rule. As we did with the FY 2018 IPPS/LTCH PPS final rule, for this FY 2019 final rule, we are providing the version of the HCRIS from which we calculated these 19 CCRs on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. Click on the link on the left side of the screen titled “FY 2019 IPPS Final Rule Home Page” or “Acute Inpatient Files for Download.”

Comment: One commenter requested that CMS use a single diagnostic radiology CCR to set weights, rather than using the separate CT and MRI cost centers. The commenter requested that if CMS maintains the separate CT and MRI cost centers, CMS not include cost reports from hospitals that use the “square foot” allocation methodology. The commenter provided an analysis to support its assertion that the CCRs for CT and MRI are incorrect and are inappropriately reducing payments under the IPPS. The commenter indicated that the charge compression hypothesis has been shown to be false with the use of the separate CT and MRI cost centers. The commenter discussed problems with cost allocation to the CT and MRI cost centers and referenced discussions in prior IPPS/LTCH PPS rules about this issue. The commenter acknowledged that CMS did not include a specific proposal in the FY 2019 proposed rule regarding this issue.

Response: As the commenter noted, we did not make any proposal for FY 2019 relating to the number of cost centers used to calculate the relative weights. As noted previously and discussed in detail in prior rulemakings, and as noted in response to a similar public comment received last year, we have calculated the IPPS MS-DRG relative weights using 19 CCRs, including distinct CCRs for MRIs and CT scans, since FY 2014. We refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56785) for a detailed discussion of the basis for establishing these 19 CCRs. We further note that in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50518 through 50523), we presented data analyses using distinct CCRs for implantable devices, MRIs, CT scans, and cardiac catheterization.

We will continue to explore ways in which we can improve the accuracy of the cost report data and calculated CCRs used in the cost estimation process.

F. Changes to Specific MS-DRG Classifications

1. Discussion of Changes to Coding System and Basis for FY 2019 MS-DRG Updates

a. Conversion of MS-DRGs to the International Classification of Diseases, 10th Revision (ICD-10)

As of October 1, 2015, providers use the International Classification of Diseases, 10th Revision (ICD-10) coding system to report diagnoses and procedures for Medicare hospital inpatient services under the MS-DRG system instead of the ICD-9-CM coding system, which was used through September 30, 2015. The ICD-10 coding system includes the International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM) for diagnosis coding and the International Classification of Diseases, 10th Revision, Procedure Coding System (ICD-10-PCS) for inpatient hospital procedure coding, as well as the ICD-10-CM and ICD-10-PCS Official Guidelines for Coding and Reporting. For a detailed discussion of the conversion of the MS-DRGs to ICD-10, we refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56787 through 56789).

b. Basis for FY 2019 MS-DRG Updates

CMS has previously encouraged input from our stakeholders concerning the annual IPPS updates when that input was made available to us by December 7 of the year prior to the next annual proposed rule update. As discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38010), as we work with the public to examine the ICD-10 claims data used for updates to the ICD-10 MS DRGs, we would like to examine areas where the MS-DRGs can be improved, which will require additional time for us to review requests from the public to make specific updates, analyze claims data, and consider any proposed updates. Given the need for more time to carefully evaluate requests and propose updates, we changed the deadline to request updates to the MS-DRGs to November 1 of each year. This will provide an additional 5 weeks for the data analysis and review process. Interested parties had to submit any comments and suggestions for FY 2019 by November 1, 2017, and are encouraged to submit any comments and suggestions for FY 2020 by November 1, 2018 via the CMS MS-DRG Classification Change Request Mailbox located at: MSDRGClassificationChange@cms.hhs.gov. The comments that were submitted in a timely manner for FY 2019 are discussed in this section of the preamble of this final rule.

Following are the changes that we proposed to the MS-DRGs for FY 2019 in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20177 through 20257). We invited public comments on each of the MS-DRG classification proposed changes, as well as our proposals to maintain certain existing MS-DRG classifications discussed in the proposed rule. In some cases, we proposed changes to the MS-DRG classifications based on our analysis of claims data and consultation with our clinical advisors. In other cases, we proposed to maintain the existing MS-DRG classifications based on our analysis of claims data and consultation with our clinical advisors. For the FY 2019 IPPS/LTCH PPS proposed rule, our MS-DRG analysis was based on ICD-10 claims data from the September 2017 update of the FY 2017 MedPAR file, which contains hospital bills received through September 30, 2017, for discharges occurring through September 30, 2017. In our discussion of the proposed MS-DRG reclassification changes, we referred to our analysis of claims data from the “September 2017 update of the FY 2017 MedPAR file.”

In this FY 2019 IPPS/LTCH PPS final rule, we summarize the public comments we received on our proposals, present our responses, and state our final policies. For this FY 2019 final rule, we did not perform any further MS-DRG analysis of claims data. Therefore, all of the data analysis is based on claims data from the September 2017 update of the FY 2017 MedPAR file, which contains bills received through September 30, 2017, for discharges occurring through September 30, 2017.

As explained in previous rulemaking (76 FR 51487), in deciding whether to propose to make further modifications to the MS-DRGs for particular circumstances brought to our attention, we consider whether the resource consumption and clinical characteristics of the patients with a given set of conditions are significantly different than the remaining patients represented in the MS-DRG. We evaluate patient care costs using average costs and lengths of stay and rely on the judgment of our clinical advisors to determine whether patients are clinically distinct or similar to other patients represented in the MS-DRG. In evaluating resource costs, we consider both the absolute and percentage differences in average costs between the cases we select for review and the remainder of cases in the MS-DRG. We also consider variation in costs within these groups; that is, whether observed average differences are consistent across patients or attributable to cases that are extreme in terms of costs or length of stay, or both. Further, we consider the number of patients who will have a given set of characteristics and generally prefer not to create a new MS-DRG unless it would include a substantial number of cases.

In our examination of the claims data, we apply the following criteria established in FY 2008 (72 FR 47169) to determine if the creation of a new complication or comorbidity (CC) or major complication or comorbidity (MCC) subgroup within a base MS-DRG is warranted:

• A reduction in variance of costs of at least 3 percent;
• At least 5 percent of the patients in the MS-DRG fall within the CC or MCC subgroup;
• At least 500 cases are in the CC or MCC subgroup;
• There is at least a 20-percent difference in average costs between subgroups; and
• There is a $2,000 difference in average costs between subgroups.

In order to warrant creation of a CC or MCC subgroup within a base MS-DRG, the subgroup must meet all five of the criteria.

We are making the FY 2019 ICD-10 MS-DRG GROUPER and Medicare Code Editor (MCE) Software Version 36, the ICD-10 MS-DRG Definitions Manual files Version 36 and the Definitions of Medicare Code Edits Manual Version 36 available to the public on our CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html.

2. Pre-MDC

a. Heart Transplant or Implant of Heart Assist System

In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38012), we stated our intent to review the ICD-10 logic for Pre-MDC MS-DRGs 001 and 002 (Heart Transplant or Implant of Heart Assist System with and without MCC, respectively), as well as MS-DRG 215 (Other Heart Assist System Implant) and MS-DRGs 268 and 269 (Aortic and Heart Assist Procedures Except Pulsation Balloon with and without MCC, respectively) where procedures involving heart assist devices are currently assigned. We also encouraged the public to submit any comments on restructuring the MS-DRGs for heart assist system procedures to the CMS MS-DRG Classification Change Request Mailbox located at: MSDRGClassificationChange@cms.hhs.gov by November 1, 2017.

As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20178 through 20179), the logic for Pre-MDC MS-DRGs 001 and 002 is comprised of two lists. The first list includes procedure codes identifying a heart transplant procedure, and the second list includes procedure codes identifying the implantation of a heart assist system. The list of procedure codes identifying the implantation of a heart assist system includes the following three codes.

In addition to these three procedure codes, there are also 33 pairs of code combinations or procedure code “clusters” that, when reported together, satisfy the logic for assignment to MS-DRGs 001 and 002. The code combinations are represented by two procedure codes and include either one code for the insertion of the device with one code for removal of the device or one code for the revision of the device with one code for the removal of the device. The 33 pairs of code combinations are listed below.

In response to our solicitation for public comments on restructuring the MS-DRGs for heart assist system procedures, commenters recommended that CMS maintain the current logic under the Pre-MDC MS-DRGs 001 and 002. Similar to the discussion in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38011 through 38012) involving MS-DRG 215 (Other Heart Assist System Implant), the commenters provided examples of common clinical scenarios involving a left ventricular assist device (LVAD) and included the procedure codes that were reported under the ICD-9 based MS-DRGs in comparison to the procedure codes reported under the ICD-10 MS-DRGs, which are reflected in the following table.

The commenters noted that, for Pre-MDC MS-DRGs 001 and 002, the procedures involving the insertion of an implantable heart assist system, such as the insertion of a LVAD, and the procedures involving exchange of an LVAD (where an existing LVAD is removed and replaced with either a new LVAD or a new LVAD pump) demonstrate clinical similarities and utilize similar resources. Although the commenters recommended that CMS maintain the current logic under the Pre-MDC MS-DRGs 001 and 002, they also recommended that CMS continue to monitor the data in these MS-DRGs for future consideration of distinctions (for example, different approaches and evolving technologies) that may impact the clinical and resource use of patients undergoing procedures utilizing heart assist devices. The commenters also requested that coding guidance be issued for assignment of the correct ICD-10-PCS procedure codes describing LVAD exchanges to encourage accurate reporting of these procedures.

In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20180), we stated that we agree with the commenters that we should continue to monitor the data in Pre-MDC MS-DRGs 001 and 002 for future consideration of distinctions (for example, different approaches and evolving technologies) that may impact the clinical and resource use of patients undergoing procedures utilizing heart assist devices. In response to the request that coding guidance be issued for assignment of the correct ICD-10-PCS procedure codes describing LVAD exchanges to encourage accurate reporting of these procedures, as we noted in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38012), coding advice is issued independently from payment policy. We also noted that, historically, we have not provided coding advice in rulemaking with respect to policy (82 FR 38045). We collaborate with the American Hospital Association (AHA) through the Coding Clinic for ICD-10-CM and ICD-10-PCS to promote proper coding. We recommended that the requestor and other interested parties submit any questions pertaining to correct coding for these technologies to the AHA.

In response to the public comments we received on this topic, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20180), we provided the results of our claims analysis from the September 2017 update of the FY 2017 MedPAR file for cases in Pre-MDC MS-DRGs 001 and 002. Our findings are shown in the following table.

As shown in this table, for MS-DRG 001, there were a total of 1,993 cases with an average length of stay of 35.6 days and average costs of $185,660. For MS-DRG 002, there were a total of 179 cases with an average length of stay of 18.3 days and average costs of $99,635.

We then examined claims data in Pre-MDC MS-DRGs 001 and 002 for cases that reported one of the three procedure codes identifying the implantation of a heart assist system such as the LVAD. Our findings are shown in the following table.

As shown in this table, for MS-DRG 001, there were a total of 1,260 cases reporting procedure code 02HA0QZ (Insertion of implantable heart assist system into heart, open approach) with an average length of stay of 35.5 days and average costs of $206,663. There was one case that reported procedure code 02HA3QZ (Insertion of implantable heart assist system into heart, percutaneous approach) with an average length of stay of 8 days and average costs of $33,889. There were no cases reporting procedure code 02HA4QZ (Insertion of implantable heart assist system into heart, percutaneous endoscopic approach). For MS-DRG 002, there were a total of 82 cases reporting procedure code 02HA0QZ (Insertion of implantable heart assist system into heart, open approach) with an average length of stay of 19.9 days and average costs of $131,957. There were no cases reporting procedure codes 02HA3QZ (Insertion of implantable heart assist system into heart, percutaneous approach) or 02HA4QZ (Insertion of implantable heart assist system into heart, percutaneous endoscopic approach).

We also examined the cases in MS-DRGs 001 and 002 that reported one of the possible 33 pairs of code combinations or clusters. Our findings are shown in the following 8 tables. The first table provides the total number of cases reporting a procedure code combination (or cluster) compared to all of the cases in the respective MS-DRG, followed by additional detailed tables showing the number of cases, average length of stay, and average costs for each specific code combination that was reported in the claims data.

We did not find any cases reporting the following procedure code combinations (clusters) in the claims data.

The data show that there are differences in the average length of stay and average costs for cases in Pre-MDC MS-DRGs 001 and 002 according to the type of procedure (insertion, revision, or removal), the type of device (biventricular short-term external heart assist system, short-term external heart assist system or implantable heart assist system), and the approaches that were utilized (open, percutaneous, or percutaneous endoscopic). In the FY 2019 IPPS/LTCH PPS proposed rule, we agreed with the commenters' recommendation to maintain the structure of Pre-MDC MS-DRGs 001 and 002 for FY 2019 and stated that we would continue to analyze the claims data.

Comment: Commenters supported CMS' proposal to maintain the current structure of Pre-MDC MS-DRGs 001 and 002 for FY 2019, and to continue to analyze claims data for consideration of future modifications. The commenters agreed with CMS that current claims data do not yet reflect recent advice published in Coding Clinic for ICD-10-CM/PCS regarding the coding of procedures involving external heart assist devices or recent changes to ICD-10-PCS codes for these procedures.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are maintaining the current structure of Pre-MDC MS-DRGs 001 and 002 for FY 2019.

Commenters also suggested that CMS maintain the current logic for MS-DRG 215 (Other Heart Assist System Implant), but they recommended that CMS continue to monitor the data in MS-DRG 215 for future consideration of distinctions (for example, different approaches and evolving technologies) that may impact the clinical and resource use of procedures utilizing heart assist devices. As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20184), we also received a request to review claims data for procedures involving extracorporeal membrane oxygenation (ECMO) in combination with the insertion of a percutaneous short-term external heart assist device to determine if the current MS-DRG assignment is appropriate.

The logic for MS-DRG 215 is comprised of the procedure codes shown in the following table, for which we examined claims data in the September 2017 update of the FY 2017 MedPAR file in response to the commenters' requests. Our findings are shown in the following table.

As shown in this table, for MS-DRG 215, we found a total of 3,428 cases with an average length of stay of 8.7 days and average costs of $68,965. For procedure codes describing the insertion of a biventricular short-term external heart assist system with open, percutaneous or percutaneous endoscopic approaches, we found a total of 127 cases with an average length of stay ranging from 2 to 10 days and average costs ranging from $43,988 to $118,361. For procedure codes describing the insertion of a short-term external heart assist system with open, percutaneous or percutaneous endoscopic approaches, we found a total of 3,233 cases with an average length of stay ranging from 5.3 days to 11.5 days and average costs ranging from $57,042 to $99,107. For procedure codes describing the revision of a short-term external heart assist system with open or percutaneous approaches, we found a total of 88 cases with an average length of stay ranging from 10 to 13.5 days and average costs ranging from $71,077 to $99,378. We found 1 case reporting procedure code 02WA0JZ (Revision of synthetic substitute in heart, open approach), with an average length of stay of 84 days and average costs of $366,089. Lastly, we found 56 cases reporting procedure code 02WA0QZ (Revision of implantable heart assist system in heart, open approach) with an average length of stay of 25.1 days and average costs of $123,410.

As the data show, there is a wide range in the average length of stay and the average costs for cases reporting procedures that involve a biventricular short-term external heart assist system versus a short-term external heart assist system. There is an even greater range in the average length of stay and the average costs when comparing the revision of a short-term external heart assist system to the revision of a synthetic substitute in the heart or to the revision of an implantable heart assist system.

In the proposed rule, we stated that we agreed with the commenters that continued monitoring of the data and further analysis is necessary prior to proposing any modifications to MS-DRG 215. As stated in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38012), we are aware that the AHA published Coding Clinic advice that clarified coding and reporting for certain external heart assist devices due to the technology being approved for new indications. The current claims data do not yet reflect that updated guidance. We also noted that there have been recent updates to the descriptions of the codes for heart assist devices in the past year. For example, the qualifier “intraoperative” was added effective October 1, 2017 (FY 2018) to the procedure codes describing the insertion of short-term external heart assist system procedures to distinguish between procedures where the device was only used intraoperatively and was removed at the conclusion of the procedure versus procedures where the device was not removed at the conclusion of the procedure and for which that qualifier would not be reported. The current claims data do not yet reflect these new procedure codes, which are displayed in the following table and are assigned to MS-DRG 215.

In the proposed rule, we indicated that our clinical advisors also agreed that additional claims data are needed for analysis prior to proposing any changes to MS-DRG 215. Therefore, we did not propose to make any modifications to MS-DRG 215 for FY 2019.

Comment: Commenters supported CMS' proposal to not make any modifications to MS-DRG 215 for FY 2019 and supported continued analysis of claims data for consideration of modifications in future rulemaking. The commenters noted that the proposal was reasonable, given the data, the ICD-10-PCS procedure codes, and information provided.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to maintain the current structure of MS-DRG 215 for FY 2019.

As stated in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20185) and earlier in this section, we also received a request to review cases reporting the use of ECMO in combination with the insertion of a percutaneous short-term external heart assist device. Under ICD-10-PCS, ECMO is identified with procedure code 5A15223 (Extracorporeal membrane oxygenation, continuous) and the insertion of a percutaneous short-term external heart assist device is identified with procedure code 02HA3RZ (Insertion of short-term external heart assist system into heart, percutaneous approach). According to the commenter, when ECMO procedures are performed percutaneously, they are less invasive and less expensive than traditional ECMO. The commenter also noted that, currently under ICD-10-PCS, there is not a specific procedure code to identify percutaneous ECMO, and providers are only able to report ICD-10-PCS procedure code 5A15223, which may be inappropriately resulting in a higher paying MS-DRG. Therefore, the commenter submitted a separate request to create a new ICD-10-PCS procedure code specifically for percutaneous ECMO which was discussed at the March 6-7, 2018 ICD-10 Coordination and Maintenance Committee Meeting. We refer readers to section II.F.18. of the preamble of this final rule for further information regarding this meeting and the discussion for a new procedure code.

The requestor suggested that cases reporting a procedure code for ECMO in combination with the insertion of a percutaneous short-term external heart assist device could be reassigned from Pre-MDC MS-DRG 003 (ECMO or Tracheostomy with Mechanical Ventilation >96 Hours or Principal Diagnosis Except Face, Mouth and Neck with Major O.R. Procedure) to MS-DRG 215. Our analysis involved examining cases in Pre-MDC MS-DRG 003 in the September 2017 update of the FY 2017 MedPAR file for cases reporting ECMO with and without the insertion of a percutaneous short-term external heart assist device. Our findings are shown in the following table.

As shown in this table, we found a total of 14,383 cases with an average length of stay of 29.5 days and average costs of $118,218 in Pre-MDC MS-DRG 003. We found 1,786 cases reporting procedure code 5A15223 (Extracorporeal membrane oxygenation, continuous) with an average length of stay of 19 days and average costs of $119,340. We found 94 cases reporting procedure code 5A15223 and 02HA3RZ (Insertion of short-term external heart assist system into heart, percutaneous approach) with an average length of stay of 11.4 days and average costs of $110,874. Lastly, we found 1 case reporting procedure code 5A15223 and 02HA4RZ (Insertion of short-term external heart assist system into heart, percutaneous endoscopic approach) with an average length of stay of 1 day and average costs of $64,319.

We also reviewed the cases in MS-DRG 215 for procedure codes 02HA3RZ and 02HA4RZ. Our findings are shown in the following table.

As shown in this table, we found a total of 3,428 cases with an average length of stay of 8.7 days and average costs of $68,965. We found a total of 3,136 cases reporting procedure code 02HA3RZ with an average length of stay of 8.4 days and average costs of $67,670. We found a total of 31 cases reporting procedure code 02HA4RZ with an average length of stay of 5.3 days and average costs of $57,042.

We stated in the proposed rule that, for Pre-MDC MS-DRG 003, while the average length of stay and average costs for cases where procedure code 5A15223 was reported with procedure code 02HA3RZ or procedure code 02HA4RZ are lower than the average length of stay and average costs for cases where procedure code 5A15223 was reported alone, we are unable to determine from the data if those ECMO procedures were performed percutaneously in the absence of a unique code. In addition, the one case reporting procedure code 5A15223 with 02HA4RZ only had a 1 day length of stay and it is unclear from the data what the circumstances of that case may have involved. For example, the patient may have been transferred or may have expired. Therefore, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20186), we proposed to not reassign cases reporting procedure code 5A15223 when reported with procedure code 02HA3RZ or procedure code 02HA4RZ for FY 2019. We stated in the proposed rule that our clinical advisors agreed that until there is a way to specifically identify percutaneous ECMO in the claims data to enable further analysis, a proposal at this time is not warranted.

Comment: Commenters supported CMS' proposal to not reassign cases reporting the use of ECMO (procedure code 5A15223) in combination with the insertion of a percutaneous short-term external heart assist device (procedure code 02HA3RZ or procedure code 02HA4RZ) for FY 2019.

Response: We appreciate the commenters' support.

Comment: Other commenters acknowledged that new ICD-10-PCS procedure codes that identify percutaneous ECMO procedures were made publicly available in May 2018. The commenters suggested that the new procedure codes be assigned to MS-DRGs that reflect cases representing patients with similar clinical characteristics and whose treatment requires similar resource utilization, such as MS-DRG 215. Some commenters specifically requested that the new procedure code describing a percutaneous veno-arterial (VA) ECMO procedure be considered for assignment to MS-DRG 215 versus Pre-MDC MS-DRG 003 because MS-DRG 215 is the primary MS-DRG for procedures involving the implantation of peripheral heart assist pumps, with similar cases representing patient conditions and clinical coherence. The commenters noted that the percutaneous ECMO procedure is less invasive and less expensive than the traditional ECMO procedure, and has the clinical similarities and requires similar resource utilization as procedures currently assigned to MS-DRG 215, such as the percutaneous ventricular assist devices procedure.

Another commenter suggested that CMS should assign cases representing patients receiving treatment involving the peripheral VA ECMO procedure to MS-DRG 215 or another MS-DRG within MDC 5. The commenter stated that cases representing patients currently assigned to MS-DRG 215 are clinically coherent to the characteristics of the patients who undergo a peripheral VA ECMO procedure. Another commenter recommended that the new procedure code describing a percutaneous veno-venous (VV) ECMO procedure be considered for assignment to MS-DRG 004 or another MS-DRG within MDC 4 because the indication is to provide respiratory support.

Response: The commenters are correct that the FY 2019 ICD-10-PCS procedure code files (which are available via the internet on the CMS website at: https://www.cms.gov/Medicare/Coding/ICD10/2019-ICD-10-PCS.html) include new ICD-10-PCS procedure codes that identify percutaneous ECMO procedures. In addition, the files also show that the current code for ECMO procedures (ICD-10-PCS code 5A15223) has been revised. These new procedure codes, and the revised ECMO procedure code and description, effective October 1, 2018, are shown in the following table.

In response to the commenters' suggestions to assign the new procedure codes for percutaneous ECMO procedures to MS-DRG 215, we note that the new procedure codes created to describe percutaneous ECMO procedures were not finalized at the time of the proposed rule. In addition, the deletion of the current procedure code for ECMO (ICD-10-PCS code 5A15223) and the creation of the new procedure code for central ECMO were not finalized at the time of the proposed rule. As these codes were not finalized at the time of the proposed rule, they were not reflected in Table 6B.—New Procedure Codes (which is available via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) associated with the FY 2019 IPPS/LTCH PPS proposed rule. Therefore, because these procedure codes were not yet approved, there were no proposed MDC, MS-DRG, or O.R. and non-O.R. designations for these new procedure codes.

Consistent with our annual process of assigning new procedure codes to MDCs and MS-DRGs, and designating a procedure as an O.R. or non-O.R. procedure, we reviewed the predecessor procedure code assignments. The predecessor procedure code (ICD-10-PCS code 5A15223) for the new percutaneous ECMO procedure codes describes an open approach which requires an incision along the sternum (sternotomy) and is performed for open heart surgery. It is considered extremely invasive and carries significant risks for complications, including bleeding, infection, and vessel injury. For central ECMO, arterial cannulation typically occurs directly into the ascending aorta and venous cannulation occurs directly into the right atrium. Conversely, percutaneous (peripheral) ECMO does not require a sternotomy and can be performed in the intensive care unit or at the bedside. The cannulae are placed percutaneously and can utilize a variety of configurations, according to the indication (VA or VV) and patient age (adult vs. pediatric). While percutaneous ECMO also carries risks, they differ from those of central ECMO. For example, our clinical advisor note that patients receiving percutaneous ECMO are at a greater risk of suffering vascular complications.

Upon review, our clinical advisors do not support assigning the new procedure codes for peripheral ECMO procedures to the same MS-DRG as the predecessor code for open (central) ECMO in Pre-MDC MS-DRG 003. Our clinical advisors also do not agree with designating percutaneous ECMO procedures as O.R. procedures because they are less resource intensive compared to open ECMO procedures. As shown in Table 6B.—New Procedure Codes associated with this final rule (which is available via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html), the new procedure codes for percutaneous ECMO procedures have been designated as non-O.R. procedures that will affect the MS-DRG assignment for specific medical MS-DRGs. Effective October 1, 2018, the MS-DRGs for which the percutaneous ECMO procedures will affect MS-DRG assignment are shown in the following table, along with the revised MS-DRG titles.

Our clinical advisors support the designation of the peripheral ECMO procedures as a non-O.R. procedure affecting the MS-DRG assignment of MS-DRG 207 because they consider the procedure to be similar to providing mechanical ventilation greater than 96 hours in terms of both clinical severity and resource use. Because any respiratory diagnosis classified under MDC 4 with mechanical ventilation greater than 96 hours is assigned to MS-DRG 207, it is reasonable to expect that any patient with a respiratory diagnosis who requires treatment involving a peripheral ECMO procedure should also be assigned to MS-DRG 207. The same rationale was applied for MS-DRG 870, which also includes mechanical ventilation greater than 96 hours. In addition, based on the common clinical indications for which a percutaneous ECMO procedure is utilized, such as cardiogenic shock and cardiac arrest, our clinical advisors determined that MS-DRGs 291 (Heart Failure and Shock with MCC) and 296 (Cardiac Arrest, Unexplained with MCC) also are appropriate for a percutaneous ECMO procedure to affect the MS-DRG assignment. The MS-DRG assignment for a central ECMO procedure will remain in Pre-MDC MS-DRG 003.

In cases where a percutaneous external heart assist device is utilized, in combination with a percutaneous ECMO procedure, effective October 1, 2018, the ICD-10 MS-DRG Version 36 GROUPER logic results in a case assignment to MS-DRG 215 because the percutaneous external heart assist device procedure is designated as an O.R. procedure and assigned to MS-DRG 215.

Because the procedure codes describing percutaneous ECMO procedures are new, becoming effective October 1, 2018, we do not yet have any claims data to analyze. Once claims data becomes available, we can examine the volume, and length of stay and cost data to determine if modifications to the assignment of these procedure codes are warranted.

After consideration of the public comments we received, we are finalizing our proposal to not reassign cases reporting ICD-10-PCS procedure code 5A15223 when reported with ICD-10-PCS procedure code 02HA3RZ or ICD-10-PCS procedure code 02HA4RZ for FY 2019. Consistent with our policy for determining MS-DRG assignment for new codes and for the reasons discussed, the two new procedure codes describing percutaneous ECMO procedures discussed and displayed in the table above, under the ICD-10 MS-DRGs Version 36 GROUPER logic, effective October 1, 2018, are designated as non-O.R. procedures impacting the MS-DRG assignment of MS-DRGs 207, 291, 296, and 870. The MS-DRG assignment for the central ECMO procedure remains in Pre-MDC MS-DRG 003.

In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20186), we also discussed that a commenter also suggested that CMS maintain the current logic for MS-DRGs 268 and 269 (Aortic and Heart Assist Procedures Except Pulsation Balloon with and without MCC, respectively), but recommended that CMS continue to monitor the data in these MS-DRGs for future consideration of distinctions (for example, different approaches and evolving technologies) that may impact the clinical and resource use of procedures involving heart assist devices.

The logic for heart assist system devices in MS-DRGs 268 and 269 is comprised of the procedure codes shown in the following table, for which we examined claims data in the September 2017 update of the FY 2017 MedPAR file in response to the commenter's request. Our findings are shown in the following table.

As shown in this table, for MS-DRG 268, there were a total of 3,798 cases, with an average length of stay of 9.6 days and average costs of $49,122. There were 16 cases reporting procedure code 02PA0QZ (Removal of implantable heart assist system from heart, open approach), with an average length of stay of 23.4 days and average costs of $79,850. There were no cases that reported procedure codes 02PA0RS (Removal of biventricular short-term external heart assist system from heart, open approach), 02PA0RZ (Removal of short-term external heart assist system from heart, open approach), 02PA3RS (Removal of biventricular short-term external heart assist system from heart, percutaneous approach), 02PA4RS (Removal of biventricular short-term external heart assist system from heart, percutaneous endoscopic approach) or 02PA4RZ (Removal of short-term external heart assist system from heart, percutaneous endoscopic approach). There were 28 cases reporting procedure code 02PA3QZ (Removal of implantable heart assist system from heart, percutaneous approach), with an average length of stay of 10.5 days and average costs of $31,797. There were 96 cases reporting procedure code 02PA3RZ (Removal of short-term external heart assist system from heart, percutaneous approach), with an average length of stay of 12.4 days and average costs of $51,469. There were 5 cases reporting procedure code 02PA4QZ (Removal of implantable heart assist system from heart, percutaneous endoscopic approach), with an average length of stay of 7.8 days and average costs of $37,592. For MS-DRG 269, there were a total of 16,900 cases, with an average length of stay of 2.4 days and average costs of $30,793. There were 10 cases reporting procedure code 02PA0QZ (Removal of implantable heart assist system from heart, open approach), with an average length of stay of 8 days and average costs of $23,741. There were no cases reporting procedure codes 02PA0RS (Removal of biventricular short-term external heart assist system from heart, open approach), 02PA0RZ (Removal of short-term external heart assist system from heart, open approach), 02PA3RS (Removal of biventricular short-term external heart assist system from heart, percutaneous approach), 02PA4RS (Removal of biventricular short-term external heart assist system from heart, percutaneous endoscopic approach) or 02PA4RZ (Removal of short-term external heart assist system from heart, percutaneous endoscopic approach). There were 6 cases reporting procedure code 02PA3QZ (Removal of implantable heart assist system from heart, percutaneous approach), with an average length of stay of 5 days and average costs of $19,421. There were 11 cases reporting procedure code 02PA3RZ (Removal of short-term external heart assist system from heart, percutaneous approach), with an average length of stay of 4 days and average costs of $25,719. There was 1 case reporting procedure code 02PA4QZ (Removal of implantable heart assist system from heart, percutaneous endoscopic approach), with an average length of stay of 3 days and average costs of $14,415.

The data show that there are differences in the average length of stay and average costs for cases in MS-DRGs 268 and 269 according to the type of device (short-term external heart assist system or implantable heart assist system), and the approaches that were utilized (open, percutaneous, or percutaneous endoscopic). In the proposed rule, we stated that we agreed with the recommendation to maintain the structure of MS-DRGs 268 and 269 for FY 2019 and will continue to analyze the claims data for possible future updates. As such, we proposed to not make any changes to the structure of MS-DRGs 268 and 269 for FY 2019.

Comment: Commenters supported CMS' proposal to not make any changes to the structure of MS-DRGs 268 and 269 for FY 2019.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to maintain the structure of MS-DRGs 268 and 269 for FY 2019.

b. Brachytherapy

As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20188), we received a request to create a new Pre-MDC MS-DRG for all procedures involving the CivaSheet® technology, an implantable, planar brachytherapy source designed to enable delivery of radiation to the site of the cancer tumor excision or debulking, while protecting neighboring tissue. The requestor stated that physicians have used the CivaSheet® technology for a number of indications, such as colorectal, gynecological, head and neck, soft tissue sarcomas and pancreatic cancer. The requestor noted that potential uses also include nonsmall-cell lung cancer, ocular melanoma, and atypical meningioma. Currently, procedures involving the CivaSheet® technology are reported using ICD-10-PCS Section D—Radiation Therapy codes, with the root operation “Brachytherapy.” These codes are non-O.R. codes and group to the MS-DRG to which the principal diagnosis is assigned.

In response to this request, we analyzed claims data from the September 2017 update of the FY 2017 MedPAR file for cases representing patients who received treatment that reported low dose rate (LDR) brachytherapy procedure codes across all MS-DRGs. We referred readers to Table 6P.—ICD-10-CM and ICD-10-PCS Codes for Proposed MS-DRG Changes associated with the proposed rule, which is available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. A detailed list of these procedure codes was shown in Table 6P.1.associated with the proposed rule. Our findings are reflected in the following table. As we note below in response to comments, there were errors in the table included in the proposed rule (83 FR 20188) with regard to an identified MS-DRG and procedure code. However, there were no errors in the data findings reported. In the proposed rule, we identified claims data for MS-DRG 129 with procedure code D710BBZ (Low dose rate (LDR) brachytherapy of bone marrow using Palladium-103 (Pd-103)). That entry was an inadventent error. The correct MS-DRG, that is, MS-DRG 054, and procedure code, that is, D010BBZ, are reflected in the table that follows. In addition, in the proposed rule we inadvertently identified MS-DRG 724 with procedure code DV10BBZ (Low dose rate (LDR) brachytherapy of prostate using Palladium 103 (Pd-103)). Upon review, this case was actually reported with MS-DRG 189. The data findings identified for each of these 4 cases are correctly reflected in the table that follows.

As shown in the immediately preceding table, we identified 4 cases reporting one of these LDR brachytherapy procedure codes across all MS-DRGs, with an average length of stay of 6.3 days and average costs of $39,853. In the proposed rule, we stated that we believe that creating a new Pre-MDC MS-DRG based on such a small number of cases could lead to distortion in the relative payment weights for the Pre-MDC MS-DRG. Having a larger number of clinically cohesive cases within the Pre-MDC MS-DRG provides greater stability for annual updates to the relative payment weights. Therefore, we did not propose to create a new Pre-MDC MS-DRG for procedures involving the CivaSheet® technology for FY 2019.

Comment: Some commenters supported CMS' proposal not to create a new MS-DRG for assignment of procedures involving the CivaSheet® technology. Several commenters, including the manufacturer of the CivaSheet® technology, disagreed with CMS' proposal, and stated that the current payment for cases involving the CivaSheet® technology is inadequate and does not currently allow widespread adoption and use of the technology. One commenter noted that its contractor also identified four cases in the proposed rule, but raised some concerns regarding the procedure codes and costs associated with the cases identified in the proposed rule. Other commenters described the clinical benefits and potential cost-savings associated with the CivaSheet® technology, and requested that CMS reconsider its proposal to not create a new Pre- MDC MS-DRG for the assignment of cases involving the use of this technology. The commenters stated that they understood CMS' concern about the lack of volume, but indicated that the lack of adequate payment for procedures involving the CivaSheet® technology does not allow more widespread use. The manufacturer requested that, if CMS finalizes its proposal not to create a new MS-DRG for assignment of cases involving the CivaSheet® technology, CMS consider other payment mechanisms by which to ensure adequate payment for hospitals providing this service.

Response: We appreciate the commenters' support and input. With respect to the commenters who disagreed with our proposal, we reiterate that our analysis of the claims data and our clinical advisors did not support the creation of a new MS-DRG based on the very small number of cases identified. As we noted in the proposed rule, only four cases were identified. The MS-DRGs are a classification system intended to group together those diagnoses and procedures with similar clinical characteristics and utilization of resources. As we discussed in the proposed rule, basing a new MS-DRG on such a small number of cases could lead to distortions in the relative payment weights for the MS-DRG because several expensive cases could impact the overall relative payment weight. Having larger clinical cohesive groups within an MS-DRG provides greater stability for annual updates to the relative payment weights.

We agree with the commenter that there were some inadvertent errors in the table included in the proposed rule in reference to certain procedure codes and MS-DRGs; the table in this final rule above now correctly reflects the procedure codes and MS-DRGs reflected in the FY 2017 MedPAR file (as of the September 2017 update). We note that because our proposal was based on the small number of cases, and not the nature of those cases, these errors had no bearing on our proposal or our decision to finalize this proposal. We acknowledge the commenters' concerns about the adequacy of payment for these low volume services. Therefore, as part of our ongoing, comprehensive analysis of the MS-DRGs under ICD-10, we will continue to explore mechanisms through which to address rare diseases and low volume DRGs.

After consideration of the public comments we received, we are finalizing our proposal to maintain the current MS-DRG structure for procedures involving the CivaSheet® technology for FY 2019.

c. Laryngectomy

The logic for case assignment to Pre-MDC MS-DRGs 11, 12, and 13 (Tracheostomy for Face, Mouth and Neck Diagnoses with MCC, with CC, and without CC/MCC, respectively) as displayed in the ICD-10 MS-DRG Version 35 Definitions Manual, which is available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending,, is comprised of a list of procedure codes for laryngectomies, a list of procedure codes for tracheostomies, and a list of diagnosis codes for conditions involving the face, mouth, and neck. The procedure codes for laryngectomies are listed separately and are reported differently from the procedure codes listed for tracheostomies. The procedure codes listed for tracheostomies must be reported with a diagnosis code involving the face, mouth, or neck as a principal diagnosis to satisfy the logic for assignment to Pre-MDC MS-DRG 11, 12, or 13. Alternatively, any principal diagnosis code reported with a procedure code from the list of procedure codes for laryngectomies will satisfy the logic for assignment to Pre-MDC MS-DRG 11, 12, or 13.

To improve the manner in which the logic for assignment is displayed in the ICD-10 MS-DRG Definitions Manual and to clarify how it is applied for grouping purposes, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20188), we proposed to reorder the lists of the diagnosis and procedure codes. The list of principal diagnosis codes for face, mouth, and neck would be sequenced first, followed by the list of the tracheostomy procedure codes and, lastly, the list of laryngectomy procedure codes.

We also proposed to revise the titles of Pre-MDC MS-DRGs 11, 12, and 13 from “Tracheostomy for Face, Mouth and Neck Diagnoses with MCC, with CC and without CC/MCC, respectively” to “Tracheostomy for Face, Mouth and Neck Diagnoses or Laryngectomy with MCC”, “Tracheostomy for Face, Mouth and Neck Diagnoses or Laryngectomy with CC”, and “Tracheostomy for Face, Mouth and Neck Diagnoses or Laryngectomy without CC/MCC”, respectively, to reflect that laryngectomy procedures may also be assigned to these MS-DRGs.

Comment: Commenters supported CMS' proposal to reorder the lists of diagnoses and procedure codes for Pre-MDC MS-DRGs 11, 12 and 13 in the ICD-10 MS-DRG Definitions Manual to clarify the GROUPER logic. The commenters stated that the proposal was reasonable given the ICD-10-CM diagnosis codes, the ICD-10-PCS procedure codes, and the information provided. Commenters also supported the proposal to revise the titles for Pre-MDC MS-DRGs 11, 12 and 13.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to reorder the lists of diagnoses and procedure codes for Pre-MDC MS-DRGs 11, 12, and 13 in the ICD-10 MS-DRG Definitions Manual Version 36. We also are finalizing our proposal to revise the titles for Pre-MDC MS-DRGs 11, 12, and 13 as follows for the ICD-10 MS-DRGs Version 36, effective October 1, 2018:

• MS-DRG 11 (Tracheostomy for Face, Mouth and Neck Diagnoses or Laryngectomy with MCC);
• MS-DRG 12 (Tracheostomy for Face, Mouth and Neck Diagnoses or Laryngectomy with CC); and
• MS-DRG 13 (Tracheostomy for Face, Mouth and Neck Diagnoses or Laryngectomy without CC/MCC).

d. Chimeric Antigen Receptor (CAR)T-Cell Therapy

Chimeric Antigen Receptor (CAR) T-cell therapy is a cell-based gene therapy in which T-cells are genetically engineered to express a chimeric antigen receptor that will bind to a certain protein on a patient's cancerous cells. The CAR T-cells are then administered to the patient to attack certain cancerous cells and the individual is observed for potential serious side effects that would require medical intervention.

Two CAR T-cell therapies received FDA approval in 2017. KYMRIAH® (manufactured by Novartis Pharmaceuticals Corporation) was approved for the use in the treatment of patients up to 25 years of age with B-cell precursor acute lymphoblastic leukemia (ALL) that is refractory or in second or later relapse. In May 2018, KYMRIAH received FDA approval for a second indication, treatment of adult patients with relapsed or refractory large B-cell lymphoma after two or more lines of systemic therapy, including diffuse large B-cell lymphoma (DLBCL), high grade B-cell lymphoma, and DLBCL arising from follicular lymphoma. YESCARTA® (manufactured by Kite Pharma, Inc.) was approved for use in the treatment of adult patients with relapsed or refractory large B-cell lymphoma and who have not responded to or who have relapsed after at least two other kinds of treatment.

Procedures involving the CAR T-cell therapies are currently identified with ICD-10-PCS procedure codes XW033C3 (Introduction of engineered autologous chimeric antigen receptor t-cell immunotherapy into peripheral vein, percutaneous approach, new technology group 3) and XW043C3 (Introduction of engineered autologous chimeric antigen receptor t-cell immunotherapy into central vein, percutaneous approach, new technology group 3), which both became effective October 1, 2017. Procedures described by these two ICD-10-PCS procedure codes are designated as non-O.R. procedures that have no impact on MS-DRG assignment.

As we discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20189), we have received many inquiries from the public regarding payment of CAR T-cell therapy under the IPPS. Suggestions for the MS-DRG assignment for FY 2019 ranged from assigning ICD-10-PCS procedure codes XW033C3 and XW043C3 to an existing MS-DRG to the creation of a new MS-DRG for CAR T-cell therapy. In the context of the recommendation to create a new MS-DRG for FY 2019, we also received suggestions that payment should be established in a way that promotes comparability between the inpatient setting and outpatient setting.

As part of our review of these suggestions, we examined the existing MS-DRGs to identify the MS-DRGs that represent cases most clinically similar to those cases in which the CAR T-cell therapy procedures would be reported. The CAR T-cell procedures involve a type of autologous immunotherapy in which the patient's cells are genetically transformed and then returned to that patient after the patient undergoes cell depleting chemotherapy. Our clinical advisors believe that patients receiving treatment utilizing CAR T-cell therapy procedures would have similar clinical characteristics and comorbidities to those seen in cases representing patients receiving treatment for other hematologic cancers who are treated with autologous bone marrow transplant therapy that are currently assigned to MS-DRG 016 (Autologous Bone Marrow Transplant with CC/MCC). Therefore, after consideration of the inquiries received as to how the IPPS can appropriately group cases reporting the use of CAR T-cell therapy, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20189), we proposed to assign ICD-10-PCS procedure codes XW033C3 and XW043C3 to Pre-MDC MS-DRG 016 for FY 2019. In addition, we proposed to revise the title of MS-DRG 016 from “Autologous Bone Marrow Transplant with CC/MCC” to “Autologous Bone Marrow Transplant with CC/MCC or T-cell Immunotherapy.”

However, we noted in the proposed rule that, as discussed in greater detail in section II.H.5.a. of the preamble of the proposed rule and this final rule, the manufacturer of KYMRIAH and the manufacturer of YESCARTA submitted applications for new technology add-on payments for FY 2019. We stated that we also recognize that many members of the public have noted that the combination of the new technology add-on payment applications, the extremely high-cost of these CAR T-cell therapies, and the potential for volume increases over time present unique challenges with respect to the MS-DRG assignment for procedures involving the utilization of CAR T-cell therapies and cases representing patients receiving treatment involving CAR T-cell therapies. We stated in the proposed rule that we believed that, in the context of these pending new technology add-on payment applications, there may also be merit in the alternative suggestion we received to create a new MS-DRG for procedures involving the utilization of CAR T-cell therapies and cases representing patients receiving treatment involving CAR T-cell therapy to which we could assign ICD-10-PCS procedure codes XW033C3 and XW043C3, effective for discharges occurring in FY 2019. We stated that, as noted in section II.H.5.a. of the preamble of the proposed rule, if a new MS-DRG were to be created then consistent with section 1886(d)(5)(K)(ix) of the Act there may no longer be a need for a new technology add-on payment under section 1886(d)(5)(K)(ii)(III) of the Act.

We invited public comments on our proposed approach of assigning ICD-10-PCS procedure codes XW033C3 and XW043C3 to Pre-MDC MS-DRG 016 for FY 2019. We also invited public comments on alternative approaches, including in the context of the pending KYMRIAH and YESCARTA new technology add-on payment applications, and the most appropriate way to establish payment for FY 2019 under any alternative approaches. We indicated that such payment alternatives may include using a CCR of 1.0 for charges associated with ICD-10-PCS procedure codes XW033C3 and XW043C3, given that many public inquirers believed that hospitals would be unlikely to set charges different from the costs for KYMRIAH and YESCARTA CAR T-cell therapies, as discussed further in section II.A.4.g.2. of the Addendum of the proposed rule and this final rule. We further stated that these payment alternatives, including payment under any potential new MS-DRG, also could take into account an appropriate portion of the average sales price (ASP) for these drugs, including in the context of the pending new technology add-on payment applications.

We invited comments on how these payment alternatives would affect access to care, as well as how they affect incentives to encourage lower drug prices, which is a high priority for this Administration. In addition, we stated that we are considering approaches and authorities to encourage value-based care and lower drug prices. We solicited comments on how the payment methodology alternatives may intersect and affect future participation in any such alternative approaches.

We noted that, as stated in section II.F.1.b. of the preamble of the proposed rule, we described the criteria used to establish new MS-DRGs. In particular, we consider whether the resource consumption and clinical characteristics of the patients with a given set of conditions are significantly different than the remaining patients in the MS-DRG. We evaluate patient care costs using average costs and lengths of stay and rely on the judgment of our clinical advisors to decide whether patients are clinically distinct or similar to other patients in the MS-DRG. In evaluating resource costs, we consider both the absolute and percentage differences in average costs between the cases we select for review and the remainder of cases in the MS-DRG. We also consider whether observed average differences are consistent across patients or attributable to cases that were extreme in terms of costs or length of stay, or both. Further, we consider the number of patients who will have a given set of characteristics and generally prefer not to create a new MS-DRG unless it would include a substantial number of cases. Based on the principles typically used to establish a new MS-DRG, we solicited comments on how the administration of the CAR T-cell therapies and associated services meet the criteria for the creation of a new MS-DRG. Also, section 1886(d)(4)(C)(iii) of the Act specifies that, beginning in FY 1991, the annual DRG reclassification and recalibration of the relative weights must be made in a manner that ensures that aggregate payments to hospitals are not affected. Given that a new MS-DRG must be established in a budget neutral manner, we stated that we are concerned with the redistributive effects away from core hospital services over time toward specialized hospitals and how that may affect payment for these core services. Therefore, we solicited public comments on our concerns with the payment alternatives that we were considering for CAR T-cell therapies.

Comment: Many commenters stated that the existing payment mechanisms under the IPPS do not allow for accurate payment of CAR T-cell therapy due its unprecedented high cost. Commenters also asserted structural insufficiencies in the new technology add-on payments for the drug therapy, such as the maximum add-on payment of 50 percent; the inapplicability of the usual cost to charge ratios used in ratesetting and payment, including those used in determining new technology add-on payments, outlier payments, and payments to IPPS-excluded cancer hospitals; and a lack of sufficient historical data and experience related to a therapy with a cost of this magnitude. In addition, commenters stated that payment for CAR T-cell therapy should avoid inappropriate financial incentives for care to be provided in an outpatient instead of an inpatient setting. Many commenters requested a permanent and long-term solution to ensure accurate payment for CAR T-cell therapy while concurrently ensuring any redistributive payment effects within the IPPS are limited.

Some commenters recommended that, until a more permanent solution is developed, CMS finalize the proposed assignment of CAR T-cell therapy to MS-DRG 016, approve the NTAP application for CAR T-cell therapy, and/or allow for a CCR of 1.0 for CAR T-cell therapy. However, some commenters disagreed with CMS' proposed assignment of CAR T-cell therapy to MS-DRG 016 and requested a new separate MS-DRG. These commenters disagreed that patients receiving CAR T-cell therapy are sufficiently clinically similar to patients receiving autologous bone marrow transplants. Reasons cited by these commenters included differences in lengths of stay, the level and predictability of associated toxicity, and the overall disease burden. Some of these commenters suggested creating a new separate MS-DRG for CAR T-cell therapy and developing the FY 2019 weight for this MS-DRG not based only on historical claims data but also including alternative data on the cost of CAR T-cell therapy drugs, such as average sales price (ASP) data. Some commenters pointed to the establishment of a separate DRG for drug eluting stents under the IPPS as a possible payment model for CAR T-cell therapy.

Other commenters did not support the creation of a new separate MS-DRG for CAR T-cell therapy. Reasons cited by these commenters included the relative newness of the therapy, the limited number of providers delivering these treatments, the low volume of patients, redistributive effects, and the lack of long term data surrounding length of stay, treatment complexities, and costs. These commenters urged CMS to collect more comprehensive clinical and cost data before considering assignment of a new MS-DRG to these therapies.

Some commenters requested that CMS carve out the cost of CAR T-cell therapy from the IPPS and pay for it on a pass-through basis reflecting the cost of the therapy to the hospital and indicated that this was the approach taken by some state Medicaid programs. These commenters believed that payment on a pass-through basis, for inpatient and/or outpatient care, provides the most accurate payment while minimizing inappropriate payment incentives across the inpatient and outpatient setting.

Commenters also made technical and operational suggestions to CMS if we were to adopt changes to our existing payment mechanisms in the final rule as they apply to CAR T-cell therapy, including how a CCR of 1.0 would be operationalized, or how CMS would collect data on the cost of CAR T-cell therapy for pass-through and other purposes.

Response: Building on President Trump's Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs, the CMS Center for Medicare and Medicaid Innovation (Innovation Center) is soliciting public comment in the CY 2019 OPPS/ASC proposed rule on key design considerations for developing a potential model that would test private market strategies and introduce competition to improve quality of care for beneficiaries, while reducing both Medicare expenditures and beneficiaries' out of pocket spending. CMS sought similar feedback in a previous solicitation of comments, and, most recently, in the President's Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs.

Given the relative newness of CAR T-cell therapy, the potential model, including the reasons underlying our consideration of a potential model described in greater detail in the CY 2019 OPPS/ASC proposed rule, and our request for feedback on this model approach, we believe it would be premature to adopt changes to our existing payment mechanisms, either under the IPPS or for IPPS-excluded cancer hospitals, specifically for CAR T-cell therapy. Therefore, we disagree with commenters who have requested such changes under the IPPS for FY 2019, including, but not limited to, the creation of a pass-through payment; structural changes in new technology add-on payments for the drug therapy; changes in the usual cost-to-charge ratios (CCRs) used in ratesetting and payment, including those used in determining new technology add-on payments, outlier payments, and payments to IPPS excluded cancer hospitals; and the creation of a new MS-DRG specifically for CAR T-cell therapy prior to gaining more experience with the therapy.

We agree with commenters who recommended that we finalize the proposed assignment of CAR-T therapy to MS-DRG 016 rather than consider the creation of a new MS-DRG for these therapies, given the relative newness of the therapy, the limited number of providers delivering these treatments, the low volume of patients, redistributive effects, and the lack of long-term data surrounding length of stay, treatment complexities, and costs. In addition to the potential model, we agree we should collect more comprehensive clinical and cost data before considering assignment of a new MS-DRG to these therapies.

In response to the commenters who indicated that MS-DRG 016 is a poor clinical match for CAR T-cell therapy patients and would prefer that we create a new MS-DRG for CAR-T cell therapy, we acknowledge that there are differences between the treatment approaches, but we continue to believe that MS-DRG 016 is the most appropriate match of the existing MS-DRGs, given similarities between CAR-T cell therapy and autologous bone marrow transplant in harvesting and infusion of patient cells as well as post-infusion monitoring for and management of potentially severe adverse effects. We reiterate that, in light of the potential model and our request for feedback on this approach, it would be premature to create a new MS-DRG specifically for CAR T-cell therapy. We will consider requests for alternative MS-DRG assignments and/or the creation of a new MS-DRG for CAR T-cell therapy after we review the public feedback on a potential model and as we gain further experience with CAR T-cell therapy and can better evaluate the commenters' concerns.

As described in more detail in section II.H. of the preamble of this final rule, we are approving new technology add-on payments for CAR T-cell therapy for FY 2019.

In response to commenters who made technical and operational suggestions if CMS were to adopt changes to its existing payment mechanisms in the final rule as they apply to CAR T-cell therapy, because we are not adopting such changes, we are not addressing those technical and operational comments at the current time but will consider them for future rulemaking as appropriate.

After consideration of the public comments we received, we are finalizing our proposed approach of assigning ICD-10-PCS procedure codes XW033C3 and XW043C3 to Pre-MDC MS-DRG 016 for FY 2019 and to revise the title of MS-DRG 016 from “Autologous Bone Marrow Transplant with CC/MCC” to “Autologous Bone Marrow Transplant with CC/MCC or T-cell Immunotherapy.”

3. MDC 1 (Diseases and Disorders of the Nervous System)

a. Epilepsy With Neurostimulator

In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38015 through 38019), based on a request we received and our review of the claims data, the advice of our clinical advisors, and consideration of public comments, we finalized our proposal to reassign all cases reporting a principal diagnosis of epilepsy and one of the following ICD-10-PCS code combinations, which capture cases involving neurostimulator generators inserted into the skull (including cases involving the use of the RNS^© neurostimulator), to retitled MS-DRG 023 (Craniotomy with Major Device Implant or Acute Complex Central Nervous System (CNS) Principal Diagnosis (PDX) with MCC or Chemotherapy Implant or Epilepsy with Neurostimulator), even if there is no MCC reported:

• 0NH00NZ (Insertion of neurostimulator generator into skull, open approach), in combination with 00H00MZ (Insertion of neurostimulator lead into brain, open approach);
• 0NH00NZ (Insertion of neurostimulator generator into skull, open approach), in combination with 00H03MZ (Insertion of neurostimulator lead into brain, percutaneous approach); and
• 0NH00NZ (Insertion of neurostimulator generator into skull, open approach), in combination with 00H04MZ (Insertion of neurostimulator lead into brain, percutaneous endoscopic approach).

The finalized listing of epilepsy diagnosis codes (82 FR 38018 through 38019) contained codes provided by the requestor (82 FR 38016), in addition to diagnosis codes organized in subcategories G40.A- and G40.B- as recommended by a commenter in response to the proposed rule (82 FR 38018) because the diagnosis codes organized in these subcategories also are representative of diagnoses of epilepsy.

For FY 2019, we received a request to include two additional diagnosis codes organized in subcategory G40.1- in the listing of epilepsy diagnosis codes for cases assigned to MS-DRG 023 because these diagnosis codes also represent diagnoses of epilepsy. The two additional codes identified by the requestor are:

• G40.109 (Localization-related (focal) (partial) symptomatic epilepsy and epileptic syndromes with simple partial seizures, not intractable, without status epilepticus); and
• G40.111 (Localization-related (focal) (partial) symptomatic epilepsy and epileptic syndromes with simple partial seizures, intractable, with status epilepticus).

In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20190), we stated that we agreed with the requestor that diagnosis codes G40.109 and G40.111 also are representative of epilepsy diagnoses and should be added to the listing of epilepsy diagnosis codes for cases assigned to MS-DRG 023 because they also capture a type of epilepsy. Our clinical advisors reviewed this issue and agreed that adding the two additional epilepsy diagnosis codes is appropriate. Therefore, we proposed to add ICD-10-CM diagnosis codes G40.109 and G40.111 to the listing of epilepsy diagnosis codes for cases assigned to MS-DRG 023, effective October 1, 2018.

Comment: Commenters agreed with CMS' proposal to add ICD-10-CM diagnosis codes G40.109 and G40.111 to the list of epilepsy diagnosis codes for assignment to MS-DRG 023. The commenters stated that the proposal was reasonable, given the ICD-10-CM diagnosis codes and the information provided.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to add ICD-10-CM diagnosis codes G40.109 and G40.111 to the list of epilepsy diagnosis codes for assignment to MS-DRG 023 in the ICD-10 MS-DRGs Version 36, effective October 1, 2018.

b. Neurological Conditions With Mechanical Ventilation

As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20190), we received two separate, but related requests to create new MS-DRGs for cases that identify patients who have been diagnosed with neurological conditions classified under MDC 1 (Diseases and Disorders of the Nervous System) and who require mechanical ventilation with and without a thrombolytic and in the absence of an O.R. procedure. The requestors suggested that CMS consider when mechanical ventilation is reported with a neurological condition for the ICD-10 MS-DRG GROUPER assignment logic, similar to the current logic for MS-DRGs 207 and 208 (Respiratory System Diagnosis with Ventilator Support >96 Hours and <=96 Hours, respectively) under MDC 4 (Diseases and Disorders of the Respiratory System), which consider respiratory conditions that require mechanical ventilation and are assigned a higher relative weight.

The requestors stated that patients with a principal diagnosis of respiratory failure requiring mechanical ventilation are currently assigned to MS-DRG 207 (Respiratory System Diagnoses with Ventilator Support >96 Hours), which has a relative weight of 5.4845, and to MS-DRG 208 (Respiratory System Diagnoses with Ventilator Support <=96 Hours), which has a relative weight of 2.3678. The requestors also stated that patients with a principal diagnosis of ischemic cerebral infarction who received a thrombolytic agent during the hospital stay and did not undergo an O.R. procedure are assigned to MS-DRGs 061, 062, and 063 (Ischemic Stroke, Precerebral Occlusion or Transient Ischemia with Thrombolytic Agent with MCC, with CC, and without CC/MCC, respectively) under MDC 1, while patients with a principal diagnosis of intracranial hemorrhage or ischemic cerebral infarction who did not receive a thrombolytic agent during the hospital stay and did not undergo an O.R. procedure are assigned to MS-DRGs 064, 065 and 66 (Intracranial Hemorrhage or Cerebral Infarction with MCC, with CC or TPA in 24 Hours, and without CC/MCC, respectively) under MDC 1.

The requestors provided the current FY 2018 relative weights for these MS-DRGs as shown in the following table.

The requestors stated that although the ICD-10-CM Official Guidelines for Coding and Reporting allow sequencing of acute respiratory failure as the principal diagnosis when it is jointly responsible (with an acute neurologic event) for admission, which would result in assignment to MS-DRGs 207 or 208 when the patient requires mechanical ventilation, it would not be appropriate to sequence acute respiratory failure as the principal diagnosis when it is secondary to intracranial hemorrhage or ischemic cerebral infarction.

The requestors also stated that reporting for other purposes, such as quality measures, clinical trials, and Joint Commission and State certification or survey cases, is based on the principal diagnosis, and it is important, from a quality of care perspective, that the intracranial hemorrhage or cerebral infarction codes continue to be sequenced as principal diagnosis. The requestors believed that cases of patients who present with cerebral infarction or cerebral hemorrhage and acute respiratory failure are currently in conflict for principal diagnosis sequencing because the cerebral infarction or cerebral hemorrhage code is needed as the principal diagnosis for quality reporting and other purposes. However, acute respiratory failure is needed as the principal diagnosis for purposes of appropriate payment under the MS-DRGs.

The requestors stated that by creating new MS-DRGs for neurological conditions with mechanical ventilation, those patients who require mechanical ventilation for airway protection on admission and those patients who develop acute respiratory failure requiring mechanical ventilation after admission can be grouped to MS-DRGs that provide appropriate payment for the mechanical ventilation resources. The requestors suggested two new MS-DRGs, citing as support that new MS-DRGs were created for patients with sepsis requiring mechanical ventilation greater than and less than 96 hours.

As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20191) and earlier in this section, the requests we received were separate, but related requests. The first request was to specifically identify patients presenting with intracranial hemorrhage or cerebral infarction with mechanical ventilation and create two new MS-DRGs as follows:

• Suggested new MS-DRG XXX (Intracranial Hemorrhage or Cerebral Infarction with Mechanical Ventilation >96 Hours); and
• Suggested new MS-DRG XXX (Intracranial Hemorrhage or Cerebral Infarction with Mechanical Ventilation <=96 Hours).

The second request was to consider any principal diagnosis under the current GROUPER logic for MDC 1 with mechanical ventilation and create two new MS-DRGs as follows:

• Suggested New MS-DRG XXX (Neurological System Diagnosis with Mechanical Ventilation 96+ Hours); and
• Suggested New MS-DRG XXX (Neurological System Diagnosis with Mechanical Ventilation <96 Hours).

Both requesters suggested that CMS use the three ICD-10-PCS codes identifying mechanical ventilation to assign cases to the respective suggested new MS-DRGs. The three ICD-10-PCS codes are shown in the following table.

Below we discuss the different aspects of each request in more detail.

The first request involved two aspects: (1) Analyzing patients diagnosed with cerebral infarction and required mechanical ventilation who received a thrombolytic (for example, TPA) and did not undergo an O.R. procedure; and (2) analyzing patients diagnosed with intracranial hemorrhage or ischemic cerebral infarction and required mechanical ventilation who did not receive a thrombolytic (for example, TPA) during the current episode of care and did not undergo an O.R. procedure.

For the first subset of patients, we analyzed claims data from the September 2017 update of the FY 2017 MedPAR file for MS-DRGs 061, 062, and 063 because cases that are assigned to these MS-DRGs specifically identify patients who were diagnosed with a cerebral infarction and received a thrombolytic. The 90 ICD-10-CM diagnosis codes that specify a cerebral infarction and were included in our analysis are listed in Table 6P.1a associated with the proposed rule (which is available via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html).

The ICD-10-PCS procedure codes displayed in the following table describe use of a thrombolytic agent.

We examined claims data in MS-DRGs 061, 062, and 063 and identified cases that reported mechanical ventilation of any duration with a principal diagnosis of cerebral infarction where a thrombolytic agent was administered and the patient did not undergo an O.R. procedure. Our findings are shown in the following table.

As shown in this table, there were a total of 5,192 cases in MS-DRG 061 with an average length of stay of 6.4 days and average costs of $20,097. There were a total of 758 cases reporting the use of mechanical ventilation in MS-DRG 061 with an average length of stay ranging from 4.9 days to 12.8 days and average costs ranging from $19,795 to $41,691. For MS-DRG 062, there were a total of 9,730 cases with an average length of stay of 3.9 days and average costs of $13,865. There were a total of 33 cases reporting the use of mechanical ventilation in MS-DRG 062 with an average length of stay ranging from 3.8 days to 5.3 days and average costs ranging from $14,026 to $19,817. For MS-DRG 063, there were a total of 1,984 cases with an average length of stay of 2.7 days and average costs of $11,771. There were a total of 8 cases reporting the use of mechanical ventilation in MS-DRG 063 with an average length of stay ranging from 2.0 days to 2.7 days and average costs ranging from $11,195 to $14,588.

We then compared the total number of cases in MS-DRGs 061, 062, and 063 specifically reporting mechanical ventilation >96 hours with a principal diagnosis of cerebral infarction where a thrombolytic agent was administered and the patient did not undergo an O.R. procedure against the total number of cases reporting mechanical ventilation <=96 hours with a principal diagnosis of cerebral infarction where a thrombolytic agent was administered and the patient did not undergo an O.R. procedure. Our findings are shown in the following table.

As shown in this table, the total number of cases reported in MS-DRG 061 was 5,192, with an average length of stay of 6.4 days and average costs of $20,097. There were 166 cases that reported mechanical ventilation >96 hours, with an average length of stay of 12.8 days and average costs of $41,691. There were 594 cases that reported mechanical ventilation <=96 hours, with an average length of stay of 6.5 days and average costs of $23,780.

The total number of cases reported in MS-DRG 062 was 9,730, with an average length of stay of 3.9 days and average costs of $13,865. There were no cases identified in MS-DRG 062 where mechanical ventilation >96 hours was reported. However, there were 34 cases that reported mechanical ventilation <=96 hours, with an average length of stay of 4.2 days and average costs of $15,558.

The total number of cases reported in MS-DRG 63 was 1,984 with an average length of stay of 2.7 days and average costs of $11,771. There were no cases identified in MS-DRG 063 where mechanical ventilation >96 hours was reported. However, there were 8 cases that reported mechanical ventilation <=96 hours, with an average length of stay of 2.3 days and average costs of $12,467.

For the second subset of patients, we examined claims data for MS-DRGs 064, 065, and 066. We identified cases reporting mechanical ventilation of any duration with a principal diagnosis of cerebral infarction or intracranial hemorrhage where a thrombolytic agent was not administered during the current hospital stay and the patient did not undergo an O.R. procedure. The 33 ICD-10-CM diagnosis codes that specify an intracranial hemorrhage and were included in our analysis are listed in Table 6P.1b associated with the proposed rule (which is available via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html).

We also used the list of 90 ICD-10-CM diagnosis codes that specify a cerebral infarction listed in Table 6P.1a associated with the proposed rule for our analysis. We noted that the GROUPER logic for case assignment to MS-DRG 065 includes that a thrombolytic agent (for example, TPA) was administered within 24 hours of the current hospital stay. The ICD-10-CM diagnosis code that describes this scenario is Z92.82 (Status post administration of tPA (rtPA) in a different facility within the last 24 hours prior to admission to current facility). We did not review the cases reporting that diagnosis code for our analysis. Our findings are shown in the following table.

The total number of cases reported in MS-DRG 064 was 76,513, with an average length of stay of 6.0 days and average costs of $12,574. There were a total of 10,997 cases reporting the use of mechanical ventilation in MS-DRG 064 with an average length of stay ranging from 3.1 days to 13.4 days and average costs ranging from $8,675 to $38,262. For MS-DRG 065, there were a total of 106,554 cases with an average length of stay of 3.7 days and average costs of $7,236. There were a total of 450 cases reporting the use of mechanical ventilation in MS-DRG 065 with an average length of stay ranging from 2.1 days to 10.2 days and average costs ranging from $6,145 to $20,759. For MS-DRG 066, there were a total of 34,689 cases with an average length of stay of 2.5 days and average costs of $5,321. There were a total of 195 cases reporting the use of mechanical ventilation in MS-DRG 066 with an average length of stay ranging from 1.4 days to 4.0 days and average costs ranging from $3,426 to $10,364.

We then compared the total number of cases in MS-DRGs 064, 065, and 066 specifically reporting mechanical ventilation >96 hours with a principal diagnosis of cerebral infarction or intracranial hemorrhage where a thrombolytic agent was not administered and the patient did not undergo an O.R. procedure against the total number of cases reporting mechanical ventilation <=96 hours with a principal diagnosis of cerebral infarction or intracranial hemorrhage where a thrombolytic agent was not administered and the patient did not undergo an O.R. procedure. Our findings are shown in the following table.

The total number of cases reported in MS-DRG 064 was 76,513, with an average length of stay of 6.0 days and average costs of $12,574. There were 2,153 cases that reported mechanical ventilation >96 hours, with an average length of stay of 13.4 days and average costs of $38,262, and there were 8,794 cases that reported mechanical ventilation <=96 hours, with an average length of stay of 4.9 days and average costs of $13,704.

The total number of cases reported in MS-DRG 65 was 106,554, with an average length of stay of 3.7 days and average costs of $7,236. There were 22 cases that reported mechanical ventilation >96 hours, with an average length of stay of 10.2 days and average costs of $20,759, and there were 428 cases that reported mechanical ventilation <=96 hours, with an average length of stay of 2.7 days and average costs of $8,086.

The total number of cases reported in MS-DRG 66 was 34,689, with an average length of stay of 2.5 days and average costs of $5,321. There was one case that reported mechanical ventilation >96 hours, with an average length of stay of 4.0 days and average costs of $3,426, and there were 194 cases that reported mechanical ventilation <=96 hours, with an average length of stay of 1.8 days and average costs of $5,141.

We also analyzed claims data for MS-DRGs 207 and 208. As shown in the following table, there were a total of 19,471 cases found in MS-DRG 207 with an average length of stay of 13.8 days and average costs of $38,124. For MS-DRG 208, there were a total of 55,802 cases found with an average length of stay of 6.7 days and average costs of $17,439.

We stated in the proposed rule that our analysis of claims data relating to the first request for MS-DRGs 061, 062, 063, 064, 065, and 066 and consultation with our clinical advisors do not support creating new MS-DRGs for cases that identify patients diagnosed with cerebral infarction or intracranial hemorrhage who require mechanical ventilation with or without a thrombolytic and in the absence of an O.R. procedure.

For the first subset of patients (in MS-DRGs 061, 062 and 063), our data findings for MS-DRG 061 demonstrate the 166 cases that reported mechanical ventilation >96 hours had a longer average length of stay (12.8 days versus 6.4 days) and higher average costs ($41,691 versus $20,097) compared to all the cases in MS-DRG 061. However, there were no cases that reported mechanical ventilation >96 hours for MS-DRG 062 or MS-DRG 063. For the 594 cases that reported mechanical ventilation <=96 hours in MS-DRG 061, the data show that the average length of stay was consistent with the average length of stay of all of the cases in MS-DRG 061 (6.5 days versus 6.4 days) and the average costs were also consistent with the average costs of all of the cases in MS-DRG 061 ($23,780 versus $20,097). For the 34 cases that reported mechanical ventilation <=996 hours in MS-DRG 062, the data show that the average length of stay was consistent with the average length of stay of all of the cases in MS-DRG 062 (4.2 days versus 3.9 days) and the average costs were also consistent with the average costs of all of the cases in MS DRG 062 ($15,558 versus $13,865). Lastly, for the 8 cases that reported mechanical ventilation <=96 hours in MS-DRG 063, the data show that the average length of stay was consistent with the average length of stay of all of the cases in MS-DRG 063 (2.3 days versus 2.7 days) and the average costs were also consistent with the average costs of all of the cases in MS DRG 063 ($12,467 versus $11,771).

For the second subset of patients (in MS-DRGs 064, 065 and 066), the data findings for the 2,153 cases that reported mechanical ventilation >96 hours in MS-DRG 064 showed a longer average length of stay (13.4 days versus 6.0 days) and higher average costs ($38,262 versus $12,574) compared to all of the cases in MS-DRG 064. However, the 2,153 cases represent only 2.8 percent of all the cases in MS-DRG 064. For the 22 cases that reported mechanical ventilation >96 hours in MS-DRG 065, the data showed a longer average length of stay (10.2 days versus 3.7 days) and higher average costs ($20,759 versus $7,236) compared to all of the cases in MS-DRG 065. However, the 22 cases represent only 0.02 percent of all the cases in MS-DRG 065. For the one case that reported mechanical ventilation >96 hours in MS-DRG 066, the data showed a longer average length of stay (4.0 days versus 2.5 days) and lower average costs ($3,426 versus $5,321) compared to all of the cases in MS-DRG 066. For the 8,794 cases that reported mechanical ventilation <=96 hours in MS-DRG 064, the data showed that the average length of stay was shorter than the average length of stay for all of the cases in MS-DRG 064 (4.9 days versus 6.0 days) and the average costs were consistent with the average costs of all of the cases in MS-DRG 064 ($13,704 versus $12,574). For the 428 cases that reported mechanical ventilation <=96 hours in MS-DRG 065, the data showed that the average length of stay was shorter than the average length of stay for all of the cases in MS-DRG 065 (2.7 days versus 3.7 days) and the average costs were consistent with the average costs of all the cases in MS-DRG 065 ($8,086 versus $7,236). For the 194 cases that reported mechanical ventilation <=96 hours in MS-DRG 066, the data showed that the average length of stay was shorter than the average length of stay for all of the cases in MS-DRG 066 (1.8 days versus 2.5 days) and the average costs were less than the average costs of all of the cases in MS-DRG 066 ($5,141 versus $5,321).

We stated in the proposed rule that, based on the analysis described above, the current MS-DRG assignment for the cases in MS-DRGs 061, 062, 063, 064, 065 and 066 that identify patients diagnosed with cerebral infarction or intracranial hemorrhage who require mechanical ventilation with or without a thrombolytic and in the absence of an O.R. procedure appears appropriate.

Our clinical advisors also noted that patients requiring mechanical ventilation (in the absence of an O.R. procedure) are known to be more resource intensive and it would not be practical to create new MS-DRGs specifically for this subset of patients diagnosed with an acute neurologic event, given the various indications for which mechanical ventilation may be utilized. We stated in the proposed rule that, if we were to create new MS-DRGs for patients diagnosed with an intracranial hemorrhage or cerebral infarction who require mechanical ventilation, it would not address all of the other patients who also utilize mechanical ventilation resources. It would also necessitate further extensive analysis and evaluation for several other conditions that require mechanical ventilation across each of the 25 MDCs under the ICD-10 MS-DRGs.

To evaluate the frequency in which the use of mechanical ventilation is reported for different clinical scenarios, we examined claims data across each of the 25 MDCs to determine the number of cases reporting the use of mechanical ventilation >96 hours. Our findings are shown in the table below.

As shown in the table, the top 5 MDCs with the largest number of cases reporting mechanical ventilation >96 hours are MDC 18, with 48,176 cases; MDC 4, with 27,793 cases; MDC 5, with 16,923 cases; MDC 1, with 13,668 cases; and MDC 6, with 6,401 cases. We noted that the claims data demonstrate that the average length of stay is consistent with what we would expect for cases reporting the use of mechanical ventilation >96 hours across each of the 25 MDCs. The top 5 MDCs with the highest average costs for cases reporting mechanical ventilation >96 hours were MDC 22, with average costs of $188,704; MDC 17, with average costs of $99,968; MDC 12, with average costs of $95,204; MDC 5, with average costs of $84,565; and MDC 13, with average costs of $83,319. We noted that the data for MDC 8 demonstrated similar results compared to MDC 13 with average costs of $83,271 for cases reporting mechanical ventilation >96 hours. In summary, the claims data reflect a wide variance with regard to the frequency and average costs for cases reporting the use of mechanical ventilation >96 hours.

We also examined claims data across each of the 25 MDCs for the number of cases reporting the use of mechanical ventilation <=96 hours. Our findings are shown in the table below.

As shown in the table, the top 5 MDCs with the largest number of cases reporting mechanical ventilation <=96 hours are MDC 18, with 69,826 cases; MDC 4, with 64,861 cases; MDC 5, with 45,147 cases; MDC 1, with 29,896 cases; and MDC 6, with 15,629 cases. We noted that the claims data demonstrate that the average length of stay is consistent with what we would expect for cases reporting the use of mechanical ventilation <=96 hours across each of the 25 MDCs. The top 5 MDCs with the highest average costs for cases reporting mechanical ventilation <=96 hours are MDC 17, with average costs of $46,335; MDC 22, with average costs of $45,557; MDC 8, with average costs of $40,183; MDC 24, with average costs of $36,475; and MDC 5, with average costs of $35,818. Similar to the cases reporting mechanical ventilation >96 hours, the claims data for cases reporting the use of mechanical ventilation <=96 hours also reflect a wide variance with regard to the frequency and average costs. Depending on the number of cases in each MS-DRG, it may be difficult to detect patterns of complexity and resource intensity.

With respect to the requestor's statement that reporting for other purposes, such as quality measures, clinical trials, and Joint Commission and State certification or survey cases, is based on the principal diagnosis, and their belief that patients who present with cerebral infarction or cerebral hemorrhage and acute respiratory failure are currently in conflict for principal diagnosis sequencing because the cerebral infarction or cerebral hemorrhage code is needed as the principal diagnosis for quality reporting and other purposes (however, acute respiratory failure is needed as the principal diagnosis for purposes of appropriate payment under the MS-DRGs), we noted that providers are required to assign the principal diagnosis according to the ICD-10-CM Official Guidelines for Coding and Reporting and these assignments are not based on factors such as quality measures or clinical trials indications. Furthermore, we do not base MS-DRG reclassification decisions on those factors. If the cerebral hemorrhage or ischemic cerebral infarction is the reason for admission to the hospital, the cerebral hemorrhage or ischemic cerebral infarction diagnosis code should be assigned as the principal diagnosis.

We acknowledged in the proposed rule that new MS-DRGs were created for cases of patients with sepsis requiring mechanical ventilation greater than and less than 96 hours. However, those MS-DRGs (MS-DRG 575 (Septicemia with Mechanical Ventilation 96+ Hours Age >17) and MS-DRG 576 (Septicemia without Mechanical Ventilation 96+ Hours Age >17)) were created several years ago, in FY 2007 (71 FR 47938 through 47939) in response to public comments suggesting alternatives for the need to recognize the treatment for that subset of patients with severe sepsis who exhibit a greater degree of severity and resource consumption as septicemia is a systemic condition, and also as a preliminary step in the transition from the CMS DRGs to MS-DRGs.

We stated in the proposed rule that we believe that additional analysis and efforts toward a broader approach to refining the MS-DRGs for cases of patients requiring mechanical ventilation across the MDCs involves carefully examining the potential for instability in the relative weights and disrupting the integrity of the MS-DRG system based on the creation of separate MS-DRGs involving small numbers of cases for various indications in which mechanical ventilation may be required.

The second request focused on patients diagnosed with any neurological condition classified under MDC 1 requiring mechanical ventilation in the absence of an O.R. procedure and without having received a thrombolytic agent. Because the first request specifically involved analysis for the acute neurological conditions of cerebral infarction and intracranial hemorrhage under MDC 1 and our findings did not support creating new MS-DRGs for those specific conditions, we did not perform separate claims analysis for other conditions classified under MDC 1.

Therefore, in the FY 2019 IPPS/LTCH PPS proposed rule, we did not propose to create new MS-DRGs for cases that identify patients diagnosed with neurological conditions classified under MDC 1 who require mechanical ventilation with or without a thrombolytic and in the absence of an O.R. procedure.

Comment: Commenters supported CMS' proposal to not create new MS-DRGs, classified under MDC 1, for cases representing patients diagnosed with a neurological condition who require mechanical ventilation with or without a thrombolytic, and in the absence of an O.R. procedure. The commenters stated that the proposal was reasonable, given the data, the ICD-10-CM diagnosis codes, the ICD-10-PCS procedure codes, and the information provided. However, the commenters also recommended that CMS continue to conduct further analyses across all the MDCs for the subset of patients who require mechanical ventilation in an effort to better address the reporting and payment issues.

Response: We appreciate the commenters' support and agree that further analyses are necessary to evaluate the development of potential proposals for the subset of patients requiring mechanical ventilation across all the MDCs.

Comment: One commenter disagreed with CMS' proposal to not create new MS-DRGs for patients admitted with strokes and treated with mechanical ventilation. The commenter expressed appreciation for CMS' efforts in analyzing the cost and length of stay data for this subset of patients. However, the commenter believed that the results of the analysis identifying patients who receive mechanical ventilation >96 hours and also have an MCC demonstrate that these cases require twice the cost of all cases in MS-DRG 61 (Ischemic Stroke, Precerebral Occlusion or Transient Ischemia with Thrombolytic Agent with MCC) and MS-DRG 64 (Intracranial Hemorrhage or Cerebral Infarction with MCC). The commenter requested that CMS reconsider alternative options for this subset of patients due to the cost and length of stay disparities.

Response: We acknowledge the commenters' concern that the average length of stay and average costs for cases where mechanical ventilation >96 hours was reported with an MCC for MS-DRG 61 and MS-DRG 64 are greater when compared to the average length of stay and average costs for all cases in those MS-DRGs. However, as stated in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20195), our clinical advisors noted that patients requiring mechanical ventilation are known to be more resource intensive and it would not be practical to create new MS-DRGs for this subset of patients given the various other indications in which mechanical ventilation may be utilized for other patients. We will consider additional analysis in the future in our efforts toward a broader approach to refining the MS-DRGs for cases of patients requiring mechanical ventilation across the MDCs.

Comment: One commenter suggested that, although CMS' analysis of the cases reporting a neurological condition with mechanical ventilation was acceptable, CMS consider creating a new MS-DRG for poisoning with mechanical ventilation in future rulemaking. The commenter believed that a patient who is in critical condition as a result of a poisoning and requires prolonged mechanical ventilation is not being recognized appropriately under the current MS-DRG relative payment weights.

Response: We appreciate the commenter's input and suggestion. As noted earlier, we will consider additional analysis in our efforts toward a broader approach to refining the MS-DRGs for cases of patients requiring mechanical ventilation across the MDCs.

After consideration of the public comments we received, we are finalizing our proposal to not create new MS-DRGs, classified under MDC 1, for cases that identify patients requiring mechanical ventilation and are diagnosed with stroke or any other neurological condition with or without a thrombolytic, and in the absence of an O.R. procedure for FY 2019.

4. MDC 5 (Diseases and Disorders of the Circulatory System)

a. Pacemaker Insertions

In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56804 through 56809), we discussed a request to examine the ICD-10-PCS procedure code combinations that describe procedures involving pacemaker insertions to determine if some procedure code combinations were excluded from the Version 33 ICD-10 MS-DRG assignments for MS-DRGs 242, 243, and 244 (Permanent Cardiac Pacemaker Implant with MCC, with CC, and without CC/MCC, respectively) under MDC 5. We finalized our proposal to modify the Version 34 ICD-10 MS-DRG GROUPER logic so the specified procedure code combinations were no longer required for assignment into those MS-DRGs. As a result, the logic for pacemaker insertion procedures was simplified by separating the procedure codes describing cardiac pacemaker device insertions into one list and separating the procedure codes describing cardiac pacemaker lead insertions into another list. Therefore, when any ICD-10-PCS procedure code describing the insertion of a pacemaker device is reported from that specific logic list with any ICD-10-PCS procedure code describing the insertion of a pacemaker lead from that specific logic list (81 FR 56804 through 56806), the case is assigned to MS-DRGs 242, 243, and 244 under MDC 5.

We then discussed our examination of the Version 33 GROUPER logic for MS-DRGs 258 and 259 (Cardiac Pacemaker Device Replacement with and without MCC, respectively) because assignment of cases to these MS-DRGs also included qualifying ICD-10-PCS procedure code combinations involving pacemaker insertions (81 FR 56806 through 56808). Specifically, the logic for Version 33 ICD-10 MS-DRGs 258 and 259 included ICD-10-PCS procedure code combinations describing the removal of pacemaker devices and the insertion of new pacemaker devices. We finalized our proposal to modify the Version 34 ICD-10 MS-DRG GROUPER logic for MS-DRGs 258 and 259 to establish that a case reporting any procedure code from the list of ICD-10-PCS procedure codes describing procedures involving pacemaker device insertions without any other procedure codes describing procedures involving pacemaker leads reported would be assigned to MS-DRGs 258 and 259 (81 FR 56806 through 56807) under MDC 5. In addition, we pointed out that a limited number of ICD-10-PCS procedure codes describing pacemaker insertion are classified as non-operating room (non-O.R.) codes within the MS-DRGs and that the Version 34 ICD-10 MS-DRG GROUPER logic would continue to classify these procedure codes as non-O.R. codes. We noted that a case reporting any one of these non-O.R. procedure codes describing a pacemaker device insertion without any other procedure code involving a pacemaker lead would be assigned to MS-DRGs 258 and 259. Therefore, the listed procedure codes describing a pacemaker device insertion under MS-DRGs 258 and 259 are designated as non-O.R. affecting the MS-DRG.

Lastly, we discussed our examination of the Version 33 GROUPER logic for MS-DRGs 260, 261, and 262 (Cardiac Pacemaker Revision Except Device Replacement with MCC, with CC, and without CC/MCC, respectively), and noted that cases assigned to these MS-DRGs also included lists of procedure code combinations describing procedures involving the removal of pacemaker leads and the insertion of new leads, in addition to lists of single procedure codes describing procedures involving the insertion of pacemaker leads, removal of cardiac devices, and revision of cardiac devices (81 FR 56808). We finalized our proposal to modify the ICD-10 MS-DRG GROUPER logic for MS-DRGs 260, 261, and 262 so that cases reporting any one of the listed ICD-10-PCS procedure codes describing procedures involving pacemakers and related procedures and associated devices are assigned to MS DRGs 260, 261, and 262 under MDC 5. Therefore, the GROUPER logic that required a combination of procedure codes be reported for assignment into MS-DRGs 260, 261 and 262 under Version 33 was no longer required effective with discharges occurring on or after October 1, 2016 (FY 2017) under Version 34 of the ICD-10 MS-DRGs.

In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20198), we noted that while the discussion in the FY 2017 IPPS/LTCH PPS final rule focused on the MS-DRGs involving pacemaker procedures under MDC 5, similar GROUPER logic exists in Version 33 of the ICD-10 MS-DRGs under MDC 1 (Diseases and Disorders of the Nervous System) in MS-DRGs 040, 041 and 042 (Peripheral, Cranial Nerve and Other Nervous System Procedures with MCC, with CC or Peripheral Neurostimulator and without CC/MCC, respectively) and MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs) in MS-DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without MCC, respectively) where procedure code combinations involving cardiac pacemaker device insertions or removals and cardiac pacemaker lead insertions or removals are required to be reported together for assignment into those MS-DRGs. We also noted that, with the exception of when a principal diagnosis is reported from MDC 1, MDC 5, or MDC 21, the procedure codes describing the insertion, removal, replacement, or revision of pacemaker devices are assigned to a medical MS-DRG in the absence of another O.R. procedure according to the GROUPER logic. We referred the reader to the ICD-10 MS-DRG Definitions Manual Version 33, which is available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2016-IPPS-Final-Rule-Home-Page-Items/FY2016-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending for complete documentation of the GROUPER logic that was in effect at that time for the Version 33 ICD-10 MS-DRGs discussed earlier.

As discussed in the FY 2019 IPS/LTCH PPS proposed rule (83 FR 20198), for FY 2019, we received a request to assign all procedures involving the insertion of pacemaker devices to surgical MS-DRGs, regardless of the principal diagnosis. The requestor recommended that procedures involving pacemaker insertion be grouped to surgical MS-DRGs within the MDC to which the principal diagnosis is assigned, or that they group to MS-DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC and without CC/MCC, respectively). Currently, in Version 35 of the ICD-10 MS-DRGs, procedures involving pacemakers are assigned to MS-DRGs 040, 041, and 042 (Peripheral, Cranial Nerve and Other Nervous System Procedures with MCC, with CC or Peripheral Neurostimulator and without CC/MCC, respectively) under MDC 1 (Diseases and Disorders of the Nervous System), to MS-DRGs 242, 243, and 244 (Permanent Cardiac Pacemaker Implant with MCC, with CC, and without CC/MCC, respectively), MS-DRGs 258 and 259 (Cardiac Pacemaker Device Replacement with MCC and without MCC, respectively), and MS-DRGs 260, 261 and 262 (Cardiac Pacemaker Revision Except Device Replacement with MCC, with CC, and without CC/MCC, respectively) under MDC 5 (Diseases and Disorders of the Circulatory System), and to MS-DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively), under MDC 21 (Injuries, Poisoning and Toxic Effects of Drugs), with all other unrelated principal diagnoses resulting in a medical MS-DRG assignment. According to the requestor, the medical MS-DRGs do not provide adequate payment for the pacemaker device, specialized operating suites, time, skills, and other resources involved for pacemaker insertion procedures. Therefore, the requestor recommended that procedures involving pacemaker insertions be grouped to surgical MS-DRGs. We refer readers to the ICD-10 MS-DRG Definitions Manual Version 35, which is available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending for complete documentation of the GROUPER logic for the MS-DRGs discussed earlier.

The following procedure codes describe procedures involving the insertion of a cardiac rhythm related device which are classified as a type of pacemaker insertion under the ICD-10 MS-DRGs. These four codes are assigned to MS-DRGs 040, 041, and 042, as well as MS-DRGs 907, 908, and 909, and are designated as O.R. procedures.

We examined cases from the September update of the FY 2017 MedPAR claims data for cases involving pacemaker insertion procedures reporting the above ICD-10-PCS codes in MS-DRGs 040, 041 and 042 under MDC 1. Our findings are shown in the following table.

The following table is a summary of the findings shown above from our review of MS-DRGs 040, 041 and 042 and the total number of cases reporting a pacemaker insertion procedure.

We found a total of 12,264 cases in MS-DRGs 040, 041, and 042 with an average length of stay of 6.7 days and average costs of $19,986. We found a total of 36 cases in MS-DRGs 040, 041, and 042 reporting procedure codes describing the insertion of a pacemaker device with an average length of stay of 9.1 days and average costs of $32,906.

We then examined cases involving pacemaker insertion procedures reporting those same four ICD-10-PCS procedure codes 0JH60PZ, 0JH63PZ, 0JH80PZ and 0JH83PZ in MS-DRGs 907, 908, and 909 under MDC 21. Our findings are shown in the following table.

We note that there were no cases found where procedure codes 0JH63PZ, 0JH80PZ or 0JH83PZ were reported in MS-DRGs 907, 908 and 909 under MDC 21 and, therefore, they are not displayed in the table.

The following table is a summary of the findings shown above from our review of MS-DRGs 907, 908, and 909 and the total number of cases reporting a pacemaker insertion procedure.

We found a total of 19,148 cases in MS-DRGs 907, 908, and 909 with an average length of stay of 6.7 days and average costs of $19,199. We found a total of 13 cases in MS-DRGs 907, 908, and 909 reporting pacemaker insertion procedures with an average length of stay of 7.5 days and average costs of $49,929.

We also examined cases involving pacemaker insertion procedures reporting the following procedure codes that are assigned to MS-DRGs 242, 243, and 244 under MDC 5.

Our data findings are shown in the following table. We note that procedure codes displayed with an asterisk (*) in the table are designated as non-O.R. procedures affecting the MS-DRG.

The following table is a summary of the findings shown above from our review of MS-DRGs 242, 243, and 244 and the total number of cases reporting a pacemaker insertion procedure.

We found a total of 58,765 cases in MS-DRGs 242, 243, and 244 with an average length of stay of 4.6 days and average costs of $20,253. We found a total of 58,822 cases reporting pacemaker insertion procedures in MS-DRGs 242, 243, and 244 with an average length of stay of 4.6 days and average costs of $20,270. We note that the analysis performed is by procedure code, and because multiple pacemaker insertion procedures may be reported on a single claim, the total number of these pacemaker insertion procedure cases exceeds the total number of all cases found across MS-DRGs 242, 243, and 244 (58,822 procedures versus 58,765 cases).

We then analyzed claims for cases reporting a procedure code describing (1) the insertion of a pacemaker device only, (2) the insertion of a pacemaker lead only, and (3) both the insertion of a pacemaker device and a pacemaker lead across all the MDCs except MDC 5 to determine the number of cases currently grouping to medical MS-DRGs and the potential impact of these cases moving into the surgical unrelated MS-DRGs 981, 982 and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC and without CC/MCC, respectively). Our findings are shown in the following table.

We found a total of 2,747 cases reporting the insertion of a pacemaker device in 177 medical MS-DRGs with an average length of stay of 9.5 days and average costs of $29,389 across all the MDCs except MDC 5. We found a total of 2,831 cases reporting the insertion of a pacemaker lead in 175 medical MS-DRGs with an average length of stay of 9.4 days and average costs of $29,240 across all the MDCs except MDC 5. We found a total of 2,709 cases reporting both the insertion of a pacemaker device and the insertion of a pacemaker lead in 170 medical MS-DRGs with an average length of stay of 9.4 days and average costs of $29,297 across all the MDCs except MDC 5.

We also analyzed claims for cases reporting a procedure code describing the insertion of a pacemaker device with a procedure code describing the insertion of a pacemaker lead in all the surgical MS-DRGs across all the MDCs except MDC 5. Our findings are shown in the following table.

We found a total of 3,667 cases reporting the insertion of a pacemaker device and the insertion of a pacemaker lead in 194 surgical MS-DRGs with an average length of stay of 12.8 days and average costs of $48,856 across all the MDCs except MDC 5.

For cases where the insertion of a pacemaker device, the insertion of a pacemaker lead or the insertion of both a pacemaker device and lead were reported on a claim grouping to a medical MS-DRG, the average length of stay and average costs were generally higher for these cases when compared to the average length of stay and average costs for all the cases in their assigned MS-DRGs. For example, we found 113 cases reporting both the insertion of a pacemaker device and lead in MS-DRG 378 (G.I. Hemorrhage with CC), with an average length of stay of 7.1 days and average costs of $23,711. The average length of stay for all cases in MS-DRG 378 was 3.6 days and the average cost for all cases in MS-DRG 378 was $7,190. The average length of stay for cases reporting both the insertion of a pacemaker device and lead were twice as long as the average length of stay for all the cases in MS-DRG 378 (7.1 days versus 3.6 days). In addition, the average costs for the cases reporting both the insertion of a pacemaker device and lead were approximately $16,500 higher than the average costs of all the cases in MS-DRG 378 ($23,711 versus $7,190). We refer readers to Table 6P.1c associated with the proposed rule (which is available via the internet on the CMS website) for the detailed report of our findings across the other medical MS-DRGs. We note that the average costs and average length of stay for cases reporting the insertion of a pacemaker device, the insertion of a pacemaker lead or the insertion of both a pacemaker device and lead are reflected in Columns D and E, while the average costs and average length of stay for all cases in the respective MS-DRG are reflected in Columns I and J.

The claims data results from our analysis of this request showed that if we were to support restructuring the GROUPER logic so that pacemaker insertion procedures that include a combination of the insertion of the pacemaker device with the insertion of the pacemaker lead are designated as an O.R. procedure across all the MDCs, we would expect approximately 2,709 cases to move or “shift” from the medical MS-DRGs where they are currently grouping into the surgical unrelated MS-DRGs 981, 982, and 983.

Our clinical advisors reviewed the data results and recommended that pacemaker insertion procedures involving a complete pacemaker system (insertion of pacemaker device combined with insertion of pacemaker lead) warrant classification into surgical MS-DRGs because the patients receiving these devices demonstrate greater treatment difficulty and utilization of resources when compared to procedures that involve the insertion of only the pacemaker device or the insertion of only the pacemaker lead. We note that the request we addressed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24981 through 24984) was to determine if some procedure code combinations were excluded from the ICD-10 MS-DRG assignments for MS-DRGs 242, 243, and 244. We proposed and, upon considering public comments received, finalized an alternate approach that we believed to be less complicated. We also stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56806) that we would continue to monitor the MS-DRGs for pacemaker insertion procedures as we receive ICD-10 claims data. Upon further review, we stated that we believe that recreating the procedure code combinations for pacemaker insertion procedures would allow for the grouping of these procedures to the surgical MS-DRGs, which we believe is warranted to better recognize the resources and complexity of performing these procedures. Therefore, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20203), we proposed to recreate pairs of procedure code combinations involving both the insertion of a pacemaker device with the insertion of a pacemaker lead to act as procedure code combination pairs or “clusters” in the GROUPER logic that are designated as O.R. procedures outside of MDC 5 when reported together.

Comment: Commenters supported the proposal to recreate pairs of procedure code combinations involving both the insertion of a pacemaker device with the insertion of a pacemaker lead to act as procedure code combination pairs or “clusters” in the GROUPER logic that are designated as O.R. procedures outside of MDC 5 when reported together. One commenter specifically expressed its appreciation of CMS' efforts to update the MS-DRG GROUPER logic to better recognize the resources and complexity of pacemaker device and lead procedures. Another commenter disagreed with the proposal to use pacemaker code pairs for assignment to a surgical MS-DRG, stating it would be more appropriate to designate each pacemaker device and pacemaker lead procedure code as an O.R. procedure to allow initial insertions and replacement of individual components to group to surgical MS-DRGs within all MDCs. According to the commenter, this designation would compensate providers for the cost of the device and the resources utilized in the performance of initial insertions and the replacement of individual components.

Response: We appreciate the commenters' support. With regard to the commenter who disagreed with the proposal to utilize pacemaker code pairs for assignment to a surgical MS-DRG and suggested that the GROUPER logic designate each pacemaker device and pacemaker lead procedure code as an O.R. procedure to allow initial insertions and replacement of individual components to group to surgical MS-DRGs within all MDCs, we note that, as displayed in Table 6P.1c. associated with the FY 2019 IPPS/LTCH PPS proposed rule (which is available via the internet on the CMS website), our claims analysis for cases reporting a procedure code describing the insertion of a pacemaker device only demonstrated a total of six cases across all the medical MS-DRGs, and for cases reporting a procedure code describing the insertion of a pacemaker lead only, the data demonstrated a total of four cases across all the medical MS-DRGs. As a result, there were a total of only 10 cases where a stand-alone code for insertion of a pacemaker device procedure or a stand-alone code for insertion of a pacemaker lead procedure was reported. Those 10 cases grouped to 10 different medical MS-DRGs, of which 8 included a CC or MCC diagnosis. Therefore, it is not clear how much of the average costs, the average length of stay, the complexity of service, and resource utilization for those cases are attributable to the insertion of the pacemaker device/lead procedure versus the severity of illness.

After consideration of the public comments we received, we are finalizing our proposal to recreate pairs of procedure code combinations involving both the insertion of a pacemaker device with the insertion of a pacemaker lead to act as procedure code combination pairs or “clusters” in the GROUPER logic that are designated as O.R. procedures outside of MDC 5 when reported together under the ICD-10 MS-DRGs Version 36, effective October 1, 2018.

We also proposed to designate all the procedure codes describing the insertion of a pacemaker device or the insertion of a pacemaker lead as non-O.R. procedures when reported as a single, individual stand-alone code based on the recommendation of our clinical advisors as noted in the proposed rule and earlier in this section and consistent with how these procedures were classified under the Version 33 ICD-10 MS-DRG GROUPER logic.

Comment: A number of commenters supported the proposal to designate all the procedure codes describing the insertion of a pacemaker device or the insertion of a pacemaker lead as non-O.R. procedures when reported as a single, individual stand-alone code. However, other commenters opposed the proposal. One commenter acknowledged that the complexity of inserting a full pacemaker system is greater than when inserting a pacemaker lead or generator. However, this commenter asserted that the complexity does not increase significantly and that the placement of a lead or generator still requires the use of an operating room, sterile field, anesthesiology, and preparing the patient. The commenter believed that the placement of a pacemaker lead or device does require the use of an operating room and expressed concern that CMS would designate the procedures as a non-O.R. procedure.

Response: We appreciate the commenters' support. With regard to the commenter who expressed concern that we proposed to designate procedure codes describing the insertion of a pacemaker device or the insertion of a pacemaker lead as non-O.R. procedures when reported as a single, individual stand-alone code, we note that historically, these procedures have been designated as non-O.R. procedures. As we noted in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20203), our proposal to designate all the procedure codes describing the insertion of a pacemaker device or the insertion of a pacemaker lead as non-O.R. procedures when reported as a single, individual stand-alone code is consistent with how these procedures were classified under the Version 33 ICD-10 MS-DRG GROUPER logic. In addition, our clinical advisors continue to support the non-O.R. designation because, as the commenter noted in its own comments, while these procedures may require a sterile field, anesthesia and preparing the patient, the complexity of inserting a pacemaker lead or generator alone is less than that of inserting a full pacemaker system and the former can be performed in settings such as cardiac catheterization laboratories.

After consideration of the public comments we received, we are finalizing our proposal to designate all the procedure codes describing the insertion of a pacemaker device or the insertion of a pacemaker lead as non-O.R. procedures when reported as a single, individual stand-alone code outside of MDC 5 under the ICD-10 MS-DRGs Version 36, effective October 1, 2018.

In the proposed rule, we referred readers to Table 6P.1d, Table 6P.1e, and Table 6P.1f. associated with the proposed rule (which is available via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) for (1) a complete list of the proposed procedure code combinations or “pairs”; (2) a complete list of the procedure codes describing the insertion of a pacemaker device; and (3) a complete list of the procedure codes describing the insertion of a pacemaker lead. We invited public comments on our lists of procedure codes that we proposed to include for restructuring the ICD-10 MS-DRG GROUPER logic for pacemaker insertion procedures.

In addition, we proposed to maintain the current GROUPER logic for MS-DRGs 258 and 259 (Cardiac Pacemaker Device Replacement with MCC and without MCC, respectively) where the listed procedure codes as shown in the ICD-10 MS-DRG Definitions Manual Version 35, which is available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending, describing a pacemaker device insertion, continue to be designated as “non-O.R. affecting the MS-DRG” because they are reported when a pacemaker device requires replacement and have a corresponding diagnosis from MDC 5. Also, we proposed to maintain the current GROUPER logic for MS-DRGs 260, 261, and 262 (Cardiac Pacemaker Revision Except Device Replacement with MCC, with CC, and without CC/MCC, respectively) so that cases reporting any one of the listed ICD-10-PCS procedure codes as shown in the ICD-10 MS-DRG Definitions Manual Version 35 describing procedures involving pacemakers and related procedures and associated devices will continue to be assigned to those MS DRGs under MDC 5 because they are reported when a pacemaker device requires revision and they have a corresponding circulatory system diagnosis.

Comment: Commenters agreed with the proposed lists of procedure codes for restructuring the ICD-10 MS DRG GROUPER logic for pacemaker insertion procedures. One commenter also suggested the addition of ICD-10-PCS procedure code 02H63MZ (Insertion of cardiac lead into right atrium, percutaneous approach) and ICD-10-PCS procedure code 02H73MZ (Insertion of cardiac lead into left atrium, percutaneous approach) to Tables 6P.1d. and Table 6P.1f. that were associated with the proposed rule. The commenter noted that the tables included the open and percutaneous endoscopic approaches but did not include the percutaneous approach.

Response: We appreciate the commenters' support. We agree with the commenter to add ICD-10-PCS procedure codes 02H63MZ and 02H73MZ to Table 6P.1d and as reflected in Table 6P.1f. associated with this final rule (which is available via the internet on the CMS website), to be included for the pacemaker insertion code pairs and as stand-alone codes for the insertion of a pacemaker lead. The codes are consistent with the other insertion of cardiac lead procedures and were inadvertently omitted from the initial list.

After consideration of the public comments we received, we are finalizing the lists of the procedure codes in Tables 6P.1d., Table 6P.1e., and Table 6P.1f associated with the proposed rule, with the addition of ICD-10-PCS procedure codes 02H63MZ and 02H73MZ to be included for the pacemaker insertion code pairs and as stand-alone codes for the insertion of a pacemaker lead, as reflected in Tables 6P.1.d. and 6P.1.f. associated with this final rule. We also are finalizing our proposal to maintain the current GROUPER logic for MS-DRGs 258 and 259 and for MS-DRGs 260, 261, and 262 under the ICD-10 Version 36, effective October 1, 2018.

We noted in the proposed rule that, while the requestor did not include the following procedure codes in its request, these codes are also currently designated as O.R. procedure codes and are assigned to MS-DRGs 260, 261, and 262 under MDC 5.

In the proposed rule, we solicited public comments on whether these procedure codes describing the removal or revision of a cardiac lead and removal or revision of a cardiac rhythm related (pacemaker) device should also be designated as non-O.R. procedure codes for FY 2019 when reported as a single, individual stand-alone code with a principal diagnosis outside of MDC 5 for consistency in the classification among these devices.

Comment: One commenter recommended that CMS not finalize the proposed designation of the procedure codes listed in the above table describing the removal or revisions of a cardiac lead and the removal or revision of a cardiac rhythm related (pacemaker) device from O.R. procedures to non-O.R. procedures when reported as a single, individual stand-alone code when reported with a principal diagnosis outside of MDC 5. Another commenter expressed concern that the rationale for the proposal was not clear and warranted additional clarification about the data used to arrive at this recommendation. According to this commenter, regardless of the principal diagnosis, the resources for procedures involving insertion, removal or revision of a pacemaker generator or lead are the same. The commenter further noted that revisions are often more complex and require greater resources. The commenter recommended that CMS continue to designate the procedures as O.R. procedures and further explain the proposal.

Response: We appreciate the commenter's feedback. We note that while we were soliciting comments on the procedure codes listed in the table above that describe the removal or revision of a cardiac lead and the removal or revision of a cardiac rhythm related (pacemaker) device, we did not specifically recommend a change to the designation of the procedure codes at this time. We agree with the commenter that the removal or revision of a cardiac lead or pacemaker generator can be more complex and require greater resources than an initial insertion procedure.

After consideration of the public comments we received, we are maintaining the O.R. designation of the procedure codes listed in the above table under the ICD-10 MS-DRGs Version 36, effective October 1, 2018. As additional claims data become available, we will continue to analyze these procedures.

We also note in the proposed rule that, while the requestor did not include the following procedure codes in its request, the codes in the following table became effective October 1, 2016 (FY 2017) and also describe procedures involving the insertion of a pacemaker. Specifically, the following list includes procedure codes that describe an intracardiac or “leadless” pacemaker. These procedure codes are designated as O.R. procedure codes and are currently assigned to MS-DRGs 228 and 229 (Other Cardiothoracic Procedures with MCC and without MCC, respectively) under MDC 5.

We examined claims data for procedures involving an intracardiac pacemaker reporting any of the above codes across all MS-DRGs. Our findings are shown in the following table.

We found 1,190 cases reporting a procedure involving an intracardiac pacemaker with an average length of stay of 8.6 days and average costs of $38,576. Of these 1,190 cases, we found 1,037 cases in MS-DRGs under MDC 5. We also found that the 153 cases that grouped to MS-DRGs outside of MDC 5 grouped to surgical MS-DRGs; therefore, another O.R. procedure was also reported on the claim. However, in the FY 2019 IPPS/LTCH PPS proposed rule, we solicited public comments on whether these procedure codes describing the insertion and revision of intracardiac pacemakers should also be considered for classification into all surgical unrelated MS-DRGs outside of MDC 5 for FY 2019.

Comment: Commenters supported classifying the procedure codes listed in the table above describing the insertion and revision of intracardiac pacemakers into all surgical unrelated MS-DRGs outside of MDC 5.

Response: We appreciate the commenters' feedback. We note that while we solicited comments on the procedure codes listed in the table above that describe the insertion of an intracardiac pacemaker device, we did not specifically recommend a change to the designation of the procedure codes at this time. We also note that, currently, the procedures are already classified within the GROUPER logic as extensive O.R. procedures. Therefore, if one of the procedure codes is reported with a principal diagnosis outside of MDC 5, the case will group to one of the unrelated surgical MS-DRGs.

After consideration of the public comments we received, we are maintaining the O.R. designation of the procedure codes listed in the above table under the ICD-10 MS-DRGs Version 36, effective October 1, 2018. As additional claims data become available, we will continue to analyze these procedures.

b. Drug-Coated Balloons in Endovascular Procedures

In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38111), we discontinued new technology add-on payments for the LUTONIX® and IN.PACT^TM Admiral^TM drug-coated balloon (DCB) technologies, effective for FY 2018, because the technology no longer met the newness criterion for new technology add-on payments. For FY 2019, we received a request to reassign cases that utilize a drug-coated balloon in the performance of an endovascular procedure involving the treatment of superficial femoral arteries for peripheral arterial disease from the lower severity level MS-DRG 254 (Other Vascular Procedures without CC/MCC) and MS-DRG 253 (Other Vascular Procedures with CC) to the highest severity level MS-DRG 252 (Other Vascular Procedures with MCC). We also received a request to revise the title of MS-DRG 252 to “Other Vascular Procedures with MCC or Drug-Coated Balloon Implant”.

As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20205), there are currently 36 ICD-10-PCS procedure codes that describe the performance of endovascular procedures involving treatment of the superficial femoral arteries that utilize a drug-coated balloon, which are listed in the following table.

The requestor performed its own analysis of claims data and expressed concern that it found that the average costs of cases using a drug-coated balloon in the performance of percutaneous endovascular procedures involving treatment of patients who have been diagnosed with peripheral arterial disease are significantly higher than the average costs of all of the cases in the MS-DRGs where these procedures are currently assigned. The requestor also expressed concern that payments may no longer be adequate because the new technology add-on payments have been discontinued and may affect patient access to these procedures.

We first examined claims data from the September 2017 update of the FY 2017 MedPAR file for cases reporting any 1 of the 36 ICD-10-PCS procedure codes listed in the immediately preceding table that describe the use of a drug-coated balloon in the performance of endovascular procedures in MS-DRGs 252, 253, and 254. Our findings are shown in the following table.

As shown in this table, there were a total of 33,583 cases in MS-DRG 252, with an average length of stay of 7.6 days and average costs of $23,906. There were 870 cases in MS-DRG 252 reporting the use of a drug-coated balloon in the performance of an endovascular procedure, with an average length of stay of 8.8 days and average costs of $30,912. The total number of cases in MS-DRG 253 was 25,714, with an average length of stay of 5.4 days and average costs of $18,986. There were 1,532 cases in MS-DRG 253 reporting the use of a DCB in the performance of an endovascular procedure, with an average length of stay of 5.4 days and average costs of $23,051. The total number of cases in MS-DRG 254 was 12,344, with an average length of stay of 2.8 days and average costs of $13,287. There were 488 cases in MS-DRG 254 reporting the use of a DCB in the performance of an endovascular procedure, with an average length of stay of 2.4 days and average costs of $17,445.

The results of our data analysis show that there is not a very high volume of cases reporting the use of a drug-coated balloon in the performance of endovascular procedures compared to all of the cases in the assigned MS-DRGs. The data results also show that the average length of stay for cases reporting the use of a drug-coated balloon in the performance of endovascular procedures in MS-DRGs 253 and 254 is lower compared to the average length of stay for all of the cases in the assigned MS-DRGs, while the average length of stay for cases reporting the use of a drug-coated balloon in the performance of endovascular procedures in MS-DRG 252 is slightly higher compared to all of the cases in MS-DRG 252 (8.8 days versus 7.6 days). Lastly, the data results showed that the average costs for cases reporting the use of a drug-coated balloon in the performance of percutaneous endovascular procedures were higher compared to all of the cases in the assigned MS-DRGs. Specifically, for MS-DRG 252, the average costs for cases reporting the use of a DCB in the performance of endovascular procedures were $30,912 versus the average costs of $23,906 for all cases in MS-DRG 252, a difference of $7,006. For MS-DRG 253, the average costs for cases reporting the use of a drug-coated balloon in the performance of endovascular procedures were $23,051 versus the average costs of $18,986 for all cases in MS-DRG 253, a difference of $4,065. For MS-DRG 254, the average costs for cases reporting the use of a drug-coated balloon in the performance of endovascular procedures were $17,445 versus the average costs of $13,287 for all cases in MS-DRG 254, a difference of $4,158.

The following table is a summary of the findings discussed above from our review of MS-DRGs 252, 253 and 254 and the total number of cases that used a drug-coated balloon in the performance of the procedure across MS-DRGs 252, 253, and 254.

As shown in this table, there were a total of 71,641 cases across MS-DRGs 252, 253, and 254, with an average length of stay of 6.0 days and average costs of $20,310. There were a total of 2,890 cases across MS-DRGs 252, 253, and 254 reporting the use of a drug-coated balloon in the performance of the procedure, with an average length of stay of 6.0 days and average costs of $24,569. The data analysis showed that cases reporting the use of a drug-coated balloon in the performance of the procedure across MS-DRGs 252, 253 and 254 have similar lengths of stay (6.0 days) compared to the average length of stay for all of the cases in MS-DRGs 252, 253, and 254. The data results also showed that the cases reporting the use of a drug-coated balloon in the performance of the procedure across these MS-DRGs have higher average costs ($24,569 versus $20,310) compared to the average costs for all of the cases across these MS-DRGs.

We stated in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20207) that the results of our claims data analysis and the advice from our clinical advisors did not support reassigning cases reporting the use of a drug-coated balloon in the performance of these procedures from the lower severity level MS-DRGs 253 and 254 to the highest severity level MS-DRG 252 at this time. We further stated that, if we were to reassign cases that utilize a drug-coated balloon in the performance of these types of procedures from MS-DRG 254 to MS-DRG 252, the cases would result in overpayment and also would have a shorter length of stay compared to all of the cases in MS-DRG 252. While the cases reporting the use of a drug-coated balloon in the performance of these procedures are higher compared to the average costs for all cases in their assigned MS-DRGs, it is not by a significant amount. We stated that we believe that as use of a drug-coated balloon becomes more common, the costs will be reflected in the data. Our clinical advisors also agreed that it would not be clinically appropriate to reassign cases for patients from the lowest severity level (without CC/MCC) MS-DRG to the highest severity level (with MCC) MS-DRG in the absence of additional data to better determine the resource utilization for this subset of patients. Therefore, for these reasons, we proposed to not reassign cases reporting the use of a drug-coated balloon in the performance of endovascular procedures from MS-DRGs 253 and 254 to MS-DRG 252.

Comment: A number of commenters supported maintaining the current classification of cases involving the use of a drug-coated balloon in the performance of endovascular procedures. The commenters stated that CMS' proposal was reasonable, given the data, ICD-10-PCS procedure codes, and information provided.

Response: We appreciate the commenters' support.

Comment: One commenter recommended that further data analysis be conducted after the new ICD-10-PCS procedure codes for endovascular procedures utilizing a drug-coated balloon in the upper extremity become effective on October 1, 2018, in order to determine if MS-DRG structure and assignment modifications are warranted in the future.

Response: We agree with the commenter that continued monitoring of the cases reporting the use of a drug-coated balloon in the performance of endovascular procedures in the lower extremity, along with analysis of the new ICD-10-PCS procedure codes that identify the use of a drug-coated balloon in the upper extremity, would be advantageous. As claims data become available, we will be able to evaluate the resource utilization of these procedures more effectively.

Comment: One commenter believed that an analysis of the average costs of cases performed with and without the use of drug-coated balloons in MS-DRGs 252, 253, and 254 justified assigning cases, including cases involving the use of drug-coated balloons in the performance of the procedure, to MS-DRGs 252 or 253, and not to MS-DRG 254. The commenter indicated that claims data showed the average costs of MS-DRG 253 for all cases is $18,986, while the average cost of cases utilizing drug-coated balloons in the performance of the procedure assigned to MS-DRG 254 is $17,445. The commenter believed that, while the average length-of-stay is lower for these cases, the average costs are consistent with that of MS-DRG 253. Therefore, the commenter suggested that CMS reassign these cases to MS-DRG 253 as a more appropriate reflection of the hospital resources utilized for these cases.

Response: Our clinical advisors reviewed the data, and again determined that it would not be clinically appropriate to reassign cases for patients from the lowest severity level (without CC/MCC) MS-DRG to the higher severity level (with CC) MS-DRG in the absence of additional data to better determine the resource utilization for this subset of patients. We reiterate that we believe as use of the drug-coated balloon in the performance of endovascular procedures becomes more common, the costs will be reflected in the data. In addition, as noted above, new ICD-10-PCS procedure codes that describe the use of a drug-coated balloon in the upper extremity are effective with discharges occurring on or after October 1, 2018. As such, we will continue to monitor cases reporting the use of a drug-coated balloon in the performance of endovascular procedures and determine if future MS-DRG structure and assignment modifications are supported.

After consideration of the public comments we received, we are finalizing our proposal to not reassign cases reporting the use of a drug-coated balloon in the performance of endovascular procedures from MS-DRGs 253 and 254 to MS-DRG 252 for FY 2019.

We noted in the proposed rule that because 24 of the 36 ICD-10-PCS procedure codes describing the use of a drug-coated balloon in the performance of endovascular procedures also include the use of an intraluminal device, we conducted further analysis to determine the number of cases reporting an intraluminal device with the use of a drug-coated balloon in the performance of the procedure versus the number of cases reporting the use of a drug-coated balloon alone. We analyzed the number of cases across MS-DRGs 252, 253, and 254 reporting: (1) The use of an intraluminal device (stent) with use of a drug-coated balloon in the performance of the procedure; (2) the use of a drug-eluting intraluminal device (stent) with the use of a drug-coated balloon in the performance of the procedure; and (3) the use of a drug-coated balloon only in the performance of the procedure. Our findings are shown in the following table.

As shown in this table, there were a total of 71,641 cases across MS-DRGs 252, 253, and 254, with an average length of stay of 6.0 days and average costs of $20,310. There were 522 cases across MS-DRGs 252, 253, and 254 reporting the use of an intraluminal device with use of a drug-coated balloon in the performance of the procedure, with an average length of stay of 6.0 days and average costs of $28,418. There were 447 cases across MS-DRGs 252, 253, and 254 reporting the use of a drug-eluting intraluminal device with use of a drug-coated balloon in the performance of the procedure, with an average length of stay of 6.0 days and average costs of $26,098. Lastly, there were 2,705 cases across MS-DRGs 252, 253, and 254 reporting the use of a drug-coated balloon alone in the performance of the procedure, with an average length of stay of 6.1 days and average costs of $24,553.

The data showed that the 2,705 cases in MS-DRGs 252, 253, and 254 reporting the use of a drug-coated balloon alone in the performance of the procedure have lower average costs compared to the 969 cases in MS-DRGs 252, 253, and 254 reporting the use of an intraluminal device (522 cases) or a drug-eluting intraluminal device (447 cases) with a drug-coated balloon in the performance of the procedure ($24,553 versus $28,418 and $26,098, respectively.) The data also showed that the cases reporting the use of a drug-coated balloon alone in the performance of the procedure have a comparable average length of stay compared to the cases reporting the use of an intraluminal device or a drug-eluting intraluminal device with a drug-coated balloon in the performance of the procedure (6.1 days versus 6.0 days).

In summary, as we stated in the proposed rule, we believe that further analysis of endovascular procedures involving the treatment of superficial femoral arteries for peripheral arterial disease that utilize a drug-coated balloon in the performance of the procedure would be advantageous. As additional claims data become available, we will be able to more fully evaluate the differences in cases where a procedure utilizes a drug-coated balloon alone in the performance of the procedure versus cases where a procedure utilizes an intraluminal device or a drug-eluting intraluminal device in addition to a drug-coated balloon in the performance of the procedure.

5. MDC 6 (Diseases and Disorders of the Digestive System)

a. Benign Lipomatous Neoplasm of Kidney

As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20207), we received a request to reassign ICD-10-CM diagnosis code D17.71 (Benign lipomatous neoplasm of kidney) from MDC 06 (Diseases and Disorders of the Digestive System) to MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract). The requestor stated that this diagnosis code is used to describe a kidney neoplasm and believed that because the ICD-10-CM code is specific to the kidney, a more appropriate assignment would be under MDC 11. In FY 2015, under the ICD-9-CM classification, there was not a specific diagnosis code for a benign lipomatous neoplasm of the kidney. The only diagnosis code available was ICD-9-CM diagnosis code 214.3 (Lipoma of intra-abdominal organs), which was assigned to MS-DRGs 393, 394, and 395 (Other Digestive System Diagnoses with MCC, with CC, and without CC/MCC, respectively) under MDC 6. Therefore, when we converted from the ICD-9 based MS-DRGs to the ICD-10 MS-DRGs, there was not a specific code available that identified the kidney from which to replicate. As a result, ICD-10-CM diagnosis code D17.71 was assigned to those same MS-DRGs (MS-DRGs 393, 394, and 395) under MDC 6.

While reviewing the MS-DRG classification of ICD-10-CM diagnosis code D17.71, we also reviewed the MS-DRG classification of another diagnosis code organized in subcategory D17.7, ICD-10-CM diagnosis code D17.72 (Benign lipomatous neoplasm of other genitourinary organ). ICD-10-CM diagnosis code D17.72 is currently assigned under MDC 09 (Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast) to MS-DRGs 606 and 607 (Minor Skin Disorders with and without MCC, respectively). Similar to the replication issue with ICD-10-CM diagnosis code D17.71, with ICD-10-CM diagnosis code D17.72, under the ICD-9-CM classification, there was not a specific diagnosis code to identify a benign lipomatous neoplasm of genitourinary organ. The only diagnosis code available was ICD-9-CM diagnosis code 214.8 (Lipoma of other specified sites), which was assigned to MS-DRGs 606 and 607 under MDC 09. Therefore, when we converted from the ICD-9 based MS-DRGs to the ICD-10 MS-DRGs, there was not a specific code available that identified another genitourinary organ (other than the kidney) from which to replicate. As a result, ICD-10-CM diagnosis code D17.72 was assigned to those same MS-DRGs (MS-DRGs 606 and 607) under MDC 9.

In the proposed rule, we proposed to reassign ICD-10-CM diagnosis code D17.71 from MS-DRGs 393, 394, and 395 (Other Digestive System Diagnoses with MCC, with CC, and without CC/MCC, respectively) under MDC 06 to MS-DRGs 686, 687, and 688 (Kidney and Urinary Tract Neoplasms with MCC, with CC, and without CC/MCC, respectively) under MDC 11 because this diagnosis code is used to describe a kidney neoplasm. We also proposed to reassign ICD-10-CM diagnosis code D17.72 from MS-DRGs 606 and 607 under MDC 09 to MS-DRGs 686, 687, and 688 under MDC 11 because this diagnosis code is used to describe other types of neoplasms classified to the genitourinary tract that do not have a specific code identifying the site. Our clinical advisors agreed that the conditions described by the ICD-10-CM diagnosis codes provide specific anatomic detail involving the kidney and genitourinary tract and, therefore, if reclassified under this proposed MDC and reassigned to these MS-DRGs, would improve the clinical coherence of the patients assigned to these groups.

Comment: Commenters agreed with CMS' proposals to reassign ICD-10-CM diagnosis code D17.71 that describes benign lipomatous neoplasm of the kidney from MDC 6 to MDC 11, and to reassign ICD-10-CM diagnosis code D17.72 that describes benign lipomatous neoplasm of other genitourinary tract organ from MDC 9 to MDC 11. The commenters stated the proposals were reasonable, given the ICD-10-CM diagnosis codes and information provided.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposals to reassign ICD-10-CM diagnosis code D17.71 from MS-DRGs 393, 394, and 395 under MDC 6 to MS-DRGs 686, 687, and 688 under MDC 11, and to reassign ICD-10-CM diagnosis code D17.72 from MS-DRGs 606 and 607 under MDC 9 to MS-DRGs 686, 687, and 688 under MDC 11 in the ICD-10 MS-DRGs Version 36, effective October 1, 2018.

b. Bowel Procedures

As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20208), we received a request to reassign the following 8 ICD-10-PCS procedure codes that describe repositioning of the colon and takedown of end colostomy from MS-DRGs 344, 345, and 346 (Minor Small and Large Bowel Procedures with MCC, with CC, and without CC/MCC, respectively) to MS-DRGs 329, 330, and 331 (Major Small and Large Bowel Procedures with MCC, with CC, and without CC/MCC, respectively):

The requestor indicated that the resources required for procedures identifying repositioning of specified segments of the large bowel are more closely aligned with other procedures that group to MS-DRGs 329, 330, and 331, such as repositioning of the large intestine (unspecified segment).

We analyzed the claims data from the September 2017 update of the FY 2017 Med PAR file for MS-DRGs 344, 345 and 346 for all cases reporting the 8 ICD-10-PCS procedure codes listed in the table above. Our findings are shown in the following table:

The data showed that the average length of stay and average costs for cases that reported a specific large bowel reposition procedure were generally consistent with the average length of stay and average costs for all of the cases in their assigned MS-DRG.

We then examined the claims data in the September 2017 update of the FY 2017 MedPAR file for MS-DRGs 329, 330 and 331. Our findings are shown in the following table.

As shown in this table, across MS-DRGs 329, 330, and 331, we found a total of 112,388 cases, with an average length of stay of 8.4 days and average costs of $21,382. We stated in the FY 2019 IPPS/LTCH PPS proposed rule that the results of our analysis indicate that the resources required for cases reporting the specific large bowel repositioning procedures are more aligned with those resources required for all cases assigned to MS-DRGs 344, 345, and 346, with the average costs being lower than the average costs for all cases assigned to MS-DRGs 329, 330, and 331. Our clinical advisors also indicated that the 8 specific bowel repositioning procedures are best aligned with those in MS-DRGs 344, 345, and 346. Therefore, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20209), we proposed to maintain the current assignment of the 8 specific bowel repositioning procedures in MS-DRGs 344, 345, and 346 for FY 2019.

Comment: Commenters supported CMS' proposal to maintain the current assignment of the 8 specific bowel repositioning procedures in MS DRGs 344, 345, and 346 for FY 2019.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to maintain the current assignment of the 8 specific bowel repositioning procedures in MS DRGs 344, 345, and 346 for FY 2019.

In conducting our analysis of MS-DRGs 329, 330, and 331, we also examined the subset of cases reporting one of the bowel procedures listed in the following table as the only O.R. procedure.

This approach can be useful in determining whether resource use is truly associated with a particular procedure or whether the procedure frequently occurs in cases with other procedures with higher than average resource use. As shown in the following table, we identified 398 cases reporting a bowel procedure as the only O.R. procedure, with an average length of stay of 6.3 days and average costs of $13,595 across MS-DRGs 329, 330, and 331, compared to the overall average length of stay of 8.4 days and average costs of $21,382 for all cases in MS-DRGs 329, 330, and 331.

We stated in the FY 2019 IPPS/LTCH PPS proposed rule that the resources required for these cases are more aligned with the resources required for cases assigned to MS-DRGs 344, 345, and 346 than with the resources required for cases assigned to MS-DRGs 329, 330, and 331. Our clinical advisors also agreed that these cases are more clinically aligned with cases in MS-DRGs 344, 345, and 346, as they are minor procedures relative to the major bowel procedures assigned to MS-DRGs 329, 330, and 331. Therefore, in the proposed rule, we proposed to reassign the 12 ICD-10-PCS procedure codes listed above from MS-DRGs 329, 330, and 331 to MS-DRGs 344, 345, and 346.

Comment: Commenters disagreed with CMS' proposal to reassign the 12 ICD-10-PCS procedure codes listed above from MS-DRGs 329, 330, and 331 to MS DRGs 344, 345, and 346. The commenters recommended that changes to these MS-DRGs be delayed until a thorough data analysis is conducted. The commenters further recommended that any future analysis include a thorough review of the principal diagnoses for cases involving these ICD-10-PCS codes, as the associated diagnosis significantly impacts the resource utilization and complexity of the procedure performed and MS-DRG assignment. The commenters noted that the root operation of “Reposition” may be used for the takedown of a stoma, as well as to treat a specific medical condition such as malrotation of the intestine, and that “Repair” is the root operation of last resort when no other ICD-10-PCS root operation applies and, therefore, is used for a wide range of procedures of varying complexity.

Commenters also noted that several questions and answers regarding these ICD-10-PCS procedure codes were published in Coding Clinic for ICD-10-CM/PCS between late 2016 and the end of 2017, and stated that because 2 full years of data were not available subsequent to publication of this advice, CMS' analysis and proposed MS-DRG modifications may be based on unreliable data.

Response: Upon further review, we agree with the commenters that the availability of a full 2 years of data would allow us to conduct a more comprehensive analysis upon which to consider potential modifications to these MS-DRGs. Therefore, we believe it would be preferable to wait until these data are available before finalizing changes to the MS-DRG assignment for these bowel procedures.

After consideration of the public comments we received, we are not finalizing our proposal to reassign the 12 ICD-10-PCS procedure codes listed above from MS-DRGs 329, 330, and 331 to MS-DRGs 344, 345, and 346 for FY 2019.

6. MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue): Spinal Fusion

In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38036), we announced our plans to review the ICD-10 logic for the MS-DRGs where procedures involving spinal fusion are currently assigned for FY 2019. After publication of the FY 2018 IPPS/LTCH PPS final rule, we received a comment suggesting that CMS publish findings from this review and discuss possible future actions. The commenter agreed that it is important to be able to fully evaluate the MS-DRGs to which all spinal fusion procedures are currently assigned with additional claims data, particularly considering the 33 clinically invalid codes that were identified through the rulemaking process (82 FR 38034 through 38035) and the 87 codes identified from the upper and lower joint fusion tables in the ICD-10-PCS classification and discussed at the September 12, 2017 ICD-10 Coordination and Maintenance Committee that were proposed to be deleted effective October 1, 2018 (FY 2019). The agenda and handouts from that meeting can be obtained from the CMS website at: https://www.cms.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/ICD-9-CM-C-and-M-Meeting-Materials.html.

According to the commenter, deleting the 33 procedure codes describing clinically invalid spinal fusion procedures for FY 2018 partially resolves the issue for data used in setting the FY 2020 payment rates. However, the commenter also noted that the problem will not be fully resolved until the FY 2019 claims are available for FY 2021 ratesetting (due to the 87 codes identified at the ICD-10 Coordination and Maintenance Committee meeting for deletion effective October 1, 2018 (FY 2019)).

The commenter noted that it analyzed claims data from the FY 2016 MedPAR data set and was surprised to discover a significant number of discharges reporting 1 of the 87 clinically invalid codes that were identified and discussed by the ICD-10 Coordination and Maintenance Committee among the following spinal fusion MS-DRGs.

In addition, the commenter noted that it also identified a number of discharges for the 33 clinically invalid codes we identified in the FY 2018 IPPS/LTCH PPS final rule in the same MS-DRGs listed above. According to the commenter, its findings of these invalid spinal fusion procedure codes in the FY 2016 claims data comprise approximately 30 percent of all discharges for spinal fusion procedures.

The commenter expressed its appreciation that CMS is making efforts to address coding inaccuracies within the classification and suggested that CMS publish findings from its own review of spinal fusion coding issues in those MS-DRGs where cases reporting spinal fusion procedures are currently assigned and include a discussion of possible future actions in the FY 2019 IPPS/LTCH PPS proposed rule. The commenter believed that such an approach would allow time for stakeholder input on any possible proposals along with time for the invalid codes to be worked out of the datasets. The commenter also noted that publishing CMS' findings will put the agency, as well as the public, in a better position to address any potential payment issues for these services beginning in FY 2021.

In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20210), we thanked the commenter for acknowledging the steps we have taken in our efforts to address coding inaccuracies within the classification as we continue to refine the ICD-10 MS-DRGs. We did not propose any changes to the MS-DRGs involving spinal fusion procedures for FY 2019. However, in response to the commenter's suggestion and findings, we provided the following results from our analysis of the September 2017 update of the FY 2017 MedPAR claims data for the MS-DRGs involving spinal fusion procedures.

We noted that while the commenter stated that 87 codes were identified from the upper and lower joint fusion tables in the ICD-10-PCS classification and discussed at the September 12, 2017 ICD-10 Coordination and Maintenance Committee meeting to be deleted effective October 1, 2018 (FY 2019), there were 99 spinal fusion codes identified in the meeting materials, as shown in Table 6P.1g associated with the proposed rule (which is available via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html).

As shown in Table 6P.1g associated with the proposed rule, the 99 procedure codes describe spinal fusion procedures that have device value “Z” representing No Device for the 6th character in the code. Because a spinal fusion procedure always requires some type of device (for example, instrumentation with bone graft or bone graft alone) to facilitate the fusion of vertebral bones, these codes are considered clinically invalid and were proposed for deletion at the September 12, 2017 ICD-10 Coordination and Maintenance Committee meeting. We received public comments in support of the proposal to delete the 99 codes describing a spinal fusion without a device, in addition to receiving support for the deletion of other procedure codes describing fusion of body sites other than the spine. A total of 213 procedure codes describing fusion of a specific body part with device value “Z” No Device are being deleted effective October 1, 2018 (FY 2019) as shown in Table 6D.—Invalid Procedure Codes associated with the proposed rule and this final rule (which is available via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html).

We examined claims data from the September 2017 update of the FY 2017 MedPAR file for cases reporting any of the clinically invalid spinal fusion procedures with device value “Z” No Device in MS-DRGs 028 (Spinal Procedures with MCC), 029 (Spinal Procedures with CC or Spinal Neurostimulators), and 030 (Spinal Procedures without CC/MCC) under MDC 1 and MS-DRGs 453, 454, 455, 456, 457, 458, 459, 460, 471, 472, and 473 under MDC 8 (that are listed and shown earlier in this section). Our findings are shown in the following tables.

As shown in this summary table, we found a total of 142,752 cases in MS-DRGs 028, 029, 030, 453, 454, 455, 456, 457, 458, 459, 460, 471, 472, and 473 with an average length of stay of 3.9 days and average costs of $31,788. We found a total of 16,472 cases reporting a procedure code for an invalid spinal fusion procedure with device value “Z” No Device across MS-DRGs 028, 029, and 030 under MDC 1 and MS-DRGs 453, 454, 455, 456, 457, 458, 459, 460, 471, 472, and 473 under MDC 8, with an average length of stay of 5.1 days and average costs of $42,929. The results of the data analysis demonstrate that these invalid spinal fusion procedures represent approximately 12 percent of all discharges across the spinal fusion MS-DRGs. Because these procedure codes describe clinically invalid procedures, we would not expect these codes to be reported on any claims data. We stated in the proposed rule that it is unclear why providers assigned procedure codes for spinal fusion procedures with the device value “Z” No Device. Our analysis did not examine whether these claims were isolated to a specific provider or whether this inaccurate reporting was widespread among a number of providers.

With regard to possible future action, we indicated in the proposed rule that we will continue to monitor the claims data for resolution of the coding issues previously identified. Because the procedure codes that we analyzed and presented findings for in the FY 2019 IPPS/LTCH PPS proposed rule will no longer be in the classification system, effective October 1, 2018 (FY 2019), the claims data that we examine for FY 2020 may still contain claims with the invalid codes. As such, we will continue to collaborate with the AHA as one of the four Cooperating Parties through the AHA's Coding Clinic for ICD-10-CM/PCS and provide further education on spinal fusion procedures and the proper reporting of the ICD-10-PCS spinal fusion procedure codes. We agreed with the commenter that until these coding inaccuracies are no longer reflected in the claims data, it would be premature to propose any MS-DRG modifications for spinal fusion procedures. Possible MS-DRG modifications may include taking into account the approach that was utilized in performing the spinal fusion procedure (for example, open versus percutaneous).

For the reasons described and as stated in the proposed rule and earlier in our discussion, we proposed not to make any changes to the spinal fusion MS-DRGs for FY 2019.

Comment: Commenters agreed with CMS' proposal not to make any changes to the MS-DRGs involving spinal fusion procedures for FY 2019.

Response: We thank the commenters for their support.

Comment: Some commenters noted that confusion has existed as to whether a spinal fusion code may be assigned when no bone graft or bone graft substitute is used (that is, instrumentation only) but the medical record documentation refers to the procedure as a spinal fusion. One commenter recommended that additional refinements be made to the ICD-10-PCS spinal fusion coding guidelines in order to further clarify appropriate reporting of spinal fusion codes. Another commenter asserted that the planned deletion of a total of 213 ICD-10-PCS fusion procedure codes with the device value “Z” for “no device”, effective October 1, 2018, should help remedy the confusion regarding the correct coding of spinal procedures.

Response: We agree with the commenters that accurate coding of spinal fusion procedures has been the subject of confusion in the past, and we will continue to monitor the claims data for spinal fusion procedures. As one of the four Cooperating Parties, we also will continue to collaborate with the American Hospital Association to provide guidance for coding spinal fusion procedures through the Coding Clinic for ICD-10-CM/PCS publication and to review the ICD-10-PCS spinal fusion coding guidelines to determine where further clarifications may be made.

After consideration of the public comments we received, we are finalizing our proposal to not make any changes to the spinal fusion MS-DRGs for FY 2019.

7. MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast): Cellulitis With Methicillin Resistant Staphylococcus Aureus (MRSA) Infection

As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20212), we received a request to reassign ICD-10-CM diagnosis codes reported with a principal diagnosis of cellulitis and a secondary diagnosis code of B95.62 (Methicillin resistant Staphylococcus aureus infection as the cause of diseases classified elsewhere) or A49.02 (Methicillin resistant Staphylococcus aureus infection, unspecified site). Currently, these cases are assigned to MS-DRG 602 (Cellulitis with MCC) and MS-DRG 603 (Cellulitis without MCC) in MDC 9. The requestor believed that cases of cellulitis with MSRA infection should be reassigned to MS-DRG 867 (Other Infectious and Parasitic Diseases Diagnoses with MCC) because MS-DRGs 602 and 603 include cases that do not accurately reflect the severity of illness or risk of mortality for patients diagnosed with cellulitis and MRSA. The requestor acknowledged that the organism is not to be coded before the localized infection, but stated in its request that patients diagnosed with cellulitis and MRSA are entirely different from patients diagnosed only with cellulitis. The requestor stated that there is a genuine threat to life or limb in these cases. The requestor further stated that, with the opioid crisis and the frequency of MRSA infection among this population, cases of cellulitis with MRSA should be identified with a specific combination code and assigned to MS-DRG 867.

For the FY 2019 IPPS/LTCH PPS proposed rule, we analyzed claims data from the September 2017 update of the FY 2017 MedPAR file for all cases assigned to MS-DRGs 602 and 603 and subsets of these cases reporting a principal ICD-10-CM diagnosis of cellulitis and a secondary diagnosis code of B95.62 or A49.02. Our findings are shown in the following table.

As shown in this table, we examined the subsets of cases in MS-DRGs 602 and 603 reported with a principal diagnosis of cellulitis and a secondary diagnosis code B95.62 or A49.02. Both of these subsets of cases had an average length of stay that was comparable to the average length of stay for all cases in MS-DRG 602 and greater than the average length of stay for all cases in MS-DRG 603, and average costs that were lower than the average costs of all cases in MS-DRG 602 and higher than the average costs of all cases in MS-DRG 603. As we have discussed in prior rulemaking (77 FR 53309), it is a fundamental principle of an averaged payment system that half of the procedures in a group will have above average costs. It is expected that there will be higher cost and lower cost subsets, especially when a subset has low numbers.

To examine the request to reassign ICD-10-CM diagnosis codes reported with a principal diagnosis of cellulitis and a secondary diagnosis code of B95.62 or A49.02 from MS-DRGs 602 and 603 to MS-DRG 867 (which would typically involve also reassigning those cases to the two other severity level MS-DRGs 868 and 869 (Other Infectious and Parasitic Diseases Diagnoses with CC and Other Infectious and Parasitic Diseases Diagnoses without CC/MCC, respectively)), we then analyzed the data for all cases in MS-DRGs 867, 868 and 869. The results of our analysis are shown in the following table.

We compared the average length of stay and average costs for MS-DRGs 867, 868, and 869 to the average length of stay and average costs for the subsets of cases in MS-DRGs 602 and 603 reported with a principal diagnosis of cellulitis and a secondary diagnosis code of B95.62 or A49.02. We found that the average length of stay for these subsets of cases was shorter and the average costs were lower than those for all cases in MS-DRG 867, but that the average length of stay and average costs were higher than those for all cases in MS-DRG 868 and MS-DRG 869. We stated in the proposed rule that our findings from the analysis of claims data do not support reassigning cellulitis cases reported with ICD-10-CM diagnosis code B95.62 or A49.02 from MS-DRGs 602 and 603 to MS-DRGs 867, 868 and 869. Our clinical advisors noted that when a principal diagnosis of cellulitis is accompanied by a secondary diagnosis of B95.62 or A49.02 in MS-DRGs 602 or 603, the combination of these primary and secondary diagnoses is the reason for the hospitalization, and the level of acuity of these subsets of patients is similar to other patients in MS-DRGs 602 and 603. Therefore, in the proposed rule, we stated that these cases are more clinically aligned with all cases in MS-DRGs 602 and 603. For these reasons, we did not propose to reassign cellulitis cases reported with ICD-10-CM diagnosis code of B95.62 or A49.02 to MS-DRG 867, 868, or 869 for FY 2019. We invited public comments on our proposal to maintain the current MS-DRG assignment for ICD-10-CM codes B95.62 and A49.02 when reported as secondary diagnoses with a principal diagnosis of cellulitis.

Comment: One commenter supported CMS' proposal to maintain the current MS-DRG assignment for ICD-10-CM codes B95.62 and A49.02 when reported as secondary diagnoses with a principal diagnosis of cellulitis.

Response: We appreciate the commenter's support.

After consideration of the public comments we received, we are finalizing our proposal to maintain the current MS-DRG classification for cases reported with ICD-10-CM diagnosis codes B95.62 and A49.02 when reported as secondary diagnoses with a principal diagnosis of cellulitis.

8. MDC 10 (Endocrine, Nutritional and Metabolic Diseases and Disorders): Acute Intermittent Porphyria

As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20212), we received a request to revise the MS-DRG classification for cases of patients diagnosed with porphyria and reported with ICD-10-CM diagnosis code E80.21 (Acute intermittent (hepatic) porphyria) to recognize the resource requirements in caring for these patients, to ensure appropriate payment for these cases, and to preserve patient access to necessary treatments. Porphyria is defined as a group of rare disorders (“porphyrias”) that interfere with the production of hemoglobin that is needed for red blood cells. While some of these disorders are genetic (inborn) and others are acquired, they all result in the abnormal accumulation of hemoglobin building blocks, called porphyrins, which can be deposited in the tissues where they particularly interfere with the functioning of the nervous system and the skin. Treatment for patients suffering from disorders of porphyrin metabolism consists of an intravenous injection of Panhematin® (hemin for injection). ICD-10-CM diagnosis code E80.21 is currently assigned to MS-DRG 642 (Inborn and Other Disorders of Metabolism). (We note that this issue has been discussed previously in the FY 2013 IPPS/LTCH PPS proposed and final rules (77 FR 27904 through 27905 and 77 FR 53311 through 53313, respectively) and the FY 2015 IPPS/LTCH PPS proposed and final rules (79 FR 28016 and 79 FR 49901, respectively)).

We analyzed claims data from the September 2017 update of the FY 2017 MedPAR file for cases assigned to MS-DRG 642. Our findings are shown in the following table.

As shown in this table, cases reporting diagnosis code E80.21 as the principal diagnosis in MS-DRG 642 had higher average costs and longer average lengths of stay compared to the average costs and lengths of stay for all other cases in MS-DRG 642.

To examine the request to reassign cases with ICD-10-CM diagnosis code E80.21 as the principal diagnosis, we analyzed claims data for all cases in MS-DRGs for endocrine disorders, including MS-DRG 643 (Endocrine Disorders with MCC), MS-DRG 644 (Endocrine Disorders with CC), and MS-DRG 645 (Endocrine Disorders without CC/MCC). The results of our analysis are shown in the following table.

The data results showed that the average length of stay for the subset of cases reporting ICD-10-CM diagnosis code E80.21 as the principal diagnosis in MS-DRG 642 is lower than the average length of stay for all cases in MS-DRG 643, but higher than the average length of stay for all cases in MS-DRGs 644 and 645. The average costs for the subset of cases reporting ICD-10-CM diagnosis code E80.21 as the principal diagnosis in MS-DRG 642 are much higher than the average costs for all cases in MS-DRGs 643, 644, and 645. However, after considering these findings in the context of the current MS-DRG structure, we stated in the FY 2019 IPPS/LTCH PPS proposed rule that we were unable to identify an MS-DRG that would more closely parallel these cases with respect to average costs and length of stay that would also be clinically aligned. We further stated that our clinical advisors believe that, in the current MS-DRG structure, the clinical characteristics of patients in these cases are most closely aligned with the clinical characteristics of patients in all cases in MS-DRG 642. Moreover, given the small number of porphyria cases, we do not believe there is justification for creating a new MS-DRG. Basing a new MS-DRG on such a small number of cases could lead to distortions in the relative payment weights for the MS-DRG because several expensive cases could impact the overall relative payment weight. Having larger clinical cohesive groups within an MS-DRG provides greater stability for annual updates to the relative payment weights. In summary, we did not propose to revise the MS-DRG classification for porphyria cases.

Comment: Some commenters supported CMS' proposal to maintain porphyria cases in MS-DRG 642.

Response: We appreciate the commenters' support.

Comment: Other commenters opposed CMS' proposal to not create a new MS-DRG for cases involving ICD-10-CM diagnosis code E80.21. These commenters described significant difficulties encountered by patients with acute porphyria attacks in obtaining Panhematin® when presenting to an inpatient hospital, which they attribute to the strong financial disincentives faced by facilities to treat these cases on an inpatient basis. The commenters asserted that the inpatient stays required for management of acute porphyria attacks are not clinically similar to inpatient stays for other inborn disorders of metabolism (which comprise the cases assigned to MS-DRG 642). The commenters stated that, based on the lower than expected average cost per case and longer than expected length of stay for acute porphyria attacks, it appears that facilities are frequently not providing Panhematin® to patients in this condition, and instead attempting to provide symptom relief and transferring patients to an outpatient setting to receive the drug where they can be adequately paid. The commenters stated that this is in contrast to the standard of care for acute porphyria attacks and can result in devastating long-term health consequences. The commenters suggested that CMS consider alternative mechanisms to ensure adequate payment for cases involving rare diseases. In summary, commenters asserted that creating a new MS-DRG would allow more accurate payment for the cases that remain in MS-DRG 642 and facilitate access to the standard of care for patients with acute porphyria attacks.

Response: We acknowledge the commenters' concerns. As we have stated in prior rulemaking, it is not appropriate for facilities to deny treatment to beneficiaries needing a specific type of therapy or treatment that involves increased costs. The MS-DRG system is a system of averages and it is expected that across the diagnostic related groups that within certain groups, some cases may demonstrate higher than average costs, while other cases may demonstrate lower than average costs.

As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20212 through 20213), we recognize the average costs of the small number of porphyria cases are greater than the average costs of the cases in MS-DRG 642 overall. An averaged payment system depends on aggregation of similar cases with a range of costs, and it is therefore usually possible to define subsets with higher values and subsets with lower values. We seek to identify sufficiently large sets of claims data with a resource/cost similarity and clinical similarity in developing diagnostic-related groups rather than smaller subsets of diagnoses. In response to the commenters' assertion that these cases are not clinically similar to other cases within the MS-DRG, our clinical advisors continue to believe that MS-DRG 642 represents the most clinically appropriate placement within the current MS-DRG structure at this time because the clinical characteristics of patients in these cases are most closely aligned with the clinical characteristics of patients in all cases in MS-DRG 642.

We are sensitive to the commenters' concerns about access to treatment for beneficiaries who have been diagnosed with this condition. Therefore, as part of our ongoing, comprehensive analysis of the MS-DRGs under ICD-10, we will continue to explore mechanisms through which to address rare diseases and low volume DRGs. However, at this time, for the reasons summarized earlier, we are finalizing our proposal for FY 2019 to maintain the MS-DRG classification for porphyria cases.

9. MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract): Admit for Renal Dialysis

As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20213 through 20214),we received a request to review the codes assigned to MS-DRG 685 (Admit for Renal Dialysis) to determine if the MS-DRG should be deleted, or if it should remain as a valid MS-DRG. Currently, the ICD-10-CM diagnosis codes shown in the table below are assigned to MS-DRG 685:

The requestor stated that, under ICD-9-CM, diagnosis code V56.0 (Encounter for extracorporeal dialysis) was reported as the principal diagnosis to identify patients who were admitted for an encounter for dialysis. However, under ICD-10-CM, there is no comparable code in which to replicate such a diagnosis. The requestor noted that, while patients continued to be admitted under inpatient status (under certain circumstances) for dialysis services, there is no existing ICD-10-CM diagnosis code within the classification that specifically identifies a patient being admitted for an encounter for dialysis services.

The requestor also noted that three of the four ICD-10-CM diagnosis codes currently assigned to MS-DRG 685 are on the “Unacceptable Principal Diagnosis” edit code list in the Medicare Code Editor (MCE). Therefore, these codes are not allowed to be reported as a principal diagnosis for an inpatient admission.

We examined claims data from the September 2017 update of the FY 2017 MedPAR file for cases reporting ICD-10-CM diagnosis codes Z49.01, Z49.02, Z49.31, and Z49.32. Our findings are shown in the following table.

As shown in the table above, for MS-DRG 685, there were a total of 78 cases reporting ICD-10-CM diagnosis code Z49.01, with an average length of stay of 4 days and average costs of $8,871. There were no cases reporting ICD-10-CM diagnosis code Z49.02, Z49.31, or Z49.32.

Our clinical advisors reviewed the clinical issues, as well as the claims data for MS-DRG 685. Based on their review of the data analysis, our clinical advisors recommended that MS-DRG 685 be deleted and ICD-10-CM diagnosis codes Z49.01, Z49.02, Z49.31, and Z49.32 be reassigned. Historically, patients were admitted as inpatients to receive hemodialysis services. However, over time, that practice has shifted to outpatient and ambulatory settings. Because of this change in medical practice, we stated in the FY 2019 IPPS/LTCH PPS proposed rule that we did not believe that it was appropriate to maintain a vestigial MS-DRG, particularly due to the fact that the transition to ICD-10 had resulted in three out of four codes that mapped to the MS-DRG being precluded from being used as principal diagnosis codes on the claim. In addition, our clinical advisors believed that reassigning the ICD-10-CM diagnosis codes from MS-DRG 685 to MS-DRGs 698, 699, and 700 (Other Kidney and Urinary Tract Diagnoses with MCC, with CC, and without CC\MCC, respectively) was clinically appropriate because the reassignment would result in an accurate MS-DRG assignment of a specific case or inpatient service and encounter based on acceptable principal diagnosis codes under these MS-DRGs.

Therefore, for FY 2019, because there is no existing ICD-10-CM diagnosis code within the classification system that specifically identifies a patient being admitted for an encounter for dialysis services; and three of the four ICD-10-CM diagnosis codes, Z49.02, Z49.31, and Z49.32, currently assigned to MS-DRG 685 are on the Unacceptable Principal Diagnosis edit code list in the MCE, we proposed to reassign ICD-10-CM diagnosis codes Z49.01, Z49.02, Z49.31, and Z49.32 from MS-DRG 685 to MS-DRGs 698, 699, and 700, and to delete MS-DRG 685.

Comment: Commenters agreed with the proposal to reassign ICD-10-CM diagnosis codes Z49.01, Z49.02, Z49.31, and Z49.32 from MS-DRG 685 to MS-DRGs 698, 699, and 700, and to delete MS-DRG 685.

Response: We thank the commenters for their support.

After consideration of the public comments we received, we are finalizing our proposal to delete MS-DRG 685 and reassign ICD-10-CM diagnosis codes Z49.01, Z49.02, Z49.31, and Z49.32 from MS-DRG 685 to MS-DRGs 698, 699, and 700 for FY 2019, without modification.

10. MDC 14 (Pregnancy, Childbirth and the Puerperium)

In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19834) and final rule (82 FR 38036 through 38037), we noted that the MS-DRG logic involving a vaginal delivery under MDC 14 is technically complex as a result of the requirements that must be met to satisfy assignment to the affected MS-DRGs. As a result, we solicited public comments on further refinement to the following four MS-DRGs related to vaginal delivery: MS-DRG 767 (Vaginal Delivery with Sterilization and/or D&C); MS-DRG 768 (Vaginal Delivery with O.R. Procedure Except Sterilization and/or D&C); MS-DRG 774 (Vaginal Delivery with Complicating Diagnosis); and MS-DRG 775 (Vaginal Delivery without Complicating Diagnosis). In addition, we sought public comments on further refinements to the conditions defined as a complicating diagnosis in MS-DRG 774 and MS-DRG 781 (Other Antepartum Diagnoses with Medical Complications). We indicated that we would review public comments received in response to the solicitation as we continued to evaluate these MS-DRGs under MDC 14 and, if warranted, we would propose refinements for FY 2019. Commenters were instructed to direct comments for consideration to the CMS MS-DRG Classification Change Request Mailbox located at MSDRGClassificationChange@cms.hhs.gov by November 1, 2017.

In response to our solicitation for public comments on the MS-DRGs related to vaginal delivery, one commenter recommended that CMS convene a workgroup that would include hospital staff and physicians to systematically review the MDC 14 MS-DRGs and to identify which conditions should appropriately be considered complicating diagnoses. As an interim step, this commenter recommended that CMS consider the following suggestions as a result of its own evaluation of MS-DRGs 767, 774 and 775.

For MS-DRG 767, the commenter recommended that the following ICD-10-CM diagnosis codes and ICD-10-PCS procedure code be removed from the GROUPER logic and provided the rationale for why the commenter suggested removing each code.

For MS-DRG 774, the commenter recommended that the following ICD-10-CM diagnosis codes be removed from the GROUPER logic and provided the rationale for why the commenter suggested removing each code.

For MS-DRG 775, the commenter recommended that the following ICD-10-CM diagnosis codes and ICD-10-PCS procedure code be removed from the GROUPER logic and provided the rationale for why the commenter suggested removing each code.

Another commenter agreed that the MS-DRG logic for a vaginal delivery under MDC 14 is technically complex and provided examples to illustrate these facts. For instance, the commenter noted that the GROUPER logic code lists appear redundant with several of the same codes listed for different MS-DRGs and that the GROUPER logic code list for a vaginal delivery in MS-DRG 774 is comprised of diagnosis codes while the GROUPER logic code list for a vaginal delivery in MS-DRG 775 is comprised of procedure codes. The commenter also noted that several of the ICD-10-CM diagnosis codes shown in the table below that became effective with discharges on and after October 1, 2016 (FY 2017) or October 1, 2017 (FY 2018) appear to be missing from the GROUPER logic code lists for MS-DRGs 781 and 774.

Lastly, the commenter stated that the list of ICD-10-PCS procedure codes appears comprehensive, but indicated that inpatient coding is not their expertise. We note that it was not clear which list of procedure codes the commenter was specifically referencing. The commenter did not provide a list of any procedure codes for CMS to review or reference a specific MS-DRG in its comment.

Another commenter expressed concern that ICD-10-PCS procedure codes 10D17Z9 (Manual extraction of products of conception, retained, via natural or artificial opening) and 10D18Z9 (Manual extraction of products of conception, retained, via natural or artificial opening endoscopic) are not assigned to the appropriate MS-DRG. ICD-10-PCS procedure codes 10D17Z9 and 10D18Z9 describe the manual removal of a retained placenta and are currently assigned to MS-DRG 767 (Vaginal Delivery with Sterilization and/or D&C). According to the commenter, a patient that has a vaginal delivery with manual removal of a retained placenta is not having a sterilization or D&C procedure. The commenter noted that, under ICD-9-CM, a vaginal delivery with manual removal of retained placenta grouped to MS-DRG 774 (Vaginal Delivery with Complicating Diagnosis) or MS-DRG 775 (Vaginal Delivery without Complicating Diagnosis). The commenter suggested CMS review these procedure codes for appropriate MS-DRG assignment under the ICD-10 MS-DRGs.

In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20217), we thanked the commenters and stated that we appreciated the recommendations and suggestions provided in response to our solicitation for comments on the GROUPER logic for the MS-DRGs involving a vaginal delivery or complicating diagnosis under MDC 14. With regard to the commenter who recommended that we convene a workgroup that would include hospital staff and physicians to systematically review the MDC 14 MS-DRGs and to identify which conditions should appropriately be considered complicating diagnoses, we noted that we formed an internal workgroup comprised of clinical advisors that included physicians, coding specialists, and other IPPS policy staff that assisted in our review of the GROUPER logic for a vaginal delivery and complicating diagnoses. We indicated that we also received clinical input from 3M/Health Information Systems (HIS) staff, which, under contract with CMS, is responsible for updating and maintaining the GROUPER program. We note that our analysis involved other MS-DRGs under MDC 14, in addition to those for which we specifically solicited public comments. As one of the other commenters correctly pointed out, there is redundancy, with several of the same codes listed for different MS-DRGs. Below we provide a summary of our internal analysis with responses to the commenters' recommendations and suggestions incorporated into the applicable sections. We referred readers to the ICD-10 MS-DRG Version 35 Definitions Manual located via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending for documentation of the GROUPER logic associated with the MDC 14 MS-DRGs to assist in the review of our discussion that follows.

We started our evaluation of the GROUPER logic for the MS-DRGs under MDC 14 by first reviewing the current concepts that exist. For example, there are “groups” for cesarean section procedures, vaginal delivery procedures, and abortions. There also are groups where no delivery occurs, and lastly, there are groups for after the delivery occurs, or the “postpartum” period. These groups are then further subdivided based on the presence or absence of complicating conditions or the presence of another procedure. We examined how we could simplify some of the older, complex GROUPER logic and remain consistent with the structure of other ICD-10 MS-DRGs. We identified the following MS-DRGs for closer review, in addition to MS-DRG 767, MS-DRG 768, MS-DRG 774, MS-DRG 775 and MS-DRG 781.

The first issue we reviewed was the GROUPER logic for complicating conditions (MS-DRGs 774 and 781). Because one of the main objectives in our transition to the MS-DRGs was to better recognize the severity of illness of a patient, we believed we could structure the vaginal delivery and other MDC 14 MS-DRGs in a similar way. Therefore, we began working with the concept of vaginal delivery “with MCC, with CC and without CC/MCC” to replace the older, “complicating conditions” logic.

Next, we compared the additional GROUPER logic that exists between the vaginal delivery and the cesarean section MS-DRGs (MS-DRGs 765, 766, 767, 774, and 775). Currently, the vaginal delivery MS-DRGs take into account a sterilization procedure; however, the cesarean section MS-DRGs do not. Because a patient can have a sterilization procedure performed along with a cesarean section procedure, we adopted a working concept of “cesarean section with and without sterilization with MCC, with CC and without CC/MCC”, as well as “vaginal delivery with and without sterilization with MCC, with CC and without CC/MCC”.

We then reviewed the GROUPER logic for the MS-DRGs involving abortion and where no delivery occurs (MS-DRGs 770, 777, 778, 779, 780, and 782). We believed that we could consolidate the groups in which no delivery occurs.

Finally, we considered the GROUPER logic for the MS-DRGs related to the postpartum period (MS-DRGs 769 and 776) and determined that the structure of these MS-DRGs did not appear to require modification.

After we established those initial working concepts for the MS-DRGs discussed above, we examined the list of the ICD-10-PCS procedure codes that comprise the sterilization procedure GROUPER logic for the vaginal delivery MS-DRG 767. We identified the two manual extraction of placenta codes that the commenter had brought to our attention (ICD-10-PCS codes 10D17Z9 and 10D18Z9). We also identified two additional procedure codes, ICD-10-PCS codes 10D17ZZ (Extraction of products of conception, retained, via natural or artificial opening) and 10D18ZZ (Extraction of products of conception, retained, via natural or artificial opening endoscopic) in the list that are not sterilization procedures. Two of the four procedure codes describe manual extraction (removal) of retained placenta and the other two procedure codes describe dilation and curettage procedures. We then identified four more procedure codes in the list that do not describe sterilization procedures. ICD-10-PCS procedure codes 0UDB7ZX (Extraction of endometrium, via natural or artificial opening, diagnostic), 0UDB7ZZ (Extraction of endometrium, via natural or artificial opening), 0UDB8ZX (Extraction of endometrium, via natural or artificial opening endoscopic, diagnostic), and 0UDB8ZZ (Extraction of endometrium, via natural or artificial opening endoscopic) describe dilation and curettage procedures that can be performed for diagnostic or therapeutic purposes. We stated in the proposed rule that we believe that these ICD-10-PCS procedure codes would be more appropriately assigned to MDC 13 (Diseases and Disorders of the Female Reproductive System) in MS-DRGs 744 and 745 (D&C, Conization, Laparaoscopy and Tubal Interruption with and without CC/MCC, respectively) and, therefore, removed them from our working list of sterilization and/or D&C procedures. Because the GROUPER logic for MS-DRG 767 includes both sterilization and/or D&C, we agreed that all the other procedure codes currently included under that logic list of sterilization procedures should remain, with the exception of the two identified by the commenter. Therefore, in the proposed rule, we stated we agreed with the commenter that the manual extraction of retained placenta procedure codes should be reassigned to a more clinically appropriate vaginal delivery MS-DRG because they are not describing sterilization procedures.

Our attention then turned to other MDC 14 GROUPER logic code lists starting with the “CC for C-section” list under MS-DRGs 765 and 766 (Cesarean Section with and without CC/MCC, respectively). As noted in the proposed rule and earlier in this section, in conducting our review, we considered how we could utilize the severity level concept (with MCC, with CC, and without CC/MCC) where applicable. Consistent with this approach, we removed the “CC for C-section” logic from these MS-DRGs as part of our working concept and efforts to refine MDC 14. We determined it would be less complicated to simply allow the existing ICD-10 MS-DRG CC and MCC code list logic to apply for these MS-DRGs. Next, we reviewed the logic code lists for “Malpresentation” and “Twins” and concluded that this logic was not necessary for the cesarean section MS-DRGs because these are describing antepartum conditions and it is the procedure of the cesarean section that determines whether or not a patient would be classified to these MS-DRGs. Therefore, those code lists were also removed for purposes of our working concept. With regard to the “Operating Room Procedure” code list, we stated in the proposed rule that we agreed there should be no changes. However, we noted that the title to ICD-10-PCS procedure code 10D00Z0 (Extraction of products of conception, classical, open approach) is being revised, effective October 1, 2018, to replace the term “classical” with “high” and ICD-10-PCS procedure code 10D00Z1 (Extraction of products of conception, low cervical, open approach) is being revised to replace the term “low cervical” to “low”. These revisions are also shown in Table 6F—Revised Procedure Code Titles associated with the proposed rule and this final rule available via the internet on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.

Next, we reviewed the “Delivery Procedure” and “Delivery Outcome” GROUPER logic code lists for the vaginal delivery MS-DRGs 767, 768, 774, and 775. We identified ICD-10-PCS procedure code 10A0726 (Abortion of products of conception, vacuum, via natural or artificial opening) and ICD-10-PCS procedure code 10S07ZZ (Reposition products of conception, via natural or artificial opening) under the “Delivery Procedure” code list as procedure codes that should not be included because ICD-10-PCS procedure code 10A07Z6 describes an abortion procedure and ICD-10-PCS procedure code 10S07ZZ describes repositioning of the fetus and does not indicate a delivery took place. We also noted that, as described in the proposed rule and earlier in this discussion, a commenter recommended that ICD-10-PCS procedure code 10A07Z6 be removed from the GROUPER logic specifically for MS-DRGs 767 and 775. Therefore, we removed these two procedure codes from the logic code list for “Delivery Procedure” in MS-DRGs 767, 768, 774, and 775. We stated in the proposed rule that we agreed with the commenter that ICD-10-PCS procedure code 10A07Z6 would be more appropriately assigned to one of the Abortion MS-DRGs. For the remaining procedures currently included in the “Delivery Procedure” code list we considered which procedures would be expected to be performed during the course of a standard, uncomplicated delivery episode versus those that would reasonably be expected to require additional resources outside of the delivery room. The list of procedure codes we reviewed is shown in the following table.

While we acknowledged that these procedures may be performed to treat obstetrical lacerations as discussed in prior rulemaking (81 FR 56853), we stated that we also believe that these procedures would reasonably be expected to require a separate operative episode and would not be performed immediately at the time of the delivery. Therefore, we removed those procedure codes describing repair of the rectum, anus, and anal sphincter shown in the table above from our working concept list of procedures to consider for a vaginal delivery. Our review of the list of diagnosis codes for the “Delivery Outcome” as a secondary diagnosis did not prompt any changes. We stated in the proposed rule we agreed that the current list of diagnosis codes continues to appear appropriate for describing the outcome of a delivery.

As the purpose of our analysis and this review was to clarify what constitutes a vaginal delivery to satisfy the ICD-10 MS-DRG logic for the vaginal delivery MS-DRGs, we believed it was appropriate to expect that a procedure code describing the vaginal delivery or extraction of “products of conception” procedure and a diagnosis code describing the delivery outcome should be reported on every claim in which a vaginal delivery occurs. This is also consistent with Section I.C.15.b.5 of the ICD-10-CM Official Guidelines for Coding and Reporting, which states “A code from category Z37, Outcome of delivery, should be included on every maternal record when a delivery has occurred. These codes are not to be used on subsequent records or on the newborn record.” Therefore, we adopted the working concept that, regardless of the principal diagnosis, if there is a procedure code describing the vaginal delivery or extraction of “products of conception” procedure and a diagnosis code describing the delivery outcome, this logic would result in assignment to a vaginal delivery MS-DRG. In the proposed rule, we noted that, as a result of this working concept, there would no longer be a need to maintain the “third condition” list under MS-DRG 774. In addition, as noted in the proposed rule and earlier in this discussion, because we were working with the concept of vaginal delivery “with MCC, with CC, and without CC/MCC” to replace the older, “complicating conditions” logic, there would no longer be a need to maintain the “second condition” list of complicating diagnosis under MS-DRG 774.

We then reviewed the GROUPER logic code list of “Or Other O.R. procedures” (MS-DRG 768) to determine if any changes to these lists were warranted. Similar to our analysis of the procedures listed under the “Delivery Procedure” logic code list, our examination of the procedures currently described in the “Or Other O.R. procedures” procedure code list also considered which procedures would be expected to be performed during the course of a standard, uncomplicated delivery episode versus those that would reasonably be expected to require additional resources outside of the delivery room. Our analysis of all the procedures resulted in the working concept to allow all O.R. procedures to be applicable for assignment to MS-DRG 768, with the exception of the procedure codes for sterilization and/or D&C and ICD-10-PCS procedure codes 0KQM0ZZ (Repair perineum muscle, open approach) and 0UJM0ZZ (Inspection of vulva, open approach), which we determined would be reasonably expected to be performed during a standard delivery episode and, therefore, assigned to MS-DRG 774 or MS-DRG 775. We also noted that, this working concept for MS-DRG 768 would eliminate vaginal delivery cases with an O.R. procedure grouping to the unrelated MS-DRGs because all O.R. procedures would be included in the GROUPER logic procedure code list for “Or Other O.R. Procedures”.

The next set of MS-DRGs we examined more closely included MS-DRGs 777, 778, 780, 781, and 782. We believed that, because the conditions in these MS-DRGs are all describing antepartum related conditions, we could group the conditions together clinically. Diagnoses described as occurring during pregnancy and diagnoses specifying a trimester or maternal care in the absence of a delivery procedure reported were considered antepartum conditions. We also believed we could better classify these groups of patients based on the presence or absence of a procedure. Therefore, we worked with the concept of “antepartum diagnoses with and without O.R. procedure”.

As noted in the proposed rule and earlier in the discussion, we adopted a working concept of “cesarean section with and without sterilization with MCC, with CC, and without CC/MCC.” This concept is illustrated in the following table and includes our suggested modifications.

As shown in the table, we suggested deleting MS-DRGs 765 and 766. We also suggested creating 6 new MS-DRGs that are subdivided by a 3-way severity level split that includes “with Sterilization” and “without Sterilization”.

We also adopted a working concept of “vaginal delivery with and without sterilization with MCC, with CC, and without CC/MCC”. This concept is illustrated in the following table and includes our suggested modifications.

As shown in the table, we suggested deleting MS-DRGs 767, 774, and 775. We also suggested creating 6 new MS-DRGs that are subdivided by a 3-way severity level split that includes “with Sterilization/D&C” and “without Sterilization/D&C”.

In addition, as indicated above, we believed that we could consolidate the groups in which no delivery occurs. In the proposed rule, we stated we believe that consolidating MS-DRGs where clinically coherent conditions exist is consistent with our approach to MS-DRG reclassification and our continued refinement efforts. This concept is illustrated in the following table and includes our suggested modifications.

As shown in the table, we suggested deleting MS-DRGs 777, 778, 780, 781, and 782. We also suggested creating 6 new MS-DRGs that are subdivided by a 3-way severity level split that includes “with O.R. Procedure” and “without O.R. Procedure”.

Once we established each of these fundamental concepts from a clinical perspective, we were able to analyze the data to determine if our initial suggested modifications were supported.

To analyze our suggested modifications for the cesarean section and vaginal delivery MS-DRGs, we examined the claims data from the September 2017 update of the FY 2017 MedPAR file for MS-DRGs 765, 766, 767, 768, 774, and 775.

As shown in the table, there were a total of 3,494 cases in MS-DRG 765, with an average length of stay of 4.6 days and average costs of $8,929. For MS-DRG 766, there were a total of 1,974 cases, with an average length of stay of 3.1 days and average costs of $6,488. For MS-DRG 767, there were a total of 351 cases, with an average length of stay of 3.2 days and average costs of $ 7,886. For MS-DRG 768, there were a total of 17 cases, with an average length of stay of 6.2 days and average costs of $26,164. For MS-DRG 774, there were a total of 1,650 cases, with an average length of stay of 3.3 days and average costs of $6,046. Lastly, for MS-DRG 775, there were a total of 4,676 cases, with an average length of stay of 2.4 days and average costs of $4,769.

To compare and analyze the impact of our suggested modifications, we ran a simulation using the Version 35 ICD-10 MS-DRG GROUPER. The following table reflects our findings for the suggested Cesarean Section MS-DRGs with a 3-way severity level split.

As shown in the table, there were a total of 178 cases for the cesarean section with sterilization with MCC group, with an average length of stay of 6.4 days and average costs of $12,977. There were a total of 511 cases for the cesarean section with sterilization with CC group, with an average length of stay of 4.1 days and average costs of $8,042. There were a total of 475 cases for the cesarean section with sterilization without CC/MCC group, with an average length of stay of 3.0 days and average costs of $6,259. For the cesarean section without sterilization with MCC group there were a total of 707 cases, with an average length of stay of 5.9 days and average costs of $11,515. There were a total of 1,887 cases for the cesarean section without sterilization with CC group, with an average length of stay of 4.2 days and average costs of $7,990. Lastly, there were a total of 1,710 cases for the cesarean section without sterilization without CC/MCC group, with an average length of stay of 3.3 days and average costs of $6,663.

The following table reflects our findings for the suggested Vaginal Delivery MS-DRGs with a 3-way severity level split.

As shown in the table, there were a total of 25 cases for the vaginal delivery with sterilization/D&C with MCC group, with an average length of stay of 6.7 days and average costs of $11,421. There were a total of 63 cases for the vaginal delivery with sterilization/D&C with CC group, with an average length of stay of 2.4 days and average costs of $6,065. There were a total of 126 cases for vaginal delivery with sterilization/D&C without CC/MCC group, with an average length of stay of 2.3 days and average costs of $6,697. There were a total of 406 cases for the vaginal delivery without sterilization/D&C with MCC group, with an average length of stay of 5.0 days and average costs of $9,605. There were a total of 1,952 cases for the vaginal delivery without sterilization/D&C with CC group, with an average length of stay of 2.9 days and average costs of $5,506. There were a total of 4,105 cases for the vaginal delivery without sterilization/D&C without CC/MCC group, with an average length of stay of 2.3 days and average costs of $4,601.

We then reviewed the claims data from the September 2017 update of the FY 2017 MedPAR file for MS-DRGs 777, 778, 780, 781, and 782. Our findings are shown in the following table.

As shown in the table, there were a total of 72 cases in MS-DRG 777, with an average length of stay of 1.9 days and average costs of $7,149. For MS-DRG 778, there were a total of 205 cases, with an average length of stay of 2.7 days and average costs of $4,001. For MS-DRG 780, there were a total of 41 cases, with an average length of stay of 2.1 days and average costs of $3,045. For MS-DRG 781, there were a total of 2,333 cases, with an average length of stay of 3.7 days and average costs of $5,817. Lastly, for MS-DRG 782, there were a total of 70 cases, with an average length of stay of 2.1 days and average costs of $3,381.

To compare and analyze the impact of deleting those 5 MS-DRGs and creating 6 new MS-DRGs, we ran a simulation using the Version 35 ICD-10 MS-DRG GROUPER. Our findings below represent what we found and would expect under the suggested modifications. The following table reflects the MS-DRGs for the suggested Other Antepartum Diagnoses MS-DRGs with a 3-way severity level split.

Our analysis of claims data from the September 2017 update of the FY 2017 MedPAR file recognized that when the criteria to create subgroups were applied for the 3-way severity level splits for the suggested MS-DRGs, those criteria were not met in all instances. For example, the criteria that there are at least 500 cases in the MCC or CC group was not met for the suggested Vaginal Delivery with Sterilization/D&C 3-way severity level split or the suggested Other Antepartum Diagnoses with O.R. Procedure 3-way severity level split.

However, as we have noted in prior rulemaking (72 FR 47152), we cannot adopt the same approach to refine the maternity and newborn MS-DRGs because of the extremely low volume of Medicare patients there are in these DRGs. While there is not a high volume of these cases represented in the Medicare data, and while we generally advise that other payers should develop MS-DRGs to address the needs of their patients, we believe that our suggested 3-way severity level splits would address the complexity of the current MDC 14 GROUPER logic for a vaginal delivery and takes into account the new and different clinical concepts that exist under ICD-10 for this subset of patients while also maintaining the existing MS-DRG structure for identifying severity of illness, utilization of resources and complexity of service.

However, as an alternative option, we also performed analysis for a 2-way severity level split for the suggested MS-DRGs. Our findings are shown in the following tables.

Similar to the analysis performed for the 3-way severity level split, we acknowledged that when the criteria to create subgroups was applied for the alternative 2-way severity level splits for the suggested MS-DRGs, those criteria were not met in all instances. For example, the suggested Vaginal Delivery with Sterilization/D&C and the Other Antepartum Diagnoses with O.R. Procedure alternative option 2-way severity level splits did not meet the criteria for 500 or more cases in the MCC or CC group.

Based on our review, which included support from our clinical advisors, and the analysis of claims data described above, in the FY 2019 IPPS/LTCH PPS proposed rule, we proposed the deletion of 10 MS-DRGs and the creation of 18 new MS-DRGs (as shown below). This proposal was based on the approach described above, which involves consolidating specific conditions and concepts into the structure of existing logic and making additional modifications, such as adding severity levels, as part of our refinement efforts for the ICD-10 MS-DRGs. We indicated in the proposed rule that our proposals are intended to address the vaginal delivery “complicating diagnosis” logic and antepartum diagnoses with “medical complications” logic with the proposed addition of the existing and familiar severity level concept (with MCC, with CC, and without CC/MCC) to the MDC 14 MS-DRGs to provide the ability to distinguish the varying resource requirements for this subset of patients and allow the opportunity to make more meaningful comparisons with regard to severity across the MS-DRGs. We stated that our proposals, as set forth below, would also simplify the vaginal delivery procedure logic that we identified and commenters acknowledged as technically complex by eliminating the extensive diagnosis and procedure code lists for several conditions that must be met for assignment to the vaginal delivery MS-DRGs. We stated that our proposals also are intended to respond to issues identified and brought to our attention through public comments for consideration in updating the GROUPER logic code lists in MDC 14.

Specifically, we proposed to delete the following 10 MS-DRGs under MDC 14:

• MS-DRG 765 (Cesarean Section with CC/MCC);
• MS-DRG 766 (Cesarean Section without CC/MCC);
• MS-DRG 767 (Vaginal Delivery with Sterilization and/or D&C);
• MS-DRG 774 (Vaginal Delivery with Complicating Diagnosis);
• MS-DRG 775 (Vaginal Delivery without Complicating Diagnosis);
• MS-DRG 777 (Ectopic Pregnancy);
• MS-DRG 778 (Threatened Abortion);
• MS-DRG 780 (False Labor);
• MS-DRG 781 (Other Antepartum Diagnoses with Medical Complications); and
• MS-DRG 782 (Other Antepartum Diagnoses without Medical Complications).

We proposed to create the following new 18 MS-DRGs under MDC 14:

• Proposed new MS-DRG 783 (Cesarean Section with Sterilization with MCC);
• Proposed new MS-DRG 784 (Cesarean Section with Sterilization with CC);
• Proposed new MS-DRG 785 (Cesarean Section with Sterilization without CC/MCC);
• Proposed new MS-DRG 786 (Cesarean Section without Sterilization with MCC);
• Proposed new MS-DRG 787 (Cesarean Section without Sterilization with CC);
• Proposed new MS-DRG 788 Cesarean Section without Sterilization without CC/MCC);
• Proposed new MS-DRG 796 (Vaginal Delivery with Sterilization/D&C with MCC);
• Proposed new MS-DRG 797 (Vaginal Delivery with Sterilization/D&C with CC);
• Proposed new MS-DRG 798 (Vaginal Delivery with Sterilization/D&C without CC/MCC);
• Proposed new MS-DRG 805 (Vaginal Delivery without Sterilization/D&C with MCC);
• Proposed new MS-DRG 806 (Vaginal Delivery without Sterilization/D&C with CC);
• Proposed new MS-DRG 807 (Vaginal Delivery without Sterilization/D&C without CC/MCC);
• Proposed new MS-DRG 817 (Other Antepartum Diagnoses with O.R. Procedure with MCC);
• Proposed new MS-DRG 818 (Other Antepartum Diagnoses with O.R. Procedure with CC);
• Proposed new MS-DRG 819 (Other Antepartum Diagnoses with O.R. Procedure without CC/MCC);
• Proposed new MS-DRG 831 (Other Antepartum Diagnoses without O.R. Procedure with MCC);
• Proposed new MS-DRG 832 (Other Antepartum Diagnoses without O.R. Procedure with CC); and
• Proposed new MS-DRG 833 (Other Antepartum Diagnoses without O.R. Procedure without CC/MCC).

The diagrams below illustrate how the proposed MS-DRG logic for MDC 14 would function. The first diagram (Diagram 1.) begins by asking if there is a principal diagnosis from MDC 14. If no, the GROUPER logic directs the case to the appropriate MDC based on the principal diagnosis reported. Next, the logic asks if there is a cesarean section procedure reported on the claim. If yes, the logic asks if there was a sterilization procedure reported on the claim. If yes, the logic assigns the case to one of the proposed new MS-DRGs 783, 784, or 785. If no, the logic assigns the case to one of the proposed new MS-DRGs 786, 787, or 788. If there was not a cesarean section procedure reported on the claim, the logic asks if there was a vaginal delivery procedure reported on the claim. If yes, the logic asks if there was another O.R. procedure other than sterilization, D&C, delivery procedure or a delivery inclusive O.R. procedure. If yes, the logic assigns the case to existing MS-DRG 768. If no, the logic asks if there was a sterilization and/or D&C reported on the claim. If yes, the logic assigns the case to one of the proposed new MS-DRGs 796, 797, or 798. If no, the logic assigns the case to one of the proposed new MS-DRGs 805, 806, or 807. If there was not a vaginal delivery procedure reported on the claim, the GROUPER logic directs you to the other non-delivery MS-DRGs as shown in Diagram 2.

The logic for Diagram 2. begins by asking if there is a principal diagnosis of abortion reported on the claim. If yes, the logic then asks if there was a D&C, aspiration curettage or hysterotomy procedure reported on the claim. If yes, the logic assigns the case to existing MS-DRG 770. If no, the logic assigns the case to existing MS-DRG 779. If there was not a principal diagnosis of abortion reported on the claim, the logic asks if there was a principal diagnosis of an antepartum condition reported on the claim. If yes, the logic then asks if there was an O.R. procedure reported on the claim. If yes, the logic assigns the case to one of the proposed new MS-DRGs 817, 818, or 819. If no, the logic assigns the case to one of the proposed new MS-DRGs 831, 832, or 833. If there was not a principal diagnosis of an antepartum condition reported on the claim, the logic asks if there was a principal diagnosis of a postpartum condition reported on the claim. If yes, the logic then asks if there was an O.R. procedure reported on the claim. If yes, the logic assigns the case to existing MS-DRG 769. If no, the logic assigns the case to existing MS-DRG 776. If there was not a principal diagnosis of a postpartum condition reported on the claim, the logic identifies that there was a principal diagnosis describing childbirth, delivery or an intrapartum condition reported on the claim without any other procedures, and assigns the case to existing MS-DRG 998 (Principal Diagnosis Invalid as Discharge Diagnosis).

To assist in detecting coding and MS-DRG assignment errors for MS-DRG 998 that could result when a provider does not report the procedure code for either a cesarean section or a vaginal delivery along with an outcome of delivery diagnosis code, as discussed in section II.F.13.d., we proposed to add a new Questionable Obstetric Admission edit under the MCE. We invited public comments on this proposed MCE edit and we also invited public comments on the need for any additional MCE considerations with regard to the proposed changes for the MDC 14 MS-DRGs.

We referred readers to Tables 6P.1h. through 6P.1k. associated with the proposed rule for the lists of the diagnosis and procedure codes that we proposed to assign to the GROUPER logic for the proposed new MS-DRGs and the existing MS-DRGs under MDC 14. We invited public comments on our proposed list of diagnosis codes, which also addresses the list of diagnosis codes that a commenter identified as missing from the GROUPER logic. We noted that, as a result of our proposed GROUPER logic changes to the vaginal delivery MS-DRGs, which would only take into account the procedure codes for a vaginal delivery and the outcome of delivery secondary diagnosis codes, there is no longer a need to maintain a specific principal diagnosis logic list for those MS-DRGs. Therefore, while we appreciate the detailed suggestions and rationale submitted by the commenter for why specific diagnosis codes should be removed from the vaginal delivery principal diagnosis logic as displayed earlier in this discussion, we proposed to remove that logic. We invited public comments on this proposal, as well as our proposed list of procedure codes for the proposed revised MDC 14 MS-DRG logic, which would require a procedure code for case assignment. We also invited public comments on the proposed deletion of the 10 MS-DRGs and the proposed creation of 18 new MS-DRGs with a 3-way severity level split listed above in this section, as well as on the potential alternative new MS-DRGs using a 2-way severity level split as also presented above.

Comment: Commenters agreed with CMS' proposal to restructure the MS-DRGs within MDC 14. A few commenters commended CMS on the proposed new structure and GROUPER logic for these MS-DRGs, and believed that the new structure and logic is clearer and clinically appropriate. Another commenter agreed with the proposed new GROUPER logic for MDC 14 for deliveries with the 3-way severity level splits. The commenters anticipated that the new structure and logic will provide more clarity than the current structure.

Response: We appreciate the commenters' support. We agree the proposed new structure and GROUPER logic of the MS-DRGs under MDC 14 will provide more clarity than the current structure and logic.

Comment: Another commenter stated that all of the diagnoses currently assigned to MS-DRG 774 (Vaginal Delivery with Complicating Diagnosis) in the GROUPER logic, along with some of the diagnoses that were noted to appear to be missing from the GROUPER logic (83 FR 20216 through 20217), should be added to the Principal Diagnosis Is Its Own CC Or MCC logic for the proposed new vaginal delivery MS-DRGs 796 (Vaginal Delivery with Sterilization/D&C with MCC), 797 (Vaginal Delivery with Sterilization/D&C with CC), 798 (Vaginal Delivery with Sterilization/D&C without CC/MCC), 805 (Vaginal Delivery without Sterilization/D&C with MCC), 806 (Vaginal Delivery without Sterilization/D&C with CC), and 807 (Vaginal Delivery without Sterilization/D&C without CC/MCC). The commenter provided the following list of diagnosis codes that were noted to appear to be missing from the GROUPER logic, and requested CMS consider adding these diagnosis codes to the Principal Diagnosis Is Its Own CC Or MCC Lists. The commenter believed that the current GROUPER logic for MS-DRG 774 includes diagnoses that could change the MS-DRG assignment of a case from MS-DRG 775 to MS-DRG 774 based on the principal diagnosis. The commenter further expressed concern that these same diagnoses may group to the proposed new MS-DRGs 798 or 807 (without CC/MCC) under the proposed new structure and GROUPER logic for the vaginal delivery MS-DRGs.

Response: As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20236 through 20239), we proposed to remove the special logic in the GROUPER for processing claims containing a diagnosis code from the Principal Diagnosis Is Its Own CC or MCC Lists. For the reasons stated in section II.F.15.c. of the preamble of this final rule, we are finalizing that proposal, and therefore this logic will no longer apply for FY 2019. We refer readers to section II.F.15.c. of the preamble of this final rule for further discussion of the specific proposal, including summaries of the public comments we received and our responses and our statement of final policy.

With regard to the commenter's concern that the diagnosis codes listed above appear to be missing from the GROUPER logic, we note that, currently, all of the diagnoses codes are included in the MDC 14 Assignment of Diagnosis Codes List. The diagnosis codes that include the terminology “complicating the puerperium” are listed under the “Second Condition—Principal or Secondary Diagnosis” code list in the diagnosis code logic for MS-DRG 774, and the diagnosis codes that include the terminology “complicating childbirth” are listed under the “Principal Diagnosis” code list for the diagnosis code logic for MS-DRG 781 (Other Antepartum Diagnoses with Medical Complications). We acknowledge that the diagnosis codes that include the terminology “complicating childbirth” that the commenter referenced were inadvertently omitted, and are not listed in the ICD-10 MS-DRG Definitions Manual Version 35 under the diagnosis code logic list for MS-DRG 774 (or for MS-DRGs 767 (Vaginal Delivery with Sterilization and/or D&C) and 768 (Vaginal Delivery with O.R. Procedure Except Sterilization and/or D&C)). However, if one of those diagnosis codes is reported with a procedure code from the vaginal delivery code list, the ICD-10 MS-DRG GROUPER Version 35 accurately groups the case to a vaginal delivery MS-DRG.

As stated in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20220), in our proposal for restructuring the MDC 14 MS-DRGs under the ICD-10 MS-DRGs Version 36, diagnoses described as occurring during pregnancy and diagnoses specifying a trimester or maternal care in the absence of a delivery procedure reported are considered antepartum conditions. Also, as shown in Table 6P.1j. associated with the proposed rule (available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2019-IPPS-Proposed-Rule-Home-Page-Items/FY2019-IPPS-Proposed-Rule-Tables.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending), we did not propose to include any diagnosis codes describing a condition as “complicating childbirth” in the list of diagnosis codes describing antepartum conditions. Therefore, the diagnosis codes described as “complicating childbirth” would be applicable when a patient is admitted for a delivery episode and are subject to MS-DRG assignment to proposed MS-DRGs describing a cesarean or vaginal delivery.

Comment: Another commenter agreed with CMS' initiative to restructure the MS-DRGs and GROUPER logic under MDC 14. However, the commenter expressed concerns with the proposed GROUPER logic, and requested CMS consider all of the issues prior to implementing the proposed new MS-DRGs and GROUPER logic. The commenter believed that grouping a vaginal delivery by procedure codes describing a delivery and a diagnosis code describing the outcome of delivery did not seem appropriate. The commenter stated that it is necessary to determine if a case should be assigned to a vaginal delivery MS-DRG based on the combination of principal diagnoses and procedure codes versus the combination of a procedure code with an outcome of delivery code. The commenter recommended that the first consideration should consist of identification of a principal diagnosis code within the O00-O08 code range (Pregnancy with Abortive Outcome) and then proceeding with grouping those cases to the Abortion MS-DRGs 770 (Abortion with D&C, Aspiration Curettage or Hysterotomy) and 779 (Abortion without D&C), prior to possibly grouping the cases to the cesarean or vaginal delivery MS-DRGs. The commenter provided the example of a blighted ovum that may be treated with ICD-10-PCS procedure codes 10D07Z6 (Extraction of products of conception, vacuum, via natural or artificial opening) or 10D07Z8 (Extraction of products of conception, other, via natural or artificial opening), which are reported for vaginal deliveries.

Response: We appreciate the commenter's support for the effort to restructure the MS-DRGs and GROUPER logic under MDC 14. However, with respect to the commenter's concerns regarding the proposed new GROUPER logic for a vaginal delivery, we disagree with the commenter that it is necessary to determine if cases should be assigned to a vaginal delivery MS-DRG based on the combination of principal diagnoses and procedure codes versus the combination of a procedure code with an outcome of delivery code. One of the underlying purposes of the effort to restructure the vaginal delivery MS-DRGs was to simplify the complex logic currently associated with the vaginal delivery MS-DRGs, which includes multiple code lists for principal and secondary diagnoses. Based on the proposed new structure and GROUPER logic of the MS-DRGs under MDC 14, to identify that a vaginal delivery occurred, the logic does not have to consider or depend on the reason the patient was admitted. Rather, the GROUPER logic is structured to account for the fact that a delivery took place during that hospitalization. The delivery MS-DRGs (whether cesarean or vaginal) are specifically intended for that reason. With regard to the example provided by the commenter, we note that ICD-10-PCS procedure codes 10D07Z6 and 10D07Z8 are designated as non-O.R. procedures that affect the MS-DRG assignment of specific MS-DRGs. ICD-10-PCS procedure codes 10D07Z6 and 10D07Z8 impact the MS-DRG assignment of the vaginal delivery MS-DRGs. However, ICD-10-CM diagnosis code O02.0 (Blighted ovum and nonhydatidiform mole) is identified as a proposed antepartum condition, as shown in Table 6P.1j. associated with the proposed rule (available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2019-IPPS-Proposed-Rule-Home-Page-Items/FY2019-IPPS-Proposed-Rule-Tables.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending) and, therefore, as depicted in the commenter's example, if a patient has a principal diagnosis of a blighted ovum and either ICD-10-PCS procedure code 10D07Z6 or 10D07Z8 is reported, the proposed new GROUPER logic would result in an MS-DRG case assignment to one of the proposed new MS-DRGs 831, 832, or 833 (Other Antepartum Diagnoses without O.R. Procedure with MCC, with CC or without CC/MCC, respectively) and not a vaginal delivery MS-DRG. The diagnosis of a blighted ovum does not result in a viable pregnancy and, therefore, an outcome of delivery diagnosis code would not be reported. An illustration of how this proposed new GROUPER logic would apply for antepartum conditions was represented in Diagram 2 of the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20225).

Comment: One commenter expressed concern about the proposed relative weights for several of the proposed new MS-DRGs under MDC 14. The commenter stated that the low volume of the procedures assigned to these MS-DRGs accounted for volatility in the relative weights. With regard to proposed new MS-DRGs 817, 818, and 819 (Other Antepartum Diagnoses with O.R. Procedure with MCC, CC, and without CC/MCC, respectively), the commenter stated that the proposed relative weights for these MS-DRGs are significantly lower than the proposed relative weights of the surgical MS-DRGs to which the procedure codes proposed to be assigned to these proposed new MS-DRGs would map for non-obstetrical patients. This commenter also stated that the relative weights for proposed new MS-DRGs 806 and 807 (Vaginal Delivery without Sterilization/D&C with CC and without CC/MCC, respectively) are lower than the current relative weights for MS-DRGs 774 and 775 (Vaginal Delivery with and without Complicating Diagnosis, respectively), and believed the relative weight for proposed new MS-DRG 805 (Vaginal Delivery without Sterilization/D&C with MCC) is likely inadequate for the resources required to care for patients with MCC severity level designations. The commenter suggested that CMS maintain the relative weights for proposed new MS-DRGs 806 and 807 at the same value of the current MS-DRGs, and establish a relative weight for proposed new MS-DRG 805 that is more comparable with those values of medical MS-DRGs with MCC severity level designations. The commenter further noted that the relative weights for proposed new MS-DRGs 797 and 798 (Vaginal Delivery with Sterilization/D&C with CC and without CC/MCC, respectively) are the same value, but believed the relative weight should be greater for proposed new MS-DRG 797. The commenter also believed that the relative weight for proposed new MS-DRG 786 (Cesarean Section without Sterilization with MCC) is insufficient for the required resources necessary to perform these procedures and provide the appropriate care to patients, and requested CMS establish a relative weight with a value more consistent with values of surgical MS-DRGs with MCC severity level designations. The commenter also requested that CMS maintain the relative weights for MS-DRG 787 (Cesarean Section without Sterilization with CC) at the same value of current MS-DRG 765 (Cesarean Section with CC/MCC), and the relative weight for proposed new MS-DRG 833 (Other Antepartum Diagnoses without O.R. Procedure without CC/MCC) at the same value of current MS-DRG 782 (Other Antepartum Diagnoses without Medical Complications).

Response: It is to be expected that when MS-DRGs are restructured, resulting in a different case-mix within the new MS-DRGs, the relative weights of the MS-DRGs will change as a result. With respect to the comment about the low volume of cases, as we have noted in the proposed rule, we were unable to use our usual criterion of ensuring that there are at least 500 cases in the MCC or CC group to refine the maternity MS-DRGs because of the extremely low volume of Medicare patients cases reflected in claims data for these DRGs. While there is not a high volume of these cases represented in the Medicare data, and while we generally advise that other payers should develop MS-DRGs to address the needs of their patients, we continue to believe that the restructured MS-DRGs within MDC 14 serve important purposes to account for the new and different clinical concepts that exist under ICD-10 for this subset of patients while also maintaining the existing MS-DRG structure for identifying severity of illness, utilization of resources, and complexity of service. We believe that even though some of the resulting MS-DRGs have relatively low volumes in the Medicare population, using our established methodology for developing DRG relative weights is the most appropriate approach for the new MS-DRGs within MDC 14. With regard to the comment about MS-DRGs 797 and 798, we note that the average cost per case for MS-DRG 797 was lower than the average cost per case for MS-DRG 798. Therefore, we blended the data for these two MS-DRGs to avoid nonmonotonocity, in which the lower severity MS-DRG has a higher relative weight than the higher severity MS-DRG. For these reasons, we are not finalizing a change to the calculation of the relative weights for the MS-DRGs under MDC 14.

After consideration of the public comments we received, we are finalizing our proposals, without modification, including the list of diagnosis codes assigned to the MS-DRGs under the restructuring of the vaginal delivery MS-DRGs under MDC 14, which we note also addresses the list of diagnosis codes that a commenter identified and were noted in the proposed rule as appearing to be missing from the GROUPER logic.

We also invited public comments on our proposal to reassign ICD-10-PCS procedure codes 0UDB7ZX, 0UDB7ZZ, 0UDB8ZX, and 0UDB8ZZ that describe dilation and curettage procedures from MS-DRG 767 under MDC 14 to MS-DRGs 744 and 745 under MDC 13.

Comment: Commenters supported CMS' proposal to reassign ICD-10-PCS procedure codes 0UDB7ZX, 0UDB7ZZ, 0UDB8ZX, and 0UDB8ZZ from MS-DRG 767 to MS-DRGs 744 and 745.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to reassign ICD-10-PCS procedure codes 0UDB7ZX, 0UDB7ZZ, 0UDB8ZX, and 0UDB8ZZ that describe dilation and curettage procedures from MS-DRG 767 under MDC 14 to MS-DRGs 744 and 745 under MDC 13 in the ICD-10 MS-DRGs Version 36, effective October 1, 2018.

After consideration of the public comments we received, we are finalizing our proposed list of diagnosis and procedure codes for assignment to the revised MDC 14 MS-DRGs including the deletion of 10 MS-DRGs and the creation of 18 new MS-DRGs in the ICD-10 MS-DRGs Version 36, effective October 1, 2018.

11. MDC 18 (Infectious and Parasitic Diseases (Systematic or Unspecified Sites): Systemic Inflammatory Response Syndrome (SIRS) of Non-Infectious Origin

ICD-10-CM diagnosis codes R65.10 (Systemic Inflammatory Response Syndrome (SIRS) of non-infectious origin without acute organ dysfunction) and R65.11 (Systemic Inflammatory Response Syndrome (SIRS) of non-infectious origin with acute organ dysfunction) are currently assigned to MS-DRGs 870 (Septicemia or Severe Sepsis with Mechanical Ventilation >96 Hours), 871 (Septicemia or Severe Sepsis with Mechanical Ventilation >96 Hours with MCC), and 872 (Septicemia or Severe Sepsis with Mechanical Ventilation >96 Hours without MCC) under MDC 18 (Infectious and Parasitic Diseases, Systemic or Unspecified Sites). As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20226), our clinical advisors noted that these diagnosis codes are specifically describing conditions of a non-infectious origin, and recommended that they be reassigned to a more clinically appropriate MS-DRG.

We examined claims data from the September 2017 update of the FY 2017 MedPAR file for cases in MS-DRGs 870, 871, and 872. Our findings are shown in the following table.

As shown in this table, we found a total of 31,658 cases in MS-DRG 870, with an average length of stay of 14.3 days and average costs of $42,981. We found a total of 566,531 cases in MS-DRG 871, with an average length of stay of 6.3 days and average costs of $13,002. Lastly, we found a total of 150,437 cases in MS-DRG 872, with an average length of stay of 4.3 days and average costs of $7,532.

We then examined claims data in MS-DRGs 870, 871, or 872 for cases reporting an ICD-10-CM diagnosis code of R65.10 or R65.11. Our findings are shown in the following table.

As shown in this table, we found a total of 1,254 cases reporting a principal diagnosis code of R65.10 in MS-DRGs 870, 871, and 872, with an average length of stay of 3.8 days and average costs of $6,615. We found a total of 138 cases reporting a principal diagnosis code of R65.11 in MS-DRGs 870, 871, and 872, with an average length of stay of 4.8 days and average costs of $9,655. We found a total of 1,232 cases reporting a secondary diagnosis code of R65.10 in MS-DRGs 870, 871, and 872, with an average length of stay of 5.5 days and average costs of $10,670. Lastly, we found a total of 117 cases reporting a secondary diagnosis code of R65.11 in MS-DRGs 870, 871, and 872, with an average length of stay of 6.2 days and average costs of $12,525.

The claims data included a total of 1,392 cases in MS-DRGs 870, 871, and 872 that reported a principal diagnosis code of R65.10 or R65.11. We noted in the FY 2019 IPPS/LTCH PPS proposed rule that these 1,392 cases appear to have been coded inaccurately according to the ICD-10-CM Official Guidelines for Coding and Reporting at Section I.C.18.g., which specifically state: “The systemic inflammatory response syndrome (SIRS) can develop as a result of certain non-infectious disease processes, such as trauma, malignant neoplasm, or pancreatitis. When SIRS is documented with a non-infectious condition, and no subsequent infection is documented, the code for the underlying condition, such as an injury, should be assigned, followed by code R65.10, Systemic inflammatory response syndrome (SIRS) of non-infectious origin without acute organ dysfunction or code R65.11, Systemic inflammatory response syndrome (SIRS) of non-infectious origin with acute organ dysfunction.” Therefore, according to the Coding Guidelines, ICD-10-CM diagnosis codes R65.10 and R65.11 should not be reported as the principal diagnosis on an inpatient claim.

We have acknowledged in past rulemaking the challenges with coding for SIRS (and sepsis) (71 FR 24037). In addition, we note that there has been confusion with regard to how these codes are displayed in the ICD-10 MS-DRG Definitions Manual under MS-DRGs 870, 871, and 872, which may also impact the reporting of these conditions. For example, in Version 35 of the ICD-10 MS-DRG Definitions Manual (which is available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending, the logic for case assignment to MS-DRGs 870, 871, and 872 is comprised of a list of several diagnosis codes, of which ICD-10-CM diagnosis codes R65.10 and R65.11 are included. Because these codes are listed under the heading of “Principal Diagnosis”, it may appear that these codes are to be reported as a principal diagnosis for assignment to MS-DRGs 870, 871, or 872. However, the Definitions Manual display of the GROUPER logic assignment for each diagnosis code is for grouping purposes only. The GROUPER (and, therefore, documentation in the MS-DRG Definitions Manual) was not designed to account for coding guidelines or coverage policies. Since the inception of the IPPS, the data editing function has been a separate and independent step in the process of determining a DRG assignment. Except for extreme data integrity issues that prevent a DRG from being assigned, such as an invalid principal diagnosis, the DRG assignment GROUPER does not edit for data integrity. Prior to assigning the MS-DRG to a claim, the MACs apply a series of data integrity edits using programs such as the Medicare Code Editor (MCE). The MCE is designed to identify cases that require further review before classification into an MS-DRG. These data integrity edits address issues such as data validity, coding rules, and coverage policies. The separation of the MS-DRG grouping and data editing functions allows the MS-DRG GROUPER to remain stable during a fiscal year even though coding rules and coverage policies may change during the fiscal year. As such, in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38050 through 38051), we finalized our proposal to add ICD-10-CM diagnosis codes R65.10 and R65.11 to the Unacceptable Principal Diagnosis edit in the MCE as a result of the Official Guidelines for Coding and Reporting related to SIRS, in efforts to improve coding accuracy for these types of cases.

To address the issue of determining a more appropriate MS-DRG assignment for ICD-10-CM diagnosis codes R65.10 and R65.11, we reviewed alternative options under MDC 18. Our clinical advisors determined the most appropriate option is MS-DRG 864 (Fever) because the conditions that are assigned here describe conditions of a non-infectious origin.

Therefore, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20227), we proposed to reassign ICD-10-CM diagnosis codes R65.10 and R65.11 to MS-DRG 864 and to revise the title of MS-DRG 864 to “Fever and Inflammatory Conditions” to better reflect the diagnoses assigned there.

Comment: Commenters supported the proposal to reassign ICD-10-CM diagnosis codes R65.10 and R65.11 to MS-DRG 864 and to revise the title of MS-DRG 864 to “Fever and Inflammatory Conditions”.

Response: We thank the commenters for their support.

Comment: One commenter questioned the proposed logic for ICD-10-CM diagnosis codes R65.10 and R65.11 within MS-DRG 864. The commenter noted that the diagnosis codes are included on the unacceptable principal diagnoses code edit list in the MCE and specifically inquired if cases reporting diagnosis code R65.10 or R65.11 as a secondary diagnosis would result in assignment to MS-DRG 864.

Response: The GROUPER logic assignment for each diagnosis code as a principal diagnosis is for grouping purposes only. The GROUPER was not designed to account for coding guidelines or coverage policies. The MCE is designed to identify cases that require further review before classification into an MS-DRG. Therefore, the MS-DRG logic must specifically require a condition to group based on whether it is reported as a principal diagnosis or a secondary diagnosis, and consider any procedures that are reported, in addition to consideration of the patient's age, sex and discharge status in order to affect the MS-DRG assignment.

As noted in the ICD-10 MS-DRG Definitions Manual Version 35, Appendix B—Diagnosis Code/MDC/MS-DRG Index, each diagnosis code is listed with the MDC and the MS-DRGs to which the diagnosis is used to define the logic of the DRG either as a principal diagnosis or a secondary diagnosis. For diagnosis codes R65.10 and R65.11, the ICD-10 MS DRG Definitions Manual displays MDC 18 and MS-DRGs 870-872, as described previously. As discussed in the proposed rule, because the diagnosis are codes listed under the heading of “Principal Diagnosis” in the ICD-10 MS DRG Definitions Manual, it may appear to indicate that these codes are to be reported as a principal diagnosis for assignment to these MS-DRGs. However, the Definitions Manual display of the GROUPER logic assignment for each diagnosis code is for grouping purposes only and does not correspond to coding guidelines for reporting the principal diagnosis. In other words, cases will group according to the GROUPER logic, regardless of any coding guidelines or coverage policies. It is the MCE and other payer specific edits that identify inconsistencies in the coding guidelines or coverage policies. Under our proposed change to the ICD-10 MS-DRGs Version 36, cases reporting diagnosis code R65.10 or R65.11 as a secondary diagnosis would result in assignment to MS-DRG 864 when one of the other listed diagnosis codes in the MS-DRG 864 logic is reported as the principal diagnosis.

After consideration of the public comments we received, we are finalizing our proposal to reassign ICD-10-CM diagnosis codes R65.10 and R65.11 to MS-DRG 864 and to revise the title of MS-DRG 864 to “Fever and Inflammatory Conditions”.

12. MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs): Corrosive Burns

ICD-10-CM Coding Guidelines include “Code first” sequencing instructions for cases reporting a principal diagnosis of toxic effect (ICD-10-CM codes T51 through T65) and a secondary diagnosis of corrosive burn (ICD-10-CM codes T21.40 through T21.79). As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20227), we received a request to reassign these cases from MS-DRGs 901 (Wound Debridements for Injuries with MCC), 902 (Wound Debridements for Injuries with CC), 903 (Wound Debridements for Injuries without CC/MCC), 904 (Skin Grafts for Injuries with CC/MCC), 905 (Skin Grafts for Injuries without CC/MCC), 917 (Poisoning and Toxic Effects of Drugs with MCC), and 918 (Poisoning and Toxic Effects of Drugs without MCC) to MS-DRGs 927 (Extensive Burns or Full Thickness Burns with Mechanical Ventilation >96 Hours with Skin Graft), 928 (Full Thickness Burn with Skin Graft or Inhalation Injury with CC/MCC), 929 (Full Thickness Burn with Skin Graft or Inhalation Injury without CC/MCC), 933 (Extensive Burns or Full Thickness Burns with Mechanical Ventilation >96 Hours without Skin Graft), 934 (Full Thickness Burn without Skin Graft or Inhalation Injury), and 935 (Nonextensive Burns).

The requestor noted that, for corrosion burns codes T21.40 through T21.79, ICD-10-CM Coding Guidelines instruct to “Code first (T51 through T65) to identify chemical and intent.” Because code first notes provide sequencing directive, when patients are admitted with corrosive burns (which can be full thickness and extensive), toxic effect codes T51 through T65 must be sequenced first followed by codes for the corrosive burns. This causes full-thickness and extensive burns to group to MS-DRGs 901 through 905 when excisional debridement and split thickness skin grafts are performed, and to MS-DRGs 917 and 918 when procedures are not performed. This is in contrast to cases reporting a principal diagnosis of corrosive burn, which group to MS-DRGs 927 through 935.

The requestor stated that MS-DRGs 456 (Spinal Fusion except Cervical with Spinal Curvature or Malignancy or Infection or Extensive Fusions with MCC), 457 (Spinal Fusion Except Cervical with Spinal Curvature or Malignancy or Infection or Extensive Fusions with CC), and 458 (Spinal Fusion Except Cervical with Spinal Curvature or Malignancy or Infection or Extensive Fusions without CC/MCC) are grouped based on the procedure performed in combination with the principal diagnosis or secondary diagnosis (secondary scoliosis). The requestor stated that when codes for corrosive burns are reported as secondary diagnoses in conjunction with principal diagnoses codes T5l through T65, particularly when skin grafts are performed, they would be more appropriately assigned to MS-DRGs 927 through 935.

We analyzed claims data from the September 2017 update of the FY 2017 MedPAR file for all cases assigned to MS-DRGs 901, 902, 903, 904, 905, 917, and 918, and subsets of these cases with principal diagnosis of toxic effect with secondary diagnosis of corrosive burn. We noted in the proposed rule that we found no cases from this subset in MS-DRGs 903, 907, 908, and 909 and, therefore, did not include the results for these MS-DRGs in the table below. We also analyzed all cases assigned to MS-DRGs 927, 928, 929, 933, 934, and 935 and those cases that reported a principal diagnosis of corrosive burn. Our findings are shown in the following two tables.

As shown in this table, there were a total of 55 cases with a principal diagnosis of toxic effect and a secondary diagnosis of corrosive burn across MS-DRGs 901, 902, 903, 904, 905, 917, and 918. When comparing this subset of codes relative to those of each MS-DRG as a whole, we noted that, in most of these MS-DRGs, the average costs and average length of stay for this subset of cases were roughly equivalent to or lower than the average costs and average length of stay for cases in the MS-DRG as a whole, while in one case, they were higher. As we have noted in prior rulemaking (77 FR 53309) and elsewhere in the proposed rule and this final rule, it is a fundamental principle of an averaged payment system that half of the procedures in a group will have above average costs. It is expected that there will be higher cost and lower cost subsets, especially when a subset has low numbers. We stated in the proposed rule that the results of this analysis indicate that these cases are appropriately placed within their current MDC.

Our clinical advisors reviewed this request and indicated that patients with a principal diagnosis of toxic effect and a secondary diagnosis of corrosive burn have been exposed to an irritant or corrosive substance and, therefore, are clinically similar to those patients in MDC 21. Furthermore, our clinical advisors did not believe that the size of this subset of cases justifies the significant changes to the GROUPER logic that would be required to address the commenter's request, which would involve rerouting cases when the primary and secondary diagnoses are in different MDCs.

To address the request of reassigning cases with a principal diagnosis of toxic effect and secondary diagnosis of corrosive burn, we reviewed the data for all cases in MS-DRGs 927, 928, 929, 933, 934, and 935 and those cases reporting a principal diagnosis of corrosive burn. We found a total of 60 cases reporting a principal diagnosis of corrosive burn, with an average length of stay of 8.5 days and average costs of $19,456. We stated in the proposed rule that our clinical advisors believe that these cases reporting a principal diagnosis of corrosive burn are appropriately placed in MDC 22 as they are clinically aligned with other patients in this MDC. We further stated that, in summary, the results of our claims data analysis and the advice from our clinical advisors do not support reassigning cases in MS-DRGs 901, 902, 903, 904, 905, 917, and 918 reporting a principal diagnosis of toxic effect and a secondary diagnosis of corrosive burn to MS-DRGs 927, 928, 929, 933, 934 and 935. Therefore, we did not propose to reassign these cases.

Comment: One commenter supported the proposal to maintain the current MS-DRG structure for cases reporting a principal diagnosis of toxic effect (ICD-10-CM codes T51 through T65) and a secondary diagnosis of corrosive burn (ICD-10-CM codes T21.40 through T21.79). Another commenter suggested that the 60 identified cases that CMS used in its analysis were incorrectly coded. The commenter noted that ICD-10-CM coding guidelines under each code for corrosion burn state “Code first (T51-T65) to identify chemical and intent.” The commenter stated that corrosive burns cannot be sequenced as the principal diagnosis because the coding guidelines must be followed. The commenter stated that the toxic effect codes T51-T65 must be sequenced first, which causes these cases to group to MS-DRGs 901 through 905 and 917 and 918 instead of the more appropriate burn MS-DRGs. The commenter stated that it appears that when codes T51-T65 are the principal diagnosis, the cases group to MDC 21 (Injuries, Poisoning. and Toxic Effects of Drugs), and then to MS-DRGs 901 through 905 and 917 and 918.

Response: We appreciate the commenter's support. With regard to the commenter who raised concerns about the coding guidelines and display of codes in the ICD-10 MS-DRG Definitions Manual, we note that the GROUPER logic was not designed to account for coding guidelines. With regard to the display of code lists in the ICD-10 MS-DRG Definitions Manual, the MS-DRG logic must specifically require a condition to group based on whether it is reported as a principal diagnosis or a secondary diagnosis and consider any procedures that are reported in order to affect the MS-DRG assignment. However, as stated previously, the GROUPER logic is not dependent on coding guidelines. The purpose of the GROUPER is to group cases into particular MS-DRGs. We recognize that, over time, the desire to create or modify existing GROUPER logic in response to coding guidelines has become more common. As we continue our efforts to refine the ICD-10 MS-DRGs, we will consider alternate approaches to ensure the integrity of both the GROUPER logic and coding guidelines. Based on the data available at this time, we do not believe that it is appropriate to change the MS-DRG assignment for the procedures identifying corrosive burns identified earlier.

After consideration of the public comments we received, we are finalizing our proposal to maintain the current MS-DRG structure for cases reporting a principal diagnosis of toxic effect (ICD-10-CM codes T51 through T65) and a secondary diagnosis of corrosive burn (ICD-10-CM codes T21.40 through T21.79).

13. Changes to the Medicare Code Editor (MCE)

The Medicare Code Editor (MCE) is a software program that detects and reports errors in the coding of Medicare claims data. Patient diagnoses, procedure(s), and demographic information are entered into the Medicare claims processing systems and are subjected to a series of automated screens. The MCE screens are designed to identify cases that require further review before classification into an MS-DRG.

As discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38045), we made available the FY 2018 ICD-10 MCE Version 35 manual file. The link to this MCE manual file, along with the link to the mainframe and computer software for the MCE Version 35 (and ICD-10 MS-DRGs) are posted on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html through the FY 2018 IPPS Final Rule Home Page.

In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20229), we addressed the MCE requests we received by the November 1, 2017 deadline. We also discussed the proposals we were making based on our internal review and analysis. In this FY 2019 IPPS/LTCH PPS final rule, we present a summation of the comments we received in response to the MCE requests and proposals presented based on internal reviews and analyses in the proposed rule, our responses to those comments, and our finalized policies.

In addition, as a result of new and modified code updates approved after the annual spring ICD-10 Coordination and Maintenance Committee meeting, we routinely make changes to the MCE. In the past, in both the IPPS proposed and final rules, we only provided the list of changes to the MCE that were brought to our attention after the prior year's final rule. We historically have not listed the changes we have made to the MCE as a result of the new and modified codes approved after the annual spring ICD-10 Coordination and Maintenance Committee meeting. These changes are approved too late in the rulemaking schedule for inclusion in the proposed rule. Furthermore, although our MCE policies have been described in our proposed and final rules, we have not provided the detail of each new or modified diagnosis and procedure code edit in the final rule. However, we make available the finalized Definitions of Medicare Code Edits (MCE) file. Therefore, we are making available the FY 2019 ICD-10 MCE Version 36 Manual file, along with the link to the mainframe and computer software for the MCE Version 36 (and ICD-10 MS DRGs), on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html.

a. Age Conflict Edit

In the MCE, the Age Conflict edit exists to detect inconsistencies between a patient's age and any diagnosis on the patient's record; for example, a 5-year-old patient with benign prostatic hypertrophy or a 78-year-old patient coded with a delivery. In these cases, the diagnosis is clinically and virtually impossible for a patient of the stated age. Therefore, either the diagnosis or the age is presumed to be incorrect. Currently, in the MCE, the following four age diagnosis categories appear under the Age Conflict edit and are listed in the manual and written in the software program:

• Perinatal/Newborn—Age of 0 years only; a subset of diagnoses which will only occur during the perinatal or newborn period of age 0 (for example, tetanus neonatorum, health examination for newborn under 8 days old).
• Pediatric—Age is 0-17 years inclusive (for example, Reye's syndrome, routine child health exam).
• Maternity—Age range is 12-55 years inclusive (for example, diabetes in pregnancy, antepartum pulmonary complication).
• Adult—Age range is 15-124 years inclusive (for example, senile delirium, mature cataract).

(1) Perinatal/Newborn Diagnoses Category

Under the ICD-10 MCE, the Perinatal/Newborn Diagnoses category under the Age Conflict edit considers the age of 0 years only; a subset of diagnoses which will only occur during the perinatal or newborn period of age 0 to be inclusive. This includes conditions that have their origin in the fetal or perinatal period (before birth through the first 28 days after birth) even if morbidity occurs later. For that reason, the diagnosis codes on this Age Conflict edit list would be expected to apply to conditions or disorders specific to that age group only.

In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20229), we indicated that, in the ICD-10-CM classification, there are 14 diagnosis codes that describe specific suspected conditions that have been evaluated and ruled out during the newborn period and are currently not on the Perinatal/Newborn Diagnoses Category edit code list. We consulted with staff at the Centers for Disease Control's (CDC's) National Center for Health Statistics (NCHS) because NCHS has the lead responsibility for the ICD-10-CM diagnosis codes. The NCHS' staff confirmed that the following diagnosis codes are appropriate to add to the edit code list for the Perinatal/Newborn Diagnoses Category.

Therefore, we proposed to add the ICD-10-CM diagnosis codes listed in the table above to the Age Conflict edit under the Perinatal/Newborn Diagnoses Category edit code list. We also proposed to continue to include the existing diagnosis codes currently listed under the Perinatal/Newborn Diagnoses Category edit code list.

Comment: Commenters agreed with CMS' proposal to add the diagnosis codes listed in the table above to the Age Conflict edit under the Perinatal/Newborn Diagnoses Category edit code list.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to add the ICD-10-CM diagnosis codes listed in the table above to the Age Conflict edit under the Perinatal/Newborn Diagnoses Category edit code list. We also are finalizing our proposal to continue to include the existing list of codes on the Perinatal/Newborn Diagnoses Category edit code list under the ICD-10 MCE Version 36, effective October 1, 2018.

(2) Pediatric Diagnoses Category

Under the ICD-10 MCE, the Pediatric Diagnoses Category for the Age Conflict edit considers the age range of 0 to 17 years inclusive. For that reason, the diagnosis codes on this Age Conflict edit list would be expected to apply to conditions or disorders specific to that age group only.

As discussed in section II.F.15. of the preamble of the proposed rule, Table 6C.—Invalid Diagnosis Codes associated with the proposed rule and this final (which is available via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) lists the diagnoses that will no longer be effective as of October 1, 2018. Included in this table is an ICD-10-CM diagnosis code currently listed on the Pediatric Diagnoses Category edit code list, ICD-10-CM diagnosis code Z13.4 (Encounter for screening for certain developmental disorders in childhood). In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20230), we proposed to remove this code from the Pediatric Diagnoses Category edit code list. We also proposed to continue to include the other existing diagnosis codes currently listed under the Pediatric Diagnoses Category edit code list.

Comment: Commenters agreed with the proposal to remove ICD-10-CM diagnosis code Z13.4 from the Pediatric Diagnoses Category edit code list because this code will no longer be effective as of October 1, 2018.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to remove ICD-10-CM diagnosis code Z13.4 from the Pediatric Diagnoses Category edit code list. We also are finalizing our proposal to maintain the other existing codes on the Pediatric Diagnoses Category edit code list under the ICD-10 MCE Version 36, effective October 1, 2018.

(3) Maternity Diagnoses

Under the ICD-10 MCE, the Maternity Diagnoses Category for the Age Conflict edit considers the age range of 12 to 55 years inclusive. For that reason, the diagnosis codes on this Age Conflict edit list would be expected to apply to conditions or disorders specific to that age group only.

As discussed in section II.F.15. of the preamble of the proposed rule, Table 6A.—New Diagnosis Codes associated with the proposed rule (which is available via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) listed the new diagnoses codes that had been approved to date, which will be effective with discharges occurring on and after October 1, 2018. The following table lists the new ICD-10-CM diagnosis codes included in Table 6A associated with pregnancy and maternal care that we stated we believe are appropriate to add to the Maternity Diagnoses Category edit code list under the Age Conflict edit. Therefore, in the proposed rule, we proposed to add these codes to the Maternity Diagnoses Category edit code list under the Age Conflict edit.

In addition, as discussed in section II.F.15. of the preamble of the proposed rule, Table 6C.—Invalid Diagnosis Codes associated with the proposed rule (which is available via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) listed the diagnosis codes that will no longer be effective as of October 1, 2018. Included in this table are two ICD-10-CM diagnosis codes currently listed on the Maternity Diagnoses Category edit code list: ICD-10-CM diagnosis codes F53 (Puerperal psychosis) and O86.0 (Infection of obstetric surgical wound). In the proposed rule, we proposed to remove these codes from the Maternity Diagnoses Category Edit code list. We also proposed to continue to include the other existing diagnosis codes currently listed under the Maternity Diagnoses Category edit code list.

Comment: Commenters agreed with the proposal to add the diagnosis codes listed in the table above to the Maternity Diagnoses Category edit code list. Commenters also agreed with the proposal to remove ICD-10-CM diagnosis codes F53 and O86.0 from the Maternity Diagnoses Category edit code list.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to add the diagnosis codes listed in the table above to the Maternity Diagnoses Category edit code list and our proposal to remove ICD-10-CM diagnosis codes F53 and O86.0 from the Maternity Diagnoses Category edit code list. We also are finalizing our proposal to maintain the other existing codes on the Maternity Diagnoses Category edit code list under the ICD-10 MCE Version 36, effective October 1, 2018.

b. Sex Conflict Edit

In the MCE, the Sex Conflict edit detects inconsistencies between a patient's sex and any diagnosis or procedure on the patient's record; for example, a male patient with cervical cancer (diagnosis) or a female patient with a prostatectomy (procedure). In both instances, the indicated diagnosis or the procedure conflicts with the stated sex of the patient. Therefore, the patient's diagnosis, procedure, or sex is presumed to be incorrect.

(1) Diagnoses for Females Only Edit

In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20231), we indicated that we received a request to consider the addition of the following ICD-10-CM diagnosis codes to the list for the Diagnoses for Females Only edit.

The requestor noted that, currently, ICD-10-CM diagnosis code Z30.44 (Encounter for surveillance of vaginal ring hormonal contraceptive device) is on the Diagnoses for Females Only edit code list and suggested that ICD-10-CM diagnosis code Z30.015, which also describes an encounter involving a vaginal ring hormonal contraceptive, be added to the Diagnoses for Females Only edit code list as well. In addition, the requestor suggested that ICD-10-CM diagnosis codes Z31.7 and Z98.891 be added to the Diagnoses for Females Only edit code list.

We reviewed ICD-10-CM diagnosis codes Z30.015, Z31.7, and Z98.891, and we agreed with the requestor that it is clinically appropriate to add these three ICD-10-CM diagnosis codes to the Diagnoses for Females Only edit code list because the conditions described by these codes are specific to and consistent with the female sex.

In addition, as discussed in section II.F.15. of the preamble of the proposed rule, Table 6A.—New Diagnosis Codes associated with the proposed rule (which is available via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) listed the new diagnosis codes that had been approved to date, which will be effective with discharges occurring on and after October 1, 2018. The following table lists the new diagnosis codes that are associated with conditions consistent with the female sex. We proposed to add these ICD-10-CM diagnosis codes to the Diagnoses for Females Only edit code list under the Sex Conflict edit.

Comment: Commenters supported the proposals to add ICD-10-CM diagnosis codes Z30.015, Z31.7 and Z98.891 and the ICD-10-CM diagnosis codes listed in the table above to the Diagnoses for Females Only edit code list.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposals to add ICD-10-CM diagnosis codes Z30.015, Z31.7 and Z98.891 and the ICD-10-CM diagnosis codes listed in the table above to the Diagnoses for Females Only edit code list under the ICD-10 MCE Version 36, effective October 1, 2018.

In addition, as discussed in section II.F.15. of the preamble of the proposed rule, Table 6C.—Invalid Diagnosis Codes associated with the proposed rule (which is available via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) listed the diagnosis codes that are no longer effective as of October 1, 2018. Included in this table were the following three ICD-10-CM diagnosis codes currently listed on the Diagnoses for Females Only edit code list.

Because these three ICD-10-CM diagnosis codes will no longer be effective as of October 1, 2018, we proposed to remove them from the Diagnoses for Females Only edit code list under the Sex Conflict edit.

Comment: Commenters supported the proposal to remove ICD-10-CM diagnosis codes F53, O86.0, and Q51.2, from the Diagnoses for Females Only edit code list, as they are no longer valid effective October 1, 2018. One commenter also noted that there were typographical errors in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20232) for diagnosis codes O86.0 and Q51.2, where an extra zero was inadvertently included as a fifth digit.

Response: We appreciate the commenters' support. We agree with the commenter that there were typographical errors in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20232) for diagnosis codes O86.0 and Q51.2, where an extra zero was inadvertently included as a fifth digit, and have corrected these errors in the table presented in this final rule preamble.

After consideration of the public comments we received, we are finalizing our proposal to remove ICD-10-CM diagnosis codes F53, O86.0, and Q51.2, from the Diagnoses for Females Only edit code list under the ICD-10 MCE Version 36, effective October 1, 2018.

(2) Procedures for Females Only Edit

As discussed in section II.F.15. of the preamble of the FY 2019 IPPS/LTCH PPS proposed rule, Table 6B.—New Procedure Codes associated with the proposed rule (which is available via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) listed the procedure codes that had been approved to date, which will be effective with discharges occurring on and after October 1, 2018. In the proposed rule, we proposed to add the three ICD-10-PCS procedure codes in the following table describing procedures associated with the female sex to the Procedures for Females Only edit code list.

We also proposed to continue to include the existing procedure codes currently listed under the Procedures for Females Only edit code list.

Comment: Commenters supported the proposal to add ICD-10-PCS procedure codes 0UY90Z0, 0UY90Z1 and 0UY90Z2 to the Procedures for Females Only edit code list.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to add ICD-10-PCS procedure codes 0UY90Z0, 0UY90Z1 and 0UY90Z2 to the Procedures for Females Only edit code list. We also are finalizing our proposal to maintain the existing list of codes on the Procedures for Females Only edit code list under the ICD-10 MCE Version 36, effective October 1, 2018.

(3) Diagnoses for Males Only Edit

As discussed in section II.F.15. of the preamble of the proposed rule, Table 6A.—New Diagnosis Codes associated with the proposed rule (which is available via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) listed the new diagnosis codes that had been approved to date, which will be effective with discharges occurring on and after October 1, 2018. The following table lists the new diagnosis codes that are associated with conditions consistent with the male sex. In the proposed rule, we proposed to add these ICD-10-CM diagnosis codes to the Diagnoses for Males Only edit code list under the Sex Conflict edit.

We also proposed to continue to include the existing diagnosis codes currently listed under the Diagnoses for Males Only edit code list.

Comment: Commenters supported the proposal to add the ICD-10-CM diagnosis codes listed in the table above to the Diagnoses for Males Only edit code list.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to add the ICD-10-CM diagnosis codes listed in the table above to the Diagnoses for Males Only edit code list. We also are finalizing our proposal to maintain the existing list of codes on the Diagnoses for Males Only edit code list under the ICD-10 MCE Version 36, effective October 1, 2018.

c. Manifestation Code as Principal Diagnosis Edit

In the ICD-10-CM classification system, manifestation codes describe the manifestation of an underlying disease, not the disease itself and, therefore, should not be used as a principal diagnosis.

In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20232), we noted that, as discussed in section II.F.15. of the preamble of the proposed rule, Table 6A.—New Diagnosis Codes associated with the proposed rule (which is available via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) listed the new diagnosis codes that had been approved to date which will be effective with discharges occurring on and after October 1, 2018. Included in this table are ICD-10-CM diagnosis codes K82.A1 (Gangrene of gallbladder in cholecystitis) and K82.A2 (Perforation of gallbladder in cholecystitis). We proposed to add these two ICD-10-CM diagnosis codes to the Manifestation Code as Principal Diagnosis edit code list because the type of cholecystitis would be required to be reported first. We also proposed to continue to include the existing diagnosis codes currently listed under the Manifestation Code as Principal Diagnosis edit code list. We invited public comments on our proposals.

Comment: Commenters supported the proposal to add ICD-10-CM diagnosis codes K82.A1 and K82.A2 to the Manifestation Code as Principal Diagnosis edit code list and to continue to include the existing diagnosis codes currently listed under the Manifestation Code as Principal Diagnosis edit code list.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to add ICD-10-CM diagnosis codes K82.A1 and K82.A2 to the Manifestation Code as Principal Diagnosis edit code list and to continue to include the existing diagnosis codes currently listed under the Manifestation Code as Principal Diagnosis edit code list under the ICD-10 MCE Version 36, effective October 1, 2018.

d. Questionable Admission Edit

In the MCE, some diagnoses are not usually sufficient justification for admission to an acute care hospital. For example, if a patient is assigned ICD-10-CM diagnosis code R03.0 (Elevated blood pressure reading, without diagnosis of hypertension), the patient would have a questionable admission because an elevated blood pressure reading is not normally sufficient justification for admission to a hospital.

In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20233), we noted that, as discussed in section II.F.10. of the preamble of the proposed rule, we were proposing several modifications to the MS-DRGs under MDC 14 (Pregnancy, Childbirth and the Puerperium). We stated in the proposed rule that one aspect of these proposed modifications involves the GROUPER logic for the cesarean section and vaginal delivery MS-DRGs. We referred readers to section II.F.10. of the preamble of the proposed rule for a detailed discussion of the proposals regarding these MS-DRG modifications under MDC 14 and the relation to the MCE.

If a patient presents to the hospital and either a cesarean section or a vaginal delivery occurs, it is expected that, in addition to the specific type of delivery code, an outcome of delivery code is also assigned and reported on the claim. The outcome of delivery codes are ICD-10-CM diagnosis codes that are to be reported as secondary diagnoses as instructed in Section I.C.15.b.5 of the ICD-10-CM Official Guidelines for Coding and Reporting which states: “A code from category Z37, Outcome of delivery, should be included on every maternal record when a delivery has occurred. These codes are not to be used on subsequent records or on the newborn record.” Therefore, to encourage accurate coding and appropriate MS-DRG assignment in alignment with the proposed modifications to the delivery MS-DRGs, we proposed to create a new “Questionable Obstetric Admission Edit” under the Questionable Admission edit to read as follows:

“b. Questionable obstetric admission

ICD-10-PCS procedure codes describing a cesarean section or vaginal delivery are considered to be a questionable admission except when reported with a corresponding secondary diagnosis code describing the outcome of delivery.

Procedure code list for cesarean section

10D00Z0 Extraction of Products of Conception, High, Open Approach

10D00Z1 Extraction of Products of Conception, Low, Open Approach

10D00Z2 Extraction of Products of Conception, Extraperitoneal, Open Approach

Procedure code list for vaginal delivery

10D07Z3 Extraction of Products of Conception, Low Forceps, Via Natural or Artificial Opening

10D07Z4 Extraction of Products of Conception, Mid Forceps, Via Natural or Artificial Opening

10D07Z5 Extraction of Products of Conception, High Forceps, Via Natural or Artificial Opening

10D07Z6 Extraction of Products of Conception, Vacuum, Via Natural or Artificial Opening

10D07Z7 Extraction of Products of Conception, Internal Version, Via Natural or Artificial Opening

10D07Z8 Extraction of Products of Conception, Other, Via Natural or Artificial Opening

10D17Z9 Manual Extraction of Products of Conception, Retained, Via Natural or Artificial Opening

10D18Z9 Manual Extraction of Products of Conception, Retained, Via Natural or Artificial Opening Endoscopic

10E0XZZ Delivery of Products of Conception, External Approach

Secondary diagnosis code list for outcome of delivery

Z37.0 Single live birth

Z37.1 Single stillbirth

Z37.2 Twins, both liveborn

Z37.3 Twins, one liveborn and one stillborn

Z37.4 Twins, both stillborn

Z37.50 Multiple births, unspecified, all liveborn

Z37.51 Triplets, all liveborn

Z37.52 Quadruplets, all liveborn

Z37.53 Quintuplets, all liveborn

Z37.54 Sextuplets, all liveborn

Z37.59 Other multiple births, all liveborn

Z37.60 Multiple births, unspecified, some liveborn

Z37.61 Triplets, some liveborn

Z37.62 Quadruplets, some liveborn

Z37.63 Quintuplets, some liveborn

Z37.64 Sextuplets, some liveborn

Z37.69 Other multiple births, some liveborn

Z37.7 Other multiple births, all stillborn

Z37.9 Outcome of delivery, unspecified”

We proposed that the three ICD-10-PCS procedure codes listed in the following table would be used to establish the list of codes for the proposed Questionable Obstetric Admission edit logic for cesarean section.

We proposed that the nine ICD-10-PCS procedure codes listed in the following table would be used to establish the list of codes for the proposed new Questionable Obstetric Admission edit logic for vaginal delivery.

We proposed that the 19 ICD-10-CM diagnosis codes listed in the following table would be used to establish the list of secondary diagnosis codes for the proposed new Questionable Obstetric Admission edit logic for outcome of delivery.

Comment: Commenters supported creating the new Questionable Obstetric Admission edit. Commenters also supported the list of diagnoses and procedure codes that we proposed to include for the proposed new edit. However, a few commenters expressed concern with several of the procedure codes that were proposed for inclusion under the vaginal delivery procedure code list. Specifically, the commenters identified that ICD-10-PCS procedure codes 10D17Z9 and 10D18Z9 may be reported for other clinical indications, in the absence of an outcome of delivery diagnosis code. Therefore, the commenter stated that the edit would be triggered erroneously for those case scenarios.

Response: We appreciate the commenters' support. We reviewed the procedure codes for which the commenters expressed concern under the vaginal delivery procedure code list (ICD-10-PCS procedure codes 10D17Z9 and 10D18Z9) and agree that there may be instances in which the procedure codes could be reported in the absence of an outcome of delivery diagnosis code. Therefore, we believe it is appropriate to remove these two procedure codes from the vaginal delivery procedure code list for the edit. In addition, we reviewed ICD-10-PCS procedure codes 10D07Z6 and 10D07Z8 and believe the procedures could potentially be performed for other clinical indications, in the absence of an outcome of delivery code, and erroneously trigger the proposed edit if reported.

After consideration of the public comments we received, we are finalizing our proposal to create the new Questionable Obstetric Admission edit. We also are finalizing our proposal to include ICD-10-PCS procedure codes 10D00Z0, 10D00Z1, and 10D00Z2 listed above for the “Procedure code list for cesarean section” portion of the edit. We are finalizing our proposal to include the procedure codes listed above for vaginal delivery with modifications. Specifically, we are not including ICD-10-PCS procedure codes 10D07Z6, 10D07Z87, 10D17Z9 and 10D18Z9 in the “Procedure code list for vaginal delivery” portion of the edit and finalizing the inclusion of the remaining procedure codes listed above. In addition, we are finalizing our proposal to include the diagnosis codes listed above under the “Secondary diagnosis code list for outcome of delivery” portion of the edit. We are finalizing these changes as described above under the ICD-10 MCE Version 36, effective October 1, 2018.

e. Unacceptable Principal Diagnosis Edit

In the MCE, there are select codes that describe a circumstance which influences an individual's health status, but does not actually describe a current illness or injury. There also are codes that are not specific manifestations, but may be due to an underlying cause. These codes are considered unacceptable as a principal diagnosis. In limited situations, there are a few codes on the MCE Unacceptable Principal Diagnosis edit code list that are considered “acceptable” when a specified secondary diagnosis is also coded and reported on the claim.

In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20234), we noted that, as discussed in section II.F.9. of the preamble of the proposed rule, ICD-10-CM diagnosis codes Z49.02 (Encounter for fitting and adjustment of peritoneal dialysis catheter), Z49.31 (Encounter for adequacy testing for hemodialysis), and Z49.32 (Encounter for adequacy testing for peritoneal dialysis) are currently on the Unacceptable Principal Diagnosis edit code list. We proposed to add diagnosis code Z49.01 (Encounter for fitting and adjustment of extracorporeal dialysis catheter) to the Unacceptable Principal Diagnosis edit code list because this is an encounter code that would more likely be performed in an outpatient setting.

Comment: Some commenters supported the proposal to add ICD-10-CM diagnosis code Z49.01 to the Unacceptable Principal Diagnosis edit code list. However, some commenters recommended that CMS reconsider the proposal. These commenters did not dispute the fact that this code is more likely to be reported in the outpatient setting. However, they stated that the proposal to add it to the edit appeared to conflict with the proposal that was discussed in section II.F.9. for MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract) and MS-DRG 685 (Admit for Renal Dialysis). According to the commenters, CMS proposed to only reassign diagnosis code Z49.01 as a principal diagnosis in the proposal to delete MS-DRG 685 and reassign diagnosis code Z49.01 to MS-DRGs 698, 699 and 700.

Response: We appreciate the commenters' support. With regard to the commenters who recommended that we reconsider the proposal to add diagnosis code Z49.01 to the Unacceptable Principal Diagnoses edit code list, we believe there is some confusion with respect to the proposal that was discussed in section II.F.9. of the preamble of the proposed rule. The proposal was to reassign diagnosis codes Z49.01, Z49.02, Z49.31 and Z49.32 to MS-DRGs 698, 699 and 700 (Other Kidney and Urinary Tract Diagnoses with MCC, with CC and without CC/MCC, respectively) with the proposed deletion of MS-DRG 685. We are unable to determine what aspect of the proposal that was discussed in section II.F. 9. of the preamble of the proposed rule was unclear. For example, it is not clear if the commenters' confusion relates to the GROUPER logic for MS-DRGs 698, 699, and 700 as shown in the ICD-10 MS-DRG Definitions Manual. As discussed elsewhere in this final rule, in the ICD-10 MS-DRG Definitions Manual, diagnosis codes listed under the heading of “Principal Diagnosis” may appear to indicate that those codes are to be reported as a principal diagnosis for assignment to the respective MS-DRG. However, the Definitions Manual display of the GROUPER logic assignment for each diagnosis code is for grouping purposes only and does not correspond to coding guidelines for reporting the principal diagnosis. In other words, cases will group according to the GROUPER logic, regardless of any coding guidelines or coverage policies. It is the MCE and other payer-specific edits that identify inconsistencies in the coding guidelines or coverage policies.

We also noted in the proposed rule that, as discussed in section II.F.15. of the preamble of the proposed rule, Table 6C.—Invalid Diagnosis Codes associated with the proposed rule (which is available via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) listed the diagnosis codes that will no longer be effective as of October 1, 2018. As previously noted, included in this table is an ICD-10-CM diagnosis code Z13.4 (Encounter for screening for certain developmental disorders in childhood) which is currently listed on the Unacceptable Principal Diagnoses edit code list. We proposed to remove this code from the Unacceptable Principal Diagnosis edit code list.

We also proposed to continue to include the other existing diagnosis codes currently listed under the Unacceptable Principal Diagnosis edit code list.

Comment: Commenters supported the proposal to remove ICD-10-CM diagnosis code Z13.4 from the Unacceptable Principal diagnoses category edit code list because it will be an invalid code effective October 1, 2018.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to add ICD-10-CM diagnosis code Z49.01 to the Unacceptable Principal Diagnosis edit code list. We also are finalizing our proposal to remove ICD-10-CM diagnosis code Z13.4 from the Unacceptable Principal Diagnosis edit code list. In addition, we are finalizing our proposal to maintain the other existing codes on the Unacceptable Principal Diagnosis edit code list under the ICD-10 MCE Version 36, effective October 1, 2018.

Comment: One commenter requested that CMS review a coverage edit in the MCE manual and software. According to the commenter, CMS began covering multiple myeloma on January 1, 2016 under the condition of coverage with evidence development (CED) as shown in guidance located at: https://www.cms.gov/Medicare/Coverage/Coverage-with-Evidence-Development/allo-MM.html. The commenter noted that the applicable procedure codes along with diagnosis codes C90.00 (Multiple myeloma not having achieved remission) and C90.01 (Multiple myeloma in remission) are listed as “non-covered” in the MCE manual and encouraged CMS to review further and make any necessary updates as needed to ensure claims are processed appropriately.

Response: We thank the commenter for bringing this to our attention. Upon review, guidance was issued on January 27, 2016 for allogeneic hematopoietic stem cell transplant (HSCT) for certain Medicare beneficiaries with multiple myeloma under CED. This guidance is available via the internet on the CMS website at: https://www.cms.gov/Medicare/Coverage/Coverage-with-Evidence-Development/allo-MM.html. We agree with the commenter and, therefore, are removing the following noncovered procedure edit from the ICD-10 MCE Version 36 manual, effective October 1, 2018:

“E. Non-covered procedure codes

The procedures shown below are identified as non-covered procedures only when any code from the diagnoses list shown below is present as either a principal or secondary diagnosis.

Procedures

30230G2 Transfuse Allo Rel Bone Marrow in Periph Vein, Open

30230G3 Transfuse Allo Unr Bone Marrow in Periph Vein, Open

30230G4 Transfuse Allo Unsp Bone Marrow in Periph Vein, Open

30230Y2 Transfuse Allo Rel Hemat Stem Cell in Periph Vein, Open

30230Y3 Transfuse Allo Unr Hemat Stem Cell in Periph Vein, Open

30230Y4 Transfuse Allo Unsp Hemat Stem Cell in Periph Vein, Open

30233G2 Transfuse Allo Rel Bone Marrow in Periph Vein, Perc

30233G3 Transfuse Allo Unr Bone Marrow in Periph Vein, Perc

30233G4 Transfuse Allo Unsp Bone Marrow in Periph Vein, Perc

30233Y2 Transfuse Allo Rel Hemat Stem Cell in Periph Vein, Per

30233Y3 Transfuse Allo Unr Hemat Stem Cell in Periph Vein, Perc

30233Y4 Transfuse Allo Unsp Hemat Stem Cell in Periph Vein, Perc

30240G2 Transfuse Allo Rel Bone Marrow in Central Vein, Open

30240G3 Transfuse Allo Unr Bone Marrow in Central Vein, Open

30240G4 Transfuse Allo Unsp Bone Marrow in Central Vein, Open

30240Y2 Transfuse Allo Rel Hemat Stem Cell in Central Vein, Open

30240Y3 Transfuse Allo Unr Hemat Stem Cell in Central Vein, Open

30240Y4 Transfuse Allo Unsp Hemat Stem Cell in Central Vein, Open

30243G2 Transfuse Allo Rel Bone Marrow in Central Vein, Perc

30243G3 Transfuse Allo Unr Bone Marrow in Central Vein, Perc

30243G4 Transfuse Allo Unsp Bone Marrow in Central Vein, Perc

30243Y2 Transfuse Allo Rel Hemat Stem Cell in Central Vein, Perc

30243Y3 Transfuse Allo Unr Hemat Stem Cell in Central Vein, Perc

30243Y4 Transfuse Allo Unsp Hemat Stem Cell in Central Vein, Perc

30250G1 Transfuse Nonaut Bone Marrow in Periph Art, Open

30250Y1 Transfuse Nonaut Hemat Stem Cell in Periph Art, Open

30253G1 Transfuse Nonaut Bone Marrow in Periph Art, Perc

30253Y1 Transfuse Nonaut Hemat Stem Cell in Periph Art, Perc

30260G1 Transfuse Nonaut Bone Marrow in Central Art, Open

30260Y1 Transfuse Nonaut Hemat Stem Cell in Central Art, Open

30263G1 Transfuse Nonaut Bone Marrow in Central Art, Perc

30263Y1 Transfuse Nonaut Hemat Stem Cell in Central Art, Perc

Diagnoses

C9000 Multiple myeloma not having achieved remission

C9001 Multiple myeloma in remission”

This update will also be reflected in the ICD-10 MCE software Version 36 effective October 1, 2018.

f. Future Enhancement

In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38053 through 38054), we noted the importance of ensuring accuracy of the coded data from the reporting, collection, processing, coverage, payment, and analysis aspects. We have engaged a contractor to assist in the review of the limited coverage and noncovered procedure edits in the MCE that may also be present in other claims processing systems that are utilized by our MACs. The MACs must adhere to criteria specified within the National Coverage Determinations (NCDs) and may implement their own edits in addition to what are already incorporated into the MCE, resulting in duplicate edits. The objective of this review is to identify where duplicate edits may exist and to determine what the impact might be if these edits were to be removed from the MCE.

We have noted that the purpose of the MCE is to ensure that errors and inconsistencies in the coded data are recognized during Medicare claims processing. In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20235), we indicated that we are considering whether the inclusion of coverage edits in the MCE necessarily aligns with that specific goal because the focus of coverage edits is on whether or not a particular service is covered for payment purposes and not whether it was coded correctly.

As we continue to evaluate the purpose and function of the MCE with respect to ICD-10, we encourage public input for future discussion. As we discussed in the FY 2018 IPPS/LTCH PPS final rule, we recognize a need to further examine the current list of edits and the definitions of those edits. We continue to encourage public comments on whether there are additional concerns with the current edits, including specific edits or language that should be removed or revised, edits that should be combined, or new edits that should be added to assist in detecting errors or inaccuracies in the coded data. Comments should be directed to the MS-DRG Classification Change Mailbox located at: MSDRGClassificationChange@cms.hhs.gov by November 1, 2018 for FY 2020.

14. Changes to Surgical Hierarchies

Some inpatient stays entail multiple surgical procedures, each one of which, occurring by itself, could result in assignment of the case to a different MS-DRG within the MDC to which the principal diagnosis is assigned. Therefore, it is necessary to have a decision rule within the GROUPER by which these cases are assigned to a single MS-DRG. The surgical hierarchy, an ordering of surgical classes from most resource-intensive to least resource-intensive, performs that function. Application of this hierarchy ensures that cases involving multiple surgical procedures are assigned to the MS-DRG associated with the most resource-intensive surgical class.

A surgical class can be composed of one or more MS-DRGs. For example, in MDC 11, the surgical class “kidney transplant” consists of a single MS-DRG (MS-DRG 652) and the class “major bladder procedures” consists of three MS-DRGs (MS-DRGs 653, 654, and 655). Consequently, in many cases, the surgical hierarchy has an impact on more than one MS-DRG. The methodology for determining the most resource-intensive surgical class involves weighting the average resources for each MS-DRG by frequency to determine the weighted average resources for each surgical class. For example, assume surgical class A includes MS-DRGs 001 and 002 and surgical class B includes MS-DRGs 003, 004, and 005. Assume also that the average costs of MS-DRG 001 are higher than that of MS-DRG 003, but the average costs of MS-DRGs 004 and 005 are higher than the average costs of MS-DRG 002. To determine whether surgical class A should be higher or lower than surgical class B in the surgical hierarchy, we would weigh the average costs of each MS-DRG in the class by frequency (that is, by the number of cases in the MS-DRG) to determine average resource consumption for the surgical class. The surgical classes would then be ordered from the class with the highest average resource utilization to that with the lowest, with the exception of “other O.R. procedures” as discussed in this final rule.

This methodology may occasionally result in assignment of a case involving multiple procedures to the lower-weighted MS-DRG (in the highest, most resource-intensive surgical class) of the available alternatives. However, given that the logic underlying the surgical hierarchy provides that the GROUPER search for the procedure in the most resource-intensive surgical class, in cases involving multiple procedures, this result is sometimes unavoidable.

We note that, notwithstanding the foregoing discussion, there are a few instances when a surgical class with a lower average cost is ordered above a surgical class with a higher average cost. For example, the “other O.R. procedures” surgical class is uniformly ordered last in the surgical hierarchy of each MDC in which it occurs, regardless of the fact that the average costs for the MS-DRG or MS-DRGs in that surgical class may be higher than those for other surgical classes in the MDC. The “other O.R. procedures” class is a group of procedures that are only infrequently related to the diagnoses in the MDC, but are still occasionally performed on patients with cases assigned to the MDC with these diagnoses. Therefore, assignment to these surgical classes should only occur if no other surgical class more closely related to the diagnoses in the MDC is appropriate.

A second example occurs when the difference between the average costs for two surgical classes is very small. We have found that small differences generally do not warrant reordering of the hierarchy because, as a result of reassigning cases on the basis of the hierarchy change, the average costs are likely to shift such that the higher-ordered surgical class has lower average costs than the class ordered below it.

Based on the changes that we proposed to make in the FY 2019 IPPS/LTCH PPS proposed rule, as discussed in section II.F.10. of the preamble of this final rule, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20235), we proposed to revise the surgical hierarchy for MDC 14 (Pregnancy, Childbirth & the Puerperium) as follows: In MDC 14, we proposed to delete MS-DRGs 765 and 766 (Cesarean Section with and without CC/MCC, respectively) and MS-DRG 767 (Vaginal Delivery with Sterilization and/or D&C) from the surgical hierarchy. We proposed to sequence proposed new MS-DRGs 783, 784, and 785 (Cesarean Section with Sterilization with MCC, with CC and without CC/MCC, respectively) above proposed new MS-DRGs 786, 787, and 788 (Cesarean Section without Sterilization with MCC, with CC and without CC/MCC, respectively). We proposed to sequence proposed new MS-DRGs 786, 787, and 788 (Cesarean Section without Sterilization with MCC, with CC and without CC/MCC, respectively) above MS-DRG 768 (Vaginal Delivery with O.R. Procedure Except Sterilization and/or D&C). We also proposed to sequence proposed new MS-DRGs 796, 797, and 798 (Vaginal Delivery with Sterilization/D&C with MCC, with CC and without CC/MCC, respectively) below MS-DRG 768 and above MS-DRG 770 (Abortion with D&C, Aspiration Curettage or Hysterotomy). Finally, we proposed to sequence proposed new MS-DRGs 817, 818, and 819 (Other Antepartum Diagnoses with O.R. procedure with MCC, with CC and without CC/MCC, respectively) below MS-DRG 770 and above MS-DRG 769 (Postpartum and Post Abortion Diagnoses with O.R. Procedure). Our proposals for Appendix D MS-DRG Surgical Hierarchy by MDC and MS-DRG of the ICD-10 MS-DRG Definitions Manual Version 36 are illustrated in the following table.

Comment: Commenters supported the proposed additions, deletions, and sequencing for the surgical hierarchy under MDC 14.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposed changes to Appendix D MS-DRG Surgical Hierarchy by MDC and MS-DRG of the ICD-10 MS-DRG Definitions Manual Version 36 as illustrated in the table above effective October 1, 2018.

As with other MS-DRG related issues, we encourage commenters to submit requests to examine ICD-10 claims pertaining to the surgical hierarchy via the CMS MS-DRG Classification Change Request Mailbox located at: MSDRGClassificationChange@cms.hhs.gov by November 1, 2018 for FY 2020 consideration.

15. Changes to the MS-DRG Diagnosis Codes for FY 2019

a. Background of the CC List and the CC Exclusions List

Under the IPPS MS-DRG classification system, we have developed a standard list of diagnoses that are considered CCs. Historically, we developed this list using physician panels that classified each diagnosis code based on whether the diagnosis, when present as a secondary condition, would be considered a substantial complication or comorbidity. A substantial complication or comorbidity was defined as a condition that, because of its presence with a specific principal diagnosis, would cause an increase in the length-of-stay by at least 1 day in at least 75 percent of the patients. However, depending on the principal diagnosis of the patient, some diagnoses on the basic list of complications and comorbidities may be excluded if they are closely related to the principal diagnosis. In FY 2008, we evaluated each diagnosis code to determine its impact on resource use and to determine the most appropriate CC subclassification (non-CC, CC, or MCC) assignment. We refer readers to sections II.D.2. and 3. of the preamble of the FY 2008 IPPS final rule with comment period for a discussion of the refinement of CCs in relation to the MS-DRGs we adopted for FY 2008 (72 FR 47152 through 47171).

b. Additions and Deletions to the Diagnosis Code Severity Levels for FY 2019

In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20236), we indicated that the following tables identifying the proposed additions and deletions to the MCC severity levels list and the proposed additions and deletions to the CC severity levels list for FY 2019 were available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.

Table 6I.1—Proposed Additions to the MCC List—FY 2019;

Table 6I.2—Proposed Deletions to the MCC List—FY 2019;

Table 6J.1—Proposed Additions to the CC List—FY 2019; and

Table 6J.2—Proposed Deletions to the CC List—FY 2019.

We invited public comments on our proposed severity level designations for the diagnosis codes listed in Table 6I.1. and Table 6J.1. We noted that, for Table 6I.2. and Table 6J.2., the proposed deletions are a result of code expansions, with the exception of diagnosis codes B20 and J80, which are the result of proposed severity level designation changes. Therefore, the diagnosis codes on these lists will no longer be valid codes, effective FY 2019.

We referred readers to the Tables 6I.1, 6I.2, 6J.1, and 6J.2 associated with the proposed rule, which are available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.

Comment: Commenters supported the proposed additions and deletions for the diagnosis codes, and their corresponding severity level designations that were listed in Tables 6I.1, 6I.2, 6J.1, and 6J.2. associated with the FY 2019 IPPS/LTCH PPS proposed rule. However, a few commenters expressed concern with the proposed severity level designation change to diagnosis code B20, and recommended CMS conduct further analysis prior to finalizing any proposals.

Response: We appreciate the commenters' support. We refer readers to section II.F.16.b. of the preamble of this final rule for the detailed discussion of public comments related to the proposals and final statement of policy involving diagnosis codes B20 and J80.

Comment: One commenter disagreed with CMS' proposal to designate diagnosis codes K35.20 (Acute appendicitis with generalized peritonitis, without abscess) and T81.44XA (Sepsis following a procedure, initial encounter) as CC severity levels, and recommended CMS reconsider the conditions and classify the severity levels as MCCs. The commenter noted that the predecessor code for diagnosis code K35.20 is diagnosis code K35.2 (Acute appendicitis with generalized peritonitis), which is classified as a MCC severity level designation. Therefore, the commenter also believed that diagnosis code K35.20 should be designated as a MCC severity level. Additionally, the commenter stated that diagnosis code T81.44XA should be classified as an MCC severity level because sepsis is defined as a life-threatening organ dysfunction caused by a host response to infection.

Response: While we acknowledge that our process in assigning a severity level designation for a diagnosis code generally begins with identifying the designation of the predecessor code assignment, we believe that any new or revised clinical concepts included in the new diagnosis codes should also be considered when making a severity level designation. We reviewed diagnosis codes K35.20 and T81.44XA and our clinical advisors continue to support the CC severity level designation of these diagnosis codes. The commenter is correct that, effective October 1, 2018, diagnosis code K35.20 has been expanded from the current diagnosis code K35.2. However, we also note that, effective October 1, 2018, diagnosis code K35.2 has been expanded to create new diagnosis code K35.21 (Acute appendicitis with generalized peritonitis, with abscess). In addition, effective October 1, 2018, diagnosis code K35.3 (Acute appendicitis with localized peritonitis) has been expanded to create new diagnosis codes K35.30 (Acute appendicitis with localized peritonitis, without perforation or gangrene), K35.31 (Acute appendicitis with localized peritonitis and gangrene, without perforation), K35.32 (Acute appendicitis with perforation and localized peritonitis, without abscess) and K35.33 (Acute appendicitis with perforation and localized peritonitis, with abscess). Consistent with our usual process, in reviewing all of these newly expanded conditions, our clinical advisors considered the additional clinical concepts now included with each diagnosis code in evaluating the appropriate proposed severity level assignments. Our clinical advisors believed that the new diagnosis codes for acute appendicitis described as “with abscess” or “with perforation” were clinically qualified for the MCC severity level designation, while acute appendicitis “without abscess” or “without perforation” were clinically qualified for the CC severity level designation because cases with abscess or perforation would be expected to require more clinical resources and time to treat while those cases “without abscess” or “without perforation” are not as severe clinical conditions. As such, we disagree with the commenter that, based on the designation of its predecessor code alone, diagnosis code K35.20 should be designated as an MCC severity level instead of a CC for FY 2019. With regard to diagnosis code T81.44XA, our clinical advisors maintain that a CC severity level designation is most appropriate because the new code is clinically consistent with the predecessor code, T81.4XXA (Infection following a procedure, initial encounter), which also has a CC severity level designation. Currently, under Version 35 of the ICD-10 MS-DRGs, diagnosis code T81.4XXA contains several inclusion terms (conditions for which the code may be reported), one of which is “sepsis following a procedure”. Our clinical advisors do not believe that the creation of a unique diagnosis code to specifically identify this condition within the classification introduces a new clinical concept requiring a higher level of resources. The new diagnosis code provides additional detail as to the type of infection following a procedure. However, it is considered to be clinically similar to the current diagnosis code describing an infection following a procedure. We also note that an additional five new diagnosis codes describing infections of varying degrees following a procedure were created for FY 2019 based on the other inclusion terms that currently exist at diagnosis code T81.4XXA.

As shown in the table below and in Table 6J.1. associated with the proposed rule, a total of six new diagnosis codes were proposed to be designated at the CC severity level based on review of the predecessor code (T81.4XXA), clinical coherence, and resource considerations.

Therefore, for the reasons discussed above, our clinical advisors continue to support the proposed CC severity level designation for diagnosis code T81.44XA for FY 2019.

In addition, because these diagnosis codes identified by the commenter are new, we do not have any claims data for further analysis. Once we have additional claims data to allow us to conduct further review, we can continue to examine these conditions to determine if their impact on resource use is equal to or above the expected value of a CC severity level designation.

After consideration of the public comments we received, we are finalizing our proposal to designate diagnosis codes K35.20 and T81.44XA as CC severity levels. We also are finalizing our other proposed additions and deletions with their corresponding severity level designations for FY 2019. We refer readers to Tables 6I.1., 6I.2, 6J.1, and 6J.2. associated with this final rule, which are available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.

c. Principal Diagnosis Is Its Own CC or MCC

In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38060), we provided the public with notice of our plans to conduct a comprehensive review of the CC and MCC lists for FY 2019. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38056 through 38057), we also finalized our proposal to maintain the existing lists of principal diagnosis codes in Table 6L.—Principal Diagnosis Is Its Own MCC List and Table 6M.—Principal Diagnosis Is Its Own CC List for FY 2018, without any changes to the existing lists, noting our plans to conduct a comprehensive review of the CC and MCC lists for FY 2019 (82 FR 38060). We stated that having multiple lists for CC and MCC diagnoses when reported as a principal and/or secondary diagnosis may not provide an accurate representation of resource utilization for the MS-DRGs.

We also stated that the purpose of the Principal Diagnosis Is Its Own CC or MCC Lists was to ensure consistent MS-DRG assignment between the ICD-9-CM and ICD-10 MS-DRGs. The Principal Diagnosis Is Its Own CC or MCC Lists were developed for the FY 2016 implementation of the ICD-10 version of the MS-DRGs to facilitate replication of the ICD-9-CM MS-DRGs. As part of our efforts to replicate the ICD-9-CM MS-DRGs, we implemented logic that may have increased the complexity of the MS-DRG assignment hierarchy and altered the format of the ICD-10 MS-DRG Definitions Manual. Two examples of workarounds used to facilitate replication are the proliferation of procedure clusters in the surgical MS-DRGs and the creation of the Principal Diagnosis Is Its Own CC or MCC Lists special logic.

The following paragraph was added to the Version 33 ICD-10 MS-DRG Definitions Manual to explain the use of the Principal Diagnosis Is Its Own CC or MCC Lists: “A few ICD-10-CM diagnosis codes express conditions that are normally coded in ICD-9-CM using two or more ICD-9-CM diagnosis codes. In the interest of ensuring that the ICD-10 MS-DRGs Version 33 places a patient in the same DRG regardless whether the patient record were to be coded in ICD-9-CM or ICD-10-CM/PCS, whenever one of these ICD-10-CM combination codes is used as principal diagnosis, the cluster of ICD-9-CM codes that would be coded on an ICD-9-CM record is considered. If one of the ICD-9-CM codes in the cluster is a CC or MCC, then the single ICD-10-CM combination code used as a principal diagnosis must also imply the CC or MCC that the ICD-9-CM cluster would have presented. The ICD-10-CM diagnoses for which this implication must be made are listed here.” Versions 34 and 35 of the ICD-10 MS-DRG Definitions Manual also include this special logic for the MS-DRGs.

The Principal Diagnosis Is Its Own CC or MCC Lists were developed in the absence of ICD-10 coded data by mapping the ICD-9-CM diagnosis codes to the new ICD-10-CM combination codes. CMS has historically used clinical judgment combined with data analysis to assign a principal diagnosis describing a complex or severe condition to the appropriate DRG or MS-DRG. The initial ICD-10 version of the MS-DRGs replicated from the ICD-9 version can now be evaluated using clinical judgment combined with ICD-10 coded data because it is no longer necessary to replicate MS-DRG assignment across the ICD-9 and ICD-10 versions of the MS-DRGs for purposes of calculating relative weights. Now that ICD-10 coded data are available, in addition to using the data for calculating relative weights, ICD-10 data can be used to evaluate the effectiveness of the special logic for assigning a severity level to a principal diagnosis, as an indicator of resource utilization. In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20237), to evaluate the effectiveness of the special logic, we conducted analysis of the ICD-10 coded data combined with clinical review to determine whether to propose to keep the special logic for assigning a severity level to a principal diagnosis, or to propose to remove the special logic and use other available means of assigning a complex principal diagnosis to the appropriate MS-DRG.

In the proposed rule, using claims data from the September 2017 update of the FY 2017 MedPAR file, we employed the following method to determine the impact of removing the special logic used in the current Version 35 GROUPER to process claims containing a code on the Principal Diagnosis Is Its Own CC or MCC Lists. Edits and cost estimations used for relative weight calculations were applied, resulting in 9,070,073 IPPS claims analyzed for this special logic impact evaluation. We refer readers to section II.G. of the preamble of this final rule for further information regarding the methodology for calculation of the relative weights.

First, we identified the number of cases potentially impacted by the special logic. We identified 310,184 cases reporting a principal diagnosis on the Principal Diagnosis Is Its Own CC or MCC lists. Of the 310,184 total cases that reported a principal diagnosis code on the Principal Diagnosis Is Its Own CC or MCC Lists, 204,749 cases also reported a secondary diagnosis code at the same severity level or higher severity level, and therefore the special logic had no impact on MS-DRG assignment. However, of the 310,184 total cases, there were 105,435 cases that did not report a secondary diagnosis code at the same severity level or higher severity level, and therefore the special logic could potentially impact MS-DRG assignment, depending on the specific severity leveling structure of the base DRG.

Next, we removed the special logic in the GROUPER that is used for processing claims reporting a principal diagnosis on the Principal Diagnosis Is Its Own CC or MCC Lists, thereby creating a Modified Version 35 GROUPER. Using this Modified Version 35 GROUPER, we reprocessed the 105,435 claims for which the principal diagnosis code was the sole source of a MCC or CC on the case, to obtain data for comparison showing the effect of removing the special logic.

After removing the special logic in the Version 35 GROUPER for processing claims containing diagnosis codes on the Principal Diagnosis Is Its Own CC or MCC Lists, and reprocessing the claims using the Modified Version 35 GROUPER software, we found that 18,596 (6 percent) of the 310,184 cases reporting a principal diagnosis on the Principal Diagnosis Is Its Own CC or MCC Lists resulted in a different MS-DRG assignment. Overall, the number of claims impacted by removal of the special logic (18,596) represents 0.2 percent of the 9,070,073 IPPS claims analyzed.

Below we provide a summary of the steps that we followed for the analysis performed.

Step 1. We analyzed 9,070,073 claims to determine the number of cases impacted by the special logic.

Step 2. We removed special logic from GROUPER and created a modified GROUPER.

Step 3. We reprocessed 105,435 claims with modified GROUPER.

To estimate the overall financial impact of removing the special logic from the GROUPER, we calculated the aggregate change in estimated payment for the MS-DRGs by comparing average costs for each MS-DRG affected by the change, before and after removing the special logic. Before removing the special logic in the Version 35 GROUPER, the cases impacted by the special logic had an estimated average payment of $58 million above the average costs for all the MS-DRGs to which the claim was originally assigned. After removing the special logic in the Version 35 GROUPER, the 18,596 cases impacted by the special logic had an estimated average payment of $39 million below the average costs for the newly assigned MS-DRGs.

We performed regression analysis to compare the proportion of variance in the MS-DRGs with and without the special logic. The results of the regression analysis showed a slight decrease in variance when the logic was removed. While the decrease itself was not statistically significant (an R-squared of 36.2603 percent after the special logic was removed, compared with an R-squared of 36.2501 percent in the current version 35 GROUPER), we note that the proportion of variance across the MS-DRGs essentially stayed the same, and certainly did not increase, when the special logic was removed.

We further examined the 18,596 claims that were impacted by the special logic in the GROUPER for processing claims containing a code on the Principal Diagnosis Is Its Own CC or MCC Lists. The 18,596 claims were analyzed by the principal diagnosis code and the MS-DRG assigned, resulting in 588 principal diagnosis and MS-DRG combinations or subsets. Of the 588 subsets of cases that utilized the special logic, 556 of the 588 subsets (95 percent) had fewer than 100 cases, 529 of the 588 subsets (90 percent) had fewer than 50 cases, and 489 of the 588 subsets (83 percent) had fewer than 25 cases.

We examined the 32 subsets of cases (5 percent of the 588 subsets) that utilized the special logic and had 100 or more cases. Of the 32 subsets of cases, 18 (56 percent) are similar in terms of average costs and length of stay to the MS-DRG assignment that results when the special logic is removed, and 14 of the 32 subsets of cases (44 percent) are similar in terms of average costs and length of stay to the MS-DRG assignment that results when the special logic is utilized.

The table below contains examples of four subsets of cases that utilize the special logic, comparing average length of stay and average costs between two MS-DRGs within a base DRG, corresponding to the MS-DRG assigned when the special logic is removed and the MS-DRG assigned when the special logic is utilized. All four subsets of cases involve the principal diagnosis code E11.52 (Type 2 diabetes mellitus with diabetic peripheral angiopathy with gangrene). There are four subsets of cases in this example because the records involving the principal diagnosis code E11.52 are assigned to four different base DRGs, one medical MS-DRG and three surgical MS-DRGs, depending on the procedure code(s) reported on the claim. All subsets of cases contain more than 100 claims. In three of the four subsets, the cases are similar in terms of average length of stay and average costs to the MS-DRG assignment that results when the special logic is removed, and in one of the four subsets, the cases are similar in terms of average length of stay and average costs to the MS-DRG assignment that results when the special logic is utilized.

As shown in the following table, using ICD-10-CM diagnosis code E11.52 (Type 2 diabetes mellitus with diabetic peripheral angiopathy with gangrene) as our example, the data findings show four different MS-DRG pairs for which code E11.52 was the principal diagnosis on the claim and where the special logic impacted MS-DRG assignment. For the first MS-DRG pair, we examined MS-DRGs 240 and 241 (Amputation for Circulatory System Disorders Except Upper Limb and Toe with CC and without CC/MCC, respectively). We found 436 cases reporting diagnosis code E11.52 as the principal diagnosis, with an average length of stay of 5.5 days and average costs of $11,769. These 436 cases are assigned to MS-DRG 240 with the special logic utilized, and assigned to MS-DRG 241 with the special logic removed. The total number of cases reported in MS-DRG 240 was 7,675, with an average length of stay of 8.3 days and average costs of $17,876. The total number of cases reported in MS-DRG 241 was 778, with an average length of stay of 5.0 days and average costs of $10,882. The 436 cases are more similar to MS-DRG 241 in terms of length of stay and average cost and less similar to MS-DRG 240.

For the second MS-DRG pair, we examined MS-DRGs 256 and 257 (Upper Limb and Toe Amputation for Circulatory System Disorders with CC and without CC/MCC, respectively). We found 193 cases reporting ICD-10-CM diagnosis code E11.52 as the principal diagnosis, with an average length of stay of 4.2 days and average costs of $8,478. These 193 cases are assigned to MS-DRG 256 with the special logic utilized, and assigned to MS-DRG 257 with the special logic removed. The total number of cases reported in MS-DRG 256 was 2,251, with an average length of stay of 6.1 days and average costs of $11,987. The total number of cases reported in MS-DRG 257 was 115, with an average length of stay of 4.6 days and average costs of $7,794. These 193 cases are more similar to MS-DRG 257 in terms of average length of stay and average costs and less similar to MS-DRG 256.

For the third MS-DRG pair, we examined MS-DRGs 300 and 301 (Peripheral Vascular Disorders with CC and without CC/MCC, respectively). We found 185 cases reporting ICD-10-CM diagnosis code E11.52 as the principal diagnosis, with an average length of stay of 3.6 days and average costs of $5,981. These 185 cases are assigned to MS-DRG 300 with the special logic utilized, and assigned to MS-DRG 301 with the special logic removed. The total number of cases reported in MS-DRG 300 was 29,327, with an average length of stay of 4.1 days and average costs of $7,272. The total number of cases reported in MS-DRG 301 was 9,611, with an average length of stay of 2.8 days and average costs of $5,263. These 185 cases are more similar to MS-DRG 301 in terms of average length of stay and average costs and less similar to MS-DRG 300.

For the fourth MS-DRG pair, we examined MS-DRGs 253 and 254 (Other Vascular Procedures with CC and without CC/MCC, respectively). We found 225 cases reporting diagnosis code E11.52 as the principal diagnosis, with an average length of stay of 5.2 days and average costs of $17,901. These 225 cases are assigned to MS-DRG 253 with the special logic utilized, and assigned to MS-DRG 254 with the special logic removed. The total number of cases reported in MS-DRG 253 was 25,714, with an average length of stay of 5.4 days and average costs of $18,986. The total number of cases reported in MS-DRG 254 was 12,344, with an average length of stay of 2.8 days and average costs of $13,287. Unlike the previous three MS-DRG pairs, these 225 cases are more similar to MS-DRG 253 in terms of average length of stay and average costs and less similar to MS-DRG 254.

Based on our analysis of the data, we stated that we believe that there may be more effective indicators of resource utilization than the Principal Diagnosis Is Its Own CC or MCC Lists and the special logic used to assign clinical severity to a principal diagnosis. As stated in the proposed rule and earlier in this discussion, it is no longer necessary to replicate MS-DRG assignment across the ICD-9 and ICD-10 versions of the MS-DRGs. The available ICD-10 data can now be used to evaluate other indicators of resource utilization.

Therefore, as an initial recommendation from the first phase in our comprehensive review of the CC and MCC lists, we proposed to remove the special logic in the GROUPER for processing claims containing a diagnosis code from the Principal Diagnosis Is Its Own CC or MCC Lists, and we proposed to delete the tables containing the lists of principal diagnosis codes, Table 6L.—Principal Diagnosis Is Its Own MCC List and Table 6M.—Principal Diagnosis Is Its Own CC List, from the ICD-10 MS-DRG Definitions Manual for FY 2019. We invited public comments on our proposals.

Comment: Commenters supported the proposed deletion of the Principal Diagnosis Is Its Own CC or MCC logic. One commenter stated that the lists were created to facilitate replication of the ICD-9 based MS-DRGs and are an artifact of the ICD-10 transitions. Another commenter recommended removing some of the conditions that are currently on the lists but expressed concern that eliminating the logic completely could impact the ability to measure a patient's severity of illness. One commenter noted that CMS described its internal comprehensive review and analysis that were conducted, which provided some level of insight for the proposal; however, the overarching comment was that CMS believed there were more effective indicators of resource utilization. Other commenters disagreed with CMS' proposal to “globally” remove the Principal Diagnosis Is Its Own CC or MCC logic. A few commenters stated that a more detailed analysis, consistent with the comprehensive CC/MCC analysis approach conducted for severity level changes, should occur. One commenter recommended that the logic described as part of the MS-DRG Conversion Project with the MCC and CC translations from ICD-9 to ICD-10 be considered. Another commenter acknowledged that CMS is no longer attempting to replicate the ICD-9 based MS-DRG GROUPER logic. However, this commenter noted that the conditions represented by the ICD-10-CM combination codes are clinically the same conditions that were CCs or MCCs under ICD-9-CM.

Response: We appreciate the commenters' support. With regard to the commenter who recommended removing some of the conditions that are currently on the lists but expressed concern that eliminating the logic completely could impact the ability to measure a patient's severity of illness, we disagree because, in general, the description of a diagnosis code itself describes or implies a certain level of severity. In addition, there are other factors to consider besides the principal diagnosis when determining severity of illness and resource utilization. In response to the other commenters who disagreed with our proposal to remove the Principal Diagnosis Is Its Own CC or MCC logic and recommended that we perform an analysis consistent with the comprehensive CC/MCC analysis, we note that such an analysis would not be conclusive because the purpose of the comprehensive CC/MCC analysis is to evaluate the impact in resource use for patients with conditions reported as secondary diagnoses. We believe that the analysis that was performed and discussed in the proposed rule was appropriate for assessing if we should maintain the special logic that currently exists for assigning a severity level to a principal diagnosis, as well as to assess whether it would be appropriate to propose removing the special logic and utilize alternate methods to evaluate what should be considered a complex principal diagnosis for MS-DRG assignment purposes. As stated in the proposed rule (83 FR 20237), CMS has historically used clinical judgment combined with data analysis to assign a principal diagnosis describing a complex or severe condition to the appropriate MS-DRG. We also note that, as stated in the proposed rule (83 FR 20238), the findings from our analysis of the 18,596 claims that were impacted by the special logic in the GROUPER for processing claims containing a code on the Principal Diagnosis Is Its Own CC or MCC Lists demonstrated that 556 of the 588 subsets had fewer than 100 cases. The low number of cases means that if the special logic had been proposed for the first time under ICD-10, 95 percent of the diagnosis codes that were responsible for 95 percent of the cases using the special logic would not have met the criteria for proposing a change to their severity level. With regard to the commenter who stated that the conditions represented by the ICD-10-CM combination codes are clinically the same conditions that were CCs or MCCs under ICD-9-CM, we note that combination diagnosis codes are a feature of the classification of both ICD-9-CM and ICD-10-CM. The majority of the combination diagnosis codes in ICD-9-CM are also combination codes in ICD-10-CM. The current list of ICD-10-CM codes that are included in the special logic is a result of the fact that the codes were classified differently in ICD-9-CM than in ICD-10-CM. Diagnoses represented as two separate codes under ICD-9-CM were represented in a combination code under ICD-10-CM. Codes that were combination codes in both ICD-9-CM and ICD-10-CM do not have any special severity logic applied, regardless of the clinical severity of the conditions described, or the increased use of resources that could be associated with a particular combination principal diagnosis. As a result, the categorization of ICD-10-CM codes into lists wherein the principal diagnosis is its own CC or MCC is based not on a systematic clinical evaluation of the severity of illness of patients with these combination diagnosis codes, or on a systematic evaluation of data containing these combination diagnosis codes used as principal diagnosis, but on a collection of codes selected exclusively because there were structural differences between the classification scheme in ICD-9-CM versus ICD-10-CM. Now that ICD-10 coded data are available, it can be used to evaluate other indicators of resource utilization, along with clinical judgment.

After consideration of the public comments we received, we are finalizing our proposal to remove the special logic in the GROUPER for processing claims containing a code on the Principal Diagnosis Is Its Own CC or MCC Lists as an initial step in our first phase of the comprehensive review of the CC and MCC lists. We also are finalizing our proposal to delete the tables containing the lists of principal diagnosis codes, Table 6L.—Principal Diagnosis Is Its Own MCC List and Table 6M.—Principal Diagnosis Is Its Own CC List, from the ICD-10 MS-DRG Definitions Manual Version 36, effective October 1, 2018.

d. CC Exclusions List for FY 2019

In the September 1, 1987 final notice (52 FR 33143) concerning changes to the DRG classification system, we modified the GROUPER logic so that certain diagnoses included on the standard list of CCs would not be considered valid CCs in combination with a particular principal diagnosis. We created the CC Exclusions List for the following reasons: (1) To preclude coding of CCs for closely related conditions; (2) to preclude duplicative or inconsistent coding from being treated as CCs; and (3) to ensure that cases are appropriately classified between the complicated and uncomplicated DRGs in a pair.

In the May 19, 1987 proposed notice (52 FR 18877) and the September 1, 1987 final notice (52 FR 33154), we explained that the excluded secondary diagnoses were established using the following five principles:

• Chronic and acute manifestations of the same condition should not be considered CCs for one another;
• Specific and nonspecific (that is, not otherwise specified (NOS)) diagnosis codes for the same condition should not be considered CCs for one another;
• Codes for the same condition that cannot coexist, such as partial/total, unilateral/bilateral, obstructed/unobstructed, and benign/malignant, should not be considered CCs for one another;
• Codes for the same condition in anatomically proximal sites should not be considered CCs for one another; and
• Closely related conditions should not be considered CCs for one another.

The creation of the CC Exclusions List was a major project involving hundreds of codes. We have continued to review the remaining CCs to identify additional exclusions and to remove diagnoses from the master list that have been shown not to meet the definition of a CC. We refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50541 through 50544) for detailed information regarding revisions that were made to the CC and CC Exclusion Lists under the ICD-9-CM MS-DRGs.

The ICD-10 MS-DRGs Version 35 CC Exclusion List is included as Appendix C in the ICD-10 MS-DRG Definitions Manual, which is available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html, and includes two lists identified as Part 1 and Part 2. Part 1 is the list of all diagnosis codes that are defined as a CC or MCC when reported as a secondary diagnosis. If the code designated as a CC or MCC is allowed with all principal diagnoses, the phrase “NoExcl” (for no exclusions) follows the CC or MCC designation. For example, ICD-10-CM diagnosis code A17.83 (Tuberculous neuritis) has this “NoExcl” entry. For all other diagnosis codes on the list, a link is provided to a collection of diagnosis codes which, when used as the principal diagnosis, would cause the CC or MCC diagnosis to be considered as a non-CC. Part 2 is the list of diagnosis codes designated as a MCC only for patients discharged alive; otherwise, they are assigned as a non-CC.

In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20239), for FY 2019, we proposed changes to the ICD-10 MS-DRGs Version 36 CC Exclusion List. Therefore, we developed Table 6G.1.—Proposed Secondary Diagnosis Order Additions to the CC Exclusions List—FY 2019; Table 6G.2.—Proposed Principal Diagnosis Order Additions to the CC Exclusions List—FY 2019; Table 6H.1.—Proposed Secondary Diagnosis Order Deletions to the CC Exclusions List—FY 2019; and Table 6H.2.—Proposed Principal Diagnosis Order Deletions to the CC Exclusions List—FY 2019. For Table 6G.1, each secondary diagnosis code proposed for addition to the CC Exclusion List is shown with an asterisk and the principal diagnoses proposed to exclude the secondary diagnosis code are provided in the indented column immediately following it. For Table 6G.2, each of the principal diagnosis codes for which there is a CC exclusion is shown with an asterisk and the conditions proposed for addition to the CC Exclusion List that will not count as a CC are provided in an indented column immediately following the affected principal diagnosis. For Table 6H.1, each secondary diagnosis code proposed for deletion from the CC Exclusion List is shown with an asterisk followed by the principal diagnosis codes that currently exclude it. For Table 6H.2, each of the principal diagnosis codes is shown with an asterisk and the proposed deletions to the CC Exclusions List are provided in an indented column immediately following the affected principal diagnosis. Tables 6G.1., 6G.2., 6H.1., and 6H.2. associated with the proposed rule are available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.

To identify new, revised and deleted diagnosis and procedure codes, for FY 2019, we developed Table 6A.—New Diagnosis Codes, Table 6B.—New Procedure Codes, Table 6C.—Invalid Diagnosis Codes, Table 6D.—Invalid Procedure Codes, Table 6E.—Revised Diagnosis Code Titles, and Table 6F.—Revised Procedure Code Titles for the proposed rule and this final rule.

These tables are not published in the Addendum to the proposed rule or the final rule but are available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html as described in section VI. of the Addendum to this final rule. As discussed in section II.F.18. of the preamble of this final rule, the code titles are adopted as part of the ICD-10 (previously ICD-9-CM) Coordination and Maintenance Committee process. Therefore, although we publish the code titles in the IPPS proposed and final rules, they are not subject to comment in the proposed or final rules.

In the FY 2019 IPPS/LTCH PPS proposed rule, we invited public comments on the MDC and MS-DRG assignments for the new diagnosis and procedure codes as set forth in Table 6A.—New Diagnosis Codes and Table 6B.—New Procedure Codes. In addition, we invited public comments on the proposed severity level designations for the new diagnosis codes as set forth in Table 6A. and the proposed O.R. status for the new procedure codes as set forth in Table 6B.

Comment: One commenter addressed the proposed MS-DRG assignment for ICD-10-CM diagnosis code K35.20 (Acute appendicitis with generalized peritonitis, without abscess) that was included in Table 6A.—New Diagnosis Codes associated with the proposed rule. The commenter included the following codes that describe conditions involving appendicitis with peritonitis, abscess, perforation and gangrene.

The commenter stated that the proposed MS-DRG assignment for diagnosis code K35.20 is inappropriate and urged CMS to assign additional MS-DRGs and revise Table 6A. Specifically, the commenter expressed concern that MS-DRGs 371, 372, and 373 (Major Gastrointestinal Disorders and Peritoneal Infections with MCC, with CC, and without CC/MCC, respectively) were the only MS-DRGs assigned to diagnosis code K35.20 and requested that MS-DRGs 338, 339, and 340 (Appendectomy with Complicated Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) also be assigned. The commenter questioned why CMS only assigned MS-DRGs 371, 372, and 373 for diagnosis code K35.20 when diagnosis code K35.32 was assigned to MS-DRGs 338, 339, and 340 in addition to MS-DRGs 371, 372, and 373. The commenter stated that the FY 2019 ICD-10-CM Tabular List of Diseases and Injuries indicates that codes at the new subcategory K35.2 include a ruptured or perforated appendix, which is a complicating diagnosis and requires additional resources. The commenter expressed concern that the proposed MS-DRG assignment for diagnosis code K35.20 does not appropriately reflect the complications of the underlying disease or resources associated with acute appendicitis with generalized peritonitis. The commenter also noted that studies of patients admitted with appendicitis define complicated appendicitis as the presence of either generalized peritonitis due to perforated appendicitis or appendicular abscess. The commenter further noted that an appendix may perforate and cause generalized peritonitis without abscess if the perforation is walled off from the remainder of the peritoneal cavity because of its retroperitoneal location or by loops of small intestine or omentum.

Response: We note that the predecessor code for new diagnosis code K35.20 is diagnosis code K35.2 (Acute appendicitis with generalized peritonitis), which is currently assigned to MS-DRGs 338, 339, 340, 371, 372, and 373. Diagnosis code K35.2 was subdivided into diagnosis codes K35.20 and K35.21. In assigning the proposed MS-DRGs for these new diagnosis codes, we considered the predecessor code MS-DRG assignment and the descriptions of the new diagnosis codes. Our clinical advisors determined that diagnosis code K35.21 “with abscess” was more appropriate to assign to MS-DRGs 338, 339, and 340 in addition to MS-DRGs 371, 372, and 373 versus diagnosis code K35.20 “without abscess”. The degree and severity of the peritonitis in a patient with acute appendicitis can vary greatly. However, not all patients with peritonitis develop an abscess. While we agree that peritonitis is a serious condition when it develops in a patient with acute appendicitis, we also believe that, clinically, an abscess presents an even greater risk of complications that requires more resources as discussed in section II.F.15.b. of the preamble of this final rule with regard to the severity level designation.

We also consulted with the staff at the Centers for Disease Control's (CDC's) National Center for Health Statistics (NCHS) because NCHS has the lead responsibility for maintaining the ICD-10-CM diagnosis codes. The NCHS' staff acknowledged the clinical concerns of the commenter based on the manner in which diagnosis codes K35.2 and K35.3 were expanded and confirmed that they will consider further review of these newly expanded codes with respect to the clinical concepts.

Therefore, we maintain that the proposed MS-DRG assignment for diagnosis code K35.20 as shown in Table 6A is appropriate. Because the diagnosis codes that the commenter submitted in its comments are new, effective October 1, 2018, we do not yet have any claims data. We will continue to monitor these codes as data become available.

After consideration of the public comments we received, we are finalizing our proposal to assign diagnosis code K35.20 to MS-DRGs 371, 372, and 373 under the ICD-10 MS-DRGs Version 36, effective October 1, 2018.

Comment: One commenter recommended that the following new diagnosis codes that were included in Table 6A.—New Diagnosis Codes—FY 2019, be designated as a CC in the ICD-10-CM classification.

According to the commenter, abscesses, postoperative infections, and gangrene of gallbladder warrant the CC designation because they are acute conditions and require antibiotics or surgical treatment and impact the length of stay. The commenter noted that, currently, diagnosis codes K61.3 (Ischiorectal abscess) and K61.4 (Intrasphincteric abscess) are designated as CCs. The commenter also noted that gangrene of gallbladder classifies to acute cholecystitis, which is a CC, and recommended that the codes listed in the above table all be designated as CCs.

Response: We appreciate the commenter's feedback on the proposed severity level designations of the diagnosis codes that were included in Table 6A.—New Diagnosis Codes—FY 2019. The commenter is correct that, currently, diagnosis codes K61.3 and K61.4 are designated as CCs. However, our clinical advisors reviewed diagnosis codes K61.31, K61.39, and K61.5 and continue to support maintaining the proposed non-CC designation because they do not agree from a clinical perspective that these conditions warrant a CC designation or significantly impact resource utilization as a secondary diagnosis. Specifically, our clinical advisors believe that these diagnosis codes described conditions that can range in severity and subsequently, the treatment that is rendered. With regard to the commenter's statement that abscesses, postoperative infections, and gangrene of gallbladder warrant the CC designation because they are acute conditions and require antibiotics or surgical treatment and impact the length of stay, we note that there are various types of abscesses and postoperative infections with varying levels of severity that do not always warrant surgical intervention.

With regard to the commenter's statement that gangrene of gallbladder classifies to acute cholecystitis which is a CC, we acknowledge that, currently, diagnosis code K81.0 (Acute cholecystitis) is a CC and has an inclusion term for gangrene of gallbladder. However, the new code description does not include the term “acute”. Upon review of code K82.A1, our clinical advisors continue to support maintaining the proposed non-CC designation because they do not agree from a clinical perspective that this condition warrants a CC designation or significantly impacts resource utilization as a secondary diagnosis as the primary diagnosis likely is a more significant contributor to resource utilization. With regard to the codes describing infection of obstetrical wound of varying degrees and depths, the predecessor code O86.0 (Infection of obstetric wound) is currently classified as a non-CC and our clinical advisors agreed that, in the absence of data for the new codes, they are appropriately designated as non-CCs.

After consideration of the public comments we received, we are finalizing our proposed severity level assignments for the above listed diagnosis codes under the ICD-10 MS-DRGs Version 36, effective October 1, 2018.

We also are making available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html the following final tables associated with this final rule:

• Table 6A.—New Diagnosis Codes—FY 2019;
• Table 6B.—New Procedure Codes—FY 2019;
• Table 6C.—Invalid Diagnosis Codes—FY 2019;
• Table 6D.—Invalid Procedure Codes—FY 2019;
• Table 6E.—Revised Diagnosis Code Titles—FY 2019;
• Table 6F.—Revised Procedure Code Titles—FY 2019;
• Table 6G.1.—Secondary Diagnosis Order Additions to the CC Exclusions List—FY 2019;
• Table 6G.2.—Principal Diagnosis Order Additions to the CC Exclusions List—FY 2019;
• Table 6H.1.—Secondary Diagnosis Order Deletions to the CC Exclusions List—FY 2019;
• Table 6H.2.—Principal Diagnosis Order Deletions to the CC Exclusions List—FY 2019;
• Table 6I.1.—Additions to the MCC List—FY 2019;
• Table 6I.2.-Deletions to the MCC List—FY 2019;
• Table 6J.1.—Additions to the CC List—FY 2019; and
• Table 6J.2.—Deletions to the CC List—FY 2019.

We note that, as discussed in section II.F.15.c. of the preamble of this final rule, we proposed, and in this final rule are finalizing, to delete Table 6L. and Table 6M. from the ICD-10 MS-DRG Definitions Manual for FY 2019.

16. Comprehensive Review of CC List for FY 2019

a. Overview of Comprehensive CC/MCC Analysis

In the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159), we described our process for establishing three different levels of CC severity into which we would subdivide the diagnosis codes. The categorization of diagnoses as an MCC, a CC, or a non-CC was accomplished using an iterative approach in which each diagnosis was evaluated to determine the extent to which its presence as a secondary diagnosis resulted in increased hospital resource use. We refer readers to the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159) for a complete discussion of our approach. Since this comprehensive analysis was completed for FY 2008, we have evaluated diagnosis codes individually when receiving requests to change the severity level of specific diagnosis codes. However, given the transition to ICD-10-CM and the significant changes that have occurred to diagnosis codes since this review, we believe it is necessary to conduct a comprehensive analysis once again. We have begun this analysis and will discuss our findings in future rulemaking. We are currently using the same methodology utilized in FY 2008 and described below to conduct this analysis.

For each secondary diagnosis, we measured the impact in resource use for the following three subsets of patients:

(1) Patients with no other secondary diagnosis or with all other secondary diagnoses that are non-CCs.

(2) Patients with at least one other secondary diagnosis that is a CC but none that is an MCC.

(3) Patients with at least one other secondary diagnosis that is an MCC.

Numerical resource impact values were assigned for each diagnosis as follows:

Each diagnosis for which Medicare data were available was evaluated to determine its impact on resource use and to determine the most appropriate CC subclass (non-CC, CC, or MCC) assignment. In order to make this determination, the average cost for each subset of cases was compared to the expected cost for cases in that subset. The following format was used to evaluate each diagnosis:

Count (Cnt) is the number of patients in each subset and C1, C2, and C3 are a measure of the impact on resource use of patients in each of the subsets. The C1, C2, and C3 values are a measure of the ratio of average costs for patients with these conditions to the expected average cost across all cases. The C1 value reflects a patient with no other secondary diagnosis or with all other secondary diagnoses that are non-CCs. The C2 value reflects a patient with at least one other secondary diagnosis that is a CC but none that is a major CC. The C3 value reflects a patient with at least one other secondary diagnosis that is a major CC. A value close to 1.0 in the C1 field would suggest that the code produces the same expected value as a non-CC diagnosis. That is, average costs for the case are similar to the expected average costs for that subset and the diagnosis is not expected to increase resource usage. A higher value in the C1 (or C2 and C3) field suggests more resource usage is associated with the diagnosis and an increased likelihood that it is more like a CC or major CC than a non-CC. Thus, a value close to 2.0 suggests the condition is more like a CC than a non-CC but not as significant in resource usage as an MCC. A value close to 3.0 suggests the condition is expected to consume resources more similar to an MCC than a CC or non-CC. For example, a C1 value of 1.8 for a secondary diagnosis means that for the subset of patients who have the secondary diagnosis and have either no other secondary diagnosis present, or all the other secondary diagnoses present are non-CCs, the impact on resource use of the secondary diagnoses is greater than the expected value for a non-CC by an amount equal to 80 percent of the difference between the expected value of a CC and a non-CC (that is, the impact on resource use of the secondary diagnosis is closer to a CC than a non-CC).

These mathematical constructs are used as guides in conjunction with the judgment of our clinical advisors to classify each secondary diagnosis reviewed as an MCC, CC or non-CC. Our clinical panel reviews the resource use impact reports and suggests modifications to the initial CC subclass assignments when clinically appropriate.

b. Requested Changes to Severity Levels

(1) Human Immunodeficiency Virus [HIV] Disease

As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20241), we received a request that we consider changing the severity level of ICD-10-CM diagnosis code B20 (Human immunodeficiency virus [HIV] disease) from an MCC to a CC. We used the approach outlined above to evaluate this request. The table below contains the data that were evaluated for this request.

We stated in the proposed rule that while the data did not strongly suggest that the categorization of HIV as an MCC was inaccurate, our clinical advisors indicated that, for many patients with HIV disease, symptoms are well controlled by medications. Our clinical advisors stated that if these patients have an HIV-related complicating disease, that complicating disease would serve as a CC or an MCC. Therefore, they advised us that ICD-10-CM diagnosis code B20 is more similar to a CC than an MCC. Based on the data results and the advice of our clinical advisors, we proposed to change the severity level of ICD-10-CM diagnosis code B20 from an MCC to a CC.

Comment: Commenters opposed the proposal to change the severity level for ICD-10-CM diagnosis code B20 from an MCC to a CC. The commenters stated that the change should not be made without strong supporting empirical data, referencing the language in the proposed rule that indicated that the data did not strongly suggest that the categorization of HIV as an MCC was inaccurate. One commenter indicated that patients with CD4 counts of less than 100, or elevated viral loads, would need more laboratory tests, more imaging, and a higher level of care even if they are in the hospital for a non-HIV related condition. This commenter suggested that if diagnosis code B20 is changed to a CC, CMS develop distinct codes for patients with AIDS based on their level of CD4 and whether viral loads are suppressed.

Response: While we stated in the proposed rule that the data did not strongly suggest correlation of a secondary diagnosis code of B20 with a severity level of an MCC was inaccurate, the data also did not definitively support maintaining a severity level of an MCC. While we understand that HIV is a serious disease that causes significant chronic illness and can lead to serious complications, we note that when a patient is admitted for a non-HIV related condition, our clinical advisors do not believe that the secondary diagnosis of HIV would be expected to result in the additional resources associated with an MCC. As explained in the proposed rule, our clinical advisors believe that, for many patients with HIV disease, symptoms are well controlled by medications, and if these patients have an HIV-related complicating disease, that complicating disease would serve as a CC or an MCC. For these reasons, our clinical advisors continue to believe that ICD-10-CM diagnosis code B20 is more accurately characterized as a CC.

As discussed in section II.F.18. of the preamble of this final rule, requests for new ICD-10-CM diagnosis codes are discussed at the ICD-10 Coordination and Maintenance Committee meetings. We refer the commenter to the National Center for Health Statistics (NCHS) website at https://www.cdc.gov/nchs/icd/icd10_maintenance.html for further information regarding these meetings and the process for how to request code updates.

After consideration of the public comments we received, we are finalizing our proposal to change the severity level of diagnosis code of B20 from an MCC to a CC.

(2) Acute Respiratory Distress Syndrome

As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20241), we also received a request to change the severity level for ICD-10-CM diagnosis code J80 (Acute respiratory distress syndrome) from a CC to a MCC. We used the approach outlined above to evaluate this request. The following table contains the data that were evaluated for this request.

We stated in the proposed rule that the data suggest that the resources involved in caring for a patient with this condition are 77 percent greater than expected when the patient has either no other secondary diagnosis present or all the other secondary diagnoses present are non-CCs. The resources are 56 percent greater than expected when reported in conjunction with another secondary diagnosis that is a CC, and 34 percent greater than expected when reported in conjunction with another secondary diagnosis code that is an MCC. Our clinical advisors agreed that the resources required to care for a patient with this secondary diagnosis are consistent with those of an MCC. Therefore, we proposed to change the severity level of ICD-10-CM diagnosis code J80 from a CC to an MCC.

Comment: Commenters supported the proposal to change the severity level of ICD-10-CM diagnosis code J80 from a CC to an MCC.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to change the severity level of ICD-10-CM diagnosis code J80 from a CC to an MCC.

(3) Encephalopathy

As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20241), we also received a request to change the severity level for ICD-10-CM diagnosis code G93.40 (Encephalopathy, unspecified) from an MCC to a non-CC. The requestor pointed out that the nature of the encephalopathy or its underlying cause should be coded. The requestor also noted that unspecified heart failure is a non-CC. We used the approach outlined earlier to evaluate this request. The following table contains the data that were evaluated for this request.

We stated in the proposed rule that the data suggest that the resources involved in caring for a patient with this condition are 84 percent greater than expected when the patient has either no other secondary diagnosis present or all the other secondary diagnoses present are non-CCs. We stated in the proposed rule that the resources are 15 percent lower than expected when reported in conjunction with another secondary diagnosis that is a CC, and 49 percent lower than expected when reported in conjunction with another secondary diagnosis code that is an MCC. The sentence should have read as follows: The resources are 15 percent lower than expected when reported in conjunction with another secondary diagnosis that is a CC, and 51 percent lower than expected when reported in conjunction with another secondary diagnosis code that is an MCC. We noted that the pattern observed in resource use for the condition of unspecified heart failure (ICD-10-CM diagnosis code I50.9) differs from that of unspecified encephalopathy. Our clinical advisors reviewed this request and agreed that, from a clinical standpoint, the resources involved in caring for a patient with this condition are aligned with those of an MCC. Therefore, we did not propose a change to the severity level for ICD-10-CM diagnosis code G93.40.

Comment: Several commenters supported the proposal to maintain the severity level for ICD-10-CM diagnosis code G93.40 as an MCC. One commenter opposed the proposal, stating that unspecified encephalopathy is poorly defined, not all specified encephalopathies are MCCs, and the MCC status creates an incentive for coding personnel to not pursue specificity of encephalopathy which could lead to a lower relative weight.

Response: We appreciate the commenters' support. After reviewing the rationale provided by the commenter who opposed our proposal, we concur with the commenter that unspecified encephalopathy is poorly defined, not all encephalopathies are MCCs, and the MCC status creates an incentive for coding personnel to not pursue specificity of encephalopathy. For these reason, our clinical advisors agree that it is appropriate to change the severity level from an MCC to a CC.

After consideration of the public comments we received, we are changing the severity level for ICD-10-CM diagnosis code G93.40 from an MCC to a CC.

(4) End-Stage Heart Failure and Hepatic Encephalopathy

Comment: One commenter stated that ICD-10-CM code I50.84 (End-stage heart failure) should be assigned the severity level of a CC and that hepatic encephalopathy should be assigned the severity level of an MCC. The commenter did not provide the specific ICD-10-CM diagnosis codes that describe hepatic encephalopathy.

Response: Because ICD-10-CM code I50.84 and the codes that describe hepatic encephalopathy referred to by the commenter are newly created codes, we do not yet have data with which to evaluate the commenter's request. We will consider these diagnosis codes during our ongoing comprehensive CC/MCC analysis once data become available.

After consideration of the public comment received, we are not changing the severity level of ICD-10-CM code I50.84 or the ICD-10-CM codes describing hepatic encephalopathy for FY 2019.

17. Review of Procedure Codes in MS DRGs 981 Through 983 and 987 Through 989

Each year, we review cases assigned to MS-DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) and MS-DRGs 987, 988, and 989 (Nonextensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) to determine whether it would be appropriate to change the procedures assigned among these MS-DRGs. MS-DRGs 981 through 983 and 987 through 989 are reserved for those cases in which none of the O.R. procedures performed are related to the principal diagnosis. These MS-DRGs are intended to capture atypical cases, that is, those cases not occurring with sufficient frequency to represent a distinct, recognizable clinical group.

a. Moving Procedure Codes From MS-DRGs 981 Through 983 or MS-DRGs 987 Through 989 Into MDCs

We annually conduct a review of procedures producing assignment to MS-DRGs 981 through 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) or MS-DRGs 987 through 989 (Nonextensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) on the basis of volume, by procedure, to see if it would be appropriate to move procedure codes out of these MS-DRGs into one of the surgical MS-DRGs for the MDC into which the principal diagnosis falls. The data are arrayed in two ways for comparison purposes. We look at a frequency count of each major operative procedure code. We also compare procedures across MDCs by volume of procedure codes within each MDC.

We identify those procedures occurring in conjunction with certain principal diagnoses with sufficient frequency to justify adding them to one of the surgical MS-DRGs for the MDC in which the diagnosis falls. Based on the results of our review of the claims data from the September 2017 update of the FY 2017 MedPAR file, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20242), we did not propose to move any procedures from MS-DRGs 981 through 983 or MS-DRGs 987 through 989 into one of the surgical MS-DRGs for the MDC into which the principal diagnosis is assigned.

Comment: One commenter identified two scenarios that involve some cases that are grouping to MS-DRGs 981 through 983 and MS-DRGs 987 through 989. The commenter stated that these grouping issues should be addressed by CMS and provided specific examples with a combination of several codes.

Response: We appreciate the commenter bringing these issues to our attention. However, we were unable to fully evaluate these scenarios for consideration in FY 2019. We intend to review and consider these items for FY 2020 as part of our ongoing analysis of the unrelated procedure MS-DRGs. As stated in section II.F.1.b. of the preamble of this final rule, we encourage individuals with comments about MS-DRG classification issues to submit these comments no later than November 1 of each year so that they can be considered for possible inclusion in the annual proposed rule.

After consideration of the public comments we received, we are not moving any procedures from MS-DRGs 981 through 983 or MS-DRGs 987 through 989 into one of the surgical MS-DRGs for the MDC into which the principal diagnosis is assigned for FY 2019.

b. Reassignment of Procedures Among MS-DRGs 981 Through 983 and 987 Through 989

We also review the list of ICD-10-PCS procedures that, when in combination with their principal diagnosis code, result in assignment to MS-DRGs 981 through 983, or 987 through 989, to ascertain whether any of those procedures should be reassigned from one of those two groups of MS-DRGs to the other group of MS-DRGs based on average costs and the length of stay. We look at the data for trends such as shifts in treatment practice or reporting practice that would make the resulting MS-DRG assignment illogical. If we find these shifts, we would propose to move cases to keep the MS-DRGs clinically similar or to provide payment for the cases in a similar manner. Generally, we move only those procedures for which we have an adequate number of discharges to analyze the data.

Based on the results of our review of the September 2017 update of the FY 2017 MedPAR file, we also proposed to maintain the current structure of MS-DRGs 981 through 983 and MS-DRGs 987 through 989.

Comment: One commenter recommended that CMS classify the insertion and revision of intracardiac pacemakers as discussed in section II.F.4.a. of the proposed rule (83 FR 20204) as extensive O.R. procedures (MS-DRG 981 through 983). The commenter performed its own analysis where the results demonstrated the average costs of the intracardiac pacemakers were higher than the average costs of cases in MS-DRGs 981 through 983.

Response: We are unclear as to the nature of the commenter's request, as the intracardiac pacemaker procedure codes are already designated as extensive O.R. procedures in the GROUPER logic, as discussed in section II.F.4.a. of the preamble of this final rule

After consideration of the public comments we received, we are finalizing our proposal to maintain the current structure of MS-DRGs 981 through 983 and MS-DRGs 987 through 989 under the ICD-10 MS-DRGs Version 36, effective October 1, 2018.

c. Adding Diagnosis or Procedure Codes to MDCs

We received a request recommending that CMS reassign cases for congenital pectus excavatum (congenital depression of the sternum or concave chest) when reported with a procedure describing repositioning of the sternum (the Nuss procedure) from MS-DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) to MS-DRGs 515, 516, and 517 (Other Musculoskeletal System and Connective Tissue O.R. Procedures with MCC, with CC, and without CC/MCC, respectively). ICD-10-CM diagnosis code Q67.6 (Pectus excavatum) is reported for this congenital condition and is currently assigned to MDC 4 (Diseases and Disorders of the Respiratory System). ICD-10-PCS procedure code 0PS044Z (Reposition sternum with internal fixation device, percutaneous endoscopic approach) may be reported to identify the Nuss procedure and is currently assigned to MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue) in MS-DRGs 515, 516, and 517. The requester noted that acquired pectus excavatum (ICD-10-CM diagnosis code M95.4) groups to MS-DRGs 515, 516, and 517 when reported with a ICD-10-PCS procedure code describing repositioning of the sternum and requested that cases involving diagnoses describing congenital pectus excavatum also group to those MS-DRGs when reported with a ICD-10-PCS procedure code describing repositioning of the sternum.

Our analysis of this grouping issue confirmed that, when pectus excavatum (ICD-10-CM diagnosis code Q67.6) is reported as a principal diagnosis with a procedure such as the Nuss procedure (ICD-10-PCS procedure code 0PS044Z), these cases group to MS-DRGs 981, 982, and 983. The reason for this grouping is because whenever there is a surgical procedure reported on a claim, which is unrelated to the MDC to which the case was assigned based on the principal diagnosis, it results in an MS-DRG assignment to a surgical class referred to as “unrelated operating room procedures.” In the example provided, because the ICD-10-CM diagnosis code Q67.6 describing pectus excavatum is classified to MDC 4 and the ICD-10-PCS procedure code 0PS044Z is classified to MDC 8, the GROUPER logic assigns this case to the “unrelated operating room procedures” set of MS-DRGs.

During our review of ICD-10-CM diagnosis code Q67.6, we also reviewed additional ICD-10-CM diagnosis codes in the Q65 through Q79 code range to determine if there might be other conditions classified to MDC 4 that describe congenital malformations and deformities of the musculoskeletal system. We identified the following six ICD-10-CM diagnosis codes:

In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20243), we proposed to reassign ICD-10-CM diagnosis code Q67.6, as well as the additional six ICD-10-CM diagnosis codes above describing congenital musculoskeletal conditions, from MDC 4 to MDC 8 where other related congenital conditions that correspond to the musculoskeletal system are classified, as discussed further below.

We identified other related ICD-10-CM diagnosis codes that are currently assigned to MDC 8 in categories Q67 (Congenital musculoskeletal deformities of head, face, spine and chest), Q76 (Congenital malformations of spine and bony thorax), and Q77 (Osteochondrodysplasia with defects of growth of tubular bones and spine) that are listed in the following table.

Next, we analyzed the MS-DRG assignments for the related codes listed above and found that cases with the following conditions are assigned to MS-DRGs 551 and 552 (Medical Back Problems with and without MCC, respectively) under MDC 8.

The remaining conditions shown below are assigned to MS-DRGs 564, 565, and 566 (Other Musculoskeletal System and Connective Tissue Diagnoses with MCC, with CC, and without CC/MCC, respectively) under MDC 8.

As a result of our review, we proposed to reassign ICD-10-CM diagnosis code Q67.6, as well as the additional six ICD-10-CM diagnosis codes above describing congenital musculoskeletal conditions, from MDC 4 to MDC 8 in MS-DRGs 564, 565, and 566. Our clinical advisors agreed with this proposed reassignment because it is clinically appropriate and consistent with the other related ICD-10-CM diagnosis codes grouped in the Q65 through Q79 range that describe congenital malformations and deformities of the musculoskeletal system that are classified under MDC 8 in MS-DRGs 564, 565, and 566. We stated in the propsed rule that by reassigning ICD-10-CM diagnosis code Q67.6 and the additional six ICD-10-CM diagnosis codes listed in the table above from MDC 4 to MDC 8, cases reporting these ICD-10-CM diagnosis codes in combination with the respective ICD-10-PCS procedure code will reflect a more appropriate grouping from a clinical perspective because they will now be classified under a surgical musculoskeletal system related MS-DRG and will no longer result in an MS-DRG assignment to the “unrelated operating room procedures” surgical class.

In summary, we proposed to reassign ICD-10-CM diagnosis codes Q67.6, Q67.7, Q76.6, Q76.7, Q76.8, Q76.9, and Q77.2 from MDC 4 to MDC 8 in MS-DRGs 564, 565, and 566 (Other Musculoskeletal System and Connective Tissue Diagnoses with MCC, with CC, and without CC/MCC, respectively).

Comment: Commenters supported the proposal to reassign the seven ICD-10-CM diagnosis codes describing congenital musculoskeletal conditions from MDC 4 to MDC 8 into MS-DRGs 564, 565 and 566. The commenters stated that the proposal was reasonable, given the ICD-10-CM codes and the information provided.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing the proposal to reassign ICD-10-CM diagnosis codes Q67.6, Q67.7, Q76.6, Q76.7, Q76.8, Q76.9, and Q77.2 from MDC 4 to MDC 8 in MS-DRGs 564, 565, and 566 under the ICD-10 MS-DRGs Version 36, effective October 1, 2018.

We also received a request recommending that CMS reassign cases for sternal fracture repair procedures from MS-DRGs 981, 982, and 983 and from MS-DRGs 166, 167 and 168 (Other Respiratory System O.R. Procedures with MCC, with CC and without CC/MCC, respectively) under MDC 4 to MS-DRGs 515, 516, and 517 under MDC 8. The requester noted that clavicle fracture repair procedures with an internal fixation device group to MS-DRGs 515, 516, and 517 when reported with an ICD-10-CM diagnosis code describing a fractured clavicle. However, sternal fracture repair procedures with an internal fixation device group to MS-DRGs 981, 982, and 983 or MS-DRGs 166, 167 and 168 when reported with an ICD-10-CM diagnosis code describing a fracture of the sternum. According to the requestor, because the clavicle and sternum are in the same anatomical region of the body, it would appear that assignment to MS-DRGs 515, 516, and 517 would be more appropriate for sternal fracture repair procedures.

The requestor provided the following list of ICD-10-PCS procedure codes in its request for consideration to reassign to MS-DRGs 515, 516 and 517 when reported with an ICD-10-CM diagnosis code for sternal fracture.

We noted that the above five ICD-10-PCS procedure codes that may be reported to describe a sternal fracture repair are already assigned to MS-DRGs 515, 516, and 517 under MDC 8. In addition, ICD-10-PCS procedure codes 0PS000Z and 0PS030Z are assigned to MS-DRGs 166, 167 and 168 under MDC 4.

As noted in the previous discussion, whenever there is a surgical procedure reported on a claim, which is unrelated to the MDC to which the case was assigned based on the principal diagnosis, it results in an MS-DRG assignment to a surgical class referred to as “unrelated operating room procedures.” In the examples provided by the requestor, when the ICD-10-CM diagnosis code describing a sternal fracture is classified under MDC 4 and the ICD-10-PCS procedure code describing a sternal fracture repair procedure is classified under MDC 8, the GROUPER logic assigns these cases to the “unrelated operating room procedures” group of MS-DRGs (981, 982, and 983) and when the ICD-10-CM diagnosis code describing a sternal fracture is classified under MDC 4 and the ICD-10-PCS procedure code describing a sternal repair procedure is also classified under MDC 4, the GROUPER logic assigns these cases to MS-DRG 166, 167, or 168.

For our review of this grouping issue and the request to have procedures for sternal fracture repairs assigned to MDC 8, we analyzed the ICD-10-CM diagnosis codes describing a sternal fracture currently classified under MDC 4. We identified 10 ICD-10-CM diagnosis codes describing a sternal fracture with an “initial encounter” classified under MDC 4 that are listed in the following table.

Our analysis of this grouping issue confirmed that when 1 of the 10 ICD-10-CM diagnosis codes describing a sternal fracture listed in the table above from MDC 4 is reported as a principal diagnosis with an ICD-10-PCS procedure code for a sternal repair procedure from MDC 8, these cases group to MS-DRG 981, 982, or 983. We also confirmed that when 1 of the 10 ICD-10-CM diagnosis codes describing a sternal fracture listed in the table above from MDC 4 is reported as a principal diagnosis with an ICD-10-PCS procedure code for a sternal repair procedure from MDC 4, these cases group to MS-DRG 166, 167 or 168.

Our clinical advisors agreed with the requested reclassification of ICD-10-CM diagnosis codes S22.20XA, S22.20XB, S22.21XA, S22.21XB, S22.22XA, S22.22XB, S22.23XA, S22.23XB, S22.24XA, and S22.24XB describing a sternal fracture with an initial encounter from MDC 4 to MDC 8. They advised that this requested reclassification is clinically appropriate because it is consistent with the other related ICD-10-CM diagnosis codes that describe fractures of the sternum and which are classified under MDC 8. The ICD-10-CM diagnosis codes describing a sternal fracture currently classified under MDC 8 to MS-DRGs 564, 565, and 566 are listed in the following table.

We stated in the proposed rule that by reclassifying the 10 ICD-10-CM diagnosis codes listed in the table earlier in this section describing sternal fracture codes with an “initial encounter” from MDC 4 to MDC 8, the cases reporting these ICD-10-CM diagnosis codes in combination with the respective ICD-10-PCS procedure codes will reflect a more appropriate grouping from a clinical perspective and will no longer result in an MS-DRG assignment to the “unrelated operating room procedures” surgical class when reported with a surgical procedure classified under MDC 8.

Therefore, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20245), we proposed to reassign ICD-10-CM diagnosis codes S22.20XA, S22.20XB, S22.21XA, S22.21XB, S22.22XA, S22.22XB, S22.23XA, S22.23XB, S22.24XA, and S22.24XB from under MDC 4 to MDC 8 to MS-DRGs 564, 565, and 566. We invited public comments on our proposals.

Comment: Commenters supported the proposal to reassign the 10 ICD-10-CM diagnosis codes describing sternal fractures with an initial encounter from MDC 4 to MDC 8 into MS-DRGs 564, 565 and 566. The commenters stated that the proposal was reasonable, given the ICD-10-CM codes and the information provided.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing the proposal to reassign ICD-10-CM diagnosis codes S22.20XA, S22.20XB, S22.21XA, S22.21XB, S22.22XA, S22.22XB, S22.23XA, S22.23XB, S22.24XA, and S22.24XB from MDC 4 to MDC 8 to MS-DRGs 564, 565, and 566 under the ICD-10 MS-DRGs Version 36, effective October 1, 2018.

In addition, we received a request recommending that CMS reassign cases for rib fracture repair procedures from MS-DRGs 981, 982, and 983, and from MS-DRGs 166, 167 and 168 (Other Respiratory System O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) under MDC 4 to MS-DRGs 515, 516, and 517 under MDC 8. The requestor noted that clavicle fracture repair procedures with an internal fixation device group to MS-DRGs 515, 516, and 517 when reported with an ICD-10-CM diagnosis code describing a fractured clavicle. However, rib fracture repair procedures with an internal fixation device group to MS-DRGs 981, 982, and 983 or to MS-DRGs 166, 167 and 168 when reported with an ICD-10-CM diagnosis code describing a rib fracture. According to the requestor, because the clavicle and ribs are in the same anatomical region of the body, it would appear that assignment to MS-DRGs 515, 516, and 517 would be more appropriate for rib fracture repair procedures.

The requestor provided the following list of 10 ICD-10-PCS procedure codes in its request for consideration for reassignment to MS-DRGs 515, 516 and 517 when reported with an ICD-10-CM diagnosis code for rib fracture.

We note that the above 10 ICD-10-PCS procedure codes that may be reported to describe a rib fracture repair are already assigned to MS-DRGs 515, 516, and 517 under MDC 8. In addition, 6 of the 10 ICD-10-PCS procedure codes listed above (0PH104Z, 0PH134Z, 0PH144Z, 0PH204Z, 0PH234Z and 0PH244Z) are also assigned to MS-DRGs 166, 167, and 168 under MDC 4.

As noted in the previous discussions above, whenever there is a surgical procedure reported on a claim, which is unrelated to the MDC to which the case was assigned based on the principal diagnosis, it results in an MS-DRG assignment to a surgical class referred to as “unrelated operating room procedures.” In the examples provided by the requestor, when the ICD-10-CM diagnosis code describing a rib fracture is classified under MDC 4 and the ICD-10-PCS procedure code describing a rib fracture repair procedure is classified under MDC 8, the GROUPER logic assigns these cases to the “unrelated operating room procedures” group of MS-DRGs (981, 982, and 983) and when the ICD-10-CM diagnosis code describing a rib fracture is classified under MDC 4 and the ICD-10-PCS procedure code describing a rib repair procedure is also classified under MDC 4, the GROUPER logic assigns these cases to MS-DRG 166, 167, or 168.

For our review of this grouping issue and the request to have procedures for rib fracture repairs assigned to MDC 8, we analyzed the ICD-10-CM diagnosis codes describing a rib fracture and found that, while some rib fracture ICD-10-CM diagnosis codes are classified under MDC 8 (which would result in those cases grouping appropriately to MS-DRGs 515, 516, and 517), there are other ICD-10-CM diagnosis codes that are currently classified under MDC 4. We identified the following ICD-10-CM diagnosis codes describing a rib fracture with an initial encounter classified under MDC 4, as listed in the following table.

Our analysis of this grouping issue confirmed that, when one of the following four ICD-10-PCS procedure codes identified by the requestor (and listed in the table earlier in this section) from MDC 8 (0PS104Z, 0PS134Z, 0PS204Z, or 0PS234Z) is reported to describe a rib fracture repair procedure with a principal diagnosis code for a rib fracture with an initial encounter listed in the table above from MDC 4, these cases group to MS-DRG 981, 982, or 983.

During our review of those four repositioning of the rib procedure codes, we also identified the following four ICD-10-PCS procedure codes classified to MDC 8 that describe repositioning of the ribs.

We confirmed that when one of the above four procedure codes is reported with a principal diagnosis code for a rib fracture listed in the table above from MDC 4, these cases also group to MS-DRG 981, 982, or 983.

Lastly, we confirmed that when one of the six ICD-10-PCS procedure codes describing a rib fracture repair listed in the previous table above from MDC 4 is reported with a principal diagnosis code for a rib fracture with an initial encounter from MDC 4, these cases group to MS-DRG 166, 167, or 168.

In response to the request to reassign the procedure codes that describe a rib fracture repair procedure from MS-DRGs 981, 982, and 983 and from MS-DRGs 166, 167, and 168 under MDC 4 to MS-DRGs 515, 516, and 517 under MDC 8, as discussed above, the 10 ICD-10-PCS procedure codes submitted by the requestor that may be reported to describe a rib fracture repair are already assigned to MS-DRGs 515, 516, and 517 under MDC 8 and 6 of those 10 procedure codes (0PH104Z, 0PH134Z, 0PH144Z, 0PH204Z, 0PH234Z, and 0PH244Z) are also assigned to MS-DRGs 166, 167, and 168 under MDC 4.

We analyzed claims data from the September 2017 update of the FY 2017 MedPAR file for cases reporting a principal diagnosis of a rib fracture (initial encounter) from the list of diagnosis codes shown in the table above with one of the six ICD-10-PCS procedure codes describing the insertion of an internal fixation device into the rib (0PH104Z, 0PH134Z, 0PH144Z, 0PH204Z, 0PH234Z, and 0PH244Z) in MS-DRGs 166, 167, and 168 under MDC 4. Our findings are shown in the table below.

As shown in this table, there were a total of 22,938 cases in MS-DRG 166, with an average length of stay of 10.2 days and average costs of $24,299. In MS-DRG 166, we found 40 cases reporting a principal diagnosis of a rib fracture(s) with insertion of an internal fixation device for the rib(s), with an average length of stay of 11.4 days and average costs of $43,094. There were a total of 10,815 cases in MS-DRG 167, with an average length of stay of 5.7 days and average costs of $13,252. In MS-DRG 167, we found 10 cases reporting a principal diagnosis of a rib fracture(s) with insertion of an internal fixation device for the rib(s), with an average length of stay of 6.7 days and average costs of $30,617. There were a total of 3,242 cases in MS-DRG 168, with an average length of stay of 3.1 days and average costs of $9,708. In MS-DRG 168, we found 4 cases reporting a principal diagnosis of a rib fracture(s) with insertion of an internal fixation device for the rib(s), with an average length of stay of 2 days and average costs of $21,501. Overall, for MS-DRGs 166, 167, and 168, there were a total of 54 cases reporting a principal diagnosis of a rib fracture(s) with insertion of an internal fixation device for the rib(s), demonstrating that while rib fractures may require treatment, they are not typically corrected surgically. Our clinical advisors agreed with the current assignment of procedure codes to MS-DRGs 166, 167, and 168 that may be reported to describe repair of a rib fracture under MDC 4, as well as the current assignment of procedure codes to MS-DRGs 515, 516, and 517 that may be reported to describe repair of a rib fracture under MDC 8. Our clinical advisors noted that initial, acute rib fractures can cause numerous respiratory related issues requiring various treatments and problems with the healing of a rib fracture are considered musculoskeletal issues.

We also noted that the procedure codes submitted by the requestor may be reported for other indications and they are not restricted to reporting for repair of a rib fracture. Therefore, assignment of these codes to the MDC 4 MS-DRGs and the MDC 8 MS-DRGs is clinically appropriate.

To address the cases reporting procedure codes describing the repositioning of a rib(s) that are grouping to MS-DRGs 981, 982, and 983 when reported with a principal diagnosis of a rib fracture (initial encounter), in the FY 2019 IPPS/LTCH PPS proposed rule, we proposed to add the following eight ICD-10-PCS procedure codes currently assigned to MDC 8 into MDC 4, in MS-DRGs 166, 167 and 168.

Our clinical advisors agreed with this proposed addition to the classification structure because it is clinically appropriate and consistent with the other related ICD-10-PCS procedure codes that may be reported to describe rib fracture repair procedures with the insertion of an internal fixation device and are classified under MDC 4.

We stated in the proposed rule that by adding the eight ICD-10-PCS procedure codes describing repositioning of the rib(s) that may be reported to describe a rib fracture repair procedure under the classification structure for MDC 4, these cases will no longer result in an MS-DRG assignment to the “unrelated operating room procedures” surgical class when reported with a diagnosis code under MDC 4.

Comment: Commenters supported the proposal to add the eight ICD-10-PCS procedure codes describing repositioning of the ribs to MDC 4 in MS-DRGs 166, 167 and 168. The commenters stated that the proposal was reasonable, given the data, the ICD-10-PCS codes and the information provided.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing the proposal to add ICD-10-PCS procedure codes 0PS104Z, 0PS10ZZ, 0PS134Z, 0PS144Z, 0PS204Z, 0PS20ZZ, 0PS234Z and 0PS244Z currently assigned to MDC 8 into MDC 4 in MS-DRGs 166, 167 and 168 under the ICD-10 MS-DRGs Version 36, effective October 1, 2018.

18. Changes to the ICD-10-CM and ICD-10-PCS Coding Systems

In September 1985, the ICD-9-CM Coordination and Maintenance Committee was formed. This is a Federal interdepartmental committee, co-chaired by the National Center for Health Statistics (NCHS), the Centers for Disease Control and Prevention (CDC), and CMS, charged with maintaining and updating the ICD-9-CM system. The final update to ICD-9-CM codes was made on October 1, 2013. Thereafter, the name of the Committee was changed to the ICD-10 Coordination and Maintenance Committee, effective with the March 19-20, 2014 meeting. The ICD-10 Coordination and Maintenance Committee addresses updates to the ICD-10-CM and ICD-10-PCS coding systems. The Committee is jointly responsible for approving coding changes, and developing errata, addenda, and other modifications to the coding systems to reflect newly developed procedures and technologies and newly identified diseases. The Committee is also responsible for promoting the use of Federal and non-Federal educational programs and other communication techniques with a view toward standardizing coding applications and upgrading the quality of the classification system.

The official list of ICD-9-CM diagnosis and procedure codes by fiscal year can be found on the CMS website at: http://cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/codes.html. The official list of ICD-10-CM and ICD-10-PCS codes can be found on the CMS website at: http://www.cms.gov/Medicare/Coding/ICD10/index.html.

The NCHS has lead responsibility for the ICD-10-CM and ICD-9-CM diagnosis codes included in the Tabular List and Alphabetic Index for Diseases, while CMS has lead responsibility for the ICD-10-PCS and ICD-9-CM procedure codes included in the Tabular List and Alphabetic Index for Procedures.

The Committee encourages participation in the previously mentioned process by health-related organizations. In this regard, the Committee holds public meetings for discussion of educational issues and proposed coding changes. These meetings provide an opportunity for representatives of recognized organizations in the coding field, such as the American Health Information Management Association (AHIMA), the American Hospital Association (AHA), and various physician specialty groups, as well as individual physicians, health information management professionals, and other members of the public, to contribute ideas on coding matters. After considering the opinions expressed at the public meetings and in writing, the Committee formulates recommendations, which then must be approved by the agencies.

The Committee presented proposals for coding changes for implementation in FY 2019 at a public meeting held on September 12-13, 2017, and finalized the coding changes after consideration of comments received at the meetings and in writing by November 13, 2017.

The Committee held its 2018 meeting on March 6-7, 2018. The deadline for submitting comments on these code proposals was scheduled for April 6, 2018. It was announced at this meeting that any new ICD-10-CM/PCS codes for which there was consensus of public support and for which complete tabular and indexing changes would be made by May 2018 would be included in the October 1, 2018 update to ICD-10-CM/ICD-10-PCS. As discussed in earlier sections of the preamble of this final rule, there are new, revised, and deleted ICD-10-CM diagnosis codes and ICD-10-PCS procedure codes that are captured in Table 6A.—New Diagnosis Codes, Table 6B.—New Procedure Codes, Table 6C.—Invalid Diagnosis Codes, Table 6D.—Invalid Procedure Codes, Table 6E.—Revised Diagnosis Code Titles, and Table 6F.—Revised Procedure Code Titles for this final rule, which are available via the internet on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. The code titles are adopted as part of the ICD-10 (previously ICD-9-CM) Coordination and Maintenance Committee process. Therefore, although we make the code titles available for the IPPS proposed rule, they are not subject to comment in the proposed rule. Because of the length of these tables, they were not published in the Addendum to the proposed rule. Rather, they are available via the internet as discussed in section VI. of the Addendum to the proposed rule.

Live Webcast recordings of the discussions of procedure codes at the Committee's September 12-13, 2017 meeting and March 6-7, 2018 meeting can be obtained from the CMS website at: http://cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html?redirect=/icd9ProviderDiagnosticCodes/03_meetings.asp. The minutes of the discussions of diagnosis codes at the September 12-13, 2017 meeting and March 6-7, 2018 meeting can be found at: http://www.cdc.gov/nchs/icd/icd10cm_maintenance.html. These websites also provide detailed information about the Committee, including information on requesting a new code, attending a Committee meeting, and timeline requirements and meeting dates.

We encourage commenters to address suggestions on coding issues involving diagnosis codes to: Donna Pickett, Co-Chairperson, ICD-10 Coordination and Maintenance Committee, NCHS, Room 2402, 3311 Toledo Road, Hyattsville, MD 20782. Comments may be sent by Email to: nchsicd10cm@cdc.gov.

Questions and comments concerning the procedure codes should be submitted via Email to: ICDProcedureCodeRequest@cms.hhs.gov.

In the September 7, 2001 final rule implementing the IPPS new technology add-on payments (66 FR 46906), we indicated we would attempt to include proposals for procedure codes that would describe new technology discussed and approved at the Spring meeting as part of the code revisions effective the following October.

Section 503(a) of Public Law 108-173 included a requirement for updating diagnosis and procedure codes twice a year instead of a single update on October 1 of each year. This requirement was included as part of the amendments to the Act relating to recognition of new technology under the IPPS. Section 503(a) amended section 1886(d)(5)(K) of the Act by adding a clause (vii) which states that the Secretary shall provide for the addition of new diagnosis and procedure codes on April 1 of each year, but the addition of such codes shall not require the Secretary to adjust the payment (or diagnosis-related group classification) until the fiscal year that begins after such date. This requirement improves the recognition of new technologies under the IPPS by providing information on these new technologies at an earlier date. Data will be available 6 months earlier than would be possible with updates occurring only once a year on October 1.

While section 1886(d)(5)(K)(vii) of the Act states that the addition of new diagnosis and procedure codes on April 1 of each year shall not require the Secretary to adjust the payment, or DRG classification, under section 1886(d) of the Act until the fiscal year that begins after such date, we have to update the DRG software and other systems in order to recognize and accept the new codes. We also publicize the code changes and the need for a mid-year systems update by providers to identify the new codes. Hospitals also have to obtain the new code books and encoder updates, and make other system changes in order to identify and report the new codes.

The ICD-10 (previously the ICD-9-CM) Coordination and Maintenance Committee holds its meetings in the spring and fall in order to update the codes and the applicable payment and reporting systems by October 1 of each year. Items are placed on the agenda for the Committee meeting if the request is received at least 2 months prior to the meeting. This requirement allows time for staff to review and research the coding issues and prepare material for discussion at the meeting. It also allows time for the topic to be publicized in meeting announcements in the Federal Register as well as on the CMS website. Final decisions on code title revisions are currently made by March 1 so that these titles can be included in the IPPS proposed rule. A complete addendum describing details of all diagnosis and procedure coding changes, both tabular and index, is published on the CMS and NCHS websites in June of each year. Publishers of coding books and software use this information to modify their products that are used by health care providers. This 5-month time period has proved to be necessary for hospitals and other providers to update their systems.

A discussion of this timeline and the need for changes are included in the December 4-5, 2005 ICD-9-CM Coordination and Maintenance Committee Meeting minutes. The public agreed that there was a need to hold the fall meetings earlier, in September or October, in order to meet the new implementation dates. The public provided comment that additional time would be needed to update hospital systems and obtain new code books and coding software. There was considerable concern expressed about the impact this April update would have on providers.

In the FY 2005 IPPS final rule, we implemented section 1886(d)(5)(K)(vii) of the Act, as added by section 503(a) of Public Law 108-173, by developing a mechanism for approving, in time for the April update, diagnosis and procedure code revisions needed to describe new technologies and medical services for purposes of the new technology add-on payment process. We also established the following process for making these determinations. Topics considered during the Fall ICD-10 (previously ICD-9-CM) Coordination and Maintenance Committee meeting are considered for an April 1 update if a strong and convincing case is made by the requester at the Committee's public meeting. The request must identify the reason why a new code is needed in April for purposes of the new technology process. The participants at the meeting and those reviewing the Committee meeting summary report are provided the opportunity to comment on this expedited request. All other topics are considered for the October 1 update. Participants at the Committee meeting are encouraged to comment on all such requests. There were not any requests approved for an expedited April 1, 2018 implementation of a code at the September 12-13, 2017 Committee meeting. Therefore, there were not any new codes for implementation on April 1, 2018.

ICD-9-CM addendum and code title information is published on the CMS website at: http://www.cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html?redirect=/icd9ProviderDiagnosticCodes/01overview.asp#TopofPage. ICD-10-CM and ICD-10-PCS addendum and code title information is published on the CMS website at: http://www.cms.gov/Medicare/Coding/ICD10/index.html. CMS also sends copies of all ICD-10-CM and ICD-10-PCS coding changes to its Medicare contractors for use in updating their systems and providing education to providers.

Information on ICD-10-CM diagnosis codes, along with the Official ICD-10-CM Coding Guidelines, can also be found on the CDC website at: http://www.cdc.gov/nchs/icd/icd10.htm. Additionally, information on new, revised, and deleted ICD-10-CM/ICD-10-PCS codes is provided to the AHA for publication in the Coding Clinic for ICD-10. AHA also distributes coding update information to publishers and software vendors.

The following chart shows the number of ICD-10-CM and ICD-10-PCS codes and code changes since FY 2016 when ICD-10 was implemented.

As mentioned previously, the public is provided the opportunity to comment on any requests for new diagnosis or procedure codes discussed at the ICD-10 Coordination and Maintenance Committee meeting.

At the September 12-13, 2017 and March 6-7, 2018 Committee meetings, we discussed any requests we had received for new ICD-10-CM diagnosis codes and ICD-10-PCS procedure codes that were to be implemented on October 1, 2018. We invited public comments on any code requests discussed at the September 12-13, 2017 and March 6-7, 2018 Committee meetings for implementation as part of the October 1, 2018 update. The deadline for commenting on code proposals discussed at the September 12-13, 2017 Committee meeting was November 13, 2017. The deadline for commenting on code proposals discussed at the March 6-7, 2018 Committee meeting was April 6, 2018.

19. Replaced Devices Offered Without Cost or With a Credit

a. Background

In the FY 2008 IPPS final rule with comment period (72 FR 47246 through 47251), we discussed the topic of Medicare payment for devices that are replaced without cost or where credit for a replaced device is furnished to the hospital. We implemented a policy to reduce a hospital's IPPS payment for certain MS-DRGs where the implantation of a device that subsequently failed or was recalled determined the base MS-DRG assignment. At that time, we specified that we will reduce a hospital's IPPS payment for those MS-DRGs where the hospital received a credit for a replaced device equal to 50 percent or more of the cost of the device.

In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51556 through 51557), we clarified this policy to state that the policy applies if the hospital received a credit equal to 50 percent or more of the cost of the replacement device and issued instructions to hospitals accordingly.

b. Changes for FY 2019

In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20250 through 20251), for FY 2019, we did not propose to add any MS-DRGs to the policy for replaced devices offered without cost or with a credit. We proposed to continue to include the existing MS-DRGs currently subject to the policy as displayed in the table below.

We did not receive any public comments on our proposal to continue to include the existing MS-DRGs currently subject to the policy and to not add any additional MS-DRGs. Therefore, we are finalizing the list of MS-DRGs in the table included in the proposed rule and above that will be subject to the replaced devices offered without cost or with a credit policy, effective October 1, 2018.

20. Other Policy Changes: Other Operating Room (O.R.) and Non-O.R. Issues

In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20251 through 20257), we addressed requests that we received regarding changing the designation of specific ICD-10-PCS procedure codes from non-O.R. to O.R. procedures, or changing the designation from O.R. procedure to non-O.R. procedure. In cases where we proposed to change the designation of procedure codes from non-O.R. to O.R. procedures, we also proposed one or more MS-DRGs with which these procedures are clinically aligned and to which the procedure code would be assigned. We generally examine the MS-DRG assignment for similar procedures, such as the other approaches for that procedure, to determine the most appropriate MS-DRG assignment for procedures newly designated as O.R. procedures. We invited public comments on these proposed MS-DRG assignments.

We also noted that many MS-DRGs require the presence of any O.R. procedure. As a result, cases with a principal diagnosis associated with a particular MS-DRG would, by default, be grouped to that MS-DRG. Therefore, we do not list these MS-DRGs in our discussion below. Instead, we only discussed MS-DRGs that require explicitly adding the relevant procedures codes to the GROUPER logic in order for those procedure codes to affect the MS-DRG assignment as intended. In addition, cases that contain O.R. procedures will map to MS-DRGs 981, 982, or 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) or MS-DRGs 987, 988, or 989 (Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) when they do not contain a principal diagnosis that corresponds to one of the MDCs to which that procedure is assigned. These procedures need not be assigned to MS-DRGs 981 through 989 in order for this to occur. Therefore, if requestors included some or all of MS-DRGs 981 through 989 in their request or included MS-DRGs that require the presence of any O.R. procedure, we did not specifically address that aspect in summarizing their request or our response to the request in the section below.

(a) Percutaneous and Percutaneous Endoscopic Excision of Brain and Cerebral Ventricle

One requestor identified 22 ICD-10-PCS procedure codes that describe procedures involving transcranial brain and cerebral ventricle excision that the requestor stated would generally require the resources of an operating room. The 22 procedure codes are listed in the following table.

The requestor stated that, although percutaneous burr hole biopsies are performed through smaller openings in the skull than open burr hole biopsies, these procedures require drilling or cutting through the skull using sterile technique with anesthesia for pain control. The requestor also noted that similar procedures involving percutaneous drainage of the subdural space are currently classified as O.R. procedures in Version 35 of the ICD-10 MS-DRGs. However, these 22 ICD-10-PCS procedure codes are not recognized as O.R. procedures for purposes of MS-DRG assignment. The requestor recommended that the 22 ICD-10-PCS codes be designated as O.R. procedures and assigned to MS-DRGs 25, 26, and 27 (Craniotomy and Endovascular Intracranial Procedures with MCC, with CC, and without CC/MCC, respectively).

In the proposed rule, we stated that we agreed with the requestor that these procedures typically require the resources of an operating room. Therefore, we proposed to add these 22 ICD-10-PCS procedure codes to the FY 2019 ICD-10 MS-DRGs Version 36 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures assigned to MS-DRGs 25, 26, and 27 in MDC 1 (Diseases and Disorders of the Nervous System).

Comment: One commenter supported the proposal to change the designation of the 22 procedure codes listed in the table above to O.R. procedures.

Response: We appreciate the commenter's support.

After consideration of the public comment we received, we are finalizing our proposal to change the designation of the 22 ICD-10-PCS procedure codes shown in the table above from non-O.R. procedures to O.R. procedures, effective October 1, 2018.

b. Open Extirpation of Subcutaneous Tissue and Fascia

One requestor identified 22 ICD-10-PCS procedure codes that describe procedures involving open extirpation of subcutaneous tissue and fascia that the requestor stated would generally require the resources of an operating room. The 22 procedure codes are listed in the following table.

The requestor stated that these procedures involve making an open incision deeper than the skin under general anesthesia, and that irrigation and/or excision of devitalized tissue or cavity are often required and are considered inherent to the procedure. The requestor also stated that open drainage of subcutaneous tissue and fascia, open excisional debridement of subcutaneous tissue and fascia, and open nonexcisional debridement/extraction of subcutaneous tissue and fascia are designated as O.R. procedures, and that these 22 procedures should be designated as O.R. procedures for the same reason. In the ICD-10 MS-DRGs Version 35, these 22 ICD-10-PCS procedure codes are not recognized as O.R. procedures for purposes of MS-DRG assignment. The requestor recommended that the 22 ICD-10-PCS procedure codes listed in the table be assigned to MS-DRGs 579, 580, and 581 (Other Skin, Subcutaneous Tissue and Breast Procedures with MCC, CC, and without CC/MCC, respectively).

In the proposed rule, we stated that we disagreed with the requestor that these procedures typically require the resources of an operating room. Our clinical advisors indicated that these open extirpation procedures are minor procedures that can be performed outside of an operating room, such as in a radiology suite with CT or MRI guidance. We disagreed that these procedures are similar to open drainage procedures. Therefore, we proposed to maintain the status of these 22 ICD-10-PCS procedure codes as non-O.R. procedures.

Comment: Some commenters supported the proposal to maintain the designation of the 22 identified procedure codes as non-O.R. procedures. One commenter opposed the proposal, stating that open extirpation procedures typically require the use of anesthesia and an operating room. This commenter stated that the 22 procedures are similar to open drainage, excisional debridement, and non-excisional debridement/extraction of subcutaneous tissue and fascia, which are designated as O.R. procedures.

Response: We appreciate the commenters' support. In response to the commenter who opposed the proposal, our clinical advisors continue to believe that these open extirpation procedures are minor procedures that can be performed outside of an operating room, such as in a radiology suite with CT or MRI guidance, and therefore do not require the use of an operating room. Our clinical advisors further noted that the use of anesthesia frequently occurs in a CT or MRI suite. In addition, our clinical advisors continue to disagree with the assertion that these procedures are similar to open drainage procedures because fewer resources are required for open extirpation procedures relative to open drainage procedures and the open extirpation procedures are not usually performed in the operating room.

After consideration of the public comments we received, we are finalizing our proposal to maintain the non-O.R. status of the 22 identified open extirpation procedures.

c. Open Scrotum and Breast Procedures

One requestor identified 13 ICD-10-PCS procedure codes that describe procedures involving open drainage, open extirpation, and open debridement/excision of the scrotum and breast. The requestor stated that the 13 procedures listed in the following table involve making an open incision deeper than the skin under general anesthesia, and that irrigation and/or excision of devitalized tissue or cavity are often required and are considered inherent to the procedure. The requestor also stated that open drainage of subcutaneous tissue and fascia, open excisional debridement of subcutaneous tissue and fascia, open non-excisional debridement/extraction of subcutaneous tissue and fascia, and open excision of breast are designated as O.R. procedures, and that these 13 procedures should be designated as O.R. procedures for the same reason. In the ICD-10 MS-DRGs Version 35, these 13 ICD-10-PCS procedure codes are not recognized as O.R. procedures for purposes of MS-DRG assignment.

The requestor recommended that the 3 ICD-10-PCS scrotal procedure codes be assigned to MS-DRGs 717 and 718 (Other Male Reproductive System O.R. Procedures Except Malignancy with CC/MCC and without CC/MCC, respectively) and the 10 breast procedure codes be assigned to MS-DRGs 584 and 585 (Breast Biopsy, Local Excision and Other Breast Procedures with CC/MCC and without CC/MCC, respectively).

In the proposed rule, we stated that we agreed with the requestor that these procedures typically require the resources of an operating room due to the nature of breast and scrotal tissue, as well as with the MS-DRG assignments recommended by the requestor. In addition, we stated that we believe that the scrotal codes should also be assigned to MS-DRGs 715 and 716 (Other Male Reproductive System O.R. Procedures for Malignancy with CC/MCC and without CC/MCC, respectively). Therefore, we proposed to add these 13 ICD-10-PCS procedure codes to the FY 2019 ICD-10 MS-DRGs Version 36 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures, assigned to MS-DRGs 715, 716, 717, and 718 in MDC 12 (Diseases and Disorders of the Male Reproductive System) for the scrotal procedure codes and assigned to MS-DRGs 584 and 585 in MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue & Breast) for the breast procedure codes.

Comment: Commenters supported the proposal to change the designation of the 13 identified procedure codes to O.R. procedures.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to change the designation of the 13 ICD-10-PCS procedure codes shown in the table above from non-O.R. procedures to O.R. procedures, effective October 1, 2018.

d. Open Parotid Gland and Submaxillary Gland Procedures

One requestor identified eight ICD-10-PCS procedure codes that describe procedures involving open drainage and open extirpation of the parotid or submaxillary glands, shown in the following table.

The requestor stated that these procedures involve making an open incision through subcutaneous tissue, fascia, and potentially muscle, to reach and incise the parotid or submaxillary gland under general anesthesia, and that irrigation and/or excision of devitalized tissue or cavity may be required and are considered inherent to the procedure. The requestor also stated that open drainage of subcutaneous tissue and fascia, open excisional debridement of subcutaneous tissue and fascia, and open non-excisional debridement/extraction of subcutaneous tissue and fascia are designated as O.R. procedures, and that these eight procedures should be designated as O.R. procedures for the same reason. In the ICD-10 MS-DRGs Version 35, these eight ICD-10-PCS procedure codes are not recognized as O.R. procedures for purposes of MS-DRG assignment. The requestor requested that these procedures be assigned to MS-DRG 139 (Salivary Gland Procedures).

In the proposed rule, we stated that we agreed with the requestor that these eight procedures typically require the resources of an operating room. Therefore, we proposed to add these ICD-10-PCS procedure codes to the FY 2019 ICD-10 MS-DRGs Version 36 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures assigned to MS-DRG 139 in MDC 3 (Diseases and Disorders of the Ear, Nose, Mouth and Throat).

Comment: One commenter supported the proposal to change the designation of the 8 identified procedure codes to O.R. procedures.

Response: We appreciate the commenter's support.

After consideration of the public comments we received, we are finalizing our proposal to change the designation of the 8 ICD-10-PCS procedure codes shown in the table above from non-O.R. procedures to O.R. procedures, effective October 1, 2018.

e. Removal and Reinsertion of Spacer; Knee Joint and Hip Joint

One requestor identified four sets of ICD-10-PCS procedure code combinations (eight ICD-10-PCS codes) that describe procedures involving open removal and insertion of spacers into the knee or hip joints, shown in the following table. The requestor stated that these are invasive procedures involving removal and reinsertion of devices into major joints and are performed in the operating room under general anesthesia. In the ICD-10 MS-DRGs Version 35, these four ICD-10-PCS procedure code combinations are not recognized as O.R. procedures for purposes of MS-DRG assignment. The requestor recommended that CMS determine the most appropriate surgical DRGs for these procedures.

In the proposed rule, we stated that we agreed with the requestor that these procedures typically require the resources of an operating room. However, our clinical advisors indicated that these codes should be designated as O.R. procedures even when reported as stand-alone procedures. Therefore, for the knee procedures, we proposed to add these four ICD-10-PCS procedure codes to the FY 2019 ICD-10 MS-DRGs Version 36 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures assigned to MS-DRGs 485, 486, and 487 (Knee Procedures with Principal Diagnosis of Infection with MCC, with CC, and without CC/MCC, respectively) or MS-DRGs 488 and 489 (Knee Procedures without Principal diagnosis of Infection with CC/MCC and without CC/MCC, respectively), both in MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue). For the hip procedures, we proposed to add these four ICD-10-PCS procedure codes to the FY 2019 ICD-10 MS-DRGs Version 36 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures assigned to MS-DRGs 480, 481, and 482 (Hip and Femur Procedures Except Major Joint with MCC, with CC, and without CC/MCC, respectively) in MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue).

Comment: Commenters supported the proposal to change the designation of the eight identified procedure codes to O.R. procedures. Several commenters who supported the proposal also requested that CMS ensure that changing the designation to O.R. procedures not have the unintended impact of reducing payment for these procedures. These commenters also requested that CMS clarify that the proposed MS-DRG assignments only apply when the eight codes are reported as stand-alone procedures and not, for example, when a spacer is removed and a permanent joint implant is inserted. One commenter stated that additional cost data would be useful in determining whether the payment for the proposed MS-DRGs fully reflect the O.R. resources used in these procedures.

Response: We appreciate the commenters' support. With regard to the MS-DRG assignment, we are clarifying that, in all cases, the GROUPER logic would consider all of the procedures reported, the principal diagnosis, the surgical hierarchy, and the MS-DRG assignments for those procedures to determine the appropriate MS-DRG assignment. In cases where there is a procedure that is used for MS-DRG assignment that is higher in the surgical hierarchy, that procedure code would determine the MS-DRG assignment. In cases where the other procedure(s) are lower in the surgical hierarchy, the case would be assigned to the MS-DRGs listed above. With regard to the comments about the implications for payment and the cost data, we note that the goals of changing the designation of procedures from non-O.R. to O.R., or vice versa, are to better clinically represent the resources involved in caring for these patients and to enhance the overall accuracy of the system. Therefore, decisions to change an O.R. designation are based on whether such a change would accomplish those goals and not whether the change in designation would impact the payment in a particular direction.

After consideration of the public comments we received, we are finalizing our proposal to change the designation of the eight ICD-10-PCS procedure codes shown in the table above from non-O.R. procedures to O.R. procedures, effective October 1, 2018.

f. Endoscopic Dilation of Ureter(s) With Intraluminal Device

One requestor identified the following three ICD-10-PCS procedure codes that describe procedures involving endoscopic dilation of ureter(s) with intraluminal device.

The requestor stated that these procedures involve the use of cystoureteroscopy to view the bladder and ureter and dilation under visualization, which are often followed by placement of a ureteral stent. The requestor also stated that endoscopic extirpation of matter from ureter, endoscopic biopsy of bladder, endoscopic dilation of bladder, endoscopic dilation of renal pelvis, and endoscopic dilation of the ureter without insertion of intraluminal device are all assigned to surgical DRGs, and that these three procedures should be designated as O.R. procedures for the same reason. In the ICD-10 MS-DRGs Version 35, these three ICD-10-PCS procedure codes are not recognized as O.R. procedures for purposes of MS-DRG assignment. The requestor recommended that these procedures be assigned to MS-DRGs 656, 657, and 658 (Kidney and Ureter Procedures for Neoplasm with MCC, with CC, and without CC/MCC, respectively) and MS-DRGs 659, 660, and 661 (Kidney and Ureter Procedures for Non-Neoplasm with MCC, with CC, and without CC/MCC, respectively).

In the proposed rule, we stated that we agreed with the requestor that these procedures typically require the resources of an operating room. In addition to the MS-DRGs recommended by the requestor, we further stated that we believe that these procedure codes should also be assigned to other MS-DRGs, consistent with the assignment of other dilation of ureter procedures: MS-DRG 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively) and MS-DRGs 957, 958, and 959 (Other O.R. Procedures for Multiple Significant Trauma with MCC, with CC, and without CC/MCC, respectively). Therefore, we proposed to add the three ICD-10-PCS procedure codes identified by the requestor to the FY 2019 ICD-10 MS-DRGs Version 36 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures assigned to MS-DRGs 656, 657, and 658 in MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract), MS-DRGs 659, 660, and 661 in MDC 11, MS-DRGs 907, 908, and 909 in MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs), and MS-DRGs 957, 958, and 959 in MDC 24 (Multiple Significant Trauma).

Comment: One commenter supported the proposal to change the designation of the three identified procedure codes to O.R. procedures.

Response: We appreciate the commenter's support.

After consideration of the public comments we received, we are finalizing our proposal to change the designation of the three ICD-10-PCS procedure codes shown in the table above from non-O.R. procedures to O.R. procedures, effective October 1, 2018.

g. Thoracoscopic Procedures of Pericardium and Pleura

One requestor identified seven ICD-10-PCS procedure codes that describe procedures involving thoracoscopic drainage of the pericardial cavity or pleural cavity, or extirpation of matter from the pleura, as shown in the following table.

The requestor stated that these procedures involve making an incision through the chest wall and inserting a thoracoscope for visualization of thoracic structures during the procedure. The requestor also stated that some thoracoscopic procedures are assigned to surgical MS-DRGs, while other procedures are assigned to medical MS-DRGs. In the ICD-10 MS-DRGs Version 35, these seven ICD-10-PCS procedure codes are not recognized as O.R. procedures for purposes of MS-DRG assignment.

In the proposed rule, we stated that we agreed with the requestor that these procedures typically require the resources of an operating room, as well as significant time and skill. During our review, we noted that the following two related procedures using the open approach also were not currently recognized as O.R. procedures:

Therefore, to be consistent with the MS-DRGs to which other approaches for procedures involving drainage or extirpation of matter from the pleura are assigned, we proposed to add these nine ICD-10-PCS procedure codes to the FY 2019 ICD-10 MS-DRGs Version 36 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures assigned to one of the following MS-DRGs: MS-DRGs 163, 164, and 165 (Major Chest Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 4 (Diseases and Disorders of the Respiratory System); MS-DRGs 270, 271, and 272 (Other Major Cardiovascular Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 5 (Diseases and Disorders of the Circulatory System); MS-DRGs 820, 821, and 822 (Lymphoma and Leukemia with Major O.R. Procedure with MCC, with CC, and without CC/MCC, respectively) in MDC 17 (Myeloproliferative Diseases and Disorders, Poorly Differentiated Neoplasms); MS-DRGs 826, 827, and 828 (Myeloproliferative Disorders or Poorly Differentiated Neoplasms with Major O.R. Procedure with MCC, with CC, and without CC/MCC, respectively) in MDC 17; MS-DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively) in MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs); and MS-DRGs 957, 958, and 959 (Other O.R. Procedures for Multiple Significant Trauma with MCC, with CC, and without CC/MCC, respectively) in MDC 24 (Multiple Significant Trauma). We invited public comments on our proposal.

Comment: One commenter supported the proposal to change the designation of the nine identified procedure codes to O.R. procedures.

Response: We appreciate the commenter's support.

After consideration of the public comments we received, we are finalizing our proposal to change the designation of the nine ICD-10-PCS procedure codes shown in the tables above from non-O.R. procedures to O.R. procedures, effective October 1, 2018.

h. Open Insertion of Totally Implantable and Tunneled Vascular Access Devices

One requestor identified 20 ICD-10-PCS procedure codes that describe procedures involving open insertion of totally implantable and tunneled vascular access devices. The codes are identified in the following table.

The requestor stated that open procedures to insert totally implantable vascular access devices (VAD) involve implantation of a port by open approach, cutting through subcutaneous tissue/fascia, placing the device, and then closing tissues so that none of the device is exposed. The requestor explained that open procedures to insert tunneled VADs involve insertion of the catheter into central vasculature, and then open incision of subcutaneous tissue and fascia through which the device is tunneled. The requestor also indicated that these procedures require two ICD-10-PCS codes: One for the insertion of the VAD or port within the subcutaneous tissue; and one for percutaneous insertion of the central venous catheter that is connected to the device. The requestor further noted that, in MDC 11, cases with these procedure codes are assigned to surgical MS-DRGs and that insertion of infusion pumps by open approach groups to surgical MS-DRGs. The requestor recommended that these procedures be assigned to surgical MS-DRGs in MDC 09 as well. We examined the O.R. designations for this group of procedures and determined that they currently are designated as non-O.R. procedures for MDC 09 and MDC 11.

In the proposed rule, we stated that we agreed with the requestor that procedures involving open insertion of totally implantable VAD procedures typically require the resources of an operating room. However, we stated that we disagreed that the tunneled VAD procedures typically require the resources of an operating room. Therefore, we proposed to update the FY 2019 ICD-10 MS-DRGs Version 36 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS-DRG Index to designate the 10 ICD-10-PCS procedure codes describing the totally implantable VAD procedures as O.R. procedures, which will continue to be assigned to MS-DRGs 579, 580, and 581 (Other Skin, Subcutaneous Tissue and Breast Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast) and MS-DRGs 673, 674, and 675 (Other Kidney and Urinary Tract Procedures, with CC, with MCC, and without CC/MCC, respectively) in MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract). We noted that these procedures already affect MS-DRG assignment to these MS-DRGs. However, we stated that if the procedure is unrelated to the principal diagnosis, it will be assigned to MS-DRGs 981, 982, and 983 instead of a medical MS-DRG.

Comment: Commenters supported the proposal to change the designation of the open insertion of totally implantable VAD procedures to O.R. procedures. One commenter requested that CMS reconsider the GROUPER logic to add totally implantable VADs to additional MDCs, and not just MDCs 9 and 11.

Response: We appreciate the commenters' support. With regard to the GROUPER logic, we will consider whether procedures should be added to additional MDCs during our annual assessment of the codes that group to the unrelated procedure MS-DRGs, which is discussed later in this section of the preamble of this final rule.

After consideration of the public comments we received, we are finalizing our proposal to change the designation of the 10 ICD-10-PCS procedure codes describing open insertion of totally implantable VAD procedures shown in the table above from non-O.R. procedures to O.R. procedures, effective October 1, 2018.

Comment: Some commenters supported the proposal to maintain the non-O.R. assignment of the tunneled VAD procedures listed in the table above, while others opposed this proposal. The commenters who opposed the proposal stated that tunneled VAD procedures involve significantly more resources than non-tunneled catheters because of the significant subcutaneous tunneling required. The commenters also noted that the procedures require the specialized setting of an operating room or interventional radiology suite. The commenters explained the following aspects of the technique that they believe indicate that the procedures should be designated as O.R. procedures: A small incision is typically made and one end of the catheter is advanced into the internal jugular vein, and threaded into the superior/inferior vena cava, or right atrium under fluoroscopic guidance. The other end of the catheter is tunneled beneath the skin and subcutaneous tissue and a small incision is made at the exit site on the chest. A small cuff is sometimes anchored to the skin to stabilize and prevent infection. While the tunneled VADs are typically performed with small incisions, the subcutaneous tunneling is the most complex portion of the procedure. In addition, one commenter listed additional tunneled VAD codes (performed on other body parts, such as the arms and legs) that should also be considered for a change to the O.R. designation.

Response: Our clinical advisors continue to believe that tunneled VAD procedures do not typically require the use of an operating room. As the commenter stated, these procedures are frequently performed under image guidance, which our clinical advisors believe would typically take place in a radiology suite. Our clinical advisors believe that the list of other VAD procedures cited by the commenter would also typically take place in the radiology suite and, therefore, would not typically require the use of an operating room. Therefore, we are not making a change to the O.R. designation of the codes suggested by the commenter.

After consideration of the public comments we received, we are finalizing our proposals to change the designation of the totally implantable VAD procedures to O.R. procedures and to maintain the non-O.R. designation of the tunneled VAD procedures.

i. Percutaneous Joint Reposition With Internal Fixation Device

One requestor identified 20 ICD-10-PCS procedure codes that describe procedures involving percutaneous joint reposition with internal fixation device, shown in the following table.