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

AGENCY:

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

ACTION:

Final rule.

SUMMARY:

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

DATES:

This final rule is effective October 1, 2021.

FOR FURTHER INFORMATION CONTACT:

Donald Thompson, (410) 786-4487, and Michele Hudson, (410) 786-4487, Operating Prospective Payment, MS-DRG Relative Weights, Wage Index, Hospital Geographic Reclassifications, Capital Prospective Payment, Excluded Hospitals, Medicare Disproportionate Share Hospital (DSH) Payment Adjustment, Sole Community Hospitals (SCHs), Medicare-Dependent Small Rural Hospital (MDH) Program, Low-Volume Hospital Payment Adjustment, and Critical Access Hospital (CAH) Issues.

Emily Lipkin, (410) 786-3633 and Jim Mildenberger, (410) 786-4551, Long-Term Care Hospital Prospective Payment System and MS-LTC-DRG Relative Weights Issues.

Emily Forrest, (202) 205-1922, Market-Based Data Collection and Market-Based MS-DRG Relative Weight Methodology Issues.

Allison Pompey, (410) 786-2348, New Technology Add On Payments and New COVID-19 Treatments Add-on Payments Issues.

Mady Hue, (410) 786-4510, and Andrea Hazeley, (410) 786-3543, MS-DRG Classifications Issues.

Mollie Knight, (410) 786-7948, and Bridget Dickensheets, (410) 786-8670, Rebasing and Revising the Hospital Market Baskets Issues.

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

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

Pamela Brown, pamela.brown@cms.hhs.gov, Hospital Readmissions Reduction Program—Administration Issues.

Jim Poyer, james.poyer@cms.hhs.gov, Hospital Readmissions Reduction Program—Readmissions—Measures Issues.

Jennifer Tate, jennifer.tate@cms.hhs.gov, Hospital-Acquired Condition Reduction Program—Administration Issues.

Yuling Li, (410) 786-8421, Hospital-Acquired Condition Reduction Program—Measures Issues.

Julia Venanzi, julia.venanzi@cms.hhs.gov, Hospital Inpatient Quality Reporting and Hospital Value-Based Purchasing Programs—Administration Issues

Katrina Hoadley, katrina.hoadley@cms.hhs.gov, Hospital Inpatient Quality Reporting and Hospital Value-Based Purchasing Programs—Measures Issues Except Hospital Consumer Assessment of Healthcare Providers and Systems Issues.

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

Annie Hollis, annie.hollis@cms.hhs.gov, PPS-Exempt Cancer Hospital Quality Reporting—Administration Issues.

Katrina Hoadley, katrina.hoadley@cms.hhs.gov, PPS-Exempt Cancer Hospital Quality Reporting Program-Measure Issues

Christy Hughes, (410) 786-5662, Long-Term Care Hospital Quality Reporting Program—Data Reporting Issues.

Jessica Warren, jessica.warren@cms.hhs.gov and Elizabeth Holland, elizabeth.holland@cms.hhs.gov, Promoting Interoperability Programs.

Candace Anderson, (410) 786-1553, Medicaid Enrollment of Medicare Providers and Suppliers for Purposes of Processing Claims for Cost-Sharing for Services Furnished to Dually Eligible Beneficiaries.

Naseem Tarmohamed, (410) 786-0814, or SharedSavingsProgram@cms.hhs.gov, for issues related to the Shared Savings Program.

SUPPLEMENTARY INFORMATION:

Tables Available Through the Internet on the CMS Website

The IPPS tables for this FY 2022 final rule are available through the internet on the CMS website at: https://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 2022 IPPS Final rule Home Page” or “Acute Inpatient—Files for Download.” The LTCH PPS tables for this FY 2022 final rule are available through the internet on the CMS website at: http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​LongTermCareHospitalPPS/​index.html under the list item for Regulation Number CMS-1752-F. For further details on the contents of the tables referenced in this final rule, we refer readers to section VI. of the Addendum to this FY 2022 IPPS/LTCH PPS final rule.

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

Table of Contents

I. Executive Summary and Background

A. Executive Summary

B. Background Summary

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

D. Issuance of Proposed and Interim Final Rulemakings

E. Advancing Health Information Exchange

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

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

A. Background

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

C. FY 2022 MS-DRG Documentation and Coding Adjustment

D. Changes to Specific MS-DRG Classifications

E. Recalibration of the FY 2022 MS-DRG Relative Weights

F. Add-On Payments for New Services and Technologies for FY 2022

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

A. Background

B. Worksheet S-3 Wage Data for the Proposed FY 2022 Wage Index

C. Verification of Worksheet S-3 Wage Data

D. Method for Computing the Proposed FY 2022 Unadjusted Wage Index

E. Occupational Mix Adjustment to the FY 2022 Wage Index

F. Analysis and Implementation of the Occupational Mix Adjustment and the Proposed FY 2022 Occupational Mix Adjusted Wage Index

G. Application of the Rural Floor, Application of the State Frontier Floor, and Continuation of the Low Wage Index Hospital Policy, and Budget Neutrality Adjustment

H. FY 2022 Wage Index Tables

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

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

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

L. Process for Requests for Wage Index Data Corrections

M. Labor-Related Share for the FY 2022 Wage Index

IV. Rebasing and Revising of the Hospital Market Baskets for Acute Care Hospitals

A. Background

B. Rebasing and Revising the IPPS Market Basket

C. Market Basket for Certain Hospitals Presently Excluded From the IPPS

D. Rebasing and Revising the Capital Input Price Index (CIPI)

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

A. Changes in the Inpatient Hospital Updates for FY 2021 (§ 412.64(d))

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

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

D. Indirect Medical Education (IME) Payment Adjustment Factor (§ 412.105)

E. Payment Adjustment for Medicare Disproportionate Share Hospitals (DSHs) for FY 2022 (§ 412.106)

F. Counting Days Associated With Section 1115 Demonstration Projects in the Medicaid Fraction

G. Hospital Readmissions Reduction Program: Updates and Changes (§§ 412.150 through 412.154)

H. Hospital Value-Based Purchasing (VBP) Program: Updates and Changes (§§ 412.160 through 412.167)

I. Hospital-Acquired Conditions (HAC) Reduction Program: Updates and Changes (§ 412.170)

J. Proposed Payments for Indirect and Direct Graduate Medical Education Costs (§§ 412.105 and 413.75 through 413.83)

K. Rural Community Hospital Demonstration Program

L. Market-Based MS-DRG Relative Weight—Policy Changes (§ 413.20)

M. Payment Adjustment for CAR T-cell Clinical Trial and Expanded Use for Immunotherapy Cases (§§ 412.85 and 412.312)

VI. Changes to the IPPS for Capital-Related Costs

A. Overview

B. Additional Provisions

C. Annual Update for FY 2022

VII. Changes for Hospitals Excluded From the IPPS

A. Rate-of-Increase in Payments to Excluded Hospitals for FY 2022

B. Critical Access Hospitals (CAHs)

VIII. Changes to the Long-Term Care Hospital Prospective Payment System (LTCH PPS) for FY 2022

A. Background of the LTCH PPS

B. Medicare Severity Long-Term Care Diagnosis-Related Group (MS-LTC-DRG) Classifications and Relative Weights for FY 2021

C. Changes to the LTCH PPS Payment Rates and Other Proposed Changes to the LTCH PPS for FY 2022

IX. Quality Data Reporting Requirements for Specific Providers and Suppliers

A. Advancing to Digital Quality Measurement and the Use of Fast Healthcare Interoperability Resources (FHIR) in Hospital Quality Programs—Request for Information

B. Closing the Health Equity Gap in CMS Hospital Quality Programs—Request For Information

C. Hospital Inpatient Quality Reporting (IQR) Program

D. Changes to the PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program

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

F. Changes to the Medicare Promoting Interoperability Programs

X. Changes for Hospitals and Other Providers and Suppliers

A. Medicaid Enrollment of Medicare Providers and Suppliers for Purposes of Processing Claims for Cost-Sharing for Services Furnished to Dually Eligible Beneficiaries—Policy Changes (§ 455.410)

B. Medicare Shared Savings Program—Policy Changes (§ 425.600)

XI. MedPAC Recommendations

XII. Other Required Information

A. Publicly Available Files

B. Collection of Information Requirements

Regulation Text

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

I. Summary and Background

II. Changes to Prospective Payment Rates for Hospital Inpatient Operating Costs for Acute Care Hospitals for FY 2022

A. Calculation of the Proposed Adjusted Standardized Amount

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

C. Calculation of the Prospective Payment Rates

III. Changes to Payment Rates for Acute Care Hospital Inpatient Capital-Related Costs for FY 2022

A. Determination of the Federal Hospital Inpatient Capital-Related Prospective Payment Rate Update for FY 2022

B. Calculation of the Inpatient Capital-Related Prospective Payments for FY 2022

C. Capital Input Price Index

IV. Changes to Payment Rates for Excluded Hospitals: Rate-of-Increase Percentages for FY 2022

V. Changes to the Payment Rates for the LTCH PPS for FY 2022

A. LTCH PPS Standard Federal Payment Rate for FY 2022

B. Adjustment for Area Wage Levels Under the LTCH PPS for FY 2022

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

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

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

F. Computing the Adjusted LTCH PPS Federal Prospective Payments for FY 2022

VI. Tables Referenced in This Rule Generally Available Through the internet on the CMS website

Appendix A—Economic Analyses

I. Regulatory Impact Analysis

A. Statement of Need

B. Overall Impact

C. Objectives of the IPPS and the LTCH PPS

D. Limitations of Our Analysis

E. Hospitals Included in and Excluded From the IPPS

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

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

H. Effects of Other Policy Changes

I. Effects of Changes in the Capital IPPS

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

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

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

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

N. Effects of Requirements Regarding the Promoting Interoperability Program

O. Alternatives Considered

P. Overall Conclusion

Q. Regulatory Review Costs

II. Accounting Statements and Tables

A. Acute Care Hospitals

B. LTCHs

III. Regulatory Flexibility Act (RFA) Analysis

IV. Impact on Small Rural Hospitals

V. Unfunded Mandate Reform Act (UMRA) Analysis

VI. Executive Order 13175

VII. Executive Order 12866

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

I. Background

II. Inpatient Hospital Update for FY 2022

A. FY 2022 Inpatient Hospital Update

B. Update for SCHs and MDHs for FY 2022

C. FY 2022 Puerto Rico Hospital Update

D. Update for Hospitals Excluded from the IPPS for FY 2022

E. Update for LTCHs for FY 2022

III. Secretary's Recommendation

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

I. Executive Summary and Background

A. Executive Summary

1. Purpose and Legal Authority

This FY 2022 IPPS/LTCH PPS final rule makes payment and policy changes under the Medicare inpatient prospective payment systems (IPPS) for operating and capital-related costs of acute care hospitals as well as for certain hospitals and hospital units excluded from the IPPS. In addition, it makes payment and policy changes for inpatient hospital services provided by long-term care hospitals (LTCHs) under the long-term care hospital prospective payment system (LTCH PPS). This final rule also makes policy changes to programs associated with Medicare IPPS hospitals, IPPS-excluded hospitals, and LTCHs. In this FY 2022 final rule, we are continuing policies to address wage index disparities impacting low wage index hospitals. We are finalizing our implementation of Section 9831 of the American Rescue Plan Act of 2021, which permanently established the imputed floor wage index policy. In addition, we are finalizing the regulations implemented in CMS-1762-IFC (86 CFR 24735-24739), which allowed hospitals with a rural redesignation under the Act to reclassify through the MGCRB using the rural reclassified area as the geographic area in which the hospital is located. This final rule includes policies related to new technology add-on payments. We are also finalizing our proposal to repeal the collection of market-based rate information on the Medicare cost report and the market-based MS-DRG relative weight methodology.

We are establishing new requirements and revising existing requirements for eligible hospitals and CAHs participating in the Medicare Promoting Interoperability Program.

We are providing estimated and newly established performance standards for the Hospital Value-Based Purchasing (VBP) Program, and updated policies for the Hospital Readmissions Reduction Program, Hospital Inpatient Quality Reporting (IQR) Program, Hospital VBP Program, Hospital-Acquired Condition (HAC) Reduction Program, Long-Term Care Hospital Quality Reporting Program (LTCH QRP), and the PPS-Exempt Cancer Hospital Reporting (PCHQR) Program. Additionally, due to the impact of the COVID-19 PHE on measure data used in our value-based purchasing programs, we are finalizing our proposal to suppress several measures in the Hospital VBP, HAC Reduction, and Hospital Readmissions Reduction Programs. As a result of these measure suppressions for the Hospital VBP Program we are also implementing a special scoring methodology for FY 2022 that results in a value-based incentive payment amount that matches the 2-percent reduction to the base operating DRG payment amount.

We note that the FY 2022 IPPS/LTCH PPS proposed rule included our proposals related to the implementation of the provisions of the Consolidated Appropriations Act (CAA) of 2021 related to payments to hospitals for direct graduate medical education (GME) and indirect medical education (IME) costs. Please refer to the proposed rule (86 FR 25502 through 25524) for additional background information on these proposals. Due to the number and nature of the comments that we received on the implementation of sections 126, 127 and 131 of the CAA of 2021 relating to payments to hospitals for direct GME and IME costs, we will address public comments associated with these issues in future rulemaking.

In addition, we note that the FY 2022 IPPS/LTCH PPS proposed rule included our proposals related to the organ acquisition payment policy for transplant hospitals, donor community hospitals and organ procurement organizations. Please refer to the proposed rule (86 FR 25656 through 25676) for additional background information on these proposals. Due to the number and nature of the comments that we received on the organ acquisition payment policy proposals we will address public comments associated with these issues in future rulemaking.

Under various statutory authorities, we either discuss continued program implementation or are making changes to the Medicare IPPS, to the LTCH PPS, other related payment methodologies and programs for FY 2022 and subsequent fiscal years, and other policies and provisions included in this rule. These statutory authorities include, but are not limited to, the following:

• 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 (Public Law (Pub. L.) 106-113) and section 307(b)(1) of the BIPA (Pub. L. 106-554) (as codified under section 1886(m)(1) of the Act), which provide for the development and implementation of a prospective payment system for payment for inpatient hospital services of LTCHs described in section 1886(d)(1)(B)(iv) of the Act.
• 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 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 1866(k) of the Act, which provides for the establishment of a quality reporting program for hospitals described in section 1886(d)(1)(B)(v) of the Act, referred to as “PPS-exempt cancer hospitals.”
• 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, 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 amended by section 15002 of the 21st Century Cures Act, which establishes the Hospital Readmissions Reduction Program. Under the program, payments for discharges from an applicable hospital as defined under section 1886(d) of the Act will be reduced to account for certain excess readmissions. Section 15002 of the 21st Century Cures Act directs the Secretary to compare hospitals with respect to the number of their Medicare-Medicaid dual-eligible beneficiaries (dual-eligibles) in determining the extent of excess readmissions.
• Section 1886(r) of the Act, as added by section 3133 of the Affordable Care Act, which provides for a reduction to disproportionate share hospital (DSH) payments under section 1886(d)(5)(F) of the Act and for a new uncompensated care payment to eligible hospitals. Specifically, section 1886(r) of the Act requires that, for fiscal year 2014 and each subsequent fiscal year, subsection (d) hospitals that would otherwise receive a DSH payment made under section 1886(d)(5)(F) of the Act will receive two separate payments: (1) 25 percent of the amount they previously would have received under section 1886(d)(5)(F) of the Act for DSH (“the empirically justified amount”), and (2) an additional payment for the DSH hospital's proportion of uncompensated care, determined as the product of three factors. These three factors are: (1) 75 percent of the payments that would otherwise be made under section 1886(d)(5)(F) of the Act; (2) 1 minus the percent change in the percent of individuals who are uninsured; and (3) a hospital's uncompensated care amount relative to the uncompensated care amount of all DSH hospitals expressed as a percentage.
• Section 1886(m)(5) of the Act, which requires the Secretary to reduce by two percentage points the annual update to the standard Federal rate for discharges for a long-term care hospital (LTCH) during the rate year for LTCHs that do not submit data in the form, manner, and at a time, specified by the Secretary.
• Section 1886(m)(6) of the Act, as added by section 1206(a)(1) of the Pathway for Sustainable Growth Rate (SGR) Reform Act of 2013 (Pub. L. 113-67) and amended by section 51005(a) of the Bipartisan Budget Act of 2018 (Pub. L. 115-123), which provided for the establishment of site neutral payment rate criteria under the LTCH PPS, with implementation beginning in FY 2016. Section 51005(b) of the Bipartisan Budget Act of 2018 amended section 1886(m)(6)(B) by adding new clause (iv), which specifies that the IPPS comparable amount defined in clause (ii)(I) shall be reduced by 4.6 percent for FYs 2018 through 2026.
• 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.
• Section 1899 of the Act which established the Medicare Shared Savings Program (Shared Savings Program) to facilitate coordination and cooperation among providers and suppliers to improve the quality of care for Medicare fee-for-service (FFS) beneficiaries and reduce the rate of growth in expenditures under Medicare Parts A and B.
• Section 1902(kk)(3) of the Act, as amended by section 6401(b) of the Affordable Care Act, which mandates that states require providers and suppliers to comply with the same disclosure requirements established by the Secretary under section 1866(j)(5) of the Act.
• Section 2107(e)(1) of the Act, as amended by section 6401(c) of the Affordable Care Act, which makes the requirements of section 1902(kk) of the Act, including the disclosure requirements, applicable to CHIP.

2. Summary of the Major Provisions

The following is a summary of the major provisions in this final rule. In general, these major provisions are being finalized as part of the annual update to the payment policies and payment rates, consistent with the applicable statutory provisions. A general summary of the changes in this final rule is presented in section I.D. of the preamble of this final rule.

a. MS-DRG Documentation and Coding Adjustment

Section 631 of the American Taxpayer Relief Act of 2012 (ATRA, Pub. L. 112- 240) amended section 7(b)(1)(B) of Public Law 110-90 to require the Secretary to make a recoupment adjustment to the standardized amount of Medicare payments to acute care hospitals to account for changes in MS-DRG documentation and coding that do not reflect real changes in case-mix, totaling $11 billion over a 4-year period of FYs 2014, 2015, 2016, and 2017. The FY 2014 through FY 2017 adjustments represented the amount of the increase in aggregate payments as a result of not completing the prospective adjustment authorized under section 7(b)(1)(A) of Public Law 110-90 until FY 2013. Prior to the ATRA, this amount could not have been recovered under Public Law 110-90. Section 414 of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114-10) replaced the single positive adjustment we intended to make in FY 2018 with a 0.5 percent positive adjustment to the standardized amount of Medicare payments to acute care hospitals for FYs 2018 through 2023. (The FY 2018 adjustment was subsequently adjusted to 0.4588 percent by section 15005 of the 21st Century Cures Act.) Therefore, for FY 2022, we are making an adjustment of +0.5 percent to the standardized amount.

b. Extension of the New COVID-19 Treatments Add-on Payment (NCTAP)

In response to the COVID-19 PHE, we established the New COVID-19 Treatments Add-on Payment (NCTAP) under the IPPS for COVID-19 cases that meet certain criteria (85 FR 71157 and 71158). We believe that as drugs and biological products become available and are authorized for emergency use or approved by Food and Drug Administration (FDA) for the treatment of COVID-19 in the inpatient setting, it is appropriate to increase the current IPPS payment amounts to mitigate any potential financial disincentives for hospitals to provide new COVID-19 treatments during the PHE. Therefore, effective for discharges occurring on or after November 2, 2020 and until the end of the PHE for COVID-19, CMS established the NCTAP.

We anticipate that there might be inpatient cases of COVID-19, beyond the end of the PHE, for which payment based on the assigned MS-DRG may not adequately reflect the additional cost of new COVID-19 treatments. In order to continue to mitigate potential financial disincentives for hospitals to provide these new treatments, and to minimize any potential payment disruption immediately following the end of the PHE, we believe that the NCTAP should remain available for cases involving eligible treatments for the remainder of the fiscal year in which the PHE ends (for example, until September 30, 2022). After review of public comments received, and for the reasons discussed in section II.F. of the preamble of this final rule, we are finalizing to extend the NCTAP through the end of the fiscal year in which the PHE ends for all eligible products, including those approved for new technology add-on payments for FY 2022, with any new technology add-on payment reducing the amount of the NCTAP.

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

For the IPPS and LTCH PPS ratesetting, our longstanding goal is always to use the best available data overall. In section I.F. of the preamble of this final rule, we discuss our analysis of the best available data for use in the development of this FY 2022 IPPS/LTCH PPS final rule given the potential impact of the public health emergency (PHE) for the Coronavirus Disease (COVID-19). As discussed in section I.F. of the preamble of this final rule, we are using the FY 2019 data, such as the FY 2019 MedPAR file, for the FY 2022 ratesetting for circumstances where the FY 2020 data is significantly impacted by the COVID-19 PHE, primarily in that the utilization of inpatient services reflect generally markedly different utilization for certain types of services in FY 2020 than would have been expected in the absence of the PHE.

d. Continuation of the Low Wage Index Hospital Policy

To help mitigate wage index disparities between high wage and low hospitals, in the FY 2020 IPPS/LTCH PPS rule (84 FR 42326 through 42332), we adopted a policy to increase the wage index values for certain hospitals with low wage index values (the low wage index hospital policy). This policy was adopted in a budget neutral manner through an adjustment applied to the standardized amounts for all hospitals. We also indicated that this policy will be effective for at least 4 years, beginning in FY 2020, in order to allow employee compensation increases implemented by these hospitals sufficient time to be reflected in the wage index calculation. Therefore, for FY 2022, we are continuing the low-wage index hospital policy, and are also applying this policy in a budget neutral manner by applying an adjustment to the standardized amounts.

e. Implementation of Section 9831 of the American Rescue Plan Act of 2021 (Pub. L. 117-2) Imputed Floor Wage Index Policy for All-Urban States

Section 9831 of the American Rescue Plan Act of 2021 (Pub. L. 117-2) amended section 1886(d)(3)(E) of the Act (42 U.S.C. 1395ww(d)(3)(E)) to establish a minimum area wage index for hospitals in all-urban States. Specifically, section 1886(d)(3)(E)(iv) of the Act (as added by section 9831(a)(2) of Pub. L. 117-2) reinstates the imputed floor wage index policy for all-urban States effective for discharges on or after October 1, 2021 (FY 2022) with no expiration date using the methodology described in 42 CFR 412.64(h)(4)(vi) as in effect for FY 2018. Furthermore, section 1886(d)(3)(E)(iv)(III) of the Act provides that the imputed floor wage index shall not be applied in a budget neutral manner. We refer readers to section III.G.2. of this final rule for a summary of the provisions of section 9831 of Public Law 117-2 that we are implementing in this final rule.

f. DSH Payment Adjustment and Additional Payment for Uncompensated Care

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

In this final rule, we are updating our estimates of the three factors used to determine uncompensated care payments for FY 2022. We are also continuing to use uninsured estimates produced by CMS' Office of the Actuary (OACT) as part of the development of the National Health Expenditure Accounts (NHEA) in the calculation of Factor 2. Consistent with the policy adopted in the FY 2021 IPPS/LTCH PPS final rule for FY 2022 and subsequent fiscal years, we are using a single year of data on uncompensated care costs from Worksheet S-10 of the FY 2018 cost reports to calculate Factor 3 in the FY 2022 methodology for all eligible hospitals with the exception of Indian Health Service (IHS) and Tribal hospitals and Puerto Rico hospitals. For IHS and Tribal hospitals and Puerto Rico hospitals we are finalizing our proposal to continue to use the low-income insured days proxy to calculate Factor 3 for these hospitals for FY 2022. We are also finalizing certain methodological changes for calculating Factor 3 for FY 2022.

g. Modification of Limitations on Redesignation by the Medicare Geographic Classification Review Board (MGCRB)

In May 10, 2021 Federal Register (86 FR 24735), concurrent with the FY 2022 IPPS/LTCH PPS proposed rule, we published an interim final rule with comment period (IFC) (CMS-1762-IFC) that amended our current regulations to allow hospitals with a rural redesignation under the Act to reclassify through the Medicare MGCRB using the rural reclassified area as the geographic area in which the hospital is located. These regulatory changes align our policy with the decision in Bates County Memorial Hospital v. Azar, effective with reclassifications beginning with fiscal year (FY) 2023. We respond to the public comments on CMS-1762-IFC in this final rule, and finalize the regulatory changes made therein.

h. Reduction of Hospital Payments for Excess Readmissions

We are making changes to policies for the Hospital Readmissions Reduction Program, which was established under section 1886(q) of the Act, as amended by section 15002 of the 21st Century Cures Act. The Hospital Readmissions Reduction Program requires a reduction to a hospital's base operating DRG payment to account for excess readmissions of selected applicable conditions. For FY 2017 and subsequent years, the reduction is based on a hospital's risk-adjusted readmission rate during a 3-year period for acute myocardial infarction (AMI), heart failure (HF), pneumonia, chronic obstructive pulmonary disease (COPD), elective primary total hip arthroplasty/total knee arthroplasty (THA/TKA), and coronary artery bypass graft (CABG) surgery. In this FY 2022 IPPS/LTCH PPS final rule, we are finalizing the following policies: (1) To adopt a cross-program measure suppression policy for the duration of the public health emergency for COVID-19; (2) to suppress the Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate (RSRR) following Pneumonia Hospitalization measure (NQF #0506) for the FY 2023 program year; (3) to modify the remaining five condition-specific readmission measures to exclude COVID-19 diagnosed patients from the measure denominators, beginning with the FY 2023 program year; (4) to use the MedPAR data that aligns with the applicable period for FY 2022; (5) to automatically adopt the use of MedPAR data corresponding to the applicable period beginning with the FY 2023 program year and all subsequent program years, unless otherwise specified by the Secretary; and (6) to update the regulatory text to reflect that our Hospital Compare website has been renamed and is now referred to as Care Compare. We are clarifying our Extraordinary Circumstances Exceptions (ECE) policy, and we also requested public comment on opportunities to advance health equity through possible future stratification of results by race and ethnicity for condition/procedure-specific readmission measures and by expansion of standardized data collection to additional social factors, such as language preference and disability status. We also sought comment on mechanisms of incorporating other demographic characteristics into analyses that address and advance health equity, such as the potential to include administrative and self-reported data to measure co-occurring disability status.

i. Hospital Value-Based Purchasing (VBP) Program

Section 1886(o) of the Act requires the Secretary to establish a Hospital VBP Program under which value-based incentive payments are made in a fiscal year to hospitals based on their performance on measures established for a performance period for such fiscal year. In this final rule, we are finalizing our proposals to: (1) Establish a measure suppression policy for the duration of the public health emergency for COVID-19; (2) suppress the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS), Medicare Spending Per Beneficiary (MSPB), and five Healthcare-Associated Infection (HAI) measures, for the FY 2022 program year; and (3) suppress the Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Pneumonia (PN) Hospitalization (MORT-30-PN) measure for the FY 2023 program year. We are also finalizing our proposal to revise the scoring and payment methodology for the FY 2022 program year such that hospitals will not receive Total Performance Scores. We believe that awarding a TPS to any hospital based off the remaining measures that are not suppressed would not result in a fair national comparison and, as a result, are not awarding a TPS to any hospital for the FY 2022 program year. Instead, we are finalizing our proposal to award each hospital a payment incentive multiplier that results in a value-based incentive payment that is equal to the amount withheld for the fiscal year (2 percent). We are finalizing our proposal to remove the CMS Patient Safety and Adverse Events Composite (CMS PSI 90) measure beginning with FY 2023 because the costs associated with the measure outweigh the benefit of its use in the program. We are also finalizing our proposal to update the baseline periods for certain measures affected by the ECE granted in response to the COVID-19 PHE and making a technical update to our terminology used in the Hospital VBP Program regulations.

j. Hospital-Acquired Condition (HAC) Reduction Program

Section 1886(p) of the Act establishes an incentive to hospitals to reduce the incidence of hospital-acquired conditions by requiring the Secretary to make an adjustment to payments to applicable hospitals, effective for discharges beginning on October 1, 2014. This 1-percent payment reduction applies to hospitals that rank in the worst-performing quartile (25 percent) of all applicable hospitals, relative to the national average, of conditions acquired during the applicable period and on all of the hospital's discharges for the specified fiscal year. In this FY 2022 IPPS/LTCH PPS final rule, we are: (1) Clarifying our ECE policy; (2) finalizing our proposal to adopt a cross-program measure suppression policy for the duration of the public health emergency for COVID-19; (3) finalizing our proposal to apply that measure suppression policy to suppress certain program data from FY 2022, FY 2023, and FY 2024 HAC Reduction Programs; and (4) finalizing our proposal to update the regulatory text to reflect that the Hospital Compare website has been renamed and is now referred to as Care Compare.

k. Hospital Inpatient Quality Reporting (IQR) Program

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

In this FY 2022 IPPS/LTCH PPS final rule, we are making several changes. We are finalizing the adoption of five new measures: (1) A new structural measure—Maternal Morbidity Structural Measure—beginning with a shortened reporting period from October 1, 2021 through December 31, 2021 affecting the CY 2021 reporting period/FY 2023 payment determination; (2) the Hybrid Hospital-Wide All-Cause Risk Standardized Mortality (Hybrid HWM) measure in a stepwise fashion, beginning with a voluntary reporting period from July 1, 2022 through June 30, 2023, and followed by mandatory reporting from July 1, 2023 through June 30, 2024, affecting the FY 2026 payment determination and for subsequent years; (3) the COVID-19 Vaccination Coverage among Health Care Personnel (HCP) measure beginning with a shortened reporting period from October 1, 2021 through December 31, 2021, affecting the CY 2021 reporting period/FY 2023 payment determination and with quarterly reporting beginning with the FY 2024 payment determination and for subsequent years; and two medication-related adverse event eCQMs beginning with the CY 2023 reporting period/FY 2025 payment determination; (4) Hospital Harm-Severe Hypoglycemia eCQM (NQF #3503e); and (5) Hospital Harm-Severe Hyperglycemia eCQM (NQF #3533e).

We are also finalizing the removal of three measures: (1) Exclusive Breast Milk Feeding (PC-05) (NQF #0480) beginning with the FY 2026 payment determination; (2) Admit Decision Time to ED Departure Time for Admitted Patients (ED-2) (NQF #0497) beginning with the FY 2026 payment determination; and (3) the Discharged on Statin Medication eCQM (STK-06) (NQF #0439), beginning with the FY 2026 payment determination. We are not finalizing our proposals to remove the following two measures: (1) Death Among Surgical Inpatients with Serious Treatable Complications (CMS PSI-04); and (2) Anticoagulation Therapy for Atrial Fibrillation/Flutter eCQM (STK-03) (NQF #0436).

In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25070), we requested comment from stakeholders on the potential future development and inclusion of two measures: (1) A mortality measure for patients admitted with COVID-19; and (2) a patient-reported outcomes measure following elective total hip and/or total knee arthroplasty (THA/TKA). We also requested comment from stakeholders on ways we can leverage measures to address gaps in existing health equity generally as well as comment on: (1) Potential future confidential stratified reporting for the Hospital-Wide All-Cause Unplanned Readmission (HWR) measure using both dual eligibility and race/ethnicity; and (2) potential future reporting of a structural measure to assess the degree of hospital leadership engagement in health equity performance data. We also requested feedback across programs on potential actions and priority areas that would enable the continued transformation of our quality measurement toward greater digital capture of data and use of the FHIR standard.

In addition, we are finalizing our proposal that beginning with the CY 2023 reporting period/FY 2025 payment determination, hospitals will be required to use certified technology that has been updated consistent with the 2015 Edition Cures Update and clarifying that certified technology must support the reporting requirements for all available eCQMs. We also are finalizing our provision that hybrid measures comply with the same certification requirements as eCQMs, specifically that EHR technology must be certified to the 2015 Edition Cures Update. We are revising 42 CFR 412.140(a)(2) and 42 CFR 412.140(e)(2)(iii) to replace the terms “Security Administrator” and “System Administrator” with the term “security official” in alignment with other CMS quality programs. Due to an updated URL for the QualityNet website from QualityNet.org to QualityNet.cms.gov, we are also revising Hospital IQR Program regulations at 42 CFR 412.140(a)(1) and 42 CFR 412.140(c)(2)(i) to reflect updates to the QualityNet website. Lastly, we are finalizing our proposal to extend the effects of the educational review process for chart-abstracted measures beginning with validations affecting the FY 2024 payment determination.

l. PPS-Exempt Cancer Hospital Quality Reporting Program

Section 1866(k)(1) of the Act requires, for purposes of FY 2014 and each subsequent fiscal year, that a hospital described in section 1886(d)(1)(B)(v) of the Act (a PPS-exempt cancer hospital, or a PCH) submit data in accordance with section 1866(k)(2) of the Act with respect to such fiscal year. There is no financial impact to PCH Medicare payment if a PCH does not participate.

In this final rule, we are removing the Oncology: Plan of Care for Pain—Medical Oncology and Radiation Oncology (NQF #0383) (PCH-15) measure beginning with the FY 2024 program year, adopting the COVID-19 Vaccination Coverage among Healthcare Personnel measure beginning with the FY 2023 program year, making a technical update to the terminology we use in the program, and codifying existing PCHQR Program policies in our regulations.

m. Medicare Promoting Interoperability Program

For purposes of reducing the burden on eligible hospitals and CAHs, we are making several changes to the Medicare Promoting Interoperability Program. Specifically, we are: (1) Continuing the EHR reporting period of a minimum of any continuous 90-day period for new and returning eligible hospitals and CAHs for CY 2023 and increasing the EHR reporting period to a minimum of any continuous 180-day period for new and returning eligible hospitals and CAHs for CY 2024; (2) maintaining the Electronic Prescribing Objective's Query of PDMP measure as optional while increasing its available bonus from 5 points to 10 points for the EHR reporting period in CY 2022; (3) adding a new Health Information Exchange (HIE) Bi-Directional Exchange measure as a yes/no attestation to the HIE objective as an optional alternative to the two existing measures beginning with the EHR reporting period in CY 2022; (4) requiring reporting a “yes” on four of the existing Public Health and Clinical Data Exchange Objective measures (Syndromic Surveillance Reporting, Immunization Registry Reporting, Electronic Case Reporting, and Electronic Reportable Laboratory Result Reporting) or requesting the applicable exclusion(s); (5) adding a new measure to the Protect Patient Health Information objective that requires eligible hospitals and CAHs to attest to having completed an annual assessment of SAFER Guides beginning with the EHR reporting period in CY 2022; (6) removing attestation statements 2 and 3 from the Promoting Interoperability Program's prevention of information blocking requirement; (7) increasing the minimum required score for the objectives and measures from 50 points to 60 points (out of 100 points) in order to be considered a meaningful EHR user; and (8) adopting two new eCQMs to the Medicare Promoting Interoperability Program's eCQM measure set beginning with the reporting period in CY 2023, in addition to removing three eCQMs from the measure set beginning with the reporting period in CY 2024, which updates are in alignment with the eCQM updates being finalized for the Hospital IQR Program. We are amending our regulation texts as necessary to incorporate several of these changes. We are not finalizing our proposal to remove the Anticoagulation Therapy for Atrial Fibrillation/Flutter eCQM (STK-03) (NQF #0436) in alignment with the Hospital IQR Program. We are also not finalizing our proposal to modify the Provide Patients Electronic Access to Their Health Information measure by requiring eligible hospitals and CAHs to ensure that patient health information remains available to the patient (or patient-authorized representative). We will consider the feedback we received for future rulemaking.

n. Repeal of Market-Based Data Collection and Market-Based MS-DRG Relative Weight Methodology

As discussed in section V.L. of the preamble of this final rule, we are finalizing our proposal, without modification, to repeal the requirement that a hospital report on the Medicare cost report the median payer-specific negotiated charge that the hospital has negotiated with all of its MA organization payers, by MS-DRG, for cost reporting periods ending on or after January 1, 2021. We are also finalizing our proposal, without modification, to repeal the market-based MS-DRG relative weight methodology adopted for calculating the MS-DRG relative weights effective in FY 2024, and to continue using the existing cost-based methodology for calculating the MS-DRG relative weights for FY 2024 and subsequent fiscal years. Lastly, we solicited comment on alternative approaches or data sources that could be used in Medicare fee-for-service (FFS) ratesetting. We will continue to consider these comments as applicable.

o. Medicare Shared Savings Program

We are making changes to policies for the Shared Savings Program, which was established under section 1899 of the Act, to allow eligible ACOs participating in the BASIC track's glide path the option to elect to forgo automatic advancement along the glide path's increasing levels of risk and potential reward for performance year (PY) 2022. Under the policy we are adopting in this final rule, prior to the automatic advancement for PY 2022, an eligible ACO may elect to remain in the same level of the BASIC track's glide path in which it participated during PY 2021. For PY 2023, an ACO that elects this advancement deferral option will be automatically advanced to the level of the BASIC track's glide path in which it would have participated during PY 2023 if it had advanced automatically to the required level for PY 2022 (unless the ACO elects to advance more quickly before the start of PY 2023).

3. Summary of Costs and Benefits

The following table provides a summary of the costs, savings, benefits associated with the major provisions described in section I.A.3. of the preamble of this final rule.

B. Background Summary

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

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

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

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

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

Additional payments may be made for cases that involve new technologies or medical services that have been approved for special add-on payments. In general, to qualify, a new technology or medical service must demonstrate that it is a substantial clinical improvement over technologies or services otherwise available, and that, absent an add-on payment, it would be inadequately paid under the regular DRG payment. In addition, certain transformative new devices and certain antimicrobial products may qualify under an alternative inpatient new technology add-on payment pathway by demonstrating that, absent an add-on payment, they would be inadequately paid under the regular DRG payment.

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

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

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

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

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

2. Hospitals and Hospital Units Excluded From the IPPS

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

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

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

The Medicare prospective payment system (PPS) for LTCHs applies to hospitals described in section 1886(d)(1)(B)(iv) of the Act, effective for cost reporting periods beginning on or after October 1, 2002. The LTCH PPS was established under the authority of sections 123 of the BBRA and section 307(b) of the BIPA (as codified under section 1886(m)(1) of the Act). Section 1206(a) of the Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) established the site neutral payment rate under the LTCH PPS, which made the LTCH PPS a dual rate payment system beginning in FY 2016. Under this statute, effective for LTCH's cost reporting periods beginning in FY 2016 cost reporting period, LTCHs are generally paid for discharges at the site neutral payment rate unless the discharge meets the patient criteria for payment at the LTCH PPS standard Federal payment rate. The existing regulations governing payment under the LTCH PPS are located in 42 CFR part 412, subpart O. Beginning October 1, 2009, we issue the annual updates to the LTCH PPS in the same documents that update the IPPS.

4. Critical Access Hospitals (CAHs)

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

5. Payments for Graduate Medical Education (GME)

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

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

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

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

2. The American Rescue Plan Act of 2021 (Pub. L. 117-2)

Section 9831 of the American Rescue Plan Act of 2021 (Pub. L. 117-2) amended section 1886(d)(3)(E) of the Act (42 U.S.C. 1395ww(d)(3)(E)) to establish a minimum area wage index for hospitals in all-urban States. Specifically, section 1886(d)(3)(E)(iv) of the Act (as added by section 9831(a)(2) of Pub. L. 117-2) reinstates the imputed floor wage index policy for all-urban states effective for discharges on or after October 1, 2021 (FY 2022) with no expiration date using the methodology described in 42 CFR 412.64(h)(4)(vi) as in effect for FY 2018.

D. Issuance of Proposed and Interim Final Rulemakings

1. FY 2022 IPPS/LTCH PPS Proposed Rule

In the FY 2022 IPPS/LTCH PPS proposed rule appearing in the May 10, 2021 Federal Register (86 FR 25070), we set forth proposed payment and policy changes to the Medicare IPPS for FY 2022 operating costs and capital-related costs of acute care hospitals and certain hospitals and hospital units that are excluded from IPPS. In addition, we set forth proposed changes to the payment rates, factors, and other payment and policy-related changes to programs associated with payment rate policies under the LTCH PPS for FY 2022.

The following is a general summary of the changes that we proposed to make.

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

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

• Proposed changes to MS-DRG classifications based on our yearly review for FY 2022.
• Proposed adjustment to the standardized amounts under section 1886(d) of the Act for FY 2022 in accordance with the amendments made to section 7(b)(1)(B) of Public Law 110-90 by section 414 of the MACRA.
• Proposed recalibration of the MS-DRG relative weights.
• A discussion of the proposed FY 2022 status of new technologies approved for add-on payments for FY 2022, a presentation of our evaluation and analysis of the FY 2022 applicants for add-on payments for high-cost new medical services and technologies (including public input, as directed by Pub. L. 108-173, obtained in a town hall meeting) for applications not submitted under an alternative pathway, and a discussion of the proposed status of FY 2022 new technology applicants under the alternative pathways for certain medical devices and certain antimicrobial products.
• A proposal to extend the New COVID-19 Treatments Add-on Payment (NCTAP) through the end of the fiscal year in which the PHE ends for certain products and discontinue NCTAP for products approved for new technology add-on payments in FY 2022.

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

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

• The proposed FY 2022 wage index update using wage data from cost reporting periods beginning in FY 2018.
• Calculation, analysis, and implementation of the proposed occupational mix adjustment to the wage index for acute care hospitals for FY 2022 based on the 2019 Occupational Mix Survey.
• Proposed application of the rural floor and the frontier State floor, and continuation of the low wage index hospital policy.
• Proposed implementation of the imputed floor wage index policy for all-urban States under section 9831 of the American Rescue Plan Act of 2021 (Pub. L. 117-2).
• 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.
• Proposed revisions to the regulations at § 412.278 regarding the Administrator's Review of MGCRB decisions.
• Proposed changes to rural reclassification cancellation requirements at § 412.103(g).
• Proposed adjustment to the wage index for acute care hospitals for FY 2022 based on commuting patterns of hospital employees who reside in a county and work in a different area with a higher wage index.
• Proposed labor-related share for the proposed FY 2022 wage index.

c. Proposed Rebasing and Revising of the Hospital Market Baskets

In section IV. of the preamble of the proposed rule, we proposed to rebase and revise the hospital market baskets for acute care hospitals and update the labor-related share.

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

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

• Proposed inpatient hospital update for FY 2022.
• Proposed updated national and regional case-mix values and discharges for purposes of determining RRC status.
• The statutorily required IME adjustment factor for FY 2022.
• Proposed changes to the methodologies for determining Medicare DSH payments and the additional payments for uncompensated care.
• Proposed requirements for payment adjustments under the Hospital Readmissions Reduction Program for FY 2022.
• The provision of estimated and newly established performance standards for the calculation of value-based incentive payments, as well as a proposal to suppress multiple measures and provide net-neutral payment adjustments under the Hospital Value-Based Purchasing Program.
• Proposed requirements for payment adjustments to hospitals under the HAC Reduction Program for FY 2022.
• Discussion of and proposed changes relating to the implementation of the Rural Community Hospital Demonstration Program in FY 2022.
• Proposed revisions to the regulations regarding the counting of days associated with section 1115 demonstration projects in the Medicaid fraction.
• Proposals to implement provisions of the Consolidated Appropriations Act relating to payments to hospitals for direct graduate medical education (GME) and indirect medical education (IME) costs.
• Proposed repeal of the market-based data collection requirement and market-based MS-DRG relative weight methodology

e. Proposed FY 2022 Policy Governing the IPPS for Capital-Related Costs

In section VI. of the preamble to the proposed rule, we discussed the proposed payment policy requirements for capital-related costs and capital payments to hospitals for FY 2022.

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

In section VII. of the preamble of the proposed rule, we discussed the following:

• Proposed changes to payments to certain excluded hospitals for FY 2022.
• Proposed continued implementation of the Frontier Community Health Integration Project (FCHIP) Demonstration.

g. Proposed Changes to the LTCH PPS

In section VIII. of the preamble of the proposed rule, we set forth proposed changes to the LTCH PPS Federal payment rates, factors, and other payment rate policies under the LTCH PPS for FY 2022.

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

In section IX. of the preamble of the proposed rule, we addressed the following:

• We requested information on CMS's future plans to define digital quality measures (dQMs) in CMS Hospital Quality Programs and on CMS' continued efforts to close the health equity gap in CMS Hospital Quality Programs.
• 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 (QRP). We also sought information on CMS's future plans to define digital quality measures (dQMs) for the LTCH QRP and on CMS' continued efforts to close the health equity gap.
• Proposed changes to requirements pertaining to eligible hospitals and CAHs participating in the Medicare Promoting Interoperability Program.

i. Other Proposals Included in the Proposed Rule

Section X. of the preamble of the proposed rule included the following proposals:

• Proposed changes pertaining to Medicaid enrollment of Medicare-enrolled providers and suppliers to 42 CFR part 455.410 and request for comment on provider experiences where State Medicaid agencies apply the Medicaid payment and coverage rules to a claim for a Medicare service rather than adjudicating the claim for Medicare cost-sharing liability.
• Proposed changes pertaining to Medicare's share of organ acquisition costs transplanted into Medicare beneficiaries and the charges for services provided to cadaveric organ donors by donor community hospitals and transplants hospitals.
• Proposed changes pertaining to the Shared Savings Program that would allow eligible ACOs participating in the BASIC track's glide path to maintain their current level of participation for PY 2022.

j. Other Provisions of the Proposed Rule

Section XI. of the preamble to the proposed rule included our discussion of the MedPAC Recommendations.

Section XII. of the preamble to the proposed rule includes the following:

• A descriptive listing of the public use files associated with the proposed rule.
• The collection of information requirements for entities based on our proposals.
• Information regarding our responses to public comments.

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

In sections II. and III. of the Addendum to the proposed rule, we set forth proposed changes to the amounts and factors for determining the proposed FY 2022 prospective payment rates for operating costs and capital-related costs for acute care hospitals. We proposed to establish the threshold amounts for outlier cases. In addition, in section IV. of the Addendum to the proposed rule, we addressed the proposed update factors for determining the rate-of-increase limits for cost reporting periods beginning in FY 2022 for certain hospitals excluded from the IPPS.

l. Determining Prospective Payment Rates for LTCHs

In section V. of the Addendum to the proposed rule, we set forth proposed changes to the amounts and factors for determining the proposed FY 2022 LTCH PPS standard Federal payment rate and other factors used to determine LTCH PPS payments under both the LTCH PPS standard Federal payment rate and the site neutral payment rate in FY 2022. We are proposing to establish the adjustments for the wage index, labor-related share, the cost-of-living adjustment, and high-cost outliers, including the applicable fixed-loss amounts and the LTCH cost-to-charge ratios (CCRs) for both payment rates.

m. Impact Analysis

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

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

In Appendix B of the proposed rule, as required by sections 1886(e)(4) and (e)(5) of the Act, we provide our recommendations of the appropriate percentage changes for FY 2022 for the following:

• 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.

o. Discussion of Medicare Payment Advisory Commission Recommendations

Under section 1805(b) of the Act, MedPAC is required to submit a report to Congress, no later than March 15 of each year, in which MedPAC reviews and makes recommendations on Medicare payment policies. MedPAC's March 2021 recommendations concerning hospital inpatient payment policies address the update factor for hospital inpatient operating costs and capital-related costs for hospitals under the IPPS. We addressed these recommendations in Appendix B of the proposed rule. For further information relating specifically to the MedPAC March 2021 report or to obtain a copy of the report, contact MedPAC at (202) 220-3700 or visit MedPAC's website at: http://www.medpac.gov.

2. Medicare Geographic Classification Review Board (MGCRB) Interim Final Rule With Comment Period

In the interim final rule with comment period appearing in the May 10, 2021 Federal Register (86 FR 25735) (hereinafter referred to as CMS-1762-IFC), we implemented regulations which allowed hospitals with a rural redesignation under the section XXXX of the Act to reclassify through the Medicare Geographic Classification Review Board (MGCRB) using the rural reclassified area as the geographic area in which the hospital is located.

E. Advancing Health Information Exchange

The Department of Health and Human Services (HHS) has a number of initiatives designed to encourage and support the adoption of interoperable health information technology and to promote nationwide health information exchange to improve health care and patient access to their health information.

To further interoperability in post-acute care settings, CMS and the Office of the National Coordinator for Health Information Technology (ONC) participate in the Post-Acute Care Interoperability Workgroup (PACIO http://pacioproject.org/​) to facilitate collaboration with industry stakeholders to develop FHIR standards. These standards could support the exchange and reuse of patient assessment data derived from the Minimum Data Set (MDS), Inpatient Rehabilitation Facility-Patient Assessment Instrument (IRF-PAI), LTCH Continuity Assessment Record and Evaluation (CARE Data Set (LCDS), Outcome and Assessment Information Set (OASIS), and other sources. The PACIO Project has focused on FHIR implementation guides for functional status, cognitive status and new use cases on advance directives and speech language pathology. We encourage post-acute care (PAC) provider and health information technology (IT) vendor participation as the efforts advance.

The CMS Data Element Library (DEL) continues to be updated and serves as the authoritative resource for PAC assessment data elements and their associated mappings to health IT standards, such as Logical Observation Identifiers Names and Codes (LOINC) and Systematized Nomenclature of Medicine Clinical Terms (SNOMED). The DEL furthers CMS' goal of data standardization and interoperability. These interoperable data elements can reduce provider burden by allowing the use and exchange of healthcare data; supporting provider exchange of electronic health information for care coordination, person-centered care; and supporting real-time, data driven, clinical decision-making. Standards in the Data Element Library (https://del.cms.gov/​DELWeb/​pubHome) can be referenced on the CMS website and in the ONC Interoperability Standards Advisory (ISA). The 2021 ISA is available at https://www.healthit.gov/​isa.

The 21st Century Cures Act (Cures Act) (Pub. L. 114-255, enacted December 13, 2016) requires HHS to take new steps to enable the electronic sharing of health information ensuring interoperability for providers and settings across the care continuum. The Cures Act includes a trusted exchange framework and common agreement (TEFCA) provision that will enable the nationwide exchange of electronic health information across health information networks and provide an important way to enable bi-directional health information exchange in the future. For more information on current developments related to TEFCA, we refer readers to https://www.healthit.gov/​topic/​interoperability/​trusted-exchange-framework-and-common-agreement and https://rce.sequoiaproject.org/​.

The ONC final rule entitled “21st Century Cures Act: Interoperability, Information Blocking, and the ONC Health IT Certification Program” (85 FR 25642) published in the May 1, 2020 Federal Register, (hereinafter referred to as “ONC Cures Act Final Rule”) implemented policies related to information blocking as authorized under section 4004 of the 21st Century Cures Act. Information blocking is generally defined as a practice by a health IT developer of certified health IT, health information network, health information exchange, or health care provider that, except as required by law or specified by the HHS Secretary as a reasonable and necessary activity, is likely to interfere with access, exchange, or use of electronic health information. For a health care provider (as defined in 45 CFR 171.102), the definition of information blocking (see 45 CFR 171.103) specifies that the provider knows that the practice is unreasonable, as well as likely to interfere with access, exchange, or use of electronic health information. To deter information blocking, health IT developers of certified health IT, health information networks and health information exchanges whom the HHS Inspector General determines, following an investigation, have committed information blocking, are subject to civil monetary penalties of up to $1 million per violation. Appropriate disincentives for health care providers need to be established by the Secretary through rulemaking. Stakeholders can learn more about information blocking at https://www.healthit.gov/​curesrule/​final-rule-policy/​information-blocking. ONC has posted information resources including fact sheets (https://www.healthit.gov/​curesrule/​resources/​fact-sheets), frequently asked questions (https://www.healthit.gov/​curesrule/​resources/​information-blocking-faqs), and recorded webinars (https://www.healthit.gov/​curesrule/​resources/​webinars).

We invite providers to learn more about these important developments and how they are likely to affect LTCHs.

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

We primarily use two data sources in the IPPS and LTCH PPS ratesetting: Claims data and cost report data. The claims data source is the MedPAR file, which includes fully coded diagnostic and procedure data for all Medicare inpatient hospital claims for discharges in a fiscal year. Our goal is always to use the best available data overall for ratesetting. Ordinarily, the best available MedPAR data would be the most recent MedPAR file that contains claims from discharges for the fiscal year that is 2 years prior to the fiscal year that is the subject of the rulemaking. For FY 2022 ratesetting, under ordinary circumstances, the best available data would be the FY 2020 MedPAR file. The cost report data source is the Medicare hospital cost report data files from the most recent quarterly HCRIS release. For example, ordinarily, the best available cost report data used in relative weight calculations would be based on the cost reports beginning 3 fiscal years prior to the fiscal year that is the subject of the rulemaking. For the FY 2022 ratesetting, under ordinary circumstances, that would be the FY 2019 cost report data from HCRIS, which would contain many cost reports ending in FY 2020 based on each hospital's cost reporting period.

In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25086 through 25090), we discussed that the FY 2020 MedPAR claims file and the FY 2019 HCRIS dataset both contain data significantly impacted by the COVID-19 PHE, primarily in that the utilization of inpatient services was generally markedly different for certain types of services in FY 2020 than would have been expected in the absence of the PHE. Accordingly, we questioned whether these data sources are the best available data to use for the FY 2022 ratesetting. In the proposed rule, we identified two factors for assessing whether these data sources represent the best available data. The first factor is to what extent the FY 2019 data from before the COVID-19 PHE is a better overall approximation of FY 2022 inpatient experience (for example, whether the share of total inpatient utilization for elective surgeries will be more similar to FY 2019 than to FY 2020), or alternatively, to what extent the FY 2020 data which include the COVID-19 PHE time period is a better overall approximation of FY 2022 inpatient experience (for example, whether the share of total inpatient utilization for respiratory infections will be more similar to FY 2020 than to FY 2019). The second factor is to what extent the decision to use the FY 2019 or FY 2020 data differentially impacts the FY 2022 IPPS ratesetting.

In the proposed rule, in order to help assess likely inpatient utilization in FY 2022, we examined the trend in the number of COVID-19 vaccinations in the United States as reported to the Centers for Disease Control (CDC) (see https://www.cdc.gov/​coronavirus/​2019-ncov/​covid-data/​covidview/​index.html, accessed April 16, 2021).

The U.S. COVID-19 Vaccination Program began December 14, 2020. As of April 15, 2021, 198.3 million vaccine doses had been administered. Overall, about 125.8 million people, or 37.9 percent of the U.S. population, had received at least one dose of vaccine as of this date. About 78.5 million people, or 23.6 percent of the U.S. population had been fully vaccinated. As of April 15, the 7-day average number of administered vaccine doses reported to CDC per day was 3.3 million, a 10.3 percent increase from the previous week. As of April 15, 80 percent of people 65 or older had received at least one dose of vaccine; 63.7 percent were fully vaccinated. Nearly one-half (48.3 percent) of people 18 or older had received at least one dose of vaccine; 30.3 percent were fully vaccinated. Nationally, COVID-19-related emergency department visits as well as both hospital admissions and current hospitalizations had risen among patients ages 18 to 64 years in recent weeks, but emergency department visits and hospitalizations among people ages 65 years and older had decreased, likely demonstrating the important role vaccination plays in protecting against COVID-19.

As indicated by the CDC, COVID-19 vaccines are effective at preventing COVID-19. For example, a CDC report on the effectiveness of the Pfizer-BioNTech and Moderna COVID-19 vaccines when administered in real-world conditions found that after being fully vaccinated with either of these vaccines a person's risk of infection is reduced by up to 90 percent. With respect to inpatient utilization in FY 2020, in the proposed rule we stated our belief that COVID-19 and the risk of disease were drivers of the different utilization patterns observed. Therefore, the continuing rapid increase in vaccinations coupled with the overall effectiveness of the vaccines led us to conclude based on the information available at the time of the proposed rule that there will be significantly lower risk of COVID-19 in FY 2022 and fewer hospitalizations for COVID-19 for Medicare beneficiaries in FY 2022 than there were in FY 2020. This called into question the applicability of inpatient data from FY 2020 to the FY 2022 time period for hospitals paid under the IPPS and LTCH PPS.

In the proposed rule, we also reviewed CDC guidance to healthcare facilities during the COVID-19 PHE (see https://www.cdc.gov/​coronavirus/​2019-ncov/​hcp/​guidance-hcf.html). In its most recent guidance available at the time of the proposed rule, the CDC described how the COVID-19 pandemic has changed how health care is delivered in the United States and has affected the operations of healthcare facilities. Effects cited by the CDC include increases in patients seeking care for respiratory illnesses, patients deferring and delaying non-COVID-19 care, disruptions in supply chains, fluctuations in facilities' occupancy, absenteeism among staff because of illness or caregiving responsibilities, and increases in mental health concerns.

In the proposed rule, in order to investigate the effects cited by the CDC, we examined the claims data from the FY 2020 MedPAR compared to the FY 2019 MedPAR. Overall, in FY 2020, inpatient admissions under the IPPS dropped by approximately 14 percent compared to FY 2019. Elective surgeries declined significantly, and the share of admissions for MS-DRGs associated with the treatment of COVID-19 increased. For example, the number of inpatient admissions for MS-DRG 470 (Major Hip and Knee Joint Replacement or Reattachment of Lower Extremity without MCC) dropped by 40 percent in FY 2020. Its share of inpatient admissions dropped from 4.0 percent in FY 2019 to 2.8 percent in FY 2020. The number of inpatient admissions for MS-DRG 177 (Respiratory Infections and Inflammations with MCC) increased by +133 percent. Its share of inpatient admissions increased from 0.8 percent in FY 2019 to 2.2 percent in FY 2020. This data analysis from the proposed rule was consistent with the observations in the CDC's guidance that COVID-19 increased the number of patients seeking care for respiratory illnesses, and caused patients to defer and delay non-COVID-19 care. In the proposed rule, we noted that these observed changes in the claims data also extend to the cost reports submitted by hospitals that include the COVID-19 PHE time period, since those cost reports that extend into the COVID-19 PHE are based in part on the discharges that occurred during that time.

In the proposed rule, we concluded that the effects noted by the CDC are specific to the pandemic and to the extent that the effects on healthcare facilities noted by the CDC are not expected to continue into FY 2022, it would suggest that the inpatient data from FY 2020 impacted by the COVID-19 PHE may be less suitable for use in the FY 2022 ratesetting.

In the proposed rule, we also considered the analysis of 2020 IPPS real case-mix included in the notice titled “CY 2021 Inpatient Hospital Deductible and Hospital and Extended Care Services Coinsurance Amounts” that appeared in the Federal Register on November 12, 2020 (85 FR 71916). Section 1813(b) of the Act prescribes the method for computing the amount of the inpatient hospital deductible. The inpatient hospital deductible is an amount equal to the inpatient hospital deductible for the preceding CY, adjusted by the best estimate of the payment-weighted average of the applicable percentage increases used for updating the payment rates to hospitals, and adjusted to reflect changes in real case-mix.

To develop the adjustment to reflect changes in real case-mix, we first calculated an average case-mix for each hospital that reflected the relative costliness of that hospital's mix of cases compared to those of other hospitals. We then computed the change in average case-mix for hospitals paid under the IPPS in FY 2020 compared to FY 2019, using Medicare claims from IPPS hospitals received as of July 2020. Those claims represented a total of about 6.1 million Medicare discharges for FY 2020 and provided the most recent case-mix data available at the time of that analysis. Based on these claims, the change in average case-mix in FY 2020 was 2.8 percent. Based on these claims and past experience, we expected the overall case-mix change to be 3.8 percent as the year progressed and more FY 2020 data became available.

Real case-mix is that portion of case-mix that is due to changes in the mix of cases in the hospital and not due to coding optimization. As stated in the November 2020 notice, COVID-19 has complicated the determination of real case-mix increase. COVID-19 cases typically group to higher-weighted MS-DRGs, and hospitals have experienced a concurrent reduction in cases that group to lower weighted MS-DRGs. Both of these factors cause a real increase in case-mix. We compared the average case-mix for February 2020 through July 2020 (COVID-19 period) with average case-mix for October 2019 through January 2020 (pre-COVID-19 period). Since this increase applies for only a portion of CY 2020, we allocated this increase by the estimated discharges over the 2 periods—a 2.5 percent increase for FY 2020. The 1.3-percent residual case-mix increase is a mixture of real case-mix and coding optimization. Over the past several years, we have observed total case-mix increases of about 0.5 percent per year and have assumed that they are real. Thus, based on the information available, we expect that 0.5 percent of the residual 1.3 percent change in average case-mix for FY 2020 will be real. The combination of the 2.5 percent COVID-19 effect and the remaining residual 0.5-percent real case-mix increase results in an estimated 3.0 percent increase in real case-mix for FY 2020.

Because this analysis was based on Medicare claims from IPPS hospitals received as of July 2020, in the proposed rule, we calculated case-mix values for FY 2019 and FY 2020 based on the full year FY 2019 and FY 2020 MedPAR files to help assess the change in case-mix based on more complete data. For FY 2019 we calculated a case-mix value of 1.813 and for FY 2020 we calculated a case-mix value of 1.883, an increase in total case-mix of 3.9 percent. These were calculated using the MS-DRG relative weights in effect for those time periods. This was consistent with the estimate in the Notice of the CY 2021 Inpatient Hospital Deductible and Hospital and Extended Care Services Coinsurance Amounts that the change in total case-mix for FY 2020 would be 3.8 percent when more complete data was available.

The increases in patients seeking care for respiratory illnesses and patients deferring and delaying non-COVID-19 care during FY 2020, the increasing number of vaccinations for COVID-19, and the high estimate of FY 2020 real case-mix growth all led us to believe that FY 2020 is not the best overall approximation of inpatient experience in FY 2022 and that FY 2019 as the most recent complete FY prior to the COVID-19 PHE is a better approximation of FY 2022 inpatient experience.

As we indicated in the proposed rule, whether the data is a better overall approximation of FY 2022 inpatient experience is one factor in assessing which data source represents the best available data for the FY 2022 rulemaking. Another factor is to what extent the decision to use the FY 2019 or FY 2020 data differentially impacts the FY 2022 ratesetting. One way to assess this factor is to model the change in the total case-mix, which is a driver of spending, if our assumption regarding the FY 2022 inpatient experience used in calculating the MS-DRG relative weights turns out to be less accurate based on actual FY 2022 experience. In the proposed rule, we estimated the difference in the total case-mix if we calculated the MS-DRG relative weights based on the FY 2019 claims data and the actual utilization is ultimately more similar to the FY 2020 data, as compared to if we calculated the MS-DRG relative weights based on the FY 2020 data and the actual utilization is ultimately more similar to the FY 2019 data.

We first calculated a set of MS-DRG relative weights using an assumption that the FY 2022 inpatient experience would be similar to the FY 2019 data. Specifically, we used the proposed version 39 GROUPER (which would be applicable to discharges occurring in FY 2022) and the FY 2019 MedPAR data to calculate MS-DRG relative weights. We refer to these MS-DRG relative weights as the FY 2019-based weights.

We next calculated a set of MS-DRG relative weights using an assumption that the FY 2022 inpatient experience would be more similar to the FY 2020 data. Specifically, we used the proposed version 39 GROUPER and the FY 2020 MedPAR data to calculate MS-DRG relative weights. This is how we would ordinarily calculate the proposed FY 2022 MS-DRG relative weights. We refer to these MS-DRG relative weights as the FY 2020-based weights.

We then estimated the difference in case-mix under the FY 2019-based weights and the FY 2020-based weights if the FY 2022 inpatient experience ended up being the reverse of the assumption made when calculating that set of relative weights. In other words, we compared estimated case-mix calculated under four different scenarios. For the FY 2019-based weights, we calculated the case-mix using claims from the FY 2019 MedPAR as an approximation of the actual FY 2022 experience (Scenario A), and using claims from the FY 2020 MedPAR as an approximation of the actual FY 2022 experience (Scenario B). For the FY 2020-based weights, we calculated the case-mix using claims from the FY 2020 MedPAR as an approximation of the actual FY 2022 experience (Scenario C), and using claims from the FY 2019 MedPAR as an approximation of the actual FY 2022 experience (Scenario D).

The results are shown in the following table.

In Scenario A and Scenario C, there is by definition no differential impact on total case-mix due to a less accurate assumption made when the MS-DRG relative weights were calculated: The FY 2022 inpatient experience matches the assumption used when the MS-DRG relative weights were calculated. In Scenario B and Scenario D, it is the reverse of the assumption used when the MS-DRG relative weights were calculated.

In the proposed rule, we explained that in Scenario B, when the FY 2019-based weights were used, but the FY 2022 inpatient experience turns out to be more similar to FY 2020 data, the less accurate assumption does not differentially impact the modelled case-mix. This can be seen by comparing the modelled case-mix under Scenario B (1.885) with the modelled case-mix under Scenario C (also 1.885). In other words, if the FY 2019-based weights and inpatient experience turn out to be more similar to the FY 2020 data, then the modelled case-mix is approximately the same as if we had used the FY 2020-based weights. The results show that use of the FY 2019-based weights did not impact the modelled case-mix compared to using the FY 2020-based weights.

In the proposed rule, we explained that the same conclusion is not true of Scenario D where the FY 2020-based weights were used, but the FY 2022 inpatient experience turns out to be more similar to FY 2019 data. Here the less accurate assumption does differentially impact the modelled case-mix, by −0.2 percent. This can be seen by comparing the modelled case-mix under Scenario D (1.816) with the modelled case-mix under Scenario A (1.820). In other words, if we use the FY 2020-based weights, and FY 2022 inpatient experience turns out to be more similar to FY 2019 data, the modelled case-mix is −0.2 percent lower than if we had used the FY 2019-based weights. This shows that use of the FY 2020-based weights does impact the modelled case-mix compared to a result from using the FY 2019-based weights.

Putting aside that we believe FY 2019 is a more likely approximation of the FY 2022 inpatient experience for the reasons discussed earlier, the previous analysis from the proposed rule indicates that the differential effect of the FY 2022 MS-DRG relative weights is more limited if the FY 2019-based weights are used than it is if the FY 2020-based weights are used, should the FY 2022 inpatient experience not match the assumption used to calculate the MS-DRG relative weights.

Another payment factor that is impacted by the use of the FY 2019 or FY 2020 data in the FY 2022 ratesetting is the outlier fixed-loss threshold. As discussed in section II.A.4.j. of the proposed rule, section 1886(d)(5)(A) of the Act provides for payments in addition to the basic prospective payments for “outlier” cases involving extraordinarily high costs. To qualify for outlier payments, a case must have costs greater than the sum of certain payments and the “outlier threshold” or “fixed-loss” amount (a dollar amount by which the costs of a case must exceed payments in order to qualify for an outlier payment). In accordance with section 1886(d)(5)(A)(iv) of the Act, outlier payments for any year are projected to be not less than 5 percent nor more than 6 percent of total operating DRG payments plus outlier payments. We target 5.1 percent within this range. Section 1886(d)(3)(B) of the Act requires the Secretary to reduce the average standardized amount by a factor to account for the estimated proportion of total DRG payments made to outlier cases. In other words, outlier payments are prospectively estimated to be budget neutral overall under the IPPS.

In the proposed rule, under an assumption that the FY 2022 inpatient experience will be more similar to FY 2019 data, we estimated an outlier fixed-loss amount of $30,967. Under an assumption that FY 2022 inpatient experience will be more similar to FY 2020 data, we estimated an outlier fixed-loss amount of $36,843, a difference of $5,876 or approximately 20 percent higher. Again, putting aside that we believe FY 2019 is a better approximation of the FY 2022 inpatient experience for the reasons discussed earlier, we concluded in the proposed rule that the difference between the two estimated outlier fixed-loss amounts means there is a consequence to making a decision as to the best available data for estimating the FY 2022 outlier fixed-loss amount in the form of potentially exceeding or falling short of the targeted 5.1 percent of total operating DRG payments plus outlier payments.

In summary, in the proposed rule, we highlighted two factors in the decision regarding the best available data to use in the FY 2022 ratesetting. The first factor was to what extent the FY 2019 data from before the COVID-19 PHE is a better overall approximation of FY 2022 inpatient experience, or alternatively, to what extent the FY 2020 data including the COVID-19 PHE time period is a better overall approximation of FY 2022 inpatient experience. After analyzing this issue and for the reasons discussed, in the proposed rule we stated our belief that FY 2019 is generally a better overall approximation of FY 2022. The second factor was to what extent the decision to use the FY 2019 or FY 2020 data differentially impacts the FY 2022 IPPS ratesetting. After analyzing this issue, in the proposed rule we determined that the decision does differentially impact the overall FY 2022 IPPS ratesetting in two primary ways. First, a decision to base the MS-DRG relative weights on the FY 2020 data has an impact of −0.2 percent if the FY 2022 inpatient experience is more like FY 2019 data. Second, the decision to use the FY 2019 or FY 2020 data results in an approximately 20 percent difference in the estimate of the outlier fixed-loss amount.

Taking these factors into account, in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25089) we proposed to use the FY 2019 data for the FY 2022 ratesetting for circumstances where the FY 2020 data is significantly impacted by the COVID-19 PHE, primarily in that the data reflect generally markedly different utilization for certain types of services in FY 2020 than would have been expected in the absence of the PHE, as discussed previously. For example, we proposed to use the FY 2019 MedPAR claims data for purposes where we ordinarily would have used the FY 2020 MedPAR claims data, such as in our analysis of changes to MS-DRG classifications (as discussed in greater detail in section II.D. of the preamble of the proposed rule). Similarly, we proposed to use cost report data from the FY 2018 HCRIS file for purposes where we ordinarily would have used the FY 2019 HCRIS file, such as in determining the FY 2022 IPPS MS-DRG relative weights (as discussed in greater detail in section II.E. of the preamble of the proposed rule). (As noted previously, the FY 2019 HCRIS data would contain many cost reports ending in FY 2020 based on each hospital's cost reporting period.)

In section I.O. of Appendix A of the proposed rule, we stated that we were considering, as an alternative to this proposal, the use of the same FY 2020 data that we would ordinarily use for purposes of FY 2022 ratesetting, and which we may consider finalizing based on consideration of comments received. To facilitate comment on this alternative for FY 2022, we made data and other supplemental files available. We refer the reader to section I.O. of Appendix A of the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25784) for more information on these supplemental files and where they may be found.

Comment: The vast majority of commenters were fully supportive of our proposal to use the FY 2019 data for the FY 2022 ratesetting for circumstances where the FY 2020 data is significantly impacted by the COVID-19 PHE. A commenter was supportive of our proposal but noted that transplant volume was higher in 2020 than 2019. However, the commenter stated that it recognized that due to the nature of hospital admissions during 2020 and the number and types of procedures provided in the hospital during the PHE, use of 2019 data is necessary.

A commenter who stated they did not disagree with our proposal, expressed a concern that surges in COVID-19 cases could still occur in the future, making it impossible to predict what FY 2022 will look like. The commenter mentioned the slowing COVID-19 vaccination rate in many areas and the emergence of new COVID-19 variants that the COVID-19 vaccines were not tested against as reasons to support this concern.

Some commenters were supportive of our proposal, but urged CMS to make or consider certain technical adjustments when calculating the FY 2022 relative weights. We refer readers to section II.E. of the preamble to this final rule for a complete discussion of these comments. A few commenters objected to CMS not using FY 2020 data to calculate the payment adjustment for CAR T-cell clinical trial and expanded access use immunotherapy cases. We refer readers to section V.M. of the preamble to this final rule for a complete discussion of these comments. A commenter expressed concern about not using FY 2020 data in FY 2022 ratesetting for the LTCH PPS, in particular with respect to how the additional costs LTCHs incurred in 2020 will be reflected in future years' rates. We believe this commenter may have misunderstood the role of the market basket update and refer readers to section VIII.A.4. of the preamble to this final rule for a complete discussion of this comment.

Response: We appreciate the commenters' support of our proposal to use the FY 2019 data for the FY 2022 ratesetting for circumstances where the FY 2020 data is significantly impacted by the COVID-19 PHE. In response to the commenter who expressed concerns about the possibility of future surges in COVID-19 making it impossible to predict what FY 2022 will look like, we appreciate the feedback. However, we believe the most recent vaccination and hospitalization data reported by the CDC, discussed later in this section, support our assumption that there will be significantly lower risk of COVID-19 in FY 2022 and fewer hospitalizations for COVID-19 for Medicare beneficiaries in FY 2022 than there were in FY 2020. To address to the extent possible the commenter's concerns about the efficacy of the COVID-19 vaccines against new variants, we refer the reader to the June 25th weekly summary report from the CDC that states “recent studies have shown that the vaccines available in the United States are effective against variants currently circulating, including B.1.617.2.”

Since the publication of the proposed rule, we have continued to monitor the vaccination and hospitalization data reported by the CDC (see https://www.cdc.gov/​coronavirus/​2019-ncov/​covid-data/​covidview/​past-reports/​07022021.html, accessed July 6, 2021). As of July 1, 2021, 328.2 million vaccine doses have been administered. Overall, about 181.3 million people, or 54.6 percent of the U.S. population, have received at least one dose of vaccine as of this date. About 155.9 million people, or 47.0 percent of the U.S. population have been fully vaccinated. As of July 1, the 7-day average number of administered vaccine doses reported to CDC per day was 334,816, a 45.3 percent decrease from the previous week. As of July 1, 2021, 88.2 percent of people 65 or older have received at least one dose of vaccine; 78.3 percent are fully vaccinated. Two-thirds (66.7 percent) of people 18 or older have received at least one dose of vaccine; 57.7 percent are fully vaccinated. Nationally, the COVID-19-related 7-day moving average for new hospital admissions has been generally decreasing since publication of the proposed rule, demonstrating the important role vaccination is playing in protecting against COVID-19. As of July 3, 2021 (the most recent date with data available at the time of writing), the 7-day moving average for new hospital admissions was 1,821, down significantly from the 7-day moving average peak of 16,492 recorded on January 9th, 2021 and the 7-day moving average of 5,075 recorded on April 27, 2021, the date the proposed rule was issued.

In the proposed rule, we analyzed the significant growth in real-case mix observed in the FY 2020 MedPAR claims data. This analysis was consistent with the observations in the CDC's guidance that COVID-19 increased the number of patients seeking care for respiratory illnesses, and caused patients to defer and delay non-COVID-19 care. While we acknowledge that the rate of vaccination for the U.S. population has slowed considerably since we released the proposed rule, the total number of vaccines administered, especially for people 65 or older, along with the latest hospitalization trends, lead us to continue to believe that there will be a significantly lower risk of COVID-19 in FY 2022 and fewer hospitalizations for COVID-19 for Medicare beneficiaries in FY 2022 than there were in FY 2020. For these reasons, we continue to believe that FY 2020 is not the best overall approximation of inpatient experience in FY 2022 and that FY 2019 as the most recent complete FY prior to the COVID-19 PHE is a better approximation of FY 2022 inpatient experience.

Therefore, after considering the comments received and evaluating the most recent vaccination and hospitalization data from the CDC, we are finalizing our proposal to use the FY 2019 data for the FY 2022 ratesetting for circumstances where the FY 2020 data is significantly impacted by the COVID-19 PHE, primarily in that the data reflect generally markedly different utilization for certain types of services in FY 2020 than would have been expected in the absence of the PHE, as discussed previously. For example, in this final rule we used the FY 2019 MedPAR claims data for purposes where we ordinarily would have used the FY 2020 MedPAR claims data, such as in our analysis of changes to MS-DRG classifications (as discussed in greater detail in section II.D. of the preamble of this final rule). Similarly, we used cost report data from the FY 2018 HCRIS file for purposes where we ordinarily would have used the FY 2019 HCRIS file, such as in determining the FY 2022 IPPS MS-DRG relative weights (as discussed in greater detail in section II.E. of the preamble of this final rule). (As noted previously, the FY 2019 HCRIS data would contain many cost reports ending in FY 2020 based on each hospital's cost reporting period.)

We note that MedPAR claims data and cost report data from the HCRIS file are examples of the data sources for which we discuss the use of the FY 2019 data for the FY 2022 ratesetting in this final rule. We have clearly identified throughout this final rule where and how we are using alternative data than what ordinarily would be used for the FY 2022 IPPS and LTCH PPS ratesetting, including certain provider specific information.

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

A. Background

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

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

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

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

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

C. FY 2022 MS-DRG Documentation and Coding Adjustment

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

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

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

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

As discussed in prior year rulemakings, and most recently in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56780 through 56782), we implemented a series of adjustments required under sections 7(b)(1)(A) and 7(b)(1)(B) of Public Law 110-90, based on a retrospective review of FY 2008 and FY 2009 claims data. We completed these adjustments in FY 2013 but indicated in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53274 through 53275) that delaying full implementation of the adjustment required under section 7(b)(1)(A) of Public Law 110-90 until FY 2013 resulted in payments in FY 2010 through FY 2012 being overstated, and that these overpayments could not be recovered under Public Law 110-90. In addition, as discussed in prior rulemakings and most recently in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38008 through 38009), section 631 of the American Taxpayer Relief Act of 2012 (ATRA) amended section 7(b)(1)(B) of Public Law 110-90 to require the Secretary to make a recoupment adjustment or adjustments totaling $11 billion by FY 2017. This adjustment represented the amount of the increase in aggregate payments as a result of not completing the prospective adjustment authorized under section 7(b)(1)(A) of Public Law 110-90 until FY 2013.

2. Adjustments Made for FYs 2018, 2019, 2020, and 2021 as Required Under Section 414 of Public Law 114-10 (MACRA) and Section 15005 of Public Law 114-255

As stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56785), once the recoupment required under section 631 of the ATRA was complete, we had anticipated making a single positive adjustment in FY 2018 to offset the reductions required to recoup the $11 billion under section 631 of the ATRA. However, section 414 of the MACRA (which was enacted on April 16, 2015) replaced the single positive adjustment we intended to make in FY 2018 with a 0.5 percentage point positive adjustment for each of FYs 2018 through 2023. In the FY 2017 rulemaking, we indicated that we would address the adjustments for FY 2018 and later fiscal years in future rulemaking. Section 15005 of the 21st Century Cures Act (Pub. L. 114-255), which was enacted on December 13, 2016, amended section 7(b)(1)(B) of the TMA, as amended by section 631 of the ATRA and section 414 of the MACRA, to reduce the adjustment for FY 2018 from a 0.5 percentage point positive adjustment to a 0.4588 percentage point positive adjustment. As we discussed in the FY 2018 rulemaking, we believe the directive under section 15005 of Public Law 114-255 is clear. Therefore, in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38009) for FY 2018, we implemented the required +0.4588 percentage point adjustment to the standardized amount. In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41157), the FY 2020 IPPS/LTCH PPS final rule (84 FR 42057), and the FY 2021 IPPS/LTCH PPS final rule (85 FR 58444 and 58445), consistent with the requirements of section 414 of the MACRA, we implemented 0.5 percentage point positive adjustments to the standardized amount for FY 2019, FY 2020, and FY 2021, respectively. We indicated the FY 2018, FY 2019, FY 2020, and FY 2021 adjustments were permanent adjustments to payment rates. We also stated that we plan to propose future adjustments required under section 414 of the MACRA for FYs 2022 and 2023 in future rulemaking.

3. Adjustment for FY 2022

Consistent with the requirements of section 414 of the MACRA, we proposed to implement a 0.5 percentage point positive adjustment to the standardized amount for FY 2022. We stated that this proposed adjustment would constitute a permanent adjustment to payment rates. We also stated that we plan to propose the final adjustment required under section 414 of the MACRA for FY 2023 in future rulemaking.

Comment: A commenter reiterated their position from prior year comments that CMS misinterpreted the relevant statutory authority, which they believe explicitly assumes that the ATRA recoupment would result in negative adjustments totaling −3.2 percentage points completed through FY 2017, rather than the cumulative −3.9 percentage point adjustment made by CMS. The commenter stated that CMS should have made an additional 0.7 percent positive adjustment to the standardized amount in FY 2018. The commenter stated that the failure to make this adjustment resulted in an incorrect reduction in the standardized amount for all subsequent years. We also received multiple comments recommending that CMS commit to use its authority (a commenter specifically citing CMS's authority under § 1886(d)(5)(I) of the Act) to restore the full amount of the cumulative −3.9 percentage point adjustment made to achieve the $11 billion targeted by the ATRA. A commenter requested CMS specify the method for full repayment of this reduction to all providers by FY 2023 in the final rule, instead of waiting until future rulemaking to propose the final adjustment for FY 2023.

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

After consideration of the public comments we received, we are finalizing our proposal to implement a 0.5 percentage point adjustment to the standardized amount for FY 2022.

D. Changes to Specific MS-DRG Classifications

1. Discussion of Changes to Coding System and Basis for FY 2022 MS-DRG Updates

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

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

b. Basis for FY 2022 MS-DRG Updates

Given the need for more time to carefully evaluate requests and propose updates, as discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38010), we changed the deadline to request updates to the MS-DRGs to November 1 of each year, which provided an additional five weeks for the data analysis and review process. In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32472), we stated that with the continued increase in the number and complexity of the requested changes to the MS-DRG classifications since the adoption of ICD-10 MS-DRGs, and in order to consider as many requests as possible, more time is needed to carefully evaluate the requested changes, analyze claims data, and consider any proposed updates. We further stated we were changing the deadline to request changes to the MS-DRGs to October 20 of each year to allow for additional time for the review and consideration of any proposed updates. However, in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58445), due to the unique circumstances for the FY 2021 IPPS/LTCH PPS final rule for which we waived the delayed effective date, we maintained the deadline of November 1, 2020 for FY 2022 MS-DRG classification change requests. We also noted that we expected to reconsider a change in the deadline beginning with comments and suggestions submitted for FY 2023. We stated in the proposed rule that while we continue to believe that a change in the deadline from November 1 to October 20 will provide hospitals sufficient time to assess potential impacts and inform future MS-DRG recommendations, we are maintaining the deadline of November 1 for FY 2023 MS-DRG classification change requests.

Comment: Commenters expressed support for a future change to the deadline for requesting updates to the MS-DRG classifications from November 1 to October 20. The commenters also recommended that CMS consider implementing an additional submission deadline, such as earlier in the calendar year. According to the commenters, while the current process to submit requests for changes to the MS-DRG classifications may be submitted at any time prior to the fall deadline, a second target submission date may encourage interested parties to submit requests earlier in the year and enable additional time for CMS to carefully evaluate requested changes, analyze claims data and consider proposed changes.

Response: We appreciate the commenters feedback and support for our discussion regarding a future change to the deadline for requesting updates to the MS-DRG classifications from November 1 to October 20. We also thank the commenters for the suggestion to add a second submission date, and may consider any changes to the deadline and/or the frequency for submissions of requests for MS-DRG classification changes for future fiscal years.

Interested parties had to submit MS-DRG classification change requests for FY 2022 by November 1, 2020, and the comments that were submitted in a timely manner for FY 2022 are discussed in this section of the preamble of this final rule. As we discuss in the sections that follow, we may not be able to fully consider all of the requests that we receive for the upcoming fiscal year. We have found that, with the implementation of ICD-10, some types of requested changes to the MS-DRG classifications require more extensive research to identify and analyze all of the data that are relevant to evaluating the potential change. We note in the discussion that follows those topics for which further research and analysis are required, and which we will continue to consider in connection with future rulemaking. Interested parties should continue to submit any comments and suggestions for FY 2023 by November 1, 2021 via the CMS MS-DRG Classification Change Request Mailbox located at: MSDRGClassificationChange@cms.hhs.gov.

We provided a test version of the ICD-10 MS-DRG GROUPER Software, Version 39, in connection with the FY 2022 IPPS/LTCH PPS proposed rule so that the public could better analyze and understand the impact of the proposals included in the proposed rule. We noted that this test software reflected the proposed GROUPER logic for FY 2022. Therefore, it included the new diagnosis and procedure codes that are effective for FY 2022 as reflected in Table 6A.—New Diagnosis Codes—FY 2022 and Table 6B.—New Procedure Codes—FY 2022 that were associated with the proposed rule and did not include the diagnosis codes that are invalid beginning in FY 2022 as reflected in Table 6C.—Invalid Diagnosis Codes—FY 2022 and Table 6D.—Invalid Procedure Codes—FY 2022 that was associated with the proposed rule. Those tables were not published in the Addendum to the proposed rule, but are available via the internet on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index.html as described in section VI. of the Addendum to the proposed rule. Because the diagnosis and procedure codes no longer valid for FY 2022 are not reflected in the test software, we made available a supplemental file in Table 6P.1a that included the mapped Version 39 FY 2022 ICD-10-CM codes and the deleted Version 38 FY 2021 ICD-10-CM codes that should be used for testing purposes with users' available claims data. In addition, we made available a supplemental file in Table 6P.1b that included the mapped Version 39 FY 2022 ICD-10-PCS codes and the deleted Version 38 FY 2021 ICD-10-PCS codes that should be used for testing purposes with users' available claims data. Therefore, users had access to the test software allowing them to build case examples that reflect the proposals that were included in the proposed rule. In addition, users were able to view the draft version of the ICD-10 MS-DRG Definitions Manual, Version 39.

The test version of the ICD-10 MS-DRG GROUPER Software, Version 39, the draft version of the ICD-10 MS-DRG Definitions Manual, Version 39, and the supplemental mapping files in Table 6P.1a and Table 6P.1b of the FY 2021 and FY 2022 ICD-10-CM diagnosis and ICD-10-PCS procedure codes are available at https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​MS-DRG-Classifications-and-Software.

Following are the changes that we proposed to the MS-DRGs for FY 2022. We invited public comments on each of the MS-DRG classification proposed changes, as well as our proposals to maintain certain existing MS-DRG classifications discussed in the proposed rule. In some cases, we proposed changes to the MS-DRG classifications based on our analysis of claims data and consultation with our clinical advisors. In other cases, we proposed to maintain the existing MS-DRG classifications based on our analysis of claims data and consultation with our clinical advisors. As discussed in section I.F of the preamble of the proposed rule, we proposed to use claims data from the March 2020 update of the FY 2019 MedPAR file in our analysis of proposed MS-DRG classification changes for FY 2022, consistent with our goal of using the best available data overall for ratesetting. Alternatively, we also provided the results of our analysis of proposed MS-DRG classification changes using claims data from the September 2020 update of the FY 2020 MedPAR file. As a result, for the FY 2022 IPPS/LTCH PPS proposed rule, our MS-DRG analysis was based on ICD-10 claims data from the March 2020 update of the FY 2019 MedPAR file, which contains hospital claims received from October 1, 2018 through March 31, 2020, for discharges occurring through September 30, 2019. In addition, we also analyzed ICD-10 claims data from the September 2020 update of the FY 2020 MedPAR file, which contains hospital claims received from October 1, 2019 through September 30, 2020, for discharges occurring through September 30, 2020. In our discussion of the proposed MS-DRG reclassification changes, we referred to these claims data as the “March 2020 update of the FY 2019 MedPAR file” and “the September 2020 update of the FY 2020 MedPAR file.”

In this FY 2022 IPPS/LTCH PPS final rule, we summarize the public comments we received on our proposals, present our responses, and state our final policies. For this FY 2022 final rule, we generally did not perform any further MS-DRG analysis of claims data. Therefore, the MS-DRG analysis is based on ICD-10 claims data from both the March 2020 update of the FY 2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR file, as set forth in the proposed rule, except as otherwise noted. As explained in previous rulemaking (76 FR 51487), in deciding whether to propose to make further modifications to the MS-DRGs for particular circumstances brought to our attention, we consider whether the resource consumption and clinical characteristics of the patients with a given set of conditions are significantly different than the remaining patients represented in the MS-DRG. We evaluate patient care costs using average costs and lengths of stay and rely on the judgment of our clinical advisors to determine whether patients are clinically distinct or similar to other patients represented in the MS-DRG. In evaluating resource costs, we consider both the absolute and percentage differences in average costs between the cases we select for review and the remainder of cases in the MS-DRG. We also consider variation in costs within these groups; that is, whether observed average differences are consistent across patients or attributable to cases that are extreme in terms of costs or length of stay, or both. Further, we consider the number of patients who will have a given set of characteristics and generally prefer not to create a new MS-DRG unless it would include a substantial number of cases.

In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58448), we finalized our proposal to expand our existing criteria to create a new complication or comorbidity (CC) or major complication or comorbidity (MCC) subgroup within a base MS-DRG. Specifically, we finalized the expansion of the criteria to include the NonCC subgroup for a three-way severity level split. We stated we believed that applying these criteria to the NonCC subgroup would better reflect resource stratification as well as promote stability in the relative weights by avoiding low volume counts for the NonCC level MS-DRGs. We noted that in our analysis of MS-DRG classification requests for FY 2021 that were received by November 1, 2019, as well as any additional analyses that were conducted in connection with those requests, we applied these criteria to each of the MCC, CC, and NonCC subgroups. We also noted that the application of the NonCC subgroup criteria going forward may result in modifications to certain MS-DRGs that are currently split into three severity levels and result in MS-DRGs that are split into two severity levels. We stated that any proposed modifications to the MS-DRGs would be addressed in future rulemaking consistent with our annual process and reflected in Table 5—Proposed List of Medicare Severity Diagnosis Related Groups (MS-DRGs), Relative Weighting Factors, and Geometric and Arithmetic Mean Length of Stay for the applicable fiscal year.

In our analysis of the MS-DRG classification requests for FY 2022 that we received by November 1, 2020, as well as any additional analyses that were conducted in connection with those requests, we applied these criteria to each of the MCC, CC, and NonCC subgroups, as described in the following table.

In general, once the decision has been made to propose to make further modifications to the MS-DRGs as described previously, such as creating a new base MS-DRG, or in our evaluation of a specific MS-DRG classification request to split (or subdivide) an existing base MS-DRG into severity levels, all five criteria must be met for the base MS-DRG to be split (or subdivided) by a CC subgroup. We note that in our analysis of requests to create a new MS-DRG, we typically evaluate the most recent year of MedPAR claims data available. For example, in the FY 2022 IPPS/LTCH PPS proposed rule we stated our MS-DRG analysis was based on ICD-10 claims data from both the March 2020 update of the FY 2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR file. However, in our evaluation of requests to split an existing base MS-DRG into severity levels, as noted in prior rulemaking (80 FR 49368), we typically analyze the most recent two years of data. This analysis includes 2 years of MedPAR claims data to compare the data results from 1 year to the next to avoid making determinations about whether additional severity levels are warranted based on an isolated year's data fluctuation and also, to validate that the established severity levels within a base MS-DRG are supported. The first step in our process of evaluating if the creation of a new CC subgroup within a base MS-DRG is warranted is to determine if all the criteria is satisfied for a three way split. If the criteria fail, the next step is to determine if the criteria are satisfied for a two way split. If the criteria for both of the two way splits fail, then a split (or CC subgroup) would generally not be warranted for that base MS-DRG. If the three way split fails on any one of the five criteria and all five criteria for both two way splits (1_23 and 12_3) are met, we would apply the two way split with the highest R2 value. We note that if the request to split (or subdivide) an existing base MS-DRG into severity levels specifies the request is for either one of the two way splits (1_23 or 12_3), in response to the specific request, we will evaluate the criteria for both of the two way splits, however we do not also evaluate the criteria for a three way split.

In the FY 2022 IPPS/LTCH PPS proposed rule, we stated that using the March 2020 update of the FY 2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR file, we analyzed how applying the NonCC subgroup criteria to all MS-DRGs currently split into three severity levels would affect the MS-DRG structure beginning in FY 2022. We noted that findings from our analysis indicated that approximately 32 MS-DRGs would be subject to change based on the three-way severity level split criterion finalized in FY 2021. Specifically, we found that applying the NonCC subgroup criteria to all MS-DRGs currently split into three severity levels would result in the deletion of 96 MS-DRGs (32 MS-DRGs × 3 severity levels = 96) and the creation of 58 new MS-DRGs. We further noted that these updates would also involve a redistribution of cases, which would impact the relative weights, and, thus, the payment rates proposed for particular types of cases. We referred the reader to Table 6P.1c associated with the proposed rule for the list of the 96 MS-DRGs that would be subject to deletion and the list of the 58 new MS-DRGs that would be proposed for creation for FY 2022 under this policy if the NonCC subgroup criteria were applied.

We stated in the proposed rule that in light of the public health emergency (PHE), we had concerns about the impact of implementing this volume of MS-DRG changes at this time, and our belief that it may be appropriate to delay application of the NonCC subgroup criteria to existing MS-DRGs in order to maintain more stability in the current MS-DRG structure. Therefore, we proposed to delay the application of the NonCC subgroup criteria to existing MS-DRGs with a three-way severity level split until FY 2023, and proposed for FY 2022 to maintain the current structure of the 32 MS-DRGs that currently have a three-way severity level split (total of 96 MS-DRGs) that would otherwise be subject to these criteria.

Comment: Several commenters expressed support for our proposal to delay the application of the expanded three-way severity level split criteria to the NonCC subgroup until fiscal year 2023 in light of the PHE, and to maintain the current structure of the MS-DRGs. Many commenters also recommended that a complete analysis of the MS-DRG changes to be proposed for fiscal year 2023 in connection with the expanded three-way severity split criteria be conducted and made available to enable the public an opportunity to review and consider the redistribution of cases, the impact to the relative weights (for example, Table 5—Proposed List of Medicare Severity Diagnosis Related Groups (MS-DRGs), Relative Weighting Factors, and Geometric and Arithmetic Mean Length of Stay), payment rates and hospital case mix to allow meaningful comment prior to implementation. A few commenters suggested delaying the application of the expanded three-way severity split NonCC subgroup criteria until fiscal year 2024 to allow analysis of claims data from FY 2022 that may better reflect post pandemic utilization. Another commenter recommended delaying any changes until FY 2025.

A commenter expressed concern that changes to the underlying MS-DRG structure may inadvertently exacerbate payment differentials between different types of hospitals (e.g., urban versus rural) based on the types of services they provide, which may negatively impact Medicare beneficiary access to some services. Another commenter stated it reviewed its hospital specific data and had concerns that the “with cc” level will be reduced on several MS-DRGs. This commenter stated that if its case mix remains the same it would continue to treat many patients with comorbid conditions and receive payment consistent with a MS-DRG at the “without CC” level. The commenter identified the following four MS-DRGs that appeared to be impacted the most with respect to lost revenue, MS-DRG 617 (Amputation of Lower Limb for Endocrine, Nutritional and Metabolic Disorder with CC); MS-DRG 847 (Chemotherapy without Acute Leukemia as Secondary Diagnosis with CC); MS-DRG 854 (Infectious and Parasitic Diseases with O.R. Procedure with CC) and MS-DRG 958 (Other O.R. Procedures for Multiple Significant Trauma with CC). Lastly, the commenter recommended that CMS also further assess other proposed groupings, such as the maternity MS-DRGs, due to historically low volumes in these MS-DRGs and to determine if it would be appropriate to combine any of them.

Another commenter requested that CMS provide data transparency to illustrate volumes by MS-DRG that support the proposal for changes to the 96 MS-DRGs discussed in the FY 2022 IPPS/LTCH PPS proposed rule and to also consider patient mix for the obstetric MS-DRGs. This commenter also suggested that CMS examine the impact for surgical versus medical MS-DRGs with respect to redistribution and associated impacts to the relative weights. According to the commenter, the impact appears to be greater for surgical MS-DRGs.

Finally, a commenter who expressed support for CMS' proposal to delay implementation of the expanded three-way severity split criteria to the NonCC subgroup recommended that any proposed changes to the structure of the MS-DRGs should consist of the impact of the proposed CC/MCC redesign and not the current CC/MCC structure that is scheduled to be changed.

Response: We appreciate the commenters' support. In response to the recommendation that a complete analysis of the MS-DRG changes to be proposed for FY 2023 in connection with the application of the expanded three-way severity split criteria to the NonCC subgroup be conducted and made publicly available, we plan to perform and make publicly available a more detailed analysis in connection with any future proposed changes, consistent with our annual claims analysis for MS-DRG classification change proposals. With respect to the commenters who suggested delaying the application of the expanded three-way severity split NonCC subgroup criteria until fiscal year 2024 or later, including to allow the use of FY 2022 claims data, we appreciate the feedback and will take these suggestions under consideration.

In response to the commenters who expressed concern that changes to the underlying MS-DRG structure may inadvertently exacerbate payment differentials between different types of hospitals based on the types of services they provide, or would have the greatest impacts with respect to particular MS-DRGs, we note that generally, changes to the MS-DRG classifications and related policies under the IPPS that are implemented on an annual basis may affect payment for different types of hospitals depending on the services they provide, and, note that we intend to conduct and make publicly available analysis of the application of the NonCC subgroup criteria in connection with any future proposed changes, consistent with our annual MS-DRG analysis, including with respect to particular MS-DRGs.

We appreciate the commenters' feedback suggesting further review of the maternity (obstetric) MS-DRGs and agree that these groupings warrant special consideration. As discussed in prior rulemaking (83 FR 41210), we cannot adopt the same approach to refine the maternity and newborn MS-DRGs because of the extremely low volume of Medicare patients there are in these DRGs.

In response to the commenter who requested that CMS provide data transparency to illustrate volumes by MS-DRG that support the proposal for changes to the 96 MS-DRGs discussed in the FY 2022 IPPS/LTCH PPS proposed rule, we refer the reader to Table 6P.1l associated with this final rule and available via the internet at https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS. This table displays the volume (case counts) by each MS-DRG based on claims data from the March 2020 update of the FY 2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR file.

We also thank the commenter for its suggestion to examine the impact for surgical versus medical MS-DRGs and agree that type of information can be useful for stakeholders.

With respect to the commenter who recommended that any proposed changes to the structure of the MS-DRGs should consist of the impact of the proposed CC/MCC redesign and not the current CC/MCC structure that is scheduled to be changed, it is not clear to us from the limited comment if the commenter is referring to the potential changes in connection with the comprehensive CC/MCC analysis that is currently in progress. We note that any proposed modifications to the MS-DRGs would be addressed in future rulemaking, including any proposed changes to the severity level designation of diagnosis codes, and would be considered and taken into account with application of the NonCC subgroup criteria.

After consideration of the public comments we received, we are finalizing our proposal to delay the application of the NonCC subgroup criteria to existing MS-DRGs with a three-way severity level split until FY 2023 or later, and are finalizing for FY 2022 to maintain the current structure of the 32 MS-DRGs that currently have a three-way severity level split.

We are making the FY 2022 ICD-10 MS-DRG GROUPER and Medicare Code Editor (MCE) Software Version 39, the ICD-10 MS-DRG Definitions Manual files Version 39 and the Definitions of Medicare Code Edits Manual Version 39 available to the public on our CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​MS-DRG-Classifications-and-Software.

2. Pre-MDC: MS-DRG 018 Chimeric Antigen Receptor (CAR) T-Cell Therapy

In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58451 through 58453), we finalized our proposal to create Pre-MDC MS-DRG 018 (Chimeric Antigen Receptor (CAR) T-cell Immunotherapy) and to reassign cases reporting ICD-10-PCS procedure codes XW033C3 (Introduction of engineered autologous chimeric antigen receptor t-cell immunotherapy into peripheral vein, percutaneous approach, new technology group 3) or XW043C3 (Introduction of engineered autologous chimeric antigen receptor t-cell immunotherapy into central vein, percutaneous approach, new technology group 3) from Pre-MDC MS-DRG 016 (Autologous Bone Marrow Transplant with CC/MCC or T-cell Immunotherapy), to new Pre-MDC MS-DRG 018 effective with discharges on and after October 1, 2020. We also finalized our proposal to revise the title for MS-DRG 016 from “Autologous Bone Marrow Transplant with CC/MCC or T-cell Immunotherapy” to “Autologous Bone Marrow Transplant with CC/MCC” to reflect these changes.

Additionally, in the FY 2021 IPPS/LTCH PPS final rule in response to public comments expressing concern that Pre-MDC MS-DRG 018 is specific to one mechanistic approach to cellular therapy, and in response to commenters who sought clarification on how future CAR T-cell and non-CAR T-cell therapy products would be assigned, we stated that if additional cellular therapies should become available, we would use our established process to determine the MS-DRG assignment. The commenters requested that CMS provide flexibility for future cellular therapies, as they are made available and not restrict Pre-MDC MS-DRG 018 to CAR T-cell therapies alone. In this section of this rule, we discuss the assignment of these therapies in more detail.

As discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25094), during the September 8-9, 2020 ICD-10 Coordination and Maintenance Committee meeting, several topics involving requests for new procedure codes related to CAR T-cell therapies, non-CAR T-cell therapies and other immunotherapies were discussed. We referred the reader to the CMS website at: https://www.cms.gov/​Medicare/​Coding/​ICD10/​C-and-M-Meeting-Materials for additional detailed information regarding these requests for new procedure codes.

As noted in prior rulemaking (85 FR 32543), for new procedure codes that have been finalized through the ICD-10 Coordination and Maintenance Committee meeting process and are proposed to be classified as O.R. procedures or non-O.R. procedures affecting the MS-DRG, our clinical advisors recommend the MS-DRG assignment which is then made available in association with the proposed rule (Table 6B.—New Procedure Codes) and subject to public comment. These proposed assignments are generally based on the assignment of predecessor codes or the assignment of similar codes. As discussed in section II.D.13 of the preamble of the proposed rule and this final rule, Table 6B.—New Procedure Codes, lists the new procedure codes that have been approved to date that will be effective with discharges on and after October 1, 2021. Included in Table 6B are the following new procedure codes that describe the administration of CAR T-cell and non-CAR T-cell therapies and other immunotherapies. As stated in the proposed rule, consistent with our established process, we examined the MS-DRG assignment for the predecessor codes to determine the most appropriate MS-DRG assignment and, consistent with the assignment of those predecessor codes, we proposed to classify the following new procedure codes as non-O.R. procedures affecting Pre-MDC MS-DRG 018, as shown in Table 6B.—New Procedure Codes associated with the proposed rule and available via the internet on the CMS website at https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index/​.

In connection with our proposed assignment of the listed procedure codes to Pre-MDC MS-DRG 018, we also proposed to revise the title for Pre-MDC MS-DRG 018 “Chimeric Antigen Receptor (CAR) T-cell Immunotherapy” to “Chimeric Antigen Receptor (CAR) T-cell and Other Immunotherapies” to better reflect the cases reporting the administration of non-CAR T-cell therapies and other immunotherapies that would also be assigned to this MS-DRG (for example, Introduction of lifileucel immunotherapy into peripheral vein, percutaneous approach, new technology group 7), in addition to CAR T-cell therapies.

Comment: Several commenters agreed with the proposal to assign the listed ICD-10-PCS procedure codes to Pre-MDC MS-DRG 018 and to revise the title to include “Other Immunotherapies.” A commenter who expressed support for the change to Pre-MDC MS-DRG 018 stated its view that the domain of cellular therapeutics will become increasingly important in the care of Medicare beneficiaries with cancer in the future and that creating sufficient plasticity in the diagnostic coding system to permit the continued integration of new and innovative therapeutics into the evidence-based care of Medicare beneficiaries is essential. Another commenter stated they appreciated the recognition of the differentiated nature of cancer care, as well as the importance of innovation in the domain of immune-oncology, which it stated was a necessary part of effective, equitable cancer care delivery to CMS beneficiaries who receive their care at both PPS and PPS-Exempt centers to ensure equitable access. A commenter stated the proposed change to Pre-MDC MS-DRG 018 furthers the goal of securing expedited access for Medicare beneficiaries to innovative therapies. Another commenter stated the proposal responds to stakeholder concerns that currently, Pre-MDC MS-DRG 018 is specific to one mechanistic approach to cellular therapy. This same commenter and other commenters stated the proposal is also responsive to stakeholder requests that CMS provide flexibility for future cellular therapies as they are made available, and not restrict Pre-MDC MS-DRG 018 to CAR T-cell therapies alone.

However, some commenters who expressed appreciation of CMS' recognition of non-CAR T-cell immunotherapy and a need to revise the description for Pre-MDC MS-DRG 018 requested further clarification from CMS on what the “Other Immunotherapies” terminology is intended to include. The commenters stated the term “Other Immunotherapies” is very general and may lead to confusion since “immunotherapy” is a broad term that is applied across several therapeutic areas (for example Diabetes, Rheumatoid Arthritis, Cancer, etc.) to describe treatments that stimulate an immune response within patients. A commenter stated that the National Cancer Institute differentiates immunotherapy for cancer patients into several types (for example, Immune checkpoint inhibitors, T-cell transfer therapy, Monoclonal antibodies, etc.). This commenter stated their belief that CMS is not intending to refer to a broad array of immunotherapy and suggested that more precise language in the descriptor of Pre-MDC MS-DRG 018 may be beneficial. Some commenters recommended that CMS consider using terminology such as “Immune Effector Cells” in place of “Other Immunotherapies” with respect to the description of the MS-DRG. Other commenters suggested that CMS consider revising the title for Pre-MDC MS-DRG 018 to “Autologous T-cell Immunotherapies”. Another commenter stated they recognized the intent of the proposed change and commended the effort by CMS to ensure that future cellular and CAR T-cell therapies are rapidly assigned to a MS-DRG to allow for proper payment, however, similar to other commenters, this commenter requested clarification as to whether the proposed revision to the title of Pre-MDC MS-DRG 18 is intended to incorporate solely cellular and CAR T-cell therapies, or whether the goal is to include all cancer immunotherapeutic agents since the term “immunotherapy” is broad and future novel cancer immunotherapeutic agents may have different resource utilization.

A commenter acknowledged that CMS is faced with a challenging landscape in incorporating the administration of new gene and cell therapies into the IPPS and recognized that CMS' proposed assignment of procedure codes describing the administration of tumor-infiltrating lymphocyte (TIL) therapies to MS-DRG 018 is to the most similar MS-DRG that covers similar clinical characteristics and comorbidities. However, whether for TIL therapies or other products in the pipeline, the commenter recommended that CMS consider the following factors when determining a permanent payment mechanism:

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

According to the commenter, society experts state there are distinct and important differences in these factors between TIL therapies and CAR T-cell therapies that may support reconsideration of the MS-DRG assignment after a product is approved by the FDA and is used to treat Medicare beneficiaries. The commenter recommended further consideration of the appropriateness and patient access implications, based on these factors, before grouping the two types of therapies together on a long-term basis. This commenter also suggested that if CMS finalized a change to the title of MS-DRG 018 to include TIL therapies upon their initial approval, as proposed, that the title of the MS-DRG more clearly reflect the specialized products assigned to it.

A few commenters urged CMS to finalize the proposal while continuing to work with stakeholders on ways to improve the predictability and stability of hospital payment for these complex, novel cell therapies that provide options for patients who so desperately need them. Other commenters stated that if the proposed revision to the title for Pre-MDC MS-DRG 018 is finalized, that CMS should continue to monitor and assess the appropriateness of therapies assigned to MS-DRG 018, if they continue to be aligned on resource use, and whether additional refinements or MS-DRGs may be warranted in the future. The commenters also suggested that CMS consider and detail a process for creating new Pre-MDC MS-DRGs that reflect utilization and clinical similarity consistent with the current overall IPPS infrastructure while maintaining important resource and clinical differences to maintain relative weight stability.

Other commenters opposed or expressed strong concerns with the proposal to assign the procedure codes describing non-CAR T-cell and other immunotherapies to Pre-MDC MS-DRG 018 and to revise the title of the MS-DRG. These commenters stated that assigning therapies that are clinically distinct from CAR T-cell therapies and may vary in resource use has the potential to distort future rate setting and will disrupt the Agency's measured multi-year approach in establishing a MS-DRG dedicated to CAR T-cell therapy. According to the commenters, expanding the MS-DRG to other immunotherapies one year after it has been implemented holds the risk of creating additional payment uncertainty around CAR T-cell therapies. The commenters urged CMS to maintain Pre-MDC MS-DRG 018 specifically for autologous CAR T-cell therapies only, as a long-term solution for reliable and predictable payments that will enable hospitals to provide access to CAR T-cell therapies for Medicare beneficiaries.

Some commenters recommended that CMS publicly propose MS-DRG mappings in advance of making a final assignment decision and provide an opportunity for stakeholders to submit comments with respect to proposed mappings. Other commenters stated the new technology add-on payment process should be independent of the process for obtaining a MS-DRG assignment for a new code.

A few commenters provided specific information relating to the process that is involved for patients undergoing treatment with CAR T-cell therapy. The commenters outlined the stage of leukapheresis where T-cells are separated and removed from the blood and the remaining blood is returned to the body, followed by the T-cells being sent to a manufacturing facility where they are genetically engineered and grown in a laboratory until millions of T-cells are produced. These commenters did not agree with the assignment of procedure codes describing non-CAR T-cell therapies and other immunotherapies to Pre-MDC MS-DRG 018 stating the treatment processes are distinctly different and that some products have yet to be approved by the FDA.

A commenter who specifically opposed the modification of Pre-MDC MS-DRG 018 for FY 2022 stated that there are not any non-CAR T-cell therapy FDA approved products that are anticipated in the near term. This commenter further stated that CMS' proposal to include “other immunotherapies” in the description for Pre-MDC MS-DRG 018 is overly broad and risks inclusion of therapeutics which are not well aligned with CAR T-cell cases being mapped to this MS-DRG. According to the commenter, CMS has not provided sufficient detail about the rationale and supporting evidence for assignment of non-CAR T-cell products to MS-DRG 018. The commenter also stated that the term “immunotherapy” could describe products that treat a range of conditions, and those products may have different experience with potential complications and expected length of stay than CAR T-cell products as well as different costs for the product itself. This same commenter recommended that CMS provide evidence of clinical consistency and resource use alignment in future rulemaking when proposing therapies that may map to Pre-MDC MS-DRG-018 and allow for public comments. Another commenter expressed concern that the proposed change to encompass “other immunotherapies” in Pre-MDC MS-DRG 018 could set a precedent for creating “generic” MS-DRGs for gene therapies, which, according to the commenter, could hamper timely beneficiary access to needed treatment. This commenter urged CMS to limit Pre-MDC MS-DRG 018 to all types of CAR T-cell therapies and to consider creating new MS-DRGs for therapies, such as gene therapies, outside the CAR T-cell space.

Response: We thank the commenters for their support of our proposal to assign the listed procedure codes describing CAR T-cell, non-CAR T-cell and other immunotherapies to Pre-MDC MS-DRG 018 and to modify the title for Pre-MDC MS-DRG 018 to reflect this assignment. As previously noted, we used our established process to examine the MS-DRG assignment for the predecessor codes to determine the most appropriate MS-DRG assignment. Specifically, we reviewed the predecessor code and MS-DRG assignment most closely associated with the new procedure code, and in the absence of claims data, we considered other factors that may be relevant to the MS-DRG assignment, including the severity of illness, treatment difficulty, complexity of service and the resources utilized in the diagnosis and/or treatment of the condition. We have noted in prior rulemaking that this process does not automatically result in the new procedure code being assigned to the same MS-DRG or to have the same designation (O.R. versus Non-O.R.) as the predecessor code. As stated in the preamble of the proposed rule and discussed in this final rule, we proposed to classify the new procedure codes as Non-O.R. procedures affecting Pre-MDC MS-DRG 018, as shown in Table 6B.—New Procedure Codes that was associated with the proposed rule and available via the internet on the CMS website at https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index/​, providing the opportunity for public comment on the MDC, MS-DRG assignment and designation.

The predecessor code and associated MS-DRG assignment (if applicable) for the listed codes are as follows:

As shown in the table, all the procedure codes have a predecessor code that was previously assigned to Pre-MDC MS-DRG 018 with the exception of four procedure codes (XW033G7, XW033L7, XW043G7, and XW043L7) that have a predecessor code that was designated Non-O.R. and did not impact any MS-DRG assignment. Two of the four codes describe the introduction (administration) of an allogeneic CAR T-cell therapy and are intended to capture any allogeneic CAR T-cell products that may become available and do not yet have a unique procedure code. The other two codes specifically describe the product lifileucel. We believe that at this time, as the field of cellular and gene immunotherapies is continuing to evolve very rapidly, that it is appropriate to initially classify the procedure codes describing allogeneic CAR T-cell therapy and lifileucel to Pre-MDC MS-DRG 018 because there are clinical similarities with respect to the administration of these products, the complexity of the conditions in which they are treating, and resource utilization that are consistent with other CAR T-cell products currently assigned to the MS-DRG. As a commenter specifically noted in its support to assign the procedure codes describing the introduction of lifileucel (XW033L7 and XW043L7) to Pre-MDC MS-DRG 018, both lifileucel (a tumor-infiltrating lymphocyte or TIL therapy) and CAR T-cell therapies require collection of a patient's lymphocyte cells which are a key component of a complicated manufacturing process to produce a patient-specific therapeutic dose, both are primarily administered in the inpatient setting due to risk of significant but treatable adverse events and the resources are anticipated to be comparable with respect to the intensity of patient care that includes the treatment phase, monitoring, management of any adverse events, and length of stay. While for TIL therapy the source of the lymphocyte is the patient's tumor and is obtained through surgical resection, and for CAR T-cell therapy the source of the lymphocyte is the patient's blood, obtained through apheresis, both therapies require a patient's lymphocytes. We also appreciate another commenter's recognition of the challenges involved with incorporating the administration of new gene and cellular therapies into the IPPS and the view that assignment of procedure codes describing the administration of tumor-infiltrating lymphocyte (TIL) therapies to Pre-MDC MS-DRG 018 is to the most similar MS-DRG that reflects similar clinical characteristics and comorbidities. With respect to allogeneic CAR T-cell therapies, it is understood that these therapies are not derived from a patient's own cells and therefore are not “autologous”, however, the resources and complexity in the care and clinical management of these patients may be considered comparable when taking into account diagnosis, prognosis, and treatment difficulty (for example, frequent adjustments in dosing regimens in efforts to prevent rejection of the new cells and susceptibility to infection). We note that the definition of a MS-DRG will not be so specific that every patient is identical, rather, the level of variation is known and predictable. Thus, while the precise resource intensity of a patient cannot be predicted, the average pattern of resource intensity of a group of patients in a MS-DRG can be accurately predicted.

We also appreciate the commenter's feedback on factors to consider for products that are in the pipeline with respect to MS-DRG assignment as a permanent payment mechanism. We agree that there may be distinctions to account for as we continue to gain more experience in the utilization of these therapies and have additional claims data to analyze.

We acknowledge the commenters' concerns that the term “Other Immunotherapies” that was proposed for the title of Pre-MDC MS-DRG 018 may be considered broad. While, as several commenters stated in their comments, cellular therapies and gene therapies are an evolving field, the term “Other Immunotherapies” is intended to encompass the group of therapies that are currently available and being utilized today (for which codes have been created for reporting in response to industry requests or are being considered for implementation), and to enable appropriate MS-DRG assignment for any future therapies that may also fit into this category and are not specifically identified as a CAR T-cell product, that may become available (for example receive marketing authorization or a newly established procedure code in the ICD-10-PCS classification) during FY 2022. We appreciate the suggestions to consider alternative terminology for the title (description) of Pre-MDC MS-DRG 018 and look forward to continuing to work with stakeholders on this issue in the future. At this time, for FY 2022, we believe it is premature to finalize any of the suggested title revisions by commenters to Pre-MDC MS-DRG 018 that may not fully reflect the various types of therapies and products described by the different procedure codes that are currently assigned or may be considered for assignment there in FY 2022. We also note that any proposed changes to modify the logic for case assignment and/or the title to Pre-MDC MS-DRG 018 would be considered in future rulemaking. We further note that the process of code creation and proposed assignment to the most appropriate MS-DRG exists independently, regardless of whether there is an associated application for a new technology add-on payment for a product or technology submitted for consideration in a given fiscal year. Specifically, requests for a new code(s) or updates to existing codes are addressed through the ICD-10 Coordination and Maintenance Committee meetings where code proposals are presented and the public is provided the opportunity to comment. All codes finalized after the September meeting must be reviewed and are subsequently proposed for assignment under the ICD-10 MS-DRGs through notice and comment rulemaking. Codes that are finalized after the March meeting are also reviewed and subject to our established process of initially reviewing the predecessor codes MS-DRG assignment and designation, while considering other relevant factors as previously described. The codes that are finalized after the March meeting are specifically identified with a footnote in Tables 6A.—New Diagnosis Codes and Table 6B.—New Procedure Codes that are made publicly available in association with the final rule via the internet on the CMS website at https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS. The public may provide feedback on these finalized assignments which are then taken into consideration for the following fiscal year. We refer the reader to section II.D.16 of the preamble of this final rule for additional information regarding the ICD-10 Coordination and Maintenance Committee meeting process. Lastly, we note that while some of the commenters opposed the revision to the title and assignment of the new ICD-10-PCS procedure codes to Pre-MDC MS-DRG 018, these commenters did not provide any alternative MS-DRGs for CMS to consider.

In response to concerns involving payment uncertainty, we disagree that modifying Pre-MDC MS-DRG 018 to include other immunotherapies one year after it has been implemented carries a risk of creating additional payment uncertainty around CAR T-cell therapies and volatility in the relative weight for Pre-MDC MS-DRG 018. As stated in section II.E.2.b. of the preamble of the proposed rule and this final rule, we proposed and are finalizing to maintain the methodology for the relative weight calculation for Pre-MDC MS-DRG 018. We refer the reader to section II.E.2.b. of the preamble of this final rule for the detailed discussion. Since the new procedure codes describing CAR T-cell, non-CAR T-cell or other immunotherapies are effective with discharges on and after October 1, 2021 and based on our understanding that the administration of these therapies continues to be in clinical trials, any claims reporting these new procedure codes containing diagnosis code Z00.6 or having standardized drug charges of less than $373,000 would be excluded from the calculation of the relative weight for Pre-MDC MS-DRG 018. During this timeframe, as additional claims data is made available, we will be better positioned to further evaluate if changes to the current methodology or other modifications to the procedure code assignments and MS-DRG are warranted.

We appreciate the unique process that is involved with the development and production of CAR T-cell therapies, however, under the IPPS, when evaluating appropriate MS-DRG assignment for technologies (for example devices) that are utilized in the performance of a procedure we do not take into consideration how a specific device is manufactured compared to how other similar devices are manufactured. Rather, we analyze and consider the procedure(s) for which the technology is utilized for or in, and the resources involved in the performance of the procedure. As discussed, based on the information to date, we believe that the initial assignment of the listed procedure codes is appropriate. Based on the nature of some comments, it appears commenters were suggesting that CMS apply the criteria that is utilized for the new technology add-on application process when suggesting what factors CMS should consider for MS-DRG assignment of CAR T-cell, non-CAR T-cell, and other immunotherapies. We note that the new technology add-on application criteria is separate and distinct from the code request process and subsequent MS-DRG assignment process.

In response to the commenter who stated there are not any non-CAR T-cell therapy FDA approved products that are anticipated in the near term, we wish to clarify that the proposed and final assignment of a procedure code to a MS-DRG is not dependent upon a products FDA approval. Similarly, the creation of a code to describe a technology that is utilized in the performance of a procedure or service does not require FDA approval of the technology.

With respect to the commenters' recommendation for CMS to continue to assess the appropriateness of the therapies being proposed or finalized to group to Pre-MDC MS-DRG 018, we note that, as discussed in the preamble of the proposed rule and this final rule we use our established process to examine the MS-DRG assignment for the predecessor codes to determine the most appropriate MS-DRG assignment and, consistent with the assignment of those predecessor codes, we propose to classify new procedure codes as shown Table 6B.—New Procedure Codes in association with the proposed rule each year. The procedure codes describing CAR T-cell, non-CAR T-cell or other immunotherapies are effective with discharges on and after October 1, 2021 as shown in Table 6B.—New Procedure Codes associated with this final rule and available via the internet on the CMS website at: https://www.cms.gov/​medicare/​medicare-fee-for-service-payment/​acuteinpatientpps. In connection with the creation of new procedure codes (and diagnosis codes), the MS-DRGs are reviewed and recalibrated on an annual basis to specifically identify changes in utilization and resources, and to allow the opportunity for public comment on proposed changes under the IPPS.

In response to the comment that the term “immunotherapy” could describe products that treat a range of conditions, we note that for FY 2022 we are addressing an immediate need to account for any upcoming therapies that may be made available that are not specifically classified as a CAR T-cell therapy to enable appropriate payment and predictability. We note that the ICD-10-CM diagnosis codes identify specific conditions and are available for tracking indications and other purposes. We also note that because MS-DRG 018 is a Pre-MDC, the logic for case assignment is dependent on the procedure codes that are specifically assigned to the logic of the MS-DRG. Therefore, if a particular type of immunotherapy is not specifically described by one of the procedure codes that are listed in the definition (logic) for Pre-MDC MS-DRG 018, then the logic for case assignment to this MS-DRG would not be satisfied and another MS-DRG would be appropriately assigned based on the GROUPER logic (the definition of the MS-DRG).

After consideration of the public comments received, for FY 2022, we are finalizing our proposal to assign the listed procedure codes describing CAR T-cell, non-CAR T-cell and other immunotherapies to Pre-MDC MS-DRG 018 and to modify the title to “Chimeric Antigen Receptor (CAR) T-cell and Other Immunotherapies” to better reflect the cases reporting the administration of non-CAR T-cell therapies and other immunotherapies.

When additional claims data becomes available for the CAR T-cell, non-CAR T-cell therapies and other immunotherapies for which new procedure codes have been created and are effective October 1, 2021 or that may be created and become effective during FY 2022, we can evaluate that data to determine if further modifications to Pre-MDC MS-DRG 018 are warranted. We plan to continue engaging with stakeholders on additional options for consideration in this field of cellular and gene therapies, such as the creation of new and distinct MS-DRGs and to determine if the creation of a new MDC (Major Diagnostic Category) may be warranted to which unique MS-DRGs could be established and the appropriate corresponding procedure codes could be proposed for assignment.

3. MDC 03 (Diseases and Disorders of Ear, Nose, Mouth and Throat)

In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58462 through 58471), we finalized our proposal to create two new base MS-DRGs, 140 and 143, with a three-way severity level split for new MS-DRGs 140, 141, and 142 (Major Head and Neck Procedures with MCC, with CC, and without CC/MCC, respectively) and new MS-DRGs 143, 144, and 145 (Other Ear, Nose, Mouth and Throat O.R. Procedures with MCC, with CC, and without CC/MCC, respectively). We provided the list of procedure codes that were finalized to define the logic for the new MS-DRGs in Tables 6P.2a, 6P.2b, and 6P.2c associated with the final rule and available via the internet on the CMS website at https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index/​. As discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25095 through 25098), we received two separate but related requests to review and reconsider the MS-DRG assignments for a subset of the procedure codes listed in Table 6P.2a (procedure codes assigned to MS-DRGs 140, 141, and 142) and Table 6P.2b (procedure codes assigned to MS-DRGs 143, 144, and 145). In this section of this rule, we discuss each of these separate, but related requests.

a. Major Head and Neck Procedures

The requestor provided the following procedure codes from Table 6P.2a associated with the FY 2021 IPPS/LTCH PPS final rule for CMS to examine.

The requestor stated that the listed procedure codes do not appear appropriately assigned to MS-DRGs 140, 141, and 142. According to the requestor, if any one of the five procedure codes describing a procedure performed on the cranial cavity (0W9100Z, 0W910ZZ, 0WC10ZZ, 0WC13ZZ, or 0WX14ZZ) is assigned in conjunction with a principal diagnosis from MDC 03 (Diseases and Disorders of Ear, Nose, Mouth, and Throat), it appears more appropriate that cases reporting the diagnosis and procedure combination would group to MS-DRGs 25, 26, and 27 (Craniotomy and Endovascular Intracranial Procedures with MCC, with CC, and without CC/MCC, respectively) (for example, “craniotomy” MS-DRGs) in MDC 01 (Diseases and Disorders of the Central Nervous System) or to MS-DRGs 981, 982, and 983 (Extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively). The requestor stated that drainage and extirpation from the cranial cavity always involves drilling or cutting through the skull regardless of the approach, therefore the five procedure codes identified warrant assignment to the “craniotomy” MS-DRGs. For the three procedure codes describing excision of subcutaneous tissue of chest, back, or abdomen (0JB60ZZ, 0JB70ZZ, and 0JB80ZZ), the requestor stated those codes should group to MS-DRGs 987, 988, and 989 (Non-extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) because they are not pertinent to the ear, nose, mouth, or throat.

In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25096 through 25097), we stated that we reviewed this request and noted that the five procedure codes describing procedures performed on the cranial cavity are already assigned to MDC 01 and group to the “craniotomy” MS-DRGs (25, 26, and 27) when reported with a principal diagnosis from MDC 01, and are also currently classified as Extensive O.R. procedures, resulting in assignment to MS-DRGs 981, 982, and 983 when any one of the five procedure codes is reported on the claim and is unrelated to the MDC to which the case was assigned based on the principal diagnosis. We also noted that in addition to MS-DRGs 25, 26, and 27, MS-DRG 23 (Craniotomy with Major Device Implant or Acute Complex CNS Principal Diagnosis with MCC or Chemotherapy Implant or Epilepsy with Neurostimulator) and MS-DRG 24 (Craniotomy with Major Device Implant or Acute Complex CNS Principal Diagnosis without MCC) include procedures performed on structures located within the cranial cavity, are included in the range of MS-DRGs known as the “craniotomy” MS-DRGs in MDC 01, and the five procedure codes submitted by the requestor describing procedures performed on the cranial cavity are also assigned to these MS-DRGs. We referred the requestor to Appendix E of the ICD-10 MS-DRG Definitions Manual for further discussion of how each procedure code may be assigned to multiple MDCs and MS-DRGs under the IPPS. The ICD-10 MS-DRG Definitions Manual is located on the CMS website at https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​MS-DRG-Classifications-and-Software. We also noted that these five procedure codes were previously assigned to MS-DRGs 131 and 132 (Cranial and Facial Procedures with and without CC/MCC, respectively) in MDC 03 under version 37 of the ICD-10 MS-DRGs prior to the restructuring that was finalized effective FY 2021 for MS-DRG 129 (Major Head and Neck Procedures with CC/MCC or Major Device) and MS-DRG 130 (Major Head and Neck Procedures without CC/MCC), MS-DRGs 131 and 132, and MS-DRGs 133 and 134 (Other Ear, Nose, Mouth and Throat O.R. Procedures with and without CC/MCC, respectively).

With regard to the three procedure codes describing excision of subcutaneous tissue of chest, back, or abdomen (0JB60ZZ, 0JB70ZZ, and 0JB80ZZ), the requestor suggested that the codes should group to MS-DRGs 987, 988, and 989 (Non-extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) specifically because they are not pertinent to the ear, nose, mouth, or throat, however, we noted it is unclear if the requestor was concerned more broadly that the three procedure codes should not group to any MS-DRGs in MDC 03 (Diseases and Disorders of Ear, Nose, Mouth and Throat), given the stated rationale for the request.

We stated in the proposed rule that, upon our review, we believed that the three procedure codes describing excision of subcutaneous tissue of chest, back, and abdomen (0JB60ZZ, 0JB70ZZ, and 0JB80ZZ), which do not describe major head and neck procedures, were inadvertently included in Table 6P.2a for assignment to MS-DRGs 140, 141, and 142. However, we also stated we believe that the codes are appropriate for assignment in MDC 03 and noted that the three procedure codes were previously assigned to MS-DRGs 133 and 134 (Other Ear, Nose, Mouth and Throat O.R. Procedures with and without CC/MCC, respectively) in MDC 03 prior to the restructuring that was finalized effective FY 2021 for MS-DRGs 129, 130, 131, 132, 133, and 134. We also provided the following clarification in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58470), as stated in the ICD-10 MS-DRG Definitions Manual, “In each MDC there is usually a medical and a surgical class referred to as “other medical diseases” and “other surgical procedures,” respectively. The “other” medical and surgical classes are not as precisely defined from a clinical perspective. The other classes would include diagnoses or procedures, which were infrequently encountered or not well defined clinically. For example, the “other” medical class for the Respiratory System MDC would contain the diagnoses “other somatoform disorders” and “congenital malformation of the respiratory system,” while the “other” surgical class for the female reproductive MDC would contain the surgical procedures “excision of liver” (liver biopsy in ICD-9-CM) and “inspection of peritoneal cavity” (exploratory laparotomy in ICD-9-CM). The “other” surgical category contains surgical procedures which, while infrequent, could still reasonably be expected to be performed for a patient in the particular MDC.”

In the proposed rule, we noted that during our review of procedure codes 0JB60ZZ, 0JB70ZZ, and 0JB80ZZ (describing excision of subcutaneous tissue of chest, back, and abdomen, respectively) we also confirmed that these procedures are currently designated as Extensive O.R. procedures. Consistent with other procedure codes on the Non-extensive procedure code list, we stated we do not believe the procedures described by these procedure codes necessarily utilize the resources or have the level of technical complexity as the procedures on the Extensive O.R. procedures list. Therefore, we agreed that the procedure codes describing these procedures would be more appropriately designated as Non-extensive procedures and group to MS-DRGs 987, 988, and 989 (Non-extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) when any one of the three procedure codes is reported on a claim and is unrelated to the MDC to which the case was assigned based on the principal diagnosis. We referred the reader to section II.D.10. of the preamble of the proposed rule for further discussion regarding our proposal to reassign these procedure codes from MS-DRGs 981, 982, and 983 (Extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) to MS-DRGs 987, 988, and 989 (Non-extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) for FY 2022.

Therefore, we proposed to reassign the three procedure codes describing excision of subcutaneous tissue of chest, back, or abdomen (0JB60ZZ, 0JB70ZZ, and 0JB80ZZ) from MS-DRGs 140, 141, and 142 (Major Head and Neck Procedures with MCC, with CC, and without CC/MCC, respectively) to MS-DRGs 143, 144, and 145 (Other Ear, Nose, Mouth and Throat O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 03 for FY 2022. We refer the reader to section II.D.10. of the preamble of this final rule for further discussion regarding the designation of these codes as Extensive O.R. procedures versus Non-extensive O.R. procedures and our finalized reassignment of these codes from MS-DRGs 981, 982, and 983 to MS-DRGs 987, 988, and 989 for FY 2022.

Comment: Commenters supported the proposed reassignment of the three procedure codes describing excision of subcutaneous tissue of chest, back, or abdomen from MS-DRGs 140, 141, and 142 to MS-DRGs 143, 144, and 145.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to reassign procedure codes 0JB60ZZ, 0JB70ZZ, and 0JB80ZZ describing excision of subcutaneous tissue of chest, back, or abdomen from MS-DRGs 140, 141, and 142 to MS-DRGs 143, 144, and 145 for FY 2022.

b. Other Ear, Nose, Mouth and Throat O.R. Procedures

As discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25097 through 25098) and noted earlier, we received two separate but related requests to review and reconsider the MS-DRG assignments for a subset of the procedure codes listed in Table 6P.2a and Table 6P.2b associated with the FY 2021 IPPS/LTCH PPS final rule. In this section of this rule, we discuss the second request related to procedure codes listed in Table 6P.2b associated with the FY 2021 IPPS/LTCH PPS final rule and currently assigned to MS-DRGs 143, 144 and 145.

The requestor provided a list of 82 procedure codes from Table 6P.2b associated with the FY 2021 IPPS/LTCH PPS final rule for CMS to examine. We refer the reader to Table 6P.1d associated with the FY 2022 IPPS/LTCH PPS proposed rule and this final rule and available via the internet at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index/​ for the list of procedure codes that were provided by the requestor. According to the requestor, if any one of the 82 procedure codes is assigned in conjunction with a principal diagnosis code from MDC 03, it appears more appropriate that cases reporting the diagnosis and procedure code combination would group to MS-DRGs 981, 982, and 983 (Extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) or to MS-DRGs 987, 988, and 989 (Non-extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) versus MS-DRGs 143, 144, and 145 (Other Ear, Nose, Mouth And Throat O.R. Procedures with MCC, with CC, and without CC/MCC, respectively). However, the requestor also stated that of the 82 procedure codes, the following three procedure codes describing control of bleeding in the cranial cavity warrant grouping to MS-DRGs 25, 26, and 27 (for example, “craniotomy” MS-DRGs) in MDC 01, for the same reasons previously described in the prior section pertaining to the five other procedures performed on the cranial cavity.

We reviewed this request and similar to the discussion in the prior section for the separate but related request, we noted that the “other” surgical category contains surgical procedures which, while infrequent, could still reasonably be expected to be performed for a patient in the particular MDC. We stated we continue to believe that the 82 procedure codes provided by the requestor are appropriately assigned to MS-DRGs 143, 144, and 145 in MDC 03. With regard to the requestor's assertion that cases reporting any one of the 82 procedure codes would more appropriately group to the MS-DRGs for Extensive O.R. procedures or Non-extensive O.R. procedures when reported in conjunction with a principal diagnosis from MDC 03, we noted that, as shown in Table 6P.2b associated with the FY 2021 IPPS/LTCH PPS final rule, the procedure codes that were finalized for assignment to MS-DRGs 143, 144, and 145 were previously assigned to MS-DRGs 129 and 130, 131 and 132, or 133 and 134 in MDC 03. We also noted that, as discussed in prior rulemaking, cases that contain O.R. procedures will map to MS-DRG 981, 982, or 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) or MS-DRG 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. For these reasons, we proposed to maintain the current structure for MS-DRGs 143, 144, and 145 for FY 2022.

Comment: A few commenters recommended that CMS reconsider the list of 82 procedure codes assigned to MS-DRGs 143, 144, and 145 (Other Ear, Nose, Mouth and Throat O.R. Procedures with MCC, with CC and without CC/MCC, respectively) that were displayed in Table 6P.1d associated with the proposed rule when reported with a principal diagnosis from MDC 03.

The commenters acknowledged that the “other” surgical category contains surgical procedures which, while infrequent, could still reasonably be expected to be performed for a patient in the particular MDC, however, the commenters stated it is unclear what clinical scenarios would result in certain procedure codes listed being assigned with a diagnosis in MDC 03. The commenters provided the following list of 38 procedure codes as examples of procedures that would not be expected to be performed with a diagnosis from MDC 03.

Another commenter requested transparency for the logic and data for the exclusion of the 82 procedure codes and suggested that CMS may not have any data for these procedures within MS-DRGs 143, 144, and 145 that were created in FY 2021.

Response: We appreciate the commenters' feedback and acknowledge that the listed procedure codes would not appear to be clinically indicated specifically for diagnoses in MDC 03. The commenter is correct that it is too soon to have data available for the listed procedure codes under MS-DRGs 143, 144, and 145 that were created effective FY 2021. However, in our analysis of the FY 2018 MedPAR data that was studied in our initial review of MDC 03 in consideration of potential restructuring, for MS-DRG 133 (currently MS-DRG 144), we identified one case reporting procedure code 0DJ04ZZ (Inspection of upper intestinal tract, percutaneous endoscopic approach) with an average length of stay of 14 days and average costs of $5,728 and one case reporting procedure code 0FB00ZX (Excision of liver, open approach, diagnostic) with an average length of stay of 17 days and average costs of $32,642. We continued to believe that these procedures, in addition and/or including the 38 procedure codes listed that are now the subject of commenters' concerns, appropriate to maintain in the logic for case assignment to the “other” surgical MS-DRGs in MDC 03. However, as a result of the ongoing concerns expressed by commenters specifically regarding the assignment of the 38 listed procedure codes and the suggestion that CMS should reconsider the current MS-DRG assignment, we determined it may be helpful to provide the comparable translations under ICD-9-CM for commenters to better understand how these 38 procedures were initially grouped to the ICD-10 MS-DRGs as a result of replication during the conversion from ICD-9 to ICD-10 based MS-DRGs. We refer the reader to Table 6P.1m for findings from our analysis of the 38 listed procedure codes, which indicates how these procedures were classified under ICD-10-PCS based on the comparable translations under ICD-9-CM resulting in the current MS-DRG assignment. We note that we were unable to fully evaluate the 82 procedure codes and believe it may be advantageous to evaluate further when claims data becomes available under the restructured MS-DRGs (143, 144, and 145) that were effective with discharges beginning FY 2021.

In response to the commenter who requested transparency for the logic, we note that the GROUPER logic for all the MS-DRGs is made publicly available in the ICD-10 MS-DRG Definitions Manual via the internet on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​MS-DRG-Classifications-and-Software.

After consideration of the public comments we received, we are finalizing to maintain the assignment of the listed 82 procedure codes to MS-DRGs 143, 144, and 145 for FY 2022. We will continue to review the appropriateness of procedure code assignment to these MS-DRGs in connection with our broader comprehensive procedure code analysis.

As noted in the proposed rule, with regard to the three procedure codes describing control of bleeding in the cranial cavity (0W310ZZ, 0W313ZZ, and 0W314ZZ), and the requestor's suggestion that the codes should group to MS-DRGs 25, 26, and 27 in MDC 01, we consulted with our clinical advisors who stated these procedures are consistent with the existing procedure codes included in the logic for case assignment to MS-DRGs 25, 26, and 27. We refer the reader to section II.D.10. of the preamble of the proposed rule and this final rule for further discussion of this request, as well as the finalized assignment of these codes to MS-DRGs 23, 24, 25, 26, and 27 for FY 2022.

4. MDC 04 (Diseases and Disorders of the Respiratory System)

a. Bronchiectasis

In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25098), we discussed a request we received to reassign cases reporting diagnosis codes describing bronchiectasis from MS-DRGs 190, 191, and 192 (Chronic Obstructive Pulmonary Disease with MCC, with CC, and without CC/MCC, respectively) to MS-DRGs 177, 178, and 179 (Respiratory Infections and Inflammation with MCC, with CC, and without CC/MCC, respectively). Bronchiectasis is described by the following diagnosis codes:

According to the requestor, the underlying pathophysiology of bronchiectasis is more similar to cystic fibrosis than it is to chronic obstructive pulmonary disease (COPD). The requestor stated that in bronchiectasis, there is an inciting event that creates scarring in the lung which prevents the lung from clearing out mucous like it normally would. The accumulation of abnormal mucous results in an environment conducive to bacterial growth and commonly found bacteria in this setting is very similar to those of cystic fibrosis with staphylococcus aureus, pseudomonas aeruginosa, and non-tuberculous mycobacterium. The requestor reported that when patients develop an exacerbation of bronchiectasis, this is because of a buildup of mucous compounded by overwhelming growth of the previously discussed bacteria. The requestor also stated that patients admitted to the hospital for bronchiectasis exacerbation are treated aggressively with intravenous (IV) antibiotics to suppress the bacterial infection in combination with airway clearance therapies. The requestor further stated that, unlike in an acute COPD exacerbation, these patients do not always require steroids as there is not necessarily airway reactivity.

The requestor maintained that the underlying reason for admission to the hospital for these patients is the bacterial infection component of the exacerbation, with the standard course of treatment for these pulmonary bacterial infections averaging a minimum of 10-14 days due to the slow growing nature of the bacteria commonly encountered in these patients.

We stated in the FY 2022 IPPS/LTCH PPS proposed rule that we reviewed this request and believed that bronchiectasis is appropriately assigned to MS-DRGs 190, 191, and 192 (Chronic Obstructive Pulmonary Disease with MCC, with CC, and without CC/MCC, respectively) because bronchiectasis, like COPD, is a chronic condition. We noted that with respect to the requestor's comments, cystic fibrosis, a genetic disease that affects mucous producing cells resulting in recurring lung infections, can lead to bronchiectasis. However, our clinical advisors indicated that the cause of bronchiectasis can be multifactorial or even remain undefined. Regardless of the cause, when present, bronchiectasis is an irreversible chronic pulmonary condition due to abnormal change to or destruction of normal pulmonary anatomy (the major bronchi and bronchiole walls), resulting in impaired air movement in and out of the lungs. COPD, regardless of the cause (smoking, pollution, other exposures), is a chronic pulmonary condition due to change/destruction of normal pulmonary anatomy, resulting in impaired air movement in and out of the lungs. Both bronchiectasis and COPD patients have abnormal pulmonary function tests and abnormal anatomic findings on chest x-ray and/or chest CT. Therefore, for these reasons, we proposed to maintain the structure of MS-DRGs 190, 191, and 192 for FY 2022.

Comment: Commenters agreed with our proposal to maintain the structure of MS-DRGs 190, 191, and 192.

Response: We thank the commenters for their support.

After consideration of the public comments we received, we are finalizing our proposal to maintain the structure of MS-DRGs 190, 191, and 192 for FY 2022.

b. Major Chest Procedures

In the FY 2020 IPPS/LTCH PPS proposed (84 FR 19234) and final rules (84 FR 42148), we stated that in review of the procedures that are currently assigned to MS-DRGs 163, 164, and 165 (Major Chest Procedures with MCC, with CC and without CC/MCC, respectively) and 166, 167, and 168 (Other Respiratory System O.R. Procedures with MCC, with CC, and without CC/MCC, respectively), that further refinement of these MS-DRGs may be warranted. In this section of this rule, we discuss our review of the procedures and restructuring these MS-DRGs for FY 2022.

We began our review of MS-DRGs 163, 164, 165, 166, 167, and 168 by first examining all the procedures currently assigned to these MS-DRGs. We referred the reader to the ICD-10 MS-DRG Definitions Manual Version 38.1, which is available via the internet on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS for complete documentation of the GROUPER logic for MS-DRGs 163, 164, 165, 166, 167, and 168.

We stated in the proposed rule that in our review of the procedures currently assigned to MS-DRGs 163, 164, 165, 166, 167, and 168, we found 17 procedure codes in MS-DRGs 163, 164, and 165 describing laser interstitial thermal therapy (LITT) of body parts that do not describe areas within the respiratory system, which would not be clinically appropriate to maintain in the logic. These procedure codes are listed in the following table.

During our review of these 17 procedure codes, we identified additional MDCs and MS-DRG assignments that are also not clinically appropriate to maintain in the logic because the body parts described by the codes are not consistent with the organ system, etiology or clinical specialty of the MDC to which the procedure code is currently assigned. For example, 16 of the 17 procedure codes (all except procedure code DVY0KZZ) are included in the logic for case assignment to MDC 12 (Diseases and Disorders of the Male Reproductive System) in MS-DRGs 715 and 716 (Other Male Reproductive System O.R. Procedures for Malignancy with and without CC/MCC, respectively) and MS-DRGs 717 and 718 (Other Male Reproductive System O.R. Procedures Except Malignancy with and without CC/MCC, respectively) which is not clinically appropriate. Therefore, we proposed to reassign these 17 procedure codes from their current MS-DRG assignments in MDC 04, and from the additional MDCs and MS-DRGs identified during our review that were found to be clinically inappropriate, to their clinically appropriate MDC and MS-DRGs as shown in Table 6P.2b associated with the proposed rule and this final rule (which is available via the internet on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS).

Comment: Commenters agreed with the proposed reassignment of the listed procedure codes as shown in Table 6P.2b associated with the proposed rule describing LITT of various body parts to the proposed more clinically appropriate MDCs and MS-DRGs. However, a commenter suggested that CMS consider reassignment of code D0Y6KZZ to MS-DRGs 28, 29, and 30 (Spinal Procedures with MCC, with CC or Spinal Neurostimulators and without CC/CC, respectively) rather than MS-DRGs 40, 41, and 42 (Peripheral, Cranial Nerve and Other Nervous System Procedures with MCC, with CC and without CC/MCC, respectively) as being more clinically and anatomically homogenous.

Response: We thank the commenters for their support. In response to the commenter who suggested that CMS consider reassignment of code D0Y6KZZ to MS-DRGs 28, 29, and 30 rather than MS-DRGs 40, 41, and 42 we note that our clinical advisors continue to believe this is an appropriate assignment to MS-DRGs 40, 41, and 42 because the resources involved in the performance of a LITT procedure of the spinal cord (code D0Y6KZZ) clinically align more appropriately with the resources involved in the performance of stereotactic radiosurgery of spinal cord procedures currently assigned to MS-DRGs 40, 41, and 42 (procedure codes D026DZZ, D026HZZ, and D026JZZ).

We also note that, as discussed in section II.D.10. of the preamble of the proposed rule and this final rule, we identified additional procedure codes describing LITT of various body parts, in addition to the 17 procedure codes listed earlier in this section. The 14 additional procedure codes are:

As these codes also describe laser interstitial thermal therapy (LITT) of various body parts, we conducted further review of the MDC and MS-DRG assignments of these 14 procedure codes consistent with our initial review of the 17 procedure codes, and determined that clinically inappropriate assignments also exist or that the current MS-DRG assignment is not in alignment with the resources that are utilized in the performance of the LITT procedure. For example, we examined procedure codes D0Y0KZZ and D0Y1KZZ describing LITT of brain and brain stem, respectively, that are currently assigned to the “craniotomy” MS-DRGs 23, 24, 25 26, and 27 in MDC 01 (Diseases and Disorders of the Central Nervous System). The technique to perform the LITT procedure on these structures is considered minimally invasive and does not involve a craniotomy, therefore, continued assignment to the craniotomy MS-DRGs is not clinically appropriate. While we agree that these procedures are appropriately assigned to MDC 01, similar to our review for procedure code D0Y6KZZ describing LITT of spinal cord, we believe it is more appropriate for the procedures described by codes D0Y0KZZ and D0Y1KZZ to be reassigned to MS-DRGs 40, 41, and 42. We then examined procedure codes DBY0KZZ, DBY1KZZ, DBY2KZZ, DBY5KZZ, DBY6KZZ, DBY7KZZ, and DBY8KZZ describing LITT of respiratory structures including the trachea, bronchus, lung, pleura, mediastinum, chest wall, and diaphragm, respectively, that are currently assigned to the “major chest procedures” MS-DRGs 163, 164, and 165. While we agree that these procedures are appropriately assigned to MDC 04, we do not believe LITT of these respiratory structures utilize the same resources or require the same level of complexity as the other procedures currently defined in the GROUPER logic as “major chest procedures” since, as noted previously, LITT is considered a minimally invasive procedure and there are no large incisions with extensive muscle dissection. For these reasons, we believe it is more appropriate for the procedure codes describing LITT of respiratory structures to be reassigned to MS-DRGs 166, 167, and 168 (Other Respiratory System O.R. Procedures with MCC, with CC, and without CC/MCC, respectively).

After consideration of the public comments we received and based on the analysis described previously, we are finalizing our proposal, with modification, to reassign the 31 listed procedure codes as shown in Table 6P.2b associated with this final rule describing LITT of various body parts to the more clinically appropriate MDCs and MS-DRGs for FY 2022.

During our review of the procedure codes describing LITT of various body parts we also confirmed that these procedures are currently designated as Extensive O.R. procedures. We do not believe the procedures described by these procedure codes necessarily utilize the resources or have the level of technical complexity as the other procedures on the Extensive O.R. procedures list. We stated in the proposed rule that we believe that the procedure codes describing these procedures would be more appropriately designated as Non-extensive procedures and group to MS-DRGs 987, 988, and 989 (Non-extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) when any one of the procedure codes is reported on a claim and is unrelated to the MDC to which the case was assigned based on the principal diagnosis. We refer the reader to section II.D.10. of the preamble of the proposed rule and this final rule for further discussion regarding reassignment of these procedure codes from MS-DRGs 981, 982, and 983 (Extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) to MS-DRGs 987, 988, and 989 (Non-extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) for FY 2022.

We also identified five procedure codes describing repair of the esophagus procedures currently assigned to MS-DRGs 163, 164, and 165 that would not be clinically appropriate to maintain in the logic. The procedure codes are 0DQ50ZZ (Repair esophagus, open approach), 0DQ53ZZ (Repair esophagus, percutaneous approach), 0DQ54ZZ (Repair esophagus, percutaneous endoscopic approach), 0DQ57ZZ (Repair esophagus, via natural or artificial opening), and 0DQ58ZZ (Repair esophagus, via natural or artificial opening endoscopic), and are currently assigned to the following MDCs and MS-DRGs.

We stated that the five procedure codes describing repair of esophagus procedures are not clinically coherent with the other procedures in MS-DRGs 163, 164, and 165 that describe procedures performed on major chest structures. Therefore, we proposed to remove procedure codes 0DQ50ZZ, 0DQ53ZZ, 0DQ54ZZ, 0DQ57ZZ, and 0DQ58ZZ from the logic in MDC 04 for FY 2022.

Comment: Commenters agreed with the proposal to remove procedure codes 0DQ50ZZ, 0DQ53ZZ, 0DQ54ZZ, 0DQ57ZZ, and 0DQ58ZZ from the logic in MDC 04.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to remove procedure codes 0DQ50ZZ, 0DQ53ZZ, 0DQ54ZZ, 0DQ57ZZ, and 0DQ58ZZ describing repair of the esophagus from the logic in MDC 04 for FY 2022.

As discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25102), during our review of procedure codes 0DQ50ZZ, 0DQ53ZZ, 0DQ54ZZ, 0DQ57ZZ, and 0DQ58ZZ (describing repair of esophagus procedures) we also confirmed that these procedures are currently designated as Extensive O.R. procedures. We stated we do not believe the procedures described by procedure codes 0DQ53ZZ, 0DQ57ZZ, and 0DQ58ZZ necessarily utilize the resources or have the level of technical complexity as the other procedures on the Extensive O.R. procedures list. We further stated we believe that the procedure codes describing these procedures would be more appropriately designated as Non-extensive procedures and group to MS-DRGs 987, 988, and 989 (Non-extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) when any one of the three procedure codes is reported on a claim and is unrelated to the MDC to which the case was assigned based on the principal diagnosis. We refer the reader to section II.D.10. of the preamble of the proposed rule and this final rule for further discussion regarding reassignment of these procedure codes from MS-DRGs 981, 982, and 983 (Extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) to MS-DRGs 987, 988, and 989 (Non-extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) for FY 2022.

Next, we examined claims data from the March 2020 update of the FY 2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR file for all cases in MS-DRGs 163, 164, 165, 166, 167, and 168. Our findings are shown in the following tables.

As shown in the tables, there were a higher number of cases reported in MS-DRGs 163, 164, 165, 166, 167, and 168 from the March 2020 update of the FY 2019 MedPAR file in comparison to the September 2020 update of the FY 2020 MedPAR file and overall, the cases reported have comparable average lengths of stay and comparable average costs for both fiscal years.

We then examined claims data from both the March 2020 update of the FY 2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR file for MS-DRGs 163, 164, 165, 166, 167, and 168 to compare costs, complexity of service and clinical coherence for each procedure code currently assigned to these MS-DRGs to assess any potential reassignment of the procedures. We refer the reader to Table 6P.1e and Table 6P.1f associated with the proposed rule and this final rule (which is available via the internet on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS) for the detailed claims data analysis. Table 6P.1e contains the data analysis findings of procedure codes currently assigned to MS-DRGs 163, 164, 165, 166, 167, and 168 from the March 2020 update of the FY 2019 MedPAR file and Table 6P.1f contains the data analysis findings of procedure codes currently assigned to MS-DRGs 163, 164, 165, 166, 167, and 168 from the September 2020 update of the FY 2020 MedPAR file. We note that if a procedure code that is currently assigned to MS-DRGs 163, 164, 165, 166, 167, or 168 is not displayed, it is because there were no cases found reporting that code in the assigned MS-DRG.

As shown in Table 6P.1e and Table 6P.1f associated with the proposed rule and this final rule, in our examination of the claims data from both the March 2020 update of the FY 2019 MedPAR file and September 2020 update of the FY 2020 MedPAR file, we found there is wide variation in the volume, length of stay, and average costs for the procedures currently assigned to MS-DRGs 163, 164, 165, 166, 167, and 168. There were several instances in which only one occurrence of a procedure was reported with a procedure code from MS-DRGs 163, 164, 165, 166, 167, or 168, and the average length of stay for these specific cases ranged from 1 day to 97 days. For example, in the analysis of claims data from the March 2020 update of the FY 2019 MedPAR file, during our review of MS-DRG 163, we found 153 procedures for which only one occurrence of the procedure was reported with the average length of stay ranging from 2 days to 65 days and the average costs ranging from $3,760 to $195,447 for these cases. For MS-DRG 164, we found 145 procedures for which only one occurrence of the procedure was reported with the average length of stay ranging from 1 day to 28 days and the average costs ranging from $1,886 to $137,810 for these cases. For MS-DRG 165, we found 111 procedures for which only one occurrence of the procedure was reported with the average length of stay ranging from 1 day to 23 days and the average costs ranging from $2,656 to $73,092 for these cases. For MS-DRG 166, we found 150 procedures for which only one occurrence of the procedure was reported with the average length of stay ranging from 1 day to 61 days and the average costs ranging from $3,230 to $246,679 for these cases. For MS-DRG 167, we found 110 procedures for which only one occurrence of the procedure was reported with the average length of stay ranging from 1 day to 23 days and the average costs ranging from $2,058 to $149,220 for these cases. For MS-DRG 168, we found 68 procedures for which only one occurrence of the procedure was reported with the average length of stay ranging from 1 day to 18 days and the average costs ranging from $2,033 to $35,576 for these cases.

Our analysis of the claims data from the September 2020 update of the FY 2020 MedPAR file resulted in similar findings to those from the March 2020 update of the FY 2019 MedPAR file; there were several instances in which only one occurrence of a procedure was reported with a procedure code from MS-DRGs 163, 164, 165, 166, 167, or 168. During our review of MS-DRG 163, we found 139 procedures for which only one occurrence of the procedure was reported with the average length of stay ranging from 2 days to 97 days and the average costs ranging from $5,697 to $205,696 for these cases. For MS-DRG 164, we found 122 procedures for which only one occurrence of the procedure was reported with the average length of stay ranging from 1 day to 35 days and the average costs ranging from $3,204 to $120,128 for these cases. For MS-DRG 165, we found 92 procedures for which only one occurrence of the procedure was reported with the average length of stay ranging from 1 day to 16 days and the average costs ranging from $2,682 to $164,014 for these cases. For MS-DRG 166, we found 141 procedures for which only one occurrence of the procedure was reported with the average length of stay ranging from 1 day to 45 days and the average costs ranging from $3,230 to $246,679 for these cases. For MS-DRG 167, we found 105 procedures for which only one occurrence of the procedure was reported with the average length of stay ranging from 1 day to 22 days and the average costs ranging from $2,150 to $112,465 for these cases. For MS-DRG 168, we found 72 procedures for which only one occurrence of the procedure was reported with the average length of stay ranging from 1 day to 9 days and the average costs ranging from $1,563 to $76,061 for these cases.

Our clinical advisors reviewed the procedures currently assigned to MS-DRGs 163, 164, 165, 166, 167, and 168 to identify the patient attributes that currently define each of these procedures and to group them with respect to complexity of service and resource intensity. This process included separating the procedures according to the surgical approach (open, percutaneous, percutaneous endoscopic, via natural or artificial opening, via natural or artificial opening endoscopic, and external).

We also considered the claims data from the March 2020 update of the FY 2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR file for MS-DRGs 163, 164, 165, 166, 167, and 168 to further analyze the average length of stay and average costs for the cases reporting procedures assigned to any one of these MS-DRGs as well as clinical coherence for these cases. For example, procedures that we believe represent greater treatment difficulty and reflect a class of patients who are similar clinically with regard to consumption of hospital resources were grouped separately from procedures that we believe to be less complex but still reflect patients who are similar clinically with regard to consumption of hospital resources. This approach differentiated the more complex procedures, such as procedures performed on the sternum and ribs (for example, major chest) from the less complex procedures such as bypass procedures performed on peripheral vessels or diagnostic biopsies.

We stated in the FY 2022 IPPS/LTCH PPS proposed rule that as an initial step in our proposed restructuring of these MS-DRGs, we identified the following 26 procedure codes that are currently assigned to MS-DRGs 166, 167, and 168 that we believe represent procedures performed on structures that align more appropriately with the procedures assigned to MS-DRGs 163, 164, and 165 that describe major chest procedures.

We analyzed claims data from the March 2020 update of the FY 2019 MedPAR file for the listed procedure codes in MS-DRGs 166, 167, and 168. We noted that if a listed procedure code is not displayed, it is because there were no cases found reporting that code among MS-DRGs 166, 167, and 168. Our findings are shown in the following table.

We then analyzed claims data from the September 2020 update of the FY 2020 MedPAR file for the listed procedure codes in MS-DRGs 166, 167, and 168. We noted that if a listed procedure code is not displayed, it is because there were no cases found reporting that code among MS-DRGs 166, 167, and 168. Our findings are shown in the following table.

We referred the reader to Tables 6P.1e and 6P.1f for detailed claims data for the previously listed procedures in MS-DRGs 163, 164, 165, 166, 167, and 168 from the March 2020 update of the FY 2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR file, respectively, and noted in the proposed rule that while some of the 26 listed procedure codes identified in MS-DRGs 166, 167, and 168 may not have been reported in either year's MedPAR claims data or only had one occurrence in which the procedure was reported, we believe these procedures described by the listed 26 procedure codes are clinically coherent with the other procedures that are currently assigned to MS-DRGs 163, 164, and 165. For example, in our analysis of the March 2020 update of the FY 2019 MedPAR file, as shown in the table, we found procedure code 02QW0ZZ reported with one occurrence with an average length of stay of 15 days and average costs of $46,829. Despite finding only one case, we stated that we believe procedures described by this procedure code, as well as related procedure codes describing procedures performed on the great vessels, are more clinically coherent with the procedures assigned to MS-DRGs 163, 164, and 165 and align more appropriately with the average length of stay and average costs of those MS-DRGs. Similarly, in our analysis of the September 2020 update of the FY 2020 MedPAR file, as shown in the table, we found procedure code 0PS204Z reported with 344 occurrences with an average length of stay of 9.6 days and average costs of $48,340. We stated that we believe procedures described by this procedure code, as well as related procedure codes describing procedures performed to repair or resect the ribs, are more clinically coherent with the procedures assigned to MS-DRGs 163, 164, and 165 and also align more appropriately with the average length of stay and average costs of those MS-DRGs.

As a result of our preliminary review of MS-DRGs 163, 164, 165, 166, 167, and 168, for FY 2022, we proposed the reassignment of the listed 26 procedure codes (9 procedure codes describing repair of pulmonary or thoracic structures, and 17 procedure codes describing procedures performed on the sternum or ribs) from MS-DRGs 166, 167, and 168 to MS-DRGs 163, 164, and 165 in MDC 04. We stated that our data analysis shows that for the cases reporting any one of the 26 procedure codes, generally, they have an average length of stay and average costs that appear more consistent with the average length of stay and average costs of cases in MS-DRGs 163, 164, and 165. Our clinical advisors also agreed that these procedures clinically align with the other procedures that are currently assigned to MS-DRGs 163, 164, and 165. We referred the reader to Table 6P.2c associated with the proposed rule for the list of procedure codes we proposed for reassignment from MS-DRGs 166, 167, and 168 to MS-DRGs 163, 164, and 165 in MDC 04.

Comment: Commenters supported the proposed reassignment of the listed 26 procedure codes from MS-DRGs 166, 167, and 168 to MS-DRGs 163, 164, and 165 in MDC 04.

Response: We appreciate the commenters' support.

After consideration of the public comments received, we are finalizing our proposal to reassign the listed 26 procedure codes (9 procedure codes describing repair of pulmonary or thoracic structures, and 17 procedure codes describing procedures performed on the sternum or ribs), as listed in Table 6P.2c associated with this final rule, from MS-DRGs 166, 167, and 168 to MS-DRGs 163, 164, and 165 in MDC 04 for FY 2022.

As discussed in the proposed rule, after this initial review of all the procedures currently assigned to MS-DRGs 163, 164, 165, 166, 167, and 168, in combination with the results of the data analysis as reflected in Tables 6P.1e and 6P.1f, our clinical advisors support a phased restructuring of these MS-DRGs. We believe further analysis of the procedures assigned to these MS-DRGs is warranted based on the creation of new procedure codes that have been assigned to these MS-DRGs in recent years for which claims data are not yet available and the need for additional time to examine the procedures currently assigned to those MS-DRGs by clinical intensity, complexity of service and resource utilization. We will continue to evaluate the procedures assigned to these MS-DRGs as additional claims data become available.

5. MDC 05 (Diseases and Disorders of the Circulatory System)

a. Short-Term External Heart Assist Device

As discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25106 through 25115), Impella® Ventricular Support Systems are temporary heart assist devices intended to support blood pressure and provide increased blood flow to critical organs in patients with cardiogenic shock, by drawing blood out of the heart and pumping it into the aorta, partially or fully bypassing the left ventricle to provide adequate circulation of blood (replace or supplement left ventricle pumping) while also allowing damaged heart muscle the opportunity to rest and recover in patients who need short-term support for up to 6 days. The ICD-10-PCS codes that describe the insertion of Impella® heart assist devices are currently assigned to MS-DRG 215 (Other Heart Assist System Implant). We referred the reader to the ICD-10 MS-DRG Definitions Manual Version 38.1, which is available via the internet on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​MS-DRG-Classifications-and-Software for complete documentation of the GROUPER logic for MS-DRG 215.

In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41159 through 41170), we discussed public comments that 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. Our data analysis showed 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. We noted we were 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 but the claims data current at that time did not yet reflect that updated guidance. We also noted that there had been recent updates to the descriptions of the codes for heart assist devices. 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. We agreed with the commenters that continued monitoring of the data and further analysis was necessary prior to proposing any modifications to MS-DRG 215 and finalized our proposal to maintain the current structure of MS-DRG 215 for FY 2019.

In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42167) we discussed public comments on our proposals related to recalibration of the FY 2020 relative weights and the changes in relative weights from FY 2019. Several commenters expressed concern about significant reductions to the relative weight for MS-DRG 215. Commenters stated that the reduction in the proposed relative weight was 29 percent, the largest decrease of any MS-DRG; commenters also noted that the cumulative decrease to the relative weight for MS-DRG 215 would be 43 percent since FY 2017. Commenters stated that the proposed relative weights would result in significant underpayments to facilities, which would in turn limit access to heart assist devices. After reviewing the comments received and the data used in our ratesetting calculations, we acknowledged an outlier circumstance where the weight for a MS-DRG was seeing a significant reduction for each of the 3 years since CMS began using the ICD-10 data in calculating the relative weights. Therefore, for the reasons discussed in the FY 2020 final rule, we adopted a temporary one-time measure for FY 2020 where the FY 2020 relative weight was set equal to the FY 2019 relative weight, which in turn had been set equal to the FY 2018 relative weight.

In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58598) we again acknowledged an outlier circumstance where the weight for MS-DRG 215 was seeing a significant reduction for each of the 4 years since CMS began using the ICD-10 data in calculating the relative weights. We stated while we would ordinarily consider this weight change to be appropriately driven by the underlying data, given the comments received, and in an abundance of caution because this may be the MS-DRG assigned when a hospital provides temporary right ventricular support for up to 14 days in critical care patients for the treatment of acute right heart failure or decompensation caused by complications related to COVID-19, including pulmonary embolism, we adopted a temporary one-time measure for FY 2021 for MS-DRG 215. Specifically, we set the 2021 relative weight for MS-DRG 215 equal to the average of the FY 2020 relative weight and the otherwise applicable FY 2021 weight.

For the FY 2022 IPPS/LTCH PPS proposed rule, we received a request to reassign certain cases reporting procedure codes describing the insertion of a percutaneous short-term external heart assist device from MS-DRG 215 to MS-DRGs 216, 217, and 218 (Cardiac Valve and Other Major Cardiothoracic Procedures with Cardiac Catheterization with MCC, with CC, and without CC/MCC, respectively). According to the requestor, there are two distinct clinical populations within MS-DRG 215: High-risk Percutaneous Coronary Intervention (PCI) patients receiving short term “intraoperative” external heart assist systems where the device is only used intraoperatively and is removed at the conclusion of the procedure, and those patients in or at risk of cardiogenic shock requiring longer heart pump support and ICU stays. The requestor stated that cases in which short-term external heart assist systems are placed intraoperatively require fewer resources. The requestor suggested that moving the less resource intensive cases that report a procedure code that describes the intraoperative insertion of short-term external heart assist systems from MS-DRG 215 into MS-DRG 216, 217, and 218, will clinically align the two distinctly different patient populations, and consequently will address the potential decrease in the relative weight of MS-DRG 215.

The requestor stated it performed its own analysis of claims in MS-DRG 215 that involve the intraoperative insertion of a short-term external heart assist device (as identified by the presence of ICD-10-PCS codes 02HA3RJ (Insertion of short-term external heart assist system into heart, intraoperative, percutaneous approach) and 5A0221D (Assistance with cardiac output using impeller pump, continuous). The requestor stated that its analysis found that if procedures involving intraoperative placement of a short-term external heart assist device were moved into MS-DRGs 216, 217 and 218, it would result in an increase in the average costs and average lengths of stay for the cases that would remain to be assigned to MS-DRG 215.

As discussed in the proposed rule, during our review of this issue, we noted that when a patient is admitted and has an Impella® external heart assist device inserted two ICD-10-PCS codes are assigned: A code that describes the insertion of the device and code 5A0221D that describes assistance with an impeller pump. Therefore, our analysis included procedure code 02HA3RJ as identified by the requestor as well as similar procedure codes 02HA0RJ (Insertion of short-term external heart assist system into heart, intraoperative, open approach) and 02HA4RJ (Insertion of short-term external heart assist system into heart, intraoperative, percutaneous endoscopic approach) that also describe the intraoperative insertion of a short-term heart assist device, differing only in approach. Because the assistance with an Impella® is coded with ICD-10-PCS code 5A0221D whether the device is used only intraoperatively or in instances where the device is left in place at the conclusion of the procedure, we did not include this code in our analysis. We also noted that the requestor suggested that the cases reporting a procedure code describing the intraoperative insertion of a short-term external heart assist device be moved to MS-DRGs 216, 217 and 218 but these MS-DRGs are defined by the performance of cardiac catheterization. Therefore, we expanded our analysis to also include MS-DRGs 219, 220 and 221 (Cardiac Valve and Other Major Cardiothoracic Procedures without Cardiac Catheterization with MCC, with CC, and without CC/MCC, respectively).

We stated in the FY 2022 IPPS/LTCH PPS proposed rule that first, we examined claims data from the March 2020 update of the FY 2019 MedPAR file for MS-DRG 215 to identify cases reporting ICD-10-PCS codes 02HA0RJ, 02HA3RJ or 02HA4RJ and a procedure code describing the performance of a cardiac catheterization. Our findings are shown in the following table:

As shown in the table, we identified a total of 7,741 cases within MS-DRG 215 with an average length of stay of 7.8 days and average costs of $68,234. Of these 7,741 cases, there are 2,943 cases that include both a procedure code describing the intraoperative insertion of a short-term external heart assist device and a procedure code describing the performance of a cardiac catheterization with an average length of stay of 7.1 days and average costs of $60,449. Of these 2,943 cases, there are 23 cases reporting a procedure code describing the open intraoperative insertion of a short-term external heart assist device with a procedure code describing the performance of a cardiac catheterization with an average length of stay of 8.9 days and average costs of $85,806. There are 2,904 cases reporting a procedure code describing a percutaneous intraoperative insertion of a short-term external heart assist device with a procedure code describing the performance of a cardiac catheterization with an average length of stay of 7.1 days and average costs of $60,227. There are 16 cases reporting a procedure code describing a percutaneous endoscopic intraoperative insertion of a short-term external heart assist device with a procedure code describing the performance of a cardiac catheterization approach with an average length of stay of 6.4 days and average costs of $64,217. The data analysis shows that for the cases in MS-DRG 215 reporting ICD-10-PCS codes 02HA0RJ, 02HA3RJ or 02HA4RJ with a procedure code describing the performance of a cardiac catheterization, generally, the average length of stay is shorter and the average costs are lower than the average length of stay and average costs (with the exception of the average costs and length of stay for the 23 cases reporting a procedure code describing the open intraoperative insertion of a short-term external heart assist device with a procedure code describing the performance of a cardiac catheterization which are higher) compared to all cases in that MS-DRG.

In the proposed rule, we indicated that we also examined claims data from the March 2020 update of the FY 2019 MedPAR file for MS-DRGs 216, 217 and 218. Our findings are shown in the following table.

Because MS-DRG 215 is a base DRG and there is a three-way split within MS-DRGs 216, 217, and 218, we indicated that we also analyzed the cases reporting a procedure code describing the intraoperative insertion of a short-term external heart assist device with a procedure code describing the performance of a cardiac catheterization for the presence or absence of a secondary diagnosis designated as a complication or comorbidity (CC) or a major complication or comorbidity (MCC).

This data analysis shows the cases in MS-DRG 215 reporting ICD-10-PCS codes 02HA0RJ, 02HA3RJ or 02HA4RJ with a procedure code describing the performance of a cardiac catheterization when distributed based on the presence or absence of a secondary diagnosis designated as a complication or comorbidity (CC) or a major complication or comorbidity (MCC) have average costs generally more similar to the average costs in the FY 2019 MedPAR file for MS-DRGs 216, 217 and 218 respectively, while the average lengths of stay are shorter. While the cases from MS-DRG 215 reporting a procedure code describing the intraoperative insertion of a short-term external heart assist device with a procedure code describing the performance of a cardiac catheterization “with CC” and “without CC/MCC” have higher average costs than the average costs of MS-DRGs 217 and 218, these costs are closer to the average costs of those MS-DRGs than they are to the average costs of MS-DRG 215. The average costs of the cases from MS-DRG 215 reporting a procedure code describing the intraoperative insertion of a short-term external heart assist device with a procedure code describing the performance of a cardiac catheterization “with MCC” are lower than the average costs of both MS-DRGs 215 and 216.

Next, we examined claims data from the March 2020 update of the FY 2019 MedPAR file for MS-DRG 215 to identify cases reporting ICD-10-PCS codes 02HA0RJ, 02HA3RJ or 02HA4RJ without a procedure code describing the performance of a cardiac catheterization. Our findings are shown in the following table:

As shown in the table, of the 7,741 cases within MS-DRG 215, there are 432 cases that include a procedure code describing the intraoperative insertion of a short-term external heart assist device without a procedure code describing the performance of a cardiac catheterization with an average length of stay of 4.8 days and average costs of $53,607. Of these 432 cases, there are eight cases reporting a procedure code describing the open intraoperative insertion of a short-term external heart assist device without a procedure code describing the performance of a cardiac catheterization with an average length of stay of 8.8 days and average costs of $141,242. There are 423 cases reporting a procedure code describing a percutaneous intraoperative insertion of a short-term external heart assist device without a procedure code describing the performance of a cardiac catheterization with an average length of stay of 4.7 days and average costs of $51,964. There is one case reporting a procedure code describing a percutaneous endoscopic intraoperative insertion of a short-term external heart assist device without a procedure code describing the performance of a cardiac catheterization approach with a length of stay of 2 days and costs of $47,289. We noted that the data analysis shows that for the cases in MS-DRG 215 reporting ICD-10-PCS codes 02HA0RJ, 02HA3RJ or 02HA4RJ without a procedure code describing the performance of a cardiac catheterization, generally, the average length of stay is shorter and the average costs are lower than the average length of stay and average costs (with the exception of the average costs and length of stay for the eight cases describing the open intraoperative insertion of a short-term external heart assist device without a procedure code describing the performance of a cardiac catheterization which are higher) compared to all cases in that MS-DRG.

We also examined claims data from the March 2020 update of the FY 2019 MedPAR file for MS-DRGs 219, 220 and 221. Our findings are shown in the following table.

Similarly, because MS-DRG 215 is a base DRG and there is a three-way split within MS-DRGs 219, 220 and 221, we stated that we also analyzed the cases reporting a procedure code describing the intraoperative insertion of a short-term external heart assist device without a procedure code describing the performance of a cardiac catheterization for the presence or absence of a secondary diagnosis designated as a complication or comorbidity (CC) or a major complication or comorbidity (MCC).

We indicated in the proposed rule that this data analysis shows the cases in MS-DRG 215 reporting ICD-10-PCS codes 02HA0RJ, 02HA3RJ or 02HA4RJ without a procedure code describing the performance of a cardiac catheterization when distributed based on the presence or absence of a secondary diagnosis designated as a complication or comorbidity (CC) or a major complication or comorbidity (MCC) have average costs generally more similar to the average costs in the FY 2019 MedPAR file for MS-DRGs 219, 220 and 221 respectively, while the average lengths of stay are shorter. While the cases from MS-DRG 215 reporting a procedure code describing the intraoperative insertion of a short-term external heart assist device, without a procedure code describing the performance of a cardiac catheterization “with MCC”, “with CC” and “without CC/MCC” have higher average costs than the average costs MS-DRGs 219, 220 and 221, respectively, these costs are closer to the average costs of those MS-DRGs than they are to the average costs of MS-DRG 215.

We also examined claims data from the September 2020 update of the FY 2020 MedPAR file for MS-DRG 215 to identify cases reporting ICD-10-PCS codes 02HA0RJ, 02HA3RJ or 02HA4RJ with a procedure code describing the performance of a cardiac catheterization. Our findings are shown in the following table:

As shown in the table, we identified a total of 6,275 cases within MS-DRG 215 with an average length of stay of 7.9 days and average costs of $72,144. Of these 6,275 cases, there are 2,395 cases that include both a procedure code describing the intraoperative insertion of a short-term external heart assist device and a procedure code describing the performance of a cardiac catheterization with an average length of stay of 6.8 days and average costs of $62,260. Of these 2,395 cases, there were 25 cases reporting a procedure code describing the open intraoperative insertion of a short-term external heart assist device with a procedure code describing the performance of a cardiac catheterization with an average length of stay of 8.2 days and average costs of $85,954. There are 2,360 cases reporting a procedure code describing a percutaneous intraoperative insertion of a short-term external heart assist device with a procedure code describing the performance of a cardiac catheterization with an average length of stay of 6.8 days and average costs of $61,965. There are 10 cases reporting a procedure code describing a percutaneous endoscopic intraoperative insertion of a short-term external heart assist device with a procedure code describing the performance of a cardiac catheterization approach with an average length of stay of 6.9 days and average costs of $72,564. The data analysis shows that for the cases in MS-DRG 215 reporting ICD-10-PCS codes 02HA0RJ, 02HA3RJ or 02HA4RJ with a procedure code describing the performance of a cardiac catheterization, when examined collectively, the average length of stay is shorter (6.8 days versus 7.9 days) and the average costs are lower ($62,260 versus $72,144) than the average length of stay and average costs (of all cases in that MS-DRG). We noted there were some differences noted in cases reporting a procedure code describing the intraoperative insertion of a short-term external heart assist device with a procedure code describing the performance of a cardiac catheterization when examined by operative approach. For the 25 cases reporting a procedure code describing the open intraoperative insertion of a short-term external heart assist device with a procedure code describing the performance of a cardiac catheterization, the average costs were higher ($85,954 versus $72,144) and average length of stay was slightly longer (8.2 days versus 7.9 days) when compared to all cases in that MS-DRG. For the 10 cases reporting a procedure code describing the percutaneous endoscopic intraoperative insertion of a short-term external heart assist device with a procedure code describing the performance of a cardiac catheterization, the average costs were nearly equal ($72,564 versus $72,144) and average length of stay was shorter (6.9 days versus 7.9 days) when compared to all cases in that MS-DRG.

We also examined claims data from the September 2020 update of the FY 2020 MedPAR file for MS-DRGs 216, 217 and 218. Our findings are shown in the following table.

Because MS-DRG 215 is a base DRG and there is a three-way split within MS-DRGs 216, 217, and 218, we also analyzed the cases reporting a procedure code describing the intraoperative insertion of a short-term external heart assist device with a procedure code describing the performance of a cardiac catheterization for the presence or absence of a secondary diagnosis designated as a complication or comorbidity (CC) or a major complication or comorbidity (MCC).

This data analysis shows the cases in MS-DRG 215 reporting ICD-10-PCS codes 02HA0RJ, 02HA3RJ or 02HA4RJ with a procedure code describing the performance of a cardiac catheterization when distributed based on the presence or absence of a secondary diagnosis designated as a complication or comorbidity (CC) or a major complication or comorbidity (MCC) have average costs generally more similar to the average costs in the FY 2020 MedPAR file for MS-DRGs 216, 217 and 218 respectively, while the average lengths of stay are shorter. While the cases from MS-DRG 215 reporting a procedure code describing the intraoperative insertion of a short-term external heart assist device with a procedure code describing the performance of a cardiac catheterization “with CC” and “without CC/MCC” have higher average costs than the average costs of MS-DRGs 217 and 218, these costs are closer to the average costs of those MS-DRGs than they are to the average costs of MS-DRG 215. The average costs of the cases from MS-DRG 215 reporting a procedure code describing the intraoperative insertion of a short-term external heart assist device with a procedure code describing the performance of a cardiac catheterization “with MCC” are lower than the average costs of both MS-DRGs 215 and 216.

Next, we examined claims data from the September 2020 update of the FY 2020 MedPAR file for MS-DRG 215 to identify cases reporting ICD-10-PCS codes 02HA0RJ, 02HA3RJ or 02HA4RJ without a procedure code describing the performance of a cardiac catheterization. Our findings are shown in the following table:

As shown in the table, of the 6,275 cases within MS-DRG 215, there are 331 cases that include a procedure code describing the intraoperative insertion of a short-term external heart assist device without a procedure code describing the performance of a cardiac catheterization with an average length of stay of 4.5 days and average costs of $52,181. Of these 331 cases, there are eight cases reporting a procedure code describing the open intraoperative insertion of a short-term external heart assist device without a procedure code describing the performance of a cardiac catheterization with an average length of stay of 8.9 days and average costs of $80,314. There are 332 cases reporting a procedure code describing a percutaneous intraoperative insertion of a short-term external heart assist device without a procedure code describing the performance of a cardiac catheterization with an average length of stay of 4.4 days and average costs of $51,569. There is one case reporting a procedure code describing a percutaneous endoscopic intraoperative insertion of a short-term external heart assist device without a procedure code describing the performance of a cardiac catheterization approach with a length of stay of 2 days and costs of $24,379. The data analysis shows that for the cases in MS-DRG 215 reporting ICD-10-PCS codes 02HA0RJ, 02HA3RJ or 02HA4RJ without a procedure code describing the performance of a cardiac catheterization, generally, the average length of stay is shorter and the average costs are lower than the average length of stay and average costs (with the exception of the average costs and length of stay for the eight cases reporting a procedure code describing the open intraoperative insertion of a short-term external heart assist device without a procedure code describing the performance of a cardiac catheterization which are higher) compared to all cases in that MS-DRG.

We also examined claims data from the September 2020 update of the FY 2020 MedPAR file for MS-DRGs 219, 220 and 221. Our findings are shown in the following table.

Similarly, because MS-DRG 215 is a base DRG and there is a three-way split within MS-DRGs 219, 220 and 221, we also analyzed the 331 cases reporting a procedure code describing the intraoperative insertion of a short-term external heart assist device without a procedure code describing the performance of a cardiac catheterization for the presence or absence of a secondary diagnosis designated as a complication or comorbidity (CC) or a major complication or comorbidity (MCC).

This data analysis shows the cases in MS-DRG 215 reporting ICD-10-PCS codes 02HA0RJ, 02HA3RJ or 02HA4RJ without a procedure code describing the performance of a cardiac catheterization when distributed based on the presence or absence of a secondary diagnosis designated as a complication or comorbidity (CC) or a major complication or comorbidity (MCC) have average costs generally more similar to the average costs in the FY 2020 MedPAR file for MS-DRGs 219, 220 and 221 respectively, while the average lengths of stay are shorter. While the cases from MS-DRG 215 reporting a procedure code describing the intraoperative insertion of a short-term external heart assist device without a procedure code describing the performance of a cardiac catheterization “with CC” and “without CC/MCC” have higher average costs than the average costs of MS-DRGs 220 and 221, these costs are closer to the average costs of those MS-DRGs than they are to the average costs of MS-DRG 215. The average costs of the cases from MS-DRG 215 reporting a procedure code describing the intraoperative insertion of a short-term external heart assist device without a procedure code describing the performance of a cardiac catheterization “with MCC” are lower than the average costs of both MS-DRGs 215 and 219.

We indicated in the proposed rule that our clinical advisors reviewed the clinical issues and the claims data and agreed that cases reporting a procedure code that describes the intraoperative insertion of a short-term external heart assist device are generally less resource intensive and are clinically distinct from other cases reporting procedure codes describing the insertion of other types of heart assist devices currently assigned to MS-DRG 215. Our clinical advisors stated that critically ill patients who are experiencing or at risk for cardiogenic shock from an emergent event such as heart attack or virus that impacts the functioning of the heart and requires longer heart pump support are different from those patients who require intraoperative support only. Patients receiving a short-term external heart assist device intraoperatively during coronary interventions often have an underlying disease pathology such as heart failure related to occluded coronary vessels that is broadly similar in kind to other patients also receiving these interventions without the need for an insertion of a short-term external heart assist device. In the post-operative period, these patients can recover and can be sufficiently rehabilitated prior to discharge. For these reasons, we indicated our clinical advisors supported reassigning ICD-10-PCS codes 02HA0RJ, 02HA3RJ, and 02HA4RJ that describe the intraoperative insertion of a short-term external heart assist device to MS-DRGs 216, 217, 218, 219, 220 and 221 in MDC 05. They stated this reassignment would improve clinical coherence in these MS-DRGs.

To compare and analyze the impact of our suggested modifications, we ran a simulation using the Version 38.1 ICD-10 MS-DRG GROUPER and the claims data from the March 2020 update of the FY 2019 MedPAR file. The following table reflects our simulation for ICD-10-PCS procedure codes 02HA0RJ, 02HA3RJ or 02HA4RJ that describe the intraoperative insertion of a short-term external heart assist device if they were moved to MS-DRGS 216, 217, 218, 219, 220 and 221.

We stated in the proposed rule that we believe the resulting proposed MS-DRG assignments would be more clinically homogeneous, coherent and better reflect hospital resource use while at the same time addressing concerns related to the relative weight of MS-DRG 215. A review of this simulation shows that this distribution of ICD-10-PCS codes 02HA0RJ, 02HA3RJ or 02HA4RJ that describe the intraoperative insertion of a short-term external heart assist device if moved to MS-DRGs 216, 217, 218, 219, 220 and 221, increases the average costs of the cases remaining in MS-DRG 215 by over $4,500, while generally having a more limited effect on the average costs of MS-DRGs 216, 217, 218, 219, 220 and 221.

We also ran a simulation using the Version 38.1 ICD-10 MS-DRG GROUPER and the claims data from the September 2020 update of the FY 2020 MedPAR file. The following table reflects our simulation for ICD-10-PCS procedure codes 02HA0RJ, 02HA3RJ or 02HA4RJ that describe the intraoperative insertion of a short-term external heart assist device if they were moved to MS-DRGS 216, 217, 218, 219, 220 and 221.

As with our simulation based on the March 2020 update of the FY 2019 MedPAR file, we indicated we believe that this simulation supports that the resulting proposed MS-DRG assignments would be more clinically homogeneous, coherent and better reflect hospital resource use while at the same time addressing concerns related to the relative weight of MS-DRG 215. We noted that a review of this simulation shows that this distribution of ICD-10-PCS codes 02HA0RJ, 02HA3RJ or 02HA4RJ that describe the intraoperative insertion of a short-term external heart assist device if moved to MS-DRGs 216, 217, 218, 219, 220 and 221, increases the average costs of the cases remaining in MS-DRG 215 by over $6,000, while generally having a more limited effect on the average costs of MS-DRGS 216, 217, 218, 219, 220 and 221.

Therefore, for FY 2022, we proposed to reassign ICD-10-PCS codes 02HA0RJ, 02HA3RJ, and 02HA4RJ from MDC 05 in MS-DRG 215 to MS-DRGs 216, 217, 218, 219, 220 and 221 in MDC 05.

Comment: Commenters supported the proposal to reassign ICD-10-PCS codes 02HA0RJ, 02HA3RJ, and 02HA4RJ from MDC 05 in MS-DRG 215. These commenters stated they appreciated CMS' attention, careful review and efforts to create more long-term stability for heart assist devices, a life-saving technology. Some commenters stated CMS' actions will create a more clinically balanced structure for hospital payments for patients needing short-term external heart assist device support. Commenters stated that this reassignment will better reflect hospital resource utilization creating a more clinically homogenous coherent structure for acute patients that require intraoperative support of a short-term external heart assist device. A commenter stated this reassignment would also result in a relative weight for MS-DRG 215 that more accurately reflects the resource utilization of the procedures within that MS-DRG, as well as stabilizing the relative weight for MS-DRG 215, which has fluctuated over the last few years. Another commenter acknowledged intraoperative cases require fewer hospital resources during their admission than all other cases in MS-DRG 215 and stated removing ICD-10-PCS codes 02HA0RJ, 02HA3RJ, and 02HA4RJ describing intraoperative use from MS-DRG 215 maintains appropriate payment for longer term circulatory support, such as cardiogenic shock patients, who require more intensive resource use.

Response: We thank the commenters for their support.

Comment: Other commenters opposed CMS' proposal to reassign the short-term heart assist device ICD-10-PCS codes 02HA0RJ, 02HA3RJ, and 02HA4RJ from MDC 05 in MS-DRG 215 to MS-DRGs 216, 217, 218, 219, 220 and 221 in MDC 05. Some commenters urged CMS to reconsider the proposal regarding short-term external heart assist devices and leave procedure codes 02HA0RJ, 02HA3RJ, and 02HA4RJ in MS-DRG 215 where they are currently assigned. These commenters noted patients requiring intraoperative short-term external heart assist devices tend to be more severely ill and stated the proposal does not fully consider the complexity of care required for these patients and the associated resource utilization, in terms of the need for additional length of stay and monitoring. A commenter stated short-term external heart assist systems, require high resources consumption evidenced by critical care management, expensive drugs and tests; and specialized clinical staff such as: Physicians, nursing, perfusionists, etc. Another commenter stated they believe there may be hospital-specific differences with some facilities performing the diagnostic cardiac catheterizations as outpatient services prior to the inpatient admission for the other cardiothoracic procedures. A commenter expressed concern about the impact this change would have related to the increased use of the external heart assist devices and resources required to insert the device, including the cost of the device. This commenter stated an estimated 50% of the cases at their facility involving a short-term heart assist device would fall into a CC or NonCC category under the proposed MS-DRG change in spite of the fact the patients who require this device are at higher risk, which would mean that approximately 50% of their Medicare payment would be allocated to the cost of the device itself. This commenter stated that an even greater negative financial impact may be recognized as there has been an increase in the use of Impella® devices due to higher incidence of advanced ischemic cardiomyopathy because of the COVID-19 pandemic and delays in treatment.

Another commenter requested that CMS consider re-evaluation once the MedPAR data are normalized from the pandemic to consider structure revisions for these MS-DRGs. This commenter noted that there is a proposed relative weight reduction from 11.1579 to 10.5614 for MS- DRG 215 even though CMS proposed to move the intraoperative short-term heart assist devices from this MS-DRG. This commenter stated this reduction does not seem appropriate especially if the proposed MS-DRG changes are finalized.

Response: We thank the commenters for their feedback. Our clinical advisors have reviewed these concerns regarding the proposed reassignment and continue to state the resulting MS-DRG assignments, as proposed, would be more clinically homogeneous, coherent and better reflect hospital resource use because cases reporting a procedure code that describes the intraoperative insertion of a short-term external heart assist device are generally less resource intensive and are clinically distinct from other cases reporting procedure codes describing the insertion of other types of heart assist devices currently assigned to MS-DRG 215. Our clinical advisors acknowledge that while the need to have a short term heart assist device inserted can reflect on the severity of illness of the patient being treated, critically ill patients who are experiencing or at risk for cardiogenic shock from an emergent event such as heart attack or virus that impacts the functioning of the heart and require longer heart pump support and ICU stays are different from those patients who require intraoperative support only where the device is removed at the conclusion of the procedure. As additional claims data become available, we will continue to analyze the clinical nature of each of the procedures describing the insertion of short-term heart assist devices and their MS-DRG assignments to further improve the overall accuracy of the IPPS payments in future rulemaking.

Comment: While indicating their support of CMS' proposal, some commenters urged CMS to refrain from moving cases reporting a procedure code describing the intraoperative insertion of a short-term external heart assist device into MS-DRG 219, 220, and 221. These commenters stated the cases should be assigned to MS-DRGs 216, 217 and 218 only, based on the presence or absence of a secondary diagnosis designated as a complication or comorbidity (CC) or a major complication or comorbidity (MCC). A few commenters stated that CMS should refrain from moving cases into MS-DRG 219, 220, or 221 because the claim volume of cases reporting a procedure code describing the intraoperative insertion of a short-term external heart assist device without a procedure code describing a cardiac catherization is under five hundred and intracardiac heart assist devices, such as Impella® devices require the use of diagnostic catheters, fluoroscopy, and hemodynamic monitoring during use, all resulting in higher costs. Considering the types of procedures that utilize short term circulatory support and the techniques used by these circulatory support devices, these commenters stated cases reporting a procedure code describing the intraoperative insertion of a short-term external heart assist device are comparable to those mapping to MS-DRG 216, 217 and 218, even when a cardiac catherization procedure is not performed. Other commenters asserted there are known coding and documentation issues seen with this complex therapy, without providing examples of these issues, and stated that reassigning ICD-10-PCS codes 02HA0RJ, 02HA3RJ, and 02HA4RJ to MS-DRGs 219, 220, and 221, described as “without cardiac catheterization” may lead to coding errors since the vast majority of these procedures necessitate a cardiac catheterization.

Response: We note that the requestor originally suggested that the cases reporting a procedure code describing the intraoperative insertion of a short-term external heart assist device be moved to MS-DRGs 216, 217 and 218 but because these MS-DRGs are defined by the performance of cardiac catheterization, we specifically expanded our analysis to also include MS-DRGs 219, 220 and 221 (Cardiac Valve and Other Major Cardiothoracic Procedures without Cardiac Catheterization with MCC, with CC, and without CC/MCC, respectively). We do not believe it would be appropriate to assign all cases to the “with cardiac catheterization” MS-DRGs because the claims data would not reflect the additional resources associated with the performance of a cardiac catheterization in cases reporting a procedure code describing the intraoperative insertion of a short-term external heart assist device.

As presented in the proposed rule and in this final rule, the data analysis performed show in both in the FY 2019 MedPAR file and the FY 2020 MedPAR file, the average length of stay is shorter and the average costs are lower in cases reporting a procedure code describing the intraoperative insertion of a short-term external heart assist device without the performance of a cardiac catheterization when compared to cases reporting a procedure code describing the intraoperative insertion of a short-term external heart assist device with the performance of a cardiac catheterization when analyzed for the presence or absence of a secondary diagnosis designated as a complication or comorbidity (CC) or a major complication or comorbidity (MCC).

Our clinical advisors believe that continued monitoring of the data and further analysis is needed prior to proposing any additional modifications to the MS-DRG assignment of cases reporting ICD-10-PCS codes 02HA0RJ, 02HA3RJ or 02HA4RJ without a procedure code describing the performance of a cardiac catheterization. Our clinical advisors believe maintaining the distinction between the performance of or lack of a cardiac catherization procedure is important in these subsets of cases as we continue to examine the volume and length of stay as well as considering a variety of factors pertaining to resource consumption and clinical characteristics that might account for differences in resource use before determining if additional modifications to the assignment of these procedure codes are warranted.

In response to the suggestion that we refrain from moving cases into MS-DRG 219, 220, or 221 because claim volume of cases reporting a procedure code describing the intraoperative insertion of a short-term external heart assist device without a procedure code describing a cardiac catherization is low, we do not believe moving this subset of cases into an incoherent grouping simply because the case volume is low is in keeping with our goal to maintain clinically coherent groups that also more accurately stratify Medicare patients with varying levels of severity.

Similarly, in response to the comments asserting that there are known coding and documentation issues seen with this complex therapy and that reassigning ICD-10-PCS codes 02HA0RJ, 02HA3RJ, and 02HA4RJ to MS-DRGs 219, 220, and 221, described as “without cardiac catheterization” may lead to coding errors since the vast majority of these procedures necessitate a cardiac catheterization, we again do not believe moving cases into an MS-DRG because of the need for improved provider documentation or any additional coder instruction is in keeping with our goal to maintain clinically coherent groups that also more accurately stratify Medicare patients with varying levels of severity. We acknowledge that accurate coding of external heart assist devices has been the subject of confusion in the past, and we will continue to monitor the claims data for these procedures. As one of the four Cooperating Parties, we also will continue to collaborate with the American Hospital Association to provide guidance for coding external heart assist devices through the Coding Clinic for ICD-10-CM/PCS publication and to review the ICD-10-PCS guidelines to determine where further clarifications may be made.

Therefore, after consideration of the public comments we received, and for reasons stated previously, we are finalizing our proposal to reassign ICD-10-PCS codes 02HA0RJ, 02HA3RJ, and 02HA4RJ from MDC 05 in MS-DRG 215 to MS-DRGs 216, 217, 218, 219, 220 and 221 in MDC 05, without modification, effective October 1, 2021.

b. Type II Myocardial Infarction

In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25115 through 25116), we discussed a request we received to review the MS-DRG assignment of ICD-10-CM diagnosis code I21.A1 (Myocardial infarction type 2). The requestor stated that when a type 2 myocardial infarction is documented, per coding guidelines, it is to be coded as a secondary diagnosis since it is due to an underlying cause. This requestor also noted that when a type 2 myocardial infarction is coded with a principal diagnosis in MDC 05 (Diseases and Disorders of the Circulatory System), the GROUPER logic assigns MS-DRGs 280 through 282 (Acute Myocardial Infarction, Discharged Alive with MCC, with CC, and without CC/MCC, respectively). The requestor questioned if this GROUPER logic was correct or if the logic should be changed so that a type 2 myocardial infarction, coded as a secondary diagnosis, does not result in the assignment of a MS-DRG that describes an acute myocardial infarction.

As discussed in the proposed rule, to begin our analysis, we reviewed the GROUPER logic. We noted that the requestor is correct that when diagnosis code I21.A1 is reported as a secondary diagnosis in combination with a principal diagnosis in MDC 05, the case currently groups to medical MS-DRGs 280 through 282 in the absence of a surgical procedure, when the patient is discharged alive. We also noted that if the patient expires, GROUPER logic instead will assign MS-DRGs 283 through 285 (Acute Myocardial Infarction, Expired with MCC, with CC, and without CC/MCC, respectively) when diagnosis code I21.A1 is reported as a secondary diagnosis in combination with a principal diagnosis in MDC 05.

According to the Universal Definition of Myocardial Infarction (MI), developed by a global task force that included the European Society of Cardiology, the American College of Cardiology, the American Heart Association and the World Heart Federation (WHF), the diagnosis of MI requires the rise and/or fall of cardiac biomarkers with clinical evidence of ischemia in which there is evidence of myocardial injury or necrosis, defined by symptoms, electrocardiographic (ECG) changes, or new regional wall motion abnormalities. Since 2007, this definition further classifies myocardial infarctions into five distinct subtypes. While a type 1 MI is defined as a MI due to an acute coronary syndrome, type 2 MI is defined as a mismatch in myocardial oxygen supply and demand due to other causes such as coronary dissection, vasospasm, emboli, or hypotension that is not attributed to unstable coronary artery disease (CAD).

We indicated in the proposed rule that our clinical advisors reviewed this issue and did not recommend changing the current MS-DRG assignment of ICD-10-CM diagnosis code I21.A1. As noted by the requestor, the ICD-10-CM Official Guidelines for Coding and Reporting state “Type 2 myocardial infarction, (myocardial infarction due to demand ischemia or secondary to ischemic imbalance) is assigned to code I21.A1, Myocardial infarction type 2 with a code for the underlying cause coded first.” We indicated our clinical advisors believed that cases reporting diagnosis code I21.A1 as a secondary diagnosis are associated with a severity of illness on par with cases reporting a principal diagnosis of another type myocardial infarction. They stated the diagnosis of myocardial infarction describes myocardial cell death due to inadequate oxygen supply to the myocardium for a prolonged period, regardless of the subtype. Our clinical advisors further stated, for clinical consistency, it is more appropriate to maintain the current assignment of ICD-10-CM diagnosis code I21.A1 with the other codes that describe myocardial infarction. Therefore, we did not propose to reassign diagnosis code I21.A1 from MS-DRGs 280 through 285.

As discussed in the proposed rule, during our review of this issue we also noted that code I21.A1 (Myocardial infarction type 2) is currently one of the listed principal diagnoses in the GROUPER logic for MS-DRGs 222 and 223 (Cardiac Defibrillator Implant with Cardiac Catheterization with AMI, HF or Shock with and without MCC, respectively). However, code I21.A1 is not currently recognized in these same MS-DRGs when coded as a secondary diagnosis. As a result, when coded as a secondary diagnosis in combination with a principal diagnosis in MDC 05, MS-DRGs 224 and 225 (Cardiac Defibrillator Implant with Cardiac Catheterization without AMI, HF, or Shock with and without MCC, respectively) are instead assigned when reported with a listed procedure code. We referred the reader to the ICD-10 MS-DRG Definitions Manual Version 38.1, which is available via the internet on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​MS-DRG-Classifications-and-Software for complete documentation of the GROUPER logic for MS-DRGs 222, 223, 224, and 225.

Acknowledging that coding guidelines instruct to code I21.A1 after the diagnosis code that describes the underlying cause, we indicated our clinical advisors recommended adding special logic in MS-DRGs 222 and 223 to have code I21.A1 also qualify when coded as a secondary diagnosis in combination with a principal diagnosis in MDC 05 since these diagnosis code combinations also describe acute myocardial infarctions.

As a result, we proposed modifications to the GROUPER logic to allow cases reporting diagnosis code I21.A1 (Myocardial infarction type 2) as a secondary diagnosis to group to MS-DRGs 222 and 223 when reported with a listed procedure code for clinical consistency with the other MS-DRGs describing acute myocardial infarction.

A diagnosis code may define the logic for a specific MS-DRG assignment in three different ways. The diagnosis code may be listed as principal or as any one of the secondary diagnoses, as a secondary diagnosis, or only as a secondary diagnosis as noted in more detail in the proposed rule and this final rule.

• Principal or secondary diagnoses. Indicates that a specific set of diagnoses are used in the definition of the MS-DRG. The diagnoses may be listed as principal or as any one of the secondary diagnoses. A special case of this condition is MS-DRG 008 in which two diagnoses (for example, renal and diabetic) must both be present somewhere in the list of diagnoses in order to be assigned to MS-DRG 008.
• Secondary diagnoses. Indicates that a specific set of secondary diagnoses are used in the definition of the MS-DRG. For example, a secondary diagnosis of acute leukemia with chemotherapy is used to define MS-DRG 839.
• Only secondary diagnoses. Indicates that in order to be assigned to the specified MS-DRG no secondary diagnoses other than those in the specified list may appear on the patient's record. For example, in order to be assigned to MS-DRG 795, only secondary diagnoses from the specified list may appear on the patient's record.

We noted in the proposed rule that whenever there is a secondary diagnosis component to the MS-DRG logic, the diagnosis code can either be used in the logic for assignment to the MS-DRG or to act as a CC/MCC. For this specific scenario, we proposed that code I21.A1, as a secondary diagnosis, be used in the definition of the logic for assignment to MS-DRGs 222 and 223, similar to the example described previously, where a secondary diagnosis of acute leukemia with chemotherapy is used to define MS-DRG 839, and therefore will not act as an MCC in these MS-DRGs.

In summary, for FY 2022, we proposed to maintain the current structure of MS-DRGs 280 through 285. We proposed to modify the GROUPER logic to allow cases reporting diagnosis code I21.A1 (Myocardial infarction type 2) as a secondary diagnosis to group to MS-DRGs 222 and 223 when reported with qualifying procedures.

Comment: A commenter agreed with CMS' proposed modifications to the GROUPER logic to allow cases reporting diagnosis code I21.A1 (Myocardial infarction type 2) as a secondary diagnosis to group to MS-DRGs 222 and 223 (Cardiac Defibrillator Implant with Cardiac Catheterization with AMI, HF or Shock with and without MCC, respectively) when reported with qualifying procedures. This commenter stated they agreed that coding rules stipulate that diagnosis code I21.A1 must be reported as a secondary diagnosis.

Response: We appreciate the commenters' support.

Comment: Other commenters expressed concern with CMS' proposal. A commenter stated that they believed it is inappropriate to include cases with diagnosis code I21.A1 in the MS-DRGs that describe an acute myocardial infarction (MS-DRGs 280 through 285). The commenter expressed concern that if cases reporting diagnosis code I21.A1 are assigned to the MS-DRGs that describe an acute myocardial infarction, this would disrupt the resource accuracy of these MS-DRGs. They stated from a clinical perspective, the pattern of care for patients with type 2 MI may vary considerably compared to the treatment of patients with other types of myocardial infarctions, namely Type 1 STEMI and Type 1 NSTEMI. This commenter however, agreed with the proposal to modify the GROUPER logic to allow cases reporting diagnosis code I21.A1 as a secondary diagnosis to group to MS-DRGs 222 and 223 when reported with qualifying procedures and stated this portion of the proposal aligns with the intended use of type 2 MI and creates clinical consistency in MS-DRGs. The commenter also stated while it is inappropriate for diagnosis code I21.A1 to be classified as the diagnosis driving MS-DRG assignment, type 2 MI should be classified as a major complication or comorbidity (MCC) because patients with type 2 MI face an increased mortality risk. Another commenter stated the proposed rule did not provide rationale as to why code I21.A1 would not act as an MCC under the proposal to revise the GROUPER logic to allow cases reporting diagnosis code I21.A1 as a secondary diagnosis to group to MS-DRGs 222 and 223 when reported with qualifying procedures. This commenter requested that data analysis be provided on the instances when this code would not act as an MCC.

Response: We appreciate the commenters' feedback. We note to that the GROUPER logic assignment for each diagnosis code as a principal diagnosis is for grouping purposes only. As discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41217) and the FY 2021 IPPS/LTCH PPS final rule (85 FR 58519), because the diagnoses 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 does not correspond to coding guidelines for reporting the principal diagnosis. 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. In other words, cases will group according to the GROUPER logic, regardless of any coding guidelines or coverage policies. It is the Medicare Code Editor (MCE) and other payer-specific edits that identify inconsistencies in the coding guidelines or coverage policies. These data integrity edits address issues such as data validity, coding rules, and 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. The separation of the MS-DRG grouping and data editing functions allows the MS-DRG GROUPER to remain stable even though coding rules and coverage policies may change during the fiscal year.

In response to the commenter that stated that if type 2 MI cases are assigned to the MS-DRGs that describe an acute myocardial infarction, this would disrupt the resource accuracy of these MS-DRGs, while at the same time agreeing with the proposal to allow cases reporting diagnosis code I21.A1 (Myocardial infarction type 2) as a secondary diagnosis to group to MS-DRGs 222 and 223 when reported with qualifying procedures, we are unclear of the commenters' rationale for these conflicting statements. Specifically, because MS-DRGs 222 and 223 also describe an acute myocardial infarction, it is unclear why the commenter indicates a type 2 MI should only be considered an MI in this instance.

In response to the commenter that stated that CMS did not provide rationale as to why code I21.A1 would not act as an MCC under the proposal to revise the GROUPER logic in MS-DRGs 222 and 223 and in response to their request that data analysis be provided on the instances when this code would not act as an MCC, as we indicated in the proposed rule, whenever there is a secondary diagnosis component to the MS-DRG logic, the diagnosis code can either be used in the logic for assignment to the MS-DRG or to act as a CC/MCC. It is not a question of data analysis. Although I21.A1 is designated as an MCC when reported as a secondary diagnosis, if code I21.A1, as a secondary diagnosis, is being used in the definition of the logic for assignment to MS-DRGs 222 and 223, it cannot act as an MCC in these MS-DRGs. Therefore, outside of MS-DRGs 222, 223, 280, 281, 282, 283, 284 and 285, diagnosis code I21.A1 will continue to act as an MCC when reported as a secondary diagnosis in Version 39.

After consideration of the public comments we received, we are finalizing our proposal to maintain the current structure of MS-DRGs 280 through 285, without modification, for FY 2022. We are also finalizing our proposal, without modification, to modify the GROUPER logic to allow cases reporting diagnosis code I21.A1 (Myocardial infarction type 2) as a secondary diagnosis to group to MS-DRGs 222 and 223 when reported with qualifying procedures, effective October 1, 2021.

c. Viral Cardiomyopathy

In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25116 through 25117), we discussed three separate but related requests that we received to add ICD-10-CM diagnosis code B33.24 (Viral cardiomyopathy) to the list of principal diagnoses for MS-DRGs 314, 315, and 316 (Other Circulatory System Diagnoses with MCC, with CC, and without CC/MCC, respectively) in MDC 05. The requestors noted that a discontinuity exists in the current MDC assignment of diagnosis codes in ICD-10-CM subcategory B33.2. The list of the five ICD-10-CM diagnosis codes in subcategory B33.2, as well as their current MDC assignments, is found in the following table.

A requestor noted ICD-10-CM codes B33.20, B33.21, B33.22, and B33.23 are assigned to MDC 05 (Diseases and Disorders of the Circulatory System), while code B33.24 is assigned to MDC 18 (Infectious and Parasitic Diseases, Systemic or Unspecified Sites). The requestor stated that the placement of ICD-10-CM diagnosis code B33.24 within subcategory B33.2 is clinically appropriate, as all the diagnoses within this subcategory share a common etiology, involve the heart and supporting structures, and require the same intensity of hospital care. However, the assignment of code B33.24 to a different MDC is clinically incongruous with the placement of the other codes in the subcategory. According to the requestor, all of the conditions share similar etiology, anatomic location, and needs for care, therefore the five codes should all be assigned to MDC 05. This requestor also stated that reassigning code B33.24 to MDC 05 would ensure both clinical continuity and coding consistency within the B33.2 subcategory. Another requestor stated MDC 05 surgical MS-DRGs should be assigned when procedures such as cardiac catheterization or coronary angioplasty are performed for a principal diagnosis of viral cardiomyopathy.

In the proposed rule, we indicated that to begin our analysis, we reviewed the GROUPER logic. We noted that currently, cases reporting ICD-10-CM diagnosis code B33.24 as a principal diagnosis group to medical MS-DRGs 865 and 866 (Viral Illness with and without MCC, respectively) in MDC 18 in the absence of a surgical procedure. We indicated our clinical advisors reviewed this issue and noted viral cardiac infections may present as endocarditis (inflammation of the heart's inner lining), myocarditis (inflammation of the middle layer of the heart), pericarditis (inflammation of the pericardium), or cardiomyopathy (disease of the heart muscle). The infection usually begins somewhere other than the heart, often in the nose, lungs, or stomach. As the infection progresses, and the microbe multiplies and gets into the bloodstream, it can infiltrate the heart muscle. The growth and replication of viruses inside the heart can endanger the heart by destroying heart cells. The management of viral cardiomyopathy is similar to the management of other viral cardiac infections and can include bed rest, control of pain with non-steroidal anti-inflammatory agents and anti-microbial therapy to avoid permanent myocardial damage, cardiomegaly, and/or congestive cardiac failure.

We indicated our clinical advisors agreed that the diagnosis of viral cardiomyopathy is clinically related to the other diagnoses in ICD-10-CM subcategory B33.2. We stated that they believed it is clinically appropriate for all five diagnoses in subcategory B33.2 to group to MDC 05 (Diseases and Disorders of the Circulatory System) as these conditions describe circulatory system conditions and complications and that this modification will improve clinical coherence. Therefore, we proposed to reassign ICD-10-CM diagnosis code B33.24 from MDC 18 in MS DRGs 865 and 866 (Viral Illness with and without MCC, respectively) to MDC 05 in MS DRGs 314, 315, and 316 (Other Circulatory System Diagnoses with MCC, with CC, and without CC/MCC, respectively). We stated in the proposed rule that, under this proposal, cases reporting procedure codes from MDC 05 in conjunction with principal diagnosis B33.24, would group to MS-DRGs in MDC 05.

Comment: Commenters agreed with CMS' proposal to reassign ICD-10-CM diagnosis code B33.24 (Viral cardiomyopathy) from MDC 18 in MS DRGs 865 and 866 (Viral Illness with and without MCC, respectively) to MDC 05 in MS-DRGs 314, 315, and 316 (Other Circulatory System Diagnoses with MCC, with CC, and without CC/MCC, respectively). Commenters stated this change will improve clinical coherence since viral cardiomyopathy is closely related to the other viral heart diseases in subcategory B33.2 that are already assigned to MDC 05.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to reassign ICD-10-CM diagnosis code B33.24 from MDC 18 in MS DRGs 865 and 866 (Viral Illness with and without MCC, respectively) to MDC 05 in MS DRGs 314, 315, and 316 (Other Circulatory System Diagnoses with MCC, with CC, and without CC/MCC, respectively), without modification, effective October 1, 2021.

d. Left Atrial Appendage Closure (LAAC)

In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58471 through 58477), we identified nine ICD-10-PCS procedure codes that describe Left Atrial Appendage Closure (LAAC) procedures and noted their corresponding MS-DRG assignments in the ICD-10 MS-DRGs Version 37 as listed in the following table.

As discussed in the FY 2021 IPPS/LTCH PPS final rule, we examined claims data from the September 2019 update of the FY 2019 MedPAR file for cases reporting LAAC procedures with an open approach in MS-DRGs 250 and 251 (Percutaneous Cardiovascular Procedures without Coronary Artery Stent with and without MCC, respectively). Our analysis showed that the cases reporting a LAAC procedure with an open approach in MS-DRGs 250 and 251 had higher average costs and longer average length of stay compared to all cases in MS-DRGs 250 and 251. We also stated our clinical advisors believed that ICD-10-PCS codes 02L70CK, 02L70DK, and 02L70ZK that describe a LAAC procedure with an open approach were more suitably grouped to MS-DRGs 273 and 274 (Percutaneous Intracardiac Procedures with and without MCC, respectfully). Therefore, we finalized our proposal to reassign ICD-10-PCS procedure codes 02L70CK, 02L70DK, and 02L70ZK from MS-DRGs 250 and 251 to MS-DRGs 273 and 274. We also finalized a revision to the titles for MS-DRG 273 and 274 to Percutaneous and Other Intracardiac Procedures with and without MCC, respectively to reflect this reassignment for FY 2021.

In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25117 through 25118), we discussed a request we received to again review the MS-DRG assignment of cases involving LAAC procedures with an open approach in response to this final policy. The requestor disagreed with CMS' FY 2021 IPPS/LTCH PPS final rule decision to move the three procedure codes describing the open occlusion of left atrial appendage to MS-DRGs 273 and 274 (Percutaneous and Other Intracardiac Procedures with and without MCC, respectively). The requestor stated they believe that MS-DRGs 228 and 229 (Other Cardiothoracic Procedures with and without MCC, respectively), would more appropriately correspond with the open procedural resources and longer length of stay expected with open heart procedures.

We indicated in the proposed rule that our clinical advisors reviewed this request and continued to support the reassignment of ICD-10-PCS procedure codes 02L70CK, 02L70DK, and 02L70ZK from MS-DRGs 250 and 251 to MS-DRGs 273 and 274 because it allows all LAAC procedures to be grouped together under the same MS-DRGs and improves clinical coherence. Our clinical advisors stated open LAAC procedures are primarily performed in the absence of another O.R. procedure and generally are not performed with a more intensive open chest procedure. When performed as standalone procedures, open LAAC procedures share similar factors such as complexity and resource utilization with all other LAAC procedures. We noted that our clinical advisors continued to state our FY 2021 final policy results in MS-DRG assignments that are more clinically homogeneous and better reflect hospital resource use. Therefore, we proposed to maintain the assignment of codes 02L70CK, 02L70DK, and 02L70ZK that describe the open occlusion of the left atrial appendage in MS-DRGs 273 and 274.

Comment: A commenter expressed concern and requested that CMS reconsider its proposal to continue the assignment of the open LAAC procedure codes to MS-DRGs 273 and 274 (Percutaneous and Other Intracardiac Procedures with and without MCC, respectively) and instead assign these procedures to MS-DRGs 228 and 229 (Other Cardiothoracic Procedures with and without MCC, respectively). This commenter acknowledged in response to the FY 2021 proposed rule, they supported CMS' proposal to reassign the open approach left atrial appendage procedure codes from MS-DRGs 250 and 251 to MS-DRGS 273 and 274 at that time. However, the commenter stated that because CMS did not provide a detailed analysis of the claims data for the average length of stay and average costs related to the cases reporting procedure codes describing the open occlusion of left atrial appendage in the FY 2022 proposed rule, it reviewed the data analysis as presented in the FY 2021 IPPS/LTCH PPS rule and compared it to the data analysis in Section II.D.5.d of the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25118 through 25121) which was presented as part of the discussion of a two-part request to review the MS-DRG assignments for cases involving surgical ablation procedures for atrial fibrillation. The commenter stated based on their own analysis, it appeared the average length of stay and average costs of open occlusion of left atrial appendage procedures would be more clinically aligned with MS-DRGs 228 and 229.

Response: We appreciate the commenter's feedback. We note that the analysis discussed in FY 2021 rulemaking was based on the examination of claims data from the September 2019 update of the FY 2019 MedPAR file, while discussions in Section II. D. of the FY 2022 proposed rule are based on the examination of claims data from the March 2020 update of the FY 2019 MedPAR file, as well as the September 2020 update of the FY 2020 MedPAR file.

We display in the following tables claims analysis using claims data from the March 2020 update of the FY 2019 MedPAR file, as well as the September 2020 update of the FY 2020 MedPAR file. We examined claims data from the March 2020 update of the FY 2019 MedPAR file for all cases in MS-DRGs 273 and 274 and compared the results to cases with a procedure code describing an open LAAC procedure.

In MS-DRG 273, we found a total of 7,557 cases with an average length of stay of 6.1 days and average costs of $28,356. Of those 7,557 cases, there were 29 cases reporting a LAAC procedure with an open approach, with an average length of stay of 7.6 days and average costs of $52,365. In MS-DRG 274, we found a total of 26,595 cases with an average length of stay of 2 days and average costs of $24,295. Of those 26,595 cases, there were 89 cases reporting a LAAC procedure with an open approach, with an average length of stay of 3.5 days and average costs of $25,185. The analysis shows that the cases reporting a LAAC procedure with an open approach in MS-DRGs 273 and 274 have higher average costs compared to all cases in MS-DRGs 273 and 274 ($52,365 versus $28,356 and $25,185 versus $24,295, respectively).

We also examined claims data from the September 2020 update of the FY 2020 MedPAR file for all cases in MS-DRGs 273 and 274 and compared the results to cases with a procedure code describing an open LAAC procedure.

In MS-DRG 273, we found a total of 6,542 cases with an average length of stay of 6.1 days and average costs of $30,671. Of those 6,542 cases, there were 19 cases reporting a LAAC procedure with an open approach, with an average length of stay of 8.3 days and average costs of $47,421. In MS-DRG 274, we found a total of 23,125 cases with an average length of stay of 1.9 days and average costs of $25,880. Of those 23,125 cases, there were 55 cases reporting a LAAC procedure with an open approach, with an average length of stay of 3.1 days and average costs of $20,995. The analysis shows that the cases reporting a LAAC procedure with an open approach in MS-DRG 273 have higher average costs compared to all cases in MS-DRG 273 ($47,421 versus $30,671) while the cases reporting a LAAC procedure with an open approach in MS-DRG 274 have lower average costs compared to all cases in MS-DRG 274 ($20,995 versus $25,880).

While we recognize the average costs of the small number of cases reporting LAAC procedures with an open approach generally have average costs greater than the average costs of the cases in MS-DRGs 273 and 274 overall, our clinical advisors continue to support the reassignment of the open occlusion of left atrial appendage procedures, which was finalized in FY 2021 rulemaking. 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.

Our clinical advisors reviewed this issue and stated they do not believe that assigning procedure codes describing an open LAAC procedure to MS-DRGs 228 and 229 (Other Cardiothoracic Procedures with and without MCC, respectively) will improve clinical coherence, as this surgical class is not as precisely defined from a clinical perspective. MS-DRGs 228 and 229 are an example of the surgical MS-DRGs that are found within each MDC that include `other' procedures intended to encompass procedures that, while not directly related to the MDC, can and do occur with principal diagnoses in that MDC with sufficient frequency.

Our clinical advisors note that, as stated in the ICD-10 MS-DRG Definitions Manual, “In each MDC there is usually a medical and a surgical class referred to as “other medical diseases” and “other surgical procedures,” respectively. The “other” medical and surgical classes are not as precisely defined from a clinical perspective. The other classes would include diagnoses or procedures which were infrequently encountered or not well defined clinically”. The ICD-10 MS-DRG Definitions Manual also states “The “other” surgical category contains surgical procedures which, while infrequent, could still reasonably be expected to be performed for a patient in the particular MDC.”

Our clinical advisors continue to state that when performed as standalone procedures, open LAAC procedures share similar factors such as complexity and resource utilization with all other LAAC procedures. Moreover, our clinical advisors continue to support the FY 2021 reassignment of the open occlusion of left atrial appendage procedures because it allows all LAAC procedures to be grouped together under the same MS-DRGs and improves clinical coherence. After consideration of the public comments we received, and for the reasons stated previously, we are finalizing our proposal to maintain the assignment of codes 02L70CK, 02L70DK, and 02L70ZK that describe the open occlusion of the left atrial appendage in MS-DRGs 273 and 274, without modification, for FY 2022.

e. Surgical Ablation

In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25118 through 25121), we discussed a two-part request we received to review the MS-DRG assignments for cases involving the surgical ablation procedure for atrial fibrillation. Atrial fibrillation (AF) is an irregular and often rapid heart rate that occurs when the two upper chambers of the heart experience chaotic electrical signals. AF presents as either paroxysmal (lasting <7 days), persistent (lasting >7 day, but less than 1 year), or long standing persistent (chronic) (lasting >1 year) based on time duration and can increase the risk for stroke, heart failure, and mortality. Management of AF has two primary goals: Optimizing cardiac output through rhythm or rate control, and decreasing the risk of cerebral and systemic thromboembolism. Patients that worsen in symptomology or fail to respond to pharmacological treatment or other interventions may be referred for surgical ablation to treat their AF. Surgical ablation is a procedure that works by burning or freezing tissue on the inside of the heart to disrupt faulty electrical signals causing the arrhythmia, which can help the heart maintain a normal heart rhythm.

As discussed in the proposed rule, the first part of this request was to create a new classification of surgical ablation MS-DRGs to better accommodate the costs of open concomitant surgical ablations. According to the requestor, patients undergoing surgical ablation are treated under two potential scenarios: (1) Open concomitant (combination) surgical ablation, meaning open surgical ablation performed during another open-heart surgical procedure such as mitral valve repair or replacement (MVR), aortic valve repair or replacement (AVR), or coronary artery bypass grafting (CABG) and (2) minimally invasive, percutaneous endoscopic, standalone surgical ablation as the sole therapeutic procedure performed. According to the requestor, open concomitant surgical ablation is an efficient procedure, as it allows treatment of AF and another clinical pathology in one procedure thereby decreasing the risk of future readmits, need for future repeat catheter ablation procedures, and patient mortality.

The requestor identified the following potential procedure combinations that would comprise an “open concomitant surgical ablation” procedure.

• Open CABG + open surgical ablation
• Open MVR + open surgical ablation
• Open AVR + open surgical ablation
• Open MVR + open AVR + open surgical ablation
• Open MVR + open CABG + open surgical ablation
• Open MVR + open AVR + open CABG + open surgical ablation
• Open AVR + open CABG + open surgical ablation

The requestor performed their own analysis of these procedure code combinations and stated that it found the average costs for open concomitant surgical ablation procedures were consistently higher compared to the average costs within their respective MS-DRGs, which could limit beneficiary access to these procedures.

The requestor suggested that the following four MS-DRGs be created to address the differences in average costs and average lengths of stay it found in its data analysis:

• Suggested New MS-DRG XXX—Open Surgical Ablation with or without Other Cardiothoracic Procedure with Cardiac Catheterization with MCC;
• Suggested New MS-DRG XXX—Open Surgical Ablation with or without Other Cardiothoracic Procedure with Cardiac Catheterization without MCC;
• Suggested New MS-DRG XXX—Open Surgical Ablation with or without Other Cardiothoracic Procedure without Cardiac Catheterization with MCC; and
• Suggested New MS-DRG XXX—Open Surgical Ablation with or without Other Cardiothoracic Procedure without Cardiac Catheterization without MCC.

In response to this request, we identified nine ICD-10-PCS codes that describe open surgical ablation. These codes and their corresponding MDC and MS-DRG assignments are listed in the following table.

We stated in the proposed rule that the ICD-10 MS-DRGs Definitions Manual Version 38.1, for open concomitant surgical ablation procedures, the GROUPER logic assigns MS-DRGs 228 and 229 (Other Cardiothoracic Procedures with and without MCC, respectively) in most instances because MS-DRGs 228 and 229 are high in the surgical hierarchy GROUPER logic of MDC 05 (Diseases and Disorders of the Circulatory System). We would like to correct the statement in the proposed rule that, in ICD-10 MS-DRGs Definitions Manual Version 38.1, for open concomitant surgical ablation procedures, the GROUPER logic assigns MS-DRGs 228 and 229 (Other Cardiothoracic Procedures with and without MCC, respectively) in most instances. We list in the following table the open concomitant surgical ablation procedure code combinations and their corresponding MS-DRG assignments in the ICD-10 MS-DRGs Definitions Manual Version 38.1.

Since patients can have multiple procedures reported with a principal diagnosis during a particular hospital stay, and a patient can be assigned to only one MS-DRG, the surgical hierarchy GROUPER logic provides a hierarchical order of surgical classes from the most resource-intensive to the least resource-intensive. Patients with multiple procedures are generally assigned to the MS-DRG that correlates to the most resource-intensive surgical class.

As noted in the proposed rule, our clinical advisors reviewed this grouping issue and noted in open concomitant surgical ablation procedures, the CABG, MVR, and/or AVR components of the procedure are more technically complex than the open surgical ablation procedure. We noted that our clinical advisors stated that in open concomitant surgical ablation procedures, the MS-DRG assigned should be based on the most resource-intensive procedure performed. Therefore, we indicated we believed this request would be better addressed by proposing to revise the surgical hierarchy in MDC 05 rather than creating four new MS-DRGs. For FY 2022, we proposed to revise the surgical hierarchy for the MS-DRGs in MDC 05 to sequence MS-DRGs 231-236 (Coronary Bypass) above MS-DRGs 228 and 229 to enable more appropriate MS-DRG assignment for these types of cases. We indicated in the proposed rule, that, under this proposal, if a procedure code describing a CABG and a procedure code describing an open surgical ablation are present, the GROUPER logic would assign the CABG surgical class because a CABG would be sequenced higher in the hierarchy than an open surgical ablation.

Comment: Many commenters agreed with our proposal to revise the surgical hierarchy for the MS-DRGs in MDC 05 to sequence MS-DRGs 231-236 (Coronary Bypass) above MS-DRGs 228 and 229. Some commenters stated the re-sequencing of the CABG MS-DRGs is long overdue. A commenter specifically stated they agreed with CMS' reasoning to revise the surgical hierarchy rather than to create new DRGs and stated from a clinical and payment standpoint, moving CABG MS-DRGs 231-236 above Other Cardiothoracic Procedure MS-DRGs 228-229 aligns the procedures better with their technical complexity and their costs.

Response: We thank the commenters for their support.

Comment: While supporting our proposal, other commenters stated that this proposal does not address the issue of the increased resources required to treat patients with AF that are also a candidate for an open surgical ablation procedure at the same time of their CABG procedure. Some commenters stated that CMS' proposal to revise the surgical hierarchy for CABG procedures does not advance patient access nor allow patients the opportunity to receive these procedures during the CABG surgical procedure. Another commenter stated that the proposed revision to the surgical hierarchy fails to address the increased costs of cases associated with open concomitant surgical ablation for AF performed during open mitral valve procedures, which are assigned to MS-DRGs 216 through 221. Another commenter stated while they agree that surgical ablation procedures are not as resource intensive as CABG procedures, CMS' proposal does not give consideration to the increased costs the surgical ablation procedure adds to the CABG procedure.

A commenter stated that CMS did not describe its methodology in detail regarding its analysis of the costs associated with performance of open surgical ablation for AF performed concomitantly during open-heart procedures, preventing meaningful public comments. This commenter stated that concomitant surgical ablation does not represent an “incidental cost” to a hospital that can be remedied just through changes in the existing surgical hierarchy.

Commenters expressed concern that given the added costs of performing as many as three procedures at the same time, hospitals may more likely schedule the patient for separate procedures even though guidelines of the Society for Thoracic Surgeons and the Heart Rhythm Society recommend performing surgical ablation for AF at the time of open-heart procedures. A commenter stated that facilities receive only one MS-DRG payment when procedures are performed concomitantly and are therefore burdened with absorbing the additional expenses of other services provided, further stating that data have shown that mortality is significantly reduced in the first year following concomitant treatment.

Many commenters urged CMS to either (1) create new MS-DRGs for these open concomitant procedures as originally requested, or (2) assign these procedures to MS-DRGs that consider the added procedure and device costs required. Another commenter requested that CMS create a supplemental payment mechanism that could be modeled based on the respective costs of the individual procedures determined by claims data and then adjusted for efficiencies of a single operative session to facilitate incremental payment when two major procedures are performed during the same hospital admission.

Response: We appreciate the commenters' feedback.

As discussed in section II.D.15. of the preamble of the proposed rule and this final rule, in our proposal to revise the surgical hierarchy for the MS-DRGs in MDC 05, MS-DRGs 216-221 (Cardiac Valve and Other Major Cardiothoracic Procedures) will continue to be sequenced above MS-DRGs 231-236 (Coronary Bypass) and MS-DRGs 228 and 229. Of note, in the absence of other procedure codes on the claim, we agree with the commenter that the only procedure code combination describing open concomitant surgical ablations affected by our proposal to revise the surgical hierarchy for the MS-DRGs in MDC 05 is “Open CABG + Open Ablation”. Under this proposal, the six other combinations describing open concomitant surgical ablations will continue to be assigned to MS-DRGs 216 through 221.

In response to the comment that CMS did not describe its methodology in detail regarding its analysis of the costs associated with performance of open surgical ablation, as we discussed insection II.D.15. of the preamble of the proposed rule, we reviewed the surgical hierarchy within MDC 05 consistent with our annual process; specifically, we 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.

With regard to the comments stating that the proposed revision to the surgical hierarchy fails to address the increased costs of cases associated with open concomitant surgical ablation, we examined the data analysis of cases reporting procedure code combinations describing open concomitant surgical ablations in the March 2020 update of the FY 2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR file for cases reporting procedure code combinations describing open concomitant surgical ablations. First, we refer the reader to Table 6P.1n associated with this final rule (which is available via the internet on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS) for the list of ICD-10-PCS procedure codes reflecting mitral valve repair or replacement (MVR), aortic valve repair or replacement (AVR), and coronary artery bypass grafting (CABG) procedures that we examined in our analysis of this issue. We also refer the reader to Table 6P.1o associated with this final rule (which is available via the internet on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS) for data analysis findings of cases reporting procedure code combinations describing open concomitant surgical ablations currently assigned to MS-DRGs 216, 217, 218, 219, 220 and 221 from the March 2020 update of the FY 2019 MedPAR file and from the September 2020 update of the FY 2020 MedPAR file. We note that if a procedure code combination that is currently assigned to MS-DRGs 216, 217, 218, 219, 220 and 221 is not displayed, it is because there were no cases found reporting that combination in the assigned MS-DRG.

As shown in Table 6P.1o associated with this final rule, in our examination of the claims data from both the March 2020 update of the FY 2019 MedPAR file and September 2020 update of the FY 2020 MedPAR file, while the average lengths of stay and average costs of cases reporting procedure code combinations describing open concomitant surgical ablations are higher than all cases in their respective MS-DRG, we found there is variation in the volume, length of stay, and average costs of the cases. In the analysis of claims data from the March 2020 update of the FY 2019 MedPAR file, during our review of MS-DRG 216, we found 1,145 cases reporting procedure code combinations describing open concomitant surgical ablations with the average length of stay ranging from 17.6 days to 24.3 days and average costs ranging from $77,868 to $125,120 for these cases. For MS-DRG 217, we found 295 cases reporting procedure code combinations describing open concomitant surgical ablations with the average length of stay ranging from 10 days to 13 days and average costs ranging from $45,526 to $52,859 for these cases. For MS-DRG 218, we found 7 cases reporting procedure code combinations describing open concomitant surgical ablations with the average length of stay ranging from 7 days to 11 days and average costs ranging from $28,614 to $68,725 for these cases. For MS-DRG 219, we found 2,673 cases reporting procedure code combinations describing open concomitant surgical ablations with the average length of stay ranging from 11.6 days to 13.3 days and average costs ranging from $65,846 to $83,281 for these cases. For MS-DRG 220, we found 1,890 cases reporting procedure code combinations describing open concomitant surgical ablations with the average length of stay ranging from 7.3 days to 10.2 days and average costs ranging from $44,568 to $64,726 for these cases. For MS-DRG 221, we found 110 cases reporting procedure code combinations describing open concomitant surgical ablations with the average length of stay ranging from 5.6 days to 6.8 days and average costs ranging from $44,826 to $73,629 for these cases.

Our analysis of the claims data from the September 2020 update of the FY 2020 MedPAR file resulted in similar findings to those from the March 2020 update of the FY 2019 MedPAR file; while the average lengths of stay and average costs of cases reporting procedure code combinations describing open concomitant surgical ablations are higher than all the cases in their respective MS-DRG, we found there is variation in the volume, length of stay, and average costs of the cases. In the analysis of claims data from the September 2020 update of the FY 2020 MedPAR file, during our review of MS-DRG 216, we found 931 cases reporting procedure code combinations describing open concomitant surgical ablations with the average length of stay ranging from 16.1 days to 20.5 days and average costs ranging from $79,732 to $108,552 for these cases. For MS-DRG 217, we found 207 cases reporting procedure code combinations describing open concomitant surgical ablations with the average length of stay ranging from 9.2 days to 12 days and average costs ranging from $46,588 to $70,840 for these cases. For MS-DRG 218, we found 1 case reporting procedure code combinations describing open concomitant surgical ablations with a length of stay of 8 days and costs of $17,611. For MS-DRG 219, we found 1,998 cases reporting procedure code combinations describing open concomitant surgical ablations with the average length of stay ranging from 11.6 days to 14.6 days and average costs ranging from $68,175 to $104,560 for these cases. For MS-DRG 220, we found 1,318 cases reporting procedure code combinations describing open concomitant surgical ablations with the average length of stay ranging from 7.5 days to 8.0 days and average costs ranging from $48,200 to $61,444 for these cases. For MS-DRG 221, we found 60 cases reporting procedure code combinations describing open concomitant surgical ablations with the average length of stay ranging from 5.1 days to 8.6 days and average costs ranging from $49,910 to $65,501 for these cases.

In response to comments that urged CMS to create new MS-DRGs for these open concomitant procedures as originally requested, based on these data, our clinical advisors believe additional time is needed given the complexity of these code combinations and corresponding data before exploring a proposal to create new MS-DRGs for this subset of patients. For example, cases reporting a CABG and a procedure code describing an open surgical ablation without procedure codes describing an AVR or an MVR were found in MS-DRGs 216 through 221 meaning another cardiac valve or other major cardiothoracic procedure was reported, which could be contributing to the increased costs of these cases. Secondly, MS-DRGs 216, 217 and 218 are defined by the performance of cardiac catheterization, meaning a cardiac catherization procedure was reported, which could be also contributing to the increased costs of these cases. Lastly, the cases reporting an open concomitant surgical ablation code combination are predominately found in the higher (CC or MCC) severity level MS-DRGs of their current base MS-DRG assignment. Therefore, our clinical advisors believe that additional time is needed to allow for further analysis of the claims data to determine to what extent the patient's co-morbid conditions are also contributing to higher costs and to identify other contributing factors that might exist with respect to the increased length of stay and costs of these cases in these MS-DRGs. Our clinical advisors also believe that future data findings may demonstrate additional variance in resource utilization for this patient population.

We also note, as discussed in Section D.1.b of the proposed rule and this final rule, using the March 2020 update of the FY 2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR file, we analyzed how applying the NonCC subgroup criteria to all MS-DRGs currently split into three severity levels would affect the MS-DRG structure beginning in FY 2022. Findings from our analysis indicated that MS-DRGs 216, 217, 218 as well as approximately 31 other MS-DRGs would be subject to change based on the three-way severity level split criterion finalized in FY 2021. We refer the reader to Table 6P.1c associated with the proposed rule and this final rule (which is available via the internet on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS) for the list of the 96 MS-DRGs that would be subject to deletion and the list of the 58 new MS-DRGs that would have been proposed for creation under this policy if the NonCC subgroup criteria were applied.

As discussed previously, we are finalizing the delay of the application of the NonCC subgroup criteria to existing MS-DRGs with a three-way severity level split until FY 2023 or later, and are finalizing our proposal to maintain the current structure of the 32 MS-DRGs that currently have a three-way severity level split (total of 96 MS-DRGs) that would otherwise be subject to these criteria for FY 2022. Noting that currently the total number of cases in MS-DRG 218 is below 500, and that we may consider consolidating these MS-DRGs into two severity levels based on the application of the NonCC subgroup criteria in future rule-making, as well as for the reasons stated previously, we believe additional time is needed to review the clinical nature of cases reporting an open concomitant surgical ablation code combination before creating new MS-DRGs for the subset of cases with procedure codes that describe open concomitant surgical ablation procedures that are currently assigned to MS-DRGs 216 through 221 at this time.

In response to comment that the proposed hierarchy change will not address the increased resources required to treat patients with AF that are a candidate for an open surgical ablation procedure at the same time of their CABG procedure, we analyzed the March 2020 update of the FY 2019 MedPAR file for cases reporting the procedure code combination “Open CABG + Open Ablation” of the seven potential procedure combinations that would comprise an “open concomitant surgical ablation” procedure, as this is the only concomitant procedure code combination potentially affected by the proposed hierarchy change (in the absence of other procedure codes that could affect MS-DRG assignment on the claim).

As shown in the table, the data analysis performed indicates that the 1,010 cases in MS-DRG 228 reporting a procedure code that describes a CABG procedure as well as a procedure code describing an open ablation have an average length of stay that is longer than the average length of stay for all the cases in MS-DRG 228 (12.8 days versus 10.7 days) and higher average costs when compared to all the cases in MS-DRG 228 ($56,331 versus $45,772). The 1,041 cases in MS-DRG 229 reporting a procedure code that describes a CABG procedure as well as a procedure code describing an open ablation also have an average length of stay that is longer than the average length of stay for all the cases in MS-DRG 229 (8.2 days versus 5.3 days) and higher average costs when compared to all the cases in MS-DRG 229 ($38,643 versus $29,454). As expected, there were zero cases found with procedure codes describing one of the other six “open concomitant surgical ablation” procedure code combinations as described by the requestor since GROUPER logic would assign MS-DRGs 216 through 221 for the other combinations.

We then examined the redistribution of cases that is anticipated to occur as a result of the proposal to move MS-DRGs 231 through 236 (Coronary Bypass) above MS-DRGs 228 and 229 in the surgical hierarchy of MDC 05 for Version 39 of the ICD-10 MS-DRGs, by processing the claims data from the March 2020 update of the FY 2019 MedPAR file through the ICD-10 MS-DRG GROUPER Version 38 and then processing the same claims data through the ICD-10 MS-DRG GROUPER Version 39 for comparison. The number of cases from this comparison that result in different MS-DRG assignments is the number of the cases that are anticipated to potentially shift or be redistributed. Our findings are shown in the following table.

We found a number of cases that are anticipated to potentially shift or be redistributed into MS-DRGs 231 through 236. The largest number of cases moving out of MS-DRG 228 are moving into MS-DRG 235, which means these cases reported a procedure code for CABG and a cardiothoracic procedure, such as a surgical ablation, without procedure codes reporting a PTCA or cardiac catherization. The largest number of cases moving out of MS-DRG 229 are moving into MS-DRG 236, which again means these cases reported a procedure code for CABG and a cardiothoracic procedure, such as a surgical ablation, without procedure codes reporting a PTCA or cardiac catherization.

We then examined the claims data from the March 2020 update of the FY 2019 MedPAR file to identify the average length of stay and average costs for all cases in MS-DRGs 231, 232, 233, 234, 235 and 236. Our findings are shown in the following table.

In reviewing the data analysis performed, the 1,010 cases in MS-DRG 228 reporting a procedure code that describes a CABG procedure as well as a procedure code describing an open ablation have an average length of stay that is longer than the average length of stay for all the cases in MS-DRG 235 (12.8 days versus 9.8 days) and higher average costs when compared to all the cases in MS-DRG 235 ($56,331 versus $42,133). The 1,041 cases in MS-DRG 229 reporting a procedure code that describes a CABG procedure as well as a procedure code describing an open ablation also have an average length of stay that is longer than the average length of stay for all the cases in MS-DRG 236 (8.2 days versus 6.4 days) and higher average costs when compared to all the cases in MS-DRG 236 ($38,643 versus $29,565). The average length of stay and average costs of cases reporting a procedure code that describes a CABG procedure as well as a procedure code describing an open ablation in MS-DRG 228 as well as a secondary diagnosis of MCC are closer aligned to costs of cases in MS-DRGs 233 (Coronary Bypass with Cardiac Catheterization with MCC) (12.8 days versus 12.7 days and $56,331 versus $54,170 respectively). The average length of stay and average costs of cases reporting a procedure code that describes a CABG procedure as well as a procedure code describing an open ablation in MS-DRG 229 without secondary diagnosis of MCC are closer aligned to costs of cases in MS-DRGs 234 (Coronary Bypass with Cardiac Catheterization without MCC) (8.2 days versus 8.7 days and $38,643 versus $38,058 respectively).

Next, we analyzed the September 2020 update of the FY 2020 MedPAR file for cases reporting a procedure code describing a CABG procedure with a procedure code describing an open ablation.

As shown in the table, the data analysis performed indicates that the 836 cases in MS-DRG 228 reporting a procedure code that describes a CABG procedure as well as a procedure code describing an open ablation have an average length of stay that is longer than the average length of stay for all the cases in MS-DRG 228 (12.8 days versus 10.2 days) and higher average costs when compared to all the cases in MS-DRG 228 ($60,327 versus $46,508). The 824 cases in MS-DRG 229 reporting a procedure code that describes a CABG procedure as well as a procedure code describing an open ablation also have an average length of stay that is longer than the average length of stay for all the cases in MS-DRG 229 (7.9 days versus 4.9 days) and higher average costs when compared to all the cases in MS-DRG 229 ($39,392 versus $29,885). As expected, there were zero cases found with procedure codes describing one of the other six “open concomitant ablation” procedure code combinations as described by the requestor since GROUPER logic would assign MS-DRGs 216 through 221 for the other combinations.

As we did with the March 2020 update of the FY 2019 MedPAR file, we then examined the redistribution of cases that is anticipated to occur by processing the claims data, this time from the September 2020 update of the FY 2020 MedPAR file through the ICD-10 MS-DRG GROUPER Version 38 and then processed the same claims data through the ICD-10 MS-DRG GROUPER Version 39 for comparison. Our findings are shown in the table.

Similarly, we found a number of cases that are anticipated to potentially shift or be redistributed into MS-DRGs 231 through 236. The largest number of cases moving out of MS-DRG 228 are moving into MS-DRG 235, which means these cases reported a procedure code for CABG and a cardiothoracic procedure, such as a surgical ablation, without procedure codes reporting a PTCA or cardiac catherization. The largest number of cases moving out of MS-DRG 229 are moving into MS-DRG 236, which again means these cases reported a procedure code for CABG and a cardiothoracic procedure, such as a surgical ablation, without procedure codes reporting a PTCA or cardiac catherization.

We also examined the claims data from the September 2020 update of the FY 2020 MedPAR file to identify the average length of stay and average costs for all cases in MS-DRGs 231, 232, 233, 234, 235 and 236. Our findings are shown in the following table.

In reviewing the data analysis performed, the 836 cases in MS-DRG 228 reporting a procedure code that describes a CABG procedure as well as a procedure code describing an open ablation have an average length of stay that is longer than the average length of stay for all the cases in MS-DRG 235 (12.8 days versus 9.7 days) and higher average costs when compared to all the cases in MS-DRG 235 ($60,327 versus $44,106). The 824 cases in MS-DRG 229 reporting a procedure code that describes a CABG procedure as well as a procedure code describing an open ablation also have an average length of stay that is longer than the average length of stay for all the cases in MS-DRG 236 (7.9 days versus 6.4 days) and higher average costs when compared to all the cases in MS-DRG 236 ($39,392 versus $31,170). The average length of stay and average costs of cases reporting a procedure code that describes a CABG procedure as well as a procedure code describing an open ablation in MS-DRG 228 as well as a secondary diagnosis of MCC are closer aligned to costs of cases in MS-DRGs 233 (Coronary Bypass with Cardiac Catheterization with MCC) (12.8 days versus 12.5 days and $60,327 versus $56,388 respectively). The average length of stay and average costs of cases reporting a procedure code that describes a CABG procedure as well as a procedure code describing an open ablation in MS-DRG 229 without secondary diagnosis of MCC are closer aligned to costs of cases in MS-DRGs 234 (Coronary Bypass with Cardiac Catheterization without MCC) (7.9 days versus 8.5 days and $39,392 versus $39,406 respectively).

In response to comments that urged CMS to assign these procedures to MS-DRGs that consider the added procedure and device costs required, our clinical advisors reviewed these data and continue to state that in open concomitant surgical ablation procedures, the CABG, MVR, and/or AVR components of the procedure are more technically complex than the open surgical ablation procedure. They also state that the proposed revision to the surgical hierarchy leads to a grouping that is more coherent and better accounts for the resources expended to address the more complex procedures from other cases redistributed during the hierarchy change. However, in cases where an open ablation is performed in combination with a coronary bypass procedure but without a PTCA or cardiac catherization procedure also being performed, to better address the concerns expressed in the public comments, our clinical advisors support the assignment of these cases to MS-DRGs 233 and 234 as an enhancement to better reflect the clinical severity and resource use involved in these cases. Our clinical advisors also support changing the titles of MS-DRGs 233 and 234 to “Coronary Bypass with Cardiac Catheterization or Open Ablation with and without MCC, respectively” to better reflect the assigned procedures.

Therefore, after consideration of the public comments we received, and for the reasons discussed, we are finalizing our proposal to revise the surgical hierarchy for the MS-DRGs in MDC 05 to sequence MS-DRGs 231-236 (Coronary Bypass) above MS-DRGs 228 and 229, effective October 1, 2021. We refer the reader to section II.D.15. of the preamble of this final rule for the discussion of the surgical hierarchy and the complete list of our proposed modifications to the surgical hierarchy in MDC 05 as well as our finalization of that proposal. In addition, after consideration of the public comments we received and for the reasons discussed, we are also finalizing the assignment of cases with a procedure code describing coronary bypass and a procedure code describing open ablation to MS-DRGs 233 and 234 and changing the titles of these MS-DRGs to “Coronary Bypass with Cardiac Catheterization or Open Ablation with and without MCC, respectively”.

As discussed earlier in the proposed rule and in this section, this request involved two parts. The second part of the request was to reassign cases describing standalone percutaneous endoscopic surgical ablation. According to the requestor, standalone, percutaneous endoscopic surgical ablation is a rapidly growing therapy, indicated for highly symptomatic patients that have already failed medical management and/or percutaneous catheter ablation procedures. The requestor identified nine ICD-10-PCS codes that they stated describe percutaneous endoscopic surgical ablation. These codes and their corresponding MDC and MS-DRG assignments are listed in the following table.

The requestor performed their own analysis and stated that they found the most common MS-DRG assignment for cases describing standalone percutaneous endoscopic surgical ablation was MS-DRGs 228 and 229 (Other Cardiothoracic Procedures with and without MCC, respectively) and that in those MS-DRGs, the standalone surgical ablation procedures cost more than all the procedures in their currently assigned MS-DRGs 228 and 229. Therefore, the requestor recommended CMS reassign these procedures to higher weighted MS-DRGs 219 and 220 (Cardiac Valve and Other Major Cardiothoracic Procedures without Cardiac Catheterization with MCC and with CC, respectively).

In response to this request, we examined claims data from the March 2020 update of the FY 2019 MedPAR file for all cases in MS-DRGs 228 and 229 and compared the results to cases with a procedure code describing a standalone percutaneous endoscopic surgical ablation procedure. Our findings are shown in the following table.

As shown in the table, the data analysis performed indicates that the 99 cases in MS-DRG 228 reporting a procedure code that describes percutaneous endoscopic surgical ablation have an average length of stay that is shorter than the average length of stay for all the cases in MS-DRG 228 (7.1 days versus 10.7 days) and higher average costs when compared to all the cases in MS-DRG 228 ($48,281 versus $45,772). The 497 cases in MS-DRG 229 reporting a procedure code that describes percutaneous endoscopic surgical ablation have an average length of stay that is shorter than the average length of stay for all the cases in MS-DRG 229 (3.7 days versus 5.3 days) and higher average costs when compared to all the cases in MS-DRG 229 ($35,516 versus $29,454).

We then examined the claims data from the March 2020 update of the FY 2019 MedPAR file to identify the average length of stay and average costs for all cases in MS-DRGs 219 and 220. Our findings are shown in the following table.

As shown in the table, for MS-DRG 219, there were a total of 15,597 cases with an average length of stay of 10.9 days and average costs of $57,845. For MS-DRG 220, there were a total of 15,074 cases with an average length of stay of 6.5 days and average costs of $39,565.

We also examined claims data from the September 2020 update of the FY 2020 MedPAR file for all cases in MS-DRGs 228 and 229 and compared the results to cases with a procedure code describing a standalone percutaneous endoscopic surgical ablation procedure. Our findings are shown in the following table.

As shown in the table, the data analysis performed indicates that the 84 cases in MS-DRG 228 reporting a procedure code that describes percutaneous endoscopic surgical ablation have an average length of stay that is shorter than the average length of stay for all the cases in MS-DRG 228 (6.9 days versus 10.2 days) and lower average costs when compared to all the cases in MS-DRG 228 ($44,710 versus $46,508). The 393 cases in MS-DRG 229 reporting a procedure code that describes percutaneous endoscopic surgical ablation have an average length of stay that is shorter than the average length of stay for all the cases in MS-DRG 229 (3.4 days versus 4.9 days) and higher average costs when compared to all the cases in MS-DRG 229 ($34,237 versus $29,885).

We then examined the claims data from the September 2020 update of the FY 2020 MedPAR file to identify the average length of stay and average costs for all cases in MS-DRGs 219 and 220. Our findings are shown in the following table.

As shown in the table, for MS-DRG 219, there were a total of 11,863 cases with an average length of stay of 10.9 days and average costs of $61,934. For MS-DRG 220, there were a total of 10,072 cases with an average length of stay of 6.5 days and average costs of $41,800.

As noted in the proposed rule, our analysis indicates that MS-DRGs 219 and 220 generally have much higher average costs and longer average lengths of stay than the cases with a procedure code describing a standalone percutaneous endoscopic surgical ablation procedure currently assigned to MS-DRGs 228 and 229. Instead, the average costs and average length of stay for cases reporting a standalone percutaneous endoscopic surgical ablation appear to be generally more aligned with the average costs and average length of stay for all cases in MS-DRGs 228 and 229, where they are currently assigned. We indicated that our clinical advisors reviewed this issue and did not recommend changing the assignment of procedure codes describing percutaneous endoscopic surgical ablation. Therefore, for the reasons indicated, we proposed to maintain the current structure of MS-DRGs 219 and 220.

Comment: Commenters disagreed with our proposal to maintain the current structure of MS-DRGs 219 and 220 and noted that payment for MS-DRGs 228 and 229 has been trending downward over the last 5 years. Some commenters stated that CMS did not provide transparency to the details of its analysis to support why standalone hybrid surgical ablation procedures should not be moved from MS-DRGs 228 and 229. Another commenter stated CMS' proposed decline in payment rates makes it impossible for their facility to continue to provide these needed procedures to patients suffering from atrial fibrillation. Another commenter stated the proposed relative weight does not accurately reflect the costs of these device intensive procedures and that there has been no transparency into the cause for these significant declines. Other commenters asserted that hospitals will be forced to postpone or “trim back” on providing patients access to more complex, resource intensive procedures such as these, to better align their costs with what they asserted were Medicare's inadequate payment levels. Other commenters requested that CMS use its statutory authority to not reduce the relative weight and payment for MS-DRGs 228 and 229, which contain stand-alone surgical ablation procedures for AF.

Response: We appreciate the commenters' feedback. We note that we did not propose a change to the GROUPER logic of MS-DRGs 228 and 229. Our clinical advisors did not recommend changing the assignment of procedure codes describing percutaneous endoscopic surgical ablation, currently assigned to MS-DRGs 228 and 229, to MS-DRGs 219 and 220. Therefore, we proposed to maintain the current structure of MS-DRGs 219 and 220. This proposal by extension also maintains the current structure of MS-DRGs 228 and 229. With regard to the comments about the implications for payment in MS-DRGs 228 and 229, we note that the goals of assigning or re-assigning procedure codes to MS-DRGs are to better clinically represent the resources involved in caring for these patients and enhance the overall accuracy of the system. In response to the comment that CMS did not provide transparency to the details of its analysis in the proposed rule, we provided our claims analysis for the cases with a procedure code describing a standalone percutaneous endoscopic surgical ablation procedure as well as a discussion of that analysis and the basis for our proposal. It is unclear from the comments what additional details the commenters are referencing.

In response to the comment that hospitals will be forced to postpone or “trim back” on providing patients access to these procedures in order to better align their costs with Medicare payment levels, 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 potentially involves increased costs.

As we have indicated in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38103), the FY 2019 IPPS/LTCH PPS final rule (83 FR 41273), the FY 2020 IPPS/LTCH PPS final rule (84 FR 42167) and the FY 2021 IPPS/LTCH final rule (85 FR 58598), we do not believe it is normally appropriate to address relative weight fluctuations that appear to be driven by changes in the underlying data even if we have addressed relative weight fluctuations in specific circumstances such as when a relative weight would have declined by more than 20 percent in one year, or in instances where we did not have sufficient MedPAR data to set accurate and stable cost relative weights for low volume MS-DRGs. We do however acknowledge the trending reduction in relative weights for MS-DRGs 228 and 229 in our ratesetting as reflected in the following chart.

We believe this weight change over time to be appropriately driven by the underlying data in the 5 years since CMS began using the ICD-10 data in calculating the relative weights. We note that there are 809 ICD-10-PCS codes assigned to the GROUPER logic of MS-DRGs 228 and 229 in the ICD-10 MS-DRGs Definitions Manual Version 38.1, of which the procedure codes describing standalone ablation represent a small percentage.

As stated in the ICD-10 MS-DRG Definitions Manual, “In each MDC there is usually a medical and a surgical class referred to as “other medical diseases” and “other surgical procedures,” respectively. The “other” medical and surgical classes are not as precisely defined from a clinical perspective. The other classes would include diagnoses or procedures which were infrequently encountered or not well defined clinically”. The ICD-10 MS-DRG Definitions Manual also states “The “other” surgical category contains surgical procedures which, while infrequent, could still reasonably be expected to be performed for a patient in the particular MDC.” MS-DRGs 228 and 229 are an example of the surgical MS-DRGs that are found within each MDC that include “other” procedures intended to encompass procedures that, while not directly related to the MDC, can and do occur with principal diagnoses in that MDC with sufficient frequency.

As displayed in the proposed rule, when we examined claims data from the March 2020 update of the FY 2019 MedPAR file for all cases in MS-DRGs 228 and 229 and compared the results to cases with a procedure code describing a standalone percutaneous endoscopic surgical ablation procedure, the 99 cases in MS-DRG 228 reporting a procedure code that describes percutaneous endoscopic surgical ablation represent only 2% of the 4,436 total cases in MS-DRG 228. The 497 cases in MS-DRG 229 reporting a procedure code that describes percutaneous endoscopic surgical ablation represent only 9% of the 5,250 total cases in MS-DRG 229.

Similarly, when we examined claims data from the September 2020 update of the FY 2020 MedPAR file for all cases in MS-DRGs 228 and 229 and compared the results to cases with a procedure code describing a standalone percutaneous endoscopic surgical ablation procedure, the 84 cases in MS-DRG 228 reporting a procedure code that describes percutaneous endoscopic surgical ablation represent only 2% of the 4,419 total cases in MS-DRG 228. The 393 cases in MS-DRG 229 reporting a procedure code that describes percutaneous endoscopic surgical ablation represent only 8% of the 4,732 total cases in MS-DRG 229.

We also note that each year, we calculate the relative weights by dividing the average cost for cases within each MS-DRG by the average cost for cases across all MS-DRGs. It is to be expected that when MS-DRGs are restructured, such as when procedure codes are reassigned or the hierarchy within an MDC is revised, resulting in a different case-mix within the MS-DRGs, the relative weights of the MS-DRGs will change as a result. Over the past five years, there have been changes to the structure of MS-DRGS 228 and 229. Specifically, in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56809 through 56813), we finalized our proposal to collapse MS-DRGs 228, 229, and 230 from three severity levels to two severity levels by deleting MS-DRG 230 and revised the structure of MS- DRG 229. We also finalized our proposal to reassign ICD-9-CM procedure code 35.97 and the cases reporting ICD-10-PCS procedure code 02UG3JZ (Supplement mitral valve with synthetic substitute, percutaneous approach) from MS-DRGs 273 and 274 to MS-DRG 228 and revised the titles of MS-DRG 228 and 229. In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42080 through 56813) we finalized our proposal to modify the structure of MS-DRGs 266 and 267 by reassigning ICD-10-PCS procedure code 02UG3JZ describing a transcatheter mitral valve repair with implant procedure from MS-DRGs 228 and 229 to MS-DRGs 266 and 267 and revised the titles of MS- DRG 266 and 267. Finally, as discussed in the FY 2022 IPPS/LTCHPPS proposed rule, and earlier in this section, we proposed to revise the surgical hierarchy for the MS-DRGs in MDC 05 to sequence MS-DRGs 231-236 (Coronary Bypass) above MS-DRGs 228 and 229 for FY 2022. Therefore, the data appear to reflect that the difference in the relative weights reflected in Table 5 -List of Medicare Severity Diagnosis Related Groups (MS-DRGs), Relative Weighting Factors, and Geometric and Arithmetic Mean Length of Stay associated with final rule for the applicable fiscal year can be attributed to the fact that the finalization of these proposals resulted in a different case-mix within the MS-DRGs which is then being reflected in the relative weights. We refer the reader to section II.E. of the preamble of this FY 2022 IPPS/LTCH PPS final rule for a complete discussion of the relative weight calculations.

Comment: A few commenters noted that hybrid standalone percutaneous endoscopic surgical ablation includes both a minimally invasive surgical ablation performed by a surgeon and catheter ablation performed by an electrophysiologist in the same hospital visit, and stated that the downward payment trend for the MS-DRGs 228 and 229 has resulted in hospitals being undercompensated for the costs of furnishing standalone hybrid percutaneous endoscopic surgical ablation procedures for AF. These commenters proposed two possible remedies to this underpayment, that CMS either (1) maintain the relative weights of MS-DRGs 228 and 229 for a year and then reassess the data, or (2) assign cases reporting procedure codes describing standalone percutaneous endoscopic surgical ablation from MS-DRGs 228 and 229 to the higher (MCC) severity level MS-DRG of its current base MS-DRG assignment, which is MS-DRG 228 (Other Cardiothoracic Procedures with MCC), to prevent underpayment for these procedures.

Response: We appreciate the commenter's suggestions. In response to the request that CMS maintain the relative weights of MS-DRGs 228 and 229 for a year, as stated in response to similar comments expressed by other commenters, we believe the weight change in these MS-DRGs over time to be appropriately driven by the underlying data. In response to the request that CMS assign cases reporting procedure codes describing standalone percutaneous endoscopic surgical ablation from MS-DRGs 228 and 229 to the higher (MCC) severity level MS-DRG of its current base MS-DRG assignment, we examined the claims analysis as presented in the proposed rule and earlier in this section. Using the March 2020 update of the FY 2019 MedPAR file, the 497 cases in MS-DRG 229 reporting a procedure code that describes percutaneous endoscopic surgical ablation without a secondary diagnosis designated as an MCC have an average length of stay that is shorter than the average length of stay for all the cases in MS-DRG 228 (3.7 days versus 10.7 days) and lower average costs when compared to all the cases in MS-DRG 228 ($35,516 versus $45,772). Similarly, using the September 2020 update of the FY 2020 MedPAR file, the 393 cases in MS-DRG 229 reporting a procedure code that describes percutaneous endoscopic surgical ablation without a secondary diagnosis designated as an MCC have an average length of stay that is shorter than the average length of stay for all the cases in MS-DRG 228 (3.4 days versus 10.2 days) and lower average costs when compared to all the cases in MS-DRG 228 ($34,237 versus $46,508). Our clinical advisors reviewed this analysis and do not support reassignment of cases reporting a procedure code that describes percutaneous endoscopic surgical ablation without a secondary diagnosis designated as an MCC from MS-DRG 229 to MS-DRG 228 based on this claims data analysis. Our advisors stated it would not be appropriate to reassign these cases into the higher severity level MS-DRG in the absence of an MCC and noted that the cases would not be clinically coherent with regard to resource utilization as reflected in the differences in average costs and average lengths of stay. As additional claims data becomes available, we will continue to analyze the clinical nature of procedure codes that describe percutaneous endoscopic surgical ablation and their MS-DRG assignments to further improve the overall accuracy of the IPPS payments in future rulemaking.

Therefore, after consideration of the public comments we received, and for the reasons stated earlier, we are finalizing our proposal to maintain the current structure of MS-DRGs 219 and 220 for FY 2022.

f. Drug-Eluting Stents

In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25121 through 25122), we discussed a request we received to review the MS-DRG assignments of claims involving the insertion of coronary stents in percutaneous coronary interventions. The requestor suggested that CMS eliminate the distinction between drug-eluting and bare-metal coronary stents in the MS-DRG classification. According to the requestor, coated stents have a clinical performance comparable to drug-eluting stents however they are grouped with bare-metal stents because they do not contain a drug. The requestor asserted that this comingling muddies the clinical coherence of the MS-DRG structure, as one cannot infer distinctions in clinical performance or benefits among the groups and potentially creates a barrier (based on hospital decision-making) to patient access to modern coated stents.

The requestor listed the following MS-DRGs in its request.

• MS-DRG 246 (Percutaneous Cardiovascular Procedures with Drug-Eluting Stent with MCC or 4+ Arteries or Stents);
• MS-DRG 247 (Percutaneous Cardiovascular Procedures with Drug-Eluting Stent without MCC);
• MS-DRG 248 (Percutaneous Cardiovascular Procedures with Non-Drug-Eluting Stent with MCC or 4+ Arteries or Stents); and
• MS-DRG 249 (Percutaneous Cardiovascular Procedures with Non-Drug-Eluting Stent without MCC).

According to the requestor, the non-drug-eluting stent MS-DRGs have outlived their usefulness in the stent market. The requestor performed its own analysis of MedPAR data from FY 2015 through FY 2019 and stated that it found the volume of cases describing non-drug-eluting coronary stents has declined since 2015, culminating in FY 2019, with drug-eluting stents accounting for 96.1% of all stent cases within the Medicare program, while non-drug-eluting stents accounted for only 3.9% that year. The requestor asserted that the assignment of coated stents to the non-drug-eluting stent category creates a market distortion as this newer technology is being comingled with very old technology at a payment disadvantage large enough to influence hospitals' willingness to prescribe, while at the same time acknowledging that the separation in average charges and costs between the non-drug-eluting stent category and the drug-eluting stent category is minimal in their analysis of the claims data.

In the proposed rule, based on a review of the procedure codes that are currently assigned to MS-DRGs 246, 247, 248 and 249, we indicated that our clinical advisors agreed that further refinement of these MS-DRGs may be warranted. However, we noted that in ICD-10-PCS, a stent is considered an intraluminal device. The distinction between drug-eluting and non-drug eluting intraluminal devices is found elsewhere in the ICD-10-PCS procedure code classification and evaluating this request requires a more extensive analysis to assess potential impacts across the MS-DRGs. For these reasons, at this time, we indicated that our clinical advisors recommended that rather than evaluating the procedure codes assigned to MS-DRGs 246, 247, 248 and 249 in isolation, additional analysis should be performed for this subset of procedure codes across the MS-DRGs, as part of the comprehensive procedure code review described in section II.D.11. of the preamble of the proposed rule and this final rule. Therefore, we indicated we believed it would be more appropriate to consider this request further during our comprehensive procedure code review in future rulemaking.

Comment: We received a comment expressing concern that the existence of a payment differential between drug-eluting and bare-metal stents continues to prevent access for patients who are not able to obtain the clinical benefits of modern coated stents due to hospital margin concerns. The commenter stated that multiple clinical studies have consistently proven that the clinical safety and effectiveness of their cardiovascular coated stent is more similar to drug-eluting coronary stents when compared to bare-metal-stents. This commenter urged CMS to take timely action in refining the MS-DRGs to remedy the patient access issue, respectfully requested that CMS complete its analysis in time for the FY 2023 IPPS proposed rule, and also requested that CMS confirm the timing in this FY 2022 IPPS final rule.

Response: We appreciate the commenter's comments. We note that the distinction between drug eluting and non-drug-eluting stents has long existed in the classification. In the FY 2003 IPPS/LTCH PPS final rule (67 FR 50003 through 50005), we created two new temporary CMS DRGs to reflect cases involving the insertion of a drug-eluting coronary artery stent as signified by the presence of code ICD-9-CM procedure code 36.07 (Insertion of drug-eluting coronary artery stent): CMS DRG 526 (Percutaneous Cardiovascular Procedure With Drug- Eluting Stent With AMI); and CMS DRG 527 (Percutaneous Cardiovascular Procedure With Drug-Eluting Stent Without AMI) to parallel existing CMS DRGs 516 (Percutaneous Cardiovascular Procedure with Acute Myocardial Infarction (AMI)) and 517(Percutaneous Cardiovascular Procedure with Coronary Artery Stent without AMI). Although the FDA had not yet approved the technology for use, at the time public presentation of the results from clinical trials found virtually no in-stent restenosis in patients treated with the drug-eluting stent. Therefore, we stated temporary CMS DRGs 526 and 527 CMS DRGs were created effective for discharges occurring on or after April 1, 2003 in recognition of the potentially significant impact this technology may conceivably have on the treatment of coronary artery blockages, the predictions of its rapid, widespread use, and that the higher costs of this technology could create undue financial hardships for hospitals due to the high volume of stent cases. The FDA ultimately approved drug-eluting stents for use in April 2003.

In the FY 2006 IPPS/LTCH PPS (70 FR 47292 through 47295), we deleted CMS DRGs 516, 517, 526, and 527 and created four new CMS DRGs in their places. We stated that rather than divide the CMS DRG pairs based on whether the patient had an acute myocardial (AMI), we split each pair of CMS DRGs based on the presence or absence of a major cardiovascular condition to identify subgroups of significantly more severe patients who use greater hospital resources more accurately than was possible under the previous CMS DRGs. The new CMS DRG titles were: CMS DRG 555 (Percutaneous Cardiovascular Procedure with Major Cardiovascular Diagnosis); CMS DRG 556 (Percutaneous Cardiovascular Procedure with Non- Drug-Eluting Stent without Major Cardiovascular Diagnosis); CMS DRG 557 (Percutaneous Cardiovascular Procedure with Drug-Eluting Stent with Major Cardiovascular Diagnosis) (formerly CMS DRG 526); and CMS DRG 558 (Percutaneous Cardiovascular Procedure with Drug- Eluting Stent without Major Cardiovascular Diagnosis). In the FY 2008 IPPS/LTCH PPS final rule we adopted the MS-DRGs and in that rule (72 FR 47259 through 47260) we stated we found that PTCAs with four or more vessels or four or more stents were more comparable in average charges to the higher weighted DRG in the group and made changes to the GROUPER logic. Claims containing ICD-9-CM procedure code 00.66 for PTCA, and code 36.07 (Insertion of drug-eluting coronary artery stent(s)), and code 00.43 (Procedure on four or more vessels) or code 00.48 (Insertion of four or more vascular stents) were assigned to MS-DRG 246 (formerly 557). In addition, claims containing ICD-9-CM procedure code 00.66 for PTCA, and code 36.06 (Insertion of non-drug eluting coronary artery stent(s)), and code 00.43 or code 00.48 were assigned to MS-DRG 248 (formerly 555). We also made conforming changes to the MS-DRG titles as follows: MS-DRG 246 was titled “Percutaneous Cardiovascular Procedures with Drug-Eluting Stent(s) with MCC or 4 or more Vessels/Stents”. MS-DRG 248 was titled “Percutaneous Cardiovascular Procedures with Non-Drug-Eluting Stent(s) with MCC or 4 or more Vessels/Stents”. The title for MS-DRGs 247 (formerly 558) and 249 (formerly 556) remained unchanged. In FY 2018 IPPS/LTCH PPS Final rule (82 FR 38024) we finalized our proposal to revise the title of MS- DRG 246 to “Percutaneous Cardiovascular Procedures with Drug- Eluting Stent with MCC or 4+ Arteries or Stents” and the title of MS-DRG 248 to “Percutaneous Cardiovascular Procedures with Non-Drug-Eluting Stent with MCC or 4+ Arteries or Stents” to better reflect the ICD-10-PCS terminology of “arteries” versus “vessels” as used in the procedure code titles within the classification.

We also again note the distinction between drug-eluting and non-drug eluting intraluminal devices is found elsewhere in the ICD-10-PCS procedure code classification. This distinction is not limited to procedures describing coronary interventions. A more extensive analysis is needed to assess the potential impacts across the MS-DRGs to avoid unintended consequences or missed opportunities in most appropriately capturing the resource utilization and clinical coherence for this subset of procedures.

In response to the commenter's concern that the existence of a payment differential between drug-eluting and bare-metal stents continues to prevent access for patients, 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 potentially involves increased costs. In response to the commenter's request that CMS complete its analysis of the classification in time for the FY 2023 IPPS proposed rule, we note that the comprehensive procedure code review will be a multi-year project. As indicated in section II.D.11. of the preamble of the proposed rule and this final rule, we will provide more detail on this analysis and the methodology for conducting this review in future rulemaking.

After consideration of the public comments we received, and for the reasons discussed, we are not making changes in this final rule to the MS-DRG assignments of claims involving the insertion of coronary stents in percutaneous coronary interventions, and we will further consider this issue in future rulemaking.

6. MDC 08 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue)

a. Knee Joint Procedures

In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25122), we discussed a request we received to examine the procedure code combinations for procedures describing a right knee joint removal and replacement and procedures describing a left knee joint removal and replacement in MS-DRGs 466, 467, and 468 (Revision of Hip or Knee Replacement with MCC, with CC, and without CC/MCC, respectively). According to the requestor, when using the MS-DRG GROUPER software version 37, the left knee joint procedure combinations group correctly to MS-DRG 468, while the exact same right knee procedure code combinations group incorrectly to MS-DRG 465 (Wound Debridement and Skin Graft Except Hand for Musculoskeletal and Connective Tissue Disorders without CC/MCC).

The requestor provided the following procedure codes that describe the procedure code combinations for the left knee joint removal and replacement procedures currently assigned to MS-DRGs 466, 467, and 468.

The requestor also provided the following procedure codes that describe the procedure code combinations for right knee joint removal and replacement procedures for CMS' review and consideration.

In the proposed rule, we noted that we reviewed the procedure code combinations listed and agree with the requestor that the procedure codes that describe the procedure code combinations for right knee joint removal and replacement procedures were inadvertently excluded from the logic for MS-DRGs 466, 467, and 468.

We also noted that during our review of the previously listed procedure code combinations describing removal and replacement of the right and left knee joints, we identified additional MS-DRGs in which the listed procedure code combinations for the left knee joint are in the logic, however, the listed procedure code combinations for the right knee joint were inadvertently excluded from the logic. Specifically, the listed procedure code combinations describing removal and replacement of the left knee joint are also included in the logic for case assignment to MS-DRGs 461 and 462 (Bilateral or Multiple Major Joint Procedures of Lower Extremity with and without MCC, respectively) in MDC 08 and in the logic for case assignment to MS-DRGs 628, 629, and 630 (Other Endocrine, Nutritional and Metabolic O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 10 (Endocrine, Nutritional and Metabolic Diseases and Disorders). Our clinical advisors stated that the procedure code combinations describing removal and replacement of the right knee joint should be added to MS-DRGs 461, 462, 466, 467, and 468 in MDC 08 and MS-DRGs 628, 629, and 630 in MDC 10 for consistency with the procedure code combinations describing removal and replacement of the left knee joint that are currently assigned to those MS-DRGs. We stated that adding these procedure codes will improve clinical coherence and ensure more appropriate MS-DRG assignment for these cases.

Therefore, for FY 2022, we proposed to add the three procedure code combinations listed previously describing removal and replacement of the right knee joint that were inadvertently omitted from the logic to MS-DRGs 461, 462, 466, 467, and 468 in MDC 08 and MS-DRGs 628, 629, and 630 in MDC 10.

Comment: Several commenters supported the proposal to add the three procedure code combinations listed previously describing removal and replacement of the right knee joint that were inadvertently omitted from the logic to MS-DRGs 461, 462, 466, 467, and 468 in MDC 08 and to MS-DRGs 628, 629, and 630 in MDC 10. A few commenters also recommended that CMS conduct further review to determine whether additional combinations may be currently excluded from the logic for these MS-DRGs.

Another commenter who supported our proposal stated they found the following 11 additional combinations that appeared to be missing from the logic for MS-DRGs 628, 629, and 630 in MDC 10.

This commenter also noted the difficulty in analyzing the logic list as some code combinations display the Removal code first and other combinations display the Replacement code first.

Response: We appreciate the commenters' support. We thank the commenters for their feedback and agree with the commenter's findings of the 11 additional code combinations inadvertently missing from the logic for MS-DRGs 628, 629, and 630 in MDC 10. We performed further analysis to determine if other combinations may be inadvertently missing and did not find any.

In response to the commenter's feedback regarding the format in which the Removal and Replacement codes are displayed in the logic, we note that we are working with our contractor, 3M HIS, to evaluate modifications to the logic list in these MS-DRGs that are defined by such combinations and reflected in the ICD-10 MS-DRG Definitions Manual to refine how the logic list may be better displayed.

After consideration of the public comments received, we are finalizing our proposal to add the three procedure code combinations listed previously describing removal and replacement of the right knee joint that were inadvertently omitted from the logic to MS-DRGs 461, 462, 466, 467, and 468 in MDC 08 and MS-DRGs 628, 629, and 630 in MDC 10 and are adding the 11 additional code combinations listed that were provided by the commenter to the logic for MS-DRGs 628, 629, and 630 in MDC 10 for FY 2022.

b. Pelvic Trauma With Internal Fixation

In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25123), we discussed a request we received to reassign cases reporting a diagnosis code describing a pelvic fracture in combination with a procedure code describing repair of a pelvic fracture with internal fixation, from the lower (NonCC) severity level MS-DRG of its current base MS-DRG assignment to the higher (MCC) severity level MS-DRG of its current base MS-DRG assignment. According to the requestor, there has been steady growth in the volume of internal fixation procedures performed for pelvic fractures since 2008. The requestor stated that due to this growth rate and the anticipated increase in utilization of these internal fixation devices in these procedures in the future that CMS should reconsider the payment structure for these cases it referred to as “internal fixation for pelvic trauma”.

The requestor provided data for the Healthcare Common Procedural Coding System (HCPCS) code G0413 (Percutaneous skeletal fixation of posterior pelvic bone fracture and/or dislocation, for fracture patterns which disrupt the pelvic ring, unilateral or bilateral, (includes ileum, sacroiliac joint and/or sacrum) and Current Procedural Terminology (CPT) code 22848 (Pelvic fixation (attachment of caudal end of instrumentation to pelvic bony structures) other than sacrum) from 2008 through 2018 that it cross walked to ICD-10-PCS procedure codes. The requestor stated that this CPT coded data indicated that physicians have used pelvic fracture fixation, and pelvic instrumentation, for an increasing number of trauma/fracture repair cases, demonstrating expanded use of these devices in the pelvic area overall.

The requestor reported that sacral fractures are often underdiagnosed and once the diagnosis is made, bedrest is common, although prolonged bedrest is not recommended for the elderly. In addition, the requestor stated that pelvic fractures may be isolated or they may be associated with surrounding structures. For example, the requester reported that the sacroiliac joint is involved in approximately 30 to 35% of pelvic fracture cases. According to the requestor, the standard of care has also transitioned, from bedrest-only to surgery, and current medical practice has evolved to lower the threshold for fracture repair surgery. For instance, the requestor stated that smaller 5mm fractures that were once left untreated now have standard treatment protocols involving the use of pelvic instrumentation. As a result, the requestor asserted that there will be greater utilization of internal fixation devices to treat these smaller pelvic fractures.

The requestor provided the following procedure codes that it stated describe procedures involving the use of internal fixation devices for pelvic fracture repair.

The requestor also provided the following diagnosis code subcategories that it stated identify diagnoses describing pelvic fracture.

The requestor performed its own analysis of claims data and reported findings for cases reporting a combination of the diagnosis codes found in the listed diagnosis code subcategories and the listed procedure codes (internal fixation for pelvic trauma) for MS-DRGs 515, 516, and 517 (Other Musculoskeletal System and Connective Tissue O.R. Procedures with MCC, with CC, and without CC/MCC, respectively); MS-DRGs 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). According to the requestor, its findings support reassignment of these internal fixation for pelvic trauma cases from the lower severity level MS-DRG 517 to the higher severity level MS-DRG 515, from the lower severity level MS-DRG 909 to the higher severity level 907, and from the lower severity level MS-DRG 959 to the higher severity level 957. The requestor suggested that approximately 2,000 cases would be impacted by its recommendation to reassign internal fixation for pelvic trauma cases. The requestor also stated that these internal fixation for pelvic trauma cases currently result in a high rate of CMS outlier payments to institutions that perform a high volume of these procedures. Finally, the requestor stated that there is precedent for reassignment of cases from the lower severity level MS-DRGs to the higher severity level MS-DRG for cases involving the use of a device in orthopedic surgery. The requestor provided the examples of total ankle replacement procedures, spinal disc replacement procedures and neurostimulator implantation procedures to demonstrate how CMS has previously reassigned cases from the lower severity level MS-DRG to the higher severity level MS-DRG.

We noted in the proposed rule that we first examined the claims data from the March 2020 update of the FY 2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR file for all cases in MS-DRGs 515, 516, and 517; MS-DRGs 907, 908, and 909; and MS-DRGs 957, 958, and 959. Our findings are shown in the following tables.

We then examined claims data from the March 2020 update of the FY 2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR file for cases reporting any combination of the diagnosis and procedure codes that the requestor provided to identify internal fixation for pelvic trauma cases in MS-DRGs 515, 516, and 517; MS-DRGs 907, 908, and 909; and MS-DRGs 957, 958, and 959.

We noted in the proposed rule that our analysis identified two types of cases in which the combination of a diagnosis code and a procedure code (that the requestor provided to identify internal fixation for pelvic trauma cases) was reported. The first type of case consisted of a diagnosis code describing a pelvic fracture reported in combination with a single procedure code describing repair of a pelvic fracture with internal fixation on a claim, and the second type of case consisted of a diagnosis code describing a pelvic fracture reported in combination with two procedure codes describing repair of a pelvic fracture with internal fixation (for example, one for the right side and one for the left side) on a claim. These cases are described as single and bilateral internal fixation procedures for pelvic trauma, respectively. We refer the reader to Tables 6P.1h and 6P.1i associated with the proposed rule and 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) for the list of diagnosis and procedure code combinations reflecting single internal fixation for pelvic trauma procedures reported by case ID in each MS-DRG, by fiscal year, along with the detailed claims analysis. We refer the reader to Tables 6P.1j and 6P.1k associated with the proposed rule and 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) for the list of diagnosis and procedure code combinations reflecting bilateral internal fixation for pelvic trauma procedures reported by case ID in each MS-DRG, by fiscal year, along with the detailed claims analysis. For example, Table 6P.1h shows the claims data analysis findings from the March 2020 update of the FY 2019 MedPAR file. Line 2 identifies the section for single cases reported in MS-DRG 515, line 13 identifies the section for single cases reported in MS-DRG 516, and line 42 identifies the single cases reported in MS-DRG 517. The following table summarizes the information found in each column of the tables.

As shown in Table 6P.1h, line 4, column A, displays the Case ID “Single-A” for the first case; column B displays MS-DRG 515; column C displays the diagnosis code S32.111A; column D displays the description of the diagnosis code (Minimally displaced Zone 1 fracture of sacrum, initial encounter for closed fracture); column E displays the procedure code 0QS234Z; column F displays the description of the procedure code (Reposition right pelvic bone with internal fixation device, percutaneous approach); column G displays the case count 1; column H displays an average length of stay of 3.0 days ; column I displays average costs of $8,433 for the case; column J displays the frequency of the procedure reported was one (1) occurrence; column K displays a 3.0 day length of stay for the case; and column L displays $8,433 for the cost of the case.

We also noted that in our analysis of the claims data from the March 2020 update of the FY 2019 MedPAR file, we found that there were no cases reporting any combination of the diagnosis codes and procedure codes previously listed in MS-DRGs 907, 908, and 909 or MS-DRGs 957, 958, and 959. Our findings are shown in the following table for any cases found to report a diagnosis code describing a pelvic trauma in combination with a procedure code describing single internal fixation in MS-DRGs 515, 516, and 517.

As shown in the table, there were only three cases found in MS-DRG 517 reporting single internal fixation for pelvic trauma procedures, with an average length of stay of 5.33 days and average costs of $12,147. The average length of stay is longer and the average costs of these three cases higher compared to the average length of stay and the average costs for all cases in MS-DRG 517 (5.33 days versus 2.6 days and $12,147 versus $10,316, respectively); however, overall, we believe the data findings are comparable. We stated that our clinical advisors did not support reassignment of the three cases from MS-DRG 517 to MS-DRG 515 based on the claims data analysis and also stated it would not be appropriate to reassign these cases into the higher severity level MS-DRG in the absence of a MCC and noted that the cases would not be clinically coherent with regard to resource utilization.

In the proposed rule we noted that in our analysis of the claims data from the March 2020 update of the FY 2019 MedPAR file for cases in which a bilateral internal fixation for pelvic trauma procedure was performed, we identified one case in MS-DRG 517. As shown in Table 6P.1j, the average length of stay for this case was 4.0 days and the average costs were $24,258, which is longer than the average length of stay and greater than the average costs for all cases in MS-DRG 517 (2.6 days and $10,316, respectively). We also identified cases reporting various code combinations for MS-DRGs 515 and 516, and provide the details in Table 6P.1j associated with the proposed rule and this final rule (which is available via the internet on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS).

We also noted that in our analysis of the claims data from the September 2020 update of the FY 2020 MedPAR file we found that there were no cases reporting any combination of the diagnosis codes and procedure codes previously listed in MS-DRG 909 or in MS-DRGs 957, 958, and 959. Our findings are shown in the following table for any cases found to report a diagnosis code describing a pelvic trauma in combination with a procedure code describing single internal fixation in MS-DRGs 515, 516, 517, 907, and 908.

As shown in the table, there were only four cases found in MS-DRG 517 reporting single internal fixation for pelvic trauma procedures, with an average length of stay of 2.5 days and average costs of $10,136. For the same reasons described previously based on the FY 2019 analysis, our clinical advisors did not support reassignment of the cases in the lower severity level MS-DRG 517 to the higher severity level MS-DRG 515. In addition, the average length of stay and average costs for these four cases reporting single internal fixation for pelvic trauma procedures are less than the average length of stay and average costs for all the cases in MS-DRG 517 (2.5 days versus 2.6 days and $10,136 versus $11,301, respectively); however, overall, we believe the data findings are comparable.

As indicated in the proposed rule, in our analysis of the claims data from the September 2020 update of the FY 2020 MedPAR file for cases in which a bilateral internal fixation for pelvic trauma procedure was performed, we identified one case in MS-DRG 517. As shown in Table 6P.1k, the average length of stay for this case was 2.0 days and the average costs were $10,103, which is shorter than the average length of stay and less than the average costs for all cases in MS-DRG 517 (2.6 days and $11,301, respectively). We also identified cases reporting various combinations for MS-DRGs 515, 516 and MS-DRG 907, and provide the details in Table 6P.1k associated with the proposed rule and this final rule (which is available via the internet on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS).

We stated we believe further analyses of these internal fixation for pelvic trauma cases in the claims data is warranted. We noted that our analysis for both the single and bilateral cases was centered on the reporting of a principal diagnosis code describing a pelvic trauma (fracture) in combination with a procedure code describing internal fixation based on the codes provided by the requestor. However, we also identified cases in the claims data in which a pelvic trauma diagnosis code was reported as a secondary diagnosis code in combination with a procedure code describing internal fixation and believe these cases require further evaluation. In addition, during our review of the diagnosis and procedure codes that the requestor provided, we identified diagnosis codes that we believe do not warrant consideration for purposes of this request and additional procedure codes that describe internal fixation for pelvic trauma procedures, which we believe do warrant further analysis. For example, as previously noted, the requestor provided the subcategories for the diagnosis codes that it requested we consider for analysis. We do not agree that diagnosis codes describing a pelvic fracture that include the term “sequela” should be considered in the analysis to examine this request because, in the ICD-10-CM classification, the term sequela is defined as the residual effect (condition produced) after the acute phase of an illness or injury has terminated.

As noted in the proposed rule, we referred the reader to Table 6P.1g for the list of diagnosis codes that are included in the diagnosis subcategories provided by the requestor and the list of procedure codes provided by the requestor, which also contains the procedure codes we identified. We stated that additional time is needed for data analysis given the volume of these code combinations and corresponding data. We also stated we believe that additional time is needed to allow for further analysis of the claims data to determine the causes of the fractures and other possible contributing factors with respect to the length of stay and costs of these cases, as well as the rate of outlier payments as identified by the requestor. We noted that our clinical advisors also believe that future data findings may demonstrate additional variance in resource utilization for this patient population. We further noted that, as discussed in the FY 2021 IPPS/LTCH PPS final rule, we finalized the addition of 161 procedure codes to MS-DRGs 957, 958, and 959 in MDC 24 (Multiple Significant Trauma) that include the insertion of internal fixation devices. We stated we believe it would be beneficial to examine future claims data to determine if there is a change in the volume of cases in those specific MS-DRGs as a result of that update. For these reasons, we proposed to maintain the structure of MS-DRGs 515, 516, and 517; MS-DRGs 907, 908, and 909; and MS-DRGs 957, 958, and 959 for FY 2022.

Comment: Some commenters agreed with CMS that additional analysis would be beneficial for the reasons discussed in the proposed rule. A commenter also suggested that as part of the additional analysis, CMS should also analyze cases involving trauma activations. According to the commenter, the most common reason for treatment of Medicare patients by a trauma center is falls with a high rate of associated fractures, especially hip fractures. This commenter stated that in addition to trauma programs' readiness, activation and coordinated care, designated and verified programs are required to engage in injury prevention. The commenter further stated their belief that since falls are the single largest traumatic event for Medicare beneficiaries and trauma centers, CMS should engage in policies designed to prevent falls and mitigate the incidence of hip and extremity fractures which are a major source of disability for seniors. The commenter provided examples such as making beneficiary data available on ED visits and hospital admissions for falls sorted by geographic location and the treating hospital and including the source of admission for these beneficiaries. The commenter stated that with appropriate incentives, hospitals could direct injury prevention efforts in collaboration with community organizations, nursing facilities and senior centers to assist with proven fall prevention interventions such as installing safety equipment (for example, grab bars and railings), introducing exercise programs and promoting safe routines for activities of daily living. The commenter also stated that other approaches could involve providing payment for prevention activities targeted at patients who present with a first or recurrent fall in an attempt to avoid a future, more severe injury that could result in a debilitating hip and/or extremity fracture. This commenter expressed interest in collaborating further with CMS and other stakeholders on these initiatives.

Response: We appreciate the commenters' support. We also thank the commenter for their recommendation to examine trauma activation in connection with the additional analysis planned for pelvic fracture repair cases and for the various options presented for injury prevention strategies. We look forward to further engagement with stakeholders on this topic.

Comment: Other commenters suggested that CMS reconsider the request to reassign cases reporting a diagnosis code describing a pelvic fracture in combination with a procedure code describing repair of a pelvic fracture with internal fixation, from the lower (NonCC) severity level MS-DRG of its current base MS-DRG assignment to the higher (MCC) severity level MS-DRG for FY 2022. According to a commenter, as new technologies are made available intended to surgically treat many pelvic fracture patients who previously may have been treated medically in the inpatient setting, hospitals may bear a disproportionate share of these costs until the MS-DRGs are calibrated. This commenter stated that providing a reassignment now would help mitigate the financial strain for hospitals supporting these procedure types, and would benefit the Medicare program in its potential to reduce outlier payments. The commenter maintained that CMS could initially limit the reassignment to specific DRGs, or to specific combinations of procedure and diagnosis codes at this time, and review the data in a future rulemaking period.

Another commenter conducted its own analysis and indicated its findings support reassignment for FY 2022. Alternatively, this commenter also stated they looked forward to updating CMS with additional data to support future reassignment options.

Response: We appreciate the commenters' feedback and the additional analysis conducted. It is not clear from the commenter's analysis which specific code combinations generated the results provided. As we noted in the proposed rule, among other factors, there are specific codes and code combinations requiring further review as we identified additional codes that the requestor did not include in their initial submission. We will continue to work with stakeholders as we evaluate the data for these cases and consider future modifications to the structure of the MS-DRGs.

After consideration of the public comments received, we are finalizing our proposal to maintain the structure of MS-DRGs 515, 516, and 517; MS-DRGs 907, 908, and 909; and MS-DRGs 957, 958, and 959 for FY 2022.

7. MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract): Chronic Renal Replacement Therapy (CRRT)

In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25128 through 25138), we discussed a request we received to create new MS-DRGs for cases where the patient receives continuous renal replacement therapy (CRRT) during the inpatient stay. According to the requestor, hospitals incur higher costs related to CRRT and current MS-DRG definitions do not adequately account for the clinical and resource requirements of CRRT. The requestor stated Medicare payment is insufficient to cover the costs of administering CRRT, creating a disincentive in offering this dialysis modality and is a barrier to further adoption of CRRT. The requestor suggested that the following two new MS-DRGs be created:

• Suggested New MS-DRG XXX—Continuous Renal Replacement Therapy with CC/MCC; and
• Suggested New MS-DRG XXX—Continuous Renal Replacement Therapy without CC/MCC.

Renal replacement therapy (RRT) replaces kidney function by exchanging solute and removing fluid from the blood as a means to prevent or treat renal failure in patients with acute kidney injury (AKI). Modalities of renal support include CRRT, conventional intermittent hemodialysis (IHD), and prolonged intermittent renal replacement therapies (PIRRTs), which are a hybrid of CRRT and IHD. IHD provides solute clearance and filtration during relatively brief treatment sessions, generally lasting from three to five hours. CRRT provides gradual fluid removal and solute clearance over prolonged treatment times, typically over a 24-hour period, mimicking the natural function of the kidney to allow for the continuous removal or replacement of fluid. The most common CRRT modalities are continuous venovenous hemofiltration, continuous venovenous hemodialysis, and continuous venovenous hemodiafiltration.

According to the requestor, CRRT is used primarily to treat critically ill, hospitalized patients who experience AKI requiring more intensive and continuous treatment than other dialysis modalities. The requestor stated that CRRT offers fluid balance and convective clearance that may be precisely adjusted for each patient, and has been associated with a higher likelihood of kidney recovery as compared to other modalities of RRT. The requestor asserted that IHD may worsen the neurological status of patients with acute brain injury or other causes of increased intracranial pressure by compromising their cerebral perfusion by raising intracranial pressure. The ongoing modulation of fluid balance and targeted fluid management capabilities of CRRT enables its use in situations other than renal failure. According to the requestor, CRRT, a slow continuous therapy, is preferred for patients who are hemodynamically unstable because it helps prevent the hemodynamic fluctuations common with the more rapid IHD. In light of the COVID-19 pandemic, the requestor noted the National Institutes of Health's Coronavirus Disease 2019 (COVID-19) Treatment Guidelines and The American Society of Nephrology recommend CRRT as the preferred renal replacement therapy for critically ill, COVID-19 patients experiencing AKI, who develop indications for renal replacement therapy, due to the hemodynamic instability often experienced in this condition.

The requestor acknowledged that under the current MS-DRG definitions, Medicare cases with beneficiaries receiving CRRT are assigned to more than 300 MS-DRGs. Although these beneficiaries are clinically similar in that they are critically ill patients who experience AKI requiring more intensive and continuous treatment than other dialysis modalities, the principal diagnoses for their inpatient stays vary. The requestor stated their analysis of the variability in principal diagnosis of the cases examined with beneficiaries receiving CRRT indicated that, in general, IHD tends to be used more for patients with chronic illnesses, and CRRT tends to be used for more acute injuries and end of life scenarios. Therefore, the requestor suggested that CMS create new MS-DRGs specific to CRRT, without regard to principal diagnosis, in order to group the resource intensive, clinically coherent, CRRT cases together in contrast to the existing GROUPER definitions.

According to the requestor, continuing to assign CRRT to existing MS-DRGs would be clinically inappropriate and remain financially devastating to providers even when treating the most routine, uncomplicated CRRT patients. The requestor performed its own data analysis and stated hospitals lose over $22,000 per CRRT case on average, even when outliers are considered, which they state is a shortfall of more than 30 percent. The requestor asserted these losses create a disincentive for providers to offer CRRT despite its clinical benefits. The requestor also asserted the magnitude of financial losses associated with the provision of CRRT at the current level of MS-DRG payment could force many hospitals to examine the capacity and scope of their CRRT programs if facilities continue to determine that the financial burden of treating Medicare beneficiaries with CRRT is more than the facility can sustain. As COVID-19 continues to strain hospital resources, the requestor asserts the availability of CRRT should not be impeded by inadequate MS-DRG payments related to CRRT.

In the proposed rule, we noted that the following ICD-10-PCS procedure code identifies the performance of CRRT.

In the ICD-10 MS-DRGs Definitions Manual Version 38.1, procedure code 5A1D90Z is currently recognized as a non-O.R. procedure that affects the MS-DRG to which it is assigned. We indicated that our clinical advisors agreed that the principal diagnosis assigned for inpatient admissions where continuous renal replacement of therapy is utilized can vary. To examine the impact of the use of CRRT in response to this request, we examined claims data from the March 2020 update of the FY 2019 MedPAR file for the top ten MS-DRGs reporting the use of CRRT. Our findings are reflected in the following table:

As shown in this table, our data findings demonstrate the average lengths of stay were longer and the average costs were higher for the cases reporting the use of CRRT when compared to all cases in their respective MS-DRG. We note that the claims data demonstrate that the MS-DRG with the largest number of cases reporting CRRT is MS-DRG 871 with 2,912 cases. Of the top 10 MS-DRGs reporting CRRT, the MS-DRG with the smallest number of cases is MS-DRG 682 with 401 cases. The average length of stay of this subset of cases ranges from a high of 35.5 days in MS-DRG 004 to a low of 7.9 days in MS-DRG 871 for cases reporting the use of CRRT. The average costs of this subset of cases ranges from a high of $174,085 in MS-DRG 003 to a low of $27,681 in MS-DRG 871 for cases reporting the use of CRRT.

We also examined claims data from the September 2020 update of the FY 2020 MedPAR file for the top ten MS-DRGs reporting the use of CRRT. Our similar findings are reflected in the following table:

As shown in this table, our data findings show that the average lengths of stay were longer and the average costs were higher for the cases reporting the use of CRRT when compared to all cases in their respective MS-DRG. We noted that the claims data demonstrate that the MS-DRG with the largest number of cases reporting CRRT is MS-DRG 871 with 3,023 cases. Of the top 10 MS-DRGs reporting CRRT, the MS-DRG with the smallest number of cases is MS-DRG 219 with 374 cases. The average length of stay of this subset of cases ranges from a high of 34.9 days in MS-DRG 004 to a low of 7.9 days in MS-DRG 871 for cases reporting the use of CRRT. The average costs of this subset of cases ranges from a high of $182,952 in MS-DRG 003 to a low of $29,248 in MS-DRG 871 for cases reporting the use of CRRT.

We indicated in the proposed rule that, while the results of the claims analysis indicate that the average costs and average lengths of stay for cases reporting the use of CRRT are higher compared to the average costs for all cases in their assigned MS-DRG, we were unable to ascertain from the claims data the resource use specifically attributable to CRRT during a hospital stay. We noted that there is large variability in the differences in average costs from MS-DRG to MS-DRG, indicating there may have been other factors contributing to the higher costs. When reviewing consumption of hospital resources for this subset of cases, the claims data clearly demonstrate the patients typically have a major complication or co-morbid (MCC) condition reported based on the MS-DRGs assigned. The claims data also reflect, based on the top ten MS-DRGS, that the procedure frequently occurs in cases with other procedures with higher than average resource use such as mechanical ventilation, tracheostomy, extracorporeal membrane oxygenation (ECMO) and other major cardiovascular procedures that also may be contributing to the higher average costs for these cases.

To further examine the variability in cases reporting the use of CRRT, we also reviewed the claims data to identify the number (frequency) and types of principal diagnoses that were reported to determine what factors may also be contributing to the higher average costs for these cases.

Our findings for the top 10 principal diagnoses that were reported within the claims data from the March 2020 update of the FY 2019 MedPAR file for this subset of cases is shown in the following table:

The claims data in this table reflects a wide variance with regard to the frequency and types of principal diagnoses that were reported along with the procedure code describing the use of CRRT. We noted that the claims data demonstrate that the diagnosis with the largest number of cases reporting CRRT is A41.9 (Sepsis, unspecified organism) with 4,226 cases. Of the top 10 principal diagnoses reporting CRRT, the diagnosis with the smallest number of cases is A41.01 (Sepsis due to Methicillin susceptible Staphylococcus aureus) with 271 cases. The average length of stay of this subset of cases ranges from a high of 20 days with a diagnosis of I13.0 (Hypertensive heart and chronic kidney disease with heart failure and stage 1 through stage 4 chronic kidney disease, or unspecified chronic kidney disease) to a low of 12.6 days with a diagnosis of A41.9 (Sepsis, unspecified organism) for cases reporting the use of CRRT. The average costs of this subset of cases ranges from a high of $85,557 with a diagnosis of I21.4 (Non-ST elevation (NSTEMI) myocardial infarction) to a low of $40,908 with a diagnosis of N17.9 (Acute kidney failure, unspecified) for cases reporting the use of CRRT.

Our findings for the top 10 principal diagnoses that were reported within the claims data from the September 2020 update of the FY 2020 MedPAR file for this subset of cases are shown in the following table:

The claims data in this table also reflect a wide variance with regard to the frequency and types of principal diagnoses that were reported along with the procedure code describing the use of CRRT. As shown, the claims data demonstrate that the diagnosis with the largest number of cases reporting CRRT is A41.9 (Sepsis, unspecified organism) with 4,128 cases. Of the top 10 principal diagnoses reporting CRRT, the diagnosis with the smallest number of cases is N17.0 (Acute kidney failure with tubular necrosis) with 270 cases. The average length of stay of this subset of cases ranges from a high of 21.4 days with a diagnosis of U07.1 (COVID-19) to a low of 11.8 days with a diagnosis of J96.01 (Acute respiratory failure with hypoxia) for cases reporting the use of CRRT. The average costs of this subset of cases ranges from a high of $86,717 with a diagnosis of I21.4 (Non-ST elevation (NSTEMI) myocardial infarction) to a low of $48,882 with a diagnosis of J96.01 (Acute respiratory failure with hypoxia) for cases reporting the use of CRRT.

As indicated in the proposed rule, to evaluate the frequency with which the use of CRRT is reported for different clinical scenarios, we examined claims from the March 2020 update of the FY 2019 MedPAR file across each of the 25 MDCs to determine the number of cases reporting the use of CRRT. Our findings are shown in this table.

As shown in the table, the top five MDCs with the largest number of cases reporting CRRT are MDC 18, with 6,761 cases; MDC 05, with 6,027 cases; MDC 04, with 1,370 cases; MDC 11, with 1,134 cases; and MDC 06, with 987 cases. The top five MDCs with the highest average costs for cases reporting the use of CRRT were MDC 13, with average costs of $131,252; MDC 22, with average costs of $104,749; MDC 17, with average costs of $95,309; MDC 07, with average costs of $87,272; and MDC 05, with average costs of $86,024. The claims data indicate that the average length of stay ranges from a high of 47.3 days in MDC 13 to a low of 8 days in MDC 14 for cases reporting the use of CRRT across each of the 25 MDCs.

We also examined claims from the September 2020 update of the FY 2020 MedPAR file across each of the 25 MDCs to determine the number of cases reporting the use of CRRT. Our findings are shown in this table.

As shown in the table, the top five MDCs with the largest number of cases reporting CRRT are MDC 18, with 7,678 cases; MDC 05, with 5,516 cases; MDC 04, with 2,191 cases; MDC 11, with 1,066 cases; and MDC 06, with 838 cases. The top five MDCs with the highest average costs for cases reporting the use of CRRT were MDC 22, with average costs of $139,244; MDC 17, with average costs of $88,182; MDC 05, with average costs of $87,875; MDC 07, with average costs of $86,894; and MDC 08, with average costs of $ 77,515. The claims data indicate that the average length of stay ranges from a high of 26.7 days in MDC 22 to a low of 11 days in MDC 20 for cases reporting the use of CRRT across each of the 25 MDCs.

We indicated in the proposed rule that our clinical advisors reviewed the clinical issues and the claims data, and did not support creating new MS-DRGs for CRRT without regard to principal diagnosis. Our clinical advisors noted that more than one modality for RRT can be utilized for managing patients with AKI given the needs of the patient. For example, a patient may initially start on CRRT when they are hemodynamically unstable, but transition to IHD as their condition is managed during the admission. While patients requiring CRRT can be more resource intensive, we stated it would not be practical to create new MS-DRGs specifically for this subset of patients given the various clinical presentations for which CRRT may be utilized, and the variation of costs in their assigned MS-DRGs. We further indicated that we believed that additional analysis and efforts toward a broader approach to refining the MS-DRGs for cases of patients requiring renal replacement therapy would be needed to address the concerns expressed by the requestor. These data do show cases reporting the use of CRRT can present greater treatment difficulty. However, when reviewing consumption of hospital resources for this subset of cases, the claims data also suggest that the increased costs may be attributable to the severity of illness of the patient and other circumstances of the admission.

In summary, we indicated in the proposed rule that the claims data reflect a wide variance with regard to the frequency and average costs for cases reporting the use of CRRT. Depending on the number of cases in each MS-DRG, it is difficult to detect patterns of complexity and resource intensity. We indicated we believed the creation of new MS-DRGs for cases with procedure codes reporting the use of CRRT has the potential for creating instability in the relative weights and disrupting the integrity of the MS-DRG system. Therefore, we did not propose to create new MS-DRGs for cases reporting the use of continuous renal replacement therapy.

Comment: A commenter supported CMS' proposal and stated they agreed that new MS-DRGs should not be created for continuous renal replacement therapy without regard to principal diagnosis. Another commenter stated that CMS should group cases reporting the use of continuous renal replacement therapy along with ICD-10-CM diagnosis codes N17.8 (Other acute kidney failure) or N17.9 (Acute kidney failure, unspecified) to the highest (MCC) severity level MS-DRG of its current base MS-DRG assignment. The commenter noted that both N17.8 and N17.9 (Acute kidney failure, unspecified) are designated as a “CC” when reported as a secondary diagnosis. This commenter also stated that while CRRT is not a new technology, given its increased costs, CRRT should be considered for a permanent “add-on” payment that compensates hospitals for the higher costs of caring for these patients.

Response: We appreciate the commenters' support. With regard to the commenter's statement that cases reporting the use of continuous renal replacement therapy along with ICD-10-CM diagnosis codes N17.8 (Other acute kidney failure) or N17.9 (Acute kidney failure, unspecified) should be grouped to the highest (MCC) severity level MS-DRG of its current base MS-DRG assignment, we consider this comment to be outside the scope of the proposal discussed. We may consider additional claims data analysis for these procedures in future rulemaking. After consideration of the public comments we received, we are finalizing our proposal to not create new MS-DRGs for cases reporting the use of continuous renal replacement therapy for FY 2022.

8. MDC 16 (Diseases and Disorders of Blood, Blood Forming Organs and Immunologic Disorders)

a. ANDEXXA® (Coagulation Factor Xa (Recombinant), Inactivated-zhzo)

ANDEXXA® (Coagulation Factor Xa (Recombinant), Inactivated-zhzo) is a recombinant decoy protein that rapidly reverses the anticoagulant effects of two direct oral anticoagulants, apixaban and rivaroxaban, when reversal of anticoagulation is needed due to life-threatening or uncontrolled bleeding in indications such as intracranial hemorrhages (ICHs) and gastrointestinal bleeds (GIBs). ANDEXXA® received FDA approval on May 3, 2018. When administered as a bolus followed by continuous infusion, ANDEXXA® blocks the anticoagulants ability to inhibit FXa. ANDEXXA® was approved for new technology add on payments in FY 2019 (83 FR 41362). We refer readers to section II.H.5.j. of the preamble of the FY 2019 IPPS/LTCH PPS final rule (83 FR 41355 through 41362), and section II.H.4.k. of the preamble of the FY 2020 IPPS/LTCH PPS final rule (84 FR 42193 through 42194) for a complete discussion of the new technology add on payment application and payment amount for ANDEXXA® for FY 2019 and FY 2020.

In section II.H.4.i. of the preamble of the FY 2021 IPPS/LTCH PPS final rule (85 FR 58614 through 58615), we noted the 3-year anniversary date of the entry of ANDEXXA® onto the U.S. market (May 3, 2021) will occur in the second half of FY 2021. We stated in general, we extend new technology add-on payments for an additional year only if the 3-year anniversary date of the product's entry onto the U.S. market occurs in the latter half of the upcoming fiscal year. After consideration of the public comments received, we finalized our proposal to continue new technology add-on payments for this technology for FY 2021.

In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25138 through 25146), we discussed a request we received from the manufacturer to review potential access issues in the inpatient setting for this drug in the future. The requestor acknowledged that CMS approved the new technology add-on payment for ANDEXXA® beginning in FY 2019 and noted that FY 2021 will be the last year before the add-on payments expire. According to the requestor, ANDEXXA® is the only indicated factor Xa inhibitor reversal agent, and the requestor stated a concern for the future of access to ANDEXXA® for patients experiencing uncontrolled bleeds caused by factor Xa inhibitors. The requestor stated their claims modeling showed a significant drop in hospital payment for cases involving use of ANDEXXA® following the expiration of new technology add-on payments. Specifically, after new technology add-on payments expire, the requestor stated their model projects that approximately 59% of cases are likely to be paid less than the wholesale acquisition costs for ANDEXXA®.

We noted in the proposed rule that the following ICD-10-PCS procedure codes identify the intravenous administration of ANDEXXA®.

In the ICD-10 MS-DRGs Definitions Manual Version 38.1, procedure codes XW03372 and XW04372 are designated as non-O.R. procedures for purposes of MS-DRG assignment. We indicated that our clinical advisors agreed that the principal diagnosis assigned for inpatient admissions where the intravenous administration of ANDEXXA® is indicated can vary.

To evaluate the frequency with which the intravenous administration of ANDEXXA® is reported for different clinical scenarios in response to this request, we examined claims data from the March 2020 update of the FY 2019 MedPAR file across the Pre-MDC category, each of the 25 MDCs and the surgical class referred to as “unrelated operating room procedures” to determine the number of cases reporting the use of ANDEXXA®. Our findings are shown in the following table.

As shown in the table, there were 461 cases reporting the intravenous administration of ANDEXXA® with procedure codes XW03372 or XW04372. The top five MDCs with the largest number of cases reporting ANDEXXA® are MDC 01, with 250 cases; MDC 06 with 53 cases; MDC 05, with 33 cases; MDC 18, with 25 cases; and the Pre-MDC category, with 16 cases. The claims data indicate that the average costs range from a high of $107,741 in the Pre-MDC category to a low of $22,242 in MDC 09 for cases reporting the use of ANDEXXA® across the claims data. The claims data also indicates that the average length of stay ranges from a high of 19.9 days in the Pre-MDC category to a low of 4 days in MDC 09 for cases reporting the use of ANDEXXA®.

We also examined claims data from the September 2020 update of the FY 2020 MedPAR file across the Pre-MDC category, each of the 25 MDCs and the surgical class referred to as “unrelated operating room procedures” to determine the number of cases reporting the use of ANDEXXA®. Our findings are shown in the following table.

As shown in the table, there were 719 cases reporting the intravenous administration of ANDEXXA® with procedure codes XW03372 or XW04372. The top five MDCs with the largest number of cases reporting ANDEXXA® are MDC 01, with 364 cases; MDC 06 with 98 cases; MDC 18, with 52 cases; MDC 05, with 50 cases; and MDC 24, with 30 cases. The claims data indicate that the average costs range from a high of $123,750 in the Pre-MDC category to a low of $27,922 in MDC 09 for cases reporting the use of ANDEXXA® across the claims data. The claims data also indicates that the average length of stay ranges from a high of 25 days in the Pre-MDC category to a low of 4.2 days in MDC 21 for cases reporting the use of ANDEXXA® across the claims data.

As discussed in the proposed rule, to further examine the impact of the intravenous administration of ANDEXXA®, we examined claims data from the March 2020 update of the FY 2019 MedPAR file for the top ten MS-DRGs reporting procedure codes XW03372 or XW04372. Our findings are reflected in the following table:

As shown in this table, the claims data demonstrate that the MS-DRG with the largest number of cases reporting ANDEXXA® is MS-DRG 064 with 78 cases. Of the top 10 MS-DRGs reporting ANDEXXA®, the MS-DRG with the smallest number of cases is MS-DRG 003 with 13 cases. The average length of stay of this subset of cases ranges from a high of 21.5 days in MS-DRG 003 to a low of 4.2 days in MS-DRG 086 for cases reporting the use of ANDEXXA®. The average costs of this subset of cases ranges from a high of $117,265 in MS-DRG 003 to a low of $26,992 in MS-DRG 083 for cases reporting the use of ANDEXXA®. We noted while our data findings demonstrate the average costs were higher for the cases reporting the intravenous administration of ANDEXXA® when compared to all cases in their respective MS-DRG, these cases represent a very small percentage of the total number of cases reported in these MS-DRGs. We also noted that the top 10 MS-DRGs identified only account for 239 of the 461 cases in total that were identified in the March 2020 update of the FY 2019 MedPAR file reporting ICD-10-PCS codes XW03372 or XW04372. The remainder of the cases are distributed in small numbers across the MS-DRGs.

We also examined claims data from the September 2020 update of the FY 2020 MedPAR file for the top ten MS-DRGs reporting procedure codes XW03372 or XW04372. Our findings are reflected in the following table:

As shown in this table, the claims data demonstrate that the MS-DRG with the largest number of cases reporting ANDEXXA® is MS-DRG 064 with 111 cases. Of the top 10 MS-DRGs reporting ANDEXXA®, the MS-DRG with the smallest number of cases is MS-DRG 083 with 23 cases. The average length of stay of this subset of cases ranges from a high of 10 days in MS-DRG 023 to a low of 3.5 days in MS-DRG 378 for cases reporting the use of ANDEXXA®. The average costs of this subset of cases ranges from a high of $59,478 in MS-DRG 025 to a low of $24,348 in MS-DRG 378 for cases reporting the use of ANDEXXA®. As with our analysis of the FY 2019 claims data, while these data findings demonstrate the average costs were higher for the cases reporting the intravenous administration of ANDEXXA® when compared to all cases in their respective MS-DRG, these cases represent a very small percentage of the total number of cases reported in these MS-DRGs. We also noted that the top 10 MS-DRGs identified only account for 385 of the 719 cases in total that were identified in the September 2020 update of the FY 2020 MedPAR file reporting ICD-10-PCS codes XW03372 or XW04372. The remainder of the cases are distributed in small numbers across the MS-DRGs.

After reviewing the claims data, we indicated in the proposed rule that we believe it is premature to consider a proposal for cases involving ANDEXXA® therapy for FY 2022. We noted that while the March 2020 update of the FY 2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR file do contain claims reporting the procedure codes identifying the intravenous administration of ANDEXXA®, the number of cases is small across the MDCs and MS-DRGs. We also noted the claims data also reflects a wide variance with regard to the frequency and average costs for these cases reporting the use of ANDEXXA®. Moreover, we indicated we were unable to identify another MS-DRG that would be a more appropriate MS-DRG assignment for these cases based on the indication for this therapeutic drug. As noted previously, ANDEXXA® reverses the anticoagulant effects of apixaban and rivaroxaban, when reversal of anticoagulation is needed due to life-threatening or uncontrolled bleeding. The underlying cause of the life-threatening or uncontrolled bleeding can vary which means the principal diagnosis assigned for inpatient admissions where ANDEXXA® is administered can vary. The MS-DRGs are a classification system intended to group together diagnoses and procedures with similar clinical characteristics and utilization of resources. As discussed in the proposed rule, we generally 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 based on the drugs administered. In reviewing this issue, we indicated our clinical advisors expressed concern regarding making potential MS-DRG changes based on a specific, single therapeutic agent, identified by unique procedure codes rather than based on a group of related procedure codes that can be reported to describe that same type or class of treatment or technology, which is more consistent with the intent of the MS-DRGs.

We indicated that we recognized that the average costs of the small numbers of cases involving the intravenous administration of ANDEXXA® are greater when compared to the average costs of all cases in their respective MS-DRG. We noted that the MS-DRG system is a system of averages and it is expected that within the diagnostic related groups, some cases may demonstrate higher than average costs, while other cases may demonstrate lower than average costs. We further noted that section 1886(d)(5)(A) of the Act provides for Medicare payments to Medicare-participating hospitals in addition to the basic prospective payments for cases incurring extraordinarily high costs.

In the proposed rule, we acknowledged the importance of ensuring that patients diagnosed with an indication for a factor Xa inhibitor reversal agent have adequate access to care and receive the necessary treatment. While we are sensitive to the requestors' concerns about continued access to treatment for beneficiaries who require the reversal of anticoagulation due to life-threatening or uncontrolled bleeding, we indicated additional time is needed to explore options and other mechanisms through which to address low volume high-cost drugs outside of the MS-DRGs.

Furthermore, we noted that we were proposing to continue new technology add-on payments for ANDEXXA® for FY 2022. We refer the reader to section II.F.4.b of the preamble of the proposed rule and this final rule for further discussion regarding our proposal to allow a one-time extension of new technology add-on payments for FY 2022 for 15 technologies for which the new technology add-on payment would otherwise be discontinued, in connection with our proposal to use the FY 2019 data to develop the proposed FY 2022 relative weights, as well as our finalization of that proposal.

Therefore, for the reasons stated previously, for FY 2022 we did not propose any MS-DRG changes for cases involving the intravenous administration of ANDEXXA®.

Comment: Commenters expressed appreciation for the consideration CMS provided. These commenters acknowledged that ANDEXXA® presents a unique challenge because MS-DRGs are a classification system for grouping diagnoses and procedures with similar clinical characteristics and utilization of resources. Another commenter agreed that the underlying cause of life-threatening or uncontrolled bleeding can vary and stated that cases involving the use of ANDEXXA® (coagulation factor Xa (recombinant), inactivated-zhzo) do not fit neatly within another MS-DRG. These commenters also agreed that options and mechanisms through which to address low volume high-cost drugs should be explored outside of the MS-DRG classification.

Response: We appreciate the commenters' support, and intend to continue to consider these issues. For the reasons summarized earlier, and after consideration of the public comments we received, we are not making any MS-DRG changes for cases involving the intravenous administration of ANDEXXA® for FY 2022.

b. Cytokine Release Syndrome (CRS) Logic

In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58557 through 58561), we finalized modifications to the proposed severity level designations for a subset of the diagnosis codes describing Cytokine Release Syndrome (CRS) based upon further review of the conditions and in response to public comments. We provided the following table to display the finalized severity level designations and stated that we will continue to monitor the CRS codes and their impact on resource use once the claims data become available to determine if further modifications to the severity level are warranted.

In connection with the finalized severity level designations for the listed CRS codes, we also finalized modifications to the ICD-10 MS-DRG GROUPER logic V38 for MS-DRGs 814, 815, and 816 (Reticuloendothelial and Immunity Disorders with MCC, with CC, and without CC/MCC, respectively) to conform to the updates the CDC finalized in the ICD-10-CM Tabular List instructions for assigning and reporting the CRS codes effective with discharges on and after October 1, 2020. The following modifications to the GROUPER logic were finalized effective with discharges on and after October 1, 2020, for case assignment involving CRS following CAR T-cell therapy to MS-DRGs 814, 815, and 816. We noted that the GROUPER logic for MS-DRGs 814, 815, and 816 will include a principal diagnosis of T80.89XA with a secondary diagnosis of any CRS code as shown.

Principal Diagnosis

T80.89XA Other complications following infusion, transfusion and therapeutic injection, initial encounter

with

Secondary Diagnosis

D89.831 Cytokine release syndrome, grade 1

D89.832 Cytokine release syndrome, grade 2

D89.833 Cytokine release syndrome, grade 3

D89.834 Cytokine release syndrome, grade 4

D89.835 Cytokine release syndrome, grade 5

D89.839 Cytokine release syndrome, grade unspecified

As discussed in section II.D.13 of the preamble of the proposed rule and this final rule, Table 6A.—New Diagnosis Codes, lists the new diagnosis codes that have been approved to date and will be effective with discharges on and after October 1, 2021. Included in Table 6A are the following codes that describe complication of immune effector cellular therapy identifying the timeframe of the encounter.

Also included in Table 6A are the following diagnosis codes that describe immune effector cell-associated neurotoxicity syndrome (ICANS), with varying degrees of severity.

Consistent with the Tabular List instruction for these two sets of diagnosis codes as presented and discussed by the CDC at the September 8-9, 2020 ICD-10 Coordination and Maintenance Committee meeting, the diagnosis codes describing a complication of the immune effector cellular therapy (T80.82XA, T80.82XD, and T80.82XS) are to be sequenced first, followed by the applicable diagnosis code to identify the specified condition resulting from the complication. For example, the types of complications that may result from immune effector cellular therapy treatment (for example, CAR T-cell therapy) include ICANS or CRS, as described by the listed diagnosis codes. Accordingly, the CDC included the following instructional note in the Tabular List modifications for code T80.82—

“Use additional code to identify the specific complication, such as:

cytokine release syndrome (D89.83-)

immune effector cell-associated neurotoxicity syndrome (G92.0-)”

Materials relating to the discussions involving the diagnosis codes from the September 8-9, 2020 ICD-10 Coordination and Maintenance Committee meeting can be obtained from the CDC website at: https://www.cdc.gov/​nchs/​icd/​icd10cm_​maintenance.htm.

As noted previously, the current logic for case assignment involving CRS following CAR T-cell therapy to MS-DRGs 814, 815, and 816 includes a principal diagnosis of T80.89XA with a secondary diagnosis of any CRS code. However, with the finalization of new diagnosis code T80.82-, diagnosis code T80.89XA would no longer be reported and these cases would instead report new diagnosis code T80.82XA, effective with discharges on and after October 1, 2021. As shown in Table 6A associated with the proposed rule, we proposed to assign diagnosis code T80.82XA to MDC 16 (Diseases and Disorders of Blood, Blood Forming Organs, and Immunologic Disorders) in MS-DRGs 814, 815, and 816. We stated that if the MDC and MS-DRG assignment for new diagnosis code T80.82XA is finalized, the current logic for MS-DRGs 814, 815, and 816 that includes a principal diagnosis code of T80.89XA with a secondary diagnosis code of any CRS code would no longer be appropriate or necessary.

Therefore, we proposed to revise the structure of MS-DRGs 814, 815, and 816 by removing the logic that includes a principal diagnosis of T80.89XA with a secondary diagnosis of any CRS code from MS-DRGs 814, 815, and 816 effective FY 2022.

Comment: Commenters supported the proposed revision to the structure of MS-DRGs 814, 815, and 816 to remove the logic that includes a principal diagnosis of T80.89XA with a secondary diagnosis of any CRS code from MS-DRGs 814, 815, and 816. Commenters also supported the proposed assignment of new diagnosis code T80.82XA to MS-DRGs 814, 815, and 816 in MDC 16.

Response: We appreciate the commenters' support.

Comment: A commenter requested that CMS explain its rationale for MS-DRG assignment of the listed diagnosis codes describing complication of immune effector cellular therapy (T80.82XA, T80.82XD, and T80.82XS) and the codes describing immune effector cell-associated neurotoxicity syndrome (ICANS), with varying degrees of severity (G92.00, G92.01, G92.02, G92.03, G92.04, and G92.05). Specifically, the commenter questioned why CMS limited assignment to these MS-DRGs and if consideration could be given for the codes to be identified as CCs or MCCs for any MS-DRG.

Response: As discussed in prior rulemaking and in the proposed rule (86 FR 25186), we use our established process which involves examining the MS-DRG assignment and the attributes (severity level and O.R. status) of the predecessor diagnosis or procedure code, as applicable, to inform our proposed assignments and designations. Specifically, we review the predecessor code and MS-DRG assignment most closely associated with the new diagnosis or procedure code, and in the absence of claims data, we consider other factors that may be relevant to the MS-DRG assignment, including the severity of illness, treatment difficulty, complexity of service and the resources utilized in the diagnosis and/or treatment of the condition. We note that this process does not automatically result in the new diagnosis or procedure code being proposed for assignment to the same MS-DRG or to have the same designation as the predecessor code. We encourage the commenter to also review the FY 2022 Conversion Table that was made publicly available via the internet on the CDC website at: https://www.cdc.gov/​nchs/​icd/​icd10cm.htm, the V38.1 ICD-10 MS-DRG Definitions Manual that is available via the internet on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​MS-DRG-Classifications-and-Software, and Table 6A.—New Diagnosis Codes associated with the proposed and final rules (available via the internet on the CMS website at: https://www.cms.gov/​medicare/​acute-inpatient-pps/​fy-2022-ipps-proposed-rule-home-page#Tables) for information regarding MDC, MS-DRG and severity level assignment for these diagnosis codes. As shown in the Conversion Table, the predecessor code for new diagnosis code T80.82XA is diagnosis code T80.89XA; as shown in Appendix B—Diagnosis Code/MDC/MS-DRG Index of the V38.1 ICD-10 MS-DRG Definitions Manual, diagnosis code T80.89XA is assigned to MDC 16 in MS-DRGs 814-816; and as shown in Table 6A.- New Diagnosis Codes, the finalized severity level assignments for the diagnosis codes inquired about are as follows:

Effective October 1, 2021, when diagnosis code G92.03, G92.04 or G92.05 are reported as a secondary diagnosis, the GROUPER logic would recognize any one of these codes as a CC and the appropriate “with CC” MS-DRG would be assigned.

After consideration of the public comments we received, we are finalizing our proposal to assign diagnosis code T80.82XA to MDC 16 (Diseases and Disorders of Blood, Blood Forming Organs, and Immunologic Disorders) in MS-DRGs 814, 815, and 816. We are also finalizing our proposal to revise the structure of MS-DRGs 814, 815, and 816 by removing the logic that includes a principal diagnosis of T80.89XA with a secondary diagnosis of any CRS code from MS-DRGs 814, 815, and 816 effective FY 2022.

9. MDC 17 (Myeloproliferative Diseases and Disorders, and Poorly Differentiated Neoplasms): Inferior Vena Cava Filter Procedures

In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58517 through 58520), we discussed the ICD-10-PCS codes that describe the insertion of an intraluminal device into the inferior vena cava that are listed in the following table.

We finalized a change in the designation of ICD-10-PCS procedure code 06H03DZ from O.R. procedure to non-O.R. procedure and maintained the O.R. designation of procedure codes 06H00DZ and 06H04DZ. In that discussion, we noted our clinical advisors supported changing the O.R. designation of procedures describing insertion of an intraluminal device into the inferior vena cava performed via a percutaneous approach since the procedure does not require the resources of an operating room, while concurring that procedures describing the insertion of an intraluminal device into the inferior vena cava performed via an open or a percutaneous endoscopic approach could require greater resources than a procedure describing insertion of an intraluminal device into the inferior vena cava performed via a percutaneous approach. We also noted 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 and not whether the change in designation would impact payment in a particular direction.

In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25147 through 25149), we discussed a request we received to revise MS-DRGs 829 and 830 (Myeloproliferative Disorders or Poorly Differentiated Neoplasms with Other Procedures with and without CC/MCC, respectively) by removing the current two-way severity level split and creating a three-way severity level split in response to this final policy. The requestor respectfully disagreed with the FY 2021 IPPS/LTCH PPS final rule decision to change the designation of the procedure code describing the insertion of an inferior vena cava intraluminal device via percutaneous approach to a non-O.R. procedure, and stated vena cava filters are most often placed in interventional radiology suites and require a high level of skill to prevent rupture of the vena cava; and although they are long-term devices, they must be placed skillfully to allow for removal later if needed.

According to the requestor, it is a conundrum that patients with principal and secondary diagnoses that qualify for medical MS-DRGs 837 (Chemotherapy with Acute Leukemia as Secondary Diagnosis or with High Dose Chemotherapy Agent with MCC), MS-DRG 838 (Chemotherapy with Acute Leukemia as Secondary Diagnosis with CC or High Dose Chemotherapy Agent), and MS-DRG 839 (Chemotherapy with Acute Leukemia as Secondary Diagnosis without CC/MCC) group to lower weighted surgical MS-DRGs 829 and 830 (Myeloproliferative Disorders or Poorly Differentiated Neoplasms with Other Procedures with and without CC/MCC, respectively) when a non-major O.R. procedure is performed. The requestor stated the difference in relative weights might be occurring because of the two-way split within MS-DRGs 829 and 830 and the three-way split within MS-DRGs 837, 838 and 839. The requestor theorized that removing the current two-way severity level split of MS-DRGs 829 and 830 and creating a three-way severity level split could help resolve the relative weight discrepancy when any non-major O.R. procedures are performed during hospitalizations for chemotherapy for acute leukemia.

This requestor also suggested that if CMS' analysis did not support creating a three-way split for MS-DRGs 829 and 830, exclusion of PCS code 06H03DZ from the list of qualifying procedures and reinstatement of O.R. procedure status to appropriately compensate providers for the cost of devices and resources to place inferior vena cava filters across the patient population should be proposed.

As indicated in the proposed rule, to evaluate the request to create a three-way severity split MS-DRG for cases reporting myeloproliferative disorders or poorly differentiated neoplasms with other procedures, consistent with our established process, we conducted an analysis of base MS-DRG 829. This analysis includes 2 years of MedPAR claims data to compare the data results from 1 year to the next to avoid making determinations about whether additional severity levels are warranted based on an isolated year's data fluctuation and also, to validate that the established severity levels within a base MS-DRG are supported.

Therefore, we reviewed the claims data for base MS-DRG 829 using the September 2018 update of the FY 2018 MedPAR file and the March 2020 update of the FY 2019 MedPAR file, which were used in our analysis of claims data for MS-DRG reclassification requests for FY 2020 and FY 2022, respectively. Our findings are shown in the table:

We applied the criteria to create subgroups for the three-way severity level split. We found that the criterion that there be at least 500 cases for each subgroup was not met based on the data in both the FY 2018 and FY 2019 MedPAR files, as shown in the table for both years. Specifically, for the “with MCC”, “with CC”, and “without CC/MCC” split, there were only 333 cases in the “without CC/MCC” subgroup based on the data in the FY 2019 MedPAR file and only 333 cases in the “without CC/MCC” subgroup based on the data in the FY 2018 MedPAR file. Accordingly, the claims data do not support a three-way severity level split for base MS-DRG 829.

We also reviewed the claims data for base MS-DRG 829 using the September 2019 update of the FY 2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR file, which were used in our analysis of claims data for MS-DRG reclassification requests for FY 2021 and FY 2022, respectively. Our findings are shown in the table:

We applied the criteria to create subgroups for the three-way severity level split. We found that the criterion that there be at least 500 cases for each subgroup was not met based on the data in both the FY 2019 and FY 2020 MedPAR files, as shown in the table for both years. Specifically, for the “with MCC”, “with CC”, and “without CC/MCC” split, there were only 303 cases in the “without CC/MCC” subgroup based on the data in the FY 2020 MedPAR file and, as previously noted, only 333 cases in the “without CC/MCC” subgroup based on the data in the FY 2019 MedPAR file. As shown in both sets of data and stated previously, the claims data do not support a three-way severity level split for base MS-DRG 829.

As discussed in the proposed rule, in response to the request to exclude ICD-10-PCS code 06H03DZ from a list of qualifying procedures if CMS' analysis did not support creating a three-way split for MS-DRGs 829 and 830, we noted that by definition, procedure codes designated as non-O.R. procedures, not further classified as “affecting the MS-DRG assignment”, do not influence the MS-DRG assignment. As stated previously, in the FY 2021 IPPS/LTCH PPS final rule we finalized our proposal to change the designation of ICD-10-PCS procedure code 06H03DZ from O.R. procedure to non-O.R. procedure, therefore as a non-O.R. procedure, there is no need to exclude ICD-10-PCS code 06H03DZ from a list of qualifying procedure codes for MS-DRGs 829 and 830.

In response to the request to reinstate the O.R. procedure designation of ICD-10-PCS code 06H03DZ if CMS' analysis did not support creating a three-way split for MS-DRGs 829 and 830, we indicated the change in designation from O.R. procedure to non-O.R. procedure was recent, only becoming effective October 1, 2020. We indicated our clinical advisors continued to indicate that code 06H03DZ, describing the percutaneous insertion of an intraluminal device into the inferior vena cava, does not require the resources of an operating room, that the procedure to insert an IVC filter percutaneously is not surgical in nature and that the resources involved in furnishing this procedure are comparable to the related ICD-10-PCS procedure codes that describe the insertion of infusion devices into the inferior vena cava that are currently designated as non-O.R. procedures. We noted our clinical advisors stated that our FY 2021 final policy resulted in an O.R. designation of 06H03DZ that better reflects the associated technical complexity and hospital resource use of this procedure. We also noted that we continue to explore alternatives on how we may restructure the current O.R. and non-O.R. designations for procedures by leveraging the detail that is now available in the ICD-10 claims data, as discussed in the FY 2021 IPPS/LTCH PPS final rule and in section II.D.11. of the preamble of the proposed rule and this final rule. We indicated we continue to develop our process and methodology, and that we will provide more detail in future rulemaking.

In summary, based on the results of our analysis, for FY 2022, we proposed to maintain the current structure of MS-DRGs 829 and 830.

Comment: Commenters expressed support for CMS' proposal to maintain the current structure of MS-DRGs 829 and 830 (Myeloproliferative Disorders or Poorly Differentiated Neoplasms with Other Procedures with and without CC/MCC, respectively) and not create a three-way severity level split.

Response: We thank the commenters for their support.

After consideration of the public comments we received, we are finalizing our proposal to maintain the current structure of MS-DRGs 829 and 830, without modification, for FY 2022.

10. Review of Procedure Codes in MS-DRGs 981 Through 983 and 987 Through 989

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 (Non-Extensive 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 cases reporting these 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 use this information to determine which procedure codes and diagnosis codes to examine.

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. We also consider whether it would be more appropriate to move the principal diagnosis codes into the MDC to which the procedure is currently assigned.

In addition to this internal review, we also consider requests that we receive to examine cases found to group to MS-DRGs 981 through 983 or MS-DRGs 987 through 989 to determine if it would be appropriate to add procedure codes to one of the surgical MS DRGs for the MDC into which the principal diagnosis falls or to move the principal diagnosis to the surgical MS DRGs to which the procedure codes are assigned.

Based on the results of our review of the claims data from the March 2020 update of the FY 2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR file, as well as our review of the requests that we received to examine cases found to group to MS-DRGs 981 through 983 or MS-DRGs 987 through 989, we proposed to move the cases reporting the procedures and/or principal diagnosis codes described in this section of this rule 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 or procedure is assigned.

As discussed in section II.D.3.b. of the preamble of the proposed rule and this final rule, we received a request to reassign cases with procedures describing control of bleeding in the cranial cavity when reported with a central nervous system diagnosis 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 MDC 01 (Diseases and Disorders of the Central Nervous System) in MS-DRGs 25, 26, and 27 (Craniotomy and Endovascular Intracranial Procedures with MCC, with CC, and without CC/MCC, respectively (for example, “craniotomy” MS-DRGs). We noted that in addition to MS-DRGs 25, 26, and 27, MS-DRG 23 (Craniotomy with Major Device Implant or Acute Complex CNS Principal Diagnosis with MCC or Chemotherapy Implant or Epilepsy with Neurostimulator) and MS-DRG 24 (Craniotomy with Major Device Implant or Acute Complex CNS Principal Diagnosis without MCC) also include procedures performed on structures located within the cranial cavity and are included in the range of MS-DRGs known as the “craniotomy” MS-DRGs in MDC 01.

The management and treatment for bleeding (or hemorrhage) within the cranial cavity varies depending on the location, cause and the severity (or extent) of the bleed. Common causes include head trauma or cerebral aneurysm. Control of bleeding in the cranial cavity procedures are identified by ICD-10-PCS procedure codes 0W310ZZ (Control bleeding in cranial cavity, open approach), 0W313ZZ (Control bleeding in cranial cavity, percutaneous approach) and 0W314ZZ (Control bleeding in cranial cavity, percutaneous endoscopic approach) and are currently assigned to the following MDCs and MS-DRGs.

According to the requestor, procedures performed within the cranial cavity always involve drilling or cutting through the skull regardless of the approach, therefore the three procedure codes identified (0W310ZZ, 0W313ZZ, and 0W314ZZ) warrant assignment to the “craniotomy” MS-DRGs.

We stated in the proposed rule that our analysis of this grouping issue confirmed that when a procedure describing control of bleeding in the cranial cavity is reported with a principal diagnosis from MDC 01, these cases group to MS-DRGs 981, 982, and 983. Whenever there is a surgical procedure reported on the claim that is unrelated to the MDC to which the case was assigned based on the principal diagnosis, it results in a MS-DRG assignment to a surgical class referred to as “unrelated operating room procedures”.

As noted in the proposed rule, we examined claims data from the March 2020 update of the FY 2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR file for cases reporting any one of the three procedure codes (0W310ZZ, 0W313ZZ or 0W314ZZ) in MS-DRGs 981 through 983 with a principal diagnosis from MDC 01. Our findings are shown in the following tables.

As noted previously, the requestor asked that we consider reassignment of these cases to the craniotomy MS-DRGs (identified as MS-DRGs 23, 24, 25, 26, and 27). We therefore examined the data for all cases in MS-DRGs 23, 24, 25, 26, and 27. Our findings are shown in the following tables.

As shown, in our analyses of the claims data for MS-DRGs 981 through 983, we found a total of ten cases reporting procedures describing control of bleeding in cranial cavity with a principal diagnosis from MDC 01 in the March 2020 update of the FY 2019 MedPAR file, and a total of two cases reporting procedures describing control of bleeding in cranial cavity with a principal diagnosis from MDC 01 in the September 2020 update of the FY 2020 MedPAR file.

As noted in the proposed rule, our clinical advisors stated these procedures describing control of bleeding in the cranial cavity are consistent with the existing procedure codes included in the logic for case assignment to MS-DRGs 25, 26, and 27, in addition to MS-DRG 23 (Craniotomy with Major Device Implant or Acute Complex CNS Principal Diagnosis with MCC or Chemotherapy Implant or Epilepsy with Neurostimulator) and MS-DRG 24 (Craniotomy with Major Device Implant or Acute Complex CNS Principal Diagnosis without MCC) that also describe procedures performed on structures located within the cranial cavity and are included in the range of MS-DRGs known as the “craniotomy” MS-DRGs. While the claims analysis based on the March 2020 update of the FY 2019 MedPAR file identified only ten cases and the September 2020 update of the FY 2020 MedPAR file identified only two cases for which these procedures were reported as a stand-alone procedure resulting in assignment to MS-DRGs 981 through 983, and the average length of stay and average costs for these cases vary in comparison to the average length of stay and average costs of all cases in MS-DRGs 23, 24, 25, 26, and 27, given the nature of head trauma cases, the resource use would be expected to vary based on the extent of the patient's injuries. We stated in the proposed rule that we believed it is clinically appropriate to add these procedure codes describing control of bleeding in the cranial cavity to MS-DRGs 23, 24, 25, 26, and 27 in MDC 01.

Therefore, we proposed to add procedure codes 0W310ZZ, 0W313ZZ, and 0W314ZZ to MDC 01 in MS-DRGs 23, 24, 25, 26, and 27 (“craniotomy” MS-DRGs) for FY 2022.

Comment: Commenters agreed with our proposal to add procedure codes 0W310ZZ, 0W313ZZ, and 0W314ZZ to MDC 01 in MS-DRGs 23, 24, 25, 26, and 27.

Response: We thank the commenters for their support.

After consideration of the public comments received, we are finalizing our proposal to add procedure codes 0W310ZZ, 0W313ZZ, and 0W314ZZ describing bleeding in the cranial cavity to MDC 01 in MS-DRGs 23, 24, 25, 26, and 27 for FY 2022.

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.

In addition to this internal review, we also consider requests that we receive to examine cases found to group to MS-DRGs 981 through 983 or MS-DRGs 987 through 989 to determine if it would be appropriate for the cases to be reassigned from one of the MS-DRG groups to the other.

Based on the results of our review of the claims data from the March 2020 update of the FY 2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR file, as well as our review of the requests that we received to examine cases found to group to MS-DRGs 981 through 983 or MS-DRGs 987 through 989, we proposed to move the cases reporting the procedures codes described in this section of this rule from MS-DRGs 981 through 983 to MS-DRGs 987 through 989.

As discussed in section II.D.3.a. of the preamble of the proposed rule and this final rule, we received a request that we understood to be for our consideration of the reassignment of the following three procedure codes from Extensive O.R. procedures to Non-extensive O.R. procedures.

As stated in the proposed rule, in conducting our review of this request, our clinical advisors noted that ICD-10-PCS codes 0JB60ZZ, 0JB70ZZ, and 0JB80ZZ currently group to MS-DRGs 981 through 983 when reported with a principal diagnosis that is not assigned to one of the MDCs to which these procedure codes are assigned. While our claims analysis of both the March 2020 update of the FY 2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR file did not identify any cases reporting any one of the three listed procedure codes in MS-DRGs 981, 982, or 983, we stated that our clinical advisors believe that these procedures would be more appropriately designated as Non-extensive procedures because they are more consistent with other procedures on the Non-extensive procedure code list. They stated that these procedures do not consume the resources or require a similar level of technical complexity as the procedures on the Extensive O.R. procedures list.

Therefore, we proposed to reassign the three procedure codes listed from MS-DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, without CC/MCC, respectively) to MS-DRGs 987, 988, and 989 (Non-Extensive Procedure Unrelated to Principal Diagnosis with MCC, with CC, without CC/MCC, respectively) for FY 2022.

Comment: Commenters supported our proposal to reassign procedure codes 0JB60ZZ, 0JB70ZZ, and 0JB80ZZ from MS-DRGs 981, 982, and 983 to MS-DRGs 987, 988, and 989.

Response: We appreciate the commenters' support.

After consideration of the public comments received, we are finalizing our proposal to reassign procedure codes 0JB60ZZ, 0JB70ZZ, and 0JB80ZZ describing excision of subcutaneous tissue from the chest, back, and abdomen, respectively, from MS-DRGs 981, 982, and 983 to MS-DRGs 987, 988, and 989 for FY 2022.

As discussed in section II.D.4.b. of the preamble of the proposed rule and this final rule, we identified 17 procedure codes describing laser interstitial thermal therapy (LITT) that are currently designated as extensive O.R. procedures. In addition to those 17 procedure codes, we identified additional procedure codes describing LITT of various body parts that are also designated as extensive O.R. procedures. The ICD-10-PCS codes describing LITT of various body parts are as follows.

Whenever one of these listed procedure codes is reported on a claim that is unrelated to the MDC to which the case was assigned based on the principal diagnosis, it currently results in assignment to MS-DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, without CC/MCC, respectively). Our clinical advisors stated that all of the listed procedure codes warrant redesignation from the extensive procedure list and MS-DRGs 981, 982, and 983 to the non-extensive procedure list and to MS-DRGs 987, 988, and 989 (Non-Extensive Procedure Unrelated to Principal Diagnosis with MCC, with CC, without CC/MCC, respectively). Specifically, our clinical advisors stated the procedures described by these codes are minimally invasive and are consistent with other ablation (root operation Destruction) type procedures that are designated as non-extensive procedures in the ICD-10-PCS classification.

As noted in the proposed rule, in our analysis of claims from the March 2020 update of the FY 2019 MedPAR file, we identified a total of six cases reporting procedure codes describing LITT of various body sites in MS-DRGs 981, 982, and 983 with an average length of stay of 2.5 days and average costs of $7,734. Specifically, we found one case reporting procedure code DVY0KZZ (Laser interstitial thermal therapy of prostate) in MS-DRG 981 with an average length of stay of 4.0 days and average costs of $7,348. For MS-DRG 982, we found five cases in which procedure codes describing LITT of various body sites were reported. The first case reported procedure code D0Y0KZZ (Laser interstitial thermal therapy of brain) with an average length of stay of 1.0 day and average costs of $4,142, the second case reported procedure code D0Y6KZZ (Laser interstitial thermal therapy of spinal cord) with an average length of stay of 3.0 days and average costs of $20,007, the third case reported procedure code DDY1KZZ (Laser interstitial thermal therapy of stomach) with an average length of stay of 2.0 days and average costs of $3,424, the fourth case reported procedure code DDY7KZZ (Laser interstitial thermal therapy of rectum) with an average length of stay of 3.0 days and average costs of $3,735, and the fifth case reported procedure code DVY0KZZ (Laser interstitial thermal therapy of prostate) with an average length of stay of 2.0 days and average costs of $7,750. There were no cases found to report procedures describing LITT in MS-DRG 983. Our findings are summarized in the following table.

In the proposed rule, we stated that for our analysis of claims from the September 2020 update of the FY 2020 MedPAR file, we identified one case reporting procedure code D0Y6KZZ (Laser interstitial thermal therapy of spinal cord) with an average length of stay of 6 days and average costs of $5,130, and two cases reporting procedure code DVY0KZZ (Laser interstitial thermal therapy of prostate) with an average length of stay of 8.5 days and average costs of $20,329 in MS-DRGs 981, 982, or 983. Although our claims analysis identified a limited number of cases reporting procedures describing LITT, we stated that our clinical advisors believe that these procedures would be more appropriately designated as Non-extensive procedures because they are more consistent with other procedures on the Non-extensive procedure code list.

Therefore, we proposed to reassign the listed procedure codes describing LITT of various body parts from MS-DRGs 981, 982, and 983 (Extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) to MS-DRGs 987, 988, and 989 (Non-extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) for FY 2022.

Comment: Commenters agreed with our proposal to reassign the listed procedure codes describing LITT of various body parts from MS-DRGs 981, 982, and 983 to MS-DRGs 987, 988, and 989.

Response: We thank the commenters for their support.

After consideration of the public comments received, we are finalizing our proposal to reassign the listed procedure codes describing LITT of various body parts from MS-DRGs 981, 982, and 983 to MS-DRGs 987, 988, and 989, without modification, for FY 2022.

As also discussed in section II.D.4.b. of the preamble of the proposed rule and this final rule, we identified five procedure codes describing repair of the esophagus that are currently designated as extensive O.R. procedures. The procedure codes are 0DQ50ZZ (Repair esophagus, open approach), 0DQ53ZZ (Repair esophagus, percutaneous approach), 0DQ54ZZ (Repair esophagus, percutaneous endoscopic approach), 0DQ57ZZ (Repair esophagus, via natural or artificial opening), and 0DQ58ZZ (Repair esophagus, via natural or artificial opening endoscopic). Whenever one of these five procedure codes is reported on a claim that is unrelated to the MDC to which the case was assigned based on the principal diagnosis, it currently results in assignment to MS-DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, without CC/MCC, respectively). Our clinical advisors stated that three of these five procedures warrant redesignation from the extensive procedure list and MS-DRGs 981, 982, and 983 to the non-extensive procedure list and to MS-DRGs 987, 988, and 989 (Non-Extensive Procedure Unrelated to Principal Diagnosis with MCC, with CC, without CC/MCC, respectively). Specifically, our clinical advisors stated the procedures identified by procedure codes 0DQ53ZZ, 0DQ57ZZ, and 0DQ58ZZ do not involve the same utilization of resources with respect to the performance of the procedure in comparison to the procedures identified by procedure codes 0DQ50ZZ and 0DQ540ZZ. In our analysis of claims from the March 2020 update of the FY 2019 MedPAR file, we identified three cases reporting procedure code 0DQ58ZZ in MS-DRGs 981, 982, and 983 with an average length of stay of 14 days and average costs of $34,894. In our analysis of claims from the September 2020 update of the FY 2020 MedPAR file, we identified two cases reporting procedure code 0DQ58ZZ in MS-DRGs 981, 982, or 983 with an average length of stay of 8 days and average costs of $12,037. We stated that our clinical advisors believe that these procedures would be more appropriately designated as Non-extensive procedures because they are more consistent with other procedures on the Non-extensive procedure code list. Therefore, we proposed to reassign these three procedure codes (0DQ53ZZ, 0DQ57ZZ, and 0DQ58ZZ) from MS-DRGs 981, 982, and 983 (Extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) to MS-DRGs 987, 988, and 989 (Non-extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) for FY 2022.

Comment: Commenters supported our proposal to reassign procedure codes 0DQ53ZZ, 0DQ57ZZ, and 0DQ58ZZ from MS-DRGs 981, 982, and 983 to MS-DRGs 987, 988, and 989.

Response: We appreciate the commenters' support.

After consideration of the public comments received, we are finalizing our proposal to reassign the procedure codes describing repair of the esophagus via percutaneous approach, natural or artificial opening approach, and natural or artificial opening endoscopic approach, from MS-DRGs 981, 982, and 983 to MS-DRGs 987, 988, and 989, without modification, for FY 2022.

As discussed in section II.D.11.c.24. of the preamble of the proposed rule, we identified procedure code 0T9D0ZZ (Drainage of urethra, open approach) during our review of procedure code 0U9L0ZZ (Drainage of vestibular gland, open approach), which is currently designated as a non-O.R. procedure. We noted that the procedure described by procedure code 0T9D0ZZ represents the male equivalent of the female procedure described by procedure code 0U9L0ZZ. Procedure code 0T9D0ZZ is currently designated as an extensive O.R. procedure and is reported to describe procedures performed on the Cowper's (bulbourethral) gland in males. Whenever this procedure code is reported on a claim that is unrelated to the MDC to which the case was assigned based on the principal diagnosis, it currently results in assignment to MS-DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, without CC/MCC, respectively).

In the proposed rule we noted that our clinical advisors stated that this procedure warrants redesignation from the extensive procedure list and MS-DRGs 981, 982, and 983 to the non-extensive procedure list and to MS-DRGs 987, 988, and 989 (Non-Extensive Procedure Unrelated to Principal Diagnosis with MCC, with CC, without CC/MCC, respectively). Specifically, our clinical advisors stated that the procedure described by procedure code 0T9D0ZZ continues to warrant an O.R. designation because it is performed on deeper structures and requires a higher level of technical skill and it is a more complex procedure when compared to the non-O.R. procedure described by procedure code 0U9L0ZZ, however, abscess formation in the Cowper's (bulbourethral) glands is uncommon and can often be treated with ultrasound guided percutaneous aspiration. The need for open surgical management is rare and includes chronic infection unresponsive to non-operative management and complicated acute infection such as perineal fistula formation. Open surgical management would require use of the operating room for both appropriate anesthesia and for the resources required to perform the more invasive perineal surgical dissection. Therefore, we stated that our clinical advisors believe a non-extensive O.R. designation is suitable for this procedure.

We noted in the proposed rule that we analyzed claims data from the March 2020 update of the FY 2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR file for cases reporting procedure code 0T9D0ZZ in MS-DRGs 981, 982, and 983. We found one case in MS-DRG 981 with an average length of stay of 8.0 days and average costs of $23,566 in the March 2020 update of the FY 2019 MedPAR file, and no cases in the September 2020 update of the FY 2020 MedPAR file. Although our claims analysis identified only one case reporting procedure code 0T9D0ZZ, we stated in the proposed rule that our clinical advisors believe that these procedures would be more appropriately designated as Non-extensive procedures because they are more consistent with other procedures on the Non-extensive procedure code list.

Therefore, we proposed to reassign procedure code 0T9D0ZZ from MS-DRGs 981, 982, and 983 (Extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) to MS-DRGs 987, 988, and 989 (Non-extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) for FY 2022.

Comment: Commenters supported our proposal to reassign procedure code 0T9D0ZZ from MS-DRGs 981, 982, and 983 to MS-DRGs 987, 988, and 989.

Response: We thank the commenters for their support.

After consideration of the public comments received, we are finalizing our proposal to reassign procedure code 0T9D0ZZ from MS-DRGs 981, 982, and 983 to MS-DRGs 987, 988, and 989, without modification, for FY 2022.

11. Operating Room (O.R.) and Non-O.R. Issues

a. Background

Under the IPPS MS-DRGs (and former CMS MS-DRGs), we have a list of procedure codes that are considered operating room (O.R.) procedures. Historically, we developed this list using physician panels that classified each procedure code based on the procedure and its effect on consumption of hospital resources. For example, generally the presence of a surgical procedure which required the use of the operating room would be expected to have a significant effect on the type of hospital resources (for example, operating room, recovery room, and anesthesia) used by a patient, and therefore, these patients were considered surgical. Because the claims data generally available do not precisely indicate whether a patient was taken to the operating room, surgical patients were identified based on the procedures that were performed. Generally, if the procedure was not expected to require the use of the operating room, the patient would be considered medical (non-O.R.).

Currently, each ICD-10-PCS procedure code has designations that determine whether and in what way the presence of that procedure on a claim impacts the MS-DRG assignment. First, each ICD-10-PCS procedure code is either designated as an O.R. procedure for purposes of MS-DRG assignment (“O.R. procedures”) or is not designated as an O.R. procedure for purposes of MS-DRG assignment (“non-O.R. procedures”). Second, for each procedure that is designated as an O.R. procedure, that O.R. procedure is further classified as either extensive or non-extensive. Third, for each procedure that is designated as a non-O.R. procedure, that non-O.R. procedure is further classified as either affecting the MS-DRG assignment or not affecting the MS-DRG assignment. We refer to these designations that do affect MS-DRG assignment as “non O.R. affecting the MS-DRG.” For new procedure codes that have been finalized through the ICD-10 Coordination and Maintenance Committee meeting process and are proposed to be classified as O.R. procedures or non-O.R. procedures affecting the MS-DRG, our clinical advisors recommend the MS-DRG assignment which is then made available in association with the proposed rule (Table 6B.—New Procedure Codes) and subject to public comment. These proposed assignments are generally based on the assignment of predecessor codes or the assignment of similar codes. For example, 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 proposed to be newly designated as O.R. procedures. As discussed in section II.D.13 of the preamble of this final rule, we are making Table 6B.—New Procedure Codes—FY 2022 available on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index.html. We also refer readers to the ICD-10 MS-DRG Version 38.1 Definitions Manual at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​MS-DRG-Classifications-and-Software.html for detailed information regarding the designation of procedures as O.R. or non-O.R. (affecting the MS-DRG) in Appendix E—Operating Room Procedures and Procedure Code/MS-DRG Index.

In the FY 2020 IPPS/LTCH PPS proposed rule, we stated that, given the long period of time that has elapsed since the original O.R. (extensive and non-extensive) and non-O.R. designations were established, the incremental changes that have occurred to these O.R. and non-O.R. procedure code lists, and changes in the way inpatient care is delivered, we plan to conduct a comprehensive, systematic review of the ICD-10-PCS procedure codes. This will be a multi year project during which we will also review the process for determining when a procedure is considered an operating room procedure. For example, we may restructure the current O.R. and non O.R. designations for procedures by leveraging the detail that is now available in the ICD-10 claims data. We refer readers to the discussion regarding the designation of procedure codes in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38066) where we stated that the determination of when a procedure code should be designated as an O.R. procedure has become a much more complex task. This is, in part, due to the number of various approaches available in the ICD-10-PCS classification, as well as changes in medical practice. While we have typically evaluated procedures on the basis of whether or not they would be performed in an operating room, we believe that there may be other factors to consider with regard to resource utilization, particularly with the implementation of ICD-10.

We discussed in the FY 2020 IPPS/LTCH PPS proposed rule that as a result of this planned review and potential restructuring, procedures that are currently designated as O.R. procedures may no longer warrant that designation, and conversely, procedures that are currently designated as non-O.R. procedures may warrant an O.R. type of designation. We intend to consider the resources used and how a procedure should affect the MS-DRG assignment. We may also consider the effect of specific surgical approaches to evaluate whether to subdivide specific MS-DRGs based on a specific surgical approach. We plan to utilize our available MedPAR claims data as a basis for this review and the input of our clinical advisors. As part of this comprehensive review of the procedure codes, we also intend to evaluate the MS-DRG assignment of the procedures and the current surgical hierarchy because both of these factor into the process of refining the ICD-10 MS-DRGs to better recognize complexity of service and resource utilization.

In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58540 through 58541), we provided a summary of the comments we had received in response to our request for feedback on what factors or criteria to consider in determining whether a procedure is designated as an O.R. procedure in the ICD-10-PCS classification system for future consideration.

We stated in the proposed rule that in consideration of the PHE, we believe it may be appropriate to allow additional time for the claims data to stabilize prior to selecting the timeframe to analyze for this review. Additional time is also necessary as we continue to develop our process and methodology. Therefore, stated that we will provide more detail on this analysis and the methodology for conducting this review in future rulemaking.

Comment: Several commenters agreed it is appropriate to allow additional time for the claims data to stabilize prior to selecting the timeframe to analyze for the comprehensive procedure code review.

Response: In the FY 2022 IPPS/LTCH PPS proposed rule and this final rule, we are addressing 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 this section of the rule we discuss the process that was utilized for evaluating the requests that were received for FY 2022 consideration. For each procedure, our clinical advisors considered—

• Whether the procedure would typically require the resources of an operating room;
• Whether it is an extensive or a nonextensive procedure; and
• To which MS-DRGs the procedure should be assigned.

We note 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 in this section of this rule. Instead, we only discuss MS-DRGs that require explicitly adding the relevant procedure codes to the GROUPER logic in order for those procedure codes to affect the MS-DRG assignment as intended. In cases where we proposed to change the designation of procedure codes from non-O.R. procedures 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.

In addition, cases that contain O.R. procedures will map to MS-DRG 981, 982, or 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) or MS-DRG 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 this section of this rule.

For procedures that would not typically require the resources of an operating room, our clinical advisors determined if the procedure should affect the MS-DRG assignment.

As indicated in the proposed rule, we received several requests to change the designation of specific ICD-10-PCS procedure codes from non-O.R. procedures to O.R. procedures, or to change the designation from O.R. procedures to non-O.R. procedures. In this section of this rule, as we did in the proposed rule, we detail and respond to some of those requests and, further, summarize and respond to the public comments we received in response to our proposals, if applicable. With regard to the remaining requests, as stated in the proposed rule, our clinical advisors believe it is appropriate to consider these requests as part of our comprehensive review of the procedure codes as previously discussed.

With respect to some of the comments received in response to our discussion of several requests to change the designation of specific ICD-10-PCS procedure codes from non-O.R. procedures to O.R. procedures, we wish to clarify that when we state that a current non-O.R. procedure is frequently or generally performed in the outpatient setting, we are indicating that the resources involved in the performance of the procedure are such that, it does not specifically require an inpatient admission and is typically not the underlying reason for the admission, nor a major factor in the consumption of resources for an inpatient admission. While an inpatient provider may elect to perform a specific procedure in the operating room or a procedure room, that does not constitute automatic designation of the procedure as an O.R. procedure under the IPPS. Alternatively, a procedure that is performed at the bedside does not constitute automatic designation of the procedure as a non-O.R. procedure under the IPPS. In addition, when we state that a current non-O.R. procedure is typically performed in conjunction with another O.R. procedure, we are indicating that there is generally another O.R. procedure reported on the claim that is primarily responsible for impacting the utilization of resources for that admission.

b. O.R. Procedures to Non-O.R. Procedures

(1) Open Drainage of Subcutaneous Tissue and Fascia

One requestor identified the following ICD-10-PCS procedure code that describes the open drainage of right lower leg subcutaneous tissue and fascia, shown in the following table.

In the ICD-10 MS-DRG Version 38.1 Definitions Manual, this ICD-10-PCS procedure code is currently recognized as an O.R. procedure for purposes of MS-DRG assignment. The requestor noted that this procedure consumes resources comparable to related ICD-10-PCS procedure code 0J9N00Z (Drainage of right lower leg subcutaneous tissue and fascia with drainage device, open approach) that describes the open drainage of right lower leg subcutaneous tissue and fascia with a drainage device, which is currently designated as a non-O.R. procedure. The requestor stated that these comparable procedures should be recognized similarly for purposes of MS-DRG assignment.

In the proposed rule, we noted that during our review of this issue, we identified 21 ICD-10-PCS procedure codes that describe the open drainage of subcutaneous tissue and fascia, shown in the following table that are clinically similar to ICD-10-PCS code 0J9N0ZZ, and are also designated as O.R. procedures in the ICD-10 MS-DRG Version 38.1 Definitions Manual.

We stated we reviewed these procedures and that our clinical advisors agreed that procedures that describe the open drainage of subcutaneous tissue and fascia consume resources comparable to the related ICD-10-PCS procedure codes that describe the open drainage of subcutaneous tissue and fascia with a drainage device that are currently designated as non-O.R. procedures. We stated that these procedures do not typically require the resources of an operating room, and are not surgical in nature. Therefore, we proposed to remove the 22 codes listed in the following table from the FY 2022 ICD-10 MS-DRGs Version 39 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures. We stated in the proposed rule that, under this proposal, these procedures would no longer impact MS-DRG assignment.

Comment: Commenters supported CMS' proposal to change the designation of the 22 procedure codes describing open drainage of subcutaneous tissue and fascia from O.R. procedures to non-O.R. procedures.

Response: We appreciate the commenters for their support.

Comment: Other commenters opposed CMS' proposal. Commenters stated that these procedures are indeed performed in the operating room under general anesthesia, are surgical in nature, and significantly increase costs. A commenter also stated that ICD-10-PCS codes describing open drainage “with drainage device” are rarely (if ever) assigned because when drains are placed at the conclusion of open drainage procedures, drains are considered integral to the performance of a procedure. Some commenters acknowledged there may be certain circumstances in which these procedures do not require an operating room but note they are not consistently conducive to being performed at bedside, especially when the patient is not able to tolerate the procedure, or when performed in for community hospitals that do not have hybrid O.R.s or special procedure rooms. A commenter stated that a review of the cases at their facility shows that approximately 80% of the procedures describing open drainage of subcutaneous tissue and fascia are performed in an O.R. setting requiring anesthesia, with a much lesser percentage performed at the bedside.

Another commenter noted in the FY 2018 IPPS proposed rule, these same 22 ICD-10-PCS codes were identified and a commenter opposed the proposal to redesignate these codes at that time. In response to the issues raised by this commenter, CMS agreed in the FY 2018 IPPS final rule to maintain the designation of the 22 procedure codes. This commenter stated the rationale to maintain these 22 codes as O.R. procedures has not changed and that there is no safe way to effectively drain an infection involving the subfascial plane without the resources of an O.R.

Response: Our clinical advisors reviewed the commenters' concerns and state that treatment practices have continued to shift since FY 2018 rulemaking. Procedures describing the open drainage of subcutaneous tissue and fascia can now be safely performed in the outpatient setting and when performed during a hospitalization, it is typically in conjunction with another O.R. procedure. In cases where procedures describing open drainage of subcutaneous tissue and fascia are the only procedures performed in an admission, the admission is quite likely due to need for IV antibiotics as opposed to the need for operating room resources in an inpatient setting. Our clinical advisors continue to state that these procedures consume resources comparable to the related ICD-10-PCS procedure codes that describe the open drainage of subcutaneous tissue and fascia with a drainage device that are currently designated as non-O.R. procedures. In response to the comment that ICD-10-PCS codes describing open drainage “with drainage device” are rarely (if ever) assigned, while we agree there are limited scenarios in which the qualifier “with drainage device” is applicable, we note coding is dependent on the documentation in the medical record.

In response to the comments that differentiate when these procedures are performed at bedside versus in hybrid O.R.s versus in special procedure rooms, we note that the designation of procedure as a non-O.R. procedure is not determined solely by the location in the facility in which the procedure was performed. While the site in which the procedure is performed and the procedural approach are important considerations in the designation of a procedure, other clinical factors such as procedure complexity, resource utilization, and need for anesthesia administration are also relevant to whether a procedure would typically require the resources of an operating room. In that regard, our clinical advisors state procedure codes that describe the open drainage of subcutaneous tissue and fascia do not reflect the technical complexity or resource intensity in comparison to other procedures that are designated as O.R. procedures. As noted by the commenters, while there are circumstances where performing open drainage in the operating room under sedation or general anesthesia may be necessary, open drainage procedures can be performed at the bedside or settings other than an operating room under general anesthesia.

We also note we have identified that the designation of the 22 procedure codes that describe the open drainage of subcutaneous tissue and fascia as O.R. procedures is a result of a replication error in transitioning to ICD-10. This replication error led to ICD-10-PCS procedure codes that describe the open drainage of subcutaneous tissue and fascia being listed as comparable translations for ICD-9-CM code 83.09 (Other incision of soft tissue), which was designated as a non-extensive O.R. procedure under the ICD-9-CM MS-DRGs Version 32. Conversely, this replication error led ICD-10-PCS procedure codes that describe the open drainage of subcutaneous tissue and fascia with a drainage device being listed as comparable translations for ICD-9-CM code 86.04 (Other incision with drainage of skin and subcutaneous tissue) which was designated as a non-O.R. procedure under the ICD-9-CM MS-DRGs Version 32. Designating the 22 procedure codes that describe the open drainage of subcutaneous tissue and fascia as non-O.R. procedures will result in a more accurate replication of the comparable procedure, under the ICD-9-CM MS-DRGs Version 32 which was 86.04, not 83.09 and is more aligned with current shifts in treatment practices.

After consideration of the public comments we received, for the reasons stated, we are finalizing our proposal, without modification, to change the designation of the 22 procedure codes listed in the preceding table from O.R. procedures to non-O.R. procedures, effective October 1, 2021.

c. Non-O.R. Procedures to O.R. Procedures

(1) Percutaneous Introduction of Substance Into Cranial Cavity and Brain

One requestor identified ICD-10-PCS procedure code XW0Q316 (Introduction of eladocagene exuparvovec into cranial cavity and brain, percutaneous approach, new technology group 6) that the requestor stated is currently not recognized as an O.R. procedure for purposes of MS-DRG assignment. The requestor recommended that this procedure be designated as an O.R. procedure because the procedure requires traversing the skull in order to place a substance within the cranial cavity or brain. The requestor noted that CMS disagreed with designating this procedure as an O.R. procedure last year in the absence of claims data; however, the requestor stated that because the skull must be opened by drilling or cutting a burr hole through the skull, this procedure warrants O.R. status similar to other transcranial procedures performed with an open or percutaneous approach that are classified as O.R. procedures.

We noted in the proposed rule that in the ICD-10 MS-DRGs Definitions Manual Version 38.1, procedure code XW0Q316 is currently designated as a non-O.R. procedure for purposes of MS-DRG assignment. We agreed with the requestor that procedure code XW0Q316 describes a procedure that involves the creation of a burr hole in the skull. In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58579 through 58580), we stated that, 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 assignment. The predecessor code for procedure code XW0Q316 is procedure code 3E0Q3GC (Introduction of other therapeutic substance into cranial cavity and brain, percutaneous approach) which is designated as a non-O.R. procedure. In the absence of claims data, our clinical advisors also considered the indication for the specific procedure being described by the new procedure code, the treatment difficulty, and the resources utilized.

We stated in the proposed rule that upon further review and consideration, our clinical advisors agreed that procedure code XW0Q316 describing a procedure that is performed by creating a burr hole in the skull warrants designation as an O.R. procedure consistent with other percutaneous procedures performed on the cranial cavity and brain body parts. Therefore, we proposed to add this procedure code to the FY 2022 ICD-10 MS-DRGs Version 39 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS-DRG Index as an O.R. procedure, assigned to MS-DRGs 628, 629, and 630 (Other Endocrine, Nutritional and Metabolic O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 10 (Endocrine, Nutritional and Metabolic Diseases and Disorders) and to MS-DRGs 987, 988, and 989 (Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC and without MCC/CC, respectively).

Comment: Commenters agreed with our proposal to designate procedure code XW0Q316 as an O.R. procedure.

Response: After consideration of the public comments we received, we are finalizing our proposal to change the designation of procedure code XW0Q316 from a non-O.R. procedure to an O.R. procedure, effective October 1, 2021.

(2) Open Drainage of Maxilla and Mandible

One requestor identified three ICD-10-PCS procedure codes that describe the open drainage of maxilla or mandible that the requestor stated are currently not recognized as O.R. procedures for purposes of MS-DRG assignment. The three procedure codes are listed in the following table.

The requestor stated that procedures that describe the open drainage of the maxilla or mandible should be designated as O.R. procedures because these procedures, indicated for diagnoses such as subperiosteal abscesses, are performed in the operating room under general anesthesia and involve making open incisions through muscle and stripping away the periosteum. The requestor identified procedure codes 0W950ZZ (Drainage of lower jaw, open approach) and 0W940ZZ (Drainage of upper jaw, open approach) that are currently designated as O.R. procedures. The requestor noted that ICD-10-PCS guidelines instruct that the procedure codes in Anatomical Regions, General, can be used when the procedure is performed on an anatomical region rather than a specific body part, or on the rare occasion when no information is available to support assignment of a code to a specific body part. The requestor stated that because bone is a specific body part in ICD-10-PCS, procedure codes should be assigned for subperiosteal drainage of mandible and maxilla bones from table 0N9, Drainage of Head and Facial Bones, instead of codes from table 0W9, Drainage of Anatomical Regions, General, when these procedures are performed. Therefore, the requestor stated that procedure codes 0N9R0ZZ, 0N9T0ZZ, and 0N9V0ZZ should also be recognized as O.R. procedures for purposes of MS-DRG assignment.

In the ICD-10 MS-DRGs Definitions Manual Version 38.1, procedure codes 0N9R0ZZ, 0N9T0ZZ, and 0N9V0ZZ are currently designated as non-O.R. procedures for purposes of MS-DRG assignment. In the proposed rule, we stated that our clinical advisors reviewed this issue and disagreed that the procedures describing the open drainage of the maxilla or mandible are typically performed in the operating room under general anesthesia. Our clinical advisors stated that these procedures can be done in an oral surgeon's office or an outpatient setting and are rarely performed in the inpatient setting. Our clinical advisors also stated a correlation cannot be made between procedures performed in general anatomic regions and procedures performed in specific body parts because these procedures coded with the general anatomic regions body part represent a broader range of procedures that cannot be coded to a specific body part. Therefore, we proposed to maintain the current non-O.R. designation of ICD-10-PCS procedure codes 0N9R0ZZ, 0N9T0ZZ, and 0N9V0ZZ.

Comment: A commenter supported CMS' proposal to maintain the current non-O.R. designation for procedure codes describing open drainage of maxilla or mandible.

Response: We appreciate the commenters' support.

Comment: Another commenter opposed CMS' proposal to maintain the current non-O.R. designation of ICD-10-PCS procedure codes 0N9R0ZZ, 0N9T0ZZ, and 0N9V0ZZ and stated that the treatment of jaw infections requires open drainage of jaw bones performed in the operating room under anesthesia in conjunction with intravenous antibiotics to prevent sepsis. This commenter stated that procedures that are typically performed in the outpatient surgical setting should be designated as O.R. procedures and that the frequency in which procedures are performed in the inpatient setting should not determine the designation. The commenter asserted that when these procedures are necessitated during inpatient stays, providers should be compensated for operating room resources because the payment of infrequent surgeries as non-O.R. procedures results in significant uncompensated surgical resources for facilities.

Response: Our clinical advisors reviewed the commenters' concerns and continue to support maintaining the current non-O.R. designation for procedure codes describing open drainage of maxilla or mandible and disagree that the procedures describing the open drainage of the maxilla or mandible typically require the resources of an operating room. Our clinical advisors state that if admission is required for the treatment of a jaw infection as the commenter suggested, the admission is quite likely due to need for IV antibiotics as opposed to the need for operating room resources in an inpatient setting.

With regard to the comments about the implications for reimbursement, 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, for the reasons stated, we are finalizing our proposal to maintain the current non-O.R. designation of ICD-10-PCS procedure codes 0N9R0ZZ, 0N9T0ZZ, and 0N9V0ZZ, without modification, for FY 2022.

(3) Thoracoscopic Extirpation of Pleural Cavities

One requestor identified ICD-10-PCS procedure codes 0WC94ZZ (Extirpation of matter from right pleural cavity, percutaneous endoscopic approach) and 0WCB4ZZ (Extirpation of matter from left pleural cavity, percutaneous endoscopic approach) that the requestor stated are currently not recognized as O.R. procedures for purposes of MS-DRG assignment. The requestor stated that these procedures should be designated as O.R. procedures because they are thoracoscopic procedures that are always performed in the operating room under general anesthesia. The requestor stated procedure codes 0W994ZZ (Drainage of right pleural cavity, percutaneous endoscopic approach) and 0W9B4ZZ (Drainage of left pleural cavity, percutaneous endoscopic approach) are currently designated as O.R. procedures, therefore procedure codes 0WC94ZZ and 0WCB4ZZ should also be recognized as O.R. procedures for purposes of MS-DRG assignment because they utilize the same resources.

In the ICD-10 MS-DRGs Definitions Manual Version 38.1, procedure codes 0WC94ZZ and 0WCB4ZZ are currently designated as non-O.R. procedures for purposes of MS-DRG assignment. We stated in the proposed rule that our clinical advisors reviewed this issue and disagreed that procedure codes describing the thoracoscopic drainage of the pleural cavities should necessarily have the same designation as procedure codes describing the thoracoscopic extirpation of matter from the pleural cavities. We noted that our review of the designation of ICD-10-PCS codes as an O.R. procedure or a non-O.R. procedure considers the resources used as well as whether that procedure should affect the MS-DRG assignment, and if so, in what way. Our clinical advisors stated that thoracoscopic drainage of the pleural cavities is performed for distinct indications in clinically different scenarios. Our clinical advisors further stated that drainage is the process of taking out, or letting out, fluids and/or gases from a body part and is typically performed in the pleural cavity for indications such as congestive heart failure, infection, hemothorax and empyema. In contrast, the procedures describing the thoracoscopic extirpation of the pleural cavities are performed for a wider range of indications because the solid matter removed may be an abnormal byproduct of a biological function or a foreign body. Our clinical advisors noted that the thoracoscopic extirpation of the pleural cavities is generally performed with other procedures such as heart transplant, lung transplant mechanical ventilation, and other major chest procedures and would not be the main reason for inpatient hospitalization or be considered the principal driver of resource expenditure.

Therefore, we proposed to maintain the current non-O.R. designation of ICD-10-PCS procedure codes 0WC94ZZ and 0WCB4ZZ.

Comment: A commenter supported CMS' proposal to maintain the current non-O.R. designation for procedure codes describing the thoracoscopic extirpation of matter from the pleural cavities.

Response: We appreciate the commenters' support.

Comment: Another commenter opposed CMS' proposal to maintain the non-O.R. designation of ICD-10-PCS procedure codes 0WC94ZZ and 0WCB4ZZ. The commenter stated that procedure codes describing the thoracoscopic extirpation of matter from the pleural cavities can indeed be primary surgical procedures in procedures such as when the thoracoscopic evacuation of a traumatic hemothorax is performed during hospitalization, and stated that all thoracoscopic lung procedures should be designated as O.R. procedures because they are performed in the operating room and require general anesthesia with one lung ventilation. This commenter also stated that ICD-10-PCS codes for thoracoscopic drainage of pleural cavities have been appropriately designated as O.R. procedures, and the only difference between root operations “Drainage” and “Extirpation” is strictly the consistency of the substance removed.

Response: Our clinical advisors reviewed the commenters' concerns and continue to support maintaining the current non-O.R. designation for procedure codes of ICD-10-PCS procedure codes 0WC94ZZ and 0WCB4ZZ because the resources involved in furnishing these procedures does not warrant designation as O.R. procedures. Our clinical advisors continue to state the thoracoscopic extirpation of the pleural cavities is generally performed with other procedures such as heart transplant, lung transplant mechanical ventilation, and other major chest procedures and would not be the main reason for inpatient hospitalization or be considered the principal driver of resource expenditure. Our clinical advisors also do not agree that unilaterally all thoracoscopic lung procedures should be designated as O.R. procedures.

Our clinical advisors reiterate that thoracoscopic drainage of the pleural cavities and thoracoscopic extirpation of the pleural cavities are performed for distinct indications in clinically different scenarios and disagree with the suggestion that the only difference between the PCS root operations “Drainage” and “Extirpation” is the consistency of the substance removed. Rather, drainage procedures take out, or let out, fluids and/or gases from a body part and are typically performed in the pleural cavity for indications such as congestive heart failure, infection, hemothorax and empyema. Extirpation procedures are not limited to removing blood clots. In contrast, the procedures describing the thoracoscopic extirpation of the pleural cavities are performed for a wider range of indications because the solid matter removed may be an abnormal byproduct of a biological function or a foreign body.

In response to the commenter that stated highlighted the thoracoscopic evacuation of a traumatic hemothorax as an example of how these procedures can indeed be primary surgical procedures, we note hemothorax is defined as a collection of blood in the pleural cavity. The thoracoscopic evacuation of a hemothorax would meet the ICD-10-PCS definition of a “Drainage” procedure. The procedure codes describing the drainage of the pleural cavity were not the subject of this request.

After consideration of the public comments we received, for the reasons stated, we are finalizing our proposal to maintain the current non-O.R. designation of ICD-10-PCS procedure codes 0WC94ZZ and 0WCB4ZZ, without modification, for FY 2022.

(4) Open Pleural Biopsy

One requestor identified ICD-10-PCS procedure codes 0BBN0ZX (Excision of right pleura, open approach, diagnostic) and 0BBP0ZX (Excision of left pleura, open approach, diagnostic), that describe an open pleural biopsy that the requestor stated are performed in the operating room with general anesthesia. The requestor also stated that procedure codes 0BBN0ZZ (Excision of right pleura, open approach) and 0BBP0ZZ (Excision of left pleura, open approach) describing open pleural biopsy for non-diagnostic purposes are justifiably designated as O.R. procedures. According to the requestor, these procedure codes describing an open pleural biopsy should be designated as O.R. procedures regardless of whether they are performed for diagnostic or therapeutic purposes.

In the proposed rule we noted that under the ICD-10-PCS procedure classification, biopsy procedures are identified by the 7th digit qualifier value “diagnostic” in the code description. In response to the requestor's suggestion that procedures performed for a pleural biopsy by an open approach, regardless of whether it is a diagnostic or therapeutic procedure, should be designated as an O.R. procedure, we examined procedure codes 0BBN0ZX, 0BBN0ZZ, 0BBP0ZX, and 0BBP0ZZ.

We also noted that in the ICD-10 MS-DRGs Definitions Manual Version 38.1, procedure codes 0BBN0ZZ and 0BBP0ZZ are currently designated as O.R. procedures, however, procedure codes 0BBN0ZX and 0BBP0ZX are not recognized as O.R. procedures for purposes of MS-DRG assignment. We agreed with the requestor that procedure codes 0BBN0ZX and 0BBP0ZX would typically require the resources of an operating room. We stated that our clinical advisors also agreed that procedure codes 0BBN0ZX and 0BBP0ZX would typically require the resources of an operating room. Therefore, we proposed to add these 2 procedure codes to the FY 2022 ICD-10 MS-DRGs Version 39 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures, assigned to MS-DRGs 166, 167, and 168 (Other Respiratory System O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 04 (Diseases and Disorders of the Respiratory System).

Comment: Commenters supported our proposal to designate procedure codes 0BBN0ZX and 0BBP0ZX as O.R. procedures.

Response: After consideration of the public comments we received, we are finalizing our proposal to change the designation of procedure codes 0BBN0ZX and 0BBP0ZX from non-O.R. procedures to O.R. procedures, without modification, effective October 1, 2021.

(5) Percutaneous Revision of Intraluminal Devices

One requestor identified five ICD-10-PCS procedure codes that describe the percutaneous revision of intraluminal vascular devices that the requestor stated are currently not recognized as O.R. procedures for purposes of MS-DRG assignment. The five procedure codes are listed in the following table.

The requestor stated that the procedure codes that describe the percutaneous revision of intraluminal vascular devices within arteries, veins, and great vessels should be designated as O.R. procedures to compensate for the resources needed to perform these procedures. The requestor also stated procedures to reattach, realign, or otherwise revise intraluminal devices percutaneously require anesthesia, specialized equipment for intravascular visualization, significant skill, and time, therefore, it is important for these codes to be designated with O.R. procedure status.

In the ICD-10 MS-DRGs Definitions Manual Version 38.1, procedure codes 02WY3DZ, 03WY3DZ, 04WY3DZ, 05WY3DZ, and 06WY3DZ are currently designated as non-O.R. procedures for purposes of MS-DRG assignment. We stated in the proposed rule that we agreed with the requestor that these five ICD-10-PCS procedure codes typically require the resources of an operating room. Therefore, to the FY 2022 ICD-10 MS-DRG Version 39 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS-DRG Index, we proposed to add code 02WY3DZ as an O.R. procedure assigned to MS-DRGs 270, 271, and 272 (Other Major Cardiovascular Procedures, with MCC, with CC, and without CC/MCC, respectively) in MDC 05 (Diseases and Disorders of the Circulatory System). We also proposed to add codes 03WY3DZ, 04WY3DZ, 05WY3DZ, and 06WY3DZ as O.R. procedures assigned to MS-DRGs 252, 253, and 254 (Other Vascular Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 05 (Diseases and Disorders of the Circulatory System).

Comment: Commenters supported our proposal to designate ICD-10-PCS procedure codes 02WY3DZ, 03WY3DZ, 04WY3DZ, 05WY3DZ, and 06WY3DZ as O.R. procedures. A commenter noted that they agreed that these procedures do typically require the resources of an operating room.

Response: After consideration of the public comments we received, we are finalizing our proposal to change the designation of procedure code 02WY3DZ from a non-O.R. procedure to an O.R. procedure, effective October 1, 2021, without modification. We are also finalizing our proposal to change the designation of procedure codes 03WY3DZ, 04WY3DZ, 05WY3DZ, and 06WY3DZ from non-O.R. procedures to O.R. procedure, without modification, effective October 1, 2021.

(6) Occlusion of Left Atrial Appendage

One requestor identified nine ICD-10-PCS procedure codes that describe left atrial appendage closure (LAAC) procedures that the requestor stated are currently not recognized as O.R. procedures for purposes of MS-DRG assignment in all instances. The nine procedure codes are listed in the following table.

The requestor stated that these procedures are currently designated as non-O.R. procedures that route to surgical MS-DRGs only when assigned in combination with a principal diagnosis within MDC 05 (Diseases and Disorders of the Circulatory System). The requestor stated these procedures should also be designated as O.R. procedures when assigned in combination with diagnoses outside of the circulatory system, such as sepsis or trauma, to compensate for the associated resource use, skill requirements, and device costs.

In the ICD-10 MS-DRG Version 38.1 Definitions Manual, the nine ICD-10-PCS procedure codes that describe left atrial appendage closure are currently recognized as non-O.R. procedures that affect the MS-DRG to which they are assigned. We refer readers to section II.D.5.d of the preamble of this final rule, where we address ICD-10-PCS procedure codes 02L70CK, 02L70DK, and 02L70ZK that describe a LAAC procedure performed with an open approach. These codes were discussed in response to a request to reassign these codes to MS-DRGs 228 and 229 (Other Cardiothoracic Procedures with and without MCC, respectively). In section II.D.5.d of this final rule we also summarize and respond to the comments regarding our proposal to maintain the assignment of these codes in MS-DRGs 273 and 274 (Percutaneous and Other Intracardiac Procedures with and without MCC, respectively) in MDC 05 for the reasons discussed, and discuss our finalization of that proposal.

We stated in the proposed rule that our clinical advisors reviewed this related issue and believed the current designation of LAAC procedures as non-O.R. procedures that affect the assignment for MS-DRGs 273 and 274 is clinically appropriate to account for the subset of patients undergoing left atrial appendage closure specifically. LAAC is indicated and approved as a treatment option for patients diagnosed with atrial fibrillation, a heart rhythm disorder that can lead to cardiovascular blood clot formation, who are also at increased risk for stroke. LAAC procedures block off the left atrial appendage to prevent emboli that may form in the left atrial appendage from exiting and traveling to other sites in the vascular system, thereby preventing the occurrence of ischemic stroke and systemic thromboembolism. We noted the ICD-10-CM diagnosis codes used to report atrial fibrillation are currently assigned to MDC 05 (Diseases and Disorders of the Circulatory System). We stated our clinical advisors believed that circumstances in which a patient is admitted for a principal diagnosis outside of MDC 05 and a left atrial appendage closure is performed as the only surgical procedure in the same admission are infrequent, and if they do occur, the LAAC procedure would not be a significant contributing factor in the increased intensity of resources needed for facilities to manage these complex cases. Our clinical advisors further stated LAAC procedures generally do not require the resources of an operating room. LAAC procedures are most often performed percutaneously in settings such as cardiac catheterization laboratories and take approximately one hour. We stated when performed with an open approach or percutaneous endoscopic approach, these procedures share similar factors such as complexity, and resource utilization with all other LAAC procedures. Therefore, we proposed to maintain the current designation of ICD-10-PCS procedure codes 02L70CK, 02L70DK, 02L70ZK, 02L73CK, 02L73DK, 02L73ZK, 02L74CK, 02L74DK, and 02L74ZK as non-O.R. procedures affecting the MS-DRGs to which they are assigned.

Comment: Commenters supported maintaining the current designation of procedure codes describing left atrial appendage closure as non-O.R. procedures affecting the MS-DRGs to which they are assigned. Another commenter stated although they believe it would be reasonable for these PCS codes to be designated as O.R. procedures in the event they are necessitated during a hospitalization with a principal diagnosis outside of MDC 05, their own data analysis showed when performed, cases reporting LAAC procedures are being assigned to MS-DRGs 273 and 274 or into higher-weighted cardiac MS-DRGs corresponding with other cardiac procedures performed during the same stay.

Response: After consideration of the public comments we received, we are finalizing our proposal to maintain the current designation of ICD-10-PCS procedure codes 02L70CK, 02L70DK, 02L70ZK, 02L73CK, 02L73DK, 02L73ZK, 02L74CK, 02L74DK, and 02L74ZK as non-O.R. procedures affecting the MS-DRGs to which they are assigned, without modification, for FY 2022.

(7) Arthroscopic Drainage of Joints

One requestor identified six ICD-10-PCS procedure codes that describe the percutaneous endoscopic drainage of joints that the requestor stated are currently not recognized as O.R. procedures for purposes of MS-DRG assignment. The six procedure codes are listed in the following table.

The requestor stated that these procedures should be designated as O.R. procedures because procedures describing the arthroscopic drainage of major joints such as knee, hip, and shoulder are performed in the operating room under general anesthesia. The requestor stated these procedures are indicated for conditions such as symptomatic septic/pyogenic arthritis, which can require inpatient admission for intravenous antibiotics and arthroscopic drainage to resolve infection. Therefore, the requestor stated it is reasonable for these arthroscopic procedures to be designated as O.R. procedures to compensate for operating room resources.

In the ICD-10 MS-DRGs Definitions Manual Version 38.1, procedure codes 0S9C4ZZ, 0S9D4ZZ, 0S994ZZ, 0S9B4ZZ, 0R9J4ZZ, and 0R9K4ZZ are currently designated as non-O.R. procedures for purposes of MS-DRG assignment. In the proposed rule, we stated our clinical advisors reviewed this issue and disagreed that procedures describing the percutaneous endoscopic drainage of major joints such as knee, hip, and shoulder are typically performed in the operating room under general anesthesia. With development of better instrumentation and surgical techniques, many patients now have arthroscopic procedures performed in an outpatient setting and return home several hours after the procedure. Our clinical advisors also stated the percutaneous endoscopic drainage of joints can be performed using local or regional anesthesia, and general anesthesia is not always required. We stated that in cases where the patient is admitted for diagnoses such as septic/pyogenic arthritis, as identified by the requestor, the requirement for intravenous antibiotics would be the main reason for admission because the percutaneous endoscopic drainage procedure could be done as an outpatient. Therefore, we proposed to maintain the current non-O.R. designation of ICD-10-PCS procedure codes 0S9C4ZZ, 0S9D4ZZ, 0S994ZZ, 0S9B4ZZ, 0R9J4ZZ, and 0R9K4ZZ.

Comment: A commenter supported CMS' proposal to maintain the non-O.R. designation of procedure codes describing percutaneous endoscopic drainage of shoulder, knee, and hip joints.

Response: We appreciate the commenters' support.

Comment: A commenter opposed CMS' proposal to maintain the current non-O.R. designation of ICD-10-PCS procedure codes 0S9C4ZZ, 0S9D4ZZ, 0S994ZZ, 0S9B4ZZ, 0R9J4ZZ, and 0R9K4ZZ. This commenter stated that an O.R. designation should not be determined based on whether or not a surgery is most often performed as an outpatient or based on the type anesthesia required during the surgery. This commenter also noted that some patients who undergo outpatient surgery require inpatient admission instead of release home. The commenter stated that retention of non-O.R. procedure status for surgeries most often performed as outpatient results in providers not being reimbursed for surgical resources when patients require conversion to inpatient, while those discharged from outpatient surgery are paid a surgical APC. The commenter also included a portion of an operative report from its facility to demonstrate that an arthroscopic drainage procedure was performed under general anesthesia at their facility.

Response: Our clinical advisors reviewed the commenters' concerns and continue to support maintaining the current non-O.R. designation for ICD-10-PCS procedure codes 0S9C4ZZ, 0S9D4ZZ, 0S994ZZ, 0S9B4ZZ, 0R9J4ZZ, and 0R9K4ZZ. In reviewing the operative report included in the comment, our clinical advisors note that using a single isolated case, with only an operative report provided and without other diagnostic information on the patient, does not provide a clear picture of the circumstances of that admission, nor does it inform whether the procedure requires the resources of an operating room more broadly. For any procedure, there may be instances where performing this procedure is best done in the setting of an operative room using general anesthesia. However, when looking more broadly at the procedure being described by the ICD-10-PCS codes 0S9C4ZZ, 0S9D4ZZ, 0S994ZZ, 0S9B4ZZ, 0R9J4ZZ, and 0R9K4ZZ, our clinical advisors state in most instances, the percutaneous endoscopic drainage of joints does not require the resources of an operative room.

With regard to the comments about the implications for reimbursement when cases are converted from outpatient to inpatient, 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, after consideration of the public comments we received, for the reasons stated, we are finalizing our proposal to maintain the current non-O.R. designation of ICD-10-PCS procedure codes 0S9C4ZZ, 0S9D4ZZ, 0S994ZZ, 0S9B4ZZ, 0R9J4ZZ, and 0R9K4ZZ, without modification, for FY 2022.

(8) Arthroscopic Irrigation of Joints

One requestor identified ICD-10-PCS procedure codes 3E1U48X (Irrigation of joints using irrigating substance, percutaneous endoscopic approach, diagnostic) and 3E1U48Z (Irrigation of joints using irrigating substance, percutaneous endoscopic approach) that the requestor stated are currently not recognized as O.R. procedures for purposes of MS-DRG assignment. The requestor stated that these procedures should be designated as O.R. procedures because the arthroscopic irrigation of joints such as knee, hip, and shoulder is performed in the operating room under general anesthesia. The requestor states procedure codes 3E1U48X and 3E1U48Z are used to describe surgical joint irrigations in the absence of more definitive procedures, therefore procedure codes 3E1U48X and 3E1U48Z should be recognized as O.R. procedures for purposes of MS-DRG assignment.

In the ICD-10 MS-DRGs Definitions Manual Version 38.1, procedure codes 3E1U48X and 3E1U48Z are currently designated as non-O.R. procedures for purposes of MS-DRG assignment. In the proposed rule, we stated that our clinical advisors reviewed this issue and disagreed that procedure codes describing the arthroscopic irrigation of joints should be designated as O.R. procedures. Our clinical advisors noted the arthroscopic irrigation of joints is rarely performed independently as a standalone procedure in the inpatient setting to be considered the principal driver of resource expenditure in those admissions. Instead, the arthroscopic irrigation of joints is generally performed with other definitive procedures such as debridement or synovectomy. We noted that in the operative note sent by the requestor to support the requested change in O.R. status, the arthroscopic irrigation of the joint was performed along with a surgical debridement procedure. Therefore, we proposed to maintain the current non-O.R. designation of ICD-10-PCS procedure codes 3E1U48X and 3E1U48Z.

Comment: A commenter supported CMS' proposal to maintain the non-O.R. designation of procedure codes describing arthroscopic irrigation of joints.

Response: We appreciate the commenters' support.

Comment: Another commenter opposed CMS' proposal to maintain the non-O.R. designation of ICD-10-PCS procedure codes 3E1U48X and 3E1U48Z. This commenter acknowledged that arthroscopic irrigations may be performed with other definitive procedures such as bone debridement and synovectomy, but stated that some are indeed performed as sole definitive operating room procedures. This commenter stated there are no other PCS codes for irrigational debridement of joints; when minor debridement is performed in conjunction with more significant primary procedures, minor debridement is considered inherent and not separately reportable.

Response: We appreciate the commenters' feedback. We are unclear from the comment why the commenter references the ICD-10-PCS guidelines related to debridement procedures, as this topic relates to the arthroscopic irrigation of joints. Our clinical advisors reviewed the commenters' concerns and continue to note the arthroscopic irrigation of joints is rarely performed independently as a standalone procedure in the inpatient setting to be considered the principal driver of resource expenditure in those admissions.

After consideration of the public comments we received, we are finalizing our proposal to maintain the current non-O.R. designation of ICD-10-PCS procedure codes 3E1U48X and 3E1U48Z, without modification, for FY 2022.

(9) Percutaneous Reposition With Internal Fixation

One requestor identified four ICD-10-PCS procedure codes describing procedures performed on the sacroiliac and hip joints that involve percutaneous repositioning with internal fixation that the requestor stated are not recognized as O.R. procedures for purposes of MS-DRG assignment but warrant an O.R. designation. The procedure codes are listed in the following table.

We stated in the proposed rule that our clinical advisors reviewed the procedures described by these four procedure codes and agreed that these percutaneous reposition procedures involving internal fixation in the sacroiliac and hip joint warrant an O.R. designation. They noted that these procedures are major operations that would require the resources of an operating room, involve a higher level of technical complexity and a greater utilization of hospital resources.

Therefore, we proposed to add the two procedure codes describing percutaneous reposition of the sacroiliac joint with internal fixation procedures (0SS734Z and 0SS834Z) to the FY 2022 ICD-10 MS-DRGs Version 39 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures, assigned 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) in MDC 08 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue) and to MS-DRGs 987, 988, and 989 (Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC and without MCC/CC, respectively). We also proposed to add the two procedure codes describing percutaneous reposition of the hip joint with internal fixation procedures (0SS934Z and 0SSB34Z) to the FY 2022 ICD-10 MS-DRGs Version 39 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 08 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue) and to MS-DRGs 987, 988, and 989 (Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC and without MCC/CC, respectively).

Comment: Commenters supported our proposal to designate procedure codes 0SS734Z, 0SS834Z, 0SS934Z and 0SSB34Z as O.R. procedures.

Response: After consideration of the public comments we received, we are finalizing our proposal to change the designation of procedure codes 0SS734Z, 0SS834Z, 0SS934Z and 0SSB34Z from non-O.R. procedures to O.R. procedures, without modification, effective October 1, 2021.

(10) Open Insertion and Removal of Spacer Into Shoulder Joint

One requestor identified four ICD-10-PCS procedure codes describing procedures performed on the shoulder joint that involve the insertion or removal of a spacer by an open approach that the requestor stated are not recognized as O.R. procedures for purposes of MS-DRG assignment. The procedure codes are listed in the following table.

According to the requestor, insertion and removal of joint spacers from the hips and knees are designated with an O.R. procedure status and although similar procedures performed on the shoulder joint may be performed less frequently, these procedures warrant an O.R. designation because they are performed in the operating room under general anesthesia.

In the proposed rule we stated that during our review, we noted that the following procedure codes describing procedures performed on the shoulder joint that involve the insertion or removal of a spacer by a percutaneous endoscopic approach are also not recognized as O.R. procedures for purposes of MS-DRG assignment.

We stated that our clinical advisors reviewed the procedures described by these eight procedure codes and agreed that these procedures involving the insertion or removal of a spacer in the shoulder joint with an open or percutaneous endoscopic approach warrant an O.R. designation. They noted that the insertion of a spacer is typically performed to treat an infection at the site of a previously placed prosthesis and the removal of a spacer is typically performed once the infection is healed and the site is ready for a new prosthetic replacement or to exchange for a new spacer if the infection is not yet healed.

Therefore, we proposed to add the listed procedure codes describing the insertion or removal of spacer in the shoulder joint to the FY 2022 ICD-10 MS-DRGs Version 39 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures, assigned to MS-DRGs 510, 511, and 512 (Shoulder, Elbow or Forearm Procedures, Except Major Joint Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 08 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue) and to MS-DRGs 987, 988, and 989 (Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC and without MCC/CC, respectively).

Comment: Commenters supported our proposal to designate the listed procedure codes as 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 procedure codes 0RHK08Z, 0RHJ08Z, 0RPK08Z, 0RPJ08Z, 0RPJ48Z, 0RPK48Z, 0RHJ48Z, and 0RHK48Z from non-O.R. procedures to O.R. procedures, without modification, effective October 1, 2021.

(11) Open/Percutaneous Extirpation of Jaw

One requestor identified four ICD-10-PCS procedure codes that describe the extirpation of matter from the upper or lower jaw that the requestor stated are currently not recognized as O.R. procedures for purposes of MS-DRG assignment. The four procedure codes are listed in the following table.

The requestor stated that the procedure codes that describe the extirpation of matter from the upper or lower jaw by an open or percutaneous endoscopic approach should be designated as O.R. procedures. The requestor stated these procedures would commonly be performed under general anesthesia and require the resources of an operating room. The requestor also stated that these ICD-10-PCS codes were specifically created to describe the surgical evacuation of solid matter from deep jaw structures therefore, it is important for these codes to be designated with O.R. procedure status.

In the ICD-10 MS-DRGs Definitions Manual Version 38.1, procedure codes 0WC40ZZ, 0WC44ZZ, 0WC50ZZ, 0WC54ZZ are currently designated as non-O.R. procedures for purposes of MS-DRG assignment. We stated in the proposed rule that we agreed with the requestor that these four ICD-10-PCS procedure codes typically require the resources of an operating room. Therefore, to the FY 2022 ICD-10 MS-DRG Version 39 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS-DRG Index, we proposed to add codes 0WC40ZZ, 0WC44ZZ, 0WC50ZZ, 0WC54ZZ as O.R. procedures assigned to MS-DRGs 143, 144 and 145 (Other Ear, Nose, Mouth and Throat O.R. procedures, with MCC, with CC, and without CC/MCC, respectively) in MDC 03 (Diseases and Disorders of the Ear, Nose, Mouth and Throat).

Comment: Commenters supported our proposal to designate ICD-10-PCS procedure codes 0WC40ZZ, 0WC44ZZ, 0WC50ZZ, and 0WC54ZZ as O.R. procedures. A commenter noted that they agreed that these procedures do typically require the resources of an operating room.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to change the designation of procedure codes 0WC40ZZ, 0WC44ZZ, 0WC50ZZ, 0WC54ZZ from non-O.R. procedures to O.R. procedures, without modification, effective October 1, 2021.

(12) Open Extirpation of Subcutaneous Tissue and Fascia

One requestor identified 22 ICD-10-PCS procedure codes that describe the open extirpation of matter from the subcutaneous tissue and fascia that the requestor stated are currently not recognized as O.R. procedures for purposes of MS-DRG assignment. The 22 procedure codes are listed in the following table.

The requestor stated that procedure codes that describe the open extirpation of matter from the subcutaneous tissue and fascia should be designated as O.R. procedures because these procedures are performed through open incisions with direct visualization of subcutaneous tissue and fascia in the operating room under general anesthesia. The requestor noted procedure codes that describe the open drainage of subcutaneous tissue and fascia and use comparable resources are currently designated as O.R. procedures. The requestor noted that root operation “Drainage” is assigned when fluid is drained; and root operation of “Extirpation” is assigned when any of the substance evacuated is solid. The requestor stated whether the evacuated substance is fluid, gelatinous, or solid, a procedure involving an open incision with direct visualization of subcutaneous tissue and fascia for evacuation of substances should be classified as an O.R. procedure. Therefore, the requestor stated that these procedures should also be recognized as O.R. procedures for purposes of MS-DRG assignment.

In the ICD-10 MS-DRGs Definitions Manual Version 38.1, the 22 ICD-10-PCS procedure codes listed in the table are currently designated as non-O.R. procedures for purposes of MS-DRG assignment. We stated in the proposed rule that while we disagreed that drainage procedures are comparable to extirpation procedures, we agreed with the requestor that these 22 ICD-10-PCS procedure codes typically require the resources of an operating room. We noted that our clinical advisors stated that drainage is the process of taking out, or letting out, fluids and/or gases from a body part and is typically performed for indications such as abscess, infection, and other systemic conditions. In contrast, extirpation procedures are performed for a wider range of indications because the solid matter removed may be an abnormal byproduct of a biological function or a retained foreign body. Therefore, to the FY 2022 ICD-10 MS-DRG Version 39 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS-DRG Index, we proposed to add the 22 ICD-10-PCS listed previously as O.R. procedures 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 09 (Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast) and 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).

Comment: Commenters supported our proposal to designate 22 ICD-10-PCS procedure codes that describe the open extirpation of matter from the subcutaneous tissue and fascia as O.R. procedures. A commenter noted that they agreed that open incision with direct visualization of subcutaneous tissue and fascia for the evacuation of a substance typically requires the resources of an operating room.

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 22 procedure codes listed in the preceding table from non-O.R. procedures to O.R. procedures, without modification, effective October 1, 2021.

(13) Open Revision and Removal of Devices From Subcutaneous Tissue and Fascia

One requestor identified six ICD-10-PCS procedure codes describing open revision and removal of neurostimulator generators, monitoring devices, and totally implantable vascular access devices (TIVADs) procedures that are not currently designated as O.R. procedures for purposes of MS-DRG assignment. The six procedure codes are listed in the following table.

The requestor stated that although removal of these devices is often performed in outpatient surgery, device complications can require removal or revision during inpatient hospitalizations. The requestor indicated it is reasonable for these open procedures to be designated as O.R. procedures to compensate for operating room resources during such inpatient stays.

In the proposed rule we stated that our clinical advisors reviewed this request and did not agree that these procedures warrant an O.R. designation. They noted that these procedures are generally performed in the outpatient setting and when performed during a hospitalization, it is typically in conjunction with another O.R. procedure. Therefore, we proposed to maintain the current non-O.R. designation for procedure codes 0JPT0MZ, 0JPT02Z, 0JPT0WZ, 0JWT0MZ, 0JWT0WZ, and 0JWT03Z for FY 2022.

Comment: Commenters supported our proposal to maintain the non-O.R. designation for procedure codes 0JPT0MZ, 0JPT02Z, 0JPT0WZ, 0JWT0MZ, 0JWT0WZ, and 0JWT03Z.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to maintain the non-O.R. designation for procedure codes 0JPT0MZ, 0JPT02Z, 0JPT0WZ, 0JWT0MZ, 0JWT0WZ, and 0JWT03Z, effective October 1, 2021.

(14) Open Insertion of Feeding Device

One requestor identified ICD-10-PCS procedure code 0DHA0UZ (Insertion of feeding device into jejunum, open approach) that the requestor stated is currently not recognized as an O.R. procedure for purposes of MS-DRG assignment. The requestor stated the open insertion of a feeding device into the jejunum should be designated as an O.R. procedure because this procedure is performed in the operating room under general anesthesia. The requestor noted comparable procedure code 0DH60UZ (Insertion of feeding device into stomach, open approach) is currently designated as an O.R. procedure. Therefore, the requestor stated that procedure code 0DHA0UZ should also be recognized as an O.R. procedure for purposes of MS-DRG assignment.

We stated in the proposed rule that our analysis of this issue confirmed that in the ICD-10 MS-DRG Version 38.1 Definitions Manual, for purposes of MS-DRG assignment, 0DHA0UZ is recognized as a non-O.R. procedure and 0DH60UZ is currently recognized as an O.R. procedure. We stated that in reviewing this request, we also identified the following four related codes:

In the ICD-10 MS-DRGs Version 38.1, these four ICD-10-PCS codes are currently recognized as non-O.R. procedure for purposes of MS-DRG assignment. In the proposal rule, we stated that while we agreed with the requestor that procedures describing the open insertion of a feeding device into the jejunum are comparable to procedures describing the open insertion of a feeding device into the stomach, we did not agree that these procedures should be designated as O.R. procedures. Our clinical advisors stated the procedures that describe the open insertion of a feeding device into the jejunum or the stomach should instead have the same designation as the related ICD-10-PCS procedure codes that describe the open insertion of a feeding device into the esophagus, small intestine, duodenum and ileum that are currently designated as non-O.R. procedures.

We noted with advancements in procedural techniques, feeding devices are most commonly placed using a percutaneous endoscopic approach. Our clinical advisors further stated feeding devices are usually not placed using an open surgical approach; this approach is generally only used if the patient requires another surgical procedure at the same time. When placed at the same time as another surgical procedure, our clinical advisors stated the surgical procedure, as the main determinant of resource use for those cases, should drive the MS-DRG assignment, not the procedure that describes the open insertion of a feeding device. For these reasons, our clinical advisors stated procedures that describe the open insertion of a feeding device in the gastrointestinal system should all have the same non-O.R. designation in the ICD-10 MS-DRGs Version 39 for coherence.

Therefore, we proposed to maintain the current non-O.R. designation of ICD-10-PCS procedure code 0DHA0UZ. We also proposed to remove ICD-10-PCS procedure code 0DH60UZ from the FY 2022 ICD-10 MS-DRG Version 39 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS-DRG Index as an O.R. procedure. We stated in the proposed rule that, under this proposal, this procedure would no longer impact MS-DRG assignment.

Comment: A commenter supported CMS' proposal and stated they agreed that neither the procedure code describing open insertion of feeding device into stomach nor the procedure code describing open insertion of feeding device into jejunum should be designated as an O.R. procedure.

Response: We appreciate the commenters' support.

Comment: Other commenters opposed CMS' proposal. A commenter stated that ICD-10-PCS procedure codes that describe the open insertion of a feeding device should be designated as O.R. procedures because they require operating room resources with general anesthesia, and involve incision through the abdominal wall and into the peritoneal cavity with direct visualization. The commenter noted that these procedures may be performed as standalone procedures in patients who are unable to have feeding tubes placed by percutaneous or percutaneous endoscopic approaches because of anatomy, prior surgeries, and adhesions. Another commenter stated that open feeding tube insertions are associated with higher resource use, are prone to more complications, have higher mortality rates, and can have extended recovery times and these procedures should have an OR designation to accurately reflect the resource use for the patient.

Response: We appreciate the commenters' feedback and concern. In response to the comment that these procedures may be performed as standalone procedures in patients who are unable to have feeding tubes placed by percutaneous or percutaneous endoscopic approaches, our clinical advisors note there may be instances when performing any procedure is best done in the setting of an operative room using general anesthesia. However, when looking more broadly at the procedures being described, and the manner in which these procedures are most often performed and their associated resource use our clinical advisors believe that the open insertion of a feeding device in the gastrointestinal system do not warrant an O.R. designation. They noted that these procedures, when performed during a hospitalization, are typically in conjunction with another O.R. procedure and maintain that procedures that describe the open insertion of a feeding device into the esophagus, stomach, small intestine, duodenum, jejunum and ileum are all clinically aligned. Accordingly, our clinical advisors state procedures that describe the open insertion of a feeding device in the gastrointestinal system should all have the same non-O.R. designation in the ICD-10 MS-DRGs Version 39 for coherence.

After consideration of the public comments we received, for the reasons stated, we are finalizing our proposal to maintain the current non-O.R. designation of ICD-10-PCS procedure code 0DHA0UZ for FY 2022, without modification. We are also finalizing our proposal to change the designation of ICD-10-PCS procedure code 0DH60UZ from O.R. procedure to non-O.R. procedure, without modification, effective October 1, 2021.

(15) Laparoscopic Insertion of Feeding Tube

One requestor identified ICD-10-PCS procedure codes 0DH64UZ (Insertion of feeding device into stomach, percutaneous endoscopic approach) and 0DHA4UZ (Insertion of feeding device into jejunum, percutaneous endoscopic approach) that the requestor stated are currently not recognized as O.R. procedures for purposes of MS-DRG assignment. The requestor stated the procedures describing the percutaneous endoscopic insertion of a feeding device into the stomach or the jejunum should be designated as O.R. procedures because these procedures are performed in the operating room under general anesthesia. The requestor stated all laparoscopic procedures, regardless if they are diagnostic or therapeutic, should be classified as O.R. procedures to compensate for operating room resources.

In the proposed rule, we stated our analysis of this issue confirmed that in the ICD-10 MS-DRG Version 38.1 Definitions Manual, 0DH64UZ and 0DHA4UZ are currently designated as non-O.R. procedures for purposes of MS-DRG assignment. We stated in reviewing this request, we also identified the following four related codes:

In the ICD-10 MS-DRGs Version 38.1, these four ICD-10-PCS codes are currently recognized as non-O.R. procedures for purposes of MS-DRG assignment. We stated in the proposed rule that our clinical advisors reviewed this request and did not agree that unilaterally all laparoscopic procedures should be designated as O.R. procedures. We stated that while the procedural approach is an important consideration in the designation of a procedure, there are other clinical factors such as the site of procedure, the procedure complexity, and resource utilization that should also be considered. In this regard, our clinical advisors indicated that codes 0DH64UZ and 0DHA4UZ describing the percutaneous endoscopic insertion of a feeding device into the stomach or the jejunum, do not require the resources of an operating room, are not surgical in nature, and are generally performed in the outpatient setting. The percutaneous endoscopic insertion of a feeding device also does not require general anesthesia. As opposed to being rendered unconscious, patients can receive a local anesthetic (usually a lidocaine spray), an intravenous (IV) pain reliever, and a mild sedative if needed. Patients receiving these devices usually return home the same day after placement, unless they are in the hospital for treatment of another condition.

Our clinical advisors stated the percutaneous endoscopic insertion of a feeding device into the stomach or the jejunum is comparable to the related ICD-10-PCS procedure codes that describe the insertion of feeding devices of other gastrointestinal system body parts that are currently designated as non-O.R. procedures. We stated our clinical advisors believed all procedures that describe the percutaneous endoscopic insertion of a feeding device in the gastrointestinal system should continue to have the same non-O.R. designation in the ICD-10 MS-DRGs Version 39 for coherence. Therefore, for the reasons discussed, we proposed to maintain the current non-O.R. designation of ICD-10-PCS procedure codes 0DH64UZ and 0DHA4UZ.

Comment: A commenter supported CMS' proposal and stated they agreed that all procedures that describe the percutaneous endoscopic insertion of a feeding device in the gastrointestinal system should continue to have the same non-O.R. designation.

Response: We appreciate the commenters' support.

Comment: Other commenters opposed CMS' proposal. A commenter stated that ICD-10-PCS procedure codes that describe the percutaneous endoscopic insertion of a feeding device should be designated as O.R. procedures. This commenter stated that laparoscopic procedures, whether performed inpatient or outpatient, are indeed surgical procedures which require general anesthesia, have increased procedural risks, and require high skill and specialized equipment. The commenter stated that when necessitated during inpatient stays, even if infrequent, providers should be compensated for operating room resources. Another commenter stated that these procedures require the use of an operating room and should be classified in a manner that reflects the resources expended by the facility in the care and treatment of the patient.

Response: We appreciate the commenters' feedback and concern. Our clinical advisors reviewed the commenters' concerns and continue to state the percutaneous endoscopic insertion of a feeding device into the stomach or the jejunum, does not require the resources of an operating room or general anesthesia. Our advisors state these procedures are not surgical in nature, and because treatment practices have shifted are generally performed in the outpatient setting. When performed in the inpatient setting, patients are generally in the hospital for the treatment of another condition as opposed to the need for operating room resources in an inpatient setting. Accordingly, when considering clinical factors such as the site of procedure, the procedure complexity, and resource utilization, when performed in the inpatient setting, they believe the non-O.R. designation of procedure codes describing the percutaneous endoscopic insertion of a feeding device is supported.

Therefore, after consideration of the public comments we received, we are finalizing our proposal to maintain the current non-O.R. designation of ICD-10-PCS procedure codes 0DH64UZ and 0DHA4UZ, without modification, for FY 2022.

(16) Endoscopic Fragmentation and Extirpation of Matter of Urinary Tract

As discussed in the proposed rule, one requestor sent two separate but related requests related to endoscopic procedures performed in the urinary system. With regard to the first request, the requestor identified six ICD-10-PCS procedure codes that describe endoscopic fragmentation in the kidney pelvis, ureter, bladder, and bladder neck that the requestor stated are currently not recognized as O.R. procedures for purposes of MS-DRG assignment. The six procedure codes are listed in the following table.

The requestor stated that these procedures should be designated as O.R. procedures because procedures such as the endoscopic fragmentation of calculi within the kidney pelvis, ureter, bladder, and bladder neck are performed in the operating room under anesthesia. The requestor stated that procedures that describe the endoscopic extirpation of calculi from the kidney pelvis or ureter use comparable resources, and are designated as O.R. procedures. Therefore, the requestor asserted it is reasonable that procedure codes that describe endoscopic fragmentation in kidney pelvis, ureter, bladder, and bladder neck also be designated as O.R. procedures.

In the ICD-10 MS-DRGs Definitions Manual Version 38.1, procedure codes 0TF38ZZ, 0TF48ZZ, 0TF68ZZ, 0TF78ZZ, 0TFB8ZZ, and 0TFC8ZZ are designated as non-O.R. procedures for purposes of MS-DRG assignment. We stated in the proposed rule that our clinical advisors reviewed this issue and disagreed that procedures describing the endoscopic fragmentation of calculi within the kidney pelvis, ureter, bladder, and bladder neck are typically performed in the operating room. We stated that in endoscopic fragmentation procedures in the kidney pelvis, ureter, bladder, and bladder neck, the scope is passed through a natural or artificial orifice. The procedure is not surgical in nature and involves no skin incisions. With advancements in scope size, deflection capabilities, video imaging, and instrumentation, many patients now have these endoscopic urinary procedures performed in an outpatient setting, instead of the inpatient setting. Therefore, we proposed to maintain the current non-O.R. designation of ICD-10-PCS procedure codes 0TF38ZZ, 0TF48ZZ, 0TF68ZZ, 0TF78ZZ, 0TFB8ZZ, and 0TFC8ZZ.

In the second request, the requestor also identified two ICD-10-PCS procedure codes that describe endoscopic extirpation of matter from the bladder and bladder neck that the requestor stated are also currently not recognized as O.R. procedures for purposes of MS-DRG assignment. The two procedure codes are listed in the following table.

The requestor stated that these procedures also should be designated as O.R. procedures because they performed in the operating room under anesthesia.

In the ICD-10 MS-DRGs Definitions Manual Version 38.1, procedure codes 0TCB8ZZ and 0TCC8ZZ are currently designated as a non-O.R. procedure for purposes of MS-DRG assignment. As indicated in the proposed rule, in response to the second request to designate 0TCB8ZZ and 0TCC8ZZ as O.R. procedures and in response to the requestor's suggestion that resource consumption is comparable in procedures describing endoscopic fragmentation in the urinary system and procedures describing the endoscopic extirpation in the urinary system, we examined the following procedure codes:

In the ICD-10 MS-DRG Version 38.1 Definitions Manual, these six ICD-10-PCS procedure codes are currently recognized as O.R. procedures for purposes of MS-DRG assignment. We stated in the proposed rule that our clinical advisors indicated that these procedures are not surgical in nature. In endoscopic extirpation procedures, the scope enters the urinary tract through the urethra, which is the tube that carries urine out of the body, or through an artificial orifice. Our clinical advisors further stated the urinary system is one conduit so the scope continues to pass through the urethra, bladder, and into the ureter or kidney (if necessary) to access the stone. For that reason, we stated the procedures describing endoscopic extirpation from a urinary body part should all have the same non-O.R. designation in the ICD-10 MS-DRGs Version 39 for coherence.

Therefore, we proposed to maintain the current non-O.R. designation of ICD-10-PCS procedure codes 0TCB8ZZ and 0TCC8ZZ. We also proposed to remove ICD-10-PCS procedure codes 0TC08ZZ, 0TC18ZZ, 0TC38ZZ, 0TC48ZZ, 0TC68ZZ, and 0TC78ZZ from the FY 2022 ICD-10 MS-DRG Version 39 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures. We stated in the proposed rule that, under this proposal, these procedures would no longer impact MS-DRG assignment.

Comment: Commenters supported CMS' proposal. A commenter stated they supported maintaining the non-O.R. designation of procedure codes describing fragmentation in the kidney pelvis, ureter, bladder, and bladder neck via natural or artificial opening endoscopic approach. This commenter supported maintaining the non-O.R. designation of the procedure codes describing endoscopic extirpation of matter from the bladder and bladder neck and removing six procedure codes describing endoscopic extirpation of matter from the kidney, kidney pelvis, and ureter from the O.R. procedure list. This commenter stated they agreed that procedures describing endoscopic extirpation from a urinary body part should all have the same non-O.R. designation.

Response: We appreciate the commenters' support.

Comment: Other commenters opposed CMS' proposal. These commenters stated endoscopic kidney and ureter procedures traverse narrow tubular structures and require the operating room with specialized equipment, positioning, image-guidance, and general anesthesia to obtain the surgical precision and satisfactory pain control that cannot be provided at the bedside. A commenter stated that although providers attempt to manage conditions that might warrant the performance of these procedures in the outpatient setting, some patients fail outpatient preventative measures and require both medical and surgical interventions in an inpatient setting.

Response: We appreciate the commenters' feedback and concern.

Our clinical advisors reviewed the commenters' concerns and state with development of better instrumentation and surgical techniques, many patients now have endoscopic fragmentation procedures and endoscopic extirpation procedures performed in an outpatient setting. In response to the comment that these procedures cannot be provided at the bedside, we wish to clarify the designation of a procedure as a non-O.R. procedure is not limited to procedures that can be performed at the patient's bedside. While the site in which the procedure is performed and the procedural approach are important considerations in the designation of a procedure, there are other clinical factors such as procedure complexity, resource utilization, and need for anesthesia administration that should also be considered. In this regard, our clinical advisors state endoscopic fragmentation procedures and endoscopic extirpation procedures are not surgical in nature, because treatment practices have shifted and they do not generally require the resources of an operating room or general anesthesia in an inpatient setting.

After consideration of the public comments we received, for the reasons stated, we are, without modification, (1) finalizing our proposal to maintain the current non-O.R. designation of ICD-10-PCS procedure codes 0TF38ZZ, 0TF48ZZ, 0TF68ZZ, 0TF78ZZ, 0TFB8ZZ, and 0TFC8ZZ for FY 2022 and (2) finalizing our proposal to maintain the current non-O.R. designation of ICD-10-PCS procedure codes 0TCB8ZZ and 0TCC8ZZ for FY 2022. We are also finalizing our proposal to change the designation of ICD-10-PCS procedure codes 0TC08ZZ, 0TC18ZZ, 0TC38ZZ, 0TC48ZZ, 0TC68ZZ, and 0TC78ZZ from O.R. procedures to non-O.R. procedures, without modification, effective October 1, 2021.

(17) Endoscopic Removal of Ureteral Stent

One requestor identified ICD-10-PCS procedure code 0TP98DZ (Removal of intraluminal device from ureter, via natural or artificial opening endoscopic) that the requestor stated is not recognized as an O.R. procedure for purposes of MS-DRG assignment. The requestor suggested that this procedure warrants an O.R. designation because the procedure code describes a procedure that is performed in the operating room with anesthesia. The requestor stated that while most ureteral stents can be removed by string, some complicated cases require endoscopic removal using forceps in the operating room under general anesthesia and may be performed during inpatient stays precipitated by severe urinary tract infection, sepsis, or urinary obstructions. The requestor asserted that procedure codes for insertion of ureteral stent(s) via a ureteroscopic, endoscopic approach have been justifiably designated as O.R. procedures because they are performed in the O.R. under anesthesia. Therefore, the requestor suggested it is reasonable for endoscopic removal of the stent to be designated with OR procedure status to compensate for operating room resources and anesthesia.

We stated in the proposed rule that our clinical advisors reviewed this procedure and did not agree that it warrants an O.R. designation. They noted that this procedure is generally not the focus of the admission when it is performed and does not reflect the technical complexity or resource intensity in comparison to other procedures that are designated as O.R. procedures. Therefore, we proposed to maintain the current non-O.R. designation for procedure code 0TP98DZ for FY 2022.

Comment: Commenters supported our proposal to maintain the non-O.R. designation for procedure code 0TP98DZ.

Response: We appreciate the commenters' support.

Comment: A commenter did not support our proposal based on the rationale provided. According to the commenter, patients may be admitted with sepsis and/or urinary tract infections associated with ureteral stents and require joint focuses of treatment consisting of removal of a stent(s) and intravenous antibiotics. The commenter stated that patients who require stent removal during hospitalization are those who have chronic diagnoses, altered anatomy, or encrusted stents that prevent removal from being performed elsewhere.

Response: Our clinical advisors maintain that generally, the procedure to remove a ureteral stent endoscopically is not the focus or driver of resources for an inpatient admission. With respect to patients who may be admitted with or acquire an infection during the hospitalization, it is understood that these patients typically consume additional resources, however, our clinical advisors do not believe that the endoscopic removal of a ureteral stent is a contributing factor. For those patients who have a chronic diagnosis, altered anatomy or an encrusted stent requiring stent removal specifically in an inpatient setting, we believe additional analysis may be advantageous to determine if a subset of the claims reporting these conditions warrant any modifications to the GROUPER logic. However, the commenter did not provide a list of the specific ICD-10-CM diagnoses describing these conditions for CMS to consider in its analysis for FY 2022. We intend to work with the commenter and examine this issue for consideration in future rulemaking.

After consideration of the public comments we received, we are finalizing our proposal to maintain the non-O.R. designation for procedure code 0TP98DZ, effective October 1, 2021.

(18) Endoscopic/Transorifice Inspection of Ureter

One requestor identified ICD-10-PCS procedure code 0TJ98ZZ (Inspection of ureter, via natural or artificial opening endoscopic), that describes procedures involving endoscopic viewing of the ureter that the requestor stated is currently not recognized as an O.R. procedure for purposes of MS-DRG assignment.

The requestor stated this ureteroscopy procedure is performed in the operating room with anesthesia. According to the requestor, the inspection of ureter procedure code is assigned when obstruction is found during the ureteroscopy and procedures to break up (fragmentation), remove calculi (extirpation), or place a ureteral stent cannot be performed.

In the proposed rule we stated that our clinical advisors reviewed this procedure and disagree that it warrants an O.R. designation. They noted that this procedure typically does not require hospitalization and is generally not the reason for the patient's admission since it is often performed in connection with another O.R. procedure when it is performed. Therefore, we proposed to maintain the current non-O.R. designation for procedure code 0TJ98ZZ for FY 2022.

Comment: Commenters supported our proposal to maintain the non-O.R. designation for procedure code 0TJ98ZZ.

Response: We appreciate the commenters' support.

Comment: A commenter did not support our proposal to maintain the non-O.R. designation for procedure code 0TJ98ZZ based on the rationale that this procedure typically does not require hospitalization and is generally not the reason for the patient's admission since it is often performed in connection with another O.R. procedure. According to the commenter, whether or not a procedure is most often performed as an outpatient should not be the determining factor for designating O.R. status.

Response: Our clinical advisors maintain that typically, this procedure is not the basis for an inpatient admission and as noted earlier in this section, when we state a current non-O.R. procedure is typically performed in conjunction with another O.R. procedure, we are indicating that there is generally another O.R. procedure reported on the claim that is primarily responsible for impacting the utilization of resources for that admission. We wish to clarify that statements indicating a procedure is most often performed as an outpatient or in an outpatient setting are not the single determining factor in our proposals to maintain or modify the designation of a procedure code from O.R. to non-O.R. or vice versa, rather, the proposals set forth in rulemaking are based on a combination of clinical judgment and data, when applicable.

After consideration of the public comments we received, we are finalizing our proposal to maintain the non-O.R. designation for procedure code 0TJ98ZZ, without modification, effective October 1, 2021.

(19) Endoscopic Biopsy of Ureter and Kidney

One requestor identified six ICD-10-PCS procedure codes that describe endoscopic biopsy procedures performed on the ureter and kidney structures that the requestor stated are currently not recognized as O.R. procedures for purposes of MS-DRG assignment. According to the requestor, regardless of whether it is a diagnostic or therapeutic procedure, these procedures should be designated as O.R. procedures because the procedures utilize operating room, anesthesia and recovery room resources. The requestor stated that after the surgeon places the scope into the bladder that ureteral orifices must be identified and instruments carefully navigated to obtain excisional biopsies from within the ureter or further within the kidney. The six procedure codes are listed in the following table.

In the proposed rule we noted that under the ICD-10-PCS procedure classification, biopsy procedures are identified by the 7th digit qualifier value “diagnostic” in the code description.

We also noted that our clinical advisors do not agree that endoscopic biopsy procedures performed on the ureter and kidney structures warrant an O.R. designation. They stated these procedures are typically not the focus for the patient's admission and are frequently performed in conjunction with another O.R. procedure. Therefore, we proposed to maintain the current non-O.R. designation for procedure codes 0TB08ZX, 0TB18ZX, 0TB38ZX, 0TB48ZX, 0TB68ZX, and 0TB78ZX for FY 2022.

Comment: Commenters supported our proposal to maintain the non-O.R. designation for procedure codes 0TB08ZX, 0TB18ZX, 0TB38ZX, 0TB48ZX, 0TB68ZX, 0TB78ZX.

Response: We appreciate the commenters' support.

Comment: A commenter did not support our proposal. According to the commenter, urinary obstructions and associated urinary tract infections with or without sepsis can necessitate inpatient admissions, and abnormalities on imaging can raise suspicion for malignancy requiring biopsy for diagnosis and treatment. The commenter stated that when these procedures are standalone procedures performed during inpatient hospitalizations, they warrant O.R. procedure status for the same reasons as the procedures describing endoscopic fragmentation or extirpation of the urinary tract described previously.

Response: We appreciate the commenter's feedback. Similar to the reasons discussed for procedures describing the endoscopic fragmentation or extirpation of the urinary tract, our clinical advisors maintained that with the development of better instrumentation and surgical techniques, many patients now have endoscopic procedures involving urinary tract structures performed in an outpatient setting. In addition, they stated that these procedures are not surgical in nature.

After consideration of the public comments we received, we are finalizing our proposal to maintain the non-O.R. designation for procedure codes 0TB08ZX, 0TB18ZX, 0TB38ZX, 0TB48ZX, 0TB68ZX, and 0TB78ZX, without modification, effective October 1, 2021.

(20) Transorifice Insertion of Ureteral Stent

One requestor identified three ICD-10-PCS procedure codes that the requestor stated are not recognized as O.R. procedures for purposes of MS-DRG assignment. The requestor suggested that the procedure described by these procedure codes warrants an O.R. designation because it involves the insertion of an indwelling ureteral stent through a nephrostomy with image-guidance in the interventional radiology suite. According to the requestor, image-guided technology now allows placement of ureteral stents through nephrostomy tracts. The requestor stated this procedure may or may not be performed in the operating room, however, it involves placement of device(s), interventional radiology resources, sedation, and continuous monitoring of vital signs. The three procedure codes are shown in the following table.

In the proposed rule we stated that our clinical advisors reviewed this request and do not agree that this procedure warrants an O.R. designation. They noted that this procedure is not surgical in nature, does not require the resources of an operating room and is not a technically complex procedure requiring increased hospital resources. Therefore, we proposed to maintain the current non-O.R. designation for procedure codes 0T767DZ, 0T777DZ, and 0T787DZ for FY 2022.

Comment: Commenters supported our proposal to maintain the non-O.R. designation for procedure codes 0T767DZ, 0T777DZ, and 0T787DZ.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to maintain the non-O.R. designation for procedure codes 0T767DZ, 0T777DZ, and 0T787DZ, without modification, effective October 1, 2021.

(21) Percutaneous Insertion of Ureteral Stent

One requestor identified three ICD-10-PCS procedure codes that the requestor stated are not recognized as O.R. procedures for purposes of MS-DRG assignment. The requestor suggested that the procedure described by these procedure codes warrants an O.R. designation because the procedure is typically performed following a failed ureteral stent insertion procedure in the operating room, which can only be reported as a cystoscopy or ureteroscopy, neither of which are designated as O.R. procedures. According to the requestor, percutaneous ureteral stenting through the abdominal wall is subsequently performed in an interventional radiology suite with image-guidance, sedation, and continuous vital sign monitoring. The three procedure codes are shown in the following table.

In the proposed rule we stated that our clinical advisors reviewed this request and do not agree that the procedure warrants an O.R. designation. They noted that this procedure is not surgical in nature, does not involve technical complexity or require the resources of an operating room. Therefore, we proposed to maintain the current non-O.R. designation for procedure codes 0T763DZ, 0T773DZ, and 0T783DZ for FY 2022.

Comment: Commenters supported our proposal to maintain the non-O.R. designation for procedure codes 0T763DZ, 0T773DZ, and 0T783DZ.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to maintain the non-O.R. designation for procedure codes 0T763DZ, 0T773DZ, and 0T783DZ, without modification, effective October 1, 2021.

(22) Endoscopic Dilation of Urethra

One requestor identified ICD-10-PCS procedure code 0T7D8DZ (Dilation of urethra with intraluminal device, via natural or artificial opening endoscopic) that the requestor stated is not recognized as an O.R. procedure for purposes of MS-DRG assignment. The requestor suggested that this procedure warrants an O.R. designation because the procedure code describes a procedure that utilizes the UroLift® System, a minimally invasive technology to treat lower urinary tract symptoms (LUTS) due to benign prostatic hyperplasia (BPH). According to the requestor, the technology is placed endoscopically within the prostatic urethra in the operating room under anesthesia.

In the proposed rule we stated that our clinical advisors reviewed this request and do not agree that the procedure warrants an O.R. designation. They noted that this procedure is performed without incision, resection or thermal injury to the prostate and is primarily performed in the outpatient setting. It is generally not the cause for the patient's admission and utilization of resources when it is performed. Therefore, we proposed to maintain the current non-O.R. designation for procedure code 0T7D8DZ for FY 2022.

Comment: Commenters supported our proposal to maintain the non-O.R. designation for procedure code 0T7D8DZ.

Response: We appreciate the commenters' support.

Comment: A commenter did not support our proposal to maintain the non-O.R. designation for procedure code 0T7D8DZ based on the rationale that this procedure is primarily performed in the outpatient setting and is generally not the cause for the patient's admission and utilization of resources. According to the commenter, whether or not a procedure is most often performed as an outpatient should not be the determining factor in O.R status. The commenter asserted that in its review of procedures currently assigned to MS-DRGs 671 and 672, the procedure described by procedure code 0T7D8DZ utilizes comparable O.R. resources.

Response: We thank the commenter for their feedback. Our clinical advisors maintain that typically, this procedure is not the basis for an inpatient admission and if performed, it does not increase the consumption of hospital resources to warrant O.R. status. With regard to the list of procedures currently assigned to MS-DRGs 671 and 672 and the assertion that code 0T7D8DZ utilizes comparable O.R. resources, as stated in previous rulemaking, as well as, the preamble of the FY 2022 IPPS/LTCH PPS proposed rule and this final rule, we are in the process of reviewing prior stakeholder feedback on criteria and factors to consider on what constitutes a procedure being designated as O.R versus non-O.R. as a component of our broader comprehensive procedure code review. We are allowing additional time for the claims data to stabilize prior to selecting the timeframe to analyze for this review considering the PHE, and to develop our proposed methodology. Therefore, we will be examining all the procedures currently assigned to MS-DRGs 671 and 672 in connection with that process and discuss if modifications to the designation of code 0T7D8DZ are warranted.

After consideration of the public comments we received, we are finalizing our proposal to maintain the non-O.R. designation for procedure code 0T7D8DZ, without modification, effective October 1, 2021.

(23) Open Repair of Scrotum

One requestor identified ICD-10-PCS procedure code 0VQ50ZZ (Repair scrotum, open approach) that the requestor stated is not recognized as an O.R. procedure for purposes of MS-DRG assignment. The requestor suggested that this procedure warrants an O.R. designation because it involves repair of scrotal tissue deeper than the skin with direct visualization and utilizes general anesthesia in the operating room.

We noted in the proposed rule that our clinical advisors do not agree that open repair of the scrotum merits an O.R. designation. They stated this procedure would not typically require the resources of an operating room and would generally not be a contributing factor impacting hospital resource use during the patient's admission when it is performed. Therefore, we proposed to maintain the current non-O.R. designation for procedure code 0VQ50ZZ for FY 2022.

Comment: Commenters supported our proposal to maintain the non-O.R. designation for procedure code 0VQ50ZZ.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to maintain the non-O.R. designation for procedure code 0VQ50ZZ, without modification, effective October 1, 2021.

(24) Open Drainage of Vestibular Gland

One requestor identified ICD-10-PCS procedure code 0U9L0ZZ (Drainage of vestibular gland, open approach) that describes a procedure commonly performed for the treatment of an abscess that the requestor stated is performed in the operating room under general anesthesia and therefore warrants an O.R designation. The requestor stated this procedure is comparable to the procedure described by procedure code 0UBL0ZZ (Excision of vestibular gland, open approach) which is currently designated as an O.R. procedure.

We stated in the proposed rule that during our review of procedure code 0U9L0ZZ, we also examined procedure codes 0U9L0ZX (Drainage of vestibular gland, open approach, diagnostic), 0U9LXZX (Drainage of vestibular gland, external approach, diagnostic), and 0UBL0ZZ. Separately, we reviewed procedure code 0T9D0ZZ (Drainage of urethra, open approach) because it represents the male equivalent of the female procedure described by procedure code 0U9L0ZZ.

In the ICD-10 MS-DRGs Definitions Manual Version 38.1, procedure codes 0T9D0ZZ, 0U9L0ZX, 0U9LXZX, and 0UBL0ZZ are currently designated as O.R. procedures, however, procedure code 0U9L0ZZ is not recognized as an O.R. procedure for purposes of MS-DRG assignment. In the proposed rule we stated that we examined procedure code 0U9L0ZZ and do not believe this drainage procedure warrants an O.R. designation, nor do we agree that this drainage of the vestibular gland procedure (0U9L0ZZ) is comparable to an excision of the vestibular gland procedure (0UBL0ZZ), which is currently designated as an O.R. procedure.

In the ICD-10-PCS classification, drainage is defined as taking or letting out fluids and/or gases from a body part and excision is defined as cutting out or off, without replacement, a portion of a body part. Therefore, the classification specifically defines and distinguishes the underlying objectives of each distinct procedure. In the proposed rule we noted that our clinical advisors stated a drainage procedure is frequently performed in the outpatient setting and is generally not the cause for the patient's admission and utilization of resources when it is performed. Drainage of the vestibular gland, also known as Bartholin's glands, is typically indicated when a cyst or abscess is present and may or may not involve the placement of a Word catheter. Conversely, excision of the vestibular gland is not considered an office-based procedure and is generally reserved for a vulvar mass or for patients who have not responded to more conservative attempts to create a drainage tract. In addition, after review, our clinical advisors recommended changing the O.R. status for procedure codes 0U9L0ZX and 0U9LXZX from O.R. to non-O.R. for similar reasons. These procedures do not typically require the resources of an operating room.

Therefore, we proposed to remove procedure codes 0U9L0ZX and 0U9LXZX from the FY 2022 ICD-10 MS-DRGs Version 39 Definitions Manual in Appendix E- Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures and noted that under this proposal, these procedure codes would no longer impact MS-DRG assignment. We refer the reader to section II.D.10 of the preamble of the proposed rule and this final rule for further discussion related to procedure code 0T9D0ZZ.

Comment: Commenters supported our proposal to maintain the non-O.R. designation of procedure code 0U9L0ZZ and to change the designation of procedure codes 0U9L0ZX and 0U9LXZX from O.R. to non-O.R.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to maintain the non-O.R. designation of procedure code 0U9L0ZZ and to change the designation of procedure codes 0U9L0ZX and 0U9LXZX from O.R. to non-O.R., effective October 1, 2021.

(25) Transvaginal Repair of Vagina

One requestor identified ICD-10-PCS procedure code 0UQG7ZZ (Repair vagina, via natural or artificial opening) that the requestor stated is currently not recognized as an O.R. procedure for purposes of MS-DRG assignment. The requestor stated that procedures described by this code such as the non-obstetric transvaginal repair of the vaginal cuff and the non-obstetric transvaginal repair of vaginal lacerations should be designated as O.R. procedures because these procedures are performed in the operating room under general anesthesia. The requestor noted procedure codes 0USG7ZZ (Reposition vagina, via natural or artificial opening), 0UBG7ZZ (Excision of vagina, via natural or artificial opening), and 0UQG8ZZ (Repair vagina, via natural or artificial opening endoscopic) are currently designated as O.R. procedures, therefore procedure code 0UQG7ZZ should also be recognized as an O.R. procedure for purposes of MS-DRG assignment.

In the ICD-10 MS-DRGs Definitions Manual Version 38.1, procedure code 0UQG7ZZ is currently designated as a non-O.R. procedure for purposes of MS-DRG assignment. In the proposed rule, we stated that our clinical advisors reviewed this issue and disagreed that a correlation can be made between procedures described as the transvaginal repair of the vagina and the procedures described by ICD-10-PCS codes 0USG7ZZ, 0UBG7ZZ, and 0UQG8ZZ. We stated that the root operation “repair” represents a broad range of procedures for restoring the anatomic structure of a body part such as suture of lacerations, while the root operations “reposition,” and “excision” define procedures with more distinct objectives. Also, the approach “via natural or artificial opening”, for example, transvaginal, is defined as the entry of instrumentation through a natural or artificial external opening to reach the site of the procedure while the “via natural or artificial opening endoscopic approach” is defined as the entry of instrumentation (for example a scope) through a natural or artificial external opening to both reach and visualize the site of the procedure. We stated that our clinical advisors also disagreed that procedures described as the transvaginal repair of the vagina are typically performed in the operating room under general anesthesia. Our clinical advisors stated transvaginal repair can be performed using regional anesthesia, used to numb only the area of the body that requires surgery instead of rendering the patient unconscious. Therefore, for the reasons described, we proposed to maintain the current non-O.R. designation of ICD-10-PCS procedure code 0UQG7ZZ.

Comment: Commenters supported CMS' proposal to maintain the non-O.R. designation of a procedure code describing repair of vagina via natural or artificial opening.

Response: We appreciate the commenters' support.

Comment: Other commenters opposed CMS' proposal to maintain the non-O.R. designation of ICD-10-PCS procedure code 0UQG7ZZ. A commenter stated procedures such as vaginal cuff revisions must be performed in the operating room under general anesthesia because a sterile surgical environment remains required for surgeons to accomplish this procedure before safely discharging patients. Another commenter stated that transvaginal repair of the vagina is typically an emergent procedure and for the safety of the patient, the procedure is best performed in the operating room under general anesthesia so the patient can stay relaxed. This commenter also stated that when this procedure is performed for indications such as vaginal cuff dehiscence, it is common that a concurrent procedure may be indicated to ensure there was not compromised/ischemic bowel since is imperative that the bowel is kept out of the field while the cuff is closed.

Response: We appreciate the commenters' feedback and concern.

Our clinical advisors reviewed the commenters' concerns and continue to support maintaining the current non-O.R. designation for ICD-10-PCS procedure code 0UQG7ZZ. While our clinical advisors agree that procedures described as the transvaginal repair of the vagina are often performed in conjunction with another O.R. procedure, they do not agree that this procedure warrants an O.R. designation. They stated these procedures are typically not the focus for the patient's admission, and that the other definitive procedures performed with the transvaginal repair of the vagina in the inpatient setting would be considered the principal driver of resource expenditure in those admissions.

After consideration of the public comments we received, we are finalizing our proposal to maintain the current non-O.R. designation of ICD-10-PCS procedure code 0UQG7ZZ, without modification, for FY 2022.

(26) Percutaneous Tunneled Vascular Access Devices

One requestor identified ten ICD-10-PCS procedure codes describing percutaneous insertion of tunneled vascular access devices into various body parts that the requestor stated are not recognized as an O.R. procedure for purposes of MS-DRG assignment. The requestor suggested that these procedures warrant an O.R. designation because they are placed in an interventional radiology suite or in the operating room under anesthesia. The ten procedure codes are shown in the following table.

According to the requestor, it does not make sense for tunneled vascular access devices to group to procedural MS-DRGs in limited circumstances as is the case currently with the logic in MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast) and MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract). The requestor stated that these procedures should be grouping to procedural MS-DRGs across all MDCs.

In the proposed rule we noted that we have addressed requests related to these procedures in previous rulemaking (85 FR 58511 through 58517). We also stated that our clinical advisors reviewed this request and disagreed that procedures performed to insert a tunneled vascular access device should group to procedural MS-DRGs across all MDCs. They stated that these percutaneous procedures are generally performed in the outpatient setting and when performed during a hospitalization, they are frequently performed in combination with another O.R. procedure. Therefore, we proposed to maintain the current non-O.R. status for the ten procedure codes listed previously for FY 2022.

Comment: Commenters supported our proposal to maintain the non-O.R. designation for procedure codes 0JH63XZ, 0JH83XZ, 0JHD3XZ, 0JHF3XZ, 0JHG3XZ, 0JHH3XZ, 0JHL3XZ, 0JHM3XZ, 0JHN3XZ and 0JHP3XZ.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to maintain the non-O.R. designation for procedure codes 0JH63XZ, 0JH83XZ, 0JHD3XZ, 0JHF3XZ, 0JHG3XZ, 0JHH3XZ, 0JHL3XZ, 0JHM3XZ, 0JHN3XZ and 0JHP3XZ, effective October 1, 2021.

12. Changes to the MS-DRG Diagnosis Codes for FY 2022

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 (NonCC, 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. 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 a MCC, a CC, or a NonCC 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 the comprehensive analysis was completed for FY 2008, we have evaluated diagnosis codes individually when assigning severity levels to new codes and when receiving requests to change the severity level of specific diagnosis codes.

We noted in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19235 through 19246) that with the transition to ICD-10-CM and the significant changes that have occurred to diagnosis codes since the FY 2008 review, we believed it was necessary to conduct a comprehensive analysis once again. Based on this analysis, we proposed changes to the severity level designations for 1,492 ICD-10-CM diagnosis codes and invited public comments on those proposals. As summarized in the FY 2020 IPPS/LTCH PPS final rule, many commenters expressed concern with the proposed severity level designation changes overall and recommended that CMS conduct further analysis prior to finalizing any proposals. After careful consideration of the public comments we received, as discussed further in the FY 2020 final rule, we generally did not finalize our proposed changes to the severity designations for the ICD-10-CM diagnosis codes, other than the changes to the severity level designations for the diagnosis codes in category Z16- (Resistance to antimicrobial drugs) from a NonCC to a CC. We stated that postponing adoption of the proposed comprehensive changes in the severity level designations would allow further opportunity to provide additional background to the public on the methodology utilized and clinical rationale applied across diagnostic categories to assist the public in its review. We refer readers to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42150 through 42152) for a complete discussion of our response to public comments regarding the proposed severity level designation changes for FY 2020.

We discussed in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58550 through 58554) that we plan to continue a comprehensive CC/MCC analysis, using a combination of mathematical analysis of claims data as discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19235) and the application of nine guiding principles and plan to present the findings and proposals in future rulemaking. The nine guiding principles are as follows:

• Represents end of life/near death or has reached an advanced stage associated with systemic physiologic decompensation and debility.
• Denotes organ system instability or failure.
• Involves a chronic illness with susceptibility to exacerbations or abrupt decline.
• Serves as a marker for advanced disease states across multiple different comorbid conditions.
• Reflects systemic impact.
• Post-operative/post-procedure condition/complication impacting recovery.
• Typically requires higher level of care (that is, intensive monitoring, greater number of caregivers, additional testing, intensive care unit care, extended length of stay).
• Impedes patient cooperation and/or management of care.
• Recent (last 10 years) change in best practice, or in practice guidelines and review of the extent to which these changes have led to concomitant changes in expected resource use.

We refer readers to the FY 2021 IPPS/LTCH PPS final rule for a complete discussion of our response to public comments regarding the nine guiding principles. We continue to solicit feedback regarding these guiding principles, as well as other possible ways we can incorporate meaningful indicators of clinical severity. When providing additional feedback or comments, we encourage the public to provide a detailed explanation of how applying a suggested concept or principle would ensure that the severity designation appropriately reflects resource use for any diagnosis code.

As discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25175), for new diagnosis codes approved for FY 2022, consistent with our annual process for designating a severity level (MCC, CC or NonCC) for new diagnosis codes, we first review the predecessor code designation, followed by review and consideration of other factors that may be relevant to the severity level designation, including the severity of illness, treatment difficulty, complexity of service and the resources utilized in the diagnosis and/or treatment of the condition. We noted that this process does not automatically result in the new diagnosis code having the same designation as the predecessor code. We refer the reader to II.D.13 of this final rule for the discussion of the proposed changes to the ICD-10-CM and ICD-10-PCS coding systems for FY 2022.

In the FY 2022 IPPS/LTCH PPS proposed rule, we noted that we received several requests to change the severity level designations of specific ICD-10-CM diagnosis codes. We stated our clinical advisors believed it was appropriate to consider these requests in connection with our continued comprehensive CC/MCC analysis in future rulemaking, rather than proposing to change the designation of individual ICD-10-CM diagnosis codes at this time. As discussed in the proposed rule and noted earlier in this section, we plan to continue a comprehensive CC/MCC analysis, using a combination of mathematical analysis of claims data and the application of nine guiding principles. We will consider these individual requests received for changes to severity level designations as we continue our comprehensive CC/MCC analysis and will provide more detail in future rulemaking.

Comment: A commenter stated they agreed with the decision by CMS to withhold its recommendations pending a complete discussion of how the comprehensive CC/MCC analysis in future rulemaking is to be constructed. This commenter also stated they appreciated CMS' publication of the guiding principles of what should constitute a CC or MCC.

Response: We appreciate the commenters” support. In response to the comment that the guiding principles indicate what should constitute a CC or MCC, as noted in the FY 2021 IPPS/LTCH PPS final rule, we do not believe the nine guiding principles would be mostly applicable, or only applicable, to CC or MCC conditions. In applying the nine guiding principles in our review of the appropriate severity level designation, the intention is not to require that a diagnosis code satisfy each principle, or a specific number of principles in assessing whether to designate a secondary diagnosis code as a NonCC versus a CC versus a MCC. Rather, the severity level determinations would be based on the consideration of the clinical factors captured by these principles as well as the empirical analysis of the additional resources associated with the secondary diagnosis.

Comment: Other commenters expressed their willingness to partner with CMS to provide their expertise to assist in the continuation of a comprehensive CC/MCC analysis. These commenters requested that CMS post another secondary diagnosis impact on resource use file so that the public can determine how individual ICD-10-CM diagnosis codes affect resource use when reported as secondary diagnoses. A commenter stated providing this information will help prepare the public and inform the feedback and advice summitted by the public in the IPPS comment periods of future rulemaking.

Response: While CMS has already convened an internal workgroup comprised of clinicians, consultants, coding specialists and other policy analysts, we welcome additional public feedback. Commenters can continue to submit their recommendations to the following email address: MSDRGClassificationChange@cms.hhs.gov by November 1, 2021.

In response to the request that CMS make an updated impact on resource use file available, we note that in May 2021, we made an updated impact on resource use file available so that the public can review the mathematical data for the impact on resource use generated using claims from the FY 2019 MedPAR file and the FY 2020 MedPAR file. The link to this file is posted on the CMS website at https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​MS-DRG-Classifications-and-Software.

c. Potential Change to Severity Level Designation for Unspecified Diagnosis Codes for FY 2022

As discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25175 through 25180), as another interval step as we continue to address the comprehensive review of the severity designations of ICD-10-CM diagnosis codes in which we have been engaged over the past two years, we requested public comments on a potential change to the severity level designations for “unspecified” ICD-10-CM diagnosis codes that we were considering adopting for FY 2022. Specifically, we noted we were considering changing the severity level designation of all “unspecified” diagnosis codes to a NonCC where there are other codes available in that code subcategory that further specify the anatomic site, effective for FY 2022, after consideration of the public comments we receive in response to the proposed rule.

We noted that according to the ICD-10-CM Official Guidelines for Coding and Reporting, codes titled “unspecified” are for use when the information in the medical record is insufficient to assign a more specific code. In our review of severity level designation of the codes in the ICD-10-CM classification, we stated we noted 3,490 “unspecified” diagnosis codes designated as either CC or MCC, where there are other codes available in that code subcategory that further specify the anatomic site with an equivalent severity level designation. For example, ICD-10-CM code L89.003 (Pressure ulcer of unspecified elbow, stage 3) is currently designated as a MCC. In the same code subcategory of L89.0- (Pressure ulcer of elbow), ICD-10-CM codes L89.013 (Pressure ulcer of right elbow, stage 3) and code L89.023 (Pressure ulcer of left elbow, stage 3) are also designed as MCCs.

In the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159), we described the categorization of diagnoses as an MCC, a CC, or a NonCC, 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. As such, the designation of CC or MCC is intended to account for the increased resources required to address a condition as a secondary diagnosis. The usage of “unspecified” diagnosis codes where there are other codes available in that code subcategory that further specify the anatomic site may contribute to and eventually result in less reliable data for researching clinical outcomes. If documentation is not available to code to the highest level of specificity as to the laterality of the condition treated, and an unspecified code is reported by the hospital, it may be harder to quantify in the claims data what additional resources were expended to address that condition in terms of requiring clinical evaluation, therapeutic treatment, diagnostic procedures, extended length of hospital stay, increased nursing care and/or monitoring.

As stated in the proposed rule and previously, we discussed in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58550 through 58554) that we plan to continue a comprehensive CC/MCC analysis, using a combination of mathematical analysis of claims data, and the application of nine guiding principles, and plan to present the findings and proposals in future rulemaking. As patients present with a variety of diagnoses, in examining the secondary diagnoses, we stated we would consider what additional resources are required, that surpasses those that are already being utilized to address the principal diagnosis and/or other secondary diagnoses that might also be present on the claim. The goal of our comprehensive analysis is to create stratification for reimbursing inpatient hospitalization in the fewest amount of categories with the most explanatory power in a clinically cohesive way. We stated in the FY 2022 proposed rule that we believed more robust claims data would facilitate this effort to determine the impact on resource use and inform our decision-making in determining the most appropriate CC subclass (NonCC, CC, or MCC) assignment for each diagnosis as a secondary diagnosis. As part of this effort, we solicited comments on adopting a change to the severity level designation of the 3,490 “unspecified” diagnosis codes currently designated as either CC or MCC, where there are other codes available in that code subcategory that further specify the anatomic site, to a NonCC for FY 2022.

As discussed in the HIPAA Administrative Simplification: Modification to Medical Data Code Set Standards To Adopt ICD-10-CM and ICD-10-PCS proposed rule (73 FR 49796 through 49803), in proposing the adoption of ICD-10-CM and ICD-10-PCS, we listed that the addition of laterality in ICD-10-CM—specifying which organ or part of the body is involved when the location could be on the right, the left, or could be bilateral, was one of several improvements over ICD-9-CM. We also noted that in comparison to ICD-9-CM, ICD-10-CM diagnosis codes are very specific and that this specificity improves the richness of data for analysis and improves the accuracy of data used for medical research. In the Modifications to Medical Data Code Set Standards To Adopt ICD-10-CM and ICD-10-PCS final rule (74 FR 3328 through 3362), we adopted the ICD-10-CM and ICD-10-PCS as medical data code sets under HIPAA, replacing ICD-9-CM Volumes 1 and 2, and Volume 3 and noted that ICD-10-CM and ICD-10-PCS provide specific diagnosis and treatment information that can improve quality measurements and patient safety, and the evaluation of medical processes and outcomes. We stated in the FY 2022 proposed rule that we continue to believe that reporting the most specific diagnosis codes supported by the available medical record documentation and clinical knowledge of the patient's health condition would more accurately reflect the health care encounter and improve the reliability and validity of the coded data.

We also stated we believe that changing the severity level for these “unspecified codes” as compared to the more specific codes in the same subcategory recognizing laterality would leverage the additional specificity available under the ICD-10 system, by fostering the reporting of the most specific diagnosis codes supported by the available medical record documentation and clinical knowledge of the patient's health condition to more accurately reflect each health care encounter and improve the reliability and validity of the coded data. However, in consideration of the PHE, and to the extent that some providers may not currently have programs in place that focus on improving documentation, we requested public comments on making this change to the severity level designation for these unspecified ICD-10-CM diagnosis codes for FY 2022.

We refer the reader to table 6P.2a associated with the proposed rule for a detailed list of the diagnosis codes for which we solicited comments on a change in severity level. As noted in the proposed rule, we also made available the data describing the impact on resource use when reported as a secondary diagnosis for all 3,490 ICD-10-CM unspecified diagnosis codes. While these claims data were not used in our identification of the “unspecified” diagnosis codes for which there are other codes available in the code subcategory that further specify the anatomic site, as stated in the proposed rule and earlier in this section, these data are consistent with data historically used to mathematically measure impact on resource use for secondary diagnoses, and the data which we plan to use in combination with application of the nine guiding principles as we continue a comprehensive CC/MCC analysis. Therefore, we displayed the data on these unspecified codes in order to facilitate public comment on these potential changes in the severity level designation for these codes.

In Table 6P.2a associated with the proposed rule, column C displays the FY 2020 severity level designation for these diagnosis codes in MS-DRG Grouper Version 37.2. Column D displays CMS' current FY 2021 severity level designation in MS-DRG Grouper Version 38.1 and column E displays the potential changes to the severity level designation that we stated we were considering adopting. Columns F-O show data on the impact on resource use generated using discharge claims from the September 2019 update of the FY 2019 MedPAR file and MS-DRG Grouper Version 37.2. Columns Q-Z show data on the impact on resource use generated using discharge claims from the September 2020 update of the FY 2020 MedPAR file and MS-DRG Grouper Version 38.1.

For further information on the data on the impact on resource use as displayed in Columns F-O and Columns Q-Z, we refer readers to the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159) for a complete discussion of the methodology utilized to mathematically measure the impact on resource use. Also, as discussed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32550), to provide the public with more information on the CC/MCC comprehensive analysis discussed in the FY 2020 IPPS/LTCH PPS proposed and final rules, CMS hosted a listening session on October 8, 2019. The listening session included a review of this methodology utilized to mathematically measure the impact on resource use. We refer readers to https://www.cms.gov/​Outreach-and-Education/​Outreach/​OpenDoorForums/​PodcastAndTranscripts.html for the transcript and audio file of the listening session. We also refer readers to https://www.cms.gov/​Medicare/​MedicareFee-for-Service-Payment/​AcuteInpatientPPS/​MS-DRG-Classifications-and-Software.html for the supplementary file containing the data describing the impact on resource use of specific ICD-10-CM diagnosis codes when reported as a secondary diagnosis that was made available for the listening session. We note that the supplementary file that was made available for the listening session contains the mathematical data for the impact on resource use generated using claims from the FY 2018 MedPAR file. We have also made available on the CMS website an updated impact on resource use file so that the public can review the mathematical data for the impact on resource use generated using claims from the FY 2019 MedPAR file and the FY 2020 MedPAR file.

This table shows the Version 38.1 ICD-10 MS-DRG categorization of diagnosis codes by severity level.

As stated in the proposed rule, we requested public comments on a modification to the Version 38.1 severity level subclass assignments for 4.8 percent of the ICD-10-CM diagnosis codes, potentially effective with the Version 39 ICD-10 MS-DRG MCC/CC list. The following table compares the Version 38.1 ICD-10 MS-DRG MCC/CC list and the potential Version 39 ICD-10 MS-DRG MCC/CC list. There are 17,957 diagnosis codes on the Version 38.1 MCC/CC lists. These potential MCC/CC severity level changes would reduce the number of diagnosis codes on the MCC/CC lists to 14,467 (2,771 + 11,696).

The net result of these potential changes to the Version 39 ICD-10 MS-DRG MCC/CC list, for the 72,621 diagnosis codes in the ICD-10-CM classification, would be a decrease of 507 (3,278 − 2,771) codes designated as an MCC, a decrease of 2,983 (14,679 − 11,696) codes designated as a CC, and an increase of 3,490 (58,154 − 54,664) codes designated as a NonCC.

The following table compares the Version 38.1 ICD-10 MS-DRG severity level list and the potential Version 39 ICD-10 MS-DRG severity level list by each of the 22 chapters of the ICD-10-CM classification to display how each chapter of ICD-10-CM might be affected by these modifications.

As shown in the table, the Diseases of the Musculoskeletal System and Connective Tissue (M00-M99) chapter of ICD-10-CM would have the largest percentage reduction in codes designated as CC/MCC. Twelve chapters would have a zero percentage change to the percentage of codes designated as CC/MCC.

As stated in the proposed rule and previously, we requested public comments on our possible adoption of a change to the severity level designation of these 3,490 “unspecified” diagnosis codes currently designated as either CC or MCC, where there are other codes available in that code subcategory that further specify the anatomic site, to a NonCC, potentially effective with the Version 39 ICD-10 MS-DRG MCC/CC list. As part of this request, we stated we would be interested in comments regarding whether this modification might present operational challenges and how we might otherwise foster the reporting of the most specific diagnosis codes supported by the available medical record documentation and clinical knowledge of the patient's health condition to more accurately reflect each health care encounter and improve the reliability and validity of the coded data.

In this FY 2022 IPPS/LTCH PPS final rule, we present a summation of the comments we received on our possible adoption of a change to the severity level designation of the 3,490 “unspecified” diagnosis codes currently designated as either CC or MCC, where there are other codes available in that code subcategory that further specify the anatomic site, to a NonCC, potentially effective with the Version 39 ICD-10 MS-DRG MCC/CC list and our responses to those comments. We appreciate commenters for sharing their views and their willingness to support CMS in our efforts to continue a comprehensive CC/MCC analysis.

Comment: Many commenters supported CMS' possible adoption of a change to the severity level designation of the 3,490 “unspecified” diagnosis codes to a NonCC when there are more specific codes available in that code subcategory that recognize laterality. Some commenters stated it is reasonable to expect that laterality would be documented in the hospital inpatient setting in most cases. A commenter stated that they agreed that reporting the most specific diagnosis codes supported by the available medical record documentation and clinical knowledge of the patient's health condition would more accurately reflect the healthcare encounter and improve the reliability and validity of the coded data. This commenter further stated the anticipated benefits of the ICD-10-CM transition (including better data for measuring quality and safety of patient care, assessing patient outcomes, determining disease severity for risk and severity adjustment, and conducting analyses and research) cannot be realized if healthcare encounters are not coded and documented to the highest possible level of specificity. A commenter stated that they appreciated that CMS is considering changing the severity designation of “unspecified” diagnosis codes where a more specific code describing laterality is available as they have observed that the presence of these codes in the classification has become a challenge when determining how to code based on vague medical record documentation. Another commenter stated they supported CMS' aim to encourage diagnosis coding to the highest level of specificity available, and stated specifically, if there are codes that can be used to indicate laterality, then those codes should be reported rather than an unspecified code.

Response: We appreciate the commenters' support.

Comment: Other commenters questioned the need for such a change. Commenters stated the use of unspecified codes in reporting diagnoses that describe the patient's condition does not diminish the resources required to care for patients. A commenter requested that CMS provide insight pertaining to how the laterality of the condition impacts the severity of the diagnosis. Another commenter stated the treatment plans developed by providers to address diagnoses remains the same, regardless of the laterality affected. Another commenter stated that the laterality of a condition does not clinically impact the severity of the diagnosis or make it less costly to treat, and that it also does not offer any more value to the reported data.

Response: We appreciate the commenter's' feedback.

To clarify how the concept of laterality is reflected in the claims data and the importance in accurately reporting this information we provide the following examples of diagnosis codes and their impact on resource use as represented in the claims data when reported as a secondary diagnosis.

The following table reflects the impact on resource use data using the September 2019 update of the FY 2019 MedPAR file for diagnosis codes that describe stage 3 pressure ulcers of the hip. We refer readers to the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159) for a complete discussion of our historical approach to mathematically evaluate the extent to which the presence of an ICD-10-CM code as a secondary diagnosis resulted in increased hospital resource use, and the explanation of the columns in the table.

As shown in the table, the three diagnosis codes that describe stage 3 pressure ulcers of the hip are designated as MCCs in Version 38.1 of the ICD-10 MS-DRGs. When examining diagnosis code L89.213 (Pressure ulcer of right hip, stage 3), the value in column C1is closer to 2.0 than to 1.0. The data suggests that when stage 3 pressure ulcers of the right hip are reported as a secondary diagnosis, the resources involved in caring for these patients are more aligned with a CC than a NonCC or an MCC, as explained in the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159). However, when examining diagnosis codes L89.223 (Pressure ulcer of left hip, stage 3) and L89.203 (Pressure ulcer of unspecified hip, stage 3), the C1 values are generally closer to 1, which suggest the resources involved in caring for stage 3 pressure ulcers of the left hip or an unspecified hip are more aligned with a NonCC severity level than a CC or an MCC severity level.

The following table reflects the impact on resource use data using the September 2020 update of the FY 2020 MedPAR file for the same three diagnosis codes.

When examining this data file, we find opposite results. The C1 values for diagnosis code L89.213 (Pressure ulcer of right hip, stage 3) is generally close to 1 and the C2 values for L89.213 and L89.203 (Pressure ulcer of unspecified hip, stage 3) are generally close to 2, both of which suggest the resources involved in caring for stage 3 pressure ulcers of the right hip or an unspecified hip are more aligned with a NonCC severity level than a CC or an MCC severity level. However, when examining diagnosis code L89.223 (Pressure ulcer of left hip, stage 3), the value in column C1 is closer to 2.0, which suggests that when stage 3 pressure ulcers of the left hip are reported as a secondary diagnosis, the resources involved in caring for these patients are more aligned with a CC than either a NonCC or an MCC.

As we have noted in prior rulemaking, these mathematical constructs are used as guides in conjunction with the judgment of our clinical advisors to classify each secondary diagnosis reviewed. We present these data to highlight that when taking laterality into account, the resources expended in caring for certain conditions may not be as equally expressed in the claims data as some commenters may suggest and to demonstrate how reporting the most specific diagnosis codes supported by the available medical record documentation and clinical knowledge of the patient's health condition could more accurately reflect the health care encounter and improve the reliability and validity of the coded data the 108 cases and 56 cases that reported a stage 3 pressure ulcer of an unspecified hip as a secondary diagnosis in the FY 2019 and FY 2020 MedPAR file, respectively, may each reflect an opportunity to potentially have reported more specific and valuable data that could be used in evaluating the impact of resource use in the claims data, had the laterality been specified.

We also note that in Table 6P.2a associated with the proposed rule, of the 3,490 diagnosis codes listed, when reviewing the total counts in the data on the impact on resource use generated using discharge claims from the September 2019 update of the FY 2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR file, only 36 and 38 ICD-10-CM codes respectively, were reported in numbers greater than 500 in the claims data. The remaining codes were generally all reported in small numbers. In fact, in as shown in table 6P.2a, 2,772 and 2,767 of these codes were reported zero times in the claims data when reviewing the impact on resource use generated using discharge claims from the September 2019 update of the FY 2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR file, respectively.

As noted in the proposed rule, this consideration of a possible adoption to change the severity level designation of certain unspecified codes was to foster the reporting of the most specific diagnosis codes supported by the available medical record documentation and clinical knowledge of the patient's health condition to more accurately reflect each health care encounter and improve the reliability and validity of the coded data. These findings demonstrate providers are already appropriately documenting laterality in most instances.

Comment: Other commenters noted that laterality is not one of CMS' long-standing criteria for determining the severity level of a condition. These commenters stated the presence (or absence) of laterality is not a factor in the nine guiding principles for establishing the severity level of an ICD-10 code. Therefore, these commenters suggested that CMS withdraw its possible adoption of a change, as the agency's own principles for establishing the severity level of an ICD-10 code do not support this change.

Response: In prior rulemaking, our clinical advisors reviewed the resource use impact reports and suggested modifications to the initial CC subclass assignments when clinically appropriate based on review of the mathematical data as well as consideration of the clinical nature of each of the secondary diagnoses and the severity level of clinically similar diagnoses. As discussed in the proposed rule and noted earlier in this section, we plan to continue a comprehensive CC/MCC analysis, using a combination of mathematical analysis of claims data and the application of nine guiding principles. We believe the possible adoption of a change to the severity level designation of diagnosis codes when there are more specific codes available in that code subcategory that recognize laterality will have the downstream effect of strengthening the data used in such analysis. In regards to the comment that laterality in not listed as a factor in the nine guiding principles, our clinical advisors state that determining laterality is inherent to the guiding principle that states “typically requires higher level of care (that is, intensive monitoring, greater number of caregivers, additional testing, intensive care unit care, extended length of stay).” If a higher level of care is required to address the diagnosis as a secondary diagnosis, then the laterality affected in most instances should be able to be determined in the course of the associated intensive monitoring, greater number of caregivers, and/or additional testing in most instances. We also note that if a procedure is performed to address a diagnosis as a secondary diagnosis, the laterality must be known and documented in order to assign an ICD-10-PCS code because ICD-10-PCS requires the use of laterality since “unspecified” is not an anatomical option in the procedure classification.

Comment: A commenter requested that CMS provide transparency in reference to the table that displays the distribution of volume within these codes for a better representation of the impact. The commenter noted that the table indicates that only 4% of the neoplasm codes would be impacted under the proposal; however, when reviewing the distribution of cases, the commenter stated that it appears that neoplasms were actually heavily impacted with the highest volume of cases.

Response: We note that the table displayed in the proposed rule compares the Version 38.1 ICD-10 MS-DRG severity level list and the potential Version 39 ICD-10 MS-DRG severity level list by each of the 22 chapters of the ICD-10-CM classification to display how each chapter of ICD-10-CM might be affected by these modifications. This table was not intended to represent an analysis of the claims reporting the 3,490 codes as listed.

Comment: A few commenters suggested that CMS analyze the frequency of use of unspecified codes, their impact on resource utilization, and also the typical documentation practices for acute stays with these conditions which may or may not include specificity before changing the severity designation of these codes. These commenters recommended that CMS conduct an analysis of how often the unspecified codes in question are actually used; how much resources they consume; and the standard documentation for the patient stays associated with the use of these codes.

Response: Table 6P.2a associated with the proposed rule contained data describing the impact on resource use when reported as a secondary diagnosis for all 3,490 ICD-10-CM unspecified diagnosis codes, generated using discharge claims from the September 2019 update of the FY 2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR file, including the number of cases reporting these unspecified codes We note that we have made complete impact on resource use files available so that the public can review the mathematical data for the impact on resource use generated using claims from the FY 2018 MedPAR file, FY 2019 MedPAR file and the FY 2020 MedPAR file. The link to these files is posted on the CMS website at https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​MS-DRG-Classifications-and-Software.

In response to the comment that CMS review the typical documentation practices for acute stays with these conditions, we note that medical professionals' documentation is already open to scrutiny by many, including employers, Federal and State reviewers, and auditors. We encourage providers to continue to focus efforts on improving their respective facilities medical record documentation practices.

Comment: Some commenters disagreed with the possible adoption of a change to the severity level designation of individual diagnosis codes listed in Table 6P. 2a associated with the proposed rule.

Many commenters opposed the inclusion of diagnosis codes that describe neoplasms in the list of codes. Commenters stated cancer patients typically are more complex than other types of patients, and often their cancer leads to greater resource utilization even when coded with an unspecified code. These commenters noted that while the neoplasm may still be under active treatment, the specific side of the neoplasm may not be documented if the patient is admitted for a different, unrelated condition such as trauma or infections. Also, there are instances where patients with a known primary cancer are often evaluated, tested, and treated for a clinically likely yet unspecified secondary cancer site. These commenters stated in these cases, the lack of specificity is warranted, and the clinical presentation is still aligned with a CC or MCC. A commenter specifically identified code C56.9, Malignant neoplasm of unspecified ovary, and stated this code should remain a CC because some patients have extensive intraperitoneal metastases typical of (presumed) ovarian primary, and have pelvic involvement so extensive that resection is unable to be performed, and laterality is unable to be determined.

Response: Our clinical advisors reviewed this condition described by code C56.9 and agree with the commenters that this and other unspecified diagnosis codes that describe neoplasms should not be included in the list of unspecified diagnosis codes for consideration for a possible adoption of a change to the severity level designation. They agree that in certain presentations, the laterality affected might be difficult to determine in certain instances. Our clinical advisors believe the severity level designations for this subset of codes would be better addressed as part of our comprehensive CC/MCC analysis, using a combination of mathematical analysis of claims data and the application of nine guiding principles.

Comment: A commenter identified diagnosis codes S02.113A, S02.113B, and S02.113K that describe unspecified occipital condyle fractures listed in Table 6P.2a associated with the proposed rule. The commenter noted that the ICD-10-CM classification does not have diagnosis codes that specify laterality when the type of occipital fracture (for example, Type 1, Type II, Type III) is unknown or unobtainable. Because unspecified codes must be assigned when the type of fracture is unknown, even when laterality is documented, the commenter suggested that these codes should be removed from the list of codes under consideration and retain their CC and MCC designations.

Response: We agree with the commenter that in subcategory S02.11 of the ICD-10-CM classification, there are no codes available that further specify laterality in the code description when the type of occipital condyle fracture is unknown. We further examined the list of diagnosis codes listed in Table 6P.2a, and noted diagnosis codes S02.119A, S02.119B and S02.119K that describe unspecified fractures of the occiput. Our clinical advisors noted that there are also no codes available in that classification that further specify laterality in the code description when the type of occipital fracture is unknown. Accordingly, our clinical advisors believe that these codes should not be included in the list of unspecified diagnosis codes for consideration for a possible adoption of a change to the severity level designation.

Comment: A commenter noted that ICD-10-CM diagnosis codes S82.001N and S82.001R that describe a fracture of the right patella were included in the list of codes in Table 6P.2a. The commenter stated these codes should be removed from Table 6P.2a because the laterality of “right” is specified within the code description.

Response: We appreciate the commenter noting that two diagnosis codes describing fractures affecting the right patella were included in Table 6P.2a associated with the proposed rule. We note that this was an inadvertent error. We further examined the list of diagnosis codes in Table 6P.2a, and noted diagnosis codes S78.911A and S78.921A that describe complete and partial traumatic amputation of right hip and thigh, respectively, were also inadvertently included in the list of “unspecified” diagnosis codes currently designated as either CC or MCC, where there are other codes available in that code subcategory that further specify the anatomic site.

Comment: A commenter stated they disagreed with removing the severity designation of an unspecified code that is internal to the body and cannot be visualized externally. This would include all of the codes involving conditions of internal organs, vessels or body parts (for example, neoplasm, DVT, etc.).

Response: In response to this comment, we further examined the list of diagnosis codes in Table 6P.2a, and note the following:

• Our clinical advisors noted that codes S02.118A, S02.118B, and S02.118Kwhich describe other fractures of occiput, S04.819A which describes an injury of olfactory [1st] nerve, and S04.9XXA which describes an injury of unspecified cranial nerve were listed in Table 6P.2a. Our clinical advisors stated that in cases of traumatic injury, laterality may not be easily identified in occipital fractures or injuries to olfactory or cranial nerves.
• Our clinical advisors noted codes S32.9XXA, S32.9XXB, and S32.9XXK that describe fractures of unspecified parts of lumbosacral spine and pelvis; codes S36.209A, S36.249A, S36.259A, and S36.269A that describe injury and laceration to unspecified parts of the pancreas; code S36.509A that describes an unspecified injury of an unspecified part of colon; code S36.90XA that describes an unspecified injury of an unspecified intra-abdominal organ; code S37.90XA that describes an unspecified injury of unspecified urinary and pelvic organ; code T27.3XXA that describes a burn of an unspecified part of the respiratory tract; and T27.7XXA that describes a corrosion of an unspecified part of the respiratory tract were listed in Table 6P.2a. Our clinical advisors note that while we encourage the reporting and coding to the highest possible level of specificity based on documentation, the codes listed in Table 6P.2a were intended to be limited to “unspecified” diagnosis codes currently designated as either CC or MCC, where there are other codes available in that code subcategory that further specify the anatomic site involved, when the location could be on the right, the left, or could be bilateral; and not parts of body sites.

Therefore, after further consideration, and for the reasons noted, we believe that the 58 ICD-10-CM diagnosis codes listed in the following table should not be included for consideration of changing the severity level designation as part of the list of “unspecified” diagnosis codes currently designated as either CC or MCC, where there are other codes available in that code subcategory that further specify the anatomic site.

Comment: Some commenters suggested that CMS can meet its goal to improve coding specificity through other mechanisms, such as working with the Cooperating Parties for ICD-10 to update coding guidelines to allow coding specificity from other clinical staff documentation. These commenters indicated they are supportive of CMS' efforts but believe CMS should first focus on provider outreach and education and consider updating the ICD-10-CM Official Guidelines for Coding and Reporting. Commenters noted the ICD-10-CM Official Guidelines require that these codes be based only on provider documentation for the current encounter and prohibits coders from using previous encounters or problem lists to obtain the required specificity. These commenters stated if the coding guidelines from the Cooperating Parties were updated in advance of any severity level designation changes being finalized, the use of unspecified codes would likely diminish. Another commenter stated that unless the ICD-10-CM guidelines are liberalized so that code assignment can be obtained from other documents other than provider documentation for that encounter, the possible adoption of a change to the severity level designation will create undue burden. Another commenter noted without an update to the coding guidelines, hospitals will need to expand their clinical documentation improvement programs to prompt physicians to change their documentation practices on each applicable hospital encounter.

Response: The ICD-10-CM Official Guidelines for Coding and Reporting have been revised effective October 1, 2021 to provide additional guidance as it relates to the source documentation for code assignment. We believe this update will alleviate the concerns expressed by these commenters. Specifically, Section I.B.13 of the guidelines have been updated to state “when laterality is not documented by the patient's provider, code assignment for the affected side may be based on medical record documentation from other clinicians. If there is conflicting medical record documentation regarding the affected side, the patient's attending provider should be queried for clarification. Codes for “unspecified” side should rarely be used, such as when the documentation in the record is insufficient to determine the affected side and it is not possible to obtain clarification. In this context, “clinicians” other than the patient's provider refer to healthcare professionals permitted, based on regulatory or accreditation requirements or internal hospital policies, to document in a patient's official medical record.” Corresponding revisions to the guidelines can also be found in section I.B.14. Therefore, we believe that the updates made to the coding guidelines address that aspect of the commenters' concerns.

We encourage the commenters to review the Official ICD-10-CM Coding Guidelines, which can be found on the CDC website at: http://www.cdc.gov/​nchs/​icd/​icd10.htm.

Comment: A number of commenters recommended (or urged) CMS to delay any possible change to the designation of these codes for at least two years to give hospitals and their physicians time to prepare. These commenters stated a change of this magnitude should not be implemented without giving providers time to restructure physician documentation improvement plans and to provide additional education to physicians and coders related to documentation practices. These commenters also stated a delay will give hospitals the time needed to update computer-assisted coding systems to incorporate this change to reduce the administrative burden on physicians related to documentation. Other commenters stated more time is needed before finalizing any policy decisions since this change impacts the quality and risk of mortality scores generated by commercial insurers who often follow CMS' coding and MS-DRG changes. Another commenter stated that this is a significant change from an operational perspective that, if implemented, will create significant administrative burden for hospitals at a time when administrative and clinical resources are still stretched thin by the COVID-19 PHE.

Response: We appreciate the commenter's concern's after consideration of the public comments we received, we are maintaining the severity level designation of all “unspecified” diagnosis codes currently designated as a CC or MCC where there are other codes available in that code subcategory that further specify the anatomic site for FY 2022. Instead, we are finalizing the Unspecified code MCE edit option as discussed in the proposed rule, which we believe provides additional time to educate providers while not affecting the payment the provider is eligible to receive. We refer the reader to section II.D.14.e. of the preamble of this final rule, for the complete discussion.

While we remain committed to fostering the documentation and reporting of the most specific diagnosis codes supported by the available medical record documentation and clinical knowledge of the patient's health condition, we believe additional time is needed before adopting a change to the severity level designation of all “unspecified” diagnosis codes to a NonCC where there are other codes available in that code subcategory that further specify the anatomic site. This time will allow the industry an opportunity to educate coders on the updated guidelines and to offer assistance on proper documentation to providers.

We continue to be interested in receiving feedback on how we might otherwise foster the documentation and reporting of the most specific diagnosis codes supported by the available medical record documentation and clinical knowledge of the patient's health condition to more accurately reflect each health care encounter and improve the reliability and validity of the coded data. Comments should be directed to the MS-DRG Classification Change Mailbox located at: MSDRGClassificationChange@cms.hhs.gov.

d. Additions and Deletions to the Diagnosis Code Severity Levels for FY 2022

In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25180) we noted the following tables identify the proposed additions and deletions to the diagnosis code MCC severity levels list and the proposed additions and deletions to the diagnosis code CC severity levels list for FY 2022 and are 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 2022;

Table 6I.2—Proposed Deletions to the MCC List—FY 2022; and

Table 6J.1—Proposed Additions to the CC List—FY 2022.

Comment: Commenters agreed with the proposed additions and deletions to the MCC and CC lists as shown in tables 6I.1, 6I.2, and 6J.1 associated with the proposed rule.

Response: We appreciate the commenters' support.

The following tables associated with this final rule reflect the finalized severity levels under Version 39 of the ICD-10 MS-DRGs for FY 2022 and are available via the internet on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index.html.

Table 6I. —Complete MCC List—FY 2022;

Table 6I.1—Additions to the MCC List—FY 2022;

Table 6I.2—Deletions to the MCC List—FY 2022;

Table 6J. —Complete CC List—FY 2022;

Table 6J.1—Additions to the CC List—FY 2022; and

Table 6J.2—Deletions to the CC List—FY 2022.

We note that in the FY 2022 IPPS/LTCH PPS proposed rule there was not a Table 6J.2—Proposed Deletions to the CC List—FY 2022 listed because we were not specifically proposing to delete any diagnosis codes from the current CC list effective with discharges on October 1, 2021 for FY 2022. However, we have included Table 6J.2 in association with this final rule for completeness, to display diagnosis code M35.8 (Other specified systemic involvement of connective tissue) that was previously designated as a CC in FY 2020 and was deleted effective January 1, 2021 due to the creation of diagnosis codes, M35.81 (Multisystem inflammatory syndrome) and M35.89 (Other specified systemic involvement of connective tissue) effective January 1, 2021 as displayed in the footnote of Table 6A.—New Diagnosis Codes —FY 2022. Similar to the process we described in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32559), where we solicited comments and provided the public an opportunity to comment on the severity level designations (in addition to the MDC and MS-DRG assignments) that had been implemented for the two diagnosis codes (U07.0 and U07.1) effective with discharges on and after April 1, 2020 (FY 2020) for FY 2021 consideration, in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25191 through 25192), we provided the list of six diagnosis codes that were effective with discharges on and after January 1, 2021in Table 6A.—New Diagnosis Codes—FY 2022 associated with the proposed rule and likewise, provided the public an opportunity to comment on the severity level designations (in addition to the MDC and MS-DRG assignments) that had been implemented for those six diagnosis codes, for FY 2022 consideration. We did not receive any comments suggesting changes to the severity level (or MDC and MS-DRG assignments) for diagnosis codes M35.81 or M35.89 that were implemented on January 1, 2021, therefore, as shown in Table 6A.-New Diagnosis Codes-FY 2022 associated with this final rule, we are maintaining the CC severity level for these two diagnosis codes and displaying in Table 6J.2—Deletions to the CC List—FY 2022 also associated with this final rule, the corresponding deletion of diagnosis code M35.8 from the CC list that was implemented January 1, 2021 for completeness.

e. CC Exclusions List for FY 2022

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 38.1 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. For all diagnosis codes on the list, a link is provided to a collection of diagnosis codes which, when reported as the principal diagnosis, would cause the CC or MCC diagnosis to be considered as a NonCC. Part 2 is the list of diagnosis codes designated as a MCC only for patients discharged alive; otherwise, they are assigned as a NonCC.

In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25175 through 25180) we discussed our request for public comments on potential changes to the severity level for 3,490 diagnosis codes describing an “unspecified” anatomic site, from a CC severity level to a NonCC severity level, for FY 2022. We referred the reader to Table 6P.3a 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) for the list of the 3,490 diagnosis codes that are currently listed in Part 1 of the CC Exclusions List and are defined as a CC when reported as a secondary diagnosis. Table 6P.3a is divided into several tabs, with the first tab titled “SDX Codes and Exclu Categories” containing columns A, B, and C. Column A (titled “ICD-10-CM Code”) lists the “unspecified” diagnosis codes that are currently listed in Part 1 of Appendix C of the CC Exclusions List, column B (titled “Description”) lists the narrative description of each diagnosis code, and column C (titled Exclusion Category) contains a hyperlink to the collection of diagnosis codes which, when reported as the principal diagnosis, would cause the CC diagnosis to be considered as a NonCC. For example, for line 2, Column A displays diagnosis code C34.00, column B displays “Malignant neoplasm of unspecified main bronchus” and column C displays a hyperlink to Exclusion Category number 280. When the user clicks on the hyperlink for number 280, they are directed to another tab labeled “PDX Category 280” that contains the list of diagnosis codes which, when reported as the principal diagnosis, would cause the corresponding CC diagnosis to be considered as a NonCC. In connection with the request for public comments on the potential changes to the severity level for 3,490 diagnosis codes describing an “unspecified” anatomic site, from a CC severity level to a NonCC severity level for FY 2022, Table 6P.3a was made available for readers to review and consider the list of the 3,490 “unspecified” diagnosis codes that are currently included in Part 1 of the CC Exclusions List and the principal diagnosis exclusion category with which they are currently associated. In the proposed rule we stated that if we were to finalize the potential changes to the severity level for the 3,490 diagnosis codes describing an “unspecified” anatomic site from a CC severity level to a NonCC severity level for FY 2022, we would also finalize the removal of these codes from the CC Exclusions List for FY 2022. As discussed previously, we are not finalizing the changes to the severity level for the 3,490 diagnosis codes describing an “unspecified” anatomic site from a CC severity level to a NonCC severity level for FY 2022, and therefore we are also not finalizing the removal of these codes from the CC Exclusions List for FY 2022.

In the proposed rule we discussed three requests we received related to the CC Exclusions List logic.

We received a request to review the secondary diagnoses that are excluded as a CC or MCC in the CC Exclusions List logic when any one of the following three diagnosis codes is reported as the principal diagnosis.

According to the requestor, in the ICD-10 MS-DRGs version 37.2 CC Exclusions List logic, the predecessor code for the listed diagnosis codes, diagnosis code O99.89 (Other specified diseases and conditions complicating pregnancy, childbirth and the puerperium) is listed in the collection of principal diagnosis list number 1000, therefore, when a CC or MCC secondary diagnosis associated with that principal diagnosis list describes a condition as occurring in pregnancy, childbirth or the puerperium, the CC Exclusions List logic will render that diagnosis code as a NonCC. The requestor stated that because diagnosis code O99.89 under version 37.2 of the ICD-10 MS-DRGs is now a subcategory under version 38.1 of the ICD-10 MS-DRGs, with three unique diagnosis codes to specify which obstetric stage the patient is in, that further analysis of the new diagnosis codes (O99.891, O99.892, and O99.893) should occur to determine if changes to the collection of principal diagnosis list is warranted. The requestor provided three examples for CMS to review and consider for possible changes to the CC Exclusions List logic.

In the first example, the requestor noted that diagnosis code O72.1 (Other immediate postpartum hemorrhage) is listed as a CC secondary diagnosis associated with the collection of principal diagnosis list number 1000, and that under the ICD-10 MS-DRGs version 38.1 CC Exclusions List logic, the diagnosis listed in principal diagnosis collection 1000 is now diagnosis code O99.893 (Other specified diseases and conditions complicating puerperium). Thus, both diagnosis codes (O72.1 and O99.893) are describing conditions occurring specifically in the postpartum or puerperium period. The postpartum period is defined as the period beginning immediately after delivery and continues for six weeks following delivery. A postpartum complication is any complication occurring within the six-week period. The requestor stated that because diagnosis code O72.1 is assigned for documented postpartum uterine atony with hemorrhage when it occurs immediately following the delivery of the baby and placenta, that CMS should review diagnosis code O99.892 (Other specified diseases and conditions complicating childbirth) and determine if it should be added to the collection of principal diagnosis list number 1000 to cause diagnosis code O72.1 to be considered as a NonCC when diagnosis code O99.892 is reported as the principal diagnosis.

In the second example, the requestor noted that diagnosis code O98.32 (Other infections with a predominantly sexual mode of transmission complicating childbirth) is associated with principal diagnosis collection number 1012. The requestor also noted that principal diagnosis collection number 1012 does not list diagnosis codes O99.891, O99.892, or O99.893 as a principal diagnosis to exclude the CC secondary diagnosis code O98.32, however, it does list diagnosis codes O98.311 (Other infections with a predominantly sexual mode of transmission complicating pregnancy, first trimester), O98.312 (Other infections with a predominantly sexual mode of transmission complicating pregnancy, second trimester), and O98.313 (Other infections with a predominantly sexual mode of transmission complicating pregnancy, third trimester) as a principal diagnosis to exclude the CC secondary diagnosis code O98.32. The requestor recommended CMS review diagnosis codes O98.32 (Other infections with a predominantly sexual mode of transmission complicating childbirth) and O98.33 (Other infections with a predominantly sexual mode of transmission complicating the puerperium), to determine if diagnosis codes O99.891, O99.892 or O99.893, when reported as a principal diagnosis, should exclude CC secondary diagnosis codes O98.32 and O98.33. Thus, the requestor suggested CMS consider if it is appropriate to add diagnosis codes O99.891, O99.892 and O99.893 to principal diagnosis collection number 1012 to cause diagnosis code O98.32 to be considered as a NonCC when diagnosis codes O99.891, O99.892 or O99.893 are reported as the principal diagnosis.

In the third example, the requestor noted that diagnosis code O87.2 (Hemorrhoids in the puerperium) is associated with principal diagnosis collection number 4041. The requestor also noted that principal diagnosis collection number 4041 lists diagnosis code O99.893 as a principal diagnosis to exclude the CC diagnosis code O87.2, however, it does not list diagnosis code O99.892. The requestor further noted that the “Includes” note at Category O87 (Venous complications and hemorrhoids in the puerperium) in the FY 2021 ICD-10-CM Tabular List includes “venous complications in labor, delivery and the puerperium”, therefore, diagnosis code O87.2 would also be reported for documented hemorrhoids during labor and delivery. The requestor recommended CMS review diagnosis code O99.892 to determine if, when reported as a principal diagnosis, it should exclude CC diagnosis code O87.2. Thus, the requestor suggested CMS consider if it is appropriate to add diagnosis code O99.892 to principal diagnosis collection number 4041 to cause diagnosis code O87.2 to be considered as a NonCC when diagnosis code O99.892 is reported as the principal diagnosis.

We stated in the proposed rule that we reviewed diagnosis codes O99.891, O99.892 and O99.893 with respect to the principal diagnosis collection list and because these diagnosis codes are specifically describing “other specified diseases and conditions complicating pregnancy, childbirth, and the puerperium,” respectively, we do not believe that any of these three diagnosis codes, when reported as a principal diagnosis, should exclude any CC secondary diagnosis. In cases where any one of these three diagnosis codes is reported as a principal diagnosis, which are generally anticipated to be rare, it is understood that there is not a more specific diagnosis code available in the classification to report as the principal diagnosis that identifies the underlying or associated cause of the disease or the condition complicating the specific obstetric stage (pregnancy, childbirth, or puerperium), hence the “other specified” in the code title. Specifically, the title of category O99 is “Other maternal diseases classifiable elsewhere but complicating pregnancy, childbirth and the puerperium” and there are nine subcategories, each of which is generally associated with a single organ system or etiology, with the exception of the “other specified” subcategory (O99.8) as displayed in the following table.

The instructional note at category O99 states “use additional code to identify specific condition” and included at each subcategory (O99.0-O99.7) are a range of codes that refer to diagnoses that are associated with the condition in the title of the subcategory that are to be reported in addition to the applicable code within the respective subcategory. For example, at subcategory O99.0 (Anemia complicating pregnancy, childbirth, and the puerperium), the range of associated codes to identify the specific condition (for example, type of anemia) includes conditions in diagnosis code range D50-D64, meaning that when any one of the diagnosis codes under subcategory O99.0 describing anemia complicating a specific obstetric stage (pregnancy, childbirth, or puerperium) is reported, a code within the D50-D64 code range to identify the specific type of anemia would also be expected to be reported when supported by the medical record documentation. It is therefore reasonable to associate the two conditions (one from subcategory O99.0 and one from code range D50-D64) when reported on a claim. However, the same cannot be stated for subcategory O99.8. There is no range of associated codes from which users are instructed to report located at this particular subcategory in addition to the specific code under sub-subcategory O99.89 (Other specified diseases and conditions complicating pregnancy, childbirth and the puerperium). We note that subcategory O99.8 and sub-subcategory O99.89 have the same title. Therefore, when a diagnosis code from other than that sub-subcategory is reported that describes a condition occurring in any one of the obstetric stages (pregnancy, childbirth, or puerperium) it is not clear if the condition can reasonably be associated to correspond to the “other specified diseases and conditions” diagnosis. In addition, the code ranges included at subcategory O99.8 are D00-D48, H00-H95, M00-N99, and Q00-Q99. Consequently, diagnosis codes within those code ranges would be expected to be reported with one of the diagnosis codes under subcategory O99.8 when reported as a principal diagnosis.

In all three of the requestor's examples, the diagnosis codes provided for CMS to review and consider are located in the “O” code range (O72.1, O98.32, and O87.2 in addition to O99.891, O99.892, and O99.893). As noted previously, the code ranges included at subcategory O99.8 as listed, do not include any codes in the “O” code range. Upon review of the diagnosis codes provided by the requestor, it is also reasonable to expect that any one of those diagnosis codes (O72.1, O98.32, and O87.2) could be reported as a principal diagnosis alone. For instance, there are no instructional notes at diagnosis code O72.1 that preclude that diagnosis code from being reported as the principal diagnosis.

We stated in the proposed rule that during our review of the CC Exclusions List logic in response to the requestor's recommendations, we also identified some diagnosis codes describing the specific trimester of pregnancy that we believe warrant further examination. We noted that we were unable to fully evaluate these conditions for FY 2022, therefore, we will continue to analyze for future rulemaking.

For the reasons discussed, we stated in the proposed rule that we do not believe that any of the three diagnosis codes (O99.891, O99.892, and O99.893), when reported as a principal diagnosis, should exclude any CC secondary diagnosis. Therefore, we proposed to remove diagnosis codes O99.891, O99.892, and O99.893 from the CC Exclusions List logic principal diagnosis collection lists. Specifically, we proposed to remove those diagnosis codes from the following principal diagnosis collection list numbers 0085, 0954, 0956 through 0963, 0972, 0988, 0991 through 0998, 1000 through 1002, 1004, 1006, 1009, 1011, 1014, 1015, 1019, 3999, 4000, 4002 through 4006, 4008, 4010, through 4013, 4017, 4020, 4021, 4023 through 4026, 4030, 4031, 4033 through 4043, 4050 through 4054, 4059 through 4063, 4065 and 4067, effective FY 2022.

We did not receive any comments opposing our proposal, therefore, we are finalizing the removal of diagnosis codes O99.891, O99.892, and O99.893 from the CC Exclusions List logic principal diagnosis collection lists identified for FY 2022.

In the proposed rule we also discussed a request we received to review diagnosis codes describing oxygen dependence, chronic obstructive pulmonary disease with exacerbation, and chronic respiratory failure with regard to assignment in MS-DRG 191 (Chronic Obstructive Pulmonary Disease with CC) and to consider whether any changes to principal diagnosis collection number 0744 in the CC Exclusions List logic are warranted.

The requestor provided diagnosis codes J44.1 (Chronic obstructive pulmonary disease with (acute) exacerbation), J96.11 (Chronic respiratory failure with hypoxia (CC)) and Z99.81 (Dependence on supplemental oxygen) for CMS to review. Specifically, the requestor suggested that if oxygen dependence, by definition, is clinically inherent to chronic respiratory failure, then CMS should consider adding diagnosis code J44.1 to the CC Exclusions List logic principal diagnosis collection list number 0744 and cause diagnosis code J96.11 to be considered as a NonCC when J44.1 is reported as the principal diagnosis.

We stated in the proposed rule that we reviewed the diagnosis codes and MS-DRG assignment as the requestor suggested. We confirmed that when diagnosis code J44.1 is reported as the principal diagnosis with the CC secondary diagnosis code J96.11, and secondary diagnosis code Z99.81, the resulting MS-DRG assignment is MS-DRG 191. We stated our belief that diagnosis code J96.11 should continue to group as a CC, to the “with CC” MS-DRG 191, when reported as a secondary diagnosis code with diagnosis code J44.1 reported as the principal diagnosis. We disagreed with the requestor's suggestion that every oxygen-dependent COPD patient has chronic respiratory failure, and that separately reporting the chronic respiratory failure is clinically redundant. Patients can be oxygen-dependent with COPD and not have a diagnosis of chronic respiratory failure. Therefore, we proposed to maintain the structure of principal diagnosis collection list number 0744 in the CC Exclusions List logic for FY 2022.

We did not receive any comments opposing our proposal, therefore, we are finalizing the proposal to maintain the structure of principal diagnosis collection list number 0744 in the CC Exclusions List logic for FY 2022.

Lastly, in the proposed rule we discussed a request we received to reconsider the MCC exclusions for diagnosis code I11.0 (Hypertensive heart disease with heart failure) when reported as the principal diagnosis. According to the requestor, there appears to be an inconsistency for the CC Exclusions List logic. Specifically, the requestor noted that when diagnosis code I11.0 is reported as the principal diagnosis, it causes the following MCC secondary diagnosis codes to be considered as a NonCC.

However, the requestor stated that diagnosis codes I50.21 (Acute systolic (congestive) heart failure) and I50.31 (Acute diastolic (congestive) heart failure) are not excluded from acting as MCCs when diagnosis code I11.0 is reported as the principal diagnosis. The requestor also stated that all diagnosis codes in category I50 (Heart Failure) share common etiologies and demonstrate comparable severity of illness. Therefore, the requestor suggested that none of the conditions in this category (I50) should be excluded from acting as a MCC when diagnosis code I11.0 is reported as a principal diagnosis.

In the proposed rule we stated that we examined all the diagnosis codes in category I50 with regard to the CC Exclusions List logic. In addition to diagnosis code I11.0, we also reviewed diagnosis code I13.2 (Hypertensive heart and chronic kidney disease with heart failure and with stage 5 chronic kidney disease, or end stage renal disease) when reported as a principal diagnosis because that diagnosis code also has the Tabular instruction “use additional code to identify the type of heart failure”.

We found additional inconsistencies in the CC secondary diagnosis heart failure codes where some diagnoses were excluded depending on the principal diagnosis reported and others were not excluded. As a result, we proposed to revise the CC Exclusions Logic list for diagnosis codes I11.0 and I13.2 when reported as a principal diagnosis to ensure they are consistent in the CC and MCC diagnoses they exclude. In the proposed rule we showed the findings for each diagnosis code in category I50 in the following table with respect to the current severity level (MCC, CC or NonCC), if it is currently excluded as a CC or MCC when reported with either diagnosis code I11.0 or I13.2 as the principal diagnosis, and our proposal under the CC Exclusions List logic for FY 2022.

Comment: Several commenters agreed with our proposal to revise the CC Exclusions List logic for diagnosis codes I11.0 and I13.2 when either code is reported as a principal diagnosis. A commenter also suggested that the changes made for diagnosis code I13.2 should be made for diagnosis code I13.0 (Hypertensive heart and chronic kidney disease with heart failure and stage 1 through stage 4 chronic kidney disease, or unspecified chronic kidney disease).

Response: With regard to the commenter's suggestion that changes made for diagnosis code I13.2 should also be made for diagnosis code I13.0, we appreciate the feedback. We were unable to fully evaluate the request for FY 2022 consideration, therefore, we will examine this issue for future rulemaking and determine if there are other diagnoses that should also be considered further.

After consideration of the comments received, we are finalizing our proposal to revise the CC Exclusions Logic list for diagnosis codes I11.0 and I13.2 when reported as a principal diagnosis, without modification, for FY 2022.

We also proposed additional changes to the ICD-10 MS-DRGs Version 39 CC Exclusion List based on the diagnosis and procedure code updates as discussed in section II.D.13. of the FY 2022 IPPS/LTCH PPS proposed rule and set forth in Tables 6G.1, 6G.2, 6H.1, and 6H.2 associated with the proposed rule and available via the internet on the CMS website at https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index.html.

Comment: A commenter stated they did not agree with the proposed MCC exclusion for new diagnosis codes S06.A0XA (Traumatic brain compression without herniation, initial encounter) and S06.A1XA (Traumatic brain compression with herniation, initial encounter) as shown in Tables 6G.1 and 6G.2 associated with the proposed rule, when reported with principal diagnoses from subcategories S06.1, S06.2, S06.3, S06.4, S06.5, or S06.6. According to the commenter, patients with brain compression secondary to traumatic intracranial injuries have significantly higher morbidity and mortality, longer length of stays, and greater consumption of resources than those without brain compression. The commenter identified that the current code for brain compression (G93.5) has been separately reportable as a MCC with principal diagnoses from subcategories S06.4, S06.5, and S06.6; and maintained that the new codes for brain compression should reasonably retain MCC severity. The commenter added that some epidural, subdural, and subarachnoid hemorrhages are small, easily monitored and without compression; but others result in significant brain compression with longer length of stays and greater consumption of resources with the MCC severity differentiating these groups of patients. The commenter asserted that brain compression should also be a MCC when reported with principal diagnoses from subcategories S06.2 (Diffuse traumatic brain injury) and S06.3 (Focal traumatic brain injury) for the same reasons.

Lastly, the commenter stated that because diffuse traumatic brain injury with diffuse cerebral edema must be reported with a single code from subcategory S06.1- per the Excludes 1 note at subcategory S06.2-, it is additionally reasonable for brain compression to be a MCC severity with a principal diagnosis of traumatic cerebral edema (S06.1-) in order to differentiate between patients with and without the life-threatening complication of brain compression.

Response: We appreciate the commenter's feedback. It is not clear from the commenter's statement if they were unable to differentiate the content between Table 6G.1 and Table 6G.2 associated with the proposed rule. We note that 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 proposed 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. We believe the commenter may have inadvertently reviewed Table 6G.2 as if it were Table 6G.1. To clarify, diagnosis codes S06.A0XA and S06.A1XA, as shown in Table 6G.1 with an asterisk, were proposed to be excluded from acting as a secondary diagnosis MCC when any one of the following diagnoses are reported as the principal diagnosis; G93.6 (Cerebral edema), G93.82 (Brain death), S06.1X0A (Traumatic cerebral edema without loss of consciousness, initial encounter), S06.A0XA (Traumatic brain compression without herniation, initial encounter), and S06.A1XA (Traumatic brain compression with herniation, initial encounter). We are providing the following table to illustrate how the contents of Table 6G.1 associated with the proposed rule (and available via the internet on the CMS website at https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index.html), are displayed for these codes. We note that Table 6G.1 does not include the decimal point for any of the diagnosis codes listed.

As shown in the table, codes S06.A0XA and S06.A1XA are the secondary diagnosis codes that were proposed for addition to the CC Exclusion List as shown with an asterisk, and the principal diagnoses proposed to exclude these codes from acting as a MCC are provided in the indented column immediately following each. Therefore, our proposal was not to exclude codes S06.A0XA and S06.A1XA from acting as a MCC when reported with principal diagnoses from subcategories S06.2, S06.3, S06.4, S06.5, or S06.6, as there are no codes from those subcategories listed in the table. With respect to subcategory S06.1, as shown in the table, diagnosis code S06.1X0A is listed as a principal diagnosis that would exclude codes S06.A0XA and S06.A1XA from acting as a MCC when reported as a secondary diagnosis, as proposed.

We acknowledge that diffuse traumatic brain injury with diffuse cerebral edema must be reported with a single code from subcategory S06.1- per the Excludes 1 note at subcategory S06.2-, therefore, 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 Excludes 1 note at subcategory S06.2- requires further clinical review and consideration. We also examined the predecessor code for new diagnosis codes S06.A0XA and S06.A1XA, (code S06.1X0A), to identify the principal diagnosis collection list (list of principal diagnosis codes) that exclude code S06.1X0A from acting as a MCC and were the basis for the list of principal diagnosis codes proposed to exclude new diagnosis codes S06.A0XA and S06.A1XA from acting as a MCC when reported as a principal diagnosis. We note that code S06.1X0A is associated with principal diagnosis collection number 3977 and includes diagnosis codes G93.6, G93.82, and S06.1X0A, consistent with the principal diagnosis exclusions proposed for new diagnosis codes S06.A0XA and S06.A1XA.

We refer the reader to Table 6G.2 associated with the proposed rule (and available via the internet on the CMS website at https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index.html), to review how codes S06.A0XA and S06.A1XA were displayed as principal diagnoses as shown with an asterisk, and the conditions proposed for addition to the CC Exclusion List to not count as a CC are provided in an indented column immediately following the affected principal diagnosis. Among the conditions proposed for addition to the CC Exclusion List to not count as a CC are those from subcategories S06.1, S06.2, S06.3, S06.4, S06.5, and S06.6. As such, we believe the commenter inadvertently reviewed Table 6G.2 as if it were Table 6G.1.

After consideration of the public comments received, and until such time the CDC/NCHS staff can review the Excludes note at subcategory S06.2- further, we are finalizing our proposal to exclude diagnosis codes S06.A0XA and S06.A1XA from acting as a MCC when one of the listed diagnosis codes from Table 6G.1 is reported as a principal diagnosis and we are also finalizing our proposal to exclude the listed diagnosis codes in Table 6G.2 from acting as a MCC when diagnosis code S06.A0XA or S06.A1XA is reported as the principal diagnosis.

As discussed in section II.D.13. of the preamble of this final rule, we are finalizing, without modification, the proposed assignments and designations for the diagnosis codes after consideration of the public comments received. Therefore, the finalized CC Exclusions List as displayed in Tables 6G.1, 6G.2, 6H.1, 6H.2, and 6K, associated with this final rule reflect the severity levels under V39 of the ICD-10 MS-DRGs.

We have developed Table 6G.1.—Secondary Diagnosis Order Additions to the CC Exclusions List—FY 2022; Table 6G.2.—Principal Diagnosis Order Additions to the CC Exclusions List—FY 2022; Table 6H.1.—Secondary Diagnosis Order Deletions to the CC Exclusions List—FY 2022; and Table 6H.2.—Principal Diagnosis Order Deletions to the CC Exclusions List—FY 2022; and Table 6K. Complete List of CC Exclusions-FY 2022.

For Table 6G.1, each secondary diagnosis code finalized for addition to the CC Exclusion List is shown with an asterisk and the principal diagnoses finalized 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 finalized 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 finalized 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 finalized deletions to the CC Exclusions List are provided in an indented column immediately following the affected principal diagnosis. Table 6K is a list of all of the codes that are defined as either CC or a MCC when used as a secondary diagnosis. Within the table each code is specifically indicated as CC or MCC. A table number is given to a collection of diagnosis codes which, when used as the principal diagnosis, will cause the CC or MCC to be considered as only a NonCC. Tables 6G.1., 6G.2., 6H.1., 6H.2, and 6K. associated with this final rule are available via the internet on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index.html.

The ICD-10 MS-DRGs Version 39 CC Exclusion List is included as Appendix C of the Definitions Manual (available in two formats; text and HTML). The manuals are available via the internet on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Feefor-Service-Payment/​AcuteInpatientPPS/​MS-DRGClassifications-and-Software and each format 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. For all diagnosis codes on the list, a link (HTML version) 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.

13. Changes to the ICD-10-CM and ICD-10-PCS Coding Systems

To identify new, revised and deleted diagnosis and procedure codes, for FY 2022, we have 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 this final rule.

These tables are not published in the Addendum to the proposed rule or 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.D.16. 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 meeting 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 2022 IPPS/LTCH PPS proposed rule (86 FR 25186) we proposed the MDC and MS-DRG assignments for the new diagnosis codes and procedure codes as set forth in Table 6A.—New Diagnosis Codes and Table 6B.—New Procedure Codes. We also stated that the proposed severity level designations for the new diagnosis codes are set forth in Table 6A. and the proposed O.R. status for the new procedure codes are set forth in Table 6B. Consistent with our established process, we examined the MS-DRG assignment and the attributes (severity level and O.R. status) of the predecessor diagnosis or procedure code, as applicable, to inform our proposed assignments and designations. Specifically, we reviewed the predecessor code and MS-DRG assignment most closely associated with the new diagnosis or procedure code, and in the absence of claims data, we considered other factors that may be relevant to the MS-DRG assignment, including the severity of illness, treatment difficulty, complexity of service and the resources utilized in the diagnosis and/or treatment of the condition. We noted that this process does not automatically result in the new diagnosis or procedure code being proposed for assignment to the same MS-DRG or to have the same designation as the predecessor code.

Comment: A commenter stated they did not agree with the proposed severity level for diagnosis code I5A (Non-ischemic myocardial injury (non-traumatic)) shown as a CC in Table 6A.—New Diagnosis Codes. According to the commenter, the 4th Universal Definition of MI states that a non-ischemic myocardial injury is diagnosed only with an elevated troponin. The commenter recommended that the CC severity level for this diagnosis code be changed to a NonCC and to allow the underlying cause of the non-ischemic myocardial injury to act as the CC or MCC instead.

Response: We appreciate the commenter's feedback. Consistent with our annual process of assigning new diagnosis codes to MDCs, MS-DRGs, and designating a severity level (MCC, CC or NonCC), we reviewed the predecessor diagnosis code assignment for code I5A. The predecessor code for code I5A is diagnosis code I21.A9 (Other myocardial infarction type), which is designated as a MCC. Our clinical advisors did not agree with a MCC severity level assignment for code I5A because they stated nonischemic myocardial injury may be secondary to cardiac conditions such as myocarditis or non-cardiac conditions such as renal failure and the clinical evaluation and work up vary depending on the results of testing. Upon further review, they continue to believe that a CC severity level designation is warranted.

Comment: A commenter stated they did not agree with the proposed designation of procedure codes 07DT0ZX (Extraction of bone marrow, open approach, diagnostic) and 07DT0ZZ (Extraction of bone marrow, open approach) shown as Non-O.R. procedures in Table 6B.—New Procedure Codes. According to the commenter, these procedures should be classified as O.R. procedures because open incision down to bone with direct visualization of bone marrow during extraction requires operating room resources and anesthesia.

Response: We appreciate the commenter's feedback. Consistent with our annual process of assigning new procedure codes to MDCs, MS-DRGs, and classifying as an O.R. or Non-O.R. procedure, we reviewed the predecessor procedure code assignment for codes 07DT0ZX and 07DT0ZZ. The predecessor code for code 07DT0ZX is procedure code 079T0ZX (Drainage of bone marrow, open approach, diagnostic), which is designated as a Non-O.R. procedure and the predecessor code for code 07DT0ZZ is 079T0ZZ (Drainage of bone marrow, open approach) which is also designated as a Non-O.R. procedure. Our clinical advisors did not agree with an O.R. designation because they stated open bone marrow biopsy procedures would rarely be performed and rarely be the primary cause for an inpatient admission contributing to resource consumption. They indicated that if performed, it is more likely they would be conducted in connection with another open surgical procedure.

After consideration of the comments received, for FY 2022, we are maintaining the CC severity level for diagnosis code I5A and finalizing the Non-O.R. designation for procedure codes 07DT0ZX and 07DT0ZZ.

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

• Table 6A.—New Diagnosis Codes-FY 2022;
• Table 6B.—New Procedure Codes—FY 2022;
• Table 6C.—Invalid Diagnosis Codes—FY 2022;
• Table 6D.—Invalid Procedure Codes—FY 2022;
• Table 6E.—Revised Diagnosis Code Titles—FY 2022;
• Table 6F.—Revised Procedure Code Titles—FY 2022;
• Table 6G.1.—Secondary Diagnosis Order Additions to the CC Exclusions List—FY 2022;
• Table 6G.2.—Principal Diagnosis Order Additions to the CC Exclusions List—FY 2022;
• Table 6H.1.—Secondary Diagnosis Order Deletions to the CC Exclusions List-FY 2022;
• Table 6H.2.—Principal Diagnosis Order Deletions to the CC Exclusions List—FY 2022;
• Table 6I.—Complete MCC List—FY 2022;
• Table 6I.1.—Additions to the MCC List—FY 2022;
• Table 6I.2.—Deletions to the MCC List—FY 2022;
• Table 6J.—Complete CC List—FY 2022;
• Table 6J.1.—Additions to the CC List—FY 2022;
• Table 6J.2.—Deletions to the CC List—FY 2022; and
• Table 6K.—Complete List of CC Exclusions—FY 2022

14. 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 2021 IPPS/LTCH PPS final rule (85 FR 58448), we made available the FY 2021 ICD-10 MCE Version 38 manual file. The manual contains the definitions of the Medicare code edits, including a description of each coding edit with the corresponding diagnosis and procedure code edit lists. The link to this MCE manual file, along with the link to the mainframe and computer software for the MCE Version 38 (and ICD-10 MS-DRGs) are posted on the CMS website at https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​MS-DRG-Classifications-and-Software.

In the FY 2022 IPPS/LTCH PPS proposed rule, we addressed the MCE requests we received by the November 1, 2020 deadline. We also discussed the proposals we were making based on our internal review and analysis. In this FY 2022 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 review 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 have 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 2022 ICD-10 MCE Version 39 Manual file, along with the link to the mainframe and computer software for the MCE Version 39 (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.

a. External Causes of Morbidity Codes as Principal Diagnosis

In the MCE, the external cause codes (V, W, X, or Y codes) describe the circumstance causing an injury, not the nature of the injury, and therefore should not be used as a principal diagnosis.

As discussed in section II.D.13. of the preamble of the proposed rule and section II.D.13. of this final rule, Table 6A.—New Diagnosis Codes, lists the diagnosis codes that have been approved to date which will be effective with discharges on and after October 1, 2021. We proposed to add the following new ICD-10-CM diagnosis codes to the External Causes of Morbidity edit code list.

Comment: Commenters agreed with CMS' proposal to add the diagnosis codes listed in the previous table to the External Causes of Morbidity 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 previous table to the External Causes of Morbidity edit code list under the ICD-10 MCE Version 39, effective October 1, 2021.

b. 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 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 9-64 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) Pediatric Diagnoses

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.D.13. of the preamble of the proposed rule and section II.D.13. of this final rule, Table 6A.—New Diagnosis Codes, lists the diagnosis codes that have been approved to date which will be effective with discharges on and after October 1, 2021. We proposed to add the following new ICD-10-CM diagnosis codes to the Pediatric diagnoses category code list under the Age conflict edit.

Comment: Commenters agreed with CMS' proposal to add the diagnosis codes listed in the previous table to the Pediatric diagnoses category code list under the Age Conflict edit.

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 previous table to the Pediatric diagnoses category code list under the Age Conflict edit in the ICD-10 MCE Version 39, effective October 1, 2021.

c. 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

As discussed in section II.D.13. of the preamble of the proposed rule and section II.D.13. of this final rule, Table 6A.—New Diagnosis Codes, lists the new diagnosis codes that have been approved to date which will be effective with discharges on and after October 1, 2021. We proposed to add the following new ICD-10-CM diagnosis codes to the edit code list for the Diagnoses for Females Only edit.

Comment: Commenters supported the proposal to add the ICD-10-CM diagnosis codes listed in the previous table 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 proposal to add the diagnosis codes listed in the previous table to the Diagnoses for Females Only edit code list under the ICD-10 MCE Version 39, effective October 1, 2021.

d. 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.

As discussed in section II.D.13. of the preamble of the proposed rule and section II.D.13. of this final rule, Table 6A.—New Diagnosis Codes, lists the new diagnosis codes that have been approved to date which will be effective with discharges on and after October 1, 2021. We stated in the proposed rule that as a result of proposed new instructional notes to “Code first underlying disease” (which indicate the proper sequencing order of the codes) for existing diagnosis codes found at subcategory M40.1 (Other secondary kyphosis) and subcategory M41.5 (Other secondary scoliosis) discussed at the September 8-9, 2020 ICD-10 Coordination and Maintenance Committee meeting, we were proposing to add the following new and, if those instructional notes were finalized, existing ICD-10-CM diagnosis codes at subcategories M40.1 and M41.5, to the Unacceptable Principal Diagnosis edit code list.

Comment: Many commenters supported our proposal to add the diagnosis codes listed in the previous table to the Unacceptable Principal Diagnosis edit code list.

Response: We appreciate the commenters' support.

Comment: A commenter expressed disagreement with the proposal to add the listed diagnosis codes from subcategories M40.1 and M41.5 to the unacceptable principal diagnosis code edit list if the “code first underlying disease” notes are finalized. The commenter acknowledged that physicians can reasonably diagnose acquired, new onset scoliosis and/or kyphosis as “secondary” to an underlying condition; however, the commenter stated diagnostic workup must occur (usually as an outpatient) before the exact cause(s) can be determined, such as degenerative disc disease, spondylosis, osteoporosis, pathologic fracture, failed fusion, etc. According to the commenter, when there are two or more potential causes, physicians may be unable to identify one specific cause versus multifactorial causes and the commenter stated their concern that when queried for the underlying cause(s), the physician may respond that they are unable to determine. The commenter added that when secondary scoliosis and/or kyphosis are responsible for causing surgical hospitalizations, the ability to sequence these conditions as a principal diagnosis should remain when the underlying cause(s) cannot be obtained.

The commenter referenced language from the ICD-10-CM Official Guidelines for Coding and Reporting, with an emphasis on section I.A.13. Etiology/manifestation convention (“code first”, “use additional code” and “in diseases classified elsewhere” notes) which essentially states that “Code first” and “Use additional code” notes are also used as sequencing rules in the classification for certain codes that are not part of an etiology manifestation combination and section I.B.7. Multiple coding for a single condition, which states “code first” notes are also under certain codes that are not specifically manifestation codes but may be due to an underlying cause. When there is a “code first” note and an underlying condition is present, the underlying condition should be sequenced first, if known.

Response: We appreciate the commenters' feedback. We note that we consulted with the staff at the Centers for Disease Control and Prevention'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 intent is that the listed diagnosis codes from subcategories M40.1 and M41.5 be reported as secondary diagnoses. The staff agreed that in cases where it could be more than one condition as the underlying cause (E.g. Multifactorial), that the guideline for the principal diagnosis could be applied. Section 11. C. (Two or more diagnoses that equally meet the definition for principal diagnosis.) in the ICD-10-CM Official Guidelines for Coding and Reporting.

After consideration of the public comments that we received, we are finalizing our proposal to add the diagnosis codes listed in the previous table to the Unacceptable Principal Diagnosis edit code list under the ICD-10 MCE Version 39, effective October 1, 2021.

In addition, as discussed in section II.D.13. of the preamble of the proposed rule and section II.D.13. of this final rule, Table 6C.—Invalid Diagnosis Codes, lists the diagnosis codes that are no longer effective October 1, 2021. Included in this table are the following ICD-10-CM diagnosis codes that are currently listed on the Unacceptable Principal Diagnosis edit code list. We proposed to delete these codes from the Unacceptable Principal Diagnosis edit code list.

Comment: Commenters agreed with our proposal to remove the codes listed in the previous table from the Unacceptable Principal Diagnosis edit code list since they are no longer valid effective October 1, 2021.

Response: We appreciate the commenters' support.

After consideration of the public comments that we received, we are finalizing our proposal to remove the diagnosis codes previously listed from the Unacceptable Principal Diagnosis edit code list under the ICD-10 MCE Version 39, effective October 1, 2021.

e. Unspecified Codes

As discussed in section II.D.12.c. of the preamble of the proposed rule and this final rule, we requested public comments on a potential change to the severity level designations for “unspecified” ICD-10-CM diagnosis codes that we were considering adopting for FY 2022. In connection with that request, we also requested public comments on the potential creation of a new MCE code edit involving these “unspecified” codes for FY 2022. Specifically, this MCE code edit could trigger when an “unspecified” diagnosis code currently designated as either a CC or MCC, that includes other codes available in that code subcategory that further specify the anatomic site, is entered. We referred the reader to table 6P.3a 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 the list of unspecified diagnosis codes that would be subject to this edit. We stated that this edit could signal to the provider that a more specific code is available to report. We also stated we believed this edit aligns with documentation improvement efforts and leverages the specificity within ICD-10. As part of our request for comment on the potential creation of this new MCE code edit for these “unspecified” codes, we noted we were interested in comments on how this MCE code edit may be developed for FY 2022 to more accurately reflect each health care encounter and improve the reliability and validity of the coded data.

Comment: Many commenters expressed support for the creation of a new “unspecified” code edit where other codes in the subcategory (family) exist describing laterality, however, the commenters stated that the edit should be phased in with a subset of the “unspecified” codes at a time. The commenters also stated this approach would help provide training time for coding professionals and clinical documentation program staff on the potential changes to the severity level for the unspecified codes. A commenter stated a phased approach could also better prepare teams to adapt to potential operational challenges in addressing these edits industry wide. Another commenter who expressed support stated they agreed with the list of codes, with the exception of the neoplasm codes.

Another commenter expressed support for the creation of a new “unspecified” code MCE edit to align with the potential change to the severity level designation of “unspecified” diagnosis codes to a NonCC when there are other codes available in that code subcategory that further specify the anatomic site.

Other commenters stated they appreciated CMS assisting hospitals to more accurately code and not negatively impact MS-DRG group assignment, however according to the commenters, edits at the time of claim submission will add significant administrative burden to hospitals. According to the commenters, it would necessitate every case being routed from billing staff back to coding staff and then coding staff having to query physicians to amend the medical record with specificity. The commenters stated they did not object to CMS instructing providers to no longer report unspecified codes if it was done in concert with updates to the coding guidelines. Commenters suggested a delay in the implementation of the edit to allow the Cooperating Parties for ICD-10 time to update the current guidelines to include reporting specificity (for example laterality) based on non-physician clinical staff documentation.

Other commenters recommended that CMS conduct an analysis of how often the unspecified codes that were listed in Table 6P.2a in association with the proposed rule are reported and how many resources they consume.

Response: In response to the recommendation that CMS implement the edit using a phased approach to allow time for staff to prepare for potential changes to the severity level for the unspecified codes, we do not believe that a phased approach is necessary. As discussed in section II.D.12.c. of the preamble of this final rule, we are not finalizing any changes to the severity level designations for the unspecified codes that were subject to the potential change and listed in Table 6P.2a in association with the proposed rule (available via the internet on the CMS website at: https://www.cms.gov/​medicare/​medicare-fee-for-service-payment/​acuteinpatientpps), at this time. As also discussed in section II.D.12.c. of the preamble of this final rule, in response to public comments, we removed the diagnosis codes describing neoplasm of an unspecified site from the list of codes that were being considered for possible adoption of a change to the severity level designation.

In response to commenters' concerns that an edit for “unspecified” codes would create an administrative burden to hospitals, as it may result in additional physician queries, we note that the intent of the edit is not to create the need for physician queries. In anticipation of such potential concerns and suggested updates to the coding guidelines, we note that, as one of the four Cooperating Parties for ICD-10, we considered these issues in advance and updated the guidelines accordingly, as shown in the FY 2022 ICD-10-CM Official Guidelines for Coding and Reporting (available via the internet on the CMS website at: https://www.cms.gov/​medicare/​icd-10/​2022-icd-10-cm) and discussed in section II.D.12.c. of the preamble of this final rule. Specifically, as stated in section I.B.13. of the guidelines, “When laterality is not documented by the patient's provider, code assignment for the affected side may be based on medical record documentation from other clinicians. If there is conflicting medical record documentation regarding the affected side, the patient's attending provider should be queried for clarification. Codes for “unspecified” side should rarely be used, such as when the documentation in the record is insufficient to determine the affected side and it is not possible to obtain clarification.” Corresponding revisions to the guidelines can also be found in section I.B.14. Therefore, we believe that the updates made to the coding guidelines address that aspect of the commenters' concerns.

With respect to the commenters' recommendation that CMS conduct an analysis of how often the unspecified codes that were listed in Table 6P.2a are reported and how many resources they consume, we refer to the discussion in section II.D.12.c. of the preamble of this final rule, and note that Table 6P.2a associated with the proposed rule specifically provided this information.

After consideration of the public comments received, we are finalizing the implementation of a new code edit for “unspecified” codes, where there are other codes available in that code subcategory that further specify the anatomic site. As noted previously, the severity level of the unspecified diagnosis codes is unaffected and therefore this edit does not affect the payment the provider is eligible to receive. We also note that, in consideration of commenters' concerns that more time is needed to educate providers, the implementation date for this new edit is April 1, 2022. As such, we are finalizing the new edit for FY 2022, effective with discharges on and after April 1, 2022. Stakeholders can anticipate future information regarding an updated version of the ICD-10 Medicare Severity Diagnosis Related Group (MS-DRG) GROUPER Software and Medicare Code Editor (MCE) ICD-10 Software to be released by February 1, 2022 via the internet on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​MS-DRG-Classifications-and-Software.

We are finalizing a new “Unspecified Code Edit: to read as follows:

20. Unspecified Code Edit

Unspecified codes exist in the ICD-10-CM classification for circumstances when documentation in the medical record does not provide the level of detail needed to support reporting a more specific code. However, in the inpatient setting, there should generally be very limited and rare circumstances for which the laterality (right, left, bilateral) of a condition is unable to be documented and reported.

The following pages contain the list of unspecified ICD-10-CM diagnosis codes for which there is a more specific code to identify laterality (right, left, bilateral) within that code family.”

The list of codes subject to this edit are identified in Table 6P.3a associated with this final rule. In addition to the removal of the neoplasm codes from the unspecified codes list discussed previously, we also removed the following codes from consideration in response to public comments and further internal review, as discussed previously in connection with the potential change to the severity level designation.

When a code from the list displayed in Table 6P.3a is entered on the claim, the edit will be triggered. It is the provider's responsibility to determine if a more specific code from that subcategory is available in the medical record documentation by a clinical provider. If, upon review, additional information to identify the laterality from the available medical record documentation by any other clinical provider is unable to be obtained or there is documentation in the record that the physician is clinically unable to determine the laterality because of the nature of the disease/condition, then the provider must enter that information into the remarks section. Specifically, the provider may enter “UNABLE TO DET LAT 1” to identify that they are unable to obtain additional information to specify laterality or they may enter “UNABLE TO DET LAT 2” to identify that the physician is clinically unable to determine laterality.” This action and language will enable the Medicare Administrative Contractor (MAC) to bypass the edit and process the claim accordingly. If there is no language entered into the remarks section as to the availability of additional information to specify laterality and the provider submits the claim for processing, the claim would then be returned to the provider.

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. Subsequently, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20235) we stated that we engaged a contractor to assist in the review of the limited coverage and non-covered 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 is 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 also noted that the purpose of the MCE is to ensure that errors and inconsistencies in the coded data are recognized during Medicare claims processing. As we indicated in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41228), 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 have discussed in prior rulemaking, 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, 2021.

15. 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.

As discussed in the FY 2022 IPPS/LTCH PPS proposed rule, we received a request to examine the MS-DRG hierarchy within MDC 05 (Diseases and Disorders of the Circulatory System). The requestor stated its request to review the hierarchy within MDC 05 was based on the relative weights within each MS-DRG subdivision which they stated are supportive of higher position within the hierarchy. The requestor stated that when multiple procedures are performed, it is reasonable for providers to be compensated for the highest weighted procedure. The requestor did not specify which data year it analyzed to identify the relative weights. As discussed in the proposed rule and previously in this section, in reviewing the surgical hierarchy, we weigh the average costs of each MS-DRG in the class by frequency (that is, by the number of cases in the MS-DRG), not the relative weights of each MS-DRG as suggested by the requestor, to determine average resource consumption for the surgical class; therefore, consistent with our annual process, we stated we used the methodology as described previously to review the surgical hierarchy within MDC 05.

Based on our review of the surgical hierarchy within MDC 05 in response to this request, and in response to the request we received to review the MS-DRG assignments for cases involving the surgical ablation procedure for atrial fibrillation as discussed in section II.D.5.e. of the preamble of the proposed rule and this final rule, we proposed to revise the surgical hierarchy for the MS-DRGs in MDC 05 for FY 2022. Specifically, we proposed to sequence MS-DRGs 231-236 above MS-DRGs 222-227 and below MS-DRGs 216-221, sequence MS-DRGs 222-227 above MS-DRGs 266-227 and below MS-DRGs 231-236, sequence MS-DRGs 266-267 above MS-DRGs 268-269 and below MS-DRGs 222-227, sequence MS-DRGs 228-229 above MS-DRGs 319-320 and below MS-DRGs 268-269.

Our proposal for Appendix D MS-DRG Surgical Hierarchy by MDC and MS-DRG of the ICD-10 MS-DRG Definitions Manual Version 39 is illustrated in the following table.

Comment: Commenters supported our proposal. A commenter stated that this reordering of the surgical hierarchy appears reasonable. However, other commenters opposed portions of our proposal and requested that CMS reconsider and maintain MS-DRGs 222-227 (Cardiac Defibrillator Implant) as higher in the surgical hierarchy than MS-DRGs 231-236 (Coronary Bypass). These commenters stated that if CABG procedures are considered in the surgical hierarchy before procedures to insert a cardiac defibrillator implant, the majority of the cases would probably be assigned to MS-DRGs 235 and 236 (Coronary Bypass without Cardiac Catheterization with and without MCC, respectively), which would not account for the higher cost of the defibrillators.

Another commenter stated while they agreed with the proposal to sequence MS-DRGs 231-236 above MS-DRGs 228 and 229 (Other Cardiothoracic Procedures), they stated that CMS did not provide specific discussion regarding the more extensive re-sequencing in MDC 05 and suggested that CMS to hold on these revisions to the surgical hierarchy pending a clear and specific rationale for each, to which the public can respond. Another commenter proposed an alternative option by stating that it seemed more appropriate to sequence MS-DRG 245 (AICD Generator Procedures) above MS-DRGs 270—272 (Other Major Cardiovascular Procedures) and below MS-DRGs 228-229 (Other Cardiothoracic Procedures) and to sequence MS-DRGs 270-272 above MS-DRGs 319-320 (Other Endovascular Cardiac Valve Procedures) and below MS-DRG 245. However, this commenter did not provide any rationale for their alternative option.

Response: We appreciate the commenters' support.

In response to the comment that CMS did not provide specific discussion, we note that we indicated in the proposed rule and previously in this section, that in reviewing the surgical hierarchy, we 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. Consistent with our annual process, we stated we used the methodology as described previously to review the surgical hierarchy within MDC 05.

To compare and analyze the impact of our suggested modifications in response to the commenter's suggestion that we sequence MS-DRGs 222-227 above MS-DRGs 231-236, we reviewed the surgical hierarchy once again. Specifically, we examined the redistribution of cases that is anticipated to occur as a result of the proposal to move MS-DRGs 231-236 (Coronary Bypass) above MS-DRGs 222-227 (Cardiac Defibrillator Implant) in the surgical hierarchy of MDC 05 for Version 39 of the ICD-10 MS-DRGs. We processed the claims data from the March 2020 update of the FY 2019 MedPAR file through the ICD-10 MS-DRG GROUPER Version 38 and then processed the same claims data through the ICD-10 MS-DRG GROUPER Version 39 for comparison. The number of cases from this comparison that result in different MS-DRG assignments is the number of the cases that are anticipated to potentially shift or be redistributed. Our findings are shown in the following table.

We found that a small number of cases, 67 cases and 24 cases, are anticipated to potentially shift or be redistributed into MS-DRGs 235 and 236, respectively.

As we did with March 2020 update of the FY 2019 MedPAR file, we then examined the redistribution of cases that is anticipated to occur by processing the claims data, this time from the September 2020 update of the FY 2020 MedPAR file through the ICD-10 MS-DRG GROUPER Version 38 and then processed the same claims data through the ICD-10 MS-DRG GROUPER Version 39 for comparison. Our findings are shown in the following table.

Similarly, we found that a small number of cases, 84 cases and 23 cases, are anticipated to potentially shift or be redistributed into MS-DRGs 235 and 236, respectively.

Our clinical advisors reviewed these data and the commenter's concerns and state, as in open concomitant surgical ablation procedures, when a CABG procedure is performed along with the insertion of a cardiac defibrillator implant, the CABG component of the procedure is more technically complex than the procedure to insert the cardiac defibrillator implant. The redistribution of the small number of cases to MS-DRGs 235 and 236 as a result of the proposed hierarchy change more appropriately reflects resource utilization when multiple cardiac procedures are performed and will result in the most suitable MS-DRG assignment.

In the absence of a compelling rationale to further modify our proposal as suggested by the alternate option provided by the commenter, our clinical advisors continue to state that the proposed revision to the surgical hierarchy leads to a grouping that is more coherent and better accounts for the resources expended to address the more complex procedures from other cases redistributed during the hierarchy change.

Therefore, after consideration of the public comments we received, we are finalizing the proposed changes to the surgical hierarchy for the MS-DRGs in MDC 05 as illustrated in the table for the surgical hierarchy within Appendix D MS-DRG Surgical Hierarchy by MDC and MS-DRG of the ICD-10 MS-DRG Definitions Manual Version 39, without modification, for FY 2022.

16. Maintenance of 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 Centers for Disease Control and Prevention's (CDC) National Center for Health Statistics (NCHS) 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: https://www.cms.gov/​Medicare/​Coding/​ICD9ProviderDiagnosticCodes/​codes. 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 stated 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 during 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 2022 at a public meeting held on September 8-9, 2020 and finalized the coding changes after consideration of comments received at the meetings and in writing by November 09, 2020.

The Committee held its 2021 meeting on March 9-10, 2021. The deadline for submitting comments on the code proposals being considered for an October 1, 2021 implementation was April 9, 2021. It was announced at this meeting that any new diagnosis and procedure codes for which there was consensus of public support and for which complete tabular and indexing changes would be made by June 2021 would be included in the October 1, 2021 update to the ICD-10-CM diagnosis and ICD-10-PCS procedure code sets. 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 and final rules, they are not subject to comment in the proposed or final rule. Because of the length of these tables, they are not published in the Addendum to the proposed or final rule. Rather, they are available via the internet as discussed in section VI. of the Addendum to the proposed rule and this final rule.

Recordings for the virtual meeting discussions of the procedure codes at the Committee's September 8-9, 2020 meeting and the March 9-10, 2021 meeting can be obtained from the CMS website at: https://www.cms.gov/​Medicare/​Coding/​ICD10/​C-and-M-Meeting-Materials. The materials for the discussions relating to diagnosis codes at the September 8-9, 2020 meeting and March 9-10, 2021 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, participating in a Committee meeting, timeline requirements and meeting dates.

We encourage commenters to submit questions and comments on coding issues involving diagnosis codes via Email to: nchsicd10cm@cdc.gov.

Questions and comments concerning the procedure codes should be submitted via Email to: ICDProcedureCodeRequest@cms.hhs.gov.

We stated in the proposed rule that as a result of the ongoing COVID-19 public health emergency, the CDC implemented six new diagnosis codes describing conditions related to COVID-19 into the ICD-10-CM effective with discharges on and after January 1, 2021. The diagnosis codes are

We refer the reader to the CDC web page at https://www.cdc.gov/​nchs/​icd/​icd10cm.htm for additional details regarding the implementation of these new diagnosis codes.

As we discussed in the proposed rule, we provided the MS-DRG assignments for the six diagnosis codes effective with discharges on and after January 1, 2021, consistent with our established process for assigning new diagnosis codes. Specifically, we review the predecessor diagnosis code and MS-DRG assignment most closely associated with the new diagnosis code, and consider other factors that may be relevant to the MS-DRG assignment, including the severity of illness, treatment difficulty, and the resources utilized for the specific condition/diagnosis. We note that this process does not automatically result in the new diagnosis code being assigned to the same MS-DRG as the predecessor code. The assignments for the previously listed diagnosis codes are reflected in Table 6A—New Diagnosis Codes 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). As with the other new diagnosis codes and MS-DRG assignments included in Table 6A of the proposed rule, we solicited public comments on the most appropriate MDC, MS-DRG, and severity level assignments for these codes for FY 2022, as well as any other options for the GROUPER logic.

We did not receive any comments opposing the MDC, MS-DRG, and severity level assignments for the listed codes and are therefore, finalizing the assignments as reflected in Table 6A—New Diagnosis Codes in association with this final rule.

In addition, we noted in the proposed rule that CMS implemented 21 new procedure codes describing the introduction or infusion of therapeutics, including monoclonal antibodies and vaccines for COVID-19 treatment, into the ICD-10-PCS effective with discharges on and after January 01, 2021. The 21 procedure codes listed in this section of this rule are designated as non-O.R. and do not affect any MDC or MS-DRG assignment as shown in the following table.

The ICD-10 MS-DRG assignment for cases reporting any one of the 21 procedure codes is dependent on the reported principal diagnosis, any secondary diagnoses defined as a CC or MCC, procedures or services performed, age, sex, and discharge status. The 21 procedure codes are reflected in Table 6B—New Procedure Codes 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.) As with the other new procedure codes and MS-DRG assignments included in Table 6B of the proposed rule, we solicited public comments on the most appropriate MDC, MS-DRG, and operating room status assignments for these codes for FY 2022, as well as any other options for the GROUPER logic.

We did not receive any comments opposing the MDC, MS-DRG, and operating room status assignments for the listed codes and are therefore, finalizing the assignments as reflected in Table 6B—New Procedure Codes in association with this final rule.

In the proposed rule we also noted that Change Request (CR) 11895, Transmittal 10654, titled “Fiscal Year (FY) 2021 Annual Update to the Medicare Code Editor (MCE) and International Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM) and Procedure Coding System (ICD-10-PCS)”, was issued on March 12, 2021 (available via the internet on the CMS website at: https://www.cms.gov/​Regulations-and-Guidance/​Guidance/​Transmittals/​Transmittals/​r10654cp) regarding the release of an updated version of the ICD-10 MS-DRG GROUPER and Medicare Code Editor software, Version 38.1, effective with discharges on and after January 1, 2021, reflecting the new diagnosis and procedure codes. The updated software, along with the updated ICD-10 MS-DRG V38.1 Definitions Manual and the Definitions of Medicare Code Edits V38.1 manual is available at https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​MS-DRG-Classifications-and-Software.

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) of Public Law 108-173 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 3 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. 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. Historically, 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 Pub. L. 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 requestor during 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. Meeting participants and those reviewing the Committee meeting materials are provided the opportunity to comment on this expedited request. All other topics are considered for the October 1 update. Participants of the Committee meeting and those reviewing the Committee meeting materials are encouraged to comment on all such requests. There were no code requests approved for an expedited April 1, 2021 implementation at the September 8-9, 2020 Committee meetings. Therefore, there were no new codes implemented April 1, 2021.

We noted in the proposed rule that during the March 9-10, 2021 ICD-10 Coordination and Maintenance Committee meeting we announced our consideration of an April 1 implementation date for ICD-10-CM diagnosis and ICD-10-PCS procedure code updates, in addition to the current October 1 annual update for ICD-10-CM diagnosis codes and ICD-10-PCS procedure codes. We stated that this April 1 code update would be in addition to the existing April 1 update under section 1886(d)(5)(k)(vii) of the Act for diagnosis or procedure code revisions needed to describe new technologies and medical services for purposes of the new technology add-on payment process. As explained during the March 9-10, 2021 meeting, we stated we believe this additional April 1 implementation date for new codes would allow for earlier recognition of diagnoses, conditions, and illnesses as well as procedures, services, and treatments in the claims data. We also stated we believe this earlier recognition would be beneficial for purposes of reporting, data collection, tracking clinical outcomes, claims processing, surveillance, research, policy decisions and data interoperability. We noted, as previously summarized, that in 2005, in connection with the implementation of the current April 1 update for diagnosis or procedure code revisions for purposes of the new technology add-on payment process, stakeholders expressed concerns with an April 1 update, specifically with regard to the time needed to update hospital systems and obtain new code books and coding software. We further stated we believe that the advances in technology that have occurred since that time, including the use of electronic health records (EHRs), electronic coding books, and updated encoder software that are now utilized by the majority of providers, would alleviate those concerns and make a broader April 1 update more feasible today. Consistent with our established process for the existing April 1 update under section 1886(d)(5)(k)(vii) of the Act, if adopted, any new ICD-10 code updates finalized for implementation on the following April 1 would be announced in November of the prior year, which would provide a 4-month timeframe for the public to receive notice about the diagnosis and/or procedure code updates with respect to the codes, code descriptions, code designations (severity level for diagnosis codes or O.R. status for procedure codes) and code assignment under the ICD-10 MS-DRGs. As discussed during the March 9-10, 2021 meeting, all April 1 code update files would be made publicly available by February 1, providing a 2-month timeframe for providers to incorporate systems updates. We also noted in the proposed rule that we do not anticipate any need for code book publishers to issue new code books as a result of an April 1 code update, if adopted. Rather, as was done in the past at the publisher's discretion, supplemental pages containing the code update information were made available and sent to purchasers of the code book products. We further noted that historically, coders would hand-write any updates or notes directly into their code books. In addition, we stated in the proposed rule that with the availability of electronic code book files, we would anticipate any April 1 code updates, if adopted, could be reasonably completed in the allotted timeframe. For these same reasons, we also stated we do not believe a 5-month time period would continue to be needed to update providers' systems to reflect newly approved coding changes. We further noted that if an April 1 update were to be adopted, it could be through a phased approach, such that initially, the number and nature of the code updates would be fewer and less comprehensive as compared to the existing October 1 update. For example, it was discussed during the meeting that consideration could first be given to proposals identified as “Addenda”. For diagnosis codes, the proposed addenda update typically consist primarily of minor revisions to the Index and Tabular List, such as corrections to typos and changes to instructional notes. For procedure codes, the proposed addenda update typically consist primarily of minor revisions to the Index and Tables, such as adding or deleting entries to describe a body part or approach value or making changes to the Substance and Device Keys. We stated we would use our established process to implement an April 1 code update, which would include presenting proposals for April 1 consideration at the September ICD-10 Coordination and Maintenance Committee meeting, requesting public comments, reviewing the public comments, finalizing codes, and announcing the new codes with their assignments consistent with the new GROUPER release information. We also stated that under our contemplated process, requestors would indicate whether they are submitting their code request for consideration for an April 1 implementation date, if adopted, or an October 1 implementation date. We further stated that the ICD-10 Coordination and Maintenance Committee would make efforts to accommodate the requested implementation date for each request submitted. However, the Committee would determine which requests would be presented for consideration for an April 1 implementation date or an October 1 implementation date. We refer the reader to the Agenda packet from the meeting at: https://www.cms.gov/​Medicare/​Coding/​ICD10/​C-and-M-Meeting-Materials for additional information regarding this announcement and our request for comments.

We stated that if this new April 1 implementation date is adopted, we would assign the codes approved for the April 1 update to an MS-DRG(s) using our established process for GROUPER assignments for new diagnosis and procedure codes. Specifically, consistent with our established process for assigning new diagnosis and procedure codes, we would review the predecessor code and MS-DRG assignment most closely associated with the new diagnosis or procedure code, and in the absence of claims data, we would consider other factors that may be relevant to the MS-DRG assignment, including the severity of illness, treatment difficulty, complexity of service and the resources utilized in the diagnosis and/or treatment of the condition. We noted that this process would not automatically result in the new diagnosis or procedure code being assigned to the same MS-DRG or having the same designation as the predecessor code.

Comment: Several commenters expressed support for an April 1 update, in addition to the October 1 annual update. The commenters encouraged the CDC/NCHS and CMS to develop policies that expedite the assignment of new diagnosis and procedure codes to meet the needs of clinical advancements. Other commenters commended CMS for its ongoing efforts to improve the timeliness of coding and payment decisions for new technologies, and expressed their support for an April 1 update as a key piece of those efforts. Some commenters stated that more timely coding updates will allow CMS additional time to analyze how therapies are utilized in the inpatient setting and will improve the completeness of claims data capture that includes volume, length of stay, and cost data that should lead to better informed rate-setting methodologies. According to the commenters, expedited coding could potentially reduce the amount of time required to stabilize payments to hospitals for utilizing first-in-class therapies. Many commenters agreed that an additional update for ICD-10 codes would allow for earlier recognition of diagnoses, conditions, and illnesses as well as procedures, services, and treatments in the claims data. A commenter stated they strongly support the timely and specific data capture of ICD-10-CM and ICD-10-PCS codes for the purposes of tracking rare diseases, research, tracking of social determinants of health (SDOH), advancing medicine through quality data, and for public health. This commenter stated that processes are already in place for code updates in October and this new proposed update, if adopted, would not be a departure from that process, but would yield more timely implementation of important codes. According to the commenter, this would lessen the burden of putting all updates into one annual update in October. Another commenter emphasized that the availability of an April 1 process for updating and implementing new technology related ICD-10-CM and ICD-10-PCS codes is especially important for encouraging access to transformative therapies, including novel cell and gene therapies-such as TIL therapies and chimeric antigen receptor (CAR) T-cell therapies. According to the commenter, these new technologies target some of the most serious medical conditions imaginable, offer treatment that is highly personalized to each individual patient, and carry vast transformational potential in terms of patient care and clinical outcomes. The commenter stated that to the extent CMS and CDC/NCHS are considering a phased-in implementation of the April 1 code implementation as the agencies suggested during the March 9-10, 2021 ICD-10 Coordination and Maintenance Committee meeting, the commenter strongly urged the agencies to ensure that if adopted, the initial implementation permit new technology codes related to novel cell and gene therapies to be implemented effective April 1, as well as October 1. The commenter asserted that these types of therapies are limited in number and there is a profound and unique need for the prompt availability of such therapies in order to encourage more timely beneficiary access to these potentially lifesaving new therapies.

Another commenter expressed its support for the approach to integrating the potential April 1 implementation of new codes into the IPPS based on the MS-DRG policies in effect under the established process. According to the commenter, if adopted, this April 1 implementation option could offer several specific advantages for MS-DRG assignment for technologies receiving market approval too late to have coding and payment in place on October 1, particularly related to applications for new technology add-on payments. The commenter stated their belief that it also maintains the current public notice and comment rulemaking process for proposing, considering, and implementing decisions affecting MS-DRG assignments, with the additional flexibility to establish policies in anticipation of codes implemented on April 1. This commenter stated that its support for an April 1 implementation presumes that conditional decisions are established through prior notice and comment rulemaking.

In response to the request for feedback on what criteria or factors should be taken into consideration for determining whether to consider a code request for an April 1 or October 1 implementation date, some commenters stated CMS should consider expedited access. Specifically, according to the commenters, CMS should work with manufacturers to identify an implementation date that most closely aligns with approval by the Food and Drug Administration as the implementation date of the new procedure code and consideration for a new technology add-on payment (NTAP) as well. By doing so, the commenters indicated CMS will take steps to align the IPPS and provider reimbursement with the pace of innovation. The commenters also stated CMS should consider new codes that are related to new therapies that will be up for regulatory approval, or for diagnoses that are new and important to public health (such as those from the COVID-19 PHE). The commenters stated it is better to have coding in place before, and certainly as soon as, a product is approved, and sooner rather than later when an emerging public health issue is identified. A commenter suggested that if a sponsor anticipates receiving approval from the Food and Drug Administration in the third quarter of the year, the ICD-10 code update could occur in April. Similarly, if an approval is anticipated in the first quarter, then the ICD-10 code update could occur October 1. According to the commenter, the Committee should strive to make data collection as accurate and timely as possible.

Other commenters recommended that the Committee should consider the goal of facilitating and promoting patient access and well-being. These commenters stated the Committee should prioritize updates for which significant public feedback and corresponding medical literature indicate a pronounced need for expedited implementation to further understanding of particular conditions and advance clinical research on potential treatment options.

A few commenters stated that although the coding changes associated with COVID-19 under the PHE have demonstrated it is possible to implement more frequent coding updates that are limited in number, significant adjustments were needed to incorporate the updates and resulted in operational issues for hospitals. These commenters suggested that CMS consider limiting the number of codes approved with respect to adoption of an April 1 implementation date for ICD-10-CM diagnosis and ICD-10-PCS procedure code updates, in addition to the current October 1 annual update. In addition to limited updates, other commenters specifically recommended that if adopted, April 1 code updates should be restricted to simple, straightforward changes, such as the Addenda proposals involving proposed updates to the Alphabetic Index and Tabular List of Diseases and the correction of errors. The commenters stated that clear and consistent criteria should be applied to determine the need for new codes such as consideration of a new or emerging disease/illness/condition, an innovative technology that is unable to be reported with existing codes, or codes related to proposals that have been presented at the Coordination and Maintenance Committee meetings more than one time as a repeat proposal due to public comments and feedback.

Another commenter stated that consideration of an April 1 implementation should include a public process, similar to HCPCS and rulemaking, that allows stakeholders to weigh in on both procedure code creation and MS-DRG assignment and provides stakeholders with CMS reasoning behind its decisions.

With respect to the request for feedback on how an April 1 implementation date may affect business processes, a few commenters stated their belief that, initially, there may be some increased work to ensure that the April 1 codes released (and the MS-DRG grouping assignments) are up to date in their systems. The commenters stated this effort would include checking with software vendors to ensure that they are also updating their software for the new codes and groupings. A commenter stated that the benefits of adding the new release cycle, however, will be well worth the time and resource investment at the beginning. According to the commenter, having codes released in a timely manner so that data can be collected sooner rather than later will give insights that could lead to a reduction in burden elsewhere. The commenter stated that modernization to existing codes so they match current physician documentation terminology and practices will also reduce coders' work downstream over time.

A commenter stated that the addition of another cycle will enable ICD-10-CM diagnosis codes to be released in a more timely manner to reflect new diseases or conditions and facilitate clinical research, as well as data collection, all of which would ultimately improve patient care. This commenter stated the adoption of an April 1 implementation is particularly important for diagnosis codes, since proposals discussed at the March meetings generally do not go into effect until October 1 of the following year, resulting in an 18-month delay. According to the commenter, more timely releases of diagnosis codes would be crucial in the area of advanced cell therapy research, as it would facilitate better identification and tracking for this distinct subset of patients, which can advance clinical understanding and subsequently improve diagnostic and treatment standards.

Some commenters who supported an April 1 implementation date also expressed concerns with having twice a year code updates. Specifically, commenters noted concerns with payor/vendor updates being incorporated timely, training and education, and the ability to comment on MS-DRG assignments. The commenters also requested additional clarity and transparency on how the agencies intend to communicate timelines and decisions on which coding requests would be considered for April 1 versus October 1 during the ICD-10 Coordination and Maintenance Committee meetings.

A few commenters opposed consideration of the April 1 implementation date in addition to the October 1 annual update, for similar reasons described previously, as to how it may affect business processes. A commenter stated it will be a work intensive process in terms of systems updates, training time, and data comparison. A few commenters indicated they did not support an April 1 implementation and corresponding updated Grouper release without a comment period. A commenter stated the current GROUPER allows for a comment period prior to implementation in October (of the new GROUPER) and it is important to recognize that revisions may be made from the proposed and final GROUPER considerations especially for new codes. The commenter provided the example that for FY 2021 rulemaking, the comment period was important to allow CMS to consider provider feedback on the proposed MCC/CC designations for new ICD-10-CM diagnosis codes which also provided specificity for the grades of Cytokine Release Syndrome which were all proposed to be NonCC severity level. The commenter stated that after review of the comments, the diagnosis codes for Grades 3, 4, 5 (D89.833, D89.834, D89.835) were revised and finalized by CMS to a CC Severity Level. This commenter also stated that the ICD-10-CM and ICD-10-PCS code sets are not limited to the use of CMS providers as all providers utilize the ICD-10 codes and may not be able to turn around code updates as quickly as CMS. The commenter further stated that the code set is used to update computer systems, contracts, reimbursement systems and is not limited to MS-DRGs only. A few commenters expressed concern with operational challenges and stated that there are providers and commercial payors that currently do not incorporate the annual update timely, so it is important for systems to be able to adapt to the version of the code set in place for the provider. The commenters stated a second release date in April would result in addressing payor non-compliance twice a year. Other commenters who opposed adoption of an April 1 implementation date for code updates stated it would be costly for providers, payors, insurance companies and all healthcare organizations as it would involve purchase of code books, code tables, encoder updates and other related materials twice per year rather than once per year.

A commenter who opposed the potential adoption of an April 1 code update submitted the following questions or statements about the process.

1. What is the process and/or criteria that will be used in identifying which codes will be implemented in April versus October? Is it solely based on the date the submitter requested?

2. Will both April and October proposed codes be covered in the ICD-10 Coordination and Maintenance Committee meetings?

3. Right now, 99% of the codes proposed in March are not for the upcoming October 1 release but the following October 1 release (two years away). Will adding an April update increase the turnaround time for implementing a new code, that is, reducing it to a 1-year proposal to implementation versus a 2-year proposal to implementation?

4. What will be the effective dates of the codes and guidelines added in April? Will this alter the effective dates of the October codes and guidelines?

Example:

April codes/guidelines—effective April 1, 2022 to September 30, 2022

October codes/guidelines—effective October 1, 2022 to March 31, 2023

OR

April codes/guidelines—effective April 1, 2022 to March 31, 2023

October codes/guidelines—effective October 1, 2022 to September 30, 2023

5. Can you provide examples of codes that would require immediate implementation, outside of a public health emergency? For 2020, there were at least three separate code updates outside the April and October “regular” dates. If it is essential that a code be added to the classification, can this just occur on an as-needed basis, that is, due to public health emergency or pandemic situations, instead of having two regulatory updates?

According to the commenter, although many were able to adjust to the changes that happened through 2020, a PHE presents very different circumstances compared to adding codes to the classification on an annual or semi-annual basis.

6. How will this affect other regulatory agencies, payment systems and processes?

How will rulemaking be affected, two proposed rules and two final rules?

• MS-DRGs
• APR-DRGs
• Medicaid
• HH Agencies—Patient-Driven Groupings Model
• SNF—Patient Driven Payment Model
• IRF PPS
• Medicare Advantage Plans—HCC
• Commercial HCCs
• OPPS
• Worker's Compensation
• Other state agencies

We also received comments in response to this topic that we consider to be outside the scope of the request for feedback. Because we consider these public comments to be outside the scope of the proposed rule, we are not addressing them in this final rule.

Response: We appreciate the commenters' support and feedback received on what criteria or factors the agencies (Committee) should consider for determining whether to consider a code request for an April 1 or October 1 implementation date, as well, as how it may impact provider's business processes. With respect to commenters' concerns regarding clarity and transparency in the process for how the agencies will communicate timelines and information on which code requests would be considered for April 1 versus an October 1 implementation date, we note that we provide detailed information regarding the ICD-10 Coordination and Maintenance Committee meetings, including detailed timelines in the Agenda and meeting materials made available on each agency's respective websites. Members of the public may refer to the prior meeting's Agenda and meeting materials for information about upcoming deadlines. Additionally, we discuss information related to the code updates as a result of proposals brought forth to the meetings in the annual IPPS rulemaking process. As noted in the preamble of this final rule, and discussed earlier in this section, 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 3 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. 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. We note that, on July 26, 2021, the Federal Register Notice announcing the September 14-15, 2021 committee meetings was published with the tentative agenda items listed for both diagnosis and procedure code topics. This notice is located at https://www.federalregister.gov/​documents/​2021/​07/​26/​2021-15801/​national-center-for-health-statistics-nchs-icd-10-coordination-and-maintenance-candm-committee and specifically indicates for the ICD-10-PCS procedure code topics, which topics are associated with a new technology add-on payment application for FY 2023, as well as, which topic was requested for consideration of an April 1, 2022 implementation date. We note that there were no diagnosis code topics at the time of the development of the Federal Register Notice identified as requesting an April 1, 2022 consideration. With respect to communication, in addition to the resources previously discussed, CMS maintains an ICD-10 Maintenance subscriber list to enable members of the public to remain informed of updates related to ICD-10. Instructions on how to join this subscriber list are available on the CMS website at: https://www.cms.gov/​Medicare/​Coding/​ICD10/​ICD-10-Coordination-and-Maintenance-Committee-Meetings

We believe the combination of these various resources provide the necessary level of transparency regarding information pertaining to the ICD-10 Coordination and Maintenance Committee meeting process.

With regard to concerns about the ability to comment on the MS-DRG assignment of any new codes that may be considered for an April 1 implementation, we note that our current and long-established process includes finalizing procedure codes that have been presented at the March meeting that were unable to be included in the proposed rule. (Diagnosis code proposals discussed at the March meeting are typically not considered for implementation until the following October (18 month delay)). As discussed throughout section II.D. of the preamble of the FY 2022 IPPS/LTCH PPS proposed and final rules, using our established process, we review the predecessor codes MDC, MS-DRG assignment and designation (severity level or O.R. versus Non-O.R.) and consider other relevant factors in the assignment of a new code under the IPPS ICD-10 MS-DRGs. Members of the public have the opportunity to provide feedback on the assignment and designation of the codes if they disagree, which are then considered in the following or future year's rulemaking cycle. As discussed in more detail later in this section of this final rule, as shown in Table 6A.—New Diagnosis Codes associated with this final rule (and available via the internet on the CMS website at https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS, there were diagnosis codes discussed at the March 9-10, 2021 ICD-10 Coordination and Maintenance Committee meeting that were not finalized in time to include in the proposed rule. These 12 codes are identified in Table 6A with an asterisk and have been assigned to the most appropriate MDC, MS-DRG, and severity level designation using our established process, for FY 2022. As noted previously, members of the public have the opportunity to provide feedback on the assignment and designation of the codes finalized after the March meeting if they disagree, which are then considered in the following or future year's rulemaking cycle.

The process that was described for the MS-DRG assignment of new procedure codes (and/or diagnosis codes) that could potentially be finalized for an April 1 implementation is the same process that was utilized when the new diagnosis codes for COVID-19 and vaping related disorder were implemented April 1, 2020 and, as discussed earlier in this section, the MS-DRG assignments for the six diagnosis codes that were effective with discharges on and after January 1, 2021. We provided members of the public the opportunity to comment on the MDC, MS-DRG and severity level designation of the six diagnosis codes for FY 2022 consideration in association with the proposed rule, and we did not receive any comments suggesting we consider alternative assignments. To summarize, with respect to an April 1 implementation date, the process as described would consist of the initial assignment for any code finalized for an April 1 implementation to be assigned to the most appropriate MDC, MS-DRG and designation using our established process which would be in effect from April 1 through September 30 of that same calendar and fiscal year, along with the opportunity for members of the public to comment (during the public comment period in association with the proposed rule for the upcoming fiscal year), on any alternate suggestions should they not agree with the initial assignment. As a commenter noted in its comments and discussed earlier in this section, the current GROUPER allows for a comment period prior to implementation in October (of the new GROUPER) and it is important to recognize that revisions may be made from the proposed and final GROUPER especially for new codes.

With respect to commenters' concerns regarding training and education, as outlined in the materials and discussed during the March 9-10, 2021 meetings, if adopted, any codes implemented effective April 1 would be incorporated into the ICD-10-CM Official Guidelines for Coding and Reporting, if applicable, and coding advice would be published in AHA's Coding Clinic for ICD-10-CM/PCS publication. We note that the same opportunities, methods and options that are currently utilized to provide education and training on the code updates for the annual October update would also be available for an April 1 implementation date. These include, but are not limited to, workshops, seminars, webinars, podcasts, presentations, electronic communications, announcements via social media, etc.

In response to commenters' concerns regarding the ability of commercial payors to stay up to date on code changes if an April 1 implementation date were to be adopted, we believe that these concerns can be mitigated with limited code updates using a phased in approach. In addition, outreach efforts to better understand why systems are currently not being updated in a timely manner will help inform where process improvements can begin to ensure compliance. It is not clear to us if payors are not familiar with the HIPAA requirements for use of the current code set.

With respect to concerns about increased costs related to the production and purchase of additional code books or software, we do not believe there is a specific need for publishers to produce new code books for the reasons discussed in the proposed rule. With regard to new software, we were not and have not been made aware of any significant challenges encountered by vendors or programmers during the PHE with the additional GROUPER releases that were made available.

In response to the commenter's process questions, we have provided the following sample timeline from the March 9-10, 2021 ICD-10 Coordination and Maintenance Committee meeting materials and are sharing here to illustrate the process.

Sample Timeline

June 11, 2021

Deadline for requestors: Those members of the public requesting that topics be discussed at the September 14-15, 2021 ICD-10 Coordination and Maintenance Committee Meeting, must have their requests submitted to CMS for procedures and NCHS for diagnoses.

Requestors should indicate if they are submitting their code request for consideration for an April 1, 2022 implementation date, if adopted, or an October 1, 2022 implementation date.

The ICD-10 Coordination and Maintenance Committee will make efforts to accommodate the requested implementation date for each request submitted, however, the Committee will determine which requests will be presented for consideration for an April 1, 2022 implementation date or an October 1, 2022 implementation date.

*We are also seeking input on what factors the Committee should consider when determining which requests should be considered for either an April 1, 2022 or October 1, 2022 implementation date.

July 2021

Federal Register notice for the September 14-15, 2021 ICD-10 Coordination and Maintenance Committee Meeting will be published. This will include the tentative agenda.

August 2021

FY 2022 Hospital Inpatient Prospective Payment System final rule is issued. This rule will also include links to tables listing all the final codes to be implemented on October 1, 2021.

This rule can be accessed at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index.html.

August 2021

Tentative agenda for the Procedure portion of the September 14, 2021 ICD-10 Coordination and Maintenance Committee Meeting will be posted on the CMS web page at: https://www.cms.gov/​Medicare/​Coding/​ICD10/​C-and-M-Meeting-Materials.html.

Tentative agenda for the Diagnosis portion of the September 15, 2021 ICD-10 Coordination and Maintenance Committee Meeting will be posted on the NCHS web page at: https://www.cdc.gov/​nchs/​icd/​icd10cm_​maintenance.htm.

If adopted, topics being considered for an April 1 implementation will be identified.

August 9, 2021

On-line registration opens for the September 14-15, 2021 ICD-10 Coordination and Maintenance Committee Meeting at: https://www.eventbrite.com/​e/​icd-10-coordination-and-maintenance-committee-meeting-tickets.

Please note that this meeting will be conducted virtually and registration is not required to attend. However, we are providing the ability to register on-line for those required to provide proof of attendance for continuing education purposes. The on-line registration will be available through September 9, 2021.

September 14-15, 2021

The September 2021 ICD-10 Coordination and Maintenance Committee Meeting will be held fully virtual, with no in-person audience. Those who wish to attend must participate via Zoom Webinar or by dialing in.

September 2021

Recordings and slide presentations of the September 14-15, 2021 ICD-10 Coordination and Maintenance Committee Meeting will be posted on the following web pages:

Diagnosis code portion of the recording and related materials https://www.cdc.gov/​nchs/​icd/​icd10cm_​maintenance.htm;​

Procedure code portion of the recording and related materials https://www.cms.gov/​Medicare/​Coding/​ICD10/​C-and-M-Meeting-Materials.html.

October 1, 2021

New and revised ICD-10-CM and ICD-10-PCS codes go into effect along with MS-DRG changes. Final addendum available on web pages as follows:

Diagnosis addendum https://www.cdc.gov/​nchs/​icd/​icd10cm.htm;

Procedure addendum https://www.cms.gov/​Medicare/​Coding/​ICD10/​.

October 15, 2021

Deadline for receipt of public comments on proposed new codes discussed at the September 14-15, 2021 ICD-10 Coordination and Maintenance Committee Meeting being considered for implementation on April 1, 2022.

November 2021

Any new ICD-10 codes that will be implemented on the following April 1 will be announced. Information on any new codes to be implemented April 1, 2022 will be posted on the following websites: https://www.cdc.gov/​nchs/​icd/​icd10cm.htm, https://www.cms.gov/​Medicare/​Coding/​ICD10/​.

November 15, 2021

Deadline for receipt of public comments on proposed new codes and revisions discussed at the September 14-15, 2021 ICD-10 Coordination and Maintenance Committee Meeting being considered for implementation on October 1, 2022.

December 3, 2021

Deadline for requestors: Those members of the public requesting that topics be discussed at the March XX, 2022 ICD-10 Coordination and Maintenance Committee Meeting, must have their requests submitted to CMS for procedures and NCHS for diagnoses.

Requestors should indicate if they are submitting their code request for consideration for an October 1, 2022 implementation date, or an April 1, 2023 if adopted, implementation date.

The ICD-10 Coordination and Maintenance Committee will make efforts to accommodate the requested implementation date for each request submitted, however, the Committee will determine which requests will be presented for consideration for an October 1, 2022 implementation date or an April 1, 2023 implementation date.

January 2022

Federal Register notice for the March X-X, 2022 ICD-10 Coordination and Maintenance Committee Meeting will be published. This will include the tentative agenda.

February 1, 2022

ICD-10 MS-DRG Grouper software and related materials posted on CMS web page at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​MS-DRG-Classifications-and-Software.

February 1, 2022

Any updates to the ICD-10-CM and ICD-10-PCS Coding Guidelines will be posted on the following websites: https://www.cdc.gov/​nchs/​icd/​icd10cm.htmhttps://www.cms.gov/​Medicare/​Coding/​ICD10/​.

February 1, 2022

All ICD-10-CM and ICD-10-PCS code update files (includes April 1 update and full files from prior October 1) will be posted on the following websites: https://www.cdc.gov/​nchs/​icd/​icd10cm.htmhttps://www.cms.gov/​Medicare/​Coding/​ICD10/​.

March 8-9, 2022

ICD-10 Coordination and Maintenance Committee Meeting.

March 2022

Recordings and slide presentations of the March 9-10, 2021 ICD-10 Coordination and Maintenance Committee Meeting will be posted on the following web pages:

Diagnosis code portion of the recording and related materials https://www.cdc.gov/​nchs/​icd/​icd10cm_​maintenance.htm.

Procedure code portion of the recording and related materials https://www.cms.gov/​Medicare/​Coding/​ICD10/​C-and-M-Meeting-Materials.html.

April 1, 2022

New and revised ICD-10-CM and ICD-10-PCS codes go into effect along with MS-DRG changes.

We note that, as outlined in the sample timeline, by the June 11, 2021 deadline, requestors were encouraged to indicate in their submission of a code request whether they sought consideration for an April 1, 2022 implementation date, if adopted, or an October 1, 2022 implementation date. As discussed earlier in this section, we received one procedure code request for consideration of an April 1, 2022 implementation date for discussion at the September 14-15, 2021 ICD-10 Coordination and Maintenance Committee meeting. There were no diagnosis code requests submitted by that deadline. The process and/or criteria to determine which codes would be implemented in April versus October would include identifying the number of code requests received for consideration of each date, providing the Agenda and meeting materials which indicate the implementation date (April or October) being considered for each topic, using our established process for presenting the code proposal to members of the public participating in the ICD-10 Coordination and Maintenance Committee meeting process, allowing the opportunity for public comments to be submitted following the meeting, agency review of the public comments to determine if there is support for the code proposal, as well as, support for the proposed implementation date.

We also note that enabling code proposals related to diagnosis code topics that are presented in March to be considered for implementation the following April would assist in reducing the current 18-month timeframe that exists to incorporate new diagnosis codes into the classification. We further note that there is additional flexibility with regard to repeat diagnosis code proposals that have been updated and brought back for consideration to be implemented sooner as well. This scenario (repeat proposals) was also suggested by a commenter for the agencies to consider as one of the criteria for consideration of an April 1 implementation date.

With respect to coding guideline updates, any updates to the ICD-10-CM Official Guidelines for Coding and Reporting would depend on the circumstances relating to the new code(s), such that, there may be instances in which no guideline updates are needed and in other instances there may. However, if updates to the guidelines are necessary, the four Cooperating Parties for ICD-10 (AHA, AHIMA, CDC, and CMS) would evaluate and incorporate the necessary information into the appropriate section for all users of the classification accordingly. Coding guideline updates in response to April 1 code updates effective with discharges on and after April 1 are valid beginning on that April 1 date of that fiscal year. These April 1 coding guideline updates would be in addition to the coding guidelines that were effective at the beginning of that same fiscal year. A fiscal year for IPPS purposes begins with discharges on and after October 1 through September 30 of the following year. As displayed in the sample timeline, all materials requiring updates would be made publicly available by February 1 for an April 1 code implementation, including coding guidelines.

Finally, similar to the current process that is involved for users of the classification when incorporating changes associated with the annual October 1 code update, we anticipate that other regulatory agencies would continue to utilize their existing processes to update their payment systems accordingly.

After consideration of the public comments and feedback received, we are adopting an April 1 implementation date, in addition to the annual October 1 update, beginning with April 1, 2022. We note that the intent of this April 1 implementation date is to allow flexibility in the ICD-10 code update process for the reasons previously discussed and based on the feedback received by commenters.

We appreciate the commenters' suggestions on the criteria and/or factors that should be considered by the Committee in determining whether to consider a code request for an April 1 versus an October 1 implementation and note that, as discussed during the March 9-10, 2021 ICD-10 Coordination and Maintenance Committee meeting that we recommend a phased in approach with limited code updates. We acknowledge the concerns that some commenters expressed with respect to potential operational issues and with commercial payers and compliance issues. As noted previously, we intend to work with stakeholders and identify how we can address issues that may arise in this process. We will continue to provide additional information pertaining to the adoption of the April 1 implementation date for new codes in connection with the ICD-10 Coordination and Maintenance Committee meeting process and our annual IPPS rulemaking.

ICD-9-CM addendum and code title information is published on the CMS website at: https://www.cms.gov/​Medicare/​Coding/​ICD9ProviderDiagnosticCodes/​addendum. 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 electronic files containing 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 be found on the CDC website at: https://www.cdc.gov/​nchs/​icd/​icd10cm.htm. Additionally, information on new, revised, and deleted ICD-10-CM diagnosis and ICD-10-PCS procedure codes is provided to the AHA for publication in the Coding Clinic for ICD-10. The AHA also distributes coding update information to publishers and software vendors.

In the proposed rule we noted that for FY 2021, there are currently 72,621 ICD-10-CM diagnosis codes and 78,136 ICD-10-PCS procedure codes. We also noted that as displayed in Table 6A—New Diagnosis Codes and in Table 6B—New Procedure Codes associated with the proposed rule (and available via the internet on the CMS website at https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index/​, there were 147 new diagnosis codes and 106 new procedure codes that had been finalized for FY 2022 at the time of the development of the proposed rule. As discussed in section II.D.13 of the preamble of this final rule, we are making available 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 via the internet on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index.html in association with this final rule. As shown in Table 6A—New Diagnosis Codes, there were diagnosis codes discussed at the March 9-10, 2021 ICD-10 Coordination and Maintenance Committee meeting that were not finalized in time to include in the proposed rule. These 12 codes are identified in Table 6A with an asterisk and are as follows.

The addition of these 12 new diagnosis codes to the 147 diagnosis codes that had been finalized at the time of the development of the proposed rule result in a total of 159 (147 + 12 = 159) new diagnosis codes for FY 2022.

Similarly, there were procedure codes discussed at the March 9-10, 2021 ICD-10 Coordination and Maintenance Committee meeting that were not finalized in time to include in the proposed rule and are also identified with an asterisk, as shown in Table 6B—New Procedure Codes. We refer the reader to Table 6B—New Procedure Codes associated with this final rule and available via the internet on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index.html for the detailed list of these additional 85 new procedure codes. The addition of these 85 new procedure codes to the 106 procedure codes that had been finalized at the time of the development of the proposed rule result in a total of 191 (106 + 85 = 191) new procedure codes for FY 2022.

We also note, as reflected in Table 6C—Invalid Diagnosis Codes and in Table 6D—Invalid Procedure Codes, there are a total of 32 diagnosis codes and 107 procedure codes that will become invalid effective October 1, 2021. Based on these code updates, effective October 1, 2021, there are a total of 72,748 ICD-10-CM diagnosis codes and 78,220 ICD-10-PCS procedure codes for FY 2022 as shown in the following table.

As stated 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. The code titles are adopted as part of the ICD-10 Coordination and Maintenance Committee process. Thus, 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. We will continue to provide the October updates in this manner in the IPPS proposed and final rules.

17. 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 2022

As discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25195 through 25198) for FY 2022, we proposed to not 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 following table.

We did not receive any public comments opposing our proposal to continue to include the existing MS-DRGs currently subject to the policy. Therefore, we are finalizing the list of MS-DRGs in the table included in the proposed rule and in this final rule that will be subject to the replaced devices offered without cost or with a credit policy effective October 1, 2021.

The final list of MS-DRGs subject to the IPPS policy for replaced devices offered without cost or with a credit will be issued to providers in the form of a Change Request (CR).

18. Out of Scope Public Comments Received

We received public comments on MS-DRG related issues that were outside the scope of the proposals included in the FY 2022 IPPS/LTCH PPS proposed rule.

Because we consider these public comments to be outside the scope of the proposed rule, we are not addressing them in this final rule. As stated in section II.D.1.b. of the preamble of this final rule, we encourage individuals with comments about MS-DRG classifications to submit these comments no later than November 1, 2021 so that they can be considered for possible inclusion in the annual proposed rule. We will consider these public comments for possible proposals in future rulemaking as part of our annual review process.

E. Recalibration of the FY 2022 MS-DRG Relative Weights

1. Data Sources for Developing the Relative Weights

In accordance with our final policy in section I.F. of this final rule, for the purposes of establishing the FY 2022 MS-DRG relative weights, we are finalizing our proposal to use the FY 2019 MedPAR claims data, based on claims received by CMS through March 31, 2020, and the March 2020 update of the FY 2018 HCRIS file where we ordinarily would have used the FY 2020 MedPAR claims data, based on claims received by CMS through December 31, 2020, and the December 2020 update of the FY 2019 HCRIS file. We refer the reader to section I.F. of this final rule for further discussion of our analysis of the best available data for purposes of the FY 2022 ratesetting and our related policies.

Consistent with our established policy, in developing the MS-DRG relative weights for FY 2022, we proposed to use two data sources: claims data and cost report data. The claims data source is the MedPAR file, which includes fully coded diagnostic and procedure data for all Medicare inpatient hospital claims. The FY 2019 MedPAR data used in this final rule include discharges occurring on October 1, 2018, through September 30, 2019, based on claims received by CMS through March 31, 2020, from all hospitals subject to the IPPS and short-term, acute care hospitals in Maryland (which at that time were under a waiver from the IPPS).

The FY 2019 MedPAR file used in calculating the relative weights includes data for approximately 9,216,615 Medicare discharges from IPPS providers. Discharges for Medicare beneficiaries enrolled in a Medicare Advantage managed care plan are excluded from this analysis. These discharges are excluded when the MedPAR “GHO Paid” indicator field on the claim record is equal to “1” or when the MedPAR DRG payment field, which represents the total payment for the claim, is equal to the MedPAR “Indirect Medical Education (IME)” payment field, indicating that the claim was an “IME only” claim submitted by a teaching hospital on behalf of a beneficiary enrolled in a Medicare Advantage managed care plan. In addition, the March 31, 2020 update of the FY 2019 MedPAR file complies with version 5010 of the X12 HIPAA Transaction and Code Set Standards, and includes a variable called “claim type.” Claim type “60” indicates that the claim was an inpatient claim paid as fee-for-service.

Claim types “61,” “62,” “63,” and “64” relate to encounter claims, Medicare Advantage IME claims, and HMO no-pay claims. Therefore, the calculation of the relative weights for FY 2022 also excludes claims with claim type values not equal to “60.” The data exclude CAHs, including hospitals that subsequently became CAHs after the period from which the data were taken. We note that the FY 2022 relative weights are based on the ICD-10-CM diagnosis codes and ICD-10-PCS procedure codes from the FY 2019 MedPAR claims data, grouped through the ICD-10 version of the FY 2022 GROUPER (Version 39).

The second data source used in the cost-based relative weighting methodology is the Medicare cost report data files from the HCRIS. Normally, we use the HCRIS dataset that is 3 years prior to the IPPS fiscal year. However, as discussed earlier in this section, we proposed to use the March 31, 2020 update of the FY 2018 HCRIS for calculating the FY 2022 cost-based relative weights. Consistent with our historical practice, for this FY 2022 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 2022 IPPS Final Rule Home Page” or “Acute Inpatient Files for Download.” We note that this file is identical to the file used for the FY 2021 IPPS/LTCH PPS final rule. As discussed previously and in the proposed rule, we also made available the FY 2019 HCRIS and the FY 2020 MedPAR file as well as other related information and data files for purposes of public comment on our alternative approach of using the same FY 2020 data that we would ordinarily use for purposes of FY 2022 ratesetting.

Comment: A few commenters requested that CMS consider whether an adjustment needs to be made to the normalization factor since the FY 2021 and FY 2022 relative weights were both calculated using the same set of claims data (FY 2019 MedPAR). Specifically, the commenters were concerned about the impact holding real changes in case-mix constant (when calculating the relative weights) might have on accuracy of the FY 2022 relative weights. A commenter stated that “by using FY 2019 utilization in place of FY 2020 data, the base year weights (FY 2021) will not reflect any changes in case mix that would occur from using FY 2020 compared to FY 2019 utilization. Thus, CMS will be making the payment year weights (FY 2022) budget neutral to a base year that does not reflect any change in real case mix as would normally occur.”

Response: We believe the commenters may have misinterpreted the purpose of the normalization adjustment. The normalization adjustment is the first of two steps performed by CMS to ensure that the recalibration of the relative weights does not increase nor decrease total payments under the IPPS.

The purpose of the normalization factor is to ensure that changes in average case-mix do not impact the final relative weights used for payment purposes. For example, if the average cost of cases grouped to each MS-DRG remained the same from one year to the next, and all that changed was the number of cases grouped to each MS-DRG, the normalization factor would ensure that the final relative weights calculated in each year were the same. This is appropriate since it ensures that when the relative costliness of cases across MS-DRGs is unchanged, the relative weights are unchanged as well. Therefore, if CMS were to somehow develop a method for introducing some level of real-case mix growth into the FY 2019 claims, the revised normalization factor would produce the same set of final relative weights, since the average cost of claims grouped to each MS-DRG would not have changed.

The result of the normalization adjustment is that the relative weights from both years result in the same average case-mix value when using the same set of utilization. However, the normalization adjustment alone does not completely meet the goal of ensuring that the recalibration of the relative weights does not increase nor decrease total payments under the IPPS. Due to other factors that impact IPPS payments (for example, the wage index), a budget neutrality factor is calculated that ensures the normalized relative weights for the current year result in the same total payments as the normalized relative weights from the previous year. We refer readers to section II.A.4.a of the Addendum to this final rule for a complete discussion on the calculation of the budget neutrality factor for recalibration of MS-DRG relative weights.

To the extent commenters were implying that CMS should simply increase the normalization factor by an estimate of real case mix growth without somehow introducing it into the FY 2019 claims, even putting aside the methodological issues with such an approach, we note that such an increase in the normalization factor would be offset by a larger budget neutrality adjustment.

2. Methodology for Calculation of the Relative Weights

a. General

We calculated the FY 2022 relative weights based on 19 CCRs, as we did for FY 2021. The methodology we proposed to use to calculate the FY 2022 MS-DRG cost-based relative weights based on claims data in the FY 2019 MedPAR file and data from the FY 2018 Medicare cost reports is as follows:

• To the extent possible, all the claims were regrouped using the FY 2022 MS-DRG classifications discussed in sections II.B. and II.F. of the preamble of this final rule.
• The transplant cases that were used to establish the relative weights for heart and heart-lung, liver and/or intestinal, and lung transplants (MS-DRGs 001, 002, 005, 006, and 007, respectively) were limited to those Medicare-approved transplant centers that have cases in the FY 2019 MedPAR file. (Medicare coverage for heart, heart-lung, liver and/or intestinal, and lung transplants is limited to those facilities that have received approval from CMS as transplant centers.)
• Organ acquisition costs for kidney, heart, heart-lung, liver, lung, pancreas, and intestinal (or multivisceral organs) transplants continue to be paid on a reasonable cost basis. Because these acquisition costs are paid separately from the prospective payment rate, it is necessary to subtract the acquisition charges from the total charges on each transplant bill that showed acquisition charges before computing the average cost for each MS-DRG and before eliminating statistical outliers.

Section 108 of the Further Consolidated Appropriations Act, 2020 provides that, for cost reporting periods beginning on or after October 1, 2020, costs related to hematopoietic stem cell acquisition for the purpose of an allogeneic hematopoietic stem cell transplant shall be paid on a reasonable cost basis. We refer the reader to the FY 2021 IPPS/LTCH PPS final rule for further discussion of the reasonable cost basis payment for cost reporting periods beginning on or after October 1, 2020 (85 FR 58835 to 58842). For FY 2022 and subsequent years, we proposed to subtract the hematopoietic stem cell acquisition charges from the total charges on each transplant bill that showed hematopoietic stem cell acquisition charges before computing the average cost for each MS-DRG and before eliminating statistical outliers.

• Claims with total charges or total lengths of stay less than or equal to zero were deleted. Claims that had an amount in the total charge field that differed by more than $30.00 from the sum of the routine day charges, intensive care charges, pharmacy charges, implantable devices charges, supplies and equipment charges, therapy services charges, operating room charges, cardiology charges, laboratory charges, radiology charges, other service charges, labor and delivery charges, inhalation therapy charges, emergency room charges, blood and blood products charges, anesthesia charges, cardiac catheterization charges, CT scan charges, and MRI charges were also deleted.
• At least 92.8 percent of the providers in the MedPAR file had charges for 14 of the 19 cost centers. All claims of providers that did not have charges greater than zero for at least 14 of the 19 cost centers were deleted. In other words, a provider must have no more than five blank cost centers. If a provider did not have charges greater than zero in more than five cost centers, the claims for the provider were deleted.
• Statistical outliers were eliminated by removing all cases that were beyond 3.0 standard deviations from the geometric mean of the log distribution of both the total charges per case and the total charges per day for each MS-DRG.
• Effective October 1, 2008, because hospital inpatient claims include a POA indicator field for each diagnosis present on the claim, only for purposes of relative weight-setting, the POA indicator field was reset to “Y” for “Yes” for all claims that otherwise have an “N” (No) or a “U” (documentation insufficient to determine if the condition was present at the time of inpatient admission) in the POA field.

Under current payment policy, the presence of specific HAC codes, as indicated by the POA field values, can generate a lower payment for the claim. Specifically, if the particular condition is present on admission (that is, a “Y” indicator is associated with the diagnosis on the claim), it is not a HAC, and the hospital is paid for the higher severity (and, therefore, the higher weighted MS-DRG). If the particular condition is not present on admission (that is, an “N” indicator is associated with the diagnosis on the claim) and there are no other complicating conditions, the DRG GROUPER assigns the claim to a lower severity (and, therefore, the lower weighted MS-DRG) as a penalty for allowing a Medicare inpatient to contract a HAC. While the POA reporting meets policy goals of encouraging quality care and generates program savings, it presents an issue for the relative weight-setting process. Because cases identified as HACs are likely to be more complex than similar cases that are not identified as HACs, the charges associated with HAC cases are likely to be higher as well. Therefore, if the higher charges of these HAC claims are grouped into lower severity MS-DRGs prior to the relative weight-setting process, the relative weights of these particular MS-DRGs would become artificially inflated, potentially skewing the relative weights. In addition, we want to protect the integrity of the budget neutrality process by ensuring that, in estimating payments, no increase to the standardized amount occurs as a result of lower overall payments in a previous year that stem from using weights and case-mix that are based on lower severity MS-DRG assignments. If this would occur, the anticipated cost savings from the HAC policy would be lost.

To avoid these problems, we reset the POA indicator field to “Y” only for relative weight-setting purposes for all claims that otherwise have an “N” or a “U” in the POA field. This resetting “forced” the more costly HAC claims into the higher severity MS-DRGs as appropriate, and the relative weights calculated for each MS-DRG more closely reflect the true costs of those cases.

In addition, in the FY 2013 IPPS/LTCH PPS final rule, for FY 2013 and subsequent fiscal years, we finalized a policy to treat hospitals that participate in the Bundled Payments for Care Improvement (BPCI) initiative the same as prior fiscal years for the IPPS payment modeling and ratesetting process without regard to hospitals' participation within these bundled payment models (77 FR 53341 through 53343). Specifically, because acute care hospitals participating in the BPCI Initiative still receive IPPS payments under section 1886(d) of the Act, we include all applicable data from these subsection (d) hospitals in our IPPS payment modeling and ratesetting calculations as if the hospitals were not participating in those models under the BPCI initiative. We refer readers to the FY 2013 IPPS/LTCH PPS final rule for a complete discussion on our final policy for the treatment of hospitals participating in the BPCI initiative in our ratesetting process. For additional information on the BPCI initiative, we refer readers to the CMS' Center for Medicare and Medicaid Innovation's website at: http://innovation.cms.gov/​initiatives/​Bundled-Payments/​index.html and to section IV.H.4. of the preamble of the FY 2013 IPPS/LTCH PPS final rule (77 FR 53341 through 53343).

The participation of hospitals in the BPCI initiative concluded on September 30, 2018. The participation of hospitals in the BPCI Advanced model started on October 1, 2018. The BPCI Advanced model, tested under the authority of section 1115A of the Act, is comprised of a single payment and risk track, which bundles payments for multiple services beneficiaries receive during a Clinical Episode. Acute care hospitals may participate in BPCI Advanced in one of two capacities: As a model Participant or as a downstream Episode Initiator. Regardless of the capacity in which they participate in the BPCI Advanced model, participating acute care hospitals will continue to receive IPPS payments under section 1886(d) of the Act. Acute care hospitals that are Participants also assume financial and quality performance accountability for Clinical Episodes in the form of a reconciliation payment. For additional information on the BPCI Advanced model, we refer readers to the BPCI Advanced web page on the CMS Center for Medicare and Medicaid Innovation's website at: https://innovation.cms.gov/​initiatives/​bpci-advanced/​. Consistent with our policy for FY 2021, and consistent with how we have treated hospitals that participated in the BPCI Initiative, for FY 2022, we continue to believe it is appropriate to include all applicable data from the subsection (d) hospitals participating in the BPCI Advanced model in our IPPS payment modeling and ratesetting calculations because, as noted previously, these hospitals are still receiving IPPS payments under section 1886(d) of the Act. Consistent with the FY 2021 IPPS/LTCH PPS final rule, we also proposed to include all applicable data from subsection (d) hospitals participating in the Comprehensive Care for Joint Replacement (CJR) Model in our IPPS payment modeling and ratesetting calculations.

The charges for each of the 19 cost groups for each claim were standardized to remove the effects of differences in area wage levels, IME and DSH payments, and for hospitals located in Alaska and Hawaii, the applicable cost-of-living adjustment. Because hospital charges include charges for both operating and capital costs, we standardized total charges to remove the effects of differences in geographic adjustment factors, cost-of-living adjustments, and DSH payments under the capital IPPS as well. Charges were then summed by MS-DRG for each of the 19 cost groups so that each MS-DRG had 19 standardized charge totals. Statistical outliers were then removed. These charges were then adjusted to cost by applying the national average CCRs developed from the FY 2018 cost report data, consistent with our FY 2022 ratesetting discussed in section II.A.4 of the Addendum of this final rule.

The 19 cost centers that we used in the relative weight calculation are shown in a supplemental data file, Cost Center HCRIS Lines Supplemental Data File, posted via the internet on the CMS website for this final rule and available at http://www.cms.hhs.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index.html. The supplemental data file shows the lines on the cost report and the corresponding revenue codes that we used to create the 19 national cost center CCRs. In the proposed rule, we stated that if we receive comments about the groupings in this supplemental data file, we may consider these comments as we finalize our policy. However, we did not receive any comments on the groupings in this table, and therefore, we are finalizing the groupings as proposed.

Consistent with historical practice, we account for rare situations of non-monotonicity in a base MS-DRG and its severity levels, where the mean cost in the higher severity level is less than the mean cost in the lower severity level, in determining the relative weights for the different severity levels. If there are initially non-monotonic relative weights in the same base DRG and its severity levels, then we combine the cases that group to the specific non-monotonic MS-DRGs for purposes of relative weight calculations. For example, if there are two non-monotonic MS-DRGs, combining the cases across those two MS-DRGs results in the same relative weight for both MS-DRGs. The relative weight calculated using the combined cases for those severity levels is monotonic, effectively removing any non-monotonicity with the base DRG and its severity levels. For this FY 2022 final rule, this calculation was applied to address non-monotonicity for cases that grouped to MS-DRG 504 and MS-DRG 505. We note that cases were also combined in calculating the relative weights for these two MS-DRGs for FY 2021. In the supplemental file titled AOR/BOR File, we include statistics for the affected MS-DRGs both separately and with cases combined.

In the proposed rule, we invited public comments on our proposals related to recalibration of the FY 2022 relative weights and the changes in relative weights from FY 2021. We did not receive any public comments on these proposals. Therefore, we are finalizing our proposed policies with respect to the recalibration of the FY 2022 relative weights.

b. Relative Weight Calculation for MS-DRG 018

As discussed in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58599 through 58600), we created MS-DRG 018 for cases that include procedures describing CAR T-cell therapies, which were reported using ICD-10-PCS procedure codes XW033C3 or XW043C3. We refer the reader to section II.D.2. of this final rule for discussion of the procedure codes for CAR T-cell and non-CAR T-cell therapies and other immunotherapies that are finalizing for assignment to MS-DRG 018 for FY 2022.

In the FY 2021 IPPS/LTCH PPS final rule, we finalized our proposals to modify our existing relative weight methodology to ensure that the relative weight for new MS-DRG 018 appropriately reflects the relative resources required for providing CAR T-cell therapy outside of a clinical trial, while still accounting for the clinical trial cases in the overall average cost for all MS-DRGs, with additional refinements in response to comments. For cases that group to MS-DRG 018, we finalized to not include claims determined to be clinical trial claims that group to new MS-DRG 018 when calculating the average cost for new MS-DRG 018 that is used to calculate the relative weight for this MS-DRG, with the additional refinements that (a) when the CAR T-cell therapy product is purchased in the usual manner, but the case involves a clinical trial of a different product, the claim will be included when calculating the average cost for new MS-DRG 018 to the extent such claims can be identified in the historical data, and (b) when there is expanded access use of immunotherapy, these cases will not be included when calculating the average cost for new MS-DRG 018 to the extent such claims can be identified in the historical data (85 FR 58600). We also finalized our proposal to calculate an adjustment to account for the CAR T-cell therapy cases determined to be clinical trial cases, as described in the FY 2021 IPPS/LTCH PPS final rule, with the additional refinement of including revenue center 891 in our calculation of standardized drug charges for MS-DRG 018. Applying this finalized methodology, based on the March 2020 update of the FY 2019 MedPAR file for the FY 2021 IPPS/LTCH PPS final rule, we estimated that the average costs of CAR T-cell therapy cases determined to be clinical trial cases ($46,062) were 17 percent of the average costs of CAR T cell therapy cases determined to be non-clinical trial cases ($276,042), and therefore, in calculating the national average cost per case for purposes of the FY 2021 IPPS/LTCH PPS final rule, each case identified as a clinical trial case was adjusted by 0.17. We also noted that we were applying this adjustor for cases determined to be CAR T-cell therapy clinical trial cases for purposes of budget neutrality and outlier simulations. We refer the reader to the FY 2021 IPPS/LTCH PPS final rule for complete discussion of our finalized modifications to the relative weight calculation for MS-DRG 018.

Since we proposed to use the same FY 2019 MedPAR claims data for FY 2022 ratesetting that we did for the FY 2021 final rule, we also proposed to continue to use the same process to identify clinical trial claims in the FY 2019 MedPAR for purposes of calculating the FY 2022 relative weights. We continue to use the proxy of standardized drug charges of less than $373,000, which was the average sales price of KYMRIAH and YESCARTA, which are the two CAR T-cell biological products in the MedPAR data used for the FY 2021 final rule and this final rule. Using the same methodology from the FY 2021 IPPS/LTCH PPS final rule, we proposed to apply an adjustment to account for the CAR T cell therapy cases identified as clinical trial cases in calculating the national average standardized cost per case that is used to calculate the relative weights for all MS-DRGs:

Step 1—Calculate the average cost for cases to be assigned to new MS-DRG 018 that contain ICD-10-CM diagnosis code Z00.6 or contain standardized drug charges of less than $373,000.

Step 2—Calculate the average cost for cases to be assigned to new MS-DRG 018 that do not contain ICD-10-CM diagnosis code Z00.6 or standardized drug charges of at least $373,000.

Step 3—Calculate an adjustor by dividing the average cost calculated in step 1 by the average cost calculated in step 2.

Step 4—Apply the adjustor calculated in step 3 to the cases identified in step 1 as clinical trial cases, then add this adjusted case count to the non-clinical trial case count prior to calculating the average cost across all MS-DRGs.

Additionally, we are continuing our finalized methodology for calculating this payment adjustment, such that: (a) When the CAR T-cell therapy product is purchased in the usual manner, but the case involves a clinical trial of a different product, the claim will be included when calculating the average cost for cases not determined to be clinical trial cases and (b) when there is expanded access use of immunotherapy, these cases will be included when calculating the average cost for cases determined to be clinical trial cases. However, we continue to believe to the best of our knowledge there are no claims in the historical data (FY 2019 MedPAR) used in the calculation of the adjustment for cases involving a clinical trial of a different product, and to the extent the historical data contain claims for cases involving expanded access use of immunotherapy we believe those claims would have drug charges less than $373,000. Consistent with our proposal to use the FY 2019 data for the FY 2022 ratesetting, we also proposed to calculate this adjustor based on the March 2020 update of the FY 2019 MedPAR file for purposes of establishing the FY 2022 relative weights. Accordingly, as we did for FY 2021, we proposed to adjust the transfer-adjusted case count for MS-DRG 018 by applying the proposed adjustor of 17 percent to the applicable clinical trial cases, and to use this adjusted case count for MS-DRG 018 in calculating the national average cost per case, which is used in the calculation of the relative weights. Therefore, in calculating the national average cost per case for purposes of the proposed rule, each case identified as a clinical trial case was adjusted by 17 percent. As we did for FY 2021, we proposed to apply this same adjustor for the applicable cases that group to MS-DRG 018 for purposes of budget neutrality and outlier simulations.

As discussed in section I.F. of this final rule, we also solicited comments on an alternative approach of using the same FY 2020 data that we would ordinarily use for purposes of the FY 2022 rulemaking, which we stated we may consider finalizing for FY 2022 based on consideration of comments received. We noted that using the methodology as finalized in the FY 2021 IPPS/LTCH PPS final rule, we calculated an adjustor of 0.25 based on this alternative approach of using the FY 2020 MedPAR file.

Comment: The majority of commenters supported CMS' proposal to use the same ratesetting methodology for MS-DRG 018 in FY 2022 as it did in FY 2021. Commenters stated that the inclusion of cases without product acquisition costs would compromise the relative weight calculation. The majority of commenters also supported CMS' proposal to apply an adjustor to expanded access or clinical trial cases. While the majority of commenters generally supported CMS' proposed adjustor of 0.17, calculated based on the FY 2019 MedPAR data, some commenters requested that we use the calculated adjustment of 0.25 from the FY 2020 MedPAR data. Some commenters also requested that CMS raise the $373,000 threshold or otherwise modify the methodology so that more cases would be classified into the expanded access or clinical trial case cohort.

Response: We appreciate the support and feedback on our proposal to use the same ratesetting methodology for MS-DRG 018 in FY 2022 as we did in FY 2021, including the application of an adjustor for expanded access or clinical trial cases.

In response to commenters who requested that CMS raise the $373,000 threshold or otherwise modify the methodology so that more cases would be classified into the expanded access or clinical trial case cohort, as noted earlier, we are using the FY 2019 MedPAR to approximate the relative resource use for each MS-DRG. This is the same data source that was used to approximate the relative resource use for determining the FY 2021 MS-DRG relative weights. As we discussed in the FY 2021 IPPS/LTCH PPS final rule, we believe that given this data source, our methodology to divide cases into these cohorts provides reasonable estimates on average of the costs of the cases in these cohorts. (85 FR 58599) As we are continuing to use the same data source that was used for purposes of the FY 2021 MS-DRG relative weights and the calculation of the adjustor to the relative weight for MS-DRG 018, it continues to be reasonable that in that data source, hospitals would not generally have charges of greater than $373,000 in the absence of incurring the cost of the CAR T-cell drug. As previously noted, we used the proxy of standardized drug charges of less than $373,000, which was the average sales price of KYMRIAH and YESCARTA, which are the two CAR T-cell biological products in the MedPAR data used for the FY 2021 final rule and this final rule.

In response to commenters who requested that we use the calculated adjustment of 0.25, we disagree that we should use the adjustment of 0.25 calculated from the FY 2020 MedPAR data instead of the 0.17 adjustment calculated from the FY 2019 MedPAR data. Given that under the IPPS the relative weight assigned to each MS-DRG reflects the relative hospital resources used with respect to discharges classified within that group compared to discharges classified within other MS-DRGs, it would be inappropriate to use the FY 2019 MedPAR to approximate the relative resource use for each MS-DRG, including the majority of MS-DRG 018 cases, but then a different data source (that is, the FY 2020 MedPAR) to determine the relative resources required for MS-DRG 018 cases that are expanded access or clinical trial cases to calculate the adjustor.

Comment: Several commenters stated that the MS-DRG relative weight for MS-DRG 018 does not result in payment that fully covers the hospital resource costs, including the cost of the drug. Some commenters indicated that CMS should make structural changes to the IPPS, such as incorporating the Average Sales Price of the CAR T-cell drug into the IPPS relative weight calculation rather than use our usual methodology for determining the MS-DRG relative weight, or we should base the Medicare payment itself on the Average Sales Price of the CAR T-cell drug. For example, some commenters stated that the price of the CAR T-cell drug is expected to increase soon and the IPPS payment does not reflect price increases in a timely manner.

Response: With regard to the comment that the MS-DRG relative weight for MS-DRG 018 does not result in payment that fully covers the hospital resource costs, we note that the IPPS is a prospective payment system and not a cost reimbursement system. The primary objective of the IPPS is to create incentives for hospitals to operate efficiently and minimize unnecessary costs, while at the same time ensuring that payments are sufficient to adequately compensate hospitals for their costs in delivering necessary care to Medicare beneficiaries. In addition, we share national goals of preserving the Medicare Hospital Insurance Trust Fund. Cost reimbursement is not the optimal means of achieving these objectives. As indicated earlier, under the IPPS the relative weight assigned to each MS-DRG reflects the relative hospital resources used with respect to discharges classified within that group compared to discharges classified within other MS-DRGs. For the reasons described earlier, CMS is using the FY 2019 MedPAR data to determine the MS-DRG relative weights for FY 2022, including the relative weight for MS-DRG 018.

We appreciate the commenters' recommendations for structural changes to the IPPS, but as we stated in response to similar comments in the FY 2021 rulemaking, we believe that is premature to make structural changes to the IPPS at this time to pay for CAR T-cell therapies. (85 FR 58453). As we gain more experience paying for these therapies under the IPPS, we may consider these comments to inform future rulemaking.

Comment: Some commenters requested clarifications or raised concerns regarding hospital charging practices for CAR T-cell therapies, including the ability of hospitals to set charges for CAR T-cell drugs consistent with their CCRs. Some commenters requested that CMS establish a dedicated CAR T-cell cost center, which they stated would allow hospitals to set charges appropriate for CAR T-cell therapy.

Response: As we noted in response to similar comments in the FY 2021 IPPS final rule, there is nothing that precludes hospitals from setting their drug charges consistent with their CCRs (85 FR 58453). We also highlight our statements in prior rulemaking regarding our existing administrative mechanisms for hospitals to voluntarily establish lower charges (85 FR 58874). Specifically, if a hospital is planning on voluntarily lowering its charges, it can request a CCR change in accordance with 42 CFR 412.84(i)(1) and as also discussed in prior rulemaking (84 FR 42630). For example, a hospital could use these existing administrative mechanisms to request a CCR closer to 1.0. We appreciate the commenters' requests regarding the creation of new cost centers and may consider this request in future rulemaking. However, we believe that such a step is not necessary at this time given that hospitals are not precluded from setting their charges consistent with their CCRs and the existing administrative mechanisms for hospitals to request CCR changes consistent with lower charges.

We also note that some commenters requested additional clarifications regarding billing instructions for CAR T-cell therapies, for example, relating to the use of hospital charges in apportioning costs under section 2203 of the Provider Reimbursement Manual. We do not believe changes to billing guidance are needed at this time but will take these comments into consideration when developing policies and program requirements for future years for CAR T-cell therapy policy.

After consideration of the public comments received, we are finalizing our proposal regarding the calculation of the relative weight for MS-DRG 018.

3. Development of National Average CCRs

Consistent with our final policy to use the FY 2019 data for the FY 2022 ratesetting, as discussed earlier in this section, we are finalizing our proposal to continue to use the national average CCRs that were calculated for the FY 2021 final rule using that same data. Specifically, we calculated these national average CCRs as follows:

Using the FY 2018 cost report data, we removed CAHs, Indian Health Service hospitals, all-inclusive rate hospitals, and cost reports that represented time periods of less than 1 year (365 days). We included hospitals located in Maryland because we include their charges in our claims database. Then we created CCRs for each provider for each cost center (see the supplemental data file for line items used in the calculations) and removed any CCRs that were greater than 10 or less than 0.01. We normalized the departmental CCRs by dividing the CCR for each department by the total CCR for the hospital for the purpose of trimming the data. Then we took the logs of the normalized cost center CCRs and removed any cost center CCRs where the log of the cost center CCR was greater or less than the mean log plus/minus 3 times the standard deviation for the log of that cost center CCR. Once the cost report data were trimmed, we calculated a Medicare-specific CCR. The Medicare-specific CCR was determined by taking the Medicare charges for each line item from Worksheet D-3 and deriving the Medicare-specific costs by applying the hospital-specific departmental CCRs to the Medicare-specific charges for each line item from Worksheet D-3. Once each hospital's Medicare-specific costs were established, we summed the total Medicare-specific costs and divided by the sum of the total Medicare-specific charges to produce national average, charge-weighted CCRs.

After we multiplied the total charges for each MS-DRG in each of the 19 cost centers by the corresponding national average CCR, we summed the 19 “costs” across each MS-DRG to produce a total standardized cost for the MS-DRG. The average standardized cost for each MS-DRG was then computed as the total standardized cost for the MS-DRG divided by the transfer-adjusted case count for the MS-DRG. The average cost for each MS-DRG was then divided by the national average standardized cost per case to determine the relative weight. The FY 2022 cost-based relative weights were then normalized by an adjustment factor of 1.820829 so that the average case weight after recalibration was equal to the average case weight before recalibration. The normalization adjustment is intended to ensure that recalibration by itself neither increases nor decreases total payments under the IPPS, as required by section 1886(d)(4)(C)(iii) of the Act.

The 19 national average CCRs for FY 2022 are as follows:

Since FY 2009, the relative weights have been based on 100 percent cost weights based on our MS-DRG grouping system. When we recalibrated the DRG weights for previous years, we set a threshold of 10 cases as the minimum number of cases required to compute a reasonable weight. We used that same case threshold in recalibrating the MS-DRG relative weights for FY 2022. Using data from the FY 2019 MedPAR file, there were 7 MS-DRGs that contain fewer than 10 cases. For FY 2022, because we do not have sufficient MedPAR data to set accurate and stable cost relative weights for these low-volume MS-DRGs, we proposed to compute relative weights for the low-volume MS-DRGs by adjusting their final FY 2021 relative weights by the percentage change in the average weight of the cases in other MS-DRGs from FY 2021 to FY 2022. The crosswalk table is as follows:

We did not receive any public comments on our proposals and we are finalizing our proposals without modification.

F. Add-On Payments for New Services and Technologies for FY 2022

1. Background

Sections 1886(d)(5)(K) and (L) of the Act establish a process of identifying and ensuring adequate payment for new medical services and technologies (sometimes collectively referred to in this section as “new technologies”) under the IPPS. Section 1886(d)(5)(K)(vi) of the Act specifies that a medical service or technology will be considered new if it meets criteria established by the Secretary after notice and opportunity for public comment. Section 1886(d)(5)(K)(ii)(I) of the Act specifies that a new medical service or technology may be considered for new technology add-on payment if, based on the estimated costs incurred with respect to discharges involving such service or technology, the DRG prospective payment rate otherwise applicable to such discharges under this subsection is inadequate. We note that, beginning with discharges occurring in FY 2008, CMS transitioned from CMS-DRGs to MS-DRGs. The regulations at 42 CFR 412.87 implement these provisions and 42 CFR 412.87(b) specifies three criteria for a new medical service or technology to receive the additional payment: (1) The medical service or technology must be new; (2) the medical service or technology must be costly such that the DRG rate otherwise applicable to discharges involving the medical service or technology is determined to be inadequate; and (3) the service or technology must demonstrate a substantial clinical improvement over existing services or technologies. In addition, certain transformative new devices and antimicrobial products may qualify under an alternative inpatient new technology add-on payment pathway, as set forth in the regulations at § 412.87(c) and (d). We note that section 1886(d)(5)(K)(i) of the Act requires that the Secretary establish a mechanism to recognize the costs of new medical services and technologies under the payment system established under that subsection, which establishes the system for paying for the operating costs of inpatient hospital services. The system of payment for capital costs is established under section 1886(g) of the Act. Therefore, as discussed in prior rulemaking (72 FR 47307 through 47308), we do not include capital costs in the add-on payments for a new medical service or technology or make new technology add-on payments under the IPPS for capital-related costs. In this rule, we highlight some of the major statutory and regulatory provisions relevant to the new technology add-on payment criteria, as well as other information. For a complete discussion of the new technology add-on payment criteria, we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51572 through 51574), FY 2020 IPPS/LTCH PPS final rule (84 FR 42288 through 42300) and the FY 2021 IPPS/LTCH PPS final rule (85 FR 58736 through 58742).

a. New Technology Add-On Payment Criteria

(1) Newness Criterion

Under the first criterion, as reflected in § 412.87(b)(2), a specific medical service or technology will no longer be considered “new” for purposes of new medical service or technology add-on payments after CMS has recalibrated the MS-DRGs, based on available data, to reflect the cost of the technology. We note that we do not consider a service or technology to be new if it is substantially similar to one or more existing technologies. That is, even if a medical product receives a new FDA approval or clearance, it may not necessarily be considered “new” for purposes of new technology add-on payments if it is “substantially similar” to another medical product that was approved or cleared by FDA and has been on the market for more than 2 to 3 years. In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43813 through 43814), we established criteria for evaluating whether a new technology is substantially similar to an existing technology, specifically: (1) Whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome; (2) whether a product is assigned to the same or a different MS-DRG; and (3) whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population. If a technology meets all three of these criteria, it would be considered substantially similar to an existing technology and would not be considered “new” for purposes of new technology add-on payments. For a detailed discussion of the criteria for substantial similarity, we refer readers to the FY 2006 IPPS final rule (70 FR 47351 through 47352) and the FY 2010 IPPS/LTCH PPS final rule (74 FR 43813 through 43814).

(2) Cost Criterion

Under the second criterion, § 412.87(b)(3) further provides that, to be eligible for the add-on payment for new medical services or technologies, the MS-DRG prospective payment rate otherwise applicable to discharges involving the new medical service or technology must be assessed for adequacy. Under the cost criterion, consistent with the formula specified in section 1886(d)(5)(K)(ii)(I) of the Act, to assess the adequacy of payment for a new technology paid under the applicable MS-DRG prospective payment rate, we evaluate whether the charges of the cases involving a new medical service or technology will exceed a threshold amount that is the lesser of 75 percent of the standardized amount (increased to reflect the difference between cost and charges) or 75 percent of one standard deviation beyond the geometric mean standardized charge for all cases in the MS-DRG to which the new medical service or technology is assigned (or the case-weighted average of all relevant MS-DRGs if the new medical service or technology occurs in many different MS-DRGs). The MS-DRG threshold amounts generally used in evaluating new technology add-on payment applications for FY 2022 are presented in a data file that is available, along with the other data files associated with the FY 2021 IPPS/LTCH PPS final rule and correction notice, on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index.

We note that, under the policy finalized in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58603 through 58605), beginning with FY 2022, we use the proposed threshold values associated with the proposed rule for that fiscal year to evaluate the cost criterion for all applications for new technology add-on payments and previously approved technologies that may continue to receive new technology add-on payments, if those technologies would be assigned to a proposed new MS-DRG for that same fiscal year.

As finalized in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41275), beginning with FY 2020, we include the thresholds applicable to the next fiscal year (previously included in Table 10 of the annual IPPS/LTCH PPS proposed and final rules) in the data files associated with the prior fiscal year. Accordingly, the proposed thresholds for applications for new technology add-on payments for FY 2023 were presented in a data file that is available on the CMS website, along with the other data files associated with the FY 2022 proposed rule, by clicking on the FY 2022 IPPS Proposed Rule Home Page at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index. We note, for the reasons discussed in section I.F. of the preamble of the proposed rule and this final rule, we proposed to use the FY 2019 MedPAR claims data where we ordinarily would have used the FY 2020 MedPAR claims data for purposes of proposed FY 2022 ratesetting. We refer the reader to section I.F. of the preamble of this final rule for further discussion of our analysis of the best available data for FY 2022 ratesetting and our related proposals, as well as our finalized policy to use the FY 2019 MedPAR claims data where we ordinarily would have used the FY 2020 MedPAR claims data for purposes of FY 2022 ratesetting. For the FY 2023 proposed threshold values, consistent with our proposal, we proposed to use FY 2019 claims data to evaluate whether the charges of the cases involving a new medical service or technology will exceed a threshold amount that is the lesser of 75 percent of the proposed FY 2022 standardized amount (increased to reflect the difference between cost and charges) or 75 percent of one standard deviation beyond the geometric mean standardized charge (using FY 2019 claims data) for all cases in the MS-DRG (using FY 2019 claims data) to which the new medical service or technology is assigned (or the case-weighted average of all relevant MS-DRGs if the new medical service or technology occurs in many different MS-DRGs), rather than the FY 2020 data we would otherwise use. As discussed in section I.F. of the preamble of this final rule, we also considered, as an alternative to our proposal, the use of the same FY 2020 data that we would ordinarily use for purposes of FY 2022 ratesetting. We stated that if we were to finalize this alternative approach for FY 2022, we would use the FY 2020 claims data for purposes of the final thresholds for applications for new technology add-on payments for FY 2023 in the FY 2022 IPPS/LTCH PPS final rule. We made available the threshold values calculated using the FY 2020 claims data at https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS.

As discussed in section I.F. of the preamble of this final rule, we are finalizing our proposal to use the FY 2019 MedPAR claims data where we ordinarily would have used the FY 2020 MedPAR claims data for purposes of FY 2022 ratesetting. Accordingly, consistent with this final policy, we are finalizing to use FY 2019 claims data to set the thresholds for applications for new technology add-on payments for FY 2023 in this final rule. The finalized thresholds for applications for new technology add-on payments for FY 2023 are presented in a data file that is available on the CMS website, along with the other data files associated with this FY 2022 final rule, by clicking on the FY 2022 IPPS Final Rule Home Page at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index.

In the September 7, 2001 final rule that established the new technology add-on payment regulations (66 FR 46917), we discussed that applicants should submit a significant sample of data to demonstrate that the medical service or technology meets the high-cost threshold. Specifically, applicants should submit a sample of sufficient size to enable us to undertake an initial validation and analysis of the data. We also discussed in the September 7, 2001 final rule (66 FR 46917) the issue of whether the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule at 45 CFR parts 160 and 164 applies to claims information that providers submit with applications for new medical service or technology add-on payments. We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51573) for complete information on this issue.

(3) Substantial Clinical Improvement Criterion

Under the third criterion at § 412.87(b)(1), a medical service or technology must represent an advance that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries. In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42288 through 42292), we prospectively codified in our regulations at § 412.87(b) the following aspects of how we evaluate substantial clinical improvement for purposes of new technology add-on payments under the IPPS:

• The totality of the circumstances is considered when making a determination that a new medical service or technology represents an advance that substantially improves, relative to services or technologies previously available, the diagnosis or treatment of Medicare beneficiaries.
• A determination that a new medical service or technology represents an advance that substantially improves, relative to services or technologies previously available, the diagnosis or treatment of Medicare beneficiaries means—

++ The new medical service or technology offers a treatment option for a patient population unresponsive to, or ineligible for, currently available treatments;

++ The new medical service or technology offers the ability to diagnose a medical condition in a patient population where that medical condition is currently undetectable, or offers the ability to diagnose a medical condition earlier in a patient population than allowed by currently available methods, and there must also be evidence that use of the new medical service or technology to make a diagnosis affects the management of the patient;

++ The use of the new medical service or technology significantly improves clinical outcomes relative to services or technologies previously available as demonstrated by one or more of the following: A reduction in at least one clinically significant adverse event, including a reduction in mortality or a clinically significant complication; a decreased rate of at least one subsequent diagnostic or therapeutic intervention; a decreased number of future hospitalizations or physician visits; a more rapid beneficial resolution of the disease process treatment including, but not limited to, a reduced length of stay or recovery time; an improvement in one or more activities of daily living; an improved quality of life; or, a demonstrated greater medication adherence or compliance; or

++ The totality of the circumstances otherwise demonstrates that the new medical service or technology substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries.

• Evidence from the following published or unpublished information sources from within the United States or elsewhere may be sufficient to establish that a new medical service or technology represents an advance that substantially improves, relative to services or technologies previously available, the diagnosis or treatment of Medicare beneficiaries: Clinical trials, peer reviewed journal articles; study results; meta-analyses; consensus statements; white papers; patient surveys; case studies; reports; systematic literature reviews; letters from major healthcare associations; editorials and letters to the editor; and public comments. Other appropriate information sources may be considered.
• The medical condition diagnosed or treated by the new medical service or technology may have a low prevalence among Medicare beneficiaries.
• The new medical service or technology may represent an advance that substantially improves, relative to services or technologies previously available, the diagnosis or treatment of a subpopulation of patients with the medical condition diagnosed or treated by the new medical service or technology.

We refer the reader to the FY 2020 IPPS/LTCH PPS final rule for additional discussion of the evaluation of substantial clinical improvement for purposes of new technology add-on payments under the IPPS.

We note, consistent with the discussion in the FY 2003 IPPS final rule (67 FR 50015), that although we are affiliated with the FDA and we do not question the FDA's regulatory responsibility for decisions related to marketing authorization (for example, approval, clearance, etc.), we do not rely upon FDA criteria in our determination of what drugs, devices, or technologies qualify for new technology add-on payments under Medicare. Our criteria do not depend on the standard of safety and efficacy on which the FDA relies but on a demonstration of substantial clinical improvement in the Medicare population (particularly patients over age 65).

c. Alternative Inpatient New Technology Add-On Payment Pathway

Beginning with applications for FY 2021 new technology add-on payments, under the regulations at § 412.87(c), a medical device that is part of FDA's Breakthrough Devices Program may qualify for the new technology add-on payment under an alternative pathway. Additionally, under the regulations at § 412.87(d) for certain antimicrobial products, beginning with FY 2021, a drug that is designated by the FDA as a Qualified Infectious Disease Product (QIDP), and, beginning with FY 2022, a drug that is approved by the FDA under the Limited Population Pathway for Antibacterial and Antifungal Drugs (LPAD), may also qualify for the new technology add-on payment under an alternative pathway. We refer the reader to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42292 through 42297) and the FY 2021 IPPS/LTCH PPS final rule (85 FR 58737 through 58739) for a complete discussion on this policy. We note that a technology is not required to have the specified FDA designation at the time the new technology add-on payment application is submitted. CMS will review the application based on the information provided by the applicant under the alternative pathway specified by the applicant. However, to receive approval for the new technology add-on payment under that alternative pathway, the technology must have the applicable FDA designation and meet all other requirements in the regulations in § 412.87(c) and (d), as applicable.

(1) Alternative Pathway for Certain Transformative New Devices

For applications received for new technology add-on payments for FY 2021 and subsequent fiscal years, if a medical device is part of FDA's Breakthrough Devices Program and received FDA marketing authorization, it will be considered new and not substantially similar to an existing technology for purposes of the new technology add-on payment under the IPPS, and will not need to meet the requirement under § 412.87(b)(1) that it represent an advance that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries. This policy is codified at § 412.87(c). Under this alternative pathway, a medical device that has received FDA marketing authorization (that is, has been approved or cleared by, or had a De Novo classification request granted by, FDA) and that is part of FDA's Breakthrough Devices Program will need to meet the cost criterion under § 412.87(b)(3), and will be considered new as reflected in § 412.87(c)(2). We note, in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58734 through 58736), we clarified our policy that a new medical device under this alternative pathway must receive marketing authorization for the indication covered by the Breakthrough Devices Program designation. We refer the reader to the FY 2021 IPPS/LTCH PPS final rule (85 FR 58734 through 58736) for a complete discussion regarding this clarification.

(2) Alternative Pathway for Certain Antimicrobial Products

For applications received for new technology add-on payments for certain antimicrobial products, beginning with FY 2021, if a technology is designated by FDA as a QIDP and received FDA marketing authorization, and, beginning with FY 2022, if a drug is approved under FDA's LPAD pathway and used for the indication approved under the LPAD pathway, it will be considered new and not substantially similar to an existing technology for purposes of new technology add-on payments and will not need to meet the requirement that it represent an advance that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries. We codified this policy at § 412.87(d). Under this alternative pathway for QIDPs and LPADs, a medical product that has received FDA marketing authorization and is designated by FDA as a QIDP or approved under the LPAD pathway will need to meet the cost criterion under § 412.87(b)(3), and will be considered new as reflected in § 412.87(d)(2).

We refer the reader to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42292 through 42297) and FY 2021 IPPS/LTCH PPS final rule (85 FR 58737 through 58739) for a complete discussion on this policy. We note, in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58737 through 58739), we clarified that a new medical product seeking approval for the new technology add-on payment under the alternative pathway for QIDPs must receive marketing authorization for the indication covered by the QIDP designation. We also finalized our policy to expand our alternative new technology add-on payment pathway for certain antimicrobial products to include products approved under the LPAD pathway and used for the indication approved under the LPAD pathway.

d. Additional Payment for New Medical Service or Technology

The new medical service or technology add-on payment policy under the IPPS provides additional payments for cases with relatively high costs involving eligible new medical services or technologies, while preserving some of the incentives inherent under an average-based prospective payment system. The payment mechanism is based on the cost to hospitals for the new medical service or technology. As noted previously, we do not include capital costs in the add-on payments for a new medical service or technology or make new technology add-on payments under the IPPS for capital-related costs (72 FR 47307 through 47308).

For discharges occurring before October 1, 2019, under § 412.88, if the costs of the discharge (determined by applying operating cost-to-charge ratios (CCRs) as described in § 412.84(h)) exceed the full DRG payment (including payments for IME and DSH, but excluding outlier payments), CMS made an add-on payment equal to the lesser of: (1) 50 Percent of the costs of the new medical service or technology; or (2) 50 percent of the amount by which the costs of the case exceed the standard DRG payment.

Beginning with discharges on or after October 1, 2019, for the reasons discussed in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42297 through 42300), we finalized an increase in the new technology add-on payment percentage, as reflected at § 412.88(a)(2)(ii). Specifically, for a new technology other than a medical product designated by FDA as a QIDP, beginning with discharges on or after October 1, 2019, if the costs of a discharge involving a new technology (determined by applying CCRs as described in § 412.84(h)) exceed the full DRG payment (including payments for IME and DSH, but excluding outlier payments), Medicare will make an add-on payment equal to the lesser of: (1) 65 Percent of the costs of the new medical service or technology; or (2) 65 percent of the amount by which the costs of the case exceed the standard DRG payment. For a new technology that is a medical product designated by FDA as a QIDP, beginning with discharges on or after October 1, 2019, if the costs of a discharge involving a new technology (determined by applying CCRs as described in § 412.84(h)) exceed the full DRG payment (including payments for IME and DSH, but excluding outlier payments), Medicare will make an add-on payment equal to the lesser of: (1) 75 Percent of the costs of the new medical service or technology; or (2) 75 percent of the amount by which the costs of the case exceed the standard DRG payment. For a new technology that is a medical product approved under FDA's LPAD pathway, beginning with discharges on or after October 1, 2020, if the costs of a discharge involving a new technology (determined by applying CCRs as described in § 412.84(h)) exceed the full DRG payment (including payments for IME and DSH, but excluding outlier payments), Medicare will make an add-on payment equal to the lesser of: (1) 75 Percent of the costs of the new medical service or technology; or (2) 75 percent of the amount by which the costs of the case exceed the standard DRG payment. As set forth in § 412.88(b)(2), unless the discharge qualifies for an outlier payment, the additional Medicare payment will be limited to the full MS-DRG payment plus 65 percent (or 75 percent for certain antimicrobial products (QIDPs and LPADs)) of the estimated costs of the new technology or medical service.

We refer the reader to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42297 through 42300) for complete discussion on the increase in the new technology add on payment beginning with discharges on or after October 1, 2019.

Section 503(d)(2) of Public Law 108-173 provides that there shall be no reduction or adjustment in aggregate payments under the IPPS due to add-on payments for new medical services and technologies. Therefore, in accordance with section 503(d)(2) of Public Law 108-173, add-on payments for new medical services or technologies for FY 2005 and subsequent years have not been subjected to budget neutrality.

e. Evaluation of Eligibility Criteria for New Medical Service or Technology Applications

In the FY 2009 IPPS final rule (73 FR 48561 through 48563), we modified our regulations at § 412.87 to codify our longstanding practice of how CMS evaluates the eligibility criteria for new medical service or technology add-on payment applications. That is, we first determine whether a medical service or technology meets the newness criterion, and only if so, do we then make a determination as to whether the technology meets the cost threshold and represents a substantial clinical improvement over existing medical services or technologies. We specified that all applicants for new technology add-on payments must have FDA approval or clearance by July 1 of the year prior to the beginning of the fiscal year for which the application is being considered. In the FY 2021 IPPS final rule, to more precisely describe the various types of FDA approvals, clearances and classifications that we consider under our new technology add-on payment policy, we finalized a technical clarification to the regulation to indicate that new technologies must receive FDA marketing authorization (such as pre-market approval (PMA); 510(k) clearance; the granting of a De Novo classification request, or approval of a New Drug Application (NDA)) by July 1 of the year prior to the beginning of the fiscal year for which the application is being considered. Consistent with our longstanding policy, we consider FDA marketing authorization as representing that a product has received FDA approval or clearance when considering eligibility for the new technology add-on payment under § 412.87(e)(2) (85 FR 58742).

Additionally, in the FY 2021 IPPS final rule (85 FR 58739 through 58742), we finalized our proposal to provide conditional approval for new technology add-on payment for a technology for which an application is submitted under the alternative pathway for certain antimicrobial products at § 412.87(d) that does not receive FDA marketing authorization by the July 1 deadline specified in § 412.87(e)(2), provided that the technology otherwise meets the applicable add-on payment criteria. Under this policy, cases involving eligible antimicrobial products would begin receiving the new technology add-on payment sooner, effective for discharges the quarter after the date of FDA marketing authorization provided that the technology receives FDA marketing authorization by July 1 of the particular fiscal year for which the applicant applied for new technology add-on payments.

f. Council on Technology and Innovation (CTI)

The Council on Technology and Innovation at CMS oversees the agency's cross-cutting priority on coordinating coverage, coding and payment processes for Medicare with respect to new technologies and procedures, including new drug therapies, as well as promoting the exchange of information on new technologies and medical services between CMS and other entities. The CTI, composed of senior CMS staff and clinicians, was established under section 942(a) of Public Law 108-173. The Council is co-chaired by the Director of the Center for Clinical Standards and Quality (CCSQ) and the Director of the Center for Medicare (CM), who is also designated as the CTI's Executive Coordinator.

The specific processes for coverage, coding, and payment are implemented by CM, CCSQ, and the local Medicare Administrative Contractors (MACs) (in the case of local coverage and payment decisions). The CTI supplements, rather than replaces, these processes by working to assure that all of these activities reflect the agency-wide priority to promote high-quality, innovative care. At the same time, the CTI also works to streamline, accelerate, and improve coordination of these processes to ensure that they remain up to date as new issues arise. To achieve its goals, the CTI works to streamline and create a more transparent coding and payment process, improve the quality of medical decisions, and speed patient access to effective new treatments. It is also dedicated to supporting better decisions by patients and doctors in using Medicare-covered services through the promotion of better evidence development, which is critical for improving the quality of care for Medicare beneficiaries.

To improve the understanding of CMS' processes for coverage, coding, and payment and how to access them, the CTI has developed an “Innovator's Guide” to these processes. The intent is to consolidate this information, much of which is already available in a variety of CMS documents and in various places on the CMS website, in a user friendly format. This guide was published in 2010 and is available on the CMS website at: https://www.cms.gov/​Medicare/​Coverage/​CouncilonTechInnov/​Downloads/​Innovators-Guide-Master-7-23-15.pdf.

As we indicated in the FY 2009 IPPS final rule (73 FR 48554), we invited any product developers or manufacturers of new medical services or technologies to contact the agency early in the process of product development if they have questions or concerns about the evidence that would be needed later in the development process for the agency's coverage decisions for Medicare.

The CTI aims to provide useful information on its activities and initiatives to stakeholders, including Medicare beneficiaries, advocates, medical product manufacturers, providers, and health policy experts. Stakeholders with further questions about Medicare's coverage, coding, and payment processes, or who want further guidance about how they can navigate these processes, can contact the CTI at CTI@cms.hhs.gov.

g. Application Information for New Medical Services or Technologies

Applicants for add-on payments for new medical services or technologies for FY 2023 must submit a formal request, including a full description of the clinical applications of the medical service or technology and the results of any clinical evaluations demonstrating that the new medical service or technology represents a substantial clinical improvement (unless the application is under one of the alternative pathways as previously described), along with a significant sample of data to demonstrate that the medical service or technology meets the high-cost threshold. Complete application information, along with final deadlines for submitting a full application, will be posted as it becomes available on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​newtech.html. To allow interested parties to identify the new medical services or technologies under review before the publication of the proposed rule for FY 2023, the CMS website also will post the tracking forms completed by each applicant. We note that the burden associated with this information collection requirement is the time and effort required to collect and submit the data in the formal request for add-on payments for new medical services and technologies to CMS. The aforementioned burden is subject to the PRA and approved under OMB control number 0938-1347.

As discussed previously, in the FY 2020 IPPS/LTCH PPS final rule, we adopted an alternative inpatient new technology add-on payment pathway for certain transformative new devices and for Qualified Infectious Disease Products, as set forth in the regulations at § 412.87(c) and (d). The change in burden associated with these changes to the new technology add-on payment application process were discussed in a revision of the information collection requirement (ICR) request currently approved under OMB control number 0938-1347. In accordance with the implementing regulations of the PRA, we detailed the revisions of the ICR and published the required 60-day notice on August 15, 2019 (84 FR 41723) and 30-day notice on December 17, 2019 (84 FR 68936) to solicit public comments.

2. Public Input Before Publication of a Notice of Proposed Rulemaking on Add-On Payments

Section 1886(d)(5)(K)(viii) of the Act, as amended by section 503(b)(2) of Public Law 108-173, provides for a mechanism for public input before publication of a notice of proposed rulemaking regarding whether a medical service or technology represents a substantial clinical improvement or advancement. The process for evaluating new medical service and technology applications requires the Secretary to—

• Provide, before publication of a proposed rule, for public input regarding whether a new service or technology represents an advance in medical technology that substantially improves the diagnosis or treatment of Medicare beneficiaries;
• Make public and periodically update a list of the services and technologies for which applications for add-on payments are pending;
• Accept comments, recommendations, and data from the public regarding whether a service or technology represents a substantial clinical improvement; and
• Provide, before publication of a proposed rule, for a meeting at which organizations representing hospitals, physicians, manufacturers, and any other interested party may present comments, recommendations, and data regarding whether a new medical service or technology represents a substantial clinical improvement to the clinical staff of CMS.

In order to provide an opportunity for public input regarding add-on payments for new medical services and technologies for FY 2022 prior to publication of the FY 2022 IPPS/LTCH PPS proposed rule, we published a notice in the Federal Register on October 16, 2020 (85 FR 65815), and held a virtual town hall meeting on December 15 and 16, 2020. In the announcement notice for the meeting, we stated that the opinions and presentations provided during the meeting would assist us in our evaluations of applications by allowing public discussion of the substantial clinical improvement criterion for the FY 2022 new medical service and technology add on payment applications before the publication of the FY 2022 IPPS/LTCH PPS proposed rule.

Approximately 330 individuals registered to attend the 2-day virtual town hall meeting. We posted the recordings of the 2-day virtual town hall on the CMS web page at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​newtech. We considered each applicant's presentation made at the town hall meeting, as well as written comments received by the December 28, 2020 deadline, in our evaluation of the new technology add-on payment applications for FY 2022 in the development of the FY 2022 IPPS/LTCH PPS proposed rule.

In response to the published notice and the December 15-16, 2020 New Technology Town Hall meeting, we received written comments regarding the applications for FY 2022 new technology add on payments. As explained earlier and in the Federal Register notice announcing the New Technology Town Hall meeting (85 FR 65815 through 65817), the purpose of the meeting was specifically to discuss the substantial clinical improvement criterion with regard to pending new technology add-on payment applications for FY 2022. Therefore, we did not summarize the written comments in the proposed rule that were unrelated to the substantial clinical improvement criterion. In section II.H.5. of the preamble of the proposed rule, we summarized comments regarding individual applications, or, if applicable, indicated that there were no comments received in response to the New Technology Town Hall meeting notice or New Technology Town Hall meeting, at the end of each discussion of the individual applications.

3. ICD-10-PCS Section “X” Codes for Certain New Medical Services and Technologies

As discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49434), the ICD-10-PCS includes a new section containing the new Section “X” codes, which began being used with discharges occurring on or after October 1, 2015. Decisions regarding changes to ICD-10-PCS Section “X” codes will be handled in the same manner as the decisions for all of the other ICD-10-PCS code changes. That is, proposals to create, delete, or revise Section “X” codes under the ICD-10-PCS structure will be referred to the ICD-10 Coordination and Maintenance Committee. In addition, several of the new medical services and technologies that have been, or may be, approved for new technology add-on payments may now, and in the future, be assigned a Section “X” code within the structure of the ICD-10-PCS. We posted ICD-10-PCS Guidelines on the CMS website at: https://www.cms.gov/​medicare/​icd-10/​2021-icd-10-pcs, including guidelines for ICD-10-PCS Section “X” codes. We encourage providers to view the material provided on ICD-10-PCS Section “X” codes.

4. FY 2022 Status of Technologies Approved for FY 2021 New Technology Add-On Payments

In this section of the final rule, we discuss the proposed FY 2022 status of 23 technologies approved for FY 2021 new technology add-on payments, and our finalized policies, as set forth in the tables that follow. In general, we extend new technology add-on payments for an additional year only if the 3-year anniversary date of the product's entry onto the U.S. market occurs in the latter half of the upcoming fiscal year. We refer the reader to section II.F.6.b.(1). of the preamble of this final rule for discussion of CONTEPO, which we conditionally approved for FY 2021 new technology add-on payments under the alternative pathway for certain antimicrobial products, subject to the technology receiving FDA marketing authorization by July 1, 2021. We note that CONTEPO did not receive FDA marketing authorization by July 1, 2021. As discussed in section II.F.6.b.(1). of the preamble of this final rule, because the applicant for CONTEPO submitted a new application for FY 2022, we are conditionally approving CONTEPO for FY 2022 new technology add-on payments under the alternative pathway for certain antimicrobial products, subject to the technology receiving FDA marketing authorization by July 1, 2022.

a. Continuation of New Technology Add-On Payments for FY 2022 for Technologies Still Considered to be New

In the table in section II.F (Proposed Add-On Payments for New Services and Technologies for FY 2022) of the proposed rule (86 FR 25208 through 25211), we presented our proposals to continue the new technology add-on payment for FY 2022 for those technologies that were approved for the new technology add-on payment for FY 2021 and which would still be considered “new” for purposes of new technology add-on payments for FY 2022.

Our policy is that a medical service or technology may continue to be considered “new” for purposes of new technology add-on payments within 2 or 3 years after the point at which data begin to become available reflecting the inpatient hospital code assigned to the new service or technology. Our practice has been to begin and end new technology add-on payments on the basis of a fiscal year, and we have generally followed a guideline that uses a 6-month window before and after the start of the fiscal year to determine whether to extend the new technology add-on payment for an additional fiscal year. In general, we extend new technology add-on payments for an additional year only if the 3-year anniversary date of the product's entry onto the U.S. market occurs in the latter half of the fiscal year (70 FR 47362).

In the proposed rule, we provided a table listing the technologies for which we proposed to continue making new technology add-on payments for FY 2022 because they would still be considered new for purposes of new technology add-on payments (86 FR 25209). This table also presented the newness start date, new technology add-on payment start date, relevant final rule citations from prior fiscal years, proposed maximum add-on payment amount, and coding assignments. We referred readers to the cited final rules in the table for a complete discussion of the new technology add-on payment application, coding and payment amount for these technologies, including the applicable indications and discussion of the newness start date.

We summarize in this section of this final rule the comments we received regarding our proposal to continue making new technology add-on payments for FY 2022 for the technologies listed in the table in the proposed rule because they would still be considered new for purposes of new technology add-on payments.

Comment: Commenters overwhelmingly supported our proposed continuation of new technology add-on payments for FY 2022 for those technologies that were approved for the new technology add-on payment for FY 2021 and which would still be considered “new” for purposes of new technology add-on payments for FY 2022.

Response: We appreciate the commenters' support.

Comment: A commenter, the applicant for Jakafi®, requested the maximum new technology add-on payment amount for Jakafi® be updated from $4,096.21 to $6,885.20 to reflect the updated Wholesale Acquisition Cost (WAC) for 60 Jakafi tablets using a 14-day anticipated duration.

Response: We appreciate the updated cost information from the applicant. Jakafi's current WAC is $14,754.00 per 60 tablets. The maximum NTAP, using the WAC for 60 Jakafi tablets, determining the per tablet amount, multiplying that figure by two (Jakafi taken twice daily), and using a 14 day anticipated duration, the average cost per case would change to $4,475.38 ($14,754.00/60 * 2 * 14) * .65. Based on this updated information, the maximum new technology add-on payment for Jakafi® for FY 2022 would be $4,475.38, as reflected in the table in this section.

Comment: The manufacturer for Azedra® stated that the newness period for Azedra® should start with the first sale which would be June 6, 2019 instead of July 30, 2018. Based on this date, the commenter stated that the three-year anniversary of that date would be June 6, 2022, which would be in the latter half of FY 2022. The applicant noted that under longstanding CMS practice and policy, a technology generally receives an additional year of new technology add-on payments if the third anniversary of the product's market entry date occurs in the latter half of the relevant fiscal year.

The commenter added if CMS does not agree that the date of the first sale of Azedra® should be used as the date when the product became available on the market, then it believes that an appropriate alternative for the start date of Azedra's® market availability is May 21, 2019, as this was the date that the first doses of the product were delivered to be used as dosimetry doses for two patients who subsequently received their first therapeutic doses of Azedra® in June 2019 and July 2019, respectively. More specifically, the commenter explained that its records indicate that, prior to May 2019, it received but was not able to fulfill attempted orders for Azedra® due to lack of product availability. Accordingly, the records reflect that the first doses of Azedra® became available on the market in May 2019. The commenter confirmed, however, that the first orders of Azedra® that were fulfilled in May 2019 were used for dosimetry doses for two patients who, as noted, subsequently received their first therapeutic doses of Azedra® in June 2019 and July 2019, respectively. The first therapeutic doses of Azedra® were not available or possible to calculate until after the results of the dosimetry dose were obtained.

Commenters also stated that CMS should finalize its proposal to continue Azedra's® new technology add-on payments for FY 2022 even if CMS does not finalize its proposal to use the FY 2019 MedPAR claims data for the FY 2022 IPPS ratesetting. Commenters emphasized that the condition Azedra® is indicated to treat is exceedingly rare and as a result, use of Azedra® is quite infrequent. A commenter believes that the realities with respect to the nature of Azedra®, the ultra-orphan condition it treats, and the infrequency of its use provide further support for the continuation of new technology add-on payments for Azedra® for FY 2022, particularly in light of the unique circumstances in FY 2020 and FY 2021 related to utilization of hospital services because of the COVID-19 pandemic and PHE. The commenter believes another year of new technology add-on payments for Azedra® will be critical for purposes of additional data collection and further opportunity for relevant MS-DRGs to adjust to the availability of this innovative, yet very infrequently used, therapy.

Response: We thank the commenter for their comments and we agree that the newness date for Azedra® should begin on May 21, 2019. We believe Azedra® was available on the market beginning May 21, 2019 rather than July 30, 2018 as May 21, 2019 was the date that the first doses of the product were delivered to be used. Based on the information available at the time, we indicated in the proposed rule that the newness date for Azedra® started on July 30, 2018 and we included Azedra® in our table of technologies that we proposed a one-year extension of new technology add-on payments for those technologies for which the new technology add-on payment would otherwise be discontinued. Based on the comment from the manufacturer, Azedra® is still new for FY 2022 and is eligible to continue new technology add-on payments for FY 2022 since the 3-year anniversary date of the entry of Azedra® onto the U.S. market (May 21, 2022) will occur in the second half of FY 2022. Therefore, we are including Azedra® in the table below for technologies that were approved for the new technology add-on payment for FY 2021 and that would still be considered “new” for purposes of new technology add-on payments for FY 2022. Finally, with regard to the comment about the FY 2020 MedPAR data, we did not finalize use of the FY 2020 MedPAR data for the FY 2022 ratesetting and Azedra® is still new for FY 2022. Also, in the FY 2006 IPPS final rule (70 FR 47349), we state that case volume is not a relevant consideration for making the determination as to whether a product is new. We refer the reader to the FY 2006 IPPS final rule for a complete discussion on this.

After consideration of the public comments we received, we are finalizing our proposal to continue new technology add-on payments for FY 2022 for the technologies that were approved for the new technology add-on payment for FY 2021 and that would still be considered “new” for purposes of new technology add-on payments for FY 2022, as listed in the proposed rule and in the following table in this section of this final rule. We note, the table below is the same as it was in the proposed rule, but the table in this final rule includes Azedra® and the updated cost information for Jakafi®, as discussed previously. The following table also presents the newness start date, new technology add-on payment start date, relevant final rule citations from prior fiscal years, maximum add-on payment amount, and coding assignments. We refer readers to the cited final rules in the following table for a complete discussion of the new technology add-on payment application, coding and payment amount for these technologies, including the applicable indications and discussion of the newness start date.

b. Extension of New Technology Add-On Payments

Section 1886(d)(5)(K)(ii)(II) of the Act provides for the collection of data with respect to the costs of a new medical service or technology described in subclause (I) for a period of not less than 2 years and not more than 3 years beginning on the date on which an inpatient hospital code is issued with respect to the service or technology. As explained in the FY 2005 IPPS final rule (69 FR 49002), the intent of section 1886(d)(5)(K) of the Act and regulations under § 412.87(b)(2) is to pay for new medical services and technologies for the first 2 to 3 years that a product comes on the market, during the period when the costs of the new technology are not yet fully reflected in the DRG weights. Generally, we use FDA, marketing authorization (for example, approval of an NDA) as the indicator of the time when a technology begins to become available on the market and data reflecting the costs of the technology begin to become available for recalibration of the DRGs. The costs of the new medical service or technology, once paid for by Medicare for this 2-year to 3-year period, are accounted for in the MedPAR data that are used to recalibrate the DRG weights on an annual basis. Therefore, we limit the add-on payment window for those technologies that have passed this 2-to 3-year timeframe.

As discussed in the FY 2006 IPPS final rule (70 FR 47349) and subsequent years, we do not believe that case volume is a relevant consideration for making the determination as to whether a product is “new.” Consistent with the statute, a technology no longer qualifies as “new” once it is more than 2 to 3 years old, irrespective of how frequently it has been used in the Medicare population. Therefore, if a product is more than 2 to 3 years old, we have historically considered its costs to be included in the MS-DRG relative weights whether its use in the Medicare population has been frequent or infrequent.

However, in light of the unique circumstances for FY 2022 ratesetting, for which we proposed to use the FY 2019 MedPAR claims data where we ordinarily would have used the FY 2020 MedPAR claims data for purposes of developing the FY 2022 relative weights, for the reasons discussed in section I.F. of the preamble of the proposed rule and this final rule, we stated in the proposed rule that we believe it may be appropriate to make a one-time exception to this long-standing policy for all technologies approved for new technology add-on payments for FY 2021, but for which the add-on payments would otherwise be discontinued beginning in FY 2022 because the technologies would no longer be considered new.

As discussed in section I.F. of the preamble of the proposed rule and this final rule, ordinarily, the best available MedPAR data for ratesetting would be the most recent MedPAR file that contains claims from discharges for the fiscal year that is 2 years prior to the fiscal year that is the subject of the rulemaking. For FY 2022 ratesetting, under ordinary circumstances, the best available data would be the FY 2020 MedPAR file. As discussed in section I.F. of the preamble of the proposed rule and this final rule, the FY 2020 MedPAR claims file contains data significantly impacted by the COVID-19 PHE, primarily in that the utilization of inpatient services was generally markedly different for certain types of services in FY 2020 than would have been expected in the absence of the PHE. Accordingly, we questioned whether the FY 2020 MedPAR claims file is the best available data to use for the FY 2022 ratesetting.

In our discussion in section I.F. of the preamble of the proposed rule and this final rule, we highlighted two factors we considered in assessing which data sources would represent the best available data to use in the FY 2022 ratesetting. The first factor is whether the FY 2019 data, which is from before the COVID-19 PHE, or the FY 2020 data, which includes the COVID-19 PHE time period, is a better overall approximation of the FY 2022 inpatient experience. After analyzing this issue, for the reasons discussed in section I.F. of the preamble of the proposed rule and this final rule, we stated in the proposed rule that we believe for purposes of the proposed rule that FY 2019 data are generally a better overall approximation of FY 2022. The second factor is to what extent the decision to use the FY 2019 or FY 2020 data differentially impacts the FY 2022 IPPS ratesetting. As discussed more fully in section I.F. of the preamble of the proposed rule and this final rule, after analyzing this issue, we determined that the decision does differentially impact the overall FY 2022 IPPS ratesetting. For example, we determined that the effect of the FY 2022 MS-DRG relative weights is more limited if the FY 2019-based weights are used rather than the FY 2020-based weights, should the FY 2022 inpatient experience not match the assumption used to calculate the MS-DRG relative weights.

Based on our analyses, we proposed to use FY 2019 data for the FY 2022 ratesetting for circumstances where the FY 2020 data is significantly impacted by the COVID-19 PHE. We stated in the proposed rule that because we believe the FY 2020 MedPAR claims data is significantly impacted by the COVID-19 PHE, we were proposing to use the FY 2019 MedPAR claims data for purposes where we ordinarily would have used the FY 2020 MedPAR claims data, including for purposes of developing the FY 2022 relative weights. We referred the reader to section I.F. of the preamble of the proposed rule for a further discussion on our analysis of the best available data for FY 2022 ratesetting. We refer the reader to section I.F. of the preamble of this final rule for a discussion of our finalized policy on the use the FY 2019 data for the FY 2022 ratesetting.

As discussed previously, in general, we extend new technology add-on payments for an additional year only if the 3-year anniversary date of the product's entry onto the U.S. market occurs in the latter half of the upcoming fiscal year. We stated in the proposed rule that because we were proposing to use FY 2019 MedPAR data instead of FY 2020 MedPAR data for the FY 2022 IPPS ratesetting, the costs for a new technology for which the 3-year anniversary date of the product's entry onto the U.S. market occurs prior to the latter half of the upcoming fiscal year (FY 2022) may not be fully reflected in the MedPAR data used to recalibrate the MS-DRG relative weights for FY 2022. Therefore, in light of our proposal to use FY 2019 data instead of FY 2020 data to develop the FY 2022 relative weights, we stated that we believe it would be appropriate to allow for a 1-year extension of new technology add-on payments for those technologies for which the new technology add-on payment would otherwise be discontinued beginning with FY 2022. Accordingly, we proposed to use our authority under section 1886(d)(5)(I) of the Act to provide for a 1-year extension of new technology add-on payments for FY 2022 for those technologies listed in the table presented in section II.F of the proposed rule (86 FR 25213). We noted that if we were to finalize our alternative approach of using the same FY 2020 data that we would ordinarily use for purposes of FY 2022 ratesetting, including development of the FY 2022 relative weights, as discussed in section I.F. of the preamble of the proposed rule and this final rule, we would also finalize to discontinue the new technology add-on payments for these expiring technologies beginning in FY 2022, consistent with our historic policies.

We noted that the table in the proposed rule also presented the newness start date, new technology add-on payment start date, relevant final rule citations from prior fiscal years, proposed maximum add-on payment amount, and coding assignments for these technologies. We referred readers to the final rules cited in the table for a complete discussion of the new technology add-on payment application, coding and payment amount for these technologies, including the applicable indications and discussion of the newness start date.

We invited public comment on our proposal to use our authority under section 1886(d)(5)(I) of the Act to provide for a 1-year extension of new technology add-on payments for FY 2022 for those technologies for which the new technology add-on payment would otherwise be discontinued beginning with FY 2022.

We also noted with regard to ContaCT, which is a technology sold on a subscription basis, we continued to welcome comments from the public as to the appropriate method to determine a cost per case for technologies sold on a subscription basis, including comments on whether the cost per case should be estimated based on subscriber hospital data as described previously, and if so, whether the cost analysis should be updated based on the most recent subscriber data for each year for which the technology may be eligible for the new technology add-on payment.

We summarize in this section the comments we received regarding our proposal to provide for a 1-year extension of new technology add-on payments for FY 2022 for those technologies listed in the table in the proposed rule for which the new technology add-on payment would otherwise be discontinued beginning with FY 2022.

Comment: Commenters overwhelmingly supported our proposal to use FY 2019 data instead of FY 2020 data to develop the FY 2022 relative weights and allow for a one-year extension of new technology add-on payments for those technologies for which the new technology add-on payment would otherwise be discontinued beginning with FY 2022.

Response: We appreciate the commenters' support.

Comment: We received a public comment from the applicants for NUZYRA® and IMFINZI® supporting our proposal to extend new technology add-on payments and requesting an additional extension for add-on payments through FY 2023. The applicant for IMFINZI® stated that CMS should evaluate the impact of the COVID 19 PHE on FY 2021 MedPAR claims data to determine if FY 2019 data should also be utilized in lieu of FY 2021 data for FY 2023 rate-setting. The applicant for NUZYRA® asserted that this extension would align with CMS' analysis and acknowledgement in the proposed rule that claims data from FY 2020 may not be appropriate to use in determining prospective hospital payment in the future due to the extenuating circumstances surrounding the COVID public health crisis.

Response: We thank the commenters for their comments. As noted, we proposed a one-year extension of new technology add-on payments for those technologies for which the new technology add-on payment would otherwise be discontinued beginning with FY 2022 because of our proposal to use FY 2019 data instead of FY 2020 data to develop the FY 2022 relative weights. We refer the reader to the discussion in section I.F. of the preamble of this final rule for a discussion of our finalized policy on the use the FY 2019 data for the FY 2022 ratesetting.

Comment: A commenter stated that effective May 5, 2021, the new Wholesale Acquisition Cost (WAC) for ELZONRIS^TM is $28,065.44 and requested that CMS update the new technology add-on payment amount accordingly.

Response: We appreciate the updated information from the applicant. Based on this updated information and the information regarding dosage in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42237), the maximum new technology add-on payment for ELZONRIS^TM for FY 2022 would be $144,116.04, as reflected in the table in this section.

Comment: We received a few comments on our request for comment regarding technologies sold on a subscription basis and whether the cost per case should be estimated based on subscriber hospital data, and if so, whether the cost analysis should be updated based on the most recent subscriber data for each year for which the technology may be eligible for the new technology add-on payment. Commenters agreed that in determining the cost per case for technologies seeking new technology add-on payment that utilize a subscription model, we should limit our analysis to subscriber hospitals and update the cost analysis on an annual basis. A commenter noted that alternative methodologies involving estimating the number of patients who would be eligible to receive treatment utilizing a technology sold on a subscription basis would be likely to result in a payment amount that does not adequately reflect the estimated average cost of such service or technology as required by the statute. The commenter believes that given the direct impact of utilization changes on cost per case when using a subscription model, it is reasonable for CMS to annually update the payment amount using the most recent subscriber utilization data.

Response: We thank commenters for their comments and will take the comments into consideration in future rulemaking where applicable. CMS will continue to consider the issues pertaining to technologies sold on a subscription basis relative to the calculation of the cost per unit of these technologies including the merits of calculating the cost per case across all IPPS hospitals versus limiting the cost per case analysis to current users and whether the cost analysis should be updated based on the most recent subscriber data for each year for which the technology may be eligible for the new technology add-on payment, as we gain more experience in this area.

However, for FY 2022, we believe the cost per case from the ContaCT applicant's original cost analysis is still appropriate to be used. Specifically, updated data from FY 2020 may be affected by the COVID-19 PHE as noted in our discussion in section I.A. where we finalize our policy to use the FY 2019 MedPAR data instead of the FY 2020 data. The applicant estimated that the average cost of ContaCT to the hospital is $1,600 based on customer data (85 FR 58630). Based on this information, the maximum new technology add-on payment for a case involving the use of ContaCT continues to be $1,040 for FY 2022.

As previously noted, we are finalizing our proposal to use FY 2019 data instead of FY 2020 data to develop the FY 2022 relative weights, as discussed in section I.F of the preamble of this final rule. For the reasons discussed previously, in light of this final policy, and after consideration of the public comments received, we are finalizing our proposal to use our authority under section 1886(d)(5)(I) of the Act to allow for a 1-year extension of new technology add-on payments for FY 2022 for the technologies listed in the proposed rule (except for Azedra® which is discussed above) and in the following table in this section of this final rule for which the new technology add-on payment would otherwise be discontinued beginning with FY 2022. As we discussed previously, because of the unique circumstances associated with ratesetting for FY 2022, we believe it is appropriate to make a one-time exception to our long-standing policy for all technologies approved for new technology add-on payments for FY 2021, but for which the add-on payments would otherwise be discontinued beginning in FY 2022 because the technologies would no longer be considered new.

The following table lists the technologies for which we are finalizing this 1-year extension of new technology add-on payments for FY 2022, including the newness start date, new technology add-on payment start date, relevant final rule citations from prior fiscal years, maximum add-on payment amount, and coding assignments. We refer readers to the cited final rules in the following table for a complete discussion of the new technology add-on payment application, coding and payment amount for these technologies, including the applicable indications and discussion of the newness start date.

5. FY 2022 Applications for New Technology Add-On Payments (Traditional Pathway)

We received 26 applications for new technology add-on payments for FY 2022. Four applicants withdrew their applications prior to the issuance of the FY 2022 IPPS/LTCH PPS proposed rule. Five applicants, Iovance Biotherapeutics, Omeros Corporation, Mallinckrodt Pharmaceuticals, Janssen Biotech, Inc., and Vericel withdrew their applications for lifileucel, narsoplimab, TERLIVAZ (terlipressin), ciltacabtagene autoleucel, and Nexobrid respectively, prior to the issuance of this FY 2022 IPPS/LTCH PPS final rule. In addition, in accordance with the regulations under § 412.87(c), applicants for new technology add-on payments must have FDA approval or clearance by July 1 of each year prior to the beginning of the fiscal year for which the application is being considered. One applicant, Ischemia Care, LLC for ISC-REST, did not receive FDA approval for its technology by July 1, 2021. Therefore, ISC-REST is not eligible for consideration for new technology add-on payments for FY 2022. We are not including in this final rule the description and discussion of this application which was included in the FY 2022 IPPS/LTCH PPS proposed rule.

We note that we received public comments on the applications for technologies that were withdrawn. However, because these technologies are ineligible for new technology add-on payments for FY 2022 because their applications were withdrawn, we are not summarizing nor responding to public comments regarding the new technology criteria for these technologies in this final rule. A discussion of the 16 remaining applications is presented below.

a. Aidoc Briefcase for PE

Aidoc Medical Ltd. (Aidoc) applied for new technology add-on payments for Aidoc Briefcase for PE (“Briefcase for PE”) for FY 2022. According to the applicant, Briefcase for PE is an FDA cleared, artificial intelligence (AI)-based solution for triage and notification of suspected pulmonary embolism (PE) cases.

The applicant stated that the device assists hospitals and radiologists by flagging and communicating suspected positive findings of PE in computed tomography (CT) pulmonary angiography (CTPA) examinations, which prompts the radiologist to assess relevant Digital Imaging and Communications in Medicine (DICOM) imaging files, allowing suspect cases to receive attention sooner than otherwise would have occurred, which in turn improves clinical outcomes. According to the applicant, patients with PE or suspected PE typically present at hospital emergency departments (EDs). The applicant stated that for these patients, ED physicians complete a brief evaluation and order imaging, which typically includes CTPA. With Briefcase for PE, CTPA images are automatically forwarded to the applicant's cloud-based engine where they are analyzed by an AI algorithm. The applicant claims that when Briefcase for PE detects a suspected PE, the radiologist is alerted via the user interface of the Aidoc Worklist Application that is installed on the radiologist's desktop. The applicant asserted that the notification prompts the radiologist to review the CTPA images and communicate with the emergency room team currently caring for the patient so that the appropriate clinical action may be taken sooner than it would otherwise have occurred in the absence of the tool.

The applicant stated that acute PE is a severe manifestation of venous thromboembolism (VTE) and occurs when a blood clot (thrombus) forms in a vein and then dislodges and travels to the pulmonary arteries in the lungs. The applicant stated acute symptomatic PE can cause death within 1 hour of onset in up to 10 percent of cases and it is estimated to be the third largest cause of cardiovascular death after coronary artery disease and stroke. The applicant further noted that acute PE is a life-threatening medical emergency that demands urgent intervention and clinical studies have demonstrated a strong correlation between time to communication of PE findings, treatment, and clinical outcomes. According to the applicant, in a typical workflow, a patient presenting to a hospital with signs or symptoms of PE would move through the system as follows: (1) Patient presents with suspected PE to the ED; (2) Patient receives contrast-enhanced CTPA imaging; (3) Technologist processes and reconstructs the CT images and manually routes them to the hospital picture archiving and communication system (PACS); (4) The exam enters a first-in-first-out (FIFO) reading queue, where it awaits radiological interpretation; (5) Radiologist reads the CT images and makes the diagnosis of PE; (6) The radiologist informs the referring physician of positive PE either verbally or through the radiologist report; (7) ED physician and/or on-call pulmonologist decide on the management strategy; (8) If appropriate, the patient proceeds to treatment.

The applicant asserted that the FIFO workflow is the standard of care. The applicant stated that Briefcase for PE allows facilities to substantially shorten the period of time between when the patient receives CTPA imaging (Step 2) and when the radiologist informs the referring physician of positive PE (Step 5). The applicant stated that Briefcase for PE streamlines this workflow using AI to analyze CTPA images of the chest automatically and notifies the radiologist that a suspected PE has been identified, enabling the radiologist to review imaging and make diagnostic decisions faster by prioritizing these images for review in the queue.

With respect to the newness criterion, Briefcase for PE received FDA 510(k) clearance on April 15, 2019 to market the device under FDA 510(k) number K190072. The FDA clearance for Briefcase for PE was based on substantial equivalence to the legally marketed predicate device, Briefcase for Intracranial Hemorrhage (ICH) (FDA 510(k) number K180647), as both of these devices use AI algorithms to analyze images and highlight cases for further action based on CT images. Briefcase for ICH received FDA 510(k) clearance on August 1, 2018. The predicate device for Briefcase for ICH is Viz.AI's ContaCT, which received De Novo premarket approval in February of 2018. The applicant asserted Briefcase for ICH is indicated for use in the analysis of non-enhanced head CT images, whereas Briefcase for PE is indicated for use in the analysis of non-enhanced CTPA images. The applicant submitted a request for approval of a unique ICD-10-PCS procedure code to identify use of the technology and was granted approval for the following procedure code effective October 1, 2021: XXE3X27 (Measurement of pulmonary artery flow, computer-aided triage and notification, new technology group 7).

Under the newness criterion, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered “new” for purposes of new technology add-on payments.

With respect to the first criterion, whether a product uses the same or similar mechanism of action to achieve a therapeutic outcome, according to the applicant, Briefcase for PE is the only FDA-cleared technology that uses computer-aided triage and notification to rapidly detect PE and shorten time to notification of the radiologist. The applicant claimed that no other FDA approved or cleared technology uses the same mechanism of action for computer-aided triage and prioritization of PE.

With respect to the second criterion, whether a product is assigned to the same or a different MS-DRG, the applicant stated it expects that patients evaluated for PE or suspected PE using Briefcase for PE will be assigned to the same DRGs as patients evaluated for PE or suspected PE under the current workflow or standard of care. The applicant estimates that under the MS-DRG grouper for FY 2021, Briefcase for PE could map to 279 different MS-DRGs, with MS-DRGs 175 (Pulmonary embolism with major complication or comorbidity (MCC) or acute cor pulmonale) and 176 (Pulmonary embolism without MCC) accounting for approximately 45 percent of the estimated cases.

With respect to the third criterion, whether the new use of technology involves the treatment of the same or similar type of disease and the same or similar patient population when compared to an existing technology, the applicant did not directly respond to the criterion but reiterated that no other existing technology is comparable to Briefcase for PE and that Briefcase for PE is the only FDA-cleared technology that uses computer aided triage and notification to rapidly detect PE and shorten time to notification of the radiologist.

We noted the following concerns in the proposed rule (86 FR 25218) regarding whether the technology meets the substantial similarity criteria and whether it should be considered new. We noted that the applicant asserted that Briefcase for ICH, the predicate device for Briefcase for PE, is identical in all aspects and differs only with respect to the training of the algorithm on PE (that is, non-enhanced head CT) and ICH (that is, non-enhanced CTPA) images. We noted that we were unclear whether the training of the algorithim on PE and ICH images would distinguish the mechanism of action for Briefcase for PE from Briefcase for ICH, or its predicate device, ContaCT, and we invited comment on whether Briefcase for PE represents a new mechanism of action. We noted that although the applicant did not directly state whether Briefcase for PE involves the treatment of the same or similar type of disease and the same or similar patient population, we believe that Briefcase for PE would be used for a different disease and patient population than Briefcase for ICH and ContaCT.

We noted our interest in public comments regarding issues related to determining newness for technologies that use AI, an algorithm, or software, as discussed in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58628). Specifically, we stated that we are interested in public comment on how these technologies, including devices classified as radiological computer aided triage and notification software and radiological computer-assisted diagnostic software, may be considered for the purpose of identifying a unique mechanism of action; how updates to AI, an algorithm or software would affect an already approved technology or a competing technology; whether software changes for an already approved technology could be considered a new mechanism of action, and whether an improved algorithm by competing technologies would represent a unique mechanism of action if the outcome is the same as an already approved AI new technology.

We invited public comments on whether Briefcase for PE is substantially similar to other technologies and whether Briefcase for PE meets the newness criterion.

Comment: The applicant submitted a letter maintaining that Briefcase for PE meets the newness criterion. With regard to commercial availability, the applicant commented that Briefcase for PE was commercially available on a very limited basis for less than six months during the FY 2019 time period of the data CMS is proposing to use to recalibrate MS-DRG weights and, therefore, that the claims from that time period do not reflect the cost of Briefcase for PE.

With respect to whether Briefcase for PE uses the same or a similar mechanism of action when compared to an existing technology, the applicant commented that the concern that Briefcase for PE is identical in all aspects to its predicate device, Briefcase for ICH, overlooks key components of the technology and the anatomy on which it focuses. The applicant cited the FDA definition of mechanism of action, which is “the means by which a product achieves its intended therapeutic effect or action,” in its assertion that the analysis of CTPA images for suspected findings of PE and subsequent computer-assisted triage and notification is the new mechanism of action. The applicant also noted that the images analyzed by the algorithm are of the pulmonary arteries, not of vessels in the brain as with Briefcase for ICH or ContaCT. The applicant stated that while AI is a necessary component of Briefcase for PE, it is not the mechanism of action per se, and is not sufficient to achieve the therapeutic effect alone.

With regard to the second and third newness criteria, the applicant commented that while Briefcase for PE and its predicate technologies are all AI-based triage and notification systems, these technologies are distinctly different in that the technologies focus on different patient populations and would be assigned to different MS-DRGs.

The applicant also responded to our question as to how AI, an algorithm, or software may be viewed as identifying a unique mechanism of action. The applicant concurred with other commenters in stating that such technologies should be evaluated for newness in the same way as CMS evaluates any other medical device applying for new technology add-on payment. That is, the commenters stated that human intelligence and human processes are not FDA approved or cleared technologies and should not be used as a comparator to evaluate whether Briefcase for PE, or any technology, meets the definition of newness. A commenter also noted that each of the AI technologies that applied for new technology add-on payments for FY 2022 are distinctly different in that the technologies focus on different patient populations and/or would be assigned to different MS-DRGs. This commenter stated, along with the applicant, that because there are no other technologies that have been approved or cleared by the FDA for the identification, triage and notification of suspected findings of PE that have been on the market for more than 2 to 3 years, Briefcase for PE meets the newness criterion.

A commenter noted how updates to an AI, an algorithm or software would affect an already approved technology or a competing technology. This commenter noted a phenomenon known as “model drift,” which can occur over time due to changes in healthcare workflows, practices, populations, and data. The commenter explained that when this occurs, the underlying algorithm does not automatically change and adapt to the new inputs, but its output predictions can become less accurate over time. The commenter further noted that model drift can be detected using the same statistical analyses that rigorously tested the algorithm's initial training data inputs and output predictions to ensure that they are free of statistically significant variances or biases. The commenter stated that if the AI/Machine Learning model or the algorithms that comprise the model change over time, they ideally should be subjected to this extensive statistical testing regimen that occurred before its original deployment, and developers should gauge the nature and extent of any model drift that occurs and make slight modifications if possible that would allow for its continued use in clinical care.

Response: We appreciate the clarification from the applicant with respect to whether the product meets the newness criterion. After consideration of the comments received and information submitted by the applicant as part of its FY 2022 new technology add-on payment application, at this time and given our ongoing consideration of assessing newness for technology that use AI, an algorithm or software, we believe that Briefcase for PE uses a new mechanism of action to achieve a therapeutic outcome when compared to existing treatments because there are currently no FDA approved or cleared technologies that analyze CTPA images for suspected findings of PE and subsequent computer-assisted triage and notification. Therefore, we believe that Briefcase for PE is not substantially similar to an existing technology and meets the newness criterion.

We also thank the commenters for their input on determining newness for technologies that use AI, an algorithm or software, as discussed in the proposed rule. We will continue consider how these technologies may be used to identify a unique mechanism of action; how updates to AI, an algorithm or software would affect an already approved technology or a competing technology; whether software changes for an already approved technology could be considered a new mechanism of action, and whether an improved algorithm by competing technologies would represent a unique mechanism of action if the outcome is the same as an already approved AI new technology, as we gain more experience in this area.

With regard to the cost criterion, the applicant presented the following analysis. The applicant first identified the principal diagnoses associated with the PE-related MS-DRGs 175 (“Pulmonary embolism with MCC or acute cor pulmonale”) and 176 (“Pulmonary embolism without MCC”). The applicant then searched the FY 2019 proposed rule MedPAR Limited Data Set (LDS) for claims where the principal diagnoses were listed in any position on an inpatient claim. The applicant mapped the 2,517 identified claims to the list of unique MS-DRGs corresponding to these claims and aggregated the claims by MS-DRG. Per the applicant, under the MS-DRG grouper for FY 2021, potential cases representing patients who may be eligible for treatment using Briefcase for PE map to 279 MS-DRGs, with MS-DRGs 175 and 176 accounting for approximately 45 percent of estimated cases. The applicant also provided a table of the top 10 MS-DRGs, which represent approximately 69 percent of estimated cases.

The applicant standardized the charges and applied the 2-year charge inflation factor used to adjust the outlier threshold determination, which the applicant stated was 10.22 percent. We note that the actual 2-year inflation factor in the FY 2021 IPPS/LTCH PPS final rule was 13.2 percent (85 FR 59039), which would have increased the inflated charges figure. The applicant did not remove charges for prior technology as the applicant maintained that no existing technology is comparable to Briefcase for PE. However, the applicant removed 31.9 percent of total accommodation charges, which the applicant maintained is consistent with their internal study which indicated that Briefcase for PE reduced the length of stay for PE-diagnosed patients. Per the applicant, the study demonstrated a mean length of stay of 8.77 and 5.97 days for pre-AI and post-AI time periods, respectively.

Next, the applicant added charges for the new technology. To calculate the charges for the new technology, the applicant multiplied the cases involving Briefcase for PE from each of its subscribing providers by a Medicare share of 52 percent to obtain the total estimated Medicare and non-Medicare cases. The applicant obtained the 52 percent Medicare share figure from a nationwide sample of inpatient claims provided by the Agency for Healthcare Research and Quality (AHRQ). Specifically, the applicant searched data from the Healthcare Cost and Utilization Project for discharges with the following codes: I2699, I2609, I2692, I2602, I2782, T790XXA, T800XXA, T791XXA, I2693, I2694, and I2601. The applicant found 189,575 discharges, of which 52 percent identified Medicare as the payer. The applicant divided the total cost of the technology by the estimated total number of cases for each customer to obtain a provider-specific cost per case, which it then averaged across all customers to obtain an overall average cost per case. Finally, the applicant divided the average cost per case by the national average CCR for the CT cost center of 0.034 from the FY 2021 IPPS/LTCH PPS final rule (85 FR 58601).

The applicant calculated a final inflated average case-weighted standardized charge per case of $87,483, which exceeded the average case-weighted threshold amount of $71,312. Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount, the applicant maintained that Briefcase for PE meets the cost criterion.

We stated in the proposed rule (86 FR 25219) that we would like more information regarding the methodology by which the applicant selected the diagnosis codes associated with MS-DRGs 175 and 176, as well as subanalyses that limit the cases to MS-DRGs 175 and 176 and the top 10 MS-DRGs, which per the applicant represent 45 percent of estimated cases and 69 percent of estimated cases, respectively. Additionally, we noted that the applicant appeared to have used a single list price of Briefcase for PE per hospital with a cost per patient that can vary based on the volume of cases. We questioned whether the cost per patient varied based on the utilization of the technology by the hospitals. We stated that we were interested in more information about the applicant's cost per case calculation, including how the applicant selected the codes it used to search for discharges from the Healthcare Cost and Utilization Project, as well as the per unit cost of Briefcase for PE and how the total cost of the technology was calculated for each subscribing provider.

In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58630), we stated our understanding that there are unique circumstances to determining a cost per case for a technology that utilizes a subscription for its cost. We stated our intent to continue to consider the issues relating to the calculation of the cost per unit of technologies sold on a subscription basis as we gain more experience in this area. In the FY 2022 IPPS/LTCH PPS proposed rule, we continued to welcome comments from the public as to the appropriate method to determine a cost per case for such technologies, including comments on whether the cost per case should be estimated based on subscriber hospital data as described previously, and if so, whether the cost analysis should be updated based on the most recent subscriber data for each year for which the technology may be eligible for the new technology add-on payment. We also invited public comment on whether Briefcase for PE meets the cost criterion, particularly in light of the subscription model, for which the number of subscribers and the estimated cost per case based on that subscriber data may change over time.

Comment: The applicant submitted a comment in response to our concerns in the proposed rule regarding the methodology for conducting the cost analysis for Briefcase for PE. With respect to our inquiry regarding the specific MS-DRGs selected for the analysis and the reasoning for selecting the identified ICD-10-CM diagnosis codes, the applicant explained that because Briefcase for PE is a new technology, there is no current utilization available for analysis and that, additionally, CT pulmonary angiogram, the imaging procedure that is specific to Briefcase for PE, is not reliably reported in the inpatient setting using ICD-10-PCS procedure codes. Therefore, to estimate the potential utilization of Briefcase for PE among Medicare beneficiaries, the applicant stated that it used a multi-step approach that involved identifying MS-DRGs specific to pulmonary embolism and determining the principal diagnoses associated with those MS-DRGs. The applicant determined the principal diagnoses associated with MS-DRG 175 (“Pulmonary embolism with MCC or acute cor pulmonale”) and MS-DRG 176 (“Pulmonary embolism without MCC”) and re-examined those diagnosis codes used in the initial calculation. The applicant decided to eliminate claims with the ICD-10-CM diagnosis of I27.82 (chronic pulmonary embolism) as it does not reflect incidental pulmonary embolism, the type of suspected positive cases that Briefcase for PE is intended to flag. The applicant then searched for all claims where the remaining principal diagnoses were listed as a diagnosis in any position on the claim, including the admitting diagnosis. Based on this methodology, the applicant aggregated the claims by MS-DRG and compiled a list of unique MS-DRGs corresponding to these claims. Per the applicant, the total claims for those providers who currently use Briefcase for PE were then aggregated by these MS-DRGs.

With respect to our inquiry regarding the applicant's cost per case methodology, the applicant clarified that the cost per case for each provider was not based on a single list price per hospital, as CMS described in the proposed rule, but rather the individual customer's specific list price based on the applicant's actual pricing. The applicant explained that it calculated the cost per case for each provider using the individual list price and total Medicare and non-Medicare cases, before taking an average of these unique costs per case to derive an average cost per case across all users, which the applicant then converted to charges.

In response to concerns CMS previously raised and continues to raise concerning variation in the cost per patient for a technology with subscription-based pricing, the applicant acknowledged that the cost per patient may change as the applicant adds more customers. The applicant conducted additional analyses beyond the one submitted in its new technology add-on payment application to examine how the cost per patient varied when data from all IPPS hospitals are included, versus the sample of subscriber hospitals used in its original analysis. According to the applicant, these analyses were performed using the methodology described in detail in the proposed rule with two additional changes: The elimination of ICD-10-CM code I27.82 as noted previously and an inflation factor of 13.2 percent instead of 10.22 percent. The applicant stated that it calculated the cost per patient by dividing the total cost of Briefcase for PE per year per hospital by the number of total estimated cases for which Briefcase for PE would be used at each hospital, and then averaging across all such hospitals. The applicant noted that it took a conservative approach and used the lowest pricing tier for hospitals that are not current users of the technology. After excluding hospitals with fewer than 11 cases, the applicant calculated a cost per case across 2,187 general acute care hospitals that was higher than the cost per case across subscriber hospitals. In updating its analysis, the applicant noted that the final inflated average case-weighted standardized charge per case is $104,688 which exceeded the case-weighted threshold amount of $71,507.

The applicant conducted two additional analyses for all current hospital clients and for all IPPS hospitals. For these analyses, the applicant calculated an average cost per case using the methodology described previously as well as a case-weighted average cost per case where the average was determined by assigning weight to each institution in relation to their relative importance and/or significance. Per the applicant, the additional analyses use the same methodology described previously but limit the cases included. Under the first alternative analysis, the applicant limited cases to only those in the top 10 MS-DRGs by volume. Under the second alternative analysis, the applicant limited cases to only those in the two pulmonary embolism MS-DRGs (MS-DRG 175 and 176). Under each scenario, the applicant determined that the final inflated case-weighted standardized charge per case exceeded the case-weighted threshold.

Response: We thank the applicant for its input. We note that the applicant did not specify how it determined the relative weight and importance of institutions when calculating the case-weighted cost per case in its supplemental analyses; although it appears to have been determined based on each institution's case volume relative to others in the sample, we would appreciate a clarification in the future. However, we agree with the applicant that the final inflated case-weighted standardized charge per case exceeded the case-weighted threshold under the twelve scenarios presented in its original application and in response to our concerns stated in the FY 2022 IPPS/LTCH PPS proposed rule. Therefore, we agree with the applicant that Briefcase for PE meets the cost criterion.

Comment: The applicant also responded to CMS' request for public comment as to the appropriate method to determine a cost per case for technologies sold on a subscription basis, including whether the cost per case should be estimated based on subscriber hospital data and, if so, whether the cost analysis should be updated based on the most recent subscriber data for each year for which the technology may be eligible for the new technology add-on payment. The applicant concurred with other commenters that, in determining the cost per case for technologies seeking new technology add-on payment that utilize a subscription model, we should limit our analysis to subscriber hospitals and update the cost analysis on an annual basis. The applicant also concurred that alternative methodologies involving estimating the number of patients who would be eligible to receive treatment utilizing a technology sold on a subscription basis would be likely to result in a payment amount that does not adequately reflect the estimated average cost of such service or technology as required by Section 1886(d)(5)(K)(ii)(III) of the Act.

According to the applicant, technologies sold on a subscription basis are provided to the customer at a fixed price per period of time, resulting in a cost per unit that is directly impacted by the frequency that the customer utilizes the technology. The applicant explained that customers with low utilization of a subscription-based technology have a higher cost per unit than customers with high utilization. The applicant also stated that because the overall cost per unit of subscription technologies is determined by each customer's ratio of price to utilization, an analysis that requires an estimate of cost per unit should be limited to subscribers only, as including estimates of cost per unit for potential customers that do not currently subscribe to the technology may result in a cost-per-case that does not reflect the actual costs of current users. The applicant recommends that the cost per unit of technologies sold on a subscription basis should be based on data from current subscribers only and that yearly updates to the cost per unit analysis are reasonable to reflect changes in subscribers and thus the overall cost per unit.

The applicant stated that this recommendation is consistent with how CMS calculates costs across a variety of payment systems and programs, including MS-DRG relative weights and APC relative weights where CMS only considers costs from hospitals for cases billed to Medicare and does not attempt to estimate what the cost an MS-DRG or APC relative weight might be if a broader range of hospitals delivered the type of care described by a specific MS-DRG or APC. Similarly, the applicant stated that the average sales price methodology used by CMS to determine payment for certain separately payable products includes only data from actual customer sales. The applicant noted that, although the unit price for these separately payable products often varies based on utilization, with customers with low utilization paying more per unit than customers with higher utilization, CMS does not attempt to calculate average sales price by forecasting how future customers may alter the current average sales price.

Response: We appreciate the applicant's comments relating to calculation of the cost per unit of technologies sold on a subscription basis and will take the comments into consideration in future rulemaking where applicable. CMS will continue to consider the issues pertaining to technologies sold on a subscription basis relative to the calculation of the cost per unit of these technologies including the merits of calculating the cost per case across all IPPS hospitals versus limiting the cost per case analysis to current users and whether the cost analysis should be updated based on the most recent subscriber data for each year for which the technology may be eligible for the new technology add-on payment, as we gain more experience in this area.

With regard to the substantial clinical improvement criterion, the applicant claimed that Briefcase for PE represents an advance that substantially improves the ability to diagnose pulmonary embolism by pre-reading images of CTPAs, automatically identifying suspected PE in CTPA images, and notifying the radiologist before the radiologist would have opened the study in the standard of care, which the applicant claims is the FIFO workflow. The applicant also asserted that because of a reduction in time-to-exam-open, where Briefcase for PE notifies the radiologist to open and read CTPA studies that have a high probability of being positive for PE sooner than the radiologist would have under the FIFO workflow, the treating physician can initiate treatment sooner, which can reduce mortality and reduce length of stay related to PE.

The applicant provided data from an FDA pivotal study in support of its assertion that Briefcase for PE reduces time-to-exam-open compared to the standard of care and helps in prioritization of diagnosis. For the FDA pivotal study, the applicant conducted a retrospective, blinded, multicenter, multinational study of the assessment of 184 CTPAs from 3 clinical sites (2 U.S. and 1 outside U.S.) using Briefcase for PE. The primary endpoint was to evaluate the software's performance in identifying pulmonary embolism on an approximately equal number of positive and negative cases (images with PE versus without PE), with a performance goal of at least 80 percent sensitivity (true positive rate) and specificity (true negative rate). Per the applicant, both measures exceeded the performance goal, with 90.6 percent sensitivity (95 percent CI: 82.2 percent-95.9 percent) and 89.9 percent specificity (95 percent CI: 82.2 percent-95.1 percent).

According to the applicant, the secondary endpoint of the FDA pivotal study was to evaluate time-to-notification for true positive PE cases compared to the FIFO workflow. The study showed that time-to-notification with Briefcase for PE is 3.9 minutes (95 percent CI: 3.7-4.1). The applicant noted that, in contrast, the time-to-exam-open in the FIFO workflow was significantly longer at 64.1 minutes (95 percent CI 36.6-91.5). The applicant stated the mean difference of 60.2 minutes (95 percent CI 32.7-87.6) for these two metrics is statistically significant, and assuming the radiologist receives a notification on a true positive PE case and acts on it immediately, it can save an average of 60.2 minutes (95 percent CI 32.7-87.6) compared to the time-to exam-open in a FIFO reading queue. Based on this data, the applicant concluded Briefcase for PE substantially shortened the time to diagnosis for PE cases as compared with the FIFO workflow.

The applicant further claimed that clinical studies and other real-world data have demonstrated comparable performance characteristics and shown that the integration of the Briefcase for PE software into the radiology workflow markedly improves time to notification for PE patients across a variety of clinical settings, geographies, and facilities. The applicant submitted a retrospective, single-site study by Weikert T., et al., which evaluated Briefcase for PE performance on 1,465 retrospective CTPA examinations from 2017 in an academic center outside the US. The sensitivity and specificity were measured to be 92.7 percent (95 percent CI: 88.3-95.5 percent) and 95.5 percent (95 percent CI:94.2- 96.6 percent), respectively. The researchers concluded that the system has high diagnostic performance for the automatic detection of PE on CTPA exams and as such, speeds up the diagnostic workup of critical cases.

The applicant stated that unpublished data maintained by Aidoc suggest that real-world performance of Briefcase for PE is consistent with what was found in the FDA pivotal study. The applicant stated that across 26 sites encompassing a variety of geographic locations across the United States, a total of 36,084 CTPA examinations were analyzed over a 90-day period (July 13, 2020-October 11, 2020). Time-to-notification metrics were calculated for all 4,748 CTPAs analyzed by the software and identified as positive for PE. Time-to-notification was calculated as the time to get the DICOM exam, de-identify it, upload it to the cloud, analyze and send a notification back to the worklist application. The applicant claimed that the mean time-to-notification for PE was 7.0 minutes (median: 6.1/IQR: 4.8). According to the applicant, over 85 percent of CTPA examinations identified as positive for PE were notified in under 10 minutes. The applicant concluded that the study demonstrates the ability of Briefcase for PE to provide fast time-to-notification on positive PE cases and its generalizability across different centers and patient populations.

The applicant submitted additional unpublished data from the 26 sites spread across a variety of geographic locations of the United States aggregated over a different 90-day period (September 17, 2020 to December 17, 2020). Seven sites were excluded from the analysis due to having third-party integrations that prevented the ability to capture engagement metrics. Two engagement metrics were calculated: The open percentage and the time-to-open. The open percentage metric was calculated as the percentage of notifications that were presented to the radiologist and opened by at least one radiologist. The time-to-open metric was measured by calculating the time between the arrival of the Briefcase for PE notification and the time first opened by a radiologist. A total of 2,138 notifications for CTPA examinations found to be positive for PE by Briefcase for PE were analyzed. The open percentage was found to be 97 percent across all sites (min: 80 percent, max: 100 percent), and the mean time-to-open was found to be 2.13 minutes (median: 1.0/interquartile range: 2.0). The data provided by the applicant indicated over 90 percent of notifications were found to be opened in under 5 minutes. Based on this data, the study concluded that radiologists in the US readily engage with notifications for positive PE cases provided by Briefcase for PE and do so in a timely manner. The study asserted that engagement is an important metric to assess radiologist adoption of this technology, which is critical to its practical utility in shortening time to diagnosis and communication of PE to reduce the time to treatment and improve clinical outcomes.

The applicant also claimed that Briefcase for PE significantly improves clinical outcomes relative to the current standard of care using the FIFO workflow because the use of Briefcase for PE reduces time to diagnosis and treatment by notifying the radiologist to review the image for suspected PE faster in the workflow. The applicant claimed early diagnosis and treatment is important in acute PE where there exists a “golden hour,” during which a timely approach to diagnosis and therapy can affect outcomes by reducing mortality and reducing length of stay.

The applicant provided two unpublished internal studies in support of the impact of Briefcase for PE on clinical outcomes. The applicant stated that in a single-site retrospective study, Maya M., et al. have shown a reduction in hospital length of stay for PE patients following the use of the Briefcase for PE system, compared to an equivalent time period prior to the use of the system. The applicant stated that Maya M., et al. compared mean length of stay for 366 patients with a positive PE diagnosis during 10-month periods before and after Briefcase for PE was implemented at Cedars-Sinai Medical Center in December 2018 (206 patients before the use of Briefcase for PE and 160 patients after the AI intervention). 3,997 patient encounters that underwent CTPA imaging but that were not diagnosed with PE were split as 1,926 and 2,071 patient encounters for the pre/post-AI periods based on the admission dates. Hip fracture was chosen as a comparison group due to acuity, treatment-related factors, and similar length of stay to PE. 2,422 patient encounters for patients diagnosed with hip fractures, identified by ICD9 code 820 and 821, were split as 1,279 and 1,143 patient encounters for the pre/post-AI periods based on the admission dates. According to the applicant, the pre- and post-implementation had similar seasonality and numbers of “hospital-wide patient encounters” (103,626 vs 104,733 encounters). The applicant noted that for the PE diagnosed patients, a mean length of stay of 8.77 and 5.97 days was observed for the pre-AI and post-AI time periods, respectively. The applicant stated that the mean difference was 2.80 days (p-value <0.05). For the group that underwent related PE imaging but was not diagnosed with PE, a mean length of stay of 9.28 and 9.70 days was observed for the pre-AI and post-AI time periods, respectively (mean difference was -0.42 days (p-value <0.05)). For the hip fracture diagnosed patients, a mean length of stay of 6.90 and 6.69 days was observed for the pre-AI and post-AI time periods, respectively. The mean difference was 0.21 days (p-value > 0.05). Additionally, for the hospital wide patients, a mean length of stay of 5.78 and 5.96 days was observed for the pre-AI and post-AI time periods, respectively. The mean difference was -0.18 days (p-value <0.05). According to the applicant, Maya et al. concluded that implementation of Briefcase for PE for flagging and prioritization of patients with PE resulted in significant reduction of length of stay that was not observed in other control groups.

The applicant also submitted a study by Raskin D., et al. which completed an additional retrospective, single-armed, single-site, study that indicated improved outcomes in PE patients, compared to a time period prior to the use of Briefcase for PE. In Raskin D., et al., data for all patients older than 18 years with a diagnosis of PE on CTPA and admitted to the institution's ED was collected for the period before the use of the AI software (January 1, 2016-January 1, 2018; pre-AI) and afterwards (January 1, 2019-December 6, 2019; post-AI). According to the applicant, study variables included demographics, clinical data, and imaging data. The applicant stated the primary variables for outcomes were 30- and 120-day all-cause mortality. 175 patients were eligible for the entire analyzed period (123 pre-AI, 52 Post-AI). The study found that 30- and 120-day all-cause mortality were significantly reduced post-AI (8.1 percent vs 7.7 percent, 15.5 percent vs 9.6 percent, respectively, p <0.05). According to the applicant, Raskin D., et al. concluded that implementation of Briefcase for PE for flagging patients with PE resulted in significant reduction of 30- and 120-day all-cause mortality.

The applicant submitted five additional clinical studies that do not directly involve the use of Briefcase for PE to demonstrate a strong correlation between time to communication of PE findings, initiation of treatment, and clinical outcomes. The applicants submitted a review by Kenneth E. Wood, further establishing a “golden hour” of PE during which a timely approach to diagnosis and therapy can potentially impact outcomes. According to the applicant, Wood states that major PE results whenever the combination of embolism size and underlying cardiopulmonary status interact to produce hemodynamic instability and that most deaths in patients occur within the first few hours after presentation, and rapid diagnosis and treatment is therefore essential to save patients' lives. One prospective, single-site study, Kumamaru K., et al. indicates the prevalence of a “golden hour” for PE diagnosis and treatment and concluded that delay (> 1.5 hours of CTPA acquisition) in direct communication of acute PE diagnosis from radiologists to referring physicians was significantly correlated with a higher risk of delayed treatment initiation and death within 30 days. Another prospective, single-site study, Kline J., et al., concluded that patients with a delayed diagnosis had a higher rate of in-hospital adverse events (9 percent vs. 30 percent; p = 0.01). An additional retrospective, single-site study by Smith S., et al. observed an association between early administration of anticoagulation therapy and reduced mortality for patients with acute PE. Lastly, a retrospective, single-site study asserting a “golden hour” by Soh S., et al. was submitted by the applicant to demonstrate an association between early initiation of anticoagulation therapy and in-hospital mortality in high-risk PE patients who needed ICU care. According to the applicant, Soh S., et al. concluded that their analysis showed that the cutoff point of anticoagulation initiation to achieve improved survival rates was 5.2 hours (that is, golden hour). The applicant stated that the study observed an association between early anticoagulation and reduced mortality for patients with acute PE.

In reviewing the information submitted by the applicant as part of its FY 2022 new technology add-on payment application for Briefcase for PE, we noted that the clinical literature provided by the applicant only compares the technology to unassisted FIFO workflows and not against existing electronic (for example, EHR “stat” orders) or manual (for example, verbal communication to radiologist) forms of prioritization, or other types of existing risk stratification tools or features currently available in EHRs. Additionally, we noted that some of the studies provided by the applicant that took place over many years may not have accounted for confounding variables (for example, improvements in care for patients with suspected PE) that may have occurred during the study period. Comparing to the FIFO workflow alone assumes that no other changes occurred before and after the adoption of the system and that the hospitals in question did not implement any other changes to their standard operating procedures to stratify suspected PE cases over the period of time many of the provided studies took place. We also noted that the applicant has not provided data on potential outcome concerns associated with this type of clinical decision support tool (for example, treatment delays due to false negatives, false positives, or multiple workflow prioritization alerts presented to the physician at the same time). We invited public comment on whether these issues may affect the tool's ability to help diagnose a medical condition earlier in a patient population.

Lastly, we noted that the applicant does not measure the effect of its technology on actual treatment outcomes, instead relying on the assumption that faster treatment results in better outcomes. Without measuring this impact on treatment outcomes, we noted that we were uncertain if the technology will lead to substantive clinical outcomes. Given that the applicant references a critical “golden hour” which may be as long as 5.2 hours, the potential time savings resulting from the use of Briefcase for PE may be insubstantial in relation to the time within which outcomes are affected in the setting of PE.

We invited public comments on whether Briefcase for PE meets the substantial clinical improvement criterion.

Comment: Several commenters indicated their support for Briefcase for PE. Some of these commenters offered their general positive clinical experiences as anecdotal support for the product. Other commenters offered opinions that the tool reduces bias, improves knowledge sharing, reduces treatment time, and improves outcomes with patients with pulmonary embolism but did not provide comparison to anything other than FIFO workflow. Further, commenters reflected on the accuracy of the tool due to its high sensitivity and specificity, and others noted that it can help to alleviate situations where radiology departments are overwhelmed with orders by helping staff to prioritize the workflow.

Response: We appreciate all of the comments received related to Briefcase for PE and have taken them into consideration in making our determination.

Comment: The applicant submitted comments in response to CMS' concerns in the FY 2022 IPPS/LTCH PPS proposed rule regarding whether Briefcase for PE meets the substantial clinical improvement criterion.

In response to questions raised at the Town Hall, as referenced in the proposed rule (86 FR 25221 through 25222) as to whether the shortening of time to notification by Briefcase for PE represents substantial clinical improvement, the applicant reiterated data shared previously from the FDA Pivotal Study for Aidoc Briefcase for PE. The applicant conducted a blinded, multi-center, multi-national study with Briefcase for PE that used the software's performance in identifying CTPAs containing pulmonary embolism as the primary endpoint, and time to notification for true positive PE cases compared to the standard of care as the secondary endpoint. The applicant noted a statistically significant mean difference of 60.2 minutes in time-to-notification between Briefcase for PE and the standard of care. Per the applicant, these data indicate that implementation of Briefcase for PE saves 60.2 minutes relative to the standard of care clinical workflow. The applicant further noted that data collected by the applicant in an unpublished study demonstrate that the real-world performance of Briefcase for PE is consistent with the results achieved in the aforementioned FDA study. Specifically, the applicant noted that across 4,748 CTPA examinations analyzed by Briefcase over a 90-day period and positive for PE, that the mean time-to-notification was seven minutes. The applicant also examined how radiologists engage with Briefcase for PE, noting that across 2,795 CTPA examinations analyzed by Briefcase over a 90-day period and positive for PE, the mean time-to-open as measured by calculating the time between when a notification first becomes available and the time of open, was 2.13 minutes. In this same data, the mean open rate across all customers were found to be 97 percent, and that over 90 percent of notifications were found to be opened in under 5 minutes. The applicant asserted in light of this data that by identifying cases of suspected PE and triaging and notifying radiologists of such cases, Briefcase for PE substantially shortens the time to diagnosis and therefore can impact the time to treat PE cases compared to the standard of care.

Further, the applicant submitted additional clinical evidence from Bader et al, that demonstrates that implementation of Briefcase for PE resulted in significant reduction of time to anticoagulation and reduction in length of stay in patients diagnosed with PE who were administered anticoagulation (intravenous or subcutaneous). In Bader et al, the study evaluated patient records prior to and following installation of Briefcase for PE, analyzing time to anticoagulation and patient length of stay. A total of 118 patients diagnosed with PE-77 pre-installation and 41 post-installation-were identified. The study found a 23.8-minute reduction in mean time to anticoagulation following the installation of Briefcase for PE from 61.74 minutes to 37.92 minutes. The study also found a 1.56 day reduction in mean length of stay following the installation of Briefcase for PE from 5.71 days to 4.15 days.

In response to our concerns about using FIFO workflow as the standard of care against which Briefcase for PE was evaluated, the applicant stated that other forms of prioritization such as verbal communication or STAT orders have limitations. The applicant stated that verbal communication is typically used only in severe cases, which are rare and represent less than 5 percent of positive PE cases. The applicant also stated that most patients diagnosed with PE have less severe clinical signs and symptoms at the time of presentation, making verbal communication impossible without the determination of the absence or presence of PE using CTPA. The applicant asserted that STAT orders can be overused, citing one article published by Fairview Health Services that up 70% of all portable chest x-rays are ordered STAT, and another article citing data from Emory University that up to 60% of all brain MRI studies are ordered as STAT and demonstrated that the STAT designation had a negative effect on read time. The applicant stated that this overuse of STAT orders would reduce the benefit of the prioritization method. The applicant stated that many Briefcase for PE customers in fact rely on the product to re-prioritize the STAT cases using the additional insight from the AI image-based triage and prioritization.

In response to our concerns that the applicant had not discussed any potential outcome concerns associated with this type of clinical decision support tool, the applicant reasserted its position from the Town Hall that the device is not intended to diagnose PE, and as a triage and notification system, no patient harm results from suspected false positive or negative findings because the radiologist would review images to make final determinations per the standard of care. The applicant cited post-market surveillance data, which show that there have been zero reports of adverse effects since FDA clearance, to support the notion that Briefcase for PE has not led to significant changes in the volume of CTPAs ordered prior to and following installation._{33 34}

In response to our concerns on the impact of the use of Briefcase for PE on treatment outcomes and whether a reduction in time of notification translates into a positive treatment outcome and thus a substantial clinical improvement, the applicant submitted data shared previously from Raskin et al, Bader et al., Maya et al., that indicated a reduction on 120-day and 30-day mortality respectively; and reductions in length of stay after the introduction of Briefcase for PE into the clinical workflow. Specifically, in Raskin et al. the retrospective study examined the impact of the use of Briefcase for PE on outcomes in PE patients. This study involved a retrospective analysis of 1,258 patient medical records for cases performed over the two time periods and observed statistically significant reductions of 21.8% and 26.6% in 120-day and 30-day mortality respectively. Additionally, both Maya et al and Bader et al observed statistically significant reductions in length of stay when comparing pre and post-implementation of Briefcase for PE and found observed reductions of 26.3% and 27.3% in length of stay respectively.

Response: We appreciate the additional data shared by the applicant to address our concerns. However, after review of all the data received to date, we continue to have concerns regarding the substantial clinical improvement criterion as noted in the FY 2022 IPPS/LTCH PPS proposed rule. Specifically, it remains unclear if the data provides sufficient evidence that use of Briefcase for PE significantly improves clinical outcomes for PE patients as compared to currently available workflows. While the applicant provided evidence that implementation of Briefcase for PE resulted in significant reduction of time to anticoagulation and reduction in length of stay in patients diagnosed with PE who were administered anticoagulation, we note that the studies submitted by the applicant did not directly assess outcomes using the technology but rather relied on the assumption that faster treatment leads to better outcomes. We also note that studies submitted in support of the applicant's substantial clinical improvement claims compare the technology to unassisted (FIFO) workflows and do not account for existing electronic (for example EHR “STAT orders”) or manual (for example verbal communication to radiologist) forms of prioritization. We note the applicant's statement that STAT orders may be overused but the evidence provided was from other imaging studies and not for CTPA. Additionally, some of the studies provided by the applicant took place over separate time periods and may not have accounted for improvements in care for patients with suspected PE that may have occurred during the study period.

Therefore, after consideration of the public comments we received and based on the information stated previously, we remain unable to determine that Briefcase for PE represents a substantial clinical improvement over existing therapies, and we are not approving new technology add-on payments for the Briefcase for PE for FY 2022.

b. RYBREVANT^TM (amivantamab)

Johnson & Johnson Health Care Systems, Inc. applied for new technology add-on payments for RYBREVANT^TM (amivantamab) for FY 2022. RYBREVANT^TM is intended for the treatment of metastatic non-small cell lung cancer (NSCLC). The applicant stated RYBREVANT^TM is a bispecific monoclonal antibody able to inhibit the epidermal growth factor receptor (EGFR) and c-MET tyrosine kinase signaling pathways known to be involved in the pathogenesis of NSCLC. Per the applicant, RYBREVANT^TM works by binding EGFR and c-MET targets present on the outside of the cell. The applicant noted lung cancer is the second most common cancer in the U.S., and approximately 85 percent of all lung cancers are NSCLC. The applicant stated EGFR mutations are present in 10 to 15 percent of patients with NSCLC and are categorized as either common EGFR mutations or atypical EGFR mutations. Per the applicant, common EGFR mutations in patients with NSCLC can be treated with small molecule, oral tyrosine kinase inhibitors that work inside the cell while patients with atypical EGFR mutations, such as exon 20 insertion mutations, do not respond well to small-molecule, oral EGFR inhibitors or to chemotherapy. The applicant stated exon 20 insertion mutations are the most frequently observed atypical EGFR mutations affecting 4 to 10 percent of NSCLC patients with an EGFR mutation, but there are no FDA approved targeted therapies for NSCLC patients with exon 20 insertion mutations.

With respect to the newness criterion, the applicant stated that, in March 2020, RYBREVANT^TM (also known as JNJ-61186372) received Breakthrough Therapy designation from the FDA for the treatment of patients with metastatic NSCLC with EGFR exon 20 insertion mutation whose disease has progressed on or after platinum-based chemotherapy. RYBREVANT^TM was approved by the FDA on May 21, 2021, for the treatment of adult patients with locally advanced or metastatic NSCLC with EGFR exon 20 insertion mutations, as detected by an FDA-approved test, whose disease has progressed on or after platinum-based chemotherapy. The applicant submitted a request for a unique ICD-10-PCS procedure code to identify use of the technology and was granted approval for the following procedure codes effective October 1, 2021: XW033B7 (Introduction of amivantamab monoclonal antibody into peripheral vein, percutaneous approach, new technology group 7) and XW043B7 (Introduction of amivantamab monoclonal antibody into central vein, percutaneous approach, new technology group 7).

As previously discussed, if a technology meets all three of the substantial similarity criteria under the newness criterion, it would be considered substantially similar to an existing technology and would not be considered “new” for the purpose of new technology add-on payments.

With regard to the first criterion, whether a product uses the same or similar mechanism of action to achieve a therapeutic outcome, the applicant asserted that the mechanism of action of RYBREVANT^TM for treating NSCLC is unique as amivantamab is anticipated to be the first FDA-approved bispecific antibody therapy targeting EGFR and MET mutations simultaneously. The applicant asserted that both EGFR and MET are involved in NSCLC pathogenesis, progression, and development of resistance to other therapies. According to the applicant, the most common first-line treatment for atypical EGFR-positive patients due to exon 20 insertion mutations is platinum-based chemotherapy. Per the applicant, there is no standard of care after progression for second-line treatment, and patients receive a variety of therapies such as chemotherapy, immunotherapy, and tyrosine kinase inhibitors, as well as combinations of these therapies. The applicant reiterated that none of these treatments are FDA approved for this patient population and that they are associated with limited efficacy for these patients.

With respect to the second criterion, whether a product is assigned to the same or a different MS-DRG, the applicant stated that the use of amivantamab is not expected to affect the DRG assignment. In their cost analysis, as shown below, the applicant identified several MS-DRGs relevant to this technology.

With respect to the third criterion, whether the new use of the technology involves the treatment of the same or a similar type of disease and the same or similar patient population, the applicant stated that RYBREVANT^TM treats a distinct patient population with metastatic NSCLC: Metastatic NSCLC with exon 20 insertion mutations whose disease has progressed on or after platinum-based chemotherapy. Per the applicant, there were no FDA-approved therapies at the time of the proposed rule for this patient population, and the most commonly used therapies are associated with limited efficacy.

In summary, the applicant asserted that RYBREVANT^TM should be considered new and not substantially similar to an existing technology because the mechanism of action of RYBREVANT^TM for treating NSCLC is unique and it treats a distinct patient population.

We invited public comments on whether RYBREVANT^TM is substantially similar to other currently available therapies and/or technologies and whether this technology meets the newness criterion.

Comment: The applicant submitted a comment reiterating that RYBREVANT^TM meets the newness criterion because it does not meet two of the substantial similarity criteria. The applicant stated that it does not meet the first criterion because RYBREVANT^TM's mechanism of action for treating NSCLC is unique in that it is the first FDA-approved bispecific antibody therapy targeting EGFR and MET mutations simultaneously, and it does not meet the third criterion since it treats a distinct patient population with metastatic NSCLC with exon 20 insertion mutations for which there is no other FDA-approved therapy.

Response: We thank the applicant for their comment. Based on this comment and on information submitted by the applicant as part of its FY 2022 new technology add-on payment application for RYBREVANT^TM, as discussed in the proposed rule (86 FR 25222 through 25227) and previously summarized, we believe that RYBREVANT^TM has a unique mechanism of action due to treating NSCLC via bispecific antibody therapy targeting EGFR and MET mutations simultaneously. We also agree that RYBREVANT^TM treats a new patient population, as there are no other FDA-approved therapies for patients with metastatic NSCLC with exon 20 insertion mutations. Therefore, we believe RYBREVANT^TM is not substantially similar to existing treatment options and meets the newness criterion. We consider the beginning of the newness period to commence when RYBREVANT^TM was approved by FDA for the indication of treatment of advanced or metastatic NSCLC with EGFR Exon 20 insertion mutations, on May 21, 2021.

With regard to the cost criterion, the applicant provided the following analysis to demonstrate that the technology meets the cost criterion. The applicant searched the FY 2019 Medicare Provider Analysis and Review (MedPAR) final rule file for cases based on the presence of one of the following ICD-10-CM diagnosis codes for lung cancer:

We note that the applicant also provided the following ICD-10-PCS procedure codes, which the applicant stated could be used to identify cases involving RYBREVANT^TM in the absence of a unique ICD-10-PCS code.

To further refine the cases used in the analysis, the applicant used the following methodology. Per the applicant, clinical data suggests 80 to 85 percent of lung cancer patients are NSCLC patients. The applicant stated that, of those patients, 10-15 percent are EGFR-mutations patients, and of those, at least 9 percent have atypical EGFR mutations like exon 20 ins. The applicant selected 0.93% (82.5% * 12.5% * 9%) of the cases identified based on the lung cancer diagnosis codes listed previously. The applicant stated this is the target population for RYBREVANT^TM, which the applicant used for the cost analysis.

The applicant then accounted for the circumstances where RYBREVANT^TM would be administered during an inpatient stay. The applicant stated that RYBREVANT^TM will typically be administered in the outpatient setting, and that it assumed that RYBREVANT^TM would be administered during an inpatient stay, possibly for care unrelated to a patient's cancer treatment, when that stay coincided with the 2-week cycle during which a patient receiving RYBREVANT^TM would undergo an infusion in the outpatient setting were it not for their inpatient admission. The applicant stated that, because it is very important that patients receive continuity of cancer care, it assumed that some patients would receive their RYBREVANT^TM infusion during their hospital stay. To account for this scenario, the applicant calculated the average length of stay for all of the cases in its patient population, which it asserted was about 5.862 days. The applicant then divided the average length of stay for all of the cases by 14, as per the applicant RYBREVANT^TM is administered on 28-day cycle, with a weekly administration for the first cycle, and an administration every 2 weeks thereafter.

The applicant stated that current clinical guidelines are expected to give medical professionals discretion to administer RYBREVANT^TM during the hospitalization or pause the treatment cycle. To account for physician discretion, the applicant included only 50 percent of these cases in the final cost analysis.

The applicant identified 349 cases mapping to the following MS-DRGs. The applicant has not made a request for RYBREVANT^TM to map to a new or different MS-DRG for FY 2022.

The applicant assumed patients receiving RYBREVANT^TM would receive one dose of the drug during their inpatient stay. Because RYBREVANT^TM would be administered in addition to any other drugs the patient was receiving during their inpatient admission, the applicant did not remove costs associated with any previous technology. The applicant then standardized the charges using the FY 2019 IPPS/LTCH PPS final rule Impact file. Then the applicant applied the 2-year inflation factor of 13.2 percent (1.13218) from the FY 2021 IPPS/LTCH PPS final rule (85 FR 59039). The applicant then added charges for RYBREVANT^TM, which the applicant determined using the inverse of the FY 2021 IPPS/LTCH PPS final rule pharmacy national average cost to charge ratio (CCR) of 0.187 (85 FR 58601).

Because the applicant calculated a final inflated average case-weighted standardized charge per case of $108,159, which exceeds the case weighted threshold of $64,736, the applicant maintained the technology meets the cost criterion.

Based on the information provided by the applicant, we stated in the proposed rule that we had several concerns with regard to whether the technology meets the cost criterion. In its cost analysis, the applicant combined 234 cases from multiple MS-DRGs into one group with a case-weight of 67 percent of cases. We stated that we do not believe this is appropriate for the cost analysis. As reflected in § 412.87(b)(3), where cases eligible for a particular technology may be assigned to multiple MS-DRGs, in performing the cost analysis, the applicant should compare the charges of the cases to a threshold amount that is the lesser of 75 percent of the standardized amount or 75 percent of one standard deviation beyond the case-weighted average of all MS-DRGs to which the cases map. In the event that a single MS-DRG has fewer than 11 cases, the applicant should impute a minimum case number of 11 rather than the actual value. In this way, the appropriate threshold and case weighted threshold value can be calculated.

In its analysis, the applicant appeared to take a sample of a larger case population based on clinical data. We stated that it was unclear whether the applicant was taking a simple random sample or a targeted sample of cases. We noted that, if the applicant obtained a random sample, this sample may not be any more representative of the larger population of cases identified by the lung cancer diagnosis codes listed previously. If the applicant instead non-randomly sampled cases from the larger population, we stated that we would like to understand the process used by the applicant to identify this targeted sample. We requested information under either approach on how a sampling of cases from the greater population is more representative of potential RYBREVANT^TM patients.

We invited public comments on whether RYBREVANT^TM meets the cost criterion.

Comment: The applicant provided clarifications to their analysis. With respect to the concern that the applicant combined cases from multiple MS-DRGs into one group with a case weight of 67 percent, the applicant was in agreement that it is not appropriate to combine cases that fall below the 11-case blinding threshold. The applicant stated that, in response to CMS' concern, they provided two versions of the table—one in the application pdf file with MS-DRGs that had fewer than 11 cases grouped into an “all other” category—and the full Excel file showing the complete list of DRGs, even if they had fewer than 11 cases.

With respect to CMS' request for information on how a random sampling of cases from the greater population is more representative of potential RYBREVANT^TM patients, the applicant first reiterated the assumptions behind its original cost analysis. The applicant pointed to clinical data from the American Cancer Society suggesting 80 to 85 percent of lung cancer patients are NSCLC patients, and that of those patients, 10-15 percent are EGFR-mutations, and of those, at least 9 percent are atypical EGFR mutations like exon 20 insertions which per the applicant is the target patient population for RYBREVANT^TM. The applicant also stated its assumption that, although RYBREVANT^TM will typically be administered in the outpatient setting, there would be situations in which the patient would be admitted to the hospital for care that is possibly unrelated to their cancer treatment, and that this inpatient stay would coincide with the day that they would normally receive RYBREVANT^TM as part of their ongoing cancer treatment. Per the applicant, RYBREVANT^TM's dosing regimen would mean that many beneficiaries' inpatient stays would not coincide with the RYBREVANT^TM treatment scenario, and that to account for this scenario, the applicant calculated the average length of stay for all of the cases in its patient population and divided the average length of stay for all of the cases by 14, after which the applicant multiplied this new factor by the number of cases in the sample to reduce the sample to those cases where the RYBREVANT^TM treatment day would occur during the hospitalization. The applicant then reiterated the clinical guidelines that give physicians discretion to administer RYBREVANT^TM during the hospitalization or a pause in the treatment cycle, and stated that to account for this discretion, it included only half of these cases in its cost analysis. Per the applicant, these calculations are intended to acknowledge that while there are many patients with lung cancer diagnoses receiving different types of treatment in the hospital, there are only a small number of beneficiaries who have ESCLC and are receiving RYBREVANT^TM that happen to be in the hospital on the day when they are normally scheduled to receive RYBREVANT^TM whose physician would like to continue treatment during the hospitalization.

The applicant then addressed CMS' concerns by presenting a revised analysis including only the cases with the lowest total charges at each of its filtering points, rather than selecting a random sample. The applicant explained that the cases with the lowest total charges are the least likely to meet the cost criterion threshold, and so selecting those cases represented the most conservative option in selecting a sample. The applicant first reran the analysis selecting 0.93 percent of cases with the lowest total charges to account for the portion of lung cancer patients who have NSCLC and atypical EGFR mutations. The applicant further filtered the cases to account for the patients who would receive RYBREVANT^TM in the hospital based on timing and physician discretion, resulting in a sample of 91 cases which the applicant reiterated had the lowest total charges. The applicant then added charges for RYBREVANT^TM based on the drug's WAC, resulting in a final inflated case-weighted standardized charge per case that exceeded the case weighted threshold, and the applicant maintained that RYBREVANT^TM meets the cost criterion.

Response: We thank the applicant for its comments addressing our concerns regarding the cost criterion. We appreciate the explanation of the sampling methodology behind the applicant's original analysis as well as its revised analysis representing the most conservative approach using cases with the lowest total charges that are least likely to meet the cost criterion. We agree that the applicant's approach to sampling is reasonable and representative of potential RYBREVANT^TM patients and that RYBREVANT^TM meets the cost criterion.

With respect to the substantial clinical improvement criterion, the applicant asserted that RYBREVANT^TM represents a substantial clinical improvement over existing technologies. The applicant asserted several claims of substantial clinical improvement for RYBREVANT^TM: (1) RYBREVANT^TM is anticipated to be the first therapy to treat the metastatic NSCLC with exon 20 insertion mutations for patients whose disease has progressed on or after platinum-based chemotherapy; (2) the objective response rate (ORR) was higher than what would be expected with chemotherapy or immunotherapy; (3) a clinical benefit rate higher than what would be expected with chemotherapy or immunotherapy; (4) a duration of response higher than what would be expected with chemotherapy or immunotherapy; (5) the median progression free survival was higher than what would be expected with chemotherapy or immunotherapy; and (6) the incidence and severity of diarrhea was lower than what would be expected with any oral EGFR inhibitor.

The applicant stated that patients with NSCLC and EGFR exon 20 insertion mutations have a form of disease that is generally insensitive to available EGFR TKI treatments and, as a result, carries a worse prognosis compared to patients with more common EGFR mutations. Per the applicant, the current standard of care for the initial treatment of exon 20 insertion metastatic NSCLC is platinum-based chemotherapy; and, after a patient with EGFR exon 20 insertion metastatic NSCLC disease progresses on or during platinum-based chemotherapy, there is no standard of care. The applicant stated there are currently no FDA-approved targeted therapies for patients with lung cancer who have EGFR exon 20 insertion mutations. The applicant cited an analysis of the Flatiron Health database, which includes electronic health data records from over 265 cancer clinics representing over 2 million active US cancer patients, that found prescribers use a wide variety of treatment strategies, all of which have an unclear role in the second-line treatment of exon 20 insertion mutated metastatic NSCLC or are known to be ineffective and/or have potential tolerability issues. Specifically, the analysis showed that in the second-line treatment of exon 20 insertion metastatic NSCLC, approximately 33 percent of patients received single-agent immunotherapy, 14.1 percent received an EGFR-targeting oral agent, 5.9 percent received chemoimmunotherapy combination, 5.9 percent received chemotherapy with a VEGF inhibitor, 5.9 percent received a clinical study drug, and the remainder received a variety of single-agent chemotherapies or other regimens. The applicant stated this re-iterates the lack of an accepted standard of care for the second-line treatment of exon 20 insertion metastatic NSCLC and thus underscores the unmet need of these patients. The applicant stated in their application that based on the Breakthrough Therapy designation for RYBREVANT^TM, it was anticipated that RYBREVANT^TM's first expected approval would be for the second-line treatment of exon 20 insertion metastatic NSCLC.

The applicant provided three references to support a finding of substantial clinical improvement for RYBREVANT^TM as well as some supplementary information in the application itself. The first reference was a conference presentation given at the 2019 Annual Meeting of the Society for Clinical Oncology titled “JNJ-61186372 (JNJ-372), an EGFR-cMet bispecific antibody, in EGFR-driven advanced non-small cell lung cancer (NSCLC)” by Haura et al. The second was a poster presented at the 2020 Annual Meeting of the American Society for Clinical Oncology titled “Amivantamab (JNJ-61186372), an anti-EGFR-MET bispecific antibody, in patients with EGFR Exon 20 insertion (Exon20ins)-mutated non-small cell lung cancer (NSCLC)” by Park et al. The third was a conference presentation given in January 2021 at the World Conference on Lung Cancer titled “Amivantamab in Post-platinum EGFR Exon 20 Insertion Mutant Non-small Cell Lung Cancer” by Sabari et al.

These three references all describe the ongoing Phase 1 trial titled “A Phase 1, First-in-Human, Open-Label, Dose Escalation Study of JNJ-61186372, a Human Bispecific EGFR and cMet Antibody, in Subjects With Advanced Non-Small Cell Lung Cancer” (https://clinicaltrials.gov/​ct2/​show/​NCT02609776). This open label, multicenter, first-in-human study, also known as “CHRYSALIS,” consists of two parts. Part 1 was a dose escalation study used to establish the recommended Phase 2 dosing regimen. Part 2 was a dose expansion study to assess safety and efficacy at the recommended Phase 2 dosing regimen. The primary efficacy endpoint was the overall response rate per Response Evaluation Criteria in Solid Tumors v1.1. Key secondary endpoints included clinical benefit rate (CBR), duration of response (DOR), progression-free survival (PFS), and overall survival (OS).

Key eligibility criteria for the post-platinum population of patients enrolled in the study included: Metastatic/unresectable NSCLC, EGFR exon 20 insertion mutation, and progression on platinum-based chemotherapy. Patients received the recommended Phase 2 dose of 1050 mg (1400 mg for patients ≥80 kg) amivantamab intravenously once weekly for the first cycle and biweekly thereafter. The safety population (N=114) included all post-platinum exon 20 ins patients who received amivantamab at the recommended Phase 2 dose, and the response-evaluable population (n=81) included post-platinum exon 20 ins patients who had at least three disease assessments or had discontinued, progressed, or died prior to the third post-baseline assessment at the time of clinical cut-off.

In the efficacy population, the median age was 62. In addition, 59 percent of the patients were female, 49 percent of the patients were Asian, and 47 percent had a history of smoking. Median time from initial diagnosis was 17 months with a range of 1-130 months. All patients, by definition, had a prior history of platinum-based chemotherapy while 46 percent had prior immuno-oncology therapy and 25 percent had a history of EGFR TKI treatment.

In the safety population, 98 percent of patients experienced a treatment-related adverse event. Of these, 16 percent were Grade 3 or higher, 9 percent were serious, 4 percent led to discontinuation, 13 percent led to dose reduction, and 21 percent led to dose interruption. Of note, 2 percent discontinued due to rash and 10 percent had treatment-related diarrhea with 8.5 percent at grade 1-2 and 3.5 percent at grade 3.

The applicant stated that preliminary safety results from the CHRYSALIS trial presented at the 2020 ASCO meeting appear to demonstrate that amivantamab has a manageable safety profile, with 60% of adverse events at grade 1 to 2. Per the applicant, this appears to be an improvement relative to the types and frequency of adverse events reported for platinum based chemotherapies overall in advanced NSCLC, with over half of patients reporting adverse events of grade 3 to 5, such as neutropenia, nausea, and vomiting. The applicant noted the best tolerated EGFR-targeting oral agent osimertinib was associated with a rate of discontinuation due to adverse events of 13 percent in the phase 3 FLAURA study. In addition, the applicant noted osimertinib was associated with a rate of any grade diarrhea of 58 percent with 2 percent of patients having grade 3 or higher in this study. In the same phase 3 FLAURA study, the applicant noted the comparator arm (gefitinib or erlotinib) was associated with a 57 percent incidence of any grade diarrhea with 2 percent of patients experiencing grade 3 or higher.

Regarding efficacy, in the Sabari et al reference, a blinded independent central review found an ORR in the efficacy population of 40 percent (95 percent CI 29-51) and a median DOR of 11.1 months (95 percent CI 6.9-not reached). Patients experienced a complete response in 4 percent of cases, partial response in 36 percent of cases, stable disease in 48 percent of cases, progressive disease in 10 percent of cases, and one percent of patients was not evaluable. Finally, the CBR (defined as complete response, partial response, or stable disease for at least two disease assessments) was 74 percent (95 percent CI 63-83). The median patient follow-up in this most recent analysis was 9.7 months (range 1.1-29.3). Of note, 47 percent of patients remained on treatment at time of data cutoff and 63 percent had responses of at least six months. The median PFS was 8.3 months (95 percent CI 6.5-10.9), and the median overall survival was 22.8 months (95 percent CI 14.6-not reached).

The applicant stated that, while direct comparison between therapies cannot be definitively made in the absence of comparative trials, amivantamab results appear promising and numerically better than those expected with current therapies (chemotherapy, immunotherapy, chemoimmunotherapy combination, or oral EGFR tyrosine kinase inhibitors) based on available data. The applicant stated platinum-based chemotherapy has been associated with a median progression free survival of 5.1 to 6.0 months in patients with exon 20 T790m mutations—the most common mutation observed following resistance to small molecule TKI inhibitors commonly used in advanced EGFR mutation positive NSCLC. The applicant stated that oral EGFR tyrosine kinase inhibitors (for example, erlotinib, gefitinib, afatinib, dacomitinib, osimertinib) and immunotherapies are also used to treat patients with exon 20 insertion metastatic NSCLC but generally have limited efficacy as exon 20 insertion mutations have been associated with resistance to EGFR tyrosine kinase inhibitors. The applicant stated most immunotherapy and chemoimmunotherapy studies have excluded patients with EGFR mutation because single-agent immunotherapies have very limited efficacy in patients with EGFR-mutated NSCLC.

The applicant provided the following table 1, which outlines median progression free survival (mPFS) and response rate (ORR) data among patients with exon 20 insertion mutation for amivantamab and some of the currently existing therapies. The applicant noted this table is intended to provide general information about individual therapies and is not intended for making direct comparisons between therapies as differences between study populations, follow-up time, prior treatments, and other factors may exist.

Finally, the applicant cited an analysis presented at the 2020 American Society of Clinical Oncology (ASCO) Annual Meeting, which found patients experienced a median ORR of 13% and PFS of 3.5 months when receiving a wide variety of different therapies, including immunotherapies, chemoimmunotherapies, EGFR-targeting TKIs, and other chemotherapy regimens as second-line treatment.

In the proposed rule, after review of the information provided by the applicant, we noted the following concerns regarding whether the technology meets the substantial clinical improvement criterion. We stated that at the time, results provided by the applicant were based on an ongoing Phase 1 trial. We were concerned that these are potentially partial results, from which end conclusions may not be drawn, and also about the potential for overestimating treatment effects when trials stop early or report interim results. We further noted that the only study cited by the applicant to establish substantial clinical improvement is a single-armed study assessing the safety and efficacy of RYBREVANT^TM in the target population. As noted by the applicant, no formal comparisons to other therapies were made. Without the ability to control for factors such as study design, patient characteristics, etc., we noted that we may be unable to determine whether any differences seen are the result of RYBREVANT^TM's potentially superior efficacy or confounding variables. We also noted that the single-arm study design results in an inability to distinguish between the effect of RYBREVANT^TM treatment, a placebo effect, and the effect of natural course of the disease.

We invited public comments on whether RYBREVANT^TM meets the substantial clinical improvement criterion.

Comment: The applicant submitted a comment regarding substantial clinical improvement. With regard to the concern that results provided by the applicant are based on an ongoing Phase 1 trial from which end conclusions may not be drawn, the applicant stated that these results supported the accelerated approval granted to RYBREVANT^TM by the US FDA on May 21, 2021. The applicant also reiterated that RYBREVANT^TM received Priority Review and Breakthrough Therapy designation, and explained that these designations are significant because they are only granted to applications for drugs that would be significant improvements in the safety or effectiveness of the treatment, diagnosis or prevention of serious conditions when compared to standard applications (in the case of Priority Review) or drugs that are intended to treat a serious condition and whose preliminary clinical evidence demonstrated substantial improvement over available therapy on clinically significant endpoints (in the case of Breakthrough Therapy). Per the applicant, the study that supported approval, CHRYSALIS (NCT02609776), is an ongoing, phase 1 multi-cohort, multi-center study that has not been stopped prematurely. The applicant noted that although enrollment has been closed for the study, patients continue to be followed for efficacy and safety for final data that will be provided to FDA when available. The applicant also noted that RYBREVANT^TM received FDA approval based on overall response rate (ORR) and duration of response (DoR) which were assessed and confirmed by blinded independent central review (BICR) in CHRYSALIS. The applicant emphasized that there were no currently approved therapies for the target patient population with high unmet medical needs.

The applicant also acknowledged that continued approval for this indication may be contingent upon verification and description of clinical benefit in the confirmatory trials (RYBREVANT^TM Prescribing Information). Per the applicant, the confirmatory phase 3 trial, which is currently enrolling, is a study of RYBREVANT^TM in combination with platinum-based chemotherapy, compared to platinum-based chemotherapy alone in participants with advanced or metastatic NSCLC characterized by EGFR Exon 20 insertions.

With respect to the concern that CHRYSALIS is a single-armed study assessing the safety and efficacy of RYBREVANT^TM in the target patient population, the applicant stated that because there is no standard of care (SOC) therapy and no randomized, comparative (head-to-head) studies published in patients with NSCLC and EGFR exon 20 insertion mutations, no formal comparisons to existing treatments can be made. The applicant stated that external controls can add valuable context in interpreting RYBREVANT^TM efficacy and appreciating unmet needs with current real-world therapies, the most common of which are single-agent chemotherapies, immuno-oncology therapies, and EGFR tyrosine kinase inhibitors (TKIs). Per the applicant, an external control arm was constructed using three real world datasets from US companies. The datasets were de-duplicated and adjusted using propensity score weighting for differences in age, brain metastases, ECOG PS, and prior lines of therapy. The applicant stated that patients receiving RYBREVANT^TM had longer OS and PFS than patients treated with real world therapies in the post-platinum-based chemotherapy setting based on a recent analysis. Specifically, the overall response rate (ORR) was 40 percent among RYBREVANT^TM-treated patients, 13 to 18 percent among external controls, and 16 percent for the pooled real-world dataset. The applicant also noted that RYBREVANT^TM-treated patients had a 53 percent risk reduction in progression, a 60 percent risk reduction in commencement of next therapy, and a 51 percent risk reduction in death compared to external controls. Per the applicant, poor performance of the external controls reflects the ineffectiveness of currently available real world treatments and highlights the urgent need to find more targeted treatments for the patient population.

In response to our concern that the single-arm CHRYSALIS study results in an inability to distinguish between the effect of RYBREVANT^TM treatment, a placebo effect, and the effect of natural course of the disease, the applicant provided a poster of results to distinguish between the effects of RYBREVANT^TM treatment. The applicant stated that the poster revealed that most Exon 20 insertion mutations in NSCLC have been associated with insensitivity or resistance to currently available small-molecule TKIs and are associated with poor prognosis (93% increased risk of progression or death with EGFR Exon20ins compared to common EGFR mutations); therefore, this represents an area of high unmet medical need. The applicant stated that the 5-year relative survival rate for patients with lung and bronchus cancer is 20.5%, with rates varying by stage from 59% with localized disease to 6% with metastatic disease. In addition, the 5-year relative survival rate for patients with NSCLC is 24.9%, with rates varying by stage from 63% to 7% for localized and metastatic disease, respectively. The applicant further stated that a retrospective cohort study of real-world data from the Flatiron Health Database (1 January 2011 through 21 May 2020) found that patients with metastatic NSCLC harboring exon 20 insertion mutations have an estimated 5-year survival of 8% compared to 19% for patients with common EGFR mutations. For these reasons, the applicant asserts that RYBREVANT^TM demonstrates substantial clinical improvement for this population of patients.

Response: We appreciate the additional information provided by the applicant in response to our concerns regarding substantial clinical improvement. After reviewing the information submitted by the applicant addressing our concerns raised in the proposed rule, we agree with the applicant that RYBREVANT^TM represents a substantial clinical improvement over existing technologies because, based on the information provided by the applicant, the technology offers a treatment option for patients with metastatic NSCLC with exon 20 insertion mutations whose disease has progressed on or after platinum-based chemotherapy, for which it is the first and only FDA approved treatment.

After consideration of the public comments we received, we have determined that RYBREVANT^TM meets all of the criteria for approval for new technology add-on payments. Therefore, we are approving new technology add-on payments for RYBREVANT^TM for FY 2022. Cases involving the use of RYBREVANT^TM that are eligible for new technology add-on payments will be identified by ICD-10- PCS procedure codes XW033B7 (Introduction of amivantamab monoclonal antibody into peripheral vein, percutaneous approach, new technology group 7) or XW043B7 (Introduction of amivantamab monoclonal antibody into central vein, percutaneous approach, new technology group 7).

RYBREVANT^TM is administered in 26 treatments annually and is estimated that the annual cost of the product will be $180,000 per patient. In its application, the applicant stated that RYBREVANT^TM is administered on a 28-day cycle. It is administered weekly for the first cycle, and every 2 weeks thereafter. The dose is 1050 mg (3 vials) for patients who weigh less than 80 kg and 1400 mg (4 vials) for patients who weigh 80 kg or more. Per the applicant, the WAC of RYBREVANT^TM is $2,986.43 for a 350mL vial. According to the applicant, 70% of patients with exon 20 mutations weigh less than or equal to 80 Kg, while 30% exceed 80 kg. Therefore, the average cost per patient for RYBREVANT^TM is $9,855.22 ($2,986.43 per vial * 3 vials * 0.70) + ($2,986.43 per vial * 4 vials * 0.30). Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the costs of the new medical service or technology, or 65 percent of the amount by which the costs of the case exceed the MS-DRG payment. As a result, the maximum new technology add-on payment for a case involving the use of RYBREVANT^TM is $6,405.89 for FY 2022.

c. BREYANZI® (lisocabtagene maraleucel)

Juno Therapeutics, a Bristol-Myers Squibb Company, submitted an application for new technology add-on payment for FY 2022 for BREYANZI®. BREYANZI® is a CD19-directed, autologous chimeric antigen receptor (CAR) T-cell immunotherapy that is comprised of individually formulated CD8 (killer) and CD4 (helper) CAR T-cells indicated for the treatment of adult patients with relapsed or refractory (r/r) large B-cell lymphoma after at least two prior therapies. We note that Juno Therapeutics previously submitted an application for new technology add-on payments for BREYANZI® for FY 2021, as summarized in the FY 2021 IPPS/LTCH PPS proposed rule, under the name lisocabtagene maraleucel (85 FR 32647-32652).

According to the National Comprehensive Cancer Network, Diffuse Large B-cell lymphoma (DLBCL) is the most common type of Non-Hodgkin's Lymphoma (NHL) in the U.S. and worldwide, accounting for nearly 30% of newly diagnosed cases of B-cell NHL in U.S. DLBCL is characterized by spreading of B-cells through the body that have either arrived de novo or by the transformation from indolent lymphoma.

According to the applicant, the standard-of-care, first-line immune-chemotherapy for DLBCL includes regimens such as cyclophosphamide, doxorubicin, vincristine, and prednisone plus rituximab (R-CHOP). These regimens result in long-lasting remission in more than 50% of patients. However, approximately 10% to 15% of patients will have primary refractory disease (that is, nonresponse or relapse within 3 months of first-line therapy), and an additional 20% to 25% will relapse following an initial response to therapy. Patients with relapses of aggressive B-cell lymphomas are believed to have a poor prognosis because of potential treatment resistance and rapid tumor growth, with only about 30% to 40% responding to salvage chemotherapy (for example, R-ICE, DHAP, or Gem-ox) followed by high-dose therapy and autologous stem cell transplantation for patients demonstrating chemotherapy-sensitive disease. Among patients eligible to undergo autologous stem cell transplantation (ASCT), only 50% will achieve a remission adequate to proceed to ASCT, and approximately 50% will relapse after transplantation. The applicant also noted that transplant eligibility is also restricted based on age and tolerance to high dose chemotherapy and thus excludes a moderate subset of patients with r/r DLBCL.

Additionally, the applicant explained that the available therapies for 3L+ large B-cell lymphoma include the following:

• CD19-directed genetically modified autologous CAR T-cell immunotherapy axicabtagene ciloleucel (YESCARTA®), approved in October 2017 for the treatment of adult patients with r/r large B-cell lymphoma after two or more lines of systemic therapy, including DLBCL not otherwise specified, primary mediastinal large B-cell lymphoma, high grade B-cell lymphoma, and DLBCL arising from follicular lymphoma (FL).

• CAR T-cell therapy tisagenlecluecel (KYMRIAH®), approved in May 2018, for the treatment of adult patients with r/r large B-cell lymphoma after two or more lines of systemic therapy, including DLBCL not otherwise specified, high grade B-cell lymphoma, and DLBCL arising from FL.

• Programmed death receptor-1 (PD-1)-blocking antibody (KEYTRUDA®), approved in 2018, for the treatment of adult and pediatric patients with refractory primary mediastinal B-cell lymphoma (PMBCL), or who have relapsed after two or more prior lines of therapy.

• CD79b-directed antibody-drug conjugate polatuzumab vedotin (POLIVY®), in combination with bendamustine and rituximab, approved in 2019, for the treatment of adult patients with r/r DLBCL, not otherwise specified, after at least two prior therapies.

According to the applicant, despite the availability of these therapies, r/r large B-cell lymphoma remains a major cause of morbidity and mortality due to the aggressive disease course. The applicant noted that the safety profiles of these therapies exclude many r/r large B-cell lymphoma patients from being able to undergo treatment with these therapies.

With respect to the newness criterion, the applicant submitted a BLA for BREYANZI® in October 2019, and was approved by FDA on February 5, 2021. BREYANZI® was granted Breakthrough Therapy Designation (BTD) on December 15, 2016 and Regenerative Medicine Advanced Therapy (RMAT) designation on October 20, 2017, for the treatment of patients with r/r aggressive large B-cell NHL, including DLBCL, not otherwise specified (DLBCL NOS; de novo or transformed from indolent lymphoma), primary mediastinal B-cell lymphoma (PMBCL), or follicular lymphoma Grade 3B (FL3B)). BREYANZI® is a CD19-directed genetically modified autologous T cell immunotherapy indicated for the 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) not otherwise specified (including DLBCL arising from indolent lymphoma), high-grade B-cell lymphoma, primary mediastinal large B-cell lymphoma, and follicular lymphoma grade 3B. BREYANZI® is not indicated for the treatment of patients with primary central nervous system lymphoma. We note that effective October 1, 2021 the following ICD-10-PCS codes may be used to uniquely describe procedures involving the infusion of BREYANZI®: XW033N7 (Introduction of lisocabtagene maraleucel immunotherapy into peripheral vein, percutaneous approach, new technology group 7) and XW043N7 (Introduction of lisocabtagene maraleucel immunotherapy into central vein, percutaneous approach, new technology group 7). The applicant also submitted a request for a new HCPCS code, which will uniquely describe procedures involving the use of BREYANZI®. The applicant noted in their application that BREYANZI® would likely map to the same MS-DRG as other CAR T-cell therapies, MS-DRG 018 (Chimeric Antigen Receptor (CAR) T-cell Immunotherapy).

As previously discussed, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered “new” for purposes of new technology add-on payments.

With regard to the first criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, the applicant described two ways in which it believes the mechanism of action for BREYANZI® differs from previously approved therapies for DLBCL. First, the applicant described the therapy as being comprised of individually formulated cryopreserved patient-specific helper (CD4) and killer (CD8) CAR T-cells in suspension that are administered as a defined composition of CAR-positive viable T-cells (from individually formulated CD8 and CD4 components). The applicant stated that the therapy involves a different mechanism of action from other CAR-T cell therapies because the CD4 and CD8 T-cells are purified and cultured separately to maintain compositional control of each cell type. Furthermore, during culture, each cell type is separately modified to have the CAR on the cell surface, expanded and quantified, and frozen in two separate cell suspensions. The applicant then described how BREYANZI® is infused with the same target dose of CD4 and CD8 CAR T-cells for every patient. The applicant asserted that because BREYANZI® controls the same dosage for both CD4 and CD8, it differs from other CAR T-cell therapies for DLBCL and could potentially provide for higher safety and efficacy; the applicant stated that CAR T-cell therapies that do not control for CD8 CAR T-cell dosage have demonstrated higher rates of severe and life-threatening toxicities, such as cytokine release syndrome (CRS) and neurotoxicity (NT).

The second feature the applicant described as distinguishing BREYANZI®'s mechanism of action from existing CD19-directed CAR T-cell therapies was the presence of an EGFRt cell surface tag. The applicant explained that the EGFRt cell surface tag could hypothetically be targeted for CAR T-cell clearance by separately administering cetuximab, a monoclonal antibody. According to the applicant, if the patient was separately administered cetuximab, the presence of the EGFRt cell surface tag within BREYANZI® would allow cetuximab to bind to the CAR T-cells and clear the cells from the patient. The applicant highlighted studies that showed that persistent functional CD19-directed CAR T-cells in patients caused sustained depletion of a patient's normal B-cells that expressed CD19, resulting in hypogammaglobulinemia and an increased risk of life-threatening or chronic infections. The applicant further explained that such prolonged low levels of normal B-cells could place a patient at risk of life-threatening or chronic infections. According to the applicant, the ability to deplete CAR T-cells, via the administration of cetuximab, when a patient achieves a long-term remission could hypothetically allow recovery of normal B-cells and potentially reduce the risk of life-threatening or chronic infections. The applicant noted that experiments in a laboratory setting showed that targeting EGFRt with the monoclonal antibody cetuximab eliminated CAR T-cells expressing the EGFRt marker, which resulted in long-term reversal of B-cell aplasia in mice. However, the applicant noted that this mechanism of CAR T-cell clearance, via administration of cetuximab and EGFRt cell surface tags/markers, has not been tested in humans, including patients treated with BREYANZI®.

With respect to the second criterion, whether a product is assigned to the same or a different MS-DRG, the applicant acknowledged that the ICD-10-PCS procedure codes used to uniquely identify procedures involving the administration of BREYANZI® XW033N7 (Introduction of lisocabtagene maraleucel immunotherapy into peripheral vein, percutaneous approach, new technology group 7) and XW043N7 (Introduction of lisocabtagene maraleucel immunotherapy into central vein, percutaneous approach, new technology group 7) are assigned to MS-DRG 018 (Chimeric Antigen Receptor (CAR) T-cell Immunotherapy). The applicant has not made a request for the technology to map to a new or different MS-DRG for FY 2022.

With respect to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, according to the applicant, BREYANZI® fills an unmet need in the treatment of large B-cell lymphoma because BREYANZI® would be indicated as a third-line treatment option for patients with r/r DLBCL, who cannot be treated with existing CAR T-cell therapies. The applicant asserted that BREYANZI® would be able to treat these patients that present with uncommon subtypes of DLBCL including, PMBCL, FL3B, and DLBCL transformed from indolent lymphoma from other follicular lymphoma, elderly patients (≥65 years old), patients with secondary CNS involvement by lymphoma, and those with moderate renal or cardiac comorbidities. The applicant asserted that these patient populations were excluded from registrational trials for YESCARTA® and KYMRIAH®, and therefore represent an unmet patient need.

Regarding newness, we stated in the proposed rule that we were concerned whether a differing production and/or dosage represented a different mechanism of action as compared to previously FDA-approved CAR T-cell therapies. We were also concerned about whether the existence of an EGFRt cell surface tag equates to a new mechanism of action given that in order to activate this cell surface tag, an additional medication, cetuximab, which targets the CAR T-cells for clearance, would be needed. We also expressed concern that, based on our understanding, the presence of the EGFRt cell surface tag is a potential way to treat an adverse event of the BREYANZI® therapy and is not critical to the way the drug treats the underlying disease. We noted that the applicant referenced that while this EGFRt cell surface tag is included within the BREYANZI® compound, it remains dormant without activation by cetuximab. Finally, the applicant noted that BREYANZI® has been shown safe and effective for patient populations excluded from registrational trials for YESCARTA® and KYMRIAH®, including patients with uncommon subtypes of large B-cell lymphoma, including PMBCL, FL3B, and DLBCL transformed from indolent lymphoma other than FL, elderly patients (≥65 years old), patients with secondary CNS involvement by lymphoma and those with moderate renal or cardiac comorbidities. We noted that the FDA label for YESCARTA® and KYMRIAH® does not appear to specifically exclude these patient populations or NHL subtypes. As such, it was unclear whether BREYANZI® would in fact treat a patient population different from other CAR T-cell therapies that treat patients with DLBCL.

We invited public comments on whether BREYANZI® is substantially similar to other technologies and whether BREYANZI® meets the newness criterion.

Comment: A commenter, the manufacturer of a competitor CAR T-cell product to BREYANZI®, stated that despite small differences in production and dosage, they agree with CMS that BREYANZI®'s mechanism of action does not represent a different mechanism of action as compared to KYMRIAH® and YESCARTA®. The commenter next provided the FDA-approved prescribing information for BREYANZI®, KYMRIAH®, and YESCARTA® which they asserted describe the same or similar mechanism of action for these technologies. The commenter added BREYANZI®, KYMRIAH®, and YESCARTA® are all CD19-directed genetically modified autologous T-cell immunotherapies that bind to CD19-expressing cancer cells and normal B cells. The commenter next stated that according to the applicant, BREYANZI®'s mechanism of action can be distinguished from existing CD19-directed CAR T-cell therapies given the presence of an EGFRt cell surface tag. According to the commenter, the applicant noted that EGFRt cell surface tag could “hypothetically” be targeted for CAR T-cell clearance by separately administering cetuximab, a monoclonal antibody. The commenter asserted that nevertheless, there is only preclinical murine data to support the claim that the presence of an EGFRt cell surface tag for BREYANZI® improves safety or efficacy. Therefore, the commenter asserted that the claim about the mechanism of action made by the applicant is merely hypothetical and should not be the basis to evaluate a claim for newness under the new technology add-on payment criteria. Lastly, the commenter stated that according to the applicant, BREYANZI® controls the same dosage for both CD4 and CD8, which “could potentially provide for higher safety and efficacy” than previously FDA-approved CAR T-cell therapies. In response, the commenter described an analysis of how different product attributes of KYMRIAH®, including CD4:CD8 ratio, affect efficacy and safety, in which the investigators found that the CD4:CD8 ratio had no significant impact on response rate, CRS, or neurotoxicity. The commenter added that in the phase 2 trial for YESCARTA®, investigators also found that response rates did not appear to be influenced by product characteristics, including the CD4:CD8 ratio.

Next, the commenter asserted BREYANZI® treats the same or similar type of disease and patient populations as KYMRIAH® and YESCARTA®. The commenter stated its disagreement that BREYANZI® presents a new treatment option for patients with r/r DLBCL that cannot be treated with existing FDA-approved CAR T-cell therapies. The commenter stated there is large overlap in the eligible patient populations for all three therapies as the patient populations or NHL subtypes are not excluded from the FDA label of the existing FDA-approved CAR T-cell therapies.

Response: We appreciate the information provided by the commenter and have taken this comment into consideration in our determination of the newness criterion.

Comment: In response to CMS' concerns in the proposed rule, a commenter stated their agreement and support that BREYANZI® needs additional data to show that it meets the newness criterion to support an approval for new technology add-on payment. The commenter stated specifically that they do not believe BREYANZI® is significantly different from the current two FDA approved CAR T-cell products YESCARTA® and KYMRIAH® for the treatment of Diffuse Large B-cell lymphoma (DLBCL). The commenter added that there have not been any head-to-head clinical trials performed to support the request from the manufacturer of BREYANZI®.

A few commenters encouraged CMS to consider assigning new technology add-on payments for new CAR T-cell therapies including lisocabtagene maraleucel to ensure patient access.

Response: We appreciate the information submitted by the commenters and have taken this into consideration in our final determination of new technology add-on payment status.

Comment: In response to CMS' concerns in the proposed rule, the applicant submitted a comment. The applicant stated that BREYANZI® does not use the same or similar mechanism of action to achieve a therapeutic outcome. The applicant asserted that in terms of the CAR construct and design, the therapy is impacted by differences in length of the transmembrane/hinge region, domain type, and costimulatory/activation domains. According to the applicant, new data demonstrates that the length of the transmembrane/hinge region, along with the domain type (CD28, CD8, etc.) in combination with the costimulatory/activation domains (CD28, 4-1BB, etc.), can affect cytokine production, proliferation, and T-cell memory generation, which are critical to the activity of CAR T-cell therapy. According to the applicant, BREYANZI® utilizes a different mechanism of action from other CAR T-cell therapies, including KYMRIAH® and YESCARTA®, which are also indicated to treat certain patient populations with DLBCL. The applicant added that BREYANZI® has a unique mechanism of action because it is comprised of two individually formulated cryopreserved patient-specific helper (CD4) and killer (CD8) CAR T-cells in suspensions administered as a defined composition of CAR-positive viable T-cells in a 1:1 ratio (CD4/CD8) as compared to KYMRIAH® and YESCARTA® which are comprised of varying CD4/CD8 CAR T-cell ratios and are manufactured as mixed populations. The applicant further asserted that BREYANZI® also has the unique attribute of incorporating an EGFRt cell surface tag that could potentially be used in combination with cetuximab to eliminate the genetically altered T-cells through antibody dependent cell-mediated cytotoxicity should the patient experience a catastrophic adverse event, as compared to KYMRIAH® and YESCARTA, neither of which has this same EGFRt cell surface tag.

The applicant stated that BREYANZI® does not involve the treatment of the same or similar type of disease or same or similar patient population as other technologies. The applicant asserted BREYANZI® has been shown to be safe and effective for patient populations excluded from registrational trials for YESCARTA® and KYMRIAH®, including patients with uncommon subtypes of large B-cell lymphoma, including refractory primary mediastinal B-cell lymphoma (PMBCL), FL3B, and DLBCL transformed from indolent lymphoma other than follicular lymphoma (FL), elderly patients (≥65 years old), patients with secondary central nervous system (CNS) involvement by lymphoma and those with moderate renal or cardiac comorbidities. The applicant added the FDA labels for YESCARTA® and KYMRIAH® may not exclude all these B cell lymphoma subtypes; however, clinical studies for YESCARTA® and KYMRIAH® failed to include patients transformed from indolent lymphomas (for example, chronic lymphocytic leukemia (CLL) and marginal zone lymphoma (MZL)) and patients with FL3b. Additionally, according to the applicant, clinical studies for YESCARTA® and KYMRIAH® did not allow enrollment of patients with prior allogeneic hematopoietic stem cell transplant (HSCT) or with secondary CNS disease, reduced renal function, and other specific comorbidities. The applicant asserted its belief that it would be unlikely for a clinician to prescribe KYMRIAH® or YESCARTA® for patients that were expressly excluded from the clinical trials for those therapies and even more unlikely for a commercial payor to reimburse for the use of KYMRIAH® or YESCARTA® in a patient population that was excluded from the clinical trials. Lastly, the applicant asserted patients with FL3b are excluded from Medicare coverage for KYMRIAH® and YESCARTA® under National Coverage Determination (NCD) 110.24 (Chimeric Antigen Receptor (CAR) T cell Therapy), but are covered for BREYANZI®.

Response: We appreciate the information submitted by the commenters in response to whether BREYANZI® meets the newness criterion. In regard to the first criterion, whether a technology uses the same or similar mechanism of action to achieve a therapeutic outcome, we do not believe there is a clear differentiation between the mechanism of action of BREYANZI® and currently available CAR T-cell therapies, namely KYMRIAH® and YESCARTA®. While the applicant highlights differences, such as the length of the transmembrane/hinge region, domain type, costimulatory/activation domains and CD4/CD8 ratios, we do not believe these meaningfully differentiate the mechanism of action of BREYANZI® from other CD-19 directed CAR T-cell therapies, which are all genetically modified autologous T-cell immunotherapies that bind to CD-19 expressing cancer cells. We refer the reader to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41287 through 41291) for a further discussion of this issue, where we determined that KYMRIAH® and YESCARTA® were substantially similar to one another based on similar concerns. We agree with the first commenter that the differences in production and dosage between BREYANZI®, YESCARTA®, and KYMRIAH® do not represent a different mechanism of action. We also agree with the first commenter that the EGFRt surface tag characteristic of BREYANZI® has not been shown to be a meaningful difference due to the experimental nature from which these results are derived.

In regard to the second criterion, whether a product is assigned to the same or a different MS-DRG, as noted in the proposed rule, the procedure codes used to describe the administration of BREYANZI® are assigned to MS-DRG 018 with other CAR T-cell therapies.

In regard to the third criterion, whether a technology treats the same or similar type of disease and patient populations, CMS notes there is substantial overlap between the patient populations treated by BREYANZI®, YESCARTA®, and KYMRIAH®. Based on B-cell lymphoma classifications and FDA indications for adult patients with relapsed or refractory (r/r) large B-cell lymphoma after two or more lines of systemic therapy, there appear to be only limited clinical differences between BREYANZI® and the two prior therapies. Specifically, based on coverage determinations by CMS, we believe that while YESCARTA® and KYMRIAH® treat DBLCL transformed from follicular lymphoma, BREYANZI® can also treat follicular lymphoma grade 3b that does not coexist with DLBCL.

Based on the information received to date, we believe that BREYANZI® is generally intended to treat the same or similar disease in the same or similar patient population as existing CAR T-cell technologies using the same mechanism of action as previously approved CAR T-cell therapies, that of engineered autologous cellular immunotherapy comprised of CAR T-cells that recognizes CD-19 expressing cancer cells, and mapping to the same MS-DRGs. However, because BREYANZI® can also be used to treat follicular lymphoma grade 3b that does not coexist with DLBCL, we believe that this represents a new indication for BREYANZI®. Therefore, based on the information stated previously, BREYANZI® is substantially similar to YESCARTA® and KYMRIAH® with regard to the other forms of large B-cell lymphoma listed on the indication and is therefore not new for these indications. However, BREYANZI® is considered new and not substantially similar to YESCARTA® and KYMRIAH® for the specific subpopulation of cases without DLBCL but with follicular lymphoma grade 3b.

With regard to the cost criterion, the applicant searched the FY 2019 MedPAR correction notice (December 1, 2020) data file to identify potential cases representing patients who may be eligible for treatment using BREYANZI®. The applicant identified claims that reported an ICD-10-CM diagnosis code of: C83.30 (DLBCL, unspecified site); C83.31 (DLBCL, lymph nodes of head, face and neck); C83.32 (DLBCL, intrathoracic lymph nodes); C83.33 (DLBCL, intra-abdominal lymph nodes); C83.34 (DLBCL, lymph nodes of axilla and upper limb); C83.35 (DLBCL, lymph nodes of inquinal region and lower limb); C83.36 (DLBCL, intrapelvic lymph nodes); C83.37 (DLBCL, spleen); or C83.38 (DLBCL, lymph nodes of multiple sites) in one of the first five diagnosis code positions on the claim. The applicant excluded claims if they had one or more diagnoses from the list below because these conditions would preclude use of BREYANZI®.

However, the applicant noted that the aforementioned C83.XX ICD-10-CM codes do not differentiate r/r patients from the broader DLBCL population. A clinical literature search completed by the applicant found that the r/r population makes up one-fourth of the DLBCL population, but since r/r patients typically have higher inpatient costs the applicant selected 19.36 percent of the cases with the highest total charges for their cost analysis. Applying the previously mentioned parameters, the applicant found a total of 991 cases mapped to 12 MS-DRGs.

The applicant stated that the use of BREYANZI®'s therapy would replace chemotherapy or other drug therapies, including other CAR T-cell therapies. Because of this, the applicant stated they removed all charges in the drug cost center since it was not possible to differentiate between different drugs on inpatient claims. The standardized charges per case were then calculated using the 2019 IPPS/LTCH PPS final rule Impact file and the 2-year inflation factor of 13.2 percent (1.3218) was applied. Finally, to determine the charges for BREYANZI®, the applicant used the inverse of a simulated alternative cost-to-charge ratio (CCR) specifically for CAR T-cell therapies to account for CAR T-cell therapies' higher costs compared to other drugs. To determine this alternative CCR for CAR T-cell therapies, the applicant referred to the FY 2021 IPPS final rule AOR/BOR file and calculated an alternative markup percentage by dividing the AOR drug charges within MS-DRG 018 by the number of cases to determine a per case drug charge. The applicant then divided the drug charges per case by $373,000, the acquisition cost of YESCARTA® and KYMRIAH®, the CAR T-cell products used in those claims, to arrive at a CCR of 0.295. The applicant noted that the cost of BREYANZI® had not yet been determined at the time of application. However, for the purposes of its cost analysis, the applicant assumed the per-patient cost to the hospital will be $373,000. Based on the FY 2021 IPPS/LTCH PPS final rule correction notice data file thresholds for FY 2022, the applicant calculated a final inflated average case-weighted standardized charge per case of $1,377,616 which exceeded the MS-DRG 018 average case-weighted threshold of $1,251,127 by $126,489. Therefore, the applicant stated that BREYANZI® met the cost criterion.

In the proposed rule, we stated that as noted in previous discussions, the submitted costs for CAR T-cell therapies vary widely due to differences in provider billing and charging practices for this therapy. Therefore, with regard to the use of this data for purposes of calculating a CAR T-cell CCR, we were uncertain how representative this data is for use in the applicant's cost analyses given this potential for variability.

We also stated that we continued to be interested in public comments regarding the eligibility of CAR T-cell technologies for new technology add-on payments when assigned to MS-DRG 018. As we have noted in prior rulemaking with regard to the CAR T-cell therapies (83 FR 41172 and 85 FR 58603 through 58608), 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 welcomed comment on this issue.

We invited public comment on whether BREYANZI® meets the cost criterion.

Comment: MedPAC's comments addressed the cost criterion in general as it relates to CAR T-cell therapies. In particular, MedPAC stated that CMS should provide a more detailed discussion of the NTAP cost criterion and whether under the current methodology a new CAR-T product priced similarly to existing CAR-T products can meet the cost criterion. MedPAC noted that at least one of the new CAR-T products may meet the NTAP cost criterion with a manufacturer price of $373,000, but that, with a price of $373,000, the new product's price would be similar to the prices of existing CAR-T products that are paid under the existing Chimeric Antigen Receptor (CAR) T-cell Immunotherapy MS-DRG (MS-DRG 018). MedPAC further noted that the possibility that a new CAR-T product with a price similar to existing CAR-T products might meet the cost criterion and qualify for additional payments (over and above what is paid for cases using other, similarly priced CAR-T products) seems inconsistent with the intent of current NTAP policy and the new CAR-T MS-DRG.

In addition, MedPAC stated that the discussion of each NTAP applicant's cost calculations in the proposed rule is not granular enough to discern the different factors that may contribute to this potential outcome, and urged CMS to provide a more detailed discussion of this issue.

MedPAC also stated that the current cost criterion provides an incentive for manufacturers and hospitals to increase their prices and charges and noted that the Commission may examine ways to improve how Medicare pays for new products to better balance manufacturer incentives to innovate with value and affordability for beneficiaries and taxpayers.

Response: We appreciate the comment from MEDPAC on this particular issue related to CAR T-cell and the cost criterion. As we stated in section II.F.1.a.(2) of the preamble of this final rule, the cost criterion is evaluated consistently with the formula specified in section 1886(d)(5)(K)(ii)(I) of the Act. Specifically, the charges of the cases involving a new medical service or technology are compared to, and must exceed, a threshold amount which is the lesser of 75 percent of the standardized amount or 75 percent of one standard deviation beyond the geometric mean standardized charge for all cases in the MS-DRG to which the new medical service or technology is assigned.

The cost criterion is based on the average charge per case including the cost of the technology which must exceed the threshold rather than just comparing the given price of a technology to the price of other similar technologies. If a technology meets all of the new technology add-on payment criteria then it will be eligible for the add-on payment. We refer the commenter to the spreadsheet we provide with the application (on the CMS website at https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​newtech) which details step-by-step calculations applicants provide with regard to the cost criterion. We believe the step-by-step calculation, which we summarized previously, meets the statutory criteria and is granular with sufficient detail to determine if the average charge per case exceeds the threshold.

With regard to MedPAC's concern that the cost criterion may provide an incentive for manufacturers and hospitals to increase their prices and charges, we welcome further comments from the public and MedPAC with regard to how to examine ways to improve how Medicare pays for new products to better balance manufacturer incentives to innovate with value and affordability for beneficiaries and taxpayers.

Comment: Commenters strongly opposed that CAR T-cell therapies would be ineligible for new technology add on payments consistent with section 1886(d)(5)(K)(ix) of the Act. The commenters voiced the need for new technology add on payments CAR T-cell therapies as they believe they are underpaid and meet all the criteria (including the cost criterion) to be eligible for new technology add on payments.

Response: We thank the commenters for their comments. In this final rule we have evaluated all CAR T-cell applications based on the traditional pathway criterion newness, cost, and substantial clinical improvement criterion. We will take the comments into consideration for future rulemaking.

Comment: In response to CMS' concerns, the applicant stated in its comment that CAR T-cell therapies that meet the cost and other criteria for new technology add-on payment status should continue to be eligible for new technology add-on payment status notwithstanding the creation of MS-DRG 018. The applicant stated that there is still a need for new technology add-on payment status for new CAR T-cell therapies, like BREYANZI®, to ensure patient access. Further, the applicant stated that while the payment amount for MS-DRG 018 is certainly more aligned with CAR T-cell therapy costs generally, BREYANZI® exceeds the cost threshold for MS-DRG 018, meaning that the reimbursement rate for MS-DRG 018 is not adequate for BREYANZI®. The applicant asserted that per CMS, this is precisely the type of scenario that the new technology add-on payment is intended to address.

In response to CMS' concerns regarding the cost criterion and the variability of provider billing and charging practices for CAR T-cell therapies, the applicant stated it considered the variability of CAR T-cell charging practices when developing its cost analyses and presented options that were intended to address this variability by using more conservative assumptions than have typically been the case for other new technology add-on payment applications. The applicant stated that most new technology add-on payment applications use the national average CCR for the cost center for which the new technology belongs to inflate the acquisition cost for the new technology to charges. The applicant added that in the case of a drug or biological, this would mean that the inverse of the national average CCR for drugs would be used to convert the WAC of BREYANZI® to charges. The applicant stated that using the drug CCR in the prescribed manner would result in charges that would potentially overstate actual hospital charging practices for CAR T-cell therapies. Furthermore, the applicant noted that numerous studies on charge compression have shown that hospital charging practices tend to result in higher markup percentages for lower cost drugs and lower markup percentages for higher cost drugs. The applicant added that given that the WAC for BREYANZI® is well above the average of drugs overall, it was concerned that using the inverse of the national average drug CCR might overstate what hospitals would typically charge for BREYANZI® on inpatient claims. Therefore, the applicant calculated a CAR T-cell specific CCR based solely on the total drug charges for CAR T-cell claims.

The applicant stated that to calculate the CAR T-cell CCR, it took the total drugs charges for cases in MS-DRG 018 from the FY 2021 IPPS Final Rule After Outliers Removed/Before Outliers Removed (AOR/BOR) file ($183,433,947.58). Next the applicant divided that amount by the number of cases (145) to determine an average drug charge per case ($1,265,061.70). Next it divided that amount by $373,000, the acquisition cost of YESCARTA® and KYMRIAH®. This value represents the average mark-up percentage hospitals used to convert the cost of CAR T-cell therapies to charges on claims in FY 2019. The applicant converted this mark-up percentage to a CCR by dividing 1 by the percentage (1/3.39 = 0.295).

Ultimately, the applicant stated it recognizes CMS' concern that hospitals vary in their CAR T-cell charging practices but states that its method for calculating a CAR T-cell specific CCR is meant to address this exact concern. The applicant asserted that by focusing solely on CAR T-cell claims, it is able to capture the range of charging practices in hospitals that used a CAR T-cell therapy in a non-clinical trial case in 2019. Furthermore, the applicant stated that in addition to addressing the concerns about variability in hospital charging practices, the CAR T-cell CCR is also a more conservative assumption to use in the cost threshold analysis because it inflates CAR T-cell costs to charges at a lower percentage (339%) than if the inverse of the national average drug CCR is used (535%).

Response: In regard to whether CAR T-cell therapies would be ineligible for new technology add on payments consistent with section 1886(d)(5)(K)(ix) of the Act, in this final rule we have evaluated all CAR T-cell applications based on the traditional pathway criteria of newness, cost, and substantial clinical improvement.

We appreciate the information provided by the applicant in their comment in regard to their calculation of a CAR T-cell CCR. As we stated in section E.2.b. of this rule, we continue to believe that it is premature to make structural changes to the IPPS at this time to pay for CAR T-cell therapies (78 FR 58453). As we gain more experience paying for these therapies under the IPPS, we may consider these comments to inform future rulemaking. However, we appreciate the thoughtfulness used by the applicant to provide as clear as possible a description of CAR T-cell therapy cost calculations. We appreciate the usage of multiple cost analyses, such as varying the CCR used to inflate cost to charges, which potentially allowed for a more conservative markup. After consideration of the public comments we received and based on the information included in the applicant's new technology add-on payment application, we believe that BREYANZI® meets the cost criterion.

With respect to the substantial clinical improvement criterion, the applicant asserted that BREYANZI® represents a substantial clinical improvement over existing technologies because: (1) The totality of the circumstances regarding BREYANZI®'s clinical efficacy, safety, and data make clear that BREYANZI® substantially improves, relative to services or technologies previously available, the treatment of Medicare beneficiaries with R/R NHL; (2) BREYANZI® offers a treatment option for a patient population unresponsive to, or ineligible for, currently available treatments; (3) BREYANZI® has, overall, an improved safety profile compared to YESCARTA and KYMRIAH; (4) BREYANZI® has a comparable or superior effectiveness compared to existing therapies; and (5) BREYANZI®'s patient population in its registrational study more accurately reflects real-world NHL patients compared to the studies of currently available CAR T-cell therapies.

The applicant asserts that the totality of the clinical efficacy and safety data from the TRANSCEND NHL 001 trial, which is a prospective, single arm, multicenter study of BREYANZI® in patients with r/r aggressive B-cell NHL, and the supportive safety data from the BREYANZI® clinical studies included in their Biologics License Application (BLA) submission demonstrate that BREYANZI® has equal or better efficacy and a better safety profile in a broad R/R patient population that better approximates the real world large B-cell lymphoma patient population—a population that the applicant asserted includes NHL subtypes not studied or approved for treatment with current approved or conditionally approved agents.

The applicant shared the results of the Phase I TRANSCEND NHL 001 trial, which was a prospective, single arm, multicenter study of BREYANZI® in patients with relapsed/refractory aggressive B-cell NHL. The applicant noted that TRANSCEND NHL 001 included subjects with the average age of 63 years with 111 subjects (41%) over 65 years of age and 27 (10%) subjects older than 75 years of age. These patients also failed previous therapies. Of the total number of subjects studied (efficacy: n=256; safety: n=269), 137 subjects (51%) had DLBCL, 60 (22%) had DLBCL transformed from FL, 18 (7%) had DLBCL transformed other indolent lymphomas, 36 patients (13%) had high grade lymphoma, 15 (6%) had PMBCL and 3 (1%) had FL3B. Additionally, the applicant explained that TRANSCEND NHL 001 was more inclusive, compared to the registrational trials for KYMRIAH® and YESCARTA®, of Medicare aged patients with comorbidities and NHL disease subtypes seen in the real world presentation of the disease. To support this, the applicant referenced that within this study, between 40% to 50% of subjects studied had cardiac ejection fraction, 3% had secondary CNS lymphoma, 51 patients (19%) had a creatinine clearance between 30-60 mL/min and 39 patients (14.6%) had grade ≥3 cytopenias. Furthermore, the applicant noted that 51 patients (19%) had decreased renal function and 13 patients (4.9%) had decreased cardiac function. The applicant stated that the TRANSCEND NHL 001 study showcased that the patient population treated during the study better reflected the real world large B-cell lymphoma patient population, a population that the applicant asserted included NHL subtypes not studied or approved for treatment with currently approved or conditionally approved agents, while providing similar safety and efficacy. The applicant contended that these high-unmet need large B-cell lymphoma subsets included patients with DLBCL transformed from rare indolent lymphomas other than FL, patients with FL3B, patients 65 years of age and older, as well as patients with moderate comorbidities of renal and cardiac insufficiency.

The applicant further explained that BREYANZI® provided improved effectiveness as compared to existing therapies. Patients with aggressive large B-cell NHL who have failed at least 2 prior therapies or SCT are treated with combinations of agents or monotherapy based on institutional preferences, but there is no standard of care for salvage therapies beyond first treatment therapy. The applicant noted that commonly used salvage therapies (non-CAR T-cell therapies) for relapsed, large B-cell lymphoma demonstrated objective response rates (ORRs) in the range of 12% to 46% and complete response (CR) rates of 6% to 38%. Among the patients who did achieve a response, the median duration of response (DOR) ranges from approximately 6 to 17 months and median overall survival was generally less than 12 months. Comparatively, TRANSCEND NHL 001, which provided subjects with BREYANZI®, met its primary endpoint of Independent Review Committee (IRC)-assessed ORR in adult patients with r/r large lymphoma after at least 2 prior therapies, as reported by the applicant. In the 256 efficacy evaluable patients, the ORR was 73% (95% confidence interval (CI]): 67.0% to 78.3%), and the CR rate was 53% (95% CI: 46.6% to 59.2%). With a median follow-up of 10.8 months, the median DOR per IRC assessment was 13.3 months and the median DOR for CR was not reached. By comparison, the applicant summarized that YESCARTA®, as demonstrated in the Phase I-II ZUMA-1 study (see the FY 2019 IPPS/LTCH PPS final rule 83 FR 41295 for a description of this study), had an ORR of 72.0% (95% confidence interval (CI: 62.0% to 81.0%). Also, according to the applicant, KYMRIAH®, as demonstrated by the Phase II JULIET study (see the FY 2019 IPPS/LTCH PPS final rule 83 FR 41293 for a description of this study), had an ORR of 50.0% (95% confidence interval (CI: 38.0% to 62.0%). The applicant contended that the results for BREYANZI® (ORR of 73% (95% confidence interval (CI]): 67.0% to 78.3%), and the CR rate of 53% (95% CI: 46.6% to 59.2%)) were observed across all subgroups tested, including elderly subjects, those with high burden disease or high baseline inflammatory biomarkers, those requiring anti-lymphoma therapy for disease control, as well as rare patient populations with a high unmet medical need (for example, PMBCL, DLBCL transformed from indolent lymphoma other than FL, and FL3B). The applicant contended that this data supports that BREYANZI® demonstrates comparable or superior effectiveness compared to existing therapies for patients with r/r large B-cell NHL.

Furthermore, the applicant stated that BREYANZI® had an improved safety profile in comparison to YESCARTA® and KYMRIAH®. The applicant stated that both of these FDA-approved CAR T-cell therapies had higher rates of toxicity as compared to BREYANZI®. In the TRANSCEND NHL 001 registrational study (n=268), 42% and 2% of subjects developed all-grade and Grade >3 CRS, respectively, and 30% and 10% developed all-grade and Grade >3 NT. The applicant compared these results to the results of the JULIET study has found in KYMRIAH's® prescribing information and summarized that KYMRIAH® had higher rates of all-grade and Grade >3 CRS (74% and 23%, respectively) and all-grade and Grade >3 NT (58% and 18%, respectively). The applicant provided the same comparison of the toxicity results of BREYANZI® to the results showcased in the ZUMA-1 study featuring YESCARTA® as found in YESCARTA®'s prescribing information and summarized that YESCARTA® had higher rates of all-grade and Grade >3 CRS (94% and 13%, respectively) and all-grade and Grade >3 NT (87% and 31%, respectively).

In the proposed rule, after reviewing the information submitted by the applicant as part of its FY 2022 new technology add-on payment application, we were concerned that there were no published studies directly comparing BREYANZI® and the two currently available CAR T-cell therapies for r/r DLBCL, YESCARTA® and KYMRIAH®. Additionally, we were concerned with the lack of long-term data supporting the effectiveness and efficacy of BREYANZI® and whether the lack of long-term data may limit the generalizability of the findings from the TRANSCEND NHL 001 study to the general Medicare population. While there have been no direct comparison studies of BREYANZI®, YESCARTA® and KYMRIAH®, the applicant did provide a comparison of the ORR, CR, PR and DOR across all three CAR T-cell therapies. While we noted that BREYANZI® does appear to provide an improved ORR, CR, PR, and DOR compared to the other FDA-approved CAR T-cell therapies based on the data presented by the applicant, we further noted that these differences appear to be small in magnitude, between 1-2% for the ORR, CR, and PR. Without a direct comparison of outcomes between these therapies, we were concerned as to whether these differences translate to clinically meaningful differences or improvements. We stated that BREYANZI® appeared to demonstrate similar patient outcomes to that of YESCARTA® and we questioned whether the TRANSCEND NHL 001 study is evidence that BREYANZI® is a more effective therapy to treat DLBCL over existing CAR T-cell therapies. Additionally, as previously discussed, the applicant noted that BREYANZI® has been shown safe and effective for patient populations excluded from registrational trials for YESCARTA® and KYMRIAH®. However, we stated it was unclear whether this suggests that BREYANZI® is a treatment option for patients who cannot be treated with these existing CART-cell therapies, given that the FDA label for YESCARTA® and KYMRIAH® appears to not specifically exclude these patient populations. Finally, we were concerned that the use of the EGFRt cell surface tag was not activated in patients receiving BREYANZI® to study the impact of clearing these CAR T-cells after remission and that this feature has not yet been tested on humans or in conjunction with patients treated with BREYANZI®. We expressed concern regarding the safety and efficacy of this feature given its lack of testing.

We invited public comments on whether BREYANZI® meets the substantial clinical improvement criterion.

Comment: In support to CMS' concerns about substantial clinical improvement, a commenter, the manufacturer of a competitor CAR T-cell product, submitted a comment. First, the commenter stated BREYANZI® is not a new treatment option for patients that can be treated by KYMRIAH® or YESCARTA®. The commenter stated that as part of the substantial clinical improvement criterion, the applicant argued that given that BREYANZI® has been shown to be safe and effective for patient populations excluded from registrational trials for KYMRIAH® and YESCARTA®, then it follows that BREYANZI® is a new treatment option for patients who cannot be treated with these therapies. The commenter was in agreement with CMS that these patient populations are not excluded from the FDA label of the existing FDA-approved CAR T-cell therapies, and thus BREYANZI® does not represent a new treatment option for these NHL subtypes.

Next, the commenter stated BREYANZI® does not demonstrate improved effectiveness over KYMRIAH® and YESCARTA®. The commenter stated that the applicant claimed that BREYANZI® demonstrated improved effectiveness as compared to existing therapies, when comparing the TRANSCEND data to that of KYMRIAH®'s JULIET trial and YESCARTA®'s ZUMA-1 trial. The commenter stated that it is not appropriate to claim clinically meaningful differences including improved effectiveness by comparing outcomes across different studies, as opposed to performing a head-to-head study, as these differences may be attributable to study populations and study design.

Lastly, the commenter stated that BREYANZI® does not demonstrate an improved safety profile over KYMRIAH® and YESCARTA®. The commenter stated that the applicant claimed that BREYANZI® demonstrates an improved safety profile in comparison to KYMRIAH® and YESCARTA®. As well as contending that it is inappropriate to claim clinically meaningful differences across different studies, the commenter stated that the safety profile between KYMRIAH® and BREYANZI® cannot be compared. However, according to the commenter, even using the applicant's own method of analysis by comparing safety data across different studies, the incidence of serious adverse reactions was in fact comparable across BREYANZI®'s TRANSCEND trial and YESCARTA®'s ZUMA-1 trial. The commenter added that the incidence of any grade neurologic events was actually lower in KYMRIAH®'s JULIET trial than in BREYANZI®'s TRANSCEND trial with a comparable incidence rate of grade 3/4 neurologic events. Furthermore, the commenter stated there may also appear to be a lower incidence of Grade >3 CRS with BREYANZI® than with KYMRIAH® when looking solely at the pivotal trial data; however, this is likely due to differences in adverse event management across BREYANZI®'s TRANSCEND trial and KYMRIAH®'s JULIET trial. Lastly, the commenter stated KYMRIAH®'s safety data from the Center for International Blood and Marrow Transplant Research (CIBMTR)'s Cellular Therapy (CT) registry study illustrates comparable safety to the TRANSCEND trial in true real-world conditions. The commenter stated of the 155 patients with NHL evaluated in the CIBMTR CT registry study, the rate of grade 3 or higher CRS and neurotoxicity occurred in 4.5% and 5.1% of patients respectively. The commenter concluded that even if safety data is compared across the different trials—which it stated is problematic—BREYANZI® is in fact not a safer therapy to treat DLBCL over existing FDA-approved CAR T-cell therapies.

Response: We appreciate the additional information submitted by the commenter and have taken this comment into consideration in determining whether BREYANZI® meets the substantial clinical improvement criterion.

Comment: The applicant submitted a comment in response to CMS' concerns on substantial clinical improvement. The applicant stated that BREYANZI® is a substantial clinical improvement over existing technologies because: (1) The totality of the circumstances regarding BREYANZI®'s clinical efficacy, safety, and data make clear that BREYANZI® substantially improves, relative to services or technologies previously available, the treatment of Medicare beneficiaries with relapsed/refractory (R/R) NHL; (2) BREYANZI® fills an unmet need among patients with R/R NHL; (3) BREYANZI® has, overall, an improved safety profile compared to YESCARTA® and KYMRIAH®; (4) BREYANZI® has a comparable or superior effectiveness compared to existing therapies; and (5) BREYANZI®'s patient population in its registrational study more accurately reflects real-world NHL patients compared to the studies of currently available CAR T-cell therapies.

According to the applicant, first, CMS questions the lack of long-term data supporting the effectiveness and efficacy of BREYANZI® and whether the lack of long-term data may limit the generalizability of the findings from the TRANSCEND NHL 001 study to the general Medicare population. The applicant stated they believe this concern is unwarranted because the duration of data is unrelated to the generalizability of data to the Medicare population, the TRANSCEND NHL 001 trial was specifically designed to include a patient population that is representative of real-world Medicare beneficiaries with NHL, including comorbidities, and BREYANZI®, like the other CAR T-cell therapies, is a new technology, none of which have long-term data.

Next the applicant stated that CMS raises questions regarding the lack of published studies directly comparing BREYANZI® with YESCARTA® and KYMRIAH®. The applicant stated they appreciate what they stated was CMS' recognition that BREYANZI® demonstrates improved clinical outcomes compared to KYMRIAH® and YESCARTA®, which supports that BREYANZI® is a substantial clinical improvement over prior technologies. The applicant asserted that a head-to-head comparison of the therapies is not required for purposes of new technology add-on payment status. The applicant further asserted that BREYANZI® is clearly superior to both products from a safety perspective with any grade and grade 3/4 CRS rate of 42% and 2% respectively, compared to 94% and 13% for YESCARTA® and 57% and 17% for KYMRIAH®. The applicant stated BREYANZI® showed equivalent efficacy and improved safety compared to YESCARTA®, and improved efficacy with similar safety compared with KYMRIAH®. Thus, according to the applicant, the very nature of these differences demonstrates that BREYANZI® is in fact a substantial clinical improvement.

Next the applicant stated that CMS asks whether the TRANSCEND NHL 001 study is evidence that BREYANZI® is a more effective therapy to treat DLBCL over existing CAR T-cell therapies or whether BREYANZI® has similar patient outcomes to YESCARTA®. The applicant contends that BREYANZI® is an equally effective and safer CAR T-cell therapy than YESCARTA® since the TRANSCEND NHL 001 study population represents a more accurate real-world population and is more inclusive of patients across multiple large B-cell lymphoma subtypes as well as patients with comorbidities than was represented in the registrational trial for YESCARTA®. The applicant asserted that three retrospective studies suggest that restrictive eligibility criteria employed in the YESCARTA® ZUMA-1 study made for an overall study population with a more favorable prognosis and better outcomes with standard and CAR T-cell therapy. According to the applicant, these three studies each demonstrated that patients who did not meet key eligibility criteria for ZUMA-1 were found to have a substantially shorter survival compared to those enrolled to ZUMA-1. According to the applicant, the TRANSCEND NHL 001 study included these patients. The applicant further asserted that BREYANZI® results should be more equivalent to real-world patients based on the fact that the enrolled population that was at high risk for worse outcomes compared to the population studied for YESCARTA® in ZUMA-1. Yet, despite that, according to the applicant, BREYANZI® showed equivalent efficacy and improved safety compared to YESCARTA®. The applicant stated that one can only speculate as to what the efficacy would have been for BREYANZI® had the patient population in TRANSCEND NHL 001 been limited in the same manner as the patient population for ZUMA-1.

Lastly, the applicant stated that they believe it is important to underscore that the potential use of the EGFRt cell surface tag is a method of last resort to alleviate any severe toxicities that may become life threatening to a patient. The applicant added that given the overall safety profile of BREYANZI®, it is expected that the potential use of the EGFRt cell surface tag would be extremely rare. The applicant asserted that the existence of the EGFRt cell surface tag at least provides a potential option for patients who are at serious risk of death due to a rare adverse event; according to the applicant, the lack of this option for patients treated with YESCARTA® and KYMRIAH® means that there are limited options to mitigate serious incidents.

Response: We thank the commenters for the additional information in response to our substantial clinical improvement concerns. We note that in their comment, the applicant stated that CMS recognized that BREYANZI® demonstrates improved clinical outcomes compared to KYMRIAH® and YESCARTA®, which supports that BREYANZI® is a substantial clinical improvement over prior technologies. We believe the applicant may have misunderstood what was stated in the proposed rule. Rather, we stated in the proposed rule that some data may show improvement but the differences were small and may not translate to clinically meaningful differences or improvements (86 FR 25233). We did not claim that BREYANZI® was a substantial clinical improvement. We further stated that we were not certain that the benefits were meaningful and due to differences in treatment, rather than other factors such as sample characteristics or study design. While the applicant asserts that BREYANZI® represents a substantial clinical improvement over YESCARTA® and KYMRIAH®, we continue to have concerns with regard to whether BREYANZI® demonstrates an improved safety profile compared to existing treatments as discussed by a commenter. Furthermore, as noted previously in this section, we believe BREYANZI® is generally substantially similar to YESCARTA® and KYMRIAH® and not new. Moreover, the applicant did not provide data for the specific subpopulation of patients without DLBCL and with follicular lymphoma grade 3b, for which we consider Breyanzi® new. Upon further review of the TRANSCEND NHL 001 study, three patients had FL3b at baseline. While the authors report that two patients with FL3b who received Breyanzi® remained in complete response after 1 year, we are not certain that these results can be generalizable to the greater FL3b patient population. We accept all information submitted by applicants and consider it in our determination of substantial clinical improvement. However, we believe a sample size of two or three patients is a very small sample from which to generalize about a larger population to then make a determination of substantial clinical improvement.

While we believe head to head studies are ideal for demonstration of superiority and to determine a difference in treatment effects, we accept all information submitted by applicants, as stated previously. However, we believe that we are consistent in requiring that the applicant provide data designed to test differences in treatment effects to allow us to distinguish the effect of a particular treatment from the effects of study design, sample characteristics, etc.

We agree with the applicant that the generalizability of a study may not be directly related to whether a study is long-term and we appreciate the TRANSCEND NHL 001 was designed to include a patient population that is representative of real-world Medicare beneficiaries with NHL. However, we note that long-term data supports the effectiveness and efficacy of a technology, and without long-term data, it is difficult to determine if benefits seen are durable.

We also note the applicant commented that there is a potential use of the EGFRt cell surface tag to alleviate severe toxicities in patients. We appreciate that this may be a potential use, however as a commenter stated, this is only supported by preclinical murine models. Without clinical trial data, we remain concerned that we are unable to verify the applicant's claims of a potential for positive clinical outcomes related to claims made about the EGFRt cell surface tag.

Therefore, for the reasons discussed previously, particularly the insufficiency of data evaluating the population for which Breyanzi is considered new, we are unable to determine whether Breyanzi® represents a substantial clinical improvement for the specific subpopulation for which it would be eligible for new technology add-on payments. Also, as noted previously, BREYANZI® is considered not new and substantially similar to YESCARTA® and KYMRIAH® with regard to the other forms of large B-cell lymphoma listed on the indication and is therefore not new for these indications. Therefore, we are not approving new technology add-on payments for Breyanzi for FY 2022.

d. COSELA^TM (trilaciclib)

G1 Therapeutics submitted an application for new technology add-on payments for Trilaciclib for FY 2022. COSELA^TM (trilaciclib) is indicated to decrease the incidence of chemotherapy-induced myelosuppression in adult patients when administered prior to a platinum/etoposide-containing regimen or topotecan-containing regimen for extensive-stage small cell lung cancer (ES-SCLC).

According to the applicant, COSELA^TM is a first-in-class myelopreservation therapy that has the potential to mitigate chemotherapy-induced myelosuppression (CIM). COSELA^TM is a selective, transient inhibitor of cyclin dependent kinases 4 and 6 (CDK4/6) with potential antineoplastic and chemoprotective activities. CDK4 and CDK6 are key regulators of the G1 cell-cycle checkpoint and play important roles in cell proliferation and associated biological processes. One of the most common pathways dysregulated in cancer is the cyclin D-cyclin-dependent kinase four or six (CDK4/6)-retinoblastoma (RB) pathway. COSELA^TM arrests hematopoietic stem and progenitor (HSPCs) bone marrow cells in the G1 phase of the cell cycle during chemotherapy exposure, protecting them from chemotherapy-induced damage.

According to the applicant, the defining characteristic of cancer is uncontrolled cellular proliferation, a phenomenon that requires tumor cells to avoid or disable normal, physiologic cell-cycle regulation. While there are both CDK 4/6 independent and dependent cells, HSPCs and immune cells are CDK 4/6 dependent whereas SCLC cells are CDK 4/6 independent. According to the applicant, the transient arrest of HSPCs and lymphocytes by COSELA^TM during the administration of chemotherapy is thought to have a number of beneficial effects, including a reduction in chemotherapy-induced myelosuppression and preservation of immune function, as well as an enhanced immune response. Specifically, SCLC cells replicate independently of CDK 4/6 and therefore these cells are damaged by chemotherapy. Because HSPCs and lymphocytes are CDK 4/6 dependent, COSELA^TM's mechanism of action is believed to preserve these cells by temporarily arresting their proliferation during chemotherapy. In this way, COSELA^TM reduces chemotherapy-induced myelosuppression in patients with extensive-stage small-cell lung cancer (ES-SCLC). The applicant also asserted that in preclinical models, CDK4/6 inhibition by COSELA^TM also alters the tumor immune microenvironment through transient inhibition of the immune cells known as lymphocytes that are also dependent on CDK4/6 activity for proliferation.

According to the applicant, chemotherapy remains the cornerstone of treatment for extensive stage small cell lung cancer (ES-SCLC). The applicant asserted that almost all of the ~18,600 ES-SCLC patients diagnosed each year are treated with platinum/etoposide-containing or topotecan-containing chemotherapy regimens. Chemotherapy drugs target cells at different phases of the cell cycle. According to the applicant, systemic chemotherapy, alone or in combination with immune checkpoint inhibitors, is the standard of care for patients with advanced SCLC. Additionally, per the applicant, rescue interventions, including growth factors and blood transfusions, are commonly routine therapies for SCLC. The applicant also indicated that granulocyte colony-stimulating factors (G-CSFs) only address neutropenia, while erythropoiesis stimulating agent (ESAs) and red blood cell (RBC) transfusions only address anemia, and there is no available treatment that broadly mitigates myelosuppressive effects and their corresponding impact on patient well-being before chemotherapy damage occurs.

COSELA^TM received FDA's New Drug Application approval on February 12, 2021. COSELA^TM is for intravenous use only. The recommended dose of COSELA^TM is 240 mg/m2 as a 30-minute intravenous infusion completed within four hours prior to the start of chemotherapy on each day chemotherapy is administered. The applicant also stated that in 2019, COSELA^TM was granted Breakthrough Therapy Designation for the mitigation of clinically significant chemotherapy-induced myelosuppression in adult patients with SCLC. The applicant submitted a request for a new ICD-10-PCS code and was granted approval for the following codes to uniquely identify COSELA^TM effective October 1, 2021: XW03377 (Introduction of trilaciclib into peripheral vein, percutaneous approach, new technology group 7) and XW04377 (Introduction of trilaciclib into central vein, percutaneous approach, new technology group 7).

As previously discussed, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and, therefore, would not be considered “new” for purposes of new technology add-on payments.

With respect to the first criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, the applicant asserted that COSELA^TM, also referred to as G1T28, has a unique mechanism of action as a small molecule, competitive inhibitor of CDK4/6, with potential antineoplastic and chemoprotective activities. The applicant stated that upon administration, COSELA^TM binds to and inhibits the activity of CDK4/6, thereby blocking the phosphorylation of the retinoblastoma protein (Rb) in early G1. This prevents G1/S phase transition, causing cell cycle arrest in the G1 phase and induced apoptosis, which inhibits the proliferation of CDK4/6-overexpressing tumor cells. In patients with CDK4/6-independent tumor cells, G1T28 may protect against multi-lineage chemotherapy-induced myelosuppression (CIM) by transiently and reversibly inducing G1 cell cycle arrest in hematopoietic stem and progenitor cells (HSPCs) and preventing transition to the S phase. Per the applicant, this protects all hematopoietic lineages, including red blood cells, platelets, neutrophils and lymphocytes, from the DNA-damaging effects of certain chemotherapeutics and preserves the function of the bone marrow and the immune system.

The applicant stated that the cell cycle consists of four distinct phases, Gap 1 phase (G₁), S phase, Gap 2 (G₂) post-synthesis phase, and the M phase. Regulation of this process is maintained by a series of highly conserved proteins referred to as cyclins, and their catalytic binding partners, CDKs. The CDKs are a family of enzymes that control several cellular processes in mammalian cells, including the modulation of the cell cycle via binding to cyclins A-E, which results in the activation of transcription factors that regulate the cellular transition from G1 (growth phase) to S (DNA replication) and G2 (growth phase) to M (mitosis).

According to the applicant, the G1-to-S checkpoint is a critical restriction point in the process of cell division. Cells are maintained in a quiescent state until the proper signal is achieved for reentry into the cell cycle. Throughout G1, expression of the D-type cyclins (D1, D2, D3) increases until active complexes with CDK4/6 are formed. Active CDK4/6 complexes partially phosphorylate RB, which allows partial depression of the transcription factor E2F. This induces additional transcript production of cyclin E1, which binds CDK2 to form active complexes that result in the hyperphosphorylation of RB and drives the cells through late G1 into S phase. Inhibition of cyclin D-CDK4/6 by the tumor suppressor CDKN2A leads to a G1 arrest and cell-cycle progression is halted.

With respect to the second criterion, whether a product is assigned to the same or a different MS-DRG, the applicant asserted that COSELA^TM will be assigned the same MS-DRG as existing technologies. The applicant did not explicitly state to which MS-DRG(s) COSELA^TM would be assigned, but included MS-DRGs 180 (Respiratory Neoplasms with MCC), 181 (Respiratory Neoplasms with CC), and 182 (Respiratory Neoplasms without CC/MCC) in its cost analysis.

With respect to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population when compared to an existing technology, the applicant stated that COSELA^TM is the only proactive (preventive) multilineage (erythrocytes, leukocytes, and thrombocytes, neutrophils and lymphocytes) therapy given as a 30-minute infusion administered prior to chemotherapy on each day of chemotherapy. Due to its mechanism of action, COSELA^TM's benefit is coupled to its administration schedule (that is, COSELA^TM must be administered prior to chemotherapy to ensure G1 arrest of HSPCs when those cells are exposed to cytotoxic chemotherapy). According to the applicant, this therapeutic paradigm contrasts with standard available treatment options and interventions that are administered after chemotherapy to reactively reduce or treat chemotherapy side effects. The applicant asserted that typical supportive care rescue interventions such as growth factors (G-CSFs, ESAs) and red blood cell (RBC) transfusions are used after chemotherapy causes damage to stem cells. Current supportive care therapies are used reactively to treat single cell lineage specific (leukocytes and erythrocytes) complications, such as neutropenia and anemia. Additionally, the applicant indicated that growth factor and RBC transfusion use are known to carry a number of risks and cause complications and adverse events.

In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25240), we noted that the information provided by the applicant in response to whether COSELA^TM treats the same or similar type of disease or the same or similar patient population, appeared to only speak to the first criterion and whether COSELA^TM has a mechanism of action that is different than existing technologies; however, we stated we believe COSELA^TM appears to treat the same patient population and disease as existing therapies.

We invited public comments on whether COSELA^TM is substantially similar to an existing technology and whether it meets the newness criterion.

Comment: The applicant submitted a comment reiterating that COSELA^TM meets the newness criterion because it is the first and only FDA-approved therapy to provide myeloprotective efficacy. The applicant stated that existing treatments are single lineage rescue interventions and that COSELA^TM is the only available treatment that broadly mitigates multilineage myelosuppressive effects and their corresponding impact on patient well-being before chemotherapy damage occurs. The applicant further explained that existing therapies, such as growth factors (granulocyte colony stimulating factor (G-CSF), erythropoiesis-stimulating agents (ESAs) and red blood cell (RBC) transfusions) do not treat chemotherapy-induced myelosuppression but that they treat the side effects of chemotherapy-induced myelosuppression, such as single cell lineage specific complications like neutropenia and anemia after chemotherapy damage has occurred. The applicant also stated that existing therapies are designed to work in different ways and treat different conditions than COSELA^TM.

The applicant also stated that COSELA^TM does not treat the same or similar patient population as existing therapies but that it treats adult patients diagnosed with ES-SCLC prior to a platinum/etoposide-containing regimen or topotecan-containing regimen whereas the patient population treated by other therapies (for example, G-CSF, ESAs, and RBC transfusions) is patients with side effects associated with chemotherapy-induced myelosuppression. The applicant stated that COSELA^TM treats a patient population that is not currently served by growth factors. The applicant concluded by reiterating that COSELA^TM does not use the same mechanism of action, does not treat the same condition or disease, and does not treat the same patient population as existing therapies.

Response: We thank the applicant for its comment and the additional information submitted in regard to the newness criterion. Based on our review, we agree that COSELA^TM has a unique mechanism of action to decrease the incidence of chemotherapy-induced myelosuppression in adult patients by preventing it when administered prior to a platinum/etoposide-containing regimen or topotecan-containing regimen for ES-SCLC. Though the applicant states that COSELA^TM treats a new patient population since it treats patients before they encounter side effects from chemotherapy-induced myelosuppression, we disagree that patients with such side effects would be considered a distinct patient population because COSELA^TM also treats adult patients with ES-SCLC.

Based on information submitted by the applicant in its comment and as part of its FY 2022 new technology add-on payment application for COSELA^TM, as discussed in the proposed rule (86 FR 25239) and previously summarized, we believe that COSELA^TM has a unique mechanism of action. Therefore, COSELA^TM is not substantially similar to existing treatment options and meets the newness criterion. We consider the beginning of the newness period to commence when COSELA^TM was approved by FDA to decrease the incidence of chemotherapy-induced myelosuppression in adult patients when administered prior to a platinum/etoposide-containing regimen or topotecan-containing regimen for extensive-stage small cell lung cancer (ES-SCLC), on February 12, 2021.

With respect to the cost criterion, the applicant conducted the following analysis to demonstrate that COSELA^TM meets the cost criterion. In identifying the cost of COSELA^TM, the applicant stated that dosing is based on body surface area, 240 mg/m² with an average of two vials (300mg each) per patient per dose. To identify cases that may be eligible for the use of COSELA^TM, the applicant searched the FY 2019 MedPAR LDS file for claims reporting an ICD-10-PCS code of category C34 through C34.92 (Malignant neoplasm related to the bronchus, lobe, or lung) as noted in the following table.

According to the applicant, based on the advice of clinical experts, it limited case selection criteria to claims that included one of MS-DRGs 180, 181, or 182. The applicant then randomly selected 15% of the claims from the sample to account for the fact that SCLC comprises 15% of lung cancer cases. Based on the FY 2019 MedPAR LDS file, the applicant identified 3,500 cases. The applicant noted that 2,346 cases mapped to MS-DRG 180; 1,085 cases mapped to MS-DRG 181; and 69 cases mapped to MS-DRG 182.

Using these 3,500 cases, the applicant then calculated the unstandardized average charges per case for each MS-DRG. Because the use of COSELA^TM results in approximately half of patients no longer needing drugs used to counter the effects of chemotherapy during the inpatient stay, the applicant removed 50% of the drug charges for the technology being replaced.

The applicant then standardized the charges using the 2019 IPPS/LTCH PPS final rule impact file and inflated the charges by 1.13218 or 13.2 percent, the same inflation factor used by CMS to update the outlier threshold in the FY 2021 IPPS/LTCH PPS final rule. The applicant then added the charges for COSELA^TM by converting the costs to a charge by dividing the cost by the national average cost-to-charge ratio of 0.187 for pharmacy from the FY 2021 IPPS/LTCH PPS final rule.

Using the data file thresholds associated with the FY 2021 IPPS/LTCH PPS final rule correction notice, the average case-weighted threshold amount was $57,031. In the applicant's analysis, the final inflated average case-weighted standardized charge per case was $95,701. Because the final inflated average case-weighted standardized charge per case exceeds the average case-weighted threshold amount, the applicant maintained that the technology meets the cost criterion.

With respect to the cost criterion, we noted in the proposed rule that in listing the codes it used to identify cases that may be eligible for the use of COSELA^TM, the applicant provided several ICD-10 codes that lack four digits and thus, are considered invalid. We stated that we would be interested in understanding the basis for the applicant's choice of codes. We also noted that in its analysis, the applicant randomly selected 15% of the claims from the sample to account for the fact that SCLC comprises 15% of lung cancer cases. In so doing, we stated that the applicant was making the assumption that SCLC cases are randomly distributed amongst all cases from which the applicant sampled. By randomly sampling the population, the applicant was selecting a subsample that is ideally similar to the population with less variance. We stated that it may be the case that SCLC cases are systematically different from other cases in the population. If this is true, then a random sample may not be appropriate. Accordingly, we questioned the appropriateness of the sampling used and whether it accurately represents cases that would use the technology.

Finally, with respect to pricing, we stated that it appeared that the applicant's final inflated average case-weighted standardized charge per case reflected pricing prior to the availability of more current total wholesale acquisition cost. We therefore requested that the applicant update its cost analysis to reflect the final inflated average case weighted standardized charge per case based on this more current information. We invited public comment on whether COSELA^TM meets the cost criterion.

Comment: The applicant submitted a comment in response to these concerns. First, with respect to the ICD-10 codes included in the application lacking four digits, the applicant stated that the codes used in the cost criterion analysis included both the two to three-digit code family names and all the four-digit codes that fall within the code families. The applicant clarified that in querying the claims data, only the codes with four digits resulted in usable claims for the analysis. The applicant clarified that the codes used to identify the claims for the cost criterion analysis were limited to the following four-digit ICD-10-CM codes:

Second, with respect to whether the applicant's sampling accurately represents cases in which the technology would be used, the applicant indicated that it relied on a random sample of lung cancer cases derived by selecting 15 percent of the claims from the sample to account for the fact that SCLC comprises 15 percent of lung cancer cases, since there was a lack of evidence suggesting a more specified sample should be used instead. The applicant further stated that in further examining the claims data, the current ICD-10-CM codes do not provide the level of detail and granularity to correctly identify the SCLC population from the larger lung cancer population. The applicant also stated that without a precise mechanism to differentiate the 15 percent of cases that would be eligible for COSELA^TM from the 85 percent of cases where use of COSELA^TM would not be clinically appropriate, it made the best assumption based on the information available, acknowledging that the random sample collected may not be perfectly representative of the target SCLC population but, absent additional information to otherwise identify the population, a random sample was the most appropriate assumption. The applicant stated that it ran an additional, more conservative analysis using the 15 percent of lung cancer cases with the lowest total charges recognizing that that sample would be the least likely to meet the cost threshold, and that COSELA^TM still met the cost criterion. The applicant concluded in noting that there is no clinical information to suggest that this sample is more representative of the COSELA^TM-eligible population than the random sample used in the original analysis.

Finally, with respect to pricing, the applicant submitted an updated cost analysis based on newly available total wholesale acquisition cost (WAC) of COSELA^TM of $1,417 per vial. The applicant stated that an average hospitalization would include one cycle, which is comprised of three doses. The applicant further noted that each dose includes two vials and therefore, on average, an inpatient hospitalization would involve six vials of COSELA^TM for a total cost of $8,502 per hospitalization. The applicant also stated that in relying on the conservative analysis using 15 percent of lung cancer cases with the lowest charges, there is a final inflated case weighted standardized charge per case of $58,314, which exceeds the case weighted threshold of $54,566. The applicant also stated that it assumed hospitals will use the inverse of the national average cost to charge ratio for pharmacy to markup charges and therefore assumed that charges for COSELA^TM would be $45,465. The applicant concluded by stating that COSELA^TM meets the cost criterion because the final inflated case weighted standardized charge per case of $58,314 exceeds the case weighted threshold of $54,566.

Response: We appreciate the applicant's clarification that only the codes with four digits resulted in usable claims for the cost analysis. We also appreciate the additional information from the applicant regarding its use of a random sample for purposes of its initial analysis, as well as its supplemental cost analysis using the 15 percent of lung cancer cases with the lowest total charges. Based on the information submitted by the applicant as part of its FY 2022 new technology add-on payment application for COSELA^TM, as discussed in the proposed rule (86 FR 25240 through 25242) and previously summarized, and the updated analysis provided in the applicant's public comment, we agree that the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount. Therefore,COSELA^TM meets the cost criterion.

With respect to the substantial clinical improvement criterion, the applicant asserted that trilaciclib represents a substantial clinical improvement over existing technologies because it offers a treatment option for patients unresponsive to or ineligible for currently available treatments and improves clinical outcomes for a patient population as compared to currently available treatments. The applicant stated that chemotherapy-induced myelosuppression (CIM) is typically managed with treatment dose delays and reductions due to the slow recovery of bone marrow after a course of chemotherapy. The applicant also stated that CIM is managed with rescue interventions including hematopoietic growth factors (G-CSFs and ESAs) and by RBC and platelet transfusions. Per the applicant, despite the availability and use of these treatment options, CIM continues to be of clinical significance and remains a central concern in the delivery of chemotherapy. The applicant further stated that myelosuppression results in dose reductions, dose delays, and/or dose discontinuations, affecting the dose intensity and intended antitumor efficacy of chemotherapy. Per the applicant, the supportive care interventions for treatment of myelosuppression are suboptimal and are often administered reactively, do not protect the bone marrow from chemotherapy-induced cytotoxic effects, are specific to single hematopoietic lineages, and impart their own risks for adverse reactions. The applicant concluded by stating that new approaches that proactively prevent chemotherapy-induced damage and its associated consequences, whilst not decreasing the efficacy of chemotherapy, are urgently needed to improve care of patients with ES-SCLC.

In regard to the claim that the use of COSELA^TM significantly improves clinical outcomes for a patient population as compared to currently available treatments, the applicant stated that the administration of COSELA^TM prior to chemotherapy in patients with SCLC prevented chemotherapy-induced neutropenia, reduced chemotherapy-induced anemia, reduced CIM or sepsis-related hospitalizations, and has the potential to improve the management and quality of life of patients receiving myelosuppressive chemotherapy as compared to placebo.

The applicant presented eight claims in support of the assertion that COSELA^TM represents substantial clinical improvement over existing technologies in the mitigation of clinically significant chemotherapy-induced myelosupression in adult patients with SCLC.

In its first and second claims, the applicant asserted that COSELA^TM reduces the mean duration of severe G4 neutropenia in cycle 1 of chemotherapy and reduces the proportion of patients experiencing severe G4 neutropenia in comparison to placebo. The applicant submitted three sources in support of these claims. First, the applicant submitted a poster presentation from Daniel, et. al., describing a global, randomized, double-blind, placebo-controlled, multicenter, phase 2 study that assessed the potential of COSELA^TM to reduce the incidence and consequences of chemotherapy-induced myelosuppression in patients with newly diagnosed ES-SCLC treated with etoposide, carboplatin, and atezolizumab. One hundred seven eligible patients were randomized to receive COSELA^TM (n=53) or placebo (n=54). The primary endpoints were mean duration of severe neutropenia (SN) in cycle 1 and percent of patients with grade 4 SN. Results summarized mean duration of SN in cycle 1 as 0 days with trilaciclib and 4 days with placebo, and percent of patients with grade 4 SN as 1.9% vs 49.1%, respectively.

Second, the applicant submitted an article by Weiss, et. al., summarizing a phase II randomized, double-blind placebo-controlled study of the safety, efficacy and pharmacokinetics (PK) of COSELA^TM in combination with etoposide/carboplatin (E/P) therapy for treatment-naive extensive-stage small-cell lung cancer patients. Thirty-nine patients were included in the COSELA^TM group versus 38 in the placebo group. The applicant stated that treatment with COSELA^TM resulted in a reduced mean duration of severe G4 neutropenia in cycle 1 (0 days versus 3 days in placebo) and reduced proportion of patients experiencing severe G4 neutropenia for COSELA^TM (5% versus 43%).

Third, the applicant submitted a presentation from Hart, et. al., describing a randomized, double-blind, placebo-controlled, phase 2 study to compare the results of 32 patients receiving COSELA^TM versus 28 receiving placebo in patients being treated with topotecan for previously treated ES-SCLC. Primary endpoints were mean duration of SN in cycle 1 and the percentage of patients with SN. Results demonstrated that the mean duration of severe G4 neutropenia in cycle 1 was reported at 2 days for COSELA^TM versus eight days for placebo. The proportion of patients experiencing severe G4 neutropenia was reported at 41% for COSELA^TM versus 76% for placebo.

In the third claim, the applicant asserted that COSELA^TM reduces the proportion of patients experiencing febrile neutropenia treatment emergent adverse events (TEAE) in comparison to placebo. In the fourth claim, the applicant asserted that COSELA^TM decreases the rate of therapeutic intervention with G-CSF in comparison to placebo, noting that growth factors are known to carry a number of risks, cause complications and adverse events. In the fifth claim, the applicant asserted that COSELA^TM reduces the proportion of patients experiencing grade 3/4 anemia in comparison to placebo. In the sixth claim, the applicant asserted that COSELA^TM decreases the rate of therapeutic intervention with red blood cell transfusions in comparison to placebo. To support these claims, the applicant submitted a 2020 poster presentation from Weiss, et. al., describing a pooled analysis across three RCTs that compared the proportion of ES-SCLC patients experiencing febrile neutropenia between COSELA^TM and placebo. The COSELA^TM group included 122 patients and the placebo group included 118 patients. The presentation reflected the following results: The proportion of patients experiencing febrile neutropenia for COSELA^TM was 3% versus placebo at 9%; the rate of therapeutic intervention with G-CSF for COSELA^TM at 29% versus 56% for placebo; the proportion of patients experiencing grade 3/4 anemia for COSELA^TM at 20% versus 32% for placebo; and the rate of therapeutic intervention with red blood cell transfusions for COSELA^TM at 15% versus 26% for placebo.

In the seventh claim, the applicant asserted that COSELA^TM delays time to deterioration in symptoms and functioning domains of patient-reported quality of life measures on Functional Assessment of Cancer Therapy (FACT) scores. The applicant submitted a 2019 presentation from Weiss, et. al., describing a pooled analysis across three RCTs. The applicant stated that COSELA^TM delays time to confirmed deterioration in a variety of symptoms and functioning domains compared to placebo, for example: Median of 4.7 months delay to deterioration for fatigue; median of 3.5 months delay for anemia; and median of 4 months delay for functional well-being.

In the eighth claim, the applicant asserted that COSELA^TM decreases the number of hospitalizations due to myelosuppression or sepsis. The applicant submitted a conference agenda referring to an oral presentation by Ferrarotto, et. al., at the North America Conference on Lung Cancer, October 16, 2020. The applicant stated that hospitalizations due to myelosuppression or sepsis occurred in significantly fewer patients and significantly less often among patients receiving COSELA^TM prior to chemotherapy versus placebo though we were unable to locate support for this claim in the conference agenda submitted with the application.

With respect to the substantial clinical improvement criterion, we noted several concerns in the proposed rule (86 FR 25243 through 25244). First, the data submitted by the applicant included one published peer reviewed article from Weiss, et. al., abstracts from Daniel, et. al., and Hart, et. al., and references to trials exploring broader cohorts of small cell lung cancer, breast cancer and colon cancer patients. In addition, as summarized previously, we noted that most of the studies submitted by the applicant had sample sizes fewer than 100 participants which may limit generalizability of the studies. With respect to the Weiss, et. al., study, we noted that COSELA^TM was compared with placebo at a significance level of two-sided α = 0.2 which is much lower than the typical cutoff of 0.05 and may have increased the risk of false positives and interfered with the ability to draw conclusions that are based on statistical methods. We also noted the lack of any statistical correction for multiple comparisons. We noted that in sources provided by the applicant, mean duration of severe neutropenia was assessed in day increments. However, it was not clear that zero days would indicate that those patients experienced no severe neutropenia. Specifically, we questioned whether mean hours in severe neutropenia was evaluated or whether, in addition to the groupings by days, one day or less would be an appropriate value for inclusion. Finally, while the applicant referred to decreases in the number of hospitalizations, we noted that the source provided was limited to a conference agenda that only linked to an abstract pertaining to reductions in utilization of supportive care interventions but did not reflect hospitalization rates.

We invited public comments as to whether COSELA^TM met the substantial clinical improvement criterion.

Comment: The applicant submitted comments stating that COSELA^TM satisfies the substantial clinical improvement criterion. Specifically, the applicant reiterated that COSELA^TM plus the standard of care demonstrated substantial clinical improvement over placebo plus the standard of care in decreasing the incidence of chemotherapy-induced myelosuppression in adult patients when administered prior to a platinum/etoposide-containing regimen or topotecan-containing regimen for ES-SCLC. The applicant also stated that compared with placebo, COSELA^TM consistently reduced the incidence and duration of chemotherapy-induced neutropenia, as measured by both the duration and occurrence of severe neutropenia. The applicant also stated that COSELA^TM consistently reduced chemotherapy-induced anemia compared with placebo, reflected by the reduced occurrence of RBC transfusions on or after week 5, and a reduction in ESA use. Per the applicant, fewer patients on COSELA^TM were hospitalized due to chemotherapy induced myelosuppression or sepsis and that by reducing the incidence of chemotherapy-induced myelosuppression and reducing the need for associated supportive care and hospitalizations, COSELA^TM has the potential to improve the management and quality of life of patients receiving myelosuppressive chemotherapy for the treatment of ES-SCLC and is therefore a substantial clinical improvement over prior therapies.

In response to CMS' concerns with respect to the limited published studies and small sample sizes of the studies, the applicant noted that the Daniel et. al. study publication is now available and is considered its pivotal study.

The applicant further noted that within the pivotal study, the planned sample size of this study was 106 (~53 per group) and was calculated to support the evaluation of COSELA^TM prior to carboplatin, etoposide and atezolizumab (E/P/A) placebo prior to E/P/A on each of the primary endpoints, with at least 90 percent power at a two-sided significance level of 0.025 (Bonferroni split of overall 2-sided α = .05 between the two primary endpoints).

The applicant further stated that the pivotal study assumed treatment effects on duration of severe neutropenia (DSN) in C1 and occurrence of severe neutropenia (SN) were a between-group mean difference of 2 days (standard deviation 2.5), and an absolute reduction of 34 percent (assuming a placebo event rate of 45 percent), respectively. The applicant stated that within the pivotal study, the sample size was adjusted for the possibility that 5 percent of patients would not have any post-baseline absolute neutrophil count assessments.

Next, in response to our concern regarding the low significance level cutoff of the Weiss et. al. study, the applicant clarified that they viewed this study as exploratory whereas the Daniel et al. study was the applicant's pivotal study. The applicant further noted that the pivotal study relied on the typical cutoff for alpha, meaning that it did not rely on significance levels as low as α = 0.2 and thus asserted that there is less concern regarding false positive results or the ability to draw conclusions based on statistical methods.

In response to our concern related to assessing the mean duration of severe neutropenia in day increments as opposed to smaller time increments, the applicant clarified that in the pivotal study, zero days indicates that in the COSELA^TM arm, there was a mean duration of zero days of severe neutropenia in cycle 1. The mean duration of severe neutropenia in cycle 1 was zero days (standard deviation 1.0) for COSELA^TM vs 4 days (standard deviation 4.7) for placebo (p < 0.0001). The applicant also stated that a total of 1 patient (1.9%) on the COSELA^TM arm experienced severe neutropenia in any cycle, whereas a total of 26 patients (49.1%) on the placebo arm experienced severe neutropenia in any cycle (p < 0.0001).

Response: We thank the applicant for its comment and clarifications regarding the substantial clinical improvement analysis. After consideration of the public comments received, we believe that COSELA^TM demonstrates a substantial clinical improvement over existing technologies in decreasing the incidence of chemotherapy-induced myelosuppression in adult patients when administered prior to a platinum/etoposide-containing regimen or topotecan-containing regimen for ES-SCLC. We appreciate the applicant's clarification that days of severe neutropenia were evaluated by the mean number of days and not partial days and agree with the applicant that COSELA^TM demonstrated superior outcomes as compared to placebo given the significant reduction in severe neutropenia and therefore believe COSELA^TM offers a therapeutic option that can decrease the occurrence and duration of neutropenia. We also believe that COSELA's potential to improve quality of life by preventing the side effects of chemotherapy, as opposed to treating them once they occur, is clinically important. We note that we remain unable to confirm the assertion that COSELA^TM decreases hospitalization rates as we did not receive a source to support it.

After consideration of the public comments we received and the information included in the applicant's new technology add-on payment application, we have determined that COSELA^TM meets all of the criteria for approval of the new technology add-on payment for the reasons stated previously. Therefore, we are approving new technology add-on payments for COSELA^TM for FY 2022. Cases involving the use of COSELA^TM that are eligible for new technology add-on payments will be identified by ICD-10- PCS procedure codes XW03377 (Introduction of trilaciclib into peripheral vein, percutaneous approach, new technology group 7) or XW04377 (Introduction of trilaciclib into central vein, percutaneous approach, new technology group 7).

In submitting its public comment, the applicant identified the cost of COSELA^TM as $8,502 per hospitalization. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS-DRG payment for the case. As a result, the maximum new technology add-on payment for a case involving the use of COSELA^TM is $5,526.30 for FY 2022.

e. Ellipsys® Vascular Access System

Avenu Medical, Inc. submitted an application for new technology add-on payments for the Ellipsys® Vascular Access System (“Ellipsys”) for FY 2022. Ellipsys is a device that enables percutaneous creation of an arteriovenous fistula (AVF), which is used to access the bloodstream for hemodialysis for the treatment of end-stage renal disease (ESRD). According to the applicant, to create the fistula, a physician inserts a crossing needle through the perforating vein and into the proximal radial artery in the forearm. A specialized catheter is then used to bring the artery and vein together. The two vessels are “welded” together with thermal resistance energy, creating an anastomosis. According to the applicant, the only means of creating an AVF was through open surgery before the approval of Ellipsys, and percutaneous AVF (pAVF) offers a number of advantages over surgical AVF (sAVF).

With respect to the newness criterion, the applicant for Ellipsys received 510(k) clearance from the FDA on August 9, 2019, with an indication for the creation of a proximal radial artery to perforating vein anastomosis via a retrograde venous access approach in patients with a minimum vessel diameter of 2.0mm and less than 1.5mm of separation between the artery and vein at the fistula creation site who have chronic kidney disease requiring dialysis. The subject of this 510(k) clearance was an update to the Instructions for Use (IFU) to allow an additional procedural step for balloon dilation of the anastomosis junction at the radial artery and adjacent outflow vein of the AVF immediately after creation with the Ellipsys catheter. Per the applicant, the device was immediately available on the market. The applicant further stated that the device was originally approved under a De Novo clearance on June 22, 2018. Ellipsys also received two additional 510(k) clearances dated January 25, 2019 (minor change in the packaging of components) and October 5, 2018 (minor technological differences in the power control unit and minor enhancements to the catheter design) but the applicant states they are not regarded as material for this application. The FDA has classified Ellipsys as a Class II device under the generic name percutaneous catheter for creation of an arteriovenous fistula for hemodialysis access. The applicant stated that currently, two ICD-10-PCS codes identify procedures using Ellipsys: 031B3ZF (Bypass right radial artery to lower arm vein, percutaneous approach); and 031C3ZF (Bypass left radial artery to lower arm vein, percutaneous approach). However, since these codes also identify the WavelinQ^TM EndoAVF System (“WavelinQ”), another percutaneous fistula device, Avenu Medical submitted a code request for a unique ICD-10-PCS code to distinctly identify Ellipsys beginning in FY 2022 and was granted approval for the following procedure codes, effective October 1, 2021: X2KB317 (Bypass right radial artery using thermal resistance energy, percutaneous approach, new technology group 7) and X2KC317 (Bypass left radial artery using thermal resistance energy, percutaneous approach, new technology group 7). The applicant stated this technology was first assigned HCPCS code C9754 on January 1, 2019, which was then replaced by HCPCS code G2170 on July 1, 2020. Per the applicant, WavelinQ was assigned HCPCS codes (C9755 replaced by G2171) with the same timing, and the codes for the 2 pAVF technologies are differentiated by the use of thermal resistance energy for Ellipsys and the use of radiofrequency energy for WavelinQ.

The applicant stated that hemodialysis access for the treatment of ESRD can be provided by catheter, graft, or AVF, of which AVF is generally preferred for patients whose vascular anatomy and condition permit it. Per the applicant, the only method for creating an AVF was through an open surgical approach until the introduction of Ellipsys and WavelinQ, two devices that use a percutaneous approach.

As discussed earlier, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered “new” for purposes of new technology add-on payments.

With regard to the first criterion, whether a product uses the same or similar mechanism of action to achieve a therapeutic outcome, the applicant asserted that Ellipsys uses a new mechanism of action compared to its initial clearance. Per the applicant, the current device included an additional step in the IFU, creating a different procedure profile and a different mechanism of action. The applicant states that the addition of this step, a balloon angioplasty performed within the same operative session as the creation of the pAVF, instead of days or weeks later, typically contributes to decreased time to maturation, improved initial flow, and helps avoid early thrombosis of the newly-created access, in addition to decreasing the number of secondary procedures required for maturation and maintenance. According to the applicant, the explicit inclusion of the step in the IFU, where it was not previously explicitly included, represents a new mechanism of action.

With respect to the second criterion, whether a product is assigned to the same or different MS-DRG, the applicant generally stated that Ellipsys is assigned to the same MS-DRGs as existing technologies. According to information provided by the applicant, these MS-DRGs appear to be MS-DRGs 264, 356, 357, 358, 628, 629, 630, 673, 674, 675, 907, 908, 909, 981, 982, and 983.

With respect to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, the applicant generally stated that Ellipsys will be used to treat the same or similar type of disease and the same or similar patient population as the current standard-of-care treatments.

In summary, the applicant believed that Ellipsys is not substantially similar to other currently available therapies and/or technologies because it uses a new mechanism of action and that therefore, the technology meets the “newness” criterion. However, in the proposed rule, we stated that we believe that the mechanism of action for Ellipsys may be the same or similar to the original version of the Ellipsys system, which received FDA approval on June 22, 2018. We stated that though the current IFU includes an additional procedure as part of the index procedure, it is not clear that this step of balloon angioplasty done concurrently changes the mechanism of action of the Ellipsys system. Per the FDA's 510(k) summary, compared to the predicate device, there were no changes to the device or the manner in which it creates a percutaneous anastomosis, and other than the additional procedural step of balloon dilation, all characteristics remain unchanged. In addition, we noted that clinicians were not precluded from performing this step before the change in the IFU, and in fact, balloon dilation was already performed during the index procedure in some cases. Though the applicant maintained that performing this additional step in all cases, as opposed to some, leads to superior clinical outcomes, we stated that it was unclear whether this has any bearing on newness for this technology or if it represents a change in the mechanism of action of this device. We noted that if the current device is substantially similar to the original version of Ellipsys, we believe the newness period for this technology would begin on June 22, 2018 with the De Novo approval date and, therefore, because the 3-year anniversary date of the technology's entry onto the U.S. market (June 22, 2021) would occur in FY 2021, the technology would no longer be considered new and would not be eligible for new technology add-on payments for FY 2022. We welcomed public comments on whether the change in the Ellipsys IFU represents a change to the device's mechanism of action.

We also noted that differences in mechanism of action between Ellipsys and WavelinQ were not included. We noted that CMS stated in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58702) that WavelinQ uses a unique mechanism of action that differed from that of other commercially available devices.

We invited public comments on whether Ellipsys is substantially similar to other currently available therapies and/or technologies and whether this technology meets the newness criterion.

Comment: We received a comment from a competitor stating that they believe that the mechanism of action for Ellipsys has not changed, and is the same as the original version approved on June 22, 2018. Per the commenter, it is still the use of thermal resistance energy that creates the fistula, as no changes were made to the predicate device for the 510(k) clearance, and though balloon angioplasty could potentially assist with maturation, it does not support the actual fistula creation. Therefore, the commenter believes the underlying mechanism of action is unchanged. The commenter further stated that since Ellipsys meets the other two criteria, as it is assigned to same MS-DRGs and treats the same disease and patient population as the earlier version of Ellipsys, and has a newness date of June 22, 2018 due to substantial similarity with the earlier version, Ellipsys should not be considered new and would not be eligible for new technology add-on payments for FY 2022.

Response: We appreciate the information provided by the commenter and have taken this comment into consideration in our determination of the newness criterion, which is described later in this section.

Comment: The applicant submitted a public comment in response to the concerns that CMS presented in the FY 2022 IPPS/LTCH PPS proposed rule regarding the newness criterion. In response to the concern that the mechanism of action of Ellipsys is unchanged from the De Novo version, the applicant stated that the additional step of immediate balloon angioplasty creates a different procedural profile, which makes a material difference not only in the procedure but in outcomes. The applicant described improvements in brachial artery flow volume in the post-market maturation study by Hull et al. described previously, which used the additional step of balloon angioplasty immediately after anastomosis creation, demonstrating a positive impact on patient care by avoiding complications that may limit use of the fistula. Per the applicant, the study demonstrated a decrease in early thrombosis, decreased time to two-needle cannulation, and decreased secondary procedures as compared to the pivotal trial where balloon angioplasty was done in only a small portion of cases. The applicant further stated that where the use of the prior version of Ellipsys might be considered to have one aspect of fistula creation, the current version might be considered to have two aspects: Fistula creation and balloon dilation. The applicant believes that CMS should focus on the actions involved in considering differences in the mechanism of action. Per the applicant, the hardware configuration of the device may be the same, but the clinical pattern of use has changed, and the action it accomplishes is different as well.

In response to the note that the application did not address differences in mechanism of action between Ellipsys and WavelinQ^TM EndoAVF System, the applicant reiterated differences between the two pAVF systems described in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58702), where CMS recognized that WavelinQ uses a unique mechanism of action, and stated that CMS should carry that logic through and similarly determine that Ellipsys uses a new mechanism of action as well.

Response: We appreciate the information provided by the applicant regarding the newness criterion. We agree that Ellipsys and WavelinQ have two unique mechanisms of action. In regard to the mechanism of action of the current version of Ellipsys as compared to the previous version, we continue to have concerns as stated in the proposed rule and as described by a commenter. As stated in the FY 2005 IPPS final rule (69 FR 49002), the intent of section 1886(d)(5)(K) of the Act and regulations under § 412.87(b)(2) is to pay for new medical services and technologies for the first 2 to 3 years that a product comes on the market, during the period when the costs of the new technology are not yet fully reflected in the DRG weights. We note that even if a medical product receives a new FDA approval or clearance, it may not necessarily be considered “new” for purposes of new technology add-on payments if it is “substantially similar” to another medical product that was approved or cleared by FDA and has been on the market for more than 2 to 3 years. Although the applicant maintains that the change in the Ellipsys IFU represents a new mechanism of action, we believe that regardless of whether the procedural steps have changed, the manner in which the device functions is unchanged from the De Novo version and therefore does not represent a new mechanism of action. That is, both the current and De Novo versions of the Ellipsys System use thermal resistance energy to create a percutaneous fistula in the same location using the same catheter. As per the commenter and the FDA 510(k) clearance, no changes have been made to the device or the manner in which it creates a percutaneous anastomosis for the clearance of the current version. We agree with the commenter that though the additional step of balloon angioplasty may assist with maturation, it does not change the method by which the fistula is created.

Futhermore, we agree with the applicant and commenter that the two versions of the technology are intended to treat the same or similar disease in the same or similar patient population—patients with ESRD requiring hemodialysis access and eligible for a percutaneous fistula, and cases involving the technologies would be assigned to the same MS-DRGs. Because the current version of Ellipsys meets all three of the substantial similarity criteria, we believe the current version of Ellipsys is substantially similar to the original version. Therefore, we consider the beginning of the newness period for the device to begin on June 22, 2018, which is the date that the original version of the Ellipsys system received FDA approval. Because the 3-year anniversary date of the entry of Ellipsys onto the U.S. market (June 22, 2021) will occur in FY 2021, the device does not meet the newness criterion and it is not eligible for new technology add-on payments for FY 2022. We note that we received public comments with regard to the cost and substantial clinical improvement criteria for this technology, but because we have determined that the technology does not meet the newness criterion and therefore is not eligible for approval for new technology add-on payments for FY 2022, we are not summarizing comments received or making a determination on those criteria in this final rule.

f. ENSPRYNG^TM (satralizumab-mwge)

Genentech, Inc. submitted an application for new technology add-on payments for the ENSPRYNG^TM (satralizumab-mwge) injection for FY 2022. According to the applicant, ENSPRYNG is indicated by the FDA for the treatment of neuromyelitis optica spectrum disorder (NMOSD) in adult patients who are anti-aquaporin-4 (AQP4) antibody positive. ENSPRYNG is the first subcutaneous, first self-administered, and third FDA-approved drug for the treatment of this severe chronic autoimmune disease of the central nervous system. The applicant stated, due to the severity of relapses, relapse prevention is a key disease management priority. Patients who relapse are often admitted to the hospital for acute treatment. According to the applicant, with every relapse, patients are at risk of becoming blind or paralyzed, and thus it is critical to minimize the risk of future relapses by initiating maintenance treatment with a therapy such as ENSPRYNG^TM in a timely manner while the patient is still admitted. Therefore, according to the applicant, ENSPRYNG^TM should be approved for new technology add-on payments in order to maximize the likelihood that this especially sick patient population can start the treatment they need while in the inpatient setting.

According to the applicant, NMOSD is a rare, inflammatory, potentially life-threatening autoimmune central nervous system (CNS) disorder characterized primarily by severe, unpredictable relapses of optic neuritis and/or acute longitudinally extensive transverse myelitis (LETM). The applicant asserted that NMOSD has an estimated prevalence of 0.1-10 per 100,000 individuals, affecting nearly 15,000 individuals in the United States. NMOSD occurs in children and adults of all races and disproportionately affects African and Asian females aged 30 to 40 years. According to the applicant, the (bilateral) optic neuritis and/or LETM that are characteristic of NMOSD result from inflammation of the optic nerve, spinal cord, and brainstem, but other regions of the CNS may be affected as well. The vast majority of patients (80%-90%) experience repeated relapses, and disability accumulates with each relapse. Around 60% of patients relapse within one year of diagnosis, and 90% relapse within 3 years. Compared with patients who experience an isolated attack, patients with relapsing disease have greater disease-related clinical burden, and upward of 83% of patients do not fully recover after subsequent relapses.

According to the applicant, the negative impact of NMOSD on patient quality of life (QoL) is predominantly a result of physical disability, pain, vision impairment, and bowel and bladder dysfunction. Disease-induced disability and symptoms have a considerable impact on patients' ability to work and thrive in social activities and personal relationships. The applicant added that the loss of motor and sensory function leads to approximately 50% of patients requiring a wheelchair and 62% of patients becoming functionally blind within 5 years of diagnosis. Therefore, according to the applicant, it is critical that treatments that consistently and effectively reduce the risk of relapse are initiated rapidly in patients diagnosed with NMOSD.

With respect to the newness criterion, ENSPRYNG received FDA BLA approval on August 14, 2020. The applicant added that ENSPRYNG was granted Fast Track designation and Breakthrough Therapy designation by the FDA. The applicant stated that ENSPRYNG^TM was not commercially available until August 24, 2020 because the applicant had to wait for final approval for printing and labeling as well as customs and importation. The recommended loading dosage of ENSPRYNG^TM for the first three administrations is 120 mg by subcutaneous injection at Weeks 0, 2, and 4, followed by a maintenance dosage of 120 mg every four weeks. The applicant submitted a request for an ICD-10-PCS code to uniquely identify the administration of ENSPRYNG^TM beginning FY 2022 and was granted approval for the following code effective October 1, 2021: XW01397 (Introduction of satralizumab-mwge into subcutaneous tissue, percutaneous approach, new technology Group 7).

As discussed earlier, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered “new” for purposes of new technology add-on payments. The applicant stated that there are limited treatment guidelines available for NMOSD with the most recent US guidelines published in 2012. These US NMOSD treatment guidelines exclusively recommend off-label drugs: Azathioprine, with or without prednisone; mycophenolate mofetil, with or without prednisone; rituximab; or prednisone alone. The applicant stated that there are presently two other FDA-approved therapies for patients with AQP4-IgG positive NMOSD: SOLIRIS® (eculizumab), which was approved in 2019, and UPLIZNA® (inebilizumab-cdon), which was approved in 2020.

With regard to the first criterion, whether a product uses the same or similar mechanism of action to achieve a therapeutic outcome, the application stated that ENSPRYNG is an interleukin-6 (IL-6) receptor antagonist indicated for the treatment of NMOSD in adult patients who are AQP4-IgG positive. According to the applicant, ENSPRYNG targets soluble and membrane-bound IL-6 receptors to inhibit IL-6 signaling and subsequently disrupt downstream inflammatory effects that contribute to the pathophysiology of NMOSD; ENSPRYNG dissociates from the IL-6 receptor at an acidic pH within endosomes and is recycled to circulation, prolonging the plasma half-life of the drug.

The applicant next identified other drugs used to treat NMOSD and their corresponding mechanisms of action. According to the applicant, these current treatments include: SOLIRIS®, for which a precise mechanism of action is unknown but is presumed to involve inhibition of AQP4-IgG-induced terminal complement C5b-9 deposition; UPLIZNA®, for which a precise mechanism of action is unknown but is presumed to involve binding to CD19, a surface antigen present on pre-B and mature B cells; azathioprine, for which a precise mechanism of action is unknown; Rituxan, which targets CD20 antigen on B cells and leads to profound B cell depletion, principally over an antibody-dependent cell cytotoxicity mechanism; mycophenolate mofetil, which is an immunosuppressive and an inhibitor of inosine monophosphate dehydrogenase and therefore of the guanosine nucleotide synthesis pathway upon which T and B cells depend; and prednisone, which is a synthetic adrenocortical steroid drug with predominately corticosteroid properties. The applicant concluded that none of these current drugs are characterized by their binding and blocking of soluble and membrane-bound IL-6 receptors to inhibit IL-6 signaling. Therefore, the applicant believes ENSPRYNG^TM has a unique and distinct mechanism of action.

With respect to the second criterion, whether a product is assigned to the same or different MS-DRG, the applicant acknowledged that ENSPRYNG^TM may be assigned to the same MS-DRG when compared to existing technology. Per the applicant, cases representing patients who may be eligible for treatment with ENSPRYNG^TM map to MS-DRGs 058, 059, and 060.

With respect to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, the applicant stated that the use of ENSPRYNG^TM may not involve the treatment of the same or similar patient population when compared with an existing technology because: (1) Current technologies such as SOLIRIS® may be contraindicated in patients with unresolved serious Neisseria meningitidis infections; and (2) SOLIRIS® and UPLIZNA® are administered as IV infusions which not all patients may be willing to receive.

In summary, the applicant asserted ENSPRYNG^TM meets the newness criterion because it is the only treatment for NMOSD that works specifically by suppressing IL-6 signaling, and because it may not involve the treatment of the same or similar patient population as existing technology.

In the proposed rule (86 FR 25253), we noted that the applicant stated that the use of ENSPRYNG^TM may not involve treatment of the same or similar patient population when compared to SOLIRIS® with regard to the treatment of patients with unresolved serious Neisseria meningitidis infection and with regard to the treatment of patients unwilling to receive an IV infusion. However, we questioned if UPLIZNA® may also be a treatment option for patients with meningococcal disease. We further questioned whether patients who are unwilling to receive an IV infusion would constitute a new patient population for NMOSD. We invited public comment on whether ENSPRYNG^TM involves the treatment of the same or similar patient population when compared to existing technologies.

We invited public comments on whether ENSPRYNG^TM is substantially similar to other technologies and whether ENSPRYNG^TM meets the newness criterion.

Comment: We received a public comment regarding the newness criterion. The commenter stated that ENSPRYNG^TM is not substantially similar to UPLIZNA®. The commenter explained that UPLIZNA® and ENSPRYNG^TM have different mechanisms of action. The commenter stated that while ENSPRYNG^TM's mechanism of action involves the binding and blocking of soluble and membrane-bound IL-6 receptors to inhibit IL-6 signaling, UPLIZNA®'s mechanism of action involves binding to CD19, a cell surface antigen present on pre-B and mature B lymphocytes, and results in antibody-dependent, cell-mediated B cell depletion. The commenter also explained that UPLIZNA® and ENSPRYNG^TM are not substantially similar because UPLIZNA® is the only NMOSD treatment that is administered twice per year, after two initial start-up doses. The commenter stated that the maintenance dose schedule of twice per year, following the initial start-up doses, presents an important benefit for NMOSD patients wishing to receive treatment once every six months and for patients who do not wish to or are unable to self-administer injections. Finally, the commenter responded to CMS' request for information on whether UPLIZNA® is a treatment option for NMOSD patients with meningococcal disease. The commenter stated that UPLIZNA® is not contraindicated in patients with unresolved serious Neisseria meningitidis infections and clarified that this was not a serious adverse event reported during the Phase 3 clinical trials. The commenter concluded that based on the different mechanisms of action, routes of administration, and recommended dosing schedules for maintenance treatment, UPLIZNA® and ENSPRYNG^TM are not substantially similar.

The applicant also submitted a comment addressing concerns raised by CMS in the proposed rule regarding whether ENSPRYNG^TM meets the newness criterion. In response to our concerns that UPLIZNA® may also be a treatment option for patients with meningococcal disease, the applicant stated that UPLIZNA® may or may not be an option for NMOSD patients with meningococcal disease. However, the applicant pointed out that although UPLIZNA® is not specifically contraindicated in patients with meningococcal disease, its prescribing information warns prescribers about PML, which has been observed in patients treated with other B-cell-depleting antibodies and other therapies that affect immune competence, like UPLIZNA®. In response to our concerns regarding whether patients who are unwilling to receive an IV infusion constitute a new patient population for NMOSD, the applicant stated that ENSPRYNG^TM is the only FDA-approved option for NMOSD patients that are unwilling or unable to receive infusions, perhaps due to difficulties associated with their venous access.

Response: We appreciate the commenters' input. Based on the comments received and the information submitted as part of the FY 2022 new technology add-on payment application for ENSPRYNG^TM, as discussed in the proposed rule (86 FR 25070 through 25790) and in this final rule, we concur with the comments received that ENSPRYNG^TM has a unique mechanism of action when compared to existing technologies because the other technologies are not characterized by their binding and blocking of soluble and membrane-bound IL-6 receptors to inhibit IL-6 signaling, as ENSPRYNG^TM's mechanism of action does and, therefore, we believe that ENSPRYNG^TM is not substantially similar to existing treatment options. However, we note that we disagree with the applicant that ENSPRYNG^TM does not involve the treatment of the same or similar patient population as existing technologies for two reasons. As the first commenter stated, UPLIZNA®, another treatment for NMOSD, is not contraindicated in patients with unresolved serious Neisseria meningitidis infections, and therefore, may also be a treatment option for patients with meningococcal disease. In addition, the applicant noted that existing technologies are administered via IV infusion, which not all patients may be willing or able to receive. We do not agree that patients who are unwilling to receive an IV infusion constitute a new patient population for NMOSD. Additionally, although IV infusion may be difficult to administer for some patients, we are not aware of cases where it is impossible.

Therefore, we believe ENSPRYNG^TM is not substantially similar to existing treatment options and meets the newness criterion. We consider the beginning of the newness period to commence when ENSPRYNG^TM became commercially available, on August 24, 2020.

With regard to the cost criterion, the applicant provided two cost analyses, with the first being an update of the analysis used in FY 2021 by the applicant for SOLIRIS®, which is also indicated for NMOSD, and the second which is specific to ENSPRYNG®.

Under the first analysis, the applicant searched the FY 2019 MedPAR database for cases reporting ICD-10-CM code G36.0 in the primary and/or admitting position, which resulted in 583 cases. The applicant imputed one case where an MS-DRG had a case volume lower than 11, resulting in 556 cases mapping to 30 MS-DRGs. The applicant stated that it restricted the analysis to MS-DRGs 058, 059, and 060, which accounted for 92.1% of all cases identified. The applicant also excluded cases that were not included in the FY 2021 Proposed Rule Impact File from this analysis, resulting in a final case count of 466 cases mapping to three MS-DRGs. Using a CCR of 0.343 (national other services average CCR), the applicant then removed all charges in the drug cost center, all charges in the blood cost center, and an additional $12,000 of cost for plasma exchange procedural costs for cases with non-zero charges in the blood cost center, for charges for related and prior technologies. The applicant applied an inflation factor of 13.1%, which per the applicant is the outlier charge inflation factor used in the FY 2021 IPPS/LTCH PPS final rule, to update the standardized charges from FY 2019 to FY 2021. We note that the applicant appears to have used the FY 2021 IPPS/LTCH PPS proposed rule inflation factor rather than the 2-year inflation factor from the FY 2021 IPPS/LTCH PPS final rule of 13.2 percent (85 FR 59038), which would have increased the inflated charges. Finally, the applicant added charges for the technology by multiplying the cost of ENSPRYNG^TM, based on an average of 1.22 doses per patient, by the inverse of the national average drug CCR of 0.187 from the FY 2021 IPPS/LTCH PPS final rule (85 FR 58601). The applicant calculated a final inflated average case-weighted standardized charge per case of $150,154, which exceeds the case-weighted threshold of $47,813.

For the second analysis, the applicant used the same sample of cases (466) from the first analysis, as identified in the FY 2019 MedPAR database with the ICD-10-CM code G36.0 and with the same sample restrictions. In this analysis, the applicant did not remove charges for related or prior technologies because, per the applicant, ENSPRYNG^TM is anticipated to neither replace plasma exchange nor be used as a monotherapy in all patients. The applicant standardized and inflated the charges, as well as added charges for ENSPRYNG^TM using the same methodology as the first analysis, described previously. The applicant calculated a final inflated average case-weighted standardized charge per case of $175,021, which exceeded the case-weighted threshold of $47,813. The applicant asserted that ENSPRYNG^TM meets the cost criterion based on these analyses.

Based on the information provided by the applicant, we stated that it was uncertain to us why the national other services average CCR was used to inflate costs to charges in the first analysis when the applicant indicated that it removed charges from the drugs cost center and blood cost center. We sought public comment on whether this or another CCR, such as a CCR for drugs or blood and blood products, would be more appropriate. Furthermore, in the event that a MS-DRG has fewer than 11 cases, we stated that the applicant should impute a minimum case number of 11.

We invited public comments on whether ENSPRYNG^TM meets the cost criterion, including whether the use of another CCR would substantially alter the results of the applicant's analysis.

Comment: The applicant submitted a comment addressing the concerns raised by CMS in the proposed rule regarding whether ENSPRYNG^TM meets the cost criterion. The applicant reiterated that CMS was provided with two cost analyses in its original application: An updated version of the analysis used in FY 2021 by the new technology add-on payment applicant for SOLIRIS® and a second analysis that was the applicant's original work and aligned more closely with how ENSPRYNG^TM would be used. The applicant first noted the following updates to both analyses per CMS' feedback: (1) Imputing a minimum case number of 11 and (2) using the 2-year inflation factor from the FY 2021 IPPS/LTCH PPS final rule of 13.2 percent. The applicant then addressed CMS' concern regarding the appropriateness of the CCR used to inflate cost to charges in these analyses. With respect to the first analysis, the applicant indicated that CMS accepted the use of the “other services” national average cost-to-charge ratio for SOLIRIS® and that its use in the first scenario is therefore appropriate. The applicant noted that while a different CCR (such as the CCR for drugs or blood and blood products, as suggested by CMS) might be more appropriate, it provided CMS with the first analysis for contextual purposes only and did not want to comment on the validity of the cost analysis for SOLIRIS®. With respect to the second analysis, the applicant maintained that since ENSPRYNG^TM is not anticipated to replace plasma exchange or be used as a monotherapy in all patients, there are no charges to remove. Per the applicant, the issue of which CCR is more appropriate to use when removing charges is therefore moot, and did not apply to the second analysis.

After following the methodology described previously with the exception of the imputed case value of 11 and updated inflation factor, the applicant presented the results of the revised cost analyses by MS-DRG.

The applicant stated that, under both revised analyses, the average case-weighted standardized charge per case exceeded the revised case-weighted threshold and therefore ENSPRYNG^TM meets the cost criterion.

Response: We thank the applicant for submitting its comments addressing the concerns we raised in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25070 through 25104), including with respect to the use of the “other services” CCR, and its submission of a revised cost analysis. Based on the information provided by the applicant, because the final inflated average case-weighted standardized charge per case exceeded the case-weighted threshold of amount in both scenarios, we agree with the applicant that ENSPRYNG^TM meets the cost criterion.

With regard to the substantial clinical improvement criterion, the applicant asserted that ENSPRYNG represents a substantial clinical improvement in the following ways: (1) It significantly improves clinical outcomes relative to services or technologies previously available for the treatment of NMOSD in adult patients who are AQP4-IgG positive; (2) these improvements are not accompanied by serious safety concerns; (3) ENSPRYNG is the only FDA-approved treatment for NMOSD that is subcutaneously administered; and (4) the totality of circumstances demonstrates ENSPRYNG^TM, relative to technologies previously available, substantially improves the treatment of Medicare beneficiaries. The applicant submitted two recent studies to support their claims of substantial clinical improvement over existing technologies.

The SAkuraStar (NCT02073279) study was a Phase 3, double-blind, placebo-controlled, parallel-group trial at 44 investigational sites in 13 countries to assess the safety and efficacy of ENSPRYNG^TM monotherapy in patients with NMOSD. 95 (57%) of 168 screened participants aged 18-74 years with AQP4-IgG positive or negative NMOSD met the inclusion criteria and were randomly assigned (2:1) to treatment with ENSPRYNG^TM 120mg (n = 63) or visually matched placebo (n = 32). Inclusion criteria included participants who had experienced at least one documented NMOSD attack or relapse in the previous 12 months and had a score of 6.5 or less on the Expanded Disability Status Scale, while exclusion criteria included clinical relapse 30 days or fewer before baseline. The primary endpoint was time to the first protocol-defined relapse, based on the intention-to-treat (ITT) population (AQP4-IgG positive and negative) (n=95), and analyzed with stratification for two randomization factors (previous therapy for prevention of attacks and nature of the most recent attack). Treatment in both arms was given subcutaneously at weeks 0, 2, 4, and every 4 weeks thereafter. The double-blind phase was due to last until 44 protocol-defined relapses occurred or 1.5 years after random assignment of the last patient enrolled, whichever occurred first. Participants could enter an open-label phase after the occurrence of a protocol-defined relapse or at the end of the double-blind phase. Protocol-defined relapses occurred in 19 (30%) patients receiving satralizumab and 16 (50%) receiving placebo (hazard ratio 0.45, 95% CI 0.23-0.89; p = 0.018). 473.9 adverse events per 100 patient-years occurred in the satralizumab group and 495.2 per 100 patient-years in the placebo group. The authors noted that the incidence of serious adverse events and adverse events leading to withdrawal was similar between groups.

According to the applicant, this study demonstrated that the time to the first relapse was significantly longer in ENSPRYNG treated patients compared with patients who received a placebo (risk reduction, 55%; hazard ratio, 0.45 (95% CI 0.23, 0.89); p = 0.0184). In the AQP4-IgG positive population, there was a 74% risk reduction and a hazard ratio of 0.26 (95% CI 0.11, 0.63; p = 0.0014). The results in the subgroup of AQP4-IgG negative patients were not statistically significant. The annualized relapse rate for AQP4-IgG positive patients was 0.1 (95% CI, 0.05-0.2) in the ENSPRYNG group and 0.5 (95% CI, 0.3-0.9) in the placebo group. The proportion of relapse-free AQP4-IgG positive patients at week 96 was 77% in the ENSPRYNG group and 41% in the placebo group. According to the applicant, the study concluded that ENSPRYNG^TM monotherapy reduced the rate of NMOSD relapse compared with placebo in the overall trial population and had a favorable safety profile.

In the second Phase 3, randomized, double-blind, placebo-controlled study submitted by the applicant, the SAkuraSky (NCT02028884) trial, 83 patients with NMOSD who were seropositive or seronegative for AQP4-IgG were randomly assigned (1:1) to receive either 120 mg of satralizumab (n=41) or placebo (n=42) administered subcutaneously at weeks 0, 2, and 4 and every 4 weeks thereafter, in addition to stable IST. The primary end point was the first protocol-defined relapse in a time-to-event analysis. Key secondary end points were the change from baseline to week 24 in the visual-analogue scale (VAS) pain score (range, 0 to 100, with higher scores indicating more pain) and the Functional Assessment of Chronic Illness Therapy-Fatigue (FACIT-F) score (range, 0 to 52, with lower scores indicating more fatigue). Safety was also assessed.

The results of the SAkuraSky trial demonstrated that the median treatment duration with satralizumab in the double-blind period was 107.4 weeks. Relapse occurred in 8 patients (20%) receiving satralizumab and in 18 (43%) receiving placebo (hazard ratio, 0.38; 95% confidence interval [CI], 0.16 to 0.88). Multiple imputations for censored data (including patients who discontinued the trial, received rescue therapy, had a change in baseline treatment, or were continuing in the trial at the data-cutoff date) resulted in hazard ratios ranging from 0.34 to 0.44 (with corresponding P values of 0.01 to 0.04). Among the 55 AQP4-IgG-seropositive patients, relapse occurred in 11% of those in the satralizumab group and in 43% of those in the placebo group (hazard ratio, 0.21; 95% CI, 0.06 to 0.75); among 28 AQP4-IgG-seronegative patients, relapse occurred in 36% and 43%, respectively (hazard ratio, 0.66; 95% CI, 0.20 to 2.24). The between-group difference in the change in the mean VAS pain score was 4.08 (95% CI, −8.44 to 16.61); the between-group difference in the change in the mean FACIT-F score was −3.10 (95% CI, −8.38 to 2.18). The rates of serious adverse events and infections did not differ between groups.

In support of the applicant's claim that ENSPRYNG significantly improves clinical outcomes relative to services or technologies previously available for the treatment of NMOSD in adult patients who are AQP4-IgG positive, the applicant stated that patients treated with ENSPRYNG plus IST exhibited a significantly longer time to first relapse when compared to placebo. This also included a risk reduction of 62% in patients treated with ENSPRYNG plus IST when compared with patients who received a placebo plus IST and a 79% risk reduction in the AQP4-IgG positive population. Results in the AQP4-IgG negative patient subgroup were not statistically significant. The proportion of relapse free AQP4-IgG positive patients at week 96 was 92% in ENSPRYNG plus IST group and 53% in the placebo plus IST group.

According to the applicant's second claim, substantial improvements in clinical efficacy are not accompanied by serious concerns. In the SAkuraSky trial, 90% of patients in the ENSPRYNG plus IST group had at least one adverse event compared to 95% in the placebo plus IST group. The safety profile of ENSPRYNG in the OST period was consistent with the double-blind period. There were no deaths or anaphylactic reactions, rates of AEs and serious AEs did not increase with longer exposure to ENSPRYNG; and the most frequently reported AEs in the OST period were consistent with the double-blind period.

The applicant's third claim concerns the flexibility provided to patients by the option to self-administer ENSPRYNG. According to the applicant, ENSPRYNG is the only FDA-approved treatment for NMOSD that is administered subcutaneously. Once treatment is initiated during inpatient hospital admission, upon discharge and having received adequate training on how to perform the injection, an adult patient/caregiver may administer all subsequent doses of ENSPRYNG^TM at home if the treating physician determines that it is appropriate and the adult patient/caregiver can perform the injection technique. According to the applicant, self-administration provides the patient the option to continue the therapy initiated in the hospital while in the convenience of their own home, with reduced disruption to daily life. The applicant stated that additionally, the option to self-administer provides flexibility to patients, as they can bring their medication with them while traveling without having to worry if there is an infusion site nearby. The applicant claims this may potentially reduce the rate of hospital readmissions.

In their fourth claim, the applicant stated the totality of circumstances otherwise demonstrate that ENSPRYNG, relative to technologies previously available, substantially improves the treatment of Medicare beneficiaries. The applicant asserted that a cross trial comparison between ENSPRYNG and SOLIRIS® (approved for new technology add-on payment in FY 2021) cannot be made due to differences in trial design and study population. However, the applicant noted the following distinctions between ENSPRYNG and SOLIRIS® and their clinical trials. Per the applicant, the first distinction is that in the registrational study for SOLIRIS®, a higher proportion of patients receiving SOLIRIS® than those receiving a placebo discontinued their participation in the clinical trial (17% vs 6%).During the double-blind period of SAkuraSky trial, however, a total of three patients (7%) in the ENSPRYNG group and 10 patients (24%) in the placebo group discontinued the trial agent. The applicant stated that discontinuation of SOLIRIS® may be associated with relapse and hospitalization. The second distinction made by the applicant is that the prescribing information for ENSPRYNG does not bear a black-box warning, in contrast to that of SOLIRIS®. The third distinction is that patients must be vaccinated against Neisseria meningitidis before receiving SOLIRIS® and no such requirement applies to ENSPRYNG^TM. The fourth and final distinction made by the applicant highlights duration of treatment. In the SAkuraSky trial, the mean period of treatment in the double-blind period was 94.1 ± 72.6 weeks in the ENSPRYNG^TM group and 66.0 ± 61.4 weeks in the placebo group. However, the median trial durations were shorter in the SOLIRIS® trial, at 90.93 and 43.14 weeks (minimum-maximum, 6.4-211.1 and 8.0-208.6) for the SOLIRIS® and placebo groups, respectively.

In connection with the applicant's fourth claim to support substantial clinical improvement, the applicant stated that both the SAkuraStar and SAkuraSky clinical trials included comparator arms. In SAkuraStar, an exclusion criterion was IST use, whereas in SAkuraSky, patients were permitted to continue baseline treatment with a stable dose of the IST agents in addition to the trial drug. This allowed the efficacy of ENSPRYNG^TM to be assessed both in patients who were receiving one of the IST agents for their NMOSD and in the others who were receiving nothing at all. The applicant stated that in contrast, SOLIRIS® was tested only in a single Phase 3 clinical trial where the primary end point was the first adjudicated relapse in the population of patients taking stable-dose IST and either SOLIRIS® or placebo; the efficacy of SOLIRIS® monotherapy was a sub analysis, and UPLIZNA® was tested only in a single Phase 3 clinical trial as a monotherapy with only a 28-week randomized, controlled period. According to the applicant, ENSPRYNG^TM has received approval by regulatory authorities in Japan, Canada, and Switzerland for the treatment of both adults and adolescents (12-17 years of age) with NMOSD. The applicant asserted that patients in the ENSPRYNG^TM clinical trials likely are representative of Medicare patients despite their mean ages (45.3 years for the ENSPRYNG^TM arm of SAkuraStar and 40.8 years for the ENSPRYNG^TM arm of SAkuraSky ) being less than 65, as NMOSD is so severe that patients may qualify for disability accompanied by Medicare benefits regardless of their age. The applicant explained that a severe onset attack causing increased disability is reported to occur in 45% of patients with NMOSD and that 52.4% of US-based NMOSD patients report severe problems with mobility, which is consistent with definitions of disability used by the Social Security Administration (SSA). Per the applicant, SSA maintains a list of impairments considered severe enough to prevent gainful activity. Though NMOSD is not listed, multiple sclerosis (MS) is, and the two conditions are frequently confused due to similarities between clinical presentations. According to the applicant, the SSA is open to allowing people to qualify for disability by showing their condition is as severe as one that is on the list.

After reviewing the information submitted by the applicant as part of its FY 2022 new technology add-on payment application for ENSPRYNG^TM, we noted that while the applicant provided data comparing ENSPRYNG^TM to placebo with or without IST, the applicant did not provide data to demonstrate improved outcomes over existing FDA approved treatments for NMOSD. While the applicant stated reasons why a comparison could not be made, we stated that additional information would help inform our assessment of whether ENSPRYNG^TM demonstrates a significant clinical improvement over existing technologies for outcomes such as time to first relapse and annual relapse rate. In addition, we stated that while we understand that there may be potential benefits related to the self-administrative delivery of ENSPRYNG^TM, we questioned if the benefits are related only to the outpatient administration of the medication and whether they would demonstrate improved clinical outcomes that represent a substantial clinical improvement in the inpatient setting. We invited public comments on whether ENSPRYNG^TM meets the substantial clinical improvement criterion.

Comment: We received several comments in support of the new technology add-on payment application for ENSPRYNG^TM urging the approval of this application to ensure that Medicare beneficiaries with NMOSD will have timely access to appropriate treatment in the inpatient setting for this devastating, rare, autoimmune disease. The commenters highlighted the risk of relapse associated with NMOSD, and the current practice of using ongoing treatment with medications that suppress the immune system to prevent relapse from happening. The commenters explained that approval of the new technology add-on payment for ENSPRYNG^TM would minimize the risk of future relapses and potential hospital readmissions by allowing patients to start on a safe and effective maintenance treatment while admitted in the inpatient setting. The commenters referenced the SAkuraStar and SAkuraSky studies, summarized here and in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25254 through 25256), as evidence that ENSPRYNG^TM is a safe and effective treatment for NMOSD.

Response: We thank the commenters for sharing their perspective on the new technology add-on payment application for ENSPRYNG^TM and have taken these comments into consideration in our determination of substantial clinical improvement, which is discussed later in this section.

Comment: The applicant submitted a comment in response to the concerns raised by CMS in the proposed rule regarding whether ENSPRYNG^TM meets the substantial clinical improvement criterion (86 FR 25256). With regard to our concern that the applicant did not submit data to demonstrate improved outcomes over existing FDA approved treatments for NMOSD, the applicant commented that off-label (including IST) therapies are the most appropriate comparator for CMS to use when evaluating whether or not ENSPRYNG^TM is a substantial clinical improvement because neither SOLIRIS® nor UPLIZNA® are generally available to inpatient Medicare beneficiaries. The applicant explained that because SOLIRIS® and UPLIZNA® did not have claims in the Statistical Analytical File for CY 2020, the drugs were unavailable in the inpatient setting, and therefore ENSPRYNG^TM should not be compared against them for evidence of substantial clinical improvement.

The applicant also commented that ENSPRYNG represents a substantial clinical improvement over existing technologies because it is the only FDA-approved treatment for at least two subsets of NMOSD patients who are ineligible for SOLIRIS® and UPLIZNA®: Patients who are not currently vaccinated against Neisseria meningitidis and patients at a higher risk of PML. The applicant stated that ENSPRYNG is the only FDA-approved treatment for NMOSD that specifically addresses important components of NMOSD pathophysiology without eliminating targeted components of the immune system. The applicant explained that SOLIRIS® is contraindicated in patients who are not currently vaccinated against Neisseria meningitidis. Although the vaccination reduces the risk of meningococcal infection, the applicant explained that the SOLIRIS® label states that “life-threatening and fatal meningococcal infections have occurred in patients treated with SOLIRIS®.” The applicant also argued that UPLIZNA®'s mechanism of action in targeting B cells may impact cellular reconstitution and long-term humoral memory, which cause potential safety risks including hypogammaglobulinemia and enhanced risk of infections like PML, a viral infection of the brain caused by the JC virus. The applicant cited two technologies that CMS approved for new technology add-on payment technologies, GORE® TAG® (70 FR 47356 through 47359) and CardioWest^TM Temporary Total Artificial Heart System (73 FR 48555 through 48557), as further support that offering treatment options for patients otherwise ineligible for currently available treatments constitutes substantial clinical improvement.

The applicant also commented in response to our concerns in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25256) regarding whether the benefits of ENSPRYNG^TM are related only to the outpatient administration of the medication and our concern on whether those benefits would demonstrate improved clinical outcomes that represent a substantial clinical improvement in the inpatient setting. The applicant commented that the benefits associated with the self-administration of ENSPRYNG^TM are realized in both the inpatient and outpatient settings, and therefore demonstrate improved clinical outcomes in the inpatient setting. First, the applicant stated that the benefits associated with the self-administration of ENSPRYNG^TM in the outpatient setting directly confer benefits in the inpatient setting. As an example, the applicant stated that self-administration of ENSPRYNG^TM in the outpatient setting allows patients flexibility to bring their medication with them when they travel without ensuring an infusion site is near their destination. The applicant also explained that due to the severity of NMOSD and its propensity to cause patients experiencing a relapse to be hospitalized, and the clinically-proven ability of ENSPRYNG^TM to reduce the incidence of relapse compared to off-label IST treatments, its outpatient use may reduce hospitalizations. Second, the applicant stated that ENSPRYNG^TM is the only FDA-approved option in the inpatient setting for patients that are unwilling or unable (perhaps due to difficulties associated with their venous access) to receive IV infusions. Third, the applicant pointed out that CMS has approved several technologies for the new technology add-on payment that are used in both the inpatient and outpatient settings, including DIFICID^TM (77 FR 53358), STELARA® (82 FR 38129), CABLIVI® (84 FR 42208), BALVERSA^TM (84 FR 42242), ERLEADA^TM (84 FR 42247), XOSPATA® (84 FR 42260), XENLETA (85 FR 58732), TECENTRIQ® (85 FR 58684), and IMFINZI® (85 FR 58684).

The applicant commented that CMS's past approval decisions on new technology add-on payments and commentary support the approval of ENSPRYNG^TM's application and stated that CMS appears to be taking a new policy position regarding how an applicant demonstrates substantial clinical improvement. The applicant states that at least one new technology add-on payment applicant, SPRAVATO®, has been approved for new technology add-on payment based on that technology's assertions of improved safety versus other existing treatment options. The applicant also cited six technologies approved for new technology add-on payment that the applicant believes did not submit studies in a manner conducive to a demonstration of improved outcomes over existing FDA-approved treatments or studies with any improved outcomes at all: GIAPREZA^TM (83 FR 41342), IMFINZI® (85 FR 58684), ZEMDRI^TM (83 FR 41334), BALVERSA^TM (84 FR 42242), JAKAFI^TM (84 FR 422732), and BLINCYTO^TM (80 FR 49451).

Response: We thank the applicant for its comment in response to our concerns and providing additional information for us to consider. After further review, we continue to have concerns as to whether ENSPRYNG^TM meets the substantial clinical improvement criterion to be approved for new technology add-on payments. Specifically, the applicant did not provide data to demonstrate improved outcomes over existing FDA approved treatments for NMOSD. The applicant commented that the lack of utilization, as evidenced by the absence of claims for SOLIRIS® and UPLIZNA® in the CY 2020 SAF, suggests that the drugs are unavailable in the inpatient setting, and are therefore not the appropriate comparators for ENSPRYNG^TM. We disagree. Both SOLIRIS® and UPLIZNA® are covered by Medicare, on the market, and, are therefore available for Medicare beneficiaries in the inpatient setting. It appears that the applicant is speculating with regard to the availability of the existing technologies. Therefore, whether there were Medicare claims in the CY 2020 SAF for SOLIRIS® and UPLIZNA® is not relevant to whether these drugs are an appropriate comparator for the purposes of substantial clinical improvement. We further disagree with the applicant that the lack of claims in the CY 2020 SAF data calls into question the degree of clinical improvement with which they are associated. We note that SOLIRIS® demonstrated substantial clinical improvement in their FY 2021 new technology application based on clinical data. We make substantial clinical improvement determinations based on the criteria at § 412.87(b), and not based on the utilization of a technology within the claims data. In addition, while the applicant states that the manufacturer for SPRAVATO asserted without providing supporting data that electroconvulsive therapy (ECT) had limited availability and nevertherless was awarded new technology add-on payments without providing a comparison to that comparator (84 FR 42247 through 42256), we note that we concluded that ECT was not an appropriate comparator because of poor side effects and the clinical challenges and difficulties arising from treatment with ECT which contributed to the limited availability. In this case, we believe that SOLIRIS® and UPLIZNA® do not have limited availability, for the reasons noted previously.

While the commenter is correct that CMS has determined that prior technologies, including GORE TAG® (70 FR 47356 through 47359) and CardioWest (73 FR 48555 through 48557), represented a substantial clinical improvement because they offer a treatment option for patients otherwise ineligible for currently available treatments, we cannot conclude based on the information provided that ENSPRYNG offers a treatment option for a patient population unresponsive to, or ineligible for, currently available treatments. We disagree with the applicant's assertion that individuals who are not currently vaccinated against Neisseria meningitidis and patients at a higher risk of PML constitute individual patient populations that are unresponsive to, or ineligible for, currently available treatments. First, vaccinations against Neisseria meningitidis are safe and effective, recommended by the CDC, and are required for SOLIRIS® treatment. Individuals that are not vaccinated against Neisseria meningitidis are not considered a separate patient population because eligibility can be easily attained via a widely available vaccine and are also able to receive treatment with UPLIZNA® which does not require a vaccine as noted previously in this section. Second, a patient that is at a higher risk of PML is not ineligible for UPLIZNA®, as the applicant stated, because patients at risk are not contraindicated from using UPLIZNA®, and therefore we conclude that having a higher risk of developing PML does not create a population of patients that are ineligible for UPLIZNA®. As described earlier in this section, we also disagree that patients unwilling or unable to receive an IV infusion constitute a new population. We note that patients with acute NMOSD in the inpatient setting will require IV access for treatment (that is, for IV corticosteroids, plasmapheresis, and/or IST), so we believe that inpatients with NMOSD would not be unwilling or unable to receive further IV therapies. For these reasons, unlike GORE TAG® and CardioWest^TM which demonstrated treatment of patients with an unmet need, ENSPRYNG® does not meet this criterion. Please refer to (70 FR 47356 through 47359) and (73 FR 48555 through 48557) for a full discussion of how these determinations were made.

With regard to the applicant's assertion that the self-administration of ENSPRYNG® realizes benefits in the inpatient and outpatient settings, we agree that subcutaneous drugs offer additional flexibility over infusions. The applicant claims that this flexibility may potentially reduce the rate of hospital readmissions, but the applicant did not provide any data to support a reduction of hospitalizations or other outcomes related to the form of drug administration as compared to existing treatments. The applicant listed examples of outcomes that can support a determination of substantial clinical improvement from the regulation text at § 412.87 such as an improvement in quality of life and greater medication adherence or compliance, stating that these are not restricted to demonstration of benefits in the inpatient setting; however, the applicant did not demonstrate that ENSPRYNG® confers these benefits. While we have granted new technology add-on payments to technologies that are given in both the inpatient and outpatient settings, we note that these technologies demonstrated substantial clinical improvement by demonstrating outcomes superior to the standard of care. Please see a full discussion of how these determinations were made at 77 FR 53350 through 53358, 82 FR 38125 through 38129, 84 FR 42201 through 42208, 84 FR 42237 through 42242, 84 FR 42242 through 42247, 84 FR 42256 through 42260, and 85 FR 58672 through 58684.

Finally, we disagree that we are taking a new policy position with regard to how an applicant demonstrates substantial clinical improvement. With all applications, from the time the application is submitted until the final rule, we make a concerted effort to gather all of the information necessary to make an informed decision with regard to substantial clinical improvement. We rigorously review each application with our medical officers and clinical staff to determine whether a technology represents a substantial clinical improvement over existing technologies. We provide concerns in the proposed rule for each technology to ensure transparency with regard to our review, and applicants have the opportunity to address these concerns prior to the final rule in the comment period. With regard to the applicant's reference to other new technology add-on payment applications that were previously approved to demonstrate why ENSPRYNG^TM should be approved, we note that every application is evaluated on its own data and merits to determine whether it meets the new technology add-on payment criterion for substantial clinical improvement. In listing examples of various previously approved technologies, it appeared that the applicant did not consider the differences between applications, as well as the variations in currently available technologies an applicant is compared against for purposes of showing substantial clinical improvement. For example, the applicant cited IMFINZI® as an example of a new technology add-on payment approval that, per the applicant, did not submit studies in a manner conducive to a demonstration of improved outcomes over existing FDA-approved treatments or studies with any improved outcomes at all. IMFINZI® was approved for FY 2021 new technology add-on payment after CMS concluded that it met the criteria, including demonstrating a substantial clinical improvement over existing technologies by being one of the first two treatments (the second being TECENTRIQ®, of which the applicant is also the manufacturer) to show improved overall survival in the treatment of patients with extensive-stage small cell lung cancer (ES-SCLC) in more than 20 years (85 FR 58672 through 58684). CMS reached this conclusion after reviewing data submitted by both IMFINZI® and TECENTRIQ® in their applications and during the comment period, including data that showed a sustained overall survival (OS) benefit in combination with SOC chemotherapy as compared to SOC chemotherapy+placebo. CMS did not require the two new treatments to demonstrate superiority over each other as they were determined to be substantially similar. Per our policy, because the applications were submitted for review in the same year, and because we believed they were substantially similar to each other, we considered both sets of clinical data in making a determination, and we did not believe that it would be possible to choose one set of data over another set of data in an objective manner. Accordingly, CMS disagrees with the applicant's claim that CMS approved IMFINZI® without a finding of substantial clinical improvement over existing technologies.

After review of the information submitted by the applicant as part of its FY 2022 new technology add-on payment application for ENSPRYNG^TM and consideration of the comments received, for the reasons discussed in the proposed rule and in this final rule, we are unable to determine that ENSPRYNG^TM meets the substantial clinical improvement criterion, and therefore we are not approving new technology add-on payments for ENSPRYNG^TM for FY 2022.

g. ABECMA® (idecabtagene vicleucel)

Celgene Corporation, a wholly owned subsidiary of Bristol-Myers Squibb (BMS), submitted an application for new technology add-on payment for ABECMA® for FY 2022. ABECMA® is a B-cell maturation antigen (BCMA)-directed genetically modified autologous chimeric antigen receptor (CAR) T-cell immunotherapy for the treatment of adult patients with relapsed or refractory (RR) multiple myeloma (MM) (RRMM) who have received at least four prior therapies including an immunomodulatory agent (IMiD), a proteasome inhibitor (PI), and an anti-CD38 antibody (for example, triple-class-exposed). ABECMA® is expected to be a 5th line plus (5L+) treatment.

Multiple myeloma (MM) is typically characterized by the neoplastic proliferation of plasma cells producing a monoclonal immunoglobulin. The plasma cells proliferate in the bone marrow and can result in extensive skeletal destruction with osteolytic lesions, osteopenia, and/or pathologic fractures. The diagnosis of MM is often suspected because of one (or more) of the following clinical presentations:

• Bone pain with lytic lesions discovered on routine skeletal films or other imaging modalities
• An increased total serum protein concentration and/or the presence of a monoclonal protein in the urine or serum
• Systemic signs or symptoms suggestive of malignancy, such as unexplained anemia
• Hypercalcemia, which is either symptomatic or discovered incidentally
• Acute renal failure with a bland urinalysis or rarely nephrotic syndrome due to concurrent immunoglobulin light chain (AL) amyloidosis

It is important to distinguish MM both from other causes of these clinical presentations and from other plasma cell dyscrasias for the purposes of prognosis and treatment. Data from the US Surveillance, Epidemiology, and End Results (SEER) registry estimate 32,000 new cases of MM and 13,000 deaths from MM annually in the US. This correlates with an annual incidence of approximately 7 per 100,000 men and women per year. MM is largely a disease of older adults. The median age at diagnosis is 65 to 74 years. MM is also slightly more frequent in men than in women (approximately 1.4:1). MM is associated with substantial morbidity and mortality and approximately 25% of patients have a median survival of 2 years or less.

With respect to the newness criterion, ABECMA® received FDA approval on March 26, 2021, and is indicated for the treatment of adult patients with relapsed or refractory multiple myeloma after four or more prior lines of therapy, including an immunomodulatory agent, a proteasome inhibitor, and an anti-CD38 monoclonal antibody. A single dose of ABECMA® contains a cell suspension of 300 to 460 x 106 CAR T-cells.

The applicant submitted a request for unique ICD-10-PCS codes that describe the administration of ABECMA® at the September 2020 Coordination and Maintenance Committee meeting. The following codes were approved to describe procedures involving the administration of ABECMA®: XW033K7 (Introduction of idecabtagene vicleucel immunotherapy into peripheral vein, percutaneous approach, new technology group 7) and XW043K7 (Introduction of idecabtagene vicleucel immunotherapy into central vein, percutaneous approach, new technology group 7). These codes will be effective starting October 1, 2021.

As previously stated, if a technology meets all three of the substantial similarity criteria as previously described, it would be considered substantially similar to an existing technology and therefore would not be considered “new” for purposes of new technology add-on payments.

With respect to whether a product uses the same or a similar mechanism of action when compared to an existing technology to achieve a therapeutic outcome, the applicant asserted that ABECMA® does not use the same or similar mechanism of action as other therapies approved to treat 4L+ RRMM or CAR T-cell therapies approved to treat different diseases. According to the applicant, with regard to its mechanism of action, ABECMA® is a chimeric antigen receptor (CAR)-positive T cell therapy targeting B-cell maturation antigen (BCMA), which is expressed on the surface of normal and malignant plasma cells. The CAR construct includes an anti-BCMA scFv-targeting domain for antigen specificity, a transmembrane domain, a CD3-zeta T cell activation domain, and a 4-1BB costimulatory domain. Antigen-specific activation of ABECMA® results in CAR-positive T cell proliferation, cytokine secretion, and subsequent cytolytic killing of BCMA-expressing cells.

According to the applicant, with respect to the non-CAR T-cell therapies to treat 4L+ RRMM, specifically Xpovio®, Blenrep, and chemotherapy, ABECMA®'s mechanism of action is different because it is a CAR T-cell therapy. The applicant stated that the mechanism of action for Xpovio® is reversible inhibition of nuclear export of tumor suppressor proteins (TSPs), growth regulators, and mRNAs of oncogenic proteins by blocking exportin 1 (XPO1). XPO1 inhibition by Xpovio® leads to accumulation of TSPs in the nucleus, reductions in several oncoproteins, such as c‐myc (a “master regulator” which controls many aspects of cellular growth regulation and cellular metabolism) and cyclin D1, cell cycle arrest, and apoptosis of cancer cells. The applicant stated that Blenrep's mechanism of action is cell destruction via microtubule inhibition, where the microtubule inhibitor is conjugated to a BCMA-specific antibody (antibody-drug conjugate). The applicant further stated that the mechanism of action for chemotherapy regimens generally is disruption of normal processes required for cell survival, such as deoxyribonucleic acid (DNA) replication and protein synthesis or degradation.

With respect to the mechanism of action of other currently FDA approved CAR T-cell therapies, according to the applicant, there are no other FDA approved CAR T-cell therapies that are indicated for treatment of RRMM with the same or similar mechanism of action as ABECMA®. The applicant stated that CAR T-cell therapies employ a unique mechanism of action which modifies the patient's own T-cell to express a chimeric antigen receptor (CAR) that programs T-cells to destroy cells that express a specific target. In the case of ABECMA®, this target is BCMA, which is a protein that is highly expressed on the surface of MM cells making it an ideal target for the treatment of MM. The applicant asserted that the key feature that distinguishes ABECMA® from CD-19 directed CAR T-cell therapies is the BCMA targeting domain. According to the applicant, ABECMA®'s BCMA targeting domain means that ABECMA® has a completely different mechanism of action from other currently FDA approved CAR T-cell therapies. In its application, the applicant asserted that since there are currently no FDA approved anti-BCMA CAR T-cell therapies, if approved, ABECMA® is the first CAR T-cell therapy approved for the treatment of RRMM and the only approved CAR T-cell therapy with a BCMA targeting domain which makes it unique as compared to other currently approved FDA therapies used to treat RRMM.

With regard to whether a product is assigned to the same DRG when compared to an existing technology, the applicant stated that it expects that cases involving the administration ABECMA® will be assigned to the same MS-DRG, MS-DRG 018 (Chimeric Antigen Receptor (CAR) T-cell Immunotherapy), as other CAR T-cell therapies.

With regard to whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population when compared to an existing technology, the applicant asserted that, if FDA approved, ABECMA® will be the first and only anti-BCMA CAR T-cell therapy available to treat RRMM. The applicant further asserted that ABECMA® would be indicated for a broader population than other currently FDA-approved available therapies, specifically multiple myeloma patients having received four prior therapies.

In summary, according to the applicant, because ABECMA® has a unique mechanism of action when compared to other currently FDA approved treatments for RRMM, and does not involve the treatment of the same or similar type of disease (RRMM) or the same or similar patient population (triple-class-exposed adult patients with RRMM), the technology is not substantially similar to an existing technology and therefore meets the newness criterion. However, we questioned whether ABECMA®'s mechanism of action may be similar to that of ciltacabtagene autoleucel, another CAR T-cell therapy for which an application for new technology add-on payments was submitted for FY 2022 as discussed in the proposed rule. Both ABECMA® and ciltacabtagene autoleucel seem to be intended for similar patient populations; multiple myeloma patients with three or more prior therapies, and would involve the treatment of the same conditions; adult patients with relapsed or refractory multiple myeloma.

We indicated that we were interested in information on how these two technologies may differ from each other with respect to the substantial similarity criteria and newness criterion, to inform our analysis of whether ABECMA® and ciltacabtagne autoleucel, if approved by July 1, 2021, are substantially similar to each other and therefore should be considered as a single application for purposes of new technology add-on payments.

We invited public comments on whether ABECMA® is substantially similar to an existing technology and whether it meets the newness criterion.

Comment: A few commenters encouraged CMS to consider assigning new technology add-on payments for new CAR T-cell therapies including idecabtagene vicleucel to ensure patient access.

Another commenter disagreed with CMS that ABECMA® would not be considered “new” for purposes of new technology add-on payment. The commenter supported that this product is different from the currently approved products treating patients with multiple myeloma and therefore supported that ABECMA® receive new technology add-on payment status.

Response: We appreciate the input from the commenters and the information they have highlighted, and we have taken these comments into consideration in our final decision, which is discussed later in this section.

Comment: In response to CMS' concerns for the substantial similarity criterion, the applicant submitted a comment. The applicant asserted that ABECMA® is currently the only FDA approved CAR T-cell therapy for the treatment of adult patients with RRMM after four or more prior lines of therapy and the only CAR T-cell therapy approved for the treatment of multiple myeloma. The applicant stated that unlike other therapies approved to treat 5L+ RRMM, ABECMA® modifies the patient's own T-cell to express a CAR that programs T-cells to kill cells that express a specific target, the BCMA. According to the applicant, all other approved CAR T-cell therapies today target the CD19 cell surface protein and are approved for the treatment of specific types of Non-Hodgkins Lymphoma (NHL). The applicant asserted that ABECMA® does not involve the treatment of the same or similar type of disease or the same or similar patient population when compared to existing technology because ABECMA® is the only CAR T-cell therapy available for the treatment of patients with RRMM. The applicant stated that the other treatments used in this space utilize different technologies, including small molecule inhibitors of cellular processes (XPOVIO®) or antibody drug conjugates (BLENREP).

In regard to CMS' concern whether ABECMA® and ciltacabtagne autoleucel are similar, the applicant commented that ciltacabtagene autoleucel is not yet FDA approved and is unlikely to be FDA approved by July 1, 2021, as its FDA Prescription Drug User Fee Act target action date has been set for November 29, 2021. The applicant stated that CMS should evaluate ABECMA®'s new technology add-on payment application on its own and should grant new technology add-on payment status effective October 1, 2021, in order to ensure Medicare beneficiary access.

Response: After consideration of the public comments we received and information submitted by the applicant in its application, we agree with the applicant that ABECMA® is not used to treat the same or similar type of disease (for the treatment of adult patients with relapsed or refractory multiple myeloma after four or more prior lines of therapy including an immunomodulatory agent, a proteasome inhibitor, and an anti-CD38 monoclonal antibody) or a similar patient population as currently available treatment options, and that ABECMA® does not use the same or similar mechanism of action as other technologies used for the treatment of the indication stated previously. Furthermore, as previously noted, the applicant for ciltacabtagene autoleucel withdrew its application prior to the issuance of this FY 2022 IPPS/LTCH PPS final rule, and we further note that the technology as not yet been FDA approved as of the time of the development of this final rule. We believe that the ABECMA® has a new mechanism of action as it is the only CAR T-cell therapy available for the treatment of adult patients with relapsed or refractory multiple myeloma after four or more prior lines of therapy including an immunomodulatory agent, a proteasome inhibitor, and an anti-CD38 monoclonal antibody and, therefore, we believe that ABECMA® is not substantially similar to existing technologies and meets the newness criterion. We consider the beginning of the newness period to commence on the first date ABECMA® received FDA approval, March 26, 2021.

With regard to the cost criterion, the applicant searched the FY 2019 MedPAR correction notice (December 1, 2020) file to identify potential cases representing patients who may be eligible for treatment using ABECMA®. In its analysis, the applicant identified a primary cohort to assess whether this therapy met the cost criterion. The following ICD-10-CM diagnosis codes were used to identify claims involving multiple myeloma procedures.

The applicant chose to limit its analysis to MS-DRG 016 (Autologous Bone Marrow Transplant W CC/MCC or T-Cell Immunotherapy, MS-DRG 840 (Lymphoma & Non-Acute Leukemia W MCC) and MS-DRG 841 (Lymphoma & Non-Acute Leukemia W CC). The claim search conducted by the applicant resulted in 1,955 claims mapped to MS-DRG 016, MS-DRG 840 and MS-DRG 841 using the FY 2019 MedPAR. The applicant determined an average unstandardized case weighted charge per case of $1,237,393. The applicant used the MS-DRG-018 New Technology Threshold for FY 2022 from the FY 2021 IPPS/LTCH PPS final rule.

The applicant removed all charges in the drug cost center for the prior technology because, according to the applicant, it is not possible to differentiate between different drugs on inpatient claims. The applicant added that this is likely an overestimate of the charges that would be replaced by the use of ABECMA®. The applicant then standardized the charges using the FY 2019 final rule impact file. Next, the applicant applied the 2-year inflation factor used in the FY 2021 IPPS/LTCH PPS final rule to calculate outlier threshold charges (1.13218). To calculate the charges for the new technology, the applicant used a national average CCR for the CAR T-cell therapies of 0.295. To determine this alternative CCR for CAR T-cell therapies, the applicant referred to the FY 2021 IPPS/LTCH PPS final rule AOR/BOR file and calculated an alternative markup percentage by dividing the AOR drug charges within DRG 018 by the number of cases to determine a per case drug charge. The applicant then divided the drug charges per case by $373,000, the acquisition cost of YESCARTA and KYMRIAH. The applicant calculated a final inflated average case-weighted standardized charge per case of $1,329,540, which exceeded the average case-weighted threshold amount of $1,251,127 by $78,413. The applicant stated that because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount, the therapy meets the cost criterion.

As noted in previous discussions, the submitted costs for CAR T-cell therapies vary widely due to differences in provider billing and charging practices for this therapy. Therefore, with regard to the use of this data for purposes of calculating a CAR T-cell CCR, we stated in the proposed rule that we were uncertain how representative this data is for use in the applicant's cost analyses given the potential for variability.

We stated that we continued to be interested in public comments regarding the eligibility of CAR T-cell technologies for new technology add-on payments when assigned to MS-DRG 018. As we have noted in prior rulemaking with regard to the CAR T-cell therapies (83 FR 41172 and 85 FR 58603 through 58608), 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 comment on whether ABECMA® meets the cost criterion.

Comment: We received a comment from MEDPAC which addressed the cost criterion in general as it relates to CAR T-cell therapies. Please refer to the response in the BREYANZI® application in section II.F.X.c. of the preamble of this final rule for detailed discussion of this issue.

Comment: We received multiple comments in response to our concern for CAR T-cell therapy, the MS-DRG 018 assignment, and new technology add-on payment eligibility.

Response: For a complete discussion of these comments and our response, please see the BREYANZI® application in section II.F.X.c. of the preamble of this final rule.

Comment: A few commenters suggested that CMS should establish a new technology add-on payment pathway specific to gene therapies similar to that of the QIDP and breakthrough device designation. These commenters suggested that these new pathways will provide streamlined opportunities for novel therapies to receive new technology add-on payment under the IPPS. Some commenters stated that CMS should create a category such as Regenerative Medicine Advanced Therapy (RMAT) designation to meet the newness and substantial clinical improvement new technology add-on payment criteria.

Response: We did not propose to add a new pathway to the new technology add-on payment evaluation process. We believe this comment is outside the scope of this rule.

Comment: In response to CMS' concerns, the applicant submitted similar comments to those submitted by the applicant for BREYANZI®. As discussed previously, the applicant stated in its comment that CAR T-cell therapies that meet the cost and other criteria for new technology add-on payment status should continue to be eligible for new technology add-on payment status notwithstanding the creation of MS-DRG 018. The applicant stated that there is still a need for new technology add-on payment status for new CAR T-cell therapies, like ABECMA®, to ensure patient access. Further, the applicant stated while the payment amount for MS-DRG 018 is certainly more aligned with CAR T-cell therapy costs generally, ABECMA® exceeds the cost threshold for MS-DRG 018, meaning that the reimbursement rate for MS-DRG 018 is not adequate for ABECMA®. The applicant asserted that per CMS, this is precisely the type of scenario that the new technology add-on payment is intended to address.

In responses to CMS' concerns regarding the cost criterion and the variability of provider billing and charging practices for CAR T-cell therapies (86 FR 25258), the applicant stated they considered the variability of CAR T-cell charging practices when developing its cost analyses and presented options that were intended to address this variability by using more conservative assumptions than have typically been the case for other new technology add-on payment applications. The applicant stated that most new technology add-on payment applications use the national average CCR for the cost center for which the new technology belongs is used to inflate the acquisition cost for the new technology to charges. The applicant added that in the case of a drug or biological, this would mean that the inverse of the national average CCR for drugs would be used to convert the WAC of ABECMA® to charges. The applicant stated that using the pharmacy CCR in the prescribed manner would result in charges that would potentially overstate actual hospital charging practices for CAR T-cell therapies. Furthermore, the applicant noted that numerous studies on charge compression have shown that hospital charging practices tend to result in higher markup percentages for lower cost drugs and lower markup percentages for higher cost drugs. The applicant added that given that the WAC for ABECMA® is well above the average of drugs overall, they were concerned that using the inverse of the national average drug CCR might overstate what hospitals would typically charge for ABECMA® on inpatient claims. Therefore, the applicant calculated a CAR T-cell specific CCR based solely on the total drug charges for CAR T-cell claims.

The applicant stated that to calculate the CAR T-cell CCR, they took the total drugs charges for cases in MS-DRG 018 from the FY 2021 IPPS/LTCH PPS final rule After Outliers Removed/Before Outliers Removed (AOR/BOR) file ($183,433,947.58). Next, the applicant divided that amount by the number of cases (145) to determine an average drug charge per case ($1,265,061.70). The applicant then divided that amount by $373,000, the acquisition cost of YESCARTA® and KYMRIAH®. This value represents the average mark-up percentage hospitals used to convert the cost of CAR T-cell therapy to charges on claims in FY 2019. The applicant converted this mark-up percentage to a CCR by dividing 1 by the percentage (1/3.39 = 0.295).

Ultimately, the applicant stated that it recognizes CMS's concern that hospitals vary in their CAR T-cell charging practices but states their method for calculating a CAR T-cell specific CCR is meant to address this exact concern. The applicant asserted that by focusing solely on CAR T-cell claims, they are able to capture the range of charging practices in hospitals that used a CAR T-cell therapy in a non-clinical trial case in 2019. Furthermore, the applicant stated that in addition to addressing the concerns about variability in hospital charging practices, the CAR T-cell CCR is also a more conservative assumption to use in the cost threshold analysis because it inflates CAR T-cell costs to charges at a lower percentage (339%) than if the inverse of the national average drug CCR is used (535%).

Response: We appreciate the information provided by the applicant in their comment in regard to their calculation of a CAR T-cell CCR. As we stated in section E.2.b. of this rule, we continue to believe that it is premature to make structural changes to the IPPS at this time to pay for CAR T-cell therapies (78 FR 58453). As we gain more experience paying for these therapies under the IPPS, we may consider these comments to inform future rulemaking. However, we appreciate the thoughtfulness used by the applicant to provide as clear as possible a description of CAR T-cell therapy cost calculations. We appreciate the usage of multiple cost analyses, such as varying the CCR used to inflate cost to charges, which potentially allowed for a more conservative markup.

After consideration of the public comments we received and based on the information included in the applicant's new technology add-on payment application, we believe that the ABECMA® system meets the cost criterion.

With regard to the substantial clinical improvement criterion, the applicant asserted that it believes that ABECMA® represents a substantial clinical improvement over existing technologies because: (1) The totality of the circumstances regarding ABECMA®'s clinical efficacy, safety, and data make clear that ABECMA® substantially improves, relative to services or technologies currently available, the treatment of Medicare beneficiaries with RRMM; (2) ABECMA® has superior effectiveness compared to existing therapies; (3) ABECMA® fills an unmet need as demonstrated by the patient population in its registrational study, which is reflective of real-world RRMM patients and 4) ABECMA® improves quality of life for patients with RRMM.

In support of its assertion that the totality of the circumstances regarding ABECMA®'s clinical efficacy, safety, and data make clear that ABECMA® substantially improves, relative to services or technologies currently available, the treatment of Medicare beneficiaries with RRMM, the applicant cited results from the KarMMA study, a single-arm, open-label, phase 2 trial of ABECMA®. The primary outcome measure for the KarMMA study was overall response rate (ORR). Secondary endpoints were; complete response rate (CRR) (key secondary; null hypothesis ≤10%), safety, duration of response (DOR), progression-free survival (PFS), overall survival (OS), pharmacokinetics (PK), minimum residual disease (MRD), quality of life (QOL) and health economics and outcomes research (HEOR). The study enrolled 140 patients and 128 received treatment. Patients were treated at target dose between 150 and 450 × 10⁶ CAR T-cells. Treated patients had received three or more prior lines of therapy including an immunomodulatory drug (IMiD), a proteasome inhibitor (PI), and an anti-CD38 antibody. All patients were refractory to the last regimen (94% were refractory to anti-CD38 and 84% were refractory to triple therapy). Efficacy results showed an ORR of 50% for patients (n=4) receiving the target ABECMA® dose of 150 × 10⁶; 68.6% for patients (n=70) receiving the target dose of 300 × 10⁶; 81.5% for patients (n=54) receiving the target dose of 450 × 10⁶. The overall ORR for all patients (n=128) who received ABECMA® was 73.4%.

The applicant asserts that in the KarMMA study, patients who received ABECMA® achieved numerically superior response rates, duration of response, and overall survival compared with outcomes seen for alternative therapies (belantamab-mafodotin and selinexor) in other trials. Response rates, according to the applicant, were also high even in patients refractory to five therapies (defined as 2 IMiD agents, 2 PIs, and 1 anti-CD38 antibody), reflecting the novel mechanism of action, according to the applicant. The applicant asserts that compared with anti-CD-19 CAR T-cell therapies, the adverse event profile revealed low rates of grade 3+ CRS (5%) and neurotoxicity (NT) (3%). According to the applicant, these safety results confirm that ABECMA® has the potential to offer a meaningful benefit to Medicare beneficiaries. The applicant also asserts that ABECMA® has been demonstrated to be effective and with a manageable safety profile for patients with a high-unmet need (older age, aggressive disease). The applicant asserts that the results from the pivotal KarMMa study confirm the clinical benefit of ABECMA® in a heavily pre-treated RRMM patient population.

We noted in the proposed rule that in contrast with anti-CD-19 CAR T-cell therapies (for leukemia or lymphoma) where a high fraction of responders remained in remission even after 5 years, ABECMA® does not appear to result in long-term remission. In the KarMMA study, among responding patients, over 75% relapsed by 20 months, with no plateauing of the response curve.

To support its assertion that ABECMA® has superior effectiveness compared to existing therapies, the applicant provided results from the KarMMa-RW study, a single-arm, open-label, phase 2 trial, examining real-world treatment patterns in heavily pretreated patients with RRMM. The study also provides a comparison against outcomes in the KarMMa study. The KarMMa-RW study was conducted to assess treatment patterns in real-world RRMM patients with characteristics similar to the KarMMa population and to compare outcomes with currently available therapies in this synthetic cohort vs ABECMA® therapy in the KarMMa study. The primary endpoint of the KarMMA-RW study was overall response rate (ORR). Secondary endpoints of the study were complete response rate (CRR), very good partial response (VGPR) rate, progression free survival (PFS) and overall survival (OS). Subgroup analyses by age, sex, double-class refractory (IMiD agents and PIs) and number of prior anti-myeloma regimens per year (≤1 per year or >1) were conducted to compare ORR and PFS between the KarMMa cohort and eligible RRMM cohort. Since complete response assessment requires a bone marrow biopsy evaluation, per International Myeloma Working Group (IMWG) uniform response criteria for multiple myeloma, when data to assess a complete response were not available in eligible RRMM cohort, analyses were summarized for VGPR or better (≥VGPR) to avoid underestimating the response in the eligible RRMM cohort.

Of 1,949 real-world RRMM patients, 1,171 were refractory to their last treatment regimen at baseline. Patients who had exposure to any BCMA-directed therapy or gene-modified therapy were excluded. Of the 1,171 patients in the refractory RRMM cohort, 528 received the next line of therapy; 643 patients were excluded due to no new treatment due to death (n = 441) and no new treatment due to no follow-up (n = 202). Of the remaining 528 patients, 190 triple class exposed patients were selected as the eligible RRMM cohort based on the KarMMa eligibility criteria. The ORR in the KarMMa and eligible RRMM cohorts was 76% and 32% ( p = <0.0001), respectively. The VGPR in the KarMMa and eligible RRMM cohorts was 57% and 14% (p = <0.0001), respectively.

A matched-paired analysis was conducted and ORR was adjusted for matching. Results from the matched-paired analysis were consistent with the primary analysis: the ORR for the matched KarMMa cohort (n=76-80) and matched eligible RRMM (n=76-80) was 72% and 29% (p = <0.0001), respectively. According to the applicant, PFS was significantly improved in KarMMa vs the eligible RRMM cohort; median PFS was 11.3 months and 3.5 months in the KarMMa and Eligible RRMM cohorts, respectively (p = <0.0001). Median follow-up was 11.3 months (KarMMa) and 10.2 months (eligible RRMM cohort) at data cutoff. According to the applicant, OS was significantly improved in KarMMa vs the eligible RRMM cohort. OR was 18.2 months for the KarMMa cohort (across all target doses from 150-450 × 10⁶ CAR T-cells) and 14.7 months for the eligible RRMM cohort. The estimated 12-month probability of surviving was 80% in the KarMMa cohort and 56% in the eligible RRMM cohort. Median follow-up was 12.0 months (KarMMa) and 15.0 months (eligible RRMM cohort) among surviving patients at data cutoff.

The applicant asserts that the results from the KarMMa-RW study confirm that there is no clear standard of care for RRMM patients who received at least 3 prior therapies, including IMiD agents, PIs, and anti-CD38 antibodies. Patients in the eligible RRMM cohort received 94 different treatment regimens as next-line therapy and according to the applicant, outcomes were sub-optimal with currently available therapies in the real-world RRMM patients. The applicant asserts that significantly improved outcomes were demonstrated with ABECMA® treatment in the KarMMa cohort vs the similar real-world population (eligible RRMM cohort). The applicant noted that the real world myeloma patient population is older (MM incidence is known to increase with age, with over 60 percent of all new cases occurring in adults aged 65+years). The applicant asserts that results were consistent across subgroups including patients aged ≥ 65 years.

The applicant also provided a comparison of the efficacy of ABECMA® and Xpovio® from the STORM study and Blenrep from the DREAMM-2 study. STORM is a prospective, multicenter phase 2 study of Xpovio® and dexamethasone in patients with RRMM (n = 122) in the 4L+ setting. The STORM trial served as the basis for regulatory approval in the US and demonstrated the clinical efficacy and safety of Xpovio®. The ORR was 26% for patients in the STORM study vs 73% for patients treated with ABECMA® in the KarMMa study, CR was 1% for patients in the STORM study vs 33% for patients treated with ABECMA® in the KarMMa study, medium duration of response (mDOR) was 4.4 months for patients in the STORM study vs 10.7 months for patients treated with ABECMA® in the KarMMa study, and PFS was 3.7 months for patients in the STORM study vs 8.8 months for patients treated with ABECMA® in the KarMMa study. The DREAMM-2 study is a prospective, multicenter Phase 2 study of Blenrep in patients with RRMM (n = 122) in the 4L+ setting. The ORR was 31% for patients in the DREAMM-2 study vs 73% for patients treated with ABECMA® in the KarMMa study, CR was 3% for patients in the DREAMM-2 study vs 33% for patients treated with ABECMA® in the KarMMa study, medium duration of response (mDOR) was not reached in the Blenrep group whereas it was 10.7 months for patients treated with ABECMA® in the KarMMa study, and PFS was 2.9 months for patients in the DREAMM-2 study vs 8.8 months for patients treated with ABECMA® in the KarMMa study.

Because ABECMA® showed improved ORR, CR, medDOR and PFS when compared to Xpovio® and Blenrep, the applicant asserts that ABECMA® provides a substantial clinical improvement over these existing therapies.

To support that ABECMA® fills an unmet need as demonstrated by the patient population in its registrational study, the Phase 2 KarMMa study, the applicant asserted that in addition to showing deep and durable responses and a manageable safety profile in heavily pretreated, highly refractory RRMM patients in the context of controlled clinical studies, comparisons of outcomes in real world patients (that is, patients not enrolled in clinical trials) support the assertion that ABECMA® offers significantly improved outcomes for RRMM compared with currently available therapies. The applicant asserted that when compared to myeloma patients generally included in clinical studies, the real world myeloma patient population is older (MM incidence is known to increase with age, with over 60 percent of all new cases occurring in adults aged > 65years) and sicker (due to the high proportion of elderly patients in this population, those with MM commonly also have additional comorbidities associated with increased age, including conditions such as osteoporosis, arthritis, diabetes, additional malignancies, cardiovascular disease, and renal dysfunction, amongst others). The applicant provided an abstract from the MAMMOTH study, a noninterventional, retrospective cohort analysis conducted to assess outcomes in patients after they become refractory to anti-CD38 monoclonal antibodies, including a subset of patients who were triple-class-exposed. Patients in STORM (analyzing Xpovio® plus dexamethasone) had an ORR of 32.8% versus 25% for patients receiving conventional care in MAMMOTH (p=0.078) and STORM patients had better OS than patients in MAMMOTH (median 10.4 vs 6.9 months) (p=0.043). The applicant asserts that these results highlight a high unmet need in a patient population refractory to anti-CD38 monoclonal antibody, including a subset of triple-class exposed patients.

To support the assertion that ABECMA® improves quality of life for patients with RRMM, the applicant referenced ABECMA®'s impact on Health-related quality of life (HRQoL) as assessed in the KarMMa study as a secondary endpoint. HRQoL was assessed using the European Organization for Research and Treatment of Cancer (EORTC) Quality of Life C30 Questionnaire (QLQ-C30) and the EORTC Multiple Myeloma Module (MY20). The QLQ-C30 consists of 30 questions addressing 5 functional domain scales, 3 symptom scales, a Global health/QoL scale, and 6 single item measures. The QLQ-MY20 consists of 20 questions addressing 4 myeloma-specific HRQoL domains (disease symptoms, side effects of treatment, future perspectives, and body image). Primary subscales of interest were QLQ-C30 Fatigue, Pain, Physical Functioning, Cognitive Functioning, and Global Health/QoL subscales and QLQ-MY20 Symptom and Side Effects subscales. Subscales were preselected based on their relevance to this patient population. The data are based on a minimum of 10 months post-infusion. Median follow-up durations at the target dose levels of 150, 300, and 450 × 10⁶ CAR T-cells were 17.8, 13.9, and 9.7 months, respectively. Of 140 patients enrolled in KarMMa, 128 received ABECMA®, of whom 121 (94.5%) and 120 (93.8%) were evaluable for HRQoL by QLQ-C30 and QLQ-MY20, respectively. At baseline, ABECMA®-treated patients had less favorable scores for all QLQ-C30 domains of interest (fatigue, pain, Global Health/QoL, physical functioning and cognitive functioning) than the general population. From baseline at multiple time points through month 9 post-infusion, the applicant asserts that clinically meaningful improvements were observed in QLQ-C30 Fatigue, Pain, Physical Functioning, and Global Health subscale scores relative to baseline, as the mean score from baseline showed improvement in all domains. The applicant asserts that these results support that ABECMA® provides meaningful improvements in HRQoL and self-reported symptoms associated with heavily pretreated RRMM and demonstrate that ABECMA® provides meaningful improvement in both global function and symptoms related to MM.

After reviewing the information submitted by the applicant as part of its FY 2022 new technology add-on payment application for ABECMA®, we stated in the proposed rule that we questioned whether, due to the lack of randomization, there is sufficient evidence to establish the efficacy of ABECMA® compared with current alternatives. We stated that it is unknown whether the superior outcomes for ABECMA® in the KarMMA study, which we stated has not been peer-reviewed, were due to more effective therapy or other factors, such as differences in patient population or treating oncologist. We also noted that the applicant chose to use ORR data as a measure of substantial clinical improvement rather than the more clinically relevant and available OS data.

We invited public comment on whether ABECMA® meets the substantial clinical improvement criterion.

Comment: In response to CMS' concerns regarding the substantial clinical improvement criterion, the applicant submitted a comment stating that ABECMA® is a substantial clinical improvement over existing technologies because: (1) The totality of the circumstances regarding ABECMA®'s clinical efficacy, safety, and data make clear that ABECMA® substantially improves, relative to services or technologies currently available, the treatment of Medicare beneficiaries with RRMM; (2) ABECMA® has superior effectiveness compared to existing therapies; (3) ABECMA® fills an unmet need as demonstrated by the patient population in its registrational study, which is reflective of real-world RRMM patients, and (4) ABECMA® improves quality of life for patients with RRMM.

The applicant stated that it is essential for CMS to recognize that multiple myeloma is a different disease from NHL, where CD-19 CAR T directed therapies are approved. The applicant added multiple myeloma is a disease characterized by persistence of residual disease and multiple periods of remission and relapse, with cure not generally achieved by conventional therapies. The applicant added that only long-term follow-up data will definitively show if a plateau in survival occurs after BCMA directed CAR T-cell treatment and that the KarMMA study presented data after a median follow up of 13.3 months.

The applicant stated that they believe it is not appropriate to compare outcomes between different CAR T-cell therapies approved and studied in patients with completely different diseases where the most appropriate comparison is between treatments indicated for the same patient population and disease. According to the applicant, the updated results, after a median follow up of 24.8 months, from the pivotal KarMMa study demonstrated outcomes remained consistent with those initially reported. The applicant stated that the CR/sCR rate remained 33% across all doses studied with an estimated median PFS was 8.6 months for all patients and 12.2 months for patients treated at the 450 × 106 dose; for the 33% of patients on the KarMMa study who had a CR/sCR, the median duration of response increased to 20.2 months.

The applicant disagreed with CMS's concerns surrounding the lack of randomization, peer-review status, and use of ORR as a measure of substantial clinical improvement. The applicant states that the results from the KarMMa study, which supported the FDA approval of ABECMA®, were published February 2021 in the New England Journal of Medicine.

The applicant stated that the KarMMa study, while using ORR as a primary endpoint, also demonstrated improvements in complete response (CR) rate, duration of response, PFS and OS compared with conventional therapies. The applicant stated that two analyses compared patients enrolled in the KarMMa clinical study to similar patients treated with conventional therapy enrolled on other observational studies: MAMMOTH in which a matched adjusted indirect comparison (MAIC) demonstrated that ABECMA® offers statistically significant, clinically meaningful improvements in ORR, OS, and PFS when compared with conventional care and regimens, and KarMMa-RW in which the median progression free survival was observed to be higher in the KarMMa group at 11.3 versus 3.5 months in the similar RW cohort and overall survival 18.2 versus 14.7 months, respectively.

The applicant concluded that the totality of the clinical efficacy and safety data from the prescribing information demonstrates that ABECMA® has equal or better efficacy and a better safety profile than existing therapeutic alternatives in a broad RRMM patient population, including patients aged 65+ years. Based on an updated analysis of overall survival for patients, the applicant asserts that after a median follow up of 24.8 months, 51% of patients remain alive two years after treatment with ABECMA® with an estimated median OS of 24.8 months. According to the applicant, median survival expectation with conventional therapies in this heavily pre-treated patient population (median 6 (3-16) prior lines), 94% refractory to anti-CD38 antibody, 84% refractory to all three of the main classes of antimyeloma drugs) is estimated at 9.3 months. Therefore the applicant asserted ABECMA® is clearly a substantial clinical improvement over alternative therapies for patients with RRMM after four or more prior lines of therapy.

Response: We appreciate the information provided by the applicant in their public comment. Based on the additional information received, we agree that ABECMA® represents a substantial clinical improvement over existing technologies for the treatment of adult patients with relapsed or refractory multiple myeloma after four or more prior lines of therapy, including an immunomodulatory agent, a proteasome inhibitor, and an anti-CD38 monoclonal antibody. We believe that the updated analysis information provided by the applicant demonstrated statistically significant and clinically meaningful improvements in ORR, OS, and PFS for patients treated with ABECMA®. We also agree with the applicant that ABECMA® fills an unmet need in the 4L+ treatment of RRMM as it offers a treatment option for patients unresponsive to currently available therapies.

After consideration of the public comments we received and the information included in the applicant's new technology add-on payment application, we have determined that ABECMA® meets the criteria for approval of the new technology add-on payment. Therefore, we are approving new technology add-on payments for this technology for FY 2022. Cases involving the use of ABECMA® that are eligible for new technology add-on payments will be identified by procedure codes XW033K7 (Introduction of idecabtagene vicleucel immunotherapy into peripheral vein, percutaneous approach, new technology group 7) or XW043K7 (Introduction of idecabtagene vicleucel immunotherapy into central vein, percutaneous approach, new technology group 7).

In its application, the applicant estimated that the cost of ABECMA® is $419,500.00 per patient. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS-DRG payment for the case. As a result, the maximum new technology add-on payment for a case involving the use of ABECMA® is $272,675.00 for FY 2022.

h. INDIGO Aspiration System With Lightning Aspiration Tubing

Penumbra, Inc. submitted an application for the INDIGO® Aspiration System with Lightning Tubing (“INDIGO® with Lightning”) for FY 2022. Per the applicant, INDIGO® with Lightning is a mechanical thrombectomy aspiration system used in the treatment of pulmonary embolism, deep vein thrombosis and peripheral arterial thromboembolism that optimizes thrombus removal by differentiating between thrombus and blood.

According to the applicant, INDIGO® with Lightning performs clot detection and removal via smart technology which enables the physician to determine when the catheter is in thrombus and when it is in patent flow resulting in blood loss reduction through intermittent aspiration mechanical thrombectomy. The applicant stated that INDIGO® with Lightning is used for the removal of fresh, soft emboli and thrombi from vessels of the peripheral arterial and venous systems, and for the treatment of pulmonary embolism. The applicant stated that the INDIGO® with Lightning is composed of a mechanical thrombectomy aspiration pump (known as the Penumbra Engine) that is packaged with INDIGO® CAT12 (12 French) and CAT8 (8 French) catheters as well as Lightning, a clot detection/blood loss reduction technology embedded in the Penumbra Engine pump and tubing.

Arterial thromboembolism can result in acute limb ischemia (ALI) which requires emergent treatment. Venous thromboembolism is a condition which includes both deep vein thrombosis (DVT) and pulmonary embolism (PE) and occurs in 1 to 2 individuals per 1000 per year and is predominantly a disease of older age. The 2020 American Society of Hematology guidelines for venous thromboembolism include recommendations for the treatment of patients with both pulmonary embolism and deep vein thrombosis, and recommended treatments include home care, systemic pharmacological thrombolysis, and procedural care.

Procedural care may include open procedures as well as catheter-directed thrombolysis and percutaneous mechanical thrombectomy. In catheter-directed thrombolysis, a thrombolytic agent is infused intravascularly adjacent to the clot burden through a percutaneous transcatheter. In percutaneous mechanical thrombectomy, the thrombus is lysed or removed mechanically. The therapies may be used separately or in conjunction with one another.

The applicant stated that mechanical thrombectomy may be performed with a variety of devices. These methods include aspiration thrombectomy, rheolytic thrombectomy, and fragmentation thrombectomy.

The applicant stated that INDIGO® with Lightning differs from other mechanical thrombectomy devices on the basis of the use of a mechanical pump to generate a vacuum for aspiration and “intelligent aspiration” which differentiates clots and patient blood flow, thereby limiting blood loss. The applicant states that other endovascular mechanical thrombectomy devices do not provide aspiration using a vacuum. According to the applicant, the Lightning tubing performs clot detection using a proprietary algorithm. According to the applicant, once this “smart technology” detects free-flowing blood, it indicates patent flow to the physician and begins intermittent aspiration resulting in less blood loss during the procedure.

The applicant submitted a request for a unique ICD-10-PCS code to identify the technology and was granted approval for the following procedure codes effective October 1, 2021:

INDIGO® with Lightning is a system with multiple components which have been reviewed by FDA both separately and as part of an overall system which includes catheters, tubing, and a vacuum pump. For the catheter portion of the system, INDIGO® aspiration catheter 12 (12 French) and separator 12 received FDA 510(k) clearance on May 28, 2020 for the removal of fresh, soft emboli and thrombi from vessels of the peripheral arterial and venous systems under FDA submission number K192981. The applicant stated that they submitted an application for FDA 510(k) clearance for that same technology (with a predicate which received clearance mentioned previously under submission number K192981) for indication of pulmonary embolism under FDA submission number K202821 for which clearance was completed on November 18, 2020. The INDIGO® aspiration catheter 12 and separator 12 received FDA 510(k) clearance for the peripheral arterial and venous system on the basis of similarity to an earlier version of the same catheter and separator, which itself received FDA 510(k) clearance on May 26, 2015 under FDA 510(k) number K142870 as part of the Penumbra Embolectomy System for the same indication. We note that the overall system received a second 510(k) clearance on December 20, 2019 under FDA 510(k) number K192833 for the added indication of PE.

With respect to the newness criterion for the tubing, the Lightning tubing received FDA 510(k) authorization for the removal of fresh, soft emboli and thrombi from vessels of the peripheral arterial and venous systems on March 13, 2020 under FDA 510(k) number K193244. The same tubing received FDA 510(k) authorization for pulmonary embolism on April 22, 2020 under FDA 510(k) number K200771, which was granted based on substantial similarity to the same manufacturer's device. The predicate device for the peripheral arterial and venous system was an earlier version of the tubing without Lighting which itself received FDA 510(k) authorization on May 3, 2018 under FDA 510(k) number K180939.

With respect to the newness criterion for the vacuum pump, the Penumbra Engine Pump and Canister received FDA 510(k) clearance for use in the peripheral arterial and venous systems (PAVS) on March 8, 2018 under FDA 510(k) number K180105. The following table summarizes the FDA approval information listed in this section.

The applicant has applied for new technology add-on payments for INDIGO® with Lightning when used for the treatment of venous thromboembolism, arterial thromboembolism, and pulmonary thromboembolism.

As discussed previously, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered “new” for purposes of new technology add-on payments.

With regard to the first criterion, whether a product uses the same or similar mechanism of action to achieve a therapeutic outcome, the applicant stated that INDIGO® with Lightning does not use the same or a similar mechanism of action when compared to an existing technology to achieve a therapeutic outcome. The applicant described differences between INDIGO® with Lightning and existing technologies based on the use of a mechanical pump to generate a vacuum for aspiration and the Lightning tubing, which the applicant stated limits blood loss and indicates clot versus patent flow. For pulmonary embolism and the peripheral system, the applicant identified Inari Flowtriever as an existing technology and noted that any aspiration provided using this system is provided via syringe as opposed to a vacuum pump. For the peripheral system, the applicant also identified Inari Flowtriever as using the same syringe method of aspiration. The applicant also identified two additional aspiration thrombectomy catheters, Angiojet® and Angiovac®, used in the peripheral system and suggested that Angiojet® also uses a syringe for aspiration and that Angiovac® utilizes an extracorporeal bypass circuit that is created outside the body consisting of an outflow line, a centrifugal pump, a filter and an inflow line.

With respect to the second criterion, whether a product is assigned to the same or a different MS-DRG, the applicant stated that services provided using this device would be captured under MS-DRGs 163-165 and 270-272. MS-DRGs 163-165 address major chest procedures and MS-DRGs 270-272 address other major cardiovascular procedures.

With respect to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population when compared to an existing technology, the applicant did not address this criterion directly in the application, but stated that the new use of the INDIGO® System with Lighting is for the most recent FDA indication (April 2020) in PE. The applicant further stated that PE is not the same disease as arterial and venous thromboembolism; the patient populations may overlap, but are not identical.

We noted the following concerns in the proposed rule (86 FR 25262 through 25263) regarding whether the technology meets the substantial similarity criteria and whether it should be considered new. While the applicant discussed the differences between INDIGO® with Lighting and products made by other manufacturers, the applicant did not provide enough information regarding how INDIGO® with Lightning differs in its components from the existing aspiration thrombectomy catheters on the market to determine whether the technology uses a unique mechanism of action. We questioned whether the mechanism of action of the pump is different than that of the existing aspiration thrombectomy systems that also use a pump rather than a syringe, and how the mechanism of action of the separator, which is part of the catheter portion of the device, is different from that of existing thrombectomy systems that deploy a device through the lumen of the catheter to break up the thrombus. We also noted that it was unclear what mechanism of action is used within the “smart technology” and how it may differ from other products which are intended to similarly reduce blood loss during the procedure. It was unclear if the “smart technology” resides within the pump, which was cleared by FDA 510(k) on March 8, 2018, or within the tubing, which was most recently cleared by FDA 510(k) on April 22, 2020. We noted that while the applicant did not directly address the third criterion within the application, based on the clinical uses of the device described in the application, we believed the INDIGO® with Lightning is intended for a patient population that is similar to the patient population treated by existing thrombectomy devices, including patients who receive percutaneous interventions for PE and peripheral arterial thromboembolism.

We noted that the predicate device for the vacuum pump, the Penumbra Engine Pump and Canister, received FDA 510(k) clearance for use in the peripheral arterial and venous systems on March 8, 2018 under FDA 510(k) number K180105 and therefore appears to no longer be considered new. We further noted that the catheter and tubing, as described in the 510(k) applications, appear to only have minor differences from their predicate devices such as length of tubing and shelf life, as opposed to elements that would affect the mechanism of action. If we determine that the catheter and tubing are substantially similar to the predicate devices cleared under FDA 510(k) numbers K142870 (May 26, 2015) and K180939 (May 3, 2018), respectively, the newness date of the INDIGO® with Lightning would correspond to the dates listed and therefore may no longer be considered new. We also noted that it is unclear whether the components of the system may be substantially similar to the overall system and whether the applicable newness date for each indication would therefore be the date of the overall system clearance for each indication, specifically May 26, 2015 for peripheral arterial and venous systems and December 20, 2019 for pulmonary embolism.

We invited public comment on whether INDIGO® with Lightning is substantially similar to other technologies and whether INDIGO® with Lightning meets the newness criterion.

Comment: Several commenters asserted that INDIGO® with Lightning was substantially similar to other technologies and did not meet the qualifications for newness. These commenters suggested that the mechanism of action for INDIGO® with Lightning is identical to both previous versions of the same device (INDIGO® without Lightning) and other similar devices on the market. Specifically, a commenter identified the following examples of vacuum-based mechanical thrombectomy systems: Angiodynamics AngioVac System, the Philips QuickClear Mechanical Thrombectomy System, the Walk Vascular JETi Peripheral Thrombectomy System, and the Inari FlowTriever System. This commenter asserted that while INDIGO® with Lightning may be unique in using a pump to create a vacuum, other devices create a vacuum and the method of creating the vacuum is not relevant and does not represent a new mechanism of action. On the subject of the automated intermittent aspiration, some commenters noted that the same action can be completed using manual methods on the versions of INDIGO® without Lightning, such as by manually compressing the tubing to halt and restart suction, so that the automation does not represent a unique mechanism of action.

Response: We thank the commenters for their input on the mechanism of action of INDIGO® with Lightning and have taken these comments into consideration in our evaluation of the newness criterion, which is discussed later in this section.

Comment: The applicant submitted a letter stating that INDIGO® with Lightning meets the newness criterion. The applicant provided clarification regarding the INDIGO® with Lightning device and stated that the system is composed of two components: The engine that generates the vacuum (and can be used for multiple patients) which is a capital expense, and the Lightning device, tubing, catheter, and valve which are supplied together as a set and are single-use. The applicant stated that the Lightning device is the element of the system which is the subject of this application for new technology. The applicant also responded to our concern regarding when the device was cleared by the FDA, because we noted different dates of clearance for the pump and the tubing. The applicant asserted that because the Lightning device was an element of the tubing, it was cleared by the FDA for different indications on March 13, 2020 (K193244) and April 22, 2020 (K200771). The applicant noted the INDIGO® device that was cleared by the FDA on May 26, 2015, was not relevant to the new technology application because it did not include the Lightning device.

In response to our question whether the “smart technology” resided in the pump or within the tubing, the applicant stated that the “smart technology” is contained in a standalone Lightning device, which is used once per patient and placed on top of the engine. The standalone Lightning device contains a computer, sensors, and a valve. The applicant asserted that the INDIGO® with Lightning represented a unique mechanism of action that involves an integrated, computer-run, proprietary, smart algorithm which allows for the removal of a blood clot while limiting blood loss. Per the applicant, the device itself controls the opening and closing of the valve which is distinct from manual operation. The applicant highlighted a number of competitor products and suggested that none of them have a systemic method to differentiate blood from a clot.

In response to our concerns regarding how the mechanism of action of the separator differs from other existing thrombectomy systems, the applicant stated that the separator is not distinct from other technologies but was not integral to the consideration of newness for the device.

One additional commenter noted support for INDIGO® with Lightning meeting the requirements for a novel mechanism of action, stating that no other competitive system uses a vacuum pump with automatic flow limitation.

Response: We appreciate the commenter's input. We also thank the applicant for the additional information and for their comment regarding the newness criterion, including the clarification that the Lightning technology is the subject of this application. We agree with the applicant and commenter that this technology represents a new mechanism of action due to the way in which sensors and smart technology control the opening and closing of the valve allowing automated intermittent aspiration, as distinct from individual users' ability to manually compress the tubing, as described by a commenter. We agree that based on the clarification on the nature of the Lightning technology and how it integrates into the overall INDIGO® system, that the appropriate FDA clearances to consider are those for the Lightning technology for the indications of PAVS and PE, March 13, 2020 and April 22, 2020 respectively.

After consideration of the public comments we received and information submitted by the applicant as part of its FY 2022 new technology add-on payment application for INDIGO® with Lightning, we believe that INDIGO® with Lightning has a unique mechanism of action in the treatment of patients for pulmonary embolism, deep vein thrombosis and peripheral arterial thromboembolism. Therefore, we believe that INDIGO® with Lightning is not substantially similar to existing treatment options and meets the newness criterion with the newness period beginning on March 13, 2020 for PAVS and April 22, 2020 for PE, the date on which the technology was cleared by FDA for each indication.

With regard to the cost criterion, the applicant searched the FY 2019 MedPAR claims data file with the FY 2019 Final Rule with Correction Notice IPPS Impact File to identify potential cases representing patients who may be eligible for treatment using the INDIGO® System. The applicant identified claims with any one of the following ICD-10-PCS codes for percutaneous mechanical thrombectomy:

In its analysis, the applicant identified a primary cohort to assess whether this therapy met the cost criterion. The previously listed ICD-10-PCS procedure codes were used to identify claims involving percutaneous procedures. The claim search conducted by the applicant resulted in 15,580 claims mapping to six MS-DRGs: 270 (Other Major Cardiovascular Procedures with MCC), 271 (Other Major Cardiovascular Procedures with CC), 272 (Other Major Cardiovascular Procedures without CC/MCC), 163 (Major Chest Procedures with MCC), 164 (Major Chest Procedures with CC), and 165 (Major Chest Procedures without CC/MCC).

The applicant determined an average unstandardized case weighted charge per case of $126,211.

The applicant did not remove charges for prior technology. The applicant stated that no prior technology is being replaced. The applicant then standardized the charges using the FY 2019 Final Rule with Correction Notice Impact File. Next, the applicant applied the 2-year inflation factor used in the FY 2021 IPPS/LTCH PPS final rule to calculate outlier threshold charges (1.13218). To calculate the charges for the new technology, the applicant used what it stated was the national average CCR for the Supplies and Equipment cost center of 0.299 from the FY 2021 IPPS final rule. However, we noted that the actual value for this cost center for FY 2021 was 0.297. The applicant calculated a final inflated average case-weighted standardized charge per case of $180,036, which exceeded the average case-weighted threshold amount of $126,211 by $53,825. The applicant stated that because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount, the therapy meets the cost criterion.

We invited public comment on whether INDIGO® with Lightning meets the cost criterion.

Comment: We received a public comment from the applicant on whether the INDIGO® Aspiration System with Lightning Aspiration Tubing meets the cost criterion. The applicant noted that CMS stated in the proposed rule that they did not remove charges for prior technology (86 FR 25265). The applicant clarified that in their cost analysis they did remove charges of $11,505 per case for existing technology based on a calculation of using the current price of $3,440 and dividing it by the FY 2019 national cost-to-charge ratio for supplies and equipment of 0.299 to determine charges for the existing technology. The applicant stated that they applied the national cost-to-charge ratio for supplies and equipment of 0.299 to the known cost of existing equipment because the claims data are from the FY 2019 MedPAR claims data file. The applicant believes this would have been the charges applied for the existing technology in 2019 and was therefore the most appropriate cost-to-charge ratio to use. The applicant further commented that they think it is important to note that in performing the cost calculation, they used the national average cost-to-charge ratio for the Supplies and Equipment cost center of 0.297 from the FY 2021 IPPS final rule. The applicant further commented that their application notes that they then added the weighted average charge for the new technology of $22,596 to the charges. The weighted average charge for the new technology (comprised of the catheter(s) and Lightning Device) is $6,711, which was divided by 0.297 to arrive at a charge of $22,596. The applicant noted that the appropriate charges for the existing technology were removed prior to standardizing the charges and the charges for the new technology were applied using the appropriate cost-to-charge ratio. The applicant stated that since the final inflated average case-weighted standardized charge per case of $180,036 exceeds the average case-weighted threshold amount of $126,211 that the INDIGO® System meets the cost criterion.

Response: We thank the applicant for their comment regarding the INDIGO® system meeting the cost criterion. Based on the information submitted by the applicant as part of its FY 2022 new technology add-on payment application, as discussed in the proposed rule (86 FR 25261 through 25266) and previously summarized and the comment received, we agree that the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount as previously stated. Therefore, the INDIGO® System meets the cost criterion.

With respect to the substantial clinical improvement criterion, the applicant asserted that the INDIGO® with Lightning represents a substantial clinical improvement over existing technologies because it results in lower rates of aspirated blood loss during the procedure, low major bleeding event rate, reduces blood loss, reduces ICU stays, and reduces procedure time. The applicant also suggested that the technology allows for revascularization without thrombolytics and no recurrence of pulmonary embolism after 30 days.

To support its application, the applicant submitted a reference to the EXTRACT-PE prospective, single-arm study across 22 sites comparing the use of INDIGO® without Lightning to systemic thrombolysis in 119 patients with PE who had not been previously treated with anti-thrombolytics or an adjunctive device within 48 hours. The applicant stated that this study was completed under FDA Investigational Device Exception (IDE) G170064. The applicant claimed that the EXTRACT-PE study showed the INDIGO® without Lightning led to a significant mean reduction of 0.43 in right ventricle/left ventricle (RV/LV) ratio (a measure associated with poor clinical outcomes when greater than 1) that corresponded to a 27.3 percent reduction at 48 hours after intervention. They also cited a low major adverse event composite rate of 1.7 percent within 48 hours, device usage of only 37 minutes and median ICU length of stay of 1 day. According to the applicant, rates of cardiac injury, pulmonary vascular injury, clinical deterioration, major bleeding, and device-related death at 48 hours were 0%, 1.7%, 1.7%, 1.7%, and 0.8%, respectively.

The applicant cited a poster of an unpublished retrospective case review study by Hastings of 18 patients with DVT treated with INDIGO® followed by anticoagulation. Primary technical success (defined as restoration of blood flow with minimal residual thrombus (<10%) without the need for a second session of treatment) was achieved in 15 patients. Three patients required adjunctive methods for successful clearance of thrombus, undergoing two sessions of treatment. Two patients had recurrence of DVT following single-session treatment, both of whom were asymptomatic at time of diagnosis.

The applicant cited the PRISM study, a single-arm, multicenter, retrospective analysis of 79 patients with arterial occlusion from 2018, to provide evidence that use of INDIGO® with Lightning has a low major bleeding event rate, can result in revascularization without thrombolytics, and causes no clinically significant distal embolization. The applicant also stated that the interim results of the INDIAN study, a prospective trial using INDIGO® without Lightning to treat patients with ALI showed no device-related adverse events or major bleeding complications.

The applicant asserted that an unpublished laboratory bench test using water found that the 20.3 mL/sec average flow rate of catheter with Lightning generates 18-fold reduction in blood loss when compared to the use of the same catheter and Penumbra engine pump without the Lightning technology. The applicant asserted that a bench test showed that the Penumbra aspiration pump demonstrates continuous pressure, as evidenced by a sustained −29 inHg (inches of Mercury) through 60 seconds versus a 60-ml syringe which starts at −27 Hg and drops to 0 in Hg within 18 seconds.

The applicant also asserted that an abstract of a single-center retrospective case-control trial of 38 patients by Muck, P., et al. comparing two versions of INDIGO® catheters (12F and 8F) showed that median blood loss was 250mL in the larger Lightning 12F arm (n=9, larger catheter) and 375mL in the 8F arm without Lightning (n=27, smaller catheter). Technical success (defined as greater than 70 percent thrombus reduction) was achieved in 77 percent of patients in the Lightning 12F arm compared to 18.5 percent in the 8F arm without Lightning. The applicant also asserted that this study showed that none (0/9) of the patients in the INDIGO® with Lightning group required post-procedure transfusion, whereas 18.5 percent (5/27) of the INDIGO® without Lightning group required post-procedure transfusion.

In the proposed rule (86 FR 25265 through 25266), we noted the following concerns in regard to the substantial improvement criterion. Specifically, in its application, the applicant did not explicitly state what the comparator was for each of its claims in support of substantial clinical improvement; for example, whether INDIGO® is being compared to systemic thrombolysis, percutaneous catheter directed thrombolysis, or other aspiration thrombectomy catheters. We stated that comparing INDIGO® to a medical treatment modality may not be appropriate since percutaneous interventions for PE and DVT have different clinical indications, risks, and benefits compared to medical or surgical interventions.

We also noted that the applicant relies mostly on studies of INDIGO® without Lightning to substantiate its claims regarding INDIGO® with Lightning. Of all the studies provided by the applicant, only one small, unpublished study of DVT patients by Muck, P., et al. includes patients treated with INDIGO® with Lightning (which has the intelligent aspiration) versus earlier versions of the applicant's device. We stated that the applicant did not demonstrate superior outcomes using INDIGO® with Lightning compared to INDIGO® without Lightning.

We noted that outcomes for INDIGO® for the rates of pulmonary vascular injury at 48 hours, clinical deterioration, major bleeding and device-related deaths were stated by the applicant as low compared to systemic thrombolysis, but were not compared to outcomes for existing aspiration thrombectomy devices which may be a more appropriate comparator. We further noted that in the poster study, all patients were maintained on anticoagulation following thrombectomy with INDIGO®, so it is difficult to assess the DVT recurrence rate (using INDIGO® alone) to support the claim that INDIGO® can be used with patients with high risk of bleeding.

We also noted that suction generated through a vacuum may not be superior to other mechanisms of generating negative pressure used in other existing aspiration catheters. A study comparing suction forces and vacuum pressure of Penumbra pump to a 60-mL syringe and pumps manufactured by several other manufacturers showed that all catheters transmit similar vacuum pressure regardless of pump or 60-mL syringe.

Finally, we questioned whether there is enough evidence to support that “intelligent aspiration” associated with INDIGO with Lightning provides a substantial clinical improvement over existing aspiration catheters from INDIGO® and existing devices where the aspiration is controlled manually. No direct comparison of blood loss between INDIGO® with Lightning catheter and existing aspiration thrombectomy devices from other manufacturers was provided, specifically catheters that reduce blood loss by returning the aspirated blood back to the patient. The unpublished bench test included with the application may have demonstrated a reduction in average volume of water aspirated using the INDIGO® Catheter with Lightning fully functional compared to the INDIGO® catheter with Lightning deactivated (valve pin fixed to the open position). However, this study was not designed to compare blood loss during a thrombectomy procedure between aspiration controlled by a human versus by the Lightning “intelligent aspiration.”

We invited public comment on whether INDIGO® with Lightning meets the substantial clinical improvement criterion.

Comment: Several commenters stated that they did not believe that INDIGO® with Lightning met the requirements for substantial clinical improvement. Some comments stated in general that their clinical experience with other competing mechanical thrombectomy products was superior. Other commenters noted that there was no published data to suggest that INDIGO® with Lightning offered improved outcomes over competitive products. Some commenters discussed personal experience with INDIGO® with Lightning and discussed concerns including a tendency for the catheter to be clogged with thrombus requiring removal and cleaning, which results in additional blood loss. A commenter noted their experience with many other products and asserted that blood loss was much higher using INDIGO® with Lightning. This same commenter stated that there was some difficulty in achieving good clearance of thrombus using INDIGO® with Lightning. A commenter reviewed the clinical evidence submitted by the applicant and asserted that no patients were treated with INDIGO® with Lightning in the studies demonstrating arterial or venous thromboembolism clinical evidence because the studies took place prior to the availability of the technology. The commenter also noted that the unpublished laboratory bench test which was submitted by the applicant used water as opposed to blood to demonstrate effectiveness. This same commenter asserted that only a single study of INDIGO® with Lightning was used to demonstrate clinical evidence and that it was an unpublished abstract which included nine patients with DVT. The same commenter then summarized a study of a competitive product, the Inari ClotTriever, stating that a multi-center study of DVT patients showed a median blood loss of 50ml. The same commenter summarized a multi-center study of pulmonary embolism patients treated with another competitive product, the Inari FlowTriever, that showed a median blood loss of 250ml. This commenter asserted that this evidence was both more robust due to the larger number of patients and demonstrated reduced blood loss when compared to evidence presented for INDIGO® with Lightning.

Response: We appreciate the commenters providing their personal experience with the device as well as their comments on the evidence that the applicant included provided and have taken these comments into consideration in our determination of substantial clinical improvement, which is discussed later in this section.

Comment: The applicant submitted a comment in response to our concerns regarding whether INDIGO® with Lightning meets the substantial clinical improvement criterion.

In response to the concern that the comparator for the submitted studies was unclear, the applicant stated that, in general, other aspiration thrombectomy systems are the appropriate comparators in the consideration of substantial clinical improvement for INDIGO® with Lightning. The applicant provided a table which indicated the comparators that were used in studies that were part of the application as well as one new study that was provided with the comment submission, summarized in the table below.

With regard to our concern that the application relied mostly on studies of INDIGO® without Lightning, the applicant described a recent presentation in May 2021 which compared the use of INDIGO® without Lightning to INDIGO® with Lightning. The applicant stated that the use of the intelligent aspiration associated with the Lightning device was associated with higher rates of technical success, less blood loss, and no need for blood transfusion when compared to continuous aspiration. With respect to technical success, the new submitted study reported that thrombus reduction of >70% or better was significantly higher in the Lightning group. The applicant further noted that 80% of patients in the Lightning group achieved thrombus reduction of >70% compared to only 20% of patients in the control group. With respect to blood loss, the investigators found a significant reduction in blood loss when using the Lightning Device (250mL versus 275mL blood loss, p=0.0044). They also noted that none of the patients in the Lightning group required a post-procedure transfusion whereas 16.7% of the patients without Lightning did.

With regard to our concern that it was difficult to assess the DVT recurrence rate (using the INDIGO® System alone) to support the claim that the INDIGO® System can be used with patients with high risk of bleeding because in the poster study submitted with the application, all patients were maintained on anticoagulation following thrombectomy with the INDIGO® System, the applicant asserted that anticoagulation for DVT is standard practice regardless of risk for bleeding. Thus, in order to isolate the outcomes associated with INDIGO®, the applicant stated it was necessary to maintain DVT patients on anticoagulation, as it is the standard of care.

With regard to our concern about whether suction generated through a vacuum (as in the case of the INDIGO® System) is superior to other mechanisms of generating negative pressure used in other existing aspiration catheters, the applicant noted that they do not believe the suction associated with the INDIGO® System, which is related to the Penumbra Engine, is relevant to the new technology add-on payment application because it is the Lightning device that is the component of import with respect to substantial clinical improvement, but noted their belief that the suction generated by the Penumbra engine is superior to other methods of generating a vacuum.

Several other commenters noted their support for INDIGO® with Lightning demonstrating substantial clinical improvement. Some of these commenters did not offer specific points of comparison but spoke to their personal clinical experience with the device. Other commenters pointed to the ability of INDIGO® with Lightning to reduce blood loss, increase the likelihood of completing treatment in a single session and reduce the required use of thrombolytics.

Response: We appreciate the comments and the additional data from the applicant received for INDIGO® with Lightning and have taken them into consideration in making our determination. We believe the applicant was able to address our concern regarding the continuation of anticoagulation for DVT. We also appreciate the clarification from the applicant regarding our concern that the Penumbra engine is not part of its application for new technology add-on payments, thereby resolving our concern with regard to the superiority of the vacuum suction. However, after review of all the data received to date, we continue to have concerns regarding the substantial clinical improvement criterion as noted in the FY 2022 IPPS/LTCH PPS proposed rule. Specifically, we remain concerned that the applicant primarily used data from studies that utilized INDIGO® without Lightning in their attempt to demonstrate superior outcomes using INDIGO® with Lightning which is the subject of this application. While the applicant provided an additional May 2021 presentation that compared INDIGO® with Lightning to INDIGO® without Lightning, we do not believe it is appropriate to consider INDIGO® without Lighting as a proxy for other existing mechanical thrombectomy devices as stated by the applicant. We note that multiple comments suggest that other mechanical thrombectomy devices may be superior to the comparator device of INDIGO® without Lightning, and the applicant did not provide data comparing INDIGO® with Lightning to any existing device (other than INDIGO® without Lightning) to demonstrate improved outcomes. For these reasons, we do not have sufficient evidence to support that INDIGO® with Lightning provides a substantial clinical improvement over existing aspiration catheters including INDIGO® and existing devices where the aspiration is controlled manually.

After consideration of all the information from the applicant, as well as the comments we received, we are unable to determine that INDIGO® with Lightning represents a substantial clinical improvement over existing technologies, and we are not approving new technology add-on payments for INDIGO® with Lightning for FY 2022.

i. Olumiant® (baricitinib)

Eli Lilly and Company submitted an application for new technology add-on payments for Olumiant® (baricitinib) for FY 2022. Olumiant® is a Janus kinase (JAK) 1 and 2 inhibitor used in combination with remdesivir as a treatment option for coronavirus disease 2019 (COVID-19), a respiratory disease caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). Olumiant® has not yet received marketing approval from FDA to treat COVID-19, but has received an emergency use authorization (EUA) by the FDA. Olumiant® has been previously approved by FDA for the treatment of adult patients with moderately to severely active rheumatoid arthritis, who have had inadequate response to one or more tumor necrosis factor (TNF) antagonist therapies.

The applicant stated that patients diagnosed with COVID-19 are at an elevated risk for excess morbidity and mortality due to the underlying SARS-CoV-2 infection and subsequent cytokine activation. The applicant stated that the cause of respiratory failure in COVID-19 is a hyperinflammatory state characterized by upregulation of multiple cytokines and that Olumiant® may be a viable treatment in patients with COVID-19 requiring supplemental oxygen, invasive mechanical ventilation, or extracorporeal membrane oxygenation (ECMO) because of its anti-inflammatory activity and ability to reverse dysregulated inflammatory markers in patients with COVID-19. The applicant noted treatment with baricitinib 4 mg resulted in reduced plasma levels of the cytokine IL-6 in hospitalized patients with COVID-19, a finding that was replicated after being observed in patients with rheumatoid arthritis. The applicant also claimed that Olumiant® potentially has anti-viral activity in inhibiting SARS-CoV-2 from entering and infecting lung cells due to its affinity for adaptor-associated kinase-1 (AAK1). The applicant noted that there are ongoing studies to evaluate the impact of the antiviral host activity of Olumiant®.

With respect to the newness criterion, Olumiant® received Emergency Use Authorization (EUA) from FDA on November 19, 2020 for the emergency use of Olumiant®, indicated for use in combination with remdesivir for the treatment of suspected or laboratory confirmed COVID-19 in certain hospitalized patients requiring supplemental oxygen, invasive mechanical ventilation, or extracorporeal membrane oxygenation (ECMO). The applicant stated that it intends to submit a supplemental new drug application (sNDA) for Olumiant®.

In the FY 2009 IPPS final rule (73 FR 48561 through 48563), we revised our regulations at § 412.87 to codify our longstanding practice of how CMS evaluates the eligibility criteria for new medical service or technology add-on payment applications. We stated that new technologies that have not received FDA approval do not meet the newness criterion. In addition, we stated we do not believe it is appropriate for CMS to determine whether a medical service or technology represents a substantial clinical improvement over existing technologies before the FDA makes a determination as to whether the medical service or technology is safe and effective. For these reasons, we first determine whether a new technology meets the newness criterion, and only if so, do we make a determination as to whether the technology meets the cost threshold and represents a substantial clinical improvement over existing medical services or technologies. We also finalized at 42 CFR 412.87(c) (subsequently redesignated as § 412.87(e)) that all applicants for new technology add-on payments must have FDA approval or clearance by July 1 of the year prior to the beginning of the fiscal year for which the application is being considered.

In the FY 2021 IPPS/LTCH PPS final rule, to more precisely describe the various types of FDA approvals, clearances, licensures, and classifications that we consider under our new technology add-on payment policy, we finalized a technical clarification to § 412.87(e)(2) to indicate that new technologies must receive FDA marketing authorization (for example, pre-market approval (PMA); 510(k) clearance; the granting of a De Novo classification request; approval of a New Drug Application (NDA); or Biologics License Application (BLA) licensure) by July 1 of the year prior to the beginning of the fiscal year for which the application is being considered. As noted in the FY 2021 IPPS/LTCH PPS final rule, this technical clarification did not change our longstanding policy for evaluating whether a technology is eligible for new technology add-on payment for a given fiscal year, and we continue to consider FDA marketing authorization as representing that a product has received FDA approval or clearance for purposes of eligibility for the new technology add-on payment under § 412.87(e)(2) (85 FR 58742).

An EUA by the FDA allows a product to be used for emergency use, but under our longstanding policy, we believe it would not be considered an FDA marketing authorization for the purpose of new technology add-on payments, as a product that is available only through an EUA is not considered to have FDA approval or clearance. Therefore, under the current regulations at 42 CFR 412.87(e)(2) and consistent with our longstanding policy of not considering eligibility for new technology add-on payments prior to a product receiving FDA approval or clearance, we believe a product available only through an EUA would not be eligible for new technology add-on payments.

We also refer the reader to our comment solicitation in section II.F.7. of the preamble of the proposed rule regarding how data reflecting the costs of a product with an EUA, which may become available upon authorization of the product for emergency use (but prior to FDA approval or clearance), should be considered for purposes of the 2-year to 3-year period of newness for new technology add-on payments for a product with or expected to receive an EUA, including whether the newness period should begin with the date of the EUA. With respect to Olumiant®, we specifically requested comment on whether the newness period for this technology would begin on November 19, 2020, the date of its EUA, when the product became available on the market. We summarize comments related to this comment solicitation and provide our responses as well as our finalized policy in section XXX of this final rule.

In response to the COVID-19 public health emergency (PHE), we established the New COVID-19 Treatments Add-on Payment (NCTAP) under the IPPS for COVID-19 cases that meet certain criteria (85 FR 71155). We believe that as drugs and biological products become available and are authorized for emergency use or approved by FDA for the treatment of COVID-19 in the inpatient setting, it is appropriate to increase the current IPPS payment amounts to mitigate any potential financial disincentives for hospitals to provide new COVID-19 treatments during the PHE. Therefore, effective for discharges occurring on or after November 2, 2020 and until the end of the PHE for COVID-19, we established the NCTAP to pay hospitals the lesser of (1) 65 percent of the operating outlier threshold for the claim or (2) 65 percent of the amount by which the costs of the case exceed the standard DRG payment, including the adjustment to the relative weight under section 3710 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, for certain cases that include the use of a drug or biological product currently authorized for emergency use or approved for treating COVID-19. Qualifying inpatient cases involving the use of Olumiant®, in combination with VEKLURY®, are currently eligible for NCTAP beginning November 19, 2020, the date Olumiant® received EUA, through the end of the PHE.

We stated in the proposed rule that we anticipated that there might be inpatient cases of COVID-19, beyond the end of the PHE, for which payment based on the assigned MS-DRG may not adequately reflect the additional cost of new COVID-19 treatments. In order to continue to mitigate potential financial disincentives for hospitals to provide new treatments, and to minimize any potential payment disruption immediately following the end of the PHE, we stated that we believe that the NCTAP should remain available for cases involving eligible treatments, including Olumiant®, in combination with VEKLURY®, for the remainder of the fiscal year in which the PHE ends (for example, until September 30, 2022). We refer the reader to our proposal in section II.F.8. of the preamble of the proposed rule to extend the NCTAP through the end of the fiscal year in which the PHE ends for certain products and discontinue the NCTAP for products approved for new technology add-on payments in FY 2022. We also refer the reader to section XXX of the preamble of this final rule, where we discuss our finalized policy to extend the NCTAP through the end of the fiscal year in which the PHE ends for all eligible products.

The applicant indicated that Olumiant® could be reported using the ICD-10-PCS codes 3E0DXGC (Introduction of other therapeutic substance into mouth and pharynx, external approach) or 3E0G7GC (Introduction of other therapeutic substance into upper GI, via natural or artificial opening) but stated that these codes do not uniquely identify the administration of Olumiant®. We noted that ICD-10-PCS codes XW0DXF5 (Introduction of other new technology therapeutic substance into mouth and pharynx, external approach, new technology group 5) and 3E0H7GC (Introduction of other therapeutic substance into lower G.I. via natural or artificial opening) could also be used to report use of Olumiant®. We noted that as of January 1, 2021, Olumiant® is uniquely identified by ICD-10-PCS codes XW0DXM6 (Introduction of baricitinib into mouth and pharynx, external approach, new technology group 6), XW0G7M6 (Introduction of baricitinib into upper GI, via natural or artificial opening, new technology group 6), and XW0H7M6 (Introduction of baricitinib into lower GI, via natural or artificial opening, new technology group 6).

As discussed previously, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered “new” for purposes of new technology add-on payments.

With respect to the first criterion, whether a product uses the same or similar mechanism of action to achieve a therapeutic outcome, according to the applicant, Olumiant® does not use the same or a similar mechanism of action when compared to an existing technology to achieve a therapeutic outcome, as there are no JAK inhibitor therapies that have received an EUA or an approval from FDA to treat COVID-19.

The applicant notes that currently there is one therapy approved by FDA to treat COVID-19 in hospital inpatients, remdesivir, and one therapy, besides Olumiant®, that has received EUA for the treatment of COVID-19, convalescent plasma. The applicant claims that the mechanism of action for both of these treatments differs from Olumiant®, which works as a JAK inhibitor.

With respect to the second criterion, whether a product is assigned to the same or a different MS-DRG, the applicant stated that there are no JAK inhibitor therapies that have received an EUA or an approval from FDA for the treatment of patients with COVID-19 and that Olumiant® could therefore not be assigned to the same MS-DRG as existing technologies.

With respect to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, according to the applicant, Olumiant® represents a potential new treatment option for adult and pediatric patients 2 years or older with suspected or laboratory-confirmed COVID-19 requiring supplemental oxygen, invasive mechanical ventilation, or extracorporeal membrane oxygenation (ECMO). The applicant also stated that COVID-19 is an entirely distinct disease from those caused by other coronaviruses including severe acute respiratory syndrome (SARS) and the Middle East respiratory syndrome coronavirus (MERS-CoV).

In summary, the applicant asserted that Olumiant® is not substantially similar to other available therapies because, as a JAK inhibitor, it has a unique mechanism of action; there are no other products assigned to the same MS-DRG; and it treats a different patient population and disease—COVID-19. However, we stated in the proposed rule that although there may not be any other JAK inhibitors for the treatment of COVID-19 assigned to the same MS-DRG as Olumiant®, Olumiant® may map to the same MS-DRG as other existing COVID-19 treatments. We also noted that Olumiant® involves the treatment of the same patient population and disease as other treatments for COVID-19, as Olumiant® is given to the same patients as remdesivir due to the EUA indication.

As discussed in section II.F.7 of the preamble of the proposed rule, we requested comment regarding how data reflecting the costs of a product with an EUA, which may become available upon authorization of the product for emergency use (but prior to FDA approval or clearance), should be considered for purposes of the 2-year to 3-year period of newness for new technology add-on payments for a product with or expected to receive an EUA, including whether the newness period should begin with the date of the EUA. We also specifically requested comment on whether the newness period for Olumiant® would begin on November 19, 2020, the date of its EUA, when the product became available on the market. We summarize comments related to this comment solicitation and provide our responses as well as our finalized policy in section XXX of this final rule.

As previously discussed, under the regulations at 42 CFR 412.87(e)(2) and consistent with our longstanding policy of not considering eligibility for new technology add-on payments prior to a product receiving FDA approval or clearance, we believe a product available only through an EUA would not be eligible for new technology add-on payments.

We invited public comment on whether Olumiant® meets the newness criterion.

Comment: In response to CMS' statement in the proposed rule that an EUA would not be considered FDA marketing authorization for the purpose of new technology add-on payments, as a product that is available only through an EUA is not considered to have FDA approval or clearance, and therefore a product available only through an EUA would not be eligible for new technology add-on payments, the applicant submitted a comment. The applicant stated their belief that market authorization, not approval, is the criterion for new technology add-on payment eligibility and that an EUA is a formal FDA authorization to market. Further, the applicant stated that if an EUA was sufficient for CMS to authorize payment enhancements on COVID treatments under NCTAP, the same EUA should suffice for the new technology add-on payment's marketing authorization requirement and that in the case of COVID therapies, CMS should harmonize its payment policies to ensure consistency and prevent lapses in reimbursement that could lead to access barriers for patients. The applicant requested that CMS reconsider its stated position and acknowledge that an active EUA issued by the FDA for a COVID-19 treatment prior to July 1, 2021 is an appropriate form of authorization for the purposes of meeting the FY 2022 new technology add-on payment eligibility requirements.

Response: We thank the applicant for their comment. With regard to the applicant's statement that market authorization, not approval, is the criterion for new technology add-on payment eligibility, as we noted in the proposed rule, we revised our regulations at § 412.87 in the FY 2009 IPPS final rule (73 FR 48561 through 48563) to codify our longstanding practice of how CMS evaluates the eligibility criteria for new technology add-on payment applications. We specifically stated that new technologies that have not received FDA approval do not meet the newness criterion. More recently, in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58742), we finalized a technical clarification to the language of § 412.87 to more precisely describe the various types of FDA approvals, clearances, licensures, and classifications that we consider under our new technology add-on payment policy. As we stated at that time, this technical clarification did not change or modify the policy set forth in existing § 412.87(e)(2). We explained that under our current policy, in evaluating whether a technology is eligible for new technology add-on payment for a given fiscal year, we consider whether the technology has received marketing authorization by July 1 (such as Premarket Approval (PMA); 510(k) clearance; the granting of a De Novo classification request; or approval of a New Drug Application (NDA)). Accordingly, and consistent with our longstanding practice, we continue to consider FDA marketing authorization as representing that a product has received FDA approval or clearance for purposes of eligibility for the new technology add-on payment under § 412.87(e)(2).

In the FDA's press release regarding its issuance of an EUA for Olumiant^TM, it states that “[t]he issuance of an EUA is different than an FDA approval.” To determine whether to issue an EUA, FDA “evaluates the totality of available scientific evidence and carefully balances any known or potential risks with any known or potential benefits of the product for use during an emergency.” This standard is different from the standard that FDA uses to evaluate whether to approve a drug. Therefore, we continue to believe that, for the purposes of new technology add-on payments, a product that is only available through an EUA is not considered to have FDA approval or clearance and therefore is not considered eligible for new technology add-on payments.

In response to the applicant's comment that an EUA should suffice for the new technology add-on payment's marketing authorization requirement because an EUA was sufficient for CMS to authorize payment enhancements for COVID-19 treatments under NCTAP, we note that there are distinct eligibility criteria for new technology add-on payment as compared to NCTAP. As noted previously, historically, CMS has stated that for the purposes of new technology add-on payments, that new technologies that have not received FDA approval do not meet the newness criterion. In addition to the newness criterion, there is a substantial clinical improvement criterion to qualify for new technology add-on payments that is not required for NCTAP. We have previously stated (73 FR 48561 through 48563) that we do not believe it is appropriate for CMS to determine whether a medical service or technology represents a substantial clinical improvement over existing technologies before the FDA makes a determination as to whether the medical service or technology is safe and effective. For these reasons, we first determine whether a new technology meets the newness criterion, and only if so, do we make a determination as to whether the technology meets the cost threshold and represents a substantial clinical improvement over existing medical services or technologies. As stated by FDA in their November 19, 2020 news release announcing the issuance of the EUA for Olumiant®, “the safety and effectiveness of this investigational therapy for use in the treatment of COVID-19 continues to be evaluated.” Therefore, while we believe that the FDA's issuance of an EUA for Olumiant® is sufficient to support NCTAP eligibility to ensure that providers are not disincentivized to provide this treatment to patients with COVID-19, we do not believe that it would be appropriate for us to make a determination whether Olumiant provides a substantial clinical improvement over existing technologies for the purposes of new technology add-on payments.

In response to the applicant's comment that CMS should harmonize its payment policies to ensure consistency and prevent lapses in reimbursement that could lead to access barriers for patients, we do not believe that our position that an EUA is not considered an FDA marketing authorization for the purpose of new technology add-on payments will lead to patient access issues. As discussed in section XXX of this final rule, we are finalizing our proposal to extend the NCTAP through the end of the fiscal year in which the PHE ends for all eligible products. This means that qualifying inpatient cases involving the use of Olumiant®, in combination with VEKLURY®, will continue to be eligible for NCTAP through the end of the fiscal year in which the PHE ends. Additionally, as stated in the IPPS/LTCH PPS proposed rule (86 FR 25395), if a product with an EUA receives FDA approval by July 1, 2022, it would be eligible for consideration of new technology add-on payments beginning FY 2023, and new technology add-on payments, if approved, would begin on October 1, 2022 (the beginning of FY 2023).

We refer the readers to section XXX of this final rule for a discussion of the comment solicitation including a summary of the comments received.

As stated previously, Olumiant® has an EUA and is indicated for use in combination with remdesivir for the treatment of suspected or laboratory confirmed COVID-19 in certain hospitalized patients requiring supplemental oxygen, invasive mechanical ventilation, or extracorporeal membrane oxygenation (ECMO). However, because Olumiant® did not receive FDA clearance or approval by July 1, 2021 for this indication, it is not eligible for consideration for new technology add-on payments for FY 2022 and therefore and we are not approving new technology add-on payments for Olumiant® for FY 2022. We note that we received public comments from the applicant regarding the substantial clinical improvement criterion. However, because Olumiant® is ineligible for consideration for new technology add-on payments for FY 2022 because it did not receive FDA clearance or approval by July 1, 2021, we are not summarizing nor responding to public comments regarding the substantial clinical improvement or cost criteria for this application in this final rule. Under our finalized policy as discussed in section XXX of this final rule, qualifying inpatient cases involving the use of Olumiant®, in combination with VEKLURY®, are currently eligible for NCTAP beginning November 19, 2020, the date Olumiant® received EUA, through the end of the fiscal year in which the PHE ends.

j. Pure-Vu® System

Motus GI holdings, Inc. submitted an application for new technology add-on payments for the Pure-Vu® System for FY 2022. The Pure-Vu® System is an FDA cleared system designed to connect to currently marketed colonoscopes to provide high intensity, intra-procedural cleansing of the colon during a colonoscopy. According to the applicant, the Pure-Vu® System is indicated for use in patients requiring therapeutic or diagnostic colonoscopies where the bowel has not been adequately prepared. The applicant asserted that the Pure-Vu® System would be used in situations such as a lower gastrointestinal bleed (LGIB), as LGIB does not allow for adequate bowel preparation.

The applicant asserted that the Pure-Vu® System device helps to avoid aborted and delayed colonoscopy procedures due to poor visualization of the colon mucosa by creating a unique High Intensity, Pulsed Vortex Irrigation Jet that consists of a mixture of air and water to break-up fecal matter, blood clots, and other debris, and scrub the walls of the colon while simultaneously removing the debris through two suction channels. The applicant stated that the suction channels have a sensor to detect the formation of a clog in the channels, triggering the system to automatically purge and then revert to suction mode once the channel is clear. According to the applicant, this combination of the agitation of the fluid in the colon via the pulsed vortex irrigation and simultaneous removal of the debris allows the physician to visualize the colon and achieve a successful colonoscopy or other advanced procedure through the colonoscope even if the patient is not properly prepped and has debris either blocking the ability to navigate the colon or covering the colon wall obscuring the mucosa and any pathology that may be present. The applicant asserted that the constant volume suction pumps do not cause the colon to collapse, which allows the physician to continue to navigate the colon while cleansing and avoids the need to constantly insufflate the colon, which may be required with other colonoscopy irrigation systems.

The applicant stated that the Pure-Vu® System is comprised of a workstation that controls the function of the system, a disposable oversleeve that is mounted on a colonoscope and inserted into the patient, and a disposable connector with tubing (umbilical tubing with main connector) that provides the interface between the workstation, the oversleeve, and off the shelf waste containers.

The applicant explained that the workstation has two main functions: Cleansing via irrigation and evacuation, and acting as the user interface of the system. The applicant explained that the irrigation into the colon is achieved by an electrical pump that supplies pressurized gas (air) and a peristaltic pump that supplies the liquid (water or saline). According to the applicant, the pressurized gas and liquid flow through the “main connector” and are mixed upon entry into the umbilical tubing that connects to the oversleeve. The applicant explained that the gas pressure and flow are controlled via regulators and the flow is adjusted up or down depending on the cleansing mode selected. The applicant stated that a foot pedal connected to the user interface activates the main functions of the system so that the user's hands are free to perform the colonoscope procedure in a standard fashion.

The applicant stated that the evacuation mode (also referred to as suction) removes fecal matter and fluids out of the colon. The applicant noted that the evacuation function is active during cleansing so that fluid is inserted and removed from the colon simultaneously. The applicant explained that the evacuation pumps are designed in a manner that prevents the colon from collapsing when suctioning, which facilitates the ability to simultaneously irrigate and evacuate the colon. According to the applicant, during evacuation, the system continuously monitors the pressure in the evacuation channels of the oversleeve and if the pressure drops below pre-set limits the pumps will automatically reverse the flow. The applicant explained that the clog sensor triggers the system to automatically purge the material out of the channel and back into the colon where it can be further emulsified by the Pulsed Vortex Irrigation Jet, and then automatically reverts back into evacuation mode once the channel is cleared. The applicant stated that the evacuation (suction) that drains fecal matter and fluids out of the colon is generated by peristaltic pumps that can rotate in both directions, either to evacuate fluids and fecal matter from the colon through the evacuation tubes and into a waste container, or while in the reverse direction, to purge the evacuation tubes. The applicant claimed the suction created by this type of pump creates a constant volume draw of material from the colon and therefore prevents the colon from collapsing rapidly. According to the applicant, purging of evacuation tubes may be activated in two ways: The purging cycle is automatically activated when low pressure is noted by the evacuation-line sensor (it is also activated for the first 0.5 seconds when evacuation is activated to make sure the line is clear from the start); or a manual purge may be activated by the user by pushing the “manual purge” button on the foot pedal. The applicant claimed the pressure-sensing channel is kept patent by using an air perfusion mechanism where an electrical pump is used to perfuse air through the main connector and into the oversleeve, while the sensor located in the workstation calculates the pressure via sensing of the channel.

The applicant explained the Pure-Vu® System is loaded over a colonoscope and that the colonoscope with the Pure-Vu® oversleeve is advanced through the colon in the same manner as a standard colonoscopy. The applicant stated that the body of the oversleeve consists of inner and outer sleeves with tubes intended for providing fluid path for the cleansing irrigation (2X), the evacuation of fluids (2X), the evacuation sensor (1X) and that the flexible head is at the distal end of the oversleeve and is designed to align with the colonoscope's distal end in a consistent orientation. The applicant explained that the distal cleansing and evacuation head contains the irrigation ports, evacuation openings, and a sensing port. According to the applicant, the system gives the physician the control to cleanse the colon as needed based on visual feedback from the colonoscope to make sure they have an unobstructed view of the colon mucosa to detect and treat any pathology. The applicant noted that since the Pure-Vu® System does not interfere with the working channel of the colonoscope, the physician is able to perform all diagnostic or therapeutic interventions in a standard fashion with an unobstructed field of view.

According to the applicant, multiple studies have shown that inadequate bowel visualization leads to missed pathology, delayed diagnosis, extended hospital stay, and in some cases, additional therapy being administered, especially in the acute LGIB population, which is the most common indication for inpatients that require colonoscopy. Unknown abdominal pain, infection, and foreign body removal were also cited by the applicant as being common indications for an inpatient colonoscopy.

The applicant explained that when a patient with LGIB is admitted to the hospital, they are stabilized and then started on bowel preparation for the colonoscopy procedure. The applicant claimed that the patient typically is placed on a liquid-only diet while consuming 4-6 liters of polyethylene glycol (PEG) based solution until the rectal effluent is clear. If the rectal effluent is not clear, additional bowel preparation is prescribed. The applicant stated that for severe LGIB cases, a patient is prescribed to consume a rapid purge of 1 liter every 30-45 minutes with a total volume of 4-14 liters, which could lead to purgative intolerance or vomiting. The applicant claimed that even in situations where bowel preparation has been completed, and clear rectal effluent while on a clear liquid diet has been confirmed, there are no guarantees that a patient's bowel is clean for a successful colonoscopy. The applicant submitted data from a study by the Cleveland Clinic showing 51 percent of 8,819 patients observed over a 4-year period were inadequately prepared for colonoscopies, leading to one extra day in the hospital compared to patients that were adequately prepared. The applicant cited another study, by Northwestern University, demonstrating an association between inadequate bowel preparation and increased length of stay (LOS) in hospitals, with inadequately prepared patients staying two more days than adequately prepared patients on average. The applicant claimed additional time spent in hospitals increases the patient's exposure to risks of hospital-acquired infections. The applicant claimed this risk is especially impactful to patients who are admitted for LGIB, which is seen at a higher prevalence in the elderly population. The applicant stated in the elderly population, continuous bowel preparation also poses increased risk due to their higher comorbidities and potential for electrolyte imbalances such as hyperphosphatemia, hypocalcemia, and hypokalemia.

The applicant cited a practical guide authored by Kim B., et al., to assert that poor visualization of the colon mucosa has a direct effect on the ability to detect the presence of a GI bleed or the aftermath stigmata and administer treatment successfully. The applicant used the Boston Bowel Preparation Scale (BBPS), developed by Lai E. et al., as a reliable method to measure bowel preparation. The applicant stated that the scale is a range (0-9) of dirtiest to cleanest for the whole colon and 0 to 3 for each of the 3 segments of the colon; the right colon (including the cecum and ascending colon), the transverse colon (including the hepatic and splenic flexures), and the left colon (including the descending colon, sigmoid colon, and rectum). Therefore, the maximum BBPS score for a perfectly clean colon without any residual liquid is nine and the minimum BBPS score for an unprepared colon is zero. The points are assigned as follows: zero = Unprepared colon segment with mucosa not seen due to solid stool that cannot be cleared; one = Portion of mucosa of the colon segment seen, but other areas of the colon segment not well seen due to staining, residual stool and/or opaque liquid; two = Minor amount of residual staining, small fragments of stool and/or opaque liquid, but mucosa of colon segment seen well; three = Entire mucosa of colon segment seen well with no residual staining, small fragments of stool or opaque liquid.

The applicant stated that evidence-based guidelines and clinical reviews in high impact biomedical journals recommend colonoscopy as the preferred initial modality for the diagnosis and treatment of acute lower gastrointestinal bleeding. The applicant stated that colonoscopy has been less frequently utilized than might otherwise be indicated because it suffers from the significant disadvantage of requiring the need for a large volume bowel preparation. The applicant states that even with a bowel preparation, poor visualization often occurs because of a poorly prepared colon. Based on these assertions, the applicant inferred that colonoscopy for acute lower gastrointestinal bleeding would be much more utilized and lead to more diagnoses and interventions with intraprocedural bowel preparation, which puts the control of the visualization (cleanliness) of the colon mucosa in the hands of the endoscopist. The applicant further stated it is important to appreciate that alternatives to colonoscopy, including angiography and vascular embolization treatments to create hemostasis, have risks of ischemic vascular injury, retroperitoneal bleeding and acute renal injury. The applicant stated that aside from the colonoscopy, other modalities such as tagged red blood cell scans, computed tomography (CT) angiograms, and mesenteric angiographies all require an active source of bleed in order to achieve a successful diagnostic yield. The applicant claimed that even when diagnosis is achieved using these modalities, a colonoscopy may still be ordered to treat the source of the bleed via epinephrine injections and clipping and thermal therapies, to prevent potential surgical interventions.

With respect to the newness criterion, the Pure-Vu® System first received FDA 510(k) clearance on September 22, 2016 under 510(k) number K60015. Per the applicant, this initial device was very cumbersome to set up and required direct support from the company and therefore was not viable for a small company with limited resources to market the device. The applicant noted that the initial device could have been sold starting on January 27, 2017 when the first device came off the manufacturing line. Per the applicant, the device was allocated for clinical evaluations but 10 institutions throughout the country purchased the device outside of a clinical study, primarily to allow physicians to try the product prior to committing to a clinical trial. The applicant further noted that minor modifications were made to the Pure-Vu System in additional 510(k) clearances dated December 12, 2017 and June 21, 2018. The current marketed Pure-Vu System was then granted 510(k) clearance on June 6, 2019 under 510(k) number K191220. Per the applicant, this clearance changed the entire set-up of the device, redesigned the user interface, and reduced the size, among other changes. According to the applicant, this updated version was commercially available as of September 19, 2019.

The applicant submitted a request for approval for a unique ICD-10-PCS code for the use of the Pure-Vu® System technology and was granted approval for the following procedure code effective October 1, 2021: XDPH8K7 (Irrigation of lower GI using intraoperative single-use oversleeve, via natural or artificial opening endoscopic, new technology group 7).

If a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and therefore would not be considered “new” for purposes of new technology add-on payments.

With respect to the first criterion, whether a product uses the same or similar mechanism of action to achieve a therapeutic outcome, the applicant asserted that the Pure-Vu® System has a different mechanism of action than existing technologies due to its ability to break up and remove a high volume of debris from the colon and dislodge adherent films from the colon wall in a safe manner that cannot be achieved with irrigation done through the working channel of a colonoscope. The applicant also asserted that due to the controlled simultaneous removal of the debris and fluid by the evacuation pumps in the system, the Pure-Vu® System eliminates the likelihood of creating a fluid load in the colon, which cannot be achieved with any other device on the market. The applicant further asserted a differing mechanism of action via the ability to sense and automatically clear a blockage versus manual suction through the working channel of a colonoscope, which can clog quickly if there is any appreciable debris. Lastly, the applicant explained that the Pure-Vu® System is an oversleeve device that allows use of the working channel of the colonoscope to be open and allows therapy to be administered in tandem with cleansing, unlike existing technologies on the market.

The applicant noted that the ClearPath system, a colonoscopy system by the company Easy Glide, received FDA clearance, but according to the applicant, was never fully brought to the US market. ClearPath was listed as the predicate device for the initial version of the Pure-Vu System® approved on September 22, 2016 (FDA 510(K) number K160015), in which both devices are described as able to irrigate and suction at any time during the procedure without any tools needing to be removed from the colonoscope working channel. The applicant claimed that this system did not have the High Intensity Pulsed Vortex Irrigation Jet and controlled suction capabilities with the sensing and auto purge technology that is critical to get the desired clinical outcome.

With respect to the second criterion, whether a product is assigned to the same or a different MS-DRG, the applicant stated that the Pure-Vu System is assigned to the same MS-DRGs as existing technologies. The applicant lists 21 MS-DRGs as being applicable, with MS-DRG 378 (gastrointestinal hemorrhage with complication or comorbidity (CC)) accounting for 37.1 percent of cases, and MS-DRG 377 (gastrointestinal hemorrhage with major complication or comorbidity (MCC)) accounting for 18.9 percent of total cases.

With respect to the third criterion, whether the new use of technology involves the treatment of the same or similar type of disease and the same or similar patient population when compared to an existing technology, the applicant stated that the Pure-Vu System® does involve treatment of the same or similar type of disease and patient population as existing technology.

In the proposed rule, after reviewing the information submitted by the applicant, we noted that we were unclear whether the Pure-Vu® System's mechanism of action is similar to that of the version of the product that received initial 510(k) clearance that was approved on September 22, 2016 or other versions of the system. In addition, with regard to the previous versions of Pure-Vu®, we were unsure if the limited availability noted by the applicant would allow the technology to be considered commercially available. We were also unclear what the applicant meants regarding the ClearPath system being not fully brought to the U.S. market. We stated that if the ClearPath system and/or earlier versions of the Pure-Vu® System were considered to be available on the U.S. market, then we are concerned that the current version of Pure-Vu® would no longer be considered new, as we believe it may be substantially similar to ClearPath and/or earlier versions of the Pure-Vu® System because they also allow for irrigation and suction of the colon without utilizing the working channel. We stated that if the current version of Pure-Vu is substantially similar to ClearPath and/or previous versions, then it appeared that the current Pure-Vu system may no longer be within the newness period. We further noted that though the applicant states the Pure-Vu® System features a high intensity pulsed vortex irrigation jet and controlled suction capabilities with sensing and auto purge technology, the Pure-Vu® System irrigates the colon using water and gas like other existing irrigation methods. We were therefore uncertain as to whether these features of the Pure-Vu® System result in a new mechanism of action. We invited public comment on whether the Pure-Vu® System has a new mechanism of action compared to these predicate devices.

We invited public comments on whether the Pure-Vu® System is substantially similar to existing technologies and whether it meets the newness criterion.

Comment: The applicant submitted a letter that stated the Pure-Vu® System meets the newness criterion. The applicant provided clarifying information regarding the mechanisms of action of the Pure-Vu® System compared to its predicate device, the ClearPath system. The applicant stated that the predicate device, ClearPath, allowed for much higher fluid flow rates to raise irrigation pressure, whereas the Pure-Vu® System can mix gas into the fluid to create the pulsatile action of the irrigation jet with a lower fluid load in the colon. Additionally, the applicant stated that the Pure-Vu® System has the ability to simultaneously irrigate and suction fluid and debris, whereas the ClearPath system was only able to do one or the other, similar to a colonoscope. The applicant further stated that the Pure-Vu® System maintains a built-in suction system that uses a constant volume suction pump and autopurge functions that do not cause the colon to collapse, whereas the suction in the ClearPath system was the same as that of using the working channel of a colonoscope, which tends to collapse the lumen of the colon and, therefore, requires the endoscopist to continually insufflate the colon to provide patency and visualization. Finally, the applicant stated that the irrigation and suction in the Pure-Vu® System are self-contained (without need to plug into wall suction), whereas the ClearPath system needed to connect to the wall suction in the hospital room. The applicant stated that the flexibility of the Pure-Vu® System is beneficial in performing cases in the ICU where availability of vacuum ports can be problematic.

The applicant also addressed market availability by stating that early versions of the Pure-Vu® System after the original 510(k) in September 2016 were only sold on a limited basis as part of a beta launch to allow potential investigators to evaluate the Gen 1 Pure-Vu® System to determine if they would be interested in participating in clinical trials. The applicant stated that after initial feedback was received for the Gen 1 Pure-Vu® System, the company decided to not make the product available to the market until the system was redesigned. The applicant reiterated that the commercial version (Gen 2) was subsequently FDA cleared in June 2019 and became commercially available in September 2019.

Response: We appreciate the additional information from the applicant on whether the product meets the newness criterion. After consideration of the information submitted by the applicant in their comment and as part of its FY 2022 new technology add-on payment application for the Pure-Vu® System, we agree that the Pure-Vu® System has a new mechanism of action as compared to the ClearPath system and traditional colonoscopes because of the Pure-Vu® System's oversleeve design, which enable use of irrigation and suction while leaving the working channel available for therapeutic interventions, as well as the ability to simultaneously irrigate and suction fluid and debris. We note that the applicant did not respond to our concern with regard to whether the Pure-Vu System has a new mechanism of action as compared to the predicate version and therefore we believe the two versions are substantially similar as they both allow for simultaneous irrigation and suction of the colon without utilizing the working channel. Based on further information from the applicant regarding the market availability of the predicate version, it appears that the predicate Gen 1 version of the Pure-Vu System cleared in 2016 was available for sale on a limited basis. The applicant maintains that it was not on the market. Therefore, without additional information, we are unsure with regard to the appropriate date on which the newness period should begin and whether it is new for FY 2022. However, based on the information from the applicant, it appears that the predicate Gen 1 version of the Pure-Vu System cleared in 2016 was available for sale on a limited basis. The applicant maintains that it was not on the market. Therefore, without additional information, we are unsure with regard to the appropriate date on which the newness period should begin and whether it is new for FY 2022.

With regard to the cost criterion, the applicant searched the FY 2019 MedPAR claims data file with the FY 2019 Final Rule with Correction Notice IPPS Impact File to identify potential cases representing patients who may be eligible for treatment using the Pure-Vu® System. The applicant identified claims that reported an ICD-10-CM diagnosis code of ICD-10-CM Z12.11 (Encounter for screening for malignant neoplasm of colon), K92.2 (Gastrointestinal hemorrhage, unspecified), D50.0 (Iron deficiency anemia secondary to blood loss (chronic)), and C18*._ (malignant neoplasm of colon). The ICD-10-PCS procedure codes listed in following table were used to identify claims involving colonoscopy procedures.

The claim search conducted by the applicant resulted in 163,236 claims mapping to 633 MS-DRGs. The applicant stated that MS-DRGs 377 (G.I. Hemorrhage W MCC), 378 (G.I. Hemorrhage W CC), and 379 (G.I. Hemorrhage W/O CC/MCC) were the most common MS-DRGs to which cases reporting the listed ICD-10-PCS codes were assigned. The applicant stated that the large number of DRGs to which these cases were assigned suggests that patients were admitted to the hospital for a wide variety of reasons, but during the course of their hospital stay the patients received a colonoscopy. According to the applicant, since GI bleeding is among the most common reasons for a patient needing an urgent colonoscopy, MS-DRGs 377-379 would be expected to be the most common MS-DRGs to which cases involving the Pure-Vu technology would be assigned. Lastly, the applicant did not have any data available to suggest any specific reasons why potential patients who would be eligible for the Pure-Vu technology would map to specific MS-DRGs identified based on the claims search, such as MS-DRG 291 (Heart Failure and Stroke).

The applicant determined an average unstandardized case weighted charge per case of $63,265.

The applicant did not remove charges for prior technology. The applicant stated that no prior technology is being replaced. The applicant then standardized the charges using the FY 2019 Final Rule with Correction Notice Impact File. Next, the applicant applied the 2-year inflation factor used in the FY 2021 IPPS/LTCH PPS final rule to calculate outlier threshold charges (1.13218). To calculate the charges for the new technology, the applicant used the national average CCR for the Supplies and Equipment cost center of 0.297 from the FY 2021 Final IPPS rule. The applicant calculated a final inflated average case-weighted standardized charge per case of $93,914, which exceeded the average case-weighted threshold amount of $63,265 by $30,649. The applicant stated that because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount, the therapy meets the cost criterion.

After reviewing the information submitted by the applicant as part of its FY 2022 new technology add-on payment application for the Pure-Vu® System, we noted that the MS-DRGs used in the cost analysis were not limited to those describing conditions likely to require a colonoscopy. For example, the applicant included cases assigned to MS-DRG 291 (Heart Failure and Shock with MCC). When included in the cost analysis, the assumption made is that all 1,948 cases for heart failure also had a colonoscopy performed where the technology could have potentially been utilized. We questioned whether all cases identified by the applicant appropriately represent potential cases eligible for the Pure-Vu® System. We invited public comment on whether the Pure-Vu® System meets the cost criterion.

Comment: The applicant, submitted a comment in response to concerns on whether the Pure-Vu System® meets the cost criterion. Regarding whether all cases identified by the applicant in its original cost criterion analysis appropriately represent potential cases eligible for treatment with the Pure-Vu® System, the applicant noted that not every MS-DRG included in the cost analysis was necessarily gastrointestinal in nature. The applicant explained that this is because patients may be admitted to the hospital for a variety of diagnoses, any of which may eventually lead to colonoscopy. For instance, although not all cases assigned to MS-DRG 291 (Heart Failure and Shock with MCC) would require a colonoscopy, some cases did and were thus included in the applicant's original analysis.

To respond to CMS concerns about the clinical coherence of the selected MS-DRGs, the applicant submitted a revised cost criterion analysis that pared down the number of MS-DRGs to only the top 12 in terms of case volume. The applicant identified 106,770 cases across these twelve MS-DRGs. The applicant stated that, according to the ICD-10 data, although all of these cases would have received a colonoscopy during their hospital stay, only a small portion would have met the clinical criteria for needing the Pure-Vu® System. The applicant asserted that the revised analysis includes a more clinically coherent set of MS-DRGS with 9 of 12 specifically labeled for gastrointestinal use. The applicant stated that while MS-DRGs 871, 812, and 811 are not specific to gastrointestinal diagnoses, they encompass conditions that commonly lead to GI bleeds and the need for colonoscopy and are therefore, appropriate to include in this analysis. The applicant noted that the Pure-Vu® System continues to exceed the case-weighted threshold when the MS-DRGs included in the analysis are pared down, albeit by a smaller margin than in the original analysis.

Response: We thank the commenter for its input and its submission of the revised cost criterion analysis. After review of the comments received and information submitted by the applicant for FY 2022 new technology add-on payments, we agree that the Pure-Vu® System meets the cost criterion as the final inflated case-weighted standardized charge per case exceeded the case-weighted threshold under the revised analysis including only the top 12 MS-DRGs by volume. We believe the cases identified by the applicant using the top 12 MS-DRG's by volume more appropriately represents potential cases eligible for the Pure-Vu® System than all the cases in the MS-DRGs used in their initial cost analysis.

With respect to the substantial clinical improvement criterion, the applicant asserted that the Pure-Vu® System offers the ability to achieve rapid beneficial resolution of the disease process treatment by achieving rapid and full visualization of the colon, which will improve diagnostic yield and the effectiveness of treatment of diseases of the bowel. The applicant claimed that due to the Pure-Vu® System's ability to cleanse the colon during the colonoscopy procedure in conjunction with a standard bowel preparation, or with an enema (to allow entry into the rectum) and without any purgative based preparation, the technology allows for earlier intervention. The applicant stated that in the case of an LGIB, this will reduce bleeding by achieving more rapid hemostasis and reduce the overall length of stay in the hospital for a portion of this population. The applicant also asserted the technology reduces the subsequent diagnostic and, in some instances, therapeutic interventions by minimizing aborted and early repeat procedures due to poor visualization caused by inadequate preparation. The applicant stated that the system can provide cleansing and removal of fecal matter, blood and other debris while maintaining the visibility of the colonoscope's camera and availability of the working channel to apply critical therapies.

In support of its claims, the applicant submitted a self-sponsored, U.S.-based, multicenter, prospective, single arm study in the inpatient setting, analyzing 94 patients, 65 of which (68 percent) had a GI bleed. Of the 94 patients (41 percent females/59 percent males), the mean age was 62 years. According to the applicant, the study's primary endpoint was the rate of improved bowel cleansing level from baseline to after use of the Pure-Vu® System per colon segment using the Boston Bowel Preparation Scale (BBPS). The BBPS score was recorded for each colorectal segment (left colon, transverse colon, and right colon segments) both prior to (baseline) and after colon cleansing with the Pure-Vu® System. An adequate cleansing level was a priori defined as a BBPS ≥2 in all evaluated colon segments. The study found that in 79 of the 94 patients (84 percent), the physician was able to successfully diagnose or rule out a GI bleed in the colon per the patients' colonoscopy indication using only the Pure-Vu® System. The analysis showed statistically significant visualization improvement in each colon segment after Pure-Vu® use with a mean BBPS score in the descending colon, sigmoid, and rectum of 1.74 pre-Pure-Vu® use and 2.89 post-Pure-Vu® use (P< 0.001); in the transverse colon of 1.74 pre-Pure-Vu® use and 2.91 post Pure-Vu® use (P<0.001); and the ascending colon and cecum of 1.50 pre-Pure-Vu® use and 2.86 post Pure-Vu® use (P< 0.001). The study found only 2 percent of cases where the diagnosis could not be achieved due to inadequate preparation. Overall, the 84 (89.4 percent) patients that received the Pure-Vu® System within the study improved BBPS scores from 38 percent (95 percent CI 28, 49) to 96 percent (95 percent CI 90, 99) in segments evaluated. The study noted one procedure related perforation which required surgical repair, and the patient was discharged 48 hours post operatively and recovered fully.

The applicant also provided three outpatient clinical studies to demonstrate the Pure-Vu® System's capability to convert patients to adequate preparation where preparation was previously inadequate, and the visualization was poor based on the BBPS. In the first study, Perez J., et al. conducted an outpatient prospective pilot study using the Pure-Vu® System. The study observed 50 patients with poorly prepared colons undergoing colonoscopy at two outpatient clinical sites in Spain and Israel, respectively. The applicant claimed study patients underwent a reduced bowel preparation consisting of the following: No dried fruits, seeds, or nuts starting 2 days before the colonoscopy, a clear liquid diet starting 18 to 24 hours before colonoscopy, and a split dose of 20mg oral bisacodyl. The study found the number of patients with an adequate cleansing level (BBPS ≥2 in each colon segment) increased significantly from 31 percent (15/49) prior to use of the Pure-Vu System (baseline) to 98 percent (48/49) after use of the Pure-Vu® System (P<0.001), with no serious adverse events reported.

In the second study provided by the applicant, van Keulen, et al. also conducted a single-arm, prospective study on 47 patients with a median age of 61 years in the outpatient setting in the Netherlands using the Pure-Vu® System. Within the study, cecal intubation was achieved in 46/47 patients. This multicenter feasibility study found that the Pure-Vu® System significantly improved the proportion of patients with adequate bowel cleansing from 19.1 percent prior to the use of the Pure-Vu® System to 97.9 percent after its use (P<0.001) and median BBPS score (from 3.0 [IQR 0.0-5.0] to 9.0 [IQR 8.0-9.0]).

In the third study provided by the applicant that directly evaluated the Pure-Vu® System in a clinical setting, Bertiger G., et al. performed a United States-based single center, prospective, outpatient study investigating regimes of reduced outpatient bowel preparations, which included low doses of over-the-counter laxatives, and eliminating the typical 24 hour clear liquid diet restriction, which was replaced by a low residue diet the day before the procedure. In this study, 46 of a possible 49 patients received a colonoscopy, 8 of which took the over-the-counter laxative (“MiraLAX arm”), 21 patients ingested two doses of 7.5oz Magnesium Citrate (MgC) each taken with 19.5oz of clear liquid (“Mag Citrate 15oz arm”), and 18 patients ingested 2 doses of 5oz MgC taken with 16oz of clear liquid (“Mag Citrate 10oz arm”). Of the 46 subjects, 59 percent were males and there was a mean age of 61±9.48 years. The study found that each of the 3 study arms revealed significant differences in BBPS score between the baseline preparation and post-cleansing via Pure-Vu. All the preparation regimens resulted in inadequately prepped colons. Comparing the mean BBPS rating for both pre- and post- Pure-Vu® use, the MiraLAX arm was inferior (P <0.05) to both Mag Citrate arms. For the MiraLAX arm, the mean BBPS Score improved from 1.50 to 8.63. For the Mag Citrate 15oz arm, the mean BBPS score improved from 3.62 to 8.95. For the Mag Citrate 10oz arm, the mean BBPS Score improved from 4.76 to 9.0.

In addition to the retrospective studies provided, the applicant also submitted three case studies to highlight the various clinical presentations of LGIB with the use of the Pure-Vu® System. In the first case, the applicant presented a 71-year-old woman with multiple episodes of bloody bowel movements and low hemoglobin levels for 2 days after a screening colonoscopy where 8 polyps were removed. The applicant stated that the patient underwent a successful colonoscopy using Pure-Vu without standard inpatient bowel preparation within 5 hours, and in addition to expediting the colonoscopy, four significant post-polypectomy ulcers were found and clipped by allowing the physician to cleanse the area and place the clips simultaneously. The applicant claimed that since the Pure-Vu® System does not impact the use of the endoscope's working channel, the physician was able to cleanse the area as needed during the intervention to allow precise placement of the clips applied to achieve hemostasis and the patient was discharged that same day.

The applicant submitted another case example where a 52-year-old male was admitted from the emergency department to the ICU due to significant GI bleeding, hemorrhagic shock, and acute kidney injury (AKI) six days after a colonoscopy where nine polyps were removed, including two polyps greater than 2 cm. The applicant stated that angiographic control of the bleeding was not considered due to AKI with rising creatinine, and bedside colonoscopy was immediately performed with the Pure-Vu® System without any bowel prep. Per the applicant, the physician was able to visualize the entire colon to confirm all sources of bleeding and place two clips to obtain hemostasis, and the patient was downgraded out of the ICU that day and discharged from the hospital the following day.

In the third case study submitted by the applicant, a 64-year-old male was admitted to the ICU with one day of bright red blood per rectum (BRBPR) along with a complex set of disorders including but not limited to alcohol use disorder, heart failure with reduced ejection fraction of 30 percent, and multidrug resistant tuberculosis. The Pure-Vu® System was used to attempt to definitively identify the bleeding source in the ICU. The applicant stated that although no active sites of bleeding were seen, red blood was found in the entire colon, and the patient was transferred out of the ICU 2 days later and discharged 3 days after transfer to the floor. The applicant claimed that while the patient's bleeding had stopped by the time the colon was examined, the ability to directly visualize the entire colon using the Pure-Vu® System helped avoid a third CT angiography during this hospitalization and helped the physicians to confirm that prior coil embolization had not resulted in focal colonic ischemia. The applicant asserted that this case showed that the Pure-Vu® System can be used with minimal preparation, enabling rapid investigation of LGIB in a very complex patient. The applicant concluded that these case studies demonstrate that a change in patient management occurs when the option of the Pure-Vu® System is available, especially when there is an urgent or severe GI bleed, where circumstances where other procedures (such as CT angiography) are insufficient and the option to perform the colonoscopy sooner is preferred.

After reviewing the information submitted by the applicant as part of its FY 2022 new technology add-on payment application for the Pure-Vu® System, we had stated the following concerns in the proposed rule (86 FR 25304). While the studies provided in support of the Pure-Vu® System measure improvement of bowel preparation using the BBPS, the applicant did not provide data indicating that the improved BBPS directly leads to improved clinical outcomes (for example, reduction of blood loss in LGIB or reduction of missed polyps) based on use of the Pure-Vu® System. Additionally, we noted that the applicant has not provided any studies comparing the efficacy of the Pure-Vu® System to other existing methods or products for irrigation in support of its claims that the product is superior at removing debris from the colon while simultaneously preventing the colon from collapsing, allowing use of the working channel, or improving outcomes. Furthermore, we noted that many of the provided studies were based on small sample sizes, which may affect the quality and reliability of the data provided in support of the technology. In addition, we noted that the methodology described in the provided studies often involved time to adequately prepare the colon and included outpatient planned procedures, which may not reflect the emergent situations that the applicant states the Pure-Vu® System is intended to address in the inpatient setting. We also noted that the Helmut, et al. study noted one procedure related perforation which required surgical repair and we invited public comments regarding the concern of procedure related perforation.

We invited public comments on whether the Pure-Vu® System meets the substantial clinical improvement criterion.

Comment: Several commenters provided specific examples of individual instances where the use of the Pure-Vu® System was beneficial for a particular patient, including some patients with unique challenges that the commenters stated could not have been addressed without the use of the Pure-Vu® System. A commenter, offering support, claimed the Pure-Vu® System can help shorten hospital stays and maximize access to their hospital's endoscopy unit and cited cost as a limiting factor for the Pure-Vu® System's continued use. A commenter, offering support, did not consider Pure-Vu® as a panacea for all poor bowel preparations and did not think it was an alternative to appropriate bowel cleansing in most patients but did think it can be a great addition and a useful tool in every endoscopy suite and that it provides clear clinical improvement in the appropriate patients.

Response: We appreciate all of the comments received related to the Pure-Vu® System and have taken them into consideration in making our determination of substantial clinical improvement.

Comment: The applicant submitted comments in response to CMS's concerns in the FY 2022 IPPS/LTCH PPS proposed rule regarding whether the Pure-Vu® System meets the substantial clinical improvement criterion. The applicant reiterated previously shared data from a study by the Cleveland Clinic showing 51 percent of 8,819 patients observed over a 4-year period were inadequately prepared for colonoscopies, leading to one extra day in the hospital compared to patients that were adequately prepared.

The applicant also presented a recently published study of 94 patients that analyzed the ability of the Pure-Vu® System to improve visualization of the colon mucosa for hospitalized patients undergoing colonoscopy. The study demonstrated improvement in BBPS between a baseline for the patients prior to cleansing with the Pure-Vu® System and following the cleansing, with 38% of patients showing adequate colon cleansing level before the use of Pure-Vu® and 96% following the use of Pure-Vu®. The applicant also provided information on the Pure-Vu® System's performance within individual segments of the colon from this same study.

In response to our concern that while the evidence presented demonstrated improvement in BBPS but did not provide data indicating that improved BBPS directly leads to improved clinical outcomes, the applicant provided a study demonstrating the correlation between the ability to visualize the mucosa and the ability to detect important pathology. The study generally demonstrated a linear increasing trend in advanced adenoma detection rates with improvement in BBPS. Lastly, the applicant submitted a modeling study indicating that the Pure-Vu® System can generate cost savings to health systems on a per patient basis if used in the colorectal cancer screening and surveillance population.

Response: We thank the applicant for their comment and appreciate the additional data submitted to address our concerns. After review of all the data received to date, we continue to have concerns regarding the substantial clinical improvement criterion as noted in the FY 2022 IPPS/LTCH PPS proposed rule. Specifically, we remain concerned that the studies provided in support of the Pure-Vu® System measure improvement of bowel preparation using the BBPS but do not provide data indicating that the improved BBPS directly leads to improved clinical outcomes. In addition, the studies did not demonstrate outcomes in the emergent situations for which the Pure-Vu® System is intended to address. While an additional study provided by the applicant in their comment indicated a general link between improved BBPS and advanced adenoma detection rates, we note that the study occurred in patients undergoing screening colonoscopy, and did not include the use of Pure-Vu. We also remain concerned about the lack of studies comparing the Pure-Vu® System to other existing methods or products for irrigation in support of its claims that the product is superior at removing debris from the colon while simultaneously preventing the colon from collapsing, allowing use of the working channel, or improving outcomes.

After consideration of all the information from the applicant, as well as the comments we received, we are unable to determine that the Pure-Vu® System represents a substantial clinical improvement over existing technologies, and we are not approving new technology add-on payments for the Pure-Vu® System for FY 2022.

k. Rapid ASPECTS

iSchemaView (which is in the process of a name change to RapidAI) submitted an application for new technology add-on payments for Rapid ASPECTS for FY 2022. According to the applicant, Rapid ASPECTS is a computer-aided diagnosis (CADx) software device used to assist the clinician in the assessment and characterization of brain tissue abnormalities using computed tomography (CT) image data. The applicant asserted that the software automatically registers images and segments and analyzes ASPECTS Regions of Interest (ROIs). According to the applicant, Rapid ASPECTS extracts image data for the ROI(s) to provide analysis and computer analytics based on morphological characteristics. The applicant stated that the imaging features are then synthesized by an artificial intelligence algorithm into a single ASPECT Score.

The applicant stated Rapid ASPECTS is indicated for evaluation of patients presenting for diagnostic imaging workup with known Middle Cerebral Artery (MCA) or Internal Carotid Artery (ICA) occlusion, for evaluation of extent of disease. The applicant stated that extent of disease refers to the number of ASPECTS regions affected, which is reflected in the total score.

According to the applicant, the Rapid ASPECTS device provides information that may be useful in the characterization of early ischemic brain tissue injury during image interpretation (within 6 hours). The applicant stated Rapid ASPECTS provides a comparative analysis to the ASPECTS standard of care radiologist assessment using the ASPECTS atlas definitions and atlas display including highlighted ROIs and numerical scoring. The applicant stated that Rapid ASPECTS is not intended for primary interpretation of CT images; it is used to assist physician evaluation. The applicant asserted Rapid ASPECTS has been validated in patients with known MCA or ICA occlusion prior to ASPECT scoring.

According to the applicant, when patients with a suspected stroke arrive at an emergency department, they are rapidly triaged to the CT scanner for a non-contrast CT (NCCT) and CT angiography (CTA). The applicant stated that CTA directly images large vessel occlusions and the NCCT can exclude brain hemorrhage and identify early signs of brain infarction. The applicant asserted that automated large vessel occlusion (LVO) detection software is now used at many sites to quickly identify LVOs on CTA and provide physicians with early notification that an LVO has been identified. The applicant stated that following identification of an LVO, the next imaging evaluation required is for a physician, typically a radiologist or neuroradiologist, to determine the ASPECT score by taking a close look at the NCCT for evidence of early infarct signs. The applicant stated that patients with an ASPECT score between 6 and 10 who meet clinical criteria for thrombectomy should receive thrombectomy as soon as possible, if treatment can occur within 6 hours of symptoms onset. The applicant asserted that for patients who present beyond 6 hours, a CT perfusion or MRI scan are required to identify which patients are eligible for thrombectomy.

The applicant stated approximately 800,000 primary (first-time) or secondary (recurrent) strokes occur each year in the U.S., with the majority being primary strokes (roughly 600,000). Of these strokes, approximately 87% are ischemic infarctions, 10% are primary hemorrhages, and 3% are subarachnoid hemorrhage. According to the applicant, the incidence of stroke rapidly increases with age, doubling for each decade after age 55. The applicant asserted that among adults ages 35 to 44, the incidence of stroke is 30 to 120 in 100,000 per year, and for those ages 65 to 74, the incidence is 670 to 970 in 100,000 per year. Therefore, according to the applicant, the primary burden of stroke affects the Medicare-age population. The applicant stated the most disabling strokes are those due to large vessel occlusions (LVOs), and treatment of these strokes has the largest therapeutic benefits.

The applicant stated that Rapid ASPECTS received FDA 510(k) clearance as a CADx software device on June 26, 2020 and provided a date of first installation of September 1, 2020. The applicant described Rapid ASPECTS as a machine learning-based automated software for assessment of ASPECTS. The applicant asserted that Rapid ASPECTS remains the only cleared ASPECTS software and the only stroke imaging software to receive a CADx clearance by the FDA. The legally marketed predicate device that Rapid ASPECTS is substantially equivalent to, per FDA, is QuantX, which was granted De Novo authorization on July 19, 2017. QuantX is a CADx software device used to assist radiologists in the assessment and characterization of breast abnormalities using magnetic resonance (MR) image data and is indicated for evaluation of patients presenting for high-risk screening, diagnostic imaging workup, or evaluation of extent of known disease.

We note the applicant submitted a request for approval of a unique ICD-10-PCS procedure code to identify use of the technology and was granted approval for the following procedure code effective October 1, 2021: XXE0X07 (Measurement of intracranial vascular activity, computer-aided assessment, new technology group 7). According to the applicant, this new ICD-10-PCS code would be reported in addition to the non-contrast CT using the appropriate code as listed in current coding systems.

As discussed previously, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered “new” for purposes of new technology add-on payments.

With regard to the first criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, the applicant asserted Rapid ASPECTS uses a new mechanism of action (machine learning) to assess CT scans and synthesize a single ASPECT score when compared to existing options which are limited to clinical assessment by a human reader. According to the applicant, this software remains the only FDA-cleared ASPECTS software and the only stroke imaging software to receive a CADx clearance by the FDA. The applicant asserted Rapid ASPECTS is fully automated and produces a score for each of the 10 ASPECTS regions, as well as a total score in approximately 2 minutes.

With regard to the second criterion, whether the technology is assigned to the same or a different MS-DRG, the applicant stated that cases involving Rapid ASPECTS would be assigned to the same MS-DRGs as cases involving patients confirmed with an eligible LVO by a positive CTA. According to the applicant, in these cases, the traditional clinical pathway requires a physician to determine the ASPECT score through an imaging evaluation. The applicant noted that Rapid ASPECTS may result in patients being assigned to a different MS-DRG depending on whether or not a mechanical thrombectomy is performed as a result of the Rapid ASPECTS results.

With regard to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, the applicant asserted Rapid ASPECTS addresses the current stroke population.

In summary, the applicant believes that Rapid ASPECTS is not substantially similar to other currently available therapies because Rapid ASPECTS uses a new mechanism of action (machine learning) to assess CT scans and synthesize a single ASPECT score. We stated in the proposed rule that we are unclear as to whether machine learning to assess CT scans and synthesize a single ASPECT score would represent a unique mechanism of action, or how the mechanism of action by which Rapid ASPECTS assesses stroke imaging is distinct from other automated stroke imaging analysis tools, or the traditional hospital workflow.

We stated that we continue to be interested in public comments regarding issues related to determining newness for technologies that use AI, an algorithm or software, as discussed in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58628). Specifically, we are interested in public comment on how these technologies, including devices classified as radiological computer aided triage and notification software and radiological computer-assisted diagnostic software, may be considered for the purpose of identifying a unique mechanism of action; how updates to AI, an algorithm or software would affect an already approved technology or a competing technology; whether software changes for an already approved technology could be considered a new mechanism of action, and whether an improved algorithm by competing technologies would represent a unique mechanism of action if the outcome is the same as an already approved AI new technology.

We invited public comments on whether Rapid ASPECTS is substantially similar to existing technologies, including specifically with respect to the mechanism of action, and whether it meets the newness criterion.

Comment: The applicant submitted comments responding to CMS's concerns regarding newness as indicated in the proposed rule. With respect to our concern as to whether machine learning to assess CT scans and synthesize a single ASPECT score would represent a unique mechanism of action, or how the mechanism of action by which Rapid ASPECTS assesses stroke imaging is distinct from other automated stroke imaging analysis tools, or the traditional hospital workflow, the applicant stated that it used the framework for AI/ML that is differentiated within the FDA product codes for diagnostic imaging products. Per the applicant, these codes reflect the mechanism of action and also how products may be interpreted in terms of performance both against a reference standard and in informing the clinician.

The applicant stated that ContaCT/Viz LVO was classified as (CADt) Computer Aided Triage and Notification as a mechanism of action. Per the applicant, products in this category have limitations in what the software may do; specifically, that it is limited to determining and notifying the end user of suspicion of a disease state. In contrast, more advanced implementations of AI/ML require the establishment of clinical utility which shows the device not only performs to specifications but provides some value in the clinical setting regarding the lesion under investigation. Per the applicant, Rapid ASPECTS is classified as CADe/x, which provides the added information of a standard of care score which goes beyond triage and notification to inform the end user regarding treatment decisions. Specifically, Rapid ASPECTS provides information to help determine if the patient is a candidate for treatment of the LVO or not, while the previously approved ContaCT only informs the end user of a suspicion but not the severity or extent of the disease. Furthermore, the applicant stated that Rapid ASPECTS normalizes the decision-making ability of physicians with different levels of expertise. The applicant emphasizes that Rapid ASPECTS allows the typical reader to perform at the level of an expert reader and that it is the only stroke related software product that has been cleared with the advanced CADe/x designation, both of which are novel features. It is also the only automated software for ASPECT score assessment that has been cleared by FDA with any designation.

The applicant also concurred with other commenters in stating that AI, an algorithm, or software should be evaluated for newness in the same way as CMS evaluates any other medical device applying for new technology add-on payment. That is, the commenters stated that human intelligence and human processes are not FDA approved or cleared technologies and should not be used as a comparator to evaluate whether Rapid ASPECTS, or any technology, meets the definition of newness. A commenter also noted that each of the AI technologies that applied for new technology add-on payments for FY 2022 are distinctly different in that the technologies focus on different patient populations and/or would be assigned to different MS-DRGs. This commenter stated, along with the applicant, that Rapid ASPECTS is different from other technologies in that it uses machine learning to evaluate head CT scans and develops a single ASPECTS score in patients with suspected stroke.

A commenter noted how updates to an AI, an algorithm or software would affect an already approved technology or a competing technology. This commenter noted a phenomenon known as “model drift,” which can occur over time due to changes in healthcare workflows, practices, populations, and data. The commenter explained that when this occurs, the underlying algorithm does not automatically change and adapt to the new inputs, but its output predictions can become less accurate over time. The commenter further noted that model drift can be detected using the same statistical analyses that rigorously tested the algorithm's initial training data inputs and output predictions to ensure that they are free of statistically significant variances or biases. The commenter stated that if the AI/Machine Learning model or the algorithms that comprise the model change over time, they ideally should be subjected to this extensive statistical testing regimen that occurred before its original deployment, and developers should gauge the nature and extent of any model drift that occurs and make slight modifications if possible that would allow for its continued use in clinical care.

Response: We thank the applicant for its input. After consideration of the comments received and information submitted by the applicant, at this time and given our ongoing consideration of assessing newness for technology that use AI, an algorithm or software, we agree that Rapid ASPECTS does not use the same or a similar mechanism of action to achieve a therapeutic outcome when compared to existing treatment because it provides information, and specifically a standard of care score that characterizes the severity and extent of an LVO, to inform the end user of treatment decisions. Therefore, we believe that Rapid ASPECTS is not substantially similar to an existing technology and meets the newness criterion.

We also thank the commenters for their input on determining newness for technologies that use AI, an algorithm or software, including the applicant's distinctions between devices classified as computer-aided triage and notification software (CADt) and computer-aided detection or diagnosis software (CADe/x), as discussed in the proposed rule. We will continue consider how these technologies may be used to identify a unique mechanism of action; how updates to AI, an algorithm or software would affect an already approved technology or a competing technology; whether software changes for an already approved technology could be considered a new mechanism of action, and whether an improved algorithm by competing technologies would represent a unique mechanism of action if the outcome is the same as an already approved AI new technology, as we gain more experience in this area.

With respect to the cost criterion, the applicant provided three analyses: (1) A baseline analysis containing all cases reporting one of the targeted ICD-10-CM codes below as the principal diagnosis code for cerebral infarction that map to one of the applicant's targeted MS-DRGs; (2) an analysis limited to MS-DRGs with a case volume over 100; and (3) an analysis limited to MS-DRGs 023, 062, 064, 065, and 066, which per the applicant would reflect 80 percent of all stays. For the baseline analysis, the applicant first extracted all inpatient stays from the CY 2018 Limited Data Set Standard Analytic File (LDS SAF) that contained a principal ICD-10-CM diagnosis code for cerebral infarction. The applicant used the following ICD-10-CM diagnosis codes.

The applicant then removed cases for hospitals that are not paid under the IPPS. The applicant also removed inpatient stays and their assigned MS-DRGs from its analysis where the assigned MS-DRG met any of the following conditions: (1) The MS-DRG is for a part of the body not related to the head; (2) the MS-DRG is a psychiatric MS-DRG, alcohol-related MS-DRG, or a catchall MS-DRG; (3) the MS-DRG has a very small number of cases; or (4) the MS-DRG is unlikely to involve an LVO. The applicant identified 66,990 cases mapping to 27 MS-DRGs, as listed in the following table, in descending order by volume:

The applicant then standardized the charges and applied the 2-year charge inflation factor of 13.2 percent used to adjust the outlier threshold determination (85 FR 59039). The applicant did not remove charges for prior technology, as the applicant believes Rapid ASPECTS does not eliminate or replace any prior technology or services. The applicant also noted that it did not remove charges related to the prior technology, as the applicant believes Rapid ASPECTS does not reduce costs during the inpatient stay.

The applicant then added charges for the technology. The applicant stated that it estimated the cost per case of Rapid ASPECTS using historical utilization data gathered from its Rapid CTA module. The applicant anticipates Rapid ASPECTS will be used in the same hospital sites as Rapid CTA, which also provides the applicant with a baseline number of Medicare and non-Medicare patients who were identified with a suspected LVO. The applicant estimated that approximately 20.5 percent of all patients who received a RAPID CTA scan qualified as inpatients eligible for a Rapid ASPECTS scan. The applicant divided the total number of qualified Medicare and non-Medicare inpatients by the total number of subscriber hospitals to arrive at an average number of inpatients eligible to be scanned with Rapid ASPECTS per subscriber hospital per year. The applicant then took the estimated average sales price per annual contract of Rapid ASPECTS per hospital and divided it across the estimated annual number of Rapid ASPECTS inpatients per site to estimate the average cost per case per subscriber hospital. Finally, the applicant divided the average cost per case by the national average CCR for radiology of 0.136 (85 FR 58601).

The applicant calculated a case-weighted threshold amount of $76,398 and a final inflated average case-weighted standardized charge per case of $90,097. Based on this analysis, the applicant asserted that Rapid ASPECTS meets the cost criterion because the final inflated average case-weighted standardized charge per case exceeds the case-weighted threshold amount. The applicant submitted two additional scenarios to demonstrate that the technology meets the cost criterion using the same methodology described but with limits on the cases. The first scenario limited the analysis to MS-DRGs with at least 100 cases. This resulted in a case-weighted threshold of $76,457 and a final inflated average case weighted standardized charge per case of $90,172. The second scenario limited the analysis to MS-DRGs 023, 062, 064, 065, and 066, which per the applicant reflect 80 percent of all stays. This second alternative method resulted in a case-weighted threshold of $67,890 and a final inflated average case-weighted standardized charge per case of $77,614. Across all three analyses, the applicant maintained that the technology meets the cost criterion because the final inflated average case-weighted standardized charge per case exceeds the average case-weighted threshold amount.

We noted the following concerns in the proposed rule regarding the cost analysis for Rapid ASPECTS. The applicant stated it removed from its analysis those cases and their assigned MS-DRG where the assigned MS-DRG was for a body part that is not the head; however, the list of MS-DRGs the applicant presented included MS-DRGs 37 (Extracranial Procedures w/MCC) and 38 (Extracranial Procedures w/CC), which by definition describe procedures outside of the head. We stated that we would like to understand why these MS-DRGs and their assigned cases were included in the baseline analysis. We stated that we would also like to understand the time period of the claims the applicant selected from the CY 2018 SAF, as this could have implications for the inflation factor used to update charges if the applicant selected claims from FY 2018 as opposed to FY 2019.

We stated that the applicant appears to have used a single list price of Rapid ASPECTS per hospital with a cost per patient that can vary based on the volume of cases. We noted that the cost per patient varies based on the utilization of the technology by the hospitals. The cost per patient could be skewed by the small number of hospitals utilizing the technology and their low case volumes. It is possible, if hospitals with large patient populations adopt Rapid ASPECTS, the cost per patient would be significantly lower.

In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58630), we stated our understanding that there are unique circumstances to determining a cost per case for a technology that utilizes a subscription for its cost. We stated our intent to continue to consider the issues relating to the calculation of the cost per unit of technologies sold on a subscription basis as we gain more experience in this area. We stated that we continue to welcome comments from the public as to the appropriate method to determine a cost per case for such technologies, including comments on whether the cost per case should be estimated based on subscriber hospital data as described previously, and if so, whether the cost analysis should be updated based on the most recent subscriber data for each year for which the technology may be eligible for the new technology add-on payment.

We invited public comment on whether Rapid ASPECTS meets the cost criterion.

Comment: The applicant submitted comments addressing our concerns regarding whether Rapid ASPECTS meets the cost criterion. With respect to our inquiry regarding why cases assigned to MS-DRGs 37 (Extracranial Procedures w/MCC) and 38 (Extracranial Procedures w/CC) were included in the baseline, the applicant explained that it may be possible that some cases are assigned to those MS-DRGs after a full accounting of their diagnosis and reason for inpatient stay. The applicant provided the example of a blocked carotid artery delivering blood to the brain, which can be a cause of stroke. The applicant suggested that because the blockage occurred outside of the brain, these cases could be assigned to MS-DRG 37 or 38.

The applicant also provided an additional scenario for the cost threshold analysis that excluded MS-DRGs 37 and 38. The applicant re-ran its analysis with 2018 calendar year data to exclude MS-DRGs 37 and 38 and found that Rapid ASPECTS continues to satisfy the NTAP new technology add-on payment cost criterion, as seen below.

With respect to our inquiry regarding the time period of the claims the applicant selected for the CY 2018 SAF, the applicant stated that it used all relevant discharges during the 2018 calendar year (January 1st 2018—December 31st 2018). The applicant explained that for standardizing charges it used information specific to each hospital for the applicable fiscal year. The applicant explained that for claims with discharge dates from January 1st 2018 through September 30th 2018, it used cost-to-charge ratios, IME, DSH, wage-index, GAF, and COLA information specific to each hospital for FY 2018. The applicant further explained that, for claims with discharge dates from October 1st 2018 through December 31st 2018, it used cost-to-charge ratios, IME, DSH, wage-index, GAF, and COLA information specific to each hospital for FY 2019. The applicant also noted that, to maintain a conservative approach, it used an inflation factor of 13.22% for all discharges in the 2018 calendar year, even though it would be reasonable to use a higher inflation factor for claims with a discharge date prior to October 1st 2018.

With respect to our concern that the cost per patient for Rapid ASPECTS can vary based on the volume of cases, and that the applicant's cost per case may be skewed by the small number of hospitals utilizing the technology and their low case volumes, the applicant stated that although the cost per patient for Rapid ASPECTS may be lower for hospitals with high utilization of the technology, it will also be higher for hospitals with lower utilization. The applicant also stated that Rapid ASPECTS can help save lives, and that it is important to ensure that hospitals have equitable access to this technology to conform to current AHA guidelines and address an unmet need. The applicant's comments agreed with other commenters that responded to our request for comments regarding technologies sold on a subscription basis and whether the cost per case should be estimated based on subscriber hospital data, and if so, whether the cost analysis should be updated based on the most recent subscriber data for each year for which the technology may be eligible for the new technology add-on payment. Most commenters agreed that in determining the cost per case for technologies seeking new technology add-on payment that utilize a subscription model, we should limit our analysis to subscriber hospitals and update the cost analysis on an annual basis. A commenter noted that alternative methodologies involving estimating the number of patients who would be eligible to receive treatment utilizing a technology sold on a subscription basis would be likely to result in a payment amount that does not adequately reflect the estimated average cost of such service or technology as required by the statute. The commenter believes that given the direct impact of utilization changes on cost per case when using a subscription model, it is reasonable for CMS to annually update the payment amount using the most recent subscriber utilization data.

Response: We thank the commenter for its input. We appreciate the explanation behind the inclusion of MS-DRG 37 and 38 in the applicant's original cost analysis and understand that stroke cases may be assigned to extracranial MS-DRGs after a full accounting of the patient's diagnosis and reason for inpatient stay. We also appreciate the additional information pertaining to the time period of the data used in the applicant's cost analysis submitted with its FY 2022 new technology add-on payment application and agree with the alignment of cost-to-charge ratios, IME, DSH, wage-index, GAF, and COLA information specific to each hospital with the respective fiscal year in which the discharge date falls. We agree with the applicant that, under the scenarios presented in its original application and in response to the FY 2022 IPPS/LTCH PPS proposed rule, the final inflated case-weighted standardized charge per case exceeded the case-weighted threshold and Rapid ASPECTS meets the cost criterion.

We also appreciate the applicant's comments relating to calculation of the cost per unit of technologies sold on a subscription basis. CMS will continue to consider the issues relating to calculation of the cost per unit of technologies sold on a subscription basis, including the merits of calculating the cost per case across all IPPS hospitals versus limiting the cost per case analysis to current users and whether the cost analysis should be updated based on the most recent subscriber data for each year for which the technology may be eligible for the new technology add-on payment, as we gain more experience in this area.

With respect to the substantial clinical improvement criterion, the applicant asserted Rapid ASPECTS represents a substantial clinical improvement over existing technologies because it improves diagnostic decisions by improving accuracy of ASPECT scoring. The applicant also asserted it improves diagnostic decisions by reducing inter-rater variability of ASPECT scoring. The applicant also asserted it represents a substantial clinical improvement by improving treatment decisions and by improving time to treatment.

According to the applicant, the first stroke treatment, tissue plasminogen activator (tPA), was first approved in the United States for intravenous administration to patients with acute stroke in 1996, and a study demonstrating successful catheter-directed intra-arterial infusion of a thrombolytic agent for this indication was first published in 1999. The applicant asserted that the first positive randomized controlled studies using modern mechanical thrombectomy devices for LVO stroke were published in 2015 and support combined treatment with tPA and catheter-based thrombectomy as the most effective treatment approach for patients who can be treated within six hours of symptom onset. According to the applicant, following the publication of these trials, the American Heart Association (AHA) and American Stroke Association (ASA) released new guidelines in 2016, 2018 and 2019 that all specified the following Level 1A recommendation:

Patients should receive mechanical thrombectomy with a stent retriever if they meet all the following criteria:

• Pre-stroke modified Rankin Score (mRS) score of 0 to 1.
• Causative occlusion of the internal carotid artery (ICA) or middle cerebral artery (MCA) segment 1 (M1).
• Age ≥18 years.
• NIH Stroke Scale (NIHSS) score of ≥6.
• Alberta stroke program early CT score (ASPECTS) of ≥6.
• Treatment can be initiated (groin puncture) within 6 hours of symptom onset.

According to the applicant, the previously recommended guidelines from the AHA/ASA have been widely accepted and outline the key requirements that are still used today to select early window (less than 6 hours) candidates for thrombectomy. The applicant asserted the imaging requirements (the second and the fifth criterion) require that patients be screened for an LVO with CTA and then once an LVO in the ICA or MCA is discovered, the ASPECTS score must be assessed to verify that it is 6 or higher. According to the applicant, the ASPECTS score is an assessment of the CT scan in a stroke patient to determine if there is evidence of irreversible injury in ten different brain regions. The applicant stated that patients who have more than five regions that are already irreversibly injured are not candidates for thrombectomy.

According to the applicant, it is well validated in the stroke literature that faster treatment leads to better outcomes. The applicant stated that compared with the best medical therapy alone, in the first five positive LVO endovascular thrombectomy trials that were published in the New England Journal of Medicine and subsequently summarized in a pooled analysis by the HERMES group, thrombectomy was associated with improved outcomes when procedure start (arterial puncture) could be performed within the first 7.3 hours after symptom onset among patients meeting the brain imaging entry criteria for inclusion in these randomized trials. The applicant asserted that within this period, functional outcomes were better the sooner after symptom onset that endovascular reperfusion was achieved, emphasizing the importance of programs to enhance patient awareness, out-of-hospital care, and in-hospital management to shorten symptom onset-to-treatment times. The applicant asserted that the magnitude of the association between time to treatment and outcome is clinically meaningful. According to the applicant, in patients with acute ischemic stroke due to LVO, among every 1000 patients achieving substantial endovascular reperfusion, for every 15-minutes faster emergency department door-to-reperfusion time, an estimated 39 patients would have a less-disabled outcome at 3 months, including 25 more who would achieve functional independence (mRS 0-2). The applicant stated that in addition to faster time from emergency department door to reperfusion, faster time from brain imaging to reperfusion was associated with better 3-month functional outcomes.

According to the applicant, the interpretation of early infarct signs in CT first became clinically important following the FDA approval of tPA for stroke treatment in 1996 because it was shown that the response to tPA could be predicted based on the degree of early brain injury that could be visualized on the CT scan. The applicant asserted it was clear that intravenous tPA could be harmful in patients with advanced early infarct signs because they had a high risk of intracranial hemorrhage. The applicant stated, however, only rough qualitative estimates of the degree of early infarct signs were performed. The applicant asserted stroke clinicians generally felt believed it to be safe to give tPA if the early infarct signs were confined to less than one-third of the middle cerebral artery territory.

According to the applicant, beginning in the 2000s, a more detailed and quantitative analysis of early infarct signs was proposed: The Alberta Stroke Program Early CT score (ASPECTS). The applicant stated this score requires the evaluation of 10 pre-defined MCA vascular territories. The applicant asserted these individual regions are assessed for focal hypoattenuation of the cortex and in the basal ganglia, reduction of gray and white matter differentiation, and the loss of the insular ribbon sign. According to the applicant, ASPECTS is calculated by subtracting 1 point for each involved region; scores less than 6 typically signify patients with an irreversible large hemispheric infarction.

According to the applicant, the ASPECTS evaluation became clinically essential in 2015 after mechanical thrombectomy was found to be effective for treatment of patients with a large vessel occlusion within the 6-hour time frame. The applicant stated that some of the large randomized controlled trials that ultimately led to the establishment of thrombectomy as a standard procedure required an ASPECTS greater than or equal to 6 for inclusion. According to the applicant, the MR CLEAN trial, which enrolled patients with lower ASPECT scores than the other four trials, reported the smallest overall treatment effect and in particular, patients with an ASPECT score less than 5 did not show benefit with an adjusted odds ratio close to 1.0. The applicant asserted that for these reasons, an ASPECTS evaluation is required in most national and international thrombectomy guidelines. The applicant stated most guidelines, including the AHA/ASA guidelines discussed previously, require an ASPECT score greater than or equal to six 6 for a patient to qualify for thrombectomy in the early treatment window.

The applicant asserted ASPECT score determination is challenging because early infarct signs are often very subtle and challenging to interpret correctly. According to the applicant, there is often disagreement between experts on the exact score and sometimes these disagreements preclude a definite answer regarding if the patient qualifies for thrombectomy or not. The applicant asserted these interpretation challenges are manifested by limited inter-rater agreement, even among experts. The applicant cited the DEFUSE 2 study in which two expert readers graded ischemic change on NCCT using the ASPECT score. The applicant asserted that full-scale agreement (measured by the intraclass correlation coefficient) for CT-ASPECTS was only moderate at 0.579. According to the applicant, these inter-rater differences can have important clinical implications, as discussed further. The applicant asserted that many physicians who evaluate acute stroke patients are not confident that they can accurately determine an ASPECT score, and oftentimes there are significant delays before a radiologist reads the scan. The applicant stated current AHA/ASA guidelines recommend a CT scan be performed within 25 minutes of Emergency Department arrival and the radiologist interpretation of the scan occur within 45 minutes of arrival. According to the applicant, based on these guidelines, radiologists have about 20 minutes to read the scan, however, many hospitals, especially community and primary stroke centers, do not meet these guidelines. The applicant asserted Medicare data indicate that only 72% of patients meet these guidelines. The applicant stated that automated software, such as Rapid ICH, Rapid LVO and Rapid ASPECTS can assess CT and CTA findings (both to rule out hemorrhage, confirm an LVO and to assess early signs of infarction with ASPECTS) within minutes.

According to the applicant, the limited inter-rater agreement for traditional ASPECT scoring can lead to triaging ineligible patients to thrombectomy or failing to treat eligible patients. The applicant cited a study in which four experienced readers rated ASPECT scores in patients who presented with LVO and severe strokes. The applicant stated the inter-rater agreement between these raters was poor with an interclass correlation of 0.32. According to the applicant, the range of agreement for individual raters with the gold standard assessment of the score (obtained with a concurrent MRI) for identifying patients with a score less than six 6 ranged from 35% to 94%. The applicant asserted this study demonstrates there can be substantial disagreement between physicians regarding if a patient is eligible for thrombectomy based on their assessment of the ASPECT score, which can lead to eligible patients not receiving this highly effective therapy, as well as the performance of unnecessary procedures.

The applicant asserted that particularly the Medicare population might be at risk and impacted by these limitations as the majority of LVOs occur in the Medicare population. The applicant stated that the average age of patients in the HERMES pooled analysis of thrombectomy studies was 68 years. Therefore, according to the applicant, inaccuracy of traditional ASPECT scoring translates into a substantial percentage of Medicare patients having erroneous triage decisions made regarding their eligibility for thrombectomy, which it asserted can result in unnecessary procedures and increased Medicare costs, as well as increased disability in eligible patients who are not treated because of inaccurate ASPECT scoring.

As stated previously, the applicant asserted Rapid ASPECTS represents a substantial clinical improvement over existing technologies because it improves diagnostic decisions by improving accuracy of ASPECT scoring. The applicant presented three retrospective cohort studies (two peer-reviewed and one under review) to support the claim that diagnostic decisions made by clinicians would have been improved with use of Rapid ASPECTS. According to the applicant, two of the studies showed that the automated Rapid ASPECTS score is significantly more accurate than the scores obtained by experienced clinicians.

The applicant submitted a retrospective cohort study which compared ASPECT scoring of CT images from patients with MCA occlusion (n=100) between Rapid ASPECTS software and two expert neuroradiologist reads. According to the applicant, Rapid ASPECTS showed a substantial agreement (k=0.78) when imaging took place more than 1 hour after symptom onset, which increased to high agreement (k=0.92) for imaging occurring after 4 hours. The applicant asserted that the neuroradiologist raters did not achieve comparable results to the software until the time interval of greater than 4 hours (k=0.83 and k=0.76). In this study, experts developed the reference consensus score and then, after 6 weeks, the same two neuroradiologists again determined ASPECTS by using only the baseline CT. The experts had moderate agreement with the consensus score (k=0.57 and k=0.57) while Rapid ASPECTS had better agreement (k=0.9). There was minimal agreement across experts and software in the timeframe of less than 1 hour between symptom onset and imaging, but better software agreement when the time was between 1 and 4 hours. There was agreement across experts for imaging occurring after 4 hours. According to the applicant, this study showed that in acute stroke of the MCA, Rapid ASPECTS had better agreement than that of human readers with a predefined consensus score.

The applicant submitted another retrospective cohort study to compare Rapid ASPECTS, as well as the mean score from four experienced readers, with a diffusion-weighted magnetic resonance imaging (DW-MRI) ASPECTS obtained following the baseline CT in patients (n=65) with large hemispheric infarcts. DW-MRI is sensitive in the detection of small and early infarcts. Small infarcts might not appear on CT scans for days. The AHA/ASA guidelines state that DW-MRI can be useful for selecting candidates for mechanical thrombectomy between 6 and 24 hours after the patient was last known well (that is, the time at which the patient was known to be without signs and symptoms of the current stroke).

According to the applicant, Rapid ASPECTS' automated score had a higher level of agreement with the mean of the DW-MRI ASPECTS, both for the full scale and for the dichotomized scale of either <6 or ≥6 which is the difference for treatment/no treatment (difference in intraclass correlation coefficient, p<0.001). The applicant stated that the mean DW-MRI ASPECT score was <6 in 63/65 (97%) of the cases; of these, RAPID ASPECTS agreed with the DW-MRI score in 46/63 (73%) of the cases (95% confidence interval [CI] 60-83%) vs. 35/63 56% of the cases (95% CI 44-69%) for the median score of the two experienced readers (p=0.027). The range of agreement for individual clinician CT ASPECTS with the median DW-MRI score for identifying patients with a score <6 was 35% to 94%. According to the applicant, this study demonstrated the accuracy for determining which patients have an ASPECTS <6 (which would exclude them from thrombectomy) was significantly higher with the software.

The applicant submitted an additional retrospective cohort study under review for publication which compared physicians' (two expert neuroradiologists and six typical readers) ability to read ASPECTS in patients with an LVO (n=50; 10 regions in each patients' scan for a total of 500 individual regions) within 6 hours of symptom onset when assisted by Rapid ASPECTS, compared with their unassisted score. The applicant stated that the average ASPECT score of three additional experienced neuroradiologists who were provided access to a follow-up MRI was used as the reference standard. The applicant asserted that when typical readers read the scan in conjunction with the Rapid ASPECTS software, their agreement with the expert reads improved from 72% to 78% (p< 0.0001, test of proportions). According to the applicant, Rapid ASPECTS alone achieved correlations for total ASPECT scores that were similar to the three experienced neuroradiologist readers who had access to a follow-up MRI scan to help enhance the quality of their reads. The applicant asserted the results from this study showed that the aid of Rapid ASPECTS can significantly improve typical readers' scores and that the automated scores generated by Rapid ASPECTS are interchangeable with the scores generated by expert neuroradiologists.

As stated previously, the applicant asserted Rapid ASPECTS represents a substantial clinical improvement over existing technologies because it improves diagnostic decisions by reducing inter-rater variability of ASPECT scoring. To support this claim the applicant submitted the study performed by iSchemaView and analyzed by an independent statistician that led to the FDA clearance of Rapid ASPECTS. According to the applicant, acute CT scans in patients with LVO (n=50) were read by eight readers both with and without Rapid ASPECTS. The applicant asserted that the standard deviation of ASPECT scores ranged from 0.35 to 4.5 without assistance as compared to 0.46 to 4.7 with assistance. The applicant stated that the median standard deviation dropped from 2.2 to 1.4 when assistance was used to read the scans. According to the applicant, a t-test to evaluate the hypothesis of equal standard deviations supported a significant difference in standard deviations (p=0.0002), and non-parametric tests arrived at the same conclusion (p <0.0001 for a Wilcoxon Rank Sum Test).

As stated previously, the applicant asserted Rapid ASPECTS represents a substantial clinical improvement by improving treatment decisions and by improving time to treatment. The applicant asserted that in the study performed by iSchemaView of the acute CT scans in patients with LVO (n=50) which were read by eight readers both with and without Rapid ASPECTS, a Receiver Operating Characteristic (ROC) analysis demonstrated significant improvement in typical readers' ability to identify patients who have a score of 6 to 10 if they read the scan in conjunction with the automated score. According to the applicant, the area under the curve (AUC) improved from 0.78 without Rapid ASPECTS to 0.85 with Rapid ASPECTS (p=0.0049). The applicant asserted that of the 400 treatment assessments (50 scans * 8 readers) in this study, 7% were changed from an incorrect assessment to a correct assessment when the scan was read in conjunction with the automated score compared with traditional scoring, a statistically significant difference.

The applicant cited three retrospective studies that, according to the applicant, have shown treatment decisions made by experienced clinicians would have been improved with the use of Rapid ASPECTS. As stated previously, the applicant asserted that one study showed that agreement regarding whether a patient had a treatment-eligible score based on a concurrent MRI scan interpreted by two experts was significantly higher for the Rapid ASPECTS score than for experienced clinicians. According to the applicant, Rapid ASPECTS has also been shown to improve the reads of a typical CT scan reader to become as accurate as a neuroradiologist read. The applicant asserted that since radiologists are not immediately available at the time when many LVO patients present, and obtaining a read from a neuroradiologist often takes even longer, the time to determine an ASPECT score will be substantially improved with the software, leading to faster treatment times which have been shown to reduce disability. According to the applicant, Rapid ASPECTS provides an opportunity to impact the current selection and allocation pathway for stroke care.

After reviewing the information submitted by the applicant, we had the following questions regarding whether Rapid ASPECTS meets the substantial clinical improvement criterion.

In the studies provided by the applicant, the reference ASPECT score to which Rapid ASPECTS was compared was generally derived from a mean value of the ASPECT scores rated from a small sample of expert radiologists. We noted that the radiologists used to identify the reference to which Rapid ASPECTS was compared may not be representative of radiologists in the United States. We were also unclear whether a mean ASPECT score, identified from radiologists whom the applicant describes as having low levels of agreement, is representative of a meaningful value as it does not represent the score of any particular radiologist. We further questioned whether individuals participating in these studies may have altered their behavior in a substantive way by interacting with computer-generated ratings, which would complicate study findings.

We further noted that the correlation between the ASPECT scoring of expert and Rapid ASPECTS is the primary outcome in many of the articles provided. Though this information may be important and informative, we stated it is not clear that a high correlation between expert and Rapid ASPECTS scoring is necessarily indicative of substantial clinical improvement. Furthermore, whether these providers agree with the technology does not determine whether they are correct, and it could be the case that both AI and radiologists agree on an incorrect score.

We noted that the applicant stated that inter-rater disagreement with ASPECT scores leads to erroneous triage and treatment of Medicare patients. We stated it was unclear how the applicant determined that disagreement between scores translates into inappropriate treatment, or necessarily shows that the scoring class (<6 vs ≥6) was inaccurate. The applicant also asserted that many physicians who evaluate acute stroke patients are not confident that they can accurately determine an ASPECT score, but it did not provide evidence to support this claim. Additionally, we observed that the studies provided did not demonstrate improvements in clinical outcomes such as disability, mortality, or length of stay; rather, improved outcomes were inferred by relying on the assumption that faster treatment results in better outcomes. Without measuring the impact of the technology on treatment outcomes, we stated we are uncertain whether Rapid ASPECTS represents a substantial clinical improvement.

Lastly, we noted that the applicant submitted the AHA/ASA guidelines and a review of stroke literature as support for clinical improvement. It is unclear how the guidelines support a finding of substantial clinical improvement for Rapid ASPECTS because the guidelines are for the current standard of care. Additionally, the applicant did not provide evidence to support its assertion that hospitals are not meeting the AHA/ASA guideline that radiologists read the CT scan of acute ischemic stroke patients within 20 minutes. The stroke literature review identified the inter-rater differences among ASPECT scoring, but did not demonstrate that inter-rater disagreements have led to triaging ineligible patients to thrombectomy or failing to treat eligible patients in clinical practice. We stated it is unclear how the literature on inter-rater reliability for ASPECT scoring would demonstrate a substantial clinical improvement in how Rapid ASPECTS supports improved triaging of stroke care. The applicant's stroke literature review also identified that faster treatment leads to better outcomes. While this supports the urgency of stroke care, we were unsure how it demonstrates a substantial clinical improvement in how Rapid ASPECTS supports the urgency of stroke care.

We invited public comments on whether Rapid ASPECTS meets the substantial clinical improvement criterion.

Comment: The applicant submitted comments in response to CMS' concerns regarding substantial clinical improvement as indicated in the proposed rule. With respect to our concern about sample representation, the applicant stated that two of the studies that were provided, GAMES-RP and Delio et al., used expert readers from the United States. The applicant stated that these two studies included a total of 6 different experts and that the results for Rapid ASPECTS seen in the U.S. studies were similar to the benefits seen in the studies conducted outside of the United States.

With respect to our concern that individuals participating in these studies may have altered their behavior in a substantive way by interacting with computer-generated ratings, the applicant asserted that the expert radiologists who determined the gold standard scores read the cases blinded to the computer-generated ratings, so that there is no possibility that the software influenced these reads. The applicant further stated that the exception to this was the Delio, et al study, where the gold standard was determined independent of the software by three expert neuroradiologists, followed by six “typical readers” judging the cases with and without the technology to determine if the assist from Rapid ASPECTS led to reader improvement. The applicant also noted that this study design was endorsed by FDA. Per the applicant, the readers in the first reading session saw the case without Rapid outputs half the time, while during the other half they saw the cases with the Rapid software to assist their read. In a subsequent session, the readers saw the same cases again in reverse: Cases that read without Rapid in the first session were read with Rapid and vice versa. The applicant maintained that the study demonstrated reader improvement with the software assist.

The applicant also commented in response to our concern that the high correlation between the ASPECT scoring of expert and Rapid ASPECTS, which was the primary outcome in many of the articles the applicant provided, demonstrates the accuracy of the technology and is not necessarily indicative of substantial clinical improvement. The applicant maintained that this correlation was not the primary outcome in most studies, citing the example of the GAMES study where the accuracy of the software based on the MRI finding was used as a gold standard. In addition, the applicant cited the Delio, et al and Munich study studies where the gold standard for the primary analysis was the consensus read of multiple experts that was enhanced with the follow-up MRI. The applicant agreed with CMS that both the AI and radiologist could be incorrect, hence why the MRI was used in the GAMES study as the gold standard and in Delio, et al and Munich, the expert radiologists received additional data in the form of a follow-up MRI scan to improve their accuracy. The applicant pointed out that in the prospective study reported by Mansour, et al the door-to-needle time for the standard of care group was 52.3 +/− 16 minutes versus 36.8 +/− 11 minutes (p=0.001) in the Rapid ASPECTS patients which resulted in a 14-minute reduction in the door-to-treatment time. The applicant further noted there was also a significantly increased likelihood of functional independence and fewer hemorrhagic complications in patients treated with reperfusion therapy in the Rapid ASPECTS group (p<0.001).

With respect to our request for more information concerning how inter-rater disagreement with ASPECT scores translates into erroneous triage and treatment of Medicare patients, as well as how inter-rater reliability for ASPECT scoring demonstrates that Rapid ASPECTS supports improved triaging of stroke care, the applicant presented a two-fold argument. The applicant first noted that because appropriate treatment depends on an accurate ASPECT score, Rapid ASPECTS can avoid sending a patient to thrombectomy who has an ASPECT score that does not qualify or failing to treat a patient who does qualify for the procedure. The applicant pointed to the cases cited in its application where one radiologist believed that the score was less than six and the other reader believed that the score was greater than 6. Because only one of these readers can be correct, in these cases the incorrect reader may recommend the wrong treatment decision. By improving the accuracy of the score, the software can avoid these cases of over- or under-treatment. The applicant also pointed to examples of cases where the typical reader's score disagreed with the gold standard score regarding if the patient had a qualifying score of greater than or equal to six, and that in 93 percent of these cases the Rapid ASPECTS score agreed with the gold standard score. Therefore, the applicant argued that a treatment decision based on Rapid ASPECTS would be in line with the more accurate gold standard score and differ from the typical reader's score.

To further bolster their argument, the applicant reiterated that the method for obtaining a “more accurate” baseline ASPECT score using the data provided by a follow-up MRI has been accepted by Radiology, Stroke, and the Journal of Stroke and Cerebrovascular Disease as representing a more accurate score. The applicant pointed out that an MRI scan is much more sensitive than a CT for determining the extent of early brain injury; therefore, the use of a follow-up MRI scan can help increase the accuracy of the baseline ASPECTS read. The applicant acknowledged that while the ASPECTS reader does not have the advantage of knowing what the MRI will eventually show, it is well accepted that having information about the final size of a stroke can make it easier to identify subtle signs of a stroke on the baseline scan. The applicant pointed to the Munich study, GAMES ASPECT study, and Delio et al, which all used a combined baseline CT and follow-up MRI scan as the gold standard and where the Rapid ASPECTS software was demonstrated to be more accurate based on this gold standard than the typical reader.

With respect to our observation that the applicant did not provide evidence to support the claim that many physicians who evaluate acute stroke patients are not confident that they can accurately determine an ASPECT score, the applicant clarified that readers who do not perform well, or read ASPECTS less frequently would have lower confidence, and that the key point is not confidence but rather the accuracy of their scoring. The applicant noted multiple publications showing that non-neuroradiologists and less experienced readers are less accurate than experienced neuroradiologists when performing ASPECTS scoring, such as the Delio et al study where the scores of the neurologists and ER physician were considerably less accurate than the two neuroradiologists. In this same study, the scores of the neurologists and ER physician were as accurate as the two neuroradiologists during a Rapid ASPECTS assisted read and using the gold standard score as the reference. The applicant referred CMS to two additional studies, where a better correlation between the expert consensus and the readers was documented for more experienced readers compared with less experienced readers.

With respect to our concern that the studies provided did not demonstrate improvements in clinical outcomes such as disability, mortality, and length of stay, the applicant again pointed to the prospective study reported by Mansour, et al where the door-to-needle time for the standard care group was 52.3 +/− 16 minutes vs. 36.8 +/− 11 minutes (p=0.001) in the Rapid ASPECTS patients which resulted in a 14-minute reduction in the door-to-treatment time. The applicant reiterated that there was also a significantly increased likelihood of functional independence and fewer hemorrhagic complications in patients treated with reperfusion therapy in the Rapid ASPECTS group (p < 0.001). The applicant then presented new data from the United States showing that time to treatment with thrombectomy was reduced following introduction of Rapid ASPECTS. Per the applicant, the study was performed at two comprehensive centers and one primary stroke center and observed a substantial reduction of approximately 35 minutes in the time from ER arrival to when the MDs were provided with an assessment of the non-contrast CT scan results for patients with suspected stroke. During the SOC phase of the study (pre-ASPECTS) the median time for the radiology read to be performed was 46 minutes vs 9.5 minutes for the treating MDs to receive the Rapid ASPECTS report in the post-ASPECTS phase. Furthermore, the radiologists were able to read the CT scan 6 minutes faster when they had the Rapid interpretation available. In addition, although only a limited number of patients received thrombectomy during the study period, there were compelling trends toward lower mortality and a higher rate of functional recovery at 90 days in the post-ASPECTS phase. Per the applicant, these data demonstrate that the Rapid ASPECTS software provides diagnostic data on suspected stroke patients considerably faster than SOC and provides evidence that earlier access to this diagnostic data improves stroke outcomes.

With respect to our request for clarity on how the AHA/ASA guidelines for the current standard of care support a finding of substantial clinical improvement for Rapid ASPECTS, the applicant stated that these guidelines require an ASPECT score of 6 or higher for the patient to receive thrombectomy in the 6-hour treatment window, and that they therefore assume that an accurate ASPECT score can be calculated and used to make an appropriate treatment decision. The applicant stated that the accuracy of the ASPECT score can be improved with the Rapid ASPECTS software, especially for less experienced readers, and that in addition there is clear evidence that the ASPECTS score can be generated more quickly with the assistance of the software, especially in hospitals that do not have immediate access to expert neuroradiologists. Regarding the lack of evidence to support the assertion that hospitals are not meeting the AHA/ASA guideline that radiologists read the CT of acute ischemic stroke patients within 20 minutes, the applicant pointed out that current Medicare guidelines state that the radiologist interpretation of the scan should occur within 45 minutes of arrival, and that they included Medicare data indicated that only 72 percent of patients meet these guidelines.

The applicant commented in response to CMS' numerous concerns regarding the relevance of the stroke literature review provided in its application. Regarding the literature on inter-rater reliability for ASPECT scoring and how it demonstrates a substantial clinical improvement in how Rapid ASPECTS supports improved triaging of stroke care, the applicant pointed to the three retrospective studies showing that an incorrect ASPECT score was chosen by a typical clinical reader approximately seven percent of the time based on the gold standard determined in each study, and that this leads to either an unnecessary procedure or an eligible patient not being treated with thrombectomy. The applicant emphasized that unnecessary procedures are costly and that thrombectomy is associated with a small risk of serious complications. The applicant stated that patients who are not treated with thrombectomy because the ASPECTS score is erroneously low will miss out on the substantial benefits of thrombectomy which include shorter length of stay, faster recovery time, improvement in activities of daily living, and improved quality of life. Regarding our uncertainty over how the applicant's literature review, which supports the urgency of stroke care, also demonstrates a substantial clinical improvement in how Rapid ASPECTS supports the urgency of stroke care, the applicant maintained that Rapid ASPECTS is highly likely to provide diagnostic information to treating physicians much faster than the current standard of care. Per the applicant, the Rapid ASPECTS score is generated and made available to treating physicians within two and a half minutes after the CT scan is completed whereas current AHA guidelines recommend that a radiologist reads the CT scan within 20 minutes, a metric that is often not met. The applicant pointed to a recent study from Johns Hopkins where use of the Rapid mobile app (app) for detection of large vessel occlusion (data presented to MDs about 2.5 minutes after the scan is completed) resulted in a 33 min reduction in door to groin thrombectomy times (P=0.02), and 37 min reduction in door to recanalization time (P=0.02) when compared with patients treated pre-app. The applicant also noted that the National Institutes of Health Stroke Scale (NIHSS) 24 hours after procedure and at discharge were significantly lower in the post-app group (P=0.03). The applicant pointed to the new data that they cited in response to our concern that the studies provided did not demonstrate improvements in clinical outcomes, which show that time to treatment with thrombectomy was reduced following introduction of Rapid ASPECTS; specifically, that there was a 35-minute reduction in the time from ER arrival to when the MDs were provided with an assessment of the non-contrast CT scan results for patients with suspected stroke, the radiologists were able to read the CT scan 6 minutes faster when they had the Rapid interpretation available, and although only a limited number of patients received thrombectomy during the study period, the applicant observed compelling trends toward lower mortality and a higher rate of functional recovery at 90 days in the post-ASPECTS phase.

The applicant then commented in response to our concerns regarding the additional data submitted in response to questions received at the New Technology Town Hall Meeting held in December 2020. With respect to our concerns about the generalizability of Mansour et al, given the small, non-randomized sample generated from a single hospital in Egypt, the applicant acknowledged that there are indeed limitations to the study, and that it occurred outside of the United States. With respect to our concern regarding one patient in the retrospective study for whom the Rapid ASPECTS-generated score and agreement read differed, suggesting that the tPA treatment the patient received was not appropriate, the applicant noted that an ASPECTS score of less than six is a contraindication to thrombectomy but is not a contraindication to tPA. The applicant provided new data from the United States to supplement this data, which show that time to treatment with thrombectomy was reduced following introduction of Rapid ASPECTS. The applicant also provided the Johns Hopkins study summarized previously showing treatment times and improved outcomes.

Other commenters cited their clinical experience using Rapid ASPECTS and echoed the applicant's comments regarding the importance of early intervention in stroke care. These commenters stated that, for patients with acute ischemic stroke with large vessel occlusions, these benefits from mechanical thrombectomy are time dependent. The commenters expressed their support of new technology add-on payments for Rapid ASPECTS, stating that incorporating technologies such as Rapid ASPECTS reduces the time to interpret the imaging studies needed to make treatment decisions, thus saving lives and reducing disability.

Response: We appreciate the commenters' input and the additional data from the applicant to address our concerns. However, after review of all the data received to date, we continue to have concerns related to the substantial clinical improvement criterion as noted in the FY 2022 IPPS/LTCH PPS proposed rule. Specifically, it remains unclear whether the use of Rapid ASPECTS significantly improves clinical outcomes for PE patients as compared to currently available treatments as the applicant did not measure the impact of the technology on outcome measures such as mortality, length of stay, and disability. This is in contrast to the data presented in response to CMS' concerns regarding Viz.ai's ContaCT, which demonstrated not only reduced time to notification but also an improved 5-day NIH Stroke Score (NIHSS) and lower Modified Rankin Score (mRS) post-ContaCT implementation among patients presenting to a primary stroke system who subsequently underwent mechanical thrombectomy. While the applicant has demonstrated that Rapid ASPECTS reduces time to notification, it has not shown that improved outcomes resulting from faster treatment are necessarily due to Rapid ASPECTS, as there are many variables in the hospital workflow that may influence management of the patient and time savings. We note that the Johns Hopkins study did not evaluate Rapid ASPECTS but rather the Rapid Mobile App for the detection of LVO. We also note that current Medicare guidelines, which state that the radiologist interpretation of the scan should occur within 45 minutes of arrival, do not apply to Rapid ASPECTS. The guidelines state that the CT should be read within 45 minutes of arrival in order to diagnose a stroke whereas Rapid ASPECTS is indicated for use in stroke patients only after the diagnosis has been made.

Therefore, after consideration of the public comments we received and based on the information stated previously, we are unable to determine that Rapid ASPECTS represents a substantial clinical improvement over existing technologies, and we are not approving new technology add-on payments for Rapid ASPECTS for FY 2022.

l. Steripath® Micro^TM Blood Collection System

Magnolia Medical Technologies, Inc. submitted an application for new technology add-on payments for the Steripath® Micro^TM Blood Collection System, which is also referred to as the Steripath® Micro^TM Initial Specimen Diversion Device (ISDD®), for FY 2022. The applicant described the Steripath® Micro^TM ISDD® (“Steripath Micro”) as a proprietary and patent-protected single-use, disposable device, which is indicated for use in the collection of blood cultures by nurses, phlebotomists, and technicians in emergency departments and inpatient units in acute care hospitals to reduce blood culture contamination and false positive diagnostic test results for sepsis. According to the applicant, Steripath® Micro^TM ISDD®, along with the Steripath and Steripath® Gen2, are part of a product portfolio utilizing their Steripath® ISSD® technology.

The applicant explained that the Steripath® Micro^TM ISDD® uses a syringe-driven (or blood culture bottle-driven) architecture that uses negative pressure to flip a proprietary internal bladder, which, in turn, creates gentle negative pressure to divert and sequester the initial 0.6 to 0.9 mL of blood, the portion known to most likely contain contaminants. According to the applicant, once diversion is complete, the user presses a side button to isolate the diverted blood. The applicant further explained that once the blood is isolated, a second independent blood flow pathway is opened to collect the blood specimen into the syringe (or blood culture bottle) for blood culture testing.

The applicant stated that the design and development of the Steripath® Micro^TM ISDD® was inspired by patients who present with symptoms concerning for sepsis and who are hypotensive (low blood pressure) and hypovolemic (low blood volume), have difficult intravenous access (DIVA), or are small in stature with lower blood volume. According to the applicant, clinicians typically utilize a syringe technique to collect blood from this patient population to enable management of negative pressure (attempting to avoid vein collapse) while improving the opportunity to collect a sufficient volume of blood to culture, which the applicant stated is a critical determinant of blood culture sensitivity (that is, avoiding false negative results). The applicant claimed that this patient population is generally ineligible for existing ISDD® technologies due to risk of vein collapse. According to the applicant, the negative pressure created by Steripath® Micro^TM ISDD®'s bladder-driven mechanism is designed to achieve initial specimen diversion while avoiding collapsing of the veins (losing venous access) of this patient population. The applicant stated that the Steripath® Micro^TM ISDD® is available with a preassembled sterile integrated syringe for syringe-driven diversion and blood culture sample collection, and components of the system may be used for infusion following sample collection after disconnection of the ISDD®.

According to the applicant, blood culture is the gold standard diagnostic test for bloodstream infections, including septicemia. The applicant explained that blood cultures are drawn from patients displaying symptoms of a potential bloodstream infection with results guiding therapeutic decisions and influencing outcomes for patients for their duration in acute care. The applicant stated that the standard of care is to collect two separate blood cultures, each consisting of two blood culture bottles containing aerobic or anaerobic medium. The applicant further noted that the major automated microbial blood culture detection systems (BACTEC and BacT/ALERT) recommend 8-10 mL of blood in each of the aerobic and anaerobic bottles—up to 40 mL total distributed across all four bottles.

The applicant stated that despite the critical role blood culture plays in providing diagnoses, an estimated 20 percent to over 50 percent of all positive blood culture results for sepsis are suspected to be false positive due to blood culture contamination, as explained in greater detail below. The applicant stated that blood culture contamination creates clinical confusion which leads to a risk of inappropriate antibiotic therapy, extended length of stay of an average of 2.0 to 2.4 days,Clostridium difficile (CDI) infection, multidrug resistance organism (MDRO) infections, Acute Kidney Injury (AKI), hospital-acquired infection (HAI) or hospital-acquired condition (HAC), false-positive Central Line-Associated Blood Stream Infection (CLABSI) treatment, false positives reported to National Healthcare Safety Network (NHSN)/CMS (thus biasing the data), and additional lab and/or other diagnostic testing.

The applicant explained that the detection of bacteremia is of particular concern for Medicare beneficiaries, given that the mean age for United States patients afflicted with sepsis in 2014 was 66.5, with sepsis present in 35 percent of all United States hospitalizations that resulted in death.

With regard to the newness criterion, the Steripath® Micro ISDD® is a Class II medical device that received 510(k) clearance from the FDA on October 8, 2020. The 510(k) clearance was based on substantial equivalence to an earlier version of the device, Steripath® Gen2, which received 510(k) clearance on February 28, 2020. According to the applicant, the Steripath® ISDD® product portfolio, including the Steripath® Micro ISDD®, is the only FDA 510(k)-cleared family of devices indicated to reduce blood culture contamination. According to the applicant, a supplemental Special 510(k) submission and clearance is anticipated for an additional configuration of the Steripath® Micro^TM ISDD® device that incorporates a butterfly safety venipuncture needle.

The applicant submitted a request for a new ICD-10-PCS procedure code and was granted approval for the following procedure code effective October 1, 2021: XXE5XR7 (Measurement of infection, mechanical initial specimen diversion technique using active negative pressure, new technology group 7).

As discussed previously, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered “new” for purposes of new technology add-on payments.

According to the applicant, diversion techniques use the same basic principle to reduce blood culture contamination by sequestering blood most likely to contain dislodged skin fragments and/or flora. With regard to the first criterion, whether a product uses the same or similar mechanism of action to achieve a therapeutic outcome, the applicant discussed current/alternative treatments to avoid blood contamination, but states that manual diversion, passive diversion, and the Steripath® Gen2 device are not comparable alternatives to Steripath® Micro^TM.

According to the applicant, manual diversion, which involves the phlebotomist or other medical professional first collecting blood into a waste tube and then manually switching to a sample collection tube, is not a replacement for Steripath® Micro^TM ISDD® because manual diversion inherently entails additional opportunities for human error through touch contamination and process variation, without the ability to manage and ensure healthcare worker compliance. The applicant further explained that manual diversion techniques introduce, at a minimum, one additional surface (waste tube top), which must either be sterilized (or carefully handled if pre-packaged sterile) to avoid cross contamination through the inoculation needle. The applicant noted that if the inoculation needle is contaminated in this manner, both blood culture bottles can become contaminated, which can be interpreted (inaccurately) as a true positive through laboratory testing. The applicant explained that Steripath® Micro^TM ISDD® is a closed system to prevent opportunities for touch contamination beyond conventional methods of blood culture sample acquisition. The applicant further explained that since Steripath® Micro^TM ISDD® is a pre-assembled and packaged sterile kit that does not require manual connections, it avoids touch-point contamination and prevents the need for additional time, focus, and manual diversion procedural compliance from the operator.

The applicant stated that the Kurin product, a competitor diversion device that uses passive diversion (or relying on the patient's blood pressure), is not a comparable alternative to Steripath® Micro^TM ISDD® as it is not FDA-cleared to reduce blood-culture contamination. The applicant claimed that passive diversion, because of its limitations, is integrated into the Kurin product to redirect 0.15 mL of blood. The applicant stated that passive devices are susceptible to bypassing diversion when the culture bottle is inoculated before diversion is complete, and that this limitation is not present within the Steripath® Micro^TM ISDD® architecture. The applicant asserted that the Steripath® Micro^TM ISDD® uses a novel syringe-driven (or blood culture bottle-driven) negative pressure to flip an internal bladder which, in turn, creates gentle negative pressure to divert and sequester the initial 0.6 to 0.9 mL of blood.

The applicant further stated that the Steripath® Gen2 ISDD® is not a comparable product to Steripath® Micro^TM ISDD®, as it uses greater negative pressure to divert an initial 1.5-2.0 mL of blood for the adult patient population. According to the applicant, the Steripath® Micro^TM ISDD® platform leverages ISDD® technology but is smaller, easier-to-use, and employs a novel proprietary diversion bladder technology to address patients who are hypotensive and hypovolemic, have difficult intravenous access, or are small in stature with lower blood volume. Specifically, the applicant explained that the Steripath® Micro^TM ISDD® uses syringe-driven (or blood culture bottle-driven) negative pressure to flip an internal bladder which in turn creates gentle negative pressure to effectively and consistently divert and sequester the initial 0.6 to 0.9 mL of blood, the portion known to most likely contain contaminants, with this patient population. The applicant asserts this differentiates the Steripath® Micro^TM from the Steripath® Gen2. The applicant further explained that once diversion is complete, the user presses a button to isolate the diverted blood and, automatically, a second independent blood flow pathway opens to collect the blood specimen into the syringe (or blood culture bottle) for culture.

With respect to the second criterion, whether the technology is assigned to the same or a different MS-DRG, the applicant did not indicate whether the Steripath® Micro^TM ISDD® would be assigned to the same MS-DRGs as cases representing patients who receive diagnostic information from competing technologies or traditional blood collection methods.

With respect to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, the applicant stated that the Steripath® Micro^TM ISDD® was fundamentally designed to address a specific and broader patient population than any other technology that is currently available and FDA 510(k) cleared to prevent blood culture contamination. The applicant explained that in a certain subset of `hard-stick' (low blood volume, hypovolemic and hypotensive) patients, blood culture using passive diversion or the Steripath® Gen2 ISDD® is not possible. According to the applicant, Steripath® Micro<sup>TM</sup> is the first ISDD designed specifically to address the unmet needs of the low blood volume, hypovolemic and hypotensive, `hard-stick' patient populations (many requiring integrated sterile syringe collection) that is FDA 510(k) cleared indicated to reduce blood culture contamination.

In the proposed rule (86 FR 25316), we noted the following concerns regarding whether the technology meets the substantial similarity criteria and whether it should be considered new. Although we understand that the Steripath® Micro^TM ISDD® version may divert less blood volume and utilize less negative pressure than the Steripath® Gen2 ISDD®, we noted that both devices utilize negative pressure and, according to the applicant, leveraged Magnolia Medical Technologies' foundational ISDD® technology, and it is unclear whether this represents a new mechanism of action. We further noted that the applicant also appears to consider the devices as similar, as they exclusively rely on studies conducted using the Steripath® Gen2 ISDD® to demonstrate substantial clinical improvement. We stated that we believe that the newness date for Steripath® Micro^TM ISDD® would begin on February 28, 2020, the date on which the predicate device received 510(k) clearance. We also noted that the applicant claimed that the Steripath® ISDD® product portfolio, including the Steripath® Micro^TM ISDD®, is the only FDA 510(k)-cleared family of devices indicated to reduce blood culture contamination and we invited public comment on whether there are other FDA-cleared products designed to reduce blood culture contamination.

We invited public comments on whether the Steripath® Micro^TM ISDD® is substantially similar to other technologies and whether the Steripath® Micro^TM ISDD® meets the newness criterion.

Comment: The applicant submitted a letter asserting that Steripath® Micro^TM ISDD® meets the newness criterion. In response to our concern regarding whether the Steripath® Micro^TM ISDD® difference constituted a new mechanism of action, the applicant stated that the reduced diversion volume, the lower average peak negative pressure of Steripath® Micro^TM ISDD® compared to Steripath® Gen2 ISDD®, and the pre-assembled integrated syringe configuration allowing for precise end-user control of the negative pressure constitute a new mechanism of action. The applicant stated that these features allow the Steripath® Micro^TM ISDD® to offer the same clinical benefits of the Steripath® Gen2 ISDD® to the DIVA, hypovolemic, hypotensive, and small-in-stature populations. The applicant also stated that initial feedback from commercial users of the Steripath® Micro^TM ISDD® is overwhelmingly positive, noting ease of use and utility for patients with fragile veins and vasculature. The applicant stated that clinical use data and end-user feedback to date shows that the novel mechanism of action is meeting the needs of the previously unserved DIVA population; however, the applicant did not provide data to support this claim. The applicant also stated that Steripath® Micro^TM ISDD® enables an equitable standard of care for sepsis testing accuracy and prevention of misdiagnosis for an expanded Medicare-eligible patient population.

In response to our concern regarding the applicant's reliance of on clinical data from the Steripath® Gen2 ISDD® indicating that the two devices may be substantially similar, the applicant stated that reliance on a predicate device's supporting clinical literature is not one of the newness criteria. The applicant stated that the unique mechanism of action of Steripath® Micro^TM ISDD® and the new target population differentiate the two devices. The Steripath® Micro^TM ISDD® was FDA cleared on October 8, 2020. The applicant stated, however, that the commercial launch date was March 31, 2021, and should function as the newness date.

A few commenters stated that the Steripath® Micro^TM ISDD® is needed for the DIVA population. These commenters generally noted the efficacy of the Steripath® Gen2 ISDD®, but stated that it may not be appropriate for use in the DIVA population, and welcome the arrival of the Steripath® Micro^TM ISDD®.

Response: We thank the commenters for their perspective on the mechanism of action and potential benefits of Steripath® Micro ISDD® to the DIVA population and have taken them under into consideration. We also appreciate the information provided by the applicant regarding the newness criterion. However, after consideration of the information provided, we continue to believe that the mechanism of action is substantially similar to that of its predicate device, Steripath® Gen2 ISDD®. While the applicant provides information that differentiates the Steripath® Micro^TM ISDD® from the Steripath® Gen2 ISDD®, we do not believe that these differences rise to the level of a new mechanism of action. We believe that the differences of reduced diversion volume, lower average peak negative pressure, and the pre-assembled integrated syringe configuration allowing for precise end-user control of the negative pressure are iterative updates. The two devices still work using the same mechanism of action, which is sequestration of the initial flash of blood during blood collection to remove skin flora and or other contaminants. We also continue to believe that the DIVA population may already be served by the Steripath® Gen2 product since the Magnolia Medical Steripath® Gen2 website states so directly. Lastly, we believe cases involving Steripath® Micro^TM ISDD® would be assigned to the same MS-DRGs as cases involving Steripath® Gen2 ISDD®.

After consideration of all the information from the applicant, as well as the comments we received, we believe that the Steripath® Micro^TM ISDD® is substantially similar to the Steripath Gen2 ISDD®. Since the Steripath® Gen2 received marketing authorization on February 28, 2020, we therefore consider the newness date for the Steripath Micro^TM ISDD® to begin on February 28, 2020.

With regard to the cost criterion, the applicant searched the FY 2019 MedPAR FR claims data file with the FY 2019 Final Rule IPPS Impact File to identify potential cases representing patients who may be eligible for treatment using Steripath® Micro^TM ISDD®.

The applicant used 37 Infection ICD-10-CM Diagnosis Codes and 15 Sepsis ICD-10-CM Diagnosis codes to identify patients who could potentially benefit from the Steripath® Micro^TM ISDD® during an inpatient stay. These ICD-10-CM codes are provided in the following table:

In its analysis, the applicant identified a primary cohort to assess whether this therapy met the cost criterion. The applicant stated that clinical literature suggests the DIVA population represents anywhere from 17 percent to 59 percent of all patients that present as symptomatic for sepsis and require blood cultures. The applicant added that the literature did not provide any additional information on the distribution of the DIVA population within the larger infection/sepsis population. To account for this, the applicant randomly selected 33% of claims that included one of the ICD-10 codes listed previously in one of the first two diagnosis code positions on the claim to include in the cost analysis.

The applicant removed MS-DRGs describing kidney and urinary tract infections and renal failure because these cases are not likely to benefit from use of the Steripath® Micro^TM ISDD®. The applicant stated that these diagnoses rely on technologies not relevant to Steripath® Micro^TM ISDD®, such as urine cultures and blood cultures specific to urea and creatinine. Lastly the applicant excluded cases in MS-DRGs that accounted for less than 1% of the total cases in the identified sample.

The claim search conducted by the applicant resulted in 295,790 claims mapping to six MS-DRGs: 871 (Septicemia or severe sepsis w/o mv >96 hours w mcc), 872 (Septicemia or severe sepsis w/o mv >96 hours w/o mcc), 853 (Infectious & parasitic diseases w O.R. procedure w mcc), 870 (Septicemia or severe sepsis w mv >96 hours or peripheral extracorporeal membrane oxygenation (ECMO)), 854 (Infectious & parasitic diseases w O.R. procedure w cc), and 177 (Respiratory infections & inflammations w mcc). The applicant determined an average unstandardized case weighted charge per case of $69,973.

The applicant stated that studies show blood culture contamination (BCC) increases length of stay (LOS) and leads to unnecessary antimicrobial therapy and/or hospital-acquired conditions. The applicant stated that a retrospective analysis involving hospitalized patients with septicemia-compatible symptoms found that avoiding BCC would decrease costs by $6,463, including $4,818 in savings for inpatient care. 53 percent of savings were attributed to reduced LOS and 26 percent to reduced antibiotic use. The applicant stated that to account for these savings, they removed $2,500 by inflating costs to charges using the national average cost-to-charge ratio (CCR) for routine days and $2,300 by inflating costs to charges using the pharmacy national average CCR. Because the previous study cited did not describe where non-LOS related inpatient savings arose, the applicant assumed that the savings arose from reduced drug use and therefore the pharmacy national average CCR was used.

Because, according to the applicant, savings accrue in around 3% of cases where the Steripath® Micro^TM ISDD® is used, the applicant applied three percent of the savings described previously to every case in the sample population. The applicant stated that removing the $4,800 in cost savings from 3 percent of the cases is mathematically the same as removing 3 percent of the cost savings from all cases. The applicant then standardized the charges using the FY 2019 Final Rule Impact File. Next, the applicant applied the 2-year inflation factor used in the FY 2021 IPPS/LTCH PPS final rule to calculate outlier threshold charges (1.13218). To calculate the charges for the technology, the applicant used the national average CCR for the Supplies and Equipment cost center of 0.297 from the FY 2021 Final IPPS rule. The applicant calculated a final inflated average case-weighted standardized charge per case of $76,796, which exceeded the average case-weighted threshold amount of $69,973 by $6,824. The applicant stated that because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount, the therapy meets the cost criterion.

Based on the information provided by the applicant, we noted the following concerns with regard to the cost criterion in the proposed rule. In its analysis, the applicant stated it randomly selected 33% of claims that included one of the ICD-10 codes listed previously in one of the first two diagnosis code positions on the claim to include in the cost analysis. Implicit in this decision to randomly select a subsample is the belief that Steripath® Micro^TM ISDD® cases are randomly distributed across all cases identified. If performed properly, the intent of random sampling from a population is to identify a smaller group of cases which remains representative or similar to the greater population. An added effect of proper random sampling is that the sample often has less variance than the population from which it was drawn. We stated that we are therefore concerned that random sampling may be inappropriate in this situation if the potential cases are not similarly randomly distributed. Furthermore, if it is true that a subset of cases would be more representive of cases eligible for use of the Steripath® Micro^TM ISDD®, it may be more likely that those cases will be distributed based on certain characteristics, not randomly distributed. We sought public comment on whether the random sample used by the applicant would appropriately identify the cases eligible for the use of Steripath.

In its cost analysis, the applicant stated that, in order to account for savings from the use of Steripath® Micro^TM ISDD®, it removed $2,500 by inflating costs to charges using the national average cost-to-charge ratio (CCR) for routine days and $2,300 by inflating costs to charges using the pharmacy national average CCR. We stated in the proposed rule that from a methodological standpoint, we are not certain that the data from which savings were calculated are generalizable to the broader Medicare population's experience if Steripath® Micro^TM Blood Collection System is used. Specifically, we were not certain that the patient population and the resulting conclusions from the aforementioned study ³⁸⁵ adequately generalize to the Medicare population.

Lastly, the applicant stated that because savings accrue in around three percent of cases where the Steripath® Micro^TM ISDD® is used, the applicant applied three percent of the savings described previously to every case in its sample population. We stated we were unclear whether the three percent of cases which experienced savings in the one study provided by the applicant is adequately representative of the Medicare population. We were not certain that three percent of a sample experiencing some level of savings is the same as all cases experiencing three percent savings. Therefore, we were not certain that it is appropriate to apply three percent of savings across all cases in the applicant's cost analysis. As with the reduction in charges discussed previously, while the applicant's approach provides a more conservative estimate for purposes of the cost criterion, we questioned whether it accurately reflects the experiences of providers and Medicare beneficiaries.

We invited public comment on whether Steripath® Micro^TM ISDD® meets the cost criterion.

Comment: A commenter, the applicant, submitted comments in response to our concerns on whether Steripath® Micro^TM ISDD® meets the cost criterion. With respect to our concern regarding the random sampling used by the applicant and whether it appropriately identified the cases eligible for the use of Steripath® Micro^TM ISDD®, the applicant pointed to clinical literature suggesting that the DIVA population represents approximately 17 to 59 percent of all patients that present symptomatic for sepsis and require blood cultures. The applicant further explained that it did not have evidence that patients who are eligible for Steripath® Micro^TM ISDD® would match any particular profile that could be identified through claims data. For instance, the applicant did not have any evidence to suggest that patients in the DIVA population have more or less costly inpatient stays. Accordingly, in its original analysis, the applicant randomly selected 33 percent of claims from its full sample that included one of the ICD-10 codes listed in its application in one of the first two diagnosis code positions. The applicant acknowledged that selecting claims is an imperfect process that requires assumptions to be made in the absence of clear selection criteria, and in response to CMS' concern reran its analysis using the full sample cases, which resulted in a final inflated case-weighted standardized charge per case that exceeded the case weighted threshold. Thus, the applicant maintained that Steripath® Micro^TM ISDD® meets the cost criterion.

With respect to our concern that the savings calculated may not be generalizable to the broader Medicare population, the applicant pointed to a retrospective analysis involving hospitalized patients with septicemia-compatible symptoms. The applicant stated that this analysis found that avoiding blood culture contamination would decrease costs by $6,463, including $4,818 in savings for inpatient care, 53 percent of which were attributed to reduced length of stay and 26 percent to reduced antibiotic use. The applicant removed $2,500 by inflating costs to charges using the national average cost-to-charge ratio for routine days and $2,300 by inflating costs to charges using the pharmacy national average cost to charge ratio. The applicant recognized that accounting for anticipated savings is an imperfect process that requires assumptions be made on the best available evidence, and that given the absence of more detailed demographic data, CMS is correct in its uncertainty on whether the experiences of the 270 true-negative and false-negative patients included in the data from which savings were calculated can be adequately generalized to the Medicare population. However, the applicant pointed to a 2011 study published by the National Center for Health Statistics which found that rates of hospitalizations for septicemia or sepsis were significantly higher for those aged 65 and over than for those under age 65. Moreover, the applicant noted that, according to this study, the septicemia or sepsis hospitalization rate for those aged 85 and over was about 30 times the rate for those under age 65 and was more than four times higher than the rate for the 65-75 age group. Additionally, the study found that two-thirds of patients hospitalized for septicemia or sepsis in 2008 were aged 65 and over and had Medicare as their payer. The applicant concluded that while it cannot definitively say that the patient population in the study evaluating cost savings from use of Steripath is generalizable to the Medicare population, it is reasonable to assume that some portion of the patient population accounted for in the study would be representative of the Medicare population based on the high incidence of septicemia and sepsis among Medicare beneficiaries.

Finally, in response to our concern that the three percent of the applicant's sample population experience some level of savings is not the same as all cases in the sample experiencing three percent savings, the applicant reran its cost analysis to randomly select three percent of cases from its full sample population and removed savings for those three percent of cases only. The applicant used the same methodology described previously to account for these savings. After randomly selecting three percent of cases from the full sample population and applying the anticipated savings from use of Steripath® Micro^TM ISDD®, the applicant found that the final inflated case-weighted standardized charge per case exceeded the case-weighted threshold and that Steripath® Micro^TM ISDD® meets the cost criterion.

Response: We thank the commenter for the additional information provided, including its supplementary cost analyses. After consideration of the comments received and the cost analyses provided by the appliant, we agree that the final inflated case-weighted standardized charge per case for Steripath® Micro^TM ISDD® exceeds the case-weighted threshold and that Steripath® Micro^TM ISDD® meets the cost criterion.

With respect to the substantial clinical improvement criterion, the applicant asserted that the Steripath® Micro^TM ISDD® represents a substantial clinical improvement over existing technology. The applicant stated that data from studies show that Steripath Micro^TM ISDD® offers the ability to reduce blood collection contamination with skin flora and asserted that it improves clinical outcomes relative to services or technologies previously available as demonstrated by reducing clinically significant adverse events (that is, a decrease in inappropriate antibiotic use and a decrease in inappropriate hospitalizations).

The applicant submitted with its application 17 Steripath® ISDD® technology-specific studies, including 5 peer-reviewed studies published in scientific journals, that it stated support the contamination rate reduction with Steripath® Gen2 ISDD ® of 73.6 percent to 100 percent, with resulting sustained contamination rates of 0.97 percent to 0.0 percent, which the applicant stated is below the 3.0 percent gold standard benchmark rate for blood culture contamination.

The applicant submitted a retrospective controlled study by Bell M, et al. that showed that investigators seeking to lower the blood culture contamination rate at four different Lee Health (a healthcare system in Florida) emergency departments found that Steripath® Gen2 ISDD® implementation reduced their blood culture contamination rate by 83.0 percent when compared to conventional methods of sample acquisition, (that is without diversion). The Lee Health emergency departments compared contamination rates obtained using Steripath® Gen2 ISDD® device as the standard of care from May 2016 through November 2016 to conventional methods which were collected from October 2015 through November 2016. The applicant stated that these findings support their claim that Steripath® ISDD® reduces the risk of blood culture contamination.

The applicant submitted the Bauman, K, poster, where investigators seeking to lower the blood culture contamination rate at the Inova Fairfax Medical Center found that Steripath® Gen2 implementation reduced their blood culture contamination rate by 81.5% when compared to conventional methods of sample acquisition. The trial use of Steripath® Gen2 lasted for one year, and results were compared to conventional methods for the year preceding the trial. According to the applicant, findings support the claim that Steripath® reduces the risk of blood culture contamination, while historical patient data from this hospital supported the claim that the lower contamination rate Steripath® enables will translate into a reduced patient length of stay of one day per avoided false positive event.

The applicant submitted the Blakeney J, et al. poster, a prospective controlled study comparing the use of Steripath® ISDD® to standard collection methods and the effect on blood culture contamination rates. Over a 16-week period, participants' blood was collected using both the Steripath® and conventional methods, with each being recorded. Per the applicant, outcomes showed that Steripath® ISDD® implementation reduced Beebe Healthcare's blood culture contamination rate by 74.6 percent when compared to conventional methods of sample acquisition. The applicant stated that the findings support the claim that Steripath® ISDD® reduces the risk of blood culture contamination.

The applicant submitted the Church K, et al. prospective controlled study, which showed that investigators at the Medical University of South Carolina emergency department found that Steripath® Gen2 ISDD® implementation reduced their blood culture contamination rate by 73.6 percent when compared to conventional methods of sample acquisition. In this 20-month study, nurses were given autonomy to decide if a patient would be best served by the Steripath® Gen2 device or conventional methods, with choices being recorded. The uptake rate of the Steripath® Gen2 device was 66%, with exclusions being uncooperative patients and difficult to stick patients.

The applicant submitted the Gauld L, et al. study, an eight month long prospective controlled study which showed that investigators seeking to lower the blood culture contamination rate at the Medical University of South Carolina emergency department found that Steripath® Gen2 ISDD® implementation reduced their blood culture contamination rate by 86.3 percent when compared to conventional methods of sample acquisition.

The applicant submitted a poster, Lanteri C, et al., with preliminary data and a paper, Huss, J, et al., that includes all of the poster data with additional data gathered. This prospective controlled study at Brooke Army Medical Center showed that Steripath® Gen2 ISDD® implementation reduced blood culture contamination rate by 91.7 percent from September 2015 through January 2016, and 89.7 percent from September 2015 through March 2016 when compared to conventional methods of sample acquisition.

The applicant submitted the Rupp M, et al. paper, which is a 12-month, single center, prospective, controlled, open label trial. Investigators at the University of Nebraska Medical Center emergency department seeking to gauge the efficacy of the Steripath® Gen2 ISDD® without confounding variables conducted a matched-set controlled study and found that Steripath® implementation reduced their blood culture contamination rate by 87.6 percent when compared to conventional methods of sample acquisition.

The applicant submitted the Stonecypher K, et al. 8 week pilot study, which showed that investigators at the Michael E. DeBakey VA Medical Center emergency department found that Steripath® Gen2 ISDD® implementation reduced their blood culture contamination rate by 83.1 percent when compared to conventional methods of sample acquisition.

The applicant submitted the Tompkins L, et al. abstract, which showed that investigators seeking to lower the blood culture contamination rate at Stanford Health Care found that Steripath® Gen2 ISDD® implementation reduced their blood culture contamination rate by 100 percent over a 4-month period when compared to conventional methods of sample acquisition. According to the applicant, full results are anticipated but not presently published.

The applicant submitted the Tongma C, et al. prospective controlled study, which showed that investigators seeking to lower the blood culture contamination rate at Rush University Medical Center emergency department found that Steripath® Gen2 ISDD® implementation reduced their blood culture contamination rate by 87.0 percent when compared to conventional methods of sample acquisition. The 6-month study was split into an initial 3 months of usual care and a subsequent 3 months using the Steripath® Gen2 ISDD®.

The applicant provided the following studies to support secondary claims of substantial clinical improvement:

The applicant submitted the Buchta C, et al. animal (pig) model study, in which investigators hypothesized that despite proper skin antiseptic use, contamination may occur because flora from deeper regions (such as pores) are not effectively eliminated. The applicant stated that results confirmed the hypothesis that cannula may cause tissue fragments to be punched in the process of blood sample acquisition, supporting the mechanism by which Steripath® Gen2 ISDD® primarily addresses blood culture contamination (that is, diversion).

The applicant submitted the Rhee C, et al. retrospective cohort study, which featured adult patients admitted to 409 academic, community, and Federal hospitals from 2009-2014. Investigators sought to estimate national sepsis incidence and trends, concluding that sepsis was present in 6 percent of adult hospitalizations and 35 percent of hospitalizations resulting in death. According to the applicant, this helps put into context the role of Steripath® ISDD® in improving the efficacy of the primary tool used to guide therapy for bloodstream infections: Blood culture.

The applicant submitted the Zimmerman F, et al. paper (a randomized clinical trial) and the Binkhamis K and Forward K paper (a prospective controlled study), which demonstrated that manual diversion reduced blood culture contamination rate by 60.0 percent and 28.2 percent, respectively, when compared to conventional methods of sample acquisition.

The applicant also submitted the Patton R and Schmitt T prospective controlled study, which showed that investigators seeking to trial manual diversion of 1 mL to lower the blood culture contamination rate at the Northwest Hospital and Medical Center Emergency Department found that manual diversion reduced their blood culture contamination rate by 43.8 percent when compared to conventional methods of sample acquisition. The applicant further stated that the findings additionally support the volume of diversion utilized by Steripath® Micro^TM ISDD®.

The applicant also submitted the Syed S, et al. preintervention and postintervention study, which showed that investigators at the AMITA Health Saint Francis Hospital Emergency Department found that manual diversion reduced their blood culture contamination rate by 30.9 percent when compared to conventional methods of sample acquisition.

According to the applicant, the findings from these four studies support the claim that manual diversion reduces the risk of blood culture contamination relative to conventional methods of sample acquisition. We note that these studies discussed manual diversion and not Steripath® Micro^TM or other diversion devices.

The applicant submitted the Alahmadi Y, et al. study, which is a retrospective case-control study that showed that false positive blood cultures were associated with an average 5.4 day increase in patient length of stay and average increases of more than $7,500 in total charges to a healthcare system. The applicant also submitted the Bates D, et al., which is a prospective controlled study that showed false positive blood cultures were associated with an average of a 4.5 day increase in patient length of stay and average increases of more than $4,000 in total charges to a healthcare system. According to the applicant, investigators also noted that contaminants were independently correlated with a 39 percent increase in antibiotic charges.

The applicant provided a study to support its claim that the Steripath® ISDD® reduces the average length of stay for patients requiring blood culture, thereby lowering their risk of hospital-acquired infections (HAI) and conditions (HAC). The applicant explained that the Skoglund E, et al. decision tree health care economic model paper showed that investigators found that overall, each false positive blood culture was on average associated with 2 day increases in patient length of stay and an average increase of more than $4,500 in total charges to a healthcare system. According to the applicant, Steripath® ISDD® implementation may reduce costs associated with contamination and reduce the average patient length of stay.

The applicant provided four studies to support its claim that Steripath® ISDD® reduces the inappropriate administration of vancomycin and other antibiotics to drive antibiotic stewardship. The applicant submitted the Chang D, et al. poster, a retrospective, nonrandomized study that recorded the San Antonio Military Medical Center Emergency Department's days of therapy (DOT) of vancomycin for 18 months as a baseline. Then, the hospital implemented a new blood culture test, and recorded the DOT of vancomycin for 7 months. Subsequently, the hospital implemented the Steripath® Gen2 device and recorded the DOT of vancomycin for an additional 14 months to complete the 39-month trial. Investigators found that Steripath® Gen2 ISDD® implementation reduced vancomycin days of therapy by 14.4 days per 1,000 patient days when compared to conventional methods of sample acquisition. According to the applicant, findings from the study, as reported by the study authors, support the claim that Steripath® ISDD® reduces the unnecessary administration of antibiotics by reducing the rate of false positive blood cultures.

The applicant also submitted the Souvenir D, et al. cohort study of 3,276 cultures of blood from 1,433 patients in which investigators found that physicians treated almost half of all patients receiving a false positive blood culture result with antibiotics, with vancomycin misuse occurring in 34 percent of patients. The applicant also submitted the Heijden Y, et al. study in which investigators found that physicians treated 27% of patients receiving a false positive blood culture result with antibiotics unnecessarily, with the median antibiotic regimen being 7 days in length. The applicant also submitted the Bates study, as discussed previously, which showed contaminants were independently correlated with a 39 percent increase in antibiotic charges. According to the applicant, as Steripath® ISDD® is designed to reduce the incidence of blood culture contamination, Steripath® ISDD® implementation may reduce unnecessary antibiotic administration while supporting antimicrobial stewardship.

In the proposed rule (86 FR 25320 through 25321), we stated the following concerns regarding the substantial clinical improvement criterion. We noted that much of the evidence submitted by the applicant to support that Steripath® Micro^TM represents a substantial clinical improvement over existing technologies spoke to the overall clinical value of reducing blood contamination, or the benefit of manual diversion over no diversion, but did not directly link the Steripath® Micro^TM to improved clinical endpoints. We noted that the applicant stated that all of the studies provided that address the specific technology used to reduce blood contamination through diversion of the initial sample during blood collection utilized the Steripath® Gen2 ISDD®, not the Steripath® Micro^TM ISDD® and we therefore question whether we have sufficient information to assess the clinical impact of Steripath® Micro^TM. Furthermore, we noted that the applicant did not present any clinical data to compare Steripath® Micro^TM ISDD® to the Steripath® Gen2 ISDD®. We also noted that comparative studies between Steripath® Micro^TM and either manual diversion or competitor devices were not provided, and we question whether the standard of care used in the studies (that is, no diversion) is an appropriate comparator against which to test this technology. Additionally, we noted that the applicant did not provide any clinical data demonstrating that the Steripath® Micro^TM directly reduced length of stay, C. difficile infections, or other secondary results of antibiotic overuse. We noted our interest in any clinical data that directly links the Steripath® Micro^TM to these outcomes.

Finally, we noted that the claim of gentle negative pressure in support of the applicant's assertion that the technology would provide a treatment option for a new patient population was not addressed by any of the studies submitted. In addition, no data was supplied that quantified appropriate levels of negative pressure for either the typical or DIVA populations. Furthermore, no data was provided which compared the asserted appropriate level of negative pressure to levels of negative pressure created by the Steripath® Micro^TM and Steripath® Gen2 devices. We noted our interest in any evidence of clinical improvement using the Steripath® Micro^TM ISDD® in the specific population identified by the applicant, the difficult intravenous access population.

We invited public comments on whether the Steripath® Micro^TM ISDD® meets the substantial clinical improvement criterion.

Comment: The applicant submitted a letter that asserted the Steripath® Micro^TM ISDD® meets the substantial clinical improvement criteriona. The applicant stated that the Steripath® Micro^TM ISDD® meets the CMS regulatory definition of “substantial clinical improvement” because it offers the DIVA, hypovolemic, hypotensive, and small-in-stature populations access to a technology for which these groups currently have no other available option. Per the applicant, Steripath® Micro^TM ISDD® confers the same benefits of the Steripath® Gen2 ISDD® onto new patient populations. The applicant further stated that Steripath® Micro^TM ISDD® initial results (over 500 blood culture draws with zero contaminations at multiple facilities) indicate an efficacy profile substantially equivalent to Steripath Gen2 ISDD®.

In response to our concern regarding the lack of clinical data for the Steripath® Micro ISDD®, the applicant reiterated that the reduced diversion volume is supported by the literature, initial data indicates a substantially equivalent efficacy profile, the DIVA population is eligible for the device, and the FDA cleared the Steripath® Micro^TM ISDD® with specific indications for use to reduce blood culture contamination.

In response to our concern regarding the lack of studies that compare the Steripath® Micro^TM ISDD® to any relevant standard of care or technology, the applicant stated that studies provided by the applicant regarding manual diversion can be compared to studies featuring the Steripath® Gen2 ISDD®, despite the studies taking place in different times, settings, and patient populations. The applicant further stated that the initial results since the commercial launch of the Steripath® Micro^TM ISDD® are equivalent to the Steripath® Gen2 ISDD®. The applicant also notes that there are no FDA-cleared competitive devices that are indicated to reduce blood culture contamination. The applicant also stated that no diversion is the standard of care and therefore an appropriate comparator.

In response to our concern that there is no evidence linking the Steripath® Micro ISDD® directly to reduced length of stay, C. difficile infections, or other secondary results of antibiotic overuse, the applicant stated that the equivalent efficacy of the Steripath® Micro ISDD® to the Steripath® Gen2 ISDD® indicated that the Steripath® Micro ISDD® will have equivalent effects on outcomes demonstrated by use of Steripath® Gen2 including reduced blood culture contamination, reduced length-of-stay and reduced antibiotic use.

In response to our concerns regarding the lack of quantifiable data related to the pressure of the devices, the applicant noted that the Steripath® Micro^TM ISDD® novel bladder architecture utilizes 78% lower average peak negative pressure compared to Steripath Gen2 ISDD® (average range of −0.5 psi compared to −2.3 psi) to help reduce the risk of vascular compromise and/or interrupted blood flow during blood culture collection.

We also received additional comments in support of the technology. A commenter noted that in their hospital's experience with using the Steripath® Micro^TM ISDD® in pediatric patients, no contaminations have occurred. Another commenter stated that the Steripath® Micro^TM ISDD® will allow their health system to reduce blood contamination equitably across populations as it serves the DIVA population who was previously ineligible for Steripath® ISDD® technology.

Response: We appreciate the commenters' perspectives on the substantial clinical improvement criterionaand have taken them into consideration. However, after review of all the data received to date, we continue to have concerns regarding the substantial clinical improvement criterion as noted in the FY 2022 IPPS/LTCH PPS proposed rule. Specifically, we remain concerned that the applicant did not provide any studies that featured the Steripath® Micro^TM ISDD®, which is the subject of this application, and we therefore cannot adequately determine if the product fully meets the substantial clinical improvement criterion. While the applicant stated that initial results of blood draws with Steripath® Micro^TM indicate a substantially equivalent efficacy profile to that of the Gen2, we did not receive any data to support this claim, and furthermore, substantial equivalence does not demonstrate superiority. We agree that existing FDA-cleared devices are not indicated to reduce blood culture contamination and are therefore not an appropriate comparator. Though the applicant compared blood culture contamination reduction rates of manual diversion as compared to Steripath® Gen2 and asserted that the Micro^TM has been proven to perform as well as Gen2, without data using the Steripath® Micro^TM to demonstrate improved outcomes we are unable to come to this conclusion. Thus, we also continue to have concerns that the applicant also did not provide studies that compared the Steripath® Micro^TM ISDD® to other Steripath® devices (specifically Steripath® Gen2) or other forms of diversion or best practices used to reduce blood culture contamination to demonstrate an improvement in clinical outcomes such as length of stay, treatment decisions, C. difficile infections, or other secondary results of antibiotic overuse, as the applicant only reiterated evidence linking the Steripath® Gen2 to these outcomes. Though the applicant asserts that the Micro®'s comparable efficacy to the Gen2 gives them no reason to believe these outcomes will be affected with the DIVA population, we disagree that this is a new patient population as discussed further below, and believe that this does not speak to the technology's superiority over existing technologies.

We also continue to have concerns with the applicant's assertion that Steripath® Micro^TM treats patients ineligible for current treatments. As discussed previously, the applicant's website states that the Gen2 is also targeted to treat DIVA patients, and patients with difficult access are still able to receive blood cultures. The applicant states that the standard of care is no diversion, and therefore it follows that these patients will not require it to receive blood cultures using other forms of best practices. Since we did not receive any data demonstrating the use of Steripath® Micro® in DIVA patients, we are unable to determine that it offers a treatment option for patients ineligible for current therapies.

After consideration of the information previously submitted in the Steripath® Micro^TM ISDD® application and previously summarized in this final rule, and the public comments we received, we are unable to determine that the Steripath® Micro^TM ISDD® meets the substantial clinical improvement criterion. Therefore, we are not approving new technology add-on payments for the Steripath® Micro^TM ISDD® for FY 2022.

m. StrataGraft^TM Skin Tissue

Stratatech Corporation, a Mallinckrodt company, submitted an application for new technology add-on payments for the StrataGraft skin tissue (“StrataGraft”) for topical application for FY 2022. The applicant describes StrataGraft skin tissue as a viable, bioengineered, regenerative skin construct (BRSC) consisting of an epidermal layer of viable, fully stratified, allogeneic human NIKS® keratinocytes growing on a dermal layer composed of viable human dermal fibroblasts embedded in a collagen-rich matrix. The applicant noted that StrataGraft^TM is intended for the treatment of adult patients with severe thermal burns that contain intact dermal elements and require surgical intervention (hereinafter referred to as severe thermal burns [STB]). The applicant stated that StrataGraft^TM skin tissue is produced in a rectangular format of approximately 100 cm², approximately 8 cm by 12.5 cm.

The applicant explained that the StrataGraft^TM skin tissue promotes durable wound closure and regenerative healing for adult patients with STB. The applicant stated that in addition to providing immediate wound coverage and epidermal barrier function, the viable and metabolically active keratinocytes and fibroblasts in StrataGraft^TM skin tissue provide sustained expression and secretion of growth factors, cytokines, and wound healing factors, which are anticipated to promote regenerative healing. The applicant stated that the StrataGraft^TM skin tissue does not engraft; rather, it promotes regenerative healing and is replaced by the patient's own cells, eliminating the need for autografting to attain definitive closure of treated wounds.

The applicant explained that a thermal burn is the most common type of burn injury and accounts for approximately 86 percent of burn cases. The applicant noted that burns are classified according to the depth of tissue injury as superficial (first-degree burns), partial-thickness (superficial and deep partial-thickness; second-degree burns), full-thickness (FT, third-degree burns), and fourth-degree burns (burns that have injured deeper structures such as muscle, fascia, and bone). The applicant also noted the percentage of total body surface area (TBSA) determines burn severity and directly correlates with mortality.

The applicant stated that in the U.S., approximately 500,000 burn injuries receive emergency medical treatment each year, leading to 40,000 burn injury hospitalizations with 30,000 at hospital burn centers. The applicant noted that children and the elderly represent especially vulnerable populations at increased risk for death due to the skin loss and its complications. The applicant explained that in 2013, the rate of burn-related hospital stays was highest for infants aged younger than 1 year (29.6 per 100,000 population) and older adults (20.7 per 100,000 population for adults aged 65-84 and 26.3 per 100,000 population for adults aged 85 and older). The applicant also stated that unintentional fire or burn injuries was the 8th leading cause of death in those 65 years or older.

The applicant explained that today, 96.7 percent of burn patients treated in burn centers will survive. The applicant noted that many of those survivors will sustain serious scarring and life-long physical disabilities. The applicant stated that burn injuries pose a significant burden to patients; they can have a considerably negative effect on the patient's health-related quality of life (HRQoL), which was estimated to be reduced by 30 percent at the time of injury and by 9 percent in the long term. The applicant explained that although most functional domains affected by burn injuries recover over time, HRQoL scores pertaining to physical and emotional role participation, anxiety, depression, pain, work, and heat sensitivity remained low at 12 months after the injury.

The applicant explained that the standard of care for STB injuries is early excision and skin grafting. The applicant noted that common surgical interventions for burn injury include: Escharotomy, debridement, excision, and skin grafting. The applicant explained that these burns have been treated with autografts, allografts, and xenografts in the past. The applicant stated that autologous grafts (autografts) are used most frequently because of the problems of infection and rejection when using allografts or xenografts.

The applicant explained that autografting involves surgical harvesting of healthy tissue from the patient (donor site) and transplantation of this skin to an injured site on the same patient. The applicant noted that autografts can be harvested as split thickness or full thickness. According to the applicant, split-thickness skin grafts (STSGs), also called partial-thickness grafts, transfer a portion of the donor site skin, including the epidermis and some of the underlying dermis. The applicant also explained that this allows the donor site to heal from the epidermal elements left behind. The applicant also stated that full-thickness skin grafts (FTSGs) harvest the entire layer of skin as the graft; no dermal or epidermal elements remain at the donor site, which must be closed by local advancement of the adjoining skin or by a secondary local flap. The applicant stated that the process of revascularization takes longer for an FTSG than for an STSG because of the increased thickness of the tissue.

The applicant explained that early excision and skin grafting reduce the chance of wound infections and systemic sepsis, and have become the standard of care. The applicant noted that without autografting, an STB that contains some dermal elements usually requires greater than 3 weeks to heal, thereby increasing the risk for infection and other complications that may lead to the development of significant scarring and contracture. The applicant stated that while STBs require surgical debridement and grafting, superficial first-degree burns do not; however, in the acute phase of the burn injury, the clinical presentation of the severely injured burn patient usually involves a range of burn depths from a superficial burn to a FT burn.

The applicant explained that although autografting is effective in closing wounds and has been a standard treatment for decades, it has limitations. The applicant stated that donor sites are often associated with several complications, including excessive pain, pruritus, infection, dyschromia, hypertrophic scarring, delayed healing, and the potential for conversion to a FT wound. The applicant also noted that donor-site pain is typically more painful than that in the treatment (burned) site and may become chronic. In patients with burns of 50-60 percent TBSA, autograft is limited by donor-site availability. The applicant explained that donor sites may be re-harvested if they heal in time without infection; however, this practice can lead to prolonged hospitalization and decreased quality of the skin from re-harvested sites. The applicant stated that after patients undergo skin grafting, in the long term, both the grafted wound site and the donor site require continuous physical and rehabilitative therapy to maintain the range of movement, minimize scar and contracture development, and maximize functional ability.

The applicant noted that autografting is especially undesirable in vulnerable patient populations, such as the elderly. The applicant stated that the healing of donor sites may be delayed or even lacking in elderly patients or patients whose wound-healing capabilities are compromised. The applicant explained that because patients in these populations have thinner dermis and epidermis than non-elderly adults, there is a higher likelihood that the donor sites will go deep into the dermis during harvest or transform into FT wounds with their anatomical characteristics. The applicant stated that these patients are disproportionately affected and are at increased risk for death due to the skin loss and its complications. The applicant also noted that the American College of Surgeons (ACS) developed guidelines to educate surgeons and other medical professionals about the significance of older adult burns and evidence-based prevention activities.

The applicant stated that burn injuries result in substantial economic burden for healthcare systems and society. The applicant noted the average total hospital charges for a surviving patient with burns was estimated to be $98,062 and a patient who did not survive burns was estimated at $309,546. For patients undergoing inpatient autografting, the applicant asserted that significant healthcare costs were observed during the first year, including per patient mean all-cause healthcare costs which ranged from $155,272 to $184,805. The applicant explained that the primary cost driver in the first year was the cost incurred from the initial inpatient episode with autografting, accounting for 85 percent of the total costs.

The applicant stated in their application that there is currently no skin replacement product approved or available that leads to durable wound closure while eliminating the need for harvesting an autograft.

The applicant explained that skin substitutes are a heterogeneous group of biologic, synthetic, or biosynthetic materials that can provide temporary or permanent coverage of open skin wounds. The applicant stated that the aim of skin substitutes is to replicate the properties of the normal skin, and to provide the protective barrier function until definitive closure of the skin. The applicant noted that synthetic skin substitutes need to be removed or undergo biodegradation or resorption so the skin can heal and regenerate. The applicant also stated that biological skin substitutes have an architecture that resembles native skin and may allow the construction of a more natural new dermis.

The applicant explained that skin substitutes are an important adjunct in the management of acute or chronic wounds and can be used to cover defects following burns or other injuries, or for reconstruction, such as for release of extensive severe post-burn contractures. The applicant also stated that Kumar's 3-category system, as shown in the table that follows, is currently the most frequently used classification system in the field. However, the applicant notes that there is no universally accepted classification system that allows for simple categorization of all the products that are commercially available. The applicant stated that several biologic and biosynthetic materials are currently used as skin substitutes to temporarily cover wounds. The applicant provided the following table which, according to the applicant, classifies skin substitutes according to Kumar (2008) and summarizes the applicant's assertions regarding existing skin substitute products.

The applicant stated that StrataGraft skin tissue is a novel BRSC which possesses many of the physical and biological properties of an ideal skin substitute, including both epidermis and dermis with a barrier function comparable to that of intact human skin. The applicant asserted that upon FDA approval, StrataGraft^TM skin tissue will be the only skin substitute for treatment of STB classified by the FDA as a biologic (as opposed to other available treatments that are medical devices) that promotes durable wound closure and regenerative healing, thereby reducing or eliminating the need of autologous skin harvesting. According to the applicant, on June 5, 2020, Mallinckrodt finalized the rolling submission of a Biologics License Application (BLA) to the FDA seeking approval to market StrataGraft^TM skin tissue for the treatment of adult patients with STB. On June 15, 2021, the FDA approved Stratagraft^TM for the treatment of adult patients with thermal burns containing intact dermal elements (remaining deep skin layers) for which surgical intervention is clinically indicated (also referred to as deep partial thickness burns). The applicant submitted a request for a unique ICD-10-PCS code for the use of Stratagraft^TM beginning FY 2022 and was granted approval to use the following ICD-10-PCS code effective October 1, 2021: XHRPXF7 (Replacement of skin with bioengineered allogeneic construct, external approach, new technology group 7).

The applicant explained that StrataGraft^TM skin tissue is a viable BRSC that may be applied universally to patients, that is, it is not a patient-specific product. The applicant stated that the active cellular components of StrataGraft^TM skin tissue are the viable and metabolically active allogeneic human NIKS® keratinocytes and normal human dermal fibroblasts (NHDF).

The applicant noted that StrataGraft skin tissue comprises an epidermal layer and a dermal layer. The applicant explained that the epidermal layer of StrataGraft skin tissue is composed of differentiated, multilayered, viable epidermal keratinocytes that are adherent through normal hemidesmosomes to a dermal equivalent. The applicant stated that human epidermal keratinocytes used are NIKS® keratinocytes, a continuous and consistent source of well-characterized, non-tumorigenic, long-lived keratinocyte precursors that are derived from a single neonatal human foreskin donor. The applicant asserted that NIKS® keratinocytes have normal steady state of messenger ribonucleic acid (mRNA) and protein expression levels for autocrine regulators and growth factors such as transforming growth factor (TGF)-α, TGF-β1, epidermal growth factor, and c-myc, providing further evidence of the normal function of these cells. The applicant also explained that NIKS® keratinocytes produce normal adhesion proteins (example, integrins and cadherins) that permit tight adherence to each other and the dermal equivalent. The applicant stated that cell-cell and cell-substratum adhesions confer excellent handling characteristics to StrataGraft^TM skin tissue, enabling it to be meshed and secured in place as is routinely done with STSGs. The applicant noted that the dermal layer of StrataGraft^TM skin tissue contains NHDF derived from a single healthy tissue donor.

The applicant explained that viable cells within StrataGraft skin tissue express and secrete a wide variety of peptides, growth factors, and cytokines that are known to promote healing, thereby reducing or eliminating the need for autograft in the management of thermal burns. The applicant also stated that no currently available technology (competitor) for the treatment of STB is characterized by the autologous (endogenous) tissue regeneration of the burned skin.

The applicant stated that the StrataGraft skin tissue is manufactured through organotypic culture under aseptic conditions in compliance with current Good Manufacturing Practices. The applicant explained that in organotypic culture, NIKS® keratinocytes undergo tissue-appropriate differentiation and stratification to produce a skin tissue that exhibits many of the structural and biological properties of intact human skin. The applicant noted that the epidermal layer of StrataGraft skin tissue exhibits typical production and organization of cell-type specific proteins (example, keratin, filaggrin, involucrin, and transglutaminase), development of a normal cornified envelope, and production of lipid-filled granules that are necessary for the generation and maintenance of robust epidermal barrier function similar to that found in vivo.

As discussed previously, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered “new” for purposes of new technology add-on payments.

With regard to the first criterion, whether a product uses the same or similar mechanism of action to achieve a therapeutic outcome, according to the applicant, the mechanism of action of StrataGraft skin tissue in severe thermal burns is not the same or similar to an existing technology. The applicant states that StrataGraft skin tissue will be the first and only FDA-approved biologic for the treatment of STB that reduces or eliminates the need of autograft and for which the mechanism of action is a sustained expression and secretion of growth factors, cytokines, and wound healing factors, which are anticipated to promote regenerative healing and durable wound closure. The applicant explains that this unique mechanism of action is the reason StrataGraft^TM skin tissue reduces or eliminates the need for harvest of donor site tissue.

With respect to the second criterion, whether a product would be assigned to the same MS-DRGs as existing technologies, the applicant indicated that the StrataGraft skin tissue would be assigned to the same MS-DRGs as cases representing patients who receive standard of care (autograft) or existing technologies used to treat STB. The applicant stated that the MS-DRGs in question do not differentiate between patients with burns of differential severity degree, in different body sites, due to thermal injury or corrosion, or with different percent TBSA involved.

With respect to the third criterion, whether a product would be used to treat the same or similar type of disease and patient population, the applicant asserted that StrataGraft will treat the same or similar type of disease but not the same or similar patient population when compared to existing technologies. The applicant claimed that StrataGraft skin tissue will treat a burn patient population for whom the current standard of care and/or other available technologies may not be clinically feasible solutions to achieve durable wound closure. The applicant explains that in patients with burns of 50-60 percent of the TBSA, donor-site availability is limited. The applicant also stated that autografting is especially undesirable in vulnerable patient populations, such as the elderly; healing of donor sites may be delayed or even lacking in elderly patients or patients whose wound-healing capabilities are compromised. The applicant explained that these patients are disproportionately affected and are at increased risk for death due to the skin loss and its complications. The applicant also states that the label for StrataGraft^TM skin tissue will not be reserved for a patient population diagnosed with STB for whom standard-of-care treatment is not feasible or clinically desirable. The applicant asserts that this does not imply that StrataGraft^TM skin tissue will not offer a treatment option to a new patient population.

In the FY 2022 IPPS/LTCH PPS proposed rule (86 PR 25321 through 25329), we noted that with respect to the first criterion, there may be other biologic dressings that use some combination of keratinocytes, collagen, glycosaminoglycans (GAGs), cytokines, chemokines, and/or other growth factors in either a single, double, or triple layer configuration. While StrataGraft^TM may have a unique combination of these features, we stated that we were interested in further information on whether there are any dressings with a regenerative mechanism of action that may be approved for burns.

With respect to the third criterion, we stated that we believed that StrataGraft may treat the same or similar patient population as the standard of care or existing technologies to treat STB. While we agreed that in patients with burns of 50-60 percent of the TBSA, donor-site availability is more limited, we observed that neither of the two pivotal studies included patients with burns of 50 percent or greater of the TBSA. We were unclear whether this suggests Stratagraft^TM is intended for treatment of patients with burns of less than 50 percent TBSA. We also questioned whether vulnerable patients, such as the elderly, are a new population as they are currently treated using standard of care or other technologies.

We invited public comments on whether Stratagraft^TM is substantially similar to other technologies and whether Stratagraft^TM meets the newness criterion.

Comment: The applicant submitted a public comment responding to our concerns. With respect to our concerns that StrataGraft^TM may have a similar mechanism of action to other biologic dressings, the applicant stated that StrataGraft^TM is an allogeneic cellularized scaffold product and the first-ever FDA-approved biologic (drug) product indicated for the treatment of adults with thermal burns containing intact dermal elements for which surgical intervention is clinically indicated (DPT burns). The applicant stated that StrataGraft^TM incorporates a unique, biodegradable barrier layer which does not require physical removal at some point after its application. The applicant stated that StrataGraft^TM supports the body's ability to heal itself by providing metabolically active cells that are gradually replaced by the patient's own cells, and releasing the cytokines and growth factors associated with the stimulation of healing. The applicant stated that the manner in which StrataGraft^TM supports healing is distinct from that of autograft, which is reflected in the speed at which healing takes place—complete healing of DPT burns treated with StrataGraft^TM may lag autografting by a few weeks.

The applicant stated that several medical devices may be available to Medicare beneficiaries who are receiving treatment for burns; however, a device, by definition, achieves “its primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of its primary intended purposes”. The applicant stated that such devices are so classified as they are all products in some way supplemented with cells (the active ingredient). The applicant stated that in contrast, StrataGraft is a biologic drug product, its own active ingredient, and a functional unit at the time of delivery whose functions are to (i) secrete growth factors and cytokines by the viable cells of the mature tissue to facilitate wound repair and regenerative healing; and (ii) protect the wound bed by serving as a natural protective epidermal barrier. The applicant noted that the actions of the various constituents of StrataGraft are synergic and cannot be separated. The applicant stated that input collagen is a structural component that provides a biologically relevant environment which enables cellular maturation and paracrine signaling between the NIKS keratinocytes and human dermal fibroblasts (NHDF) during manufacture, resulting in epidermal differentiation and dermal compartment organization with endogenous synthesis of human extracellular matrix (ECM) proteins. The applicant stated that since StrataGraft is both (i) its own active ingredient and (ii) unique, its mechanism of action cannot be the same or similar to that of any existing technology. The applicant noted that StrataGraft does not share an active ingredient with any other product—the FDA established a whole new active ingredient descriptor for StrataGraft as part of its assignment of the Unique Ingredient Identifier (UNII) code.

The applicant noted that StrataGraft supports the body's ability to heal itself by (i) providing metabolically active cells that are gradually replaced by the patient's own cells, and (ii) releasing the cytokines and growth factors associated with the stimulation of healing. The applicant stated that cells incorporated into StrataGraft are sourced from the NIKS keratinocyte cell line—a proprietary, single-source, karyotypically stable, nontumorigenic, and pathogen-free human keratinocyte progenitor that provides a stable, source of donor tissue. The applicant asserted that NIKS is not present in any other technology available to Medicare beneficiaries for the treatment of burns or any other type of wounds. The applicant stated that this newness is reflected in the FDA's designation of StrataGraft as a regenerative medicine advanced therapy (RMAT)—the only RMAT-designated product for the treatment of burns; a drug is eligible for RMAT designation if it is a “regenerative medicine therapy”.

The applicant stated that StrataGraft^TM incorporates a unique, biodegradable allogenic cellularized scaffold comprised of a purified murine Type I collagen matrix embedded with fibroblasts that is not present in any medical device, and is eventually replaced by the patient's own tissue. The applicant noted that a second procedure to remove StrataGraft^TM is not required.

In response to our concern regarding the applicability of StrataGraft^TM to a new patient population of >50% TBSA burns, the applicant stated that although StrataGraft^TM was not studied in patients with more than 50% total body surface area (TBSA) burns in STRATA2011 or STRATA2016, this was due to the intrapatient comparator trial design and is not a limitation of the product. The applicant also noted that separate from the STRATA2011 and STRATA2016 clinical trials, StrataGraft^TM was used to treat four adult patients as part of the FDA Single Patient Expanded Access Program (EAP). The applicant stated that two of these patients had burns >50% TBSA and one had a major burn (40% TBSA). The applicant stated that two out of three patients had successful wound closure, and one patient died three weeks post-surgery for reasons unrelated to StrataGraft^TM treatment. The applicant noted that one additional request was received for a 74-year-old male with 65% TBSA flame burn with inhalation injury, but this patient became unstable and succumbed to his injuries prior to excision and grafting of his burn wounds.

In response to our concern regarding StrataGraft^TM treating a new subpopulation, the elderly, the applicant reiterated the undesirability of treating elderly patients with the current standard of care—autograft—primarily due to co-morbidities or decreased skin thickness. The applicant also highlighted that diabetic patients may have impaired wound healing, making the harvest of an autograft particularly undesirable. The applicant stated that elderly patients have thinner dermis and epidermis than do non-elderly adults, and their skin is prone to tears and bruising, which complicates donor autograft harvesting. The applicant stated that StrataGraft^TM is the only skin substitute product FDA-approved for DPT thermal burns of any TBSA that does not require donor skin harvest and/or subsequent autografts. The applicant asserted that other technologies, such as Integra, Epicel, and RECELL all require some degree of skin harvest. The applicant stated that the need for new, autograft-sparing treatments in this patient population is reflected in the FDA's decision to allow StrataGraft to be used as part of the EAP, which the FDA characterizes as a potential pathway for a patient with an immediately life-threatening condition or serious disease or condition to gain access to an investigational medical product (drug, biologic, or medical device) for treatment outside of clinical trials when no comparable or satisfactory alternative therapy options are available.

The applicant noted that because StrataGraft^TM does not have to be removed, there is no potential for skin injury similar to that potentially experienced during removal of other products. The applicant stated that the directions for use for Epicel note that its backing layer must be removed after the procedure seven to ten days after grafting with extreme care to prevent damage to the graft. The applicant noted that directions for use for RECELL caution providers to use extreme care when removing dressings to ensure that it is atraumatic. Additionally, the applicant notes that Integra incorporates a silicone layer that must be removed about twenty-one days after application, and prior to autografting, in a separate procedure.

Several commenters asserted that StrataGraft^TM will be the only DPT burn treatment that is an FDA-approved biologic (drug) product capable of achieving durable wound closure by 3 months similar to autograft, while eliminating autograft harvest in 96% of patients; is in receipt of Regenerative Medicine Advanced Therapy (RMAT) designation; and is characterized by a mechanism of action which leverages the regenerative capacity of the patient's skin. Several commenters also asserted that prior to the approval of StrataGraft^TM, the only FDA-approved skin substitutes were medical devices that required either initial donor harvest (for example, Epicel® and RECELL®) or a subsequent autograft (for example, Integra®) for promoting wound closure.

Response: We appreciate the commenters' input on the newness of StrataGraft^TM and the additional information from the applicant in regard to the newness criterion. We agree that StrataGraft^TM utilizes a unique mechanism of action among FDA approved treatments for DPT burns because it is a regenerative technology that allows growth of the patient's own tissue until it is completely replaced, while functioning as a protective barrier. We believe this is different than autografting and other burn treatments that require skin harvest and become incorporated, with the skin healing around it. We thank the applicant for providing examples of patients with burns of 50% or more TBSA treated with StrataGraft^TM though these patients were excluded from the clinical trials. However, we note that this patient population is not excluded from the standard of care or other technologies, such as Epicel, which is indicated for use in patients with burns of 30% or greater TBSA. Further, we note that we do not consider the elderly a new patient population in regard to the use of StrataGraft^TM as they are currently not excluded from the standard of care or other technologies. Therefore, we believe that StrataGraft^TM treats the same or similar patient population as existing technologies.

After consideration of the public comments we received and information submitted by the applicant as part of its FY 2022 new technology add-on payment application for StrataGraft^TM, we agree with the applicant and commenters that StrataGraft^TM has a unique mechanism of action. Therefore, we believe that StrataGraft^TM is not substantially similar to existing treatment options and meets the newness criterion. We consider the newness period to begin on June 15, 2021 when StrataGraft^TM was approved by the FDA.

With regard to the cost criterion, the applicant stated in their application that StrataGraft^TM skin tissue is seeking FDA approval for the proposed indication of treatment of adult patients with STBs that contain intact dermal elements and require surgical intervention. In order to identify the range of MS-DRGs that eligible patients may map to, the applicant conducted a claims search for cases that include ICD-10-CM codes for thermal burns of second, third degree, or those classified according to TSBA to identify cases eligible for use of StrataGraft^TM skin tissue utilization. The applicant identified cases reporting ICD-10-CM codes for diagnoses of second-degree thermal burns, any location (T20.2XXX to T25.2XXX); third-degree thermal burns, any location (T20.3XXX to T25.3XXX); and thermal burns classified according to extent of body surface involved (T31.XX).

The applicant used the FY 2019 MedPAR Hospital LDS with the FY 2022 thresholds, and the FY 2019 IPPS/LTCH Final Rule Impact File and Standardizing File. The applicant's claim search in the aggregate identified 58,624 cases mapping to 21 MS-DRGs as listed in the following table. Of the total 21 MS-DRGs, only six had case volume greater than or equal to one percent across all cohorts and cumulatively represent 97.54 percent of cases. In cases where MS-DRGs had fewer than 11 discharges, the applicant imputed a minimum value of 11 cases for each MS-DRG.

To demonstrate that the technology meets the cost criterion, the applicant first identified four separate patient cohorts: Cohort (1) Patients with thermal burns of second or third degree in any body area, or thermal burns classified according to TBSA, who received autograft for reasons only related to thermal burns (n=14,774, MS-DRGs=21); Cohort (2) Patients with thermal burns of second or third degree in any body area, or thermal burns classified according to TBSA, who received autograft for reasons only related to thermal burns, and who underwent excisional debridement in the inpatient setting (n=13,640, MS-DRGs=20); Cohort (3) Patients with thermal burns of second or third degree in any body area, or thermal burns classified according to TBSA, who received autograft for thermal burns, with or without other conditions (n=15,744, MS-DRGs=21); and Cohort (4) Patients with thermal burns of second or third degree in any body area, or thermal burns classified according to TBSA, who received autograft for thermal burns, with or without other conditions, and who underwent excisional debridement in the inpatient setting (n=14,466, MS-DRGs=20). The applicant then identified eight analyses for the cost criterion: (1) Calculations for Cohort one (all MS-DRGs); (2) Calculations for cohort two (all MS-DRGs); (3) Calculations for Cohort three (all MS-DRGs); (4) Calculations for cohort four (all MS-DRGs); (5) Calculations for Cohort one (top 4 MS-DRGs by case volume); (6) Calculations for Cohort two (top 4 MS-DRGs by case volume); (7) Calculations for Cohort three (top 4 MS-DRGs by case volume); and (8) Calculations for Cohort 4 (top 4 MS-DRGs by case volume).

The applicant determined an average unstandardized case weighted charge per case of $173,650 for analysis one, $168,282 for analysis two, $178,530 for analysis three, $172,277 for analysis four, $158,851 for analysis five, $155,700 for analysis six, $162,377 for analysis seven, and $158,452 for analysis eight.

The applicant stated that charges for and related to the prior technologies were not removed from the cost analysis.

After calculating the average standardized charge per case for all scenarios, the applicant calculated the standardized charge per case for each MS-DRG. Next, the applicant applied the 2-year inflation factor used in the FY 2021 IPPS/LTCH PPS final rule to calculate outlier threshold charges of 13.2 percent (1.13218). The applicant stated that the price for Stratagraft^TM skin tissue has not yet been established and therefore it did not add charges for the technology. Lastly, the applicant calculated the final average inflated standardized charge per case and the inflated case weighted standardized charge per case for each scenario.

The applicant stated that, for analysis one, the final inflated average case-weighted standardized charge per case of $304,347 exceeded the average case-weighted threshold amount of $173,650 by $130,697. For analysis two, the final inflated average case-weighted standardized charge per case of $279,373 exceeded the average case-weighted threshold amount of $168,282 by $111,091. For analysis three, the final inflated average case-weighted standardized charge per case of $332,006 exceeded the average case-weighted threshold amount of $178,530 by $153,477. For analysis four, the final inflated average case-weighted standardized charge per case of $299,228 exceeded the average case-weighted threshold amount of $172,277 by $126,951. For analysis five, the final inflated average case-weighted standardized charge per case of $241,186 exceeded the average case-weighted threshold amount of $158,851 by $82,336. For analysis six, the final inflated average case-weighted standardized charge per case of $229,661 exceeded the average case-weighted threshold amount of $155,700 by $73,961. For analysis seven, the final inflated average case-weighted standardized charge per case of $257,800 exceeded the average case-weighted threshold amount of $162,377 by $95,423. For analysis eight, the final inflated average case-weighted standardized charge per case of $244,042 exceeded the average case-weighted threshold amount of $158,452 by $85,590.

The applicant stated that because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount, Stratagraft^TM meets the cost criterion.

We invited public comment on whether StrataGraft^TM meets the cost criterion.

Comment: A commenter, the applicant, maintained that StrataGraft^TM meets the cost criterion because, across several cost analysis scenarios, the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount.

Response: We appreciate the applicant's response. Based on the applicant's cost analysis as previously summarized and consideration of the comment received, we agree that the average case-weighted standardized charge per case exceeds the average case-weighted threshold amount. Therefore, StrataGraft^TM meets the cost criterion.

With respect to the substantial clinical improvement criterion, the applicant asserted that StrataGraft^TM skin tissue is a substantial clinical improvement over existing technology for the treatment of adult patients with severe thermal burns with intact dermal elements because it achieves a significant rate of durable wound closure for patients with severe burns while minimizing or eliminating the complications associated with autograft harvest.

According to the applicant, the totality of the circumstances otherwise demonstrates that StrataGraft skin tissue, relative to technologies previously available, substantially improves the treatment of STB patients including Medicare beneficiaries. The applicant stated that because the benefits associated with its use are not accompanied by an increased incidence of adverse events as compared to autograft, StrataGraft skin tissue is a substantial clinical improvement. The applicant explained that by significantly reducing or eliminating the harvest of donor sites, patients who receive StrataGraft skin tissue are spared short- and long-term sequelae and complications and, to a lesser extent, infection or conversion to a full-thickness wound of the donor sites. The applicant stated that by significantly reducing or eliminating the need for autograft, StrataGraft skin tissue is especially relevant for the elderly population where autograft is undesirable; these patients are disproportionately affected and are at increased risk for death due to the skin loss and its complications. The applicant explained that aging and environmental factors can influence the severity of burns in vulnerable skin. The applicant stated that geriatric skin also exhibits slower wound healing and is at increased risk of excessive scarring. According to the applicant, age-related changes in wound healing capacity can include delayed infiltration of immune cells, decreased secretion of growth factors, and altered collagen remodeling.

The applicant further explained that use of StrataGraft skin tissue can preserve limited donor sites for the treatment of other wounds, such as areas of FT injury and wounds in cosmetically sensitive areas. The applicant noted that it may also reduce the need for repeated harvest of autograft donor sites, potentially reducing the number of surgical procedures and total length of time to wound closure. The applicant explained that burn injury is associated with a high prevalence of posttraumatic stress disorder, ranging between 11 percent and 50 percent across studies, and may also lead to anxiety and depression due to scarring and body image concerns. Lastly, the applicant stated that use of StrataGraft skin tissue reduces pain while offering a comparable scar quality to autograft.

The applicant provided two controlled and randomized studies, STRATA2011 and STRATA2016, to support its claims of substantial clinical improvement. The applicant stated that with the exception of subject age (STRATA2011, 18 to 64 years of age; STRATA2016, ≥18 years of age), the inclusion and exclusion criteria for the two studies were similar. According to the applicant, the STRATA2016 study (NCT03005106—Phase 3 trial—71 patients) was a 12-month, open-label, multicenter, controlled, randomized study that evaluated the efficacy and safety of StrataGraft skin tissue in promoting autologous skin tissue regeneration of severe thermal burns. The applicant explained that the STRATA2011 study (NCT01437852—Phase 1b trial—30 patients) was a 12-month, open-label, multicenter, controlled, randomized, dose-escalation study that evaluated the safety, tolerability, and efficacy of StrataGraft^TM skin tissue in promoting the healing of the STB component of complex skin defects due to thermal injury as an alternative to autografting. The applicant noted that, in both studies, eligible subjects had 3 percent to 49 percent TBSA burns with two comparable treatment sites that were prospectively identified, and the sites were randomized to receive either a single topical application of StrataGraft^TM skin tissue or autograft, such that each subject received both treatments. The applicant noted that in this intrapatient comparator design, the area that was autografted served as a subject's own paired control.

To support the claim that the use of StrataGraft skin tissue significantly reduces the percent area of the treatment sites autografted, the applicant explained that the STRATA2016 study showed the average percent area of the StrataGraft skin tissue treatment site autografted by Month 3 was lower than the average percent area of the autograft control treatment site autografted by Month 3 (mean difference: 97.77 percent; P < 0.0001). We note that the applicant did not provide detailed information regarding the measurement methodology.

To support the claim that StrataGraft skin tissue is effective in achieving durable wound closure similar to that of autografting, the applicant states that the STRATA2016 study showed that the majority of subjects (59 of 71 subjects, or 83.1 percent, with a 95 percent CI of 74.4 to 91.8) achieved durable wound closure of the StrataGraft skin tissue-treated site at Month 3 without the need for autograft harvest and placement. The applicant also explained that the STRATA2011 study showed that no StrataGraft treatment sites required autografting by Day 28. The applicant noted that at Month 3 in the STRATA2016 study, 93.1 percent of StrataGraft treatment sites were assessed as closed. The applicant stated that all StrataGraft skin tissue-treated areas evaluated at 6 months and 12 months remained closed. The applicant noted that, when comparing these results to that of autografting, the proportion of wounds that achieved closure was not statistically different.

To support the claim of reduction in donor site pain using StrataGraft, the applicant stated that the STRATA2016 study showed that the difference between the donor sites preserved for StrataGraft skin tissue treatment site failure and autograft donor sites in the average pain intensity through Day 14 based on the Wong-Baker FACES® Pain Rating Scale (FPRS) was 2.40 ± 1.313 (P <0.0001), indicating significantly less mean donor-site pain intensity in the reserved StrataGraft skin tissue donor sites compared with autograft donor sites. The applicant also stated that the STRATA2011 study showed that patients experienced pain at harvested donor sites used for autograft, but minimal pain at unharvested donor sites that had been set aside for potential use with StrataGraft skin tissue.

According to the applicant, the elimination of autografting leads to superior scar quality outcome of the presumptive StrataGraft skin tissue donor site (that is lack of scarring in the donor sites reserved for StrataGraft treatment site failure), which is a substantial clinical improvement. The applicant explained that the STRATA2016 study showed that the evaluation of scarring using the Patient and Observer Scar Assessment Scale (POSAS) observer total scores demonstrated a significant difference in scar quality between the StrataGraft skin tissue and autograft donor sites at Month 3, 10.0 ± 7.92 (P <0.0001), favoring StrataGraft skin tissue. The applicant stated that the STRATA2016 study showed scores for every POSAS category were lower for StrataGraft skin tissue donor sites when compared with autograft donor sites, indicating they were more like normal skin (that is, the patient's tissue in the donor sites reserved for StrataGraft failure were more like normal skin than tissue present in autograft donor sites that were harvested). The applicant explained that the STRATA2011 study showed that observer POSAS total scores from the StrataGraft tissue treatment site and autograft were not significantly different throughout the study. The applicant stated that the STRATA2011 showed that mean overall POSAS opinion scores of observers or patients decreased (that is, became more favorable) from Month 3 through Month 12 after application for both the StrataGraft tissue and autograft. According to the applicant, although direct comparisons between StrataGraft skin tissue and other skin substitutes cannot be drawn, StrataGraft skin tissue, relative to device technologies previously available, improves the clinical outcomes of STB patients. The applicant stated that most skin substitutes do not claim to promote wound closure without the need for subsequent autograft because they have not been studied in this context, while clinical studies for StrataGraft skin tissue assessed wound closure as a pre-specified endpoint. The applicant further stated that reparative healing mechanisms, used by most available skin substitutes, are more likely to result in scarring when compared with regenerative healing mechanisms used by StrataGraft^TM.

In the proposed rule (86 FR 25329), after reviewing the information provided by the applicant with regard to the substantial clinical improvement criterion, we noted a lack of study data provided comparing StrataGraft^TM to other biologic dressings and stated that we were interested in further information related to whether there are any dressings that may be approved for burns that demonstrate durable wound closure. The applicant provided published results of one randomized trial (STRATA2011), but we questioned whether the sample size of 30 is adequately generalizable to the larger Medicare population. In addition, we noted that the STRATA2016 study has not been published and the results of this study were not submitted in full, and we therefore may not have the complete outcomes and study results for these additional patients. We further noted that in the studies provided, patients with 50 percent or greater TBSA burns were excluded. The applicant indicated that the product could be especially meaningful for patients with burns of 50-60 percent TBSA, but we questioned whether we can fully evaluate this claim because these patients were not assessed.

We invited public comments on whether StrataGraft^TM meets the substantial clinical improvement criterion.

Comment: In its comment, the applicant stated that, subsequent to publication of the FY 2022 proposed rule, the full results of the STRATA2016 trial were published. The applicant provided a copy of the study in full. Seventy-one adult patients aged 19 to 79 who sustained 3% to 37% TBSA thermal burns on the torso, arms, or legs were enrolled in the phase 3 clinical trial. In each patient, two DPT areas of comparable depth were randomized to either StrataGraft^TM or autograft. The study results indicated that the safety profiles, cosmesis, and durable wound closure of autograft and StrataGraft^TM are similar, but StrataGraft^TM is associated with a significant reduction in donor site harvesting. StrataGraft^TM eliminated the need for autograft donor site harvesting in 96% of cases. Since StrataGraft^TM eliminates the need for harvesting a donor site in most patients, typical donor site sequelae such as pain and scarring were also reduced.

In response to our concern regarding autograft as the only study comparator, the applicant noted that StrataGraft^TM is the only product to have demonstrated not just durable wound closure, but autograft-sparing durable wound closure in clinical trials, and that is FDA- approved for the treatment of DPT burns in adults. The applicant noted that when treating DPT burns, durable wound closure is just one treatment goal. Other treatment goals include mitigating sequelae such as scarring, scar-complications, and infections; autografts are a major source of these sequelae.

In response to our question about the generalizability of the sample size, the applicant provided the STRATA2016 study with an additional 71 patients. The applicant also noted that the percentage of patients >65 years old is in line with clinical trial composition of other products that have previously received new technology add-on payments.

Several commenters stated that StrataGraft^TM reduces donor site pain and scarring, and achieves clinically similar cosmesis to autograft at the treatment site in a single procedure. Several commenters also noted that StrataGraft^TM has the potential to reduce repeated hospitalizations by limiting or even eliminating sequelae associated with donor site morbidities. Several commenters stated that autografting is especially undesirable in elderly patient populations because of compromised wound healing, comorbidities, and risk of complications. The commenters asserted that these patients also have a thinner dermis and epidermis compared to younger adults.

Response: We thank the commenters for their input and have taken these comments into consideration. We also thank the applicant for its comment as well as the provision of the newly published study and additional information. After review of the information provided, we agree with the applicant and commenters that StrataGraft^TM demonstrates substantial clinical improvement by facilitating durable wound closure without the need for skin harvest and/or autograft. Because StrataGraft^TM does not any require any skin harvest, it also reduces the necessity for additional healing sites, as well as the additional scarring and pain that come along with it. For this reason, we believe it offers a valuable treatment option for patients at risk for poor wound healing and complications.

After consideration of the public comments we received and the information included in the applicant's new technology add-on payment application, we have determined that StrataGraft^TM meets the criteria for approval of the new technology add-on payment. Therefore, we are approving new technology add-on payments for this technology for FY 2022.

Cases involving the use of StrataGraft^TM that are eligible for new technology add-on payments will be identified by ICD-10- PCS procedure code XHRPXF7 (Replacement of skin with bioengineered allogeneic construct, external approach, new technology group 7). The applicant stated that the cost per sheet of StrataGraft^TM is $4,000. According to the applicant, the per-patient utilization for StrataGraft^TM is based on a 10 percent burn of a 1700cm² body surface area skin burn: 17000 cm² (average adult body surface area) × 10% = 1700 cm² burned body area. This translates to an average of 17 sheets needed per patient case involving the use of StrataGraft^TM (1700 cm² burned body area/100 cm² StrataGraft skin tissue sheet = 17 sheets). The applicant noted that the number of sheets needed may vary from one patient to the next, based on the size of the burn injury and therefore size of the StrataGraft-treated area.

The applicant estimated that the average cost of StrataGraft^TM to the hospital is $6,800 (17 sheets × $4000 per sheet). Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the costs of the new medical service or technology, or 65 percent of the amount by which the costs of the case exceed the MS-DRG payment. As a result, the maximum new technology add-on payment for a case involving the use of StrataGraft^TM is $44,200 for FY 2022.

n. TECARTUS® (brexucabtagene autoleucel)

Kite Pharma submitted an application for new technology add-on payment for FY 2022 for TECARTUS® (brexucabtagene autoleucel). TECARTUS® is a CD19 directed genetically modified autologous T-cell immunotherapy for the treatment of adult patients with relapsed and refractory (r/r) mantle cell lymphoma (MCL). We noted that Kite Pharma previously submitted an application for new technology add-on payments for TECARTUS® for FY 2021, as summarized in the FY 2021 IPPS/LTCH PPS proposed rule, under the name KTE-X19 (85 FR 32634).

TECARTUS® is a form of chimeric antigen receptor (CAR) T-cell immunotherapy that modifies the patient's own T-cells to target and eliminate tumor cells. More specifically, according to the applicant, TECARTUS® is a single infusion product consisting of autologous T-cells that have been engineered to express an anti-CD19 chimeric antigen receptor. According to the applicant, this therapy targets the CD19 antigen on the cell surface of normal and malignant B-cells. The applicant stated that TECARTUS® is different from other previously approved technologies because it has a distinct cellular product that requires a unique manufacturing process.

According to the applicant, Mantle Cell Lymphoma (MCL) is a rare and aggressive subtype of non-Hodgkin lymphoma (NHL) with distinct characteristics that accounts for 3-10% of all cases of NHL in the United States and differs from diffuse large B-cell lymphoma (another subtype of NHL). The applicant stated that MCL has an annual incidence of 0.5 to 1 cases per 100,000 population with a male-to-female ratio of 3:1 with a median age at diagnosis for patients with MCL of 68 years. MCL results from a malignant transformation of the B lymphocyle in the outer edge of a lymph node follicle (the mantle zone). Prognosis varies for relapsed/refractory MCL, but the median survival for MCL is 3-5 years depending on the risk group (the Mantle Cell Lymphoma International Prognostic Index categorizes patients into low, intermediate and high risk groups), according to the applicant. According to the applicant, the preferred first line therapy is bendamustine- rituximab which has decreased toxicity and improved progression-free survival as compared to rituximab with cyclophosphamide, doxorubicin, vincristine, and prednisone. According to the applicant, rituximab is also the only approved therapy for maintenance for patients in remission. The applicant stated the median progression free survival ranges from 29-51 months with most of MCL patients eventually relapsing. The applicant contended that approximately 40% of patients end up with durable long-term remission after a chemoimmunotherapy first line therapy.

The applicant indicated that there is no standard of care that exists for second-line and higher chemotherapy when a patient has relapsed or refractory MCL. According to the applicant, second line therapies typically depend on the front-line therapy utilized, comorbidities, the tumor's sensitivity to chemotherapy, and overall risk-benefit. According to the applicant, currently available options for second line therapy include: Cytotoxic chemotherapy, proteasome inhibitors (PI), immunomodulatory drugs (IMiD), tyrosine kinase inhibitors, and stem cell transplant (both autologous and allogenic stem cell transplant [ASCT, allo-SCT]). According to the applicant, Bruton's tyrosine kinase (BTK) inhibitors, ibrutinib, zanubrutinib, and acalabrutinib, are common third-line therapy used for patients with r/r MCL and have shown to offer improvements over other chemotherapy-based regimens for r/r MCL patients. The applicant performed a literature review and meta-analysis of patients with r/r MCL whose disease had progressed during or following treatment with a BTK inhibitor and found that despite high initial response rates, most patients eventually developed progressive disease. Therefore, according to the applicant, new therapeutic strategies are needed to improve the prognosis of patients with r/r MCL whose disease has not been effectively controlled with chemo-immunotherapy, stem cell transplant, and BTK inhibitors.

With respect to the newness criterion, the applicant indicated that the FDA approved the TECARTUS® Biologics License Application (BLA) on July 24, 2020 for the indication of the treatment of adult patients with relapsed/refractory mantle cell lymphoma (MCL). According to the applicant, TECARTUS® was granted Breakthrough Therapy designation for the treatment of patients with r/r MCL on June 15, 2018 and received Orphan Drug designation in 2016 for the treatment of MCL, acute lymphoblastic leukemia and chronic lymphocytic leukemia. The following ICD-10-PCS codes were established effective October 1, 2020 to identify the administration of TECARTUS®: XW23346 (Transfusion of brexucabtagene autoleucel immunotherapy into peripheral vein, percutaneous approach, new technology group 6) and XW24346 (Transfusion of brexucabtagene autoleucel immunotherapy into central vein, percutaneous approach, new technology group 6). We note that the following new ICD-10-PCS codes to describe procedures involving the administration of TECARTUS® are effective October 1, 2021: XW033M7 (Introduction of brexucabtagene autoleucel Immunotherapy into peripheral vein, percutaneous approach, new technology group 7) and XW043M7 (Introduction of brexucabtagene autoleucel Immunotherapy into central vein, percutaneous approach, new technology group 7).

As previously discussed, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered “new” for purposes of new technology add-on payments.

With regard to the first criterion for substantial similarity, whether a product uses the same or similar mechanism of action to achieve a therapeutic outcome, according to the applicant, TECARTUS® is the first CAR T-cell immunotherapy indicated for the treatment of r/r MCL. The applicant further asserted that it does not use a substantially similar mechanism of action. The applicant asserts the FDA concluded and approved TECARTUS® as distinct from YESCARTA® based on differences in the manufacturing process, certain product specifications and impurities, and formulation of the final products. Furthermore, the applicant stated that TECARTUS® is distinct from currently available CAR T-cell immunotherapies, namely YESCARTA® and KYMRIAH®, because neither prior CAR T-cell therapy is indicated for the treatment of patients with r/r MCL, and other differences include the manufacturing process, certain product specifications and impurities, and the final dose formulation as determined by the FDA. The applicant stated that MCL is a unique subtype of B-cell Non-Hodgkin's Lymphoma (NHL) and is distinct from DLBCL as determined by the 2016 WHO classification. The applicant stated it reviewed data from the FY 2019 100 percent MedPAR Hospital Limited Data Set to obtain a reference of currently available products used in the treatment of r/r MCL. The applicant stated that based on this analysis, available products used in the treatment of r/r MCL included: Chemotherapies, PIs, IMiDs, or BTK inhibitors. The applicant described TECARTUS® as an autologous CAR T-cell immunotherapy, which genetically modifies the patient's own T-cells to target and eliminate tumor cells for the treatment of r/r MCL and asserted that because TECARTUS® is an autologous CAR T-cell immunotherapy, it does not use the same mechanism of action as other treatments currently used to treat r/r MCL (chemotherapies, PIs, IMiDs, or BTK inhibitors).

To further note the differences between TECARTUS®'s mechanism of action and other available therapies for r/r MCL, the applicant stated that TECARTUS® represents a unique product that is customized for B-cell malignancies bearing high levels of circulating CD19-expressing tumor cells. Given these genetic modifications and differences, as previously described, the applicant described TECARTUS® as having a different mechanism of action from existing r/r MCL therapies.

The applicant stated that TECARTUS® is a distinct cellular product and is produced by a unique manufacturing process customized for B-cell malignancies characterized by circulating tumor cells and is designed to minimize the number of CD19-expressing tumor cells in the final product. The T cells in the leukapheresis product are enriched by positive selection, activated by culturing with anti-CD3 and anti-CD28 antibodies, and then transduced with a retroviral vector containing the anti-CD19 CAR gene. These engineered T cells are then propagated in culture to generate a sufficient number of cells to achieve a therapeutic effect upon infusion back into the patient. The applicant further stated that TECARTUS® has a different mechanism of action as compared to YESCARTA® given that the European Medicines Agency (EMA) deemed TECARTUS® and YESCARTA® as different products.

With respect to the second criterion for substantial similarity, whether a product is assigned to the same or a different MS-DRG, the applicant noted that CMS has established the new MS-DRG 018 (Chimeric Antigen Receptor (CAR) T-cell Immunotherapies), effective October 1, 2020, for CAR T-cell therapies. However, the applicant asserted that TECARTUS® will be uniquely identified by ICD-10-PCS codes different from those used to identify YESCARTA® and KYMRIAH®. As previously noted, under the current coding system, cases reporting the use of TECARTUS® would be coded with ICD-10-PCS codes XW23346 and XW24346, which are currently assigned to MS-DRG 018, and therefore we believe that cases reporting the use of TECARTUS® would be assigned to the same MS-DRG as existing CAR T-cell therapies.

With respect to the third criterion for substantial similarity, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, the applicant stated that TECARTUS® is the first and only CAR T-cell immunotherapy indicated for the treatment of r/r MCL which is identified by ICD-10-CM C83.1X, mantle cell lymphoma, unspecified site. The applicant noted that the patients treated by YESCARTA® and KYMRIAH® are not assigned ICD-10-CM diagnosis code C83.1X (Mantle cell lymphoma, unspecified site), as would patients treated with TECARTUS®. As previously mentioned, the applicant described that MCL results from a malignant transformation of a B lymphocyte in the outer edge of the lymph node follicle. The applicant further stated that diffuse large b-cell lymphoma (DLBCL), which YESCARTA® and KYMRIAH® treat, is defined as a neoplasm of large B cells arranged in a diffuse pattern. The applicant described this distinction as evidence that TECARTUS® treats a different subtype of NHL, r/r MCL, as compared to other FDA approved CAR T-cell therapies. However, we noted in the proposed rule that the applicant recognized in its application that MCL and DLBCL patients share similar clinical presentation of lymphadenopathy, splenomegaly and constitutional symptoms. The applicant also noted that the disease courses for MCL and DLBCL are different given that MCL has a unique molecular pathogenesis. The applicant stated that patients with r/r MCL often present with high levels of circulating tumor cells which are inherent to the disease or due to peripheral mobilization of tumor cells induced by BTK inhibitor therapy. According to the applicant, MCL requires a customized CAR T-cell therapy for B-cell malignancies bearing high levels of circulating CD19-expressing tumor cells in order to provide a functional autologous cellular therapy. Unlike MCL, the presence of circulating tumor cells occurs only rarely in patients with DLBCL.

With respect to the first criterion, the applicant asserted that TECARTUS® would provide a new treatment option for adult patients with r/r MCL and therefore is not substantially similar to any existing technologies. We noted that for FY 2019 (83 FR 41299), CMS approved two CD19 directed CAR T-cell therapies, YESCARTA® and KYMRIAH®, for new technology add-on payments. In regard to the mechanism of action, the applicant acknowledged that TECARTUS® is a form of CAR T-cell immunotherapy that modifies the patient's own T-cells, as are YESCARTA® and KYMRIAH®. However, the applicant asserted that the manufacturing process used by TECARTUS® makes the therapy significantly different from YESCARTA®. The applicant further asserted that its unique manufacturing process which includes a T-cell selection step for patients with MCL, ALL, and CLL is distinct from that used for the manufacture of YESCARTA® for the treatment of patients with malignancies characterized by high numbers of circulating tumor types.

Similar to our discussion of the FY 2021 application in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32636 and 32637), in the FY 2022 IPPS/LTCH PPS proposed rule, we were concerned as to whether the differences the applicant described in the manufacturing process should be considered a different mechanism of action as compared to previous CAR T-cell therapies. We noted, in their review, the FDA identified many similarities between TECARTUS® and YESCARTA® to include that, “the YESCARTA® and KTE-X19 final products are very similar and are formulated identically. The same release testing methods are used for both products.” Further, as TECARTUS® is also a CD19-directed T-cell immunotherapy for the treatment of patients with an aggressive subtype of NHL, we continued to question whether the differences identified by the applicant would mean that TECARTUS® does not have a similar mechanism of action to existing CD19-directed CAR T-cell therapies. We sought public comment as to whether the differences the applicant described in the manufacturing process should be considered a different mechanism of action, as compared to previous CAR T-cell therapies.

With regard to the third criterion for substantial similarity, though the applicant described differences between MCL and DLBCL, the applicant also stated that patients with MCL and DLBCL share similar clinical presentation of lymphadenopathy, splenomegaly and constitutional symptoms, and they are both subtypes of NHL. We therefore questioned whether this therapy may involve the treatment of a similar type of disease when compared to existing CAR T-cell therapies.

We invited public comments on whether TECARTUS® is substantially similar to other technologies and whether TECARTUS® meets the newness criterion.

Comment: In response to CMS's concerns, a commenter stated that MCL and DLBCL differ because MCL is considered largely incurable with standard treatment approaches and has a propensity to evolve toward increasing drug resistance over time leading to shorter periods of remission. The commenter added that clinically, MCL more frequently involves the bone marrow, spleen, and extranodal sites, such as the intestinal tract, tonsils—and, in more aggressive cases, the skin, lungs, and central nervous system—in addition to enlarged lymph nodes. In contrast, the commenter stated that DLBCL more commonly involves the lymph nodes, with lower predisposition to marrow and/or organ involvement. The commenter added that in many ways, the treatment of MCL has come to more closely resemble that of multiple myeloma, where there may be limited, if any, freedom from therapy—but with MCL showing poorer outcomes. The commenter summarized that TECARTUS® couples very high response rates and remission duration without a need for any ongoing therapy.

A second commenter emphasized that MCL has important clinical features which distinguish it from DLBCL. Most importantly according to the commenter, where DLBCL is curable in up to 60% of cases, MCL remains incurable with known therapies. The commenter added that MCL cases have a median age of 65 as compared to DLBCL of 58 according to the ZUMA 1 and ZUMA 2 trials respectively. Third, the commenter stated patients with MCL often have tumor cells circulating in the peripheral blood unlik5e patients with DLBCL.

A few commenters encouraged CMS to consider assigning new technology add-on payments for new CAR T-cell therapies to ensure patient access.

Finally, a commenter stated support for CMS' desire for additional data and comment to illustrate support that TECARTUS® meets the newness criterion to support new technology add-on payment status.

Response: We appreciate the input from the commenters and the information they have highlighted, and we have taken these comments into consideration in our final decision, which is discussed later in this section.

Comment: In response to CMS' concerns the applicant submitted a public comment. The applicant stated that TECARTUS® is a distinct CAR T-cell immunotherapy approved for the treatment of r/r MCL which is different from large B-cell lymphoma and necessarily requires a different manufacturing process in order to produce a functional autologous therapy. The applicant stated that the leukapheresis material required for TECARTUS® has a more heterogeneous cell composition than that required for YESCARTA®. The applicant stated that the presence of B-lineage cells in MCL patient apheresis, unlike diffuse large B-cell lymphoma patient apheresis, necessitated the development of a CD4+ and CD8+ T-cell manufacturing selection step, which reduced the likelihood of circulating CD19 expressing tumor cells in the product and ensured a consistent efficacious and safe product for the R/R MCL patient population.

The applicant added that both the FDA and European Medicines Agency (EMA) have concluded that TECARTUS® is a unique product distinct from YESCARTA®.

In its comment, the applicant further asserted that MCL is a unique subtype of B-cell non-Hodgkin lymphoma (NHL) and is distinct from DLBCL. The applicant added that while MCL patients may present with similar symptoms as patients with DLBCL, the conditions differ based on histopathology, genetics, clinical characteristics, treatment approaches, and clinical outcomes. The applicant asserted that the most critical distinction between MCL and DLBCL is the difference in durable complete remissions and cure with available therapies. According to the applicant, the standard of care for patients newly diagnosed with DLBCL is the immuno-chemotherapy regimen R-CHOP (rituximab, cyclophosphamide, doxorubicin, vincristine, and prednisone) which leads to a `cure' in 50-60% of patients. The applicant added, in contrast, although many combinations of rituximab-based immuno-chemotherapy have been examined in patients newly diagnosed with MCL, none is considered curative. Further, the applicant stated that another important distinction is that patients with r/r MCL often present with high levels of circulating tumor cells which are inherent to the disease or due to peripheral mobilization of tumor cells induced by BTK inhibitor therapy. The applicant stated that MCL requires a customized CAR T-cell therapy for B-cell malignancies bearing high levels of circulating CD19-expressing tumor cells in order to provide a functional autologous cellular therapy; unlike MCL, the presence of circulating tumor cells rarely occurs in patients with DLBCL. Lastly, the applicant stated that the World Health Organization has classified MCL and DLBCL as two distinct B-cell lymphoid neoplasms based on the pathogenetic differences.

Response: We appreciate the additional information from the applicant regarding whether TECARTUS® is substantially similar to existing treatment options. After consideration of the public comments we received and information submitted by the applicant in its application, we agree with the applicant that TECARTUS® does not use the same or similar mechanism of action as other technologies used for the treatment of r/r MCL because it is the only CAR T-cell therapy available for the treatment of r/r MCL. Furthermore, as mentioned by the applicant, due to the differences based on histopathology, genetics, clinical characteristics, treatment approaches, and clinical outcomes we agree that this is a unique disease population as compared to that treated by other existing CAR T-cell therapies. Based on this information, we believe that TECARTUS® is not substantially similar to existing treatments and meets the newness criterion. We consider the beginning of the newness period to commence on the date TECARTUS® was approved by the FDA, July 24, 2020.

With regard to the cost criterion, the applicant searched the FY 2019 MedPAR claims data file with the FY 2019 Final Rule IPPS Impact File to identify potential cases representing patients who may be eligible for treatment using TECARTUS®.

The applicant identified claims that reported an ICD-10-CM diagnosis code of ICD-10-CM C83.1X (Mantle cell lymphoma, unspecified site). The applicant stated that claims reporting ICD-10-CM code C83.1X would not involve the use of the other two approved CAR T-cell therapies because those therapies are not used to treat this diagnosis, MCL. As such, the applicant stated that it used C83.1X to identify potential MCL cases and ICD-10-PCS codes XW033C3 and XW043C3 to identify patients receiving CAR T-cell therapy. In its analysis, the applicant identified two sets of cohorts (Primary Cohort and Sensitivity Analysis Cohort) to assess whether this therapy met the cost criterion. The ICD-10-PCS procedure codes listed in the following table were used to identify claims involving chemotherapy and the applicant noted that these were used for both cohorts.

The applicant identified two cohorts for these analyses and used two CCRs to account for the cost of their technology. The Primary Cohort included cases with an ICD-10-CM primary diagnosis of MCL, at least one procedure code indicating receipt of chemotherapy, and no ICD-10-PCS procedure codes indicating CAR T-cell therapy. The applicant believed the Primary Cohort most closely aligned with the characteristics and health of r/r MCL patients who would receive TECARTUS® given that this cohort includes patients with far advanced disease (comparable to the ZUMA-2 study, as discussed later in this section). The Sensitivity Analysis Cohort included patients with the ICD-10-CM principal or secondary diagnosis of MCL, at least one procedure code indicating receipt of chemotherapy, and no ICD-10-PCS procedure codes indicating CAR T-cell therapy. For each cohort, the applicant performed two sub-analyses that varied the CCR used to calculate TECARTUS® charges: (1) The national pharmacy CCR of 0.187; and (2) the applicant calculated CAR T-cell CCR of 0.314.

According to the applicant, based on the primary diagnosis code and the presence of chemotherapy, these cases signify that the primary reason for hospitalization was treatment of the patient's MCL, including the complications of their advancing disease and chemotherapy-related complications, and resulted in charges and longer lengths of stay believed to be most reflective of the r/r MCL population that is treated by TECARTUS. The applicant added that this group of MCL cases with MCL as a primary diagnosis most closely compares with the characteristics and health resource utilization of r/r MCL patients that will receive TECARTUS. Furthermore, the applicant stated that the cases in the Primary Cohort had higher charges across all categories than the cases with MCL as a secondary diagnosis. The cases with MCL as a primary diagnosis are according to the applicant more reflective of the r/r MCL population as those cases were more likely being treated for the complications of their advancing disease and chemotherapy-related complications. The average length of stay for hospitalizations in the Primary Cohort was 15.1 days. Lastly, in explaining why CAR T-cell MCL cases from FY 2019 were excluded from the cost analysis, the applicant stated that they could not identify specific charges for CAR T-cell therapy, no individual revenue center had charges similar to those expected for CAR T-cell therapy, and there were no CAR T-cell therapy products approved for the treatment of MCL in FY 2019.

The applicant stated that to estimate the CAR T-cell CCR, they obtained the MS-DRG 018 arithmetic mean charge in the AOR/BOR FY 2021 Proposed Rule File released by CMS ($1,387,946). The applicant subtracted non-drug charges for TECARTUS of $201,610 (based on the TECARTUS FY 2021 new technology add-on payment application) from the total arithmetic mean charge to estimate CAR T-cell charges (approximately $1,186,336). The applicant then divided a WAC of CAR T-cell therapy of $373,000 by the estimated CAR T-cell charges to estimate a charge-to-cost ratio of 0.314 (CCR = 373,000/1,186,336).

The claim search conducted by the applicant resulted in 267 claims in the Primary Cohort, mapped to 13 MS-DRGs, and 1,100 claims in the Sensitivity Analysis Cohort, mapped to 59 MS-DRGs using the FY 2019 MedPAR Hospital LDS based on the requirements for each cohort outlined by the applicant. The applicant stated that because TECARTUS cases are mapped to MS-DRG 018, the cost criterion analysis utilized the threshold for MS-DRG 018 for all MS-DRGs included in each cohort rather than the MS-DRG specific threshold. The applicant determined an average unstandardized case weighted charge per case of $1,251,126 for the Primary cohort and $1,251,126 for the Sensitivity Analysis Cohort.

The applicant then removed charges for the prior technology. The applicant stated that the cases representing patients who had received chemotherapy, as reflected by the Medicare claims data, would generally not receive both chemotherapy and TECARTUS® as an inpatient because conditioning chemotherapy would be administered in the outpatient setting before the patient would be admitted for TECARTUS® infusion and monitoring. Otherwise, the applicant asserted that patients receiving TECARTUS® would be expected to incur similar charges to those cases in the Medicare claims data for patients with a primary diagnosis of MCL and receiving chemotherapy (Primary Cohort). In its analysis, the applicant noted that in the FY 2019 MedPAR Hospital LDS, charges for chemotherapy drugs were grouped with charges for oncology, diagnostic radiology, therapeutic radiology, nuclear medicine, CT scans, and other imaging services. The applicant believed that removing all radiology charges would understate the cost of adverse event (AE) clinical management for TECARTUS® patients needed. The applicant found that when using data from the Q4 2017 and Q1 Q3 2018 Standard Analytic files and comparing total chemotherapy charges to total radiology charges, 2 percent of radiology charges were chemotherapy charges, on average. Therefore, instead of removing all radiology charges, the applicant excluded 2 percent of the radiology charge amount to capture the effect of removing chemotherapy pharmacy charges.

The applicant then standardized the charges and applied the 2-year inflation factor used in the FY 2021 IPPS/LTCH PPS final rule to calculate outlier threshold charges (1.13218). For the Primary and Sensitivity cohorts, the applicant performed two sub-analyses that varied the CCR used to calculate TECARTUS® charges: (1) Using the national pharmacy CCR (0.187); and (2) using the CAR T-cell CCR (0.314).

The applicant stated that when comparing the Primary Cohort to the MS-DRG 018 average case-weighed threshold amount (based on the FY 2021 IPPS/LTCH PPS final rule) and using the national pharmacy CCR, the final inflated average case-weighted standardized charge per case of $2,207,969 exceeded the average case-weighted threshold amount of $1,251,126 by $956,843. When using the CAR T-cell CCR, the final inflated average case-weighted standardized charge per case of $1,399,653 exceeded the average case-weighted threshold amount of $1,251,126 by $148,527. The applicant stated that because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount, the therapy meets the cost criterion.

When conducting the same review to assess cost for the Sensitivity Analysis Cohort, the applicant noted that the sensitivity analysis cohort also meets the cost criterion when compared to the MS-DRG 018 average case-weighted threshold amount (based on the FY 2021 IPPS/LTCH PPS data file thresholds for FY 2022). As reported by the applicant, when using the national pharmacy CCR in the sensitivity analysis cohort the final inflated average case-weighted standardized charge per case of $2,142,149 exceeded the average case-weighted threshold amount of $1,251,126 by $891,023. When using the CAR T-cell CCR in the sensitivity analysis cohort, the final inflated average case-weighted standardized charge per case of $1,333,833 exceeded the average case-weighted threshold amount of $1,251,126 by $82,707. The applicant stated that because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount, the therapy meets the cost criterion.

Because the final inflated average case-weighted standardized charge per case for both the Primary Cohort and the Sensitivity Analysis Cohort exceeds the average case-weighted threshold amount for MS-DRG 018, the applicant maintained that the technology meets the cost criterion.

As noted in previous discussions, the submitted costs for CAR T-cell therapies vary widely due to differences in provider billing and charging practices for this therapy. Therefore, with regard to the use of this data for purposes of calculating a CAR T-cell CCR we stated we were uncertain how representative this data is for use in the applicant's cost analyses given this potential for variability.

We stated in the proposed rule that we continue to be interested in public comments regarding the eligibility of CAR T-cell technologies for new technology add-on payments when assigned to MS-DRG 018. As we have noted in prior rulemaking with regard to the CAR T-cell therapies (83 FR 41172 and 85 FR 58603 through 58608), 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 comment on whether TECARTUS® meets the cost criterion.

Comment: We received a comment from MEDPAC which addressed the cost criterion in general as it relates to CAR T-cell therapies.

Response: Please refer to the response in the BREYANZI® application in section II.F.X.c. of the preamble of this final rule for a detailed discussion of this issue.

Comment: We received multiple comments in response to our concern for CAR T-cell therapy, the MS-DRG 018 assignment, and new technology add-on payment eligibility.

Response: For a complete discussion of these comments and our response, please see the BREYANZI® application in section II.F.X.c. of the preamble of this final rule.

Comment: A commenter stated support for CMS' desire for additional data and comment to illustrate support that TECARTUS® meets the cost criterion to support new technology add-on payment status.

Response: We appreciate the input from the commenter and have taken this comment into consideration in determining whether TECARTUS® meets the cost criterion.

Comment: A commenter, the applicant, maintained that the cost analyses demonstrate that TECARTUS® meets the cost criterion. In response to CMS' concern regarding the representativeness of the cost data for TECARTUS® based on the CAR T-cell CCR, the applicant stated it appreciates CMS' concern regarding the “representativeness” of the estimated CAR T-cell CCR and agree that CCRs are likely to vary widely for CAR T-cell therapies. The applicant stated that while it is standard to use the pharmacy CCR to convert drug costs to charges and CMS has accepted the use of this CCR in the past for cost criterion analyses, CAR T-cell therapies, including TECARTUS®, are new and novel therapeutics, and they were concerned that CMS would question the applicability of the pharmacy CCR for purposes of demonstrating that TECARTUS® met the cost criterion. Therefore, the applicant created two sets of analyses to demonstrate that TECARTUS® meets the cost criterion, using both the national pharmacy CCR and an estimate of the CAR T-cell CCR. Furthermore, the applicant stated that the CAR T-cell therapy CCR of 0.314 is similar to the CAR T-cell therapy CCR of 0.295 used by other applicants for CAR T-cell therapy for FY 2022 new technology add-on payment applications as summarized in the FY 2022 CMS IPPS/LTCH PPS proposed rule: BREYANZI (86 FR 25231), ciltacabtagene autoleucel (86 FR 225237), and idecabtagene vicleucel (86 FR 225258). Lastly, the applicant commented TECARTUS® would also have met the cost criterion if the 0.295 CCR had been used in their analyses.

The applicant stated that in the proposed rule, CMS solicited comments on whether with the creation of MS-DRG 018 there may no longer be a need for CAR T-cell products to receive a new technology add-on payment. The applicant stated their belief that the creation of MS-DRG 018 does not alter the new technology add-on payment eligibility of future CAR T-cell products. The applicant stated the language under section 1886(d)(5)(K)(ix) is long-standing and has never before been interpreted as potentially imposing a blanket exclusion from new technology add-on payment eligibility. The applicant asserted that instead, CMS has historically operationalized section 1886(d)(5)(K)(ix) by establishing the new technology add-on payment criteria of newness, cost, and substantial clinical improvement. In particular, the applicant contends that CMS has viewed its evaluation under the cost criterion as directly satisfying the agency's obligation under section 1886(d)(5)(K)(ix) of the Act. The applicant stated, in 2005 rulemaking where the agency first recognized the addition of section 1886(d)(5)(K)(ix) of the Act, as amended by section 503(c) of Medicare Prescription Drug, Improvement, and Modernization Act of 2003, CMS stated that “at the time an application for new technology add-on payments is submitted, the DRGs associated with the new technology are identified.” The applicant added CMS went on to state that it “only determine[s] that a new DRG assignment is necessary or a new technology add-on payment is appropriate when the reimbursement under these currently assigned DRGs is not adequate for this new technology.” The applicant asserted that the current MS-DRG assignment for a case using a new CAR T-cell product would be MS-DRG 018 and CMS should follow the same approach for a new CAR T-cell product as for all other products applying for a new technology add-on payment: Determine whether the current MS-DRG assignment is inadequate and if so, either make a new MS-DRG assignment or provide for a new technology add-on payment. The applicant added if the fact that the current MS-DRG assignment takes into consideration the use of a particular therapy would disqualify new products from being eligible for a new technology add-on payment, then many more products in addition to CAR T-cell would be affected (for example, new pacemakers and the MS-DRGs 242-244 to which pacemaker cases are assigned).

Response: We appreciate the information provided by the applicant in their comment in regard to their calculation of a CAR T-cell CCR. As we stated in section E.2.b. of this rule, we continue to believe that it is premature to make structural changes to the IPPS at this time to pay for CAR T-cell therapies (78 FR 58453). As we gain more experience paying for these therapies under the IPPS, we may consider these comments to inform future rulemaking. However, we appreciate the thoughtfulness used by the applicant to provide as clear as possible a description of CAR T-cell therapy cost calculations. We appreciate the usage of multiple cost analyses, such as varying the CCR used to inflate cost to charges, which potentially allowed for a more conservative markup.

After consideration of the public comments we received and based on the information included in the applicant's new technology add-on payment application, we believe that the TECARTUS® meets the cost criterion.

With respect to the substantial clinical improvement criterion, the applicant asserted that TECARTUS® represents a new treatment option for an adult patient population unresponsive to, or ineligible for, currently available treatments. The applicant also believes that the use of TECARTUS® significantly improves clinical outcomes for a patient with r/r MCL as compared to currently available therapies, including BTK inhibitors. The applicant stated that TECARTUS® provides access to a treatment option for patients with r/r MCL who have not been responsive to first line or second line therapies. The applicant provided further detail regarding these assertions, referencing the results of a Phase 2 study (Zuma-2) and historical and meta analyses, which are summarized in this section of this rule.

According to the applicant, because no effective standard therapy for subjects with r/r MCL who have progressed following a prior BTK inhibitor therapy exists, ZUMA-2 lacked a comparison arm. The applicant described how a historical control was the only ethical and feasible study design for patients with r/r MCL who had not responded to the most promising therapies available, including BTK inhibitors. Therefore, the historical control was identified from prior studies identified in a meta-analysis of six studies, which included two studies by Martin et al., (2016) and Cheah et al., (2015), and covered 255 subjects. The ORRs in these six studies ranged from 20%-42% with the applicant identifying 26% and 32% for use as their comparator.

According to the Martin et al. (2016) retrospective cohort study referenced by the applicant, the investigators reported best response rate (RR) to ibrutinib was 55% (43% partial response [PR], 12% complete response [CR]), with 35% of patients having a best response of progressive disease. But among patients who received subsequent therapy, local clinicians reported that 13 patients (19%) achieved PR, and 5 (7%) achieved CR. The median overall survival (OS) following cessation of ibrutinib was 2.9 months (95% confidence interval [CI], 1.6-4.9). Of the 104 patients with data available, 73 underwent at least one additional line of currently available treatment after stopping ibrutinib with a median OS of 5.8 months (95% confidence interval [CI], 3.7-10.4).

A second retrospective study by Cheah et al. identified 42 (54%) who had discontinued therapy of 78 patients with MCL who had been treated at MD Anderson Cancer Center between 2011 and 2014. All 42 patients had received ibrutinib with a median number of cycles of 6.5 (range 1-43). Twenty-eight patients (67%) had disease progression as the main reason for therapy discontinuation. Of the 31 patients who experienced disease progression following ibrutinib and underwent salvage therapy, the overall objective response rate (ORR) and complete response rate (CRR) was 32% and 19%, respectively. After a median follow-up of 10.7 (range 2.4-38.9) months from discontinuation of ibrutinib, the median OS among patients with disease progression was 8.4 months and the estimated one-year OS was 22.1% (95% CI 8.3% to 40.2%).

The applicant summarized further studies that featured BTK therapy. Dreyling et al. and Epperla et al. identified ORRs of 20% and 42% respectively while Wang et al. identified an ORR of 29%, CR rate of 14%, and PR rate of 15% and Jaln et al. identified an ORR of 29%, CR rate of 14%, and PR rate of 15%.

To evaluate the effectiveness of TECARTUS®, the applicant noted it used an ORR comparison of 25%, which was derived from two aforementioned studies (Martin et al. and Cheah et al.) with patients with r/r MCL who progressed on the most predominantly prescribed BTK inhibitor, ibrutinib. The results of these two studies showed a median OS of 5.8 months after receiving at least 1 additional line of currently available therapy to treat r/r MCL. Those who did not receive salvage therapy had a median OS of 0.8 months.

According to the applicant, the ZUMA-2 study of TECARTUS® is the only pivotal study of CAR T-cell therapy for r/r MCL. ZUMA-2 is a multicenter, open label, Phase 2 study which evaluated the safety and efficacy of TECARTUS® in patients with r/r MCL that relapsed or are refractory to prior therapy, including BTK inhibitors. The primary endpoint compared the ORR from the study to the ORR 25% historical control at a one-sided alpha level of 0.025. The applicant stated that ZUMA-2 was not designed to compare the efficacy and safety of TECARTUS to BTK inhibitors, and the results of ZUMA-2 are not intended to indicate that TECARTUS should definitively be utilized to replace any existing therapies. Participants were required to have received prior treatment for MCL, no more than five prior regimens, which must have included anthracycline (or bendamustine containing chemotherapy), an anti-CD20 monoclonal antibody and BTK inhibitor. The ZUMA-2 study included 68 subjects treated with TECARTUS® out of 75 patients enrolled. The safety analysis included a review of all 68 subjects, with the primary analysis of efficacy reviewing the first 60 subjects treated with TECARTUS®. ZUMA-2 was conducted at 20 sites in the United States and Europe. Of the 60 subjects in the primary analysis set, 59 were from U.S. sites. Of the 68 subjects in the safety analysis set, 62 were from U.S. sites. Among the 68 subjects, the median age was 65 years (range 38-79) and 57 subjects (84%) were male. Additionally, 58 subjects (85%) had stage IV disease. The sample had a median of 3 prior therapies with 55 (81%) having received ≥3 prior therapies. In addition, 43% had relapsed after a prior autologous stem cell transplant (ASCT); the remaining subjects had either relapsed after or were refractory to their last therapy for MCL.

The applicant asserted that the use of TECARTUS® significantly improves clinical outcomes for a patient population as compared to currently available treatments. The applicant contended that ibrutinib, a BTK inhibitor, is the most common third-line therapy used for patients with r/r MCL and has been shown to offer improvements over other chemotherapy-based regimens for r/r MCL patients. The applicant also referenced a more selective BTK inhibitor, acalabrutinib, which was approved in the US for the treatment of patients with r/r MCL. In registrational trials, the ORR and CRR were 66% and 17%, respectively for ibrutinib, and 81% and 40%, respectively, for acalabrutinib. The applicant contended that primary and secondary resistance to BTK inhibitors is common, and subsequent therapies currently available are minimally effective.

Among the 68 patients treated in the ZUMA-2 study, the primary efficacy analysis was conducted after 60 patients had been enrolled, treated, and evaluated for response for six months after the week four disease assessment. Based on the primary analysis of the 60 subjects included in the ZUMA-2 study, there was an ORR of 93% after a single dose of TECARTUS® (56 of 60 subjects with a 95% CI of 83.8%, 98.2%). The applicant reported that the complete response rate was 67% (40 of 60 subjects with a 95% CI of 53.3%, 78.3%). The applicant noted the ORR of 93% and CR 67% were observed across age groups (94% ages ≥65; 93% ages <65 and, of the 40 subjects achieving CR, 22 subjects were aged ≥65 and 18 were aged <65). The applicant highlighted that the ORR of 93% was significantly higher than the prespecified historical control rate of 25%. Furthermore, the applicant noted that among the 42 subjects who initially had a partial response (PR) or stable disease (SD), 24 subjects (57%) went on to achieve a CR after a median of 2.2 months (range: 1.8 to 8.3 months). Twenty-one subjects converted from PR to CR, and 3 subjects converted from stable disease (SD) to CR.

According to the applicant, the median DOR was not reached with a median follow-up time for DOR of 8.6 months (95% CI: 7.8, 19.6 months) with a median study follow-up of 12.3 months; this result was consistent across age groups. Kaplan-Meier estimates of the progression free survival (PFS) rates at 6 months and 12 months were 77.0% and 60.9%, respectively, and the median PFS was not reached at the median potential follow-up of 12.3 months. Additionally, 57% of all patients and 78% of patients with a CR remained in remission (results consistent across age groups). Furthermore, as reported by the applicant, among the first 28 subjects studied as part of the interim analysis, 43% remained in continued remission without additional therapy at the follow-up period of 27 months (range, 25.3-32.3).

The applicant also conducted an additional analysis of OS among the first 28 subjects (ZUMA-2 interim analysis) who were treated with TECARTUS® and had a potential follow-up of ≥24 months. Among these subjects, the OS rate estimate at 24 months was 67.9% and the median OS was not reached. In comparison, the Cheah et al. (2015) post-ibrutinib salvage therapy study reported a lower one-year survival rate of 22%. Additionally, among the subjects in CR at month 3 who had the opportunity to be followed to month 12, 90% remained in CR at month 12. The applicant contended that this statistic showcased that early responses to TECARTUS® are likely indicative of long-term remission after the single infusion of TECARTUS®. Furthermore, the applicant suggested that a substantial number of patients with r/r MCL treated with TECARTUS® will achieve a CR, and that this suggests these patients will likely experience a long-term remission after a single infusion of TECARTUS®. The applicant also noted that these results were consistent across age groups at the time of the primary data analysis cut-off (July 24, 2019). By contrast, the applicant noted that patients with r/r MCL who had prior BTK inhibitor treatment had CR rates ranging from 7-22%. Additionally, the applicant noted that the majority of patients on BTK inhibitor treatment go on to have progressive disease given that the responses achieved with currently available salvage therapies are short lived and have a DOR ranging from 3 to 5.8 months.

With regard to the safety of TECARTUS®, the applicant argued that the ZUMA-2 study demonstrated a positive benefit-risk of TECARTUS® over the current therapy options for patients with r/r MCL. The applicant stated that the toxicity profile that is associated with TECARTUS® therapy can be managed based upon established guidance. The applicant further stated that the risk evaluation and mitigation strategies (REMS) program will ensure that hospitals providing TECARTUS® therapy are certified so that all who prescribe, dispense, or administer TECARTUS® are aware of how to manage the risk of cytokine release syndrome (CRS) and neurologic events. However, the applicant notes that patients who were ≥65 years old showed a trend toward a higher incidence of Grade 3 or higher CRS compared to those ≤65 years old. (21% versus 7%). Additionally, all subjects in the ZUMA-2 primary analysis had at least one adverse event (AE), 99% of subjects had at least one AE that was Grade 3 or higher, and 68% of subjects had at least one serious adverse event (SAE). Among all 68 treated patients, the most common Grade 3 or higher AEs were anemia (51%), neutropenia (53%), and leukopenia (41%). Furthermore, CRS occurred in 62 subjects (91%) in the ZUMA-2 safety analysis. Of these, 10 subjects (15%) had Grade 3 CRS or higher. No subject had Grade 5 CRS, according to the applicant. Furthermore, according the applicant, the most common CRS symptoms of any grade were pyrexia, hypotension, and hypoxia. The most common Grade 3 or higher CRS symptoms were hypotension (35 subjects, 51%), hypoxia (23 subjects, 34%), and pyrexia (62 subjects, 91%). No patient in the ZUMA-2 study treated with TECARTUS® died from CRS.

The applicant mentioned that 43 of the 68 patients (63%) in the ZUMA-2 study also experienced forms of neurologic events. Of these, 15 subjects (22%) had a worst Grade 3 neurologic event, and 6 subjects (9%) had a worst Grade 4 neurologic event. Twenty-two subjects (32%) had serious neurologic events, however, the applicant noted no subject had a Grade 5 neurologic event. The most common neurologic events of any grade were encephalopathy (21 subjects, 31%), confusional state (14 subjects, 21%), and tremor (24 subjects, 35%). Compared with subjects who were <65 years of age, subjects who were ≥65 years of age showed a trend toward a higher incidence of Grade 3 or higher neurologic events (36% versus 24%). The applicant noted that these neurologic events resolved for all but 6 subjects and that among those whose neurologic events had resolved, the median duration was 12 days. Additionally, no patient died from neurologic events.

In response to CMS's concern as discussed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32646 through 32647) regarding the generalizability of the findings from ZUMA-2 to the general Medicare population, the applicant stated that the ZUMA-2 study sample is representative of the Medicare population. The applicant stated that 57% of the sample were 65 to 79 years of age, and that MCL predominantly affects older adults, with a median age at diagnosis ranging from 65 to 73. The applicant asserted that the advanced disease characteristics, including Stage IV disease in 85%, bone marrow involvement in 54%, and splenic involvement in 34%, closely align with those observed in the general MCL population where newly diagnosed and previously untreated patients present with stage III/IV disease and commonly exhibit splenomegaly and bone marrow infiltration. The applicant added that the key baseline characteristics of the ZUMA-2 population mirror the r/r MCL Medicare population refractory to BTK inhibitors, including age of study subjects and stage of disease at study initiation. Overall, ZUMA-2 primary results showed that at the time of the analysis cutoff (July 2019), 16 of 68 subjects (24%) had died; 4 deaths occurred >30 days through 3 months after infusion of TECARTUS® and 12 deaths occurred ≥3 months after infusion of TECARTUS®. Fourteen of the 16 subjects died as a result of progressive disease and two of the 16 subjects died due to AEs (Grade 5 AE of staphylococcal bacteremia and Grade 5 AE of organizing pneumonia).

Based on the information provided by the applicant, we had several concerns with regard to the substantial clinical improvement criterion. As we noted in the FY 2021 IPPS/LTCH PPS proposed rule, the combined sample size from the literature search and ZUMA-2 study performed by the applicant is relatively small. While the applicant stated that it closely communicated with FDA in the development of the ZUMA-2 study, including in the development of the sample size, we questioned whether the ZUMA-2 study results would support a determination of substantial clinical improvement given the small sample size. Although the applicant's analysis of the ZUMA-2 study concluded that TECARTUS® offers a treatment option for a patient population unresponsive to, or ineligible for, currently available treatments, we questioned whether the sample size and research presented in this application support extrapolating these results across the Medicare population.

Relatedly, we had concerns regarding the potential for selection bias and its effects on results from the ZUMA-2 study. Seventy-four patients were enrolled in the trial and underwent leukapheresis, of which TECARTUS® was successfully manufactured for 71 (96%) and administered for 68 (92%). According to the authors, the primary efficacy analysis was performed among the 60 first treated patients who had at least 7 months of follow up. We also noted that the reported ORR among the first 60 is 93% (95% CI 84-98) and the ORR among all 74 patients enrolled is 85%. We had concerns, given the small sample, about the potential effects of selection bias and of patients being selected out of a study on the results of ZUMA-2, which forms the keystone of the applicant's assertions regarding substantial clinical improvement. Further, some research suggests that trials stopped early for benefit overestimate treatment effects and that formal stopping rules do not reduce this bias, particularly in samples less than 500 events or cases. Given the lack of confidence intervals around the ORR among all 74 patients and the potential for the overestimation of treatment effects, we stated it was unclear whether there was sufficient information to determine a substantial clinical improvement.

As noted in the FY 2021 IPPS/LTCH PPS proposed rule, there had not been a direct study completed comparing outcomes of patients with r/r MCL treatment with TECARTUS® and BTK inhibitors. According to the applicant, ZUMA-2 remains the only study to evaluate patient outcomes after receiving TECARTUS® for the treatment of r/r MCL, but this study did not include a direct comparison to other existing therapies for r/r MCL. Despite there being no standard of second-line care for r/r MCL patients that failed on previous therapies, according to the applicant, a BTK inhibitor reflects the best currently available therapy for treating r/r MCL.

The applicant's assertions of substantial clinical improvement are based on the ZUMA-2 trial that uses a historical control ORR of 25%. Given that the ORR in the provided literature review of six articles ranges from 20%-42%, and that, according to the applicant, two specific articles were used to develop the pre-specified historical control rate (26% and 32% respectively),we stated it was unclear whether the historical control is appropriate or representative of r/r MCL patients. Furthermore, given that the applicant states that ZUMA-2 was not designed to compare efficacy and safety of TECARTUS® to BTK inhibitors, we were uncertain whether it would support a determination of substantial clinical improvement.

We stated that, as noted in the FY 2021 IPPS/LTCH PPS proposed rule, a longer-term analysis of this population is not available to evaluate the overall survival and mortality data. We noted that the applicant did conduct an additional analysis of OS among the first 28 subjects (ZUMA-2 interim analysis) which showed an OS rate estimate at 24 months of 67.9% while the median OS was not reached. Additionally, the applicant referenced that all subjects in the ZUMA-2 primary analysis had at least 1 adverse event, and that throughout the course of the ZUMA-2 study, 16 deaths were recorded. However, while the applicant noted only 2 of these 16 deaths were related to adverse events, we stated that we remained concerned that further analysis may be needed to evaluate the safety of TECARTUS® and the longer term effects of the CRS and neurological events associated with the TECARTUS® therapy.

We invited public comments on whether TECARTUS® meets the substantial clinical improvement criterion.

Comment: A commenter submitted a comment stating that with regard to whether there is a high unmet need for Medicare patients with R/R MCL, two observations are important: (1) Median age at diagnosis of MCL is approximately 68 years old and (2) MCL is considered an incurable malignancy. The commenter stated that the median duration of remission is 3 to 5 years suggesting that the age at first relapse is approximately 70 years; this was reflected by the pivotal trial, Zuma 2, where over half of the patients were over age 65. The commenter stated that the decision to treat older patients with comorbid conditions was not taken lightly. The commenter stated that, rather then focus on the specific clinical outcomes observed with TECARTUS® in CMS' review and in publication, that they desired to lend support as evidenced by their experience with the technology and respond directly to CMS' concerns. The commenter concluded that they were able to demonstrate safety and efficacy data that parallel the clinical trial experience in spite of treating older patients with comorbid conditions, many of which would have failed to meet trial eligibility.

A second commenter stated their agreement with the assertion included in the new technology add-on payment application that the registration study population for the ZUMA-2 trial and the overall U.S. mantle cell lymphoma population are both representative of the Medicare population. The commenter stated that TECARTUS® has the potential to impact this population with an efficacy profile that is even stronger than that of approved CAR T-cell therapies for DLBCL.

A third commenter stated that while MCL and DLBCL share similar clinical presentations, they believe the key distinction between MCL and large B cell Lymphoma (LBCL) in relation to CAR T-cell therapy is that MCL has a leukemic phase in all MCL patients that both needs to be accounted for in production and accounts for a higher disease burden driving TECARTUS® CAR19 expansion. The commenter added that the real-world use of TECARTUS® is heavily skewed to an elderly patient population with most being age 65 or older and having new technology add-on payment support is critical to continued TECARTUS® usage.

Finally, a commenter stated support for CMS' desire for additional data and comment to illustrate that TECARTUS® meets the substantial clinical improvement criterion to support new technology add-on payment status.

Response: We appreciate the input from the commenters with regard to TECARTUS® and we have taken these comments into consideration in determining whether to approve TECARTUS® for the new technology add-on payment, as discussed below in this section.

Comment: In response to CMS' concern about the small sample size of the ZUMA-2 study, the applicant stated that sample size and power calculations for ZUMA-2 were carefully designed to demonstrate that TECARTUS® is an effective treatment for patients with r/r MCL who have not responded to currently available therapy. The applicant reiterated that the ORR achieved in ZUMA-2 was 93% which was significantly higher than the prespecified historical control and the pooled meta-analysis ORR. The applicant asserted the ZUMA-2 study design called for the primary analysis to be conducted after 60 subjects in Cohort 1 were treated with TECARTUS® and had the opportunity to be assessed for response 6 months after the week 4 disease assessment. The applicant added that a sample size of 60 subjects in cohort 1 had at least 96% power to distinguish between an active therapy with a true response rate of 50% or higher from a therapy with an ORR of 25% or less with a 1-sided alpha level of 0.025. The applicant added that the ZUMA-2 study reported an ORR of 93% (95% CI: 83.8%, 98.2%) after a single-dose of TECARTUS®, significantly higher than the prespecified historical control rate of 25% (p <0.0001) and the meta-analysis pooled ORR rate of 28% (95% CI: 23%, 34%) to salvage therapies that are currently available. Lastly, in regard to this concern, the applicant stated the ZUMA-2 population, in which 57% of the study subjects were 65 years of age or older, was representative of the Medicare population.

In response to CMS' concerns about the potential for selection bias and the differences of the ORR among the first 60 patients as compared to that from all 74 patients, the applicant commented that the observed ORR in ZUMA-2 is consistently higher than the prespecified historical control rate or the pooled ORR reported in the meta-analysis whether comparing the 60 subjects of the primary analysis or the 74 subjects in the full analysis. The applicant stated that the ORR from the 6-study meta-analysis was 28% (95% CI: 23-34%) which when compared to the updated analysis for the efficacy analysis (n=60) ORR of 92% (95% CI: 81.6%, 97.2%) and the full analysis set (n=74) ORR of 84% (95% CI: 73.4%, 91.3%) continues to show no overlap of confidences intervals. Lastly, in response to this concern, the applicant states that it is important to note that ZUMA-2 was not stopped early and is ongoing with 18 months of follow-up data available.

In response to CMS' concern that the historical control may not be appropriate or representative of r/r MCL patients, and that ZUMA-2 was not designed to compare efficacy and safety of TECARTUS® to BTK inhibitors, the applicant commented that the prespecified historical control rate for ORR in ZUMA-2, the meta-analyses subsequently conducted, and a separate systematic literature review and sensitivity meta-analysis provide a complete review of published clinical studies (through February 2019). The applicant stated the prespecified historical control rate was based on two retrospective studies that were published at the time of ZUMA-2 protocol development; these two studies demonstrated that patients with r/r MCL who had ≥3 prior lines of therapy before receiving a BTK inhibitor had ORRs to salvage therapy of approximately 25%. The applicant asserted that subsequent to the initial historical control rate estimation, the applicant conducted a meta-analysis of 6 published clinical studies and commissioned an independent systematic literature review, resulting in an updated, sensitivity meta-analysis. The applicant added that the pooled ORR estimate from the 6-study meta-analysis (ORR: 28%, 95% CI, 23%, 34%) is reported in Table 3 in the TECARTUS® new technology add-on payment application. The applicant stated ZUMA-2 had no comparator arm because there was no effective standard therapy for patients with r/r MCL after they had progressed. Therefore, according to the applicant, an historical control was the only ethical and feasible study design for patients with r/r MCL who have not responded to the most promising therapies available, including BTK inhibitors. Lastly, the applicant asserts that the FDA recognizes a historical control as a valid comparison of the experimental group in clinical trials used to provide evidence that a product is safe and effective for its intended use.

Lastly, in response to CMS' concern that a longer-term analysis of the population of interest is not available to evaluate the overall survival and mortality data, the applicant commented that updated efficacy and safety data was submitted in the TECARTUS® new technology add-on payment application dated December 31, 2019, which represented the first update following the primary analysis. The applicant then stated that an updated 18-month analysis, with a cut-off date of December 31, 2020, has been completed but is confidential. The applicant then stated that the data confirmed there were no changes to overall incidence in the following safety categories as compared to the primary analysis results: Adverse events, serious adverse events, related adverse events, related serious adverse events, any cytokine release syndrome (CRS), grade 3 or higher CRS, overall neurologic events, and grade 3 or higher neurologic events. The applicant added that there were no changes to comparisons of CRS or neurologic events across age group comparisons (≥65 years of age and <65 years of age). The applicant further stated two additional deaths occurred between the data cutoff dates for the primary analysis and that updated analysis due to disease progression: 18 of 68 Subjects in ZUMA-2 (26%) had died as of the December 31, 2019 updated analysis cutoff. The applicant added, of these, 4 deaths occurred >30 days through 3 months after infusion of TECARTUS® and 14 deaths occurred ≥3 months after infusion of TECARTUS®. The applicant further added that sixteen (16) of the 18 subjects died as a result of progressive disease; two subjects died due to AEs other than disease progression: 1 subject had a Grade 5 AE of Staphylococcal bacteremia (deemed related to conditioning chemotherapy and TECARTUS®), and 1 subject had a Grade 5 AE of organizing pneumonia (deemed related to conditioning chemotherapy).

Response: We thank the applicant for its comment and additional information regarding the substantial clinical improvement criterion. After consideration of the comments received, we agree with the applicant and commenters that TECARTUS® represents a substantial clinical improvement over existing therapies for relapsed and refractory MCL because TECARTUS® allows access to a treatment option for patients unresponsive to or ineligible for currently available therapies, including patients who have progressed following a prior BTK inhibitor. In addition, we believe that the ORR of 93% seen after one dose with TECARTUS®, and the difference in ORR between use of TECARTUS® and the historical controls demonstrate a substantial clinical improvement over existing technologies.

After consideration of the public comments we received and the information included in the applicant's new technology add-on payment application, we have determined, for the reasons stated previously, that TECARTUS® meets the criteria for approval of the new technology add-on payment. Therefore, we are approving new technology add-on payments for this technology for FY 2022. Cases involving the use of TECARTUS® that are eligible for new technology add-on payments will be identified by procedure codes XW033M7 (Introduction of brexucabtagene autoleucel immunotherapy into peripheral vein, percutaneous approach, new technology group 7) or XW043M7 (Introduction of brexucabtagene autoleucel immunotherapy into central vein, percutaneous approach, new technology group 7).

In its application, the applicant estimated that the cost of TECARTUS® is $373,000.00 per patient. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS-DRG payment for the case. However, in their public comment the applicant stated that effective April 15, 2021, the WAC for TECARTUS® is $399,000.00 per each patient-specific, single-infusion bag. As a result, the maximum new technology add-on payment for a case involving the use of TECARTUS® is $259,350 for FY 2022.

o. VEKLURY® (remdesivir)

Gilead Sciences, Inc. submitted an application for new technology add-on payments for VEKLURY® (remdesivir) for FY 2022. VEKLURY® is a nucleotide analog that inhibits viral RNA-dependent RNA polymerases, demonstrating activity countering viral pathogens such as severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2), the virus that causes coronavirus disease 2019 (COVID-19).

According to the applicant, spread of COVID-19 is presumed largely to occur through respiratory droplets and approximately 80% is predicted to occur by pre- and asymptomatic individuals. The applicant asserted viral incubation averages 3-7 days and can occur for up to 2 weeks. According to the applicant, once infected, approximately 81% of COVID-19 patients experience mild disease, 14% experience severe disease, and 5% experience critical disease. The applicant stated that severity of disease changes with age—approximately 113 in 100,000 people aged 18-49 years are hospitalized, compared to 250 in 100,000 aged 50-64 years and 451 in 100,000 aged 65+. The applicant asserted that other risk factors for severity include underlying comorbidities but severe illness can occur in otherwise healthy individuals at any age.

According to the applicant, patients who present to the hospital with evidence of pneumonia may require supplemental oxygen in severe cases, or, those with critical illness may develop hypoxemic respiratory failure, acute respiratory distress syndrome, and multiorgan failure that requires ventilation support. The applicant cited one study of 2,482 hospitalized COVID-19 patients, in which 32% of patients were admitted to the intensive care unit (ICU) for a median stay of 6 days and 19% received invasive mechanical ventilation, 53% of whom died in the hospital.

According to the applicant, VEKLURY® received FDA approval for use in the inpatient setting on October 22, 2020 via Priority Review and had received Fast Track designation. Under the New Drug Application (NDA) FDA approval, VEKLURY® is indicated for adults and pediatric patients (12 years of age and older and weighing at least 40 kg) for the treatment of COVID-19 requiring hospitalization. Prior to its approval, on May 1, 2020, VEKLURY® received an Emergency Use Authorization (EUA) from FDA for the treatment of suspected or laboratory-confirmed COVID-19 in adults and children hospitalized with severe disease. VEKLURY® continues to have an EUA for pediatric patients (12 years of age or younger weighing at least 3.5 kg or weighing 3.5 kg to less than 40 kgs) for emergency use to treat suspected or laboratory-confirmed COVID-19 in hospitalized pediatric patients.

According to the applicant, VEKLURY® has been available under the EUA since it was first issued in May 2020 for emergency use in the inpatient setting for patients with COVID-19. The applicant asserted that between July 1, 2020 and September 30, 2020, it entered into an agreement with the U.S. Government to allocate and distribute commercially-available VEKLURY® across the country. The applicant stated that under this agreement, the first sale of VEKLURY® was completed on July 10, 2020. The applicant stated that they transitioned to a more traditional, unallocated model of distribution as of October 1, 2020.

According to the applicant, as of August 1, 2020, VEKLURY® is uniquely identified by ICD-10-PCS codes XW033E5 (Introduction of remdesivir anti-infective into peripheral vein, percutaneous approach, new technology group 5) and XW043E5 (Introduction of remdesivir anti-infective into central vein, percutaneous approach, new technology group 5). Prior to August 1, 2020, the generic, non-COVID-19 ICD-10-PCS codes 3E033GC (Introduction of other therapeutic substance into peripheral vein, percutaneous approach) and 3E043GC (Introduction of other therapeutic substance into central vein, percutaneous approach) could be reported for the use of VEKLURY®.

As discussed previously, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered “new” for purposes of new technology add-on payments.

With regard to the first criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, the applicant asserted VEKLURY® is a SARS-CoV-2 nucleotide analog RNA polymerase inhibitor, and that there are no other antiretroviral therapies that have received an EUA or an approval from FDA to treat COVID-19. The applicant stated, however, that convalescent plasma has also received an EUA for the treatment of hospitalized patients with COVID-19. According to the applicant, convalescent plasma is collected from individuals who have been infected with SARS-CoV-2 and have developed antibodies to the virus. The applicant stated that plasma is transfused into infected patients with the expectation that the antibodies present will neutralize the virus. The applicant asserted this mechanism of action is different from VEKLURY® which works as a nucleotide analog to inhibit viral replication. We noted that, as a result of their evaluation of the most recent information available, on February 4, 2021 FDA reissued the EUA for convalescent plasma. The EUA authorizes only the use of high titer COVID-19 convalescent plasma, for the treatment of hospitalized patients early in the course of disease. The use of low titer COVID-19 convalescent plasma is not authorized under the EUA.

We noted that another inpatient treatment for COVID-19, Olumiant® (baricitinib), in combination with VEKLURY®, has received an EUA. Specifically, the EUA for Olumiant®, which should be administered in combination with VEKLURY®, is for the treatment of COVID-19 in certain hospitalized patients requiring supplemental oxygen, invasive mechanical ventilation, or extracorporeal membrane oxygenation (ECMO). Olumiant® is a Janus kinase (JAK) inhibitor with prior FDA approval for another indication—the treatment of adult patients with moderately to severely active rheumatoid arthritis who have had inadequate response to one or more tumor necrosis factor (TNF) antagonist therapies.

According to the applicant, because of the rapidly evolving nature of the COVID-19 pandemic, there is not a current standard of care used across hospitals in the United States.

With regard to the second criterion, whether the technology is assigned to the same or a different MS-DRG, the applicant asserted that as there no other antiretroviral therapies for the treatment of patients with COVID-19, VEKLURY® could not be assigned to the same MS-DRG as existing technologies.

With regard to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, the applicant asserted VEKLURY® represents a novel treatment option for patients with COVID-19 who are hospitalized. The applicant stated COVID-19 is a completely separate disease from those caused by other coronaviruses. The applicant asserted severe acute respiratory syndrome (SARS) is caused by the coronavirus SARS-CoV and was first reported in 2003. The applicant stated SARS symptoms were similar to COVID-19 and included high fever, body aches, and mild respiratory symptoms but no treatments specific to SARS-CoV have been developed. According to the applicant, MERS-CoV, the Middle east respiratory syndrome coronavirus, was first identified in 2012 and has some similarities in etiology to SARS-CoV-2 but lacks treatment options.

Based on the applicant's statements as summarized previously, the applicant believes that VEKLURY® is not substantially similar to other currently available therapies and/or technologies and meets the “newness” criterion. In the proposed rule, we noted that although there may not be other antiretrovirals available for the treatment of COVID-19, cases involving VEKLURY® may map to the same MS-DRGs as other treatments for COVID-19. We also noted that VEKLURY® may not treat a different disease or patient population as existing treatments for COVID-19, as Olumiant® (administered with VEKLURY®) and convalescent plasma appear to treat the same disease and similar patient population.

In the FY 2009 IPPS final rule (73 FR 48561 through 48563), we revised our regulations at § 412.87 to codify our longstanding practice of how CMS evaluates the eligibility criteria for new medical service or technology add-on payment applications. We stated that new technologies that have not received FDA approval do not meet the newness criterion. In addition, we stated we do not believe it is appropriate for CMS to determine whether a medical service or technology represents a substantial clinical improvement over existing technologies before the FDA makes a determination as to whether the medical service or technology is safe and effective. For these reasons, we first determine whether a new technology meets the newness criterion, and only if so, do we make a determination as to whether the technology meets the cost threshold and represents a substantial clinical improvement over existing medical services or technologies. We also finalized at 42 CFR 412.87(c) (subsequently redesignated as 412.87(e)) that all applicants for new technology add-on payments must have FDA approval or clearance by July 1 of the year prior to the beginning of the fiscal year for which the application is being considered.

In the FY 2021 IPPS/LTCH PPS final rule, to more precisely describe the various types of FDA approvals, clearances, licensures, and classifications that we consider under our new technology add-on payment policy, we finalized a technical clarification to § 412.87(e)(2) to indicate that new technologies must receive FDA marketing authorization (for example, pre-market approval (PMA); 510(k) clearance; the granting of a De Novo classification request; approval of a New Drug Application (NDA); or Biologics License Application (BLA) licensure) by July 1 of the year prior to the beginning of the fiscal year for which the application is being considered. As noted in the FY 2021 IPPS/LTCH PPS final rule, this technical clarification did not change our longstanding policy for evaluating whether a technology is eligible for new technology add-on payment for a given fiscal year, and we continue to consider FDA marketing authorization as representing that a product has received FDA approval or clearance for purposes of eligibility for the new technology add-on payment under § 412.87(e)(2) (85 FR 58742).

An EUA by the FDA allows a product to be used for emergency use, but under our longstanding policy, we believe it would not be considered an FDA marketing authorization for the purpose of new technology add-on payments, as a product that is available only through an EUA is not considered to have FDA approval or clearance. Therefore, under the current regulations at 42 CFR 412.87(e)(2) and consistent with our longstanding policy of not considering eligibility for new technology add-on payments prior to a product receiving FDA approval or clearance, we believe a product available only through an EUA would not be eligible for new technology add-on payments. Therefore, cases involving hospitalized pediatric patients (12 years of age or younger weighing at least 3.5 kg or weighing 3.5 kg to less than 40 kgs) receiving VEKLURY® for emergency use to treat suspected or laboratory-confirmed COVID-19 are not eligible for new technology add-on payment.

We refer the reader to our comment solicitation in section II.F.7 of the preamble of the proposed rule (86 FR 25394 through 25395) regarding how data reflecting the costs of a product with an EUA, which may become available upon authorization of the product for emergency use (but prior to FDA approval or clearance), should be considered for purposes of the 2-year to 3-year period of newness for new technology add-on payments for a product with or expected to receive an EUA, including whether the newness period should begin with the date of the EUA.

We also invited public comments on any implications of the distribution agreement described previously with regard to the market availability of VEKLURY®.

We also refer the reader to our proposal in section II.F.8 of the preamble of the proposed rule (86 FR 25394) to extend the new COVID-19 treatments add-on payment (NCTAP) through the end of the fiscal year in which the PHE ends for certain products and discontinue NCTAP for products approved for new technology add-on payments in FY 2022. We also refer the reader to section II.F.8 of the preamble of this final rule, where we discuss our finalized policy to extend the NCTAP through the end of the fiscal year in which the PHE ends for all eligible products.

We invited public comments on whether VEKLURY® meets the newness criterion.

Comment: The applicant submitted a comment in response to our concerns regarding newness. With respect to our concern that cases involving VEKLURY® may map to the same MS-DRGs as other treatments for COVID-19 and that VEKLURY® may not treat a different disease or patient population as existing treatments for COVID-19, as Olumiant® (administered with VEKLURY®) and convalescent plasma appear to treat the same disease and similar patient population, the applicant agreed that cases involving VEKLURY® may map to the same MS-DRG as other treatments for COVID-19 because those cases are likely to have the same principal diagnosis.

With regard to our concern that VEKLURY may not treat a different disease or patient population, the applicant stated that COVID-19 is noted to have discrete phases, including an early infectious phase, a pulmonary phase, and a hyperinflammatory phase. According to the applicant, VEKLURY® has a unique mechanism of action and may be used in patients at different phases of COVID-19, which differentiates it from other COVID-19 therapies. The applicant also stated that the utility of antiviral agents such as VEKLURY® is expected to be strongest in the earliest phases of COVID-19, while that of immunomodulators such as Olumiant or dexamethasone is likely strongest in the later phases of the COVID-19. The applicant also stated that COVID-19 drugs are currently used in conjunction with one another for effective treatment, depending on the patient population. For example, the NIH recommends VEKLURY® with or without dexamethasone for patients hospitalized on low-flow oxygen. Similarly, for patients hospitalized with high-flow oxygen/non-invasive ventilation the NIH guidelines recommend use of VEKLURY® with dexamethasone, and tocilizumab as an addition in case of rapidly progressive disease with systemic inflammation. The applicant noted that Olumiant is only recommended for use with VEKLURY® as an alternative to dexamethasone + VEKLURY® when corticosteroids cannot be used. Further, the applicant stated that the Olumiant EUA is for use in combination with VEKLURY®, and Olumiant is not yet FDA approved for the treatment of COVID-19. Current NIH treatment guidelines recommend against use of low-titer convalescent plasma for treatment of COVID-19, and recommends against use of convalescent plasma for hospitalized patients who do not have impaired immunity.

Response: We thank the applicant for its comment and additional input regarding the newness criterion. After consideration of the comment received and information submitted by the applicant, we continue to believe that the new use of the technology may involve the treatment of the same or similar type of disease and the same or similar patient population as existing technologies that treat COVID-19, such as Olumiant (administered with VEKLURY®). However, we agree that VEKLURY® does not use the same or a similar mechanism of action to achieve a therapeutic outcome when compared to existing treatment. VEKLURY® works as a nucleotide analog to inhibit viral replication and there are no other antiretroviral therapies that have received an EUA or an approval from FDA to treat COVID-19. Therefore, we believe that VEKLURY® is not substantially similar to an existing technology and meets the newness criterion with an indication for use in adults and pediatric patients (12 years of age and older and weighing at least 40 kg) for the treatment of COVID-19 requiring hospitalization. Consistent with our longstanding policy, we consider the newness period to begin on October 22, 2020, when the NDA for VEKLURY® was approved by the FDA. We refer the reader to section II.F.7. of this final rule for a discussion of the comment solicitation regarding the newness period for products available through an EUA for COVID-19 including a summary of the comments received from the applicant and other commenters regarding this solicitation.

With regard to the cost criterion, the applicant used the FY 2019 MedPAR LDS and the February through June 2020 Electronic Data Interchange (EDI) transaction data to identify applicable cases. The applicant used the FY 2022 thresholds and the FY 2019 NPRM IPPS/LTCH impact file to standardize charges. As COVID-19 is an emergent disease, the applicant asserted that FY 2019 MedPAR claims may not be reflective of actual cases. Accordingly, and as summarized below, the applicant identified the FY 2019 MedPAR cases as proxy COVID-19 cases in its cost analysis. To supplement and confirm its MedPAR findings, the applicant used EDI data that includes actual COVID-19 cases from February through June 2020 to capture what the applicant described as true COVID-19 MS-DRG mapping and charges.

For the MedPAR LDS cases, the applicant used B97.29 with a manifestation code (J12.89 or J20.8 or J40 or J22 or J98.8 or J80). According to the applicant, this is based on the CDC guidance which specifies use of B97.29 with additional coding to identify the manifestation prior to the April 1, 2020 COVID-19 code. The applicant developed 3 sensitivity scenarios to further differentiate the MedPAR cases; Scenario 1: All Proxy COVID-19, Scenario 2: Proxy COVID-19 without ventilation, and Scenario 3: Proxy COVID19 with ventilation. Next, the applicant analyzed linked 837 and 835 inpatient EDI transaction sets that were processed February through June of 2020. The 837 and 835 transaction sets are updated daily and stored in the Inovalon provider research datasets, accounting for approximately 5-7% of the total Medicare FFS volume nationally on average. For cases prior to April 1, the applicant used the same coding as the MedPAR analysis. For claims on or after April 1, 2020, the applicant used the actual COVID-19 code U07.1. The applicant then identified cases using the 3 sensitivity scenarios; Scenario 4: All COVID-19, Scenario 5: COVID-19 without ventilation, and Scenario 6: COVID-19 with ventilation.

The claim search conducted by the applicant identified 1,726 cases mapping to 25 MS-DRGs for scenario one, 274 cases mapping to eight MS-DRGs for scenario two, 1,393 cases mapping to 21 MS-DRGs for scenario three, 3,826 cases mapping to 21 MS-DRGs for scenario four, 859 cases mapping to seven MS-DRGs for scenario five, and 2,917 cases mapping to 14 MS-DRGs for scenario six. The MS-DRGs identified in each scenario are listed in the following tables.

The applicant determined an average unstandardized case weighted charge per case of $56,643 for Scenario 1; $82,733 for Scenario 2; $51,100 for Scenario 3; $75,891 for Scenario 4; $131,004 for Scenario 5; and $59,393 for Scenario 6.

The applicant stated that 33 percent of the length of stay charges from relevant cases were removed as charges for and related to the prior technologies in order to estimate the potential decrease in length of stay achieved by use of VEKLURY®. The applicant stated that these length of stay charges were removed from relevant cases to conservatively estimate the potential reduction in charges due to decreased length of stay through use of VEKLURY®. The applicant asserted that this offset was determined based on findings from the Adaptive COVID-19 Treatment Trial (ACTT-1), which found those treated with VEKLURY® had a median recovery time of 10 days, as compared with 15 days for those who received placebo.

After calculating the average standardized charge per case for all scenarios, the applicant calculated the standardized charge per case for each MS-DRG. Next, for the analysis involving MedPAR, the applicant indicated that it applied the 2-year inflation factor used in the FY 2021 IPPS/LTCH PPS final rule to calculate outlier threshold charges of 13.1 percent. We note that the inflation factor used in the FY 2021 IPPS/LTCH PPS final rule was 13.2 percent (1.13218) (85 FR 59039), which would have increased the inflated charges. For the analysis involving the EDI, the applicant used an inflation factor of 1.06353 or 6.4%, which it indicated was the same inflation factor used in the FY 2021 IPPS/LTCH PPS final rule (85 FR 59039). We note that the inflation factor used in the FY 2021 IPPS/LTCH PPS final rule was 6.4% (1.06404) (85 FR 59039), but this does not affect the cost analysis. To calculate the charges for the technology, the applicant used the national average CCR for the Drugs cost center of 0.187 from the FY 2021 Final IPPS rule. Lastly, the applicant calculated the case-weighted threshold amount and the final inflated average case-weighted standardized charge per case for each scenario.

The applicant stated that for Scenario 1, the final inflated average case-weighted standardized charge per case of $69,741 exceeded the average case-weighted threshold amount of $56,643 by $13,098. For Scenario 2, the final inflated average case-weighted standardized charge per case of $107,860 exceeded the average case-weighted threshold amount of $82,733 by $25,127. For Scenario 3, the final inflated average case-weighted standardized charge per case of $60,749 exceeded the average case-weighted threshold amount of $51,100 by $9,649. For Scenario 4, the final inflated average case-weighted standardized charge per case of $110,553 exceeded the average case-weighted threshold amount of $75,891 by $34,662. For Scenario 5, the final inflated average case-weighted standardized charge per case of $203,406 exceeded the average case-weighted threshold amount of $131,004 by $72,402. For Scenario 6, the final inflated average case-weighted standardized charge per case of $63,915 exceeded the average case-weighted threshold amount of $59,393 by $4,522.

The applicant stated that because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount, VEKLURY® meets the cost criterion.

We invited public comment on whether VEKLURY® meets the cost criterion.

Response: We did not receive comments regarding whether VEKLURY® meets the cost criterion. Based on the information included in the applicant's new technology add-on payment application, we believe that the VEKLURY® meets the cost criterion.

With respect to the substantial clinical improvement criterion, the applicant asserted that VEKLURY® represents a substantial clinical improvement over existing technologies because it shortens time to recovery in patients hospitalized with severe COVID-19. The applicant also asserted that it represents a substantial clinical improvement because the technology results in improved clinical status and a trend toward reduced mortality, with the most significant reduction seen in a post-hoc analysis of patients with COVID-19 on low-flow oxygen treated with VEKLURY®. The applicant further asserted VEKLURY® results in better clinical status for patients hospitalized with moderate COVID-19.

As stated previously, the applicant asserted that VEKLURY® represents a substantial clinical improvement over existing technologies because it shortens time to recovery in patients hospitalized with severe COVID-19. To support this claim, the applicant referenced published, peer-reviewed results from the ACTT-1 study, a multi-center, multi-country adaptive, double-blinded, placebo-controlled, randomized clinical trial. Patients with confirmed COVID-19 and evidence of lung involvement were randomly assigned to receive either VEKLURY® (n=532; 200 mg loading dose on day 1, followed by 100 mg daily for up to 9 additional days) or placebo (n=516) for up to 10 days. Patients could receive other treatments if a participating hospital had a written policy or guideline for treating COVID-19. The study was conducted in 60 trial sites across the world with a majority of trial sites within the United States (45 trial sites plus 13 sub-sites within the United States). The other sites were in Denmark (8), the United Kingdom (5), Greece (4), Germany (3), Korea (2), Mexico (2), Spain (2), Japan (1), and Singapore (1). The primary outcome measure of the ACTT-1 study was time to recovery, defined as the first day, from the time of enrollment into the study, that patients exhibited improvement in conditions based on hospitalization activity limitation, oxygen requirement, and medical care requirement.

According to the applicant, as part of the trial design, an interim analysis was planned to determine if the study should be stopped early for futility, efficacy, or safety, if there was clear and substantial evidence of a treatment difference between study drug and placebo. An independent data and safety monitoring board met to review interim data and determined VEKLURY® was better than a placebo for the primary endpoint, time to recovery. The applicant stated those treated with VEKLURY® had a median recovery time of 10 days, as compared with 15 days for those who received placebo (rate ratio for recovery, 1.29; 95% confidence interval [CI], 1.12 to 1.49; P <0.001), and the number of serious adverse events was lower in the VEKLURY® treated group.

As stated previously, the applicant asserted VEKLURY® represents a substantial clinical improvement over existing technologies because use of VEKLURY® results in improved clinical status and reduced mortality in patients with COVID-19 on low-flow oxygen. According to the applicant, the pivotal ACTT-1 study showed an overall trend toward reduction in mortality with the most significant reduction observed in a post-hoc analysis of patients on low-flow oxyen treated with VEKLURY®. The overall mortality effect was not statistically significant. The applicant stated those treated with VEKLURY® continued to receive oxygen for fewer days (median, 13 days vs. 21 days) and the incidence of new oxygen use was lower in the VEKLURY® group (incidence, 36%; 95% CI, 26% to 47%) compared with the placebo group (incidence, 44%; 95% CI, 33% to 57%). In the post-hoc analysis, those receiving low-flow supplemental oxygen (that is, not those receiving noninvasive ventilation or high-flow oxygen, nor those receiving invasive mechanical ventilation or ECMO) treated with VEKLURY® had the largest reduction in mortality compared to the same cohort receiving the placebo (hazard ratio, 0.30; 95% CI, 0.14 to 0.64).

As stated previously, the applicant asserted VEKLURY® results in better clinical status for patients hospitalized with moderate COVID-19. To support this claim, the applicant referenced published, peer-reviewed results from an open label, placebo controlled, randomized clinical trial. Patients with moderately severe COVID-19 (pulmonary infiltrates on imaging but oxygen saturation >94 percent on room air) were randomly assigned to receive either VEKLURY® plus continued standard of care for 10 days (n=197), VEKLURY® plus continued standard of care for 5 days (n=199), or continued standard of care (n=200). Standard of care could include use of concomitant medications such as steroids, hydroxychloroquine/chloroquine, lopinavir-ritonavir, tocilizumab, and azithromycin. The median time to start VEKLURY® treatment was 8 days after start of symptoms. The median length of treatment in the 10-day group was actually 6 days. Patients who improved could be discharged from the hospital before completing their assigned course of treatment. The study was conducted in 105 trial sites in the United States, Europe and Asia. The primary end point was assessment of clinical status on day 11 after initiation of treatment. Clinical status was assessed on a 7-point ordinal scale ranging from death (category 1) to discharged (category 7).

According to the applicant, on day 11, patients with moderate COVID-19 treated with VEKLURY® for 5 days had a better clinical status compared with the standard of care (odds ratio 1.65; 95% CI, 1.09 to 2.48, P=0.02). The applicant stated the difference was not statistically significant between those treated with VEKLURY® for 10 days compared with the standard of care (P=0.18 by Wilcoxon rank sum test; the proportional odds assumption was not met for this comparison). The applicant asserted that post hoc analyses demonstrated improved clinical status in both the 5- and 10-day treated cohorts at 14 days (P=.03 for both groups). The applicant stated there were no significant differences in adverse events for those treated with Veklury for 5 days.

In the proposed rule, we noted that the articles submitted by the applicant in support of substantial clinical improvement used study designs that may be subject to bias, such as the adaptive and open label design. The ACTT-1 study included a prespecified interim analysis as part of its adaptive design but no changes were made to the placebo arm. We were unclear whether this may suggest that VEKLURY® did not demonstrate superiority over the control. We also noted the ACTT-1 study showed considerable differences between geographic regions in median time to recovery for patients assigned to VEKLURY® compared to those assigned to placebo. For example, for the patient population studied at U.S. sites, the median time to recovery in the VEKLURY® group (n=310) vs. the placebo group (n=271) was 11 days vs. 16 days, respectively, whereas at non-US sites, patients treated with VEKLURY® (n=89) vs. placebo (n=81) experienced a median time to recovery of 8 vs. 12 days, respectively. Furthermore, the ACTT-1 study allowed other simultaneous treatments based on individual hospital policies or guidelines, which we stated may have potentially confounded the results of the trial.

We invited public comments on whether VEKLURY® meets the substantial clinical improvement criterion.

Comment: We received comments in support of approval of the new technology add-on payment for VEKLURY® with the commenters stating that this technology is used as standard of care for the treatment of hospitalized patients with COVID-19.

Response: We appreciate these comments and will have considered them in our determination of substantial clinical improvement, which is discussed later in this section.

Comment: The applicant submitted comments in response to CMS' concerns regarding the substantial clinical improvement criterion. In response to the concern that the articles submitted used study designs that may be subject to bias, such as the adaptive and open label design, the applicant stated that the ACTT-1 study was the first stage of the ACTT program and in this first stage, the only treatment evaluated was VEKLURY® versus placebo. The applicant stated that this comparison was done in a randomized, double-blinded manner and that this addressed potential biases and mitigated potential confounding. The applicant also stated that the term “adaptive” applies to the entire ACTT program as a whole, rather than any individual stage and that based on the superiority of VEKLURY® over placebo demonstrated in ACTT-1, subsequent stages of the study (ACTT-2, ACTT-3, ACTT-4) evaluated the efficacy of the addition of other treatments (for example, baricitinib, interferon-β, dexamethasone) to VEKLURY®.

The applicant also responded to CMS' concern that the ACTT-1 study included a prespecified interim analysis as part of its adaptive design, but no changes were made to the placebo arm making it unclear whether VEKLURY® demonstrated superiority over the control. The applicant noted the final report on ACTT-1, which stated that due to the rapid enrollment of the study, the planned interim analysis was conducted after enrollment of the study was completed and while follow-up of enrolled patients was ongoing. The applicant stated that at the recommendation of the independent Data and Safety Monitoring Board, the interim results were shared with the study team and then made public. The applicant stated that no changes were made in the randomization scheme; however, treating physicians could request to be made aware of the treatment assignment of patients who had not completed day 29 if clinically indicated (for example, because of worsening clinical status), and patients originally in the placebo group could be given VEKLURY®. Lastly, the applicant stated that analyses of the impact of this crossover were evaluated in sensitivity analyses and found to produce results similar to those of the prespecified primary analysis, which demonstrated superiority of VEKLURY® over placebo.

In response to CMS' concern that the ACTT-1 study showed considerable differences between geographic regions in median time to recovery for patients assigned to VEKLURY® compared to those assigned to placebo, the applicant stated that ACTT-1 was conducted early in the course of the COVID-19 pandemic and enrolled a diverse population of patients across the globe. The applicant also stated that at the time of the ACTT-1 study, the impact of COVID-19 was particularly great in Italy and other parts of Europe, with hospital resources stretched to the point that healthcare resources were being reserved for those most likely to recover. The applicant stated that at the time, there were no known effective treatments for COVID-19 and ventilators were in short supply and were being rationed or shared between multiple patients. The applicant noted that despite these regional differences, VEKLURY® remained superior to placebo across the entire study population, even within these subgroups. The applicant also noted that the study was designed a priori to evaluate the efficacy of VEKLURY® over placebo in the entire enrolled population, rather than individual subgroups, including those defined by region. Therefore, the applicant concluded, the geographic variation in time to recovery was likely due to differential impact of pandemic at the time, and different characteristics of patients in each region.

The applicant also referenced three additional studies presented at the World Microbe Forum in June 2021 that provided real-world data that demonstrated that effectiveness of VEKLURY® by baseline oxygen requirement subgroup and for mortality. The first study was an open label trial of 5 vs 10 days of treatment with VEKLURY® among patients hospitalized with severe COVID-19 compared to a real-world cohort of patients with severe COVID-19 who were not treated with VEKLURY® during the same time period, that is, through end of May 2020. According to the applicant, in this analysis, among 1,974 patients treated with VEKLURY® for up to 10 days and 1,426 propensity score weighted control patients, VEKLURY® was associated with reduced mortality by day 28 both overall (Hazard Ratio [HR]: 0.46, 95% CI: 0.39-0.54) and in subgroups of baseline oxygen requirement (low flow, HR: 0.35, 95% CI: 0.26-0.46; high-flow/non-invasive ventilation, HR: 0.54, 95% CI: 0.42-0.69; invasive mechanical ventilation[IMV]/extracorporeal membrane oxygenation [ECMO], HR: 0.43, 95% CI: 0.39-0.54). In addition, after the 10-day treatment course of the trial extension, VEKLURY® was associated with an increased likelihood of hospital discharge by day 28 overall (HR: 1.64, 95% CI: 1.43-1.87) and in patients requiring low flow oxygen and high-flow/non-invasive ventilation at baseline (HR: 1.85, 95% CI: 1.56-2.20; and HR: 1.82, 95% CI: 1.40-2.37, respectively). No discharge benefit was observed in patients on IMV/ECMO at baseline.

The second study was a comparative analysis of real-world U.S. hospital chargemaster data from Premier Healthcare. In the study, 27,559 patients treated with VEKLURY® within 2 days of hospitalization and not requiring IMV/ECMO were propensity-score matched to 27,559 patients not treated with VEKLURY® in the same time period (August-November 2020). According to the applicant, in patients not requiring oxygen, treatment with VEKLURY® was associated with a statistically significant reduction in mortality at both day 14 (HR: 0.69, 95%CI: 0.57-0.83) and day 28 (HR: 0.80, 95% CI: 0.68-0.94). Similarly, in patients requiring low-flow oxygen, treatment with VEKLURY® was associated with a statistically significant reduction mortality at both day 14 (HR: 0.67, 95% CI:0.59-0.77) and day 28 (HR: 0.76, 95% CI:0.68-0.86). Among patients requiring high-flow oxygen/non-invasive ventilation (NIV), treatment with VEKLURY® was associated with a statistically significant reduction in mortality at day 14 (HR: 0.81, 95% CI: 0.70—0.93); however, there was no statistically significant difference between the VEKLURY® and control groups at day 28.

The third study was a comparative analysis of integrated US hospital chargemaster and medical/pharmacy claims from HealthVerity that examined patients newly diagnosed with COVID-19 between May 1, 2020 (the date of Emergency Use Authorization from FDA) and May 3, 2021. In this analysis, 24,856 patients treated with VEKLURY® were matched to 24,856 referent patients using risk set sampling and propensity score matching. In this data analysis, VEKLURY® was associated with reduced all-cause mortality by day 28 overall (HR: 0.77, 95% CI: 0.73-0.81) and in each subgroup of baseline oxygen requirement: Room air (HR: 0.87, 95% CI: 0.80-0.94), low flow oxygen (HR: 0.78, 95% CI: 0.69-0.87), high-flow oxygen/NIV (HR: 0.73, 95% CI: 0.66-0.80), and IMV/ECMO (HR: 0.76, 95% CI: 0.66-0.88). In addition, after completion of the 5-day treatment course, VEKLURY® was associated with a statistically significantly increased likelihood of hospital discharge overall (HR: 1.19, 95% CI: 1.14, 1.25). This improvement in hospital discharge was statistically significant for patients on room air at baseline (HR: 1.24, 95% CI: 1.16-1.32) and on low-flow oxygen at baseline (HR: 1.10, 95% CI: 1.00-1.22), and suggestive for patients high-flow/NIV at baseline (HR: 1.14, 95% CI: 0.98-1.33); no association was observed for hospital discharge among patients on ECMO/IMV.

In response to CMS' concerns that the ACTT-1 study allowed other simultaneous treatments based on individual hospital policies or guidelines, which may have potentially confounded the results of the trial, the applicant stated that although the study allowed simultaneous treatment with other drugs according to local guidelines or practices, the randomized, placebo-controlled, double-blinded design of the study guarded against bias and minimized potential confounding. The applicant also stated that despite the added noise of other simultaneous treatments, VEKLURY® was demonstrated to be effective at both the interim and final analyses. The applicant also noted that at the time of ACTT-1, no other treatments had demonstrated efficacy against COVID-19, and many, including hydroxychloroquine and lopinavir/ritonavir, were later found to be ineffective. According to the applicant, the RECOVERY trial first reported results demonstrating a benefit of glucocorticoids in June 2020, after ACTT-1 enrollment was complete. Lastly, the applicant stated that the sensitivity analyses of ACTT-1 in which data were censored at earliest reported use of glucocorticoids or hydroxychloroquine still showed efficacy of VEKLURY®.

Response: We thank the applicant for the additional data it provided and for its comment. We believe that the clarifications provided by the applicant addressed the concerns we noted in the FY 2022 IPPS/LTCH PPS proposed rule regarding the differences between geographic regions in median time to recovery between VEKLURY® patients and placebo patients. Although we note that controlling for the effect of geographic area would result in more robust analyses, we agree with the applicant that the geographic variation in time to recovery could be due to differential impact of pandemic at the time, and different characteristics of patients in each region. Lastly, we believe that the additional information from the applicant has addressed our concerns regarding the potential for bias in the study design and the prespecified interim analysis. Therefore, based on the data submitted by the applicant, we believe that VEKLURY® meets the substantial clinical improvement criterion because it because it has been shown to shorten time to recovery in patients hospitalized with severe COVID-19 by five days compared to patients treated with placebo and reduce mortality among patients receiving low-flow supplemental oxygen compared to the same cohort receiving the placebo.

After consideration of the public comments we received, we have determined that VEKLURY® meets all of the criteria for approval of new technology add-on payments, and we are approving new technology add-on payments for VEKLURY® for FY 2022 when used for adults and pediatric patients (12 years of age and older and weighing at least 40 kg) for the treatment of COVID-19 requiring hospitalization. Cases involving VEKLURY® that are eligible for new technology add-on payments will be identified by ICD-10-PCS codes XW033E5 (Introduction of remdesivir anti-infective into peripheral vein, percutaneous approach, new technology group 5) or XW043E5 (Introduction of remdesivir anti-infective into central vein, percutaneous approach, new technology group 5).

In its application, the applicant stated that the cost per case for VEKLURY® is $3,120 per case. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the costs of the new medical service or technology, or 65 percent of the amount by which the costs of the case exceed the MS-DRG payment. As a result, the maximum new technology add-on payment for a case involving the use of VEKLURY® is $2,028 for FY 2022. In addition, as discussed in section II.F.8, we established the NCTAP to pay hospitals the lesser of: (1) 65 percent of the operating outlier threshold for the claim; or (2) 65 percent of the amount by which the costs of the case exceed the standard DRG payment, including the adjustment to the relative weight under section 3710 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, for certain cases that include the use of a drug or biological product currently authorized for emergency use or approved for treating COVID-19. As discussed in section II.F.8, we are finalizing to extend the NCTAP through the end of the fiscal year in which the PHE ends for all eligible products. We are also finalizing that we will reduce the NCTAP for an eligible case by the amount of any new technology add-on payments. Therefore, cases involving the use of VEKLURY® in FY 2022 are eligible for new technology add-on payments and NCTAP, with the NCTAP to be reduced by a maximum of $2,028 for the same treatment.

p. ZEPZELCA^TM (lurbinectedin)

Jazz Pharmaceuticals submitted an application for new technology add-on payments for ZEPZELCA^TM for FY 2022. According to the applicant, ZEPZELCA^TM is an alkylating drug indicated for the treatment of adult patients with metastatic small cell lung cancer (SCLC) with disease progression on or after platinum-based chemotherapy. ZEPZELCA^TM is a marine-derived, synthetic antineoplastic compound that inhibits transcription-dependent replication stress and genome instability in tumor cells.

According to the applicant, small cell lung cancer (SCLC) is an aggressive type of lung cancer where patients that progress after first-line chemotherapy have a poor prognosis due to limited clinical benefit from currently available second-line chemotherapy. Patients relapsing or progressing more than 90 days after completion of first-line treatment are considered platinum sensitive and may be rechallenged with platinum-based chemotherapy. The majority of SCLC treated patients show disease relapse and are eligible for second-line therapy; however, few second-line treatment options exist.

According to the applicant, lung cancer overall is the second most common malignancy in the United States with 234,030 new cases and 154,050 deaths estimated in 2018. Per the applicant, where most lung cancers are classified as non-SCLC, SCLC now comprises approximately 15% of all lung cancers. According to the applicant, SCLC is the most aggressive form of lung cancer characterized by rapid disease progression and early metastatic spread—doubling in cell number about every 30 days and spreading quickly to lymph nodes and other organs. The applicant stated that the Veterans Lung Cancer Study Group used a two-stage system for describing SCLC, with a limited-stage (30% of cases) which is confined to a smaller portion of the body, and an extensive-stage (70% of cases) where the tumor was widespread. Many patients with SCLC have substantial comorbidities that may affect performance status and treatment options. A retrospective review analysis of Extensive-stage SCLC (ES-SCLC) patients found that when compared to patients at diagnosis, patients receiving second-line therapy were more likely to have congestive heart failure (67% vs 49%), thromboembolism (9% vs 2%), and depression (11% vs 7%). Further, these patients receiving second-line therapy were more likely to have infectious disease (57% vs 43%), electrolyte disorders (50% vs 22%), anemia (45% vs 19%), neutropenia (17% vs <0.2%), thrombocytopenia (12% vs 2%), and diarrhea (7% vs 3%) compared to the incidence of these comorbidities at diagnosis of ES-SCLC.

According to the applicant, the standard of care for first-line chemotherapy for both limited-stage SCLC and ES-SCLC is platinum doublet and, in the case of ES-SCLC, platinum doublet in combination with a checkpoint inhibitor. SCLC is sensitive to platinum-based chemotherapy in the first-line setting but almost universally relapses, requiring subsequent lines of therapy. Once a patient relapses, the likelihood of response is highly dependent on time from initial therapy to relapse, with survival based on the duration of remission. According to the applicant, ES-SCLC is incurable; patients are treated with palliative intent, with a median survival of 7 to 11 months after diagnosis and with less than 5% survival at 2 years. Even limited-stage disease is rarely cured with radical local therapy (surgery or radiotherapy), and systemic chemotherapy (platinum plus etoposide) remains the cornerstone of first-line treatment in SCLC. Despite best management, the 5-year overall survival (OS) of even limited-stage SCLC is still only 15% to 25%.

The applicant asserted that while SCLC shows high sensitivity to first-line chemotherapy and radiotherapy, most patients develop disease relapse or progression within one year of treatment. It is reported that about 80% of limited-disease SCLC patients and almost all patients with ES-SCLC will develop relapse or progression after first-line treatment. Without second-line chemotherapy, the median survival time is 2 to 4 months. The applicant stated that for patients classified as sensitive to first line treatment, due to remaining relapse-free for at least 3 months after treatment, rechallenge with the same chemotherapy regimen given as first line treatment is reasonable. For those classified as refractory (disease progression through first line treatment) and resistant (patients who show initial response to treatment but whose disease progresses within 3 months of completing chemotherapy), the second line treatment is Hycamtin (topotecan). According to the applicant, topotecan was the only preferred agent in the National Comprehensive Cancer Network (NCCN) Clinical Practice Guidelines for second-line treatment of patients with a Chemotherapy-free Interval (CTFI) <6 months. In summarizing the evidence of topotecan efficacy, the applicant stated that studies showed a median survival of 6.8 to 7.8 months, progression free survival of 2.7 to 3.5 months, and a median time to progression of 13.3 weeks. Furthermore, the applicant asserted that topotecan is associated with hematological toxicities such as anemia, neutropenia, thrombocytopenia, and febrile neutropenia.

The applicant stated that since topotecan's approval in 1998, no other second-line SCLC treatment option had been approved until ZEPZELCA^TM gained approval in June 2020. According to the applicant, ZEPZELCA^TM is the first second-line treatment option for SCLC since 1998.

According to the applicant, the FDA approved ZEPZELCA^TM on June 15, 2020 under the FDA's Accelerated Approval Program with Priority Review. ZEPZELCA^TM was also granted Orphan Drug Designation by the FDA. ZEPZELCA^TM is administered intravenously as a 3.2 mg/m dose over one hour, repeated every 21 days until disease progression or unacceptable toxicity. ZEPZELCA^TM will typically be administered in an outpatient clinic. However, per the applicant, because many patients with SCLC have substantial comorbidities that may necessitate hospitalization and initiation of treatment, the first infusion and possibly some additional infusions will be administered in the inpatient hospital setting. The applicant submitted a request for a unique ICD-10-PCS code to identify the technology beginning FY 2022 and was granted approval for the following codes effective October 1, 2022: XW03387 (Introduction of lurbinectedin into peripheral vein, percutaneous approach, new technology group 7) and XW04387 (Introduction of lurbinectedin into central vein, percutaneous approach, new technology group 7).

As previously discussed, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and, therefore, would not be considered “new” for purposes of new technology add-on payments.

With respect to the first criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, the applicant asserted that the mechanism of action of ZEPZELCA^TM is not the same or similar to the mechanism of action of currently available products used in the treatment of patients with metastatic SCLC with disease progression on or after platinum-based chemotherapy. Per the applicant, ZEPZELCA^TM is a novel synthetic antineoplastic marine derived compound with a unique mode of action and chemical structure, with a terminal half-life of 51 hours and total plasma clearance of 11 L/h (50%). According to the applicant, ZEPZELCA^TM is a transcription inhibitor that binds DNA preferentially in quinine-rich sequences located within gene regulatory elements and induces a rapid degradation of transcribing RNA polymerase II that induces the eviction of oncogenic transcription factors and the silencing of their transcription program. The applicant states that ZEPZELCA^TM has preclinical data which suggests that oncogenic transcription of DNA to RNA was selectively inhibited via the dual actions of RNA polymerase II degradation and the formation of DNA breaks, which leads to apoptosis. The applicant further states that ZEPZELCA^TM has been shown to induce immunogenic cell death, and based on preclinical data, impacts the tumor microenvironment by altering the survival of tumor-associated macrophages (TAMs) and the production and function of key oncogenic inflammatory and growth factors.

According to the applicant, topotecan is a semi-synthetic derivative of camptothecin with topoisomerase I-inhibitory activity that relieves torsional strain in DNA by inducing reversible single strand breaks. The pharmacokinetics of topotecan have been evaluated in cancer patients following doses of 0.5 to 1.5 mg/m administered as a 30-minute infusion. Topotecan exhibits multiexponential pharmacokinetics with a terminal half-life of 2 to 3 hours. Total exposure area under the curve (AUC) is approximately dose proportional. The applicant asserts that a clinical differentiator of ZEPZELCA^TM from topotecan is the rate of hematologic adverse reactions including neutropenia, anemia, thrombocytopenia, and febrile neutropenia.

Lastly, the applicant asserted that ZEPZELCA^TM is not substantially similar to the more recently approved first-line treatments for ES-SCLC, TECENTRIQ® (atezolizumab) and IMFINZI® (durvalumab), both of which are PD-L1 blocking antibodies.

With respect to the second criterion, whether a product is assigned to the same or a different MS-DRG, the applicant stated that ZEPZELCA^TM will not map to MS-DRGs distinct from other treatments for SCLC.

With respect to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population when compared to an existing technology, the applicant stated that there have been no approved treatments for second-line treatment of SCLC since 1998 when topotecan was approved. Topotecan is indicated for the treatment of small cell lung cancers in patients with chemotherapy-sensitive disease after failure of first-line chemotherapy. The applicant states that topotecan is approved for relapses at least 60 days after initiation of a platinum-containing first-line regimen. ZEPZELCA^TM is indicated for the treatment of adult patients with metastatic small cell lung cancer (SCLC) with disease progression on or after platinum-based chemotherapy. The applicant also stated that ZEPZELCA was listed as a preferred regimen by the NCCN Clinical Practice Guidelines for second-line treatment of patients with a chemotherapy free interval (CTFI) ≤6 months and recommended for patients with a CTFI >6 months.

The applicant repeated results concerning the efficacy of topotecan and asserted that the efficacy results were achieved with a high rate of grade three and four hematologic Treatment Emergent Adverse Events (TEAEs).

In summary, the applicant asserted that ZEPZELCA^TM meets the newness criterion because its mechanism of action is not the same or similar to the mechanism of action of currently available products used in the treatment of adult patients with metastatic SCLC and because it is indicated in patients with disease progression on or after platinum-based chemotherapy.

We invited public comments on whether ZEPZELCA^TM is substantially similar to an existing technology and whether it meets the newness criterion.

Comment: The applicant submitted comments reiterating its belief that ZEPZELCA^TM meets the newness criterion. First, the applicant stated that ZEPZELCA^TM's mechanism of action is not the same or similar to that of existing technology approved for treatment of the same patient population. Per the applicant, SCLC is a difficult to treat, extraordinarily lethal malignancy and that misregulated oncogenic transcriptions seem to direct SCLC initation and evolution, with transcription addiction being a feasible therapeutic target to treat the disease. Per the applicant, ZEPZELCA^TM represents an innovative approach to conventional anti-cancer drugs, with an elegant mechanism of action that has been well characterized in peer-reviewed, scientific journals and is based on the inhibition of transcription-dependent replication stress and genome instability of tumor cells. The applicant reiterated that ZEPZELCA^TM is a novel synthetic antineoplastic compound, a marine-derived agent, with a unique mode of action and chemical structure. The applicant stated that ZEPZELCA^TM is not substantially similar to topotecan (brand name: Hycamtin), the only drug approved in over 20 years for patients with disease sensitive to treatment. The applicant further noted that topotecan is approved for relapses at least 60 days after initiation of a platinum containing first-line regimen. The applicant also stated that ZEPZELCA is also not substantially similar to the more recently approved first-line treatments for ES-SCLC: TECENTRIQ® (atezolizumab) and IMFINZI® (durvalumab), both of which are PD-L1 blocking antibodies.

The applicant also stated that patient cases receiving intravenous infusion of ZEPZELCA^TM will be discretely identified by unique ICD-10-PCS procedure codes for ZEPZELCA^TM administration. The applicant stated that Jazz Pharmaceuticals' request for ZEPZELCA^TM-specific ICD-10-PCS codes was reviewed during the March 2021 ICD-10 Coordination and Maintenance (C&M) Committee meeting and that the effective date of these codes will be October 1, 2021.

Response: We thank the applicant for its comment. Based on our review of comments received and information submitted by the applicant as part of its FY 2022 new technology add-on payment application for ZEPZELCA^TM, as discussed in the proposed rule (86 FR 25353) and previously summarized, we agree with the applicant that ZEPZELCA^TM has a unique mechanism of action as a transcription inhibitor in the treatment of metastatic SCLC. Therefore, we believe ZEPZELCA^TM is not substantially similar to existing treatment options and meets the newness criterion. We consider the beginning of the newness period to commence when ZEPZELCA^TM was approved by FDA for the indication of adult patients with metastatic SCLC with disease progression on or after platinum-based chemotherapy, on June 15, 2020.

With respect to the cost criterion, the applicant conducted the following analysis to demonstrate that ZEPZELCA^TM meets the cost criterion. For the primary cost analysis cohort the applicant used the selection criteria of the presence of a lung cancer code as defined by ICD-10-CM family C34 (Malignant neoplasm of bronchus and lung) as the principal diagnosis and the presence of any chemotherapy code as defined by ICD_10-CM Z51.11 (Encounter for antineoplastic chemotherapy), ICD-10-CM Z51.12 (Encounter for antineoplastic immunotherapy), or any ICD-10-PCS chemotherapy code. Additionally, the applicant performed three sensitivity analyses for the cost criterion. The first is a broad cohort with the selection criteria of the presence of at least one lung cancer code (C34xx) and the presence of any chemotherapy code as defined by ICD-10-CM code Z51.11 (Encounter for antineoplastic chemotherapy), Z51.12 (Encounter for antineoplastic immunotherapy), or any ICD-10-PCS chemotherapy code. The second and third analyses involved TECENTRIQ® and IMFINZI® which are both immunotherapy drugs that have FDA approval for use as part of the first-line treatment in patients with SCLC. These drugs are to be used along with chemotherapy. The second analysis is the “TECENTRIQ®” cohort with the selection criteria of the presence of at least one lung cancer code (C34xx) as either the principal or admitting diagnosis, and excluding cases with any ES-SCLC surgical codes. The final analysis, the “IMFINZI®” cohort, has the selection criteria of at least one of the following: (1) Presence of at least one lung cancer code (C34xx) and presence of any platinum-based chemotherapy code as defined by ICD-10-CM Z51.11 (Encounter for antineoplastic chemotherapy) or Z51.12 (Encounter for antineoplastic immunotherapy); (2) Presence of at least one lung cancer code (C34xx) and assigned to MS-DRGs for respiratory neoplasms (180-182). The applicant stated that ZEPZELCA^TM is supplied in 4 mg single-dose vials with the recommended dose of 3.2 mg/m² by intravenous infusion over 60 minutes every 21 days until disease progression or unacceptable toxicity. Based on clinical study, the applicant stated that a single dose of ZEPZELCA^TM ranged from 4.05 mg to 6.4 mg. To identify cases that may be eligible for the use of ZEPZELCA^TM, the applicant searched the FY 2019 MedPAR LDS file using these cohort selection criteria. The applicant stated that in all analyses, they imputed a case count of 11 for MS-DRGs with fewer than 11 cases and calculated the weighted average standardized charges across all MS-DRGs.

Based on the FY 2019 MedPAR LDS file, the applicant identified a total of 1,100 cases in the primary cohort (mapped to 17 MS-DRGs), 4,034 cases in the first sensitivity cohort (mapped to 195 MS-DRGs), 34,437 cases in the second sensitivity cohort (mapped to 253 MS-DRGs), and 24,209 cases in the third sensitivity cohort (mapped to 128 MS-DRGs). The applicant utilized the FY 2019 Final Rule with Correction Notice IPPS Impact File. Using the cases identified, the applicant then calculated the unstandardized average charges per case for each MS-DRG. The applicant expects that ES-SCLC patients will receive their initial dose of ZEPZELCA^TM in the inpatient setting. The applicant then standardized the charges and inflated the charges by 1.13218 or 13.2 percent, the same inflation factor used by CMS to update the outlier threshold in the FY 2021 IPPS/LTCH PPS final rule. The applicant removed charges associated with chemotherapy since treatment with ZEPZELCA^TM would replace chemotherapy. To do so the applicant found the ratio of chemotherapy charges to radiology charges (0.14470075) from claims in the FY 2019 inpatient standard analytic file with a primary diagnosis of lung cancer (ICD-10-CM C34xx) and chemotherapy charges greater than zero. The applicant then added the charges for ZEPZELCA^TM by converting the costs of a single treatment (two single-dose vials) to a charge by dividing the cost by the national average cost-to-charge ratio of 0.187 for pharmacy from the FY 2021 IPPS/LTCH PPS final rule. The applicant calculated a final inflated average case weighted standardized charge per case for the primary cohort as $206,030, and $182,895, $146,174, and $130,975 for sensitivity cohorts 1, 2 and 3, respectively. The applicant referred to the FY 2022 New Technology Thresholds data file to determine the average case-weighted threshold amount for the primary cohort as $79,420, and $70,499, $70,226, and $57,383 for sensitivity cohorts 1, 2 and 3, respectively. The final inflated average case-weighted standardized charge per case in the primary cohort and three sensitivity cohorts exceeded the average case-weighted threshold amount by $126,610, $112,396, $75,948, and $73,592 respectively. Because the final inflated average case-weighted standardized charge per case exceeds in all scenarios the average case-weighted threshold amount, the applicant maintained that the technology meets the cost criterion.

While we would not expect a significant difference, we noted in the proposed rule that instead of referring to the correction notice tab within the FY 2022 New Technology Thresholds data file, the applicant referred to the final rule tab. The FY 2022 New Technology Thresholds data file is available on the CMS IPPS home page at: https://www.cms.gov/​medicare/​acute-inpatient-pps/​fy-2021-ipps-final-rule-home-page#Data.

We also noted that the analysis provided by the applicant includes many MS-DRGs that are defined by factors that may or may not be related to ZEPZELCA^TM's indication for metastatic SCLC. For example, it is not clear that MS-DRG 004 Trach w MV >96 Hrs or Pdx Exc Face, Mouth & Neck w/o Maj O.R has a direct connection to small cell lung cancer though it may be related.

We invited public comment on whether ZEPZELCA^TM meets the cost criterion.

Comment: The applicant submitted a comment in response to these concerns. First, with respect to the MS-DRGs that were selected, the applicant clarified that in conducting the cost criterion analysis for the primary cohort, it identified patients that would best represent candidates for ZEPZELCA^TM, without regard to MS-DRG assignment. The applicant further stated that there is no ICD-10-CM diagnosis code specific to SCLC, only C34—malignant neoplasm of bronchus and lung and as such, the applicant believes that ZEPZELCA^TM candidates would have a principal diagnosis of Malignant Neoplasm of Bronchus and Lung and receive chemotherapy during the hospital stay. Per the applicant, the top 4 MS-DRGs within the primary cohort were DRG 180 RESPIRATORY NEOPLASMS WITH MCC, DRG 181 RESPIRATORY NEOPLASMS WITH CC, DRG 166—OTHER RESPIRATORY SYSTEM O.R. PROCEDURES WITH MCC, and DRG 167—OTHER RESPIRATORY SYSTEM O.R. PROCEDURES WITH CC. The applicant stated that these 4 MS-DRGs represent almost 81 percent of all cases in the ZEPZELCA^TM primary cohort but acknowledges that some of the MS-DRGs are atypical MS-DRGs for SCLC patients. Per the applicant, all cases had a principal diagnosis of Malignant Neoplasm of Bronchus and Lung and received chemotherapy during the hospital stay. The applicant stated that these atypical MS-DRGs may have appeared because of complications and other factors that drive MS-DRG assignment but that these complications alone would not render the inclusion of these MS-DRGs inappropriate. The applicant further noted that the MS-DRGs referenced by CMS represent a small share of all cases (for example, MS-DRG 004 accounts for 1 percent of the full primary cohort) and that if deemed appropriate, excluding certain MS-DRGs from the cost analysis would not impact the cost criterion results as virtually all individual MS-DRGs have standardized charges that exceed the cost criterion threshold. The applicant concluded by stating that ZEPZELCA^TM meets the cost criterion in the primary and three sensitivity cohort analyses.

Next, the applicant indicated that it performed an analysis on a primary cohort and three sensitivity cohorts. Per the applicant, the primary cohort included inpatient hospital stays with the principal diagnosis code Malignant neoplasm of bronchus and lung (ICD-10-CM C34xx) and the patient received chemotherapy, as determined by presence of an ICD-10-CM Z51.11 (Encounter for antineoplastic chemotherapy), ICD-10-CM Z51.12 (Encounter for antineoplastic immunotherapy), or any ICD-10-PCS chemotherapy code on the claim. The applicant also reported its results from the three sensitivity cohorts.

Finally, with respect to referencing the correction notice tab within the FY 2022 New Technology Threshold data file, the applicant stated that it re-evaluated the cost criterion for the primary and 3 sensitivity cohorts using the correction notice thresholds and did not find material difference in the threshold or cost criterion findings. Specifically, the applicant identified the average case-weighted threshold amount for the primary cohort as $79,439, and $70,505, $70,245, and $57,384 for sensitivity cohorts 1, 2 and 3, respectively. The applicant stated the final inflated average case-weighted standardized charge per case in the primary cohort and three sensitivity cohorts exceeded the average case-weighted threshold amount by $126,591, $112,390, $75,929, and $73,591 respectively.

Response: We appreciate the applicant's clarification regarding the MS-DRGs included in the analysis and agree that atypical DRGs represent a small share of all cases. Because virtually all individual MS-DRGs have standardized charges that exceed the cost criterion threshold we believe that the applicant has sufficiently addressed this concern. Based on the information submitted by the applicant as part of its FY 2022 new technology add-on payment application for ZEPZELCA^TM, as discussed in the proposed rule (86 FR 25355 through 25356) and previously summarized, and consideration of the comment received, we agree the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount in each of the primary and 3 sensitivity cohorts. Therefore, ZEPZELCA^TM meets the cost criterion.

With respect to the substantial clinical improvement criterion, the applicant asserted that ZEPZELCA^TM significantly improves clinical outcomes over existing treatment options for adult patients with metastatic SCLC with disease progression on or after platinum-based chemotherapy in five ways. First, ZEPZELCA^TM offers an improved treatment option from both a safety and efficacy standpoint. Second, ZEPZELCA^TM offers safety improvement for treatment of patients with metastatic SCLC with disease progression on or after platinum-based chemotherapy over safety results previously reported in the literature for a comparable patient population. Third, patients with metastatic SCLC whose disease progresses on or after platinum-based chemotherapy achieved higher overall response rates (ORRs) following treatment with ZEPZELCA^TM than ORR that had been previously reported in the literature for a comparable patient population. Fourth, overall survival (OS) rates achieved with ZEPZELCA^TM are clinically meaningful and are the highest rates reported for patients with metastatic SCLC whose disease progresses on or after platinum-based chemotherapy in more than 2 decades. Fifth, the applicant asserted that ZEPZELCA^TM may represent a valuable treatment alternative to platinum rechallenge. The applicant submitted (or in some cases, referred to) multiple sources in support of these claims including retrospective analyses and other studies, a meta-analysis, data abstracts, literature reviews, prescribing information, FDA approved cancer therapies, practice guidelines, workgroup deliberations, a commentary, and an opinion regarding survival outcomes.

With regard to the first claim, the applicant stated that ZEPZELCA^TM is the first second-line treatment option approved for SCLC since 1998 and is indicated for the treatment of adult patients with metastatic SCLC with disease progression on or after platinum-based chemotherapy, a patient population with dismal outcomes. The applicant also stated that ZEPZELCA^TM offers an improved treatment option from both a safety and efficacy standpoint. The applicant outlined the nature of small cell lung cancer, patient treatment and prognosis. The applicant also stated that ZEPZELCA^TM could represent a valuable option for a patient population with high unmet medical need. Specifically, the applicant referred to four analyses, an epidemiology review, prescribing information, practice guidelines, a literature review inclusive of four articles, and one ZEPZELCA^TM study.

First, an analysis stated that although small cell lung cancer shows high sensitivity to first-line chemotherapy and radiotherapy, most patients develop disease relapse or progression. Another analysis stated that most patients experience relapse of small cell lung cancer within 1 year of treatment. A separate analysis indicated that most patients who have initially responded to chemotherapy and radiotherapy eventually experience recurrence of the cancer in a few months. The fourth analysis indicated that almost all patients with extended disease will develop disease relapse or progression after first-line treatment and that without second-line chemotherapy, the median survival time is 2 to 4 months.

Next, in referring to the epidemiology review, the applicant stated that most cases of small cell lung cancer occur in individuals aged 60-80. In referring to prescribing information, the applicant stated that in 1998, Hycamtin (topotecan) was approved for patients with SCLC sensitive disease after failure of first-line chemotherapy. The applicant further stated that in the topotecan Phase 3 clinical study, sensitive disease was defined as disease responding to chemotherapy, but subsequently progressing at least 60 days after chemotherapy.

Next, in referring to practice guidelines, the applicant stated that ZEPZELCA was studied in a broader (resistant disease and sensitive disease) population of SCLC patients and that prespecified subgroup analyses of ZEPZELCA results were done for patients with SCLC by CTFI in patients with resistant disease (CTFI <90 days) and sensitive disease (CTFI interval ≥90 days). The applicant further noted that NCCN guidelines list ZEPZELCA as a preferred regimen for second-line treatment of patients with a CTFI ≤6 months and recommended ZEPZELCA for patients with a CTFI >6 months.

Next, the applicant referred to a literature review and submitted four sources. First, per the applicant, Iams et. al. describes available data on clinical efficacy, the emerging evidence regarding biomarkers and ongoing clinical trials using immune checkpoint inhibitors and other immunotherapies in patients with SCLC. The article included a discussion of the significant unmet needs in second-line therapy for SCLC. Second, per the applicant, Tsiouprou et. al. reported on a literature review of immunotherapy in treatment of ES-SCLC and included a discussion of the significant unmet needs in second-line therapy for SCLC. Third, per the applicant, Wang et. al. presented a review of SCLC development, current therapy and included a discussion of the significant unmet needs in second-line therapy for SCLC. Fourth, per the applicant, Taniguchi et. al., is an opinion article discussing recent developments in the treatment of SCLC and includes a discussion of the significant unmet needs in second-line therapy for SCLC.

Finally, the applicant referred to Trigo, et. al., and stated that authors expressed that ZEPZELCA could present a valuable potential new treatment option after first-line platinum-based chemotherapy.

With regard to the second claim, the applicant asserted that ZEPZELCA^TM offers safety improvement for treatment of patients with metastatic SCLC with disease progression on or after platinum-based chemotherapy over safety results previously reported in the literature for a comparable patient population. The applicant asserted that safety is of particular importance for patients > 65 with age being a major patient-related risk factor. The applicant also referred to a meeting abstract stating that several acute comorbidities were more common in Medicare patients initiating second-line chemotherapy than in all patients at diagnosis: infectious disease (57% versus 43%), electrolyte disorder (50% versus 22%), anemia (45% versus 19%), neutropenia (17% versus 0.1%), thrombocytopenia (12% versus 2%), and diarrhea (7% versus 3%).

The applicant also referred to six studies to support this claim. First, the applicant submitted Trigo et. al., that was based on Study B-005 (NCT01454972), a single-arm, open label, phase II basket trial to evaluate the activity and safety of lurbinectedin in patients with SCLC after failure of platinum-based chemotherapy. One hundred five patients with a diagnosis of SCLC and pre-treated with only one previous chemotherapy-containing line of treatment were included. Treatment consisted of 3.2mg/m2 lurbinectedin intravenously every 3 weeks until disease progression or unacceptable toxicity. The safety-related outcomes demonstrated the following adverse events: anemia 9%, leucopenia 29%, neutropenia 46%, and thrombocytopenia 7%. Serious treatment-related adverse events occurred in 10% of patients, of which neutropenia and febrile neutropenia were the most common with 5% of patients for each.

Second, the applicant submitted an article from Von Pawel, et. al., of a randomized phase 3 study of a total of 637 patients with refractory or sensitive SCLC treated with topotecan and reported hematologic toxicities of grade ≥3 anemia, 30.5%; neutropenia, 53.8%; thrombocytopenia, 54.3%; febrile neutropenia, 3%.

Third, the applicant submitted an open label phase 2 study of 179 patients with SCLC who relapsed after initial platinum-based chemotherapy, treated with topotecan and reported hematologic toxicities of neutropenia, 78.4%; thrombocytopenia, 45.5%; and febrile neutropenia/neutropenic infection/neutropenic sepsis, 18%.

Fourth, the applicant submitted an abstract from Monnet, et. al. of an open-label, multicenter, phase 3 trial that randomized patients with SCLC that responded to first-line platin-etoposide doublet treatment but showed evidence of disease relapse or progression at least 90 days after completion of the first-line treatment. Eighty-two patients were assigned to each treatment group: Those receiving combination chemotherapy (carboplatin and etoposide) versus those receiving oral topotecan. The abstract indicated that grade 3/4 neutropenia was significantly more common in the topotecan group at 35.8% versus 19.7%; insignificantly more febrile neutropenia in the topotecan arm at 13.6% versus 6.2%; no difference for grade 3/4 thrombocytopenia, 35.8% versus 30.9%; and anemia, 24.6% versus 21%.

Fifth, the applicant submitted an abstract from Leary, et. al., that is described as a pooled safety analysis with data from the phase II, single arm basket study by Trigo, et. al. (discussed previously), and a phase III RCT, the CORAIL study. The pooled analysis included a total of 554 patients treated with lurbinectedin. Of the 554, 335 were from the phase II basket study with selected solid tumors (9 indications including 105 patients with small cell lung cancer) and 219 were from the phase III CORAIL study with platinum resistant ovarian cancer. Authors presented an indirect exploratory comparison (pooled data from CORAIL + basket) and a direct comparison (data from CORAIL) of lurbinectedin vs. topotecan. Authors reported adverse events with lurbinectedin were grade 1/2 fatigue, nausea and vomiting. Treatment-related lurbinectedin/topotecan outcomes showed: dose reductions: 22.9/48.3%; delays: 25.8/52.9%; grade ≥3 serious adverse events: 15.0/32.2%; discontinuations: 3.2/5.7%; deaths: 1.3/1.5%; granulocyte colony stimulating factor (G-CSF) use: 23.8/70.1%; and transfusions: 15.9/52.9%. Authors concluded by stating that a significant safety advantage was observed when lurbinectedin was compared with topotecan in the CORAIL trial in terms of hematological toxicities. Authors also noted that with the limitations of indirect comparisons, in the pooled safety analysis, fewer lurbinectedin-treated patients had severe hematological toxicities, severe adverse events, dose adjustments, treatment discontinuations and use of supportive treatments than topotecan-treated patients.

Sixth, the applicant provided a presentation summarizing results from the randomized phase 3 CORAIL study. The patient population was comprised of platinum resistant ovarian, fallopian or primary peritoneal cancer. Enrolled patients were randomly assigned to receive lurbinectedin or investigator choice of pegylated liposomal doxorubicin (PLD) or topotecan. The applicant stated that ZEPZELCA^TM was better tolerated than the control arm and that, overall, the data support a favorable safety profile for ZEPZELCA^TM.

With regard to the third claim, the applicant stated that patients with metastatic SCLC whose disease progresses on or after platinum-based chemotherapy achieved higher ORRs following treatment with ZEPZELCA^TM than ORR that had been previously reported in the literature for a comparable patient population. The applicant referred to four primary resources in support of ZEPZELCA^TM. First, as described previously, the applicant submitted Trigo, et. al., in which the primary endpoint is described as lurbinectedin anti-tumor activity in terms of investigator-assessed overall response (OR) and duration of response (DOR) as a secondary endpoint. The OR rate was identified as 35.2% and the mean DOR as 5.3 months. Second, the applicant submitted an abstract from Subbiah, et. al., a sub-study from Study B-005, that concluded that time from randomization to response was similar regardless of prior resistance or sensitivity to platinum-based chemotherapy, and clinically meaningful DOR was noted in both subgroups of responders. Third, the applicant submitted an abstract from a second sub-study from Study B-005, indicating that ORR was similar across baseline characteristics: Age <65 = 36.8%; age >65 = 32.4%; female = 31%; male = 38.1%; 1 prior line of therapy = 34.7%; >2 prior lines of therapy = 42.9%; BSA 1.8m2 = 34.5%; and BSA >1.8m2 = 36%. The authors concluded by noting that response to lurbinectedin appeared consistent regardless of baseline patient characteristics. Fourth, the applicant submitted a commentary from Arrieta, et. al., and stated that ZEPZELCA^TM outperformed all previously reported results for topotecan.

The applicant also referred to three additional sources reflecting ORRs following treatment with topotecan. The Phase 3 trial of a total of 637 patients with refractory or sensitive SCLC treated with topotecan demonstrated an ORR of 16.9% and DOR of 4.2 months. In the open-label, multicenter, phase 3 trial of 164 patients with sensitive relapsed SCLC that responded to first-line platin etoposide doublet treatment but showed evidence of disease relapse or progression at least 90 days after completion of the first-line treatment, patients randomized to the topotecan group demonstrated an ORR of 25%. Lastly, a randomized, multi-center phase 3 trial of 107 patients treated with topotecan reported an ORR of 24.3%.

With regard to the fourth claim, the applicant stated that the OS rates achieved with ZEPZELCA^TM are clinically meaningful and are the highest rates reported for patients with metastatic SCLC whose disease progresses on or after platinum-based chemotherapy in more than 2 decades. The applicant submitted two studies in support of its claim of improved survival rates in patients treated with ZEPZELCA^TM. First, as described previously, the applicant submitted Trigo, et. al. and highlighted secondary endpoints including progression-free survival, progression-free survival at 4 and 6 months, overall survival and overall survival at 6 and 12 months. The mean progression free survival was identified as 3.5 months, mean overall survival 9.3 months in the overall population, 11.9 months in patients with a CTFI ≥90 days and 5.0 months in those with CTFI <90 days.

Second, the applicant submitted an abstract from Subbiah, et. al., that summarized a sub-study from Study B-005 in which overall survival was a secondary endpoint. Authors report that patients treated with lurbinectedin had CTFI ≥180 days and form the basis for their analysis. Sixty percent of patients were male, had ECOG PS 0-1, and had a median age of 57 years. Extensive stage disease at initial diagnosis was present in 35% of patients. All 20 patients had received prior platinum/etoposide, with no prior immunotherapy. Authors also reported that with a censoring of 55.0%, the median overall survival was 16.2 months. Per the abstract, eleven patients (55.0%) were censored for survival analysis: Eight were on follow-up after disease progression, two were ongoing lurbinectedin treatment, and one had treatment discontinuation because of a treatment-related adverse event (worsening of prior peripheral neuropathy). Median follow-up was 15.6 months. Authors concluded time from randomization to response was similar regardless of prior resistance or sensitivity to platinum-based chemotherapy.

The applicant also referred to several randomized phase I and II studies of patients undergoing alternate therapies and highlighted those OS rates. The applicant provided an abstract from Monnet, et. al., (as mentioned previously with respect to applicant's second and third claims) summarizing results from a study that investigated whether the doublet carboplatin-etoposide was superior to topotecan monotherapy as second-line treatment in patients with sensitive relapsed SCLC. Authors reported patients treated with topotecan had progression free survival (PFS) of 2.7 months and OS of 7.4 months. The applicant also referred to Evans, et. al., summarizing results from a study of patients with SCLC who relapsed after initial platinum-based chemotherapy who were divided into subgroups, chemosensitive vs. chemo-resistant/refractory disease. Patients were treated with topotecan. Authors reported topotecan PFS of 3.0 months and OS of 6.8 months. The applicant referred to Von Pawel, et. al., summarizing the results of a phase 3 trial of a total of 637 patients with refractory or sensitive SCLC, including topotecan PFS of 3.5 months and OS of 7.8 months (5.7 months for refractory). Lastly, the applicant referred to Von Pawel, et. al., that reported randomized, multi-center phase 3 results for topotecan with time to progression of 13.3 weeks and median OS of 25 weeks.

The applicant explained that a statement from an American Society of Clinical Oncology (ASCO) workgroup indicated that relative improvements in median OS of at least 20% are necessary to define a clinically meaningful improvement in outcome. The applicant summarized oncology literature reviews between 2014 and 2016 asserting that ASCO's threshold for OS was met in only 12% of studies (6 of 49) and 19% of therapies.

The applicant further stated that ZEPZELCA^TM's median OS for the overall population compared to the literature, meets the ASCO threshold and, for subsets of patient groups, median OS exceeds the ASCO threshold for clinically meaningful.

The applicant concluded by stating that there is an urgent need for new treatment options for the SCLC population. The applicant asserted that CMS's new technology add-on payment approval of TECENTRIQ® for the treatment of patients with ES-SCLC effective for FY 2021 (85 FR 58684) further supports the urgency, referring to its 2 month improvement in survival.

The applicant also referred to comments from specialists in the field of lung cancer stating that despite small trial sizes, improvement in overall survival is a major achievement and that any advance in survival is important given that few patients diagnosed with SCLC survive for even a year despite treatment.

With regard to the fifth claim, that ZEPZELCA^TM may represent a valuable treatment alternative to platinum rechallenge, the applicant submitted several sources pertaining to ZEPZELCA^TM. First, the applicant submitted two sub-analyses from Subbiah, et al., that were based on Study B-005 as its primary support for ZEPZELCA^TM. In both of these sub-analyses, patients had been pre-treated with one prior platinum-containing line. The first analysis included 20 patients from a subset of patients with CTFI >180 and authors report that patients treated with lurbinectedin had an ORR at 60.0% and a median DoR of 5.5 months. The second analysis included 60 patients from a SCLC cohort of the basket trial, with CTFI >90 d (20 pts with CTFI >180 d). The applicant states that ZEPZELCA^TM was shown to be effective and well-tolerated in the platinum-sensitive relapsed SCLC population especially when CTFI >180 days. From these results, the authors concluded that ZEPZELCA^TM may represent a valuable alternative to platinum rechallenge. The applicant also referenced Arrieta et al., stating that ZEPZELCA^TM data outperformed less established treatment schemes including platinum rechallenge. The applicant stated that the July 7, 2020 NCCN Clinical Practice Guidelines in Oncology indicate that lurbinectedin is identified as a Preferred Regimen in relapse ≤6 months and a Recommended Regimen in relapse >6 months. The applicant referred to the authors' conclusion in Genestreti et al., stating that the outcome for second line chemotherapy for SCLC is poor and that rechallenge platinum/etoposide is a reasonable option with potentially better outcomes than standard chemotherapy.

Finally, the applicant referred to Monnet, et al., stating that patients treated with combination therapy, carboplatin and etoposide, achieved a median OS of 7.4 months and ORR of 49%.

In the proposed rule (86 FR 25360), we noted the following concerns. The evidence submitted by the applicant in support of ZEPZELCA^TM's improvement in overall response and survival rates was based on one single-arm, open label, phase II basket study (Study B-005 (NCT01454972)) and several smaller subsetted analyses that were based on the basket study, and we noted that without a direct comparison arm it may be more difficult to draw definitive conclusions. We noted the following differences between the historical control patients and patients treated with ZEPZELCA^TM in these studies, which may confound the comparisons: First, patients with central nervous system involvement (brain metastases) were excluded from ZEPZELCA^TM treatment, and we noted that Arrieta, et al., noted that this criterion is of particular interest when translating results to the clinical setting, since patients with SCLC are known to be prone to develop brain metastases, and up to 50% do so throughout the disease course. Second, patients treated with ZEPZELCA^TM had access to immunotherapy during first line treatment, which may support patients' immune systems in fighting cancer. Third, the CTFI used in the single arm basket trial differed from those used in the historical controls of topotecan studies, and we noted that CTFIs can impact treatment response and outcome. As, per the applicant, ZEPZELCA^TM was listed as a preferred regimen by the NCCN Clinical Practice Guidelines for second-line treatment of patients with a CTFI ≤6 months and recommended for patients with a CTFI >6 months, while topotecan is only FDA approved for chemotherapy-sensitive cases, defined using a 60 day CTFI, we noted that the appropriate comparator treatment for ZEPZELCA^TM would differ depending on the CTFI subset. However, the historical controls relied on an overall topotecan population with CTFI >60. To the extent that this group was more heavily weighted with patients in the lower CTFI group, it was unclear whether this may partially explain the poorer outcomes of patients in the historical control groups. We also noted that, while the claim of improved hematological outcomes using ZEPZELCA^TM appeared to be mostly supported by the female-only arm of the CORAIL study, results from the pooled sample of the basket trial still appeared to demonstrate an improvement over the topotecan arm. We believed that this may suggest that the inclusion of male patients did not alter the conclusion that patients treated with ZEPZELCA^TM appeared more favorable than those treated with topotecan. We further noted that bone marrow stimulating drugs were allowed in the topotecan arm of the CORAIL study so the observed adverse hematologic effects may have been the best case for that arm of the study. Finally, we noted that the subsetted analyses generated from the primary basket study had small sample sizes and the authors of these studies stated that further research on larger populations is required to draw firm conclusions.

We invited public comments on whether ZEPZELCA^TM meets the substantial clinical improvement criterion.

Comment: The applicant submitted comments in response to CMS' concerns pertaining to substantial clinical improvement. First, with respect to the concern that the evidence submitted by the applicant was based on one single-arm, open label, phase II basket study (Study B-005 (NCT01454972) and several smaller subsetted analyses, the applicant stated that the basket study evaluated ZEPZELCA^TM as a single-agent in patient cohorts across 9 different tumor types (a basket trial design), including a cohort of patients with SCLC with disease progression on or after platinum-based chemotherapy (n=105) (NCT02454972), conducted at 26 investigational sites in the European Union, United Kingdom and U.S. The applicant stated that the study was originally intended to be a signal-finding study, was designed as a single-arm trial, and the overall response rate (ORR) in the SCLC cohort, which consisted of patients who had received a prior line of chemotherapy, was notable at 35 percent. The applicant further noted that based on the study ORR and duration of response in the SCLC cohort, the FDA granted accelerated approval of ZEPZELCA^TM to allow for earlier approval of drugs that treat serious conditions and that fill an unmet medical need based on a surrogate endpoint (ORR and duration of response) that is thought to predict clinical benefit. The applicant stated that continued approval may be contingent upon verification and description of clinical benefit in a confirmatory trial(s). Per the applicant, accelerated approval of ZEPZELCA^TM is of paramount importance to metastatic SCLC patients given the high relapse and disease progression rates in SCLC2-5 and because no second-line therapy options had been approved in over 20 years (that is, topotecan in 1998). The applicant stated that because most cases of SCLC occur in individuals aged 60-80 years, this is a risk-benefit profile that warrants additional second-line treatment options and that ZEPZELCA^TM fulfills a high unmet need for patients with metastatic SCLC, with a majority being Medicare beneficiaries.

Next, with respect to the differences between the historical control patients and patients treated with ZEPZELCA^TM in these studies, the applicant stated that while SCLC patients often develop brain metastases, it is common for clinical trials in SCLC to exclude patients with central nervous system (CNS) involvement, including the Phase 3 trial for amrubicin versus topotecan, where patients with prior brain metastasis and symptomatic CNS metastases were excluded. Per the applicant, such exclusions are in part due to the poor clinical status of these patients. The applicant stated that in Study B-005, there were 4 patients that had CNS involvement (3 patients had a history of CNS involvement, and 1 patient had CNS involvement at baseline (protocol deviation)). The applicant also stated that among these 4 patients treated with ZEPZELCA^TM, there were 2 partial responses, 1 stable disease, and 1 progressive disease (data on file).

With respect to the concern that patients treated with ZEPZELCA^TM had access to immunotherapy during first line treatment, the applicant stated that Study B-005 was initiated prior to the FDA approval of immunotherapy agents such as atezolizumab, nivolumab, and durvalumab. The applicant also stated that in total, only 8 of the 105 patients enrolled were previously treated with immunotherapy. Per the applicant, in reviewing the data in the small number of patients that fell into this category, it could not determine that these patients were driving the median overall response. The applicant stated that the median OS 95% confidence interval of the 105 patients is overlapping with the 95% confidence interval of the 97 patients who were not treated with immunotherapy (data on file).

With respect to the concern that the CTFI used in the single arm basket trial differs from those used in the historical controls of topotecan studies, the applicant stated that while it is possible that grouping by CTFI may affect efficacy measures, it is important to understand that the clinical community uses different CTFI groups with no singular convention. Per the applicant, some in the oncology community use 90 days as a cutoff (concordant with European Society for Medical Oncology (ESMO)), and others use 180 days (concordant with NCCN guidelines). The applicant stated that the study that led to the FDA approval of topotecan used 60 days as a CTFI cutoff; Study B-005 used 90 days. Per the applicant, Study B-005 also included a population that was actually sicker than populations in several SCLC studies because of the inclusion of patients who had CTFI <30 days (n=21 of 105 patients). In order to demonstrate a more specific comparison with the topotecan trial that led to its FDA approval, an exploratory analysis was conducted excluding patients with CTFI <60 from the Study B-005 results. The applicant stated that this analysis supports that when matching CTFI groupings for comparison purposes, the efficacy profile of ZEPZELCA^TM is substantially improved over study results that Van Pawel et. al. reported for topotecan.

With respect to the concern that improved hematological outcomes using ZEPZELCA^TM appears to be mostly supported by the female-only arm of the CORAIL study, the applicant stated that a significant safety advantage was observed when ZEPZELCA^TM was compared with topotecan in the CORAIL trial in terms of hematological toxicities. Per the applicant, this finding was based on an indirect exploratory comparison (pooled data from CORAIL + Study B-005) and a direct comparison (data from CORAIL). The applicant stated that the inclusion of male patients in the pooled safety analysis did not alter the conclusion that patients treated with ZEPZELCA^TM appeared more favorable than those treated with topotecan.

With respect to the concern regarding bone marrow stimulating drugs, the applicant stated that bone marrow stimulating drugs were allowed in the topotecan arm of the CORAIL study so the observed adverse hematologic effects may have been the best case for that arm of the study, concurring with CMS' observations. The applicant reiterated that a significant safety advantage was observed when ZEPZELCA^TM was compared with topotecan in the CORAIL trial and in terms of hematological toxicities based on indirect exploratory comparison (pooled data from CORAIL + Study B-005) and a direct comparison (data from CORAIL). Per the applicant, inclusion of male patients in the pooled safety analysis did not alter the conclusion that patients treated with ZEPZELCA^TM appeared more favorable than those treated with topotecan.

Finally, with respect to the concern that the subsetted analyses generated from the primary basket study have small sample sizes, the applicant stated that while the subset sizes are small in number, these are actually sizable for a rare disease such as SCLC. Per the applicant, it is standard practice for study investigators and authors to conclude that further research is needed when presenting study results but that subset analyses can provide extremely meaningful clinical findings for consideration when clinicians evaluate and make real-world treatment decisions. The applicant stated that ZEPZELCA^TM may represent a valuable clinical option to platinum rechallenge. Per the applicant, the results of this post-hoc analysis were recently published in December 2020 by Subbiah et. al. in the peer-reviewed journal, Lung Cancer, showing that Study B-005 patients with CTFI >180 days (n=20) achieved a 60% ORR (Table 23 of the New Technology Add-on Payment application), which compares favorably to the ORR of 46% (n=11) in a previous platinum-rechallenge study sub-group analysis reported by Wakuda et. al. Per the applicant, overall survival in the Study B-005 post-hoc analysis in patients with CTFI <180 days was 16.2 months (Table 23), which compares favorably to that reported by Wakuda et al, 15.7 months (n=11). The applicant stated that while the CTFI >180 days cohort was small, it represented nearly 20% of the Study B-005 SCLC trial population and demonstrated high ORR and overall survival that appears in line with clinical efficacy of platinum rechallenge. The applicant concluded by stating that these findings are now informing clinical practice in the treatment of SCLC.

We also received several comments from clinicians in the fields of oncology and pharmacy, stating that the rapid spread of SCLC and early relapse after first-line treatment make management of this disease very challenging. The commenters stated that ZEPZELCA^TM is effective in the treatment of relapsed SCLC, fills an unmet need in second line treatment, is easy to administer and is well tolerated. Commenters stated that approving ZEPZELCA^TM for new technology add-on payments would expedite care and offer an added treatment option for eligible patients.

Response: We thank the applicant and other commenters for their comments regarding the substantial clinical improvement criterion. After consideration of the comments received and the information provided, we agree with the applicant and other commenters that ZEPZELCA^TM represents a substantial clinical improvement because it fills an unmet need in second-line treatment for ES-SCLC. Because existing treatments are indicated for patients with platinum-sensitive disease, ZEPZELCA^TM treats a disease for which there are no existing treatments. We also believe that, given the context of those patients who were treated, we believe the improvement seen in the matched comparison between topotecan and ZEPZELCA^TM in overall survival (25 weeks vs. 11.8 months) and ORR (26% vs. 32%) represents a substantial clinical improvement over existing technologies in the second line treatment of patients with metastatic SCLC with disease progression on or after platinum-based chemotherapy.

Based on the information received to date and comments received, we have determined that ZEPZELCA^TM meets all of the criteria for approval for new technology add-on payments for the reasons stated previously. Therefore, we are approving new technology add-on payments for ZEPZELCA^TM for FY 2022. Cases involving the use of ZEPZELCA^TM that are eligible for new technology add-on payments will be identified by ICD-10-PCS procedure codes: XW03387 (Introduction of lurbinectedin into peripheral vein, percutaneous approach, new technology group 7) or XW04387 (Introduction of lurbinectedin into central vein, percutaneous approach, new technology group 7).

In its application, the applicant estimated that the cost of ZEPZELCA^TM is $13,266 per patient. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS-DRG payment for the case. As a result, the maximum new technology add-on payment for a case involving the use of ZEPZELCA^TM is $8,622.90 for FY 2022.

6. FY 2022 Applications for New Technology Add-On Payments (Alternative Pathways)

As discussed previously, beginning with applications for FY 2021, a medical device that is part of FDA's Breakthrough Devices Program and has received marketing authorization for the indication covered by the Breakthrough Device designation may qualify for the new technology add-on payment under an alternative pathway. Additionally, beginning with FY 2021, a medical product that is designated by the FDA as a Qualified Infectious Disease Product (QIDP) and has received marketing authorization for the indication covered by the QIDP designation, and, beginning with FY 2022, a medical product that is a new medical product approved under FDA's Limited Population Pathway for Antibacterial and Antifungal Drugs (LPAD) and used for the indication approved under the LPAD pathway, may also qualify for the new technology add-on payment under an alternative pathway. Under an alternative pathway, a technology will be considered new and not substantially similar to an existing technology for purposes of the new technology add-on payment under the IPPS and will not need to meet the requirement that it represents an advance that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries. These technologies must still meet the cost criterion.

We note, section 1886(d)(5)(K)(ii)(II) of the Act provides for the collection of data with respect to the costs of a new medical service or technology described in subclause (I) for a period of not less than 2 years and not more than 3 years beginning on the date on which an inpatient hospital code is issued with respect to the service or technology. Our regulations in § 412.87(c)(2) for breakthrough devices and § 412.87(d)(2) for certain antimicrobial products state that a medical device/product that meets the condition in paragraph (c)(1) or (d)(1) of § 412.87 will be considered new for not less than 2 years and not more than 3 years after the point at which data begin to become available reflecting the inpatient hospital code (as defined in section 1886(d)(5)(K)(iii) of the Act) assigned to the new technology (depending on when a new code is assigned and data on the new technology become available for DRG recalibration). After CMS has recalibrated the DRGs, based on available data, to reflect the costs of an otherwise new medical technology, the medical technology will no longer be considered “new” under the criterion of this section.

We received 17 applications for new technology add-on payments for FY 2022 under the alternative new technology add-on payment pathway. In accordance with the regulations under § 412.87(e)(2), applicants for new technology add-on payments, including Breakthrough Devices, must have FDA marketing authorization by July 1 of the year prior to the beginning of the fiscal year for which the application is being considered. We first determine whether a new technology meets the newness criterion, and only if so, do we make a determination as to whether the technology meets the cost threshold. One applicant withdrew its application prior to the issuance of the proposed rule. Of the remaining 16 applications, 13 of the technologies received a Breakthrough Device designation from FDA and three were designated as a QIDP by FDA. We did not receive any applications for technologies approved through the LPAD pathway. Subsequently, two applicants withdrew their applications for the Neovasc Reducer^TM and Thoraflex^TM Hybrid Device prior to the issuance of this final rule. Two applicants, BONESUPPORT Inc. (the applicant for CERAMENT® G) and Phagenesis Ltd. (the applicant for the Phagenyx® System), did not meet the deadline of July 1, 2021 for FDA approval or clearance of the technology and, therefore, the technologies are not eligible for consideration for new technology add-on payments for FY 2022. We note that we did receive some comments requesting that CMS extend the policy that allows for conditional approval for certain antimicrobials to Breakthrough Devices that have not received FDA marketing authorization by July 1 to facilitate timely access to these technologies for beneficiaries. As discussed in the FY 2021 IPPS/LTCH final rule (85 FR 58742), we may consider this for future rulemaking as we gain more experience with this conditional approval process for certain antimicrobial products, but the July 1 deadline for FDA approval or clearance for consideration of new technology add-on payment applications, as set forth in the regulations at § 412.87(e), continues to apply to applications for new technology add-on payments for Breakthrough Devices for FY 2022. A discussion of the remaining 12 applications is presented in this final rule, including 9 technologies that have received a Breakthrough Device designation from FDA and three that were designated as a QIDP by FDA.

Under the policy finalized in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58742), we revised the regulations at § 412.87(e) by adding a new paragraph (3) which provides for conditional approval for a technology for which an application is submitted under the alternative pathway for certain antimicrobial products (QIDPs and LPADs) at § 412.87(d) that does not receive FDA marketing authorization by the July 1 deadline specified in § 412.87(e)(2), provided that the technology receives FDA marketing authorization by July 1 of the particular fiscal year for which the applicant applied for new technology add-on payments. We refer the reader to the FY 2021 IPPS/LTCH PPS final rule for a complete discussion of this policy (85 FR 58737 through 58742).

As we did in the FY 2021 IPPS/LTCH PPS proposed rule, for applications under the alternative new technology add-on payment pathway, in the FY 2022 IPPS/LTCH PPS proposed rule, we proposed to approve or disapprove each of these 12 applications for FY 2022 new technology add-on payments. Therefore, in this section of the preamble of this final rule, we provide background information on each of these 12 alternative pathway applications and discuss whether or not each technology is eligible for the new technology add-on payment for FY 2022. As previously noted, the applications for the Neovasc Reducer^TM and Thoraflex^TM Hybrid Device were withdrawn prior to the issuance of this final rule, and the remaining two technologies, CERAMENT® G and the Phagenyx® System, did not meet the deadline of July 1, 2021 for FDA approval or clearance of the technology and, therefore, these technologies are not eligible for consideration for new technology add-on payments for FY 2022. We refer readers to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42292 through 42297) and FY 2021 IPPS/LTCH PPS final rule (85 FR 58715 through 58733) for a complete discussion of the alternative new technology add-on payment pathways for these technologies.

a. Alternative Pathway for Breakthrough Devices

(1) Aprevo^TM Intervertebral Body Fusion Device

Carlsmed, Inc. submitted an application for new technology-add on payments for the aprevo^TM Intervertebral Fusion Device (aprevo^TM) for FY 2022. Per the applicant, the device is an interbody fusion implant that stabilizes the lumbar spinal column and facilitates fusion during lumbar fusion procedures indicated for the treatment of spinal deformity. The applicant states that the implant device is custom made for patient-specific features, by using patient CT scans to create 3D virtual models of the deformity. The device is used during anterior lumbar interbody fusion, lateral lumbar interbody fusion, transforaminal lumbar interbody fusion, or standalone anterior lumbar interbody fusion procedures. According to the applicant, the aprevo^TM device is additively manufactured and made from Titanium Alloy (Ti-6Al-4V) per ASTM F3001, and has a cavity intended for the packing of bone graft. In addition, the applicant explained that aprevo^TM is used with supplemental fixation devices and bone graft packing. Per the applicant, the device was formerly known as “Corra^TM.”

The aprevo^TM device received FDA Breakthrough Device designation under the name “Corra” on July 1, 2020 for the Corra Anterior, Corra Transforaminal and Corra Lateral Lumbar Fusion System interbody device which is intended for use in anterior lumbar interbody fusion (ALIF), lateral lumbar interbody fusion (LLIF), and transforaminal lumbar interbody fusion (TLIF) under this designation. The applicant was granted FDA 510(k) clearance as a Class II medical device for the anterior lumbar interbody fusion and lateral lumbar interbody fusion indications on December 3, 2020. We stated in the proposed rule that the applicant anticipated that the aprevo^TM device would receive FDA marketing authorization by May 2021 for the additional indications of transforaminal interbody fusion and standalone anterior lumbar interbody fusion (which incorporates supplemental fixation), and was granted 510(k) clearance for the TLIF indication on June 30, 2021. Since the anterior and lateral lumbar fusion indications that received marketing authorization on December 3, 2020 correspond to the indications that received Breakthrough Device designation, we stated that we believed the newness date for these indications would be December 3, 2020. The transforaminal interbody fusion indication, which also corresponds to the indication that received Breakthrough Device designation, received marketing authorization on June 30, 2021, and we therefore believe the newness date for this indication would be June 30, 2021. We noted that under the eligibility criteria for approval under the alternative pathway for certain transformative new devices, only the use of aprevo^TM for the ALIF, LLIF, and TLIF indications, and the FDA Breakthrough Device designations it received for these uses, are relevant for purposes of the new technology add-on payment application for FY 2022. As the use of aprevo^TM for the standalone indication is not included in the Breakthrough Device designation indications, it is not eligible for new technology add-on payments.

The applicant submitted a request to the ICD-10 Coordination and Maintenance Committee for approval of a code for FY 2022 to uniquely identify the technology and was granted approval for the following procedure codes effective October 1, 2021:

With respect to the cost criterion, the applicant provided the following analysis. The applicant used the MS-DRG grouping function within FindACode software in conjunction with the online MS-DRG v37.0 Definitions Manual to identify the appropriate MS-DRGs to which potential cases that may be eligible for treatment involving aprevo^TM patient-specific interbody cages would most likely map. The applicant identified the following six relevant MS-DRGs:

The applicant conducted a review of ICD-10-PCS codes for procedures in which the aprevo^TM patient-specific intervertebral body fusion cases might be placed into the lumbar spine of an adult patient diagnosed with spinal curvature. For MS-DRGs 453, 454, and 455, the applicant searched the FY 2019 MedPAR dataset for cases with any of the following procedure codes:

For MS-DRGs 456, 457, and 458, the applicant searched the FY 2019 MedPAR dataset for cases reporting a procedure code in Table A in combination with a primary diagnosis code in Table B or a secondary diagnosis code in Table C.

The applicant identified 45,331 cases across all six MS-DRGs. The applicant first removed charges to account for the two types of prior technology devices that the applicant asserted are most likely to be replaced by aprevo^TM Intervertebral Body Fusion Device. Specifically, the applicant calculated an average cost for the top five selling devices in each category of prior technology, which include standalone ALIF and LLIF lateral expandable cages. The applicant then multiplied the cost of the technology being replaced by three, which, per the applicant, is the number of lumbar cages implanted for the correction of spinal curvature, to arrive at an estimated hospital cost per case. The applicant converted costs to charges by weighting the operating cost-to-charge ratios for each of the 3,315 hospitals in the FY 2021 IPPS/LTCH final rule and correction notice impact file by each hospital's share of the 9,235,824 submitted claims to obtain a national average CCR of 0.2546, of which the inverse is a national-average hospital markup of 393 percent. The applicant then standardized the charges and applied an inflation factor of 13.1 percent, which, per the applicant, is the outlier charge inflation factor used in the FY 2021 IPPS/LTCH final rule (85 FR 59038), to update the charges from FY 2019 to FY 2021. We note that the applicant appears to have used the FY 2021 IPPS/LTCH PPS proposed rule inflation factor rather than the 2-year inflation factor from the FY 2021 IPPS/LTCH PPS final rule of 13.2 percent (85 FR 59039), which would have resulted in a higher inflated charge figure. The applicant then added charges for the new technology by multiplying the estimated average cost for the aprevo^TM Intervertebral Body Fusion Device by three devices per case and converting the cost to charges using the 393 percent hospital charge markup.

The applicant calculated a final inflated case-weighted average standardized charge per case of $247,648 and an average case-weighted threshold of $157,600. Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount, the applicant asserted that the technology meets the cost criterion.

In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25364), we agreed with the applicant that the aprevo^TM Intervertebral Body Fusion meets the cost criterion and therefore proposed to approve the aprevo^TM Intervertebral Body Fusion device for the indications of ALIF and LLIF, and for the indication of TLIF, subject to the technology receiving FDA marketing authorization for that indication by July 1, 2021, as these indications correspond to the Breakthrough Device designation, for new technology add-on payments for FY 2022.

Based on preliminary information from the applicant at the time of the proposed rule, the cost of the aprevo^TM Intervertebral Body Fusion is $31,500, or an estimated average cost of $10,500 per device multiplied by three, which, according to the applicant, is the average number of devices used per procedure. We noted that the cost information for this technology may be updated in the final rule based on revised or additional information CMS receives prior to the final rule. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS-DRG payment for the case. As a result, we proposed that the maximum new technology add-on payment for a case involving the use of the aprevo^TM Intervertebral Body Fusion Device would be $20,475 for FY 2022 (that is 65 percent of the average cost of the technology).

We invited public comments on whether the aprevo^TM Intervertebral Body Fusion Device meets the cost criterion and our proposal to approve new technology add-on payments for aprevo^TM Intervertebral Body Fusion Device for FY 2022 for ALIF and LLIF, and for TLIF, subject to the technology receiving marketing authorization for that indication by July 1, 2021.

Comment: We received several comments expressing support for the approval of the aprevo^TM Intervertebral Body Fusion Device for the new technology add-on payment for FY 2022. The commenters stated that aprevo^TM provides a more effective treatment for surgeries for adult spinal deformities and improves patient care by reducing complications. Also, a commenter expressed general support for the approval of the aprevo^TM Intervertebral Body Fusion Device as an orthopaedic device which advances the care of musculoskeletal disorders and improves patients' quality of life.

Response: We appreciate the commenters' support.

Comment: The applicant submitted a comment noting that CMS determines eligibility for the new technology add-on payment based on the newness of the technology, which has been established in regulation as being measured from the first date upon which data become available reflecting inpatient use of the technology. The applicant requested that CMS adjust the beginning of the newness period for the aprevo^TM Intervertebral Body Fusion Device from the date of FDA clearance on December 3, 2020, to the date the device was first used commercially on February 23, 2021. Per the applicant, using the date of FDA approval or clearance as the basis for the start of the newness period does not account for situations where a product may be approved by the FDA for distribution and use but is not yet being distributed to or used by hospitals in caring for patients.

Response: We thank the applicant for its comment. As we have discussed in prior rulemaking (77 FR 53348), generally, our policy is to begin the newness period on the date of FDA approval or clearance or, if later, the date of availability of the product on the U.S. market. The applicant states that the aprevo^TM Intervertebral Body Fusion Device was first used commercially on February 23, 2021, but it is unclear from the information provided when the technology first became available for sale and, absent additional information from the applicant, we cannot determine a newness date based on a documented delay in the technology's availability on the U.S. market. However, we note that using either the FDA clearance date of December 3, 2020, or the date suggested by manufacturer of February 23, 2021, aprevo^TM is still considered new for FY 2022 because the 3-year anniversary date (December 3, 2023 or February 23, 2024, respectively) would occur after FY 2022.

Based on the information provided in the application for new technology add-on payments, and after consideration of the public comments we received, we believe the aprevo^TM Intervertebral Body Fusion meets the cost criterion. The aprevo^TM Intervertebral Body Fusion received marketing authorization from the FDA on December 3, 2020 for the indications for ALIF and LLIF and on June 30, 2021 for the indication for TLIF, that are covered by its Breakthrough Device designation. Therefore, we are finalizing our proposal to approve new technology add-on payments for the aprevo^TM Intervertebral Body Fusion for FY 2022, and we consider the beginning of the newness period to commence on December 3, 2020 for the indications for ALIF and LLIF and June 30, 2021 for the indication for TLIF, which is when the technology received FDA marketing authorization for the indications covered by its Breakthrough Device designation. Based on the information at the time of this final rule, the cost per case is $31,500 or an estimated average cost of $10,500 per device multiplied by three, which, according to the applicant, is the average number of devices used per procedure. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS-DRG payment for the case. As a result, we are finalizing that the maximum new technology add-on payment for a case involving the use of the aprevo^TM Intervertebral Body Fusion Device would be $20,475 for FY 2022 (that is 65 percent of the average cost of the technology). Cases involving the use of the aprevo^TM Intervertebral Body Fusion Device that are eligible for new technology add-on payments will be identified by any of the following ICD-10-PCS codes:

(2) aScope^TM Duodeno

Ambu, Inc. submitted an application for new technology add on payments for the aScope^TM Duodeno for FY 2022. The device is a sterile, single-use endoscope for endoscopy and endoscopic surgery indicated for treatment of the upper gastrointestinal (GI) tract. Per the applicant, the device includes a flexible insertion tube with a bendable tip equipped with lighting and camera. According to the applicant, the aScope^TM Duodeno is inserted into the mouth of the patient and steered via the esophagus and stomach to the duodenum. The applicant states that single-use scopes eliminate the risk of patient-to-patient transmission of infection related to reprocessing. The applicant also states the device is designed to be used with aBox Duodeno, which is a video processor that outputs video imaging for observation and recording. Per the applicant, the device may also be used with existing external video monitors for image display as well as other endoscopic accessories and equipment.

The aScope^TM Duodeno (formerly aScope 1 Duo) was designated as a Breakthrough Device, indicated for use with the aScope Base (now aBox Duodeno), endo-therapy accessories (for example, biopsy forceps) and other ancillary equipment (for example, video monitor) for endoscopy and endoscopic surgery within the duodenum, and received FDA 510(k) clearance as a Class II medical device on July 17, 2020 for the same indication. Per the applicant, the device was available on the market immediately after FDA clearance.

The applicant stated that the applicant for EXALT^TM Model D, another technology discussed in this section, submitted a request to the ICD-10 Coordination and Maintenance Committee for FY 2022 for a unique code to identify use of single-use duodenoscopes. The applicant further stated that since this code would describe and identify use of aScope, they did not submit a request for approval of a code to uniquely identify the technology. The applicant for aScope^TM Duodeno was granted approval for the following procedure codes effective October 1, 2021: XFJB8A7 (Inspection of hepatobiliary duct using single-use duodenoscope, new technology group 7) and XFJD8A7 (Inspection of pancreatic duct using single-use duodenoscope, new technology group 7).

To demonstrate that the technology meets the cost criterion, the applicant searched the FY 2019 MedPAR Limited Data Set (LDS) for cases reporting one of the following ICD-10-PCS codes commonly used to report endoscopic retrograde cholangiopancreatography (ERCP) and use of duodenoscopes:

The applicant excluded MS-DRGs that had fewer than 100 cases from the analysis. The applicant did not say how many cases it excluded based on this criterion.

In total, the applicant identified 54,848 cases across 40 unique MS-DRGs. The applicant then removed charges for prior technology by dividing the per use cost for reusable duodenoscopes and related components by the hospital-specific cost-to-charge ratio from the FY 2021 IPPS/LTCH Proposed Rule Impact File at the claims level and averaging the resulting estimated charges by MS-DRG. The applicant then standardized the charges and applied an inflation factor of 13.2 percent, or the 2-year inflation factor used to update the outlier threshold in the FY 2021 IPPS/LTCH final rule (85 FR 59039), to update the charges from FY 2019 to FY 2021. The applicant added charges for the aScope^TM Duodeno and related components by dividing the cost per use by the national cost-to-charge ratio of 0.2970 for Supplies and Equipment (85 FR 58601).

The applicant calculated a final inflated average case-weighted standardized charge per case of $89,945 and an average case-weighted threshold of $64,894. Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount, the applicant asserted that the technology meets the cost criterion.

In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25366), we agreed with the applicant that the aScope^TM Duodeno meets the cost criterion; and therefore, we proposed to approve the aScope^TM Duodeno for new technology add-on payments for FY 2022.

Based on preliminary information from the applicant at the time of the proposed rule, the cost of the aScope^TM Duodeno is $2,184.27. However, the applicant noted in its application that this cost is broken down into three components, including the disposable sleeve, the aBox Duodeno (a video processor and light source), and other endoscopic accessories and equipment. We stated that we believed it is appropriate to only consider the cost of the disposable sleeve as the cost of the technology, as the other two components, which include the aBox Duodeno and an external monitor that, per the applicant, do not incur new costs per use, would thus be paid for under the IPPS for capital-related costs. As noted previously, because section 1886(d)(5)(K)(i) of the Act requires that the Secretary establish a mechanism to recognize the costs of new medical services or technologies under the payment system established under that subsection, which establishes the system for paying for the operating costs of inpatient hospital services, we do not include capital costs in the add-on payments for a new medical service or technology or make new technology add on payments under the IPPS for capital-related costs. Thus, we stated that we believe the operating cost of the aScope^TM Duodeno is $1,995.

Based on the information available at the time of the proposed rule, we stated that it appeared that both aScope^TM Duodeno and EXALT^TM Model D will be identified by the same ICD-10-PCS code and share the same indication for endoscopy and endoscopic surgery within the duodenum. We stated that as we are unable to separately identify these cases to apply two separate payment amounts for these technologies, we were proposing to use a case-weighted average to calculate a single cost that would be used to determine the new technology add-on payment amount for both technologies. To compute the weighted average cost, we summed the total number of projected cases for each of the applicants, which equaled 12,064 (3,750 plus 8,314). Then we divided the number of projected cases for each of the applicants by the total number of cases, which resulted in the following case-weighted percentages: 31 percent for aScope^TM Duodeno and 69 percent for EXALT^TM Model D. We multiplied the cost per case for the manufacturer specific technology by the case-weighted percentage (0.31 * $1,995 = $620.13 for aScope^TM Duodeno and 0.69 * $2,930 = $2,019.23 for EXALT^TM Model D). This resulted in a case-weighted average cost of $2,639.36 for both technologies. We invited public comments on the proposed case-weighted average, as well as any alternative approaches for determining and applying the new technology add-on payment amount for cases involving these technologies, for FY 2022.

We noted that the cost information for this technology may be updated in the final rule based on revised or additional information CMS receives prior to the final rule. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS-DRG payment for the case. As a result, we proposed that the maximum new technology add-on payment for a case involving the use of aScope^TM Duodeno or EXALT^TM Model D would be $1,715.59 for FY 2022 (that is, 65 percent of the case-weighted average cost of both technologies).

We invited public comments on whether aScope^TM Duodeno meets the cost criterion and our proposal to approve new technology add-on payments for aScope^TM Duodeno for FY 2022. We further invited public comments on the calculation of the maximum new technology add-on payment amount for the aScope^TM Duodeno.

We did not receive comments on our proposals for the aScope^TM Duodeno for the new technology add-on payment for FY 2022. As we discuss later in this section, we separately received comments from the applicant for the EXALT^TM Model D supporting CMS' proposal to use a case-weighted average to calculate a single cost that would be used to determine the new technology add-on payment amount.

Based on the information provided in the application for new technology add-on payments we believe aScope^TM Duodeno meets the cost criterion. Also, aScope^TM Duodeno received marketing authorization from the FDA on July 17, 2020 for the indication covered by its Breakthrough Device designation. Therefore, we are finalizing our proposal to approve new technology add-on payments for aScope^TM Duodeno for FY 2022, and we consider the beginning of the newness period to commence on July 17, 2020 which is when the technology received FDA marketing authorization for the indication covered by its Breakthrough Device designation. Based on the information at the time of this final rule, and using the case-weighted average cost as described in the proposed rule and earlier in this final rule, the cost per case is $2,639.36. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS DRG payment for the case. As a result, we are finalizing that the maximum new technology add-on payment for a case involving the use of the aScope^TM Duodeno or EXALT^TM Model D would be $ 1,715.59 for FY 2022 (that is 65 percent of the case-weighted average cost of both technologies). Cases involving the use of the aScope^TM Duodeno eligible for new technology add-on payments will be identified by ICD-10- PCS codes: XFJB8A7 (Inspection of hepatobiliary duct using single-use duodenoscope, new technology group 7) or XFJD8A7 (Inspection of pancreatic duct using single-use duodenoscope, new technology group).

(3) Caption Guidance^TM

Caption Health, Inc. submitted an application for new technology-add on payments for Caption Guidance^TM for FY 2022. Per the applicant, Caption Guidance^TM is an artificial intelligence (AI) guided medical imaging acquisition software system indicated for the acquisition of cardiac ultrasound images. The applicant explained that the system provides real-time guidance during transthoracic echocardiography (2D-TTE) to assist in obtaining anatomically correct and optimized images that represent standard 2D echocardiographic diagnostic views and orientations. The applicant also states that the technology is classified by FDA as software as a medical device (SaMD), so in order to use the software, the Caption Guidance^TM system must be installed on a compatible third-party ultrasound system.

Caption Guidance^TM is designated as a Breakthrough Device, indicated to assist medical professionals in the acquisition of cardiac ultrasound images, and received FDA De Novo approval on February 7, 2020 for the same indication. The applicant stated that an updated version of the system subsequently received 510(k) clearance under 510(k) number K200755 on April 16, 2020 on an expedited basis due to COVID-19. Per the applicant, an interim version of the software became available on March 17, 2020, though not sold, on an emergency basis to assist sites in responding to the COVID-19 pandemic. According to the applicant, the first version of the technology was released commercially on September 15, 2020 with a first date of sale of September 29, 2020. Therefore, we stated that we believe that the newness date for this technology is the date on which Caption Guidance^TM became available on the market, September 15, 2020. The item is a Class II medical device assigned to product code QJU with descriptor Image Acquisition And/Or Optimization Guided By Artificial Intelligence. The applicant submitted a request to the ICD-10 Coordination and Maintenance Committee for a new code to uniquely identify the technology and was granted approval to identify Caption Guidance^TM using the following procedure code effective October 1, 2021: X2JAX47 (Inspection of heart using transthoracic echocardiography, computer-aided guidance, new technology group 7).

Comment: Several commenters, including the applicant, supported the proposal to consider September 15, 2020, as the date on which Caption Guidance^TM became available for purposes of evaluating the newness period for new technology add-on payments. The applicant stated that the proposed newness date is appropriate given that, during FY 2019, which is the time period of the data CMS proposed to use for recalibrating the MS-DRGs, Caption Guidance was not yet commercially available and as a result, the claims do not adequately reflect the cost of technology. In addition, the applicant stated that CMS has defaulted to the FDA approval date despite other reasons being provided by applicants regarding the date of first commercial availability. Another commenter also stated that requiring a manufacturer to submit information rebutting a presumption that the date of first availability is the date of FDA marketing authorization adds unnecessary burden and complexity to the new technology add-on payments application and review process. The commenter believes that a more efficient and appropriate policy would be for the new technology add-on payment newness period to begin with the date of the first claim, which is consistent with the definition of newness used in determining the period of eligibility for Transitional Pass-through status in the Hospital Outpatient Prospective Payment System (OPPS).

Response: We thank the commenters for their support and feedback and agree that the newness date for this technology is the date on which Caption Guidance^TM became available on the market, September 15, 2020, and that Caption Guidance^TM meets the newness criterion for FY 2022. We note that though, generally, our policy is to begin the newness period on the date of FDA approval or clearance, we may consider a documented delay in the technology's market availability in our determination of newness (77 FR 53348 and 70 FR 47341).

Regarding the commenter's belief that beginning the newness period on the date of first claim would be a more efficient and appropriate policy, as well as consistent with the definition of newness used in determining the period of eligibility for Transitional Pass-through status in OPPS, we note that “newness” for purposes of the OPPS pass-through policy refers to a drug, biological, or device's eligibility for pass-through status. In particular, for pass-through drugs and biologicals, “newness” means that the drug or biological was first payable as an outpatient hospital service after December 31, 1996. For pass-through devices, “newness” means that CMS received the applicant's pass-through application within 3 years of the date of FDA approval for the device. It appears the commenter is referring not to newness in terms of eligibility for OPPS pass-through status, but rather to the two-to-three-year period for pass-through status can be in effect. Under §§ 419.64(c)(2) and 419.66(g), the pass-through period begins on the date on which CMS makes its first pass-through payment for a drug, biological, or device. For new technology add-on payments, as we have discussed in prior rulemaking (77 FR 53348) and noted above, generally, our policy is to begin the newness period on the date of FDA approval or clearance or, if later, the date of availability of the product on the U.S. market.

With respect to the cost criterion, the applicant searched the CY 2019 Limited Data Set (LDS)—Carrier Standard Analytic File (SAF), 5 percent sample, for beneficiaries receiving limited echocardiography, as described by Current Procedural Terminology (CPT®) code 93308 (Echocardiography, transthoracic, real-time with image documentation (2D), includes M-mode recording, when performed, follow-up or limited study) with a place of service code 21 (inpatient hospital) or 23 (emergency department) and the associated inpatient stays. Per the applicant, limited echocardiography, the procedure most likely to include Caption Guidance, is not reliably reported in the inpatient setting. As a result, the applicant used a multi-step approach where corresponding inpatient stays were identified in the CY 2019 LDS—Inpatient SAF for the beneficiaries identified in the Carrier SAF. Inpatient stays were identified by matching on the unique beneficiary ID and by matching the carrier claim date of service against the inpatient admission and discharge dates. The applicant counted an inpatient stay if the date of service for CPT code 93308 occurred on or after the inpatient admission date (or during the three days preceding the date of admission), but was also on or before the discharge date of the hospital stay. The applicant eliminated non-inpatient claims and claims with a payment amount less than or equal to zero, as well as claims from hospitals that are not used in the ratesetting process.

The applicant summarized the remaining claims by MS-DRG, and by principal diagnosis and MS-DRG. The applicant cross-walked the MS-DRG codes to FY 2021 MS-DRG definitions using the MS-DRG grouper for FY 2021 and identified a list of 461 unique MS-DRGs to which cases representing patients who may be eligible for use of Caption Guidance^TM mapped. The applicant also utilized data from current Caption Guidance^TM customers to obtain a list of principal diagnoses associated with each MS-DRG. The applicant noted that, because this analysis began with the CY 2019 LDS Carrier SAF, 5 percent sample, the inpatient claims captured underrepresent the total number of inpatient stays in which CPT code 93308 is expected to be performed. The applicant applied the unique MS-DRG and principal diagnosis combinations to all inpatient claims in the CY 2018 and CY 2019 LDS SAF with a discharge date in FY 2019. The applicant then removed any claims where there were no billed charges in revenue centers 0480 (Cardiology-General) and 0483 (Cardiology-Echocardiology). The applicant explained that MS-DRG and principal diagnosis alone are unlikely to be a good proxy for performance of CPT code 93308. The applicant noted that there are charges to revenue centers 0480 and 0483 among nearly 100 percent of cases identified, and that no other revenue centers were billed at such high frequency. The applicant explained that it did not use the FY 2021 MedPAR LDS for this reason, as the dataset does not report charges by revenue center.

The applicant identified 1,932,386 cases mapping to 461 MS-DRGs. Then the applicant standardized the charges and applied the 2-year charge inflation factor used to adjust the outlier threshold determination, which the applicant stated was 10.22 percent. We note that the applicant appears to have used an inflation factor lower than the FY 2021 IPPS/LTCH PPS final rule of 13.2 percent (85 FR 59039), which would have resulted in a higher inflated charge figure. The applicant did not remove charges for prior technology as the applicant maintained that no existing technology is comparable to Caption Guidance^TM.

The applicant then added charges for the new technology. The applicant calculated the technology's cost per case in a multi-step process. First, the applicant multiplied the cost of Caption Guidance^TM by the number of devices under the CCN of each subscribing provider to obtain a provider-specific total device cost. Next, for each subscribing provider, the applicant identified Medicare inpatient cases that would be eligible for Caption Guidance^TM using the criteria and methodology described previously. The applicant then multiplied the number of inpatient cases by 15 percent, which per the applicant is consistent with published evidence that the percent of limited echocardiography cases ranged from 12 to 15 percent of all inpatient echocardiography services. The applicant then added the number of Medicare hospital outpatient cases for CPT code 93308 for each subscribing provider to the estimated inpatient limited echocardiography utilization to estimate total Medicare limited echocardiography by provider. The applicant divided the total Medicare inpatient and outpatient cases receiving limited echocardiogram by an average Medicare share of 63 percent, which the applicant estimated by analyzing discharges reporting three ICD-10-PCS codes: B244ZZZ (Ultrasonography of right heart), B245ZZZ (Ultrasonography of left heart), and B246ZZZ (Ultrasonography of right and left heart) from HCUPnet's Nationwide Inpatient Sample, 2017, to obtain the total limited echocardiography cases. The applicant then divided the total device cost by the total limited echocardiography cases to obtain a provider-specific cost per case, which it then averaged across all subscriber hospitals. Finally, the applicant converted the cost per case to charges per case by dividing the cost per case by the national average cost-to-charge ratio for the cardiology cost center of 0.094 (85 FR 58601).

The applicant calculated a final inflated case-weighted average standardized charge per case of $113,435 and an average case-weighted threshold of $69,197. Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount, the applicant asserted that the technology meets the cost criterion.

We agreed with the applicant that, using the cost per case provided by the applicant, the Caption Guidance^TM system would meet the cost criterion and therefore proposed to approve the Caption Guidance^TM system for new technology add-on payments for FY 2022.

We stated that based on preliminary information from the applicant at the time of proposed rule, the cost per case of the Caption Guidance^TM system is $2,874. We noted that the cost information for this technology may be updated in the final rule based on revised or additional information CMS receives prior to the final rule. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS-DRG payment for the case. As a result, we proposed that the maximum new technology add-on payment for a case involving the use of the Caption Guidance^TM system would be $1,868.10 for FY 2022 (that is 65 percent of the average cost of the technology).

In the proposed rule, we stated our concern that the applicant appears to have used a single list price of Caption Guidance^TM per hospital with a cost per patient that can vary based on the volume of cases. We stated that we were interested in information about whether the cost per patient varies based on the utilization of the technology by the hospitals. We stated that the cost per patient could be skewed by the small number of hospitals utilizing the technology and their low case volumes. It is possible, if hospitals with large patient populations adopt Caption Guidance^TM, the cost per patient would be significantly lower.

In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58628), in a similar instance, we stated our understanding that there are unique circumstances to determining a cost per case for a technology that utilizes a subscription for its cost. We invited comments from the public as to the appropriate method to determine a cost per case for such technologies, including comments on whether the cost per case should be estimated based on subscriber hospital data as described previously, and if so, whether the cost analysis should be updated based on the most recent subscriber data for each year for which the technology may be eligible for the new technology add-on payment.

We invited public comments on whether the Caption Guidance^TM system meets the cost criterion and our proposal to approve new technology add-on payments for Caption Guidance^TM system for FY 2022, including on whether the newness period for this technology would begin on September 15, 2020.

Comment: We received a few comments on our request for comment regarding technologies sold on a subscription basis and whether the cost per case should be estimated based on subscriber hospital data, and if so, whether the cost analysis should be updated based on the most recent subscriber data for each year for which the technology may be eligible for the new technology add-on payment. Most commenters agreed that in determining the cost per case for technologies seeking new technology add-on payment that utilize a subscription model, we should limit our analysis to subscriber hospitals and update the cost analysis on an annual basis. A commenter noted that alternative methodologies involving estimating the number of patients who would be eligible to receive treatment utilizing a technology sold on a subscription basis would be likely to result in a payment amount that does not adequately reflect the estimated average cost of such service or technology as required by the statute. The commenter believes that given the direct impact of utilization changes on cost per case when using a subscription model, it is reasonable for CMS to annually update the payment amount using the most recent subscriber utilization data.

We also received a comment from the applicant stating that Caption Guidance^TM had been commercially available for less than 30 days prior to the application deadline and that the first sale was completed within two weeks of this deadline. The applicant stated as there were too few subscriber hospitals to limit the cost per case analysis to just subscribers, they calculated the anticipated cost per case across all IPPS hospitals. The applicant explained that each hospital's anticipated total cost was determined based on the estimated number of devices multiplied by the list price per device. The applicant then explained that the cost per case was calculated using the anticipated total device costs and the estimated number of Medicare and non-Medicare cases. The applicant stated that an average of these unique costs per case was taken to derive the average cost per case across all IPPS hospitals, which the applicant then converted to charges using the national average cost-to-charge ratio of 0.094 for cardiology cost centers (85 FR 58601). The applicant also noted that it updated its cost analysis with the correct inflation factor of 13.22 percent as advised in the FY 2022 IPPS proposed rule and stated that with the change, the technology still meets the cost criterion.

Response: We thank the commenters for the support and feedback and agree that Caption Guidance^TM meets the cost criterion. We also thank the commenters for their feedback on determining a cost per case for technologies sold on a subscription basis. CMS will continue to consider the issues relating to calculation of the cost per unit of technologies sold on a subscription basis, including the merits of calculating the cost per case across all IPPS hospitals versus limiting the cost per case analysis to current users and whether the cost analysis should be updated based on the most recent subscriber data for each year for which the technology may be eligible for the new technology add-on payment, as we gain more experience in this area.

Based on the information provided in the application for new technology add-on payments, and after consideration of the public comments we received, we believe Caption Guidance^TM system meets the cost criterion. Therefore, we are finalizing our proposal to approve new technology add-on payments for the Caption Guidance^TM system for FY 2022, and we consider the beginning of the newness period to commence on September 15, 2020 which is when the technology became commercially available for the indication covered by its Breakthrough Device designation. Based on the information at the time of this final rule, the cost per case of the Caption Guidance^TM system is $2,874. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS DRG payment for the case. As a result, we are finalizing that the maximum new technology add-on payment for a case involving the use of the Caption Guidance^TM system would be $1,868.10 for FY 2022 (that is 65 percent of the average cost of the technology). Cases involving the use of the Caption Guidance^TM system that are eligible for new technology add-on payments will be identified by ICD-10-PCS code: X2JAX47 (Inspection of heart using transthoracic echocardiography, computer-aided guidance, new technology group 7).

(5) EXALT^TM Model D Single-Use Duodenoscope

Boston Scientific Corporation applied for new technology-add on payments for EXALT^TM Model D Single-Use Duodenoscope (EXALT^TM) for FY 2022. Per the applicant, EXALT^TM is a single-use, flexible duodenoscope indicated for diagnostic and therapeutic treatment of the pancreaticobiliary system during endoscopic retrograde cholangiopancreatography (ERCP) procedures. According to the applicant, the scope is most commonly used to facilitate therapeutic maneuvers such as removal of gallstones from the bile ducts, dilation of strictures in the bile or pancreatic ducts, or to relieve an obstruction by inserting a plastic or metal stent. The applicant states that EXALT^TM is intended to eliminate the risk of patient-to-patient transmission of infection related to reprocessing of reusable duodenoscopes.

EXALT^TM is designated as a Breakthrough Device, indicated for intended use with a Boston Scientific endoscopic video imaging system for endoscopy and endoscopic surgery within the duodenum, and received FDA 510(k) clearance as a Class II medical device on December 13, 2019 for the same indication. The applicant indicates that this device is the first FDA-cleared single-use duodenoscope in the U.S. According to the applicant, EXALT^TM was available on the market immediately after FDA approval. The applicant listed 50 ICD-10-PCS codes that describe ERCP and other procedures in which EXALT^TM and other duodenoscopes are used. The applicant submitted a request to the ICD-10 Coordination and Maintenance Committee for approval of a code to uniquely identify the technology and was granted approval to identify the EXALT^TM using the following procedure codes effective October 1, 2021: XFJB8A7 (Inspection of hepatobiliary duct using single-use duodenoscope, new technology group 7) and XFJD8A7 (Inspection of pancreatic duct using single-use duodenoscope, new technology group 7).

With respect to the cost criterion, the applicant conducted two analyses based on 100 percent of identified claims and 76 percent of identified claims, both of which are further described later in this section. To identify potential cases where EXALT^TM could be utilized, the applicant searched the FY 2019 MedPAR file for the following ICD-10-PCS codes:

For the analysis using 100 percent of cases, the applicant identified a total of 59,966 cases spanning 440 MS-DRGs. The applicant then removed 100 percent of charges associated with the service Medical/Surgical Supplies and Devices for the prior technology. The applicant stated that it does not believe use of EXALT^TM will replace any other medical supplies but removed 100 percent of charges associated with service category Medical/Surgical Supply Charge Amount, which included the revenue center code 027x, to be as conservative as possible. The applicant then standardized the charges and applied an inflation factor of 13.2 percent, which is the same inflation factor used by CMS to update the outlier threshold in the FY 2021 IPPS/LTCH PPS final rule, to update the charges from FY 2019 to FY 2021 (85 FR 59039). The applicant added charges for the new technology by multiplying the cost of the technology by the national CCR for implantable devices from the FY 2021 IPPS/LTCH PPS final rule. Under the analysis based on 100 percent of claims, the applicant determined an average case-weighted threshold amount of $66,588 and a final inflated case weighted average standardized charge per case of $96,079.

For the analysis using 76 percent of cases, which the applicant conducted due to these cases mapping to just 14 MS-DRGs, the applicant used the same methodology, which identified 45,530 cases across 14 MS-DRGs. The applicant determined an average case-weighted threshold amount of $63,762 and a final inflated case weighted average standardized charge per case of $84,631. Because the final inflated case-weighted average standardized charge per case exceeded the average case-weighted threshold amount for both analyses, the applicant asserted that the technology meets the cost criterion.

We stated in the proposed rule that we are concerned that the applicant used the national CCR for implantable devices from the FY 2021 IPPS/LTCH PPS final rule, as a duodenoscope is not an implantable device. We noted that the cost analysis for another duodenoscope that is the subject of an application for new technology add-on payments for FY 2022, the aScope^TM Duodeno, used the national CCR for supplies and equipment to convert the cost of the technology to charges, and that we believe that the same CCR should apply for purposes of the cost analysis for EXALT^TM Model D Single-Use Duodenoscope.

We stated that we agreed with the applicant that EXALT^TM Model D Single-Use Duodenoscope meets the cost criterion and therefore proposed to approve EXALT^TM Model D Single-Use Duodenoscope for new technology add on payments for FY 2022.

As discussed previously, based on the information available at the time of the proposed rule, it appeared that both aScope^TM Duodeno and EXALT^TM Model D will be identified by the same ICD-10-PCS code and share the same indication for endoscopy and endoscopic surgery within the duodenum. We stated that thus, as we are unable to separately identify these cases to apply two separate payment amounts for these technologies, we were proposing to use a case-weighted average to calculate a single cost that would be used to determine the new technology add-on payment amount for both technologies. To compute the weighted average cost, we summed the total number of projected cases for each of the applicants, which equaled 12,064 (3,750 plus 8,314). Then we divided the number of projected cases for each of the applicants by the total number of cases, which resulted in the following case-weighted percentages: 31 Percent for aScope^TM Duodeno and 69 percent for EXALT^TM Model D. We then multiplied the cost per case for the manufacturer specific technology by the case-weighted percentage (0.31 * $1,995 = $620.13 for aScope^TM Duodeno and 0.69 * $2,930 = $2,019.23 for EXALT^TM Model D). This resulted in a case-weighted average cost of $2,639.36 for both technologies. We invited public comments on the proposed case-weighted average, as well as any alternative approaches for determining and applying the new technology add-on payment amount for cases involving these technologies, for FY 2022.

We noted that the cost information for this technology may be updated in the final rule based on revised or additional information CMS receives prior to the final rule. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS-DRG payment for the case. As a result, we proposed that the maximum new technology add-on payment for a case involving the use of the product EXALT^TM Model D Single-Use Duodenoscope or aScope^TM Duodeno would be $1,715.59 for FY 2022 (that is 65 percent of the case-weighted average cost of both technologies).

We invited public comments on whether EXALT^TM Model D Single-Use Duodenoscope meets the cost criterion and our proposal to approve new technology add-on payments for EXALT^TM Model D Single-Use Duodenoscope for FY 2022. We further invited public comments on our calculation of the maximum new technology add-on payment amount for the EXALT^TM Model D.

Comment: A commenter, the applicant, submitted a public comment urging CMS to finalize its proposal to approve an add-on payment for EXALT^TM Model D Single-Use Duodenoscope. The commenter agreed that EXALT Model D meets the cost criterion and therefore satisfies the criteria under the alternative new technology pathway for certain transformative new devices finalized by CMS in the FY 2020 IPPS Final Rule. The commenter also supported CMS' proposal to use a case-weighted average to calculate a single cost that would be used to determine the new technology add-on payment amount.

Response: We thank the commenter for its support and feedback.

Based on the information provided in the application for new technology add-on payments, and after consideration of the public comments we received, we believe EXALT^TM Model D meets the cost criterion. Also, EXALT^TM Model D received marketing authorization from the FDA on December 13, 2019 for the indication covered by its Breakthrough Device designation. Therefore, we are finalizing our proposal to approve new technology add-on payments for the EXALT^TM Model D for FY 2022, and we consider the beginning of the newness period to commence on December 13, 2019 which is when the technology received FDA marketing authorization for the indication covered by its Breakthrough Device designation. Based on the information at the time of this final rule, and using the case-weighted average cost as described in the proposed rule and earlier in this final rule, the cost per case of the EXALT^TM Model D is $2,639.36. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS DRG payment for the case. As a result, we are finalizing that the maximum new technology add-on payment for a case involving the use of the EXALT^TM Model D Single-Use Duodenoscope or aScope^TM Duodeno would be $1,715.59 for FY 2022 (that is 65 percent of the case-weighted average cost of both technologies). Cases involving the use of the EXALT^TM Model D eligible for new technology add-on payments will be identified by ICD-10- PCS codes: XFJB8A7 (Inspection of hepatobiliary duct using single-use duodenoscope, new technology group 7) or XFJD8A7 (Inspection of pancreatic duct using single-use duodenoscope, new technology group 7).

(6) FUJIFILM EP-7000X System

Fujifilm Corporation submitted an application for new technology-add on payments for FUJIFILM EP-7000X System for FY 2022. The FUJIFILM EP-7000X system is an endoscopic video imaging system used for endoscopic observation, diagnosis, treatment, and image recording in minimally invasive surgeries of abdominal gynecologic and thoracic areas. Per the applicant, this system allows for the visualization of hemoglobin oxygen saturation levels of blood in superficial tissue under a 2D endoscopic image, which helps physicians identify tissue that is not appropriately oxygenated and thus potentially ischemic. The applicant further explains that the technology consists of four components: Video Laparoscope EL-R740M, Processor VP-7000, Light Source BL-7000X, and Image Processing Unit EX-0.

The FUJIFILM EP-7000X system received Breakthrough Device designation for endoscopic observation, diagnosis, treatment, and image recording in patients requiring such procedures on September 17, 2020 and was granted FDA 510(k) clearance on June 30, 2021. The applicant submitted a request to the ICD-10 Coordination and Maintenance Committee for approval of a unique code for FY 2022 to identify the technology and was granted approval to identify the FUJIFILM EP-7000X system using the following procedure codes effective October 1, 2021:

With respect to the cost criterion, the applicant searched the FY 2019 MedPAR claims data file to identify potential cases representing patients who may be eligible for treatment with the EP-7000X System. The applicant identified claims that reported an ICD-10-PCS procedure code for gastrointestinal bypass or hernia repair, which the applicant listed in the following table:

Per the applicant, oxygen saturation endoscopic imaging would not be necessary, as both imaging procedures are used to evaluate vascular perfusion and therefore the applicant excluded cases with the ICD-10-PCS procedure code 4A1BXSH (Monitoring of Gastrointestinal Vascular Perfusion using Indocyanine Green Dye, External Approach). In addition, the applicant compared cases with procedure code 4A1BXSH to cases without procedure code 4A1BXSH and found that cases with the procedure code have higher total standardized charges. The applicant further limited the cases to MS-DRGs with at least one percent of case volume, leaving 12,020 cases spread across 16 MS-DRGs, or 83 percent of the 14,522 cases initially identified. The applicant standardized the charges and applied an inflation factor of 13.2 percent, which is the same inflation factor used by CMS to update the outlier threshold in the FY 2021 IPPS/LTCH PPS final rule, to update the charges from FY 2019 to FY 2021 (85 FR 59039). The applicant did not remove charges for the current technology as the applicant believed the use of EP-87000X System would not replace any other therapies except for the vascular perfusion monitoring procedure for which cases were already excluded.

The applicant then added charges for the new technology. The applicant explained that the total cost of the EP-87000X System consists of the capital equipment as well as a service contract for the equipment and a calibration fee required to perform a calibration between a video laparoscope and light source every 6 months. The applicant stated that it calculated the equipment cost per minute using the Medicare physician fee schedule formula used for calculating practice expense relative value units (RVUs). The applicant stated that it also assumed a 3 percent usage rate, a 5.5 percent interest rate, a 0 percent maintenance factor (as the maintenance fee is built into the cost of the equipment), and a 5-year useful life. The applicant multiplied the machine cost per minute by the number of minutes of procedure time, which the applicant estimated to be 4.5 hours or 270 minutes, to obtain the per patient cost. The applicant then converted the cost to charges by dividing the cost per patient by the national average cost-to-charge ratio for supplies and equipment (0.297).

Based on the cost information, the applicant calculated a final inflated case-weighted average standardized charge per case of $106,603 and an average case-weighted threshold of $80,392. Because the final inflated case-weighted average standardized charge per case exceeded the average case-weighted threshold amount, the applicant asserted that the technology meets the cost criterion.

In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25380), we stated that because section 1886(d)(5)(K)(i) of the Act requires that the Secretary establish a mechanism to recognize the costs of new medical services or technologies under the payment system established under that subsection, which establishes the system for paying for the operating costs of inpatient hospital services, we do not include capital costs in the add-on payments for a new medical service or technology or make new technology add-on payments under the IPPS for capital-related costs. We stated that based on preliminary information from the applicant, it appeared that the costs of the FUJIFILM EP-7000X System did not include any operating costs. Therefore, we stated that even if the technology meets the cost criterion, it appeared that no new technology add-on payment would be made for the FUJIFILM EP-7000X System because, as discussed in prior rulemaking and noted previously, we only make new technology add-on payments for operating costs (72 FR 47307 through 47308). We invited public comments on whether the FUJIFILM EP-7000X System has any operating costs. We proposed to approve new technology add-on payments for only the operating costs of FUJIFILM EP-7000X System for FY 2022 if it was determined that the technology does have operating costs, since it appears to meet the cost criterion as previously noted, subject to the technology receiving FDA marketing authorization for endoscopic observation, diagnosis, treatment, and image recording in patients requiring such procedures by July 1, 2021.

Comment: We received one comment from the applicant supporting the FUJIFILM EP-7000X System be approved for new technology add-on payment for FY 2022. The commenter stated that by virtue of the 510(k) clearance (K203717) the FDA marketing authorization is expected by July 15, 2021. Also, the applicant provided updated cost information and stated that the EP-7000X System contains both capital and operating costs. Per the applicant, the capital costs include those associated with the processor, light source, and imaging processing unit, and the operating costs include (1) the flexible endoscope/video laparoscope, which are types of minor equipment treatable as operating costs by hospitals, and (2) the maintenance cost associated with reprocessing and calibration, which are treated as operating expenses by CMS. The commenter asserted that the video laparoscope and flexible endoscope are “minor equipment” and, therefore, treatable as an operating cost and not a capital cost. The applicant stated that CMS has a multi-factored test for determining whether a device is minor equipment: (a) In general it has no fixed location and is subject to use by various departments of the provider's facility; (b) it is comparatively small in size and unit cost; (c) it is subject to inventory control; (d) there is a fairly large quantity in use; and, (e) generally, it has a useful life of approximately 3 years or less. Per the applicant, the video laparoscope and flexible endoscope are minor equipment because they are relatively small in size (the video laparoscope is only 330 mm in length), are mobile and not in a fixed location, and may be inventoried separately from other components of the device because they are reprocessed between uses. The applicant further stated that the useful life of the video laparoscope and flexible endoscope is one year, as evidenced by the product warranty of that length of time. Per the applicant, because the video laparoscope and flexible endoscope are integral to the EP-7000X and are treatable as operating costs by virtue of being minor equipment, there are operating costs associated with the technology.

The applicant further stated that the fees and costs associated with reprocessing, sterilization, and maintenance of the device are maintenance fees due to the use of the video laparoscope and flexible endoscope for more than one patient and are also not considered to be capital costs.

Response: We thank the applicant for their comment. However, we remain concerned that the cost for FUJIFILM EP-7000X System includes only capital-related costs and does not include operating costs. We note that the flexible endoscope is not included on the Breakthrough Device designation and is therefore ineligible for new technology add-on payments under the alternative pathway, and the remainder of our response refers only to the video laparoscope listed on the Breakthrough Device designation. We agree that minor equipment, as determined by the multi-factor test described in the Provider Reimbursement Manual (PRM) above, can be considered to be operating costs in some cases. Though the applicant asserts that the technology meets the criteria to be considered minor equipment, we disagree that the useful life of a technology is evidenced by its warranty, and believe that the useful life described in the criteria would extend for many years past that, particularly in the case of scopes. Since we believe that the video laparoscope would have a useful life extending past 3 years, we cannot consider it to be treatable as operating costs as it is not minor equipment. We further note that the PRM states that items that have a standalone functional capability may be considered on an item-by-item basis, but items purchased as in integrated system must be considered as a single asset when applying the capitalization threshold. Since the video laparoscope does not have a standalone functional capacity as it requires connections to the capital components of the system (that is, light source, processor) to function, we consider the FUJIFILM EP-7000x System to be capital as it is an integrated system and believe we should not separate individual components of the system for the purposes of determining whether it includes operating costs.

In addition, while we agree with the applicant's assertion that maintenance and processing fees are considered operating expenses, when determining a new technology add-on payment, we provide payment based on the cost of the actual technology (such as the drug or device itself) and not for additional costs related to the use of the device, such as the ongoing use of the device including maintenance and processing fees. For example, if a technology required an extra hour of operating room time, or reduced the amount of procedure time, we would neither add nor deduct costs based on this, and would only consider the actual cost of the technology at the time of purchase in our determination of the add-on payment. Therefore, the maintenance and processing fees described by the applicant are not eligible to be included in new technology add-on payments.

Based on the above, we continue to believe that there are no operating costs with the use of the FUJIFILM EP-7000X System. Therefore, we are not approving new technology add-on payments for the FUJIFILM EP-7000X System for FY 2022.

(7) Harmony^TM Transcatheter Pulmonary Valve (TPV) System

Medtronic submitted an application for new technology-add on payments for Harmony^TM Transcatheter Pulmonary Valve (TPV) System (“Harmony^TM”) for FY 2022. The system consists of a bioprosthetic heart valve developed from porcine pericardial tissue mounted on self-expanding nitinol struts sewn to a polyester fabric. According to the applicant, Harmony^TM is implanted in the patient's heart between the right ventricle and the bifurcation of the pulmonary arteries to treat patients with congenital heart disease who are indicated for a pulmonary valve replacement. The applicant states that Harmony^TM is the first transcatheter pulmonary valve that is designed to treat the patient's condition at the native site of the pulmonary valve without a pre-existing valve conduit or pre-existing bioprosthetic valve.

The Harmony^TM TPV System received designation as a Breakthrough Device on May 1, 2019, with the indication for the treatment of symptomatic severe pulmonary regurgitation in patients with a surgically-repaired right ventricular outflow tract. In the proposed rule, we stated that the applicant noted that the proposed indication for the FDA marketing authorization would be more expansive than the indication for the FDA Breakthrough Device status, to include patients who have had a prior transcatheter intervention. We noted that under the eligibility criteria for approval under the alternative pathway for certain transformative new devices, only the use of the Harmony^TM TPV System for the treatment of symptomatic severe pulmonary regurgitation in patients with a surgically-repaired RVOT, and the FDA Breakthrough Device designation it received for that use, are relevant for purposes of the new technology add-on payment application for FY 2022. Subsequently, the applicant received Premarket Approval (PMA) as a Class III medical device on March 26, 2021 with an indication for use in the management of pediatric and adult patients with severe pulmonary regurgitation (that is, severe pulmonary regurgitation as determined by echocardiography and/or pulmonary regurgitant fraction ≥30% as determined by cardiac magnetic resonance imaging) who have a native or surgically-repaired right ventricular outflow tract and are clinically indicated for surgical pulmonary valve replacement. Since the Breakthrough Device designation is indicated for use in patients with a surgically-repaired RVOT, and does not include patients with a native RVOT, we note that only the Breakthrough Device indication is eligible for new technology add-on payments.

The applicant noted that the Harmony^TM TPV System is currently reported within table 02R of the ICD-10 PCS tabular list (body part value Pulmonary Valve, approach value Percutaneous, device value as appropriate, and qualifier value No Qualifier). Per the applicant, this same code also applies to existing technology for transcatheter valve replacement within a conduit or a pre-existing prosthetic valve. The applicant submitted a request to the ICD-10 Coordination and Maintenance Committee for approval of a unique code for FY 2022 to identify the technology and was granted approval to identify the Harmony^TM Transcatheter Pulmonary Valve (TPV) using the following procedure code effective October 1, 2021: 02RH38M (Replacement of pulmonary valve with zooplastic tissue, native site, percutaneous approach).

With respect to the cost criterion, the applicant searched the FY 2019 MedPAR dataset for claims representing patients with congenital diagnoses who received a surgical valve or a transcatheter procedure. The applicant identified claims across five MS-DRGs after excluding cases with outlier payments. Per the applicant, 6 percent of cases were in MS-DRG 216, 24 percent of cases were in MS-DRG 219, 12 percent of cases were in MS-DRG 220, 26 percent of cases were in MS-DRG 266, and 32 percent of cases were in MS-DRG 267. The applicant did not provide case counts because the volume in each MS-DRG was fewer than 11 cases.

Next, the applicant removed charges for the prior technology and standardized the charges. The applicant described the charges for the technology that would be replaced as “the sum of the medical-surgical pacemaker amount, the intraocular lens amount, the other implants amount, and the investigational device amount.” The applicant also removed charges related to the prior technology, which it described as “the sum of the medical surgical supplies amount, the durable medical equipment amount, and the used durable medical amount minus the prior technology charges.” The applicant then applied an inflation factor of 13.1 percent, which per the applicant is the same inflation factor used by CMS to update the outlier threshold in the FY 2021 IPPS/LTCH PPS final rule, to update the charges from FY 2019 to FY 2021. We note that the applicant appears to have used the FY 2021 IPPS/LTCH PPS proposed rule inflation factor rather than the 2-year inflation factor from the FY 2021 IPPS/LTCH PPS final rule of 13.2 percent (85 FR 59039), which would have resulted in a higher inflated charge figure. The applicant added charges for the new technology by dividing the cost of the Harmony^TM TPV by the national CCR for implantable devices, which is 0.293 (85 FR 58601). The applicant also added charges related to the new technology, which the applicant estimated to be similar to the charges related to transcatheter procedures within MS-DRGs 266-267.

The applicant calculated a final inflated case-weighted average standardized charge per case of $257,970 and an average case-weighted threshold of $202,037. Because the final inflated case-weighted average standardized charge per case exceeded the average case-weighted threshold amount, the applicant asserted that the technology meets the cost criterion.

In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25381), we expressed our concern that the applicant's charge threshold analysis utilized a small sample of 55 cases, given that the applicant projected a case volume of over 1,000 cases for FY 2022. Subject to the applicant adequately addressing this concern, we stated that we would agree that the technology meets the cost criterion and therefore are proposing to approve Harmony^TM Transcatheter Pulmonary Valve (TPV) System for new technology add-on payments for FY 2022, subject to the technology receiving FDA marketing authorization for the treatment of symptomatic severe pulmonary regurgitation in patients with a surgically-repaired right ventricular outflow tract by July 1, 2021. We stated that, as noted previously, only the use of the Harmony^TM TPV System for the treatment of symptomatic severe pulmonary regurgitation in patients with a surgically-repaired right ventricular outflow tract, and the FDA Breakthrough Device designation it received for that use, are relevant for purposes of the new technology add-on payment application for FY 2022.

Based on preliminary information from the applicant at the time of the proposed rule, the cost of the Harmony^TM Transcatheter Pulmonary Valve (TPV) System is $41,500. Per the applicant, this cost is comprised of $33,000 for the Harmony^TM TPV and $8,500 for the Harmony^TM transcatheter pulmonary valve delivery and loading system. We stated that it was not clear to us whether these costs reflect the use of capital equipment. We noted that the cost information for this technology may be updated in the final rule based on revised or additional information CMS receives prior to the final rule. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS-DRG payment for the case. We stated as a result, if both components of the Harmony^TM Transcatheter Pulmonary Valve (TPV) System are operating costs, we were proposing that the maximum new technology add-on payment for a case involving the use of the Harmony^TM Transcatheter Pulmonary Valve (TPV) System would be $26,975 for FY 2022 (that is 65 percent of the average cost of the technology).

We invited public comments on whether the Harmony^TM Transcatheter Pulmonary Valve (TPV) System meets the cost criterion and our proposal to approve new technology add-on payments for Harmony^TM Transcatheter Pulmonary Valve (TPV) System for FY 2022, subject to FDA marketing authorization of Harmony^TM Transcatheter Pulmonary Valve (TPV) System by July 1, 2021 for the treatment of patients with severe pulmonary regurgitation who have had prior intervention on the right ventricular outflow tract and are clinically indicated for a pulmonary valve replacement. We also invited public comment on whether the costs of the Harmony^TM TPV and Harmony^TM transcatheter pulmonary valve delivery and loading system reflect use of capital equipment.

Comment: The applicant submitted a public comment urging CMS to finalize its proposal to approve a new technology add-on payment for Harmony^TM Transcatheter Pulmonary Valve (TPV) System. The commenter noted that the proposed rule referred to the anticipated FDA approval of the technology as 510(k) clearance instead of premarket approval application (PMA). The commenter also requested that CMS consider that because FDA grants Breakthrough Device designation early in the product development process, the final indication for a product may evolve based on clinical research findings, and therefore may not be identical to the proposed indication wording at the time the designation is granted. In the specific case of the Harmony^TM TPV System, the applicant stated that the final commercial indication differs from the Breakthrough Device designation in that it also includes use in native right ventricular outflow tracts in addition to surgically-repaired right ventricular outflow tracts. The applicant further stated that the final approval reflects a single, ongoing development and review process, which is distinct from scenarios in which a manufacturer may submit additional indications for separate reviews and approvals/clearances that are not encompassed by the single process arising from the Breakthrough Device designation. Accordingly, it requested that the new technology add-on payment eligibility apply to the full FDA-approved indication for the Harmony^TM TPV System.

With respect to the concerns for the cost criterion that the charge threshold analysis conducted for the Harmony^TM TPV System utilized a small sample of 55 cases, while their projected case volume was over 1,000 cases for FY 2022 (86 FR 25381) the applicant clarified that the projected sales volume of 1,054 that was included in the application included patients across payer types, while the cost criterion analysis was based on Medicare claims data only. The applicant stated that it was indicated in the application, based on analysis of the Nationwide Inpatient Sample (NIS) dataset, which is part of the Healthcare Cost and Utilization Project sponsored by the Agency for Healthcare Research and Quality, that approximately 16 percent of the total number of patients with the relevant congenital heart disease diagnosis codes (selected based on the patients enrolled in the Harmony^TM feasibility and IDE studies) were Medicare beneficiaries. The commenter applied this percentage to the projected sales volume of 1,054 to project the anticipated Medicare volume to be 171 patients. While the projected Medicare volume of 171 still exceeds the cases found in the historical claims data for the target patient population, the applicant stated it is directionally more consistent than the figure of over 1,000 cases, about which CMS expressed concern in the proposed rule. The applicant further stated that because Harmony^TM represents a new, less invasive treatment option for patients, it is reasonable to expect that more interventions may be performed in the future than what is currently reflected by the number of cases in the historical claims data.

With respect to the concern that the costs of Harmony^TM TPV may include capital costs, the applicant stated that they can confirm that neither of the components listed are considered capital equipment, as both the bioprosthetic heart valve and the delivery system are single-use products. The applicant stated that specifically, the bioprosthetic valve is implanted in the patient's heart where it remains, and the delivery system delivers the valve to the heart and is then discarded after a single use.

Response: We thank the commenter for the additional information and feedback. We agree that the FDA approval of the technology should be listed as a premarket approval application (PMA) and in this final rule, have revised the description of the relevant approval to indicate that the applicant received Premarket Approval (PMA) as a Class III medical device on March 26, 2021. With regard to the differences between the Breakthrough Device designation indication and the PMA indication, under § 412.87(c)(1), a new medical device under the alternative pathway must receive marketing authorization for the indication covered by the Breakthrough Devices Program designation (85 FR 58736). Since the PMA indication is broader than the Breakthrough Device indication in that it includes native outflow tracts in addition to surgically-repaired outflow tracts, only the Breakthrough Device indication is applicable for purposes of new technology add-on payments.

Regarding the cost criterion, we thank the applicant for its explanation of the discrepancy between the projected sales volume and the anticipated Medicare volume. We also agree with the applicant that both the bioprosthetic heart valve and the delivery system are single-use products and that these components are not capital costs.

Based on the information provided in the application for new technology add-on payments, and after consideration of the public comment we received, we believe Harmony^TM Transcatheter Pulmonary Valve (TPV) System meets the cost criterion. Therefore, we are finalizing our proposal to approve new technology add-on payments for the Harmony^TM Transcatheter Pulmonary Valve (TPV) System for FY 2022, and we consider the beginning of the newness period to commence on March 26, 2021, which is when the technology received FDA marketing authorization for use in the management of pediatric and adult patients with severe pulmonary regurgitation (that is, severe pulmonary regurgitation as determined by echocardiography and/or pulmonary regurgitant fraction ≥30% as determined by cardiac magnetic resonance imaging) who have a native or surgically-repaired right ventricular outflow tract and are clinically indicated for surgical pulmonary valve replacement. As previously discussed, under the eligibility criteria for approval under the alternative pathway for certain transformative new devices, only the use of the Harmony^TM TPV System for the treatment of symptomatic severe pulmonary regurgitation in patients with a surgically-repaired RVOT, and the FDA Breakthrough Device designation it received for that use, are relevant for purposes of the new technology add-on payment application for FY 2022. Since the Breakthrough Device designation is indicated for use in patients with a surgically-repaired RVOT, and does not include patients with a native RVOT, only cases involving the Breakthrough Device indication for use in patients with a surgically-repaired RVOT are eligible for new technology add-on payments.

Based on the information at the time of this final rule, the cost per case of the Harmony^TM Transcatheter Pulmonary Valve (TPV) System is $41,500. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS DRG payment for the case. As a result, we are finalizing that the maximum new technology add-on payment for a case involving the use of the Harmony^TM Transcatheter Pulmonary Valve (TPV) System would be $26,975 for FY 2022 (that is 65 percent of the average cost of the technology). Cases involving the use of the Harmony^TM Transcatheter Pulmonary Valve (TPV) System that are eligible for new technology add-on payments will be identified by ICD-10- PCS code 02RH38M (Replacement of pulmonary valve with zooplastic tissue, native site, percutaneous approach).

(10) INTERCEPT Fibrinogen Complex (PRCFC)

Cerus Corporation applied for new technology-add on payments for INTERCEPT Fibrinogen Complex (pathogen reduced cryoprecipitated fibrinogen complex), for FY 2022. INTERCEPT Fibrinogen Complex is a blood product indicated for the treatment for fibrinogen deficiency-related bleeding, including massive hemorrhage. Per the applicant, this blood product is useful in emergency departments and operating rooms due to its 5-day shelf life at room temperature. The applicant stated that the 5-day shelf life of the blood product makes it immediately available in a ready-to-transfuse form as a fibrinogen source and thereby provides a significant benefit for patients with massive hemorrhage in a real time-critical fashion that is not achievable with other existing fibrinogen replacement products.

INTERCEPT Fibrinogen Complex is designated as a Breakthrough Device, indicated for control of massive bleeding associated with fibrinogen (Fg) deficiency, and received FDA premarket approval (PMA) on November 24, 2020 for the following indications: (1) Treatment and control of bleeding, including massive hemorrhage, associated with fibrinogen deficiency; (2) control of bleeding when recombinant and/or specific virally inactivated preparations of factor XIII or von Willebrand factor (vWF) are not available; (3) second-line therapy for von Willebrand disease (vWD); and (4) control of uremic bleeding after other treatment modalities have failed. The applicant provided information stating that the product was not available for sale until May 5, 2021 due to manufacturing lead time for system components as well as validations and quality control analyses that needed to be completed by the manufacturing facilities and delayed production of commercially available product. We note that, under the eligibility criteria for approval under the alternative pathway for certain transformative new devices, only the use of INTERCEPT Fibrinogen Complex for the control of massive bleeding associated with fibrinogen (Fg) deficiency, and the FDA Breakthrough Device designation it received for that use, are relevant for purposes of the new technology add-on payment application for FY 2022.

The applicant submitted a request to the ICD-10 Coordination and Maintenance Committee for approval of a unique code for FY 2022 to identify the technology and was granted approval to identify INTERCEPT Fibrinogen Complex using the following procedure codes effective October 1, 2021: 30233D1 (Transfusion of nonautologous pathogen reduced cryoprecipitated fibrinogen complex into peripheral vein, percutaneous approach) and 30243D1 (Transfusion of nonautologous pathogen reduced cryoprecipitated fibrinogen complex into central vein, percutaneous approach).

With respect to the cost criterion, the applicant searched the FY 2019 MedPAR dataset for cases reporting an ICD-10-PCS procedure code for nonautologous plasma cryoprecipitate. The applicant identified 8,553 cases spanning over 369 MS-DRGs.

Per the applicant, the top 5 MS-DRGs were 219 (Cardiac Valve and Other Major Cardiothoracic Procedures Without Cardiac Catheterization with MCC), 220 (Cardiac Valve and Other Major Cardiothoracic Procedures Without Cardiac Catheterization with CC), 871 (Septicemia or Severe Sepsis Without Mv >96 Hours with MCC), 003 (ECMO or Tracheostomy with Mv >96 Hours Or Principal Diagnosis Except Face, Mouth And Neck With Major O.R. Procedure), and 216 (Cardiac Valve and Other Major Cardiothoracic Procedures with Cardiac Catheterization with MCC) and accounted for 34 percent of all cases. The applicant then removed charges for the technology being replaced. Per the applicant, INTERCEPT Fibrinogen Complex would replace the current nonautologous plasma cryoprecipitate billed with a blood revenue code. The applicant explained that it could not separate nonautologous plasma cryoprecipitate from other blood charges and therefore removed all charges from the blood department. The applicant then standardized the charges and applied the 2-year outlier inflation factor of 13.2 percent used to update the outlier threshold in the FY 2021 IPPS/LTCH final rule (85 FR 59039). To estimate the cost of the technology, the applicant multiplied the sale price of INTERCEPT Fibrinogen Complex by an average of 12.9 units of cryoprecipitate required per patient, which the applicant asserted as equivalent to 5.2 grams of fibrinogen based on a recent study in adult cardiac surgery patients with clinically significant bleeding and fibrinogen deficiency. The applicant estimated an average per-patient cost of $3,900, which the applicant converted to charges using the national cost-to-charge ratio for blood and blood products (0.271) from the FY 2021 IPPS/LTCH PPS final rule (85 FR 58601). The applicant indicated that the outlier inflation factor was not applied to charges for INTERCEPT Fibrinogen Complex.

The applicant calculated a final inflated case-weighted average standardized charge per case of $299,895 and an average case-weighted threshold of $183,897. Because the final inflated case-weighted average standardized charge per case exceeded the average case-weighted threshold amount, the applicant asserted that the technology meets the cost criterion.

In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25385), we agreed with the applicant that INTERCEPT Fibrinogen Complex meets the cost criterion and therefore proposed to approve INTERCEPT Fibrinogen Complex for new technology add-on payments for FY 2022 when used for the control of massive bleeding associated with fibrinogen (Fg) deficiency. Based on preliminary information from the applicant at the time of the proposed rule, the cost of INTERCEPT Fibrinogen Complex is $750 per gram × 5.2 grams for the amount of $3,900 per patient. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS-DRG payment for the case. As a result, we proposed that the maximum new technology add-on payment for a case involving the use of INTERCEPT Fibrinogen Complex would be $2,535 per patient for FY 2022 (that is, 65 percent of the average cost of the technology).

We invited public comments on whether INTERCEPT Fibrinogen Complex meets the cost criterion and our proposal to approve new technology add-on payments for INTERCEPT Fibrinogen Complex for FY 2022 when used for the control of massive bleeding associated with fibrinogen (Fg) deficiency.

Comment: Several commenters, including the applicant, urged CMS to finalize our proposal to approve a new technology add-on payment for INTERCEPT Fibrinogen Complex. The applicant also requested that CMS include the commercial name for the technology, INTERCEPT Fibrinogen Complex, in the final rule so that providers understand that pathogen reduced cryoprecipitated fibrinogen complex (PRCFC) and INTERCEPT Fibrinogen Complex are the same product.

Response: We thank the commenters for their support and feedback and note that we have included the commercial name for INTERCEPT Fibrinogen Complex in this final rule.

Based on the information provided in the application for new technology add-on payments, and after consideration of the public comments we received, we believe INTERCEPT Fibrinogen Complex meets the cost criterion. Also, the applicant received FDA marketing authorization on November 24, 2020 for the following indications: (1) Treatment and control of bleeding, including massive hemorrhage, associated with fibrinogen deficiency; (2) control of bleeding when recombinant and/or specific virally inactivated preparations of factor XIII or von Willebrand factor (vWF) are not available; (3) second-line therapy for von Willebrand disease (vWD); and (4) control of uremic bleeding after other treatment modalities have failed. Therefore, we are finalizing our proposal to approve new technology add-on payments for INTERCEPT Fibrinogen Complex for FY 2022, and we consider the beginning of the newness period to commence on May 5, 2021, based on information provided by the applicant that the product first became available for sale on that date. We note that, under the eligibility criteria for approval under the alternative pathway for certain transformative new devices, only the use of INTERCEPT Fibrinogen Complex for the treatment of massive bleeding associated with fibrinogen (Fg) deficiency, and the FDA Breakthrough Device designation it received for that use, are relevant for purposes of the new technology add-on payment application for FY 2022. Since the Breakthrough Device designation is indicated for use in the treatment of massive bleeding associated with fibrinogen (Fg) deficiency, and not for the other uses under the FDA marketing authorization, only cases involving the use of INTERCEPT Fibrinogen Complex for the Breakthrough Device indication for use in the treatment of massive bleeding associated with fibrinogen (Fg) deficiency are eligible for new technology add-on payments.

Based on the information at the time of this final rule, the cost per case of the INTERCEPT Fibrinogen Complex is $3,900. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS DRG payment for the case. As a result, we are finalizing that the maximum new technology add-on payment for a case involving the use of INTERCEPT Fibrinogen Complex, is $2,535 for FY 2022 (that is 65 percent of the average cost of the technology). Cases involving the use of the INTERCEPT Fibrinogen Complex that would be eligible for new technology add-on payments will be identified by ICD-10-PCS codes: 30233D1 (Transfusion of nonautologous pathogen reduced cryoprecipitated fibrinogen complex into peripheral vein, percutaneous approach) or 30243D1 (Transfusion of nonautologous pathogen reduced cryoprecipitated fibrinogen complex into central vein, percutaneous approach), in combination with one of the following ICD-10-CM codes: D65 (Disseminated intravascular coagulation) or D68.2 (Hereditary deficiency of other clotting factors).

(11) RECELL® Autologous Cell Harvesting Device

Avita Medical submitted an application for new technology-add on payments for RECELL® Autologous Cell Harvesting Device (RECELL®). The device is a standalone, single-use, battery-powered device used to process an autologous skin cell suspension for the treatment of acute thermal burn wounds. Per the applicant, the purpose of the device is to assist with harvesting a small graft from the patient's healthy skin and immediate processing into an autologous skin cell suspension which is then immediately applied to the patient's burn wound following surgical preparation of the acute thermal burn wound. The applicant describes the device components as including a mechanical scraping tray, wells for incubating the donor graft with a proprietary enzyme solution, a rinsing well, a cell strainer, a spray applicator as well as buttons for “self-test”, and “run.”

RECELL® was granted Expedited Access Pathway (EAP) by FDA (and is therefore considered part of the Breakthrough Devices Program by FDA on December 10, 2015 with the indication for use at the patient's point-of care for preparation of an autologous epithelial cell suspension to be applied to a prepared wound bed; under the supervision of a healthcare professional, the suspension is used to achieve epithelial regeneration for definitive closure of burn injuries, particularly in patients having limited availability of donor skin for autografting. RECELL® received FDA premarket approval (PMA) on September 20, 2018 with the indication for use listed as indicated for the treatment of acute thermal burn wounds in patients 18 years of age and older. We stated in the proposed rule that since the narrower indication for which the technology received PMA is included within the scope of the EAP indication, it appears that the PMA indication is appropriate for new technology add-on payment under the alternative pathway criteria. Per the applicant, RECELL® was available for sale upon FDA approval, albeit on a very limited basis primarily to burn centers involved with the clinical trials. According to the applicant, new ICD-10-PCS codes that are specific to RECELL® were created effective October 1, 2019. Per the applicant, the first three characters of these codes are “0HR,” followed by a fourth character signifying which body part is impacted, then “X72” for the final three characters.

With regard to the newness criterion, we stated that we believe that the beginning of the newness period for RECELL® commences from the date of approval by the FDA on September 20, 2018, as the applicant indicated the technology was available for sale from that date. Because the 3-year anniversary date of the entry of RECELL® onto the U.S. market (September 20, 2021) will occur in FY 2021, we stated that we do not believe that the device is eligible for new technology add on payments for FY 2022. Accordingly, we proposed to disapprove RECELL® Autologous Cell Harvesting Device for new technology add on payments for FY 2022. We invited public comments on our proposal to disapprove new technology add-on payments for the RECELL Autologous Cell Harvesting Device for FY 2022, including on whether the technology meets the newness criterion.

Comment: The applicant submitted a comment in response to our concerns. The applicant asserted that the eligibility date for the newness criterion for RECELL® should be the date on which inpatient coding was available for the technology. Since the unique Cell Suspension Technique ICD-10 code qualifier describing RECELL® did not go into effect until October 1, 2019, the applicant asserts that should be the date considered for new technology add-on payment eligibility purposes and not the date of FDA approval on September 20, 2018. The applicant explains that the regulation at 42 CFR 412.87(c) states that under the alternative pathway, the newness period begins after the point at which data begin to become available reflecting the inpatient hospital code (as defined in section 1886(d)(5)(K)(iii) of the Social Security Act) assigned to the new technology (depending on when a new code is assigned and data on the new technology become available for DRG recalibration). The applicant emphasized that the regulatory section does not reference the FDA approval date, which it stated is appropriate because there is typically a lag between FDA approval and assignment of codes for the technology. Additionally, the applicant stated that our policy is that a medical service or technology may continue to be considered “new” for purposes of new technology add-on payments within 2 or 3 years after the point at which data begin to become available reflecting the inpatient hospital code assigned to the new service or technology (88 FR 25211). Also, the applicant stated CMS proposed to extend new technology add-on payment status for numerous technologies that were cleared by FDA on dates earlier than the RECELL approval date. The applicant believes it would be inconsistent and arbitrary for CMS to deny new technology add-on payments for RECELL in FY 2022 on the basis of the FDA clearance date while extending new technology add-on payment status to technologies that are less “new” than RECELL®. Therefore the applicant believes RECELL® should qualify for new technology add-on payment in FY 2022.

We also received several comments reiterating the applicant's comments. The commenters also added that they are requesting approval of new technology add-on payment for RECELL due to the clinically meaningful improvements in healing they observed in their patients, in order to make it financially viable to provide to patients.

Response: We thank the applicant and the other commenters for their comments. However, we disagree that the newness date should begin with the date that the unique ICD-10-PCS code describing RECELL® was effective on October 1, 2019 and not with the date of FDA approval, September 20, 2018. We note that in the FY 2005 final rule (69 FR 49002), we provided a detailed explanation for why using the date on which a specific code is assigned to a technology is not an appropriate test of newness. In that rule, we noted that, in many instances, a technology may have been in use for several years, or even several decades, prior to the assignment of a new code (69 FR 49003). Thus, we continue to believe it is appropriate to determine newness based on the date on which a product becomes available for use in the Medicare population and the date when hospitals can begin to use either an existing or new code to bill for the new service or technology. Consistent with the statute and our implementing regulations, a technology is no longer considered as “new” once it is more than 2 to 3 years old, irrespective of how frequently the medical service or technology has been used in the Medicare population (70 FR 47349). As such, in this case, because RECELL has been available on the U.S. market for more than 2 to 3 years, we consider the costs to have been included in the MS-DRG relative weights. In addition, although we are finalizing our proposal to extend new technology add-on payments for technologies with a newness date prior to RECELL®, this policy does not extend to technologies that were not approved for new technology add-on payments for FY 2021. We note that our process requires applicants to submit their application for new technology add-on payments by the appropriate deadlines for the fiscal year in which they wish to be granted new technology status. We further note that the applicant received FDA approval on September 20, 2018 and could have submitted an application for new technology add on payments for earlier fiscal years under either the traditional or alternative pathways. The applicant did not apply for and was not approved for new technology add on payments for FY 2021. Our proposal was limited to an extension of new technology add-on payments for previously approved technologies and not to grant a new approval for add-on payments, and therefore RECELL® does not fit within the parameters of this proposal. We do not believe it would be appropriate to grant RECELL® a new technology add-on payment when it is not new for the fiscal year for which it is applying.

Therefore, for the reasons stated in the proposed rule and in this final rule, because the RECELL® Autologous Cell Harvesting Device will not be within the newness period for FY 2022 and is therefore ineligible to receive new technology add-on payments, we are not approving new technology add-on payments for the RECELL® Autologous Cell Harvesting Device for FY 2022. As discussed previously, our past and present practice is to analyze the new technology add-on payment criteria in a sequential fashion, beginning with newness. We note that the applicant submitted a comment in regard to the cost criterion. However, as RECELL® does not meet the criterion for newness, we will not be making a determination in regard to cost or summarizing comments on the cost criterion in this final rule.

(12) Shockwave C2 Intravascular Lithotripsy (IVL) System

Shockwave Medical Inc. submitted an application for new technology-add on payments for Shockwave C2 Intravascular Lithotripsy (IVL) System for FY 2022. Per the applicant, the IVL Catheter is intended for lithotripsy-enabled, low-pressure dilation of calcified, stenotic de novo coronary arteries prior to stenting. The applicant explained that the device is delivered through the coronary arterial system, and it generates intermittent sonic waves within the target treatment site that disrupt calcium within the lesion, allowing subsequent dilation of a coronary artery stenosis using low balloon pressure. The applicant also noted that the procedure can be used for otherwise difficult to treat calcified stenosis, including calcified stenosis that are anticipated to exhibit resistance to full balloon dilation or subsequent uniform coronary stent expansion.

Shockwave C2 Intravascular Lithotripsy (IVL) System was designated as a Breakthrough Device in August 2019, indicated for lithotripsy-enabled, low-pressure dilation of calcified, stenotic de novo coronary arteries prior to stenting.

The applicant received Pre-Market Approval as a Class III device from the FDA on February 12, 2021 for the same proposed indication. The applicant stated that though they expected market availability by April 2021, the device became available immediately after FDA approval. The applicant submitted a request to the ICD-10 Coordination and Maintenance Committee for approval of a unique code for FY 2022 to identify the technology and was granted approval to identify the Shockwave C2 Intravascular Lithotripsy (IVL) System using the following procedure codes effective October 1, 2021:

With regard to the cost criterion, the applicant conducted two analyses based on 100 percent of identified claims and 81 percent of identified claims. To identify potential cases where Coronary IVL could be utilized, the applicant searched the FY 2019 MedPAR file for ICD-10-PCS codes for the placement of a coronary stent, consistent with the anticipated FDA indication for Shockwave C2 Intravascular Lithotripsy (IVL). The applicant included all codes beginning with “027” and ending with “6” or Z” in its search. The applicant highlighted the potential codes in between using the table that follows:

For the analysis using 100 percent of cases, the applicant identified 160,901 cases mapping to 209 MS-DRGs. Per the applicant, Shockwave C2 Intravascular Lithotripsy (IVL) does not replace any current devices used for indicated patients. However, to be conservative, the applicant removed 50 percent of charges associated with revenue center 0278—other implants. The applicant then standardized the charges and applied the 2-year outlier inflation factor of 13.2 percent used to update the outlier threshold in the FY 2021 IPPS/LTCH PPS final rule (85 FR 59039), to update the charges from FY 2019 to FY 2021. The applicant added charges for the new technology by multiplying the cost of the technology by the estimated number of devices per patient and then dividing by the national CCR for implantable devices (0.293) from the FY 2021 IPPS/LTCH PPS final rule. Under the analysis based on 100 percent of identified claims, the applicant calculated a final inflated case-weighted average standardized charge per case of $143,805 and an average case-weighted threshold of $115,693.

For the analysis using 81 percent of cases, the applicant identified 130,907 cases mapping to MS-DRGs 246 and 247. The applicant conducted the same analysis noted previously and determined a final inflated case-weighted average standardized charge per case of $122,020 and an average case-weighted threshold of $104,783. Because the final inflated case-weighted average standardized charge per case exceeded the average case-weighted threshold amount under both analyses, the applicant asserted that the technology meets the cost criterion.

In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25389), we agreed with the applicant that Shockwave C2 Intravascular Lithotripsy (IVL) System meets the cost criterion and therefore proposed to approve Shockwave C2 Intravascular Lithotripsy (IVL) System for new technology add on payments for FY 2022, subject to the technology receiving FDA marketing authorization for lithotripsy-enabled, low-pressure dilation of calcified, stenotic de novo coronary arteries prior to stenting by July 1, 2021.

Based on preliminary information from the applicant at the time of the proposed rule, the cost of the Shockwave C2 Intravascular Lithotripsy (IVL) System is $4,700 per device × 1.2 devices required per case for an amount of $5,640. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS-DRG payment for the case. As a result, we proposed that the maximum new technology add-on payment for a case involving the use of the Shockwave C2 Intravascular Lithotripsy (IVL) System would be $3,666 for FY 2022 (that is, 65 percent of the average cost of the technology).

We invited public comments on whether the Shockwave C2 Intravascular Lithotripsy (IVL) System meets the cost criterion and our proposal to approve new technology add-on payments for the Shockwave C2 Intravascular Lithotripsy (IVL) System for FY 2022, subject to Shockwave C2 Intravascular Lithotripsy (IVL) System receiving FDA marketing authorization by July 1, 2021 for lithotripsy-enabled, low-pressure dilation of calcified, stenotic de novo coronary arteries prior to stenting.

Comment: The applicant submitted a public comment expressing support for the approval of the Shockwave C2 Intravascular Lithotripsy (IVL) System for the new technology add-on payment for FY 2022. The applicant further stated that the device became commercially available approximately two weeks after the date of FDA approval.

Response: We thank the commenter for their support and for providing additional information. We note that we had previously received communication from the applicant stating that the device was commercially available immediately after FDA approval and therefore, absent additional information, it is unclear which is the date of commercial availability. However, we note that, using either date as the beginning of the newness period, the technology would be considered new for FY 2022.

Based on the information provided in the application for new technology add-on payments, and after consideration of the public comments we received, we believe Shockwave C2 Intravascular Lithotripsy (IVL) System meets the cost criterion. Shockwave C2 Intravascular Lithotripsy (IVL) System received marketing authorization from the FDA on February 12, 2021 for the indications covered by its Breakthrough Device designation for lithotripsy-enabled, low-pressure dilation of calcified, stenotic de novo coronary arteries prior to stenting. Therefore, we are finalizing our proposal to approve new technology add-on payments for the Shockwave C2 Intravascular Lithotripsy (IVL) System for FY 2022, and we consider the beginning of the newness period to commence on February 12, 2021 which is the date on which the technology received FDA marketing authorization for the indication covered by its Breakthrough Device designation.

Based on the information at the time of this final rule, the cost per case of the Shockwave C2 Intravascular Lithotripsy (IVL) System is $4,700 per device × 1.2 devices required per case for an amount of $5,640. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS DRG payment for the case. As a result, we are finalizing that the maximum new technology add-on payment for a case involving the use of the Shockwave C2 Intravascular Lithotripsy (IVL) System is $3,666 for FY 2022 (that is 65 percent of the average cost of the technology). Cases involving the use of the Shockwave C2 Intravascular Lithotripsy (IVL) System that are eligible for new technology add-on payments will be identified by ICD-10- PCS codes:

b. Alternative Pathways for Qualified Infectious Disease Products (QIDPs)

(1) CONTEPO^TM (fosfomycin)

Nabriva Therapeutics US, Inc. submitted an application for new technology-add on payments for CONTEPO^TM (fosfomycin) for FY 2022. CONTEPO^TM is an intravenously administered epoxide antibiotic intended for the treatment of complicated urinary tract infections (cUTI) including acute pyelonephritis (AP) caused by designated susceptible bacteria. Per the applicant, the drug inhibits cell wall synthesis at an earlier stage and provides new treatment for patients with cUTIs including acute pyelonephritis caused by Escherichia coli and Klebsiella pneumonia that have failed to respond to other first-line therapies.

CONTEPO^TM is designated as a QIDP. The applicant initially applied for FDA approval when submitting a New Drug Application (NDA) in October 2018 seeking marketing approval of IV fosfomycin for injection (ZTI-01) for the treatment of patients 18 years and older with cUTI including acute pyelonephritis caused by designated susceptible bacteria. According to the applicant, on June 19, 2020, the FDA rejected the applicant's resubmitted NDA due to unresolved manufacturing issues that required an in-person inspection, which the FDA was not able to conduct due to travel restrictions. The applicant stated that it planned to resubmit an NDA after discussing next steps with the FDA and hoped to receive FDA approval prior to July 1, 2021.

The applicant previously applied for a new technology add-on payment for the same indication for FY 2021 and received conditional approval for new technology add-on payments for FY 2021, subject to CONTEPO^TM receiving FDA marketing authorization before July 1, 2021 (85 FR 58724). In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25391), we explained that if CONTEPO^TM receives FDA marketing authorization before July 1, 2021, the new technology add-on payment for cases involving the use of this technology would be made effective for discharges beginning in the first quarter after FDA marketing authorization is granted. We stated that if the FDA marketing authorization is received on or after July 1, 2021, no new technology add-on payments will be made for cases involving the use of CONTEPO^TM for FY 2021.

We further stated that if CONTEPO^TM receives FDA marketing authorization before July 1, 2021, the applicant has indicated that it would withdraw its application for FY 2022 and would instead seek new technology add-on payments for CONTEPO^TM for FY 2022 as a continuation of the conditional approval for FY 2021. The applicant requested in its application for FY 2022 that if the technology does not receive FDA marketing authorization by July 1, 2021, CMS conditionally approve CONTEPO^TM for new technology add-on payments for FY 2022. We note that CONTEPO^TM did not receive FDA marketing authorization by July 1, 2021.

The applicant applied for and received a unique ICD-10-PCS procedure code to identify cases involving the administration of CONTEPO^TM in 2019. Effective October 1, 2019, CONTEPO^TM administration can be identified by ICD-10-PCS procedure codes XW033K5 (Introduction of fosfomycin anti-infective into peripheral vein, percutaneous approach, new technology group 5) and XW043K5 (Introduction of fosfomycin anti-infective into central vein, percutaneous approach, new technology group 5), which the applicant states are unique to CONTEPO^TM administration.

With regard to the cost criterion, the applicant used the FY 2019 MedPAR Limited Data Set (LDS) to assess the MS-DRGs to which potential cases representing hospitalized patients who may be eligible for treatment involving CONTEPO^TM would most likely be mapped. According to the applicant, CONTEPO^TM is anticipated to be indicated for the treatment of hospitalized patients who have been diagnosed with complicated urinary tract infections (cUTIs). The applicant identified 199 ICD-10-CM diagnosis code combinations that identify hospitalized patients who have been diagnosed with a cUTI. Searching the FY 2019 MedPAR data file for these ICD-10-CM diagnosis codes resulted in a total of 525,876 potential cases that span 507 unique MS-DRGs. The applicant noted that the cases identified are fewer than in the FY 2021 new technology add-on payment application. Per the applicant, this change occurred because the applicant excluded additional claims for Medicare Advantage and inpatient “full-encounter” claims from all cohorts. The applicant maintained that while cohorts are smaller, the effects on the results were minimal.