applying probability rules assignment

SECTION 4.2 EXERCISES

For Exercise 4.8 , see page 222; for Exercise 4.9 , see page 222; for Exercises 4.10 and 4.11 , see page 225; for Exercises 4.12 and 4.13 , see page 226; for Exercise 4.14 , see page 228; for Exercise 4.15 , see page 229; and for Exercise 4.16 , see page 229.

Question 4.17

4.17 What is the sample space? For each of the following questions, define a sample space for the associated random phenomenon . Explain your answers. Be sure to specify units if that is appropriate.

(a) Will it rain tomorrow?

(b) How many times do you tweet in a typical day?

(d) What are the majors for students at your college?

Question 4.18

4.18 Probability rules. For each of the following situations, state the probability rule or rules that you would use and apply it or them. Write a sentence explaining how the situation illustrates the use of the probability rules.

(a) The probability of event A is 0.417. What is the probability that event A does not occur?

(b) A coin is tossed four times. The probability of zero heads is 1/16 and the probability of zero tails is 1/16. What is the probability that all four tosses result in the same outcome ?

(d) The probability of event A is 0.4 and the probability of event B is 0.8. Events A and B are disjoint . Can this happen?

(e) Event A is very rare. Its probability is −0.04. Can this happen?

Question 4.19

4.19 Equally likely events. For each of the following situations, explain why you think that the events are equally likely or not. Explain your answers.

(a) The outcome of the next tennis match for Sloane Stevens is either a win or a loss. (You might want to check the Internet for information about this tennis player.)

(b) You roll a fair die and get a 3 or a 4.

(d) For college basketball games, you record the times that the home team wins and the number of times that the home team loses.

Question 4.20

4.20 The multiplication rule for independent events. The probability that a randomly selected person prefers the vehicle color white is 0.24. Can you apply the multiplication rule for independent events in the situations described in parts (a) and (b)? If your answer is Yes, apply the rule.

(a) Two people are chosen at random from the population . What is the probability that both prefer white?

(b) Two people who are sisters are chosen. What is the probability that both prefer white?

(c) Write a short summary about the multiplication rule for independent events using your answers to parts (a) and (b) to illustrate the basic idea.

Question 4.21

4.21 What’s wrong? In each of the following scenarios, there is something wrong. Describe what is wrong and give a reason for your answer.

(a) If two events are disjoint, we can multiply their probabilities to determine the probability that they will both occur.

(b) If the probability of A is 0.7 and the probability of B is 0.5, the probability of both A and B happening is 1.2.

Question 4.22

4.22 What’s wrong? In each of the following scenarios, there is something wrong. Describe what is wrong and give a reason for your answer.

(a) If the sample space consists of two outcomes, then each outcome has probability 0.5.

(b) If we select a digit at random, then the probability of selecting a 3 is 0.3.

(c) If the probability of A is 0.3, the probability of B is 0.4, and the probability of A and B is 0.5, then A and B are independent .

Question 4.23

4.23 Evaluating web page designs. You are a web page designer and you set up a page with four different links. A user of the page can click on one of the links or he or she can leave that page. Describe the sample space for the outcome of someone visiting your web page.

Question 4.24

4.24 Record the length of time spent on the page. Refer to the previous exercise. You also decide to measure the length of time a visitor spends on your page. Give the sample space for this measure.

Question 4.25

4.25 Distribution of blood types. All human blood can be “ABO-typed” as one of O, A, B, or AB, but the distribution of the types varies a bit among groups of people. Here is the distribution of blood types for a randomly chosen person in the United States: 7

Blood type	A	B	AB	O
U.S. probability	0.42	0.11	?	0.44

(a) What is the probability of type AB blood in the United States?

(b) Maria has type B blood. She can safely receive blood transfusions from people with blood types O and B. What is the probability that a randomly chosen person from the United States can donate blood to Maria?

Question 4.26

4.26 Blood types in Ireland. The distribution of blood types in Ireland differs from the U.S. distribution given in the previous exercise:

Blood type	A	B	AB	O
Ireland probability	0.35	0.10	0.03	0.52

Choose a person from the United States and a person from Ireland at random, independently of each other. What is the probability that both have type O blood? What is the probability that both have the same blood type?

Question 4.27

4.27 Are the probabilities legitimate? In each of the following situations, state whether or not the given assignment of probabilities to individual outcomes is legitimate—that is, it satisfies the rules of probability. If not, give specific reasons for your answer.

(a) Choose a college student at random and record gender and enrollment status: P (female full-time) = 0.44, P (female part-time) = 0.56, P (male full-time) = 0.46, P (male part-time) = 0.54.

(b) Deal a card from a shuffled deck: P (clubs) = 16/52, P (diamonds) = 12/52, P (hearts) = 12/52, P (spades) = 12/52.

(c) Roll a die and record the count of spots on the up-face: P (1) = 1/3, P (2) = 0, P (3) = 1/6, P (4) = 1/3, P (5) = 1/6, P (6) = 0.

Question 4.28

4.28 French and English in Canada. Canada has two official languages, English and French. Choose a Canadian at random and ask, “What is your mother tongue?” Here is the distribution of responses, combining many separate languages from the broad Asian/Pacific region: 8

Language	English	French	Asian/Pacific	Other
Probability	0.59	?	0.07	0.11

(a) What probability should replace “?” in the distribution?

(b) What is the probability that a Canadian’s mother tongue is not English? Explain how you computed your answer.

Question 4.29

4.29 Education levels of young adults. Choose a young adult (age 25 to 34 years) at random. The probability is 0.12 that the person chosen did not complete high school, 0.31 that the person has a high school diploma but no further education, and 0.29 that the person has at least a bachelor’s degree.

(a) What must be the probability that a randomly chosen young adult has some education beyond high school but does not have a bachelor’s degree?

(b) What is the probability that a randomly chosen young adult has at least a high school education?

Question 4.30

Question 4.31

4.31 Rh blood types. Human blood is typed as O, A, B, or AB and also as Rh-positive or Rh-negative. ABO type and Rh-factor type are independent because they are governed by different genes. In the American population, 84% of people are Rh-positive. Use the information about ABO type in Exercise 4.25 to give the probability distribution of blood type (ABO and Rh) for a randomly chosen American.

Question 4.32

4.32 Roulette. A roulette wheel has 38 slots, numbered 0, 00, and 1 to 36. The slots 0 and 00 are colored green, 18 of the others are red, and 18 are black. The dealer spins the wheel and, at the same time, rolls a small ball along the wheel in the opposite direction. The wheel is carefully balanced so that the ball is equally likely to land in any slot when the wheel slows. Gamblers can bet on various combinations of numbers and colors.

(a) What is the probability that the ball will land in any one slot?

(b) If you bet on “red,” you win if the ball lands in a red slot. What is the probability of winning?

(c) The slot numbers are laid out on a board on which gamblers place their bets. One column of numbers on the board contains all multiples of 3, that is, 3, 6, 9, . . . , 36. You place a “column bet” that wins if any of these numbers comes up. What is your probability of winning?

Question 4.33

4.33 Winning the lottery. A state lottery’s Pick 3 game asks players to choose a three-digit number, 000 to 999. The state chooses the winning three-digit number at random so that each number has probability 1/1000. You win if the winning number contains the digits in your number, in any order.

(a) Your number is 059. What is your probability of winning?

(b) Your number is 223. What is your probability of winning?

Question 4.34

4.34 PINs. The personal identification numbers (PINs) for automatic teller machines usually consist of four digits. You notice that most of your PINs have at least one 0, and you wonder if the issuers use lots of 0s to make the numbers easy to remember. Suppose that PINs are assigned at random, so that all four-digit numbers are equally likely.

(a) How many possible PINs are there?

(b) What is the probability that a PIN assigned at random has at least one 0?

Question 4.35

4.35 Universal blood donors. People with type O-negative blood are universal donors. That is, any patient can receive a transfusion of O-negative blood. Only 7% of the American population have O-negative blood. If eight people appear at random to give blood, what is the probability that at least one of them is a universal donor?

Question 4.36

Question 4.37.

Mendelian inheritance. Some traits of plants and animals depend on inheritance of a single gene. This is called Mendelian inheritance, after Gregor Mendel (1822–1884). Exercises 4.38 through 4.41 are based on the following information about Mendelian inheritance of blood type.

Each of us has an ABO blood type, which describes whether two characteristics, called A and B, are present. Every one of us has two blood type alleles (gene forms), one inherited from our mother and one from our father. Each of these alleles can be A, B, or O. Which two we inherit determines our blood type. Here is a table that shows what our blood type is for each combination of two alleles:

Alleles inherited	Blood type
A and A	A
A and B	AB
A and O	A
B and B	B
B and O	B
O and O	O

We inherit each of a parent’s two alleles with probability 0.5. We inherit independently from our mother and father.

Question 4.38

4.38 Blood types of children. Emily and Michael both have alleles O and O.

(a) What blood types can their children have?

(b) What is the probability that their next child has each of these blood types?

Question 4.39

4.39 Parents with alleles B and O. Andreona and Caleb both have alleles B and O.

Question 4.40

4.40 Two children. Samantha has alleles B and O. Dylan has alleles A and B. They have two children. What is the probability that both children have blood type A? What is the probability that both children have the same blood type?

Question 4.41

4.41 Three children. Anna has alleles B and O. Nathan has alleles A and O.

(a) What is the probability that a child of these parents has blood type O?

(b) If Anna and Nathan have three children, what is the probability that all three have blood type O? What is the probability that the first child has blood type O and the next two do not?

How to Utilize Probability Theory with Practical Methods for Solving Assignments

How to Harness Probability Theory with Tools and Techniques for Math Assignments

Probability is a fascinating area of mathematics that helps us understand the likelihood of various events occurring in the world around us. Whether it's predicting the outcome of a dice roll, the chances of rain, or the behavior of complex systems, probability provides the tools we need to make informed predictions and decisions. This blog will guide you through the fundamental concepts of probability, providing strategies to tackle various types of assignments related to this field. The goal is to equip you with the knowledge and confidence to approach any to solve probability assignment problems with clarity and precision.

Understanding the Basics of Probability

What is Probability: At its core, probability is a measure of how likely an event is to occur. It ranges from zero to one, where zero indicates an impossible event and one signifies a certainty. In real-world scenarios, most events fall somewhere between these two extremes. Understanding this concept is the first step in mastering probability.
Random Variables and Events: In probability, a random variable is a variable that can take on different values depending on the outcome of a random event. For example, if you roll a die, the number that comes up is a random variable. Events, on the other hand, are outcomes or sets of outcomes that we are interested in. For instance, rolling an even number is an event.
Types of Probability: There are several types of probability that students often encounter in assignments:
Theoretical Probability: Based on the reasoning behind probability, often involving idealized scenarios like rolling a fair die.
Experimental Probability: Derived from actual experiments or observations, where the probability is determined by the ratio of the number of successful outcomes to the total number of trials.
Subjective Probability: Based on personal judgment or experience, rather than concrete data or mathematical reasoning.
Key Concepts:
Independent Events: Events are independent if the occurrence of one does not affect the occurrence of the other. For example, flipping a coin and rolling a die are independent events.
Dependent Events: Events are dependent if the outcome of one event influences the outcome of another. Drawing cards from a deck without replacement is an example, where the result of the first draw affects the probabilities of the subsequent draws.
Conditional Probability: This is the probability of one event occurring given that another event has already occurred. It is crucial in problems where events are linked.

How to Utilize Probability Theory with Practical Methods

Approaching Probability Assignments

1. Analyzing the Problem: When you first encounter a probability assignment, it's important to carefully read and understand the problem. Identify the type of probability involved—whether it is theoretical, experimental, or conditional—and determine whether the events are independent or dependent.

2. Breaking Down the Problem: Probability problems can often seem daunting, but they become much more manageable when broken down into smaller, more straightforward tasks. For instance, if you're asked to calculate the probability of multiple events occurring, start by calculating the probability of each individual event, then combine them using the appropriate rules.

3. Applying Probability Rules: There are several key rules in probability that you’ll frequently use:

The Addition Rule: Used when calculating the probability of either of two events occurring.
The Multiplication Rule: Used when calculating the probability of both of two events occurring, particularly if they are independent.
Complementary Probability: Sometimes, it's easier to calculate the probability of an event not occurring, and then subtract this from one to find the probability of the event occurring.

These rules are the foundation for solving more complex problems.

4. Utilizing Probability Distributions: Probability distributions describe how probabilities are distributed over the values of a random variable. There are different types of distributions depending on the nature of the variable. For example, a binomial distribution is used when there are two possible outcomes (like success or failure), while a normal distribution is used for continuous variables that follow a bell-shaped curve.

Understanding how to work with these distributions is key to solving probability problems, especially in assignments that involve data analysis or interpretation.

5. Practice with Real-World Scenarios: Probability is not just about solving abstract problems; it’s a tool for understanding real-world situations. Try applying probability concepts to everyday events. For example, calculate the likelihood of getting stuck in traffic on your way to school, or the chances of your favorite team winning a game. Practicing with real-world examples helps solidify your understanding and makes abstract concepts more relatable.

Common Probability Assignments and How to Tackle Them

Random Walks: A random walk is a process where an entity moves step-by-step in random directions. In assignments, random walks often involve movement across a grid or a graph. To solve such problems, focus on understanding the structure of the grid or graph and how the entity’s movement is governed by probability. These types of problems can involve calculating the likelihood of reaching a certain point or determining the expected number of steps to reach a destination.
Markov Chains: Markov chains are mathematical systems that transition from one state to another, with the probability of each state depending only on the current state. These are commonly used in assignments involving sequences of events or states, such as predicting weather patterns or analyzing board games. To solve Markov chain problems, you need to understand the concept of transition probabilities and how to construct and analyze a transition matrix.
Expected Values: The expected value is a fundamental concept in probability, representing the average outcome of a random variable if an experiment is repeated many times. In assignments, you might be asked to calculate the expected number of occurrences of an event or the expected value of a certain outcome. This involves multiplying each possible outcome by its probability and summing the results. Understanding expected value is crucial for making informed decisions in uncertain situations.
Stopping Times and Filtrations: In more advanced probability assignments, you may encounter concepts like stopping times and filtrations. A stopping time is a point in time when a certain event of interest occurs, and filtrations are sequences of information available up to a certain time. These concepts are often used in financial mathematics or advanced probability theory. When working on such problems, it's important to clearly define the conditions under which the stopping time is measured and understand the flow of information over time.
Covering Times: Covering time refers to the time it takes for a process, such as a random walk, to visit every possible state or location. These problems often appear in graph theory or network analysis. To tackle covering time problems, focus on understanding the structure of the graph and the behavior of the process as it moves through the states. This may involve calculating probabilities for different paths or sequences of events.

Strategies for Success

Develop a Strong Foundation: Before diving into complex problems, ensure you have a solid understanding of basic probability concepts. This includes knowing how to calculate simple probabilities, understanding the different types of probability, and being familiar with the fundamental rules.
Practice Regularly: Probability is a subject where practice truly makes perfect. The more problems you solve, the more familiar you become with different types of questions and the various strategies for solving them. Set aside regular time for practice, and don’t be afraid to tackle challenging problems—they’re the ones that will help you grow the most.
Seek Help When Needed: If you’re struggling with a particular concept or problem, don’t hesitate to seek help. This could be from a teacher, a tutor, or online resources. Understanding probability is crucial for many areas of study, so it’s worth taking the time to fully grasp the material.
Apply Probability in Real Life: Look for opportunities to apply probability concepts in your everyday life. Whether it’s calculating the odds in a game, assessing risks, or making predictions, applying what you’ve learned in practical situations can reinforce your understanding and make the concepts more intuitive.

Probability is an essential and versatile field of mathematics that finds applications in many areas, from science and engineering to finance and everyday decision-making. By understanding the fundamentals and practicing regularly, you can develop the skills needed to solve your math assignments with confidence. Remember to approach each problem methodically, breaking it down into manageable steps, and always strive to understand the underlying concepts rather than just memorizing formulas. With these strategies, you’ll be well-prepared to excel in your probability studies and apply your knowledge to real-world scenarios.

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Theorems on Probability: Introduction, Theorems, Properties, Solved Examples

Theorems on probability: The probability of the event is the chance of its occurrence. Theorems of probability tell the rules and conditions related to the addition, multiplication of two or more events. Probability density functions are statistical measures that are used to predict the likely outcome of a discrete value (e.g., the price of a stock or ETF). PDFs are typically plotted on a graph that resembles a bell curve, with the probability of the outcomes lying below the curve. A probability density function (PDF) is a continuous histogram with densities.

Basic Rules of Probability

The following probability rules are useful in understanding probability applications and performing multiple probability calculations.

Rule 1: $P(A)+P($ not $A)=1$ Rule 2: $P\left( \emptyset \right) = 0$, where $\emptyset$ is impossible event. Rule 3: $P(A)=1$, where $A$ is sure event Rule 4: $0 \leq \mathrm{P}(\mathrm{E}) \leq 1$ Rule 5: For any two events $A, B$ 1. $P(A \cup B)=P(A)+P(B)-P(A \cap B)$ 2. $P(A \cup B)=P(A)+P(B)$, where $A, B$ are mutually exclusive events.

Rule 1: The sum of two complementary events is one or we can say that, sum of probability of happening of an event and not happening of event is one.

Let $A$ be the event of a sample space $S$

We know that, the events $A$ and $A’$ will constitute the sample space.

$\Rightarrow P(A)+P\left(A^{\prime}\right)=\frac{A}{S}+\frac{A^{\prime}}{S}$

$\Rightarrow P(A)+P\left(A^{\prime}\right)=\frac{A+A^{\prime}}{S}$

$\Rightarrow P(A)+P\left(A^{\prime}\right)=\frac{S}{S}$

$\Rightarrow P(A)+P\left(A^{\prime}\right)=1$

Therefore, $P$(event)$+P$(not event)$=1$

Rule 2 : The probability of an impossible event is zero.

Let $A$ be an impossible event, then $A’$ is a sure event.

So, $P(A)=1-P\left(A^{\prime}\right)=1-1=0$

Rule 3: The probability of a sure event is one.

Let $A$ be a sure event, then the total outcomes is equals to events of sample space.

So, $P(A)=\frac{S}{S}=1$

Rule 4: For any event $A$, the limits is given by $0 \leq P(A) \leq 1$

Let $A$ be any event other than impossible event.

Then the probability of the event $A$ is $P(A) \geq 0$.

We know that, $A$ is the subset of sample space $S$.

$A \subset S$

So, $\mathrm{P}(\mathrm{A}) \leq 1$

Therefore, $0 \leq P(A) \leq 1$.

Rule 5: For two events $A$ and $B, P(A \cup B)=P(A)+P(B)-P(A \cap B)$

Let two events be $A$ and $B$

From the Venn diagram,

$A^{\prime} \cap B=B-(A \cap B)$ and $A \cap B^{\prime}=A-(A \cap B)$

Also, $A \cup B=A \cup\left(A^{\prime} \cap B\right)$

$P(A \cup B)=P\left(A \cup\left(A^{\prime} \cap B\right)\right)$

$P(A \cup B)=P(A)+P\left(A^{\prime} \cap B\right)$

$P(A \cup B)=P(A)+P(B-(A \cap B))$

$P(A \cup B)=P(A)+P(B)-P(A \cap B)$

Here, $A$ and $B$ are two not mutually exclusive events.

If $A$ and $B$ are dis-joint sets or mutually exclusive events, then $A \cap B=\varnothing$

$P(A \cap B)=P(\emptyset)=0$

$P(A \cup B)=P(A)+P(B)$

Addition Theorem of Probability

According to the addition theorem, if two events $A$ and $B$ are mutually exclusive, the probability of either $A$ or $B$ occurring is the total of the individual probabilities of $A$ and $B$.

For two mutually exclusive events $A, B$

$P(A$ or $B)=P(A)+P(B)$

Let event $A$ happen in $x$ ways, and event $B$ happen in $y$ ways.

Then the total number of happening of events is $n$, which is $n=x+y$

Thus, the probability of happening events is given by $P(A$ or $B)$.

By the definition of probability,

$P(A)=\frac{x}{n}$ and $P(B)=\frac{y}{n}$

$P(A)+P(B)=\frac{x}{n}+\frac{y}{n}=\frac{x+y}{n}=\frac{n}{n}=1$

Multiplication Theorem of Probability

According to the multiplication theorem of probability, the probability of both events $A$ and $B$ occurring is equal to the product of the probability of $B$ occurring and the conditional probability of event $A$ occurring if event $B$ occurs.

Let $A$ and $B$ be two events associated with the sample space $S$.

Then, $P(A \cap B)=P(B) \cdot P\left(\frac{A}{B}\right)$

Let $A$ and $B$ be two events associated with the sample space $S$. $A \cap B$ gives the simultaneous occurrence of two events $A$ and $B$

We know that the conditional probability of the event $A$ given that $B$ has occurred is given by $P(A \mid B)$ and is given by

$P(A \mid B)=\frac{P(A \cap B)}{P(B)}, P(B) \neq 0$

We can write the above equation as

$P(A \cap B)=P(A \mid B) \cdot P(B) \cdots(i)$

Also, we can write

$P(B \mid A)=\frac{P(B \cap A)}{P(A)}, P(A) \neq 0$

$P(A \cap B)=P(B \mid A) \cdot P(A)$

Combining $(i)$ and $(ii)$, we can write

$P(A \cap B)=P(A \mid B) \cdot P(B)=P(B \mid A) \cdot P(A)$, where $P(B), P(A) \neq 0$

Total Theorem of Probability

If $A_{1}, A_{2}, A_{3}, \ldots A_{n}$ are mutually exclusive and exhaustive events in the sample space and each has non-zero probability of occurrence. Let $B$ be any event associated with $S$, then

$P(B)=P\left(A_{1}\right) \cdot P\left(\frac{B}{A_{1}}\right)+P\left(A_{2}\right) \cdot P\left(\frac{B}{A_{2}}\right)+\cdots P\left(A_{n}\right) \cdot P\left(\frac{B}{A_{n}}\right)=\sum_{i=1}^{n} P\left(A_{i}\right) \cdot P\left(\frac{B}{A_{i}}\right)$

Given: $A_{1}, A_{2}, A_{3}, \ldots A_{n}$ are events in the sample space $S$.

$A_{1} \cup A_{2} \cup A_{3} \cup \ldots A_{n}=S \text { and } A_{1} \cap A_{2} \cap A_{3} \cap \ldots A_{n}=0$

Let $B$ be any event in the sample space $S$

$B=B \cap S$

$B = B \cap \left\{ {{A_1} \cup {A_2} \cup {A_3} \cup \ldots \ldots {A_n}} \right\}$

$B = \left\{ {B \cap {A_1}} \right\} \cup \left\{ {B \cap {A_2}} \right\} \ldots \ldots \ldots \left\{ {B \cap {A_n}} \right\}$

$P(B) = P\left( {\left\{ {B \cap {A_1}} \right\} \cup \left\{ {B \cap {A_2}} \right\} \ldots \ldots \ldots \left\{ {B \cap {A_n}} \right\}} \right)$

$P(B) = P\left\{ {B \cap {A_1}} \right\} \cup P\left\{ {B \cap {A_2}} \right\} \ldots \ldots \ldots P\left\{ {B \cap {A_n}} \right\}$

Now, by the rule of multiplication of probability,

$P\left(B \cap A_{i}\right)=P\left(A_{i}\right) \cdot P\left(\frac{B}{A_{i}}\right)$

Thus, $P(B)=P\left(A_{1}\right) \cdot P\left(\frac{B}{A_{1}}\right)+P\left(A_{2}\right) \cdot P\left(\frac{B}{A_{2}}\right)+\cdots P\left(A_{n}\right) \cdot P\left(\frac{B}{A_{n}}\right)$

Therefore, $P(B)=\sum_{i=1}^{n} P\left(A_{i}\right) \cdot P\left(\frac{B}{A_{i}}\right)$

Baye ’ s Theorem

Let $A_{1}, A_{2}, A_{3}, \ldots \ldots A_{n}$ be a set of events associated with a sample space $S$, where all the events $A_{1}, A_{2}, A_{3}, \ldots \ldots A_{n}$ have non-zero probability of occurrence. Let $B$ be any event which occurs with $A_{1}, A_{2}$ or $A_{3}$ or $\ldots \ldots A_{n}$, then according to Bayes theorem,

$P\left(A_{i} \mid B\right)=\frac{P\left(A_{i}\right) P\left(B \mid A_{i}\right)}{\sum_{k=1}^{n} P\left(A_{k}\right) \cdot P\left(B \mid A_{k}\right)}, i=1,2,3 \ldots \ldots n$

Given, $A_{1}, A_{2}, A_{3}, \ldots \ldots A_{n}$ are events in the sample space $S$ and they are exhaustive and exclusive events.

$A_{1} \cup A_{2} \cup A_{3} \cup \ldots \ldots A_{n}=S$ and $A_{1} \cap A_{2} \cap A_{3} \cap \ldots \ldots A_{n}=0$

Let $B$ be any event in the sample space $S$.

Thus , $P(B)=P\left(A_{1}\right) \cdot P\left(\frac{B}{A_{1}}\right)+P\left(A_{2}\right) \cdot P\left(\frac{B}{A_{2}}\right)+\cdots \ldots . P\left(A_{n}\right) \cdot P\left(\frac{B}{A_{n}}\right)$

Therefore, $P(B) = \sum _{i = 1}^nP\left( {{A_i}} \right) \cdot P\left( {\frac{B}{{{A_i}}}} \right) \cdots (i)$

Recalling the conditional probability, $P\left(A_{i} \mid B\right)=\frac{P\left(A_{i} \cap B\right)}{P(B)}\cdots (ii)$

Using the conditional probability formula of $P\left(B \mid A_{i}\right)$

$P\left(A_{i} \cap B\right)=P\left(B \mid A_{i}\right) \cdot P\left(A_{i}\right) \cdots(i i i)$

Substituting equations (i), (iii) in (ii), we get

$P\left(A_{i} \mid B\right)=\frac{P\left(A_{i}\right) P\left(B \mid A_{i}\right)}{\sum_{k=1}^{n} P\left(A_{k}\right) \cdot P\left(B \mid A_{k}\right)}, i=1,2,3 \ldots n$

Solved Examples on Theorems on Probability

Q.1. A jar contains $3$ red, $2$ blue, $5$ green and $6$ yellow marbles. A marble is chosen at random from the jar. After replacing a first marble, a second marble is chosen. What is the probability of choosing a green and then a yellow marble?

Ans : A jar contains $3$ red, $2$ blue,$5$ green, and $6$ yellow marbles.

Total number of marbles in a jar $=3$ red $+2$ blue $+5$ green $+6$ yellow $=16$ marbles

By, $P({\text{event}}) = \frac{{{\text{Favourable}}\,{\text{outcomes}}}}{{{\text{Total}}\,{\text{outcomes}}}}$

$P(\text {Green})=\frac{5}{16}$

$P(\text {Yellow})=\frac{6}{16}$

The probability of getting one green and one yellow marble is found by using the multiplication theorem,

$P(\text {Green and Yellow})=P(\text {Green}) \times P(\text {Yellow})$

$P(\text {Green and Yellow})=\frac{5}{16} \times \frac{6}{16}=\frac{30}{256}$

Q.2. In a class of $125$ students, $70$ passed in Mathematics and $55$ passed in Statistics. Find the probability of selecting the student who passes in two subjects.

Ans: The number of students in a class is $125$

And, $70$ passed in Mathematics and $55$ passed in Statistics.

We know that, $P({\text{event}}) = \frac{{{\text{Favourable}}\,{\text{outcomes}}}}{{{\text{Total}}\,{\text{outcomes}}}}$

$P\left( {{\text{Maths}} \cup {\text{Statistics}}} \right) = \frac{{125}}{{125}} = 1$

And, $P\left( {{\text{Maths}}} \right) = \frac{{70}}{{125}}$ and $P\left( {{\text{Statistics}}} \right) = \frac{{55}}{{125}}$

By, the theorem of probability,

$\frac{{125}}{{125}} = \frac{{70}}{{125}} + \frac{{55}}{{125}} – P\left( {{\text{Maths}} \cap {\text{Statistics}}} \right)$

$P\left( {{\text{Maths}} \cap {\text{Statistics}}} \right) = \frac{{30}}{{125}}$

Q.3. Urn- $1$ has eight red and four blue balls, whereas urn- $2$ has five red and ten blue balls. One urn is randomly selected, and two balls are drawn from it. Calculate the chances of both balls being red.

Given, urn-$1$ has $8$ red and $4$ blue balls, whereas urn-$2$ has $5$ red and $10$ blue balls.

Let $A_{1}$ be the event of selecting urn-$1$ and $A_{2}$ be the event of selecting urn-$2$.

Let $B$ be the event of selecting $2$ red balls.

The probability of getting two red balls is found using the total probability theorem.

$P(B)=P\left(A_{1}\right) \cdot P\left(\frac{B}{A_{1}}\right)+P\left(A_{2}\right) \cdot P\left(\frac{B}{A_{2}}\right)$

$P(B)=\frac{1}{2} \times \frac{8 C_{2}}{12 C_{2}}+\frac{1}{2} \times \frac{5 C_{2}}{15 C_{2}}$

$P(B)=\frac{1}{2} \times \frac{14}{33}+\frac{1}{2} \times \frac{2}{21}$

$P(B)=\frac{20}{77}$

Hence, the probability of getting two red balls is $\frac{20}{77}$.

Q.4. Suppose the probability of an event $A$ is $0.1$ . Find the probability of not getting the event $A$.

Ans: Given: The probability of $A$ is $0.1$.

Probability of not getting an event $[P(\operatorname{not} A)]$ and probability of getting event $\mathrm{A}$ are complementary events.

So, by the theorem of probability,

$P(A)+P(\operatorname{not} A)=1$

$P(\operatorname{not} A)=1-P(A)=1-0.1=0.9$

Hence, the probability of not getting event $A$ is $0.9$

Q.5. There are two machines in a factory: I and II. Machine-I produces $40\%$ of the production, whereas Machine-II produces $60\%$ of the output. In addition, $4\%$ of goods produced by Machine-I and $5\%$ of things produced by Machine-II are defective. Find the chance that an item is defective if it is drawn at random.

Ans: Given, machine I produces $40 \%$ of the production and $4 \%$ are defective. Machine II produces $60 \%$ of the production and $5 \%$ are defective.

Let $A_{1}$ be the event of selecting machine $I$ and $A_{2}$ be the event of selecting machine II.

Let $B$ be the event of selecting a defective item.

The probability of getting a defective item is found using the total probability theorem.

$P(B)=0.4 \times 0.04+0.6 \times 0.05$

$P(B)=0.046$

Hence, the probability of getting a defective item is $0.046$

Probability is the chance of getting things to happen. There are various terms associated with probability, such as random experiment, sample space, event, outcome, impossible and sure events. There are five theorems in a probability, such as the probability of impossible and sure events is $0$ and $1$. The sum of probabilities of complementary events is one.

The addition theorem of probability states that it is the sum of probabilities of two mutually exclusive events and the multiplication theorem of probability is the product of independent events.

Frequently Asked Questions (FAQs)

Ans : The major two theorems of probability are the addition theorem of probability and multiplication theorem of probability.

Ans: The three types of probability are (i) Theoretical probability (ii) Experimental probability (iii) Axiomatic probability

Q.3. What is the addition theorem of probability? Ans : According to the addition theorem, if two events $A$ and $B$ are mutually exclusive, the probability of either $A$ or $B$ occurring is the total of the individual probabilities of $A$ and $B$

Q.4. What is the concept of probability? Ans : Probability is the mathematical concept of studying uncertain things. It is the ratio of favourable outcomes to the total number of outcomes.

Q.5. What is the multiplication theorem of probability? Ans : According to the multiplication theorem, the probability that two independent events $A$ and $B$ will occur is equal to the product of their probabilities.

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Probabilities in math are very important due to its application in the various works of life. Probability is finding the best probable case from a group of probable cases. It is guessing the best chance from a group of chances. The students have to study this subject at the various stages of their life, the basic form of probability starts at the school level and the complexities with the subject only increase as the student progresses to the more advanced level. Probability is used in various fields like risk assessment; it is utilized in the financial markets, pathway analysis, gambling games, business decisions, insurance law, medical test, social science, telephone network, call centers, airline company, etc. The academic curriculum of the course requires that the student submits several assignments and homework during the year. This becomes problematic because of many reasons and therefore, the student seeks professional probability assignment help.

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The 4 Rules of Probability

The four basic rules of probability are necessary as the number of variables grows, it becomes difficult to calculate. The basic probability rule is that a probability always occurs between 0 and 1. The four rules of probability are described below.

Addition Rule - This rule of probability occurs when we have two situations and we want to know the probability of one of the two situations happening, we use this rule of probability. The rule states that the probability of Occurrence A or Occurrence B is equal to the probability of Occurrence A plus the probability of Occurrence B minus the probability of Occurrence A and B. For more on the probability rules and examples seek the assistance of our mathematicians in our probability assignment help service.
Complementary Rule - This rule occurs when there is an event that is the complement of the other event. If there is an event A then the rule would be the chances of event A not occurring is equal to one minus the chances of event A occurring. Probabilities in math are an important concept and sometimes understanding them can be a little taxing, therefore, we at this company provide the best probability assignment help that will solve all your queries and provide you with the knowledge that you crave.
Subtraction Rule - As we already know that the rule of the probability of events occurring is applicable between 0 and 1 and also that the sum of the possibilities of the events occurring is 1. Therefore, the rule of subtraction postulates that the probability of event A occurring is equal to 1 minus the probability of event A not occurring. We know that understanding these rules can be a difficult task and therefore we have devised a service called the probability assignment help service that can help you.
Multiplication Rule - This rule of probability is applied to a situation where two events cross paths or the probability of two events occurring together is to be found out. The rule states that the probability of event A and event B occurring together is equal to the probability of event A occurring multiplied by the probability of event B occurring, in the event that A has already occurred. To learn more about this rule and many other rules that were not mentioned in this brief description take the assistance of probability assignment help service.
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ASSIGNMENT MINOR Q. 1 Apply Descartes' rule of signs to examine the nature of the roots of Equations (a) x 4 + 2 x 2 + 3 x − 1 = 0 (b) x 6 + x 4 + x 2 + x + 3 = 0 Q.2. Given that the sum of two of the roots is zero. Then solve (a) 2 x 4 + 8 x 3 + 3 x 2 + 4 x + 1 = 0 Q. 3 Find the equation whose roots are the roots of x 4 − 8 x 2 + 8 x + 6 = 0 , each decreased by 2 . Q. 4 Determine x and solve the equation if the roots are in arithmetic progression. (i) 8 x 3 − 12 x 2 − k x + 3 = 0 (11) x 4 − 8 x 3 + k x 2 + 8 x − 15 = 0

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Question Text	x4+2x2+3x−1=0 (b) x6+x4+x2+x+3=0 Q.2. Given that the sum of two of the roots is zero. Then solve (a) 2x4+8x3+3x2+4x+1=0 Q. 3 Find the equation whose roots are the roots of x4−8x2+8x+6=0, each decreased by 2 . Q. 4 Determine x and solve the equation if the roots are in arithmetic progression. (i) 8x3−12x2−kx+3=0 (11) x4−8x3+kx2+8x−15=0
Updated On	Aug 26, 2024
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Supplementary information:, tables available on the cms website, i. executive summary and background, a. executive summary, 1. purpose and legal authority, 2. summary of the major provisions, a. continuation of the low wage index hospital policy, b. separate ipps payment for establishing and maintaining access to essential medicines, c. dsh payment adjustment, additional payment for uncompensated care, and supplemental payment, d. adoption of the patient safety structural measure in the hospital iqr program and pchqr program, e. updated hospital consumer assessment of healthcare providers and systems (hcahps) survey measure in the hospital iqr program, hospital vbp program, and pchqr program, f. hospital value-based purchasing (vbp) program, g. hospital inpatient quality reporting (iqr) program, h. pps-exempt cancer hospital quality reporting (pchqr) program, i. long-term care hospital quality reporting program (ltch qrp), j. medicare promoting interoperability program, k. proposed distribution of additional residency positions under the provisions of section 4122 of subtitle c of the consolidated appropriations act, 2023 (caa, 2023), l. extension of the medicare-dependent, small rural hospital (mdh) program and the temporary changes to the low-volume hospital payment adjustment, m. transforming episode accountability model (team), n. maternity care request for information (rfi), o. conditions of participation requirements for hospitals and critical access hospitals to report acute respiratory illnesses, p. changes to the severity level designation for z codes describing inadequate housing and housing instability, 3. summary of costs, transfers, savings, and benefits, b. background summary, 1. acute care hospital inpatient prospective payment system (ipps), 2. hospitals and hospital units excluded from the ipps, 3. long-term care hospital prospective payment system (ltch pps), 4. critical access hospitals (cahs), 5. payments for graduate medical education (gme), c. summary of provisions of recent legislation that are implemented in this final rule, 1. the consolidated appropriations act, 2023 (caa 2023; pub. l. 117-328 ), 2. the consolidated appropriations act, 2024 (caa, 2024; pub. l. 118-42 ), d. issuance of a notice of proposed rulemaking and summary of the proposed provisions, 1. proposed changes to ms-drg classifications and recalibrations of relative weights, 2. proposed changes to the hospital wage index for acute care hospitals, 3. payment adjustment for medicare disproportionate share hospitals (dshs) for fy 2025, 4. other decisions and proposed changes to the ipps for operating costs, 5. proposed fy 2025 policy governing the ipps for capital-related costs, 6. proposed changes to the payment rates for certain excluded hospitals: rate-of-increase percentages, 7. proposed changes to the ltch pps, 8. proposed changes relating to quality data reporting for specific providers and suppliers, 9. other proposals and comment solicitations included in the proposed rule, 10. other provisions of the proposed rule, 11. determining prospective payment operating and capital rates and rate-of-increase limits for acute care hospitals, 12. determining prospective payment rates for ltchs, 13. impact analysis, 14. recommendation of update factors for operating cost rates of payment for hospital inpatient services, 15. discussion of medicare payment advisory commission recommendations, e. public comments received in response to the fy 2025 ipps/ltch pps proposed rule, 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. changes to specific ms-drg classifications, 1. discussion of changes to coding system and basis for fy 2025 ms-drg updates, a. conversion of ms-drgs to the international classification of diseases, 10th revision (icd-10), b. basis for fy 2025 ms-drg updates, 2. pre-mdc ms-drg 018 chimeric antigen receptor (car) t-cell and other immunotherapies, 3. mdc 01 (diseases and disorders of the nervous system), a. logic for ms-drgs 023 through 027, b. intraoperative radiation therapy (iort), 4. mdc 05 (diseases and disorders of the circulatory system), a. concomitant left atrial appendage closure and cardiac ablation, b. neuromodulation device implant for heart failure (barostim tm baroreflex activation therapy), c. endovascular cardiac valve procedures, d. ms-drg logic for ms-drg 215, 5. mdc 06 (diseases and disorders of the digestive system): excision of intestinal body parts, 6. mdc 08 (diseases and disorders of the musculoskeletal system and connective tissue), a. ms-drg logic for ms-drgs 456, 457, and 458, b. interbody spinal fusion procedures, 7. mdc 10 (endocrine, nutritional and metabolic diseases and disorders): resection of right large intestine, 8. mdc 15 (newborns and other neonates with conditions originating in perinatal period): ms-drg 795 normal newborn, 9. mdc 17 (myeloproliferative diseases and disorders, poorly differentiated neoplasms): acute leukemia, 10. review of procedure codes in ms-drgs 981 through 983 and 987 through 989, 11. operating room (o.r.) and non-o.r. procedures, a. background, b. non-o.r. procedures to o.r. procedures, (1) laparoscopic biopsy of intestinal body parts, (2) laparoscopic biopsy of gallbladder and pancreas, 12. changes to the ms-drg diagnosis codes for fy 2025, a. background of the cc list and the cc exclusions list, b. overview of comprehensive cc/mcc analysis, c. changes to severity levels, 1. sdoh—inadequate housing/housing instability, 2. causally specified delirium, d. additions and deletions to the diagnosis code severity levels for fy 2025, e. cc exclusions list for fy 2025, part 3: secondary diagnosis cc/mcc severity exclusions in select ms-drgs, 13. changes to the icd-10-cm and icd-10-pcs coding systems, 14. changes to the surgical hierarchies, 15. maintenance of the icd-10-cm and icd-10-pcs coding systems, 16. replaced devices offered without cost or with a credit, b. changes for fy 2025, 17. out of scope public comments received, d. recalibration of the fy 2025 ms-drg relative weights, 1. data sources for developing the relative weights, 2. methodology for calculation of the relative weights, b. relative weight calculation for ms-drg 018, d. cap for relative weight reductions, 3. development of national average cost-to-charge ratios (ccrs), e. add-on payments for new services and technologies for fy 2025, 1. background, a. new technology add-on payment criteria, (1) newness criterion, (2) cost criterion, (3) substantial clinical improvement criterion, b. alternative inpatient new technology add-on payment pathway, (1) alternative pathway for certain transformative new devices, (2) alternative pathway for certain antimicrobial products, c. additional payment for new medical service or technology, d. evaluation of eligibility criteria for new medical service or technology applications, e. new technology liaisons, f. application information for new medical services or technologies, 2. public input before publication of a notice of rulemaking on add-on payments, 3. icd-10-pcs section “x” codes for certain new medical services and technologies, 4. fy 2025 status of technologies receiving new technology add-on payments for fy 2024, 5. fy 2025 applications for new technology add-on payments (traditional pathway), a. casgevy tm (exagamglogene autotemcel) first indication: sickle cell disease (scd), b. casgevy tm (exagamglogene autotemcel) second indication: transfusion-dependent β-thalassemia (tdt), c. duragraft® (vascular conduit solution), d. elrexfio tm (elranatamab-bcmm) and talvey tm (talquetamab-tgvs), e. flopatch fp120, f. hepzato tm kit (melphalan for injection/hepatic delivery system), g. lantidra tm (donislecel-jujn (allogeneic pancreatic islet cellular suspension for hepatic portal vein infusion)), h. amtagvi tm (lifileucel), i. lyfgenia tm (lovotibeglogene autotemcel), j. quicktome software suite (quicktome neurological visualization and planning tool), 6. fy 2025 applications for new technology add-on payments (alternative pathways), a. annalise enterprise computed tomography brain (ctb) triage—obstructive hydrocephalus (oh), b. astar ® system, c. edwards evoque tm tricuspid valve replacement system (transcatheter tricuspid valve replacement system), d. gore® excluder® thoracoabdominal branch endoprosthesis (tambe device), e. limflow tm system, f. paradise tm ultrasound renal denervation system, g. pulseselect tm pulsed field ablation (pfa) loop catheter, h. symplicity spyral tm multi-electrode renal denervation catheter, i. triclip tm g4, j. vader® pedicle system, k. zevtera tm (ceftobiprole medocaril), 7. other comments, 8. change to the method for determining whether a technology would be within its 2- to 3-year newness period when considering eligibility for new technology add-on payments, 9. change to the requirements defining an active fda marketing application for the purpose of new technology add-on payment application eligibility, 10. change to the calculation of the inpatient new technology add-on payment for gene therapies indicated for sickle cell disease, iii. changes to the hospital wage index for acute care hospitals, 1. legislative authority, 2. core-based statistical areas (cbsas) for the fy 2025 hospital wage index, b. implementation of revised labor market area delineations, 1. micropolitan statistical areas, 2. metropolitan divisions, 3. change to county-equivalents in the state of connecticut, 4. urban counties that become rural under the revised omb delineations, 5. rural counties that become urban under the revised omb delineations, 6. urban counties that move to a different urban cbsa under the revised omb delineations, 7. transition, c. worksheet s-3 wage data for the fy 2025 wage index, 1. cost reporting periods beginning in fy 2021 for fy 2025 wage index, 2. use of wage index data by suppliers and providers other than acute care hospitals under the ipps, 3. verification of worksheet s-3 wage data, 4. process for requests for wage index data corrections, a. process for hospitals to request wage index data corrections, b. process for data corrections by cms after the january 31 public use file (puf), d. method for computing the fy 2025 unadjusted wage index, e. occupational mix adjustment to the fy 2025 wage index, 1. use of new 2022 medicare wage index occupational mix survey for the fy 2025 wage index, 2. calculation of the occupational mix adjustment for fy 2025, 3. implementation of the occupational mix adjustment and the fy 2025 occupational mix adjusted wage index, f. hospital redesignations and reclassifications, 1. urban to rural reclassification under section 1886(d)(8)(e) of the act, implemented at § 412.103, a. update to rural criteria at § 412.103(a)(1), b. policy for canceling § 412.103 reclassifications of terminated providers, 2. general policies and effects of mgcrb reclassification and treatment of dual reclassified hospitals, a. revision to allow § 412.103 hospitals to use geographic area or rural area for reclassification, 3. mgcrb reclassification issues for fy 2025, a. fy 2025 reclassification application requirements and approvals, b. effects of implementation of revised omb labor market area delineations on reclassified hospitals, (1) background, (2) assignment policy for hospitals reclassified to a cbsa where one or more counties move to the rural area or one or more rural counties move into the cbsa, (3) assignment policy for hospitals reclassified to a cbsa where the cbsa number changes, or the cbsa is subsumed by another cbsa, (4) assignment policy for hospitals reclassified to cbsas where one or more counties move to a new or different urban cbsa, (5) assignment policy for hospitals reclassified to cbsas reconfigured due to the migration to connecticut planning regions, d. change to timing of withdrawals at 412.273(c), 4. redesignations under section 1886(d)(8)(b) of the act, a. lugar status determinations, b. effects of implementation of revised omb labor market area delineations on redesignations under section 1886(d)(8)(b) of the act, g. wage index adjustments: rural floor, imputed floor, state frontier floor, out-migration adjustment, low wage index, and cap on wage index decrease policies, 1. rural floor, 2. imputed floor, 3. state frontier floor for fy 2025, 4. out-migration adjustment based on commuting patterns of hospital employees, 5. continuation of the low wage index hospital policy and budget neutrality adjustment, 6. cap on wage index decreases and budget neutrality adjustment, h. fy 2025 wage index tables, i. labor-related share for the fy 2025 wage index, iv. payment adjustment for medicare disproportionate share hospitals (dshs) for fy 2025 (§ 412.106), a. general discussion, b. eligibility for empirically justified medicare dsh payments and uncompensated care payments, c. empirically justified medicare dsh payments, d. supplemental payment for indian health service (ihs) and tribal hospitals and puerto rico hospitals, e. uncompensated care payments, 1. calculation of factor 1 for fy 2025, 2. calculation of factor 2 for fy 2025, b. factor 2 for fy 2025, 3. calculation of factor 3 for fy 2025, a. general background, b. background on the methodology used to calculate factor 3 for fy 2023 and subsequent years, (1) scaling factor, (2) new hospital policy for purposes of factor 3, (3) newly merged hospital policy, (4) ccr trim methodology, (5) uncompensated care data trim methodology, c. methodology for calculating factor 3 for fy 2025, • new hospital policy for purposes of factor 3, • newly merged hospital policy for purposes of factor 3, d. per-discharge amount of interim uncompensated care payments for fy 2025, e. process for notifying cms of merger updates and to report upload issues, f. impact on medicare dsh payment adjustment of implementation of new omb labor market delineations, g. withdrawal of 42 cfr 412.106 (fy 2004 and prior fiscal years) to the extent it included only “covered days” in the ssi ratio, v. other decisions and changes to the ipps for operating costs, a. changes to ms-drgs subject to postacute care transfer policy and ms-drg special payments policies (§ 412.4), 2. changes for fy 2025, b. changes in the inpatient hospital update for fy 2025 (§ 412.64(d)), 1. fy 2025 inpatient hospital update, 2. fy 2025 puerto rico hospital update, c. rural referral centers (rrcs) annual updates to case-mix index (cmi) and discharge criteria (§ 412.96), 1. case-mix index (cmi), 2. discharges, 3. qualification under the discharge criterion for osteopathic hospitals, d. payment adjustment for low-volume hospitals (§ 412.101), 2. extension of temporary changes to low-volume hospital payment definition and payment adjustment methodology and conforming changes to regulations, 3. payment adjustment for the portion of fy 2025 beginning on january 1, 2025, and subsequent fiscal years, 4. process for requesting and obtaining the low-volume hospital payment adjustment fy 2025, e. changes in the medicare-dependent, small rural hospital (mdh) program (§ 412.108), 1. background for the mdh program, 2. implementation of legislative extension of mdh program, 3. expiration of the mdh program, f. payment for indirect and direct graduate medical education costs (§§ 412.105 and 413.75 through 413.83), 2. distribution of additional residency positions under the provisions of section 4122 of subtitle c of the consolidated appropriations act, 2023 (caa, 2023), a. overview, b. determinations required for the distribution of residency positions, (1) determination that a hospital has a “demonstrated likelihood” of filling the positions.

(2) Determination That a Hospital Is Located or Treated as Being Located in a Rural Area (Category One)
(3) Determination of Hospitals for Which the Reference Resident Level of the Hospital Is Greater Than the Otherwise Applicable Resident Limit (Category Two)
(4) Determination of Hospitals Located in States With New Medical Schools, or Additional Locations and Branch Campuses (Category Three)
(5) Determination of Hospitals That Serve Areas Designated as Health Professional Shortage Areas Under Section 332(a)(1)(A) of the Public Health Service Act (Category Four)
(6) Determination of a Qualifying Hospital
c. Number of Residency Positions Made Available to Hospitals and Limitation on Individual Hospitals
(1) Number of Residency Positions Made Available and Distribution for Psychiatry or Psychiatry Subspecialty Residencies
(2) Pro Rata Distribution and Limitation on Individual Hospitals
(3) Prioritization of Applications by HPSA Score
(4) Requirement for Rural Hospitals To Expand Programs
d. Distributing At Least 10 Percent of Positions to Each of the Four Categories
e. Hospital Attestation to National CLAS Standards
f. Payment of Additional FTE Residency Positions Awarded Under Section 4122 of the CAA, 2023
g. Aggregation of Additional FTE Residency Positions Awarded Under Section 4122 of the CAA, 2023
h. Conforming Regulation Amendments for 42 CFR 412.105 and 42 CFR 413.79
i. Prohibition on Administrative and Judicial Review
j. Application Process for Receiving Increases in FTE Resident Caps
3. Proposed Modifications to the Criteria for New Residency Programs and Requests for Information
a. Newness of Residents
b. Summary of Public Comments
c. Request for Information
4. Technical Fixes to the DGME Regulations
a. Correction of Cross-References to § 413.79(f)(7)
b. Removal of Obsolete Regulations Under § 413.79(d)(6)
c. Correction of Typographical Errors at § 413.79(k)(2)(i)
5. Notice of Closure of Teaching Hospital and Opportunity To Apply for Available Slots
b. Notice of Closure of Sacred Heart Hospital Located in Eau Claire, WI, and the Application Process—Round 23
d. Application Process for Available Resident Slots
6. Reminder of Core-Based Statistical Area (CBSA) Changes and Application to GME Policies
G. Reasonable Cost Payment for Nursing and Allied Health Education Programs (§ 413.85 and 413.87)
2. Medicare Advantage Nursing and Allied Health Education Payments
H. Payment Adjustment for Certain Clinical Trial and Expanded Access Use Immunotherapy Cases (§§ 412.85 and 412.312)
I. Changes to the Calculation of the IPPS Add-On Payment for Certain End-Stage Renal Disease (ESRD) Discharges (§ 412.104)
J. Separate IPPS Payment for Establishing and Maintaining Access to Essential Medicines
1. Overview
2. Proposed List of Essential Medicines
3. Hospital Eligibility
4. Size of the Buffer Stock
5. Separate Payment Under IPPS for Establishing and Maintaining Access to Buffer Stocks of Essential Medicines
6. Public Comments
7. Policy Summary
K. Hospital Readmissions Reduction Program
1. Regulatory Background
2. Notice of No Program Proposals or Updates
L. Hospital Value-Based Purchasing (VBP) Program
b. FY 2025 Program Year Payment Details
2. Previously Adopted Quality Measures for the Hospital VBP Program
3. Baseline and Performance Periods for the FY 2026 Through FY 2030 Program Years
b. Summary of Baseline and Performance Periods for the FY 2026 Through FY 2030 Program Years
4. Performance Standards for the Hospital VBP Program
b. Previously and Newly Estimated Performance Standards for the FY 2027 Program Year
c. Previously Established Performance Standards for Certain Measures for the FY 2028 Program Year
d. Previously Established Performance Standards for Certain Measures for the FY 2029 Program Year
e. Newly Established Performance Standards for Certain Measures for the FY 2030 Program Year
M. Hospital-Acquired Condition (HAC) Reduction Program
2. Measures for FY 2025 and Subsequent Years in the HAC Reduction Program
N. Rural Community Hospital Demonstration Program
1. Introduction
2. Background
2. Budget Neutrality
a. Statutory Budget Neutrality Requirement
b. General Budget Neutrality Methodology
c. Budget Neutrality Methodology for the Extension Period Authorized by Public Law 116-260
(1) Methodology for Estimating Demonstration Costs for FY 2025
(2) Reconciling Actual and Estimated Costs of the Demonstration for Previous Years
(3) Total Budget Neutrality Offset Amount for FY 2025
VI. Changes to the IPPS for Capital-Related Costs
A. Overview
B. Additional Provisions
1. Exception Payments
2. New Hospitals
3. Payments for Hospitals Located in Puerto Rico
C. Annual Update for FY 2025
VII. Changes for Hospitals Excluded From the IPPS
A. Rate-of-Increase in Payments to Excluded Hospitals for FY 2025
B. Report on Adjustment (Exception) Payments
B. Critical Access Hospitals (CAHs)
2. Frontier Community Health Integration Project Demonstration
a. Introduction
b. Background and Overview
c. Intervention Payment and Payment Waivers
(1) Telehealth Services Intervention Payments
(2) Ambulance Services Intervention Payments
(3) SNF/NF Beds Expansion Intervention Payments
d. Budget Neutrality
(1) Budget Neutrality Requirement
(2) FCHIP Budget Neutrality Methodology and Analytical Approach
e. Policies for Implementing the 5-year Extension and Provisions Authorized by Section 129 of the Consolidated Appropriations Act, 2021 ( Pub. L. 116-260 )
f. Total Budget Neutrality Offset Amount for FY 2025
VIII. Changes to the Long-Term Care Hospital Prospective Payment System (LTCH PPS) for FY 2025
A. Background of the LTCH PPS
1. Legislative and Regulatory Authority
2. Criteria for Classification as an LTCH
a. Classification as an LTCH
ii. Proposed Technical Clarification
b. Hospitals Excluded From the LTCH PPS
3. Limitation on Charges to Beneficiaries
B. Medicare Severity Long-Term Care Diagnosis-Related Group (MS-LTC-DRG) Classifications and Relative Weights for FY 2025
2. Patient Classifications Into MS-LTC-DRGs
b. Changes to the MS-LTC-DRGs for FY 2025
a. General Overview of the MS-LTC-DRG Relative Weights
b. Development of the MS-LTC-DRG Relative Weights for FY 2025
C. Changes to the LTCH PPS Payment Rates and Other Changes to the LTCH PPS for FY 2025
1. Overview of Development of the LTCH PPS Standard Federal Payment Rates
2. FY 2025 LTCH PPS Standard Federal Payment Rate Annual Market Basket Update
b. Annual Update to the LTCH PPS Standard Federal Payment Rate for FY 2025
c. Adjustment to the LTCH PPS Standard Federal Payment Rate Under the Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
d. Annual Market Basket Update Under the LTCH PPS for FY 2025
D. Rebasing of the LTCH Market Basket
2. Overview of the 2022-Based LTCH Market Basket
3. Development of the 2022-Based LTCH Market Basket Cost Categories and Weights
a. Use of Medicare Cost Report Data
(1) Wages and Salaries Costs
(2) Employee Benefits Costs
(3) Contract Labor Costs
(4) Pharmaceuticals Costs
(5) Professional Liability Insurance Costs
(6) Home Office/Related Organization Contract Labor Costs
(7) Capital Costs
b. Final Major Cost Category Computation
c. Derivation of the Detailed Operating Cost Weights
d. Derivation of the Detailed Capital Cost Weights
e. 2022-Based LTCH Market Basket Cost Categories and Weights
4. Selection of Price Proxies
a. Price Proxies for the Operating Portion of the 2022-Based LTCH Market Basket
(1) Wages and Salaries
(2) Employee Benefits
(3) Electricity and Other Non-Fuel Utilities
(4) Fuel: Oil and Gas
(5) Professional Liability Insurance
(6) Pharmaceuticals
(7) Food: Direct Purchases
(8) Food: Contract Purchases
(9) Chemicals
(10) Medical Instruments
(11) Rubber and Plastics
(12) Paper and Printing Products
(13) Miscellaneous Products
(14) Professional Fees: Labor-Related
(15) Administrative and Facilities Support Services
(16) Installation, Maintenance, and Repair Services
(17) All Other: Labor-Related Services
(18) Professional Fees: Nonlabor-Related
(19) Financial Services
(20) Telephone Services
(21) All Other: Nonlabor-Related Services
b. Price Proxies for the Capital Portion of the 2022-Based LTCH Market Basket
(1) Capital Price Proxies Prior to Vintage Weighting
(2) Vintage Weights for Price Proxies
c. Summary of Price Proxies of the 2022-Based LTCH Market Basket
5. FY 2025 Market Basket Update for LTCHs
6. FY 2025 Labor-Related Share
IX. Quality Data Reporting Requirements for Specific Providers
B. Crosscutting Quality Program Policies and Request for Comment
1. Adoption of the Patient Safety Structural Measure Beginning With the CY 2025 Reporting Period/FY 2027 Payment Determination for the Hospital Inpatient Quality Reporting (IQR) Program and the CY 2025 Reporting Period/FY 2027 Program Year for the PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program
b. Measure Alignment to Strategy
c. Pre-Rulemaking Process and Measure Endorsement
(1) Recommendation From the Pre-Rulemaking and Measure Review Process
(2) Endorsement and Measure Review
d. Measure Overview
e. Measure Calculation
f. Data Submission and Reporting
2. Modification of the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Survey Measure Beginning With the CY 2025 Reporting Period/FY 2027 Payment Determination for the Hospital IQR Program, the CY 2025 Reporting Period/FY 2027 Program Year for the PCHQR Program, and the FY 2030 Program Year for the Hospital VBP Program
b. Overview of the Modifications to the HCAHPS Survey Measure
c. Measure Alignment to Strategy
d. Pre-Rulemaking Process and Measure Endorsement
(1) Recommendation From Pre-Rulemaking and Measure Review Process
(2) Measure Endorsement
e. Modification of the HCAHPS Survey Measure for the Hospital IQR Program Beginning With the CY 2025 Reporting Period/FY 2027 Payment Determination and the PCHQR Program Beginning With the CY 2025 Reporting Period/FY 2027 Program Year
(1) Addition of the Care Coordination Sub-Measure in the Updated HCAHPS Survey Measure
(2) Addition of the Restfulness of Hospital Environment Sub-Measure in the Updated HCAHPS Survey Measure
(3) Addition of the Information About Symptoms Sub-Measure in the Updated HCAHPS Survey Measure
(4) Modification of the Responsiveness of Hospital Staff Sub-Measure in the Updated HCAHPS Survey Measure
(5) Removal of the Care Transition Sub-Measure in the Updated HCAHPS Survey Measure
(6) Modification to the “About You” Section for the Hospital IQR, PCHQR, and Hospital VBP Programs
f. Modifications To Scoring of the HCAHPS Survey Measure for the Hospital VBP Program for the FY 2027 Through FY 2029 Program Years
(2) Scoring Modification of the HCAHPS Survey Measure for the Hospital VBP Program for the FY 2027 Through FY 2029 Program Years
g. Adoption of the Updated HCAHPS Survey Measure and Associated Scoring Modifications in the Hospital VBP Program Beginning With the FY 2030 Program Year
(2) Adoption of the Updated HCAHPS Survey Measure in the Hospital VBP Program Beginning With the FY 2030 Program Year
(3) Modification of the Scoring of the HCAHPS Survey Measure in the Hospital VBP Program Beginning With the FY 2030 Program Year
3. Advancing Patient Safety and Outcomes Across the Hospital Quality Programs—Request for Comment
C. Requirements for and Changes to the Hospital Inpatient Quality Reporting (IQR) Program
1. Background and History of the Hospital IQR Program
2. Retention of Previously Adopted Hospital IQR Program Measures for Subsequent Payment Determinations
3. Removal of and Removal Factors for Hospital IQR Program Measures
4. Considerations in Expanding and Updating Quality Measures
5. New Measures for the Hospital IQR Program Measure Set
a. Adoption of Age Friendly Hospital Measure Beginning With the CY 2025 Reporting Period/FY 2027 Payment Determination
(2) Overview of Measure
(3) Measure Alignment to Strategy
(4) Pre-Rulemaking Process and Measure Endorsement
(a) Recommendation From the PRMR Process
(b) Measure Endorsement
(5) Measure Calculation
(6) Data Submission and Reporting
b. Adoption of Two Healthcare-Associated Infection (HAI) Measures Beginning With the CY 2026 Reporting Period/FY 2028 Payment Determination
(1) Adoption of CAUTI-Onc Measure Beginning With the CY 2026 Reporting Period/FY 2028 Payment Determination
(a) Background
(b) Overview of Measure
(c) Measure Alignment to Strategy
(d) Pre-rulemaking Process and Measure Endorsement
(i) Recommendation from the PRMR Process
(ii) Measure Endorsement
(e) Measure Specifications
(f) Data Submission and Reporting
(2) Adoption of CLABSI-Onc Measure Beginning With the CY 2026 Reporting Period/FY 2028 Payment Determination
(i) Recommendation From the PRMR Process
c. Adoption of Hospital Harm—Falls With Injury eCQM Beginning With the CY 2026 Reporting Period/FY 2028 Payment Determination
(4) Pre-rulemaking Process and Measure Endorsement
(5) Measure Specifications
d. Adoption of Hospital Harm—Postoperative Respiratory Failure eCQM Beginning With the CY 2026 Reporting Period/FY 2028 Payment Determination
e. Adoption of Thirty-day Risk-Standardized Death Rate Among Surgical Inpatients With Complications (Failure-to-Rescue) Measure Beginning With the FY 2027 Payment Determination
6. Measure Removals for the Hospital IQR Program Measure Set
a. Removal of Death Among Surgical Inpatients With Serious Treatable Complications (CMS PSI 04) Measure Beginning With the FY 2027 Payment Determination
b. Removal of Four Clinical Episode-Based Payment Measures Beginning With the FY 2026 Payment Determination
7. Refinements to Current Measures in the Hospital IQR Program Measure Set
a. Modification of the Global Malnutrition Composite Score Measure Beginning With the CY 2026 Reporting Period/FY 2028 Payment Determination
(2) Measure Alignment to Strategy
(3) Overview of Measure Update
8. Summary of Previously Finalized and New Hospital IQR Program Measures
a. Summary of Hospital IQR Program Measures for the FY 2026 Payment Determination
b. Summary of Hospital IQR Program Measures for the FY 2027 Payment Determination
c. Summary of Hospital IQR Program Measures for the FY 2028 Payment Determination
d. Summary of Hospital IQR Program Measures for the FY 2029 Payment Determination and for Subsequent Years
9. Form, Manner, and Timing of Quality Data Submission
b. Maintenance of Technical Specifications for Quality Measures
c. Reporting and Submission Requirements for eCQMs
(2) Progressive Increase of Mandatory eCQM Reporting Beginning With CY 2026 Reporting Period/FY2028 Payment Determination
(a) Proposed Reporting and Submission Requirements for eCQMs for the CY 2026 Reporting Period/FY 2028 Payment Determination
(b) Proposed Reporting and Submission Requirements for eCQMs for the CY 2027 Reporting Period/FY 2029 Payment Determination and for Subsequent Years
(c) Summary of Proposed Changes to the eCQM Reporting and Submission Requirements
10. Validation of Hospital IQR Program Data
b. Modification of eCQM Data Validation Beginning With the CY 2025 Reporting Period/FY 2028 Payment Determination
(1) Modification of eCQM Validation Scoring Beginning With CY 2025 eCQM Data Affecting the FY 2028 Payment Determination
(2) Modification of the Combined Validation Scoring Process Beginning With CY 2025 Data Affecting the FY 2028 Payment Determination
11. Data Accuracy and Completeness Acknowledgement (DACA) Requirements
12. Public Display Requirements
13. Reconsideration and Appeal Procedures
14. Hospital IQR Program Extraordinary Circumstances Exceptions (ECE) Policy
D. Changes to the PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program
2. Adoption of the Patient Safety Structural Measure Beginning With the CY 2025 Reporting Period/FY 2027 Program Year
3. Modification of the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Survey Measure Beginning With the CY 2025 Reporting Period/FY 2027 Program Year
4. Summary of Previously Adopted and Newly Finalized PCHQR Program Measures for the CY 2025 Reporting Period/FY 2027 Program Year and Subsequent Years
5. New Start Date for Public Display of the Hospital Commitment to Health Equity Measure
6. Summary of Previously Finalized Public Display Policies and Newly Finalized Public Display Start Date Change for the PCHQR Program
E. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
1. Background and Statutory Authority
2. General Considerations Used for the Selection of Quality Measures for the LTCH QRP
3. Quality Measures Currently Adopted for the FY 2025 LTCH QRP
4. Collection of Four New Items as Standardized Patient Assessment Data Elements and Modification of One Item Collected as a Standardized Patient Assessment Data Element Beginning With the FY 2028 LTCH QRP
a. Definition of Standardized Patient Assessment Data
b. Social Determinants of Health Collected as Standardized Patient Assessment Data Elements
c. Collect Four New Items as Standardized Patient Assessment Data Elements Beginning With the FY 2028 LTCH QRP
(1) Living Situation
(3) Utilities
d. Stakeholder Input
(a) Comments on the Living Situation Assessment Item
(b) Comments on the Food Assessment Items
(c) Comments on the Utilities Assessment Item
e. Modification of the Transportation Item Beginning With the FY 2028 LTCH QRP
5. LTCH QRP Quality Measure Concepts Under Consideration for Future Years: Request for Information (RFI)
1. Vaccination Composite
2. Pain Management
3. Depression
4. Other suggestions for Future Measure Concepts
1. Specific Criteria To Use In Measure Selection
2. Presentation of LTCH Star Ratings Information
3. Other Comments Received About an LTCH Star Ratings System
7. Form, Manner, and Timing of Data Submission Under the LTCH QRP
b. Reporting Schedule for the New Items as Standardized Patient Assessment Data Elements and the Modified Transportation Item Beginning With the FY 2028 LTCH QRP
c. Modification of the LCDS Admission Assessment Window to Four Days Beginning With the FY 2028 LTCH QRP
8. Policies Regarding Public Display of Measure Data for the LTCH QRP
F. Medicare Promoting Interoperability Program
1. Statutory Authority for the Medicare Promoting Interoperability Program for Eligible Hospitals and Critical Access Hospitals (CAHs)
2. Changes to the Antimicrobial Use and Resistance (AUR) Surveillance Measure Beginning With the EHR Reporting Period in Calendar Year (CY) 2025
a. Modification of the AUR Surveillance Measure Beginning With the EHR Reporting Period in CY 2025
b. Exclusions for the AU Surveillance Measure and the AR Surveillance Measure Beginning With the EHR Reporting Period in CY 2025
c. Levels of Active Engagement for the AU Surveillance Measure and AR Surveillance Measure Beginning With the EHR Reporting Period in CY 2025
d. Scoring Approach for Reporting Required Measures in the Public Health and Clinical Data Exchange Objective Beginning With the EHR Reporting Period in CY 2025
3. Overview of Objectives and Measures for the Medicare Promoting Interoperability Program for the EHR Reporting Period in CY 2025
4. Updates to the Definition of CEHRT in the Medicare Promoting Interoperability Program Beginning With the EHR Reporting Period in CY 2024
5. Changes to the Scoring Methodology Beginning With the EHR Reporting Period in CY 2025
6. Clinical Quality Measurement for Eligible Hospitals and CAHs Participating in the Medicare Promoting Interoperability Program
a. Updates to Clinical Quality Measures and Reporting Requirements in Alignment With the Hospital Inpatient Quality Reporting (IQR) Program
(2) Adoption of Additional eCQMs
b. eCQM Reporting and Submission Requirements for the CY 2026 Reporting Period and Subsequent Years
7. Potential Future Update of the SAFER Guides Measure
b. Status of Updates to SAFER Guides
8. Update the Definition of Meaningful EHR User for Healthcare Providers That Have Committed Information Blocking
9. Future Goals of the Medicare Promoting Interoperability Program
a. Future Goals With Respect to Fast Healthcare Interoperability Resources® (FHIR) APIs for Patient Access
b. Improving Cybersecurity Practices
c. Improving Prior Authorization Processes
10. Request for Information Regarding (RFI) Public Health Reporting and Data Exchange
X. Other Provisions Included in This Final Rule
A. Transforming Episode Accountability Model (TEAM)
1. General Provisions
b. Basis and Scope
c. Definitions
d. Cooperation with Model Evaluation and Monitoring
e. Rights in Data and Intellectual Property
f. Remedial Action
g. CMS Innovation Center Model Termination by CMS
h. Limitations on Review
i. Miscellaneous Provisions on Bankruptcy and Other Notifications
2. Transforming Episode Accountability Model (TEAM)—Introduction
b. Evidence Base for Model
c. ACE, BPCI, BPCI Advanced, and CJR Evaluation Results
d. CMS Innovation Center Specialty Care Strategy
3. Provisions of Transforming Episode Accountability Model
a. Model Performance Period, TEAM Participants, Participation Tracks, and Geographic Area Selection
(1) Model Performance Period
(2) Participants
(b) TEAM Participant Definition
(i) TEAM Participant Exclusions and Considerations
(c) Mandatory Participation
(d) Financial Accountability of a TEAM Participant
(i) Financial Accountability Considerations
(3) TEAM Participation Tracks
(4) Approach To Select TEAM Participants and Statistical Power
(a) Overview and Options for Geographic Area Selection
(b) Exclusion of Certain CBSAs
(c) Selection Strata
(d) Random Selection of CBSAs From Strata
b. Episodes
(2) Overview of Episodes
(3) Clinical Dimensions of Episodes
(4) Episode Category Definitions
(a) Lower Extremity Joint Replacement Episode Category
(b) Surgical Hip Femur Fracture Treatment (Excluding Lower Extremity Joint Replacement) Episode Category
(c) Coronary Artery Bypass Graft Surgery Episode Category
(d) Spinal Fusion Episode Category
(e) Major Bowel Procedure Episode Category
(5) Items and Services Included in Episodes
(a) Items and Services Excluded From Episodes
(b) Beneficiary Inclusion Criteria
(c) Initiating Episodes
(d) Episode Length
(e) Canceling Episodes
c. Quality Measures and Reporting
(2) Selection of Quality Measures
(3) Quality Measures
(a) Hybrid Hospital-Wide All-Cause Readmission Measure With Claims and Electronic Health Record Data (CMIT ID #356)
(b) CMS Patient Safety and Adverse Events Composite (CMS PSI 90) (CMIT ID #135)
(c) Hospital-Level Total Hip and/or Total Knee Arthroplasty (THA/TKA) Patient-Reported Outcome-Based Performance Measure (PRO-PM) (CMIT ID #1618)
(d) Measures Under Consideration for Future Rulemaking
(4) Form, Manner, and Timing of Quality Measures Reporting
(5) Display of Quality Measures and Availability of Information for Public
d. Pricing and Payment Methodology
(i) Previous Episode-Based Payment Methodologies
(B) BPCI Advanced
(2) Overview of TEAM Pricing and Payment Methodology
(3) Target Prices
(a) Baseline Period for Benchmarking
(b) Regional Target Prices
(c) Services That Extend Beyond an Episode
(d) Episodes That Begin in One Performance Year and End in the Subsequent Performance Year
(e) High-Cost Outlier Cap
(f) Trending Prices
(g) Discount Factor
(h) Special Considerations for Low Volume Hospitals
(i) Preliminary Target Prices
(4) Risk Adjustment and Normalization
(5) Process for Reconciliation
(a) Annual Reconciliation
(c) TEAM Participants That Experience a Reorganization Event
(d) Updating Preliminary Target Prices To Create Reconciliation Target Prices
(e) Composite Quality Score
(i) Overview
(ii) Determining Composite Quality Score
(f) Calculating the Reconciliation Payment Amount or Repayment Amount
(g) Incorporating the Composite Quality Score Into the Reconciliation Amount
(h) Limitations on NPRA
(i) Participant Responsibility for Increased Post-Episode Payments
(j) Reconciliation Payments and Repayments
(6) Appeals Process
(a) First Level Appeal Process
(b) Reconsideration Review Process
(c) CMS Administrator Review Process
e. Model Overlap
(2) Previous Episode-Based Model Overlap Policies
(3) Beneficiary Overlap
(a) Considerations for Notification Process for Shared Savings or Total Cost of Care Model
(b) Accounting for Beneficiary Overlap With New CMS Models and Programs
f. Health Equity
(2) Identification of Safety Net Hospitals
(b) Methodological Considerations
(i) CMS Innovation Center Strategy Refresh Safety Net Definition
(ii) Medicare Safety Net Index (MSNI)
(iii) Area Deprivation Index
(c) Methodology for Identifying Safety Net Hospitals
(3) Identification of Rural Hospitals
(b) Definition of Rural Hospital
(4) Beneficiary Social Risk Adjustment
(5) Health Equity Plans and Reporting
(a) Health Equity Plans
(b) Demographic Data Collection and Reporting
(c) Health-Related Social Needs Data Reporting
(6) Other Considerations
g. Financial Arrangements
(2) Overview of TEAM Financial Arrangements
(3) TEAM Collaborators
(4) Sharing Arrangements
(a) General
(b) Requirements
(c) Gainsharing Payment and Alignment Payment Conditions and Limitations
(d) Documentation Requirements
(5) Distribution Arrangements
(6) Downstream Distribution Arrangements
(7) TEAM Beneficiary Incentives
(a) Technology Provided to a TEAM Beneficiary
(b) Clinical Goals of TEAM
(c) Documentation of Beneficiary Engagement Incentives
(8) Enforcement Authority
(9) Fraud and Abuse Waiver and OIG Safe Harbor Authority
h. Waivers of Medicare Program Requirements
(1) Overview
(2) Post-Discharge Home Visits and Homebound Requirement
(3) Telehealth
(4) SNF 3-Day Rule
(a) Additional Beneficiary Protections Under the SNF 3-Day Rule Waiver
i. Monitoring and Beneficiary Protection
(2) Beneficiary Choice and Notification
(3) Monitoring for Access to Care
(4) Monitoring for Quality of Care
(5) Monitoring for Delayed Care
j. Access to Records and Record Retention
k. Data Sharing
(2) Beneficiary-Identifiable Claims Data
(a) Legal Authority To Share Beneficiary-Identifiable Data
(b) Summary and Raw Beneficiary-Identifiable Claims Data Reports
(c) Minimum Necessary Data
(3) Regional Aggregate Data
(4) Timing and Period of Baseline Period Data
(5) Timing and Period of Performance Year Data
(6) TEAM Data Sharing Agreement
(a) Content of TEAM Data Sharing Agreement
l. Referral to Primary Care Services
m. Alternative Payment Model Options
(2) TEAM APM Options
(3) Financial Arrangements List and Clinician Engagement List
n. Interoperability
o. Evaluation Approach
(2) Design and Evaluation Methods
(3) Data Collection Methods
(4) Key Evaluation Research Questions
(5) Evaluation Period and Anticipated Reports
p. Decarbonization and Resilience Initiative
(a) Climate Impact on Health
(b) Greenhouse Gas Protocol and Health
(c) Rationale for Establishing the Decarbonization and Resilience Initiative
(i) GHG Emissions are Relevant to Monitoring and Evaluating Quality Outcomes
(ii) Measuring GHG Emissions is a Key First Step to Reducing GHG Emissions Which Could Improve Quality Outcomes for Beneficiaries
(iii) Measuring GHG Emissions Could Improve Hospitals' Resilience and Beneficiaries' Continuity of Care, Both of Which Impact Quality Outcomes
(iv) GHG Emissions are Relevant to Reducing Program Expenditures
(v) GHG Emissions Impact on Medicare, Medicaid, and CHIP Populations
(2) Defining the Decarbonization and Resilience Initiative
(3) Technical Assistance
(4) Voluntary Reporting
(a) Decarbonization and Resilience Initiative Metrics
(i) Background on Scope and Metrics Sources
(ii) Scope and Sources for Metrics
(iii) Organizational Questions
(iv) Building Energy Metrics
(v) Anesthetic Gas Metrics
(vi) Transportation Metrics
(vii) Request for Information on Scope 3 Metrics and MDIs
(a) Scope 3 Metrics
(5) Report Timing
(6) Benefits for TEAM Participants Who Elect To Report in the Decarbonization and Resiliency Initiative
(a) Individualized Feedback Reports to TEAM Participants
(b) Establishment of a Publicly Reported Hospital Recognition of Decarbonization Commitment
(c) Indirect Benefits
(d) Request for Information on Potential Future Incentives for Participation in the Voluntary Decarbonization and Resilience Initiative
q. Termination of TEAM
B. Provider Reimbursement Review Board (PRRB) (§ 405.1845)
C. Maternity Care Request for Information (RFI)
2. Use of Medicare Data for the Calculation of the IPPS MS-DRG Relative Weights
3. Request for Information
D. Changes to the Payment Error Rate Measurement (PERM)
E. CoP Requirements for Hospitals and CAHs To Report Acute Respiratory Illnesses
2. Hospital Respiratory Illness Data Are and Will Continue To Be Critical for Patient Health and Safety
3. Provisions of the Proposed Regulations and Analysis and Response to Public Comments
a. Proposal To Establish Ongoing Reporting for COVID-19, Influenza, and RSV
b. Proposal To Collect Additional Elements During a PHE
c. Request for Information on Health Care Reporting to the National Syndromic Surveillance Program
XI. MedPAC Recommendations and Publicly Available Files
A. MedPAC Recommendations
B. Publicly Available Files
XII. Collection of Information Requirements
A. Statutory Requirement for Solicitation of Comments
B. Collection of Information Requirements
1. ICRs Regarding the Implementation of Section 4122 of the Consolidated Appropriations Act, 2023—Distribution of Additional Residency Positions
2. ICRs for Payment Adjustments for Establishing and Maintaining Access to Essential Medicines
3. ICRs Relating to the Hospital Readmissions Reduction Program
4. ICRs for the Hospital Value-Based Purchasing (VBP) Program
5. ICRs Relating to the Hospital-Acquired Condition (HAC) Reduction Program
6. ICRs for the Hospital Inpatient Quality Reporting (IQR) Program
b. Information Collection Burden Estimate for the Adoption of the Age Friendly Hospital Measure Beginning With the CY 2025 Reporting Period/FY 2027 Payment Determination
c. Information Collection Burden Estimate for Adoption of the Patient Safety Structural Measure Beginning With the CY 2025 Reporting Period/FY 2027 Payment Determination
d. Information Collection Burden Estimate for Adoption of Two Healthcare-Associated Infection (HAI) Measures Beginning With the CY 2026 Reporting Period/FY 2028 Payment Determination
e. Information Collection Burden for Adoption of Two eCQMs and Modification of One eCQM Beginning With the CY 2026 Reporting Period/FY 2028 Payment Determination
f. Information Collection Burden for the Modification of the eCQM Reporting Requirements Beginning With the CY 2026 Reporting Period/FY 2028 Payment Determination
g. Information Collection Burden for the Adoption of the Thirty-Day Risk-Standardized Death Rate Among Surgical Inpatients With Complications (Failure-to-Rescue) Measure Beginning With the July 1, 2023-June 30, 2025 Reporting Period/FY 2027 Payment Determination
h. Information Collection Burden for the Removal of Five Claims-Based Measures
i. Information Collection Burden for the Modification of the HCAHPS Survey Measure Beginning With the CY 2025 Reporting Period/FY 2027 Payment Determination
j. Information Collection Burden for Changes to Data Validation Policies
k. Summary of Information Collection Burden Estimates for the Hospital IQR Program
7. ICRs for PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program
a. Information Collection Burden Estimate for the Adoption of the Patient Safety Structural Measure Beginning With the CY 2025 Reporting Period/FY 2027 Program Year
b. Information Collection Burden for the Modification of the HCAHPS Survey Beginning With the CY 2025 Reporting Period/FY 2027 Program Year
c. Information Collection Burden Estimate for the Policy To Move Up the Start Date of Public Display of the Hospital Commitment to Health Equity Measure
d. Summary of Information Collection Burden Estimates for the PCHQR Program
8. ICRs for the Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
9. ICRs for the Medicare Promoting Interoperability Program
b. Information Collection Burden for the Adoption of the Two eCQMs and Modification of One eCQM Beginning With the CY 2026 Reporting Period
c. Information Collection Burden for the Modification of the eCQM Reporting Requirements Beginning With the CY 2026 Reporting Period
d. Information Collection Burden for the Separation of the AUR Surveillance Measure Into Two Measures Beginning With the EHR Reporting Period in CY 2025
e. Information Collection Burden for the Increase to the Minimum Scoring Threshold Beginning With the EHR Reporting Period in CY 2025
f. Summary of Estimates Used to Calculate the Collection of Information Burden
10. ICRs for the Transforming Episode Accountability Model
11. ICRs for Payment Error Rate Measurement (PERM)
a. ICRs Regarding § 431.970 Information Submission and Systems Access Requirements
b. ICRs Regarding § 431.992 Corrective Action Plan
c. ICRs Regarding § 431.998 Difference Resolution and Appeal Process
12. ICRs for the CoP Requirements for Hospitals and CAHs To Report Acute Respiratory Illnesses
a. Ongoing Reporting
b. PHE Reporting
List of Subjects
42 CFR Part 405
42 CFR Part 412
42 CFR Part 413
42 CFR Part 431
42 CFR Part 482
42 CFR Part 485
42 CFR Part 495
42 CFR Part 512
PART 405—FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED
PART 412—PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL SERVICES
PART 413—PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR END-STAGE RENAL DISEASE SERVICES; OPTIONAL PROSPECTIVELY DETERMINED PAYMENT RATES FOR SKILLED NURSING FACILITIES
PART 431—STATE ORGANIZATION AND GENERAL ADMINISTRATION
PART 482—CONDITIONS OF PARTICIPATION FOR HOSPITALS
PART 485—CONDITIONS OF PARTICIPATION: SPECIALIZED PROVIDERS
PART 495—STANDARDS FOR THE ELECTRONIC HEALTH RECORD TECHNOLOGY INCENTIVE PROGRAM
PART 512—STANDARD PROVISIONS FOR INNOVATION CENTER MODELS AND SPECIFIC PROVISIONS FOR CERTAIN MODELS
Subpart D [Reserved]
Subpart E—Transforming Episode Accountability Model (TEAM)
TEAM Participation
Scope of Episodes Being Tested
Pricing Methodology
Quality Measures and Composite Quality Score
Reconciliation and Review Process
Data Sharing and Other Requirements
Financial Arrangements and Beneficiary Incentives
Medicare Program Waivers
General Provisions
The following Will Not Publish in the Code of Federal Regulations Addendum—Schedule of Standardized Amounts, Update Factors, Rate-of-Increase Percentages Effective With Cost Reporting Periods Beginning on or After October 1, 2024, and Payment Rates for LTCHs Effective for Discharges Occurring on or After October 1, 2024
I. Summary and Background
II. Changes to Prospective Payment Rates for Hospital Inpatient Operating Costs for Acute Care Hospitals for FY 2025
A. Calculation of the Adjusted Standardized Amount
1. Standardization of Base-Year Costs or Target Amounts
2. Computing the National Average Standardized Amount
3. Updating the National Average Standardized Amount
4. Methodology for Calculation of the Average Standardized Amount
a. Reclassification and Recalibration of MS-DRG Relative Weights Before Cap
b. Budget Neutrality Adjustment for Reclassification and Recalibration of MS-DRG Relative Weights With Cap
c. Updated Wage Index—Budget Neutrality Adjustment
d. Reclassified Hospitals—Budget Neutrality Adjustment
f. Continuation of the Low Wage Index Hospital Policy—Budget Neutrality Adjustment
g. Permanent Cap Policy for Wage Index—Budget Neutrality Adjustment
h. Rural Community Hospital Demonstration Program Adjustment
i. Outlier Payments
(1) Methodology To Incorporate an Estimate of the Impact of Outlier Reconciliation in the FY 2025 Outlier Fixed-Loss Cost Threshold
(a) Incorporating a Projection of Outlier Reconciliations for the FY 2025 Outlier Threshold Calculation
(b) Reduction to the FY 2025 Capital Standard Federal Rate by an Adjustment Factor To Account for the Projected Proportion of Capital IPPS Payments Paid as Outliers
(2) FY 2025 Outlier Fixed-Loss Cost Threshold
(3) Other Changes Concerning Outliers
(4) FY 2023 Outlier Payments
5. FY 2025 Standardized Amount
B. Adjustments for Area Wage Levels and Cost-of-Living
1. Adjustment for Area Wage Levels
2. Adjustment for Cost-of-Living in Alaska and Hawaii
C. Calculation of the Prospective Payment Rates
1. General Formula for Calculation of the Prospective Payment Rates for FY 2025
2. Operating and Capital Federal Payment Rate and Outlier Payment Calculation
3. Hospital-Specific Rate (Applicable Only to SCHs and MDHs)
a. Calculation of Hospital-Specific Rate
b. Updating the FY 1982, FY 1987, FY 1996, FY 2002 and FY 2006 Hospital-Specific Rate for FY 2025
III. Changes to Payment Rates for Acute Care Hospital Inpatient Capital-Related Costs for FY 2025
A. Determination of the Federal Hospital Inpatient Capital-Related Prospective Payment Rate Update for FY 2025
1. Projected Capital Standard Federal Rate Update
2. Outlier Payment Adjustment Factor
3. Budget Neutrality Adjustment Factor for Changes in DRG Classifications and Weights and the GAF
4. Capital Federal Rate for FY 2025
B. Calculation of the Inpatient Capital-Related Prospective Payments for FY 2025
C. Capital Input Price Index
2. Forecast of the CIPI for FY 2025
IV. Changes to Payment Rates for Excluded Hospitals: Rate-of-Increase Percentages for FY 2025
V. Changes to the Payment Rates for the LTCH PPS for FY 2025
A. LTCH PPS Standard Federal Payment Rate for FY 2025
2. Development of the FY 2025 LTCH PPS Standard Federal Payment Rate
B. Adjustment for Area Wage Levels Under the LTCH PPS for FY 2025
2. Geographic Classifications (Labor Market Areas) Under the LTCH PPS
a. Urban Counties That Will Become Rural Under the Revised OMB Delineations
b. Rural Counties That Will Become Urban Under the Revised OMB Delineations
c. Urban Counties That Will Move to a Different Urban CBSA Under the Revised OMB Delineations
d. Change to County-Equivalents in the State of Connecticut
3. Labor-Related Share for the LTCH PPS Standard Federal Payment Rate
4. Wage Index for FY 2025 for the LTCH PPS Standard Federal Payment Rate
5. Permanent Cap on Wage Index Decreases
a. Permanent Cap on LTCH PPS Wage Index Decreases
b. Permanent Cap on IPPS Comparable Wage Index Decreases
6. Budget Neutrality Adjustments for Changes to the LTCH PPS Standard Federal Payment Rate Area Wage Level Adjustment
C. Cost-of-Living Adjustment (COLA) for LTCHs Located in Alaska and Hawaii
D. Adjustment for LTCH PPS High Cost Outlier (HCO) Cases
1. HCO Background
2. Determining LTCH CCRs Under the LTCH PPS
b. LTCH Total CCR Ceiling
c. LTCH Statewide Average CCRs
d. Reconciliation of HCO Payments
3. High-Cost Outlier Payments for LTCH PPS Standard Federal Payment Rate Cases
a. High-Cost Outlier Payments for LTCH PPS Standard Federal Payment Rate Cases
b. Fixed-Loss Amount for LTCH PPS Standard Federal Payment Rate Cases for FY 2025
(1) Charge Inflation Factor for Use in Determining the Fixed-Loss Amount for LTCH PPS Standard Federal Payment Rate Cases for FY 2025
(2) CCRs for Use in Determining the Fixed-Loss Amount for LTCH PPS Standard Federal Payment Rate Cases for FY 2025
(3) Proposed Fixed-Loss Amount for LTCH PPS Standard Federal Payment Rate Cases for FY 2025
4. High-Cost Outlier Payments for Site Neutral Payment Rate Cases
E. Update to the IPPS Comparable Amount To Reflect the Statutory Changes to the IPPS DSH Payment Adjustment Methodology
F. Computing the Adjusted LTCH PPS Federal Prospective Payments for FY 2025
VI. Tables Referenced in This Final Rule Generally Available Through the Internet on the CMS Website
Appendix A: Economic Analyses
I. Regulatory Impact Analysis
A. Statement of Need
a. Update to the IPPS Payment Rates
b. Changes for the Add-On Payments for New Services and Technologies
c. Continuation of the Low Wage Index Hospital Policy
d. Implementation of Section 4122 of the Consolidated Appropriations Act, 2023 (CAA, 2023)
e. Additional Payment for Uncompensated Care to Medicare Disproportionate Share Hospitals (DSHs) and Supplemental Payment
f. Rural Community Hospital Demonstration Program
2. Frontier Community Health Integration Project (FCHIP) Demonstration
3. Update to the LTCH PPS Payment Rates
4. Hospital Quality Programs
5. Other Provisions
a. Transforming Episode Accountability Model (TEAM)
b. Provider Reimbursement Review Board (PRRB)
c. Payment Error Rate Measurement (PERM)
d. Hospital CoP Reporting Requirements
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. Quantitative Effects of the Policy Changes Under the IPPS for Operating Costs
1. Basis and Methodology of Estimates
2. Analysis of Table I
a. Effects of the Hospital Update (Column 1)
b. Effects of the Changes to the MS-DRG Reclassifications and Relative Cost-Based Weights With Recalibration Budget Neutrality (Column 2)
c. Effects of the Wage Index Changes (Column 3)
d. Effects of MGCRB Reclassifications (Column 4)
e. Effects of the Rural Floor, Including Application of National Budget Neutrality (Column 5)
f. Effects of the Application of the Imputed Floor, Frontier State Wage Index and Out-Migration Adjustment (Column 6)
g. Effects of the Expiration of MDH Special Payment Status (Column 7)
h. Effects of All FY 2025 Changes (Column 8)
3. Impact Analysis of Table II
4. Impact Analysis of Table III: Provider Deciles by Beneficiary Characteristics
c. Social Determinants of Health (SDOH)
d. Behavioral Health
e. Disability
g. Geography
1. Effects of the Policy Changes Relating to New Medical Service and Technology Add-On Payments
a. FY 2025 Status of Technologies Approved for FY 2024 New Technology Add-On Payments
b. FY 2025 Applications for New Technology Add-On Payments
c. Total Estimated Costs for New Technology Add-On Payments in FY 2025
2. Medicare DSH Uncompensated Care Payments and Supplemental Payment for Indian Health Service Hospitals and Tribal Hospitals and Hospitals Located in Puerto Rico
3. Effects of the Changes to Low-Volume Hospital Payment Adjustment Policy
4. Effects of the Distribution of Additional Residency Positions Under the Provisions of Section 4122 of Subtitle C of the Consolidated Appropriations Act, 2023 (CAA, 2023)
5. Effects of Changes to Additional Payment for Hospitals With a High Percentage of ESRD Beneficiary Discharges
6. Estimated Effects of the IPPS Payment Adjustment for Establishing and Maintaining Access to Essential Medicines
7. Effects Under the Hospital Readmissions Reduction Program for FY 2025
8. Effects of Changes Under the FY 2025 Hospital Value-Based Purchasing (VBP) Program
9. Effects Under the HAC Reduction Program for FY 2025
10. Effects of Implementation of the Rural Community Hospital Demonstration Program in FY 2024
11. Effects of Continued Implementation of the Frontier Community Health Integration Project (FCHIP) Demonstration
12. Effects of Proposed Implementation of the Transforming Episode Accountability Model (TEAM)
a. Effects on the Medicare Program
(1) Assumptions
(2) Sensitivity Analysis
b. Effects on the Medicare Beneficiaries
c. Aggregate Effects on the Market
13. Effects of Changes the Provider Reimbursement Review Board (PRRB) Membership
14. Effects of the Removal of the Puerto Rico Exclusion From Payment Error Rate Measurement (PERM) Review
15. Effects of Hospital and CAH Reporting of Acute Respiratory Illnesses
H. Effects on Hospitals and Hospital Units Excluded From the IPPS
I. Effects of Changes in the Capital IPPS
1. General Considerations
J. Effects of Payment Rate Changes and Policy Changes Under the LTCH PPS
1. Introduction and General Considerations
2. Impact on Rural Hospitals
3. Anticipated Effects of the LTCH PPS Payment Rate Changes and Policy Changes
a. Budgetary Impact
b. Impact on Providers
c. Calculation of LTCH PPS Payments for LTCH PPS Standard Federal Payment Rate Cases
(1) Location
(2) Participation Date
(3) Ownership Control
(4) Census Region
(5) Bed Size
4. Effect on the Medicare Program
5. Effect on Medicare Beneficiaries
K. Effects of Requirements for the Hospital Inpatient Quality Reporting (IQR) Program
L. Effects of New Requirements for the PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program
M. Effects of Requirements for the Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
N. Effects of Requirements Regarding the Medicare Promoting Interoperability Program
O. Alternatives Considered
1. Alternatives Considered for the Distribution of Additional Residency Positions Under the Provisions of Section 4122 of Subtitle C of the Consolidated Appropriations Act, 2023 (CAA, 2023)
2. Alternative Considered for the Separate IPPS Payment for Establishing and Maintaining Access to Essential Medicines
3. Alternatives Considered to the LTCH QRP Reporting Requirements
4. Alternatives Considered for the Transforming Episode Accountability Model
P. Overall Conclusion
1. Acute Care Hospitals
Q. Regulatory Review Cost Estimation
II. Accounting Statements and Tables
A. Acute Care Hospitals
III. Regulatory Flexibility Act (RFA) Analysis
IV. Impact on Small Rural Hospitals
V. Unfunded Mandates Reform Act Analysis
VI. Executive Order 13132
VII. Executive Order 13175
VIII. 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 2025
A. FY 2025 Inpatient Hospital Update
B. FY 2025 SCH and MDH Update
C. FY 2025 Puerto Rico Hospital Update
D. Update for Hospitals Excluded From the IPPS for FY 2025
E. Update for LTCHs for FY 2025
III. Secretary's Recommendations
IV. MedPAC Recommendation for Assessing Payment Adequacy and Updating Payments in Traditional Medicare

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Department of Health and Human Services

Centers for medicare & medicaid services.

42 CFR Parts 405, 412, 413, 431, 482, 485, 495, and 512
[CMS-1808-F]
RIN 0938-AV34

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

Final rule.

This final rule revises the Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital-related costs of acute care hospitals; makes changes relating to Medicare graduate medical education (GME) for teaching hospitals; 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); and makes other policy-related changes.

With the exception of instruction 2 (§ 405.1845), instruction 29 (§ 482.42(e)) and instruction 31 (§ 485.640(d)), this final rule is effective October 1, 2024. The regulation at § 405.1845 is effective January 1, 2025. The regulations at §§ 482.42(e) and 485.640(d) are effective on November 1, 2024.

Donald Thompson, and Michele Hudson, (410) 786-4487 or [email protected] , Operating Prospective Payment, MS-DRG Relative Weights, Wage Index, Hospital Geographic Reclassifications, Graduate Medical Education, 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 Inpatient Critical Access Hospital (CAH) Issues.

Emily Lipkin, and Jim Mildenberger, [email protected] , Long-Term Care Hospital Prospective Payment System and MS-LTC-DRG Relative Weights Issues.

Lily Yuan, [email protected] , New Technology Add-On Payments Issues.

Mady Hue, [email protected] , and Andrea Hazeley, [email protected] , MS-DRG Classifications Issues.

Jonathan Rudy, [email protected] , Rural Community Hospital Demonstration Program Issues.

Jeris Smith, [email protected] , Frontier Community Health Integration Project (FCHIP) Demonstration Issues.

Lang Le, [email protected] , Hospital Readmissions Reduction Program—Administration Issues.

Ngozi Uzokwe, [email protected] , Hospital Readmissions Reduction Program—Measures Issues.

Jennifer Tate, [email protected] , Hospital-Acquired Condition Reduction Program—Administration Issues.

Ngozi Uzokwe, [email protected] , Hospital-Acquired Condition Reduction Program—Measures Issues.

Julia Venanzi, [email protected] , Hospital Inpatient Quality Reporting Program and Hospital Value-Based Purchasing Program—Administration Issues.

Melissa Hager, [email protected] , and Ngozi Uzokwe, [email protected] —Hospital Inpatient Quality Reporting Program and Hospital Value-Based Purchasing Program—Measures Issues Except Hospital Consumer Assessment of Healthcare Providers and Systems Issues.

Elizabeth Goldstein, [email protected] , Hospital Inpatient Quality Reporting and Hospital Value-Based Purchasing—Hospital Consumer Assessment of Healthcare Providers and Systems Measures Issues.

Jennifer Tate, [email protected] , PPS-Exempt Cancer Hospital Quality Reporting—Administration Issues.

Kristina Rabarison, [email protected] , PPS-Exempt Cancer Hospital Quality Reporting Program—Measure Issues.

Lorraine Wickiser, [email protected] , Long-Term Care Hospital Quality Reporting Program—Administration Issues.

Jessica Warren, [email protected] and Elizabeth Holland, [email protected] , Medicare Promoting Interoperability Program.

Bridget Dickensheets, [email protected] and Mollie Knight, [email protected] , LTCH Market Basket Rebasing.

Benjamin Cohen, [email protected] , Provider Reimbursement Review Board.

Nicholas Bonomo, [email protected] and Tracy Smith, [email protected] , Payment Error Rate Measurement Program.

[email protected] , Transforming Episode Accountability Model (TEAM).

Lauren Blum, [email protected] , and Kristin Shifflett, [email protected] , Conditions of Participation Requirements for Hospitals and Critical Access Hospitals to Report Acute Respiratory Illnesses.

The IPPS tables for this fiscal year (FY) 2025 final rule are available 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 2025 IPPS Final Rule Home Page” or “Acute Inpatient—Files for Download.” The LTCH PPS tables for this FY 2025 final rule are available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/LongTermCareHospitalPPS/index.html under the list item for Regulation Number CMS-1808-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 2025 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, [email protected] .

This FY 2025 IPPS/LTCH PPS final rule makes payment and policy changes under the Medicare inpatient prospective payment system (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 ( print page 68987) programs associated with Medicare IPPS hospitals, IPPS-excluded hospitals, and LTCHs. In this FY 2025 final rule, we are finalizing our proposal to continue policies to address wage index disparities impacting low wage index hospitals. We are also finalizing our proposed changes relating to Medicare graduate medical education (GME) for teaching hospitals and new technology add-on payments.

We are finalizing our proposal of a separate IPPS payment for establishing and maintaining access to essential medicines.

In the Hospital Value-Based Purchasing (VBP) Program, we are finalizing our proposal to modify scoring of the Person and Community Engagement Domain for the FY 2027 through FY 2029 program years to only score six unchanged dimensions of the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Survey measure, and we are finalizing our proposal to adopt the updated HCAHPS Survey measure in the Hospital VBP Program beginning with the FY 2030 program year after the updated measure has been publicly reported under the Hospital Inpatient Quality Reporting (IQR) Program for 1 year. We are also finalizing our proposal to modify scoring on the HCAHPS Survey measure beginning with the FY 2030 program year to incorporate the updated HCAHPS Survey measure into nine survey dimensions. Lastly, we provide previously and newly established performance standards for the FY 2027 through FY 2030 program years for the Hospital VBP Program.

In the Hospital IQR Program, we are finalizing our proposals to add seven new measures, with modifications to our proposal to adopt the Patient Safety Structural measure, modify two existing measures including the HCAHPS Survey measure, and remove five measures. We are also finalizing our proposed changes to the validation process for the Hospital IQR Program data. We are finalizing the proposed reporting and submission requirements for electronic clinical quality measures (eCQMs) with modifications.

In the PPS-Exempt Cancer Hospital Quality Reporting Program (PCHQR), we are finalizing the adoption of the Patient Safety Structural measure with modification beginning with the CY 2025 reporting period/FY 2027 program year. We are also finalizing our proposed changes to the HCAHPS Survey measure and our proposal to move up the start date for publicly displaying hospital performance on the Hospital Commitment to Health Equity measure.

In the LTCH Quality Reporting Program (QRP), we are finalizing our proposals to add four assessment items to the LTCH Continuity Assessment Record and Evaluation (CARE) Data Set (LCDS) and modify one assessment item on the LCDS beginning with the FY 2028 LTCH QRP. Additionally, we are finalizing our proposal to extend the admission assessment window for the LCDS beginning with the FY 2028 LTCH QRP. Finally, we summarize the feedback we received on our requests for information on future measure concepts for the LTCH QRP and a future LTCH Star Rating system.

In the Medicare Promoting Interoperability Program, we are finalizing our proposal to separate the Antimicrobial Use and Resistance (AUR) Surveillance measure into two measures, an Antimicrobial Use (AU) Surveillance measure and an Antimicrobial Resistance (AR) Surveillance measure, beginning with the electronic health record (EHR) reporting period in CY 2025. We are also finalizing the following proposals to: increase the performance-based scoring threshold from 60 points to 70 points for the EHR reporting period in CY 2025 and from 70 points to 80 points beginning with the EHR reporting period in CY 2026; adopt two new eCQMs and modify one eCQM, in alignment with the Hospital IQR Program; and change the reporting and submission requirements for eCQMs with modifications, in alignment with the Hospital IQR Program.

We proposed the creation and testing of a new mandatory alternative payment model called the Transforming Episode Accountability Model (TEAM). The intent of TEAM is to improve beneficiary care through financial accountability for episodes categories that begin with one of the following procedures: coronary artery bypass graft surgery (CABG), lower extremity joint replacement (LEJR), major bowel procedure, surgical hip/femur fracture treatment (SHFFT), and spinal fusion. TEAM will test whether financial accountability for these episode categories reduces Medicare expenditures while preserving or enhancing the quality of care for Medicare beneficiaries. We anticipated that TEAM would benefit Medicare beneficiaries through improving the coordination of items and services paid for through Medicare fee-for-service (FFS) payments, encouraging provider investment in health care infrastructure and redesigned care processes, and incentivizing higher value care across the inpatient and post-acute care settings for the episode. We proposed to test TEAM for a 5-year model performance period, beginning January 1, 2026, and ending December 31, 2030. Under the Quality Payment Program (QPP), we anticipated that TEAM would be an Advanced Alternative Payment Model (APM)for Track 2 and Track 3 and a Merit-based Incentive Payment System (MIPS) APM for all participation tracks. We are finalizing some policies as proposed and we are finalizing others with modification. There are also certain proposed policies that we are not finalizing, and we will instead go through future rulemaking to promulgate new policies before the model start date.

We are also finalizing the proposal requiring respiratory illness reporting for hospitals and critical access hospitals as a condition of participation following the expiration of the COVID-19 public health emergency requirements.

Under various statutory authorities, we either discuss continued program implementation or make changes to the Medicare IPPS, the LTCH PPS, other related payment methodologies and programs for FY 2025 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 Balanced Budget Refinement Act of 1999 (BBRA) (Public Law (Pub. L.) 106-113) and section 307(b)(1) of the Benefits Improvement and Protection Act of 2000 (BIPA) ( Pub. L. 106-554 ) (as codified under section 1886(m)(1) of the ( print page 68988) 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.
Section 1814(l)(4) of the Act requires downward adjustments to the applicable percentage increase, beginning with FY 2015, for CAHs that do not successfully demonstrate meaningful use of certified electronic health record technology (CEHRT) for an EHR reporting period for a payment adjustment year.
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. Hospitals paid under the IPPS with approved GME programs are paid for the indirect costs of training residents in accordance with section 1886(d)(5)(B) of the Act.
Section 1886(d)(5)(F) of the Act provides for additional Medicare IPPS payments to subsection (d) hospitals that serve a significantly disproportionate number of low-income patients. These payments are known as the Medicare disproportionate share hospital (DSH) adjustment. Section 1886(d)(5)(F) of the Act specifies the methods under which a hospital may qualify for the DSH payment adjustment.
Section 1886(b)(3)(B)(viii) of the Act, which requires the Secretary to reduce the applicable percentage increase that would otherwise apply to the standardized amount applicable to a subsection (d) hospital for discharges occurring in a fiscal year if the hospital does not submit data on measures in a form and manner, and at a time, specified by the Secretary.
Section 1886(b)(3)(B)(ix) of the Act, which requires downward adjustments to the applicable percentage increase, beginning with FY 2015 (and beginning with FY 2022 for subsection (d) Puerto Rico hospitals), for eligible hospitals that do not successfully demonstrate meaningful use of CEHRT for an EHR reporting period for a payment adjustment year.
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(n) of the Act, which establishes the requirements for an eligible hospital to be treated as a meaningful EHR user of CEHRT for an EHR reporting period for a payment adjustment year or, for purposes of subsection (b)(3)(B)(ix) of the Act, for a fiscal year.
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 based on their performance on measures 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 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 an additional 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 the statutory formula for Medicare DSH payments in section 1886(d)(5)(F) of the Act if subsection (r) did not apply (“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, in the absence of section 1886(r) of the Act; (2) 1 minus the percent change in the percent of individuals who are uninsured; and (3) the 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 2 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 on quality measures 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, which provides for the establishment of standardized data reporting for certain post-acute care providers, including LTCHs.
Section 1115A of the Act authorizes the testing of innovative payment and service delivery models that preserve or enhance the quality of care furnished to Medicare, Medicaid, and Children's Health Insurance Program (CHIP) beneficiaries while reducing program expenditures.
Sections 1866 and 1902 of the Act, which requires providers of services seeking to participate in the Medicare or Medicaid program, or both, to enter into an agreement with the Secretary or the state Medicaid agency, as appropriate. Hospitals (all hospitals to which the requirements of 42 CFR part 482 apply, including short-term acute care hospitals, LTC hospitals, rehabilitation hospitals, psychiatric hospitals, cancer hospitals, and children's hospitals) and critical access hospitals (CAHs) seeking to be Medicare and Medicaid providers of services under 42 CFR part 485, subpart F , must be certified as meeting Federal participation requirements (conditions of participation (CoPs) and conditions for coverage (CfCs)). Section 1861(e) of the Act provides the patient health and safety protections established by the Secretary for hospital CoPs. Section 1820(e) of the Act provides similar authority for CAHs.

The following is a summary of the major provisions in this final rule. In ( print page 68989) 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.

To help mitigate growing wage index disparities between high wage and low wage 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 indicated our intention that this policy would 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. As discussed in section III.G.5. of the preamble of this final rule, while we are using the FY 2021 cost report data for the FY 2025 wage index, we are unable to comprehensively evaluate the effect, if any, the low wage index hospital policy had on hospitals' wage increases during the years the COVID-19 public health emergency (PHE) was in effect. We believe it is necessary to wait until we have useable data from fiscal years after the PHE before reaching any conclusions about the efficacy of the policy. Therefore, after consideration of public comments, we are finalizing our proposal that the low wage index hospital policy and the related budget neutrality adjustment would be effective for at least 3 more years, beginning in FY 2025.

As discussed in section V.J. of the preamble of this final rule, the Biden-Harris administration has made it a priority to strengthen the resilience of medical supply chains and support reliable access to products for public health, including through prevention and mitigation of medical product shortages. As a first step in this initiative, we proposed to establish a separate payment for small, independent hospitals for the IPPS shares of the additional resource costs to voluntarily establish and maintain a 6-month buffer stock of one or more of 86 essential medicines, either directly or through contractual arrangements with a pharmaceutical manufacturer, distributor, or intermediary. For the purposes of this policy, eligibility is limited to small, independent hospitals as hospitals with 100 beds or fewer that are not part of a chain organization. We are finalizing our proposal to make this separate payment in a non-budget neutral manner under section 1886(d)(5)(I) of the Act. We are also finalizing our proposal that the payment adjustments would commence for cost reporting periods beginning on or after October 1, 2024.

Under section 1886(r) of the Act, which was added by section 3133 of the Affordable Care Act, starting in FY 2014, Medicare disproportionate share hospitals (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 would have been paid as Medicare DSH payments under section 1886(d)(5)(F) of the Act if subsection (r) did not apply, is paid as additional payments after the amount is reduced for changes in the percentage of individuals that are uninsured. Each Medicare DSH that has uncompensated care 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. This additional payment is known as the uncompensated care payment.

In this final rule, we are finalizing the proposed update to our estimates of the three factors used to determine uncompensated care payments for FY 2025. We also proposed to continue 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 conjunction with more recently available data in the calculation of Factor 2, and we are finalizing this approach. Consistent with the regulation at § 412.106(g)(1)(iii)(C)( 11 ), which was adopted in the FY 2023 IPPS/LTCH PPS final rule, for FY 2025, we will use the 3 most recent years of audited data on uncompensated care costs from Worksheet S-10 of the FY 2019, FY 2020, and FY 2021 cost reports to calculate Factor 3 in the uncompensated care payment methodology for all eligible hospitals.

Beginning with FY 2023 ( 87 FR 49047 through 49051 ), we also established a supplemental payment for IHS and Tribal hospitals and hospitals located in Puerto Rico. In section IV.D. of the preamble of this final rule, we summarized the ongoing methodology for supplemental payments.

In this final rule, we are finalizing our proposal to calculate the per-discharge amount for interim uncompensated care payments for FY 2025 and subsequent fiscal years with modification. Specifically, for FY 2025, we will calculate the per-discharge amount for interim uncompensated care payments using the average of the most recent 2 years of discharge data. In light of the commenters' concerns regarding a trend of decreasing discharge volume and possible overestimation of discharges in recent years, we believe that, on balance, omitting FY 2021 data from the calculation of interim uncompensated care payments is likely to more accurately estimate FY 2025 discharges. Therefore, we are finalizing our proposal with modification. We are modifying the text of § 412.106(i)(1) to state that for FY 2025, interim uncompensated care payments will be calculated based on an average of the most recent 2 years of available historical discharge data, and, consistent with the proposed rule,, interim uncompensated care payments for FY 2026 and subsequent fiscal years will be calculated based on an average of the most recent 3 years of available historical discharge data.

The Patient Safety Structural measure is an attestation-based measure that assesses whether hospitals have a structure and culture that prioritizes safety as demonstrated by the following five domains: (1) leadership commitment to eliminating preventable harm; (2) strategic planning and organizational policy; (3) culture of safety and learning health system; (4) accountability and transparency; and (5) patient and family engagement. Hospitals will attest to whether they engage in specific evidence-based best practices within each of these domains to achieve a score from zero to five out of five points. We proposed that hospitals would be required to report this measure beginning with the CY 2025 reporting period/FY 2027 program year for the PCHQR Program and for the CY 2025 reporting period/FY 2027 payment determination for the Hospital IQR Program. We are finalizing this proposal, with a modification to one of the domains. ( print page 68990)

The updated version of the HCAHPS Survey measure aligns with the National Quality Strategy goal to bring patient voices to the forefront by incorporating feedback from patients and caregivers. We proposed that the updated HCAHPS Survey measure would be adopted for the Hospital IQR and PCHQR Programs beginning with the CY 2025 reporting period/FY 2027 payment determination and the CY 2025 reporting period/FY 2027 program year, respectively. For the Hospital VBP Program, we proposed to modify scoring on the Person and Community Engagement Domain for the FY 2027 through FY 2029 program years to only score the six dimensions of the HCAHPS Survey measure that would remain unchanged from the current version of the survey. We proposed to adopt the updated HCAHPS Survey measure beginning with the FY 2030 program year, which would result in nine HCAHPS Survey measure dimensions for the Person and Community Engagement Domain. We also proposed to modify scoring of the Person and Community Engagement Domain beginning with the FY 2030 program year to account for the proposed updates to the HCAHPS Survey measure. We are finalizing all of these proposals.

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. We proposed to modify scoring on the Person and Community Engagement Domain for the FY 2027 through FY 2029 program years while the updated HCAHPS Survey measure would be publicly reported under the Hospital IQR Program. In addition, we proposed to adopt the updated HCAHPS Survey measure beginning with the FY 2030 program year and modify scoring beginning with the FY 2030 program year to account for the updated HCAHPS Survey measure. We are finalizing these proposals.

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. In the FY 2025 IPPS/LTCH PPS proposed rule, we proposed several changes to the Hospital IQR Program. We proposed the adoption of seven new measures: (1) Patient Safety Structural measure beginning with the CY 2025 reporting period/FY 2027 payment determination; (2) Age Friendly Hospital measure beginning with the CY 2025 reporting period/FY 2027 payment determination; (3) Catheter-Associated Urinary Tract Infection (CAUTI) Standardized Infection Ratio Stratified for Oncology Locations beginning with the CY 2026 reporting period/FY 2028 payment determination; (4) Central Line-Associated Bloodstream Infection (CLABSI) Standardized Infection Ratio Stratified for Oncology Locations beginning with the CY 2026 reporting period/FY 2028 payment determination; (5) Hospital Harm—Falls with Injury eCQM beginning with the CY 2026 reporting period/FY 2028 payment determination; (6) Hospital Harm—Postoperative Respiratory Failure eCQM beginning with the CY 2026 reporting period/FY 2028 payment determination; and (7) Thirty-day Risk-Standardized Death Rate among Surgical Inpatients with Complications (Failure-to-Rescue) measure beginning with the July 1, 2023-June 30, 2025 reporting period/FY 2027 payment determination. We also proposed refinements to two measures currently in the Hospital IQR Program measure set: (1) Global Malnutrition Composite Score (GMCS) eCQM, beginning with the CY 2026 reporting period/FY 2028 payment determination; and (2) the HCAHPS Survey beginning with the CY 2025 reporting period/FY 2027 payment determination. In addition, we proposed the removal of five measures: (1) Death Among Surgical Inpatients with Serious Treatable Complications (CMS PSI 04) measure beginning with the July 1, 2023-June 30, 2025 reporting period/FY 27 payment determination; (2) Hospital-level, Risk-Standardized Payment Associated with a 30-Day Episode-of-Care for Acute Myocardial Infarction (AMI) measure beginning with the July 1, 2021-June 30, 2024 reporting period/FY 2026 payment determination; (3) Hospital-level, Risk-Standardized Payment Associated with a 30-Day Episode-of-Care for Heart Failure (HF) measure beginning with the July 1, 2021-June 30, 2024 reporting period/FY 2026 payment determination; (4) Hospital-level, Risk-Standardized Payment Associated with a 30-Day Episode-of-Care for Pneumonia (PN) measure beginning with July 1, 2021-June 30, 2024 reporting period/FY 2026 payment determination, and (5) Hospital-level, Risk-Standardized Payment Associated with a 30-Day Episode-of-Care for Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) measure beginning with the April 1, 2021-March 31, 2024 reporting period/FY 2026 payment determination. We are finalizing all of these proposals as proposed with the exception of the Patient Safety Structural measure, which we are finalizing with modifications.

Lastly, we proposed to modify eCQM data reporting and submission requirements by proposing a progressive increase in the number of mandatory eCQMs a hospital would be required to report on beginning with the CY 2026 reporting period/FY 2028 payment determination. We also proposed two changes to current policies related to validation of hospital data: (1) to implement eCQM validation scoring based on the accuracy of eCQM data beginning with the validation of CY 2025 eCQM data affecting the FY 2028 payment determination; and (2) modification of the data validation reconsideration request requirements to make medical records submission optional for reconsideration requests beginning with CY 2023 discharges/FY 2026 payment determination. We are finalizing all of these proposals as proposed with the exception of the proposed progressive increase in the number of mandatory eCQMs, which we are finalizing with modifications.

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. In the FY 2025 IPPS/LTCH PPS proposed rule, we proposed the following:

To adopt the Patient Safety Structural measure beginning with the CY 2025 reporting period/FY 2027 program year.
To modify the HCAHPS Survey measure beginning with the CY 2025 reporting period/FY 2027 program year.
To move up the start date for publicly displaying hospital performance on the Hospital Commitment to Health Equity measure from July 2026 to January 2026 or as soon as feasible thereafter.

We are finalizing all of these proposals as proposed with the ( print page 68991) exception of the Patient Safety Structural measure, which we are finalizing with modifications.

We proposed and are finalizing the following changes to the LTCH QRP: (1) add four assessment items to the LCDS beginning with the FY 2028 LTCH QRP; (2) modify one item on the LCDS beginning with the FY 2028 LTCH QRP; and (3) extend the admission assessment window for the LCDS from 3 days to 4 days beginning with the FY 2028 LTCH QRP. We also summarize the feedback we received on requests for information in the proposed rule on future measure concepts for the LTCH QRP and a future LTCH Star Rating system.

In section X.F. of the preamble of the proposed rule, we proposed several changes to the Medicare Promoting Interoperability Program. Specifically, we proposed: (1) to separate the Antimicrobial Use and Resistance (AUR) Surveillance measure into two measures, an Antimicrobial Use (AU) Surveillance measure and an Antimicrobial Resistance (AR) Surveillance measure, beginning with the EHR reporting period in CY 2025; to add a new exclusion for eligible hospitals or critical access hospitals (CAHs) that do not have a data source containing the minimal discrete data elements that are required for AU or AR Surveillance reporting; to modify the existing exclusions for the AUR Surveillance measure to apply to the proposed AU Surveillance and AR Surveillance measures, respectively; and to treat the AU Surveillance and AR Surveillance measures as new measures with respect to active engagement beginning with the EHR reporting period in CY 2025; (2) to increase the performance-based scoring threshold for eligible hospitals and CAHs reporting under the Medicare Promoting Interoperability Program from 60 points to 80 points beginning with the EHR reporting period in CY 2025; (3) to adopt two new eCQMs that hospitals can select as one of their three self-selected eCQMs beginning with the CY 2026 reporting period: the Hospital Harm—Falls with Injury eCQM and the Hospital Harm—Postoperative Respiratory Failure eCQM; (4) beginning with the CY 2026 reporting period, to modify one eCQM, the Global Malnutrition Composite Score eCQM; and (5) to modify eCQM data reporting and submission requirements by proposing a progressive increase in the number of mandatory eCQMs eligible hospitals and CAHs would be required to report on beginning with the CY 2026 reporting period. We are finalizing all proposals as proposed, with the exception of our proposals to increase the performance-based scoring threshold for eligible hospitals and CAHs, and to progressively increase the number of mandatory eCQMs required for reporting, which we are finalizing with modification. We are finalizing, with modification, an increase to the performance-based scoring threshold for eligible hospitals and CAHs from 60 points to 70 points for the EHR reporting period in CY 2025 and from 70 points to 80 points beginning with the EHR reporting period in CY 2026, and finalizing, with modification, the regulatory text accordingly. We are also finalizing, with modification, our proposal to increase the eCQM reporting requirements in the Medicare Promoting Interoperability Program for the CY 2026, CY 2027, CY 2028, and subsequent years' reporting periods. Specifically, eligible hospitals and CAHs will be required to report a total of eight eCQMs for the CY 2026 reporting period, a total of nine eCQMs for the CY 2027 reporting period, and a total of eleven eCQMs beginning with the CY 2028 reporting period.

In the proposed rule, we included a proposal to implement section 4122 of the CAA, 2023. Section 4122(a) of the CAA, 2023, amended section 1886(h) of the Act by adding a new section 1886(h)(10) of the Act requiring the distribution of additional residency positions (also referred to as slots) to hospitals. After consideration of public comments, we are finalizing this proposal, with minor modifications. We refer readers to section V.F.2. of the preamble of this final rule for a summary of the provisions of section 4122 of the CAA, 2023 that we are implementing in this final rule.

The Consolidated Appropriations Act, 2024 (CAA, 2024) ( Pub. L. 118-42 ), enacted on March 9, 2024, extended the MDH program and the temporary changes to the low-volume hospital qualifying criteria and payment adjustment under the IPPS for a portion of FY 2025. Specifically, section 306 of the CAA, 2024, further extended the modified definition of low-volume hospital and the methodology for calculating the payment adjustment for low-volume hospitals under section 1886(d)(12) of the Act through December 31, 2024. Section 307 of the CAA, 2024, extended the MDH program under section 1886(d)(5)(G) of the Act through December 31, 2024. Prior to enactment of the CAA, 2024, the low-volume hospital qualifying criteria and payment adjustment were set revert to the statutory requirements that were in effect prior to FY 2011 at the end of FY 2024 and beginning October 1, 2024, the MDH program would have no longer been in effect.

We recognize the importance of these extensions with respect to the goal of advancing health equity by addressing the health disparities that underlie the health system is one of CMS' strategic pillars [ 1 ] and a Biden-Harris Administration priority. [ 2 ] These provisions are projected to increase payments to IPPS hospitals by approximately $137 million in FY 2025.

As discussed in section X.A. of the preamble of this final rule, we are finalizing the Transforming Episode Accountability Model (TEAM). TEAM will be a 5-year mandatory model tested under the authority of section 1115A of the Act, beginning on January 1, 2026, and ending on December 31, 2030. The intent of TEAM is to improve beneficiary care through financial accountability for episode categories that begin with one of the following procedures: coronary artery bypass graft surgery (CABG), lower extremity joint replacement (LEJR), major bowel procedure, surgical hip/femur fracture treatment (SHFFT), and spinal fusion. TEAM will test whether financial accountability for these episode categories reduces Medicare expenditures while preserving or enhancing the quality of care for Medicare beneficiaries.

Under Traditional Medicare, Medicare makes separate payments to providers and suppliers for the items and services furnished to a beneficiary over the course of an episode of care. Because providers and suppliers are paid for each individual item or service delivered, providers may not be incentivized to invest in quality improvement and care coordination ( print page 68992) activities. As a result, care may be fragmented, unnecessary, or duplicative. By holding hospitals accountable for all items and services provided during an episode, providers would be better incentivized to coordinate patient care, avoid duplicative or unnecessary services, and improve the beneficiary care experience during care transitions.

Under TEAM, all acute care hospitals, with limited exceptions, located within the mandatory Core-Based Statistical Areas (CBSAs) that CMS selected for model implementation will be required to participate in TEAM. CMS will allow a one-time opportunity for hospitals that participate until the last day of the last performance period in the BPCI Advanced model or the last day of the last performance year of the CJR model, that are not located in a mandatory CBSA selected for TEAM participation to voluntarily opt into TEAM. [ 3 ] TEAM will have a 1-year glide path opportunity for all TEAM participants and a 3-year glide path opportunity for TEAM participants that are safety net hospitals, which will allow TEAM participants to ease into full financial risk. Episodes will include non-excluded Medicare Parts A and B items and services and would begin with an anchor hospitalization or anchor procedure and will end 30 days after hospital discharge. The following episode categories, when furnished by a TEAM participant, will initiate an episode in TEAM: lower extremity joint replacement, surgical hip femur fracture treatment, spinal fusion, coronary artery bypass graft, and major bowel procedure.

TEAM participants will continue to bill Medicare FFS as usual but will receive target prices for episodes prior to each performance year. Target prices will be based on 3 years of baseline data, prospectively trended forward to the relevant performance year, and calculated at the level of MS-DRG/HCPCS episode type and region. Target prices will also include a discount factor, normalization factor, retrospective trend adjustment factor, and beneficiary and provider level risk-adjustment. Performance in the model will be assessed by comparing TEAM participants' actual Medicare FFS spending during a performance year to their reconciliation target price as well as by performance on three quality measures. TEAM participants will earn a payment from CMS, subject to a quality performance adjustment, if their spending is below the reconciliation target price. TEAM participants will owe CMS a repayment amount, subject to a quality performance adjustment, if their spending is above the reconciliation target price. In section X.A. of the preamble of this final rule some policies as proposed, and we are finalizing others with modification. There are also certain proposed policies that we are not finalizing, and we will instead go through rulemaking in the future to promulgate new policies before the model start date.

In alignment with the Biden-Harris Administration's commitment to addressing the maternal health crisis, this RFI sought to gather information on differences between hospital resources required to provide inpatient pregnancy and childbirth services to Medicare patients as compared to non-Medicare patients. To the extent that the resources required differ between patient populations, we also wanted to gather information on the extent to which non-Medicare payers, or other commercial insurers may be using the IPPS as a basis for determining their payment rates for inpatient pregnancy and childbirth services and the effect, if any, that the use of the IPPS as a basis for determining payment by those payers may have on maternal health outcomes. We summarize the comments received in section X.C. of the preamble of this final rule.

In section X.F. of the preamble of the proposed rule, we proposed to update the hospital and CAH infection prevention and control and antibiotic stewardship programs conditions of participation (CoPs) to extend a limited subset of the current COVID-19 and influenza data reporting requirements. These proposed reporting requirements ensure that hospitals and CAHs have appropriate insight related to evolving infection control needs. Specifically, we proposed to replace the COVID-19 and Seasonal Influenza reporting standards for hospitals and CAHs with a new standard addressing acute respiratory illnesses to require that, beginning on October 1, 2024, hospitals and CAHs would have to electronically report information about COVID-19, influenza, and RSV. We also proposed that outside of a public health emergency (PHE), hospitals and CAHs would have to report these data on a weekly basis. In section X.F. of the preamble of this final rule, we are finalizing these proposals with revisions.

As discussed in section II.C. of the preamble of this final rule, we are finalizing the proposed change to the severity level designation for the social determinants of health (SDOH) diagnosis codes describing inadequate housing and housing instability from non-complication or comorbidity (NonCC) to complication or comorbidity (CC) for FY 2025. Consistent with our annual updates to account for changes in resource consumption, treatment patterns, and the clinical characteristics of patients, we recognize inadequate housing and housing instability as indicators of increased resource utilization in the acute inpatient hospital setting.

Consistent with the Administration's goal of advancing health equity for all, including members of historically underserved and under-resourced communities, as described in the President's January 20, 2021 Executive Order 13985 on “Advancing Racial Equity and Support for Underserved Communities Through the Federal Government,” [ [1] ] we also continue to be interested in receiving feedback on how we might further foster the documentation and reporting of the diagnosis codes describing social and economic circumstances to more accurately reflect each health care encounter and improve the reliability and validity of the coded data including in support of efforts to advance health equity.

The following table provides a summary of the costs, transfers, savings, and benefits associated with the major provisions described in section I.A.2. of the preamble of this final rule.

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 an 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 and, beginning in FY 2023 for IHS and Tribal hospitals and hospitals located in Puerto Rico, the new supplemental payment.

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.

With the recent enactment of section 307 of the CAA, 2024, under current law, the Medicare-dependent, small rural hospital (MDH) program is effective through December 31, 2024. For discharges occurring on or after October 1, 2007, but before January 1, 2025, 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). As section 307 of the CAA, 2024, extended the MDH program through the first quarter of FY 2025 only, beginning on January 1, 2025, the MDH program will no longer be in effect absent a change in law. Because the MDH program is not authorized by statute beyond December 31, 2024, beginning January 1, 2025, all hospitals that previously qualified for MDH status under section 1886(d)(5)(G) of the Act will no longer have MDH status and will be paid based on the IPPS Federal rate.

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 .

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 ( print page 68996) 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 .

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.

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 .

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 . Section 1886(d)(5)(B) of the Act provides that prospective payment hospitals that have residents in an approved GME program receive an additional payment for each Medicare discharge to reflect the higher patient care costs of teaching hospitals relative to non-teaching hospitals. The additional payment is based on the indirect medical education (IME) adjustment factor, which is calculated using a hospital's ratio of residents to beds and a multiplier, which is set by Congress. Section 1886(d)(5)(B)(ii)(XII) of the Act provides that, for discharges occurring during FY 2008 and fiscal years thereafter, the IME formula multiplier is 1.35. The regulations regarding the indirect medical education (IME) adjustment are located at 42 CFR 412.105 .

Section 4122 of the CAA, 2023, amended section 1886(h) of the Act by adding a new section 1886(h)(10) of the Act requiring the distribution of additional residency positions (also referred to as slots) to hospitals. Section 1886(h)(10)(A) of the Act requires that for FY 2026, the Secretary shall initiate an application round to distribute 200 residency positions. At least 100 of the positions made available under section 1886(h)(10)(A) of the Act shall be distributed for psychiatry or psychiatry subspecialty residency training programs. The Secretary is required, subject to certain provisions in the law, to increase the otherwise applicable resident limit for each qualifying hospital that submits a timely application by the number of positions that may be approved by the Secretary for that hospital. The Secretary is required to notify hospitals of the number of positions distributed to them by January 31, 2026, and the increase is effective beginning July 1, 2026.

In determining the qualifying hospitals for which an increase is provided, section 1886(h)(10)(B)(i) of the Act requires the Secretary to take into account the “demonstrated likelihood” of the hospital filling the positions made available within the first 5 training years beginning after the date the increase would be effective, as determined by the Secretary.

Section 1886(h)(10)(B)(ii) of the Act requires a minimum distribution for certain categories of hospitals. Specifically, the Secretary is required to distribute at least 10 percent of the aggregate number of total residency positions available to each of four categories of hospitals. Stated briefly, and discussed in greater detail later in this final rule, the categories are as follows: (1) hospitals located in rural areas or that are treated as being located in a rural area (pursuant to sections 1886(d)(2)(D) and 1886(d)(8)(E) of the Act); (2) hospitals in which the reference resident level of the hospital is greater than the otherwise applicable resident limit; (3) hospitals in States with new medical schools or additional locations and branches of existing medical schools; and (4) hospitals that serve areas designated as Health Professional Shortage Areas (HPSAs). Section 1886(h)(10)(F)(iii) of the Act defines a qualifying hospital as a hospital in one of these four categories.

Section 1886(h)(10)(B)(iii) of the Act further requires that each qualifying hospital that submits a timely application receive at least 1 (or a fraction of 1) of the residency positions made available under section 1886(h)(10) of the Act before any qualifying hospital receives more than 1 residency position.

Section 1886(h)(10)(C) of the Act places certain limitations on the distribution of the residency positions. ( print page 68997) First, a hospital may not receive more than 10 additional full-time equivalent (FTE) residency positions. Second, no increase in the otherwise applicable resident limit of a hospital may be made unless the hospital agrees to increase the total number of FTE residency positions under the approved medical residency training program of the hospital by the number of positions made available to that hospital. Third, if a hospital that receives an increase to its otherwise applicable resident limit under section 1886(h)(10) of the Act is eligible for an increase to its otherwise applicable resident limit under 42 CFR 413.79(e)(3) (or any successor regulation), that hospital must ensure that residency positions received under section 1886(h)(10) of the Act are used to expand an existing residency training program and not for participation in a new residency training program.

Section 306 of the CAA, 2024, extended through the first 3 months of FY 2025 the modified definition of a low-volume hospital and the methodology for calculating the payment adjustment for low-volume hospitals in effect for FYs 2019 through 2024. Specifically, under section 1886(d)(12)(C)(i) of the Act, as amended, for FYs 2019 through 2024 and the portion of FY 2025 occurring before January 1, 2025, a subsection (d) hospital qualifies as a low-volume hospital if it is more than 15 road miles from another subsection (d) hospital and has less than 3,800 total discharges during the fiscal year. Under section 1886(d)(12)(D) of the Act, as amended, for discharges occurring in FYs 2019 through December 31, 2024, the Secretary determines the applicable percentage increase using a continuous, linear sliding scale ranging from an additional 25 percent payment adjustment for low-volume hospitals with 500 or fewer discharges to a zero percent additional payment for low-volume hospitals with more than 3,800 discharges in the fiscal year.

Section 307 of the CAA, 2024, amended sections 1886(d)(5)(G)(i) and 1886(d)(5)(G)(ii)(II) of the Act to provide for an extension of the MDH program through the first 3 months of FY 2025 (that is, through December 31, 2024).

The FY 2025 IPPS/LTCH PPS proposed rule appeared in the May 2, 2024, Federal Register ( 89 FR 35934 ). In this proposed rule, we set forth proposed payment and policy changes to the Medicare IPPS for FY 2025 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 2025.

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

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

Proposed changes to MS-DRG classifications based on our yearly review for FY 2025.
Proposed recalibration of the MS-DRG relative weights.
A discussion of the proposed FY 2025 status of new technologies approved for add-on payments for FY 2024, a presentation of our evaluation and analysis of the FY 2025 applicants for add-on payments for high-cost new medical services and technologies (including public input, as directed by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) Public Law 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 2025 new technology applicants under the alternative pathways for certain medical devices and certain antimicrobial products.
A proposed change to the April 1 cutoff to October 1 for determining whether a technology would be within its 2- to 3-year newness period when considering eligibility for new technology add-on payments, beginning in FY 2026, effective for those technologies that are approved for new technology add-on payments starting in FY 2025 or a subsequent year (as discussed in II.E.8. of the preamble of the proposed rule).
A proposal that, beginning with new technology add-on payment applications for FY 2026, we will no longer consider a hold status to be an inactive status for the purposes of eligibility for the new technology add-on payment (as discussed in section II.E.9. of the preamble of the proposed rule).
A proposal that, subject to our review of the new technology add-on payment eligibility criteria, for certain gene therapies approved for new technology add-on payments in the FY 2025 IPPS/LTCH final rule that are indicated and used specifically for the treatment of sickle cell disease (SCD), effective with discharges on or after October 1, 2024, and concluding at the end of the 2- to 3-year newness period for such therapy, we would temporarily increase the new technology add-on payment percentage to 75 percent (as discussed in section II.E.10. of the preamble of the proposed rule).

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

Proposed changes in core-based statistical areas (CBSAs) as a result of new OMB labor market area delineations and proposed policies related to the proposed changes in CBSAs.
The proposed FY 2025 wage index update using wage data from cost reporting periods beginning in FY 2019.
Calculation, analysis, and implementation of the proposed occupational mix adjustment to the wage index for acute care hospitals for FY 2025 based on the 2022 Occupational Mix Survey.
Proposed application of the rural, imputed and frontier State floors, and continuation of the low wage index hospital policy.
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 adjustment to the wage index for acute care hospitals for FY 2025 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 FY 2025 wage index.

In section IV. of the preamble of this proposed rule, we discuss the following:

Proposed calculation of Factor 1 and Factor 2 of the uncompensated care payment methodology.
Proposed methodological approach for determining Factor 3 of the uncompensated care payment for FY 2025, which is the same methodology that was used for FY 2024. ( print page 68998)
Proposed methodological approach for determining the amount of interim uncompensated care payments using the average of the most recent 3 years of discharge data.

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 2025.
Proposed updated national and regional case-mix values and discharges for purposes of determining RRC status and clarification of the qualification under the discharge criterion for osteopathic hospitals.
Proposed implementation of the statutory extension of the temporary changes to the low-volume hospital payment adjustment through December 31, 2024, the statutory expiration beginning January 1, 2025, and the proposed payment adjustments for low-volume hospitals for FY 2025.
Proposed implementation of the statutory extension of the MDH program through December 31, 2024, and the statutory expiration beginning January 1, 2025.
A proposal to implement a provision of the Consolidated Appropriations Act relating to payments to hospitals for GME and IME costs, proposed direct graduate medical education (DGME) and IME policy modifications to the criteria for new residency programs; technical fixes to the DGME regulations; and a notice of closure of two teaching hospitals and opportunities to apply for available slots and a reminder of CBSA changes and application to GME policies.
Proposed nursing and allied health education program Medicare Advantage (MA) add-on rates and direct GME MA percent reductions for CY 2023.
Proposed update to the payment adjustment for certain clinical trial and expanded access use immunotherapy cases.
Proposed separate IPPS payment for establishing and maintaining access to essential medicines.
Proposed update to the estimate of the financial impacts for the FY 2025 Hospital Readmissions Reduction Program.
Proposed modifications to the scoring of the Person and Community Engagement Domain in the Hospital VBP Program.

++ For the FY 2027 through FY 2029 program years to only score on six unchanged dimensions of the HCAHPS Survey.

++ Beginning with the FY 2030 program year to account for the proposed updated HCAHPS Survey.

Updating the proposed estimate of the financial impacts for the FY 2025 Hospital-Acquired Conditions Reduction Program.
Discussion of and proposed changes relating to the implementation of the Rural Community Hospital Demonstration Program in FY 2025.

In section VI. of the preamble of the proposed rule, we discussed the proposed payment policy requirements for capital-related costs and capital payments to hospitals for FY 2025.

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

Proposed changes to payments to certain excluded hospitals for FY 2025.
Proposed continued implementation of the Frontier Community Health Integration Project (FCHIP) Demonstration.

In section VIII. of the preamble of the proposed rule, we proposed to rebase and revise the LTCH market basket to reflect a 2022 base year, which includes a proposed update to the LTCH PPS labor-related share. 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 2025. We also proposed a technical clarification to the regulations for hospitals seeking to be classified as an LTCH.

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

Solicitation of comment on adopting measures across the hospital quality reporting and value-based purchasing programs which capture more forms of unplanned post-acute care and encourage hospitals to improve discharge processes.
Proposed changes to the requirements for the Hospital IQR Program.
Proposed changes to the requirements for the PCHQR Program.
Proposed adoption of the Patient Safety Structural measure in the Hospital IQR Program and the PCHQR Program.
Proposed updated HCAHPS Survey measure in the Hospital IQR Program, PCHQR Program, and Hospital VBP Program.
Proposed changes to the requirements for the LTCH QRP, and requests for information on future measure concepts for the LTCH QRP and a star rating system for the LTCH QRP.
Proposed changes to requirements pertaining to eligible hospitals and CAHs participating in the Medicare Promoting Interoperability Program.

Section X. of the preamble of the proposed rule includes the following:

Proposed implementation of TEAM that would test whether an episode-based pricing methodology linked with accountability for quality measure performance for select acute care hospitals reduces Medicare program expenditures while preserving or improving the quality of care for Medicare beneficiaries.
Proposed changes to permit a Provider Reimbursement Review Board (PRRB) member to serve up to 3 consecutive terms (9 consecutive years total), and up to 4 consecutive terms (12 consecutive years total) in cases where a PRRB Member who, in their second or third consecutive term, is designated as Chairperson, to continue serving as Chairperson in the fourth consecutive term.
Solicitation of comments to gather information on differences between hospital resources required to provide inpatient pregnancy and childbirth services to Medicare patients as compared to non-Medicare patients.
Solicitation of comments to gather information on potential solutions that can be implemented through the hospital CoPs to address well-documented concerns regarding maternal morbidity, mortality, disparities, and maternity care access in the United States. See the calendar year (CY) 2025 Outpatient Prospective Payment System (OPPS) proposed rule (89 FR XXXXX) for more information about this RFI.
Proposal to remove the exclusion of Puerto Rico from the Payment Error Rate Measurement (PERM) program found at 42 CFR 431.954(b)(3) .
Proposal for a new hospital CoP to replace the COVID-19 and Seasonal Influenza reporting standards for ( print page 68999) hospitals and CAHs that were created during PHE.

Section XI.A. of the preamble of the proposed rule includes our discussion of the MedPAC Recommendations.

Section XI.B. of the preamble of the proposed rule includes a descriptive listing of the public use files associated with this proposed rule.

Section XII. of the preamble of the proposed rule includes the collection of information requirements for entities based on our proposals.

Section XIII. of the preamble of the proposed rule includes information regarding our responses to public comments.

In sections II. and III. of the Addendum of the proposed rule, we set forth proposed changes to the amounts and factors for determining the proposed FY 2025 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 of the proposed rule, we addressed the proposed update factors for determining the rate-of-increase limits for cost reporting periods beginning in FY 2025 for certain hospitals excluded from the IPPS.

In section V. of the Addendum of the proposed rule, we set forth proposed changes to the amounts and factors for determining the proposed FY 2025 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 2025. We proposed to establish the adjustments for the wage index (including proposed changes to the LTCH PPS labor market area delineations based on the new OMB delineations), 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.

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

In Appendix B of the proposed rule, as required by sections 1886(e)(4) and (e)(5) of the Act, we provided our recommendations of the appropriate percentage changes for FY 2025 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.

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 2024 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 2024 report or to obtain a copy of the report, contact MedPAC at (202) 220-3700 or visit MedPAC's website at https://www.medpac.gov .

We received approximately 6,180 timely pieces of correspondence containing multiple comments on the proposed rule that appeared in the May 2, 2024 Federal Register ( 89 FR 39534 ) titled “Medicare and Medicaid Programs and the Children's Health Insurance 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 2025 Rates; Quality Programs Requirements; and Other Policy Changes” (hereinafter referred to as the FY 2025 IPPS/LTCH PPS proposed rule). We note that some of these public comments were outside of the scope of the proposed rule. These out-of-scope public comments are not addressed with policy responses in this final rule. Summaries of the public comments that are within the scope of the proposed rule and our responses to those public comments are set forth in the various sections of this final rule under the appropriate heading.

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.

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/rate year (RY) 2010 LTCH PPS final rule ( 74 FR 43764 through 43766 ) and the FYs 2011 through 2023 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 ( print page 69000) 38010 through 38085; 83 FR 41158 through 41258 ; 84 FR 42058 through 42165 ; 85 FR 58445 through 58596 ; 86 FR 44795 through 44961 ; and 87 FR 48800 through 48891 , respectively).

For discussion regarding our previously finalized policies (including our historical adjustments to the payment rates) relating to the effect of changes in documentation and coding that do not reflect real changes in case mix, we refer readers to the FY 2023 IPPS/LTCH PPS final rule ( 87 FR 48799 through 48800 ).

Comment: Several commenters requested that CMS make a positive adjustment to the standardized amount to restore the full amount of the documentation and coding recoupment adjustments, which they asserted is required under section (7)(B)(2) and (4) of the TMA [Transitional Medical Assistance], Abstinence Education, and QI [Qualifying Individuals] Programs Extension Act of 2007 ( Pub. L. 110-90 ). Commenters stated that the statute is explicit that CMS may not carry forward any documentation and coding adjustments applied in fiscal years 2010 through 2017 into IPPS rates after FY 2023. Commenters contended that CMS, by its own admission, has restored only 2.9588 percentage points of a total 3.9 percentage point reduction. By not fully restoring the total reductions, commenters believe that CMS is improperly extending payment adjustments beyond the FY 2023 statutory limit.

Response: As of FY 2023, CMS completed the statutory requirements of section 7(b)(1)(B) of Public Law 110-90 as amended by section 631 of the American Taxpayer Relief Act of 2012 (ATRA, Pub. L. 112-240 ), section 404 of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), and section 15005 of the 21st Century Cures Act ( Pub. L. 114-255 ). As we discussed in the FY 2022 IPPS/LTCH PPS final rule ( 86 FR 44794 through 44795 ), 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 2025 to restore any additional amount of the original 3.9 percentage point reduction, given Congress' directive regarding prescriptive adjustment levels under section 414 of the MACRA and section 15005 of the 21st Century Cures Act. Accordingly, in the FY 2018 IPPS/LTCH PPS final rule ( 82 FR 38009 ), we implemented the required +0.4588 percentage point adjustment to the standardized amount for FY 2018. In the FY 2019 IPPS/LTCH PPS final rule (FY 2019 final rule) ( 83 FR 41157 ), the FY 2020 IPPS/LTCH PPS final rule (FY 2020 final rule) ( 84 FR 42057 ), the FY 2021 IPPS/LTCH PPS final rule (FY 2021 final rule) ( 85 FR 58444 and 58445 ), the FY 2022 IPPS/LTCH PPS final rule (FY 2022 final rule) ( 86 FR 44794 and 44795 ), and the FY 2023 IPPS/LTCH PPS final rule (FY 2023 final rule) ( 87 FR 48800 ), 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, FY 2021, FY 2022 and FY 2023, respectively. As discussed in the FY 2023 final rule, the finalized 0.5 percentage point positive adjustment for FY 2023 is the final adjustment prescribed by section 414 of the MACRA.

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 ).

As discussed in the FY 2023 IPPS/LTCH PPS proposed rule ( 87 FR 28127 ) and final rule ( 87 FR 48800 through 48801 ), beginning with FY 2024 MS-DRG classification change requests, we changed 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. We also described the new process for submitting requested changes to the MS-DRGs via a new electronic application intake system, Medicare Electronic Application Request Information System TM (MEARIS TM ), accessed at https://mearis.cms.gov . We stated that effective with FY 2024 MS-DRG classification change requests, CMS will only accept requests submitted via MEARIS TM and will no longer consider requests sent via email. Additionally, we noted that within MEARIS TM , we have built in several resources to support users, including a “Resources” section available at https://mearis.cms.gov/public/resources with technical support available under “Useful Links” at the bottom of the MEARIS TM site. Questions regarding the MEARIS TM system can be submitted to CMS using the form available under “Contact”, also at the bottom of the MEARIS TM site. Accordingly, interested parties had to submit MS-DRG classification change requests for FY 2025 by October 20, 2023.

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 request for MS-DRG classification changes to CMS. The aforementioned burden is subject to the Paperwork Reduction Act (PRA) of 1995 and approved under OMB control number 0938-1431, and has an expiration date of 09/30/2025.

As noted previously, interested parties had to submit MS-DRG classification change requests for FY 2025 by October 20, 2023. As we have discussed in prior rulemaking, 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. In the proposed rule, we noted those topics for which further research and analysis ( print page 69001) are required, and which we will continue to consider in connection with future rulemaking as summarized in the discussion that follows.

As discussed in the proposed rule, we received four requests to modify the GROUPER logic in a number of cardiac MS-DRGs under Major Diagnostic Category (MDC) 05 (Diseases and Disorders of the Circulatory System). Specifically, we received requests to:

Modify the GROUPER logic of new MS-DRG 212 (Concomitant Aortic and Mitral Valve Procedures) to be defined by cases reporting procedure codes describing a single open mitral or aortic valve replacement/repair (MVR or AVR) procedure, plus an open coronary artery bypass graft procedure (CABG) or open surgical ablation or cardiac catheterization procedure plus a second concomitant procedure.
Modify the GROUPER logic of new MS-DRG 212 by redefining the procedure code list that describes the performance of a cardiac catheterization by either removing the ICD-10-PCS codes that describe plain radiography of coronary artery codes from the logic list or adding ICD-10-PCS procedure codes that involve computed tomography (CT) or magnetic resonance imaging (MRI) scanning using contrast to the list. This requestor also suggested that CMS add ICD-10-PCS procedures codes that describe endovascular valve replacement or repair procedures into the GROUPER logic of MS-DRG 212.
Modify the GROUPER logic of new MS-DRGs 323, 324, and 325 (Coronary Intravascular Lithotripsy with Intraluminal Device with MCC, without MCC, and without Intraluminal Device, respectively). In two separate but related requests, the requestors suggested that we add procedure codes that describe additional percutaneous coronary intervention (PCI) procedures such as percutaneous coronary rotational, laser, and orbital atherectomy to the GROUPER logic of new MS-DRGs 323, 324, and 325.

In the proposed rule, we stated that we appreciated the submissions and related analyses provided by the requestors for our consideration as we reviewed MS-DRG classification change requests for FY 2025; however, we also noted the complexity of the GROUPER logic for these MS-DRGs in connection with these requests requires more extensive analyses to identify and evaluate all of the data relevant to assessing these potential modifications. Specifically, we noted the list of procedure codes that describe the performance of a cardiac catheterization is in the definition of multiple MS-DRGs in MDC 05. Analyzing the impact of revising this list would necessitate evaluating the impact across numerous other MS-DRGs in MDC 05 that also include this list in their definition, in addition to new MS-DRG 212. Secondly, as discussed further in section II.C.4.c. of the preamble of the proposed rule, we stated that our analysis continues to indicate that, when performed, open cardiac valve replacement and supplement procedures are clinically different from endovascular cardiac valve replacement and supplement procedures in terms of technical complexity and hospital resource use. Lastly, as we have stated in prior rule making ( 88 FR 58708 ), atherectomy is distinct from coronary lithotripsy in that each of these procedures are defined by clinically distinct definitions and objectives. Additional analysis to assess for unintended consequences across the classification is needed as we have made a distinction between the root operations used to describe atherectomy (Extirpation) and the root operation used to describe lithotripsy (Fragmentation) in evaluating other requests in rulemaking. We stated we will need to consider the application of these two root operations in other scenarios where we have also specifically stated that Extirpation is not the same as Fragmentation and do not warrant similar MS-DRG assignment ( 85 FR 58572 through 58573 ). Furthermore, as MS-DRG 212 and MS-DRGs 323, 324, and 325 recently became effective on October 1, 2023 (FY 2024), we stated additional time is needed to review and evaluate extensive modifications to the structure of these MS-DRGs.

Comment: Commenters stated that they appreciated CMS' decision to await further data before analyzing the impact of the requested changes to MS-DRG 212 and MS-DRGs 323, 324, and 325, and agreed that any changes to these MS-DRGs should be carefully reviewed, as they stated these changes could have a significant impact on the remaining MS-DRGs in MDC 05. While thanking CMS for the continued consideration of appropriate MS-DRG assignment for concomitant open cardiac procedures, many commenters reiterated the request to modify the GROUPER logic of new MS-DRG 212. Some commenters stated it would be more impactful if cases reporting a single valve procedure, a coronary artery bypass grafting (CABG) procedure, and a procedure code describing surgical ablation were assigned to MS-DRG 212 (Concomitant Aortic and Mitral Valve Procedures). Other commenters stated that they believe that the logic of MS-DRG 212 should be modified to recognize an open aortic valve repair or replacement procedure or a mitral valve repair or replacement procedure when performed with any of the other concomitant procedures currently listed in the logic for MS-DRG 212. Another commenter suggested that MS-DRG 212 be defined by cases reporting either a mitral valve repair or replacement (MVR) procedure or an aortic valve repair or replacement (AVR) procedure, plus two other concomitant cardiac procedures such as surgical ablation, coronary artery bypass graft surgery, pulmonary valve replacement, or tricuspid valve replacement. This commenter stated that they performed their own analysis of recent MedPAR data, and stated they found that cases for beneficiaries who are not treated for their atrial fibrillation (AF) during open MVR or AVR (or CABG) procedures (currently assigned to MS-DRGs 216, 217, 218, 219, 220, and 221 (Cardiac Valve & Other Major Cardiothoracic Procedure with and without Cardiac Catheterization, with MCC, with CC, and without CC/MCC, respectively)) may have as much as $7,000 in incremental hospital index costs and 1.6 extra hospital stay days compared to similar non-AF patients during their open MVR or AVR procedures.

Some commenters were not supportive of the suggestion to assign cases reporting a single AVR or MVR procedure and another concomitant procedure to MS-DRG 212. These commenters stated that assigning cases reporting a single AVR or MVR procedure and another concomitant procedure to MS-DRG 212 would have a significant negative impact on the remaining MS-DRGs, notably MS-DRG 216. Other commenters suggested that CMS consider moving the aortic and mitral valve procedure codes with the root operations of “Creation”, “Release”, “Restriction” and “Supplement,” that are currently listed under the Concomitant Procedures list in the GROUPER logic for MS-DRG 212 in the ICD-10 MS-DRG Definitions Manual Version 41.1 to the appropriate logic list of aortic valve or mitral valve procedures. This commenter stated that procedure codes with these other root operations also represent types of valvular repairs and should be included on the aortic valve procedures and mitral valve procedures logic lists rather than the “Concomitant Procedure” logic list. A few commenters urged CMS to devise a broader, more inclusive, supplemental payment mechanism to facilitate incremental payment when ( print page 69002) two major procedures are performed during the same hospital admission.

In regard to the request to modify the GROUPER logic of new MS-DRGs 323, 324, and 325 (Coronary Intravascular Lithotripsy with Intraluminal Device with MCC, without MCC, and without Intraluminal Device, respectively), some commenters stated they agreed with CMS' assessment that atherectomy and coronary lithotripsy are mechanistically and clinically distinct. A commenter specifically noted that this distinction is supported by scientific literature and applauded CMS for demonstrating consistency on these questions and awareness of their impact across MDC 05. Other commenters stated they were disappointed that CMS did not propose to modify MS-DRGs 323, 324, and 325 to add procedure codes describing complex PCI procedures, including percutaneous coronary atherectomy procedures for FY 2025. A commenter stated that they offer a broad portfolio of products across the percutaneous coronary intervention space and believe they can provide additional input and data for consideration that would be helpful to CMS in evaluating potential modifications to the GROUPER logic to include orbital atherectomy procedures in the newly created MS-DRGs. Another commenter noted that the pipeline for additional technologies in the atherectomy family is expanding and recommended that CMS undertake an analysis of all ICD-10-PCS codes for atherectomy. A commenter questioned if Extirpation was the appropriate root operation to describe rotational and orbital atherectomy, as in their view, the procedures themselves are not removing calcified material. This commenter stated that in prior rulemaking CMS has stated procedures such as rotational and orbital atherectomy are reported with the root operation Extirpation because both techniques cut up the calcified material into small particles that are removed from the blood stream by the normal hemofiltration process and noted that in lithotripsy procedures, which are reported with the root operation Fragmentation, the normal hemofiltration process also removes the fragmented calcified material from the blood stream and suggested that CMS reconsider the root operation of atherectomy procedures as Fragmentation rather than Extirpation.

Response: We thank the commenters for sharing their feedback on these requests. As discussed in the proposed rule, 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 the relevant data for evaluating a potential change. The comments received in response to our proposed rule discussion of the requests to modify the GROUPER logic of new MS-DRG 212, specifically, illustrate the complexity of the analysis and evaluation required to address these requests. Notably, many commenters believe that a modification to the logic of MS-DRG 212 may be warranted but differ greatly in the solution they believe would best address the concerns noted. We appreciate the public comments we received on these requests and will take these suggestions under consideration as we continue to monitor for impacts in MDC 05 and across the MS-DRGs to avoid unintended consequences or missed opportunities in most appropriately capturing the resource utilization and clinical coherence for these subsets of procedures. We note that we would address any proposed modifications to the existing logic in future rulemaking.

As discussed in the proposed rule, as we continue the analysis of the claims data with respect to MS-DRGs in MDC 05, we welcome public comments and feedback on other factors that should be considered in the potential restructuring of these MS-DRGs. Feedback and other suggestions may be directed to MEARIS TM at: https://mearis.cms.gov/public/home . Interested parties should submit any MS-DRG classification change requests, including any comments and suggestions for FY 2026 consideration by October 20, 2024 via MEARIS TM at: https://mearis.cms.gov/public/home .

As we did for the FY 2024 IPPS/LTCH PPS proposed rule, for the FY 2025 IPPS/LTCH PPS proposed rule we provided a test version of the ICD-10 MS-DRG GROUPER Software, Version 42, so that the public can 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 2025. Therefore, it included the new diagnosis and procedure codes that are effective for FY 2025 as reflected in Table 6A.—New Diagnosis Codes—FY 2025 and Table 6B.—New Procedure Codes—FY 2025 that were associated with the proposed rule, and does not include the diagnosis codes that are invalid beginning in FY 2025 as reflected in Table 6C.—Invalid Diagnosis Codes—FY 2025, and Table 6D.—Invalid Procedure Codes—FY 2025 associated with the proposed rule. Those tables were not published in the Addendum to the proposed rule, but are available 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 codes no longer valid for FY 2025 are not reflected in the test software, we made available a supplemental file in Table 6P.1a and 6P.1b that includes the mapped Version 42 FY 2025 ICD-10-CM and ICD-10-PCS codes and the deleted Version 41 FY 2024 ICD-10-CM codes and V41.1 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 42.

Comment: A commenter expressed its appreciation that we provided a test version of the ICD-10 MS-DRG GROUPER Software, Version 42, however, the commenter stated that this version essentially only allows for a case-by-case analysis and a minimal batch analysis. The commenter stated that it would be more beneficial to have a Batch z/OS version of the test GROUPER so that it could be better utilized for broader and more meaningful analysis purposes. The commenter requested that availability of a Batch z/OS version of the test GROUPER be made publicly available for all future rulemaking.

Response: We appreciate the commenter's feedback and will take the suggestion into consideration.

We noted in the proposed rule that in the FY 2024 IPPS/LTCH PPS final rule ( 88 FR 58764 ), as discussed in the CY 2024 Outpatient Prospective Payment System and Ambulatory Surgical Center (OPPS/ASC) proposed rule (CY 2024 OPPS/ASC proposed rule) ( 88 FR 49552 , July 31, 2023), we stated that, consistent with the process that is used for updates to the “Integrated” Outpatient Code Editor (I/OCE) and other Medicare claims editing systems, we proposed to address any future revisions to the IPPS Medicare Code Editor (MCE), including any additions or deletions of claims edits, as well as the addition or deletion of ICD-10 diagnosis and procedure codes to the applicable MCE edit code lists, outside of the annual IPPS rulemakings. As discussed in the CY 2024 OPPS/ASC proposed rule, we proposed to remove discussion of the IPPS MCE from the annual IPPS rulemakings, beginning with the FY 2025 rulemaking, and to generally address future changes or updates to the MCE through instruction to the ( print page 69003) Medicare administrative contractors (MACs). We encouraged readers to review the discussion in the CY 2024 OPPS/ASC proposed rule and submit comments in response to the proposal by the applicable deadline by following the instructions provided in that proposed rule.

As also discussed in the proposed rule, in the CY 2024 OPPS/ASC final rule ( 88 FR 82121 through 82124 ), after consideration of the public comments we received, we finalized the proposal to remove discussion of the MCE from the annual IPPS rulemakings, beginning with FY 2025 rulemaking, and to generally address future changes or updates to the MCE through instruction to the MACs. We also stated that, beginning with FY 2025, in association with the annual proposed rule, we are making available a draft version of the Definitions of Medicare Code Edits (MCE) Manual to provide the public with an opportunity to review any changes that will become effective October 1 for the upcoming fiscal year. In addition, as a result of new and modified code updates approved after the annual spring ICD-10 Coordination and Maintenance Committee meeting, any further changes to the MCE will be reflected in the finalized Definitions of Medicare Code Edits (MCE) Manual, made available in association with the annual final rule. As such, we made available the draft FY 2025 ICD-10 MCE Version 42 Manual file on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software .

We noted in the proposed rule that the MCE manual is comprised of two chapters: Chapter 1: Edit code lists provides a listing of each edit, an explanation of each edit, and as applicable, the diagnosis and/or procedure codes for each edit, and Chapter 2: Code list changes summarizes the changes in the edit code lists (for example, additions and deletions) from the prior release of the MCE software. We also stated that the public may submit any questions, comments, concerns, or recommendations regarding the MCE to the CMS mailbox at [email protected] for our review and consideration.

Comment: Several commenters requested that CMS reconsider including updates to the MCE as part of the IPPS rulemaking process. A commenter stated that it recognized the importance of the MCE and expressed concern with the removal of MCE proposals from IPPS rulemaking. The commenter stated that identifying key considerations and mitigating unintended consequences are a key benefit of public review and consideration of stakeholder comments. The commenter stated that the proposed process is not transparent on key areas such as when the manual will be updated, effective dates, or the ability to provide feedback with timely responses. Other commenters stated that the MCE and related proposals include essential topics that warrant thorough review and consideration specific to inpatient hospital admissions and operational processes. The commenters asserted that these topics are vital to coding, clinical documentation, and revenue cycle professionals to ensure awareness and understanding ahead of implementation and historically allowed the opportunity for comment as applicable. According to the commenters, MCE change updates managed outside the IPPS rulemaking process create a strong potential for missed opportunities for pertinent public review and comment. The commenters stated these missed opportunities will create the potential for unintended consequences and administrative burdens for hospital teams. The commenters also stated that a historical review of IPPS comments in response to MCE proposals includes feedback on unacceptable principal diagnoses, age edits, and especially comments that affected the proposal and final implementation of CMS's unspecified code edit implemented in FY 2022.

The commenters stated that the draft version of the Definitions of Medicare Code Edits (MCE) Manual file made available in association with the proposed rule is a helpful reference, however revisions should be explicitly stated as proposed revisions or additions for consideration. According to the commenters, as currently written, the changes are not listed as proposals within the manual and are implied as changes that have already been decided and will be effective with the upcoming fiscal year. Another commenter expressed appreciation that CMS stated it will make available a draft version of the Definitions of Medicare Code Edits (MCE) Manual file in association with the annual proposed rule to provide the public with an opportunity to review any changes that will become effective October 1 for the upcoming fiscal year. However, the commenter also stated that it is difficult to identify the changes in the draft version of the MCE Manual and recommended that CMS provide a list of the draft MCE changes each year (including any additions or deletions of diagnosis or procedure codes or MCE edits).

Response: We appreciate the commenters' feedback. As stated in the CY 2024 OPPS/ASC final rule ( 88 FR 82121 through 82124 ), in the preamble of the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 35949 ), and previously described in the preamble of this final rule, after consideration of the public comments we received, we finalized the proposal to remove discussion of the MCE from the annual IPPS rulemakings, beginning with FY 2025 rulemaking. In the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 35949 ), we stated that beginning with FY 2025, in association with the annual proposed rule, we are making available a draft version of the Definitions of Medicare Code Edits (MCE) Manual to provide the public with an opportunity to review any changes that will become effective October 1 for the upcoming fiscal year.

We noted in the proposed rule, and as previously described in this final rule, that the MCE manual is comprised of two chapters: Chapter 1: Edit code lists provides a listing of each edit, an explanation of each edit, and as applicable, the diagnosis and/or procedure codes for each edit, and Chapter 2: Code list changes summarizes the changes in the edit code lists (for example, additions and deletions) from the prior release of the MCE software. We believe that Chapter 2: Code list changes in the MCE manual is clear as it lists the specific edit, followed by the list of codes that were added or deleted. The draft version of the Definitions of Medicare Code Edits (MCE) Manual will continue to be made publicly available in association with the annual proposed rulemaking, and it is referred to as a “draft version”. However, the Chapter 2: Code list changes are not “draft” MCE changes. Rather, consistent with our established process to assign MS-DRGs to new diagnosis codes and new procedures codes, for which we examine the MS-DRG assignment for the predecessor code to determine the most appropriate MS-DRG assignment, we have historically used, and will continue to use, a similar process in the assignment of new diagnosis codes and new procedure codes to the edit codes lists under the MCE. Specifically, we review the predecessor code to determine if there are edits under the MCE for which the predecessor code is listed to determine which edit lists may be appropriate for the newly created codes.

As discussed in prior rulemaking ( 88 FR 58764 ), as a result of new and modified code updates approved after the annual spring ICD-10 Coordination ( print page 69004) and Maintenance Committee meeting, we routinely make changes to the MCE without discussion in IPPS rulemaking. 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 all of the changes we have made to the MCE because of the new and modified codes approved after the annual spring ICD-10 Coordination and Maintenance Committee meeting. We stated that these changes are, and would still be, approved too late in the rulemaking schedule for inclusion in the proposed rule. Furthermore, although in the past 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.

Therefore, although we published, and will continue to publish, the edit code list changes in the “draft version” of the MCE manual, because discussion of the MCE has been removed from IPPS rulemakings, beginning with FY 2025 rulemaking as previously described, the edit code lists that appear in the “draft version” of the MCE manual in association with the proposed rule are considered final at the time of the development of the proposed rule. While the public may continue to submit any questions, comments, concerns, or recommendations regarding the MCE to the CMS mailbox at [email protected] for our review and consideration, we will continue to make available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software the changes to the edit code lists for both the draft version (at the time of the development of the proposed rule) and finalized version of the Definitions of Medicare Code Edits (MCE) file, in association with the annual IPPS proposed and final rules.

Comment: Some commenters encouraged CMS to delay, revisit, and provide details of specific code changes and the deactivation of edits. The commenters also stated that the edits are an additional quality assurance mechanism to ensure appropriate ICD-10-CM/PCS assignment for accurate and timely claims submission. The commenters further stated that the edits help to prevent added administrative burden associated with unnecessary claims rework and resubmission.

Response: We thank the commenters for their feedback. We believe that the FY 2025 MCE updates reflect our established process as previously described in this final rule, as well as address concerns related to claims processing discussed in prior rulemaking ( 88 FR 58768 ). We will continue to monitor these updates and consider issuing additional provider guidance to ensure accurate claims submission and processing.

Comment: Similar to the discussion in the FY 2024 IPPS/LTCH PPS final rule ( 88 FR 58789 ), a commenter requested that CMS implement an edit for claims that group to MS-DRG 014 (Allogeneic Bone Marrow Transplant), that would reject claims when an inpatient type of bill 11X claim is received without charges mapped to revenue code 0815, which is intended to capture the costs of donor search and cell acquisition activities for allogeneic hematopoietic stem cell transplants. The commenter stated that mandatory reporting of the revenue code on inpatient claims would have several benefits, including increasing the accuracy of claims reporting by transplant centers, ensuring the accuracy of CMS's budget neutrality calculations, and helping to ensure that CMS does not inappropriately generate outlier payment on MS-DRG 014 claims (given that CMS removes costs associated with revenue code 0815 from its outlier calculation). The commenter stated it would also mirror the edit established under the outpatient code editor.

Response: We appreciate the commenter's feedback. As stated in the FY 2024 IPPS/LTCH PPS final rule ( 88 FR 58789 ), we may consider provider education materials regarding the reporting of Allogeneic Stem Cell Acquisition/Donor Services in the future. We continue to believe that the suggested claims processing edit is not necessary at this time and expect providers to appropriately report charges associated with revenue code 0815.

Comment: A commenter stated it supported the removal of the vascular dementia codes from the Unacceptable Principal Diagnosis edit code list and that doing so will reduce administrative challenges with billing for services, improve the clinical accuracy of medical records and encourage appropriate care for this set of patients.

Response: We appreciate the commenter's support.

In summary, we thank the commenters for their views and feedback. Because we finalized the proposal to remove discussion of the MCE from the annual IPPS rulemakings beginning with FY 2025 rulemaking, the public may submit any future questions, comments, concerns, or recommendations regarding the MCE to the CMS mailbox at [email protected] for our review and consideration.

In association with the proposed rule, we made available the test version of the ICD-10 MS-DRG GROUPER Software, Version 42, the draft version of the ICD-10 MS-DRG Definitions Manual, Version 42, the draft version of the Definitions of Medicare Code Edits Manual, Version 42, and the supplemental mapping files in Table 6P.1a and 6P.1b of the FY 2024 and FY 2025 ICD-10-CM diagnosis and ICD-10-PCS procedure codes which 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 2025. 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 clinical appropriateness. In other cases, we proposed to maintain the existing MS-DRG classifications based on our analysis of claims data and clinical appropriateness. As discussed in the FY 2025 IPPS/LTCH PPS proposed rule, our MS-DRG analysis was based on ICD-10 claims data from the September 2023 update of the FY 2023 MedPAR file, which contains hospital bills received from October 1, 2022, through September 30, 2023. In our discussion of the proposed MS-DRG reclassification changes, we referred to these claims data as the “September 2023 update of the FY 2023 MedPAR file.”

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 clinical factors 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 ( print page 69005) 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 the FY 2022 IPPS/LTCH PPS final rule ( 86 FR 44798 ), we finalized a delay in applying this technical criterion to existing MS-DRGs until FY 2023 or future rulemaking, in light of the public health emergency (PHE). Interested parties recommended that a complete analysis of the MS-DRG changes to be proposed for future rulemaking 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, payment rates, and hospital case mix to allow meaningful comment prior to implementation.

In the FY 2023 IPPS/LTCH PPS final rule ( 87 FR 48803 ), we also finalized a delay in application of the NonCC subgroup criteria to existing MS-DRGs with a three-way severity level split in light of the ongoing PHE and until such time additional analyses can be performed to assess impacts, as discussed in response to public comments in the FY 2022 and FY 2023 IPPS/LTCH PPS final rules.

In association with our discussion of application of the NonCC subgroup criteria in the FY 2024 IPPS/LTCH PPS proposed rule ( 88 FR 26673 through 26676 ), we provided an alternate test version of the ICD-10 MS-DRG GROUPER Software, Version 41.A, reflecting the proposed GROUPER logic for FY 2024 as modified by the application of the NonCC subgroup criteria to existing MS-DRGs with a three-way severity level split, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software . Therefore, users had access to the alternate test software allowing them to build case examples that reflect the proposals included in the proposed rule with application of the NonCC subgroup criteria. We also provided additional files including an alternate Table 5—Alternate List of Medicare Severity Diagnosis Related Groups (MS-DRGs), Relative Weighting Factors, and Geometric and Arithmetic Mean Length of Stay, an alternate Length of Stay (LOS) Statistics file, an alternate Case Mix Index (CMI) file, and an alternate After Outliers Removed and Before Outliers Removed (AOR_BOR) file. The files are available in association with the FY 2024 IPPS/LTCH PPS proposed rule on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps . We stated that the alternate test software and additional files were made available so that the public could better analyze and understand the impact on the proposals included in the proposed rule if the NonCC subgroup criteria were to be applied to existing MS-DRGs with a three-way severity level split. We refer readers to the FY 2024 IPPS/LTCH PPS proposed rule ( 88 FR 26673 through 26676 ) for further discussion of the alternate test software and additional files that were made available.

In the FY 2024 IPPS/LTCH PPS final rule ( 88 FR 58655 through 58661 ), we finalized to delay the application of the NonCC subgroup criteria to existing MS-DRGs with a three-way severity level split for FY 2024. We stated that we would continue to review and consider the feedback we had received in response to the additional information we made available in association with the FY 2024 IPPS/LTCH PPS proposed rule for our development of the FY 2025 proposed rule.

In the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 35950 ), we noted that the IPPS Payment Impact File made available in connection with our annual IPPS rulemakings includes information used to categorize hospitals by various geographic and special payment consideration groups, including geographic location (urban or rural), teaching hospital status (that is, whether or not a hospital has GME residency programs and receives an IME adjustment), DSH hospital status (that is, whether or not a hospital receives Medicare DSH payments), special payment groups (that is, SCHs, MDHs, and RRCs) and other categories reflected in the impact analysis generally shown in Appendix A of the annual IPPS rulemakings. The IPPS Payment Impact File associated with the FY 2024 IPPS/LTCH PPS final rule can be found on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/fy-2024-ipps-final-rule-home-page#Data .

We proposed to continue to delay application of the NonCC subgroup criteria to existing MS-DRGs with a three-way severity level split for FY 2025, as we continue to consider the public comments received in response to the FY 2024 rulemaking. In addition, we encouraged interested parties to review the impacts and other information made available with the alternate test software (V41.A) and other additional files provided in connection with the FY 2024 IPPS/LTCH PPS proposed rule, as previously discussed, and stated that we continue to welcome feedback for consideration for future rulemaking.

Comment: Numerous commenters supported the proposal to continue to delay application of the NonCC subgroup criteria to existing MS-DRGs with a three-way severity level split for FY 2025.

Response: We thank the commenters for their support.

Comment: Several commenters expressed appreciation that CMS provided the meaningful data analysis and availability of the version 41.A alternate test GROUPER in association with the FY 2024 proposed rule, however, the commenters stated that the ability to utilize an updated alternate test software and a current batch GROUPER along with additional ( print page 69006) streamlined data by hospital type is needed. According to the commenters, updated test software and an available batch GROUPER would allow hospitals to further analyze the operational and monetary impact of this type of proposed change more thoroughly and over a longer time span.

Response: We appreciate the commenters' feedback. As we noted in the proposed rule, the IPPS Payment Impact File made available in connection with our annual IPPS rulemakings includes information used to categorize hospitals by various geographic and special payment consideration groups and other categories reflected in the impact analysis generally shown in Appendix A of the annual IPPS rulemakings. We will consider the commenters' request to provide updated test software and a batch GROUPER for future rulemaking.

Comment: A commenter who agreed with the proposal to delay application of the NonCC subgroup criteria stated that CMS did not provide any new information from, or analysis of, the FY 2023 MedPAR file as it related to base, deleted, or new MS-DRGs related to the application of the NonCC subgroup criteria. The commenter stated that new data should have been included with the proposed rule to continue efforts to view the impact of the policy.

Response: We appreciate the commenter's support and feedback. In response to the commenter's request that we provide the potential impacts using the FY 2023 claims data, we are making it available in Table 6P.4 on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps in association with this final rule.

We note that we did not propose to apply the NonCC subgroup criteria to existing MS-DRGs with a three-way severity level split for FY 2025. Moreover, as noted, we are continuing to consider comments received in response to FY 2024 rulemaking.

Comment: A commenter stated it utilized the files provided by CMS to analyze the impact of application of the NonCC subgroup criteria based on its own hospital volumes. The commenter reported that while it found some positive impacts to the relative weight of the MS-DRGs impacted when applying the NonCC subgroup criteria, they continue to have concerns regarding the variations in claims data from year-to-year that may be used in the proposed MS-DRG restructuring. The commenter stated it agreed with comments in prior years from various professional organizations that have noted the variability in claims data and, thus, case mix variations from year-to-year.

Response: We appreciate the commenter's feedback.

Comment: A few commenters expressed concern that application of the NonCC subgroup criteria to existing MS-DRGs with a three-way severity level split will reduce the impact of CCs. The commenters noted from prior year's analyses findings that there are a number of MS-DRGs that would potentially be consolidated to reflect the two-way severity split for “with MCC” and “without MCC” and there were not any that reflected a “with CC/MCC” and “without CC/MCC” severity level split. The commenters stated that the impact of CCs would decrease as a result of the application of the expanded criteria, meaning that conditions designated as CC would increasingly need to be MCCs in order to impact case complexity and severity.

Response: We thank the commenters for their feedback. We disagree that application of the NonCC subgroup criteria specifically reduces the impact of CCs. Rather, we believe that application of the criteria combines the subset of cases that may or may not report a CC into one MS-DRG grouping that reflects the average costs and length of stay for that subset. Because the IPPS MS-DRGs are a system of averages, the cases reporting a CC continue to impact the average costs and average length of stay within the subgroup. We note that in the majority of the MS-DRGs where we previously assessed the impact of application of the NonCC subgroup criteria to existing MS-DRGs with a three-way severity level split and provided the potential MS-DRG changes, the volume of cases in the CC subgroup was significantly greater than those in the NonCC subgroup, thus contributing more to the overall average costs and average length of stay of the “potential” new MS-DRG structure. We also note that providers have the ability to identify the subset of cases reporting a CC within the existing “with MCC” and “without MCC” MS-DRGs construct within their respective facilities.

After consideration of the public comments we received, and for the reasons discussed, 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 for FY 2025 as we continue to consider the public comments received in response to the FY 2024 rulemaking. We also continue to encourage interested parties to review the impacts and other information made available with the alternate test software (V41.A) and other additional files provided in connection with the FY 2024 IPPS/LTCH PPS proposed rule, as previously discussed. We continue to welcome feedback for consideration for future rulemaking that may be directed to MEARIS TM at https://mearis.cms.gov/public/home .

As discussed in the FY 2024 IPPS/LTCH PPS final rule ( 88 FR 58661 ), we continue to apply the criteria to create subgroups, including application of the NonCC subgroup criteria, in our annual analysis of MS-DRG classification requests, consistent with our approach since FY 2021 when we finalized the expansion of the criteria to include the NonCC subgroup for a three-way severity level split. Accordingly, in our analysis of the MS-DRG classification requests for FY 2025 that we received by October 20, 2023, 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, we stated earlier that for the FY 2025 IPPS/LTCH PPS proposed rule, our MS-DRG analysis was based on ICD-10 claims data from the September 2023 update of the FY 2023 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 two years of MedPAR claims data to compare the data results from one 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. In applying the criteria for a three-way split, a base MS-DRG is initially subdivided into the three subgroups: MCC, CC, and NonCC. Each subgroup is then analyzed in relation to the other two subgroups using the volume (Criteria 1 and 2), average cost (Criteria 3 and 4), and reduction in variance (Criteria 5). If the criteria fail, the next step is to determine if the criteria are satisfied for a two-way split. In applying the criteria for a two-way split, a base MS-DRG is initially subdivided into two subgroups: “with MCC” and “without MCC” (1_23) or “with CC/MCC” and “without CC/MCC” (12_3). Each subgroup is then analyzed in relation to the other using the volume (Criteria 1 and 2), average cost (Criteria 3 and 4), and reduction in variance (Criteria 5). 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.

Comment: A commenter recommended that CMS consider patient risk adjustment as a criterion for creating CC and MCC subgroups, including the impact of multiple comorbidities. According to the commenter, published literature suggests that as comorbidity status increases, patient risk of clinical events increase, as well as potential resource use. For example, the commenter stated that studies suggest that in patients with one presenting risk factor/comorbidity (either hypertension, congenital heart disease, previous stroke, or diabetes), compared to patients without these risks, that the risk of future stroke was 1.96 greater. [ 4 ] According to the commenter, the authors also found patients with 2 or more of these risk factors to have an increased risk of future stroke at 2.87 greater the risk of patients without risk factors and stated that these results suggest the cumulative effect of multiple CCs can dramatically impact a patient's risk and resource use in the absence of an MCC. The commenter suggested that CMS should consider the impact of multiple CCs (heart failure, AF, etc.) as a criterion when grouping an inpatient procedure to an MCC grouping in the absence of MCC.

Response: We appreciate the commenter's input and will take it under consideration as we continue to consider feedback associated with application of the NonCC subgroup criteria.

We are making the FY 2025 ICD-10 MS-DRG GROUPER and Medicare Code Editor (MCE) Software Version 42, the ICD-10 MS-DRG Definitions Manual files Version 42 and the Definitions of Medicare Code Edits Manual Version 42 available to the public on our CMS ( print page 69008) website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software .

In the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 35951 through 35952 ), we discussed a request we received to revise the title of Pre-MDC MS-DRG 018 (Chimeric Antigen Receptor (CAR) T-cell and Other Immunotherapies) in connection with an ICD-10-PCS procedure code request that was submitted via MEARIS TM by the December 1, 2023 deadline for consideration as an agenda topic to be discussed at the March 19-20, 2024 ICD-10 Coordination and Maintenance Committee meeting. The procedure code request involves the application of an autologous genetically engineered cell-based gene therapy, prademagene zamikeracel (PZ), that is indicated in the treatment of recessive dystrophic epidermolysis bullosa (RDEB), an extremely rare genetic disease of the skin that leads to large chronic wounds. The proposal was presented and discussed at the March 19-20, 2024, ICD-10 Coordination and Maintenance Committee meeting. We refer the reader to the CMS website at https://www.cms.gov/medicare/coding-billing/icd-10-codes/icd-10-coordination-maintenance-committee-materials for additional detailed information regarding the request, including a recording of the discussion and the related meeting materials. Public comments in response to the code proposal were due by April 19, 2024. The requestor suggested that if finalized, a new procedure code to identify the application of PZ should be assigned to Pre-MDC MS-DRG 018 and that the title for Pre-MDC MS-DRG 018 be revised to reflect “Chimeric Antigen Receptor (CAR) T and Other Autologous Gene and Cell Therapies”.

Because the diagnosis and procedure code proposals that are presented at the March ICD-10-CM Coordination and Maintenance Committee meeting for an October 1 implementation (upcoming FY) are not finalized in time to include in Table 6A.—New Diagnosis Codes and Table 6B.—New Procedure Codes in association with the proposed rule, as we have noted in prior rulemaking, we use our established process to examine the MS-DRG assignment for the predecessor codes to determine the most appropriate MS-DRG assignment. Specifically, we review the predecessor code and MS-DRG assignment most closely associated with the new 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 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. Under this established process, the MS-DRG assignment for the upcoming fiscal year for any new diagnosis or procedure codes finalized after the March meeting would be reflected in Table 6A.—New Diagnosis Codes and Table 6B.—New Procedure Codes associated with the final rule for that fiscal year. Accordingly, we stated that the MS-DRG assignment for any new procedure codes describing PZ, if finalized following the March meeting, would be reflected in Table 6B.—New Procedure Codes associated with the final rule for FY 2025. As noted in prior rulemaking ( 87 FR 28135 ), the codes that are finalized after the March meeting are specifically identified with a footnote in Table 6A.—New Diagnosis Codes and Table 6B.—New Procedure Codes that are made publicly available in association with the final rule on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps . The public may provide feedback on these finalized assignments, which is then taken into consideration for the following fiscal year.

We note that the proposal to create new procedure codes that describe the application of PZ as discussed at the March 19-20, 2024, ICD-10 Coordination and Maintenance Committee meeting was approved and finalized as reflected in the FY 2025 ICD-10-PCS Code Update files that were made publicly available on the CMS website on June 5, 2024 at https://www.cms.gov/medicare/coding-billing/icd-10-codes/2025-icd-10-pcs .

We stated in the proposed rule that we did not agree with the request to revise the title for Pre-MDC MS-DRG 018 for FY 2025 as requested because the logic for Pre-MDC MS-DRG 018 is intended to include other immunotherapies and is not restricted to CAR T-cell and autologous gene and cell therapies. As discussed in the FY 2022 IPPS/LTCH PPS final rule ( 86 FR 44798 through 44806 ), we finalized our proposal to revise the title of Pre-MDC MS-DRG 018 to include “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, in addition to CAR T-cell therapies. We noted that 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).

In the proposed rule we also noted that, as discussed in prior rulemaking, this category of therapies continues to evolve, and we are in the process of carefully considering the feedback we have previously received about ways in which we can continue to appropriately reflect resource utilization while maintaining clinical coherence and stability in the relative weights under the IPPS MS-DRGs. We stated we will continue to examine these complex issues in connection with future rulemaking and acknowledged that there may be distinctions to account for as we continue to gain more experience in the use of these therapies and have additional claims data to analyze.

Therefore, we did not propose to revise the title for Pre-MDC MS-DRG 018 to reflect “Chimeric Antigen Receptor (CAR) T and Other Autologous Gene and Cell Therapies” and proposed to maintain the existing title to Pre-MDC MS-DRG 018, “Chimeric Antigen Receptor (CAR) T-cell and Other Immunotherapies” for FY 2025.

Comment: Commenters expressed support for the proposal to maintain the existing title to Pre-MDC MS-DRG 018, “Chimeric Antigen Receptor (CAR) T-cell and Other Immunotherapies” for FY 2025.

Comment: A commenter stated that application of PZ (prademagene zamikeracel) seems to differ significantly in terms of clinical coherence and resource utilization from other therapies currently mapped to MS-DRG 018, specifically in that it requires an operating room and subsequent post-surgical care. According to the commenter, although CMS did not specifically propose to map cases reporting the application of PZ to Pre-MDC MS-DRG 018 for FY ( print page 69009) 2025, PZ does not appear to be a match for the technologies currently included in Pre-MDC MS-DRG 018 since it is not an immunotherapy and would be the only surgical episode of care in the MS-DRG. The commenter requested that CMS not finalize the mapping for application of PZ to Pre-MDC MS-DRG 018 due to differences in resource use.

Another commenter stated that if CMS were to continue to assign new, higher volume, lower cost therapies to MS-DRG 018, it could potentially distort the relative weight of the MS-DRG, resulting in inadequate payment for CAR T-cell therapies. This commenter also recommended that CMS not map cases reporting application of PZ to Pre-MDC MS-DRG 018 due to clinical resource differences with other therapies currently mapped to Pre-MDC MS-DRG 018. The commenter further stated that given the important role CAR T-cell therapies play, and will continue to play for cancer patients, CMS should clarify its methodology for the inclusion of new procedure codes within Pre-MDC MS-DRG 018 and consider the resource costs and needs of potential new therapies to this MS-DRG so as not to limit access to current therapies. Other commenters recommended that CMS provide transparency in the assignment of therapies to Pre-MDC MS-DRG 018 to ensure accurate, predictable, and appropriate payment, including consideration of comparable resource use to existing therapies currently mapped to Pre-MDC MS-DRG 018.

Another commenter requested that CMS map the new procedure codes describing application of PZ to Pre-MDC MS-DRG 018, given the clinical characteristics and resource intensity of the gene and cellular therapy. According to the commenter, administration of both autologous CAR T-cell therapies and PZ is initiated through the collection of a sample of the patient's own cells. The commenter stated the cells are then modified as part of a complex and resource intensive process requiring the insertion of a new gene into the patient's own cells before administering them back to the patient. Specifically, the commenter stated that the keratinocyte cells (that is, the most prominent cells in the epidermis) of patients diagnosed with RDEB are collected via a “punch” biopsy procedure and transduced with a functional COL7A1 transgene using a retroviral vector, which is intended to result in adequate expression and secretion of the type VII collagen protein critical to anchoring the epidermis and facilitating wound healing. The commenter stated the transduced cells are then expanded, matured, and processed into sheets through an approximate 25-day process before they can be delivered to the hospital site and applied to the patient. The commenter stated that this process mirrors the CAR T-cell therapy development and administration process, where cells are harvested from the patient's blood, the patient's T-cells are isolated through a leukapheresis procedure, and the T-cells then are transduced with a CAR-encoding viral vector and expanded over an approximate month-long period before being returned to the treatment center for administration to the patient. The commenter also stated that the application of PZ shares other similarities with the technologies currently assigned to Pre-MDC MS-DRG 018, including the need for an inter-disciplinary team of health care personnel, and an extended length of stay following treatment. According to the commenter, from a resource perspective, like other therapies currently assigned to Pre-MDC MS-DRG 018, the main driver of resource utilization for an inpatient stay is the administration of the technology.

Response: We appreciate the commenters' feedback. In response to the commenters who requested that CMS not finalize the mapping for application of PZ to Pre-MDC MS-DRG 018 due to the belief that there are differences in resource use when compared to other therapies currently mapped to Pre-MDC MS-DRG 018, we note that the commenters did not indicate whether they believed the differences in resource use for application of PZ are higher or lower in comparison to the other therapies currently mapped to Pre-MDC MS-DRG 018, nor did the commenters offer any alternative MS-DRG suggestions for CMS's consideration. We acknowledge that application of PZ requires use of an operating room and the administration of other therapies currently assigned to Pre-MDC MS-DRG 018 do not. We also note that consistent with our established process for assigning new diagnosis or new procedure codes to MDCs, MS-DRGs, and the associated attributes (severity level and O.R. status), we examined the MDCs, MS-DRG assignment and O.R. status of the predecessor procedure codes to inform our assignments and designations. As discussed in prior rulemaking and previously in the preamble of this final rule, 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 have previously noted that this process does not automatically result in the new diagnosis or procedure code being assigned to the same MS-DRG or to have the same designation as the predecessor code. In our evaluation of MS-DRG classification requests under the IPPS MS-DRGs, consideration is also given to the similarities and differences in resource utilization among patients in each MS-DRG and we strive to ensure that resource utilization is relatively consistent across patients in each MS-DRG. However, some variation in resource intensity will remain among the patients in each MS-DRG because the definition of the MS-DRG is not so specific that every patient is identical, rather the average pattern of resource intensity of a group of patients in an MS-DRG can be predicted.

We note that historically, in the development of the DRGs, the initial step in the determination of the DRG had been the assignment of the appropriate MDC based on the principal diagnosis, however, beginning with the eighth version of the GROUPER (CMS 8.0), the initial step in DRG assignment was based on the procedure being performed, thus the creation of the Pre-MDC DRGs, where the patient is assigned to these DRGs independent of the MDC of the principal diagnosis. Therefore, while the existing therapies (that is, CAR T-cell and non-CAR T-cell) currently mapped to Pre-MDC MS-DRG 018 may be indicated in the treatment of patients with cancer, the logic for case assignment to Pre-MDC MS-DRG 018 does not preclude the assignment of other therapies indicated in the treatment of patients that do not have a diagnosis of cancer. In our review of the MS-DRG assignment for application of PZ, we recognized that this technology is defined as an investigational genetically engineered autologous cell therapy. We also note that similar to the discussions in prior rulemaking with respect to the difficulty in predicting what the associated costs will be in the future for CAR T-cell and other immunotherapies that remain under development ( 87 FR 48806 ), it is also difficult to predict what the associated costs will be in the future for cell and gene therapies that remain under development or in clinical trials.

We further note that, in response to the President's Executive Order 14087 , “Lowering Prescription Drug Costs for Americans”, a Cell and Gene Therapy ( print page 69010) (CGT) Access Model was developed, which could help inform future inpatient payment policy for cell and gene therapies more generally. For additional information on the CGT Access Model, we refer the reader to the CMS website at https://www.cms.gov/priorities/innovation/innovation-models/cgt .

Until such time additional data becomes available, we believe it is appropriate to map cases reporting the application of PZ to Pre-MDC MS-DRG 018 for FY 2025 based on the information currently available indicating similar utilization of resources for other cases currently mapped to MS-DRG 018 with regard to patients' severity of illness, treatment difficulty, and complexity of service.

In response to concerns that the assignment of new, higher volume, lower cost therapies to MS-DRG 018 could potentially distort the relative weight of the MS-DRG resulting in inadequate payment for CAR T-cell therapies, we note that in the FY 2023 IPPS/LTCH PPS final rule ( 87 FR 48807 ), we addressed similar comments and also noted that we provided detailed summaries and responses to these same or similar comments in the FY 2022 IPPS/LTCH PPS final rule ( 86 FR 44798 through 44806 ). We also refer the reader to the discussion in the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 36018 through 36020 ), and in section II.D.2.b. of this final rule, regarding the proposed and finalized relative weight methodology for cases mapping to Pre-MDC MS-DRG 018 effective October 1, 2024, for FY 2025.

After consideration of the public comments we received, we are finalizing our proposal to maintain the existing title to Pre-MDC MS-DRG 018, “Chimeric Antigen Receptor (CAR) T-cell and Other Immunotherapies” for FY 2025. We are also finalizing the assignment of the eight procedure codes describing the use of PZ to Pre-MDC MS-DRG 018 as reflected in Table 6B.—New Procedure Codes, in association with this final rule and available on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps .

In the FY 2024 IPPS/LTCH PPS final rule ( 88 FR 58661 through 58667 ), we discussed a request to reassign cases describing the insertion of a neurostimulator generator into the skull in combination with the insertion of a neurostimulator lead into the brain from MS-DRG 023 (Craniotomy with Major Device Implant or Acute Complex CNS Principal Diagnosis with MCC or Chemotherapy Implant or Epilepsy with Neurostimulator) to MS-DRG 021 (Intracranial Vascular Procedures with Principal Diagnosis Hemorrhage with CC) or reassign all cases currently assigned to MS-DRG 023 that involve a craniectomy or a craniotomy with the insertion of device implant and create a new MS-DRG for these cases.

We stated the requestor acknowledged that the relatively low volume of cases that only involve the insertion of a neurostimulator generator into the skull in combination with the insertion of a neurostimulator lead into the brain in the claims data was likely not sufficient to warrant the creation of a new MS-DRG. The requestor further stated given the limited options within the existing MS-DRG structure that fit from both a cost and clinical cohesiveness perspective, they believed that MS DRG 021 was the most logical fit in terms of average costs and clinical coherence for reassignment even though, according to the requestor, the insertion of a neurostimulator generator into the skull in combination with the insertion of a neurostimulator lead into the brain is technically more complex and involves a higher level of training, extreme precision and sophisticated technology than performing a craniectomy for hemorrhage.

We noted that while our data findings demonstrated the average costs are higher for the cases with a principal diagnosis of epilepsy with a neurostimulator generator inserted into the skull and insertion of a neurostimulator lead into brain when compared to all cases in MS-DRG 023, these cases represented a small percentage of the total number of cases reported in this MS-DRG. We stated that while we appreciated the requestor's concerns regarding the differential in average costs for cases describing the insertion of a neurostimulator generator into the skull in combination with the insertion of a neurostimulator lead into the brain when compared to all cases in their assigned MS-DRG, we believed additional time was needed to evaluate these cases as part of our ongoing examination of the case logic to the MS-DRGs for craniotomy and endovascular procedures, which are MS-DRG 023, MS-DRG 024 (Craniotomy with Major Device Implant or Acute Complex CNS Principal Diagnosis without MCC), and MS-DRGs 025, 026, and 027 (Craniotomy and Endovascular Intracranial Procedures with MCC, with CC, and without CC/MCC, respectively).

As discussed in the FY 2023 IPPS/LTCH PPS final rule ( 87 FR 48808 through 48820 ), in connection with our analysis of cases reporting laser interstitial thermal therapy (LITT) procedures performed on the brain or brain stem in MDC 01, we stated we have started to examine the logic for case assignment to MS-DRGs 023 through 027 to determine where further refinements could potentially be made to better account for differences in the technical complexity and resource utilization among the procedures that are currently assigned to those MS-DRGs. We stated that specifically, we were in the process of evaluating procedures that are performed using an open craniotomy (where it is necessary to surgically remove a portion of the skull) versus a percutaneous burr hole (where a hole approximately the size of a pencil is drilled) to obtain access to the brain in the performance of a procedure. We stated we were also reviewing the indications for these procedures, for example, malignant neoplasms versus epilepsy to consider if there may be merit in considering restructuring the current MS-DRGs to better recognize the clinical distinctions of these patient populations in the MS-DRGs.

As part of this evaluation, as discussed in the FY 2024 IPPS/LTCH PPS final rule, we have begun to analyze the ICD-10 coded claims data to determine if the patients' diagnoses, the objective of the procedure performed, the specific anatomical site where the procedure is performed or the surgical approach used (for example, open, percutaneous, percutaneous endoscopic, among others) demonstrates a greater severity of illness and/or increased treatment difficulty as we consider restructuring MS-DRGs 023 through 027, including how to better align the clinical indications with the performance of specific intracranial procedures. We referred the reader to Tables 6P.2b through 6P.2f associated with the FY 2024 IPPS/LTCH PPS proposed rule (available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps ) for data analysis findings of cases assigned to MS-DRGs 023 through 027 from the September 2022 update of the FY 2022 MedPAR file as we continue to look for patterns of complexity and resource intensity.

In summary, we stated that while we agreed that neurostimulator cases can have average costs that are higher than the average costs of all cases in their respective MS-DRGs, in our analysis of this issue, it was difficult to detect ( print page 69011) patterns of complexity and resource intensity. Therefore, for the reasons discussed, we finalized our proposal to maintain the current assignment of cases describing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain for FY 2024.

In the FY 2024 IPPS/LTCH PPS final rule, we stated we continue to believe that additional time is needed to evaluate these cases as part of our ongoing examination of the case logic for MS-DRGs 023 through 027. As part of our ongoing, comprehensive analysis of the MS-DRGs under ICD-10, we stated we would continue to explore mechanisms to ensure clinical coherence between these cases and the other cases with which they may potentially be grouped. We stated that the data analysis as displayed in Tables 6P.2b through 6P.2f associated with the FY 2024 IPPS/LTCH PPS proposed rule was displayed to provide the public an opportunity to review our examination of the procedures by their approach (open versus percutaneous), clinical indications, and procedures that involve the insertion or implantation of a device and to reflect on what factors should be considered in the potential restructuring of these MS-DRGs. We welcomed further feedback on how CMS should define technical complexity, what factors should be considered in the analysis, and whether there are other data not included in Tables 6P.2b through 6P.2f that CMS should analyze. We also stated we are interested in receiving feedback on where further refinements could potentially be made to better account for differences in the technical complexity and resource utilization among the procedures that are currently assigned to these MS-DRGs.

In the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 35952 through 35953 ), we discussed two comments we received by the October 20, 2023 deadline in response to this discussion in the FY 2024 IPPS/LTCH PPS final rule. A commenter recommended that CMS not use surgical approach (for example, open versus percutaneous) as a factor to reclassify MS-DRGs 023 through 027. The commenter stated whether the opening is created via a drill into the skull percutaneously or through a larger incision in the skull for a craniotomy, both approaches involve the risk of intracranial bleeding, infection, and brain swelling. The commenter further stated they do not support a consideration of the reassignment of the ICD-10-PCS procedure codes describing LITT, currently assigned to MS-DRGs 025 through 027, based on the diagnosis being treated. The commenter stated that the LITT procedure requires the same steps, time, and clinical resources when performed for brain cancer or epilepsy. In the commenter's view, differences in the disease causing the tumors or lesions do not affect the resources used for performing the procedure or the post-operative care for the patient. Lastly, the commenter stated they support the current structure of MS-DRGs 023 and 024 based on an acute complicated principal diagnosis, or chemotherapy implant, or epilepsy with neurostimulator. The commenter stated these diagnoses represent severe complex conditions that require immediate and urgent intervention.

Another commenter stated that the current logic for MS-DRGs 023 through 027 is sufficient and supports the clinical and resource similarities of the procedures reflected in these MS-DRGs. The commenter performed its own analysis and stated they found that realignment based on surgical approach or root operation could create significant new inequities. The commenter recommended that CMS maintain the current logic for MS-DRGs 025 through 027, as making changes could be disruptive to hospitals and create challenges for Medicare beneficiary access to life-saving technologies. The commenter stated they strongly believe that maintaining the current structure provides payment stability and integrity of these procedures over time.

In this final rule, we summarize the additional comments we received in response to this discussion in the FY 2025 IPPS/LTCH PPS proposed rule.

Comment: Commenters stated they support CMS' decision to continue to monitor the case logic for MS-DRGs 023 through 027 to determine if future changes are warranted. A commenter specifically stated in their review, they were unable to detect misalignment in patterns of complexity or resource intensity within MS-DRGs 023 through 027 and noted the procedures are well-established. Another commenter stated they appreciate CMS reviewing the craniotomy MS-DRGs and stated that CMS should ensure that MS-DRG assignments fully reflect all costs for very resource-intensive craniotomy procedures. This commenter also recommended that CMS expand its review of the craniotomy MS-DRGs to include MS-DRGs 020, 021, and 022 (Intracranial Vascular Procedures with Principal Diagnosis Hemorrhage with MCC, with CC, and without CC/MCC, respectively) and stated that the payments for these MS-DRGs have been highly variable in recent years, notably being proposed to reduce by more than 7 percent for FY 2025, and may fail to adequately reflect the resources associated with care for patients with diagnoses such as aneurysms. The commenter encouraged CMS to examine these MS-DRGs with the goal of providing more stable payments for hospitals that furnish intensive craniotomy procedures and to mitigate the financial impact of large payment declines. Several other commenters expressed caution, however, and stated that CMS should allow providers more time to identify which diagnoses support this procedure code and as such do not agree with moving it to MS-DRG 021.

Response: We thank the commenters and appreciate the commenters' support and feedback. CMS will continue to monitor and analyze the claims data with respect to MS-DRGs 023 through 027 and we will take the recommendation to also review MS-DRGs 020, 021, and 022 into consideration as we further examine the logic for case assignment to the craniotomy MS-DRGs. We note that we did not propose or finalize a change to the GROUPER logic of MS-DRGs 020, 021, and 022 in FY 2024 IPPS/LTCH PPS rulemaking, nor did we propose a change to the GROUPER logic of these MS-DRGS in the FY 2025 IPPS/LTCH PPS proposed rule, therefore, 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 FY 2025 proposed rule for MS-DRGs 020, 021, and 022 can be attributed to changes in the underlying data.

In response to the comments suggesting that CMS allow more time, it is unclear which diagnosis code and which procedure code the commenters were referring to as CMS did not propose to move any codes to MS-DRG 021 in the FY 2025 IPPS/LTCH proposed rule, and the commenters did not specifically identify any ICD-10 codes for CMS to consider.

CMS appreciates the comments submitted in response to the request for feedback in the FY 2024 IPPS/LTCH PPS final rule, as well as the comments submitted in response to the discussion in the FY 2025 IPPS/LTCH PPS proposed rule. As we continue analysis of the claims data with respect to MS-DRGs 023 through 027, we continue to seek public comments and feedback on other factors that should be considered in the potential restructuring of these MS-DRGs. As stated in prior ( print page 69012) rulemaking, we recognize the logic for MS-DRGs 023 through 027 has grown more complex over the years and believe there is opportunity for further refinement. We refer the reader to the ICD-10 MS-DRG Definitions Manual, Version 42 (available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software ) for complete documentation of the GROUPER logic for MS-DRGs 023 through 027 for FY 2025. Feedback and other suggestions may continue to be directed to MEARIS TM , discussed in section II.C.1.b. of the preamble of this final rule at: https://mearis.cms.gov/public/home .

As discussed in the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 35953 through 35956 ), we received a request to add ICD-10-PCS procedure codes D0Y0CZZ (Intraoperative radiation therapy (IORT) of brain) and D0Y1CZZ (Intraoperative radiation therapy (IORT) of brain stem), to the Chemotherapy Implant logic list in MS-DRG 023 (Craniotomy with Major Device Implant or Acute Complex CNS Principal Diagnosis with MCC or Chemotherapy Implant or Epilepsy with Neurostimulator). According to the requestor, intraoperative radiation therapy (IORT) for the brain is always performed as part of the surgery to remove a brain tumor during the same operative episode. The requestor stated that once maximal safe tumor resection is achieved, the tumor cavity is examined for active egress of cerebrospinal fluid or bleeding. Next, intraoperative measurements are made using neuro-navigation or intraoperative imaging such as magnetic resonance imaging (MRI) or computed tomography (CT) to ensure safe distance to organs or tissues at risk, aid in appropriate dose calculation, and selection of proper applicator size. The applicator is then implanted into the tumor cavity and the radiation dose is delivered. The requestor stated that delivery time can be up to 40 minutes and upon completion of the treatment, the source is removed, and the cavity is re-inspected for active egress of cerebrospinal fluid and bleeding.

As discussed in the proposed rule, the requestor stated that currently the ICD-10-PCS procedure codes for excision of a brain tumor, 00B00ZZ (Excision of brain, open approach) and 00B70ZZ (Excision of cerebral hemisphere, open approach) map to both sets of craniotomy MS-DRGs. Specifically, MS-DRG 023 (Craniotomy with Major Device Implant or Acute Complex CNS Principal Diagnosis with MCC or Chemotherapy Implant or Epilepsy with Neurostimulator) and MS-DRG 024 (Craniotomy with Major Device Implant or Acute Complex CNS Principal Diagnosis without MCC), and MS-DRGs 025, 026, and 027 (Craniotomy and Endovascular Intracranial Procedures with MCC, with CC, and without CC/MCC, respectively). However, the requestor also stated that the procedure codes describing IORT (D0Y0CZZ or D0Y1CZZ) are not listed in the GROUPER logic and do not affect MS-DRG assignment. Therefore, cases reporting a procedure code describing excision of a brain tumor (00B00ZZ or 00B70ZZ) with IORT currently map to MS-DRGs 025, 026, and 027. The requestor suggested that cases reporting a procedure code describing excision of a brain tumor (00B00ZZ or 00B70ZZ) with IORT (D0Y0CZZ or D0Y1CZZ) should map to MS-DRG 023 because of the higher costs associated with the addition of IORT to the excision of brain tumor surgery. According to the requestor, MS-DRG 023 includes complicated craniotomy cases involving the placement of radiological sources and chemotherapy implants. The requestor stated that because IORT involves a full course of radiation therapy delivered directly to the tumor bed via an applicator that is implanted into the tumor cavity during the same surgical session and is clinically similar to two other procedures listed in the Chemotherapy Implant logic list, it should also be included in the Chemotherapy Implant logic list. Specifically, the requestor stated procedure code 00H004Z (Insertion of radioactive element, cesium-131 collagen implant into brain, open approach) and procedure code 3E0Q305 (Introduction of other antineoplastic into cranial cavity and brain, percutaneous approach) also involve the delivery of either radiation or chemotherapy directly after tumor resection. According to the requestor, the resources involved in placing the delivery device are similar for all three procedures and the distinction is that the procedures described by codes 00H004Z and 3E0Q305 involve the insertion of devices that deliver radiation or chemotherapy over a period of time, whereas IORT delivers the entire dose of radiation during the operative session. As such, the requestor asserted that IORT is clinically aligned with the other procedures from a therapeutic and resource utilization perspective.

We noted in the proposed rule that the requestor performed its own analysis using the FY 2022 MedPAR file that was made available in association with the FY 2024 IPPS/LTCH PPS final rule and stated it found fewer than 11 cases reporting IORT in MS-DRGs 025, 026, and 027, with the majority of those cases mapping to MS-DRG 025. According to the requestor, the volume of claims reporting IORT is anticipated to increase as appropriate use of the technology is adopted.

We also noted in the proposed rule that the requestor is correct that currently, the logic for case assignment to MS-DRG 023 includes a Chemotherapy Implant logic list and the procedure codes that identify IORT (D0Y0CZZ and D0Y1CZZ) are not listed in the GROUPER logic and do not affect MS-DRG assignment as the procedures are designated as non-O.R. procedures. The requestor is also correct that cases reporting a procedure code describing excision of a brain tumor (00B00ZZ or 00B70ZZ) with IORT currently map to MS-DRGs 025, 026, and 027. We refer the reader to the ICD-10 MS-DRG Definitions Manual Version 41.1 (available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software ) for complete documentation of the GROUPER logic.

As discussed in the proposed rule, we analyzed claims data from the September 2023 update of the FY 2023 MedPAR file for MS-DRGs 023, 024, 025, 026, and 027 and for cases reporting excision of brain tumor and IORT. We identified claims reporting excision of brain tumor with procedure code 00B00ZZ or 00B70ZZ and identified claims reporting IORT with procedure code D0Y0CZZ or D0Y1CZZ. The findings from our analysis are shown in the following table. We note that there were no cases found to report IORT of brain (D0Y0CZZ) or brain stem (D0Y1CZZ) with excision of brain (00B00ZZ) or excision of cerebral hemisphere (00B70ZZ).

As the data show, there were no cases found to report the use of IORT in the performance of a brain tumor excision; therefore, we are unable to evaluate whether the use of IORT directly impacts resource utilization. For this reason, we proposed to maintain the current structure of MS-DRGs 023, 024, ( print page 69014) 025, 026, and 027 for FY 2025. We stated that we would continue to monitor the claims data in consideration of any future modifications to the MS-DRGs for which IORT may be reported.

Comment: Commenters supported the proposal to maintain the current structure of MS-DRGs 023, 024, 025, 026, and 027 for FY 2025.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to maintain the current structure of MS-DRGs 023, 024, 025, 026, and 027 for FY 2025.

As discussed in the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 35956 through 35959 ), we received a request to create a new MS-DRG to better accommodate the costs of concomitant left atrial appendage closure and cardiac ablation for atrial fibrillation in MDC 05 (Diseases and Disorders of the Circulatory System). 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. Among patients with AF, thrombus in the left atrial appendage (LAA) is a primary source for thromboembolism. Left Atrial Appendage Closure (LAAC) is a surgical or minimally invasive procedure to seal off the LAA to reduce the risk of embolic stroke.

According to the requestor, the manufacturer of the WATCHMAN TM Left Atrial Appendage Closure (LAAC) device, patients who are indicated for a LAAC device can also have symptomatic AF. For these patients, performing a cardiac ablation and LAAC procedure at the same time is ideal. Cardiac 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. In the proposed rule, we noted the requestor highlighted a recent study (Piccini et al. Left atrial appendage occlusion with the WATCHMAN TM FLX and concomitant catheter ablation procedures. Heart Rhythm Society Meeting 2023, May 19, 2023; New Orleans, LA.). According to the requestor, the results of this study indicate that when LAAC is performed concomitantly with cardiac ablation, the outcomes are comparable to patients who have undergone these procedures separately.

As discussed in the proposed rule, the requestor identified the following potential procedure code combination that would comprise a concomitant left atrial appendage closure and cardiac ablation procedure: ICD-10-PCS procedure code 02L73DK (Occlusion of left atrial appendage with intraluminal device, percutaneous approach), that identifies the WATCHMAN TM device, in combination with 02583ZZ (Destruction of conduction mechanism, percutaneous approach). We noted in the proposed rule that the requestor performed its own analysis of this procedure code combination and stated that it found the average costs of cases reporting concomitant left atrial appendage closure and cardiac ablation procedures were consistently higher compared to the average costs of other cases within their respective MS-DRG, which it asserted could limit beneficiary access to these procedures. The requestor asserted that improved Medicare payment for providers who perform these procedures concomitantly would help Medicare patients to gain better access to these lifesaving and quality-improving services and decrease the risk of future readmissions and the need for future procedures.

We reviewed this request and in the proposed rule noted concerns regarding making proposed MS-DRG changes based on a specific, single technology (the WATCHMAN TM Left Atrial Appendage Closure (LAAC) device) identified by only one unique procedure code versus considering proposed changes based on a group of related procedure codes that can be reported to describe the same type or class of technology, which is more consistent with the intent of the MS-DRGs. Therefore, in reviewing this request, in the proposed rule we stated we identified eight additional ICD-10-PCS procedure codes that describe LAAC procedures and included these codes in our analysis. The nine codes we identified are listed in the following table.

Similarly, as noted previously, the requestor identified code 02583ZZ (Destruction of conduction mechanism, percutaneous approach) to describe cardiac ablation. In our review of the ICD-10-PCS classification, in the proposed rule we stated we identified 26 additional ICD-10-PCS codes that describe cardiac ablation that we also examined. The 27 codes we included in our analysis are listed in the following table.

In the ICD-10 MS-DRGs Definitions Manual Version 41.1, for concomitant left atrial appendage closure and cardiac ablation procedures, the GROUPER logic assigns MS-DRGs 273 and 274 (Percutaneous and Other Intracardiac Procedures with and without MCC, respectively) depending on the presence of any additional MCC secondary diagnoses. We stated in the proposed rule that we examined claims data from the September 2023 update of the FY 2023 MedPAR file for all cases in MS-DRGs 273 and 274 and compared the results to cases reporting procedure codes describing concomitant left atrial appendage closure and cardiac ablation. Our findings are shown in the following table.

As shown in the table, in MS-DRG 273, we identified a total of 7,250 cases with an average length of stay of 5.4 days and average costs of $35,197. Of those 7,250 cases, there were 80 cases reporting procedure codes describing concomitant left atrial appendage closure and cardiac ablation with average costs higher than the average costs in the FY 2023 MedPAR file for MS-DRG 273 ($70,447 compared to $35,197) and a slightly longer average length of stay (5.8 days compared to 5.4 days). In MS-DRG 274, we identified a total of 47,801 cases with an average length of stay of 1.4 days and average costs of $29,209. Of those 47,801 cases, there were 781 cases reporting procedure codes describing concomitant left atrial appendage closure and cardiac ablation, with average costs higher than the average costs in the FY 2023 MedPAR file for MS-DRG 274 ($66,277 compared to $29,209) and a slightly longer average length of stay (1.5 days compared to 1.4 days).

In the proposed rule we stated we reviewed these data and noted, clinically, the management of AF by performing concomitant left atrial appendage closure and cardiac ablation can improve symptoms, prevent stroke, and reduce the risk of bleeding compared with oral anticoagulants. We stated the data analysis clearly shows that cases reporting concomitant left atrial appendage closure and cardiac ablation procedures have higher average costs and slightly longer lengths of stay compared to all the cases in their assigned MS-DRG. For these reasons, we proposed to create a new MS-DRG for cases reporting a LAAC procedure and a cardiac ablation procedure. ( print page 69016)

As discussed in the proposed rule, to compare and analyze the impact of our suggested modifications, we ran a simulation using the claims data from the September 2023 update of the FY 2023 MedPAR file. The following table illustrates our findings for all 1,723 cases reporting procedure codes describing concomitant left atrial appendage closure and cardiac ablation. We stated we believed the resulting proposed MS-DRG assignment is more clinically homogeneous, coherent and better reflects hospital resource use.

We applied the criteria to create subgroups in a base MS-DRG as discussed in section II.C.1.b. of the FY 2025 IPPS/LTCH PPS proposed rule. As shown in the table that follows, a three-way split of the proposed new MS-DRGs failed the criterion that there be at least 500 cases for each subgroup due to low volume. Specifically, for the “with MCC” split, there were only 268 cases in the subgroup.

We noted that we then applied the criteria for a two-way split for the “with CC/MCC” and “without CC/MCC” subgroups and found that the criterion that there be at least a 20% difference in average cost between subgroups could not be met. The following table illustrates our findings.

We also applied the criteria for a two-way split for the “with MCC” and “without MCC” subgroups and found that the criterion that there be at least 500 or more cases in each subgroup similarly could not be met. The criterion that there be at least a 20% difference in average costs between the subgroups also was not met. The following table illustrates our findings.

Therefore, for FY 2025, we did not propose to subdivide the proposed new MS-DRG for cases reporting procedure codes describing concomitant left atrial appendage closure and cardiac ablation into severity levels.

In summary, for FY 2025, taking into consideration that it clinically requires greater resources to perform concomitant left atrial appendage closure and cardiac ablation procedures, we proposed to create a new base MS-DRG for cases reporting a LAAC procedure and a cardiac ablation procedure in MDC 05. The proposed new MS-DRG is proposed new MS-DRG 317 (Concomitant Left Atrial Appendage Closure and Cardiac Ablation). We also proposed to include the nine ICD-10-PCS procedure codes that describe LAAC procedures and the 27 ICD-10-PCS procedure codes that describe cardiac ablation listed previously in the logic for assignment of cases reporting a LAAC procedure and a cardiac ablation procedure for the proposed new MS-DRG.

Comment: Many commenters expressed support for the proposal to create new base MS-DRG 317 for cases reporting a LAAC procedure and a cardiac ablation procedure in MDC 05. Commenters stated the creation of MS-DRG 317 is timely and will ensure more patients have access to needed care during a single hospital stay, reducing the need for additional admissions. Other commenters agreed that some patients with AF undergoing ablation are also candidates for LAAC procedures and stated combining the procedures is feasible, efficacious, and simple to employ. Several commenters stated that the proposal is a significant step forward to support better disease management for some of the most comorbid patients and likely will reduce downstream healthcare costs. A few commenters specifically stated they appreciate CMS' continued evaluation and acknowledgement of the increased resources required for patients requiring multiple procedures during a single inpatient hospitalization. While supporting the proposal to create MS-DRG 317, some commenters suggested that CMS devise a broader, more inclusive, supplemental payment mechanism to facilitate incremental payment when two major procedures are performed during the same hospital admission.

Response: We appreciate the commenters' support and the feedback regarding payment when two major ( print page 69017) procedures are performed during the same hospital admission.

Comment: Another commenter recommended that CMS delay creation of proposed new MS-DRG 317 for concomitant LAAC and cardiac ablation. While expressing support for proposals that will improve patient outcomes and increase efficiencies in the health care system, the commenter stated they believe it is premature for CMS to develop a new MS-DRG at this time. The commenter expressed concern that the evidence to support the safety, effectiveness, and workflow of these two procedures when performed concomitantly has not been well established and suggested that the results of two ongoing randomized control trials (RCTs) focusing on LAAC and ablation should be considered before CMS moves forward to develop a new MS-DRG.

Response: We thank the commenter for their feedback. In response to the suggestion that CMS delay implementation of proposed new MS-DRG 317 for concomitant LAAC and cardiac ablation, we reviewed the commenters' concern and do not agree that a delay is necessary or appropriate. As stated earlier, the data analysis clearly shows that cases reporting concomitant LAAC and cardiac ablation procedures have higher average costs and slightly longer lengths of stay compared to all the cases in their assigned MS-DRG. For these reasons, we proposed to create a new MS-DRG for cases reporting a LAAC procedure and a cardiac ablation procedure. We will continue to monitor the claims data and perform additional analysis if any evidence is presented to us regarding the clinical efficacy of concomitant left atrial appendage closure and cardiac ablation procedures. We would address any modifications to the logic in future rulemaking.

Comment: Other commenters noted a difference in case volume between the table CMS stated reflected the cases reporting procedure codes describing concomitant LAAC and cardiac ablation in MS-DRGs 273 and 274 and the table which CMS stated illustrated the findings for all cases reporting procedure codes describing concomitant LAAC and cardiac ablation found in the claims data from the September 2023 update of the FY 2023 MedPAR file. Specifically, the commenters noted that 861 cases reporting procedure codes describing concomitant LAAC and cardiac ablation were found in MS-DRGs 273 and 274, while 1,723 cases reporting procedure codes describing concomitant LAAC and cardiac ablation were found in the simulation using the claims data from the September 2023 update of the FY 2023 MedPAR file. The commenters stated it is unclear from the tables and data associated with the proposed rule where the additional 862 cases are currently assigned. These commenters performed their own analysis of the supplemental After Outliers Removed (AOR)/Before Outliers Removed (BOR) file available in association with the FY 2025 IPPS/LTCH PPS proposed rule on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps and recommended that CMS consider that cases reporting procedure codes describing concomitant LAAC and cardiac ablation group to other MS-DRGs, and should be incorporated into the analysis based on volume differences they noted in the AOR/BOR file.

Response: We thank the commenters for their feedback.

In response to suggestion that CMS provide insight regarding the difference in case volume between the table which we stated reflects our examination of the claims data from the September 2023 update of the FY 2023 MedPAR file for all cases in MS-DRGs 273 and 274, compared to the results for cases reporting procedure codes describing concomitant LAAC and cardiac ablation in those MS-DRGs, and the table which we stated illustrated our findings for all 1,723 cases reporting procedure codes describing concomitant LAAC and cardiac ablation, we note that as stated in the proposed rule, for concomitant LAAC and cardiac ablation procedures, the GROUPER logic assigns MS-DRGs 273 or 274 (Percutaneous and Other Intracardiac Procedures with or without MCC, respectively) depending on the presence of any additional MCC secondary diagnoses. Therefore, we focused our examination of claims data from the September 2023 update of the FY 2023 MedPAR file for all cases in MS-DRGs 273 and 274 and compared the results to cases reporting procedure codes describing concomitant LAAC and cardiac ablation.

While not explicitly stated, assignment to MS-DRGs 273 or 274 is also dependent on the absence of other procedure codes that could affect MS-DRG assignment on the claim. If other procedure codes that could affect MS-DRG assignment are also reported on the claim along with procedure codes describing concomitant left atrial appendage closure and ablation, the MS-DRG assignment can vary depending on the procedure codes reported.

As discussed in section II.C.14. 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, we proposed to sequence proposed new MS-DRG 317 (Concomitant Left Atrial Appendage Closure and Cardiac Ablation) above MS-DRG 275 (Cardiac Defibrillator Implant with Cardiac Catheterization and MCC) and below MS-DRGs 231, 232, 233, 234, 235, and 236 (Coronary Bypass with or without PTCA, with or without Cardiac Catheterization or Open Ablation, with and without MCC, respectively). Under this proposal, if procedure codes describing concomitant LAAC and cardiac ablation are reported, the GROUPER logic would assign new MS-DRG 317 in the absence of other procedure codes that could affect MS-DRG assignment to an MS-DRG that would be sequenced higher in the surgical hierarchy than MS-DRG 317 in MDC 05. The table which we stated illustrated our findings for all 1,723 cases reporting procedure codes describing concomitant LAAC and cardiac ablation includes cases that are anticipated to potentially shift or be redistributed as a result of the proposal to 1) create a new base MS-DRG 317 and 2) the proposal to sequence the new MS-DRG above MS-DRG 275 and below MS-DRGs 231, 232, 233, 234, 235, and 236 in MDC 05.

To illustrate these shifts for this final rule, we again analyzed the September 2023 update of the FY 2023 MedPAR file for cases reporting procedure codes describing concomitant LAAC and cardiac ablation. We then examined the redistribution of cases that is anticipated to occur as a result of the proposal to create a new base MS-DRG 317 by processing the claims data from the September 2023 update of the FY 2023 MedPAR file through the ICD-10 MS-DRG GROUPER Version 41 and then processing the same claims data through the ICD-10 MS-DRG GROUPER Version 42 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.

As stated in the proposed rule and reflected in the previous table, we found 1,723 cases reporting procedure codes describing concomitant LAAC and cardiac ablation that are anticipated to potentially shift or be redistributed into MS-DRG 317. The largest number of cases moving into new MS-DRG 317 are moving out of MS-DRGs 274, 229, 228 and 273. In response to the suggestion that CMS incorporate other MS-DRGs into our analysis, we examined the claims data from the September 2023 update of the FY 2023 MedPAR file to identify the average length of stay and average costs for all cases in MS-DRGs 228, 229, 242, 243, 244, 245, 267, 268, 269, 270, 271, 272, 273, 274, 275, 276, 277, 319, and 320. Our findings are shown in the following table.

In reviewing the data analysis performed, the 1,723 cases anticipated to potentially shift or be redistributed into MS-DRG 317 have higher average costs when compared to all the cases in MS-DRGs 228, 229, 273, and 274 ($54,629 versus $44,565, $28,987, $35,197, and $29,209, respectively). The 1,723 cases anticipated to potentially shift or be redistributed into MS-DRG 317 have an average length of stay that is shorter than the average length of stay for all the cases in MS-DRGs 228, 229, and 273 (3.1 days versus 8.7 days, 3.3 days, and 5.4 days, respectively) and a longer average length of stay when compared to all the cases in MS-DRG 274 (3.1 days versus 1.4 days). We note that the 1,723 cases anticipated to potentially shift or be redistributed into MS-DRG 317 have lower average costs when compared to all the cases in MS-DRGs 275, 268, and 276 ($54,629 versus $63,181, $59,383, and $54, 993, respectively), however only seven cases reported procedure codes describing concomitant left atrial appendage closure and cardiac ablation in these MS-DRGs. We also note that the 1,723 cases anticipated to potentially shift or be redistributed into MS-DRG 317 have a longer average length of stay when compared to all the cases in MS-DRGs 244, 272, 269, and 267 (3.1 days versus 2.5 days, 2.3 days, 2 days, and 1.5 days, respectively), however only 20 cases reported procedure codes describing concomitant left atrial appendage closure and cardiac ablation in these MS-DRGs. We reviewed these data and believed the proposal to create new base MS-DRG 317 for cases reporting procedure codes describing concomitant LAAC and cardiac ablation in MDC 05 and the proposed revision to the surgical hierarchy leads to a grouping that is more coherent and better reflects the clinical severity and resource use involved in these cases.

Comment: In reviewing the list of nine ICD-10-PCS procedure codes that describe LAAC procedures that were proposed to be included in the logic for assignment of cases reporting procedure codes describing concomitant LAAC and cardiac ablation for the proposed new MS-DRG, a commenter noted these nine codes are designated as non-O.R. procedures affecting the MS-DRG. The commenter also noted that codes 02570ZK (Destruction of left atrial appendage, open approach), 02573ZK (Destruction of left atrial appendage, percutaneous approach), and 02574ZK (Destruction of left atrial appendage, percutaneous endoscopic approach) included in the list of 27 ICD-10-PCS procedure codes that describe cardiac ablation proposed to be included in the logic for assignment to the proposed new MS-DRG, are also designated as non-O.R. procedures affecting the MS-DRG. The commenter stated that LAAC procedures and cardiac ablation procedures performed by an open or percutaneous endoscopic approach should be designated as operating room procedures to account for the resource utilization required to perform them as these procedures require the use of specialized equipment or devices.

Response: We thank the commenter for their feedback.

We agree that in the ICD-10 MS-DRGs Definitions Manual Version 41.1, the nine ICD-10-PCS procedure codes that describe LAAC procedures are recognized as non-O.R. procedures affecting the MS-DRGs to which they are assigned. We refer the reader to Section II.C.10 in the proposed rule and this final rule for the complete discussion of the designations each ICD-10-PCS code has under the IPPS MS-DRGs that determine whether and in what way the presence of that procedure code on a claim impacts the MS-DRG assignment. In the FY 2022 IPPS/LTCH PPS final rule ( 86 FR 44898 through 44899 ) we reviewed these nine ICD-10-PCS procedure codes that ( print page 69020) describe LAAC procedures and stated we believe 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. We further stated that we 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.

We continue to believe that circumstances in which a patient is admitted for a principal diagnosis outside of MDC 05 and LAAC is performed as the only surgical procedure in the same admission are infrequent, and that the current designation of LAAC procedures as non-O.R. procedures that affect the assignment for MS-DRGs 273 and 274, and now MS-DRG 317, is clinically appropriate to account for the subset of patients undergoing left atrial appendage closure specifically.

Similarly, we agree that in the ICD-10 MS-DRGs Definitions Manual Version 41.1, procedure codes 02570ZK, 02573ZK, and 02574ZK are recognized as non-O.R. procedures affecting the MS-DRGs as reflected in the following table, specifically.

We believe that circumstances in which a patient is admitted for a principal diagnosis outside of MDC 05 and a cardiac ablation is performed as the only surgical procedure in the same admission are infrequent, and that the current designation of 02570ZK, 02573ZK, and 02574ZK as non-O.R. procedures that affect the assignment for the MS-DRGs reflected in the previous table, and now MS-DRG 317, is clinically appropriate to account for the subset of patients undergoing cardiac ablation specifically.

Comment: A commenter suggested that ICD-10-PCS codes 02590ZZ (Destruction of chordae tendineae, open approach), 02593ZZ (Destruction of chordae tendineae, percutaneous approach), and 02594ZZ (Destruction of chordae tendineae, percutaneous endoscopic approach) describing ablation of the chordae tendineae be removed from the list of cardiac ablation procedures for MS-DRG 317 as the chordae tendineae would not be ablated in relation to cardiac ablation procedures, and instead they would be ablated in relation to cardiac valve repair or replacement procedures.

Response: We appreciate the feedback from the commenter.

As noted previously, 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. Cardiac ablation is a procedure that is performed to correct a disturbance in the conduction system of the heart by damaging small areas of tissue using radiofrequency energy or freezing so that the damaged tissue can no longer generate or conduct electrical impulses. We agree that ablation of the chordae tendineae, which are the strong, fibrous connections between the valve leaflets and the papillary muscles, is not performed to stop abnormal electrical pathways as the cardiac conduction system does not pass through the chordae tendineae.

We examined claims data from the September 2023 update of the FY 2023 MedPAR file to evaluate the frequency with which ablation of the chordae tendineae is reported with left atrial appendage closure, and found one case reporting procedure codes 02590ZZ (Destruction of chordae tendineae, open approach) and 02L70ZK (Occlusion of left atrial appendage, open approach) in MS-DRG 219 (Cardiac Valve and Other Major Cardiothoracic Procedures without Cardiac Catheterization with MCC) with a length of stay of 7 days and costs of $28,989.

We note that assignment of this one case to MS-DRG 219 indicates that other procedure code(s) assigned to the GROUPER logic of MS-DRG 219 were reported in addition to procedure codes 02590ZZ and 02L70ZK to drive assignment to this MS-DRG. We reviewed these data and because our analysis identified only one case reporting ablation of the chordae tendineae and left atrial appendage closure, and recognizing that ablation of the chordae tendineae is not performed to stop abnormal electrical pathways, we agree that procedure codes 02590ZZ, 02593ZZ, and 02594ZZ should be removed from the list of 27 ICD-10-PCS procedure codes that describe cardiac ablation listed previously in the proposed logic for assignment of cases reporting a LAAC procedure and a cardiac ablation procedure for the proposed new MS-DRG.

Comment: Many commenters noted that procedure code 02583ZF (Destruction of conduction mechanism using irreversible electroporation, percutaneous approach) to identify irreversible electroporation for cardiac ablation was finalized effective April 1, 2024 as reflected in the FY 2024 ICD-10-PCS Code Update files that were made publicly available on the CMS website at https://www.cms.gov/Medicare/Coding/ICD10 on December 19, 2023. The new procedure code is also reflected in Table 6B.—New Procedure Codes, in association with the proposed rule and available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS , including the MS-DRG assignments for the new code for FY 2025.

These commenters noted that cardiac ablation procedures performed with the PulseSelect TM Pulsed Field Ablation (PFA) System for the treatment of paroxysmal (PAF) or persistent (PsAF) atrial fibrillation can also be performed concomitantly with left atrial appendage closure and recommended that procedure code 02583ZF also be assigned to new MS-DRG 317 (Concomitant Left Atrial Appendage Closure and Cardiac Ablation) in MDC 05. However, another commenter noted that there is limited data on combining the new pulse field ablation modality with LAAC and suggested that CMS continue to evaluate evidence on the safety and efficacy of using this new modality in concomitant procedures ( print page 69021) before assigning procedure code 02583ZF to new MS-DRG 317.

We note that irreversible electroporation for cardiac ablation, also referred to as pulsed field ablation, delivers electrical pulses that result in destruction of selected cardiac tissue by irreversibly increasing the porosity of the cell membranes, inducing cell death, and can be used as a treatment for paroxysmal and persistent atrial fibrillation. As a procedure code that also describes the performance of cardiac ablation, we agree that procedure code 02583ZF should be added to the list of ICD-10-PCS procedure codes that describe cardiac ablation listed previously in the proposed logic for assignment of cases reporting a LAAC procedure and a cardiac ablation procedure for the proposed new MS-DRG. In response to the suggestion that CMS continue to evaluate evidence on the safety and efficacy of using this new modality in concomitant procedures before assigning procedure code 02583ZF to new MS-DRG 317, we note that procedure code 02583ZF describes a procedure that is clinically coherent with the other procedure codes proposed for assignment to MS-DRG 317, so it is reasonable that cases reporting procedure code 02583ZF and a procedure code describing LAAC group to the same MS-DRG.

Therefore, after consideration of the public comments we received, and for the reasons discussed, we are finalizing our proposal to create new MS-DRG 317 (Concomitant Left Atrial Appendage Closure and Cardiac Ablation) in MDC 05, with modification, effective October 1, 2024, for FY 2025. Specifically, we are modifying the proposed list of ICD-10-PCS procedure codes that describe cardiac ablation in the Version 42 GROUPER logic of new MS-DRG 317 by removing ICD-10-PCS codes 02590ZZ (Destruction of chordae tendineae, open approach), 02593ZZ (Destruction of chordae tendineae, percutaneous approach), and 02594ZZ (Destruction of chordae tendineae, percutaneous endoscopic approach) and adding ICD-10-PCS procedure code 02583ZF (Destruction of conduction mechanism using irreversible electroporation, percutaneous approach), as discussed previously.

The 25 ICD-10-PCS procedure codes that describe cardiac ablation that we are finalizing in the logic for assignment of cases reporting a LAAC procedure and a cardiac ablation procedure for FY 2025 are listed in the following table. This assignment is reflected in the final Version 42 GROUPER logic.

Table 6B.—New Procedure Codes, associated with this final rule reflects the modification to the MS-DRG assignments for procedure code 02583ZF for FY 2025. We refer the reader to section II.C.13. of the preamble of this final rule for further information regarding the table.

Lastly, we are finalizing the inclusion of the nine ICD-10-PCS procedure codes that describe LAAC procedures listed previously in the logic for assignment of cases reporting a LAAC procedure and a cardiac ablation procedure for new MS-DRG 317, without modification, for FY 2025. We refer the reader to section II.C.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 as well as our finalization of those proposals.

The BAROSTIM TM system is the first neuromodulation device system designed to trigger the body's main cardiovascular reflex to target symptoms of heart failure. The system consists of an implantable pulse generator (IPG) that is implanted subcutaneously in the upper chest below the clavicle, a stimulation lead that is sutured to either ( print page 69022) the right or left carotid sinus to activate the baroreceptors in the wall of the carotid artery, and a wireless programmer system that is used to non-invasively program and adjust BAROSTIM TM therapy via telemetry. The BAROSTIM TM system is indicated for the improvement of symptoms of heart failure in a subset of patients with symptomatic New York Heart Association (NYHA) Class III or Class II (who had a recent history of Class III) heart failure, with a low left ventricular ejection fraction, who also do not benefit from guideline directed pharmacologic therapy or qualify for Cardiac Resynchronization Therapy (CRT). The BAROSTIM TM system was approved for new technology add-on payments for FY 2021 ( 85 FR 58716 through 58717 ) and FY 2022 ( 86 FR 44974 ). The new technology add-on payment was subsequently discontinued effective FY 2023 ( 87 FR 48916 ).

In the FY 2023 IPPS/LTCH PPS final rule ( 87 FR 48837 through 48843 ), we discussed a request we received to reassign the ICD-10-PCS procedure codes that describe the implantation of the BAROSTIM TM system from MS-DRGs 252, 253, and 254 (Other Vascular Procedures with MCC, with CC, and without MCC respectively) to MS-DRGs 222, 223, 224, 225, 226, and 227 (Cardiac Defibrillator Implant with and without Cardiac Catheterization with and without AMI/HF/Shock with and without MCC, respectively). The requestor stated that the subset of patients that have an indication for the implantation of a BAROSTIM TM system also have indications for the implantation of Implantable Cardioverter Defibrillators (ICD), Cardiac Resynchronization Therapy Defibrillators (CRT-D) and/or Cardiac Contractility Modulation (CCM) devices, all of which also require the permanent implantation of a programmable, electrical pulse generator and at least one electrical lead. The requestor further stated that the average resource utilization required to implant the BAROSTIM TM system demonstrates a significant disparity compared to all procedures within MS-DRGs 252, 253, and 254.

In the FY 2023 IPPS/LTCH PPS final rule, we stated that the results of the claims analysis demonstrated we did not have sufficient claims data on which to base and evaluate any proposed changes to the current MS-DRG assignment. We also expressed concern in equating the implantation of a BAROSTIM TM system to the placement of ICD, CRT-D, and CCM devices as these devices all differ in terms of technical complexity and anatomical placement of the electrical lead(s). We noted there is no intravascular component or vascular puncture involved when implanting a BAROSTIM TM system. In contrast, the placement of ICD, CRT-D, and CCM devices generally involve a lead being affixed to the myocardium, being threaded through the coronary sinus or crossing a heart valve and are procedures that involve a greater level of complexity than affixing the stimulator lead to either the right or left carotid sinus when implanting a BAROSTIM TM system. We stated that we believed that as the number of cases reporting procedure codes describing the implantation of neuromodulation devices for heart failure increases, a better view of the associated costs and lengths of stay on average will be reflected in the data for purposes of assessing any reassignment of these cases. Therefore, after consideration of the public comments we received, and for the reasons stated earlier, we finalized our proposal to maintain the assignment of cases reporting procedure codes that describe the implantation of a neuromodulation device in MS-DRGs 252, 253, and 254 for FY 2023.

In the FY 2024 IPPS/LTCH PPS final rule ( 88 FR 58712 through 58720 ), we discussed a request we received to add ICD-10-CM diagnosis code R57.0 (Cardiogenic shock) to the list of “secondary diagnoses” that grouped to MS-DRGs 222 and 223 (Cardiac Defibrillator Implant with Cardiac Catheterization with Acute Myocardial Infarction (AMI), Heart Failure (HF), or Shock with and without MCC, respectively). During our review of the issue, we noted that the results of our claims analysis showed that in procedures involving a cardiac defibrillator implant, the average costs and length of stay were generally similar without regard to the presence of diagnosis codes describing AMI, HF, or shock. We stated we believed that it may no longer be necessary to subdivide MS-DRGs 222, 223, 224, 225, 226, and 227 based on the diagnosis codes reported. After consideration of the public comments we received, and for the reasons stated in the rule, we finalized our proposal to delete MS-DRGs 222, 223, 224, 225, 226, and 227. We also finalized our proposal to create new MS-DRG 275 (Cardiac Defibrillator Implant with Cardiac Catheterization and MCC), new MS-DRG 276 (Cardiac Defibrillator Implant with MCC) and new MS-DRG 277 (Cardiac Defibrillator Implant without MCC) in MDC 05 for FY 2024.

As discussed in the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 35959 through 35962 ), we received a similar request to again review the MS-DRG assignment of the ICD-10-PCS procedure codes that describe the implantation of the BAROSTIM TM system. Specifically, the requestor recommended that CMS consider reassigning the ICD-10-PCS procedure codes that describe the implantation of the BAROSTIM TM system from MS-DRGs 252, 253, and 254 (Other Vascular Procedures with MCC, with CC, and without MCC respectively) to MS-DRGs 275 (Cardiac Defibrillator Implant with Cardiac Catheterization and MCC), MS-DRG 276, and 277 (Cardiac Defibrillator Implant with MCC and without MCC respectively); or to other more clinically coherent MS-DRGs for implantable device procedures indicated for Class III heart failure patients. The requestor stated in their analysis the number of claims reporting procedure codes that describe the implantation of the BAROSTIM TM system has been consistently growing over the past few years. The requestor acknowledged that the implantation of the BAROSTIM TM system is predominantly performed in the outpatient setting but noted that a significant number of severely sick patients with multiple comorbidities (such as chronic kidney disease, end stage renal disease (ESRD), chronic obstructive pulmonary disease (COPD), and AF) are treated in an inpatient setting. The requestor stated in their experience, hospitals that have performed BAROSTIM TM procedures have stopped allowing patients to receive the device in the inpatient setting due to the high losses for each Medicare claim. The requestor asserted it is critically important to allow very sick and fragile patients access to the BAROSTIM TM procedure in an inpatient setting and stated these patients should not be denied access by hospitals due to the perceived gross underpayment of the current MS-DRG.

In the proposed rule we noted that the requestor stated the BAROSTIM TM procedure is not clinically coherent with other procedures assigned to MS-DRGs 252, 253, and 254 (Other Vascular Procedures) as the majority of the ICD-10-PCS codes assigned to MS-DRGs 252, 253, and 254 describe procedures to identify, diagnose, clear and restructure veins and arteries, excluding those that require implantable devices. Furthermore, the requestor stated the costs of the implantable medical devices used for the BAROSTIM TM system (that is, the electrical pulse generator and electrical lead) alone far exceed the ( print page 69023) average costs of other cases assigned to MS-DRGs 252, 253, and 254.

The following ICD-10-PCS procedure codes uniquely identify the implantation of the BAROSTIM TM system: 0JH60MZ (Insertion of stimulator generator into chest subcutaneous tissue and fascia, open approach) in combination with 03HK3MZ (Insertion of stimulator lead into right internal carotid artery, percutaneous approach) or 03HL3MZ (Insertion of stimulator lead into left internal carotid artery, percutaneous approach).

We stated in the proposed rule that to analyze this request, we first examined claims data from the September 2023 update of the FY 2023 MedPAR file for MS-DRGs 252, 253, and 254 to identify cases reporting procedure codes describing the implantation of the BAROSTIM TM system with or without a procedure code describing the performance of a cardiac catheterization as MS-DRG 275 is defined by the performance of cardiac catheterization and a secondary diagnosis of MCC. Our findings are shown in the following table.

As shown in the table, in MS-DRG 252, we identified a total of 18,964 cases with an average length of stay of 8 days and average costs of $30,456. Of those 18,964 cases, there was one case reporting procedure codes describing the implantation of the BAROSTIM TM system with a procedure code describing the performance of a cardiac catheterization with costs higher than the average costs in the FY 2023 MedPAR file for MS-DRG 252 ($110,928 compared to $30,456) and a longer length of stay (9 days compared to 8 days). There were 12 cases reporting procedure codes describing the implantation of the BAROSTIM TM system without a procedure code describing the performance of a cardiac catheterization, with average costs higher than the average costs in the FY 2023 MedPAR file for MS-DRG 252 ($66,291 compared to $30,456) and a slighter shorter average length of stay (7.8 days compared to 8 days). In MS-DRG 253, we identified a total of 15,551 cases with an average length of stay of 5.2 days and average costs of $22,870. Of those 15,551 cases, there were seven cases reporting procedure codes describing the implantation of the BAROSTIM TM system without a procedure code describing the performance of a cardiac catheterization, with average costs higher than the average costs in the FY 2023 MedPAR file for MS-DRG 253 ($52,788 compared to $22,870) and a shorter average length of stay (4 days compared to 5.2 days). We found zero cases in MS-DRG 253 reporting procedure codes describing the implantation of a BAROSTIM TM system with a procedure code describing the performance of a cardiac catheterization. In MS-DRG 254, we identified a total of 5,973 cases with an average length of stay of 2.3 days and average costs of $15,778. Of those 5,973 cases, there were three cases reporting procedure codes describing the implantation of the BAROSTIM TM system without a procedure code describing the performance of a cardiac catheterization, with average costs higher than the average costs in the FY 2023 MedPAR file for MS-DRG 254 ($29,740 compared to $15,778) and a shorter average length of stay (1.3 days compared to 2.3 days). We found zero cases in MS-DRG 254 reporting procedure codes describing the implantation of a BAROSTIM TM system with a procedure code describing the performance of a cardiac catheterization.

As stated in the proposed rule, we then examined claims data from the September 2023 update of the FY 2023 MedPAR file for MS-DRGs 275, 276, and 277. Our findings are shown in the following table.

As the table shows, for MS-DRG 275, there were a total of 3,358 cases with an average length of stay of 10.3 days and average costs of $63,181. For MS-DRG 276, there were a total of 3,264 cases with an average length of stay of 8.2 days and average costs of $54,993. For MS-DRG 277, there were a total of 3,840 cases with an average length of stay of 4.2 days and average costs of $42,111.

In exploring mechanisms to address this request, in the proposed rule we noted in total, there were only 23 cases reporting procedure codes describing the implantation of a BAROSTIM TM system in MS-DRGs 252, 253, and 254 (13, 7, and 3, respectively). We stated we reviewed these data, and stated while we recognize that the average costs of the 23 cases reporting procedure codes describing the implantation of a BAROSTIM TM are greater when compared to the average costs of all cases in MS-DRGs 252, 253, and 254, the number of cases continued to be too small to warrant the creation of a new MS-DRG for these cases.

In the proposed rule we further noted, that of the 23 cases reporting procedure codes describing the implantation of a BAROSTIM TM system identified in MS-DRGs 252, 253, and 254, only one case reported the performance of cardiac catheterization. As discussed in the FY 2024 IPPS/LTCH PPS final rule, when reviewing the consumption of hospital resources for the cases reporting a cardiac defibrillator implant with cardiac catheterization during a hospital stay, the claims data clearly showed that the cases reporting secondary diagnoses designated as MCCs were more resource intensive as compared to other cases reporting cardiac defibrillator implant. Therefore, we finalized the creation of MS-DRG 275 for cases reporting a cardiac defibrillator implant with cardiac catheterization and a secondary diagnosis designated as an MCC. In the proposed rule we stated that of the 23 cases reporting procedure codes describing the implantation of a BAROSTIM TM system, there was only one case reporting a procedure code describing the performance of cardiac catheterization and a secondary diagnosis designated as an MCC, and we noted that there may have been other factors contributing to the higher costs of this one case. We stated that the results of the claims analysis demonstrated we did not have sufficient claims data on which to base and propose a change to the current MS-DRG assignment of cases reporting procedure codes describing the implantation of a BAROSTIM TM system from MS-DRGs 252, 253, and 254 to MS-DRG 275.

As stated in the proposed rule, further analysis of the claims data demonstrated that the 23 cases reporting procedure codes describing the implantation of a BAROSTIM TM system had an average length of stay of 5.8 days and average costs of $59,355, as compared to the 3,264 cases in MS-DRG 276 that had an average length of stay of 8.2 days and average costs of $54,993. We stated that while the cases reporting procedure codes describing the implantation of a BAROSTIM TM system had average costs that were $4,362 higher than the average costs of all cases in MS-DRG 276, as noted, there were only a total of 23 cases, and there may have been other factors contributing to the higher costs. In the proposed rule we noted, however, if we were to reassign all cases reporting procedure codes describing the implantation of a BAROSTIM TM system to MS-DRG 276, even if there is not a MCC present, the cases would receive higher payment and the reassignment could better account for the differences in resource utilization of these cases than in their respective MS-DRG.

In the proposed rule we stated we reviewed the clinical issues and the claims data, and while we continue to note that there is no intravascular component or vascular puncture involved when implanting a BAROSTIM TM system, and that the implantation of a BAROSTIM TM system is distinguishable from the placement of ICD, CRT-D, and CCM devices, as these devices all differ in terms of technical complexity and anatomical placement of the electrical lead(s), as discussed in the FY 2023 IPPS/LTCH PPS final rule ( 87 FR 48837 through 48843 ), we agreed that ICD, CRT-D, and CCM devices and the BAROSTIM TM system are clinically coherent in that they share an indication of heart failure, a major cause of morbidity and mortality in the United States, and that these cases demonstrate comparable resource utilization. Based on our review of the clinical issues and the claims data, and to better account for the resources required, we proposed to reassign the cases reporting procedure codes describing the implantation of a BAROSTIM TM system to MS-DRG 276, even if there is no MCC reported, to better reflect the clinical severity and resource use involved in these cases.

Therefore, for FY 2025, we proposed to reassign all cases with one of the following ICD-10-PCS code combinations capturing cases reporting procedure codes describing the implantation of a BAROSTIM TM system, to MS-DRG 276, even if there is no MCC reported:

0JH60MZ (Insertion of stimulator generator into chest subcutaneous tissue and fascia, open approach) in combination with 03HK3MZ (Insertion of stimulator lead into right internal carotid artery, percutaneous approach); and
0JH60MZ (Insertion of stimulator generator into chest subcutaneous tissue and fascia, open approach) in combination with 03HL3MZ (Insertion of stimulator lead into left internal carotid artery, percutaneous approach).

We also proposed to change the title of MS-DRG 276 from “Cardiac Defibrillator Implant with MCC” to “Cardiac Defibrillator Implant with MCC or Carotid Sinus Neurostimulator” to reflect the proposed modifications to MS-DRG assignments. We refer the reader to section II.C.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 as well as our finalization of those proposals.

Comment: Commenters expressed overwhelming support for the proposal to reassign cases reporting a procedure code combination describing the implantation of a BAROSTIM TM system to MS-DRG 276, even if there is no MCC reported. Commenters also expressed support for the proposal to change the title of MS-DRG 276 from “Cardiac Defibrillator Implant with MCC” to “Cardiac Defibrillator Implant with MCC or Carotid Sinus Neurostimulator” to reflect the proposed modifications to MS-DRG assignments. Many commenters stated this reassignment would ensure continued access of this very important therapy to eligible Medicare patients. A commenter specifically stated that assignment to MS-DRG 276 is appropriate on a clinical basis and would also better account for the differences in resource ( print page 69025) utilization of these cases as compared to their current assignments.

After consideration of the public comments we received, we are finalizing our proposal to reassign cases reporting one of the previously listed ICD-10-PCS code combinations describing the implantation of a BAROSTIM TM system to MS-DRG 276, even if there is no MCC reported, without modification, effective October 1, 2024, for FY 2025. We are also finalizing the change to the title of MS-DRG 276 from “Cardiac Defibrillator Implant with MCC” to “Cardiac Defibrillator Implant with MCC or Carotid Sinus Neurostimulator” to reflect the modifications to MS-DRG assignments.

The human heart contains four major valves—the aortic, mitral, pulmonary, and tricuspid valves. These valves function to keep blood flowing through the heart. When conditions such as stenosis or insufficiency/regurgitation occur in one or more of these valves, valvular heart disease may result. Intervention options, including surgical aortic valve replacement or transcatheter aortic valve replacement can be performed to treat diseased or damaged aortic heart valves. Surgical aortic valve replacement (SAVR) is a traditional, open-chest surgery where an incision is made to access the heart. The damaged valve is replaced, and the chest is surgically closed. Since SAVR is a major surgery that involves an incision, recovery time tends to be longer. Transcatheter aortic valve replacement (TAVR) is a minimally invasive procedure that involves a catheter being inserted into an artery, without an incision for most cases, and then guided to the heart. The catheter delivers the new valve without the need for the chest or heart to be surgically opened. Since TAVR is a non-surgical procedure, it is generally associated with a much shorter recovery time.

In the FY 2015 IPPS/LTCH PPS final rule ( 79 FR 49892 through 49893 ), we discussed a request we received to create a new MS-DRG that would only include the various types of cardiac valve replacements performed by an endovascular or transcatheter technique. We reviewed the claims data and stated the data analysis showed that cardiac valve replacements performed by an endovascular or transcatheter technique had a shorter average length of stay and higher average costs in comparison to all of the cases in their assigned MS-DRGs, which were MS-DRGs 216, 217, 218, 219, 220, and 221 (Cardiac Valve & Other Major Cardiothoracic Procedure with and without Cardiac Catheterization, with MCC, with CC, and without CC/MCC, respectively). In the FY 2015 IPPS/LTCH PPS final rule we stated that patients receiving endovascular cardiac valve replacements were significantly different from those patients who undergo an open chest cardiac valve replacement and noted that patients receiving endovascular cardiac valve replacements are not eligible for open chest cardiac valve procedures because of a variety of health constraints, which we stated highlights the fact that peri-operative complications and post-operative morbidity have significantly different profiles for open chest procedures compared with endovascular interventions. We further noted that separately grouping these endovascular valve replacement procedures provides greater clinical cohesion for this subset of high-risk patients. Therefore, we finalized our proposal to create MS-DRGs 266 and 267 (Endovascular Cardiac Valve Replacement, with MCC and without MCC, respectively) for FY 2015.

In the FY 2020 IPPS/LTCH PPS final rule ( 84 FR 42080 through 42089 ), we discussed a request we received to modify the MS-DRG assignment for transcatheter mitral valve repair (TMVR) with implant procedures. We reviewed the claims data and stated based on our data analysis, transcatheter cardiac valve repair procedures and transcatheter (endovascular) cardiac valve replacement procedures are more clinically coherent in that they describe endovascular cardiac valve interventions with implants and were similar in terms of average length of stay and average costs to cases in MS-DRGs 266 and 267 when compared to other procedures in their current MS-DRG assignment. For the reasons described in the rule and after consideration of the public comments we received, we finalized our proposal to modify the structure of MS-DRGs 266 and 267 by reassigning the procedure codes that describe transcatheter cardiac valve repair (supplement) procedures, to revise the title of MS-DRG 266 from “Endovascular Cardiac Valve Replacement with MCC” to “Endovascular Cardiac Valve Replacement and Supplement Procedures with MCC” and to revise the title of MS-DRG 267 from “Endovascular Cardiac Valve Replacement without MCC” to “Endovascular Cardiac Valve Replacement and Supplement Procedures without MCC”, to reflect the finalized restructuring.

As discussed in the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 35962 through 35966 ), we received a request to delete MS-DRGs 266 and 267 and to move the cases reporting transcatheter aortic valve replacement or repair (supplement) procedures currently assigned to those MS-DRGs into MS-DRGs 216, 217, 218, 219, 220, and 221. The requestor asserted that under the current IPPS payment methodology, TAVR procedures are not profitable to hospitals and when patients are clinically eligible for both a TAVR and SAVR procedures, factors beyond clinical appropriateness can drive treatment decisions. According to the requestor (the manufacturer of the SAPIEN TM family of transcatheter heart valves) sharing a single set of MS-DRGs would eliminate the current disincentives hospitals face and create financial neutrality between the two lifesaving treatment options. The requestor stated the current disincentives are increasingly problematic because they contribute to treatment disparities among certain racial, socioeconomic, and geographic groups.

As discussed in the proposed rule, the requestor noted that currently surgical cardiac valve replacement and supplement procedures, such as SAVR, are assigned to MS-DRGs 216, 217, 218, 219, 220, and 221, and endovascular cardiac valve replacement and supplement procedures, such as TAVR, are assigned to MS-DRGs 266 and 267. The requestor stated that both sets of MS-DRGs address valve disease and include valve repair or replacement procedures for any of the four heart valves. According to the requestor, while the sets of MS-DRGs involve clinically similar cases their payment rates differ which may be unintentionally influencing clinical decision-making by incentivizing hospitals to choose more invasive SAVR procedures over less-invasive TAVR procedures.

As mentioned earlier, the requestor recommended that CMS delete MS-DRGs 266 and 267 and move the cases reporting transcatheter aortic valve replacement or repair (supplement) procedures currently assigned to those MS-DRGs into MS-DRGs 216, 217, 218, 219, 220, and 221. We stated in the proposed rule that the requestor performed its own analysis and stated that the models of this suggested solution indicated the change would result in moderate differences in per case payments by case type and would ( print page 69026) not increase overall Medicare spending. The requestor noted that while their requested solution would potentially decrease payment to cases currently assigned to MS-DRGs 216, 217, 218, 219, 220, and 221, while at the same time increasing the payment to cases reporting endovascular cardiac valve replacement and supplement procedures, the results of their claim analysis demonstrated that the net difference in total payments across all cases would increase by approximately $6.5 million. The requestor stated that they anticipate that their proposed solution could increase Medicare patients' access to innovative endovascular cardiac valve procedures by establishing payment neutrality between SAVR and TAVR procedures.

As discussed in the proposed rule, we reviewed this request and noted the requestor was correct that in Version 41.1 cases reporting procedure codes that describe endovascular cardiac valve replacement and supplement procedures, including TAVR, group to MS-DRGs 266 and 267. We stated that the requestor was also correct that cases reporting procedure codes that describe surgical cardiac valve replacement and supplement procedures, including SAVR, group to MS-DRGs 216, 217, 218, 219, 220, and 221. We refer the reader to the ICD-10 MS-DRG Definitions Manual Version 41.1 (available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software ) for complete documentation of the GROUPER logic for MS-DRGs 216, 217, 218, 219, 220, 221, 266, and 267.

As discussed in the proposed rule, to begin our analysis, we identified the ICD-10-PCS procedure codes that describe endovascular (transcatheter) cardiac valve replacement and supplement procedures and the ICD-10-PCS procedure codes that describe surgical cardiac valve replacement and supplement procedures. We also identified the ICD-10-PCS codes that describe cardiac catheterization, as 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) are defined by the performance of cardiac catheterization. We refer the reader to Table 6P.2a, Table 6P.2b, and Table 6P.2c, respectively, associated with the proposed rule and this final rule (available at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps ) for the lists of the ICD-10-PCS procedure codes that we identified that describe endovascular cardiac valve replacement and supplement procedures, surgical cardiac valve replacement and supplement procedures, and cardiac catheterization procedures.

As discussed in the proposed rule, we then examined the claims data from the September 2023 update of the FY 2023 MedPAR file for all cases in MS-DRGs 216, 217, 218, 219, 220, and 221 and compared the results to cases reporting surgical cardiac valve replacement and supplement procedures in MS-DRG 216, 217, 218, 219, 220, and 221. The following table shows our findings:

As shown in the table, in MS-DRG 216, we identified a total of 5,033 cases with an average length of stay of 13.9 days and average costs of $84,176. Of those 5,033 cases, there were 2,973 cases reporting surgical cardiac valve replacement and supplement procedures, with average costs higher than the average costs in the FY 2023 MedPAR file for MS-DRG 216 ($87,497 compared to $84,176) and a longer average length of stay (16.8 days compared to 13.9 days). In MS-DRG 217, we identified a total of 1,635 cases with an average length of stay of 7.2 days and average costs of $58,381. Of those 1,635 cases, there were 867 cases reporting surgical cardiac valve replacement and supplement procedures, with average costs lower than the average costs in the FY 2023 MedPAR file for MS-DRG 217 ($56,829 compared to $58,381) and a longer average length of stay (9.5 days compared to 7.2 days). In MS-DRG 218, we identified a total of 275 cases with an average length of stay of 3.4 days and average costs of $54,624. Of those 275 cases, there were 60 cases reporting surgical cardiac valve replacement and supplement procedures, with average costs lower than the average costs in the FY 2023 MedPAR file for MS-DRG 218 ($45,096 compared to $54,624) and a longer average length of stay (6.7 days compared to 3.4 days). In MS-DRG 219, we identified a total of 12,458 cases with an average length of stay of 10.5 days and average costs of $67,228. Of those 12,458 cases, there were 9,780 cases reporting surgical cardiac valve replacement and supplement procedures, with average costs lower than the average costs in the FY 2023 MedPAR file for MS-DRG 219 ($64,954 ( print page 69027) compared to $67,228), and a slightly shorter average length of stay (10.3 days compared to 10.5 days). In MS-DRG 220, we identified a total of 9,829 cases with an average length of stay of 6.3 days and average costs of $47,242. Of those 9,829 cases, there were 7,841 cases reporting surgical cardiac valve replacement and supplement procedures, with average costs lower than the average costs in the FY 2023 MedPAR file for MS-DRG 220 ($46,245 compared to $47,242)and a slightly longer average length of stay (6.4 days compared to 6.3 days). In MS-DRG 221, we identified a total of 1,242 cases with an average length of stay of 3.8 days and average costs of $41,539. Of those 1,242 cases, there were 627 cases reporting surgical cardiac valve replacement and supplement procedures, with average costs lower than the average costs in the FY 2023 MedPAR file for MS-DRG 221 ($39,081 compared to $41,539) and a longer average length of stay (4.9 days compared to 3.8 days).

Next, as discussed in the proposed rule, we examined claims data from the September 2023 update of the FY 2023 MedPAR file for MS-DRGs 266 and 267. Our findings are shown in the following table.

As noted in the proposed rule, because there is a two-way split within MS-DRGs 266 and 267 and there is a three-way split within MS-DRGs 216, 217, and 218, and 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 also analyzed the cases reporting a code describing an endovascular cardiac valve replacement and supplement procedure 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). We also analyzed the cases reporting a code describing an endovascular cardiac valve replacement and supplement procedure without a procedure code describing the performance of a cardiac catheterization for the presence or absence of a secondary diagnosis designated as a CC or an MCC.

As shown in the table, the data analysis performed indicates that the 5,443 cases in MS-DRG 266 reporting endovascular cardiac valve replacement and supplement procedures with a procedure code describing the performance of a cardiac catheterization, and with a secondary diagnosis code designated as an MCC have an average length of stay that is shorter than the average length of stay (7.9 days versus 16.8 days) and lower average costs ($63,128 versus $87,497) when compared to the cases in MS-DRG 216 reporting surgical cardiac valve replacement and supplement procedures with a procedure code describing the performance of a cardiac catheterization, and with a secondary diagnosis code designated as an MCC. The 4,761 cases in MS-DRG 267 reporting endovascular cardiac valve replacement and supplement procedures with a procedure code describing the performance of a cardiac catheterization, and with a secondary diagnosis code designated as a CC have an average length of stay that is shorter than the average length of stay (2 days versus 9.5 days) and lower average costs ($42,163 versus $56,829) when compared to the cases in MS-DRG 217 reporting surgical cardiac valve replacement and supplement procedures with a procedure code describing the performance of a cardiac catheterization, and with a secondary diagnosis code designated as an CC. The 1,386 cases in MS-DRG 267 reporting ( print page 69028) endovascular cardiac valve replacement and supplement procedures with a procedure code describing the performance of a cardiac catheterization, and without a secondary diagnosis code designated as a CC or MCC have an average length of stay that is shorter than the average length of stay (1.3 days versus 6.7 days) and lower average costs ($39,709 versus $45,096) when compared to the cases in MS-DRG 218 reporting surgical cardiac valve replacement and supplement procedures with a procedure code describing the performance of a cardiac catheterization, without a secondary diagnosis code designated as a CC or MCC.

The 14,493 cases in MS-DRG 266 reporting endovascular cardiac valve replacement and supplement procedures without a procedure code describing the performance of a cardiac catheterization, and with a secondary diagnosis code designated as an MCC have an average length of stay that is shorter than the average length of stay (3.5 days versus 10.3 days) and lower average costs ($50,831 versus $64,954) when compared to the cases in MS-DRG 219 reporting surgical cardiac valve replacement and supplement procedures without a procedure code describing the performance of a cardiac catheterization, and with a secondary diagnosis code designated as an MCC. The 22,996 cases in MS-DRG 267 reporting endovascular cardiac valve replacement and supplement procedures without a procedure code describing the performance of a cardiac catheterization, and with a secondary diagnosis code designated as a CC have an average length of stay that is shorter than the average length of stay (1.5 days versus 6.4 days) and lower average costs ($43,637 versus $46,245) when compared to the cases in MS-DRG 220 reporting surgical cardiac valve replacement and supplement procedures without a procedure code describing the performance of a cardiac catheterization, and with a secondary diagnosis code designated as an CC. The 7,522 cases in MS-DRG 267 reporting endovascular cardiac valve replacement and supplement procedures without a procedure code describing the performance of a cardiac catheterization, and without a secondary diagnosis code designated as a CC or MCC have an average length of stay that is shorter than the average length of stay (1.2 days versus 4.9 days) and higher average costs ($42,472 versus $39,081) when compared to the cases in MS-DRG 221 reporting surgical cardiac valve replacement and supplement procedures without a procedure code describing the performance of a cardiac catheterization, without a secondary diagnosis code designated as a CC or MCC.

We stated in the proposed rule that this data analysis shows the cases in MS-DRG 266 and 267 reporting endovascular cardiac valve replacement and supplement procedures 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 CC or a MCC have average costs lower than the average costs of cases reporting surgical cardiac valve replacement and supplement procedures with a procedure code describing the performance of a cardiac catheterization in the FY 2023 MedPAR file for MS-DRGs 216, 217, and 218 respectively, and the average lengths of stay are shorter. Similarly, the cases in MS-DRG 266 and 267 reporting endovascular cardiac valve replacement and supplement procedures 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 CC or a MCC generally have average costs lower than the average costs of cases reporting surgical cardiac valve replacement and supplement procedures without a procedure code describing the performance of a cardiac catheterization in the FY 2023 MedPAR file for MS-DRGs 219, 220, and 221 respectively, and the average lengths of stay are shorter.

We stated in the proposed rule that for patients with an indication for cardiac valve replacement, clinical and anatomic factors must be considered when decision-making between procedures such as TAVR and SAVR. We noted that SAVR is not a treatment option for patients with extreme surgical risk (that is, high probability of death or serious irreversible complication), severe atheromatous plaques of the ascending aorta such that aortic cross-clamping is not feasible, or with other conditions that would make operation through sternotomy or thoracotomy prohibitively hazardous. We stated that we agreed that the endovascular or transcatheter technique presents a viable option for high-risk patients who are not candidates for the traditional open surgical approach, however we also noted that TAVR is not indicated for every patient. TAVR is contraindicated in patients who cannot tolerate an anticoagulation/antiplatelet regimen, or who have active bacterial endocarditis or other active infections, or who have significant annuloplasty ring dehiscence.

In the proposed rule, we stated we had concern with the assertion that clinicians perform more invasive surgical procedures, such as SAVR procedures, only to increase payment to their facility where minimally invasive TAVR procedures are also viable option. The choice of SAVR versus TAVR should not be based on potential facility payment. Instead, the decision on the procedural approach to be utilized should be based upon an individualized risk-benefit assessment that includes reviewing factors such as the patient's age, surgical risk, frailty, valve morphology, and presence of concomitant valve disease or coronary artery disease. As we have stated in prior rulemaking ( 83 FR 41201 ), it is not appropriate for facilities to deny treatment to beneficiaries needing a specific type of therapy or treatment that involves increased costs. Conversely, it is not appropriate for facilities to recommend a specific type of therapy or treatment strictly because it may involve higher payment to the facility.

Also, we stated we had concern with the requestor's assertion that sharing a single set of MS-DRGs could eliminate any perceived disincentives hospitals may face and create financial neutrality between the two lifesaving treatment options. In the proposed rule, we noted that the data analysis shows that cases reporting surgical cardiac valve replacement and supplement procedures have higher costs and longer lengths of stay. We stated that if clinical decision-making is being driven by financial motivations, as suggested by the requestor, in circumstances where the decision on which approach is best (for example, TAVR or SAVR) is left to the providers' discretion, it is unclear how reducing payment for surgical cardiac valve replacement and supplement procedures would eliminate possible disincentives, or not have the opposite effect, and instead incentivize endovascular cardiac valve replacement and supplement procedures.

As discussed in the proposed rule, the MS-DRGs are a classification system intended to group together diagnoses and procedures with similar clinical characteristics and utilization of resources and are not intended to be utilized as a tool to incentivize the performance of certain procedures. When performed, surgical cardiac valve replacement and supplement procedures are clinically different from endovascular cardiac valve replacement and supplement procedures in terms of technical complexity and hospital ( print page 69029) resource use. In the FY 2015 IPPS/LTCH PPS final rule, we stated that separately grouping endovascular valve replacement procedures provides greater clinical cohesion for this subset of high-risk patients. In the FY 2025 IPPS/LTCH PPS proposed rule, we stated our claims analysis demonstrates that this continues to be substantiated by the difference in average costs and average lengths of stay demonstrated by the two cohorts. We stated we continue to believe that endovascular cardiac valve replacement and supplement procedures are clinically coherent in their currently assigned MS-DRGs. Therefore, we proposed to maintain the structure of MS-DRGs 266 and 267 for FY 2025.

Comment: Many commenters expressed support for the proposal to maintain the structure of MS-DRGs 266 and 267 for FY 2025. A commenter stated it is unclear why the requestor would imply that there is any type of bias in patient selection of surgical cardiac valve replacement and repair procedures over endovascular cardiac valve replacement and supplement procedures, and stated in their experience, the decision to perform endovascular or surgical cardiac valve replacement and supplement procedures is typically made by the heart team based on the patient's individualized risk-benefit and associated factors such as the patient's age, surgical risk, frailty, valve morphology, and presence of concomitant valve disease or coronary artery disease. A commenter specifically stated while they firmly believe that procedures such as TAVR should be paid at a rate that makes them efficacious for hospitals to perform, given the analysis provided by CMS, the requested MS-DRG modification may not be the best path to this end. Another commenter stated they agreed with CMS that although both types of cardiac valve interventions treat the same type of disease, the work and resource utilization associated with the procedures is significantly different and noted that surgical cardiac replacement or repair procedures typically require more resources such as increased operating room time, additional supportive staff for the procedure and longer lengths of stay. Another commenter stated in addition to the important points that CMS made in the proposed rule regarding the lack of cost coherence between TAVR and SAVR procedures, in their own analysis, the impact of moving TAVR cases into MS-DRGs 216, 217, 218, 219, 220, and 221 (Cardiac Valve & Other Major Cardiothoracic Procedure with and without Cardiac Catheterization, with MCC, with CC, and without CC/MCC, respectively) would cause a 12 percent decrease in average costs and a 9 percent decrease in relative weight in MS-DRGs 216, 217, 218, 219, 220, and 221.

Response: We appreciate the commenters' support and feedback.

Comment: A commenter (the requestor) disagreed with the proposal to maintain the structure of MS-DRGs 266 and 267 and stated appropriate payment under the IPPS is critical to improving access to TAVR procedures for all eligible patients and ensuring timely access to valve replacement therapies. This commenter stated they continue to maintain that incentives for valve replacement procedures strongly favor SAVR over TAVR due to the payment differential between the two procedures. While acknowledging that SAVR cases have increased clinical labor and indirect costs, the commenter again asserted that merging the procedures into a single set of MS-DRGs would establish better financial neutrality between the procedure options by creating more similarity between TAVR and SAVR contribution margins as hospitals measure per-case profitability. Lastly, the commenter noted in their own analysis, payment rates for MS-DRGs 266 and 267 have declined approximately 6 percent from 2022 to 2025, while the payments rates for MS-DRGs 216, 217, 218, 219, 220, and 221 have increased by 8 percent in the same time frame and stated that the years of declining TAVR payment rates while SAVR payment rates increased do influence hospital decisions about whether to expand their structural heart programs to include TAVR procedures, particularly in hospitals located in geographic areas with low wage indexes.

Response: We appreciate the commenter's feedback. With respect to changes in payment rates in the referenced MS-DRGs, 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. We believe any weight changes observed by the commenter over time to be appropriately driven by the underlying data in the years since CMS began using the ICD-10 data in calculating the relative weights. We also note that over the past five years, there have been changes to the hierarchy and structure of certain MS-DRGs in MDC 05. 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. Therefore, the data appear to reflect that the differences 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 the final rule for each 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 readers to section II.D.2. of the preamble of this final rule for a discussion of the relative weight calculations.

As stated in prior rulemaking ( 88 FR 58730 ), the MS-DRGs were developed as a patient classification scheme consisting of patients who are similar clinically and with regard to their consumption of hospital resources. While all patients are unique, groups of patients have diagnostic and therapeutic attributes in common that determine their level of resource intensity. Similar resource intensity means that the resources used are relatively consistent across the patients in each MS-DRG. When performed, surgical cardiac valve replacement and supplement procedures are clinically different from endovascular cardiac valve replacement and supplement procedures in terms of technical complexity and hospital resource use. We continue to believe that endovascular cardiac valve replacement and supplement procedures are clinically coherent in their currently assigned MS-DRGs.

As stated earlier, the MS-DRGs are not intended to be utilized as a tool to incentivize the performance of certain procedures. As we have stated in prior rulemaking, we rely on providers to assess the needs of their patients and provide the most appropriate treatment. It is not appropriate for facilities to deny treatment to beneficiaries needing a specific type of therapy or treatment that potentially involves increased costs ( 86 FR 44847 ). It would also not be appropriate to consider modifications to the MS-DRG assignment of cases reporting the performance of a specific procedure solely as an incentive for providers to perform one procedure over another.

Therefore, after consideration of the public comments we received, and for the reasons stated earlier, we are finalizing our proposal to maintain the structure of MS-DRGs 266 and 267, without modification, for FY 2025. ( print page 69030)

In the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 35966 through 35968 ), we discussed a request we received to review the GROUPER logic for MS-DRG 215 (Other Heart Assist System Implant) in MDC 05 (Diseases and Disorders of the Circulatory System). The requestor stated that when the procedure code describing the revision of malfunctioning devices within the heart via an open approach is assigned, the encounter groups to MS-DRG 215. The requestor stated that, in their observation, ICD-10-PCS code 02WA0JZ (Revision of synthetic substitute in heart, open approach) can only be assigned if a more specific anatomical site is not documented in the operative note. The requestor further stated they interpreted this to mean that an ICD-10-PCS procedure code describing the open revision of a synthetic substitute in the heart can only apply to the ventricular wall or left atrial appendage and excludes the atrial or ventricular septum or any valve to qualify for MS-DRG 215 and recommended that CMS consider the expansion of the open revision of heart structures to include the atrial or ventricular septum and heart valves.

In the proposed rule we stated that to begin our analysis, we reviewed the GROUPER logic. We stated that the requestor is correct that ICD-10-PCS procedure code 02WA0JZ is currently one of the listed procedure codes in the GROUPER logic for MS-DRG 215. While the requestor stated that when procedures codes describing the revisions of malfunctioning devices within the heart via an open approach are assigned, the encounter groups to MS-DRG 215, we stated we wished to clarify that the revision codes listed in the GROUPER logic for MS-DRG 215 specifically describe procedures to correct, to the extent possible, a portion of a malfunctioning heart assist device or the position of a displaced heart assist device. Further, we stated it was unclear what was meant by the requestor's statement that ICD-10-PCS code 02WA0JZ can only be assigned if more specific anatomical site is not documented in the operative note, as ICD-10-PCS code 02WA0JZ is used to describe the open revision of artificial heart systems. We noted that total artificial hearts are pulsating bi-ventricular devices that are implanted into the chest to replace a patient's left and right ventricles and can provide a bridge to heart transplantation for patients who have no other reasonable medical or surgical treatment options. We refer the reader to the ICD-10 MS-DRG Definitions Manual Version 41.1 (available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software ) for complete documentation of the GROUPER logic for MS-DRG 215. We encouraged the requestor and any providers that have cases involving heart assist devices for which they need ICD-10 coding assistance and clarification on the usage of the codes, to submit their questions to the American Hospital Association's Central Office on ICD-10 at https://www.codingclinicadvisor.com/ .

As previously noted, as discussed in the proposed rule, the requestor recommended that we consider expansion of the open revision of heart structures to include the atrial or ventricular septum and heart valves. The requestor did not provide a specific list of procedure codes involving the open revision of heart structures. While not explicitly stated, we stated we understood this request to be for our consideration of the reassignment of the procedure codes describing the open revision of devices in the heart valves, atrial septum, or ventricular septum to MS-DRG 215, therefore, we stated we reviewed the ICD-10-PCS classification and identified the following 18 procedure codes. These 18 codes are all assigned to MS-DRGs 228 and 229 (Other Cardiothoracic Procedures with and without MCC, respectively) in MDC 05 in Version 41.1.

Next, in the proposed rule we stated we examined claims data from the September 2023 update of the FY 2023 MedPAR file for MS-DRG 228 and 229 to identify cases reporting one of the 18 codes listed previously that describe the open revision of devices in the heart valves, atrial septum, or ventricular septum. Our findings are shown in the following table:

As shown in the table, in MS-DRG 228, we identified a total of 4,391 cases with an average length of stay of 8.7 days and average costs of $44,565. Of those 4,391 cases, there were 12 cases reporting a procedure code describing the open revision of devices in the heart valves, atrial septum, or ventricular septum, with average costs higher than the average costs in the FY 2023 MedPAR file for MS-DRG 228 ($51,549 compared to $44,565) and a longer average length of stay (15.7 days compared to 8.7 days). In MS-DRG 229, we identified a total of 5,712 cases with an average length of stay of 3.3 days and average costs of $28,987. Of those 5,712 cases, there was one case reporting a procedure code describing the open revision of devices in the heart valves, atrial septum, or ventricular septum with costs lower than the average costs in the FY 2023 MedPAR file for MS-DRG 229 ($11,322 compared to $28,987) and a shorter length of stay (1 day compared to 3.3 days).

We stated we then examined claims data from the September 2023 update of the FY 2023 MedPAR for MS-DRG 215. Our findings are shown in the following table.

In the proposed rule we stated our analysis indicates that the cases assigned to MS-DRG 215 have much higher average costs than the cases reporting a procedure code describing the open revision of devices in the heart valves, atrial septum, or ventricular septum currently assigned to MS-DRGs 228 and 229. Instead, the average costs and average length of stay for case reporting a procedure code describing the open revision of devices in the heart valves, atrial septum, or ventricular septum 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.

In addition, based on our review of the clinical considerations, we stated we did not believe the procedure codes describing the open revision of devices in the heart valves, atrial septum, or ventricular septum are clinically coherent with the procedure codes currently assigned to MS-DRG 215. We noted that heart assist devices, such as ventricular assist devices and artificial heart systems, provide circulatory support by taking over most of the workload of the left ventricle. Blood enters the pump through an inflow conduit connected to the left ventricle and is ejected through an outflow conduit into the body's arterial system. Heart assist devices can provide temporary left, right, or biventricular support for patients whose hearts have failed and can also be used as a bridge for patients who are awaiting a heart transplant. In the proposed rule we stated that devices placed in the heart valves, atrial septum, or ventricular septum do not serve the same purpose as heart assist devices and we stated we did not believe the procedure codes describing the revision of these devices should be assigned to MS-DRG 215. Further, we stated that the various indications for devices placed in the heart valves, atrial septum or ventricular septum are not aligned with the indications for heart assist devices. We stated we believe that patients with indications for heart assist devices tend to be more severely ill and these inpatient admissions are associated with greater resource utilization. Therefore, for the reasons stated previously, we proposed to maintain the GROUPER logic for MS-DRG 215 for FY 2025.

Comment: Many commenters agreed with CMS' proposal to maintain the GROUPER logic for MS-DRG 215 for FY 2025. A commenter stated that they agreed with CMS that, in general, most patients with indications for heart assist devices tend to be more severely ill and will require greater resource utilization than patients that are admitted for open revision of devices related to heart valves, atrial septum, or ventricular septum.

Therefore, after consideration of the public comments we received, we are finalizing our proposal to maintain the GROUPER logic for MS-DRG 215 for FY 2025, without modification.

As discussed in the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 35968 through 35969 ), we identified a replication issue from the ICD-9 based MS-DRGs to the ICD-10 based MS-DRGs regarding the assignment of eight ICD-10-PCS codes that describe the excision of intestinal body parts by open, percutaneous, or percutaneous endoscopic approach. Under the Version 32 ICD-9 based MS-DRGs, ICD-9-CM procedure code 45.33 (Local excision of lesion or tissue of small intestine, except duodenum) was designated as an O.R. procedure and was assigned to MDC 06 (Diseases and Disorders of the Digestive System) in MS-DRGs 347, 348, and 349 (Anal and Stomal Procedures with MCC, with CC, and without CC/MCC, respectively).

In the proposed rule, we noted that there are eight ICD-10-PCS code translations that provide more detailed and specific information for ICD-9-CM code 45.33 that also currently group to MS-DRGs 347, 348, and 349 in the ICD-10 MS-DRGs Version 41.1. These eight procedure codes are shown in the following table:

In the proposed rule we stated we noted during our review of this issue that under ICD-9-CM, procedure code 45.33 did not differentiate the specific type of approach used to perform the procedure. This is in contrast to the eight comparable ICD-10-PCS code translations listed in the previous table that do differentiate among various approaches (open, percutaneous, and percutaneous endoscopic). We also noted that there are four additional ICD-10-PCS code translations that provide more detailed and specific information for ICD-9-CM code 45.33, however these four codes currently group to MS-DRGs 329, 330, and 331 (Major Small and Large Bowel Procedures with MCC, with CC, and without CC/MCC, respectively), and not MS-DRGs 347, 348, and 349, in the ICD-10 MS-DRGs Version 41.1. These four procedure codes are shown in the following table:

We refer the reader to the ICD-10 MS-DRG Definitions Manual Version 41.1 (available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software ) for complete documentation of the GROUPER logic for MS-DRGs 329, 330, 331, 347, 348, and 349.

Next, as discussed in the proposed rule we examined claims data from the September 2023 update of the FY 2023 MedPAR file for MS-DRG 347, 348, and 349 to identify cases reporting one of the eight codes listed previously that describe excision of intestinal body parts by an open, percutaneous, or percutaneous endoscopic approach. Our findings are shown in the following table:

As shown in the table, in MS-DRG 347, we identified a total of 752 cases with an average length of stay of 7.6 days and average costs of $21,462. Of those 752 cases, there were 66 cases reporting one of eight procedure codes describing the excision of intestinal body parts by an open, percutaneous, or percutaneous endoscopic approach, with average costs higher than the average costs in the FY 2023 MedPAR file for MS-DRG 347 ($27,081 compared to $21,462) and a longer average length of stay (8.5 days compared to 7.6 days). In MS-DRG 348, we identified a total of 1,580 cases with an average length of stay of 4.2 days and average costs of $12,020. Of those 1,580 cases, there were 192 cases reporting one of eight procedure codes describing the excision of intestinal body parts by an open, percutaneous, or percutaneous endoscopic approach, with average costs higher than the average costs in the FY 2023 MedPAR file for MS-DRG 348 ($17,063 compared to $12,020) and a longer average length of stay (4.9 days compared to 4.2 days). In MS-DRG 349, we identified a total of 644 cases with an average length of stay of 2.2 days and average costs of $9,095. Of those 644 cases, there were 117 cases reporting one of eight procedure codes describing the excision of intestinal body parts by an open, percutaneous, or percutaneous endoscopic approach, with average ( print page 69033) costs higher than the average costs in the FY 2023 MedPAR file for MS-DRG 349 ($14,612 compared to $9,095),and a longer average length of stay (3 days compared to 2.2 days).

We stated we then examined claims data from the September 2023 update of the FY 2023 MedPAR for MS-DRGs 329, 330, and 331. Our findings are shown in the following table.

While the average costs for all cases in MS-DRGs 329, 330, and 331 are higher than the average costs of the cases reporting one of eight procedure codes describing the excision of intestinal body parts by an open, percutaneous, or percutaneous endoscopic approach, we stated the data suggest that overall, cases reporting one of eight procedure codes describing the excision of intestinal body parts by an open, percutaneous, or percutaneous endoscopic approach may be more appropriately aligned with the average costs of the cases in MS-DRGs 329, 330, and 331 in comparison to MS-DRGs 347, 348, and 349, even though the average lengths of stay are shorter.

In the proposed rule we stated we reviewed this grouping issue, and our analysis indicates that the eight procedure codes describing the excision of intestinal body parts by an open, percutaneous, or percutaneous endoscopic approach were initially assigned to the list of procedures in the GROUPER logic for MS-DRGs 347, 348, and 349 as a result of replication in the transition from ICD-9 to ICD-10 based MS-DRGs. We also noted that procedure codes 0DB83ZZ, 0DBA3ZZ, 0DBA4ZZ, 0DBB3ZZ, 0DBB4ZZ, 0DBC0ZZ, 0DBC3ZZ, and 0DBC4ZZ do not describe procedures on a stoma, which is an artificial opening on the abdomen that can be connected to either the digestive or urinary system to allow waste to be diverted out of the body, or the anus. We stated we supported the reassignment of codes 0DB83ZZ, 0DBA3ZZ, 0DBA4ZZ, 0DBB3ZZ, 0DBB4ZZ, 0DBC0ZZ, 0DBC3ZZ, and 0DBC4ZZ for clinical coherence and that we believe these eight procedure codes should be appropriately grouped along with the four other procedure codes that describe excision of intestinal body parts by an open, or percutaneous endoscopic approach currently assigned to MS-DRGs 329, 330, and 331.

Accordingly, because the procedures described by the eight procedure codes that describe excision of intestinal body parts by an open, percutaneous, or percutaneous endoscopic approach are not clinically consistent with procedures on the anus or stoma, and it is clinically appropriate to reassign these procedures to be consistent with the four other procedure codes that describe excision of intestinal body parts by an open, or percutaneous endoscopic approach in MS-DRGs 329, 330, and 331, we proposed the reassignment of procedure codes 0DB83ZZ, 0DBA3ZZ, 0DBA4ZZ, 0DBB3ZZ, 0DBB4ZZ, 0DBC0ZZ, 0DBC3ZZ, and 0DBC4ZZ from MS-DRGs 347, 348, and 349 (Anal and Stomal Procedures with MCC, with CC, and without CC/MCC, respectively) to MS-DRGs 329, 330, and 331 (Major Small and Large Bowel Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 06, effective FY 2025.

Comment: Commenters supported the proposal to reassign the eight procedure codes that describe the excision of intestinal body parts by an open, percutaneous, or percutaneous endoscopic approach from MS-DRGs 347, 348, and 349 to MS-DRGs 329, 330, and 331. A commenter thanked CMS for this review and stated that they agreed that the proposed reassignment would correct an error that was made during the transition from the ICD-9 based MS-DRGs to the ICD-10 based MS-DRGs. Other commenters stated that these procedure codes do not belong in the MS-DRGs they are currently assigned to, and that reassignment will appropriately group these procedures based on the body part involved.

After consideration of the public comments we received, we are finalizing our proposal to reassign procedure codes 0DB83ZZ, 0DBA3ZZ, 0DBA4ZZ, 0DBB3ZZ, 0DBB4ZZ, 0DBC0ZZ, 0DBC3ZZ, and 0DBC4ZZ from MS-DRGs 347, 348, and 349 (Anal and Stomal Procedures with MCC, with CC, and without CC/MCC, respectively) to MS-DRGs 329, 330, and 331 (Major Small and Large Bowel Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 06, without modification, effective October 1, 2024, for FY 2025.

In the proposed rule we discussed an inconsistency in the GROUPER logic for MS-DRGs 456, 457, and 458 (Spinal Fusion Except Cervical with Spinal Curvature, Malignancy, Infection or Extensive Fusions with MCC, with CC, and without CC/MCC, respectively) related to ICD-10-CM diagnosis codes describing deforming dorsopathies. The logic for case assignment to MS-DRGs 456, 457, and 458 as displayed in the ICD-10 MS-DRG Definitions Manual Version 41.1 (which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software ) is comprised of four logic lists. The first logic list is entitled “Spinal Fusion Except Cervical” and is defined by a list of procedure codes designated as O.R. procedures that describe spinal fusion procedures of the thoracic, thoracolumbar, lumbar, lumbosacral, sacrococcygeal, coccygeal, and sacroiliac joint. The second logic list is entitled “Spinal Curvature/Malignancy/Infection” and is defined by a list of diagnosis codes describing spinal curvature, spinal malignancy, and spinal infection that are used to define the logic for case assignment when any one of the listed diagnosis codes is reported as the principal diagnosis. The third logic list is entitled “OR Secondary Diagnosis” and is defined by a list of diagnosis codes describing curvature of the spine that are used to define the logic for case assignment when any one of the listed codes is reported as a secondary diagnosis. The fourth logic list is entitled “Extensive Fusions” and is defined by a list of procedure codes designated as O.R. procedures that describe extensive spinal fusion procedures. We refer the reader to the ICD-10 MS-DRG Definitions Manual Version 41.1, (available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/ ( print page 69034) acute-inpatient-pps/ms-drg-classifications-and-software ) for complete documentation of the GROUPER logic for MS-DRGs 456, 457, and 458.

In the second logic list entitled “Spinal Curvature/Malignancy/Infection” there are a subset of six diagnosis codes describing other specified deforming dorsopathies as shown in the following table.

In the third logic list entitled “OR Secondary Diagnosis” there are currently 14 diagnosis codes listed, one of which is diagnosis code M43.8X9 (Other specified deforming dorsopathies, site unspecified) as shown in the following table.

In the proposed rule we stated that we recognized that the five diagnosis codes describing deforming dorsopathies of specific anatomic sites that are listed in the second logic list entitled “Spinal Curvature/Malignancy/Infection” are not listed in the third logic list entitled “OR Secondary Diagnosis”, rather, only diagnosis code M43.8X9 (Other specified deforming dorsopathies, site unspecified) appears in both logic lists. Therefore, we considered if it was clinically appropriate to add the five diagnosis codes describing deforming dorsopathies of specific anatomic sites that are listed in the second logic list entitled “Spinal Curvature/Malignancy/Infection” to the third logic list entitled “OR Secondary Diagnosis”.

A deforming dorsopathy is characterized by abnormal bending or flexion in the vertebral column. All spinal deformities involve problems with curve or rotation of the spine, regardless of site specificity. In the proposed rule we stated our belief that the five diagnosis codes describing deforming dorsopathies of specific anatomic sites are clinically aligned with the diagnosis codes currently included in the “OR Secondary Diagnosis” logic list. Therefore, for clinical consistency we proposed to add diagnosis codes M43.8X4, M43.8X5, M43.8X6, M43.8X7, and M43.8X8 to the “OR Secondary Diagnosis” logic list for MS-DRGs 456, 457, and 458, effective October 1, 2024, for FY 2025.

Comment: Commenters supported the proposal to add diagnosis codes M43.8X4, M43.8X5, M43.8X6, M43.8X7, and M43.8X8 to the “OR Secondary Diagnosis” logic list for MS-DRGs 456, 457, and 458.

After consideration of the public comments we received, we are finalizing our proposal to add diagnosis codes M43.8X4, M43.8X5, M43.8X6, M43.8X7, and M43.8X8 to the “OR Secondary Diagnosis” logic list for MS-DRGs 456, 457, and 458 effective October 1, 2024, for FY 2025.

In the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 35971 through 35985 ), we discussed a request we received to reassign cases reporting spinal fusion procedures using an aprevo TM customized interbody fusion device from the lower severity MS-DRG 455 (Combined Anterior and Posterior Spinal Fusion without CC/MCC) to the higher severity MS-DRG 453 (Combined Anterior and Posterior Spinal Fusion with MCC), from the lower severity MS-DRG 458 (Spinal Fusion Except Cervical with Spinal Curvature, Malignancy, Infection or Extensive Fusions without CC/MCC) to the higher severity level MS-DRG 456 (Spinal Fusion Except Cervical with Spinal Curvature, Malignancy, Infection or Extensive Fusions with MCC) when a diagnosis of malalignment is reported, and from MS-DRGs 459 and 460 (Spinal Fusion ( print page 69035) Except Cervical with MCC and without MCC, respectively) to MS-DRG 456. We referred the reader to the ICD-10 MS-DRG Definitions Manual Version 41.1 (available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software ) for complete documentation of the GROUPER logic.

In the proposed rule we noted that this topic has been discussed previously in the FY 2024 IPPS/LTCH PPS proposed rule ( 88 FR 26726 through 26729 ) and final rule ( 88 FR 58731 through 58735 , as corrected in the FY 2024 final rule correction notice at 88 FR 77211 ). We also noted that the aprevo TM Intervertebral Body Fusion Device technology was approved for new technology add-on payments for FY 2022 ( 86 FR 45127 through 45133 ). We further noted that, as discussed in the FY 2023 IPPS/LTCH PPS final rule ( 87 FR 49468 through 49469 ), CMS finalized the continuation of the new technology add-on payments for this technology for FY 2023. In the FY 2024 IPPS/LTCH PPS final rule ( 88 FR 58802 ), we finalized the continuation of new technology add-on payments for the transforaminal lumbar interbody fusion (TLIF) indication for aprevo TM for FY 2024, and the discontinuation of the new technology add-on payments for the anterior lumbar interbody fusion (ALIF) and lateral lumbar interbody fusion (LLIF) indications for FY 2024. We referred the reader to section II.E. for discussion of the FY 2025 status of technologies receiving new technology add-on payments for FY 2024, including the status for the aprevo TM technology.

Additionally, in the proposed rule we noted that in the FY 2024 IPPS/LTCH PPS proposed rule ( 88 FR 26726 through 26729 ) and final rule ( 88 FR 58731 through 58735 ), effective October 1, 2021 (FY 2022), we implemented 12 new ICD-10-PCS procedure codes to identify and describe spinal fusion procedures using the aprevo TM customized interbody fusion device. We noted that the manufacturer expressed concerns that there may be unintentional miscoded claims from providers with whom they do not have an explicit relationship and that following the submission of the request for the FY 2024 MS-DRG classification change for cases reporting the performance of a spinal fusion procedure utilizing an aprevo TM customized interbody spinal fusion device, it submitted a code proposal requesting a revision to the title of the procedure codes that were finalized effective FY 2022. We also noted that, as discussed in the FY 2024 IPPS/LTCH PPS final rule, a proposal to revise the code title for the procedure codes that identify and describe spinal fusion procedures using the aprevo TM customized interbody fusion device was presented and discussed as an Addenda item at the March 7-8, 2023 ICD-10 Coordination and Maintenance Committee meeting and subsequently finalized.

As discussed in the proposed rule, the code title changes for the 12 ICD-10-PCS procedure codes to identify and describe spinal fusion procedures using the aprevo TM customized interbody fusion device were reflected in the FY 2024 ICD-10-PCS Code Update files available via the CMS website at: https://www.cms.gov/medicare/coding-billing/icd-10-codes/2024-icd-10-pcs , as well as in Table 6F.—Revised Procedure Code Titles—FY 2024 associated with the FY 2024 IPPS/LTCH PPS final rule and available via the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps . We noted that only the code titles were revised and the code numbers themselves did not change.

Accordingly, effective with discharges on and after October 1, 2023 (FY 2024), the 12 ICD-10-PCS procedure codes to identify and describe spinal fusion procedures using the aprevo TM customized interbody fusion device with their revised code titles are as follows:

As stated in the proposed rule, as part of our analysis of the manufacturer's request to reassign cases involving the aprevo TM device as discussed in the FY 2024 proposed and final rules, we presented findings from our analysis of claims data from the September 2022 update of the FY 2022 MedPAR file for MS-DRGs 453, 454, 455, 456, 457, 458, 459, and 460 and cases reporting any one of the 12 original procedure codes describing utilization of an aprevo TM customized interbody spinal fusion device. We stated that while we agreed that the findings from our analysis appeared to indicate that cases reporting the performance of a procedure using an aprevo TM customized interbody spinal fusion device reflected a higher consumption of resources, due to the concerns expressed with respect to suspected inaccuracies of the coding and therefore, reliability of the claims data, we would continue to monitor the claims data for resolution of the potential coding issues identified by the requestor (the manufacturer). We also stated that we continued to believe additional review of claims data was warranted and would be informative as we continued to consider cases involving this technology for future rulemaking. Specifically, we stated we believed it would be premature to propose any MS-DRG modifications for spinal fusion procedures using an aprevo TM customized interbody spinal fusion device for FY 2024 and finalized our proposal to maintain the structure of MS-DRGs 453, 454, 455, 456, 457, 458, 459, and 460, without modification, for FY 2024 ( 88 FR 58734 through 58735 ). As discussed further in the FY 2024 final rule correction, in response to the manufacturer's comment expressing concern about the reliability of the Medicare claims data in the MedPAR file used for purposes of CMS's claims data analysis, as compared to the manufacturer's analysis of its own customer claims data, we stated that in order for us to consider using non-MedPAR data, the non-MedPAR data must be independently validated, meaning when an entity submits non-MedPAR data, we must be able to independently review the medical records and verify that a particular procedure was performed for each of the cases that purportedly involved the procedure. We noted that, in this particular circumstance, where external ( print page 69037) data for cases reporting the use of an aprevo TM spinal fusion device was provided, we did not have access to the medical records to conduct an independent review; therefore, we were not able to validate or confirm the non-MedPAR data submitted by the commenter for consideration in FY 2024. However, we also noted that our work in this area was ongoing, and we would continue to examine the data and consider these issues as we develop potential future rulemaking proposals. We referred readers to the FY 2024 IPPS/LTCH PPS correction notice ( 88 FR 77211 ) for further discussion.

In the proposed rule, we noted that the manufacturer provided us with a list of the providers with which it indicated it has an explicit relationship, to assist in our ongoing review of its request for reassignment of cases reporting spinal fusion procedures using an aprevo TM interbody fusion device from the lower severity spinal fusion MS-DRGs to the higher severity level spinal fusion MS-DRGs.

As stated in the proposed rule, to continue our analysis of cases reporting spinal fusion procedures using an aprevo TM customized interbody fusion device, we first analyzed claims data from the September 2023 update of the FY 2023 MedPAR file for MS-DRGs 453, 454, 455, 456, 457, 458, 459, and 460, and cases reporting any one of the previously listed procedure codes describing the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device. [ 5 ] Our findings are shown in the following tables.

We identified the majority of cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device in MS-DRGs 453, 454, and 455 with a total of 242 cases (26 + 129 + 87 = 242) with an average length of stay of 4.6 days and average costs of $68,526. The 26 cases found in MS-DRG 453 appear to have a comparable average length of stay (9.8 days versus 9.5 days) and higher average costs ($99,162 versus $80,420) compared to all the cases in MS-DRG 453, with a difference in average costs of $18,742 for the cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device. The 129 cases found in MS-DRG 454 appear to have a comparable average length of stay (4.9 days versus 4.3 days) and higher average costs ($71,527 versus $54,983) compared to all the cases in MS-DRG 454, with a difference in average costs of $16,544 for the cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device. The 87 cases found in MS-DRG 455 have an identical average length of stay of 2.6 days in comparison to all the cases in MS-DRG 455, however, the difference in average costs is $13,907 ($54,922−$41,015 = $13,907) for the cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device.

For MS-DRGs 456, 457, and 458, we found a total of 19 cases (2 + 11 + 6 = 19) reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device with an average length of stay of 4.7 days and average costs of $51,384. The 2 cases found in MS-DRG 456 have a shorter average length of stay (8.5 days versus 12.6 days) and lower average costs ($69,009 versus $76,060) compared to all the cases in MS-DRG 456. The 11 cases found in MS-DRG 457 also have a shorter average length of stay (5.0 days versus 6.1 days) and lower average costs ($47,221 versus $52,179). For MS-DRG 458, we found 6 cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device with a comparable average length of stay (3.0 days versus 3.1 days) and higher average costs ($53,140 versus $39,260) compared to the average costs of all the cases in MS-DRG 458, with a difference in average costs of $13,880 ($53,140−$39,260 = $13,880) for the cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device.

For MS-DRGs 459 and 460, we found a total of 65 cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device with an average length of stay of 2.7 days and average costs of $57,128. The single case found in MS-DRG 459 had a longer length of stay (22 days versus 9.6 days) and higher costs ($288,499 versus $53,192) compared to the average costs of all the cases in MS-DRG 459. For MS-DRG 460, the 64 cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device had a shorter average length of stay (2.4 days versus 3.4 days) and higher average cost ($53,513 versus $32,586), compared to ( print page 69039) all the cases in MS-DRG 460, with a difference in average costs of $20,927 ($53,513−$32,586 = $20,927) for the cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device.

As discussed in the FY 2024 final rule, the manufacturer expressed concern that there may be unintentional miscoded claims from providers with whom they do not have an explicit relationship and, as previously discussed, subsequently provided the list of providers with which it indicated it has an explicit relationship to assist in our ongoing review. We noted in the proposed rule that in connection with the list of providers submitted, the manufacturer also resubmitted claims data from the Standard Analytical File (SAF) that included FY 2022 claims and the first two quarters (discharges beginning October 1, 2022 through March 31, 2023) of FY 2023 from these providers. We stated that the list of providers the manufacturer submitted to us was considered applicable for the dates of service in connection with the resubmitted claims data. The manufacturer stated that the list of providers with which it has an explicit relationship is subject to change on a weekly basis as additional providers begin to use the technology. The manufacturer also clarified that the external customer data it had previously referenced in connection with the FY 2024 rulemaking that was received directly from the providers with which it has an explicit relationship is Medicare data. As stated in the proposed rule, we reviewed the September update of the FY 2022 MedPAR file and compared it against the claims data file with the list of providers submitted by the manufacturer for FY 2022. We noted that with this updated analysis of the September update of the FY 2022 MedPAR claims data, we were able to confirm that the majority of the cases for the providers with which the manufacturer indicated it has an explicit relationship matched the claims data in our FY 2022 MedPAR file. However, we also stated that we identified 3 claims that appeared in the manufacturer's file that were not found in our FY 2022 MedPAR file and could not be validated. Next, we reviewed the September update of the FY 2023 MedPAR file and compared it against the claims data file with the list of providers submitted by the manufacturer for the first two quarters of FY 2023. We stated we were able to confirm that the majority of the cases for the providers with which the manufacturer indicated it has an explicit relationship matched the claims data in our FY 2023 MedPAR file. However, we also stated that we identified 2 claims that appeared in the manufacturer's file that were not found in our FY 2023 MedPAR file and could not be validated.

As discussed in the proposed rule, in our analysis of the cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device in MS-DRGs 453, 454, 455, 456, 457, 458, 459, and 460 from the September update of the FY 2023 MedPAR file, we also reviewed the findings for cases identified based on the list of providers with which the manufacturer indicated it has an explicit relationship and cases based on other providers, (that is, those providers not included on the manufacturer's list), and compared those to the findings from all the cases we identified in the September update of the FY 2023 MedPAR file reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device in MS-DRGs 453, 454, 455, 456, 457, 458, 459, and 460. The findings from our analysis are shown in the following table. We noted that there were no cases found to report the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device based on the list of providers submitted by the manufacturer in MS-DRG 456.

For MS-DRG 453, the data show that of the 26 cases found to report the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device from the FY 2023 MedPAR file, 10 cases were reported based on the manufacturer's provider list, and 16 cases were reported based on other providers. The average length of stay is longer (10.5 days versus 9.4 days), and the average costs are higher ($118,863 versus $86,849) for the 10 cases reported based on the manufacturer's provider list compared to the 16 cases that were reported based on other providers. For MS-DRG 454, ( print page 69042) the data show that of the 129 cases found to report the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device from the FY 2023 MedPAR file, 48 cases were reported based on the manufacturer's provider list, and 81 cases were reported based on other providers. The average length of stay is longer (6.3 days versus 4.1 days), and the average costs are higher ($81,680 versus $65,510) for the 48 cases reported based on the manufacturer's provider list compared to the 81 cases that were reported based on other providers. For MS-DRG 455, the data show that of the 87 cases found to report the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device from the FY 2023 MedPAR file, 14 cases were reported based on the manufacturer's provider list, and 73 cases were reported based on other providers. The average length of stay is shorter (2.5 days versus 2.6 days), and the average costs are higher ($61,637 versus $53,634) for the 14 cases reported based on the manufacturer's provider list compared to the 73 cases that were reported based on other providers.

For MS-DRG 456, the data show that of the 2 cases found to report the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device from the FY 2023 MedPAR file, there were no cases reported based on the manufacturer's provider list and the 2 cases reported were based on other providers. For MS-DRG 457, the data show that of the 11 cases found to report the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device from the FY 2023 MedPAR file, 2 cases were reported based on the manufacturer's provider list, and 9 cases were reported based on other providers. The average length of stay is shorter (4.5 days versus 5.1 days), and the average costs are higher ($53,113 versus $45,912) for the 2 cases reported based on the manufacturer's provider list compared to the 9 cases that were reported based on other providers. For MS-DRG 458, the data show that of the 6 cases found to report the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device from the FY 2023 MedPAR file, 3 cases were reported based on the manufacturer's provider list, and 3 cases were reported based on other providers. The average length of stay is longer (3.3 days versus 2.7 days), and the average costs are lower ($52,760 versus $53,520) for the 3 cases reported based on the manufacturer's provider list compared to the 3 cases that were reported for other providers.

For MS-DRG 459, the data show that the single case found to report the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device from the FY 2023 MedPAR file was based on the manufacturer's provider list. There were no cases reported based on other providers. For MS-DRG 460, the data show that of the 64 cases found to report the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device from the FY 2023 MedPAR file, 13 cases were reported based on the manufacturer's provider list, and 51 cases were reported based on other providers. The average length of stay is comparable (2.6 days versus 2.3 days), and the average costs are higher ($62,829 versus $51,138) for the 13 cases reported based on the manufacturer's provider list compared to the 51 cases that were reported from other providers.

As discussed in the proposed rule, we considered these data findings with regard to the concerns expressed by the manufacturer that there may be unintentional miscoded claims reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device from providers with whom the manufacturer does not have an explicit relationship. Based on our review and analysis of the claims data, we stated that we are unable to confirm that the claims from these providers with whom the manufacturer indicated that it does not have an explicit relationship are miscoded.

In the proposed rule we noted that, while a newly established ICD-10 code may be associated with an application for new technology add-on payment, such codes are not generally established to be product specific. We stated that, if, after consulting the official coding guidelines, a provider determines that an ICD-10 code associated with a new technology add-on payment describes the technology that they are billing, the hospital may report the code and be eligible to receive the associated add-on payment. We noted that providers are responsible for ensuring that they are billing correctly for the services they render. In addition, as we noted in the FY 2018 IPPS/LTCH PPS final rule ( 82 FR 38012 ), coding advice is issued independently from payment policy. We also noted that, historically, we have not provided coding advice in rulemaking with respect to policy ( 82 FR 38045 ). We stated that as one of the Cooperating Parties for ICD-10, we collaborate with the American Hospital Association (AHA) through the Coding Clinic for ICD-10-CM and ICD-10-PCS to promote proper coding. We recommended that an entity seeking coding guidance submit any questions pertaining to correct coding to the AHA.

Accordingly, after review of the list of providers and associated claims data submitted by the manufacturer, and our analysis of the MedPAR data, we stated we believed these MedPAR data are appropriate for our FY 2025 analysis. Therefore, in assessing the request for reassignment of cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device from the lower severity MS-DRG 455 to the higher severity MS-DRG 453, from the lower severity MS-DRG 458 to the higher severity level MS-DRG 456 when a diagnosis of malalignment is reported, and cases from MS-DRGs 459 and 460 to MS-DRG 456 for FY 2025, we considered all the claims data reporting the performance of a spinal fusion procedure, including those spinal fusion procedures using an aprevo TM custom-made anatomically designed interbody fusion device as identified in the September update of the FY 2023 MedPAR file for these MS-DRGs. Consequently, our analysis also included claims based on the list of providers submitted by the manufacturer as well as other providers.

We stated in the proposed rule that, based on the findings from our analysis and clinical review, we do not believe the requested reassignments are supported. Specifically, we stated it would not be appropriate to propose to reassign the 87 cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device from the lower severity level MS-DRG 455 (without CC/MCC) with an average length of stay of 2.6 days and average costs of $54,922 to the higher severity level MS-DRG 453 (with MCC) with an average length of stay of 9.5 days and average costs of $80,420. We noted that if we were to propose to reassign the 87 cases from the lower severity MS-DRG 455 to the higher severity MS-DRG 453, the MS-DRGs would no longer be clinically coherent with regard to severity of illness of the patients, and the cases would reflect a difference in resource utilization, as demonstrated by the difference in average costs of approximately $25,498 ( print page 69043) ($80,420−$54,922 = $25,498), as well as a difference in average length of stay (2.6 days versus 9.5 days) compared to all the cases in MS-DRG 453. Similarly, we stated it would not be appropriate to propose to reassign the 6 cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device from the lower severity level MS-DRG 458 (without CC/MCC) with an average length of stay of 3.0 days and average costs of $53,140 to the higher severity level MS-DRG 456 (with MCC) with an average length of stay of 12.6 days and average costs of $76,060. We stated that if we were to propose to reassign the 6 cases from the lower severity MS-DRG 458 to the higher severity MS-DRG 456, the MS-DRGs would no longer be clinically coherent with regard to severity of illness of the patients and the cases would reflect a difference in resource utilization, as demonstrated by the difference in average costs of approximately $22,920 ($76,060−$53,140 = $22,920) as well as a difference in average length of stay (3.0 days versus 12.6 days) compared to all the cases in MS-DRG 456. Finally, we stated it would not be appropriate nor consistent with the definition of the MS-DRGs to propose to reassign the 65 cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device from MS-DRGs 459 and 460 with an average length of stay of 2.7 days and average costs of $57,128 to MS-DRG 456. In addition to the cases reflecting a difference in resource utilization as demonstrated by the difference in average costs of approximately $18,932 ($76,060−$57,128 = $18,932) as well as having a shorter average length of stay (2.7 days versus 12.6 days), we noted that the logic for case assignment to MS-DRGs 456, 457, and 458 is specifically defined by principal diagnosis logic. As such, cases grouping to this set of MS-DRGs require a principal diagnosis of spinal curvature, malignancy, or infection, or an extensive fusion procedure. We stated that it would not be clinically appropriate to propose to reassign cases from MS-DRGs 459 and 460 that do not have a principal diagnosis of spinal curvature, malignancy, or infection, or an extensive fusion procedure, and are not consistent with the logic for case assignment to MS-DRG 456.

As discussed in the proposed rule, in light of the higher average costs of the cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device in MS-DRGs 453, 454, 455, 458, and 460, we further reviewed the claims data for cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device in these MS-DRGs and identified a wide range in the average length of stay and average costs. For example, in MS-DRG 453, the average length of stay for the 26 cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device ranged from 3.0 days to 27 days and the average costs ranged from $28,054 to $177,919. In MS-DRG 454, the average length of stay for the 129 cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device ranged from 1.0 day to 16 days and the average costs ranged from $10,242 to $316,780. In MS-DRG 455, the average length of stay for the 87 cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device ranged from 1.0 day to 9.0 days and the average costs ranged from $7,961 to $216,200. In MS-DRG 456, the length of stay for the 2 cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device were 8.0 days and 9.0 days, respectively, with costs of $107,457 and $30,560, respectively. In MS-DRG 457, the average length of stay for the 11 cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device ranged from 1.0 day to 17 days and the average costs ranged from $25,955 to $89,176. In MS-DRG 458, the average length of stay for the 6 cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device ranged from 1.0 day to 5.0 days and the average costs ranged from $33,165 to $78,720. In MS-DRG 459, the length of stay for the single case reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device was 22 days with a cost of $288,499, indicating it is an outlier. In MS-DRG 460, the average length of stay for the 64 cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device ranged from 1.0 day to 8.0 days and the average costs ranged from $8,981 to $325,104.

As discussed in the proposed rule, in our analysis of the claims data for MS-DRGs 453, 454, and 455, we also identified a number of cases for which additional spinal fusion procedures were performed, beyond the logic for case assignment to the respective MS-DRG. For example, the logic for case assignment to MS-DRGs 453, 454, and 455 requires at least one anterior column fusion and one posterior column fusion (that is, combined anterior and posterior fusion). We noted that the aprevo TM custom-made anatomically designed interbody fusion device is used in the performance of an anterior column fusion. We stated that findings from our analysis of MS-DRG 453 show that of the 26 cases reporting a combined anterior and posterior fusion (including an aprevo TM custom-made anatomically designed interbody fusion device), 24 cases also reported another spinal fusion procedure. We categorized these cases as “multiple level fusions” where another procedure code describing a spinal fusion procedure was reported in addition to the combined anterior and posterior fusion procedure codes. We stated that findings from our analysis of MS-DRG 454 show that of the 129 cases reporting a combined anterior and posterior fusion (including an aprevo TM custom-made anatomically designed interbody fusion device), 100 cases also reported another spinal fusion procedure. Lastly, we stated that findings from our analysis of MS-DRG 455 show that of the 87 cases reporting a combined anterior and posterior fusion (including an aprevo TM custom-made anatomically designed interbody fusion device), 51 cases also reported another spinal fusion procedure.

We noted in the proposed rule that while the findings from our analysis indicate a wide range in the average length of stay and average costs for cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device, we believed the increase in resource utilization for certain cases may be partially attributable to the performance of multiple level fusion procedures and, specifically for MS-DRGs 453 and 454, the reporting of secondary diagnosis MCC and CC conditions. We noted that our analysis of the data for MS-DRGs 453 and 454 show that the cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device also reported multiple MCC and CC conditions, which we believe may be an additional ( print page 69044) contributing factor to the increase in resource utilization for these cases, combined with the reported performance of multiple level fusions.

As discussed in the proposed rule, in our analysis of the data for MS-DRGs 453, 454, and 455 and cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device, we also identified other procedures that were reported, some of which are designated as operating room (O.R.) procedures, that we believed may be another contributing factor to the increase in resource utilization and complexity for these cases. (We noted that because a discectomy is frequently performed in connection with a spinal fusion procedure, we did not consider these procedures as contributing factors to consumption of resources in these spinal fusion cases). We provided a list of the top 5 MCC and CC conditions, as well as the top 5 O.R. procedures (excluding discectomy) reported in MS-DRGs 453, 454, and 455 that we believed may be contributing factors to the increase in resource utilization and complexity for these cases as shown in the tables that follow. We noted that the logic for case assignment to MS-DRG 453 includes the reporting of at least one secondary diagnosis MCC condition (“with MCC”) and cases that group to this MS-DRG may also report secondary diagnosis CC conditions. We provided the frequency data for both the top 5 secondary diagnosis MCC conditions and the top 5 secondary diagnosis CC conditions, in addition to the top 5 O.R. procedures (excluding discectomy) that were reported for spinal fusion cases with an aprevo TM custom-made anatomically designed interbody fusion device in MS-DRG 453. We noted that because the logic for case assignment to MS-DRG 454 includes the reporting of at least one secondary diagnosis CC condition (“with CC”) we provided the top 5 secondary diagnosis CC conditions and the top 5 O.R. procedures (excluding discectomy) that were reported for spinal fusion cases with an aprevo TM custom-made anatomically designed interbody fusion device in MS-DRG 454. We noted that the logic for case assignment to MS-DRG 455 is “without CC/MCC” and does not include any secondary diagnosis MCC or CC conditions, therefore, we only provided a table with the top 5 O.R. procedures (excluding discectomy) reported for that MS-DRG in addition to a spinal fusion procedure.

As previously summarized, our analysis of the claims data for cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device demonstrated a low volume of cases and higher average costs in comparison to all the cases in their respective MS-DRGs (that is, in MS-DRGs 453, 454, 455, 458, 459, and 460). Therefore, as stated in the proposed rule, we expanded our analysis to include all spinal fusion cases in MS-DRGs 453, 454, 455, 456, 457, 458, 459, and 460 to identify and further examine the cases reporting multiple level fusions versus single level fusions, multiple MCCs or CCs, and other O.R. procedures as we believed that clinically, all of these factors may contribute to increases in resource utilization, severity of illness and technical complexity.

As stated in the proposed rule, we began our expanded analysis with MS-DRGs 453, 454, and 455. Based on the findings for a subset of the cases (that is, the subset of cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device) in these MS-DRGs as previously discussed, and our review of the logic for case assignment to these MS-DRGs, we developed three categories of spinal fusion procedures to further examine. The first category was for the single level combined anterior and posterior fusions except cervical, the second category was for the multiple level combined anterior and posterior fusions except cervical and the third category was for the combined anterior and posterior cervical spinal fusions. We refer the reader to Table 6P.2d for the list of procedure codes we identified to categorize the single level combined anterior and posterior fusions except cervical, Table 6P.2e for the list of procedure codes we identified to categorize the multiple level combined anterior and posterior fusions except cervical, and Table 6P.2f for the list of procedure codes we identified to categorize the combined anterior and posterior cervical spinal fusions in association with the proposed rule and available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps .

Findings from our analysis are shown in the following table.

The data show that across MS-DRGs 453, 454, and 455, cases reporting multiple level combined anterior and posterior fusion procedures have a comparable average length of stay (9.6 days versus 9.5 days, 4.8 days versus 4.3 days, and 3.0 days versus 2.6 days, respectively) and higher average costs ($91,358 versus $80,420, $64,065 versus $54,983, and $50,097 versus $41,015) compared to all the cases in MS-DRGs 453, 454, and 455, respectively. The data also show that across MS-DRGs 453, 454, and 455, cases reporting multiple level combined anterior and posterior fusion procedures have a longer average length of stay (9.6 days versus 6.4 days, 4.8 days versus 3.4 days, and 3.0 days versus 2.3 days, respectively) and higher average costs ($91,358 versus $47,031, $64,065 versus $38,107, and $50,097 versus $33,010, respectively) compared to cases reporting a single level combined anterior and posterior fusion. For cases reporting a combined anterior and posterior cervical fusion across MS-DRGs 453 and 454, the data show a longer average length of stay (12.5 days versus 9.5 days, and 5.1 days versus 4.3 days, respectively) compared to all the cases in MS-DRGs 453 and 454 and a comparable average length of stay (2.9 days versus 2.6 days) for cases reporting a combined anterior and posterior cervical fusion in MS-DRG 455. The data also show that across MS-DRGs 453, 454, and 455, cases reporting a combined anterior and posterior cervical fusion have higher average costs ($75,077 versus $47,031, $52,274 versus $38,107, and $37,515 versus $33,010, respectively) compared to the single level combined anterior and posterior fusion cases.

The data also reflect that in applying the logic that was developed for the three categories of spinal fusion in MS-DRGs 453, 454, and 455 (single level combined anterior and posterior fusion except cervical, multiple level combined anterior and posterior fusion except cervical, and combined anterior and posterior cervical fusion), there is a small redistribution of cases from the current MS-DRGs 453, 454, and 455 to other spinal fusion MS-DRGs because the logic for case assignment to MS-DRGs 453, 454, and 455 is currently satisfied with any one procedure code from the anterior spinal fusion logic list and any one procedure code from the posterior spinal fusion logic list, however, the logic lists that were developed for our analysis using the three categories of spinal fusion are comprised of specific procedure code combinations to satisfy the criteria for case assignment to any one of the three categories developed. For example, based on our analysis of MS-DRG 453 using the September update of the FY 2023 MedPAR file, the total number of cases found in MS-DRG 453 is 4,066 and with application of the logic for each of the three categories, the total number of cases in MS-DRG 453 is 4,042 (791 + 2,664 + 587 = 4,042), a difference of 24 cases. Using the September update of the FY 2023 MedPAR file, the total number of cases found in MS-DRG 454 is 20,425 and with application of the logic for each of the three categories, the total number of cases in MS-DRG 454 is 20,370 (6,481 + 12,498 + 1,391 = 20,370), a difference of 55 cases. Lastly, using the September update of the FY 2023 MedPAR file, the total number of cases found in MS-DRG 455 is 17,000 and with application of the logic for each of the three categories, the total number of cases in MS-DRG 455 is 16,987 (9,763 + 6,879 + 345 = 16,987), a difference of 13 cases. Overall, a total of 92 cases are redistributed from MS-DRGs 453, 454, ( print page 69047) and 455 to other spinal fusion MS-DRGs.

We stated in the proposed rule that the findings from our analysis of MS-DRGs 453, 454, and 455 are consistent with the expectation that clinically, the greater the number of spinal fusion procedures performed during a single procedure (for example, intervertebral levels fused), the greater the consumption of resources expended. We also stated we believed the use of interbody fusion cages, other types of spinal instrumentation, operating room time, comorbidities, pharmaceuticals, and length of stay may all be contributing factors to resource utilization for spinal fusion procedures. In addition, it is expected that as a result of potential changes to the logic for case assignment to a MS-DRG, there will be a redistribution of cases among the MS-DRGs.

We stated in the proposed rule that, based on our review and analysis of the spinal fusion cases in MS-DRGs 453, 454, and 455, we believe new MS-DRGs are warranted to differentiate between multiple level combined anterior and posterior spinal fusions except cervical, single level combined anterior and posterior spinal fusions except cervical, and combined anterior and posterior cervical spinal fusions, to more appropriately reflect utilization of resources for these procedures, including those performed with an aprevo TM custom-made anatomically designed interbody fusion device. We noted that the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device as identified by any one of the 12 previously listed procedure codes would not be reported for a cervical spinal fusion procedure as reflected in Table 6P.2f associated with the proposed rule and this final rule and available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps .

To compare and analyze the impact of our suggested modifications, we noted that we ran simulations using claims data from the September 2023 update of the FY 2023 MedPAR file. The following table illustrates our findings for all 23,017 cases reporting procedure codes describing multiple level combined anterior and posterior spinal fusions.

For the proposed new MS-DRGs, there is (1) at least 500 or more cases in the MCC group, the CC subgroup, and in the without CC/MCC subgroup; (2) at least 5 percent of the cases are in the MCC subgroup, the CC subgroup, and in the without CC/MCC subgroup; (3) at least a 20 percent difference in average costs between the MCC subgroup and the CC subgroup and between the CC group and NonCC subgroup; (4) at least a $2,000 difference in average costs between the MCC subgroup and the with CC subgroup and between the CC subgroup and NonCC subgroup; and (5) at least a 3-percent reduction in cost variance, indicating that the proposed severity level splits increase the explanatory power of the base MS-DRG in capturing differences in expected cost between the proposed MS-DRG severity level splits by at least 3 percent and thus improve the overall accuracy of the IPPS payment system.

As a result, for FY 2025, we proposed to create new MS-DRG 426 (Multiple Level Combined Anterior and Posterior Spinal Fusion Except Cervical with MCC), new MS-DRG 427 (Multiple Level Combined Anterior and Posterior Spinal Fusion Except Cervical with CC), and new MS-DRG 428 (Multiple Level Combined Anterior and Posterior Spinal Fusion Except Cervical without CC/MCC). The following table reflects a simulation of the proposed new MS-DRGs.

The next step in our analysis of the impact of our suggested modifications to MS-DRGs 453, 454, and 455 was to review the cases reporting single combined anterior and posterior cervical fusions. The following table ( print page 69048) illustrates our findings for all 16,059 cases reporting procedure codes describing single level combined anterior and posterior spinal fusions.

We stated we applied the criteria to create subgroups in a base MS-DRG as discussed in section II.C.1.b. of the preamble of the proposed rule and this final rule. We noted that, as shown in the table that follows, a three-way split of this proposed new base MS-DRG failed to meet the criterion that at least 5% or more of the cases are in the MCC subgroup. It also failed to meet the criterion that there be at least a 20% difference in average costs between the CC and NonCC (without CC/MCC) subgroup. The following table illustrates our findings.

We then applied the criteria for a two-way split for the “with CC/MCC and without CC/MCC” subgroups. As shown in the table that follows, a two-way split of this base MS-DRG failed to meet the criterion that there be at least a 20% difference in average costs between the “with CC/MCC and without CC/MCC” subgroup.

We noted that because the criteria for both of the two-way splits failed a split (or CC subgroup) is not warranted for the proposed new base MS-DRG. As a result, for FY 2025, we proposed to create new base MS-DRG 402 (Single Level Combined Anterior and Posterior Spinal Fusion Except Cervical). The following table reflects a simulation of the proposed new base MS-DRG.

For the final step in our analysis of the impact of our suggested modifications to MS-DRGs 453, 454, and 455 we reviewed the cases reporting combined anterior and posterior cervical fusions. The following table illustrates our findings for all 2,323 cases reporting procedure codes describing combined anterior and posterior cervical spinal fusions.

As discussed in section II.C.1.b. of the preamble of the proposed rule and this final rule, if the criteria for a three-way split fail, the next step is to determine if the criteria are satisfied for a two-way split. We therefore applied the criteria for a two-way split for the “with MCC and without MCC” subgroups. We note that, as shown in the table that follows, a two-way split of this proposed new base MS-DRG was met. For the proposed MS-DRGs, there is at least (1) 500 or more cases in the MCC group and in the without MCC subgroup; (2) 5 percent or more of the cases in the MCC group and in the without MCC subgroup; (3) a 20 percent difference in average costs between the MCC group and the without MCC group; (4) a $2,000 difference in average costs between the MCC group and the without MCC group; and (5) a 3-percent reduction in cost variance, indicating that the proposed severity level splits increase the explanatory power of the base MS-DRG in capturing differences in expected cost between the proposed MS-DRG severity level splits by at least 3 percent and thus improve the overall accuracy of the IPPS payment system. The following table illustrates our findings for the suggested MS-DRGs with a two-way severity level split.

Accordingly, because the criteria for the two-way split were met, we stated we believed a split (or CC subgroup) is warranted for the proposed new base MS-DRG. As a result, for FY 2025, we proposed to create new MS-DRG 429 (Combined Anterior and Posterior Cervical Spinal Fusion with MCC) and new MS-DRG 430 (Combined Anterior and Posterior Cervical Spinal Fusion without MCC). The following table reflects a simulation of the proposed new MS-DRGs.

We then analyzed the cases reporting spinal fusion procedures in MS-DRGs 456, 457, and 458. As previously described, the logic for case assignment to MS-DRGs 456, 457, and 458 is defined by principal diagnosis logic and extensive fusion procedures. Cases reporting a principal diagnosis of spinal curvature, malignancy, or infection or an extensive fusion procedure will group to these MS-DRGs. We referred the reader to the ICD-10 MS-DRG Definitions Manual Version 41.1 available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software for complete documentation of the GROUPER logic for MS-DRGs 456, 457, and 458.

As also previously described, in our initial analysis of cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device, the 13 cases we found in MS-DRGs 456 and 457 (2 + 11 = 13, respectively) appeared to be grouping appropriately, however, the average costs for the 6 cases found in MS-DRG 458 showed a difference of approximately $13,880. Because of the low volume of cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device in the “without CC/MCC” MS-DRG 458, and the low volume of cases reporting the performance of a ( print page 69050) spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device in MS-DRGs 456, 457, and 458 overall (2 + 11 + 6 = 19), for this expanded review of the claims data, we shared the results of our analysis in association with cases reporting extensive fusion procedures in MS-DRGs 456, 457, and 458. Our findings are shown in the following table.

The data show that the 332 cases reporting an extensive fusion procedure in MS-DRG 456 have a shorter average length of stay (11.5 days versus 12.6 days) and higher average costs ($89,773 versus $76,060) compared to all the cases in MS-DRG 456. For MS-DRG 457, the data show that the 171 cases reporting an extensive fusion have a comparable average length of stay (6.6 days versus 6.1 days) and higher average costs ($75,588 versus $52,179) compared to all the cases in MS-DRG 457. Lastly, for MS-DRG 458, the data show that the 146 cases reporting an extensive fusion procedure have a comparable average length of stay (3.8 days versus 3.1 days) and higher average costs ($48,035 versus $39,260) compared to all the cases in MS-DRG 458.

In the proposed rule we stated we believe that over time, the volume of cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device in MS-DRGs 456, 457, and 458 may increase and we could consider further in the context of the cases reporting an extensive fusion procedure. However, due to the logic for case assignment to these MS-DRGs also being defined by diagnosis code logic, additional analysis would be needed prior to considering any modification to the current structure of these MS-DRGs. We stated that as we continue to evaluate how we may refine these spinal fusion MS-DRGs, we are also seeking public comments and feedback on other factors that should be considered in the potential restructuring of MS-DRGs 456, 457, and 458. Thus, for FY 2025, we proposed to maintain the current structure of MS-DRGs 456, 457, and 458, without modification. Feedback and other suggestions for future rulemaking may be submitted by October 20, 2024 and directed to MEARIS TM at https://mearis.cms.gov/public/home .

Next, we performed an expanded analysis for spinal fusion cases reported in MS-DRGs 459 and 460. We noted that cases grouping to MS-DRG 459 have at least one secondary diagnosis MCC condition reported (“with MCC”) and because MS-DRG 460 is “without MCC”, cases grouping to this MS-DRG may include the reporting of at least one secondary diagnosis CC condition (in addition to cases that may not report a CC (for example, NonCC)). Based on the findings for a subset of the cases (that is, the subset of cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device) in these MS-DRGs as previously discussed, and our review of the logic for case assignment to these MS-DRGs, we developed two categories of spinal fusion procedures to further examine. The first category was for the single level spinal fusions except cervical, and the second category was for the multiple level spinal fusions except cervical. We refer the reader to Table 6P.2g for the list of procedure codes we identified to categorize the single level spinal fusions except cervical and Table 6P.2h for the list of procedure codes we identified to categorize the multiple level spinal fusions except cervical in association with the proposed rule and available on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps . Findings from our analysis are shown in the following table.

The data show that the 2,069 cases reporting a multiple level spinal fusion except cervical in MS-DRG 459 have a longer average length of stay (10.1 days versus 9.6 days) and higher average costs ($57,209 versus $53,192) when compared to all the cases in MS-DRG 459. The data also show that the 2,069 cases reporting a multiple level spinal fusion except cervical in MS-DRG 459 have a longer average length of stay (10.1 days versus 8.9 days) and higher average costs ($57,209 versus $46,031) when compared to the 1,098 cases reporting a single level spinal fusion except cervical in MS-DRG 459. For MS-DRG 460, the data show that the 14,677 cases reporting a multiple level spinal fusion except cervical have a comparable average length of stay (3.9 days versus 3.4 days) and higher average costs ($36,932 versus $32,586) when compared to all the cases in MS-DRG 460. The data also show that the 14,677 cases reporting a multiple level spinal fusion except cervical have a comparable average length of stay (3.9 days versus 3.0 days) and higher average costs ($36,932 versus $28,110) when compared to the 14,058 cases reporting a single level spinal fusion except cervical in MS-DRG 460.

In the proposed rule we stated that based on our review and analysis of the spinal fusion cases in MS-DRGs 459 and 460, we believe new MS-DRGs are warranted to differentiate between multiple level spinal fusions except cervical and single level spinal fusions except cervical to more appropriately reflect utilization of resources for these procedures, including those performed with an aprevo TM custom-made anatomically designed interbody fusion device.

To compare and analyze the impact of our suggested modifications, we ran simulations using claims data from the September 2023 update of the FY 2023 MedPAR file. The following table illustrates our findings for all 16,746 cases reporting procedure codes describing multiple level spinal fusions except cervical.

We stated we applied the criteria to create subgroups in a base MS-DRG as discussed in section II.C.1.b. of the preamble of the proposed rule and this final rule. We noted that, as shown in the table that follows, a three-way split of this proposed new base MS-DRG failed to meet the criterion that there be at least a 20% difference in average costs between the CC and NonCC (without CC/MCC) subgroup. The following table illustrates our findings.

As discussed in section II.C.1.b. of the preamble of the proposed rule and this final rule, if the criteria for a three-way split fail, the next step is to determine if the criteria are satisfied for a two-way split. We therefore applied the criteria for a two-way split for the “with MCC and without MCC” subgroups. We noted that, as shown in the table that follows, a two-way split of this proposed new base MS-DRG was met. For the proposed MS-DRGs, there is at least (1) 500 or more cases in the MCC group and in the without MCC subgroup; (2) 5 percent or more of the cases in the MCC group and in the without MCC subgroup; (3) a 20 percent difference in average costs between the MCC group and the without MCC group; (4) a $2,000 difference in average costs between the MCC group and the without MCC group; and (5) a 3-percent reduction in cost variance, indicating that the proposed severity level splits increase the explanatory power of the base MS-DRG in capturing differences in expected cost between the proposed MS-DRG severity level splits by at least 3 percent and thus improve the overall accuracy of the IPPS payment system. The following table illustrates our findings for the suggested MS-DRGs with a two-way severity level split.

As a result, for FY 2025, we proposed to create new MS-DRGs 447 (Multiple Level Spinal Fusion Except Cervical with MCC) and new MS-DRG 448 (Multiple Level Spinal Fusion Except Cervical without MCC). We also proposed to revise the title for existing MS-DRGs 459 and 460 to “Single Level Spinal Fusion Except Cervical with MCC and without MCC”, respectively. In the proposed rule we stated that this proposal would better differentiate the resource utilization, severity of illness and technical complexity between single level and multiple level spinal fusions that do not include cervical spinal fusions in the logic for case assignment. The following table reflects a simulation of the proposed new MS-DRGs.

In conclusion, we proposed to delete MS-DRGs 453, 454, and 455 and proposed to create 8 new MS-DRGs. We proposed to create new MS-DRG 426 (Multiple Level Combined Anterior and Posterior Spinal Fusion Except Cervical with MCC), MS-DRG 427 (Multiple Level Combined Anterior and Posterior Spinal Fusion Except Cervical with CC), MS-DRG 428 (Multiple Level Combined Anterior and Posterior Spinal Fusion Except Cervical without CC/MCC), MS-DRG 402 (Single Level Combined Anterior and Posterior Spinal Fusion Except Cervical), MS-DRG 429 (Combined Anterior and Posterior Cervical Spinal Fusion with MCC), MS-DRG 430 (Combined Anterior and Posterior Cervical Spinal Fusion without MCC), MS-DRG 447 (Multiple Level Spinal Fusion Except Cervical with MCC) and MS-DRG 448 (Multiple Level Spinal Fusion Except Cervical without MCC) for FY 2025. We proposed the logic for case assignment to these proposed new MS-DRGs as displayed in Table 6P.2d, Table 6P.2e, Table 6P.2f, Table 6P.2g, and Table 6P.2h in association with the proposed rule and available via the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps . We also proposed to revise the title for MS-DRGs 459 and 460 to “Single Level Spinal Fusion Except Cervical with MCC and without MCC”, respectively. Lastly, as discussed in section II.C.14 of the preamble of the proposed rule, we proposed conforming changes to the surgical hierarchy for MDC 08.

Comment: Commenters supported the proposed restructuring for the spinal fusion MS-DRGs for FY 2025. A commenter stated that the existing MS-DRGs have not kept pace with the rapid advancements in spine fusion technology and techniques, leading to significant financial strain on hospitals. According to the commenter, the cost differences associated with performing a one-level lumbar fusion compared to a multi-level fusion are substantial, not only in terms of the surgical time and complexity but also in postoperative care and rehabilitation. The commenter stated that the proposal represents a much-needed advancement in the payment structure for hospitals supporting these complex surgeries and acknowledges the varied complexity and resources required for these distinct types of surgeries. The commenter also stated that the proposal ensures a comprehensive approach that addresses the full spectrum of spinal fusion procedures. In addition, the commenter stated that this refined categorization will enable hospitals to receive more appropriate payment, reflecting the specific nature of each procedure and the level of care provided to patients with diverse spinal conditions. The commenter also stated that by aligning MS-DRGs more closely with the actual costs incurred, the new structure will allow hospitals to allocate resources more effectively and continue investing in high-quality patient care. Lastly, the commenter stated that the proposed changes recognize the variations in patient populations, including the different needs and recovery trajectories of those undergoing non-cervical versus cervical spine fusion surgeries.

Another commenter stated that currently, MS-DRGs 453 through 455 do not adequately differentiate between the complexity and relative resource use associated with multiple level procedures. The commenter stated that this adjustment will lead to more accurate payment, resource allocation, and further aligns with the clinical accuracy and medical advancements of these procedures.

A commenter stated it supported the proposed changes as it would create further specificity in coding. Another commenter also expressed appreciation for CMS's efforts to update the spinal fusion MS-DRGs to better reflect current clinical practice delineating single versus multiple level procedures with the detailed analysis that outlined the proposed changes. This commenter stated they plan to monitor the impact of the proposed revisions, if finalized, for both its customers and patients.

Comment: A commenter stated it reviewed the proposed spinal fusion MS-DRG changes and while it found that most of the redistribution appears appropriate, they have concerns about the proposed MS-DRG 402 (Single Level Combined Anterior and Posterior Spinal Fusion Except Cervical) because the ability to capture the impact of a CC or MCC is not reflected. The commenter performed its own analysis and stated that the single level combined anterior and posterior fusion cases have longer lengths of stay and higher average costs when a CC or MCC is present. According to the commenter, its analysis showed that the proposed MS-DRG 402 does not adequately reflect the resource consumption for patients with significant comorbid conditions. The commenter recommended that MS-DRG 402 not be finalized as a single MS-DRG and instead suggested it be established as a three-way split MS-DRG (with MCC, with CC and without CC/MCC, respectively).

Response: We appreciate the commenter's analysis. As discussed in the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 35981 ), we applied the criteria to create subgroups for the proposed new base MS-DRG. The criteria for a three-way split and both two-way splits failed, therefore, only a proposed new base MS-DRG was supported.

Comment: Several commenters stated they supported CMS's review of the spinal fusion MS-DRGs to consider potential logic revisions. The commenters expressed appreciation and support for the distinction that new, revised and expanded spinal fusion MS-DRGs can provide for data analysis, notably in instances where multiple and single-level anatomically different spinal level location procedures are performed during the same operative episode. However, the commenters stated that it is essential to address and consider the logic for all the spinal fusion MS-DRGs to maintain the stability of reporting and to ensure capture of the technical complexity and medical severity indications for these procedures. The commenters requested that CMS consider delaying the proposal and provide additional insight and rationale as to why MS-DRGs 456, 457, and 458 (Spinal Fusion Except Cervical with Spinal Curvature, Malignancy, Infection or Extensive Fusions with MCC, with CC, and without CC/MCC, respectively) and MS-DRGs 471, 472, and 473 (Cervical Spinal Fusion with MCC, with CC, and without CC/MCC, respectively), were not incorporated into the analysis for FY 2025.

Response: We appreciate the commenters' support. We note that in the preamble of the FY 2025 IPPS/LTCH ( print page 69053) PPS proposed rule ( 89 FR 35971 through 35985 ) and in this final rule, as part of our ongoing analysis of the manufacturer's request to reassign cases involving the aprevo TM device, we presented findings from our analysis of claims data from the September 2023 update of the FY 2023 MedPAR file for MS-DRGs 456, 457, and 458, and cases reporting any one of the procedure codes describing the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device. We stated that based on our findings, the 13 cases we found in MS-DRGs 456 and 457 (2 + 11 = 13, respectively) appeared to be grouping appropriately, however, the average costs for the 6 cases found in MS-DRG 458 showed a difference of approximately $13,880. We also stated that, because of the low volume of cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device in the “without CC/MCC” MS-DRG 458, and the low volume of cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device in MS-DRGs 456, 457, and 458 overall (2 + 11 + 6 = 19), for the expanded review of the claims data, we were sharing the results of our analysis in association with cases reporting extensive fusion procedures in MS-DRGs 456, 457, and 458. We further stated that we believed over time, that the volume of cases reporting the performance of a spinal fusion procedure using an aprevo TM custom-made anatomically designed interbody fusion device in MS-DRGs 456, 457, and 458 may increase and we could consider further in the context of the cases reporting an extensive fusion procedure. However, we also noted that due to the logic for case assignment to these MS-DRGs being defined by diagnosis code logic, additional analysis would be needed prior to considering any modification to the current structure of these MS-DRGs. We stated that as we continue to evaluate how we may refine these spinal fusion MS-DRGs, we are also seeking public comments and feedback on other factors that should be considered in the potential restructuring of MS-DRGs 456, 457, and 458. Thus, for FY 2025, we proposed to maintain the current structure of MS-DRGs 456, 457, and 458, without modification. We noted that feedback and other suggestions for future rulemaking may be submitted by October 20, 2024 and directed to MEARIS TM at https://mearis.cms.gov/public/home .

With respect to the commenters' concerns that we excluded analysis of MS-DRGs 471, 472, and 473 for FY 2025, we note that the MS-DRG request under consideration for ongoing review was related to assignment of cases reporting procedures involving use of the aprevo TM custom-made anatomically designed interbody spinal fusion device technology that is used in the performance of a spinal fusion procedure and specifically indicated for treatment of the anterior column of the thoracolumbar, lumbar, or lumbosacral vertebra. The procedure codes describing a custom-made anatomically designed interbody fusion device are not listed in the logic for case assignment to MS-DRGs 471, 472, and 473 because the logic for those MS-DRGs is specifically indicated for the cervical vertebrae. While not specifically discussed in the proposed rule, the manufacturer of the aprevo TM custom-made interbody spinal fusion device technology received a second Breakthrough Device designation for its technology in September 2023 that is indicated specifically for the treatment of patients with cervical spine disease. We anticipate, similar to the approach utilized for the treatment of patients with lumbar spine disease, that it is possible the manufacturer may request a unique procedure code(s) to describe the use of the technology for the cervical spine with the potential of applying for a new technology add-on payment and subsequent MS-DRG classification changes. For these reasons, we believe additional time is necessary as we consider how we may refine the cervical spinal fusion MS-DRGs. We are also seeking feedback on factors that should be considered in the potential restructuring of MS-DRGs 471, 472, and 473 for future rulemaking. For example, are there other patient-specific spinal fusion technologies currently in development or in use and indicated for cervical spine disease that should also be evaluated and considered. Feedback and other suggestions for future rulemaking may be submitted by October 20, 2024 and directed to MEARIS TM at https://mearis.cms.gov/public/home .

Comment: A few commenters who appreciated CMS's attempts to recognize the differences in complexity between single level and multiple level spinal fusion procedures stated their belief that additional time is needed for hospitals to assess the impact of the proposed changes. According to the commenters, the proposed changes may have a negative impact on community hospitals, which they stated tend to treat less-complex cases.

A couple commenters stated that CMS has previously given two years notice to hospitals about potential changes and provided the example of CMS's request for public comments and feedback on potential restructuring for MS-DRGs 023 through 027, as discussed in FY 2024 and FY 2025 rulemaking. Another commenter stated that the proposed restructuring of the spinal fusion MS-DRGs is a major revision, and without any warning to hospitals. However, this commenter also stated that regardless of the outcome for the proposed reorganization of the spinal fusion MS-DRGs, CMS should address the resource utilization disparity related to the use of the aprevo TM custom-made anatomically designed spine fusion devices. According to the commenter, failure to implement this issue for FY2025 will create a financial disincentive for hospitals to utilize this innovative technology, thus eliminating access for patients. The commenter recommended CMS reassign cases reporting a custom-made anatomically designed interbody fusion device to MS-DRGs that address the higher resource utilization and to ensure continued access to the technology. This same commenter also stated its belief that the proposal should undergo a comprehensive review by a spine group to identify and mitigate any unintended consequences.

Response: We appreciate the commenters' feedback. As discussed in prior rulemaking ( 86 FR 44878 ), 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. It is generally expected that as a result of the annual MS-DRG reclassifications that are finalized, the experience of different categories of hospitals may differ based on the population of patients they treat and the services offered by the facility.

With respect to the commenter's concern that hospitals had no warning regarding the proposed restructuring for a subset of the spinal fusion MS-DRGs, we note that in addition to proposing these changes in the FY 2025 IPPS/LTCH PPS proposed rule, we discussed this topic in the FY 2024 IPPS/LTCH PPS rulemaking, including noting that our work in this area was ongoing, and that we would continue to examine the data and consider these issues as we develop potential future rulemaking proposals. Providers have had the opportunity to consider how spinal fusion cases (including cases reporting ( print page 69054) the use of a custom-made anatomically designed interbody fusion device) are reported in the claims data for their respective facilities and grouped under the IPPS MS-DRGs, as well as to submit requested changes to the classifications for these MS-DRGs for CMS's consideration. We further note that, as stated in the preamble of the annual IPPS rulemakings, 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. We include these changes as part of our annual IPPS rulemaking, which provides the public, including any particular interested parties, the opportunity to review and comment on these proposals.

Comment: A few commenters who expressed appreciation for CMS's efforts to update the spinal fusion MS-DRGs to better reflect current clinical practice and facility costs more accurately stated they need more information about the potential impact of the proposed designations and the opportunity to study the proposed changes further. These commenters recommended that CMS not conduct this restructuring while also considering the spinal fusion episode accountability model under the Transforming Episode Accountability Model (TEAM).

Response: We appreciate the commenters' feedback. We refer the reader to section X.A.3.b. of the preamble of this final rule for further discussion of how the proposed restructuring of the spinal fusion MS-DRGs may be considered in connection with the spinal fusion episode category under TEAM.

Comment: A few commenters who expressed support for potential changes to the logic for case assignment to the spinal fusion MS-DRGs stated they reviewed data provided by CMS with the AOR/BOR (After Outliers Removed/Before Outliers Removed) version 41 and version 42 files, and Table 5—Proposed List of Medicare Severity Diagnosis Related Groups (MS-DRGs), Relative Weighting Factors, and Geometric and Arithmetic Mean Length of Stay that was made available in association with the proposed rule. The commenters stated it was unclear if the current proposed spinal fusion MS-DRGs better reflect resource consumption based on its findings of a minimal change in the case mix index between version 41 (4.6504) and version 42 (4.6454). The commenters suggested further analysis of all the spinal fusion MS-DRGs should be considered.

A commenter stated that the version 42 AOR table showed more spinal fusion cases in comparison to the total spinal fusion cases included in the rule discussion. The commenter questioned if there was duplication of the same patients being counted based on the logic lists for the proposal and stated it was not clear how duplications may have been handled in the data if there was both a multiple level fusion and single level fusion reported on the same case.

Response: It is not entirely clear how the commenters performed the case-mix index calculations, however, based on the data table provided by the commenters, we believe the commenters used the case counts from the AOR file and relative weights to calculate a case-weighted average relative weight for the spinal fusion MS-DRGs and are referring to that as a case-mix index. We note that under the proposed restructuring, the same population of cases among the spinal fusion MS-DRGs is being redistributed, therefore, we would not expect a significant shift in the case-mix index.

With respect to the differences in case counts between the version 42 AOR table in comparison to the number of cases included in the rule discussion for the proposed spinal fusion MS-DRGs, we note that, as stated in the proposed rule, our MS-DRG analysis was based on ICD-10 claims data from the September 2023 update of the FY 2023 MedPAR file, which contains hospital bills received from October 1, 2022, through September 30, 2023. In comparison, as also stated in the proposed rule, the FY 2023 MedPAR file used in developing the proposed MS-DRG relative weights for FY 2025 included discharges occurring on October 1, 2022, through September 30, 2023, based on bills received by CMS through December 31, 2023.

Comment: A commenter noted that the titles of the ICD-10-PCS procedure codes that were created to report spinal fusion procedures using the aprevo TM customized interbody fusion device were revised, effective October 1, 2023, as a result of the manufacturer's concerns that some claims may have been unintentionally miscoded. The commenter stated that per the materials from the March 2023 ICD-10 Coordination and Maintenance Committee meeting, the manufacturer requested the title revision to help minimize misinterpretation of the term “customizable.” The commenter remarked that CMS was unable to confirm that claims reporting any one of the codes created that describe use of the aprevo TM device had in fact been miscoded, and as discussed in the proposed rule, while a newly established ICD-10 code may be associated with an application for a new technology add-on payment, such codes are not generally established to be product specific. The commenter added that CMS further stated that if, after consulting the official coding guidelines, a provider determines that an ICD-10 code associated with a new technology add-on payment describes the technology that they are billing, the hospital may report the code and be eligible to receive the associated add-on payment. The commenter stated that some ICD-10-PCS codes are intended to be product specific, as the code title(s) often represent a manufacturer's specific technology, particularly in the New Technology section. The commenter added that the Coding Clinic for ICD-10-CM/PCS Editorial Advisory Board has determined that some ICD-10-PCS codes are only intended for a specific product and should not be used for other devices or substances.

The commenter stated that in the case of the aprevo TM device, it is not clear why the titles of the associated procedure codes were revised to more clearly describe this specific device and address the manufacturer's concerns regarding miscoding, if it was appropriate to assign the codes for spinal fusion procedures using devices other than the aprevo TM device. The commenter further stated that absence of clarity regarding device specific codes may have an unintended effect on the use of new technology due to concerns regarding lack of payment, which they stated may have a negative impact on clinical outcomes.

Response: We appreciate the commenter's feedback. With respect to the commenter's remarks about revisions made to the code title for the procedure codes describing spinal fusion procedures with an aprevo TM interbody fusion device, we note that we addressed this issue when we were made aware of it and believe the code title is now appropriate. It was brought to our attention that the term “customizable” as reflected in the original code title was leading to confusion with devices that utilize expandable cages and are “customized” to fit during the procedure. In response to the manufacturer's concerns regarding potential miscoded claims and its request to revise the original code descriptor to help minimize misinterpretation of the term “customizable” by providers' coding personnel, we presented and received ( print page 69055) public support to finalize the proposed revision to the code titles. The intent was not to specifically limit the reporting of the code, since, as stated in the proposed rule, while a newly established ICD-10 code may be associated with an application for a new technology add-on payment, such codes are not generally established to be product specific.

We note that historically, our approach to proposing and finalizing new procedure codes through the ICD-10 Coordination and Maintenance Committee meeting process was largely built on the fact that the procedure classification system was designed to report the procedure performed, not the device or other specific technology used. However, we also note that with the implementation of the new technology add-on payment policy, aspects of that approach to creating new procedure codes have been become more complex. While we have strived to maintain consistency with that historical approach, we also recognize the responsibility to balance and support the requirements of the new technology add-on payment policy, which have continued to evolve since its inception.

The commenter is correct that certain ICD-10-PCS codes located in the New Technology section of the ICD-10-PCS procedure classification, also known as “Section X”, are product specific. For example, a procedure code request for the administration of a therapeutic agent, regardless of it being related to a new technology add-on payment application, is often presented as a proposal through the ICD-10 Coordination and Maintenance Committee meeting process, and subsequently finalized (following review and consideration of the public comments) with the generic name of the agent in the code description (title). Oftentimes, there is a clinical need and several benefits to capture a certain level of specificity for purposes of data collection, such as tracking a particular patient population, or assessing clinical outcomes. We note that following the finalization of a new procedure code that is classified within the new technology section (Section X) of ICD-10-PCS, we discuss the disposition of that code after a 3-year period during a future ICD-10 Coordination and Maintenance Committee meeting, which also generally aligns with the expiration of a product's eligibility for an add-on payment under the new technology add-on payment policy. We also take this opportunity to point out that a procedure, service, or technology is not required to submit a new technology add-on payment application for consideration of a Section X code. As discussed in prior rulemaking ( 80 FR 49434 through 49435 ), when the ICD-10-PCS New Technology section was under development, we established that the purpose of the New Technology section is to also provide a mechanism to capture services that would not normally be coded and reported in the inpatient setting.

We appreciate the commenter's feedback on this topic and will continue to consider how to better address coding proposals in connection with new technologies for future discussion at the ICD-10 Coordination and Maintenance Committee meeting.

Comment: A commenter (the manufacturer of the aprevo TM custom-made anatomically designed interbody fusion device) stated that while CMS partially addressed the request to assign spinal fusion procedures reporting the use of a custom-made anatomically designed interbody fusion device to appropriate MS-DRGs that more closely align with the increase in resource utilization, the analysis under the proposed restructuring did not specifically reflect data related to the resource utilization for custom-made anatomically designed devices under the single level versus multiple level MS-DRG construct.

The commenter provided a comprehensive list detailing the sequence of events related to prior rulemaking discussions involving custom-made anatomically designed interbody fusion devices including its approved eligibility for new technology add-on payments, revisions to the procedure code title to change the description from “customizable” to “custom-made anatomically designed” interbody fusion device, and prior data analysis findings. The commenter also provided extensive clinical background on custom-made anatomically designed interbody fusion devices and reiterated the designation as an FDA Breakthrough technology. Additionally, the commenter stated that published clinical data has shown that custom-made anatomically designed interbody fusion devices improve care by delivering more precise patient specific alignment, [ 6 7 ] which they stated has been proven to reduce the risk of revision surgery.

In response to publication of the FY 2025 IPPS/LTCH PPS proposed rule, the commenter stated its belief that 1.) CMS contradicted its position on the original description of the procedure codes by making the statement in the FY 2025 IPPS/LTCH PPS proposed rule that a newly established ICD-10 code may be associated with an application for new technology add-on payment and such codes are not generally established to be product specific and 2.) CMS acknowledged that the description used in the original ICD-10 code inadvertently described several types of technologies, and this likely contributed to the miscoded claims. According to the commenter, because CMS decided to consider resource utilization disparities for all cases reporting the use of a custom-made anatomically designed interbody spinal fusion device in its analysis for FY 2025 (that is, they stated CMS did not limit its analysis to cases associated only with the list of providers provided by the manufacturer), the commenter's original requested reassignments are no longer supported by data and therefore, the commenter stated revised reassignments are appropriate to request.

The commenter stated that CMS sought to find an alternative explanation for the resource incoherence demonstrated across the cases reporting any one of the 12 procedure codes describing a spinal fusion procedure with a custom-made anatomically designed interbody spinal fusion device and that the expanded analysis was unrelated to the original request because it did not provide data related to the use of custom-made anatomically designed devices under the proposed single level versus multiple level MS-DRG construct. The commenter further stated that the absence of this specific data (single level versus multiple level) in the proposed rule necessitated the submission of a revised request under the proposed new structure and the findings from its analysis for CMS's review and consideration.

The commenter provided prior examples of MS-DRG classification requests comparing length of stay differences and low claims volume to demonstrate instances for which CMS reassigned cases from a lower severity level MS-DRG to a higher severity level MS-DRG, including the proposal regarding the Neuromodulation Device Implant for Heart Failure (Barostim TM Baroreflex Activation Therapy), as discussed in the preamble of the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 35959 through 35962 ) and in section II.C.4.b. of the preamble of this final rule.

The commenter also remarked on CMS's discussion of the data analysis presented in the proposed rule regarding the wide range in average costs for claims reporting the use of a ( print page 69056) custom-made anatomically designed interbody fusion device. The commenter stated it engaged a contractor to assess the distribution of costs and length of stay for all spinal fusion cases and cases reporting the use of a custom-made anatomically designed interbody fusion device using FY 2023 Q1-Q4 inpatient standard analytical file (SAF) data. According to the commenter, the findings from its analysis demonstrate that cases reporting the use of a custom-made anatomically designed interbody fusion device consistently show higher average costs in comparison to the average costs of all spinal fusion cases in their respective MS-DRG, which they stated are an indication that the higher costs are not an artifact of a few cases.

The commenter conducted additional analyses using the FY 2023 MedPAR data with the logic lists from the tables provided in association with the proposed rule and stated that its findings demonstrate disparities in resource utilization for cases reporting use of a custom-made anatomically designed interbody fusion device among the proposed multiple level and single level spinal fusion MS-DRGs. Specifically, the commenter stated cases reporting the use of a custom-made anatomically designed interbody fusion device under the proposed MS-DRG structure should be reassigned as shown in the table that follows.

According to the commenter, findings from its analysis under the proposed MS-DRG structure support the reassignment of cases reporting the use of a custom-made anatomically designed interbody fusion device from the lower severity proposed MS-DRGs to the higher severity level proposed MS-DRGs because the resource utilization of cases reporting the use of a custom-made anatomically designed interbody fusion device align more closely with the resource utilization of cases in the requested MS-DRG. The commenter stated that the requested reassignments are consistent with other MS-DRG classifications CMS has previously finalized and therefore, the precedent exists.

The commenter also provided an alternative recommendation for CMS's consideration based on the current, existing spinal fusion MS-DRGs, with minor modifications from its initial FY 2024 request for the reassignment of cases reporting a custom-made anatomically designed interbody fusion device. Specifically, the commenter provided its analysis under the existing MS-DRGs and indicated that cases reporting the use of a custom-made anatomically designed interbody fusion device under the existing MS-DRG structure should be considered for reassignment as shown in the table that follows, if the proposed structure is not finalized.

Based on the findings from its analyses under the proposed and current MS-DRG structure for spinal fusions, the commenter asserted that reassignment of cases reporting the use of a custom-made anatomically ( print page 69057) designed interbody fusion device is supported by compelling data that demonstrates a resource utilization disparity for cases reporting the technology. The commenter stated that without appropriate payment, Medicare beneficiaries will lose access to the technology, and stated they deserve continued access to the technology because it improves patient care. The commenter urged CMS to finalize the reassignment of these cases for FY 2025.

Some commenters stated that the new technology add-on payment for custom-made anatomically designed interbody spinal fusion devices is ending on September 30, 2024, and if CMS decides to move forward with the proposed MS-DRG changes without the reassignment of the procedure codes describing the custom-made anatomically designed technology to more appropriate MS-DRGs, it would create a financial disincentive for hospitals and eliminate access to the breakthrough technology for patients. The commenters reiterated prior concerns raised in public comments by spine surgeons that were discussed in the FY 2024 rulemaking and stated that without adequate payment, hospitals will not authorize use of the technology.

A few commenters suggested that if CMS is going to finalize the proposed restructuring, consideration be given to deleting MS-DRGs 459 and 460 and creating new MS-DRGs for single level spinal fusion except cervical with MCC and without MCC because they stated the proposed revisions would significantly change the types of cases classified to these MS-DRGs.

Response: We appreciate the commenters' feedback. In response to the commenter's statement that CMS contradicted its position on the original description of the procedure codes, we note that the manufacturer contacted CMS about its concerns. CMS' actions were to provide clarity to all parties in light of concerns that the manufacturer raised. As a general matter, CMS aims to provide clarity when possible, and we recognized there could be impacts to coding, data collection, and payment, and therefore we took the opportunity to revise the code title in this case. Specifically, as stated above, in response to the manufacturer's concerns regarding potential miscoded claims and its request to revise the original code descriptor to help minimize misinterpretation of the term “customizable” by providers' coding personnel, we presented and received public support to finalize the proposed revision to the code titles. We wish to clarify that CMS did not specifically acknowledge that the description used in the original ICD-10 code inadvertently described several types of technologies, and that this likely contributed to the miscoded claims. As discussed in the proposed rule and previously in this final rule, we provided clarification that finalization of the revised code title was not intended to specifically limit the reporting of the code, since a newly established ICD-10 code that may be associated with an application for a new technology add-on payment is generally not established to be product specific.

We disagree with the commenter's assertion that CMS contradicted its prior position on length of stay differences with respect to clinical coherence. We note that in the examples provided by the commenter of MS-DRG classification requests comparing length of stay differences and low claims volume to demonstrate instances for which CMS reassigned cases from a lower severity level MS-DRG to a higher severity level MS-DRG, the topics were discussed and considered in more than one rulemaking cycle prior to finalizing the reassignment of cases from the lower severity level to the higher severity level and length of stay was still a factor under consideration. We also note that because of the lag in claims data used in our analysis of MS-DRG classification requests, depending on the specific procedures and technology under consideration, it is not uncommon to delay a decision and continue to monitor the data until additional analysis can be performed.

In this case, CMS performed additional analyses to examine if other factors could be identified as contributing to the increased resource utilization for cases reporting any one of the 12 procedure codes describing a spinal fusion procedure with a custom-made anatomically designed interbody spinal fusion device. We disagree that the expanded analysis was unrelated to the original request because it did not specifically provide data related to the use of custom-made anatomically designed devices under the proposed single level versus multiple level MS-DRG construct, however, we appreciate the commenter's submission of suggested alternative reassignments under the proposed new structure and optional consideration under the existing structure.

In response to the commenter's request to reassign cases reporting the use of a custom-made anatomically designed interbody fusion device under the proposed restructuring for the spinal fusion MS-DRGs, we analyzed claims data from the September update of the FY 2023 MedPAR file for proposed MS-DRGs 402, 426, 427, 428, 447, 448, 459 and 460 and cases reporting spinal fusion using a custom-made anatomically designed interbody fusion device. Our findings are shown in the following table.

The findings show that the 307 cases reporting a spinal fusion procedure using a custom-made anatomically designed interbody fusion device in MS-DRGs 402, 426, 427, 428, 447, 448, 459 and 460 have higher average costs in comparison to the average costs of all the cases in their respective proposed MS-DRG. We note, as shown in the table, that there were zero cases found to report the use of a custom-made anatomically designed interbody fusion device in proposed revised MS-DRG 459. For proposed MS-DRGs 402 and 428, the findings show that the cases reporting the use of a custom-made anatomically designed interbody fusion device have a comparable average length of stay compared to all the cases in their respective proposed MS-DRG. The findings also show that for proposed MS-DRGs 426 and 427, the cases reporting the use of a custom-made anatomically designed interbody fusion device have a longer average length of stay compared to all the cases in their respective proposed MS-DRG. For proposed MS-DRG 447, we note that the single case reporting the use of a custom-made anatomically designed interbody fusion device is an outlier. For proposed MS-DRG 448 and proposed revised MS-DRG 460, cases reporting the use of a custom-made anatomically designed interbody fusion device have a shorter average length of stay compared to all the cases in their respective proposed MS-DRG.

We reviewed the requested reassignment for the 66 cases from proposed MS-DRG 402 to proposed MS-DRG 428 and note that the logic for case assignment to proposed MS-DRG 428 is comprised of cases reporting a multiple level combined anterior and posterior fusion (except cervical) without a CC/MCC and the logic for case assignment for proposed MS-DRG 402 is comprised of cases reporting a single level combined anterior and posterior fusion (except cervical) that may also ( print page 69059) have an MCC or CC reported since it is a proposed base MS-DRG that is not subdivided by severity. The proposed logic for case assignment to each of these proposed MS-DRGs includes the procedure codes describing the use of a custom-made anatomically designed interbody fusion device in the definition of the respective proposed MS-DRG. Therefore, the reassignment of cases reporting the use of a custom-made anatomically designed interbody fusion device from proposed MS-DRG 402 to proposed MS-DRG 428 would not be feasible and would not be consistent with the logic of the proposed MS-DRGs which is intended to differentiate a single level combined anterior and posterior fusion from a multiple level combined anterior and posterior spinal fusion.

Next, we reviewed the requested reassignment for the 51 cases reporting the use of a custom-made anatomically designed interbody fusion device from proposed MS-DRG 428 (without CC/MCC) to proposed MS-DRG 427 (with CC) and for the 101 cases from proposed MS-DRG 427 (with CC) to proposed MS-DRG 426 (with MCC). We note that because the proposed MS-DRGs are subdivided with a three-way split, it is not feasible to reassign cases reporting the use of a custom-made anatomically designed interbody fusion device as requested at this time. Generally, with a three-way split, the requested reassignment of cases can only be considered for movement from one severity level to the next highest severity level. For example, consideration could be given to reassign cases from the “without CC/MCC” severity level to the “with CC” severity level or from the “with CC” level to the “with MCC” severity level. Because the proposed logic lists for case assignment to each of these proposed MS-DRGs includes the procedure codes describing the use of a custom-made anatomically designed interbody fusion device in the definition of the respective proposed MS-DRG, the GROUPER software is not able to exclude cases reporting a custom-made anatomically designed interbody fusion device from grouping to proposed MS-DRG 426 (“with MCC”) that would otherwise group to proposed MS-DRG 428 (“without CC/MCC”).

We then reviewed the requested reassignment for the 38 cases reporting the use of a custom-made anatomically designed interbody fusion device from proposed revised MS-DRG 460 to proposed MS-DRG 447. We note that the logic for case assignment to proposed MS-DRG 447 is comprised of cases reporting a multiple level spinal fusion (except cervical) and the logic for case assignment for proposed revised MS-DRG 460 is comprised of cases reporting a single level spinal fusion (except cervical). The proposed logic for case assignment to each of these proposed MS-DRGs includes the procedure codes describing the use of a custom-made anatomically designed interbody fusion device in the definition of the respective proposed MS-DRG. Therefore, the reassignment of the 38 cases reporting the use of a custom-made anatomically designed interbody fusion device from proposed revised MS-DRG 460 to proposed MS-DRG 447 would not be feasible and would not be consistent with the logic of the proposed MS-DRGs which is intended to differentiate a single level spinal fusion from a multiple level spinal fusion.

Lastly, we reviewed the requested reassignment for the 26 cases reporting the use of a custom-made anatomically designed interbody fusion device from proposed MS-DRG 448 to proposed MS-DRG 447. Based on the logic lists for case assignment and because these MS-DRGs are subdivided by a two-way split that both describe multiple level spinal fusion (except cervical), we determined it would be feasible to reassign cases from the “without MCC” severity level (MS-DRG 448) to the “with MCC” severity level (MS-DRG 447).

As previously described, when MS-DRGs are subdivided with a three-way split, the requested reassignment of cases can only be considered from one severity level to the next highest severity level. In our review of the data for proposed MS-DRGs 426, 427, and 428, we considered the average costs of the 24 cases found in proposed MS-DRG 426 reporting the use of a custom-made anatomically designed interbody fusion device compared to the average cost of all the cases in proposed MS-DRG 426 ($103,956 versus $91,358) and the average costs of the 101 cases found in proposed MS-DRG 427 reporting the use of a custom-made anatomically designed interbody fusion device compared to the average cost of all the cases in proposed MS-DRG 427 ($76,827 versus $64,065). Although the average length of stay for cases reporting a custom-made anatomically designed interbody fusion device in proposed MS-DRG 427 is shorter in comparison to the average length of stay of all the cases in proposed MS-DRG 426, we believe the reassignment of cases reporting the use of a custom-made anatomically designed interbody fusion device from proposed MS-DRG 427 (with CC) to proposed MS-DRG 426 (with MCC) is supported and better reflects the resource utilization and complexity of cases using the custom-made anatomically designed interbody fusion device technology in a multiple level combined anterior and posterior spinal fusion. We recognize that the 51 cases found in proposed MS-DRG 428 reporting the use of a custom-made anatomically designed interbody fusion device have higher average costs compared to the average cost of all the cases in MS-DRG 428 ($64,038 versus $50,097), however, as previously described, we are unable to accommodate two severity level reassignment requests for an MS-DRG subdivided by a three-way split at this time.

We noted earlier in this section of the preamble of this final rule, in our review of the requested reassignment of cases reporting the use of a custom-made anatomically designed interbody fusion device from proposed MS-DRG 448 to proposed MS-DRG 447 that the request was feasible based on the logic of the proposed MS-DRGs that are subdivided with a two-way split. In our review of the data for proposed MS-DRGs 447 and 448, we considered the average costs of the 26 cases found in proposed MS-DRG 448 reporting the use of a custom-made anatomically designed interbody fusion device compared to the average cost of all the cases in proposed MS-DRG 448 ($62,831 versus $36,932). We also considered the one case found in proposed MS-DRG 447 reporting the use of a custom-made anatomically designed interbody fusion device to be an outlier with costs of $288,499 compared to the average costs of all the cases in proposed MS-DRG 447 ($57,209). We believe the reassignment of cases reporting the use of a custom-made anatomically designed interbody fusion device from proposed MS-DRG 448 (without MCC) to proposed MS-DRG 447 (with MCC) is supported and better reflects the resource utilization and complexity of cases using the custom-made anatomically designed interbody fusion device technology in a multiple level anterior and posterior spinal fusion.

As previously discussed, we determined that the requested reassignment of cases reporting the use of a custom-made anatomically designed interbody fusion device from proposed revised MS-DRG 460 to proposed MS-DRG 447 would not be feasible based on the logic for case assignment. However, based on the data findings, we believe it is appropriate to consider the reassignment of cases reporting the use of a custom-made anatomically designed interbody fusion device from proposed revised MS-DRG ( print page 69060) 460 to proposed revised MS-DRG 459. In our review of the data for proposed revised MS-DRGs 459 and 460, we considered the average costs of the 38 cases found in proposed revised MS-DRG 460 reporting the use of a custom-made anatomically designed interbody fusion device compared to the average cost of all the cases in proposed revised MS-DRG 460 ($47,138 versus $32,586). While there were no cases found to report the use of a custom-made anatomically designed interbody fusion device in proposed revised MS-DRG 459, we considered the average costs of all the cases in proposed revised MS-DRG 459 ($53,192). While the average length of stay of the cases reporting a custom-made anatomically designed interbody fusion device are shorter (2.1 days versus 9.6 days), we believe the reassignment of cases reporting the use of a custom-made anatomically designed interbody fusion device from proposed revised MS-DRG 460 (without MCC) to proposed revised MS-DRG 459 (with MCC) is supported and better reflects the resource utilization of cases using the custom-made anatomically designed interbody fusion device technology in a single level spinal fusion. As also previously discussed, a few commenters suggested that if the proposed restructuring was to be finalized, consideration be given to deleting proposed revised MS-DRGs 459 and 460 and creating new MS-DRGs for single level spinal fusion except cervical with MCC and without MCC, respectively, because the proposed revisions would significantly change the types of cases classified to these MS-DRGs. We agree with the commenters that the proposed revisions to the MS-DRG logic change the types of cases that would be classified to proposed revised MS-DRGs 459 and 460. Specifically, because the logic for case assignment to existing MS-DRGs 459 and 460 was proposed to be restructured to better differentiate between single level spinal fusions (except cervical) and multiple level spinal fusions (except cervical), it would not be appropriate to retain the existing MS-DRG numbers 459 and 460 with revised titles. We proposed to create new MS-DRGs 447 and 448 to reflect multiple level spinal fusion procedures (except cervical) therefore, maintaining the existing MS-DRG numbers of 459 and 460 for the single level spinal fusions (except cervical) logic only could potentially result in confusion about the logic for case assignment. If users were to reference MS-DRG numbers 459 and 460 only, in the absence of the full MS-DRG titles, others may not be aware that the logic for case assignment to these MS-DRGs had changed effective FY 2025. As such, we agree that existing MS-DRG numbers 459 and 460 should be deleted.

We recognize that with the requested reassignments the average length of stay for cases reporting a custom-made anatomically designed interbody fusion device varies from the average length of stay for all the cases in the requested MS-DRGs, and we continue to believe that length of stay is a factor in assessing clinical coherence, however, we also consider the use of a specific technology in the performance of a procedure as a measure of complexity in connection with resource consumption, particularly when that technology is indicated for a specific population. In the case of custom-made anatomically designed interbody fusion devices, the technology is indicated for patients who have complicated spinal anatomy necessitating individualized treatment plants to precisely address spinal alignment needs and reduce the risk of revision surgery.

After consideration of the public comments we received, we are finalizing our proposal to delete MS-DRGs 453, 454, and 455 and to create new MS-DRGs 426, 427, and 428, with modification, for FY 2025. Specifically, we are finalizing our proposal with modification to assign cases reporting the use of a custom-made anatomically designed interbody fusion device with a CC to new MS-DRG 426. Conforming changes to the GROUPER logic are also are shown in Table 6P.2e associated with this final rule and available on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps and also as reflected in the final version of ICD-10 MS-DRG Definitions Manual, version 42, available in association with this final rule and available via the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software . Accordingly, the finalized MS-DRG titles are MS-DRG 426 “Multiple Level Combined Anterior and Posterior Spinal Fusion Except Cervical with MCC or Custom-Made Anatomically Designed Interbody Fusion Device”, MS-DRG 427 “Multiple Level Combined Anterior and Posterior Spinal Fusion Except Cervical with CC” and MS-DRG 428 “Multiple Level Combined Anterior and Posterior Spinal Fusion Except Cervical without CC/MCC” effective October 1, 2024, for FY 2025.

We are also finalizing our proposal to create new MS-DRGs 447 and 448, with modification, for FY 2025. Specifically, we are finalizing our proposal with modification to assign cases reporting the use of a custom-made anatomically designed interbody fusion device without an MCC to MS-DRG 447. Conforming changes to the GROUPER logic are shown in Table 6P.2h associated with this final rule and available on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps and also reflected in the final version of ICD-10 MS-DRG Definitions Manual, version 42, available in association with this final rule and available via the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software . Accordingly, the finalized MS-DRG titles are MS-DRG 447 “Multiple Level Anterior and Posterior Spinal Fusion Except Cervical with MCC or Custom-Made Anatomically Designed Interbody Fusion Device” and MS-DRG 448 “Multiple Level Anterior and Posterior Spinal Fusion Except Cervical without MCC” effective October 1, 2024, for FY 2025.

As previously discussed, we stated we believe the reassignment of cases reporting the use of a custom-made anatomically designed interbody fusion device from proposed revised MS-DRG 460 (without MCC) to proposed revised MS-DRG 459 (with MCC) is supported and agree with the commenters that the proposed revisions to the MS-DRG logic change the types of cases that would be classified to MS-DRGs 459 and 460. As previously noted, the logic for case assignment to existing MS-DRGs 459 and 460 was proposed to be restructured to better differentiate between single level and multiple level spinal fusions, therefore it would not be appropriate to retain the existing MS-DRG numbers 459 and 460 with revised titles because the cases that group to these MS-DRGs would change. Therefore, for FY 2025, we are deleting MS-DRGs 459 and 460, and finalizing the creation of MS-DRGs 450 and 451. The logic for case assignment to MS-DRGs 450 and 451 is comprised of the logic lists that were initially proposed for revised MS-DRGs 459 and 460, with modification. We are also finalizing the assignment of cases reporting the use of a custom-made anatomically designed interbody fusion device without an MCC to MS-DRG 450. Conforming changes to the GROUPER logic are shown in Table 6P.2g associated with this final rule and available on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute- ( print page 69061) inpatient-pps and also reflected in the final version of ICD-10 MS-DRG Definitions Manual, version 42, available in association with this final rule and available via the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software . Accordingly, the finalized MS-DRG titles are MS-DRG 450 “Single Level Spinal Fusion Except Cervical with MCC or Custom-Made Anatomically Designed Interbody Fusion Device” and MS-DRG 451 “Single Level Spinal Fusion Except Cervical without MCC” effective October 1, 2024, for FY 2025.

We are also finalizing our proposal to create new MS-DRG 402, and new MS-DRGs 429 and 430, without modification, for FY 2025. Accordingly, we are finalizing the proposed GROUPER logic for these MS-DRGs as shown in Table 6P.2d and 6P.2f, respectively, associated with this final rule and available on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps and as also reflected in the final version of ICD-10 MS-DRG Definitions Manual, version 42, available in association with this final rule and available via the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software . The finalized MS-DRG titles are MS-DRG 402 “Single Level Combined Anterior and Posterior Spinal Fusion Except Cervical”, MS-DRG 429 “Combined Anterior and Posterior Cervical Spinal Fusion with MCC” and MS-DRG 430 “Combined Anterior and Posterior Cervical Spinal Fusion without MCC” effective October 1, 2024, for FY 2025. We will continue to monitor the data for these finalized MS-DRGs and consider if any future modifications may be warranted.

In the proposed rule, we noted that we identified an inconsistency in the MDC and MS-DRG assignment of procedure codes describing resection of the right large intestine and resection of the left large intestine with an open and percutaneous endoscopic approach. ICD-10-PCS procedure codes 0DTG0ZZ (Resection of left large intestine, open approach) and 0DTG4ZZ (Resection of left large intestine, percutaneous endoscopic approach) are currently assigned to MDC 10 in MS-DRGs 628, 629, and 630 (Other Endocrine, Nutritional and Metabolic O.R. Procedures with MCC, with CC, and without CC/MCC, respectively). However, the procedure codes that describe resection of the right large intestine with an open or percutaneous endoscopic approach, 0DTF0ZZ (Resection of right large intestine, open approach) and 0DTF4ZZ (Resection of right large intestine, percutaneous endoscopic approach) are not assigned to MDC 10 in MS-DRGs 628, 629, and 630. To ensure clinical alignment and consistency, as well as appropriate MS-DRG assignment, we proposed to add procedure codes 0DTF0ZZ and 0DTF4ZZ to MDC 10 in MS-DRGs 628, 629, and 630 effective October 1, 2024, for FY 2025.

Comment: Commenters supported our proposal to add procedure codes 0DTF0ZZ and 0DTF4ZZ to MDC 10 in MS-DRGs 628, 629, and 630. A commenter also suggested that CMS consider providing an index of ICD-10-PCS codes that are assigned to each MDC in the ICD-10 MS-DRG Definitions Manual in a “reverse look up” format that could be utilized to identify other potential omissions or inaccuracies such as the issues discussed in the proposed rule. The commenter urged CMS to make this information publicly available in a user-friendly format to enable interested parties to review the MDC and MS-DRG assignments more easily for ICD-10-PCS procedure codes.

Response: We thank the commenters for their support. With respect to the commenter's suggestion that CMS develop a “reverse look up” index of the ICD-10-PCS procedure codes to enable members of the public to more easily review the MDC and MS-DRG assignments of the procedure codes, we appreciate the feedback and will take the suggestion under advisement.

After consideration of the public comments we received, we are finalizing our proposal to add procedure codes 0DTF0ZZ and 0DTF4ZZ to MDC 10 in MS-DRGs 628, 629, and 630 effective October 1, 2024, for FY 2025.

As discussed in the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 35985 through 35991 ), we received a request to review the GROUPER logic that would determine the assignment of cases to MS-DRG 794 (Neonate with Other Significant Problems). The requestor stated that it appears that MS-DRG 794 is the default MS-DRG in MDC 15 (Newborns and Other Neonates with Conditions Originating in Perinatal Period), as the GROUPER logic for MS-DRG 794 displayed in the ICD-10 MS-DRG Version 41.1 Definitions Manual is defined by a “principal or secondary diagnosis of newborn or neonate, with other significant problems, not assigned to DRG 789 through 793 or 795”. The requestor expressed concern that defaulting to MS-DRG 794, instead of MS-DRG 795 (Normal Newborn), for assignment of cases in MDC 15 could contribute to overpayments in healthcare by not aligning the payment amount to the appropriate level of care in newborn cases. The requestor recommended that CMS update the GROUPER logic that would determine the assignment of cases to MS-DRGs in MDC 15 to direct all cases that do not have the diagnoses and procedures as specified in the Definitions Manual to instead be grouped to MS-DRG 795.

Specifically, as discussed in the proposed rule, the requestor expressed concern that a newborn encounter coded with a principal diagnosis code from ICD-10-CM category Z38 (Liveborn infants according to place of birth and type of delivery), followed by code P05.19 (Newborn small for gestational age, other), P59.9 (Neonatal jaundice, unspecified), Q38.1 (Ankyloglossia), Q82.5 (Congenital non-neoplastic nevus), or Z23 (Encounter for immunization) is assigned to MS-DRG 794. The requestor stated that they performed a detailed claim level study, and in their clinical assessment, newborn encounters coded with a principal diagnosis code from ICD-10-CM category Z38, followed by diagnosis code P05.19, P59.9, Q38.1, Q82.5, or Z23 in fact clinically describe normal newborn encounters and the case assignment should instead be to MS-DRG 795.

We stated in the proposed rule that our analysis of this grouping issue confirmed that when a principal diagnosis code from MDC 15, such as a diagnosis code from category Z38 (Liveborn infants according to place of birth and type of delivery), is reported followed by ICD-10-CM code P05.19 (Newborn small for gestational age, other), Q38.1 (Ankyloglossia) or Q82.5 (Congenital non-neoplastic nevus), the case is assigned to MS-DRG 794.

However, as we examined the GROUPER logic that would determine an assignment of cases to MS-DRG 795, we noted in the proposed rule that the “only secondary diagnosis” list under MS-DRG 795 already includes ICD-10-CM codes P59.9 (Neonatal jaundice, unspecified) and Z23 (Encounter for immunization). Therefore, when a principal diagnosis code from MDC 15, such as a diagnosis code from category ( print page 69062) Z38 (Liveborn infants according to place of birth and type of delivery) is reported, followed by ICD-10-CM code P59.9 or Z23, the case is currently assigned to MS-DRG 795, not MS-DRG 794, as suggested by the requestor. We refer the reader to the ICD-10 MS-DRG Version 41.1 Definitions Manual (available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software ) for complete documentation of the GROUPER logic for MS-DRGs 794 and 795.

Next, we stated in the proposed rule that we reviewed the claims data from the September 2023 update of the FY 2023 MedPAR file; however, we found zero cases across MS-DRGs 794 and 795. We then examined the clinical factors. The description for ICD-10-CM diagnosis code P05.19 is “Newborn small for gestational age, other” and the inclusion term in the ICD-10-CM Tabular List of Diseases for this diagnosis code is “Newborn small for gestational age, 2,500 grams and over.” We noted in the proposed rule that “small-for-gestational age” is diagnosed by assessing the gestational age and the weight of the baby after birth. There is no specific treatment for small-for-gestational-age newborns. Most newborns who are moderately small for gestational age are healthy babies who just happen to be on the smaller side. Unless the newborn is born with an infection or has a genetic disorder, most small-for-gestational-age newborns have no symptoms and catch up in their growth during the first year of life and have a normal adult height. Next, ICD-10-CM diagnosis code Q38.1 describes ankyloglossia, also known as tongue-tie, which is a condition that impairs tongue movement due to a restrictive lingual frenulum. We noted that in infants, tongue-tie is treated by making a small cut to the lingual frenulum to allow the tongue to move more freely. This procedure, called a frenotomy, can be done in a healthcare provider's office without anesthesia. Newborns generally recover within about a minute of the procedure, and pain relief is usually not indicated. Lastly, ICD-10-CM diagnosis code Q82.5 describes a congenital non-neoplastic nevus. A congenital nevus is a type of pigmented birthmark that appears at birth or during a baby's first year. Most congenital nevi do not cause health problems and may only require future monitoring.

In reviewing these three ICD-10-CM codes and the conditions they describe; we stated in the proposed rule that we believe these diagnoses generally do not prolong the inpatient admission of the newborn and newborns with these diagnoses generally receive standard follow-up care after birth. We stated clinically, we agreed with the requestor that newborn encounters coded with a principal diagnosis code from ICD-10-CM category Z38 (Liveborn infants according to place of birth and type of delivery), followed by code P05.19 (Newborn small for gestational age, other), Q38.1 (Ankyloglossia), or Q82.5 (Congenital non-neoplastic nevus) should not map to MS-DRG 794 (Neonate with Other Significant Problems) and should instead be assigned to MS-DRG 795 (Normal Newborn). Therefore, for the reasons discussed, we proposed to reassign diagnosis code P05.19 from the “principal or secondary diagnosis” list under MS-DRG 794 to the “principal diagnosis” list under MS-DRG 795 (Normal Newborn). We also proposed to add diagnosis codes Q38.1 and Q82.5 to the “only secondary diagnosis” list under MS-DRG 795 (Normal Newborn). Under this proposal, cases with a principal diagnosis described by an ICD-10-CM code from category Z38 (Liveborn infants according to place of birth and type of delivery), followed by codes P05.19, Q38.1, or Q82.5 will be assigned to MS-DRG 795.

In response to the recommendation that CMS update the GROUPER logic that would determine an assignment of cases to MS-DRGs in MDC 15, in the proposed rule we stated we agreed with the requestor that the GROUPER logic for MS-DRG 794 is defined by a “principal or secondary diagnosis of newborn or neonate, with other significant problems, not assigned to DRG 789 through 793 or 795”. We acknowledged that MS-DRG 794 utilizes “fall-through” logic, meaning if a diagnosis code is not assigned to any of the other MS-DRGs, then assignment “falls-through” to MS-DRG 794. As discussed in the proposed rule, we have started to examine the GROUPER logic that would determine the assignment of cases to the MS-DRGs in MDC 15, including MS-DRGs 794 and 795, to determine where further refinements could potentially be made to better account for differences in clinical complexity and resource utilization. However, as we have noted in prior rulemaking ( 72 FR 47152 ), we cannot adopt the same approach to refine the newborn MS-DRGs because of the extremely low volume of Medicare patients there are in these MS-DRGs. Additional time is needed to fully and accurately evaluate cases currently grouping to the MS-DRGs in MDC 15 to consider if restructuring the current MS-DRGs would better recognize the clinical distinctions of these patient populations. Any proposed modifications to these MS-DRGs will be addressed in future rulemaking consistent with our annual process.

Comment: Many commenters expressed support for the proposal to reassign diagnosis code P05.19 from the “principal or secondary diagnosis” list under MS-DRG 794 to the “principal diagnosis” list under MS-DRG 795 (Normal Newborn) and the proposal to add diagnosis codes Q38.1 and Q82.5 to the “only secondary diagnosis” list under MS-DRG 795 (Normal Newborn) for FY 2025. Several commenters stated these updates are needed, are very timely, and will better align cases to the appropriate level of care. Other commenters stated they were committed to helping update the GROUPER logic for MS-DRG 794 and expressed their willingness to work with CMS. A commenter specifically stated they applaud CMS' initiation of an examination of the GROUPER logic that would determine the assignment of cases to the MS-DRGs in MDC 15 to determine where further refinements could potentially be made to better account for differences in clinical complexity and resource utilization.

While indicating their support for the proposal, some commenters provided the following list of diagnoses which they stated also clinically describe normal newborn encounters when reported and therefore case assignment should also be to MS-DRG 795 instead of MS-DRG 794.

Response: We thank the commenters for their support for the proposal as well as for broader efforts to evaluate the assignment of cases to the MS-DRGs in MDC 15. In response to the list of diagnoses which commenters stated also clinically describe normal newborn encounters when reported and therefore assignment should be to MS-DRG 795, we note that the “principal diagnosis” list under MS-DRG 795 already includes ICD-10-CM codes P08.1 (Other heavy for gestational age newborn) and P08.21 (Post-term newborn). Additionally, the “only secondary diagnosis” list under MS-DRG 795 already includes ICD-10-CM codes Q82.8 (Other specified congenital malformations of skin), Z05.1 (Observation and evaluation of newborn for suspected infectious condition ruled out), Z05.42 (Observation and evaluation of newborn for suspected metabolic condition ruled out), and Z28.82 (Immunization not carried out because of caregiver refusal). Therefore, when principal diagnosis code P08.1 or P08.21 is reported, the case is currently assigned to MS-DRG 795, not MS-DRG 794. Similarly, when a principal diagnosis code from MDC 15, such as a diagnosis code from category Z38 (Liveborn infants according to place of birth and type of delivery) is reported, followed by ICD-10-CM code Q82.8, Z05.1, Z05.42, or Z28.82, the case is currently assigned to MS-DRG 795, not MS-DRG 794, as suggested by the commenters. We refer the reader to the ICD-10 MS-DRG Version 42 Definitions Manual (available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software ) for complete documentation of the GROUPER logic for MS-DRGs 794 and 795.

We will review the remaining diagnoses suggested by the commenters as we examine the GROUPER logic that would determine the assignment of cases to the MS-DRGs in MDC 15, including MS-DRGs 794 and 795. We note that we would address any proposed modifications to the existing logic in future rulemaking.

Comment: Other commenters disagreed with the proposal. A commenter noted that patients with ankyloglossia can struggle to breastfeed, are at risk of an early transition to formula, can be small for gestational age, and are at risk for malnutrition. Another commenter noted that contrary to statements in the proposed rule, frenotomy or frenectomy procedures are not as simple as once originally thought and can involve rare complications such as bleeding, airway obstruction, damage to surrounding structures, scarring, and oral aversion secondary to damage to the tongue, nerves, or salivary glands and further noted that when undergoing frenotomy without analgesia, researchers found that 18% of infants cried during and 60% cried after the procedure. This commenter stated that their analysis of claims from their facility indicated that of the approximately 1000 cases reporting a secondary diagnosis of ankyloglossia, frenectomy was performed in approximately 60 cases due to issues with breast feeding and 15% of those cases had a length of stay greater than or equal to 4 days.

A commenter disagreed with the proposal to remove ICD-10-CM diagnosis code P05.19 (newborn small for gestation age, other) from the logic for MS-DRG 794 and stated that newborns that are small for gestational age must undergo hypoglycemia screening, which includes the monitoring of glucose levels at 1, 2, 3, 12, and 24 hours of life and are at increased risk for complications such as neonatal asphyxia, hypothermia, hypoglycemia, hypocalcemia, polycythemia, sepsis, and death. This commenter stated review of the neonatal admissions at their facility supports that these neonates often require longer lengths of stay and utilize increased resources as 5% of approximately 800 cases reporting a secondary diagnosis of P05.19 had a length of stay greater or equal to 4 days. This commenter stated that should diagnosis codes P05.19 and Q38.1 be removed from the logic of MS-DRG 794, a new MS-DRG should be created to capture newborns with minor problems.

Response: We appreciate the commenters' feedback. We considered concerns expressed by the commenters and continue to believe that diagnoses P05.19 and Q38.1 generally do not prolong the inpatient admission of the newborn and newborns with these diagnoses generally receive standard follow-up care after birth. As discussed in the proposed rule, the description for ICD-10-CM diagnosis code P05.19 is “Newborn small for gestational age, other” and the inclusion term in the ICD-10-CM Tabular List of Diseases for this diagnosis code is “Newborn small for gestational age, 2,500 grams and over.” We continue to believe that most newborns who are moderately small for gestational age are healthy babies who just happen to be on the smaller side. We further note that under the proposal to reassign diagnosis code P05.19 from the “principal or secondary diagnosis” list under MS-DRG 794 to the ( print page 69064) “principal diagnosis” list under MS-DRG 795, cases reporting other codes from ICD-10-CM subcategory P05.1- (Newborns small for gestation age) describing newborns small for gestation age, 1999 grams or less, will continue to be assigned to MS-DRG 793 (Full Term Neonate with Major Problems). While we agree that newborns can require serial glucose monitoring after birth, blood glucose can be checked with just a few drops of blood, usually taken from the heel of the newborn and does not involve an invasive procedure.

Similarly, in infants with ankyloglossia indicated for frenotomy, the frenotomy is generally a quick, non-invasive procedure that can be done in a healthcare provider's office without anesthesia. Should the uncommon postprocedural complications noted by the commenter arise when frenotomy is performed in the inpatient setting, those complications should be reported to fully reflect the severity of illness, treatment difficulty, complexity of service and the resources utilized in the diagnosis and/or treatment of the complication. We also note, as discussed in prior rulemaking ( 86 FR 44878 ), 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 also provide outlier payments to mitigate extreme loss on individual cases.

We will review the suggestion to create an MS-DRG for newborns with minor problems as we examine the GROUPER logic that would determine the assignment of cases to the MS-DRGs in MDC 15 and would address any proposed modifications to the existing logic in future rulemaking.

Therefore, after consideration of the public comments we received, and for the reasons discussed, we are finalizing our proposal to reassign diagnosis code P05.19 from the “principal or secondary diagnosis” list under MS-DRG 794 to the “principal diagnosis” list under MS-DRG 795 (Normal Newborn), without modification, effective October 1, 2024, for FY 2025. We are also finalizing our proposal to add diagnosis codes Q38.1 and Q82.5 to the “only secondary diagnosis” list under MS-DRG 795 (Normal Newborn), without modification, effective October 1, 2024, for FY 2025. Under these finalizations, cases with a principal diagnosis described by an ICD-10-CM code from category Z38 (Liveborn infants according to place of birth and type of delivery), followed by codes P05.19, Q38.1, or Q82.5 will be assigned to MS-DRG 795.

As noted earlier and discussed in the proposed rule, we have started our examination of the GROUPER logic that would determine an assignment of cases to MS-DRGs in MDC 15. During this review, we stated in the proposed rule we noted the logic for MS-DRG 795 (Normal Newborn) includes five diagnosis codes from ICD-10-CM category Q81 (Epidermolysis bullosa). We refer the reader to the ICD-10 MS-DRG Version 41.1 Definitions Manual (available via on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software ) for complete documentation of the GROUPER logic for MS-DRG 795. The five diagnosis codes and their current MDC and MS-DRG assignments are listed in the following table.

In the proposed rule we stated we reviewed this grouping issue and noted that epidermolysis bullosa (EB) is a group of genetic (inherited) disorders that causes skin to be fragile, blister, and tear easily in response to minimal friction or trauma. In some cases, blisters form inside the body in places such as the mouth, esophagus, other internal organs, or eyes. When the blisters heal, they can cause painful scarring. In severe cases, the blisters and scars can harm internal organs and tissue enough to be fatal. Patients diagnosed with severe cases of EB have a life expectancy that ranges from infancy to 30 years of age.

We noted in the proposed rule that EB has four primary types: simplex, junctional, dystrophic, and Kindler syndrome, and within each type there are various subtypes, ranging from mild to severe. A skin biopsy can confirm a diagnosis of EB and identify which layers of the skin are affected and determine the type of epidermolysis bullosa. Genetic testing may also be ordered to diagnose the specific type and subtype of the disease. In caring for patients with EB, adaptions may be necessary in the form of handling, feeding, dressing, managing pain, and treating wounds caused by the blisters and tears. If there is a known diagnosis of EB, but the neonate has no physical signs at birth, there will still need to be specialty consultation in the inpatient setting or referral for outpatient follow-up. We stated we believe the five diagnosis codes from ICD-10-CM category Q81 (Epidermolysis bullosa) describe conditions that require advanced care and resources similar to other conditions already assigned to the logic of MS-DRG 794 and MS-DRGs 595 and 596 (Major Skin Disorders with MCC and without MCC, respectively), even in cases where the type of EB is unspecified.

Therefore, for clinical consistency, we proposed to reassign ICD-10-CM diagnosis codes Q81.0, Q81.1, Q81.2, Q81.8, and Q81.9 from MS-DRGs 606 and 607 in MDC 09 (Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast) and MS-DRG 795 (Normal Newborn) in MDC 15 to MS-DRGs 595 and 596 in MDC 09 and MS-DRG 794 in MDC 15, effective October 1, 2024, for FY 2025.

Comment: Commenters expressed support for the proposal to reassign ICD-10-CM diagnosis codes Q81.0, Q81.1, Q81.2, Q81.8, and Q81.9 from MS-DRGs 606 and 607 in MDC 09 (Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast) and MS-DRG 795 (Normal Newborn) in MDC 15 to MS-DRGs 595 and 596 in MDC 09 and MS-DRG 794 in MDC 15 for FY 2025.

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 codes Q81.0, Q81.1, Q81.2, Q81.8, and Q81.9 from MS-DRGs 606 and 607 in MDC 09 (Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast) and MS-DRG 795 ( print page 69065) (Normal Newborn) in MDC 15 to MS-DRGs 595 and 596 (Major Skin Disorders with MCC and without MCC, respectively) in MDC 09 and MS-DRG 794 (Neonate with Other Significant Problems) in MDC 15, without modification, effective October 1, 2024, for FY 2025.

As discussed in the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 35986 through 35991 ), we identified a replication issue from the ICD-9 based MS-DRGs to the ICD-10 based MS-DRGs regarding the assignment of six ICD-10-CM diagnosis codes that describe a type of acute leukemia. We noted that under the Version 32 ICD-9-CM based MS-DRGs, the ICD-9-CM diagnosis codes as shown in the following table were assigned to surgical MS-DRGs 820, 821, and 822 (Lymphoma and Leukemia with Major O.R. Procedures with MCC, with CC, and without CC/MCC, respectively), surgical MS-DRGs 823, 824, and 825 (Lymphoma and Non-Acute Leukemia with Other Procedures with MCC, with CC, and without CC/MCC, respectively), and medical MS-DRGs 840, 841, and 842 (Lymphoma and Non-Acute Leukemia with MCC, with CC, and without CC/MCC, respectively) in MDC 17 (Myeloproliferative Diseases and Disorders, Poorly Differentiated Neoplasms). The six ICD-10-PCS code translations also shown in the following table, that provide more detailed and specific information for the ICD-9-CM codes reflected, also currently group to MS-DRGs 820, 821, 822, 823, 824, 825, 840, 841 and 842 in the ICD-10 MS-DRGs Version 41.1. We refer the reader to the ICD-10 MS-DRG Definitions Manual Version 41.1 (available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software ) for complete documentation of the GROUPER logic for MS-DRGs 820, 821, 822, 823, 824, 825, 840, 841, and 842.

In the proposed rule we stated that during our review of this issue, we noted that under ICD-9-CM, the diagnosis codes as reflected in the table did not describe the acuity of the diagnosis (for example, acute versus chronic). This is in contrast to their six comparable ICD-10-CM code translations listed in the previous table that provide more detailed and specific information for the ICD-9-CM diagnosis codes and do specify the acuity of the diagnoses.

We noted in the proposed rule that ICD-10-CM codes C94.20, C94.21, and C94.22 describe acute megakaryoblastic leukemia (AMKL), a rare subtype of acute myeloid leukemia (AML) that affects megakaryocytes, platelet-producing cells that reside in the bone marrow. Similarly, ICD-10-CM codes C94.40, C94.41, and C94.42 describe acute panmyelosis with myelofibrosis (APMF), a rare form of acute myeloid leukemia characterized by acute panmyeloid proliferation with increased blasts and accompanying fibrosis of the bone marrow that does not meet the criteria for AML with myelodysplasia related changes. As previously mentioned, these six diagnosis codes are assigned to MS-DRGs 820, 821, 822, 823, 824, 825, 840, 841, and 842. In the proposed rule, we noted that GROUPER logic lists for MS-DRGs 820, 821, and 822 includes diagnosis codes describing lymphoma and both acute and non-acute leukemias, however the logic lists for MS-DRGs 823, 824, 825, 840, 841, and 842 contain diagnosis codes describing lymphoma and non-acute leukemias. We stated that in our analysis of this grouping issue, we also noted that cases reporting a chemotherapy principal diagnosis with a secondary diagnosis describing acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis are assigned to MS-DRGs 846, 847, and 848 (Chemotherapy without Acute Leukemia as Secondary Diagnosis, with MCC, with CC, and without CC/MCC, respectively) in Version 41.1.

Next, in the proposed rule we stated we examined claims data from the September 2023 update of the FY 2023 MedPAR file for MS-DRG 823, 824, 825, 840, 841, and 842 to identify cases reporting one of the six diagnosis codes listed previously that describe acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis. We also examined MS-DRGs 846, 847, and 848 (Chemotherapy without Acute Leukemia as Secondary Diagnosis, with MCC, with CC, and without CC/MCC, respectively). Our findings are shown in the following tables:

As shown in the table, in MS-DRG 823, we identified a total of 2,235 cases with an average length of stay of 14 days and average costs of $40,587. Of those 2,235 cases, there were two cases reporting a diagnosis code that describes acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis, with average costs higher than the average costs in the FY 2023 MedPAR file for MS-DRG 823 ($49,600 compared to $40,587) and a longer average length of stay (31.5 days compared to 14 days). We found zero cases in MS-DRG 824 reporting a diagnosis code that describes acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis. In MS-DRG 825, we identified a total of 427 cases with an average length of stay of 2.9 days and average costs of $10,959. Of those 427 cases, there was one case reporting a diagnosis code that describes acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis, with costs higher than the average costs in the FY 2023 MedPAR file for MS-DRG 825 ($17,293 compared to $10,959) and a longer length of stay (6 days compared to 2.9 days).

As shown in the table, in MS-DRG 840, we identified a total of 7,747 cases with an average length of stay of 9.6 days and average costs of $26,215. Of those 7,747 cases, there were 12 cases reporting a diagnosis code that describes acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis, with average costs lower than the average costs in the FY 2023 MedPAR file for MS-DRG 840 ($21,357 compared to $26,215) and a shorter average length of stay (8.7 days compared to 9.6 days). In MS-DRG 841, we identified a total of 5,019 cases with an average length of stay of 5.3 days and average costs of $13,502. Of those 5,019 cases, there were six cases reporting a diagnosis code that describes acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis, with average costs lower than the average costs in the FY 2023 MedPAR file for MS-DRG 841 ($6,976 compared to $13,502) and a shorter average length of stay (2.8 days compared to 5.3 days). We found zero cases in MS-DRG 842 reporting a diagnosis code that describes acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis.

As shown in the table, in MS-DRG 847, we identified a total of 7,329 cases with an average length of stay of 4.4 days and average costs of $11,250. Of those 7,329 cases, there were two cases reporting a chemotherapy principal diagnosis code with a secondary diagnosis code that describes acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis, with average costs lower than the average costs in the FY 2023 MedPAR file for MS-DRG 840 ($7,569 compared to $11,250) and a longer average length of stay (5 days compared to 4.4 days). We found zero cases in MS-DRGs 846 and 848 reporting a diagnosis code that describes acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis.

As discussed in the proposed rule, next, we examined the MS-DRGs within MDC 17. Given that the six diagnoses codes describe subtypes of acute myeloid leukemia, we stated that we determined that the cases reporting a principal diagnosis of acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis would more suitably group to medical MS-DRGs 834, 835, and 836 (Acute Leukemia without Major O.R. Procedures with MCC, with CC, and without CC/MCC, respectively). Similarly, we stated cases reporting a chemotherapy principal diagnosis with a secondary diagnosis describing acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis would more suitably group to medical MS-DRGs 837, 838, and 839 (Chemotherapy with Acute Leukemia as Secondary Diagnosis, or with High Dose Chemotherapy Agent with MCC, with CC or High Dose Chemotherapy Agent, and without CC/MCC, respectively).

We stated we then examined claims data from the September 2023 update of the FY 2023 MedPAR for MS-DRGs 834, 835, 836, 837, 838, and 839. Our findings are shown in the following table.

While the average costs for all cases in MS-DRGs 834, 835, 836, 837, 838, and 839 are higher than the average costs of the small number of cases reporting a diagnosis code that describes acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis, or reporting a chemotherapy principal diagnosis with a secondary diagnosis describing acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis, and the average lengths of stay are longer, we noted that diagnosis codes C94.20, C94.21, C94.22, C94.40, C94.41, and C94.42 describe types of acute leukemia. In the proposed rule we stated that for clinical coherence, we believe these six diagnosis codes would be more appropriately grouped along with other ICD-10-CM diagnosis codes that describe types of acute leukemia.

We reviewed this grouping issue, and stated our analysis indicates that the six diagnosis codes describing the acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis were initially assigned to the list of diagnoses in the GROUPER logic for MS-DRGs 823, 824, 825, 840, 841, and 842 as a result of replication in the transition from ICD-9 to ICD-10 based MS-DRGs. We also noted that diagnosis codes C94.20, C94.21, C94.22, C94.40, C94.41, and C94.42 do not describe non-acute leukemia diagnoses.

Accordingly, because the six diagnosis codes that describe acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis are not clinically consistent with non-acute leukemia diagnoses, and it is clinically ( print page 69068) appropriate to reassign these diagnosis codes to be consistent with the other diagnosis codes that describe acute leukemias in MS-DRGs 834, 835, 836, 837, 838, and 839, we proposed the reassignment of diagnosis codes C94.20, C94.21, C94.22, C94.40, C94.41, and C94.42 from MS-DRGs 823, 824, and 825 (Lymphoma and Non-Acute Leukemia with Other Procedures with MCC, with CC, and without CC/MCC, respectively), and MS-DRGs 840, 841, and 842 (Lymphoma and Non-Acute Leukemia with MCC, with CC, and without CC/MCC, respectively) to MS-DRGs 834, 835, and 836 (Acute Leukemia without Major O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) and MS-DRGs 837, 838, and 839 (Chemotherapy with Acute Leukemia as Secondary Diagnosis, or with High Dose Chemotherapy Agent with MCC, with CC or High Dose Chemotherapy Agent, and without CC/MCC, respectively) in MDC 17, effective FY 2025. Under this proposal, diagnosis codes C94.20, C94.21, C94.22, C94.40, C94.41, and C94.42 will continue to be assigned to surgical MS-DRGs 820, 821, and 822 (Lymphoma and Leukemia with Major O.R. Procedures with MCC, with CC, and without CC/MCC, respectively).

Comment: Commenters supported our proposal to reassign diagnosis codes C94.20, C94.21, C94.22, C94.40, C94.41, and C94.42 from MS-DRGs 823, 824, and 825 and MS-DRGs 840, 841, and 842 to MS-DRGs 834, 835, and 836 and MS-DRGs 837, 838, and 839 in MDC 17.

After consideration of the public comments we received, we are finalizing our proposal to reassign diagnosis codes C94.20, C94.21, C94.22, C94.40, C94.41, and C94.42 from MS-DRGs 823, 824, and 825 (Lymphoma and Non-Acute Leukemia with Other Procedures with MCC, with CC, and without CC/MCC, respectively), and MS-DRGs 840, 841, and 842 (Lymphoma and Non-Acute Leukemia with MCC, with CC, and without CC/MCC, respectively) to MS-DRGs 834, 835, and 836 (Acute Leukemia without Major O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) and MS-DRGs 837, 838, and 839 (Chemotherapy with Acute Leukemia as Secondary Diagnosis, or with High Dose Chemotherapy Agent with MCC, with CC or High Dose Chemotherapy Agent, and without CC/MCC, respectively) in MDC 17, without modification, effective October 1, 2024, for FY 2025. Under this finalization, diagnosis codes C94.20, C94.21, C94.22, C94.40, C94.41, and C94.42 will continue to be assigned to surgical MS-DRGs 820, 821, and 822 (Lymphoma and Leukemia with Major O.R. Procedures with MCC, with CC, and without CC/MCC, respectively).

As discussed in the proposed rule, in our review of the MS-DRGs in MDC 17 for further refinement, we next examined the procedures currently assigned to MS-DRGs 820, 821, and 822 (Lymphoma and Leukemia with Major O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) and MS-DRGs 826, 827, and 828 (Myeloproliferative Disorders or Poorly Differentiated Neoplasms with Major O.R. Procedures with MCC, with CC, and without CC/MCC, respectively). We noted that the logic for case assignment to MS-DRGs 820, 821, 822, 826, 827, and 828 is comprised of a logic list entitled “Operating Room Procedures” which is defined by a list of 4,320 ICD-10-PCS procedure codes, including 90 ICD-10-PCS codes describing bypass procedures from the cerebral ventricle to various body parts. We refer the reader to the ICD-10 MS-DRG Definitions Manual Version 41.1 (available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps ) for complete documentation of the GROUPER logic for MS-DRGs 820, 821, 822, 826, 827, and 828.

In the proposed rule we stated in our review of the procedures currently assigned to MS-DRGs 820, 821, 822, 826, 827, and 828, we noted 12 ICD-10-PCS procedure codes that describe bypass procedures from the cerebral ventricle to the subgaleal space or cerebral cisterns, such as subgaleal or cisternal shunt placement, that are not included in the logic for MS-DRGs 820, 821, 822, 826, 827, and 828. The 12 procedure codes are listed in the following table.

We noted in the proposed rule that a subgaleal shunt consists of a shunt tube with one end in the lateral ventricles while the other end is inserted into the subgaleal space of the scalp, while a ventriculo-cisternal shunt diverts the cerebrospinal fluid flow from one of the lateral ventricles, via a ventricular catheter, to the cisterna magna of the posterior fossa. Both procedures allow for the drainage of excess cerebrospinal fluid. Indications for ventriculosubgaleal or ventriculo-cisternal shunting include acute head trauma, subdural hematoma, hydrocephalus, and leptomeningeal disease (LMD) in malignancies such as breast cancer, lung cancer, melanoma, acute lymphocytic leukemia (ALL) and non-hodgkin's lymphoma (NHL).

Recognizing that acute lymphocytic leukemia (ALL) and non-hodgkin's lymphoma (NHL) are indications for ventriculosubgaleal or ventriculo- ( print page 69069) cisternal shunting, in the proposed rule we stated we supported adding the 12 ICD-10-PCS codes identified in the table to MS-DRGs 820, 821, 822, 826, 827, and 828 in MDC 17 for consistency to align with the procedure codes listed in the definition of MS-DRGs 820, 821, 822, 826, 827, and 828 and also to permit proper case assignment when a principal diagnosis from MDC 17 is reported with one of the procedure codes in the table that describes bypass procedures from the cerebral ventricle to the subgaleal space or cerebral cisterns. Therefore, we proposed to add the 12 procedure codes that describe bypass procedures from the cerebral ventricle to the subgaleal space or cerebral cisterns listed previously to MS-DRGs 820, 821, 822, 826, 827, and 828 in MDC 17 for FY 2025.

Comment: Commenters agreed with the proposal to add the 12 procedure codes that describe bypass procedures from the cerebral ventricle to the subgaleal space or cerebral cisterns to MS-DRGs 820, 821, 822, 826, 827, and 828 in MDC 17.

After consideration of the public comments we received, we are finalizing our proposal to add the 12 procedure codes that describe bypass procedures from the cerebral ventricle to the subgaleal space or cerebral cisterns listed previously to MS-DRGs 820, 821, 822, 826, 827, and 828 in MDC 17, without modification, effective October 1, 2024, for FY 2025.

Lastly, as discussed in the proposed rule, in our analysis of the MS-DRGs in MDC 17 for further refinement, we noted that the logic for case assignment to medical MS-DRGs 834, 835, and 836 (Acute Leukemia without Major O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) as displayed in the ICD-10 MS-DRG Version 41.1 Definitions Manual (available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps ) is comprised of a logic list entitled “Principal Diagnosis” and is defined by a list of 27 ICD-10-CM diagnosis codes describing various types of acute leukemias. We noted that when any one of the 27 listed diagnosis codes from the “Principal Diagnosis” logic list is reported as a principal diagnosis, without a procedure code designated as an O.R. procedure or without a procedure code designated as a non-O.R. procedure that affects the MS-DRG, the case results in assignment to MS-DRG 834, 835, or 836 depending on the presence of any additional MCC or CC secondary diagnoses. We noted however, that while not displayed in the ICD-10 MS-DRG Version 41.1 Definitions Manual, when any one of the 27 listed diagnosis codes from the “Principal Diagnosis” logic list is reported as a principal diagnosis, along with a procedure code designated as an O.R. procedure that is not listed in the logic list of MS-DRGs 820, 821, and 822 (Lymphoma and Leukemia with Major O.R. Procedures with MCC, with CC, and without CC/MCC, respectively), the case also results in assignment to medical MS-DRG 834, 835, or 836 depending on the presence of any additional MCC or CC secondary diagnoses.

As medical MS-DRG 834, 835, and 836 contains GROUPER logic that includes ICD-10-PCS procedure codes designated as O.R. procedures, in the proposed rule we stated we examined claims data from the September 2023 update of the FY 2023 MedPAR file for MS-DRG 834, 835, and 836 to identify cases reporting an O.R. procedure. Our findings are shown in the following table:

As shown by the table, in MS-DRG 834, we identified a total of 4,094 cases, with an average length of stay of 16.3 days and average costs of $49,986. Of those 4,094 cases, there were 277 cases reporting an O.R. procedure, with higher average costs as compared to all cases in MS-DRG 834 ($92,246 compared to $49,986), and a longer average length of stay (28.2 days compared to 16.3 days). In MS-DRG 835, we identified a total of 1,682 cases with an average length of stay of 7.2 days and average costs of $19,023. Of those 1,682 cases, there were 79 cases reporting an O.R. procedure, with higher average costs as compared to all cases in MS-DRG 835 ($30,771 compared to $19,023), and a longer average length of stay (10.4 days compared to 7.2 days). In MS-DRG 836, we identified a total of 230 cases with an average length of stay of 4 days and average costs of $11,225. Of those 230 cases, there were 7 cases reporting an O.R. procedure, with higher average costs as compared to all cases in MS-DRG 836 ($17,950 compared to $11,225), and a longer average length of stay (5.9 days compared to 4 days). We stated that the data analysis shows that the average costs of cases reporting an O.R. procedure are higher than for all cases in their respective MS-DRG.

We stated in the proposed rule that the data analysis clearly shows that cases reporting a principal diagnosis code describing a type of acute leukemia with an ICD-10-PCS procedure code designated as O.R. procedure that is not listed in the logic list of MS-DRGs 820, 821, and 822 have higher average costs and longer lengths of stay compared to all the cases in their assigned MS-DRG. For these reasons, we proposed to create a new surgical MS-DRG for cases reporting a principal diagnosis code describing a type of acute leukemia with an O.R. procedure.

To compare and analyze the impact of our suggested modifications, as discussed in the proposed rule, we ran a simulation using the claims data from the September 2023 update of the FY 2023 MedPAR file. The following table illustrates our findings for all 367 cases reporting a principal diagnosis code describing a type of acute leukemia with an ICD-10-PCS procedure code designated as O.R. procedure that is not listed in the logic list of MS-DRGs 820, 821, and 822. We stated we believe the resulting proposed MS-DRG assignment, reflecting these modifications, is more clinically ( print page 69070) homogeneous, coherent, and better reflects hospital resource use.

In the proposed rule, we stated we applied the criteria to create subgroups in a base MS-DRG as discussed in section II.C.1.b. of this FY 2025 IPPS/LTCH PPS proposed rule. As shown in the table, we identified a total of 367 cases using the claims data from the September 2023 update of the FY 2023 MedPAR file, so the criterion that there are at least 500 or more cases in each subgroup could not be met. Therefore, for FY 2025, we did not propose to subdivide the proposed new MS DRG for acute leukemia with other procedures into severity levels.

In summary, for FY 2025, we proposed to create a new base surgical MS-DRG for cases reporting a principal diagnosis describing a type of acute leukemia with an ICD-10-PCS procedure code designated as an O.R. procedure that is not listed in the logic list of MS-DRGs 820, 821, and 822 in MDC 17. The proposed new MS-DRG is proposed new MS-DRG 850 (Acute Leukemia with Other Procedures). We proposed to add the 27 ICD-10-CM diagnosis codes describing various types of acute leukemias currently listed in the logic list entitled “Principal Diagnosis” in MS-DRGs 834, 835, and 836 as well as ICD-10-CM codes C94.20, C94.21, C94.22, C94.40, C94.41, and C94.42 discussed earlier in this section to the proposed new MS-DRG 850. We also proposed to add the procedure codes from current MS-DRGs 823, 824, and 825 (Lymphoma and Non-Acute Leukemia with Other Procedures with MCC, with CC, and without CC/MCC, respectively) to the proposed new MS-DRG 850. In the proposed rule, we noted that in the current logic list of MS-DRGs 823, 824, and 825 there are 189 procedure codes describing stereotactic radiosurgery of various body parts that are designated as non-O.R. procedures affecting the MS-DRG, therefore, as part of the logic for new MS-DRG 850, we also proposed to designate these 189 codes as non-O.R. procedures affecting the MS-DRG.

In addition, we proposed to revise the titles for MS-DRGs 834, 835, and 836 by deleting the reference to “Major O.R. Procedures” in the title. Specifically, we proposed to revise the titles of medical MS-DRGs 834, 835, and 836 from “Acute Leukemia without Major O.R. Procedures with MCC, with CC, and without CC/MCC”, respectively to “Acute Leukemia with MCC, with CC, and without CC/MCC”, respectively to better reflect the GROUPER logic that will no longer include ICD-10-PCS procedure codes designated as O.R. procedures. We refer the reader to section II.C.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 as well as our finalization of those proposals.

Comment: Commenters supported the proposal to create new surgical MS-DRG 850 for cases reporting a principal diagnosis code describing a type of acute leukemia with an O.R. procedure in MDC 17. Commenters also supported the proposal to revise the titles of medical MS-DRGs 834, 835, and 836 from “Acute Leukemia without Major O.R. Procedures with MCC, with CC, and without CC/MCC”, respectively to “Acute Leukemia with MCC, with CC, and without CC/MCC”. Several commenters stated they appreciate CMS' continued analysis and refinement in this MDC and the recognition of the increased resource intensity involved in acute leukemia cases with certain operating room procedures. Another commenter stated they appreciate the agency's detailed explanation and stated they support the changes as proposed.

Comment: While supporting the creation of a new MS-DRG for cases reporting a principal diagnosis describing a type of acute leukemia with an ICD-10-PCS procedure code designated as O.R. procedure that is not listed in the logic list of MS-DRGs 820, 821, and 822 in MDC 17, a few commenters suggested that CMS reconsider the criteria for determining subgroups with small population MS-DRGs such as proposed new MS-DRG 850. According to these commenters, while the data clearly shows differences in the average costs and average lengths of stay in cases reporting secondary diagnoses designated as MCCs, CCs, and NonCCs, the criterion that there are at least 500 or more cases in each subgroup could not be met as only 367 cases were identified, therefore, CMS did not propose to subdivide the proposed new MS DRG for acute leukemia with other procedures into severity levels.

Response: We thank the commenters for their support and feedback. With regard to the suggestion that CMS reconsider the criteria for determining subgroups with small population MS-DRGs, we note 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.

As further discussed in the FY 2024 IPPS/LTCH PPS final rule ( 88 FR 58659 through 58660 ), the minimum case volume requirements were established to avoid overly fragmenting the MS-DRG classification system. We stated that with smaller volumes, the MS-DRGs will be subject to stochastic (unpredictable) effects. We continue to believe that stability of MS-DRG payment is an important objective and therefore, that a volume criterion is a needed adjunct to cost differentiation. We established a 500-case minimum to support this stability. Additionally, we note that in examining the claims data from the September 2023 update of the FY 2023 MedPAR file to identify cases reporting an O.R. procedure and a principal diagnosis code describing various types of acute leukemias, there were only 7 cases reporting an O.R. procedure with a principal diagnosis code describing various types of acute leukemias, without reporting a secondary diagnosis designated as a CC or an MCC. As stated in the proposed rule ( 89 FR 36021 ), we set a threshold of 10 cases as the minimum number of ( print page 69071) cases required to compute a reasonable weight for an MS-DRG. Fewer than 10 cases does not provide sufficient data to set accurate and stable cost relative weights.

We also note, as discussed in prior rulemaking ( 86 FR 44878 ), 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 also provide outlier payments to mitigate extreme loss on individual cases.

We refer the reader to section II.C.1.b. of the preamble of this final rule for related discussion regarding our finalization of the expansion of the criteria to include the NonCC subgroup in the FY 2021 final rule and our finalization of the proposal to continue to delay application of the NonCC subgroup criteria to existing MS-DRGs with a three-way severity level split for FY 2025.

After consideration of the public comments we received, and for the reasons discussed, we are finalizing our proposal to create new base surgical MS-DRG 850 (Acute Leukemia with Other Procedures) for cases reporting a principal diagnosis describing a type of acute leukemia with an ICD-10-PCS procedure code designated as an O.R. procedure that is not listed in the logic list of MS-DRGs 820, 821, and 822 in MDC 17, without modification, effective October 1, 2024, for FY 2025. Accordingly for FY 2025, we are finalizing our proposal to add the 27 ICD-10-CM diagnosis codes describing various types of acute leukemias currently listed in the logic list entitled “Principal Diagnosis” in MS-DRGs 834, 835, and 836 as well as ICD-10-CM codes C94.20, C94.21, C94.22, C94.40, C94.41, and C94.42 discussed earlier in this section to new MS-DRG 850. We are finalizing our proposal to add the procedure codes from current MS-DRGs 823, 824, and 825 (Lymphoma and Non-Acute Leukemia with Other Procedures with MCC, with CC, and without CC/MCC, respectively) to new MS-DRG 850. In addition, we are also finalizing our proposal to designate the 189 codes describing stereotactic radiosurgery of various body parts as non-O.R. procedures affecting the MS-DRG as part of the logic for new MS-DRG 850 for FY 2025.

Lastly, we are finalizing our proposal to revise the titles for medical MS-DRGs 834, 835, and 836 from “Acute Leukemia without Major O.R. Procedures with MCC, with CC, and without CC/MCC”, respectively to “Acute Leukemia with MCC, with CC, and without CC/MCC”, respectively for FY 2025.

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.

Based on the results of our review of the claims data from the September 2023 update of the FY 2023 MedPAR file of cases found to group to MS-DRGs 981 through 983 or MS-DRGs 987 through 989, in the proposed rule ( 89 FR 35991 ) we stated we did not identify any cases for reassignment and did not propose to move any cases from MS-DRGs 981 through 983 or MS-DRGs 987 through 989 into a surgical MS-DRGs for the MDC into which the principal diagnosis or procedure is assigned.

In addition to the internal review of procedures producing assignment to MS-DRGs 981 through 983 or MS-DRGs 987 through 989, 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. As discussed in the proposed rule, we did not receive any requests suggesting reassignment.

We also review the list of ICD-10-PCS procedures that, when in combination with their principal diagnosis code, result in assignment to MS-DRGs 981 through 983, or 987 through 989, to ascertain whether any of those procedures should be reassigned from one of those two groups of MS-DRGs to the other group of MS-DRGs based on average costs and the length of stay. We look at the data for trends such as shifts in treatment practice or reporting practice that would make the resulting MS-DRG assignment illogical. If we find these shifts, we would propose to move cases to keep the MS-DRGs clinically similar or to provide payment for the cases in a similar manner. Generally, we move only those procedures for which we have an adequate number of discharges to analyze the data.

Additionally, 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 September 2023 update of the FY 2023 MedPAR file, in the proposed rule we stated we did not identify any cases for reassignment. We also did not receive any requests suggesting reassignment. Therefore, for FY 2025 we did not propose to move any cases reporting procedure codes from MS-DRGs 981 through 983 to MS-DRGs 987 through 989 or vice versa.

Comment: Commenters expressed support for CMS' proposal to not move any cases from MS-DRGs 981 through 983 or MS-DRGs 987 through 989 into a surgical MS-DRGs for the MDC into which the principal diagnosis or procedure is assigned. Commenters also expressed support for CMS' proposal to not move any cases reporting procedure codes from MS-DRGs 981 through 983 to MS-DRGs 987 through 989 or vice versa.

After consideration of the public comments we received, we are finalizing, without modification, our proposal to not move any cases from MS-DRGs 981 through 983 or MS-DRGs 987 through 989 into a surgical MS-DRGs for the MDC into which the principal diagnosis or procedure is assigned. We are also finalizing, without modification, our proposal to not move any cases reporting procedure codes ( print page 69072) from MS-DRGs 981 through 983 to MS-DRGs 987 through 989 or vice versa.

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, we 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.C.13 of the preamble of this final rule, we are making Table 6B.—New Procedure Codes—FY 2025 available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps.html . We also refer readers to the ICD-10 MS-DRG Version 41.1 Definitions Manual at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/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 multiyear 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 stated 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 also stated that in consideration of the PHE, we believed it may be appropriate to allow additional time for the claims data to stabilize prior to selecting the timeframe to analyze for this review.

We stated in the FY 2024 IPPS/LTCH PPS final rule ( 88 FR 58749 ) that we continue to believe additional time is necessary as we continue to develop our process and methodology. Therefore, we stated we will provide more detail on this analysis and the methodology for conducting this review in future rulemaking. In response to this discussion in the FY 2024 IPPS/LTCH PPS final rule, we received a comment by the October 20, 2023 deadline. As discussed in the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 35992 ), the commenter acknowledged that there is no easy rule that would allow CMS to designate certain surgeries as “non-O.R.” procedures. The commenter stated that they believed that open procedures should always be designated O.R. procedures and approaches other than open should not be a sole factor in designating a procedure as non-O.R. as some minimally invasive procedures ( print page 69073) using a percutaneous endoscopic approach require more training, specialized equipment, time, and resources than traditional open procedures. In addition, the commenter stated that whether a procedure is frequently or generally performed in the outpatient setting should not be used for determination of O.R. vs non-O.R. designation and noted that a surgery that can be performed in the outpatient setting for a clinically stable patient may not be able to be safely performed on a patient who is clinically unstable. The commenter also asserted that for procedures that can be performed in various locations within the hospital, that is, bedside vs operating room, there should be a mechanism to differentiate the setting of the procedure to determine the MS-DRG assignment, as in the commenter's assessment, the ICD-10 classification does not provide a way to indicate the severity of certain conditions, or the complexity of procedures performed.

As discussed in the proposed rule, CMS appreciates the commenter's feedback and recommendations as to factors to consider in evaluating O.R. designations. We stated we agree with the commenter and believe that there may be other factors to consider with regard to resource utilization. As discussed in the FY 2024 IPPS/LTCH PPS final rule, we have signaled in prior rulemaking that the designation of an O.R. procedure encompasses more than the physical location of the hospital room in which the procedure may be performed; in other words, the performance of a procedure in an operating room is not the sole determining factor we will consider as we examine the designation of a procedure in the ICD-10-PCS classification system. We are exploring alternatives on how we may restructure the current O.R. and non-O.R. designations for procedures by leveraging the detail that is available in the ICD-10 claims data.

Comment: Many commenters supported CMS' plan to continue to conduct the comprehensive, systematic review of the ICD-10-PCS codes and to evaluate their current O.R. and non-O.R. designations. These commenters expressed that they were supportive of CMS' decision to continue to develop our process and methodology. Other commenters stated they agreed that the revolution in medical procedures in recent years may render the performance of a procedure in an O.R. a less critical distinction in driving payment policy. A commenter stated that because of technological advances, sophisticated, resource-intensive procedures are no longer confined to the O.R. setting and noted that in their observation, bi-plane radiology interventional suites and cardiac catheterization labs used for procedures such as mechanical thrombectomy or endovascular coiling for aneurysms can utilize more advanced equipment and supplies than a basic operating room with minimal installed equipment. Several commenters recommended that CMS provide detailed impact files prior to the adoption of changes to the designation of procedure codes in the ICD-10-PCS classification and stated that they look forward to commenting on CMS' data analysis and methodology in the future.

As part of the broader and continuing conversation about the designations of procedures in the ICD-10-PCS classification system, a few commenters recommended that CMS work closely with physician specialty societies and industry stakeholders to identify the most important drivers of complexity and resource use in the hospital setting. A commenter specifically recommended that CMS consider a technical expert panel (TEP) made up of industry stakeholders and experts to review methodologies for determining the designation of procedure codes in the ICD-10-PCS classification system. Another commenter encouraged CMS to consider factors such as:

whether the procedure involves either the intentional non-transient alteration of structures of the body, or cutting into the body, or both;
the surgical approach ( e.g., open, percutaneous endoscopic or percutaneous approach);
the requirement of either a surgeon or non-surgeon provider to be present during procedure;
the complexity of procedures performed in an operating room, or a hybrid operating room, versus procedures performed in an electrophysiology laboratory;
resource utilization requirements during the performance of the procedure in terms of the need for anesthesia and monitoring, etc.; and
inpatient versus outpatient status.

Response: We thank the commenters for their support. We also thank commenters for sharing their views and their willingness to provide feedback and recommendations as to what factors to consider in evaluating O.R. versus non-O.R. designations. We agree with commenters and believe that there may be other factors to consider with regard to resource utilization, particularly with the implementation of ICD-10. While CMS has already convened an internal workgroup comprised of clinicians, consultants, coding specialists and other policy analysts, as well as provided opportunity to provide feedback as to what factors to consider in evaluating O.R. versus non-O.R. designations, we look forward to further input and feedback from interested parties. As discussed in the proposed rule, we are considering the feedback received to date on what factors and/or criteria to consider in determining whether a procedure is designated as an O.R. procedure in the ICD-10-PCS classification system as we continue to develop our process and methodology and will provide more detail on this analysis and the methodology for conducting this comprehensive review in future rulemaking. We encourage the public to continue to submit comments on any other factors to consider in our refinement efforts to recognize and differentiate consumption of resources for the ICD-10 MS-DRGs for consideration.

As discussed in the FY 2025 IPPS/LTCH PPS proposed rule, we did not receive any requests regarding changing the designation of specific ICD-10-PCS procedure codes from non-O.R. to O.R. procedures, or to change the designation from O.R. procedures to non-O.R. procedures by the October 20, 2023 deadline. In this section of this final rule, as we did in the proposed rule, we discuss the proposals we made based on our internal review and analysis and we discuss the process that was utilized for evaluating each procedure code. For each procedure, we considered—

Whether the procedure would typically require the resources of an operating room;
Whether it is an extensive or a non-extensive 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 final 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.

For procedures that would not typically require the resources of an operating room, we determined if the procedure should affect the MS-DRG assignment. 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 ( print page 69074) 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-DRGs 981, 982, or 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) or MS-DRGs 987, 988, or 989 (Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) when they do not contain a principal diagnosis that corresponds to one of the MDCs to which that procedure is assigned. These procedures need not be assigned to MS-DRGs 981 through 989 in order for this to occur. Therefore, we did not specifically address that aspect in summarizing the proposals we made based on our internal review and analysis in the proposed rule and in this section of this final rule.

As discussed in the proposed rule ( 89 FR 35993 ), during our review, we noted inconsistencies in how procedures involving laparoscopic excisions of intestinal body parts are designated. Procedure codes describing the laparoscopic excision of intestinal body parts differ by qualifier. ICD-10-PCS procedure codes describing excisions of intestinal body parts with the diagnostic qualifier “X”, are used to report these procedures when performed for diagnostic purposes. We identified the following five related codes:

In the proposed rule, we noted the ICD-10-PCS procedure codes describing the laparoscopic excision of intestinal body parts for diagnostic purposes listed previously have been assigned different attributes in terms of designation as an O.R. or non-O.R. procedure when compared to similar procedures describing the laparoscopic excisions of intestinal body parts for nondiagnostic purposes. We noted in the ICD-10 MS-DRGs Version 41, these ICD-10-PCS codes are currently recognized as non-O.R. procedures for purposes of MS-DRG assignment, while similar excision of intestinal body part procedure codes with the same approach but different qualifiers are recognized as O.R. procedures.

As discussed in the proposed rule, upon further review and consideration, we stated we believe that procedure codes 0DBF4ZX, 0DBG4ZX, 0DBL4ZX, 0DBM4ZX and 0DBN4ZX describing a laparoscopic excision of an intestinal body parts for diagnostic purposes warrant designation as an O.R. procedures consistent with other laparoscopic excision procedures performed on the same intestinal body parts for nondiagnostic purposes. We stated we also believe it is clinically appropriate for these procedures to group to the same MS-DRGs as the procedures describing excision procedures performed on the intestinal body parts for nondiagnostic purposes. Therefore, we proposed to add procedure codes 0DBF4ZX, 0DBG4ZX, 0DBL4ZX, 0DBM4ZX and 0DBN4ZX to the FY 2025 ICD-10 MS-DRG Version 42 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures assigned to MS-DRG 264 (Other Circulatory System O.R. Procedures) in MDC 05 (Diseases and Disorders of the Circulatory System); MS-DRGs 329, 330, and 331 (Major Small and Large Bowel Procedures, with MCC, with CC, and without CC/MCC, respectively) in MDC 06 (Diseases and Disorders of the Digestive System); MS-DRGs 820, 821, and 822 (Lymphoma and Leukemia with Major O.R. Procedures with MCC, CC, without CC/MCC, respectively) and MS-DRGS 826, 827, and 828 (Myeloproliferative Disorders or Poorly Differentiated Neoplasms with Major O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 17 (Myeloproliferative Diseases and Disorders, Poorly Differentiated Neoplasms); MS-DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively) in MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs); and MS-DRGs 957, 958, and 959 (Other O.R. Procedures for Multiple Significant Trauma with MCC, with CC, and without CC/MCC, respectively) in MDC 24 (Multiple Significant Trauma).

Comment: Commenters supported the proposal to reclassify ICD-10-PCS procedure codes 0DBF4ZX (Excision of right large intestine, percutaneous endoscopic approach, diagnostic), 0DBG4ZX (Excision of left large intestine, percutaneous endoscopic approach, diagnostic), 0DBL4ZX (Excision of transverse colon, percutaneous endoscopic approach, diagnostic), 0DBM4ZX (Excision of descending colon, percutaneous endoscopic approach, diagnostic), and 0DBN4ZX (Excision of sigmoid colon, percutaneous endoscopic approach, diagnostic) as O.R. procedures for the purposes of MS-DRG assignment for FY 2025. A commenter stated they believed that laparoscopic procedures—whether diagnostic or nondiagnostic—will always be performed in an O.R. The commenter further urged CMS to publish O.R. versus non-O.R. designation data on its website for all ICD-10-PCS codes, not just new codes, so that specialty societies can more easily review and identify possible errors.

Response: We appreciate the commenters' support and thank the commenter for their feedback. We also appreciate the commenter's suggestion, however, as stated in the earlier in this section, and as we have signaled in prior rulemaking, the designation of an O.R. procedure encompasses more than the physical location of the hospital room in which the procedure may be performed. In other words, the performance of a procedure in an operating room is not the sole determining factor we consider as we examine the designation of a procedure in the ICD-10-PCS classification system. Additionally, we refer the commenter, and interested specialty societies, to Appendix E of the ICD-10 MS-DRG Version 42 Definitions Manual (which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatientPPS/MS- ( print page 69075) DRGClassifications-and-Software ) for a list of all the ICD-10-PCS procedure codes that affect MS-DRG assignment (that is, procedure codes designated as O.R. procedures or as non-O.R. procedures affecting the MS-DRG), the MDCs and MS-DRGs to which they are assigned, and a description of the surgical categories.

After consideration of the public comments we received, we are finalizing our proposal to change the designation of procedure codes 0DBF4ZX, 0DBG4ZX, 0DBL4ZX, 0DBM4ZX and 0DBN4ZX from non-O.R. procedures to O.R. procedures, without modification, effective October 1, 2024.

As discussed in the proposed rule ( 89 FR 35994 ), during our review, we noted inconsistencies in how procedures involving laparoscopic excisions of gallbladder or pancreas are designated. Procedure codes describing the laparoscopic excision of the gallbladder or pancreas differ by qualifier. The ICD-10-PCS procedure code describing an excision of the gallbladder and the procedure code describing an excision of the pancreas with the diagnostic qualifier “X”, are used to report these procedures when performed for diagnostic purposes. We stated we identified the following two related codes:

In the proposed rule, we noted the ICD-10-PCS procedure codes describing the laparoscopic excision of the gallbladder or the pancreas for diagnostic purposes listed previously have been assigned different attributes in terms of designation as an O.R. or a non-O.R. procedure when compared to similar procedures describing the laparoscopic excisions of the gallbladder or the pancreas for nondiagnostic purposes. In the ICD-10 MS-DRGs Version 41, these ICD-10-PCS codes are currently recognized as non-O.R. procedures for purposes of MS-DRG assignment, while similar excision of the gallbladder or the pancreas procedure codes with the same approach but different qualifiers are recognized as O.R. procedures.

As discussed in the proposed rule, upon further review and consideration, we stated we believe that procedure code 0FB44ZX describing a laparoscopic excision of the gallbladder for diagnostic purposes and procedure code 0FBG4ZX describing a laparoscopic excision of the pancreas for diagnostic purposes both warrant designation as an O.R. procedure consistent with other laparoscopic excision procedures performed on the same body parts for nondiagnostic purposes. We stated we also believe it is clinically appropriate for these procedures to group to the same MS-DRGs as the procedures describing excision procedures performed on the gallbladder or pancreas for nondiagnostic purposes. Therefore, we proposed to add procedure code 0FB44ZX to the FY 2025 ICD-10 MS-DRG Version 42 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS-DRG Index as an O.R. procedure assigned to MS-DRGs 411, 412, and 413 (Cholecystectomy with C.D.E., with MCC, with CC, and without CC/MCC, respectively) and MS-DRGs 417, 418, and 419 (Laparoscopic Cholecystectomy without C.D.E., with MCC, with CC, and without CC/MCC, respectively) in MDC 07 (Diseases and Disorders of the Hepatobiliary System and Pancreas); MS-DRGs 820, 821, and 822 (Lymphoma and Leukemia with Major O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) and MS-DRGS 826, 827, and 828 (Myeloproliferative Disorders or Poorly Differentiated Neoplasms with Major O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 17 (Myeloproliferative Diseases and Disorders, Poorly Differentiated Neoplasms); MS-DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively) in MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs); and MS-DRGs 957, 958, and 959 (Other O.R. Procedures for Multiple Significant Trauma with MCC, with CC, and without CC/MCC, respectively) in MDC 24 (Multiple Significant Trauma).

We also proposed to add procedure code 0FBG4ZX to the FY 2025 ICD-10 MS-DRG Version 42 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS-DRG Index as an O.R. procedure assigned to MS-DRGs 405, 406, and 407 (Pancreas, Liver and Shunt Procedures, with MCC, with CC, and without CC/MCC, respectively) in MDC 06 (Diseases and Disorders of the Digestive System); 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); MS-DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively) in MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs); and MS-DRGs 957, 958, and 959 (Other O.R. Procedures for Multiple Significant Trauma with MCC, with CC, and without CC/MCC, respectively) in MDC 24 (Multiple Significant Trauma).

Comment: Commenters supported the proposal to reclassify ICD-10-PCS procedure codes 0FB44ZX (Excision of gallbladder, percutaneous endoscopic approach, diagnostic) and 0FBG4ZX (Excision of pancreas, percutaneous endoscopic approach, diagnostic) as O.R. procedures for the purposes of MS-DRG assignment for FY 2025.

After consideration of the public comments we received, we are finalizing our proposal to change the designation of procedure codes 0FB44ZX and 0FBG4ZX from non-O.R. procedures to O.R. procedures, without modification, effective October 1, 2024.

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 ( print page 69076) 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 ).

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 IPPS/LTCH PPS 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.

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/Downloads/10082019ListingSessionTrasncriptandQandAsandAudioFile.zip for the transcript and audio file of the listening session. We also refer readers to https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software for the supplementary file containing the mathematical data generated using claims from the FY 2018 MedPAR file 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.

In the FY 2021 IPPS/LTCH PPS final rule ( 85 FR 58550 through 58554 ), we discussed our 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 or management of care or both.
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 summation of the comments we received for each of the nine guiding principles and our responses to those comments. In the proposed rule we noted that since the FY 2021 IPPS/LTCH PPS final rule we have continued to solicit feedback regarding the nine guiding principles, as well as other possible ways we can incorporate meaningful indicators of clinical severity. We have encouraged 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 when providing feedback or comments. In the FY 2024 IPPS/LTCH PPS proposed rule ( 88 FR 26748 through 26750 ) we illustrated how the nine guiding principles might be applied in evaluating changes to the severity designations of diagnosis codes in our discussion of our proposed changes to the severity level designation for certain diagnosis codes that describe homelessness. In the proposed rule, we stated that we have not received any additional feedback or comments on the nine guiding principles since the FY 2021 IPPS/LTCH PPS final rule; therefore, in the FY 2025 IPPS/LTCH PPS proposed rule we proposed to finalize the nine guiding principles as listed previously. We stated that under this proposal, our evaluations to determine the extent to which the presence of a diagnosis code as a secondary diagnosis results in increased hospital resource use will include 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 the nine guiding principles.

Comment: Many commenters supported our proposal to finalize the nine guiding principles. Commenters stated they continued to support CMS' consideration of the nine guiding principles in conjunction with its mathematical analysis of the data in ( print page 69077) evaluating whether changes to the severity level designations of diagnoses are needed and to ensure the severity designations appropriately reflect resource use based on review of the claims data, as well as consideration of relevant clinical factors (for example, the clinical nature of each of the secondary diagnoses and the severity level of clinically similar diagnoses).

Comments: Other commenters expressed concerns with the guiding principles. These commenters stated that the nine guiding principles appeared to be open to interpretation or differences in clinical opinion and noted a lack of detailed definitions and criteria for applying the guiding principles. Other commenters stated that it was not clear how CMS will apply the guiding principles in conjunction with the mathematical analyses of claims data to make decisions about severity levels. These commenters stated in their observation, CMS had not stated how it will handle conditions that might not fit any guiding principles, such as obstetrical diagnoses, congenital conditions, or potentially social determinants of health, but reflect mathematical data for the impact on resource use that could suggest a need for a change to the severity designation of the code. Several commenters stated they were unclear as to the impact finalizing the guiding principles would have on diagnosis codes that are currently designated as MCCs or CCs when reported as secondary diagnoses. These commenters stated that more information is needed to better understand CMS' process for decision making on the designation of diagnosis severity levels.

Response: We thank the commenters for sharing their concerns.

We note the focus of our analysis is on the appropriate severity level designation of individual ICD-10-CM codes as secondary diagnosis codes and how they relate to inpatient prospective payment and the resource utilization required while the patient is in the hospital. We wish to clarify for commenters that the application of the nine guiding principles is not a departure from our historic approach of considering both mathematical analysis and clinical factors as described in the FY 2008 IPPS/LTCH PPS final rule. In the FY 2008 IPPS/LTCH PPS final rule ( 72 FR 47153 through 47154 ), we stated the need for a revised CC list prompted a reexamination of the secondary diagnoses that qualify as a CC and stated our intent was to better distinguish cases that are likely to result in increased hospital resource use based on secondary diagnoses. We stated that using a combination of mathematical data and the judgment of our medical advisors, we included the condition on the CC list if it could demonstrate that its presence would lead to substantially increased hospital resource use. We stated diagnoses may require increased hospital resource use because of a need for such services as:

Intensive monitoring (for example, an intensive care unit (ICU) stay).
Expensive and technically complex services (for example, heart transplant).
Extensive care requiring a greater number of caregivers (for example, nursing care for a patient with quadriplegia).

In reviewing the diagnosis codes that describe chronic diseases, we stated in the FY 2008 IPPS/LTCH PPS final rule that we made exceptions for diagnosis codes that indicate a chronic disease in which the underlying illness has reached an advanced stage or is associated with systemic physiologic decompensation and debility. We refer readers to the FY 2008 IPPS/LTCH PPS final rule ( 72 FR 47153 through 47154 ) for a complete discussion of our approach.

The nine guiding principles were developed to build on the process we described in the FY 2008 IPPS/LTCH PPS final rule and are not intended to turn the analysis into a quantitative exercise, requiring that every diagnosis code satisfy each principle. Instead, as stated in prior rulemaking, the nine guiding principles are intended to provide a framework for assessing relevant clinical factors to help denote if, and to what degree, additional resources are required above and beyond those that are already being utilized to address the principal diagnosis or other secondary diagnoses that might also be present on the claim. In response to the commenter's concerns regarding a lack of detailed definition of each principle, we refer commenters to the FY 2021 IPPS/LTCH PPS final rule ( 85 FR 58550 through 58554 ), for a complete discussion of our response to similar public comments regarding each of the nine guiding principles.

Comment: Some commenters stated that the guiding principles appeared to be more applicable to MCC conditions, were too strict, and could potentially eliminate CC conditions. A commenter stated that the application of the guiding principles would represent a substantial revision to the definition of a CC, noting MS-DRG Definition Manual Version 41.1 provides the following definition: “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 length of stay by at least one day in at least 75 percent of the patients.”

Response: We appreciate the commenters' feedback.

We do not believe the nine guiding principles would be mostly applicable, or only applicable, to 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 an 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.

We wish to clarify that the definition of a “substantial complication or comorbidity” from the MS-DRG Definition Manual that the commenter referenced, is the definition of a CC that was used in Version 8 of the DRGs. In FY 2008, for Version 25 of the MS-DRGs, the diagnoses comprising the CC list were completely redefined and instead each CC was categorized as a major CC or a CC (that is, non-major CC) based on relative resource use. As stated previously, we refer readers to the FY 2008 IPPS/LTCH PPS final rule ( 72 FR 47159 ) for a complete discussion of our approach.

We note that in addition to the FY 2021 IPPS/LTCH PPS rule, in the FY 2022 IPPS/LTCH PPS final rule ( 86 FR 44915 through 44926 ), the FY 2023 IPPS/LTCH PPS final rule ( 87 FR 48865 through 48872 ), the FY 2024 IPPS/LTCH PPS final rule ( 88 FR 58753 through 58759 ), and in the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 35997 through 36001 ), we have illustrated how the guiding principles might be applied in evaluating changes to the severity designations of diagnosis codes. We have also continued to solicit feedback regarding the guiding principles, as well as other possible ways we can incorporate meaningful indicators of clinical severity. We note the commenters did not provide alternative principles for consideration, nor was feedback provided as to other possible ways we can incorporate meaningful indicators of clinical severity.

As discussed in prior rulemaking, our intended approach is for CMS to first use these guiding principles in making an initial clinical assessment of the appropriate severity level designation ( print page 69078) for each ICD-10-CM code as a secondary diagnosis. CMS will then use a mathematical analysis of claims data as discussed in the FY 2008 IPPS/LTCH PPS final rule ( 72 FR 47159 ) to determine if the presence of the ICD-10-CM code as a secondary diagnosis appears to, or does not appear to, increase hospital resource consumption. There may be instances in which we would decide that the clinical analysis weighs in favor of proposing to maintain or proposing to change the severity designation of an ICD-10-CM code after application of the nine guiding principles. Any proposed modifications to the severity level designation of ICD-10-CM codes would be addressed in future rulemaking consistent with our annual process.

Therefore, after consideration of the public comments received, and for the reasons discussed, we are finalizing the nine guiding principles as listed previously in this FY 2025 IPPS/LTCH PPS final rule. Accordingly, our evaluations to determine the extent to which the presence of a diagnosis code as a secondary diagnosis results in increased hospital resource use will include 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 the nine guiding principles. We thank commenters for sharing their views and their willingness to support CMS in our efforts to continue a comprehensive CC/MCC analysis.

In the FY 2022 IPPS/LTCH PPS proposed rule ( 86 FR 25175 through 25180 ), as another interval step in our comprehensive review of the severity designations of ICD-10-CM diagnosis codes, 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 “unspecified” diagnosis codes to a NonCC where there are other codes available in that code subcategory that further specify the anatomic site. As summarized in the FY 2022 IPPS/LTCH PPS final rule, many commenters expressed concern with the potential severity level designation changes overall and recommended that CMS delay any possible change to the designation of these codes to give hospitals and their physicians time to prepare. After careful consideration of the public comments we received, we maintained the severity level designation of the “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. We refer readers to the FY 2022 IPPS/LTCH PPS final rule ( 86 FR 44916 through 44926 ) for a complete discussion of our response to public comments regarding the potential severity level designation changes. Instead, for FY 2022, we finalized a new Medicare Code Editor (MCE) code edit for “unspecified” codes, effective with discharges on and after April 1, 2022. We stated we believe finalizing this new edit would provide additional time for providers to be educated while not affecting the payment the provider is eligible to receive. We refer the reader to section II.D.14.e. of the FY 2022 IPPS/LTCH PPS final rule ( 86 FR 44940 through 44943 ) for the complete discussion.

As discussed in the FY 2023 IPPS/LTCH PPS final rule ( 87 FR 48866 ), we stated that as the new unspecified edit became effective beginning with discharges on and after April 1, 2022, we believed it was appropriate to not propose to change the designation of any ICD-10-CM diagnosis codes, including the unspecified codes that are subject to the “Unspecified Code” edit, as we continue our comprehensive CC/MCC analysis to allow interested parties the time needed to become acclimated to the new edit.

Comment: A commenter stated that they were pleased that CMS continues to maintain the severity level designation of the “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, that are subject to the “Unspecified Code” edit. The commenter further stated that they agreed that maintaining this status quo will allow time for providers to be educated and adjust to the edit. Another commenter suggested that CMS provide data from the Medicare Code Editor (MCE) that identifies each provider reporting “unspecified” diagnosis codes with designations as a CC or MCC when there are other codes available in that code subcategory that further specify the anatomic site, which can be used to inform providers on the number of “unspecified” diagnosis codes being reported at their facility compared to their peers.

Response: CMS appreciates the commenters' feedback and recommendations. We will give careful consideration to what additional information may be helpful in assisting to educate providers on the documentation required to report to the highest level of specificity as it relates to the laterality of the conditions treated in the inpatient setting as we continue to formulate future next steps in our comprehensive review of the severity designations of ICD-10-CM diagnosis codes.

In the FY 2023 IPPS/LTCH proposed rule ( 87 FR 28177 through 28181 ), we also requested public comments on how the reporting of diagnosis codes in categories Z55-Z65 might improve our ability to recognize severity of illness, complexity of illness, and/or utilization of resources under the MS-DRGs. Consistent with the Administration's goal of advancing health equity for all, including members of historically underserved and under-resourced communities, as described in the President's January 20, 2021 Executive Order 13985 on “Advancing Racial Equity and Support for Underserved Communities Through the Federal Government,” [ 8 ] we stated we were also interested in receiving feedback on how we might otherwise foster the documentation and reporting of the diagnosis codes describing social and economic circumstances to more accurately reflect each health care encounter and improve the reliability and validity of the coded data including in support of efforts to advance health equity.

We noted that social determinants of health (SDOH) are the conditions in the environments where people are born, live, learn, work, play, worship, and age that affect a wide range of health, functioning, and quality-of-life outcomes and risks. [ 9 ] The subset of Z codes that describe the social determinants of health are found in categories Z55-Z65 (Persons with potential health hazards related to socioeconomic and psychosocial circumstances). These codes describe a range of issues related—but not limited—to education and literacy, employment, housing, ability to obtain adequate amounts of food or safe drinking water, and occupational exposure to toxic agents, dust, or radiation.

We received numerous public comments that expressed a variety of views on our comment solicitation, including many comments that were supportive, and others that offered specific suggestions for our consideration in future rulemaking. Many commenters applauded CMS' efforts to encourage documentation and ( print page 69079) reporting of SDOH diagnosis codes given the impact that social risks can have on health outcomes. These commenters stated that it is critical that physicians, other health care professionals, and facilities recognize the impact SDOH have on the health of their patients. Many commenters also stated that the most immediate and important action CMS could take to increase the use of SDOH Z codes is to finalize the evidence-based “Screening for Social Drivers of Health” and “Screen Positive Rate for Social Drivers of Health” measures proposed to be adopted in the Hospital Inpatient Quality Reporting (IQR) Program. In the FY 2023 IPPS/LTCH PPS final rule ( 87 FR 49202 through 49220 ), CMS finalized the “Screening for Social Drivers of Health” and “Screen Positive Rate for Social Drivers of Health” measures in the Hospital Inpatient Quality Reporting (IQR) Program. We refer readers to the FY 2023 IPPS/LTCH PPS final rule ( 87 FR 48867 through 48872 ) for the complete discussion of the public comments received regarding the request for information on SDOH diagnosis codes.

As discussed in the FY 2024 IPPS/LTCH PPS final rule ( 88 FR 58755 through 58759 ), based on our analysis of the impact on resource use for the ICD-10-CM Z codes that describe homelessness and after consideration of public comments, we finalized changes to the severity levels for diagnosis codes Z59.00 (Homelessness, unspecified), Z59.01 (Sheltered homelessness), and Z59.02 (Unsheltered homelessness), from NonCC to CC. We stated our expectation that finalizing the changes would encourage the increased documentation and reporting of the diagnosis codes describing social and economic circumstances and serve as an example for providers that, when they document and report SDOH codes, CMS can further examine the claims data and consider future changes to the designation of these codes when reported as a secondary diagnosis. We further stated CMS would continue to monitor and evaluate the reporting of the diagnosis codes describing social and economic circumstances.

We refer the reader to the following section of this final rule for discussion of our proposed changes to the severity level designation for the diagnosis codes that describe inadequate housing and housing instability for FY 2025, as well as our finalization of that proposal.

We have updated the Impact on Resource Use Files on the CMS website so that the public can review the mathematical data for the impact on resource use generated using claims from the FY 2019 through the FY 2023 MedPAR files. These files are posted on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software . As discussed in prior rulemaking, we also continue to be interested in receiving feedback on how we might further 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.

As discussed in the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 35997 ), for new diagnosis codes approved for FY 2025, 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 or treatment of the condition. We note 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 section II.C.13 of this final rule for the discussion of the finalized changes to the ICD-10-CM and ICD-10-PCS coding systems for FY 2025.

As discussed earlier in this section and in the proposed rule ( 89 FR 35997 through 35999 ), in continuation of our examination of the SDOH Z codes, we reviewed the mathematical data on the impact on resource use for the subset of ICD-10-CM Z codes that describe the social determinants of health found in categories Z55-Z65 (Persons with potential health hazards related to socioeconomic and psychosocial circumstances).

As discussed in the proposed rule, the ICD-10-CM SDOH Z codes that describe inadequate housing and housing instability are currently designated as NonCCs when reported as secondary diagnoses. The following table reflects the impact on resource use data generated using claims from the September 2023 update of the FY 2023 MedPAR file. 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 a more detailed explanation of the columns in the table.

The table shows that the C1 value is 2.63 for ICD-10-CM diagnosis code Z59.10 and 1.85 for ICD-10-CM diagnosis code Z59.19. A value close to 2.0 in column C1 suggests that the secondary diagnosis is more aligned with a CC than a NonCC. Because the C1 values in the table are generally close to 2, the data suggest that when these two SDOH Z codes are reported as a secondary diagnosis, the resources involved in caring for a patient experiencing inadequate housing support increasing the severity level from a NonCC to a CC. In contrast, the C1 value for ICD-10-CM diagnosis code Z59.11 is 0.51 and is 0.99 for ICD-10-CM diagnosis code Z59.12. A C1 value generally closer to 1 suggests the resources involved in caring for patients experiencing inadequate housing in terms of environmental temperature and utilities are more aligned with a NonCC severity level than a CC or an MCC severity level.

As discussed in the proposed rule, the underlying cause of the inconsistency between the C1 values for inadequate housing, unspecified and other inadequate housing and the two more specific codes that describe the necessities unavailable in the housing environment is unclear. We noted that diagnosis codes Z59.10 (Inadequate housing, unspecified), Z59.11 (Inadequate housing environmental temperature), Z59.12 (Inadequate housing utilities), and Z59.19 (Other inadequate housing) became effective on April 1, 2023 (FY 2023). In reviewing the historical C1 values for code Z59.1 (Inadequate housing), the predecessor code before the code was expanded to further describe inadequate housing and the basic necessities unavailable in the housing environment, we noted the mathematical data for the impact on resource use generated using claims from the FY 2019, FY 2020, FY 2021, and FY 2022 MedPAR files reflects C1 values for code Z59.1 of 2.09, 1.73, 2.04, and 2.69, respectively. We refer the reader to the Impact on Resource Use Files generated using claims from the FY 2019 through the FY 2022 MedPAR files posted on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software . We stated we believe the lower C1 values for ICD-10-CM codes Z59.11 (Inadequate housing environmental temperature) and Z59.12 (Inadequate housing utilities) reflected in the mathematical data for the impact on resource use generated using claims from the FY 2023 MedPAR file may be attributed to lack of use or knowledge about the newly expanded codes, such that the data may not yet reflect the full impact on resource use for patients experiencing these circumstances.

Similarly, the table shows that the C1 value is 1.97 for ICD-10-CM diagnosis code Z59.811. A value close to 2.0 in column C1 suggests that the secondary diagnosis is more aligned with a CC than a NonCC. Because the C1 value in the table is generally close to 2, the data suggest that when this SDOH Z code is reported as a secondary diagnosis, the resources involved in caring for a patient experiencing an imminent risk of homelessness support increasing the severity level from a NonCC to a CC. In contrast, the C1 value for ICD-10-CM diagnosis code Z59.812 (Housing instability, housed, homelessness in past 12 months) and (Housing instability, housed unspecified) is 0.76 and is 0.92 for ICD-10-CM diagnosis code Z59.819. A C1 value generally closer to 1 suggests the resources involved in caring for patients experiencing housing instability, with history of homelessness in the past 12 months or housing instability, unspecified are more aligned with a NonCC severity level than a CC or an MCC severity level. We stated in the proposed rule that the underlying cause of the inconsistency between the C1 values for codes describing housing instability is unclear.

In the proposed rule, we noted that diagnosis codes Z59.811, Z59.812, and Z59.819 became effective on October 1, 2021 (FY 2022). In reviewing the historical C1 values for code Z59.8 (Other problems related to housing and economic circumstances), the predecessor code before the code was expanded to further describe the ( print page 69081) problems related to housing and economic circumstances, we noted the mathematical data for the impact on resource use generated using claims from the FY 2019 and FY 2020 MedPAR files reflects C1 values for code Z59.8 of 1.92 and 1.63, respectively. There were no data reflected for this code in the Impact on Resource Use File generated using claims from the FY 2021 MedPAR files. The mathematical data for the impact on resource use generated using claims from the FY 2022 MedPAR file reflects C1 values for codes Z59.811, Z59.812, and Z59.819 of 2.44, 3.12, and 2.09, respectively. We stated we were uncertain if the fluctuations in the C1 values from year to year, or FY 2021, in particular, may reflect fluctuations that may be a result of the COVID-19 public health emergency or even reduced hospitalizations of certain conditions. We stated we were also uncertain if the fluctuations may be attributed to lack of use or knowledge about the expanded codes, such that the data on the reporting of codes Z59.812 and Z59.819 may not yet reflect the full impact on resource use for patients experiencing these circumstances.

As discussed in the FY 2021 IPPS/LTCH PPS final rule ( 85 FR 58550 through 58554 ), and earlier in this section, following the listening session on October 8, 2019, we reconvened an internal workgroup comprised of clinicians, consultants, coding specialists and other policy analysts to identify guiding principles to apply in evaluating whether changes to the severity level designations of diagnoses are needed and to ensure the severity designations appropriately reflect resource use based on review of the claims data, as well as consideration of relevant clinical factors (for example, the clinical nature of each of the secondary diagnoses and the severity level of clinically similar diagnoses) and improve the overall accuracy of the IPPS payments.

In considering the nine guiding principles identified by the workgroup, as summarized previously, in the proposed rule we noted that, similar to homelessness, inadequate housing and housing instability are circumstances that can impede patient cooperation or management of care, or both. In addition, patients experiencing inadequate housing and housing instability can require a higher level of care by needing an extended length of stay.

Inadequate housing is defined as an occupied housing unit that has moderate or severe physical problems (for example, deficiencies in plumbing, heating, electricity, hallways, and upkeep). [ 10 11 ] Features of substandard housing have long been identified as contributing to the spread of infectious diseases. Patients living in inadequate housing may be exposed to health and safety risks, such as vermin, mold, water leaks, and inadequate heating or cooling systems. [ 12 13 ] An increasing body of evidence has associated poor housing conditions with morbidity from infectious diseases, chronic illnesses, exposure to toxins, injuries, poor nutrition, and mental disorders. [ 14 ]

As discussed in the proposed rule, housing instability encompasses a number of challenges, such as having trouble paying rent, overcrowding, moving frequently, or spending the bulk of household income on housing. [ 15 ] These experiences may negatively affect physical health and make it harder to access health care. Studies have found moderate evidence to suggest that housing instability is associated with higher prevalence of overweight/obesity, hypertension, diabetes, and cardiovascular disease, worse hypertension and diabetes control, and higher acute health care utilization among those with diabetes and cardiovascular disease. [ 16 ]

In reviewing the mathematical data for the impact on resource use generated using claims from the FY 2023 MedPAR file for the seven ICD-10-CM codes describing inadequate housing and housing instability comprehensively and reviewing the potential impact these circumstances could have on patients' clinical course, we noted in the proposed rule that whether the patient is experiencing inadequate housing or housing instability, the patient may have limited or no access to prescription medicines or over-the-counter medicines, including adequate locations to store medications away from the heat or cold, and have difficulties adhering to medication regimens. Experiencing inadequate housing or housing instability may negatively affect a patient's physical health and make it harder to access timely health care. [ 12 ] Delays in medical care may increase morbidity and mortality risk among those with underlying, preventable, and treatable medical conditions. [ 17 ] In addition, we noted that findings also suggest that patients experiencing inadequate housing or housing instability are associated with higher rates of inpatient admissions for mental, behavioral, and neurodevelopmental disorders, longer hospital stays, and substantial health care costs. [ 18 ]

Therefore, after considering the impact on resource use data generated using claims from the September 2023 update of the FY 2023 MedPAR file for the seven ICD-10-CM diagnosis codes that describe inadequate housing and housing instability and consideration of the nine guiding principles, we proposed to change the severity level designation for diagnosis codes Z59.10 (Inadequate housing, unspecified), Z59.11 (Inadequate housing environmental temperature), Z59.12 (Inadequate housing utilities), Z59.19 (Other inadequate housing), Z59.811 (Housing instability, housed, with risk of homelessness), Z59.812 (Housing instability, housed, homelessness in past 12 months) and Z59.819 (Housing instability, housed unspecified) from NonCC to CC for FY 2025.

Comment: Commenters expressed overwhelming support for our proposal to change the severity level designation for diagnosis codes Z59.10 (Inadequate housing, unspecified), Z59.11 (Inadequate housing environmental temperature), Z59.12 (Inadequate housing utilities), Z59.19 (Other inadequate housing), Z59.811 (Housing instability, housed, with risk of homelessness), Z59.812 (Housing ( print page 69082) instability, housed, homelessness in past 12 months) and Z59.819 (Housing instability, housed unspecified) from NonCC to CC for FY 2025. These commenters stated this proposal acknowledges the significant impact these circumstances can have on patient outcomes and the increased resource allocation required to effectively manage the care of these patients in terms of increased severity of illness, readmissions resulting from lack of follow-up and continued medical treatment and delayed discharges. A commenter stated that changing the severity level of the seven ICD-10-CM diagnosis codes that describe inadequate housing and housing instability is not only appropriate, it is crucial in order to help address the complex needs of these patients. Commenters stated that this change is a critical step toward increasing health care access for underserved and under-resourced communities and in recognizing and addressing broader factors that impact patient health. A commenter specifically stated this proposal is another notable effort on CMS' part to recognize the interconnectedness of health and social needs. Another commenter stated this change will encourage providers to ask more detailed questions of patients to better understand their housing status, improving overall data quality.

Comment: While commending CMS' efforts, many commenters noted an operational concern in that currently only 25 diagnoses are captured on the institutional electronic claim form and 19 diagnoses are captured on the paper bill. Many commenters stated this issue is becoming increasingly critical as Medicare and other payers move to implement new quality measures that emphasize the screening and identification of patient-level, health-related social needs, which will dictate the need for reporting additional codes. Commenters stated that documenting and reporting the social and economic circumstances patients may be experiencing can require a substantial number of SDOH Z codes, which could lead to the crowding out of other diagnosis codes that also need to be captured on the institutional claim form for both payment and quality measures. Commenters suggested that a factor that may be negatively impacting more comprehensive reporting of the diagnosis codes describing social and economic circumstances is the limit on the number of diagnoses that may be reported on an inpatient claim. A commenter stated they performed their own analysis of the FY 2021 MedPAR file and found that 17 percent of inpatient claims reached the maximum limit of 25 diagnoses that can be reported on the claim. Another commenter stated at their facility approximately one-third of cases have 26 codes or more, with some cases reporting as many as 45 codes. A few commenters suggested that CMS evaluate the potential to expand the number of diagnosis codes that can be submitted, or alternatively, design a separate way to report the Z codes on the claim form, separate and distinct from the fields for the diagnosis codes.

Response: We thank the commenters for their continued feedback on this issue. We note that any proposed changes to the institutional claim form would need to be submitted to the National Uniform Billing Committee (NUBC) for consideration as the NUBC develops and maintains the Uniform Billing (UB) 04 data set and form, not CMS. The NUBC is a Data Content Committee named in the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and is composed of a diverse group of interested parties representing providers, health plans, designated standards maintenance organizations, public health organizations, and vendors.

Comment: Another commenter expressed concern that CMS continues to delay the comprehensive analysis of the severity designation of all the diagnosis codes in the ICD-10-CM classification in favor of reviewing the subset of ICD-10-CM Z codes that describe the social determinants of health. The commenter stated in their view, ensuring MS-DRG payment is congruent with what it costs to care for patients should be CMS' primary objective. Many other commenters encouraged CMS to examine other SDOH Z codes that describe circumstances such as lack of adequate food and drinking water, extreme poverty, lack of transportation, and problems related to employment, physical environment, social environment, upbringing, primary support group, literacy, economic circumstances, and psychosocial circumstances to determine the hospital resource utilization related to addressing these factors and to analyze whether these SDOH Z codes should be considered for severity designation changes in future rulemaking as well. A commenter noted that these social needs create substantial barriers to healthcare and good health, both before and after receiving care.

Specifically, many commenters stated that research has found a strong association between food insecurity and chronic conditions and encouraged CMS to examine the severity designation of ICD-10-CM SDOH Z code Z59.41 (Food insecurity). These commenters stated that food insecurity can be an indicator of food deprivation, malnutrition, or lack of access to healthy foods and diet, which could have differing impacts on a patient and could be associated with higher healthcare utilization and costs. A commenter stated that in their observation, many hospitals have built robust programs to address the food needs of inpatients and stated that several hospitals have even begun to provide patients with fresh fruit, vegetables, and other essential groceries to take home upon discharge without payment.

Response: We appreciate the feedback.

We note that as described in the FY 2024 IPPS/LTCH PPS final rule ( 88 FR 58761 ), CMS has undertaken interval steps towards a comprehensive CC/MCC analysis. We stated in the FY 2024 IPPS/LTCH PPS final rule, considering the potential impact of implementing a significant number of severity designation changes, and in light of the public health emergency (PHE) that was occurring concurrently from 2020 until 2023, we believe these interval steps were appropriate as 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 refer the reader to the discussion earlier in this section where we discuss the finalization of the nine guiding principles for FY 2025.

In response to comments that CMS examine the severity designation of ICD-10-CM code Z59.41 (Food insecurity), we note that ICD-10-CM code Z59.41 is currently designated as a NonCC when reported as a secondary diagnosis. The following table reflects the impact on resource use data generated using claims from the September 2023 update of the FY 2023 MedPAR file for code Z59.41. 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 a more detailed explanation of the columns in the table.

The table shows that the C1 value is 0.9273 for ICD-10-CM diagnosis code is Z59.41. A C1 value generally closer to 1 suggests the resources involved in caring for patients experiencing food insecurity are more aligned with a NonCC severity level, as the code is currently designated, rather than a CC or an MCC severity level. This contrasts with the conclusions documented in research that has shown that food insecurity empirically can be associated with higher healthcare use and costs, even when accounting for other socioeconomic factors. [ 19 ] We note that the table also shows that code Z59.41 was only reported in a total of 6,634 claims in the September 2023 update of the FY 2023 MedPAR file.

The impact on resource use data generated using claims from the September 2023 update of the FY 2023 MedPAR file for code Z59.41 again illustrates that if SDOH Z codes are not consistently reported in inpatient claims data, our methodology utilized to mathematically measure the impact on resource use, as described previously, may not adequately reflect what additional resources were expended by hospitals to address these circumstances. If SDOH Z codes are consistently reported in inpatient claims, the impact on resource use data may more adequately reflect what additional resources were expended to address these SDOH circumstances in terms of requiring clinical evaluation, extended length of hospital stay, increased nursing care or monitoring or both, and comprehensive discharge planning and we can re-examine these severity designations in future rulemaking.

In Table 6P.3b associated with this final rule, we have made available the data generated using claims from the September 2023 update of the FY 2023 MedPAR file describing the impact on resource use when reported as a secondary diagnosis for the ICD-10-CM codes describing various diagnoses and circumstances that commenters to the FY 2025 IPPS/LTCH proposed rule suggested CMS review to determine if changes to the severity level designations are warranted in future rulemaking. These data are consistent with data historically used to mathematically measure impact on resource use for secondary diagnoses, and the data which we will use in combination with application of the nine guiding principles as we continue the comprehensive CC/MCC analysis. We will examine these suggestions and determine if there are other diagnoses codes, including diagnosis codes that describe SDOH, that should also be considered further and will provide more detail in future rulemaking.

Comment: Some commenters stated there continue to be many challenges for clinicians in documenting SDOH, such as the lack of knowledge surrounding these codes. Many commenters stated there was a lack of standard, nationally accepted definitions of the SDOH Z codes and that ambiguity between Z codes can lead to confusion among clinical staff. A commenter stated that CMS should engage with key stakeholders, including patients and diverse communities to establish a transparent process and timeline for updating Z code terms and definitions.

Other commenters stated that healthcare providers may gravitate towards certain codes, while other, possibly more specific codes, may exist in the classification that could accurately describe similar situations. These commenters stated that this can lead to inconsistent code usage and can limit the ability to see any correlations between these particular conditions and the resulting patient complexity and additional cost of care. A commenter noted that the difference between the seven different codes describing inadequate housing and housing instability requires a nuanced understanding and stated that appropriately documenting the Z codes for inadequate housing and housing instability will require training of staff to understand the differences. Another commenter suggested that CMS focus on addressing infrastructural, technological, and knowledge gaps to facilitate use of Z codes and stated if CMS does not address these gaps, inequities between well-funded hospitals that can afford to train staff to document and report Z codes as compared to other struggling hospitals who lack the means or know-how will be exacerbated.

A commenter expressed concern and stated that documentation of an SDOH circumstance does not always clearly demonstrate whether or how the SDOH impacts the patient's health. This commenter stated that while SDOH Z codes help with mapping the social factors afflicting a patient, that map does not (and cannot) fully describe the patient's life which can present a challenge for the provider when determining what factors to document, and for the coder, when deciding how to report that documentation using the appropriate SDOH Z code(s).

Many other commenters also expressed concern and stated that while they support the use of Z codes to help identify the complexity of issues impacting patients, information about an individual's social risk and needs has been shown to be sensitive. Commenters stated that expressing certain circumstances, such as housing instability or inadequacy, can be uncomfortable for patients, which could result in underreporting. These commenters also stated they believed the descriptions of ICD-10-CM SDOH Z codes can be stigmatizing, and therefore the descriptions should be changed to be more patient friendly to protect the patient-provider relationship since patients can access their code assignments in after-visit summaries.

Response: We appreciate the feedback. As discussed in section II.C.15 of the preamble of this final rule, the CDC/NCHS has lead responsibility for the diagnosis code classification. In response to the suggestion that transparent process and timeline be established for updating Z code terms ( print page 69084) and definitions, we note there is an established process as the ICD-10 Coordination and Maintenance Committee addresses updates to the ICD-10-CM and ICD-10-PCS coding systems, as also discussed in section II.C.15 of the preamble of this final rule. The ICD-10 Coordination and Maintenance Committee holds its meetings each spring and fall to update the codes and the applicable payment and reporting systems by October 1 or April 1 of each year. Proposals for updates to the diagnosis codes, including diagnosis codes describing social determinants of health should be directed to [email protected] for consideration at a future ICD-10 Coordination and Maintenance Committee meeting.

We also note that the ICD-10-CM Official Guidelines for Coding and Reporting have been regularly revised to provide additional guidance as it relates to diagnosis codes describing social determinants of health. We encourage the commenters to review the Official ICD-10-CM Coding Guidelines, which can be found on the CDC website at: https://www.cdc.gov/nchs/icd/icd-10-cm/files.html . The American Hospital Association (AHA)'s Coding Clinic for ICD-10-CM/PCS publication has provided further clarification on the appropriate documentation and use of Z codes to enable hospitals to incorporate them into their processes. The AHA also offers a range of tools and resources for hospitals, health systems and clinicians to address the social needs of their patients. We believe these updates and resources will help alleviate the concerns expressed by these commenters. As one of the four Cooperating Parties for ICD-10, we will continue to collaborate with the AHA to provide guidance for coding problems or risk factors related to SDOH through the AHA's Coding Clinic for ICD-10-CM/PCS publication and to review the ICD-10-CM Coding Guidelines to determine where further clarifications may be made.

Comment: Some commenters recommended that CMS consider payment incentives for documenting and reporting of SDOH Z codes. Several commenters encouraged CMS to explore additional incentives for Z code utilization that do not rely on a code-by-code approach. While applauding CMS proposing to change the severity designation of the seven ICD-10-CM diagnosis codes that describe inadequate housing and housing instability, a commenter stated they also believe it is imperative that CMS continue to take steps towards more fundamental payment and delivery reforms, such as by directly addressing the social drivers of health under alternative payment models (APM) or the Hospital Value-based Purchasing (HVBP) Health Equity Adjustment (HEA), to hold providers accountable for high value, whole person care.

A few commenters stated that simply changing the severity designation of SDOH Z codes to CCs and marginally increasing payment will be inadequate to meaningfully drive CMS' stated equity mission. These commenters stated CMS' reporting and payment rules should better reflect and compensate hospitals for the multiple health-related social needs that patients experience to truly improve health outcomes and mitigate the current health disparities that exist. A commenter suggested that CMS consider an alternative policy that would provide increased payment for a CC designation only in certain MS-DRGs when certain Z codes are reported. Another commenter stated that they believed that the creation of a new Hierarchical Condition Category (HCC) for SDOH Z codes is needed to foster necessary support for delivering consistent levels of care and could help mitigate the challenges that social risk factors pose to creating effective treatment plans for patients. Some commenters suggested that CMS incentivize the use of patient self-report screening tools that are integrated within electronic health records to support the use of Z codes.

Other commenters noted that currently, if another secondary diagnosis designated as a CC or MCC is documented and reported, there will be no additional payment if the clinician reports a diagnosis code describing inadequate housing and housing instability, potentially minimalizing the practical impact of changing the severity level designation of these codes. These commenters recommended CMS provide increased flexibility in payment to account for multiple CCs or MCCs that may be reported for a given patient who may be experiencing numerous health and social concerns at the same time, stating that it is almost impossible to isolate and address only one need and expect an improved health outcome in their view.

Response: We thank commenters for sharing their views and recommendations. We will take the commenters' feedback into consideration in future policy development.

After consideration of the public comments received, we are finalizing changes to the severity levels for diagnosis codes Z59.10, Z59.11, Z59.12, Z59.19, Z59.811, Z59.812, and Z59.819, from NonCC to CC for FY 2025, without modification. In addition, these diagnosis codes are reflected in Table 6J.1—Additions to the CC List—FY 2025 associated with this final rule and available at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps . We refer the reader to section II.C.12.d of the preamble of the proposed rule and this final rule for further information regarding Table 6J.1.

We hope and expect that this finalization will foster the increased documentation and reporting of the diagnosis codes describing social and economic circumstances and continue to serve as an example for providers that when they document and report Z codes, CMS can further examine the claims data and consider future changes to the designation of these codes when reported as a secondary diagnoses. As discussed in the FY 2023 IPPS/LTCH PPS final rule ( 87 FR 48868 ), if SDOH Z codes are not consistently reported in inpatient claims data, our methodology utilized to mathematically measure the impact on resource use, as described previously, may not adequately reflect what additional resources were expended by the hospital to address these SDOH circumstances in terms of requiring clinical evaluation, extended length of hospital stay, increased nursing care or monitoring or both, and comprehensive discharge planning. We will continue to monitor SDOH Z code reporting, including reporting based on SDOH screening performed as a result of quality measures in the Hospital Inpatient Quality Reporting program.

Furthermore, we may consider proposing changes for other diagnosis codes, including SDOH codes, in the future based on our analysis of the impact on resource use, per our methodology, as previously described, and consideration of the guiding principles. We continue to be interested in receiving feedback on how we might otherwise foster the documentation and reporting of the diagnosis codes to more accurately reflect each health care encounter and improve the reliability and validity of the coded data.

To inform future rulemaking, feedback and other suggestions may be submitted by October 20, 2024, and directed to MEARIS TM at: https://mearis.cms.gov/public/home .

Additionally, as discussed in the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 35999 through 36001 ), we received a request to change the severity level designations of the ICD-10-CM diagnosis codes that describe causally ( print page 69085) specified delirium from CC to MCC when reported as secondary diagnoses. Causally specified delirium is delirium caused by the physiological effects of a medical condition, by the direct physiological effects of a substance or medication, including withdrawal, or by multiple or unknown etiological factors. The requestor noted that ICD-10-CM diagnosis codes G92.8 (Other toxic encephalopathy), G92.9 (Unspecified toxic encephalopathy) and G93.41 (Metabolic encephalopathy) are currently all designated as MCCs. According to the requestor, a diagnosis of delirium implies an underlying acute encephalopathy, and as such, the severity designation of the diagnosis codes that describe causally specified delirium should be on par with the severity designation of the diagnosis codes that describe toxic encephalopathy and metabolic encephalopathy. The requestor stated that toxic encephalopathy, metabolic encephalopathy, and causally specified delirium all describe core symptoms of impairment of level of consciousness and cognitive change caused by a medical condition or substance.

As noted in the proposed rule, the requestor further stated that there is robust literature detailing the impact delirium can have on cognitive decline, rates of functional decline, subsequent dementia diagnosis, institutionalization, care complexity and costs, readmission rates, and mortality. The requestor considered each of the nine guiding principles discussed earlier in this section and noted how each of the principles could be applied in evaluating changes to the severity designations of the diagnosis codes that describe causally specified delirium in their request. Specifically, the requestor stated that delirium is a textbook example that maps to the nine guiding principles for evaluating a potential change in severity designation in that delirium (1) has a bidirectional link with dementia, (2) indexes physiological vulnerability across populations, (3) impacts healthcare systems across levels of care, (4) complicates postoperative recovery, (5) consigns patients to higher levels of care, and for longer, (6) impedes patient engagement in care, (7) has several recent treatment guidelines, (8) indicates neuronal/brain injury, and (9) represents a common expression of terminal illness.

The requestor identified 37 ICD-10-CM diagnosis codes that describe causally specified delirium. In the proposed rule we stated we agree that these 37 diagnosis codes are all currently designated as CCs. We refer the reader to Appendix G of the ICD-10 MS-DRG Version 41.1 Definitions Manual (available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software ) for the complete list of diagnoses designated as CCs when reported as secondary diagnoses, except when used in conjunction with the principal diagnosis in the corresponding CC Exclusion List in Appendix C.

To evaluate this request, as discussed in the proposed rule, we analyzed the claims data in the September 2023 update of the FY 2023 MedPAR file. The following table shows the analysis for each of the diagnosis codes identified by the requestor that describe causally specified delirium.

As discussed in the proposed rule, we analyzed these data as described in FY 2008 IPPS final rule ( 72 FR 47158 through 47161 ). The table shows that the C1 values of the diagnosis codes that describe causally specified delirium range from a low of 0.35 to a high of 4.00. As stated earlier, a C1 value close to 2.0 suggests the condition is more like a CC than a NonCC but not as significant in resource usage as an MCC. On average, the C1 values of the diagnoses that describe causally specified delirium suggest that these codes are more like a NonCC than a CC. In the proposed rule, we noted diagnosis code F11.221 (Opioid dependence with intoxication delirium) had a C1 value of 4.00, however our analysis reflects that this diagnosis code was reported as a secondary diagnosis in only 42 claims, and only one claim reported F11.221 as a secondary diagnosis with no other secondary diagnosis or with all other secondary diagnoses that are NonCCs.

The C2 findings of the diagnosis codes that describe causally specified delirium range from a low of 0.28 to a high of 3.22 and the C3 findings range from a low of 1.25 to a high of 3.85. We stated that the data are clearly mixed between the C2 and C3 findings, and do not consistently support a change in the severity level. On average, the C2 and C3 findings again suggest that these codes that describe causally specified delirium are more similar to a NonCC.

As discussed in the proposed rule, in considering the nine guiding principles, as summarized previously, we note that delirium is a diagnosis that can impede patient cooperation or management of care or both. Delirium is a confusional state that can manifest as agitation, tremulousness, and hallucinations or even somnolence and decreased arousal. In addition, patients diagnosed with delirium can require a higher level of care by needing intensive monitoring, and a greater number of caregivers. Managing disruptive behavior, particularly agitation and combative behavior, is a challenging aspect in caring for patients diagnosed with delirium. Prevention and treatment of delirium can include avoiding factors known to cause or aggravate delirium; identifying and treating the underlying acute illness; and where appropriate using low-dose, short-acting pharmacologic agents.

In the proposed rule we stated that after considering the C1, C2, and C3 values of the 37 ICD-10-CM diagnosis codes that describe causally specified delirium and consideration of the nine guiding principles, we believe these 37 codes should not be designated as MCCs. While there is a lack of consistent claims data to support a severity level change from CCs to MCCs, we stated we recognize patients with delirium can utilize increased hospital resources and can be at a higher severity level. Therefore, we proposed to retain the severity designation of the 37 codes listed previously as CCs for FY 2025.

Comment: Some commenters agreed with CMS' proposal to retain the ( print page 69088) severity designation of the 37 ICD-10-CM diagnosis codes that describe causally specified delirium as CCs for FY 2025.

Response: We appreciate the commenters' support of our proposal.

Comment: Many other commenters disagreed with the proposal and urged CMS to change the designation of the 37 ICD-10-CM diagnosis codes that describe causally specified delirium to MCC for FY 2025. Commenters stated that delirium is a complex condition to manage and stated the diagnosis fully satisfies CMS' nine guiding principles for re-evaluating changes to severity levels. Many commenters noted that the terms “delirium” and “encephalopathy” are often used interchangeably and refer to a shared set of acute neurocognitive conditions that require additional resources to treat. Some commenters stated that all diagnoses of delirium imply an underlying acute encephalopathy, while others stated acute encephalopathy is another name for delirium. A commenter noted that ICD-10-CM diagnosis codes G92.8 (Other toxic encephalopathy), G92.9 (Unspecified toxic encephalopathy) and G93.41 (Metabolic encephalopathy) have a higher severity level designation even though, in their view, the diagnosis codes that describe causally specified delirium provide even greater specificity. The commenter further stated that designating the diagnosis codes that describe causally specified delirium as MCCs is the logical conclusion of understanding the integrated nature of delirium and acute encephalopathy and is justified by a robust body of scientific literature and clinical practice guidelines.

Some commenters stated that practitioners have been inclined to report the ICD-10-CM diagnosis codes that describe toxic or metabolic encephalopathy, that are designated as MCCs, rather than report diagnosis codes that describe delirium, which they state is the Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition, Text Revision (DSM-5-TR) preferred terminology to describe the syndrome of cognitive and behavioral changes that can occur in response to acute physical illness. Commenters stated that parity in the severity level designation of the codes that describe causally specified delirium with the severity level designation of the codes that describe acute encephalopathy is essential to enhancing awareness of the clinical and economic costs associated with managing delirium and will encourage widespread delirium prevention efforts. Another commenter stated that if parity is not achieved between the codes that describe causally specified delirium and codes that describe toxic or metabolic encephalopathy, clinicians will continue to favor reporting the relatively uninformative diagnoses of toxic or metabolic encephalopathy, thereby directing attention away from delirium guidelines and care pathways. Other commenters suggested that retaining the severity designation of delirium as a CC reinforces the stigma of mental health conditions, promotes the use of non-specific diagnoses that require no more than a cursory evaluation of mental status, directs clinicians away from the use of delirium clinical practice guidelines, stands against the broad consensus recommendation to use the term “delirium” across invested major medical specialty organizations, and discourages efforts to detect and manage delirium.

Several commenters suggested that the mathematical analysis of the FY 2023 MedPAR file provided in the proposed rule is confounded given that delirium is being preferentially coded as toxic or metabolic encephalopathy. A commenter noted that there is robust literature detailing the impact of delirium on care complexity and costs, readmissions, rates of functional decline, institutionalization, cognitive decline, subsequent dementia diagnosis, and mortality and stated that the evidence suggests that delirium is underdiagnosed or being classified as encephalopathy and is having an impact on the data available for analysis.

Another commenter stated that they believe the September 2023 update of the FY 2023 MedPAR file generally supports the request to change delirium from a CC to an MCC in their review of the analyses for each of the diagnosis codes identified by the requestor that describe causally specified delirium presented in the proposed rule. Specifically, the commenter stated that based on their review of the C1, C2, and C3 values presented for ICD-10-CM code F05 (Delirium due to known physiological condition), which are 1.68, 2.46, and 3.38, respectively, F05 appears to be performing very similarly to many other conditions that are currently designated as MCCs. The commenter further stated that based on their analysis, the weighted average of the C1, C2, and C3 values of the 37 diagnosis codes that describe causally specified delirium are 1.68, 2.47, 3.38, respectively. This commenter stated they also reviewed the updated impact on resource use files provided on the CMS website so that the public can review the mathematical data for the impact on resource use generated using claims from the FY 2023 MedPAR file and stated that many codes currently designated as MCCs have C values similar to the values for causally specified delirium and stated on this basis alone, the severity designation of codes that describe causally specified delirium deserves to be changed from a CC to an MCC. The commenter specifically referenced the mathematical data for the impact on resource use generated using claims from the FY 2023 MedPAR file for the following codes that are designated as MCCs in Version 41.1:

Response: We appreciate the commenters sharing their concerns regarding the severity level designations of the ICD-10-CM diagnosis codes that describe causally specified delirium and thank the commenters for their feedback. We reviewed the commenters' concerns and while we recognize patients with delirium can utilize increased hospital resources, we continue to believe there is a lack of consistent claims data to support a severity level change of these diagnosis codes from CCs to MCCs for FY 2025.

In response to the analysis of the impact on resource use files performed by the commenter, as stated in prior rulemaking ( 84 FR 42150 ), C1, C2, and C3 values are a measure of the ratio of average costs for patients with these conditions to the expected average cost across all cases. We have stated a value close to 1.0 in the C1 field would suggest that the code produces the same expected value as a NonCC diagnosis. That is, average costs for the case are similar to the expected average costs for that subset and the diagnosis is not expected to increase resource usage. A higher value in the C1 (or C2 and C3) field suggests more resource usage is associated with the diagnosis and an increased likelihood that it is more like a CC or major CC than a NonCC. Thus, a value close to 2.0 suggests the condition is more like a CC than a NonCC but not as significant in resource usage as an MCC. A value close to 3.0 suggests the condition is expected to consume resources more similar to an MCC than a CC or NonCC.

Accordingly, the C1, C2, and C3 values highlighted by the commenter for the diagnosis codes reflected in the previous table currently designated as MCCs generally suggests that the conditions actually are more like CCs rather than NonCCs or MCCs and suggests the severity designation of the diagnoses designated as MCCs should be changed to CCs. We will consider these codes as we continue our comprehensive CC/MCC analysis, using a combination of mathematical analysis of claims data and the application of nine guiding principles to determine the extent to which presence of each code as a secondary diagnosis results in increased hospital resource use and will provide more detail in future rulemaking.

In response to the commenters that suggested that delirium “fully satisfies CMS' nine guiding principles”, as stated earlier, the nine guiding principles are not intended to turn the analysis into a quantitative exercise, requiring that every diagnosis code satisfy each principle. As discussed in prior rulemaking and earlier in this section, our intended approach is first, CMS will use the guiding principles in making an initial clinical assessment of the appropriate severity level designation for each ICD-10-CM code as a secondary diagnosis. CMS will then use a mathematical analysis of claims data as discussed in the FY 2008 IPPS/LTCH PPS final rule ( 72 FR 47159 ) to determine if the presence of the ICD-10-CM code as a secondary diagnosis appears to, or does not appear to, increase hospital resource consumption. There may be instances in which we would decide that the clinical analysis weighs in favor of proposing to maintain or proposing to change the severity designation of an ICD-10-CM code after application of the nine guiding principles. The nine guiding principles are intended to provide a framework for assessing relevant clinical factors to help denote if, and to what degree, additional resources are required above and beyond those that are already being utilized to address the principal diagnosis or other secondary diagnoses that might also be present on the claim.

In response to the suggestion that clinicians favor reporting encephalopathy as opposed to delirium, we note that providers are responsible for ensuring that they are documenting as specifically and accurately as possible for the conditions they are treating and the services they render to correctly reflect the severity of illness and capture how truly sick a patient is when causally specified delirium or encephalopathy are present. In addition, as we noted in the FY 2018 IPPS/LTCH PPS final rule ( 82 FR 38012 ), coding advice is issued independently from payment policy. We also note that, historically, we have not provided coding advice in rulemaking with respect to policy ( 82 FR 38045 ). As one of the Cooperating Parties for ICD-10, we collaborate with the American Hospital Association (AHA) through the Coding Clinic for ICD-10-CM and ICD-10-PCS to promote proper coding. We recommend that an entity seeking coding guidance on reporting causally specified delirium or encephalopathy submit any questions pertaining to correct coding to the AHA.

We consulted with the staff at the Centers for Disease Control's (CDC's) National Center for Health Statistics (NCHS), because NCHS has the lead responsibility for maintaining the ICD-10-CM diagnosis codes. The NCHS' staff acknowledged the terms delirium and encephalopathy are differentiated in the classification, such that coding would usually depend on the specific terms used in the medical record documentation. NCHS confirmed that they would consider further review of the classification, including review of the Excludes notes, for these two diagnoses. As such, we believe it would be appropriate to maintain the current severity level designations of the ICD-10-CM diagnosis codes that describe causally specified delirium at this time in order to further examine the relevant clinical factors and possible similarities in resource consumption in order to best represent this subset of patients within the MS-DRG classification.

Therefore, after consideration of the public comments we received, and for the reasons discussed, we are finalizing our proposal, without modification, to maintain the current severity level designation of the 37 ICD-10-CM diagnosis codes that describe causally specified delirium listed previously as CCs for FY 2025.

In the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 36001 ), 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 2025 and are available 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 2025;

Table 6J.1—Proposed Additions to the CC List—FY 2025; and

Table 6J.2—Proposed Deletions to the CC List—FY 2025

Comment: Commenters agreed with the proposed additions and deletions to the MCC and CC lists as shown in tables 6I.1, 6J.1, and 6J.2 associated with the proposed rule.

The following tables associated with this final rule reflect the finalized severity levels under Version 42 of the ICD-10 MS-DRGs for FY 2025 and are available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS ; Table 6I.—Complete MCC List—FY 2025; Table 6I.1—Additions to the MCC List—FY 2025; Table 6I.2—Deletions to the MCC List—FY 2025; Table 6J.—Complete CC List—FY 2025; Table 6J.1—Additions to the CC List—FY 2025; and Table 6J.2—Deletions to the CC List—FY 2025. ( print page 69090)

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 41.1 CC Exclusion List is included as Appendix C in the ICD-10 MS-DRG Definitions Manual (available in two formats; text and HTML). The manuals are available 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 an MCC only for patients discharged alive; otherwise, they are assigned as a NonCC.

As discussed in the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 36002 through 36006 ), effective for the April 1, 2024, release of the ICD-10 MS-DRG Definitions Manual, Version 41.1, a new section has been added to Appendix C as follows:

Part 3 lists diagnosis codes that are designated as a complication or comorbidity (CC) or major complication or comorbidity (MCC) and included in the definition of the logic for the listed MS-DRGs. When reported as a secondary diagnosis and grouped to one of the listed MS-DRGs, the diagnosis is excluded from acting as a CC/MCC for severity in DRG assignment.

The purpose of this new section is to include the list of MS-DRGs subject to what is referred to as suppression logic. In addition to the suppression logic excluding secondary diagnosis CC or MCC conditions that may be included in the definition of the logic for a DRG, it is also based on the presence of other secondary diagnosis logic defined within certain base DRGs. Therefore, if a MS-DRG has secondary diagnosis logic, the suppression is activated regardless of the severity of the secondary diagnosis code(s) for appropriate grouping and MS-DRG assignment.

In the proposed rule we noted that each MS-DRG is defined by a particular set of patient attributes including principal diagnosis, specific secondary diagnoses, procedures, sex, and discharge status. The patient attributes which define each MS-DRG are displayed in a series of headings which indicate the patient characteristics used to define the MS-DRG. These headings indicate how the patient's diagnoses and procedures are used in determining MS-DRG assignment. Following each heading is a complete list of all the ICD-10-CM diagnosis or ICD-10-PCS procedure codes included in the MS-DRG. One of these headings is secondary diagnosis.

Secondary diagnosis. 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.

The full list of MS-DRGs where suppression occurs is shown in the following table.

MS-DRG 008. MS-DRG 010. MS-DRG 019. *MS-DRGs 082-084. *MS-DRGs 177-179. *MS-DRGs 280-282. *MS-DRGs 283-285. *MS-DRGs 456-458. *MS-DRGs 582-583. MS-DRG 768. MS-DRG 790. MS-DRG 791. MS-DRG 792. MS-DRG 793. MS-DRG 794. *MS-DRGs 796-798. *MS-DRGs 805-807. *MS-DRGs 837-839. MS-DRG 927. *MS-DRGs 928-929. MS-DRG 933. MS-DRG 934. MS-DRG 935. MS-DRG 955. MS-DRG 956. *MS-DRGs 957-959. *MS-DRGs 963-965. *MS-DRGs 974-976. MS-DRG 977. * The MS-DRG(s) contain diagnoses that are specifically excluded from acting as a CC/MCC for severity in MS-DRG assignment.

In the proposed rule we stated we believe this additional information about the suppression logic may further assist users of the ICD-10 MS-DRG GROUPER software and related materials.

As noted in the proposed rule, during our review of the MS-DRGs containing secondary diagnosis logic in association with the suppression logic previously discussed, we identified another set of MS-DRGs containing secondary diagnosis logic in the definition of the MS-DRG. Specifically, we identified MS-DRGs 673, 674, and 675 (Other Kidney and Urinary Tract Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract), as displayed in the ICD-10 MS-DRG Version 41.1 Definitions Manual (which is available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software ) which contains secondary diagnosis logic.

As stated in the proposed rule, of the seven logic lists included in the definition of MS-DRGs 673, 674, and 675, there are three “Or Principal Diagnosis” logic lists and one “With ( print page 69091) Secondary Diagnosis” logic list. The first “Or Principal Diagnosis” logic list is comprised of 21 diagnosis codes describing conditions such as chronic kidney disease, kidney failure, and complications related to a vascular dialysis catheter or kidney transplant. The second “Or Principal Diagnosis” logic list is comprised of four diagnosis codes describing diabetes with diabetic chronic kidney disease followed by a “With Secondary Diagnosis” logic list that includes diagnosis codes N18.5 (Chronic kidney disease, stage 5) and N18.6 (End stage renal disease). These logic lists are components of the special logic in MS-DRGs 673, 674, and 675 for certain MDC 11 diagnoses reported with procedure codes for the insertion of tunneled or totally implantable vascular access devices. The third “Or Principal Diagnosis” logic list is comprised of three diagnosis codes describing Type 1 diabetes with different kidney complications as part of the special logic in MS-DRGs 673, 674, and 675 for pancreatic islet cell transplantation performed in the absence of any other surgical procedure.

Under the Version 41.1 ICD-10 MS-DRGs, diagnosis code N18.5 (Chronic kidney disease, stage 5) is currently designated as a CC and diagnosis code N18.6 (End stage renal disease) is designated as an MCC. As discussed in the proposed rule, in our review of the MS-DRGs containing secondary diagnosis logic in association with the suppression logic, we noted that currently, when some diagnosis codes from the “Or Principal Diagnosis” logic lists in MS-DRGs 673, 674, and 675 are reported as the principal diagnosis and either diagnosis code N18.5 or N18.6 from the “With Secondary Diagnosis” logic list is reported as a secondary diagnosis, some cases are grouping to MS-DRG 673 (Other Kidney and Urinary Tract Procedures with MCC) or to MS-DRG 674 (Other Kidney and Urinary Tract Procedures with CC) in the absence of any other MCC or CC secondary diagnoses being reported.

In our analysis of this issue as discussed in the proposed rule, we noted diagnosis codes N18.5 and N18.6 are excluded from acting as a CC or MCC, when reported with principal diagnoses from Principal Diagnosis Collection Lists 1379 and 1380, respectively, as reflected in Part 1 of Appendix C in the CC Exclusion List. We refer the reader to Part 1 of Appendix C in the CC Exclusion List as displayed in the ICD-10 MS-DRG Version 41.1 Definitions Manual (which is available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software ) for the complete list of principal diagnoses in Principal Diagnosis Collection Lists 1379 and 1380. Specifically, when codes N18.5 or N18.6 are reported as secondary diagnoses, we noted they are considered as NonCCs when the diagnosis codes from the “Or Principal Diagnosis” logic lists in MS-DRGs 673, 674, and 675 reflected in the following table are reported as the principal diagnosis under the CC Exclusion logic.

In the proposed rule, we also noted that currently, a subset of diagnosis codes from the first “Or Principal Diagnosis” logic list in MS-DRGs 673, 674, and 675 are not listed in Principal Diagnosis Collection Lists 1379 or 1380 for diagnosis codes N18.5 and N18.6, respectively. As a result, when one of the 13 diagnosis codes listed in the following table are reported as the principal diagnosis, and either diagnosis code N18.5 or N18.6 from the “With Secondary Diagnosis” logic list are reported as a secondary diagnosis, the cases are grouping to MS-DRG 673 (Other Kidney and Urinary Tract Procedures with MCC) or to MS-DRG 674 (Other Kidney and Urinary Tract Procedures with CC) when also reported with a procedure code describing the ( print page 69092) insertion of a tunneled or totally implantable vascular access device.

We noted in the proposed rule that consistent with how other similar logic lists function in the ICD-10 GROUPER software for case assignment to the “with MCC” or “with CC” MS-DRGs, the logic for case assignment to MS-DRG 673 is intended to require any other diagnosis designated as an MCC and reported as a secondary diagnosis for appropriate assignment, and not the diagnoses currently listed in the logic for the definition of the MS-DRG. Likewise, the logic for case assignment to MS-DRG 674 is intended to require any other diagnosis designated as a CC and reported as a secondary diagnosis for appropriate assignment.

Therefore, for FY 2025, we proposed to correct the logic for case assignment to MS-DRGs 673, 674, and 675 by adding suppression logic to exclude diagnosis codes N18.5 (Chronic kidney disease, stage 5) and N18.6 (End stage renal disease) from the logic list entitled “With Secondary Diagnosis” from acting as a CC or an MCC, respectively, when reported as a secondary diagnosis with one of the 13 previously listed principal diagnosis codes from the “Or Principal Diagnosis” logic lists in MS-DRGs 673, 674, and 675 for appropriate grouping and MS-DRG assignment. Under this proposal, when diagnosis codes N18.5 or N18.6 are reported as a secondary diagnosis with one of the 13 previously listed principal diagnosis codes, the GROUPER will assign MS-DRG 675 (Other Kidney and Urinary Tract Procedures without CC/MCC) in the absence of any other MCC or CC secondary diagnoses being reported. In the proposed rule we also noted that the current list of MS-DRGs subject to suppression logic as previously discussed and listed under Version 41.1 includes MS-DRGs that are not subdivided by a two-way severity level split (“with MCC and without MCC” or “with CC/MCC and without CC/MCC”) or a three-way severity level split (with MCC, with CC, and without CC/MCC, respectively), or the listed MS-DRG includes diagnoses that are not currently designated as a CC or MCC. To avoid potential confusion, we proposed to refine how the suppression logic is displayed under Appendix C—Part 3 to not display the MS-DRGs where the suppression logic has no impact on the grouping (meaning the logic list for the affected MS-DRG contains diagnoses that are all designated as NonCCs, or the MS-DRG is not subdivided by a severity level split) as reflected in the draft Version 42 ICD-10 MS-DRG Definitions Manual, which is available in association with the proposed rule at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps .

Comment: Commenters stated they did not agree with the proposed application of the suppression logic within MS-DRGs 673, 674, and 675 when diagnosis codes N18.5 and N18.6 are reported as a secondary diagnosis in conjunction with one of the principal diagnosis codes listed in Part 1 of Appendix C in the CC Exclusion List. The commenters stated that ICD-10-CM codes N18.5 and N18.6 are the highest level of severity for kidney failure with end stage renal disease and stage 5, both of which require dialysis and/or kidney transplant. According to the commenters, the only principal diagnoses that could meet one of the five principles would be I12.0 (Hypertensive chronic kidney disease with stage 5 chronic kidney disease or end stage renal disease) or I13.11 (Hypertensive heart and chronic kidney disease without heart failure, with stage 5 chronic kidney disease or end-stage renal disease) as these two codes actually indicate stage 5 chronic kidney disease or end stage renal disease in the narrative description. The commenters stated their belief that the five conditions established for exclusions were not met for the majority of the diagnoses on the principal diagnosis list ( print page 69093) and for that reason should not be subject to suppression logic.

Response: We wish to clarify for the commenters that the suppression logic is not the same as the CC Exclusion List logic under Part 1 of Appendix C—CC Exclusion List in the ICD-10 MS-DRG Definitions Manual. As previously described, Part 1 of Appendix C 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. Separate from the CC Exclusion List logic, effective for the April 1, 2024, release of the ICD-10 MS-DRG Definitions Manual, Version 41.1, a new section was added to Appendix C for the suppression logic as listed under Part 3 of Appendix C. As previously described, Part 3 lists diagnosis codes that are designated as a CC or MCC and are included in the definition of the logic for the listed MS-DRGs. As such, when reported as a secondary diagnosis, the diagnosis is intended to be excluded from acting as a CC or MCC for severity in DRG assignment. We stated in the proposed rule that, because the logic for case assignment to MS-DRGs 673, 674, and 675 includes diagnosis codes N18.5 and N18.6 in the definition of the “With Secondary Diagnosis” logic list, we were proposing to correct the logic for appropriate grouping, consistent with other secondary diagnosis logic. Therefore, when diagnosis codes N18.5 or N18.6 are reported as a secondary diagnosis with one of the 13 previously listed principal diagnosis codes from the “Or Principal Diagnosis” logic lists in MS-DRGs 673, 674, and 675, for appropriate grouping and consistency they should be excluded from acting as a CC or MCC.

We note that, because the commenters raised concerns regarding the principal diagnoses listed under Part 1 of Appendix C—CC Exclusions List in Principal Diagnosis Collection Lists 1378 and 1379 that currently exclude diagnosis codes N18.5 and N18.6 from acting as a CC or MCC under the CC exclusion logic in accordance with the list of five principles established in 1987, we intend to perform a broad review of the conditions in these lists to determine if any modifications are warranted and to ensure they continue to be clinically appropriate. To inform future rulemaking, feedback and other suggestions may be submitted by October 20, 2024, and directed to MEARIS TM at: https://mearis.cms.gov/public/home .

After consideration of the public comments we received, and for the reasons discussed, we are finalizing our proposal to add suppression logic to exclude diagnosis codes N18.5 (Chronic kidney disease, stage 5) and N18.6 (End stage renal disease) from the logic list entitled “With Secondary Diagnosis” from acting as a CC or an MCC, respectively, when reported as a secondary diagnosis with one of the 13 previously listed principal diagnosis codes from the “Or Principal Diagnosis” logic lists in MS-DRGs 673, 674, and 675, without modification, effective October 1, 2024 for FY 2025.

We also note that during our review of the 37 diagnosis codes that describe causally specified delirium as discussed in section II.C.12.c.2. of the preamble of this final rule, we identified diagnosis code F05 (Delirium due to known physiological condition) as a condition that is listed on a subset of the Principal Diagnosis Collection Lists under Part 1 of Appendix C—CC Exclusions List. Specifically, we found diagnosis code F05 listed on Principal Diagnosis Collection List numbers 642, 643, 645, 646, and 647. Diagnosis code F05 is listed on the Unacceptable Principal Diagnosis Code edit code list in the Medicare Code Editor and is not appropriate to report as a principal diagnosis according to the ICD-10-CM Tabular List of Diseases and Injuries instructional note to “Code first the underlying physiological condition, such as: dementia (F03.9-)”. Consistent with the MCE Unacceptable Principal Diagnosis Code edit code list and the instructional note in the ICD-10-CM Tabular List of Diseases and Injuries, we are removing diagnosis code F05 from the previously listed Principal Diagnosis Collection Lists effective October 1, 2024, for FY 2025.

Lastly, we are finalizing our proposal to refine how the suppression logic is displayed under Appendix C—Part 3, without modification, effective October 1, 2024, for FY 2025. Under this finalization, MS-DRGs where the suppression logic has no impact on the grouping (meaning the logic list for the affected MS-DRG contains diagnoses that are all designated as NonCCs, or the MS-DRG is not subdivided by a severity level split) will not be displayed in Appendix C—Part 3 as reflected in the Version 42 ICD-10 MS-DRG Definitions Manual, which is available in association with this final rule at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps .

In the FY 2025 IPPS/LTCH PPS proposed rule, we proposed additional changes to the ICD-10 MS-DRGs Version 42 CC Exclusion List based on the diagnosis code updates as discussed in section II.C.12. of the proposed rule and set forth in Tables 6G.1, 6G.2, 6H.1, and 6H.2 associated with the proposed rule and available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS .

We did not receive any public comments opposing the proposed CC Exclusions List, however, during our internal review of the proposed CC Exclusions List we identified some inconsistencies with the 77 new Hodgkin lymphoma diagnosis codes that were proposed to be designated as a CC (based on the predecessor code designation and now finalized as reflected in Table 6A.- New Diagnosis Codes—FY 2025 associated with this final rule). We determined that clinically, all 77 Hodgkin lymphoma diagnosis codes should be excluded from acting as a CC when another Hodgkin lymphoma diagnosis code is reported as the principal diagnosis. Therefore, for FY 2025, we are finalizing, with modification, the CC exclusions for the 77 Hodgkin lymphoma codes after internal review as reflected in Tables 6G.1 and 6G.2 in association with this final rule.

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 V42 of the ICD-10 MS-DRGs. We have developed Table 6G.1.—Secondary Diagnosis Order Additions to the CC Exclusions List—FY 2025; Table 6G.2.—Principal Diagnosis Order Additions to the CC Exclusions List—FY 2025; Table 6H.1.—Secondary Diagnosis Order Deletions to the CC Exclusions List—FY 2025; and Table 6H.2.—Principal Diagnosis Order Deletions to the CC Exclusions List—FY 2025; and Table 6K. Complete List of CC Exclusions-FY 2025.

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 ( print page 69094) 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. Tables 6G.1., 6G.2., 6H.1., and 6H.2. associated with this final rule are available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html .

To identify new, revised, and deleted diagnosis and procedure codes, for FY 2025, 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 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.C.15. of the preamble of the proposed rule and 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 2025 IPPS/LTCH PPS proposed rule ( 89 FR 36006 ), 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.

In this FY 2025 IPPS/LTCH PPS final rule, we present a summation of the comments we received in response to the proposed assignments, our responses to those comments, and our finalized policies.

Comment: Commenters expressed support for the finalization of three new ICD-10-CM diagnosis codes describing presymptomatic Type 1 diabetes mellitus by stage and three new codes describing hypoglycemia by level, as shown in the following table and reflected in Table 6A.—New Diagnosis Codes—FY 2025 in association with the proposed rule and available at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps .

The commenters stated these new diagnosis codes are intended to facilitate standardized diabetes and hypoglycemia reporting and enable consistent quantification, tracking, and outcomes measurement. According to the commenters, the more granular presymptomatic diabetes diagnosis codes will help identify early disease progression and support appropriate intervention, including documentation of an individual's need for a continuous glucose monitor (CGM). The commenters urged CMS to incorporate these finalized diagnosis codes throughout Medicare payment and coverage policies.

Comment: Commenters expressed support for the proposed CC status designation and proposed MS-DRG assignments under MDC 17 and MDC 25 for the diagnosis codes describing lymphoma in remission as reflected in Table 6A.—New Diagnosis Codes—FY 2025 in association with the proposed rule and available at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps . The commenters stated that patients with these diagnoses are generally more complex and resource-intensive, warranting the CC designation. The commenters requested that we finalize the proposed designation and MS-DRG assignments for FY 2025.

Comment: A couple of commenters requested that CMS designate the following 16 new procedure codes that describe introduction of the AGENT TM Paclitaxel-Coated Balloon Catheter that is indicated to treat coronary in-stent restenosis (ISR) in patients with coronary artery disease as operating room (O.R.) procedures, with assignment to surgical MS-DRGs.

Specifically, the commenters requested assignment of the previously listed procedure codes to the following surgical MS-DRGs:

MS-DRG 250 Percutaneous Cardiovascular Procedures without Intraluminal Device with MCC
MS-DRG 251 Percutaneous Cardiovascular Procedures without Intraluminal Device without MCC
MS-DRG 321 Percutaneous Cardiovascular Procedures with Intraluminal Device with MCC or 4+ Arteries/Intraluminal Devices
MS-DRG 322 Percutaneous Cardiovascular Procedures with Intraluminal Device without MCC
MS-DRG 323 Coronary Intravascular Lithotripsy with Intraluminal Device with MCC
MS-DRG 324 Coronary Intravascular Lithotripsy with Intraluminal Device without MCC
MS-DRG 325 Coronary Intravascular Lithotripsy without Intraluminal Device

The commenters stated that based on the usual surgical hierarchy rules, the reporting of one of the vessel preparation steps (that is, angioplasty, atherectomy, or lithotripsy), or placement of a new stent in connection with the reported use of the AGENT TM Paclitaxel-Coated Balloon Catheter would mean the procedure would map to one of the previously listed surgical MS-DRGs. The commenters also stated their belief that designating the new procedure codes as O.R. procedures with assignment to the previously listed MS-DRGs would reflect the surgical nature and complexity of the procedure and would be appropriate for the time being.

Response: The 16 new procedure codes describing use of the AGENT TM Paclitaxel-Coated Balloon Catheter were finalized following the March 19, 2024, ICD-10 Coordination and Maintenance Committee meeting and made available via the CMS website on June 5, 2025, at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps . The procedure codes are also reflected in Table 6B—New Procedure Codes—FY 2025 associated with this final rule.

Under our established process, we reviewed the predecessor code and MS-DRG assignment most closely associated with the new procedure codes. We note that because the procedure codes describing the use of an AGENT TM Paclitaxel-Coated Balloon Catheter are describing delivery of the paclitaxel to the coronary vessel(s), the predecessor code is 3E073GC (Introduction of other therapeutic substance into coronary artery, percutaneous approach), which is designated as a non-O.R. procedure and does not affect MS-DRG assignment. As discussed at the March 19, 2024, ICD-10 Coordination and Maintenance Committee meeting and in the commenters' feedback, a preparatory step (that is, vessel preparation by either angioplasty, atherectomy, or lithotripsy) is required to be performed first, before ( print page 69096) the AGENT TM Paclitaxel-Coated Balloon Catheter is deployed. We note that each type of vessel preparation procedure is designated as an O.R. procedure and maps to one of the previously listed surgical MS-DRGs. We also note that the commenters are correct that based on the surgical hierarchy, the reporting of one of the vessel preparation steps (that is, angioplasty, atherectomy, or lithotripsy), or placement of a new stent in connection with the use of the AGENT TM Paclitaxel-Coated Balloon Catheter would result in assignment to one of the previously listed surgical MS-DRGs. We note that use of the AGENT TM Paclitaxel-Coated Balloon Catheter to deliver the paclitaxel to the coronary vessel(s) cannot occur in the absence of a surgical vessel preparation and therefore, it is the vessel preparation procedure that will determine the surgical MS-DRG assignment to one of the previously listed surgical MS-DRGs. As such, we do not agree with designating the 16 new procedure codes as O.R. procedure codes since the resulting MS-DRG assignment is dependent on the surgical vessel preparation procedure that would be reported when the AGENT TM Paclitaxel-Coated Balloon Catheter is used to deliver the paclitaxel to the coronary vessel(s) and result in assignment to one of the previously listed surgical MS-DRGs regardless. We refer the reader to the ICD-10 MS-DRG Definitions Manual, Version 42 available in association with this final rule on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps for complete documentation of the GROUPER logic for the previously listed surgical MS-DRGs under MDC 05. Accordingly, consistent with our established process and for the reasons discussed, we are designating the 16 new procedure codes describing use of the AGENT TM Paclitaxel-Coated Balloon Catheter as non-O.R. for FY 2025.

Comment: A commenter expressed its appreciation to the ICD-10 Coordination and Maintenance Committee for creating and implementing new ICD-10-CM Z codes to describe Duffy null status. The commenter stated that the new codes were requested to ensure that people who have lower absolute neutrophil count (ANC) due to Duffy phenotype are accurately documented within the medical record and are not considered to have “abnormal” ANC levels.

The commenter indicated that the new codes will be critical for proper payment, accurate documentation, appropriate clinical care and management, and the ability to conduct research. The commenter also indicated that accurate documentation of the Duffy status will decrease duplicative testing and allow for more precise medication administration, consistent with need.

Response: We thank the commenter for its support.

Comment: S ome commenters suggested that ICD-10-PCS procedure code 02583ZF (Destruction of conduction mechanism using irreversible electroporation, percutaneous approach) also be added to proposed new MS-DRG 317 (Concomitant Left Atrial Appendage Closure and Cardiac Ablation) in MDC 05. A couple commenters stated that pulsed field ablation is becoming the standard of care for atrial fibrillation ablation, and it should be included in the proposed new MS-DRG if patients who have atrial fibrillation are to be effectively, safely, and efficiently managed.

Response: We appreciate the commenters' feedback. As discussed in section II.C.4.a. of the preamble of this final rule, we are finalizing MS-DRG 317 for FY 2025. Upon review, we believe it is appropriate to add procedure code 02583ZF to the logic for case assignment to MS-DRG 317 as the description of the code describes a type of cardiac ablation and is clinically coherent with the other procedure codes describing cardiac ablation that were proposed and finalized for assignment to MS-DRG 317 effective for FY 2025. We are therefore, finalizing, with modification, the MS-DRG assignments for procedure code 02583ZF as reflected in Table 6B.—New Procedure Codes in association with this final rule.

After consideration of the public comments received, we are finalizing 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 associated with this final rule. In addition, the finalized severity level designations for the new diagnosis codes are set forth in Table 6A. and the finalized O.R. status for the new procedure codes are set forth in Table 6B associated with this final rule.

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

Table 6A.—New Diagnosis Codes—FY 2025;
Table 6B.—New Procedure Codes—FY 2025;
Table 6C.—Invalid Diagnosis Codes—FY 2025;
Table 6D.—Invalid Procedure Codes—FY 2025;
Table 6E.—Revised Diagnosis Code Titles—FY 2025;
Table 6F.—Revised Procedure Code Titles—FY 2025;
Table 6G.1.—Secondary Diagnosis Order Additions to the CC Exclusions List—FY 2025;
Table 6G.2.—Principal Diagnosis Order Additions to the CC Exclusions List—FY 2025;
Table 6H.1.—Secondary Diagnosis Order Deletions to the CC Exclusions List—FY 2025;
Table 6H.2.—Principal Diagnosis Order Deletions to the CC Exclusions List—FY 2025;
Table 6I.—Complete MCC List—FY 2025;
Table 6I.1.—Additions to the MCC List—FY 2025;
Table 6J.1.—Complete CC List—FY 2025;
Table 6J.1.—Additions to the CC List—FY 2025;
Table 6J.2.—Deletions to the CC List—FY 2025; and
Table 6K.—Complete List of CC Exclusions—FY 2025.

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. ( print page 69097) For example, assume surgical class A includes MS-DRGs 001 and 002 and surgical class B includes MS-DRGs 003, 004, and 005. Assume also that the average costs of MS-DRG 001 are higher than that of MS-DRG 003, but the average costs of MS-DRGs 004 and 005 are higher than the average costs of MS-DRG 002. To determine whether surgical class A should be higher or lower than surgical class B in the surgical hierarchy, we would weigh the average costs of each MS-DRG in the class by frequency (that is, by the number of cases in the MS-DRG) to determine average resource consumption for the surgical class. The surgical classes would then be ordered from the class with the highest average resource utilization to that with the lowest, with the exception of “other O.R. procedures” as discussed in this final rule.

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

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

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

Based on the changes that we proposed to make for FY 2025, as discussed in section II.C. of the preamble of the proposed rule and this final rule, we proposed to modify the existing surgical hierarchy for FY 2025 as follows.

As discussed in section II.C.4.a. of the preamble of the proposed rule and this final rule, we proposed to revise the surgical hierarchy for the MDC 05 (Diseases and Disorders of the Circulatory System) MS-DRGs as follows: In the MDC 05 MS-DRGs, we proposed to sequence proposed new MS-DRG 317 (Concomitant Left Atrial Appendage Closure and Cardiac Ablation) above MS-DRG 275 (Cardiac Defibrillator Implant with Cardiac Catheterization and MCC) and below MS-DRGs 231, 232, 233, 234, 235, and 236 (Coronary Bypass with or without PTCA, with or without Cardiac Catheterization or Open Ablation, with and without MCC, respectively). As discussed in section II.C.4.b. of the preamble of the proposed rule and this final rule, we proposed to revise the title for MS-DRG 276 from “Cardiac Defibrillator Implant with MCC” to “Cardiac Defibrillator Implant with MCC or Carotid Sinus Neurostimulator”.

As discussed in section II.C.6.b. of the preamble of the proposed rule and this final rule, we proposed to delete MS-DRGs 453, 454, and 455 (Combined Anterior and Posterior Spinal Fusion with MCC, with CC, and without CC/MCC, respectively). Based on the changes we proposed to make for those MS-DRGs in MDC 08 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue), we proposed to revise the surgical hierarchy for MDC 08 as follows: In MDC 08, we proposed to sequence proposed new MS-DRGs 426, 427, and 428 (Multiple Level Combined Anterior and Posterior Spinal Fusion Except Cervical with MCC, with CC, and without CC/MCC, respectively) above proposed new MS-DRG 402 (Single Level Combined Anterior and Posterior Spinal Fusion Except Cervical). We proposed to sequence proposed new MS-DRGs 429 and 430 (Combined Anterior and Posterior Cervical Spinal Fusion with MCC and without MCC, respectively) above MS-DRGs 456, 457, and 458 (Spinal Fusion Except Cervical with Spinal Curvature, Malignancy, Infection or Extensive Fusions with MCC, with CC, and without CC/MCC, respectively) and below proposed new MS-DRG 402. We proposed to sequence proposed new MS-DRGs 447 and 448 (Multiple Level Spinal Fusion Except Cervical with MCC and without MCC, respectively) above proposed revised MS-DRGs 459 and 460 (Single Level Spinal Fusion Except Cervical with and without MCC, respectively) and below MS-DRGs 456, 457, and 458.

Lastly, as discussed in section II.C.9. of the preamble of the proposed rule and this final rule, we proposed to revise the surgical hierarchy for the MDC 17 (Myeloproliferative Diseases and Disorders, Poorly Differentiated Neoplasms) MS-DRGs as follows: For the MDC 17 MS-DRGs, we proposed to sequence proposed new MS-DRG 850 (Acute Leukemia with Other Procedures) above MS-DRGs 823, 824, and 825 (Lymphoma and Non-Acute Leukemia with Other Procedures with MCC, with CC, and without CC/MCC, respectively) and below MS-DRGs 820, 821, and 822 (Lymphoma and Leukemia with Major O.R. Procedures with MCC, with CC, and without CC/MCC, respectively).

Our proposal for Appendix D MS-DRG Surgical Hierarchy by MDC and MS-DRG of the version of the ICD-10 MS-DRG Definitions Manual Version 42 is illustrated in the following tables.

Comment: A few commenters stated that they acknowledged the proposed conforming changes to the surgical hierarchy in association with the proposed MS-DRG classification changes, and acknowledged that the MS-DRG weight impacts the cost analysis, which in turn affects the hierarchy in the GROUPER. Regarding the proposed changes to MDC 08, the commenters stated that it is important to consider that it is not all multiple level spinal fusion procedures that appear to have the greatest impact on the proposed surgical hierarchy sequencing, rather it appears that it is the combined spinal fusion procedures. The commenters specified that the four highest MS-DRG categories listed in the proposed surgical hierarchy table for MDC 08 reflect combined spinal fusion procedures (MS-DRGs 453, 454, 455, 426, 427, 428, 420, 429, and 430). The commenters also remarked that proposed MS-DRGs 447 and 448, which describe multiple level spinal fusion procedures, are proposed to be sequenced below proposed MS-DRG 402 that describes single level combined anterior and posterior spinal fusion procedures, and below existing MS-DRGs 456, 457, and 458 that include both single level and multiple level spinal fusion procedures. The commenters stated that although they agreed with the proposed surgical hierarchy, the data appear to indicate that it is not only the multiple level spinal fusion procedures that are impacting the length of stay and average costs among the proposed MS-DRGs since the proposed MS-DRGs describing combined spinal fusion procedures appear to warrant the highest hierarchy regardless of single level or multiple levels. According to the commenters, the discussion in the proposed rule suggested that the number of levels impacts resource utilization, however, the data to differentiate cases where both multiple and single level spinal fusion procedures were performed on the same patient or during the same operative episode did not appear to impact resource utilization based on the data analysis provided.

Response: We appreciate the commenters' feedback and support. We note that while the commenters listed MS-DRGs 453, 454, and 455 among one ( print page 69100) of the four categories reflecting combined spinal fusion procedures having the greatest impact in the proposed surgical hierarchy for MDC 08, we believe that since those MS-DRGs were proposed to be deleted, the commenters' intent was for CMS to instead consider the three categories of proposed spinal fusion MS-DRGs (426, 427, and 428; 402; 429 and 430) for which the proposed logic for case assignment was derived from MS-DRGs 453, 454, and 455. Because the proposed logic for case assignment to the three categories of proposed spinal fusion MS-DRGs includes both concepts, (that is, multiple level combined spinal fusion procedures and single level combined spinal fusion procedures), we believe additional review is warranted with respect to the commenters' concerns regarding which aspect may have a greater impact on resource utilization. We intend to consider if the development of evaluation criteria would be useful for future proposed modifications to the surgical hierarchy for MS-DRGs that have meaningful changes to the clinical logic.

In the absence of a specific example, we are unclear why the commenter referenced data to differentiate cases where both multiple and single level spinal fusion procedures were performed on the same patient or during the same operative episode and its impact on resource utilization with respect to the data analysis provided in the proposed rule since, as stated in the proposed rule, the spinal fusion cases (for example, from MS-DRGs 453, 454, and 455) were separated into three categories (single level combined anterior and posterior fusions except cervical, multiple level combined anterior and posterior fusions except cervical, and combined anterior and posterior cervical spinal fusions), according to the proposed logic lists made available in Tables 6P.2d, 6P.2e, and 6P.2f in association with the proposed rule. The data analysis findings presented in the proposed rule show the difference in the number of cases, average length of stay, and average costs between multiple level and single level combined anterior and posterior spinal fusion cases. In consideration of the proposed logic, it would not be possible for a case to be reflected under both proposed MS-DRG categories at the same time.

Therefore, after consideration of the public comments we received, and based on the changes that we are finalizing for FY 2025, as discussed in section II.C. of the preamble of this final rule, we are finalizing our proposals to modify the existing surgical hierarchy, effective with the ICD-10 MS-DRGs Version 42, with modification. As discussed in section II.C.6.b., we are deleting MS-DRGs 459 and 460 and creating new MS-DRGs 450 and 451 (Single Level Spinal Fusion Except Cervical with MCC and without MCC, respectively). The finalized surgical hierarchy for MDC 08 is shown in the following table.

For issues pertaining to the surgical hierarchy, as with other MS-DRG related requests, we encourage interested parties to submit comments no later than October 20, 2024, via the Medicare Electronic Application Request Information System TM (MEARIS TM ) at https://mearis.cms.gov/public/home , so that they can be ( print page 69101) 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.

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-billing/icd-10-codes/icd-9-cm-diagnosis-procedure-codes-abbreviated-and-full-code-titles .

The official list of ICD-10-CM and ICD-10-PCS codes can be found on the CMS website at: http://www.cms.gov/Medicare/Coding/ICD10/index.html .

The NCHS has lead responsibility for the ICD-10-CM and ICD-9-CM diagnosis codes included in the Tabular List and Alphabetic Index for Diseases, while CMS has lead responsibility for the ICD-10-PCS and ICD-9-CM procedure codes included in the Tabular List and Alphabetic Index for Procedures.

The Committee encourages participation in the previously mentioned process by health-related organizations. In this regard, the Committee holds public meetings for discussion of educational issues and proposed coding changes. These meetings provide an opportunity for representatives of recognized organizations in the coding field, such as the American Health Information Management Association (AHIMA), the American Hospital Association (AHA), and various physician specialty groups, as well as individual physicians, health information management professionals, and other members of the public, to contribute ideas on coding matters. After considering the opinions expressed 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 2025 at a public meeting held on September 12-13, 2023, and finalized the coding changes after consideration of comments received at the meetings and in writing by November 15, 2023.

The Committee held its Spring 2024 meeting on March 19-20, 2024. The deadline for submitting comments on these code proposals was April 19, 2024. 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 2024 would be included in the October 1, 2024 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 on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps .

The code titles are adopted as part of the ICD-10 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 on the CMS website 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 12-13, 2023 meeting and the March 19-20, 2024 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 12-13, 2023 meeting and March 19-20, 2024 meeting can be found at: https://www.cdc.gov/nchs/icd/icd-10-maintenance/meetings.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: [email protected] .

Questions and comments concerning the procedure codes should be submitted via Email to: [email protected] .

As discussed in the proposed rule, CMS implemented 41 new procedure codes including the insertion of a palladium-103 collagen implant into the brain, the excision or resection of intestinal body parts using a laparoscopic hand-assisted approach, the transfer of omentum for pedicled omentoplasty procedures, and the administration of talquetamab into the ICD-10-PCS classification effective with discharges on and after April 1, 2024. The procedure codes are as follows:

The 41 procedure codes are also reflected in Table 6B—New Procedure Codes in association with the proposed rule and available 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 in association with the proposed rule, we solicited public comments on the most appropriate MDC, MS-DRG, and operating room status assignments for these codes for FY 2025, as well as any other options for the GROUPER logic. We discuss the comments we received on these assignments in section II.C.13. of this final rule as well as our finalized assignments, including to add new procedure code 02583ZF to the logic for case assignment to new MS-DRG 317 for FY 2025, 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) 13458, Transmittal 12384, titled “April 2024 Update to the Medicare Severity—Diagnosis Related Group (MS-DRG) Grouper and Medicare Code Editor (MCE) Version 41.1” was issued on November 30, 2023 (available on the CMS website at: https://www.cms.gov/regulations-and-guidance/guidance/transmittals/2023-transmittals/r12384cp ) regarding the release of an updated version of the ICD-10 MS-DRG GROUPER and Medicare Code Editor software, Version 41.1, effective with discharges on and after April 1, 2024, reflecting the new procedure codes. The updated software, along with the updated ICD-10 MS-DRG Version 41.1 Definitions Manual and the Definitions of Medicare Code Edits Version 41.1 manual is available at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/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 the Medicare Modernization Act ( Pub. L. 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 ( print page 69105) be available 6 months earlier than would be possible with updates occurring only once a year on October 1.

In the FY 2005 IPPS final rule, we implemented section 1886(d)(5)(K)(vii) of the Act, as added by section 503(a) of Public Law 108-173 , by developing a mechanism for approving, in time for the April update, diagnosis and procedure code revisions needed to describe new technologies and medical services for purposes of the new technology add-on payment process. We also established the following process for making these determinations. Topics considered during the Fall ICD-10 (previously ICD-9-CM) Coordination and Maintenance Committee meeting were considered for an April 1 update if a strong and convincing case was made by the requestor during the Committee's public meeting. The request needed to identify the reason why a new code was needed in April for purposes of the new technology process. Meeting participants and those reviewing the Committee meeting materials were provided the opportunity to comment on the expedited request. We refer the reader to the FY 2022 IPPS/LTCH PPS final rule ( 86 FR 44950 ) for further discussion of the implementation of this prior April 1 update for purposes of the new technology add-on payment process.

However, as discussed in the FY 2022 IPPS/LTCH PPS final rule ( 86 FR 44950 through 44956 ), we adopted an April 1 implementation date, in addition to the annual October 1 update, beginning with April 1, 2022. We noted that the intent of this April 1 implementation date is to allow flexibility in the ICD-10 code update process. With this new April 1 update, CMS now uses the same process for consideration of all requests for an April 1 implementation date, including for purposes of the new technology add-on payment process (that is, the prior process for consideration of an April 1 implementation date only if a strong and convincing case was made by the requestor during the meeting no longer applies). We are continuing to use several aspects of our existing established process to implement new codes through the April 1 code update, which includes 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 note that under our established process, requestors indicate whether they are submitting their code request for consideration for an April 1 implementation date or an October 1 implementation date. The ICD-10 Coordination and Maintenance Committee makes efforts to accommodate the requested implementation date for each request submitted. However, the Committee determines which requests are to be presented for consideration for an April 1 implementation date or an October 1 implementation date. As discussed earlier in this section of the preamble of this final rule, there were code proposals presented for an April 1, 2024 implementation at the September 12-13, 2023 Committee meetings. Following the receipt of public comments, the code proposals were approved and finalized, therefore, there were new codes implemented April 1, 2024.

As discussed in the FY 2025 IPPS/LTCH PPS proposed rule, consistent with the process we outlined for the April 1 implementation date, we announced the new codes in November 2023 and provided the updated code files in December 2023 and ICD-10-CM Official Guidelines for Coding and Reporting in January 2024. In the February 05, 2024 Federal Register ( 89 FR 7710 ), notice for the March 19-20, 2024 ICD-10 Coordination and Maintenance Committee Meeting was published that includes the tentative agenda and identifies which topics are related to a new technology add-on payment application. By February 1, 2024, we made available the updated Version 41.1 ICD-10 MS-DRG GROUPER software and related materials on the CMS web page at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software .

ICD-9-CM addendum and code title information is published on the CMS website at https://www.cms.gov/medicare/coding-billing/icd-10-codes/updates-revisions-icd-9-cm-procedure-codes-addendum . ICD-10-CM and ICD-10-PCS addendum and code title information is published on the CMS website at https://www.cms.gov/medicare/coding-billing/icd-10-codes . 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/icd-10-cm/files.html . 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 2024, there are currently 74,044 diagnosis codes and 78,638 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 on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps ), there are 252 new diagnosis codes that had been finalized for FY 2025 at the time of the development of the proposed rule and 41 new procedure codes that were effective with discharges on and after April 1, 2024.

As discussed in section II.C.13 of the preamble of this final rule, we are making 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 available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps in association with this final rule. As shown in Table 6B.—New Procedure Codes, there were procedure codes discussed at the March 19-20, 2024 ICD-10 Coordination and Maintenance Committee meeting that were not finalized in time to include in the proposed rule and are identified with an asterisk. We refer the reader to Table 6B.—New Procedure Codes associated with this final rule and available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps for the detailed list of these 371 new procedure codes finalized for FY 2025.

We also note, as reflected in Table 6C.—Invalid Diagnosis Codes and in Table 6D.—Invalid Procedure Codes, there are a total of 36 diagnosis codes and 61 procedure codes that will become invalid effective October 1, 2024. Based on these code updates, effective October 1, 2024, there are a total of 74,260 ICD-10-CM diagnosis codes and 78,948 ICD-10-PCS procedure codes for FY 2025 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.

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.

As discussed in section II.C.5. of the preamble of the proposed rule and this final rule, for FY 2025, we proposed to revise the title of MS-DRG 276 from “Cardiac Defibrillator Implant with MCC” to “Cardiac Defibrillator Implant with MCC or Carotid Sinus Neurostimulator”.

As stated in the FY 2016 IPPS/LTCH PPS proposed rule ( 80 FR 24409 ), we generally map new MS-DRGs onto the list when they are formed from procedures previously assigned to MS-DRGs that are already on the list. Currently, MS-DRG 276 is on the list of MS-DRGs subject to the policy for payment under the IPPS for replaced devices offered without cost or with a credit as shown in the following table. Therefore, we proposed that if the applicable proposed MS-DRG changes are finalized, we would make conforming changes to the title of MS-DRG 276 as reflected in the table that follows. We also proposed to continue to include the existing MS-DRGs currently subject to the policy.

As discussed in section II.C.5. of the preamble of this final rule, we are finalizing our proposal to revise the title of MS-DRG 276 from “Cardiac Defibrillator Implant with MCC” to “Cardiac Defibrillator Implant with MCC or Carotid Sinus Neurostimulator”. We did not receive any public comments opposing our proposal make conforming changes to the title of MS-DRG 276 in the list of MS-DRGs that will be subject to the replaced devices offered without cost or with a credit policy effective October 1, 2024. Additionally, 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 following table that will be subject to the replaced devices offered without cost or with a credit policy effective October 1, 2024.

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).

We received public comments on MS-DRG related issues that were ( print page 69109) outside the scope of the proposals included in the FY 2025 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.C.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 October 20, 2024, via the Medicare Electronic Application Request Information System TM (MEARIS TM ) at: https://mearis.cms.gov/public/home , 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.

Consistent with our established policy, in developing the MS-DRG relative weights for FY 2025, 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 bills. The FY 2023 MedPAR data used in this final rule include discharges occurring on October 1, 2022, through September 30, 2023, based on bills received by CMS through March 31, 2024, 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 2023 MedPAR file used in calculating the relative weights includes data for approximately 6,916,571 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 2024 update of the FY 2023 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 2025 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. In addition, the data exclude Rural Emergency Hospitals (REHs), including hospitals that subsequently became REHs after the period from which the data were taken. We note that the FY 2025 relative weights are based on the ICD-10-CM diagnosis codes and ICD-10-PCS procedure codes from the FY 2023 MedPAR claims data, grouped through the ICD-10 version of the FY 2025 GROUPER (Version 42).

The second data source used in the cost-based relative weighting methodology is the Medicare cost report data files from the Healthcare Cost Report Information System (HCRIS). In general, we use the HCRIS dataset that is 3 years prior to the IPPS fiscal year. Specifically, for this final rule, we used the March 2024 update of the FY 2022 HCRIS for calculating the FY 2025 cost-based relative weights. Consistent with our historical practice, for this FY 2025 final rule, we are providing the version of the HCRIS from which we calculated these 19 cost-to charge-ratios (CCRs) on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS . Click on the link on the left side of the screen titled “FY 2025 IPPS Final Rule Home Page” or “Acute Inpatient Files for Download.”

We calculated the FY 2025 relative weights based on 19 CCRs. The methodology we proposed to use to calculate the FY 2025 MS-DRG cost-based relative weights based on claims data in the FY 2023 MedPAR file and data from the FY 2022 Medicare cost reports is as follows:

To the extent possible, all the claims were regrouped using the FY 2025 MS-DRG classifications discussed in sections II.B. and II.C. 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 2023 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 through 58842 ). For FY 2022 and subsequent years, we 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 92.6 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 ( print page 69110) 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 Present on Admission (POA) 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 https://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 that 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 2024, and consistent with how we have treated hospitals that participated in the BPCI Initiative, for FY 2025, 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 2024 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 2022 cost report data.

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 https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS . 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. We stated in the proposed rule that if we receive comments about the groupings in this ( print page 69111) 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 2025 final rule, this calculation was applied to address non-monotonicity for cases that grouped to the following: MS-DRG 016 and MS-DRG 017, MS-DRG 095 and MS-DRG 096, MS-DRG 504 and MS-DRG 505, MS-DRG 797 and MS-DRG 798. In the supplemental file titled AOR/BOR File, we include statistics for the affected MS-DRGs both separately and with cases combined.

We invited public comments on our proposals related to recalibration of the proposed FY 2025 relative weights and the changes in relative weights from FY 2024.

We received several comments that we consider to be out of scope. For example, a commenter requested a “device intensive” cost threshold. Because we consider these comments to be out of scope, we are not responding in this final rule.

After consideration of the comments received, we are finalizing our proposals without modifications related to the recalibration of the FY 2025 relative weights. We summarize and respond to comments relating to the methodology for calculating the relative weight for MS-DRG 018 in the next section of this final rule.

In the FY 2021 IPPS/LTCH PPS final rule ( 85 FR 58451 through 58453 ), we created MS-DRG 018 for cases that include procedures describing CAR T-cell therapies. We also finalized our proposal to modify our existing relative weight methodology to ensure that the relative weight for 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 ( 85 FR 58599 through 58600 ). Specifically, we stated that clinical trial claims that group to new MS-DRG 018 would not be included when calculating the average cost for MS-DRG 018 that is used to calculate the relative weight for this MS-DRG, so that the relative weight reflects the costs of the CAR T-cell therapy drug. We stated that we identified clinical trial claims as claims that contain ICD-10-CM diagnosis code Z00.6 or contain standardized drug charges of less than $373,000, which was the average sales price of KYMRIAH and YESCARTA, the two CAR T-cell biological products licensed to treat relapsed/refractory large B-cell lymphoma as of the time of the development of the FY 2021 final rule. In addition, we stated 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 cases 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 cases can be identified in the historical data.

We also finalized our proposal to calculate 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 and for purposes of budget neutrality and outlier simulations. We calculate this adjustor by dividing the average cost for cases that we identify as clinical trial cases by the average cost for cases that we identify as non-clinical trial cases, 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 cases not determined to be clinical trial cases to the extent such cases can be identified in the historical data, 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 to the extent such cases can be identified in the historical data. We stated that to the best of our knowledge, there were no claims in the historical data used in the calculation of this 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.

In the FY 2021 IPPS/LTCH PPS final rule ( 85 FR 58842 ), we also finalized an adjustment to the payment amount for applicable clinical trial and expanded access use immunotherapy cases that group to MS-DRG 018, and indicated that we would provide instructions for identifying these claims in separate guidance. Following the issuance of the FY 2021 IPPS/LTCH PPS final rule, we issued guidance [ 20 ] stating that providers may enter a Billing Note NTE02 “Expand Acc Use” on the electronic claim 837I or a remark “Expand Acc Use” on a paper claim to notify the MAC of expanded access use of CAR T-cell therapy. In this case, the MAC would add payer-only condition code “ZB” so that Pricer will apply the payment adjustment in calculating payment for the case. In cases 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 provider may enter a Billing Note NTE02 “Diff Prod Clin Trial” on the electronic claim 837I or a remark “Diff Prod Clin Trial” on a paper claim. In this case, the MAC would add payer-only condition code “ZC” so that the Pricer will not apply the payment adjustment in calculating payment for the case.

In the FY 2022 IPPS/LTCH PPS final rule, we revised MS-DRG 018 to include cases that report the procedure codes for CAR T-cell and non-CAR T-cell therapies and other immunotherapies ( 86 FR 44798 through 44806 ). We also finalized our proposal to continue to use the proxy of standardized drug charges of less than $373,000 ( 86 FR 44965 ) to identify clinical trial claims. We also finalized use of this same proxy for the FY 2023 IPPS/LTCH PPS final rule ( 87 FR 48894 ).

Following the issuance of the FY 2023 IPPS/LTCH PPS final rule, we issued guidance [ 21 ] stating where there is expanded access use of immunotherapy, the provider may submit condition code “90” on the claim so that Pricer will apply the payment adjustment in ( print page 69112) calculating payment for the case. We stated that MACs would no longer append Condition Code `ZB' to inpatient claims reporting Billing Note NTE02 “Expand Acc Use” on the electronic claim 837I or a remark “Expand Acc Use” on a paper claim, effective for claims for discharges that occur on or after October 1, 2022.

In the FY 2024 IPPS/LTCH PPS final rule, we explained that the MedPAR claims data now includes a field that identifies whether or not the claim includes expanded access use of immunotherapy. We stated that for the FY 2022 MedPAR claims data, this field identifies whether or not the claim includes condition code ZB, and for the FY 2023 MedPAR data and subsequent years, this field will identify whether or not the claim includes condition code 90. We further noted that the MedPAR files now also include a variable that indicates whether the claim includes the payer-only condition code “ZC”, which identifies a case involving the clinical trial of a different product where the CAR T-cell, non-CAR T-cell, or other immunotherapy product is purchased in the usual manner.

Accordingly, and as discussed further in the FY 2024 IPPS/LTCH PPS final rule, we finalized two modifications to our methodology for identifying clinical trial claims and expanded access use claims in MS-DRG 018 ( 88 FR 58791 ). First, we finalized to exclude claims with the presence of condition code “90” (or, for FY 2024 ratesetting, which was based on the FY 2022 MedPAR data, the presence of condition code “ZB”) and claims that contain ICD-10-CM diagnosis code Z00.6 without payer-only code “ZC” that group to MS-DRG 018 when calculating the average cost for MS-DRG 018. Second, we finalized to no longer use the proxy of standardized drug charges of less than $373,000 to identify clinical trial claims and expanded access use cases when calculating the average cost for MS-DRG 018. Accordingly, we finalized that in calculating the relative weight for MS-DRG 018 for FY 2024, only those claims that group to MS-DRG 018 that (1) contain ICD-10-CM diagnosis code Z00.6 and do not include payer-only code “ZC” or (2) contain condition code “ZB” (or, for subsequent fiscal years, condition code “90”) would be excluded from the calculation of the average cost for MS-DRG 018. Consistent with this, we also finalized modifications to our calculation of the 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. We refer readers to the FY 2024 IPPS/LTCH PPS final rule for further discussion of these modifications ( 88 FR 58791 ).

In the FY 2025 IPPS/LTCH PPS proposed rule, we proposed to continue to use our methodology as modified in the FY 2024 IPPS/LTCH PPS final rule for identifying clinical trial claims and expanded access use claims in MS-DRG 018. First, we exclude claims with the presence of condition code “90” and claims that contain ICD-10-CM diagnosis code Z00.6 without payer-only code “ZC” that group to MS-DRG 018 when calculating the average cost for MS-DRG 018. Second, we no longer use the proxy of standardized drug charges of less than $373,000 to identify clinical trial claims and expanded access use cases when calculating the average cost for MS-DRG 018. Accordingly, we proposed that in calculating the relative weight for MS-DRG 018 for FY 2025, only those claims that group to MS-DRG 018 that (1) contain ICD-10-CM diagnosis code Z00.6 and do not include payer-only code “ZC” or (2) contain condition code “90” would be excluded from the calculation of the average cost for MS-DRG 018.

We also proposed to continue to use the methodology as modified in the FY 2024 IPPS/LTCH PPS final rule to calculate the 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:

Calculate the average cost for cases assigned to MS-DRG 018 that either (a) contain ICD-10-CM diagnosis code Z00.6 and do not contain condition code “ZC” or (b) contain condition code “90”.
Calculate the average cost for all other cases assigned to MS-DRG 018.
Calculate an adjustor by dividing the average cost calculated in step 1 by the average cost calculated in step 2.
Apply the adjustor calculated in step 3 to the cases identified in step 1 as applicable clinical trial or expanded access use cases, then add this adjusted case count to the non-clinical trial case count prior to calculating the average cost across all MS-DRGs.

Under our proposal to continue to apply this methodology, based on the December 2023 update of the FY 2023 MedPAR file used for the proposed rule, we estimated that the average costs of cases assigned to MS-DRG 018 that are identified as clinical trial cases ($116,831) were 34 percent of the average costs of the cases assigned to MS-DRG 018 that are identified as non-clinical trial cases ($342,684). Accordingly, as we did for FY 2024, we proposed to adjust the transfer-adjusted case count for MS-DRG 018 by applying the proposed adjustor of 0.34 to the applicable clinical trial and expanded access use immunotherapy 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 an applicable clinical trial or expanded access use immunotherapy case was adjusted by 0.34. As we did for FY 2024, we applied this same adjustor for the applicable cases that group to MS-DRG 018 for purposes of budget neutrality and outlier simulations. We also proposed to update the value of the adjustor based on more recent data for the final rule.

Comment: A few commenters supported the proposal to continue to exclude CAR T-cell therapy clinical trial cases from the calculation of the relative weight for MS-DRG 018. A commenter stated that the proposal for CAR T-cell therapy payment is largely responsive to previous requests for a permanent reimbursement solution for CAR T-cell therapy in a manner that reflects the cost of care.

Response: We thank commenters for their support and input on the proposed methodology.

Comment: Some commenters expressed concern that CMS no longer uses the $373,000 threshold to identify clinical trial cases. The commenters stated that a small number of claims are still coded incorrectly, and that this has the potential to reduce the relative weight for MS-DRG 018 due to the presence of lower cost cases that should be flagged as clinical trial cases. Another commenter expressed concern that CMS' methodology may not be accurately capturing some cases where the CAR T product is not purchased in the usual manner, such as when the patient receives the product as part of a patient assistance program. This commenter suggested that CMS establish a mechanism for hospitals to report when a product is obtained at no cost for reasons other than participation in a clinical trial or expanded access use. A commenter requested that CMS provide the proportion of cases with drug charges below $373,000 that do not have a clinical trial or expanded access use code.

Response: As we stated in the FY 2024 IPPS/LTCH PPS final rule, while there continues to be a small percentage of claims that report standardized drug ( print page 69113) charges of less than $373,000 and do not report ICD-10-CM code Z00.6, we do not believe it is necessary to continue the use of the proxy until the number of cases reaches zero. With respect to the commenter's suggestion regarding a mechanism for reporting products obtained at no cost for reasons other than participation in a clinical trial or expanded access use, we may consider this in the future. With respect to the commenter who requested that CMS provide the proportion of cases with drug charges below $373,000, that proportion is 4%, which is the same percentage as last year. We note that information on obtaining the MedPAR Limited Data Set is available on the CMS website, at https://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/LimitedDataSets/MEDPARLDSHospitalNational .

After consideration of the public comments we received, we are finalizing our proposals without modifications regarding the calculation of the relative weight for MS-DRG 018. Applying this finalized methodology, based on the March 2024 update of the FY 2023 MedPAR file used for this final rule, we estimated that the average costs of cases assigned to MS-DRG 018 that are identified as clinical trial cases ($111,211) were 33 percent of the average costs of the cases assigned to MS-DRG 018 that are identified as non-clinical trial cases ($334,119). Accordingly, as we did for FY 2024, we are finalizing our proposal to adjust the transfer-adjusted case count for MS-DRG 018 by applying the adjustor of 0.33 to the applicable clinical trial and expanded access use immunotherapy 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 this final rule, each case identified as an applicable clinical trial or expanded access use immunotherapy case was adjusted by 0.33. As we did for FY 2024, we are applying this same adjustor for the applicable cases that group to MS-DRG 018 for purposes of budget neutrality and outlier simulations.

In the FY 2023 IPPS/LTCH PPS final rule, we finalized a permanent 10-percent cap on the reduction in an MS-DRG's relative weight in a given fiscal year, beginning in FY 2023. We also finalized a budget neutrality adjustment to the standardized amount for all hospitals to ensure that application of the permanent 10-percent cap does not result in an increase or decrease of estimated aggregate payments. We refer the reader to the FY 2023 IPPS/LTCH PPS final rule for further discussion of this policy. In the Addendum to this IPPS/LTCH PPS final rule, we present the budget neutrality adjustment for reclassification and recalibration of the FY 2025 MS-DRG relative weights with application of this cap. We are also making available on the CMS website a supplemental file demonstrating the application of the permanent 10 percent cap for FY 2025. For a further discussion of the budget neutrality adjustment for FY 2025, we refer readers to the Addendum of this final rule.

We developed the national average CCRs as follows:

Using the FY 2022 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 final FY 2025 cost-based relative weights were then normalized by an adjustment factor of 1.92336 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. We then applied the permanent 10-percent cap on the reduction in a MS-DRG's relative weight in a given fiscal year; specifically for those MS-DRGs for which the relative weight otherwise would have declined by more than 10 percent from the FY 2024 relative weight, we set the final FY 2025 relative weight equal to 90 percent of the FY 2024 relative weight. The final relative weights for FY 2025 as set forth in Table 5 associated with this final rule and available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS reflect the application of this cap.

The 19 national average CCRs for FY 2025 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 proposed to use that same case threshold in recalibrating the proposed MS-DRG relative weights for FY 2025. Using data from the FY 2023 MedPAR file, there were 8 MS-DRGs that contain fewer than 10 cases. For FY 2025, 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 2024 relative weights by the percentage change in the average weight of the cases in other MS-DRGs from FY 2024 to FY 2025. The crosswalk table is as follows.

Comment: A commenter requested that CMS consider if there are mechanisms to reform the role of CCRs in the reimbursement methodology to prevent differential hospital charge practices from skewing reimbursement rates for hospitals—such as either eliminating the role of CCRs or creating a bridge or other CCR for gene and cell therapies that it stated could be used for more accurate rate-setting in the future. Another commenter requested that CMS utilize the “other” CCR for CAR T-cell therapy product charges as a strategy to address charge compression starting in FY 2025 and until CMS proposes an alternative payment solution.

Response: We continue to believe it would not be appropriate to utilize the “other” CCR for CAR T-cell therapy product charges associated with revenue code 0891. Under our cost-based weight methodology, many revenue codes are mapped to each of the 19 cost centers. We believe that relative to those 19 cost centers, cellular therapies are most similar to drugs given that hospitals have generally calibrated their CAR T-cell therapy product charges to the “drugs” cost center CCR. To provide additional clarity, we have renamed the “drugs” cost center to the “drugs and cellular therapies” cost center. We may consider changes to the CCRs used for gene and cellular therapies in future rulemaking.

After consideration of the public comments we received, we are finalizing our proposals without modification.

Effective for discharges beginning on or after October 1, 2001, section 1886(d)(5)(K)(i) of the Act requires the Secretary to establish (after notice and opportunity for public comment) a mechanism to recognize the costs of 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. The regulations at 42 CFR 412.87 implement these provisions and § 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 ( print page 69116) 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 further discussion on the new technology add-on payment criteria, we refer readers to the FY 2012 IPPS/LTCH PPS final rule ( 76 FR 51572 through 51574 ), the 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 ).

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 whether: (1) a product uses the same or a similar mechanism of action to achieve a therapeutic outcome; (2) a product is assigned to the same or a different MS-DRG; and (3) 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 ).

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 2025 are presented in a data file that is available, along with the other data files associated with the FY 2024 IPPS/LTCH PPS final rule and correction notification, 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 final thresholds for applications for new technology add-on payments for FY 2026 are presented in a data file that is available on the CMS website, along with the other data files associated with this FY 2025 final rule, by clicking on the FY 2025 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, subparts A and E, 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 further information on this issue.

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; ( print page 69117)

++ 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 ( 84 FR 42288 through 42292 ) 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 while FDA has regulatory responsibility for decisions related to marketing authorization (for example, approval, clearance, etc.), we do not rely upon FDA criteria in our evaluation of substantial clinical improvement for purposes of determining what services and technologies qualify for new technology add-on payments under Medicare. This criterion does not depend on the standard of safety and effectiveness on which FDA relies but on a demonstration of substantial clinical improvement in the Medicare population.

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 FDA as a Qualified Infectious Disease Product (QIDP), and, beginning with FY 2022, a drug that is approved by 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 further discussion on this policy. We note that CMS reviews the application based on the information provided by the applicant only under the alternative pathway specified by the applicant at the time of application submission. 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.

For applications received for new technology add-on payments for FY 2021 and subsequent fiscal years, a medical device designated under FDA's Breakthrough Devices Program that has received FDA marketing authorization will be considered 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. 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) as a Breakthrough Device, for the indication covered by the Breakthrough Device designation, will need to meet the requirements of § 412.87(c). We note that 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 further discussion regarding this clarification.

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 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. 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 requirements of § 412.87(d). We refer the reader to the FY 2020 IPPS/LTCH PPS final rule ( 84 FR 42292 through ( print page 69118) 42297) and FY 2021 IPPS/LTCH PPS final rule ( 85 FR 58737 through 58739 ) for further discussion on this policy.

We note that, 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 FDA 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.

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 further discussion on the increase in the new technology add-on payment beginning with discharges on or after October 1, 2019.

As discussed further in section II.E.10. of this final rule, we are finalizing our proposal that for certain gene therapies approved for new technology add-on payments in the FY 2025 IPPS/LTCH PPS final rule that are indicated and used specifically for the treatment of SCD, effective with discharges on or after October 1, 2024 and concluding at the end of the 2- to 3-year newness period for such therapy, if the costs of a discharge (determined by applying CCRs as described in § 412.84(h)) involving the use of such therapy for the treatment of SCD 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. We note that these payment amounts would only apply to Casgevy TM (exagamglogene autotemcel) and Lyfgenia TM (lovotibeglogene autotemcel), when indicated and used specifically for the treatment of SCD, which CMS has determined in this FY 2025 IPPS/LTCH PPS final rule meet the criteria for approval for new technology add-on payment, as further discussed in section II.E.5. of this final rule.

We note that, consistent with the prospective nature of the IPPS, we finalize the new technology add on payment amount for technologies approved or conditionally approved for new technology add-on payments in the final rule for each fiscal year and do not make mid-year changes to new technology add-on payment amounts. Updated cost information may be submitted and included in rulemaking to be considered for the following fiscal year.

Section 503(d)(2) of the MMA ( Pub. L. 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 the MMA, add-on payments for new medical services or technologies for FY 2005 and subsequent years have not been subjected to budget neutrality.

In the FY 2009 IPPS final rule ( 73 FR 48561 through 48563 ), we modified our regulation 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/LTCH ( print page 69119) PPS 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 ( 85 FR 58742 ).

Additionally, in the FY 2021 IPPS/LTCH PPS 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 July 1 prior to the particular fiscal year for which the applicant applied for new technology add-on payments, 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 before July 1 of the fiscal year for which the applicant applied for new technology add-on payments.

In the FY 2024 IPPS/LTCH PPS final rule ( 88 FR 58948 through 58958 ), we finalized that, beginning with the new technology add-on payment applications for FY 2025, for technologies that are not already FDA market authorized for the indication that is the subject of the new technology add-on payment application, applicants must have a complete and active FDA market authorization request at the time of new technology add-on payment application submission and must provide documentation of FDA acceptance or filing to CMS at the time of application submission, consistent with the type of FDA marketing authorization application the applicant has submitted to FDA. See § 412.87(e) and further discussion in the FY 2024 IPPS/LTCH PPS final rule ( 88 FR 58948 through 58958 ). We also finalized that, beginning with FY 2025 applications, in order to be eligible for consideration for the new technology add-on payment for the upcoming fiscal year, an applicant for new technology add-on payments must have received FDA approval or clearance by May 1 (rather than July 1) of the year prior to the beginning of the fiscal year for which the application is being considered (except for an application that is submitted under the alternative pathway for certain antimicrobial products), as reflected at §§ 412.87(f)(2) and (f)(3), as amended and redesignated in the FY 2024 IPPS/LTCH PPS final rule ( 88 FR 58948 through 58958 , 88 FR 59331 ).

Many interested parties (including device/biologic/drug developers or manufacturers, industry consultants, others) engage CMS for coverage, coding, and payment questions or concerns. In order to streamline engagement by centralizing the different innovation pathways within CMS including new technology add-on payments, CMS has established a team of new technology liaisons that can serve as an initial resource for interested parties. This team is available to assist with all of the following:

Help to point interested parties to or provide information and resources where possible regarding process, requirements, and timelines.
Coordinate and facilitate opportunities for interested parties to engage with various CMS components.
Serve as a primary point of contact for interested parties and provide updates on developments where possible or appropriate.

We receive many questions from parties interested in pursuing new technology add-on payments who may not be entirely familiar with working with CMS. While we encourage interested parties to first review our resources available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/newtech , we know that there may be additional questions about the application process. Interested parties with further questions regarding Medicare's coverage, coding, and payment processes, and how they can navigate these processes, whether for new technology add-on payments or otherwise, should review the updated resource guide available at: https://www.cms.gov/medicare/coding-billing/guide-medical-technology-companies-other-interested-parties . Parties that would like to further discuss questions or concerns with CMS should contact the new technology liaison team at [email protected] .

Applicants for add-on payments for new medical services or technologies for FY 2026 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. CMS will review the application based on the information provided by the applicant under the pathway specified by the applicant at the time of application submission. 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 2026, once the application deadline has closed, CMS will post on its website a list of the applications submitted, along with a brief description of each technology as provided by the applicant.

As discussed in the FY 2023 IPPS/LTCH PPS final rule ( 87 FR 48986 through 48990 ), we finalized our proposal to publicly post online new technology add-on payment.

Applications, including the completed application forms, certain related materials, and any additional updated application information submitted subsequent to the initial application submission (except certain volume, cost and other information identified by the applicant as confidential), beginning with the application cycle for FY 2024, at the time the proposed rule is published. We also finalized that with the exception of information included in a confidential information section of the application, cost and volume information, and materials identified by the applicant as copyrighted and/or not otherwise releasable to the public, the contents of the application and related materials may be posted publicly, and that we ( print page 69120) will not post applications that are withdrawn prior to publication of the proposed rule. We refer the reader to the FY 2023 IPPS/LTCH PPS final rule ( 87 FR 48986 through 48990 ) for further information regarding this policy.

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 and has an expiration date of December 31, 2026.

Section 1886(d)(5)(K)(viii) of the Act, as amended by section 503(b)(2) of the MMA, 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. The process for evaluating new medical service and technology applications requires the Secretary to do all of the following:

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.
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 2025 prior to publication of the FY 2025 IPPS/LTCH PPS proposed rule, we published a notice in the Federal Register on September 28, 2023 ( 88 FR 66850 ) and held a virtual town hall meeting on December 13, 2023. 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 2025 new medical service and technology add-on payment applications before the publication of the FY 2025 IPPS/LTCH IPPS proposed rule.

Approximately 130 individuals registered to attend the virtual town hall meeting. We posted the recordings of the 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 18, 2023 deadline, in our evaluation of the new technology add-on payment applications for FY 2025 in the development of the FY 2025 IPPS/LTCH PPS proposed rule. In response to the published notice and the December 13, 2023 New Technology Town Hall meeting, we received written comments regarding the applications for FY 2025 new technology add on payments. As explained earlier and in the Federal Register notice announcing the New Technology Town Hall meeting ( 88 FR 66850 through 66853 ), 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 2025. Therefore, we did not summarize any written comments in the proposed rule that were unrelated to the substantial clinical improvement criterion. In section II.E.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.

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/Coding/ICD10 , including guidelines for ICD-10-PCS Section “X” codes. We encourage providers to view the material provided on ICD-10-PCS Section “X” codes.

In this section of the final rule, we discuss the FY 2025 status of 31 technologies approved for FY 2024 new technology add-on payments, as set forth in the tables that follow. In the proposed rule, we presented our proposals to continue the new technology add-on payments for FY 2025 for those technologies that were approved for the new technology add-on payment for FY 2024, and which would still be considered “new” for purposes of new technology add-on payments for FY 2025. We also presented our proposals to discontinue new technology add-on payments for FY 2025 for those technologies that were approved for the new technology add-on payment for FY 2024, and which would no longer be considered “new” for purposes of new technology add-on payments for FY 2025.

Additionally, we noted that we conditionally approved DefenCath® (taurolidine/heparin) for FY 2024 new technology add-on payments under the alternative pathway for certain antimicrobial products ( 88 FR 58942 through 58944 ), subject to the technology receiving FDA marketing authorization by July 1, 2024. DefenCath® (taurolidine/heparin) received FDA marketing authorization on November 15, 2023, and was eligible to receive new technology add-on payments in FY 2024 beginning with discharges on or after January 1, 2024. As DefenCath® (taurolidine/heparin) received FDA marketing authorization prior to July 1, 2024, and was approved for new technology add-on payments in FY 2024, we proposed and are finalizing to continue making new technology add-on payments for DefenCath® for FY 2025.

Our policy is that a medical service or technology may continue to be ( print page 69121) 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 2025 because they were still considered “new” for purposes of new technology add-on payments. This table also presented the newness start date, new technology add-on payment start date, 3-year anniversary date of the product's entry onto the U.S. market, relevant final rule citations from prior fiscal years, proposed maximum add-on payment amount, and coding assignments for each technology. We referred 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.

We invited public comments on our proposals to continue new technology add-on payments for FY 2025 for the technologies listed in Table II.E.-01 of the proposed rule.

Comment: We received multiple comments in support of our proposed continuation of new technology add-on payments for FY 2025 for those technologies that were approved for the new technology add-on payment for FY 2024, and which would still be considered “new” for purposes of new technology add-on payments for FY 2025.

Response: We appreciate the support of the commenters.

Comment: A commenter restated a comment it made in response to previous proposed rules 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 payment application and review process. The commenter further stated that CMS did not appear to have applied this policy consistently and that it has defaulted to the FDA approval date despite other reasons being provided by applicants regarding the first date of commercial availability. The commenter believed that a more efficient and appropriate policy would be for the newness period to begin with the date of the first claim, which it stated 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 commenter for its feedback. As we discussed in the FY 2022 IPPS/LTCH PPS final rule ( 86 FR 45136 ), regarding the commenter's belief that beginning the newness period on the date of first claim would be a more efficient and appropriate policy and is 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 the purposes of the OPPS pass-through payment is separate and distinct from “newness” for the purposes of the IPPS new technology add-on payment. We note that “newness” for purposes of the OPPS pass-through payment refers to a drug, biological, or device's eligibility for pass-through payment status. In particular, under § 419.64(a), for a drug or biological's eligibility for OPPS pass-through payment (subject to certain exceptions), “newness” means that the drug or biological was first payable as an outpatient hospital service after December 31, 1996. Under § 419.66(b), for a device's eligibility for OPPS pass-through payment, “newness” means that CMS received the applicant's pass-through application within 3 years from the date of the initial FDA marketing authorization, unless there is a documented, verifiable delay in U.S. market availability after FDA marketing authorization is granted, in which case CMS will consider the pass-through payment application if it is submitted within 3 years from the date of market availability for the device. However, it appears the commenter is referring not to “newness” in terms of eligibility for OPPS pass-through status, but rather to the limited two-to-three-year period of pass-through payment. Under §§ 419.64(c)(2) and 419.66(g), this pass-through payment 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 ), 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 technology on the U.S. market. Furthermore, as we have stated in prior rulemaking, the newness period does not necessarily start with the approval date for the medical service or technology. Instead, it begins with availability of the technology on the market, which is when data become available. We have consistently applied this standard, and believe that it is most consistent with the purpose of new technology add-on payments ( 69 FR 49003 ), because section 1886(d)(5)(K)(ii)(II) of the Act requires CMS to establish a mechanism to provide for the collection of data with respect to the costs of a new medical service or technology for a period of not less than two years and not more than three years beginning on the date on which an inpatient hospital code is issued for the service or technology. Our regulations at § 412.87(b)(2), 412.87(c)(2), and 412.87(d)(2) further allow new medical services and technologies to be considered new for the first 2 to 3 years after the point at which data begin to become available reflecting the inpatient hospital code assigned to the new service or technology, which is during the period when the costs of the new technology are not yet fully reflected in the DRG weights. 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, it is appropriate to limit the add-on payment window for those technologies to this 2-to 3-year timeframe. For these reasons, we continue to disagree that the appropriate policy would be for the newness period to begin with the date of the first claim.

Comment: The applicant for REZZAYO TM (rezafungin for injection), submitted a comment regarding its newness start date of March 22, 2023, to explain why REZZAYO TM was not available on the US market until July 26, 2023. The applicant explained that the market entry for REZZAYO TM was delayed due to the steps needed to comply with FDA requirements. The applicant stated that REZZAYO TM received FDA approval on March 22, 2023, and that the product was subjected to a post marketing commitment (PMC) protocol. According to the applicant, the PMC stated that the manufacturer would complete necessary qualification and validation studies of the current assay high-performance ( print page 69122) liquid chromatography analytical procedure to be used for the gross content and assay of reconstituted solution tests in the drug product specification, and update the relevant sections of Module 3 accordingly. The applicant stated that FDA required this information be submitted to FDA via a Changes Being Effected in 0 Days Supplement (CBE-0). The applicant stated that to meet the requirements of the PMC and prepare the CBE-0 for submission, the manufacturer was unable to use anything more than a nominal amount of existing batches of product due to vial size differentials, which meant the manufacturer needed to manufacture new product for its analyses pursuant to the PMC, and that the applicant had to ensure that new product that met these requirements was created prior to launch. The applicant explained that due to the PMC requirements, REZZAYO TM needed to undergo an additional manufacturing cycle prior to launch, and the changes in vial size required changes to REZZAYO's labeling and packaging. The applicant stated that label and packaging changes alone can take an additional six weeks. The applicant stated that the manufacturer was able to complete the PMC requirements and submitted the CBE-0 on July 19, 2023, and that REZZAYO TM was made available for sale to hospitals following the first sale and shipment to a wholesaler on July 26, 2023, as reflected in the Medicaid Drug Rebate Program database.

Response: We thank the applicant for its comment. As stated previously, while CMS may consider a documented delay in the technology's market availability in determining when the newness period begins, our policy for determining whether to extend new technology add-on payments for an additional year generally applies regardless of the volume of claims for the technology after the beginning of the newness period ( 83 FR 41280 ). We do not consider the date of first sale of a product as an indicator of the entry of a product onto the U.S. market. Although the applicant states that REZZAYO TM was made available for sale to hospitals following the first sale and shipment to a wholesaler on July 26, 2023, it is unclear from the information provided if the technology may have first became available on the market between the date of completion of the PMC and submission of the CBE-0 on July 19, 2023, and its first sale on July 26, 2023, as an applicant may commence distribution of a drug product manufactured using a change proposed in a CBE-0 supplement after FDA receives that supplement. [ 22 ] Therefore, based on the information provided by the applicant regarding the documented delay in the technology's availability on the U.S. market, and absent additional information from the applicant, we consider the beginning of the newness period to commence on July 19, 2023.

Comment: We received multiple comments in support of our proposed continuation of new technology add-on payments for FY 2025 for the SAINT Neuromodulation System. A couple of commenters described their experiences and timelines for installation, training, and use of the SAINT Neuromodulation System at their hospitals. Commenters also supported modification of the technology's newness date to April 5, 2024, to recognize the delay in commercial availability.

In particular, the applicant for the SAINT Neuromodulation System submitted a comment to provide an update on its launch timeline and the commercial availability of technology in the provider market. The applicant confirmed that the SAINT Neuromodulation System is currently launching in the United States, and requested that CMS assign a newness date of April 5, 2024. The applicant stated that although SAINT received FDA clearance on September 1, 2022, there were significant product development, manufacturing design, and compliance steps that the company needed to complete before the device could become commercially available and be used to treat patients. It stated that initially, it had planned to develop and manufacture its own hardware; however, after much time and effort, it was determined in the second half of 2023 that the best course was to work with third-party manufacturers for the stimulator and neuronavigation hardware. The applicant provided a summary and timeline of all the activities that it completed prior to the device becoming commercially available to treat patients on April 5, 2024. The timeline also included information regarding the installation, training, and use of the SAINT Neuromodulation System at two hospitals after April 5, 2024.

Response: We thank the applicant and commenters for their comments. In the FY 2024 IPPS/LTCH PPS final rule ( 88 FR 58937 through 58938 ), we noted that the applicant stated that ICD-10-PCS code X0Z0X18 (Computer-assisted transcranial magnetic stimulation of prefrontal cortex, new technology group 8) may be used to uniquely describe procedures involving the use of the SAINT Neuromodulation System, effective October 1, 2022. We note that between October 1, 2022 and April 4, 2024 (inclusive), we identified 5 claims reporting this ICD-10-PCS code that were associated with an acute care hospital under the IPPS. Three of those claims were made in FY 2024, and all 3 received new technology add-on payment. Therefore, based on our review of the data, we cannot determine a newness date based on a documented delay in the technology's availability on the U.S. market. We continue to consider the beginning of the newness period to commence on September 1, 2022, the date of FDA marketing authorization for the indication covered by its Breakthrough Device designation.

Comment: The applicant for DefenCath® (taurolidine/heparin), submitted a comment in support of our proposed continuation of new technology add-on payments for FY 2025 for DefenCath® and to update its Wholesale Acquisition Cost (WAC). The applicant noted that DefenCath® received conditional new technology add-on payment approval for FY 2024. The applicant stated that DefenCath® was approved by the FDA on November 15, 2023, via the Limited Population Pathway for Antibacterial and Antifungal Drugs (LPAD pathway), and that as such, hospitals were eligible to receive new technology add-on payments for DefenCath® as of January 1, 2024, which was the first date of the first quarter post FDA approval. The applicant stated that its original application included a WAC price of $390 per mL to determine reimbursement, which it stated was based upon market conditions at the time of the submission of the application. The applicant explained that after the submission of its application for FY 2024, and following FDA approval of DefenCath®, it performed additional market research and pricing analysis, and decided to launch with a WAC price that is significantly lower than what was originally submitted. The applicant stated that it launched DefenCath® on April 15, 2024, in the inpatient setting with the WAC price of $249.99 per 3mL vial ($83.33 per mL), and urged CMS to finalize its proposal to continue making new technology add-on payments in FY 2025 for DefenCath®.

Another commenter also submitted a comment requesting that CMS reassess the new technology add-on payment ( print page 69123) amount for DefenCath® based on the WAC price of $249.99 per 3mL vial, and expressed its concern about the impact DefenCath® will have on the Medicare program. The commenter stated that DefenCath® was late to the market with a clinical study using a control group which did not represent the current standard of care, and that it does not improve patient care or outcomes beyond the commenter's product, ClearGuard TM HD Antimicrobial Barrier Caps. The commenter also stated that DefenCath® requires additional labor resources to implement. Therefore, the commenter recommended that CMS monitor the value associated with DefenCath®.

Response: We thank the applicant and commenter for their comments and the updated cost information and recommendations. We have updated the new technology add-on payment amount for DefenCath® accordingly.

Although the applicant states that DefenCath® was launched on April 15, 2024, we did not receive information regarding a documented delay in market availability, 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. Therefore, we continue to consider the beginning of the newness period to commence on November 15, 2023, the date of FDA marketing authorization for the indication covered by its QIDP designation.

DefenCath®'s current new technology add-on payment amount is $17,111.25, based on a WAC of $1,170 per 3mL vial. As we noted in the FY 2024 IPPS/LTCH PPS final rule ( 88 FR 58943 ), on average, patients would receive 9.75 HD treatments per inpatient stay based upon the average length of stay of 13.3 days, which would require 19.5 vials. For FY 2025, the maximum new technology add-on payment amount is $3,656.10, based on an updated WAC of $249.99 per 3mL vial, as reflected in Table II.E.-01 in this final rule.

We further note that, as discussed in section II.E.5.d. of this final rule, because ELREXFIO TM and TALVEY TM are substantially similar to TECVAYLI®, we are using a single cost for purposes of determining the new technology add-on payment amount for ELREXFIO TM , TALVEY TM , and TECVAYLI® for FY 2025. As discussed in section II.E.5.d. of this final rule, we determined a weighted average of the cost of ELREXFIO TM , TALVEY TM , and TECVAYLI® based upon the projected numbers of cases involving each technology to determine the maximum new technology add-on payment. To compute the weighted average cost, we summed the total number of projected cases for each technology provided by the applicants, which equaled 4,376 cases (152 cases for ELREXFIO TM plus 2,318 cases for TALVEY TM plus 1,906 cases for TECVAYLI®). We then divided the number of projected cases for each of the technologies by the total number of cases, which resulted in the following case weighted percentages: 3.47 percent for ELREXFIO TM , 52.97 percent for TALVEY TM and 43.56 percent for TECVAYLI®. For each technology, we then multiplied the estimated cost per patient by the case-weighted percentage (0.0347 * $15,112 = $524.39 for ELREXFIO TM , 0.5297 * $25,164.44 = $13,329.60 for TALVEY TM and 0.4356 * $13,754.67 = $5,991.53 for TECVAYLI®). This resulted in a case-weighted average cost of $19,845.52 for the technology.

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 ELREXFIO TM , TALVEY TM , or TECVAYLI® is $12,899.59 for FY 2025, as reflected in Table II.E.-01 of this final rule.

After consideration of the public comments we received, we are finalizing our proposals to continue new technology add-on payments for FY 2025 for the technologies that were approved for new technology add-on payment for FY 2024 and would still be considered “new” for purposes of new technology add-on payments for FY 2025, as listed in the proposed rule and in the following Table II.E.-01 in this section of this final rule.

We note that the following Table II.E.-01 is the same as Table II.E.-01 that was presented in the proposed rule, but Table II.E.-01 in this final rule includes the updated cost information for TECVAYLI® and DefenCath® and the updated newness start date for REZZAYO TM , as discussed previously. Table II.E.-01 in this final rule also presents the newness start date, new technology add-on payment start date, 3-year anniversary date of the product's entry onto the U.S. market, relevant final rule citations from prior fiscal years, maximum add-on payment amount, and coding assignments for each technology. We refer readers to the final rules cited 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.

In the proposed rule, we provided Table II.E.-02 listing the technologies for which we proposed to discontinue making new technology add-on ( print page 69126) payments for FY 2025 because they were no longer “new” for purposes of new technology add-on payments. This table also presented the newness start date, new technology add-on payment start date, the 3-year anniversary date of the product's entry onto the U.S. market, and relevant final rule citations from prior fiscal years. We referred readers to the cited final rules in the following table for a complete discussion of each new technology add-on payment application and the coding and payment amount for these technologies, including the applicable indications and discussion of the newness start date.

We invited public comments on our proposals to discontinue new technology add-on payments for FY 2025 for the technologies listed in Table II.E.-02 of the proposed rule.

Comment: A commenter urged CMS to prevent new access hurdles from arising with newer treatments by continuing new technology add-on payments that are now in place for low volume inpatient stays until the MS-DRG calculations reflect the cost of the treatment, as the commenter asserted that is what the new technology add-on payment mechanism was intended to do.

Response: As we have stated previously, our policy for determining whether to extend new technology add-on payments for an additional year generally applies regardless of the volume of claims for the technology after the beginning of the newness period. We do not believe that case volume is a relevant consideration for making the determination as to whether a product is considered “new” for purposes of new technology add-on payments. Consistent with the statute and our implementing regulations, a technology is no longer considered “new” once it is more than 2 to 3 years old, and the costs of the procedures are considered to be included in the relative weights irrespective of how frequently the technology has been used in the Medicare population ( 83 FR 41280 ).

Comment: The manufacturer of Intercept® Fibrinogen Complex (IFC), pathogen reduced cryoprecipitated fibrinogen complex (PRCFC), submitted a comment stating that due to manufacturing delays, its new technology add-on payment should be extended an additional year. The commenter explained that the IFC manufacturing process is unusual in that the IFC product must be made at blood centers, and that it has contracted with several blood centers. The commenter stated that each of these contracted blood centers must be licensed through FDA approval of a Biologics License Application (BLA) for manufacturing to ship the IFC product across state lines. The commenter stated that a complaint filed by a manufacturer of a competitive product resulted in FDA placing the BLA reviews of several of its contracted blood centers on hold and that the BLA reviews remain pending. The commenter stated that at the end of the first year of its new technology add-on payment (FY 2022), only three blood centers were authorized to ship IFC across state lines, and that as of June 2024, it was still waiting for FDA clearance of four additional blood center contract manufacturing facilities, which would increase manufacturing capacity by another 100 percent. The commenter stated that therefore, the majority of hospitals in the country did not have access to IFC in FY 2022 and FY 2023. The commenter asserted that its new technology add-on payment should be extended through FY 2025 given the significant delay in manufacturing due to the delay in BLA approvals and the resulting lack of national IFC availability.

Response: We thank the commenter for its comment. 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 , 85 FR 58610 ). As such, once a technology has been available on the U.S. market for more than 2 to 3 years, we consider the costs to be included in the MS-DRG relative weights regardless of whether the technology's use in the Medicare population has been frequent or infrequent ( 88 FR 58802 ).

After consideration of the public comments we received, we are finalizing our proposal to discontinue new technology add-on payments for the technologies as listed in the proposed rule and in the following Table II.E.-02 of this final rule for FY 2025 because they are no longer “new” for purposes of new technology add-on payments. This table also presents the newness start date, new technology add-on payment start date, the 3-year anniversary date of the product's entry onto the U.S. market, and relevant final rule citations from prior fiscal years. We refer readers to the final rules cited in the following table for a complete discussion of each new technology add-on payment application and the coding and payment amount for these technologies, including the applicable indications and discussion of the newness start date.

As discussed previously, in the FY 2023 IPPS/LTCH PPS final rule, we finalized our policy to publicly post online applications for new technology add-on payment beginning with FY 2024 applications ( 87 FR 48986 through 48990 ). As noted in the FY 2023 IPPS/LTCH PPS final rule, we are continuing to summarize each application in this final rule. However, while we are continuing to provide discussion of the concerns or issues we identified with respect to applications submitted under the traditional pathway, we are providing more succinct information as part of the summaries in the proposed and final rules regarding the applicant's assertions as to how the medical service or technology meets the newness, cost, and substantial clinical improvement criteria. We refer readers to https://mearis.cms.gov/public/publications/ntap for the publicly posted FY 2025 new technology add-on payment applications and supporting information (with the exception of certain cost and volume information, and information or materials identified by the applicant as confidential or copyrighted), including tables listing the ICD-10-CM codes, ICD-10-PCS codes, and/or MS-DRGs related to the analyses of the cost criterion for certain technologies for the FY 2025 new technology add-on payment applications.

We received 16 applications for new technology add-on payments for FY 2025 under the new technology add-on payment traditional pathway. As discussed previously, in the FY 2024 IPPS/LTCH PPS final rule ( 88 FR 58948 through 58958 ), we finalized that beginning with the new technology add-on payment applications for FY 2025, for technologies that are not already FDA market authorized for the indication that is the subject of the new technology add-on payment application, applicants must have a complete and active FDA market authorization request at the time of new technology add-on payment application submission and must provide documentation of FDA acceptance or filing to CMS at the time of application submission, consistent with the type of FDA marketing authorization application the applicant has submitted to FDA. See § 412.87(e) and further discussion in the FY 2024 IPPS/LTCH PPS final rule ( 88 FR 58948 through 58958 ). Of the 16 applications received under the traditional pathway, one applicant was not eligible for consideration for new technology add-on payment because it did not meet these requirements, and three applicants withdrew their application prior to the issuance of the proposed rule. In accordance with the regulations under § 412.87(f), applicants for FY 2025 new technology add-on payments must have received FDA approval or clearance by May 1 of the year prior to the beginning of the fiscal year for which the application is being considered. Subsequently, prior to the issuance of this final rule, two additional applications were withdrawn for odronextamab (R/R DLBCL indication) and odronextamab (R/R FL indication). We are not including in this final rule the description and discussion of applications that were withdrawn or that are ineligible for consideration for FY 2025. We are addressing the remaining 10 applications. We note that the manufacturer for Casgevy TM (exagamglogene autotemcel) submitted a single application, but for two separate indications, each of which is discussed separately in this section. We are not approving new technology add-on payments for 6 technologies: Casgevy TM (exagamglogene autotemcel) for the indication of transfusion-dependent β-thalassemia, DuraGraft®, FloPatch FP120, Lantidra TM (donislecel-jujn (allogeneic pancreatic islet cellular suspension for hepatic portal vein infusion), AMTAGVI TM (lifileucel), and Quicktome Software Suite, for the reasons discussed in the following sections. For the remaining 5 technologies, we are approving new technology add-on payments for FY 2025 for Casgevy TM (examgamglogene autotemcel) for the indication of sickle cell disease, HEPZATO TM KIT (melphalan for injection/hepatic delivery system), and Lyfgenia TM (lovotibeglogene autotemcel). Because the remaining two technologies, ELREXFIO TM (elranatamab-bcmm) and TALVEY TM (talquetamab-tgvs), are considered substantially similar to TECVAYLI TM (teclistamab-cqyv), which was approved for new technology add-on payments for FY 2024 and is still considered “new” for purposes of new technology add-on payments for FY 2025, these technologies are also eligible for the new technology add-on payment for FY 2025. A discussion of these applications is presented in the following sections.

Vertex Pharmaceuticals, Inc. submitted an application for new technology add-on payments for Casgevy TM for FY 2025 for use in sickle cell disease. According to the applicant, Casgevy TM is a one-time, clustered regularly interspaced short palindromic repeats (CRISPR)/CRISPR-associated protein 9 (Cas9) modified autologous cluster of differentiation (CD)34+ hematopoietic stem & progenitor cell (HSPC) cellular therapy approved for the treatment of sickle cell disease (SCD) in patients 12 years and older with recurrent vaso-occlusive crises (VOC). Per the applicant, using a CRISPR/Cas9 gene editing technique, the patient's CD34+ HSPCs are edited ex vivo via Cas9, a nuclease enzyme that uses a highly specific guide ribonucleic acid (gRNA), at the critical transcription factor binding site GATA1 in the erythroid specific enhancer region of the B-cell lymphoma/leukemia 11A (BCL11A) gene. According to the applicant, as a result of the editing, GATA1 binding is irreversibly disrupted, and BCL11A expression is reduced, resulting in an increased production of fetal hemoglobin (HbF), and recapitulating a naturally occurring, clinically benign condition called hereditary persistence of fetal hemoglobin (HPFH) that reduces or eliminates SCD symptoms. As stated by the applicant, Casgevy TM infusion induces increased HbF production in SCD patients to ≥20 percent, which is known to be associated with fewer SCD complications via addressing the underlying cause of SCD by preventing RBC sickling. We note that the applicant is also seeking new technology add-on payments for Casgevy TM for FY 2025 for use in treating transfusion-dependent beta thalassemia (TDT), as discussed separately later in this section.

Please refer to the online application posting for Casgevy TM , available at https://mearis.cms.gov/public/publications/ntap/NTP2310171VPTU , for additional detail describing the technology and the disease treated by the technology.

With respect to the newness criterion, according to the applicant, Casgevy TM was granted Biologics License Application (BLA) approval from FDA on December 8, 2023, for treatment of SCD in patients 12 years of age or older with recurrent VOCs. According to the applicant, Casgevy TM became commercially available immediately after FDA approval. Casgevy TM is available in 20 mL vials containing 4 to 13 × 10 6 CD34+ cells/mL frozen in 1.5 to 20 mL of solution. The minimum dose is 3 × 10 6 CD34+ cells per kg of body weight, which may be contained within multiple vials.

Effective April 1, 2023, the following ICD-10-PCS codes may be used to uniquely describe procedures involving ( print page 69129) the use of Casgevy TM : XW133J8 (Transfusion of exagamglogene autotemcel into peripheral vein, percutaneous approach, new technology group 8) and XW143J8 (Transfusion of exagamglogene autotemcel into central vein, percutaneous approach, new technology group 8). The applicant provided a list of ICD-10-CM diagnosis codes that may be used to identify this indication for Casgevy TM . Please refer to the online application posting for the complete list of ICD-10-CM codes provided by the applicant. We believe the relevant ICD-10-CM codes to identify the indication of SCD would be: D57.1 (Sickle-cell disease without crisis), D57.20 (Sickle-cell/Hb-C disease without crisis), D57.40 (Sickle-cell thalassemia without crisis), D57.42 (Sickle-cell thalassemia beta zero without crisis), D57.44 (Sickle-cell thalassemia beta plus without crisis), or D57.80 (Other sickle-cell disorders without crisis). In the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 36031 ), we invited public comments on the use of these ICD-10-CM diagnosis codes to identify the indication of SCD for purposes of the new technology add-on payment, if approved. We note that we did not receive any comments on the use of these codes.

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 respect to the substantial similarity criteria, the applicant asserted that Casgevy TM is not substantially similar to other currently available technologies, because Casgevy TM is the first approved therapy to use CRISPR gene editing technology and no other approved technology uses the same or a similar mechanism of action; and therefore, the technology meets the newness criterion. The following table summarizes the applicant's assertions regarding the substantial similarity criteria. Please see the online application posting for Casgevy TM for the applicant's complete statements in support of its assertion that Casgevy TM is not substantially similar to other currently available technologies.

As discussed in the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 36032 ), we noted that Casgevy TM may have the same or similar mechanism of action to Lyfgenia TM , for which we also received an FY 2025 new technology add-on payment application. Casgevy TM and Lyfgenia TM are both gene therapies using modified autologous CD34+ HSPC therapies administered via stem cell transplantation for the treatment of SCD. Lyfgenia TM was approved by FDA for this indication on December 8, 2023. We noted that both technologies are autologous, ex-vivo modified hematopoietic stem-cell biological products. For these technologies, patients are required to undergo CD34+ HSPC mobilization followed by apheresis to extract CD34+ HSPCs for manufacturing and then myeloablative conditioning using busulfan to deplete the patient's bone marrow in preparation for the technologies' modified stem cells to engraft to the bone marrow. Once engraftment occurs for both technologies, the patient's cells start to produce a different form of hemoglobin in order to reduce the sickling hemoglobin. We further noted that both technologies appeared to map to the same MS-DRGs, MS-DRGs 016 and 017 (Autologous Bone Marrow Transplant with CC/MCC, and without CC/MCC, respectively), and to treat the same or similar disease (SCD) in the same or similar patient population (patients 12 years of age and older who have a history of VOCs). Accordingly, as it appeared that Casgevy TM and Lyfgenia TM may use the same or similar mechanism of action to achieve a ( print page 69130) therapeutic outcome (that is, to reduce the amount of sickling hemoglobin to reduce and prevent VOEs associated with SCD), were assigned to the same MS-DRGs, and treated the same or similar patient population and disease, we stated our belief that these technologies may be substantially similar to each other such that they should be considered as a single application for purposes of new technology add-on payments. We noted that if we determined that this technology is substantially similar to Lyfgenia TM , we believed the newness period would begin on December 8, 2023, the date both Casgevy TM and Lyfgenia TM received FDA approval for SCD. We stated 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 Casgevy TM and Lyfgenia TM 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 Casgevy TM meets the newness criterion, including whether Casgevy TM is substantially similar to Lyfgenia TM and whether these technologies should be evaluated as a single technology for purposes of new technology add-on payments.

Comment: The applicant for Casgevy TM submitted a public comment regarding substantial similarity for Lyfgenia TM and Casgevy TM. The applicant asserted Casgevy TM represents the first therapy approved to use CRISPR/Cas9 gene editing technology and stated that no other approved technologies use this mechanism of action, and CRISPR/Cas9 technology has never previously been used in humans outside of clinical trials. The applicant stated that Casgevy TM is a one-time treatment that uses ex vivo non-viral CRISPR/Cas9 to precisely edit the erythroid-specific enhancer region of BCL11A in CD34+ HSPCs. The applicant stated that, while other non-gene therapy-based therapeutic approaches impact production of HbF, no other approved technology has been able to reactivate production of endogenous HbF to levels known to eliminate disease complications (for example, VOC), consistent with individuals with a clinically benign condition called hereditary persistence of fetal hemoglobin (HPFH) who experience no or minimal disease complications from SCD when they co-inherit both HPFH and SCD; therefore, it stated Casgevy TM satisfies the newness criterion. The applicant stated that CMS focused on perceived similarities in treatment journey and categorical product characteristics between Casgevy TM and certain other technologies, but did not acknowledge material differences in the underlying technology which impact the safety and efficacy profile of these products. The applicant further explained that after Casgevy TM infusion, the edited CD34+ cells engraft in the bone marrow and differentiate to erythroid lineage cells with reduced BCL11A expression, and that this reduced BCL11A expression results in an increase in γ-globin expression and HbF protein production in erythroid cells. The applicant stated that in patients with severe SCD, HbF expression reduces intracellular hemoglobin S (HbS) concentration, preventing the red blood cells from sickling and addressing the underlying cause of disease, thereby eliminating VOCs. The applicant stated that, as such, Casgevy TM is not similar to the current standard of care (bone marrow transplant), nor to other technologies used in the treatment of SCD, and that none of these treatments use a mechanism of action that relies on CRISPR gene editing to reduce intracellular HbS concentration in SCD patients. The applicant explained how Lyfgenia TM uses a separate technology, gene replacement therapy, that utilizes a viral-based mechanism to introduce exogenous genetic material into patients' HSPCs, to add functional copies of a modified βA-globin gene into patients' hematopoietic stem cells (HSCs) through transduction of autologous CD34+ cells with B8305 lentiviral vector (LVV). The applicant stated that due to the LVV-based mechanism of action and the semi-random nature of viral integration, there is a potential risk of LVV-mediated insertional oncogenesis after treatment with Lyfgenia TM used in the treatment of SCD, as documented in FDA-approved labeling. The applicant stated that Casgevy TM , with its non-viral mechanism of action using CRISPR/Cas9 gene editing, does not employ a viral vector and does not insert a transgene; therefore, insertional oncogenesis cannot occur as a matter of scientific principle. The applicant further stated that Casgevy TM uses a unique underlying technology and manufacturing process and has distinct product characteristics that differentiate it from other technologies used to treat SCD. The applicant asserted in its comments that if CMS were to consider gene replacement therapy and gene editing technologies to be substantially similar, it could set a precedent based on overgeneralization which could deter further innovation.

Another commenter who is the manufacturer of Lyfgenia TM also submitted a public comment regarding the newness criterion. With respect to mechanism of action, the applicant stated that Lyfgenia TM has a unique mechanism of action that differs from Casgevy TM 's because it is a one-time gene therapy that adds functional copies of the β A-T87Q -globin gene into a patient's own HSCs ex-vivo through the transduction of autologous CD34+ cells with a BB305 LVV to durably produce HbA T87Q . The commenter added that HbA T87Q is a modified adult hemoglobin (HbA) specifically designed to be anti-sickling while maintaining the same structure and function as naturally occurring HbA. According to the commenter, Lyfgenia TM consists of an autologous CD34+ cell-enriched population from patients with SCD that contains HSCs transduced with BB305 LVV encoding the β A-T87Q -globin gene, suspended in a cryopreservation solution. The commenter stated the BB305 LVV encodes a single amino acid variant of β-globin gene, β A-T87Q -globin: a human β-globin with a genetically engineered single amino acid change (threonine [Thr; T] to glutamine [Gin; Q] at position 87 (T87Q)). The commenter asserted HbA T87Q is nearly identical to wildtype (or “innate”) HbA, which is not prone to sickling. The commenter stated the T87Q substitution introduced in β A-T87Q -globin is designed to physically block or sterically inhibit polymerization of hemoglobin, thus rendering further “anti-sickling” properties to β A-T87Q -globin. According to the commenter, this results in a transgenic, non-immunogenic protein that can be measured in blood allowing for monitoring of the therapeutic protein in vivo and quantification relative to other globin species used to treat SCD. The commenter stated that Lyfgenia TM is not substantially similar to the CRISPR-Cas9 gene editing technique of Casgevy TM . The commenter also stated that, as described previously, Lyfgenia TM adds functional copies of a modified β-globin (HBB) gene, β A-T87Q globin gene, into patients' own HSCs to durably produce HbA T87Q , a modified adult HbA specifically designed to be anti-sickling while maintaining the same morphology and function as naturally occurring HbA. According to the commenter, the CRISPR/Cas9 gene editing technique mechanism of action described for Casgevy TM in the proposed rule differs substantially from Lyfgenia TM , as is evident by Casgevy TM 's ( print page 69131) unique editing approach in which GATA1 binding is irreversibly disrupted, and BCL11A expression is reduced, resulting in an increased production of HbF, and recapitulating a naturally occurring, clinically benign condition called HPFH that reduces or eliminates SCD symptoms.

According to the commenter, increasing HbA T87Q versus increasing HbF are fundamentally distinct mechanistic approaches. For individuals without SCD, HbF production is decreased shortly after birth, coinciding with an increase in HbA, and Lyfgenia TM is designed to replicate this natural state by introducing the production of HbA T87Q . The commenter stated HbA T87Q is nearly identical to HbA in several keyways: sequence homology, protein structure, oxygen affinity and oxygen dissociation curves. The commenter stated that HbF has ~50 percent homology to HbA (two β globin chains are replaced with two γ-chains) and has a higher observed oxygen affinity and different oxygen unloading properties than HbA. According to the commenter, from a clinical perspective, current standard of care approaches (for example, the use of hydroxyurea) are available to increase levels of HbF with variable effectiveness, while the mechanism of action Lyfgenia TM affords is unique in increasing a modified HbA. The commenter commented that while both gene therapies are indicated for the treatment of SCD, the mechanistic approach of each is fundamentally and significantly different from the other, and therefore Lyfgenia TM and Casgevy TM are not substantially similar and should not be considered as a single application for the purposes of new technology add-on consideration.

The commenter also described potential risks associated with consideration of the two technologies as a single application. Specifically, the commenter stated that if Lyfgenia TM and Casgevy TM are treated as a single application and paid under a single maximum new technology add-on payment amount, this could potentially undermine CMS's aim to improve timely, meaningful access to SCD gene therapies for Medicare patients. Per the commenter, not only do the two therapies have distinct mechanisms of action but they also differ in the length of follow-up and the features of the population in which they were studied (for example, the commenter stated that the Lyfgenia TM clinical trials did not exclude patients with a history of chronic pain and included some patients with a history of stroke), and patients should have a choice to work with physicians to decide which therapy is most appropriate, based solely on their specific individual clinical circumstances. The commenter further asserted that given these differences, the finalization of a single new technology add-on payment amount for both therapies could hamper patient access to the most appropriate gene therapy, and potentially create a fiscally problematic and financial loss for IPPS hospitals, given the difference in the wholesale acquisition costs of both therapies, and CMS could potentially over-pay for one product, while under-paying for the other through the use of the historical blended weighted average cost utilizing volume estimates. Therefore, the commenter stated that Lyfgenia TM is not substantially similar to Casgevy TM and should not be considered as a single application with Casgevy TM for the purposes of new technology add-on payments.

Response: We thank the applicant and the other commenters for their comments. Based on our review of comments received and information submitted by the applicant as part of its FY 2025 new technology add-on payment application for Casgevy TM , we agree that Casgevy TM and Lyfgenia TM do not have the same mechanism of action because Casgevy TM modifies a patients' own HSPCs to increase HbF expression to subsequently reduce the expression of intracellular sickled hemoglobin concentration, which is a distinct mechanism of action compared to Lyfgenia TM, which modifies a patients' own HSPCs to increase HbA T87Q (modified adult hemoglobin). Therefore, we agree with the applicant that Casgevy TM has a unique mechanism of action and is not substantially similar to existing treatment options for the treatment of SCD in patients 12 years of age or older with recurrent VOCs and meets the newness criterion. We consider the beginning of the newness period for Casgevy TM to commence on December 8, 2023, when Casgevy TM was granted BLA approval from FDA for the treatment of SCD in patients 12 years of age or older with recurrent VOCs.

With respect to the cost criterion, the applicant searched the FY 2022 MedPAR file and provided multiple analyses to demonstrate that Casgevy TM meets the cost criterion. The applicant included two cohorts in the analyses to identify potential cases representing patients who may be eligible for Casgevy TM : the first cohort included all cases in MS-DRG 014 (Allogeneic Bone Marrow Transplant) to account for the low volume of SCD or transfusion-dependent beta thalassemia (TDT) cases, and the second cohort included cases in MS-DRG 014 (Allogeneic Bone Marrow Transplant) with any ICD-10-CM diagnosis code of SCD or TDT. The applicant explained that the cost analyses for SCD and TDT were combined because the volume of cases with a sickle cell disease or beta thalassemia diagnosis code was very low, and because it believed both indications would be approved in time for new technology add-on payment. In addition, the applicant noted that when searching for cases in MS-DRG 014 with SCD or beta thalassemia diagnosis codes, there were no beta thalassemia cases. The applicant noted that cases included in the analysis may not be a completely accurate representation of cases that will be eligible for Casgevy TM but that the analyses were provided in recognition of the low volume of cases.

The applicant performed two analyses for each cohort: one with all prior drug charges maintained, representing a scenario in which there is no change to patient drug regimen with the use of Casgevy TM ; and another with all prior drug charges removed, representing a scenario in which no ancillary drugs are used in the treatment of Casgevy TM patients. Per the applicant, this was done because some patients receiving Casgevy TM could receive fewer ancillary drugs during the inpatient stay, but it was difficult to know with certainty whether this would be the case or to identify the exact differences in drug regimens between patients receiving Casgevy TM and those receiving allogeneic bone marrow transplants. The applicant noted the analyses with drug charges removed were likely an over-estimation of the ancillary drug charges that would be removed in cases involving the use of Casgevy TM , but these were provided as sensitivity analyses.

According to the applicant, eligible cases for Casgevy TM will be mapped to either Pre-MDC MS-DRGs 016 or 017, depending on whether complications or comorbidities (CCs) or major complications or comorbidities (MCCs) are present. For each analysis, the applicant used the FY 2025 new technology add-on payment threshold for Pre-MDC MS-DRG 016 for all identified cases, because it was typically higher than the threshold for Pre-MDC MS-DRG 017. Each analysis followed the order of operations described in the table later in this section.

For the first cohort, the applicant included all cases associated with MS-DRG 014 (Allogeneic Bone Marrow Transplant). The applicant used the inclusion/exclusion criteria described in the following table and identified 996 ( print page 69132) claims mapping to MS-DRG 014. With all prior drug charges maintained (Scenario 1), the applicant calculated a final inflated average case-weighted standardized charge per case of $12,325,062, which exceeded the average case-weighted threshold amount of $182,491. With all prior drug charges removed (Scenario 2), the applicant calculated a final inflated average case-weighted standardized charge per case of $12,181,526, which exceeded the average case-weighted threshold amount of $182,491.

For the second cohort, the applicant searched for cases within MS-DRG 014 with any ICD-10-CM diagnosis codes representing SCD or TDT. The applicant used the inclusion/exclusion criteria described in the following table and identified 11 claims mapping to MS-DRG 014. With all prior drug charges maintained (Scenario 3), the applicant calculated a final inflated average case-weighted standardized charge per case of $12,125,212, which exceeded the average case-weighted threshold amount of $182,491. With all prior drug charges removed (Scenario 4), the applicant calculated a final inflated average case-weighted standardized charge per case of $12,086,551, which exceeded the average case-weighted threshold amount of $182,491.

Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount in all scenarios, the applicant maintained that Casgevy [ TM ] meets the cost criterion.

In the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 36034 ), we invited public comments on whether Casgevy TM meets the cost criterion.

Comment: The applicant reiterated that the cost criterion analyses submitted with the application demonstrate that Casgevy TM meets the cost criterion.

Response: We thank the applicant for its comments. We agree that the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount in all scenarios. Therefore, Casgevy TM meets the cost criterion.

With regard to the substantial clinical improvement criterion, the applicant asserted that Casgevy [ TM ] represents a substantial clinical improvement over existing technologies because it is anticipated to expand patient eligibility for potentially curative SCD therapies, have improved clinical outcomes relative to available therapies, and avoid certain serious risks or side effects associated with existing potentially curative treatment options for SCD. The applicant provided one study to support these claims, as well as eight background articles about clinical outcomes and safety risks of other SCD treatments. [ 24 ] The following table summarizes the applicant's assertions regarding the substantial clinical improvement criterion. Please see the online posting for Casgevy TM for the applicant's complete statements regarding the substantial clinical improvement criterion and the supporting evidence provided.

In the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 36035 through 36036 ), after reviewing the information provided by the applicant, we stated we had the following concerns regarding whether Casgevy [ TM ] meets the substantial clinical improvement criterion. We noted that the only assessment of the technology submitted was from conference presentations that provided data on the ongoing CLIMB-121 trial, a phase 1/2/3 single-arm trial assessing a single dose of Casgevy [ TM ] in patients 12 to 35 years old with SCD and a history of two or more severe VOCs per year over 2 years. The most recent data presented at ASH in December 2023, [ 25 ] which appears to supersede the earlier results from Locatelli, et al. (2023), [ 26 ] indicated 44 participants received Casgevy TM for SCD, of which only 30 participants were evaluable for the primary and key secondary endpoints because they were followed for at least 16 months (up to 45.5 months) post Casgevy TM infusion. The applicant stated 96.7 percent of patients achieved the primary efficacy endpoint (free of severe VOCs for at least 12 consecutive months) and 100 percent of patients achieved the key secondary efficacy endpoint (free from in-patient hospitalization for severe VOCs for at least 12 consecutive months). Additionally, the applicant noted a safety profile consistent with myeloablative busulfan and autologous HSCT and that there were no malignancies nor serious adverse events related to Casgevy TM . However, we noted that the provided evidence did not include peer-reviewed literature that directly assessed the use of Casgevy TM for SCD. We questioned whether the small study population may limit the generalizability of these study outcomes to a Medicare population. In addition, from the evidence submitted, we noted we were unable to determine where the study took place (that is, within the United States (U.S.) or in locations outside the U.S), which may also limit generalizability to the Medicare population. Additionally, we questioned if the short follow-up duration was sufficient to assess improvements in long-term clinical outcomes.

Furthermore, the applicant asserted that Casgevy TM significantly improves ( print page 69134) clinical outcomes relative to services or technologies previously available. Regarding the claim that Casgevy TM is the first gene therapy specifically approved for the treatment of SCD in patients 12 years and older with recurrent VOCs, the applicant claimed it was first to submit and have its BLA accepted for a genetic therapy for treatment of SCD. The applicant stated the PDUFA date for Casgevy TM was December 8, 2023, and the PDUFA data for another gene therapy for SCD was December 20, 2023, however, we note that Casgevy TM and another product were both approved on December 8, 2023, as the first gene therapies for SCD. While this claim was made in support of the assertion that Casgevy TM significantly improves clinical outcomes, we noted that the information submitted regarding PDUFA dates and FDA approvals did not appear to provide data regarding a significantly improved clinical outcome under § 412.87(b)(1)(ii)(C).

With regards to the claim that Casgevy TM is expected to avoid certain serious risks or side effects associated with approved viral-based gene therapies for SCD, the applicant cited the potential risk of insertional oncogenesis after treatment with Lyfgenia TM , listed per the package insert for this other gene therapy for SCD. We noted that because clinical trials are conducted under widely varying conditions, we questioned whether adverse reaction rates observed in the clinical trials of one drug can be directly compared to rates in the clinical trials of another drug. We also questioned if the follow-up duration for patients treated with Casgevy TM was sufficient to assess improvement in the rate of malignancy.

With regard to the claim that Casgevy TM is expected to avoid certain serious risks or side effects associated with existing potentially curative treatment options for SCD, the applicant stated that there are significant risks associated with allo-HSCT, including graft failure (up to 9 percent frequency), acute and chronic graft-versus-host disease (GVHD) (with chronic GVHD up to 18 percent frequency), severe infection, hematologic malignancy, bleeding events, and death. In contrast, the applicant claimed Casgevy TM does not require an allogeneic donor as each patient is their own donor, and therefore, does not have the risks of acute and chronic GVHD or the immunologic risks of secondary graft failure/rejection, in addition to not requiring post-transplant immunosuppressive therapies. However, we stated that we were interested in additional evidence regarding the frequency and clinical relevance of side effects such as severe infection, hematologic malignancy, bleeding events, and death for both therapies.

We invited public comments on whether Casgevy TM meets the substantial clinical improvement criterion.

Comment: A few commenters, including the applicant, stated support for approval of Casgevy TM for new technology add-on payments for the SCD indication and disagreed with CMS's concerns. A commenter stated that for beneficiaries with SCD, the available therapy of HSCT is a potentially curative treatment especially for patients with significant barriers to access such as lack of a matched sibling who could potentially serve as a donor and the potential increased risks from the side effects of stem cell transplant.

Response: We thank the commenters for their input and have taken it into consideration in determining whether Casgevy TM meets the substantial clinical improvement criterion as discussed later in this section.

Comment: In response to our concerns about the lack of any published, peer-reviewed studies that directly assessed the use of Casgevy TM within the U.S., the applicant provided additional information from a published phase 3, single-group, open-label study by Frangoul, et al. (2024) [ 27 ] which assessed Casgevy TM in patients 12 to 35 years of age with SCD who had at least two severe VOCs in each of the 2 years before screening. The applicant stated that the study was conducted in both the U.S. and European Union in which a total of 44 patients received exagamglogene autotemcel, and the median follow-up was 19.3 months (range, 0.8 to 48.1). The applicant stated that of the 30 patients who had sufficient follow-up to be evaluated, 29 (97 percent; 95 percent CI, 83 to 100) were free from VOCs for at least 12 consecutive months, and all 30 (100 percent; 95 percent Cl, 88 to 100) were free from hospitalizations for VOCs for at least 12 consecutive months (P<0.001 for both comparisons against the null hypothesis of a 50 percent response).

In response to our concerns about providing peer-reviewed evidence of the safety profile of Casgevy TM , the applicant stated that the Frangoul, et al. (2024) study showed that the safety profile of Casgevy TM was generally consistent with that of myeloablative busulfan conditioning and autologous HSPC transplantation and that no cancers occurred. The applicant stated that, while patients treated with Casgevy TM experienced adverse effects, the adverse effects are consistent with the conditioning regimen, similar to adverse effects in autologous transplant. The applicant stated that in the CLIMB SCD-121 trial [ 28 ] for SCD, the most common adverse events were stomatitis (55 percent), febrile neutropenia (48 percent), platelet count decrease (48 percent), and appetite decrease (41 percent). The applicant stated that patients treated with Casgevy TM did not have any reported cases of graft-versus-host-disease (GVHD), which is a common and potentially serious side effect that can be seen in allogeneic transplant.

In response to our concern regarding oncogenesis with gene therapy, the applicant stated that the two primary potential mechanisms for oncogenesis post-treatment include a late effect of alkylating chemotherapy or oncogene activation from off-target editing or insertional oncogenesis, as seen in other technologies used in treatment of SCD. In Frangoul, et al. (2024) no off-target editing was found through multiple orthogonal approaches. The applicant clarified, however, that alkylating agents generally require 5 to 7 years before secondary malignancies occur, and although off-target genome editing was not observed in the edited CD34+ cells evaluated from healthy donors and patients, the risk of unintended, off-target editing in an individual's CD34+ cells cannot be ruled out due to genetic variants and therefore, the clinical significance of potential off-target editing is unknown. The applicant further stated that longest follow-up in both the CLIMB SCD-121 and CLIMB THAL-111 trials has surpassed 4 years, and stated that it will continue to follow study patients for up to 15 years. The applicant further asserted that due to Casgevy TM 's mechanism of action, which does not employ a viral vector and does not insert a transgene, insertional oncogenesis by definition cannot occur.

In response to our concerns about sample size, the applicant stated its belief that the study sample sizes are appropriate. The applicant stated that SCD affects an estimated 100,000 Americans and that the sample size of the studies reflects the challenges ( print page 69135) associated with enrolling larger studies for rare conditions, as well as significant challenges in conducting larger studies for autologous gene therapy that must be individualized to each patient.

In response to our concern about the generalizability of the evidence to the Medicare population, the applicant commented that it believed the study population reflects the patient population for these medical conditions, including Medicare-covered patients who, as noted, may be dually eligible for Medicare and Medicaid (and thus often not over the age of 65). The commenter also stated that, as noted in the CMS SCD Action Plan, [ 29 ] 11 percent of patients with SCD are enrolled in Medicare. The applicant stated that the CLIMB-121's study population is generalizable as it included patients aged 12-35, reflective of dual Medicare and Medicaid-eligible populations. The applicant stated that CMS has previously shared SCD prevalence data, indicating that more than 70 percent of Medicare fee-for-service beneficiaries with SCD are dual eligibles and more than 80 percent of these beneficiaries with SCD are covered under Medicare through disability insurance benefits.

Response: We thank the applicant for the additional information and have taken it into consideration in determining whether Casgevy TM meets the substantial clinical improvement criterion, discussed later in this section.

Comment: A commenter, who is the manufacturer of Lyfgenia TM , stated that it was not possible to make direct comparisons between the safety or efficacy of Casgevy TM and Lyfgenia TM . The commenter stated that while Lyfgenia TM 's prescribing information includes a warning as to the potential risk of insertional oncogenesis after treatment, there have been no cases of insertional oncogenesis nor any positive results for replication competent lentivirus observed [ 30 ] across the utilization of the BB305 vector across all clinical studies. The commenter also cited the prescribing information for Casgevy TM stating: “[a]lthough not observed in healthy donors and patients, the risk of unintended, off-target editing in CD34+ cells due to uncommon genetic variants cannot be ruled out.” The commenter further stated that although no cases of insertional oncogenesis have been observed with BB305 across the clinical program, two cases of acute myeloid leukemia were observed in patients treated with an earlier version of Lyfgenia TM using a different manufacturing process and transplant procedure, and that patients treated with Lyfgenia TM may develop hematologic malignancies and should have lifelong monitoring.

Response: We thank the applicant and other commenters for their comments regarding the substantial clinical improvement criterion. Based on the additional information received, we agree with the applicant that Casgevy TM represents a substantial clinical improvement over existing technologies because Casgevy TM offers a treatment option for certain patients with SCD who are not eligible for bone marrow transplant due to a lack of HLA matching and who experience recurrent VOEs and have not been able to achieve adequate control of the condition with existing treatments such as hydroxyurea.

After consideration of the public comments and the information included in the applicant's new technology add-on payment application, we have determined that Casgevy TM for the indication of SCD meets the criteria for approval for new technology add-on payment. Therefore, we are approving new technology add-on payments for this technology for SCD for FY 2025.

Cases involving the use of Casgevy TM for the indication of SCD that are eligible for new technology add-on payments will be identified by ICD-10-PCS codes: XW133J8 (Transfusion of exagamglogene autotemcel into peripheral vein, percutaneous approach, new technology group 8) or XW143J8 (Transfusion of exagamglogene autotemcel into central vein, percutaneous approach, new technology group 8) in combination with one of the following ICD-10-CM codes: D57.1 (Sickle-cell disease without crisis), D57.20 (Sickle-cell/Hb-C disease without crisis), D57.40 (Sickle-cell thalassemia without crisis), D57.42 (Sickle-cell thalassemia beta zero without crisis), D57.44 (Sickle-cell thalassemia beta plus without crisis), or D57.80 (Other sickle-cell disorders without crisis).

In its application, the applicant estimated that the cost of Casgevy TM is $2,200,000 per patient. As discussed in section II.E.10 of the preamble of this final rule, we are revising the maximum new technology add-on payment percentage to 75 percent, for a medical product that is a gene therapy that is indicated and used specifically for the treatment of SCD and approved for new technology add-on payments for the treatment of SCD in the FY 2025 IPPS/LTCH PPS final rule. Accordingly, under § 412.88(a)(2) as revised in this final rule, we limit new technology add-on payments to the lesser of 75 percent of the average cost of the technology, or 75 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 Casgevy TM for the treatment of SCD is $1,650,000 for FY 2025.

Vertex Pharmaceuticals, Inc. submitted an application for new technology add-on payments for Casgevy TM for FY 2025 for TDT. According to the applicant, Casgevy TM is a one-time, clustered regularly interspaced short palindromic repeats (CRISPR)/CRISPR-associated protein 9 (Cas9) modified autologous cluster of differentiation (CD)34+ hematopoietic stem & progenitor cell (HSPC) cellular therapy indicated for the treatment of TDT in patients 12 years of age or older. Per the applicant, using a CRISPR/Cas9 gene editing technique, the patient's CD34+ HSPCs are edited ex vivo via Cas9, a nuclease enzyme that uses a highly-specific guide ribonucleic acid (gRNA), at the critical transcription factor binding site GATA1 in the erythroid specific enhancer region of the B-cell lymphoma/leukemia 11A (BCL11A) gene. According to the applicant, as a result of the editing, GATA1 binding is irreversibly disrupted, and BCL11A expression is reduced, resulting in an increased production of fetal hemoglobin (HbF). As stated by the applicant, this increase in HbF recapitulates a naturally occurring, clinically benign condition called hereditary persistence of fetal hemoglobin (HPFH). The applicant stated that as a result, Casgevy TM infusion induces increased HbF production in TDT patients so that circulating red blood cells (RBC) exhibit nearly 100 percent HbF, eliminating the need for RBC transfusions. As previously discussed earlier in this section, the applicant is also seeking new technology add-on payments for Casgevy TM for FY 2025 for use in treating SCD.

With respect to the newness criterion, according to the applicant, Casgevy TM ( print page 69136) was granted BLA approval from FDA on January 16, 2024, for the treatment of TDT in patients 12 years of age and older. The applicant also explained that the minimum dosage of Casgevy TM is 3 × 10 6 CD34+ cells per kg of patient's weight. A single dose of Casgevy TM is supplied in one or more vials, with each vial containing 4 to 13 × 10 6 cells/mL suspended in 1.5 to 20 mL of cryo-preservative medium.

Effective April 1, 2023, the following ICD-10-PCS codes may be used to uniquely describe procedures involving the use of Casgevy TM : XW133J8 (Transfusion of exagamglogene autotemcel into peripheral vein, percutaneous approach, new technology group 8) and XW143J8 (Transfusion of exagamglogene autotemcel into central vein, percutaneous approach, new technology group 8). The applicant provided a list of diagnosis codes that may be used to currently identify this indication for Casgevy TM under the ICD-10-CM coding system. Please refer to the online application posting for the complete list of ICD-10-CM codes provided by the applicant.

In the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 36036 ), we stated our belief that the relevant ICD-10-CM codes to identify the indication of TDT would be: D56.1 (Beta thalassemia), D56.2 (Delta-beta thalassemia), or D56.5 (Hemoglobin E-beta thalassemia). We invited public comments on the use of these ICD-10-CM diagnosis codes to identify the indication of TDT for purposes of the new technology add-on payment, if approved.

With respect to the substantial similarity criteria, the applicant asserted that Casgevy TM is not substantially similar to other currently available technologies because Casgevy TM is the first approved therapy to use CRISPR gene editing as its mechanism of action, and therefore, the technology meets the newness criterion. The following table summarizes the applicant's assertions regarding the substantial similarity criteria. Please see the online application posting for Casgevy TM for the applicant's complete statements in support of its assertion that Casgevy TM is not substantially similar to other currently available technologies.

In the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 36037 ), we questioned whether Casgevy TM may be the same or similar to other gene ( print page 69137) therapies used to treat TDT, specifically Zynteglo TM , which was approved for treatment of TDT on August 17, 2022. Casgevy TM and Zynteglo TM are both gene therapies using modified autologous CD34+ HSPC therapies administered via stem cell transplantation for the treatment of TDT. Both technologies are autologous, ex-vivo modified hematopoietic stem-cell biological products. For these technologies, patients are required to undergo CD34+ HSPC mobilization followed by apheresis to extract CD34+ HSPCs for manufacturing and then myeloablative conditioning using busulfan to deplete the patient's bone marrow in preparation for the technologies' modified stem cells to engraft to the bone marrow. Once engraftment occurs, the patient's cells start to produce a different form of hemoglobin to increase total hemoglobin and reduce the need for RBC transfusions. Therefore, we noted that it appeared as if Casgevy TM and Zynteglo TM would use a similar mechanism of action to achieve a therapeutic outcome for the treatment of TDT. Further, both technologies appeared to map to the same MS-DRGs, MS-DRG 016 (Autologous Bone Marrow Transplant with CC/MCC) and 017 (Autologous Bone Marrow Transplant without CC/MCC), and to treat the same or similar disease (beta thalassemia) in the same or similar patient population (patients who require regular blood transfusions). Accordingly, we stated our belief that these technologies may be substantially similar to each other. We noted that if Casgevy TM is substantially similar to Zynteglo TM for the treatment of TDT, we believed the newness period for this technology would begin on August 17, 2022, the BLA approval date for Zynteglo TM .

We invited public comments on whether Casgevy TM is substantially similar to existing technologies and whether Casgevy TM meets the newness criterion.

Comment: The applicant objected to the use of the Zynteglo TM market entry date as the start of the newness period. With respect to substantial similarity, the applicant stated that Casgevy TM is a nonviral, autologous cell therapy that is designed to reactivate fetal hemoglobin production by means of ex vivo CRISPR/Cas9 gene editing at the erythroid enhancer region of BCL11A in a patient's own hematopoietic stem and progenitor cells (HSPCs). The applicant stated that after Casgevy TM infusion, the edited CD34+ cells engraft in the bone marrow and differentiate to erythroid lineage cells with reduced BCL11A expression. The applicant stated that reduced BCL11A expression results in an increase in γ-globin expression and HbF protein production in erythroid cells. The applicant stated that in patients with TDT, γ-globin production improves the α-globin to non-α-globin imbalance thereby reducing ineffective erythropoiesis and hemolysis and increasing total hemoglobin levels, addressing the underlying cause of disease, and eliminating the dependence on regular RBC transfusions. The applicant asserted that Casgevy TM is not similar to the current standard of care for TDT (non-curative, lifelong regular blood transfusions), nor to other technologies used in the treatment of TDT, because it relies on a completely different mechanism of action than either of these treatments and therefore, Casgevy TM satisfies the newness criterion.

Another commenter, who is the manufacturer of Zynteglo TM , also stated that these technologies are not substantially similar to one another. The commenter stated the CRISPR/Cas9 gene editing technique of Casgevy TM is not substantially similar to the gene editing approach used for Zynteglo TM , which works by adding functional copies of a modified form of the β A-T87Q -globin gene into a patient's own HSPCs to allow them to make normal to near-normal levels of total hemoglobin without regular red blood cell transfusions.

Response: Based on our review of comments received and information submitted by the applicant as part of its FY 2025 new technology add-on payment application for Casgevy TM , we agree with the applicant that Casgevy TM modifies HSPCs to stimulate production of endogenous HbF, and does not modify HSPCs to increase HbA T87Q (modified adult hemoglobin) as seen with Zynteglo TM, in order to increase total hemoglobin levels. Therefore, we agree with the applicant that Casgevy TM has a unique mechanism of action and is not substantially similar to existing treatment options for the treatment of TDT in patients 12 years of age and older and meets the newness criterion. We therefore consider the beginning of the newness period to commence on January 16, 2024, when Casgevy TM was granted BLA approval from FDA for the treatment of TDT in patients 12 years of age and older.

With respect to the cost criterion, the applicant searched the FY 2022 MedPAR file and provided multiple analyses to demonstrate that Casgevy TM meets the cost criterion. The applicant included two cohorts in the analyses to identify potential cases representing patients who may be eligible for Casgevy TM : the first cohort included all cases in MS-DRG 014 (Allogeneic Bone Marrow Transplant) to account for the low volume of SCD or TDT cases, and the second cohort included cases in MS-DRG 014 (Allogeneic Bone Marrow Transplant) with any ICD-10-CM diagnosis code of SCD or TDT. The applicant explained that the cost analyses for SCD and TDT were combined because the volume of cases with a sickle cell disease or beta thalassemia diagnosis code was very small, and because it believed both indications would be approved in time for new technology add-on payment. In addition, the applicant noted that when searching for cases in MS-DRG 014 with SCD or beta thalassemia diagnosis codes, there were no beta thalassemia cases. The applicant noted that cases included in the analysis may not be a completely accurate representation of cases that will be eligible for Casgevy TM but that the analyses were provided in recognition of the low volume of cases.

The applicant performed two analyses for each cohort: one with all prior drug charges maintained, representing a scenario in which there is no change to patient drug regimen with the use of Casgevy TM ; and the other with all prior drug charges removed, representing a scenario in which no ancillary drugs are used in the treatment of Casgevy TM patients. Per the applicant, this was done because some patients receiving Casgevy TM could receive fewer ancillary drugs during the inpatient stay, but it was difficult to know with certainty whether this would be the case or to identify the exact differences in drug regimens between patients receiving Casgevy TM and those receiving allogeneic bone marrow transplants. The applicant noted the analyses with drug charges removed were likely an over-estimation of the ancillary drug charges that would be removed in cases involving the use of Casgevy TM , but these were provided as sensitivity analyses.

According to the applicant, eligible cases for Casgevy TM will be mapped to either Pre-MDC MS-DRG 016 (Autologous Bone Marrow Transplant with CC/MCC) or Pre-MDC MS-DRG 017 (Autologous Bone Marrow Transplant without CC/MCC), depending on whether complications or comorbidities (CCs) or major complications or comorbidities (MCCs) are present. For each analysis, the applicant used the FY 2025 new technology add-on payment threshold for Pre-MDC MS-DRG 016 for all identified cases, because it was typically higher than the threshold for Pre-MDC MS-DRG 017. Each analysis followed ( print page 69138) the order of operations described in the table later in this section.

For the first cohort, the applicant included all cases associated with MS-DRG 014 (Allogeneic Bone Marrow Transplant). The applicant used the inclusion/exclusion criteria described in the following table and identified 996 claims mapping to MS-DRG 014. With all prior drug charges maintained (Scenario 1), the applicant calculated a final inflated average case-weighted standardized charge per case of $12,325,062, which exceeded the average case-weighted threshold amount of $182,491. With all prior drug charges removed (Scenario 2), the applicant calculated a final inflated average case-weighted standardized charge per case of $12,181,526, which exceeded the average case-weighted threshold amount of $182,491.

For the second cohort, the applicant searched for cases within MS-DRG 014 (Allogeneic Bone Marrow Transplant) with any ICD-10-CM diagnosis codes representing SCD or TDT. The applicant used the inclusion/exclusion criteria described in the following table and identified 11 claims mapping to MS-DRG 014 (Allogeneic Bone Marrow Transplant). With all prior drug charges maintained (Scenario 3), the applicant calculated a final inflated average case-weighted standardized charge per case of $12,125,212, which exceeded the average case-weighted threshold amount of $182,491. With all prior drug charges removed (Scenario 4), the applicant calculated a final inflated average case-weighted standardized charge per case of $12,086,551, which exceeded the average case-weighted threshold amount of $182,491.

Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount in all scenarios, the applicant asserted that Casgevy TM meets the cost criterion.

In the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 36039 ), we invited public comments on whether Casgevy TM meets the cost criterion.

With regard to the substantial clinical improvement criterion, the applicant asserted that Casgevy [ TM ] represents a substantial clinical improvement over existing technologies because it is expected to avoid certain serious risks or side effects associated with the existing approved gene therapy for TDT, Zynteglo [ TM ] . The applicant provided one study to support these claims, as well as two package inserts. [ 32 ] The following table summarizes the applicant's assertion regarding the substantial clinical improvement criterion. Please see the online posting for Casgevy TM for the applicant's complete statements regarding the substantial clinical improvement criterion and the supporting evidence provided.

In the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 36039 ), after reviewing the information provided by the applicant, we stated we had the following concerns regarding whether Casgevy [ TM ] meets the substantial clinical improvement criterion. We noted that the provided evidence did not include any peer-reviewed literature that directly assessed the use of Casgevy [ TM ] for TDT. We noted that the only assessment of the technology submitted was from a conference presentation [ 33 ] that provided data on the CLIMB-111 trial, an ongoing phase 1/2/3 single-arm trial assessing a single dose of Casgevy TM in patients 12 to 35 years old with TDT. The data submitted by the applicant indicated that 48 participants aged 12 to 35 years received Casgevy TM for TDT, of which only 27 participants were evaluable for the primary and key secondary endpoints because they were followed for at least 16 months (up to 43.7 months) after Casgevy TM infusion. Per the applicant's conference presentation, 88.9 percent of participants achieved both the primary efficacy endpoint (transfusion independence for 12 consecutive months while maintaining a weighted average hemoglobin of at least 9 g/dL) and the key secondary efficacy endpoint (transfusion independence for 6 consecutive months while maintaining a weighted average hemoglobin of at least 9 g/dL). The applicant noted that two patients had serious adverse events related to Casgevy TM . Due to the small study population and the median age of participants in the study, we questioned if these study outcomes would be generalizable to a Medicare population. In addition, from the evidence submitted, we stated we were also unable to determine where the study took place (that is, within the U.S. or in locations outside the U.S.), which may also limit generalizability to the Medicare population. We also questioned if the short follow-up duration was sufficient to assess improvements in long-term clinical outcomes.

Furthermore, we stated that with regard to the claim that Casgevy TM is expected to avoid certain serious risks or side effects associated with approved viral-based gene therapies for TDT, the applicant stated that Zynteglo TM utilizes gene transfer to use a modified, inert lentivirus to add working exogenous copies of the β-globin gene to increase functional hemoglobin A; due to this mechanism of action and the semi-random nature of viral integration, the applicant stated that treatment with Zynteglo TM carries the risk of lentiviral vector (LVV)-mediated insertional oncogenesis after treatment. The applicant explained that Casgevy TM is an autologous ex-vivo modified hematopoietic stem-cell biological product which uses a non-viral mechanism of action (CRISPR/Cas9 gene editing), and therefore, this technology does not carry a risk for insertional oncogenesis. The applicant also noted that gene editing approaches, including CRISPR/Cas9, have the potential to produce off-target edits, but in trials to date, off-target gene editing has not been observed in the edited CD34+ cells from healthy donors or patients. We noted that we were unclear regarding the frequency and related clinical relevance of LVV-mediated oncogenesis, and we questioned if the follow-up duration for patients treated with Casgevy TM was sufficient to assess improvement in the rate of malignancy. We also noted we were interested in more information on the overall safety profile comparison between Casgevy TM and Zynteglo TM , as well as any comparisons of Casgevy TM to another potentially curative treatment, allogeneic hematopoietic stem cell transplant for patients with TDT.

Comment: A few commenters, including the applicant, stated support for approval of Casgevy TM for new technology add-on payments for the TDT indication. A commenter further stated that it disagreed with CMS's concerns because for patients with TDT, available treatments have historically included regular blood transfusions or transplantation of bone marrow, options that present significant risk and complications; in the young population, bone marrow transplant results in a 23% rejection rate, which can ultimately become fatal. The commenter stated that for a large number of patients with TDT, a gene therapy is the only transformative, durable, and potentially curative treatment option and thus, represents a substantial improvement.

The applicant submitted a public comment regarding the substantial clinical improvement criterion. The applicant stated that following its application submission, additional data were published in the peer-reviewed New England Journal of Medicine for the TDT therapy indication which provides further support for why Casgevy TM satisfies the substantial clinical improvement criterion, as well as further evidence of safety and effectiveness and the transformative potential of Casgevy TM to treat TDT. The applicant stated that in Locatelli, et al. (2024), the authors directly assessed the use of Casgevy TM for TDT in a phase 3, single-group, open-label study (CLIMB THAL-111) in patients 12 to 35 years of age with TDT and a β 0 /β 0 , β 0 /β 0 -like, or non-β 0 /β 0 -like genotype. The applicant stated that the study showed a total of 52 patients with TDT received exagamglogene-autotemcel and were included in this prespecified interim analysis; the median follow-up was 20.4 months (range, 2.1 to 48.1) and neutrophils and platelets were engrafted in each patient. Among the 35 patients with sufficient follow-up data for evaluation, transfusion independence occurred in 32 patients (91 percent; 95 percent confidence interval, 77 to 98; P < 0.001 against the null hypothesis of a 50 percent response). During transfusion independence, the mean total hemoglobin level was 13.1 g per deciliter and the mean HbF level was 11.9 g per deciliter, and HbF had a pancellular distribution (≥94 percent of red cells). The authors of the study ( print page 69140) reported that the safety profile of Casgevy TM was generally consistent with that of myeloablative busulfan conditioning and autologous HSPC transplantation and no deaths or cancers occurred.

The applicant also stated that the study population from the CLIMB THAL-111 trial was generalizable to the Medicare population, stating that Casgevy TM was studied in trials conducted in the United States and the European Union. The applicant stated that the sample size for the studies were appropriate because TDT is a rare medical condition, and impacts only an estimated 1,000 to 1,500 Americans. The applicant stated that sample sizes of the studies involving Casgevy TM are reflective of the challenges associated with enrolling larger studies for rare conditions, as well as significant challenges in conducting larger studies for an autologous gene therapy that must be individualized to each patient. The applicant stated its belief that the study populations are reflective of the patient population for these conditions, including Medicare covered populations who will often be dual eligible (and thus often not over age 65).

The applicant stated that peer-reviewed data demonstrates the well-tolerated safety profile of Casgevy TM for TDT. The applicant stated that while patients treated with Casgevy TM experienced adverse effects, the adverse effects are consistent with the conditioning regimen, similar to adverse effects in autologous transplant. The applicant stated that in the CLIMB THAL-111 trial for TDT, the most common adverse events were febrile neutropenia (54 percent), stomatitis (40 percent), anemia (38 percent), and thrombocytopenia (35 percent), and that the patients treated with Casgevy TM did not have any reported cases of graft-versus-host-disease (GVHD), which is a common and potentially serious side effect associated with allogeneic stem cell transplant.

The applicant stated that with respect to CMS's question about the length of the follow-up durations being studied, a long-term follow-up study is also continuing to monitor total and fetal hemoglobin levels and safety, including (but not limited to) the potential for secondary cancers, vaso-occlusive events, and markers of end-organ damage in patients who have completed the current study (CLIMB-131; NCT04208529); other studies are being conducted to assess the risk of secondary cancers and off-target effects after genome editing.

In response to CMS's concern regarding oncogenesis with gene therapy, the applicant noted that the two primary potential mechanisms for oncogenesis post-treatment include a late effect of alkylating chemotherapy or oncogene activation from off-target editing or insertional oncogenesis, as seen in other technologies used in treatment of TDT. The applicant stated in newly published peer-reviewed research in New England Journal of Medicine, [ 34 ] no off-target editing was found through multiple orthogonal approaches, but that alkylating agents, however, generally require five to seven years before secondary malignancies occur. The applicant stated that the longest follow-up in the CLIMB THAL-111 trial had surpassed four years, and that it would continue to follow study patients for up to 15 years.

In response to CMS's concern regarding whether variations in clinical trial conditions allows for adequate comparison of adverse event rates between clinical trials with respect to the applicant's claim that Casgevy TM is expected to avoid potential risk associated with other technologies and allogenic bone marrow transplant procedures used in treatment of TDT, the applicant noted that the adverse event profile for Casgevy TM in TDT is consistent with busulfan myeloablative conditioning and HSPC transplant. The applicant further stated that the Casgevy TM 's mechanism of action does not employ a viral vector and does not insert a transgene, and therefore, insertional oncogenesis, a documented risk found in FDA-approved labeling for other viral-based technologies used in the treatment of TDT, by definition, cannot occur as a matter of scientific principle. The applicant further stated that although off-target genome editing was not observed in the edited CD34+ cells evaluated from healthy donors and patients, or in clinical trials to date, the risk of unintended, off-target editing in an individual's CD34+ cells cannot be ruled out due to genetic variants. In addition, the applicant stated that the clinical significance of potential off-target editing is unknown. The applicant stated that as an autologous therapy, which is manufactured from the patient's own HSPCs, which are modified with CRISPR/Cas9 gene editing technology and administered to the patient, there is no risk of GVHD or graft rejection, nor a need for immunosuppressive drugs, because the drug product is based on the patient's own cells and, according to the applicant, this is supported by clinical data generated to date in the CLIMB SCD-121 and CLIMB THAL-111 study, in which no GVHD or graft rejection/failure were observed. The applicant further stated that there are no clinical studies which exist to compare Casgevy TM to other technologies and therefore, no comparisons or conclusions of comparable safety or efficacy can be made.

Another commenter, the manufacturer of Zynteglo TM , commented on CMS's request for more information on the overall safety profile comparison between Casgevy TM and Zynteglo TM with regard to the applicant's claim that Casgevy TM is expected to avoid certain serious risks or side effects associated with approved viral-based gene therapies for TDT. The commenter stated that while the Warnings and Precautions section of the Zynteglo TM package insert includes a warning as to the potential risk of insertional oncogenesis after treatment with Zynteglo TM , there have been no cases of insertional oncogenesis nor any positive results for replication competent lentivirus observed across the utilization of the BB305 vector across all clinical studies.

Response: We thank the applicant and commenters for the additional information. After further review, we continue to have concerns as to whether Casgevy TM meets the substantial clinical improvement criterion. We continue to question whether there is evidence to demonstrate that Casgevy TM improves clinical outcomes relative to existing technologies because of the lack of comparison to allo-HSCT and Zynteglo TM , both of which are previously existing standard of care and potentially curative treatment options for this indication, and which treat the same condition in the same patient population. Without a comparison of outcomes between these existing therapies for TDT, we are unable to make a determination as to whether the technology significantly improves clinical outcomes relative to services or technologies previously available, as asserted by the applicant. We further note that the applicant's only assertion regarding whether Casgevy TM improves clinical outcomes for TDT was regarding the avoidance of a potential risk of a single side effect, and as a commenter stated, there have been no cases of insertional oncogenesis nor any positive results for replication competent lentivirus observed across the utilization of the BB305 vector across all clinical studies. We remain unclear how the provided evidence supports this claim, given that the applicant did not ( print page 69141) provide any evidence of this potential side effect occurring with use of the comparator technology. We continue to question if the follow-up duration for TDT patients treated with Casgevy TM is sufficient to adequately support the applicant's single claim, given the lack of existing data presented to assess improvement in long-term clinical outcomes and reduction in clinically significant adverse events, such as the rate of malignancy, compared with existing treatments, especially given the risk of potential unintended off-target editing remains unknown.

After review of the information submitted by the applicant as part of its FY 2025 new technology add-on payment application for Casgevy TM for TDT and consideration of the comments received, we are unable to determine that Casgevy TM for TDT meets the substantial clinical improvement criterion to be approved for new technology add-on payments for the reasons discussed in the proposed rule and in this final rule, and therefore, we are not approving new technology add-on payments for Casgevy TM for TDT for FY 2025.

Marizyme, Inc. submitted an application for new technology add-on payments for DuraGraft® for FY 2025. According to the applicant, DuraGraft® is an intraoperative vein-graft preservation solution used during the harvesting and grafting interval during coronary artery bypass graft (CABG) surgery. The applicant stated that the use of DuraGraft® does not change clinical/surgical practice; it replaces solutions currently used for flushing and storage of the saphenous vein grafts (SVG) from harvesting through grafting, including tests for graft leakage. As noted in the FY 2024 IPPS/LTCH PPS proposed rule ( 88 FR 26795 ), Somahlution, Inc., acquired by Marizyme in 2020, [ 35 ] submitted and withdrew applications for new technology add-on payments for DuraGraft® for FY 2018 and FY 2019. The applicant also submitted an application for new technology add-on payments for FY 2020, as summarized in the FY 2020 IPPS/LTCH PPS proposed rule ( 84 FR 19305 through 19312 ), that it withdrew prior to the issuance of the FY 2020 IPPS/LTCH PPS final rule ( 84 FR 42180 ). We note that the applicant also submitted an application for new technology add-on payments for FY 2024, as summarized in the FY 2024 IPPS/LTCH PPS proposed rule ( 88 FR 26795 through 26803 ), that it withdrew prior to the issuance of the FY 2024 IPPS/LTCH PPS final rule ( 88 FR 58804 ).

Please refer to the online application posting for DuraGraft®, available at https://mearis.cms.gov/public/publications/ntap/NTP231012EE9NW , for additional detail describing the technology and intraoperative ischemic injury.

With respect to the newness criterion, according to the applicant, DuraGraft® was granted De Novo classification from FDA on October 4, 2023, for adult patients undergoing CABG surgeries and is intended for flushing and storage of SVGs from harvesting through grafting for up to 4 hours. In the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 36040 ), we noted that, per the applicant, DuraGraft® was not yet commercially available due to a delay related to finalizing the label prior to manufacturing.

The applicant stated that, effective October 1, 2017, the following ICD-10-PCS code may be used to uniquely describe procedures involving the use of DuraGraft®: XY0VX83 (Extracorporeal introduction of endothelial damage inhibitor to vein graft, new technology group 3). Please refer to the online application posting for the complete list of ICD-10-CM and -PCS codes provided by the applicant.

With respect to the substantial similarity criteria, the applicant asserted that DuraGraft® is not substantially similar to other currently available technologies because DuraGraft® is a first-in-class product as a storage and flushing solution for vascular grafts used during CABG surgery and the components of DuraGraft® directly interfere with the mechanisms of oxidative damage, and that therefore, the technology meets the newness criterion. The following table summarizes the applicant's assertions regarding the substantial similarity criteria. Please see the online application posting for DuraGraft® for the applicant's complete statements in support of its assertion that DuraGraft® is not substantially similar to other currently available technologies.

In the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 36040 ), we stated that in the FY 2024 IPPS/LTCH PPS proposed rule ( 88 FR 26796 ), we expressed concern that the mechanism of action of DuraGraft® may be the same or similar to other vein graft storage solutions. Similarly, we noted that, according to the applicant, DuraGraft® prevents intraoperative ischemic injury to the endothelial layer of free vascular grafts, reducing the risks for post-CABG vein graft disease and graft failure, which are clinical manifestations of graft ischemia reperfusion injury (IRI), and we questioned whether DuraGraft® might have a similar mechanism of action as existing treatments for preventing ischemic injury of vein grafts during CABG surgery and reducing vein graft disease or its complications following CABG surgery. We invited public comments on whether DuraGraft® is substantially similar to existing technologies and whether DuraGraft® meets the newness criterion.

Comment: The applicant stated that the mechanism of action of DuraGraft® is not substantially similar to other products on the market. The applicant asserted that by FDA definition of a de novo request, there are no other legally marketed treatments or products intended for treating or storing vascular grafts and that the technology has a novel intended use. Therefore, the applicant believed that DuraGraft® met the newness criterion because there no other legally marketed graft storage solutions on the market, there are no other products of this type with FDA market authorization, and that it has a novel intended use according to FDA.

With respect to CMS's concern regarding existing treatments for preventing ischemic injury of vein grafts during CABG surgery, the applicant stated that is not clear which treatments CMS is referring to as there are no legally marketed treatments or products intended for treating or storing vascular grafts besides DuraGraft®. The applicant further stated that while vascular grafts are placed in a liquid, usually Ringers Lactate, Plasmalyte or Normosol, to keep them from drying out between harvesting and implantation, in no way should these liquids be compared to or considered similar to DuraGraft®. The applicant also stated that these liquids cannot prevent ischemic or oxidative damage to vascular grafts. The applicant provided a table showing the components of competing wetting solutions to demonstrate that the solutions do not have the same molecules needed to prevent oxidative damage as DuraGraft®. The applicant stated that on the other hand, the mechanism of action of DuraGraft® as stated in the Instructions for Use (IFU) is through reduction of oxidative damage to maintain the structural and functional integrity of vascular conduits. The applicant asserted that Duragraft®'s primary function is to provide a reducing environment for vascular grafts to prevent oxidative damage which occurs during ischemic storage of grafts, using a combination of L-glutathione and L-Ascorbic acid that is manufactured in such a way as to preserve these molecules in their reduced state. The applicant concluded that, based upon composition, the stated mechanism of action, and preclinical evidence showing maintenance of the graft's structural and functional integrity provided on the DuraGraft® label, there are no similar products.

The applicant also stated that DuraGraft® is considered the first product of its type by FDA. Additionally, the applicant stated that in 2018, CMS established a new ICD-10-PCS code, XYOVX83 (Extracorporeal introduction of endothelial damage inhibitor to vein graft, new technology group 3), to report DuraGraft® when used in CABG procedures. The applicant stated that this ICD-10-PCS code would not be used with other procedures, outside of a few isolated instances. The applicant stated that claims submitted with this ICD-10-PCS code would be in error as DuraGraft® was not authorized or commercialized in the United States prior to October 2023.

A few commenters submitted comments stating that the mechanism of action is not substantially similar to existing technologies and that DuraGraft® has a novel mechanism of action in preventing oxidative damage to prevent ischemic injury and subsequent Ischemic Reperfusion Injury (IRI).

One commenter stated that they remained concerned that the information provided by the applicant does not show that DuraGraft® meets the newness criterion.

Response: We thank the applicant and the commenters for their comments. Based on our review of comments received and information submitted by the applicant as part of its FY 2025 new technology add-on payment application for DuraGraft®, we agree with the applicant and some of the commenters ( print page 69143) that DuraGraft® has a unique mechanism of action compared to other vein graft storage solutions because it creates a reducing environment for vascular grafts to prevent oxidative damage which occurs during ischemic storage of grafts. Therefore, we agree with the applicant that DuraGraft® is not substantially similar to existing treatment options and meets the newness criterion.

Comment: In response to our note in the proposed rule that DuraGraft® was not commercially available, the applicant responded that DuraGraft® is not yet commercially available but is expected to be available near the end of the second quarter of 2024.

Response: We thank the applicant for their response. As discussed in prior rulemaking ( 86 FR 45132 ; 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 US market. At this time, as there is not sufficient information to determine a newness date based on a documented delay in the technology's availability on the U.S. market, we consider the newness date for this technology to be October 4, 2023, the date it was granted De Novo classification from FDA.

With respect to the cost criterion, to identify potential cases representing patients who may be eligible for DuraGraft®, the applicant searched the FY 2022 MedPAR file for cases reporting a combination of ICD-10-CM/PCS codes that represent patients who underwent CABG procedures. Please see the online posting for DuraGraft® for a complete list of MS-DRGs and ICD-10-CM and -PCS codes provided by the applicant. Using the inclusion/exclusion criteria described in the following table, the applicant identified 33,511 cases mapping to 59 MS-DRGs, including MS-DRG 236 (Coronary Bypass Without Cardiac Catheterization Without MCC) representing 21.9 percent of the identified cases. The applicant followed the order of operations described in the following table and calculated a final inflated average case-weighted standardized charge per case of $321,620, which exceeded the average case-weighted threshold amount of $235,829. Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount, the applicant asserted that DuraGraft® meets the cost criterion.

In the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 36041 ), we noted the following concerns regarding the cost criterion. Although the applicant did not remove direct or indirect charges related to the prior technology, we noted that the applicant indicated that the use of DuraGraft® replaces solutions currently used for flushing and storage of the SVGs harvested through grafting, including tests for graft leakage, in its discussion of the newness criterion. Therefore, we questioned whether the cost criterion analysis should remove charges for related or prior technologies, such as autologous heparinized blood, Plasmalyte/Normosol, Lactated Ringers, and heparinized saline.

We invited public comments on whether DuraGraft® meets the cost criterion.

Comment: The applicant conducted two new cost analyses to address CMS's concerns about not removing direct or indirect charges related to prior technology. Specifically, the applicant removed 25 percent of the medical supply's charges including Plasmalyte/Noromosol, Lactated Ringers and Heparinized saline, and separately removed all blood charges. Under the first analysis, DuraGraft® exceeded the ( print page 69144) average case-weighted cost threshold amount by $75,125, and under the second analysis, Duragraft® exceeded the average case-weighted cost threshold amount by $85,777. The applicant stated that Duragraft® met the cost criterion as it exceeded the cost threshold with inclusion of the charges for related or prior technologies and when charges for the prior technologies are removed.

Response: We thank the applicant for its comments and new cost analyses. We agree that the final inflated average case-weighted standardized charges per case exceeded the average case-weighted threshold amounts. Therefore, DuraGraft® meets the cost criterion.

With regard to the substantial clinical improvement criterion, the applicant asserted that DuraGraft® represents a substantial clinical improvement over existing technologies because there is no other product or technology that reduces the incidence of peri-operative myocardial infarction. The applicant provided four studies to support this assertion, as well as 47 background articles about reducing major adverse cardiac events (MACE). [ 37 ] The following table summarizes the applicant's assertions regarding the substantial clinical improvement criterion. Please see the online posting for DuraGraft® for the applicant's complete statements regarding the substantial clinical improvement criterion and the supporting evidence provided.

In the FY 2025 IPPS/LTCH PPS proposed rule ( 89 FR 36042 through 36043 ), after review of the information provided by the applicant, we stated we ( print page 69146) had the following concerns regarding whether DuraGraft® meets the substantial clinical improvement criterion. As discussed in the FY 2024 IPPS/LTCH PPS proposed rule ( 88 FR 26800 through 26801 ), we expressed concern regarding the relatively small sample sizes of the Szalkiewicz, et al. (2022) [ 38 ] and Perrault, et al. (2021) [ 39 ] studies, as compared to the number of potentially eligible patients for this technology, and relatively short follow-up periods. We continued to question whether the sample was representative of the number of Medicare beneficiaries potentially eligible for DuraGraft®. We referred readers to the FY 2024 IPPS/LTCH PPS proposed rule for further discussion of these concerns. We also stated that, for its FY 2025 application, the applicant also cited Lopez-Menendez, et al. (2021), [ 40 ] which we noted used a sample size of 180, and therefore we similarly questioned whether the results of this study would be replicated with a larger patient sample.

Similar to the FY 2024 IPPS/LTCH PPS proposed rule ( 88 FR 26800 through 26801 ), we also questioned whether the results from the Haime, et al. (2018) [ 41 ] study could be generalized to other patient groups, including non-Veterans, women, or those from other racial or ethnic groups. We continued to question whether the demographic profiles in the Perrault, Szalkiewicz, and Haime studies that the applicant submitted were comparable with those of the U.S. Medicare patients who underwent CABG surgery. For its FY 2025 application, the applicant also cited the Lopez-Menendez, et al. (2021) [ 42 ] study, which was based on a European patient population that was predominantly male (82 percent to 90 percent). However, as we noted in the FY 2024 IPPS/LTCH PPS proposed rule ( 88 FR 26800 through 26801 ), among the Medicare fee-for-service beneficiaries who underwent CABG surgery, male patients accounted for two-thirds (66 percent) of this population. Therefore, we stated that we continued to question whether the findings of these studies would be replicable among the Medicare population.

We invited public comments on whether DuraGraft® meets the substantial clinical improvement criterion.

Comment: The applicant reiterated the studies provided in its application in support of substantial clinical improvement for DuraGraft® and stated that the FDA label for DuraGraft® includes the following data from the Perrault study and the Internal Study Report: DuraGraft-treated SVGs had smaller wall thickness and lesser maximum focal narrowing at 12 months versus saline controls, [ 43 ] and reduced all-cause mortality at 3 years for Duragraft patients compared to patients who received SOC. [ 44 ]

In response to CMS's concerns regarding small sample sizes in the Perrault, Szalkiewicz, and Lopez-Menendez studies, the applicant stated that the sample size for the Perrault study was typical for a Class 2 medical device pivotal study under FDA, with 125 patients enrolled. The applicant stated that the study utilized a within-patient control design in that each patient received a DuraGraft® treated graft and a control graft, eliminating the need for a control group. The applicant also stated that the study was powered to observe changes in saphenous vein graft wall thickening, a surrogate endpoint in the pathophysiology of vein graft stenosis after CABG. Additionally, the applicant stated that the study, with each patient acting as their own control point, was powered to demonstrate a difference in the primary multidetector computed tomography (MDCT)-based endpoints. The applicant asserted that despite smaller sample sizes compared to those for drug studies, the size is typical for that of a medical device. Per the applicant, the study demonstrates important graft pathophysiology associated with the use of DuraGraft. The applicant further stated that the outcomes of each study are consistent with the growing body of data on DuraGraft® and is generalizable to the Medicare population. The applicant stated that the Szalkiewicz study was retrospective and powered to demonstrate the change in a surrogate endpoint of myocardial damage. The study was based on a sample size of 272 patients, with a mean age of 72 years (inter-quartile range (IQR): 62-75 years) in the DuraGraft® arm and 70 years (IQR: 61-76 years) in the control arm. The applicant stated the age is typical of CABG patients and the Medicare population. Regarding the Lopez-Menendez study, the applicant explained that this observational, prospective, single-center study had a follow-up period of 3 years and a sample size of 180 patients, 90 in the DuraGraft® arm and 90 in the control arm. The applicant stated that the study results showed a reduction of MACE in the DuraGraft® arm and, in a subset analysis, the use of DuraGraft® in diabetic patients was associated with better event-free survival. Additionally, the applicant stated that the observational study in the Marizyme internal study report had more than 5,000 patients and demonstrated DuraGraft®'s long-term treatment effects by comparing 3-year mortality from CABG patients in the DuraGraft® registry to a propensity matched cohort from the STS registry. The applicant asserted that the overall sample size of the patients treated with DuraGraft® in these four studies was 2,700.

The applicant also commented on CMS's concerns about the differences in the distribution of demographic characteristics between the patients in the Perrault, Haime, and Szalkewicz studies and the U.S. Medicare population. To address this concern, the applicant highlighted a head-to-head comparison (described in the DuraGraft IFU) comparing CABG patients on the European DuraGraft® registry, who were exposed to DuraGraft®, to those in the U.S. STS CABG registry, who were not. The applicant stated that outcomes from patients from the European DuraGraft® Registry (n=2522) were compared to randomly selected patients from the STS registry database in the U.S. who were operated on during the same period (n=294,725). The applicant stated that prior to propensity score ( print page 69147) matching, women comprised only 23.9 percent of the population undergoing first-time CABG in the U.S. during the time of the study, while men made up 76.1 percent. The applicant stated that the percentages were also similar to those of Medicare beneficiaries with the top 15 DRGs associated with cardiac surgery in the CMS MedPAR file data from 2022. The applicant stated that after propensity score matching, the sex distribution of the U.S. cohort became comparable to that of the European cohort, with 82.5 percent male and 17.5 percent female. The applicant asserted that the sex distribution of the patient population in the study was similar to that of Medicare patients undergoing first time CABG procedures at the time of the study. The applicant stated that the primary endpoint for the study was mortality through 3 years of follow-up. The applicant stated that the STS database contains data through 30-days after CABG surgery, and the STS' data was merged by STS with the national Death Index, a database maintained by the National Center for Health Statistics (NCHS) which captures all death records for the U.S. and U.S. territories, allowing mortality to be assessed for most STS patients beyond 30 days. The applicant asserted that the study results demonstrated a reduced mortality estimate in DuraGraft® patients at 3 years compared to STS patients. The applicant stated that this additional information should address CMS's concerns regarding DuraGraft® studies' applicability to the female Medicare population.

With respect to the Perrault study, the applicant stated it was a medical device study conducted with input from FDA, which involved radiologic assessment, using MDCT angiography, to evaluate graft morphology changes post-CABG comparing DuraGraft® treated grafts to saline controls. The applicant stated that some of the study results, reduction in wall thickening and reduction in maximal focal narrowing of the graft following use of DuraGraft®, have been allowed in the DuraGraft® label. The applicant stated that the study patient population was 91.2 percent male and 8.8 percent female and somewhat under-represented Medicare eligible women 8.9 percent versus 23.9 percent based on data in the STS database and CMS data for the timeframe. The applicant stated that the study still represented a study that included women, and taken together with the European DuraGraft® registry described earlier in this section, it was the applicant's conclusion that together these studies are representative of the Medicare eligible population. Additionally, the applicant stated that the average age of the patients, 66.2, was consistent with the age of a Medicare beneficiary.

With respect to the Haime study, the applicant stated that it was a single site study performed at the Boston Veterans Affairs (VA) hospital. According to the applicant, while the group was 99 percent male, the population of the VA hospitals typically represents one with elevated cardiac risk factors. The applicant stated that the characteristics of the study participants are typical for studies of CABG surgery and align with the Medicare population in terms of age, BMI, and presence of a diabetes diagnosis. The applicant stated that according to both CMS and STS data taken from the same time period in which both the Perrault and Registry comparison studies were performed, the percentage of Medicare eligible women undergoing CABG surgery ranges between 23.9 to 25.3 percent. The applicant stated that while the Perrault study included 8.9 percent women, the Registry comparison study patient population was 17.5 percent women. The applicant also stated that the percentage of women in the study reported by Lopez-Menendez (2023) was 17.8 percent, only a few percentage points lower than the percentage of Medicare eligible women undergoing CABG surgery based on both CMS and STS data.

The applicant commented that its current data does not allow an assessment of whether race changes the effect of DuraGraft® and acknowledged that the race of the patients in all the DuraGraft® studies was predominantly Caucasian. According to the applicant, in the Marizyme internal study report, it tried to isolate population differences and eliminate possible biases by propensity score matching based on 35 variables most strongly associated with surgical risk. The applicant cited the Shahian 2012 ASCERT study, [ 45 ] which identified perioperative as well as longer-term predictors of mortality post-CABG. The applicant also asserted that race and sex have been demonstrated in these multiple studies as lesser determinants of post-CABG mortality compared to other important risk factors such as age, congestive heart failure, chronic obstructive pulmonary disease, renal failure, myocardial infarction, and emergent operative status.

Another commenter cited a study by Gaudino and team (2023), [ 46 ] which examined outcomes in women undergoing CABG in the US from 2011-2020. According to the commenter, the authors of the study acknowledged that women have been chronically underrepresented in cardiology studies, but stated that there is no biological evidence for gender-based differential effect of DuraGraft® solution. The commenter further stated that CAD is becoming more common among women, which makes them amenable to medical and invasive treatment options, like CABG surgery. The commenter also referred to a Goldstein 2022 study, [ 47 ] which examined the effects of an external saphenous vein graft support device on reducing intimal hyperplasia and graft failure in patients undergoing CABG, and stated that 20.5 percent of the patients in that study were women.

One commenter stated that the study design for the Perrault study, in which each patient received a DuraGraft® treated graft and a control graft to control for patient-specific graft effects, obviated the need for a separate control patient cohort, thereby decreasing the sample size required for the study. The commenter asserted that the study was powered appropriately as the MDCT scanning measurements were taken every 10mm along the whole of the grafts at 1, 3, and 12 months for the endpoints of the study.

One commenter expressed concern that the data received to date did not support the substantial clinical improvement criterion for DuraGraft®.

Response: We thank the applicant and the commenters for their additional input. After review of the comments and all data received to date, we continue to have concerns that the evidence submitted does not support that the technology meets the substantial clinical improvement criterion.

We continue to question whether the patient samples in the studies provided are representative of the Medicare population, as this could impact the extent to which the results related to DuraGraft®'s effects on clinical outcomes could be generalized to the ( print page 69148) Medicare population, including those who may potentially need CABG surgery or be eligible for DuraGraft®. According to the applicant, because the matched STS cohort, with 82.5 percent males and 17.5 percent females, was equivalent to the European DuraGraft® Registry, it was very similar to the sex demographics of Medicare patients undergoing first time CABG procedures at the time of the study. However, as we noted in the FY 2024 and FY 2025 IPPS/LTCH PPS proposed rules ( 88 FR 26801 and 89 FR 36043 ), male patients accounted for only 66 percent of all CABG patients on Medicare, while women accounted for the remaining 34 percent, and statistics have shown that women tend to have poorer outcomes after CABG surgery. We are also concerned that study results, based on predominantly male and white samples, may not be replicable among the Medicare population, especially since the proportion of racial and ethnic minorities has continued to grow, from 20.9 percent in 2008 to 27.2 percent in 2022. [ 48 ] While the applicant asserted that race and sex were demonstrated in the studies provided to be lesser determinants of post-CABG mortality compared to other important risk factors, such as age, congestive heart failure, chronic obstructive pulmonary disease, renal failure, myocardial infarction (MI) and emergent operative status, the applicant also commented that these factors were not well represented in the same studies, such that it is unclear how they could be accurately demonstrated as a lower determinant of mortality. We note that the poorer clinical outcomes of female and minority CABG patients are well-documented in the literature. Compared to male CABG patients, female CABG patients had worse post-CABG outcomes, including a higher rate of unplanned readmissions within 30 or 90 days post-discharge, inpatient mortality, major cardiovascular and cerebrovascular adverse events (MACCE), like non-fatal MI, transient ischemic attack, cardiovascular-related mortality, and all-cause mortality. [ 49 50 51 ] Compared to white CABG patients, African American CABG patients have a higher risk for poor post-CABG outcomes, like longer length of inpatient stay, MACCE, and all-cause mortality. [ 52 53 ] Study results based on patient samples in which women or racial and ethnic minorities were under-represented may limit our ability to generalize the findings to a population with different clinical characteristics. [ 54 55 ]

Furthermore, we continue to have concerns about the sample sizes in some of the studies referenced. Based on the information provided, we remain unclear about how the sample sizes were calculated and the parameters used in the calculations, such as the size of the populations that the samples represented, the effect size, [ 56 ] and how much of a difference in outcomes was clinically meaningful and reflected a true effect between those who were exposed to Duragraft® and those who were not. [ 57 ]

As noted, the applicant stated that the Perrault study showed that DuraGraft®-treated SVGs had smaller mean wall thickness and lesser maximum focal narrowing at 12 months versus saline controls, and that these results were included in the FDA label for DuraGraft®. The applicant stated that the Perrault study was powered to observe changes in SVG wall thickening, which it stated is a surrogate endpoint in the pathophysiology of vein graft stenosis. While we acknowledge that the study demonstrated smaller wall thickness and lesser maximum focal narrowing at 12 months for DuraGraft®-treated SVGs versus saline controls, as included in the FDA label, we also agree that these are surrogate endpoints. As the study was not powered to demonstrate an improved clinical outcome as described under the regulations at 412.87(b)(1)(ii), we do not believe the inclusion of these findings from this study support a finding of substantial clinical improvement. We also note that we do not believe that the inclusion of outcomes on the FDA label by itself supports a finding of substantial clinical improvement. In addition, the Perrault study compared DuraGraft® to saline controls. However, as previously noted, there are other vein graft preservation solutions, including but not limited to Plasmalyte, Normosol, lactated ringers, and heparinized autologous blood, to which DuraGraft® was not compared. We further note that studies have shown that these solutions have differing effects on graft endothelium. [ 58 59 ] We are unclear how improvements demonstrated by use of DuraGraft® as compared to saline controls demonstrate substantial clinical improvement over other existing technologies without an assessment of comparative outcomes to the other vein graft preservation solutions.

With regard to the applicant's assertions that results of the Marizyme internal study report showing reduced mortality at three years in DuraGraft® patients were included in the FDA label, we note that the primary endpoint was mortality through 1 year of follow up. While the applicant stated in its comment that the study results demonstrated a reduced mortality estimate at 3 years for Duragraft®-treated patients compared to SOC controls, we note that differences in mortality were not statistically significant at the primary endpoint of 1 year. Similarly, we do not believe the inclusion of outcomes on the FDA label by itself supports a finding of substantial clinical improvement. In addition, although we acknowledge that, as stated by the applicant, it tried to isolate population differences and eliminate possible biases by propensity score matching ( print page 69149) based on 35 variables most strongly associated with surgical risk, we note that propensity scoring can only control for confounding factors that are measured. Unmeasured confounding factors could still impact the association between exposure to DuraGraft® and clinical outcomes. In particular, it does not appear that intra-operative or post-operative factors that could impact vein integrity or post-CABG outcomes were accounted for in this study (or in other studies provided by the applicant, as we had previously noted in the FY 2024 IPPS/LTCH PPS proposed rule ( 88 FR 26801 )) including vein distention pressure, time of intra-operative SVG ischemia, or post-operative antiplatelet therapy or lipid-lowering drugs. We further note that the Marizyme internal study report is unpublished, and it is unclear from the report which vein preservation solutions were included in the control arm as the report only states that SOC solution was used. Further, the study only reports all-cause mortality and does not specify how many patients had mortality due to other causes that could not be attributed to use of a vein preservation solution other than DuraGraft®. Therefore, although the applicant stated that this additional information should address CMS's concerns regarding DuraGraft® studies' applicability to the female Medicare population, we continue to question the generalizability of any outcomes associated with use of DuraGraft®.

Therefore, after consideration of the public comments we received and based on the information stated previously, we are unable to determine that DuraGraft® represents a substantial clinical improvement over existing therapies, and we are not approving new technology add-on payments for DuraGraft® for FY 2025.

Two manufacturers, Pfizer, Inc. and Johnson & Johnson Health Care Systems, Inc. submitted separate applications for new technology add-on payments for FY 2025 for ELREXFIO TM and TALVEY TM , respectively. Both of these technologies are bispecific antibodies (bsAb) used for the treatment of adults with relapsed or refractory multiple myeloma (RRMM) who have received at least four prior lines of therapy, including a proteasome inhibitor (PI), an immunomodulatory (IMiD), and an anti-CD38 monoclonal antibody (mAb). ELREXFIO TM is a B-cell maturation antigen (BCMA) directed cluster of differentiation (CD)3 T-cell engager. Per the applicant, ELREXFIO TM is a bispecific, humanized immunoglobulin 2-alanine (IgG2Δa) kappa antibody derived from two mAbs, administered as a fixed-dose, subcutaneous treatment. TALVEY TM is a G protein-coupled receptor, class C, group 5, member D (GPRC5D) targeting bsAb. GPRC5D is an orphan receptor expressed at a significantly higher level on malignant multiple myeloma (MM) cells than on normal plasma cells. We note that Pfizer, Inc. submitted an application for new technology add-on payments for ELREXFIO TM for FY 2024 under the name elranatamab, as summarized in the FY 2024 IPPS/LTCH PPS proposed rule ( 88 FR 26803 through 26809 ), but the technology did not meet the July 1, 2023, deadline for FDA approval or clearance of the technology and, therefore, was not eligible for consideration for new technology add-on payments for FY 2024 ( 88 FR 58804 ).

In the FY 2025 IPPS/LTCH PPS proposed rule ( 86 FR 36043 through 36052 and 36087 through 36092 ), we discussed these applications as two separate technologies. However, after further consideration and as discussed later in this section, we believe ELREXFIO TM and TALVEY TM are substantially similar to each other and that it is appropriate to evaluate both technologies as one application for new technology add-on payments under the IPPS.

Please refer to the online application posting for ELREXFIO TM available at https://mearis.cms.gov/public/publications/ntap/NTP2310176PV9B , for additional detail describing the technology and the disease treated by the technology.

Please refer to the online application posting for TALVEY TM , available at https://mearis.cms.gov/public/publications/ntap/NTP2310163HW2V , for additional detail describing the technology and the disease treated by the technology.

With respect to the newness criterion, the applicant for ELREXFIO TM stated that ELREXFIO TM was granted Biologics License Application (BLA) approval from FDA on August 14, 2023, for the treatment of adult patients with RRMM who have received at least four prior lines of therapy, including a PI, an IMiD, and an anti-CD38 mAb. According to the applicant, ELREXFIO TM was commercially available immediately after FDA approval. Per the applicant, the recommended doses of ELREXFIO TM subcutaneous injection are step-up doses of 12 mg on day 1 and 32 mg on day 4, followed by a first treatment dose of 76 mg on day 8 and subsequent treatment doses as indicated on the label. The applicant noted that treatment doses may be administered in an inpatient or outpatient setting. Per the applicant, patients should be hospitalized for 48 hours after administration of the first step-up dose, and for 24 hours after administration of the second step-up dose. The applicant assumed that there would be a single inpatient stay, with one 44 mg vial used per dose, resulting in two doses (each a step-up dose) being administered.

The applicant for TALVEY TM stated that TALVEY TM was granted BLA approval from FDA on August 9, 2023, for the treatment of adult patients with RRMM who have received at least four prior lines of therapy, including a PI, an IMiD, and an anti-CD38 mAb. According to the applicant, TALVEY TM was commercially available immediately after FDA approval. Per the applicant, patients may be dosed on a weekly or bi-weekly dosing schedule. The applicant noted that patients on a weekly dosing schedule receive three weight-based doses—a 0.01 mg/kg loading dose, a 0.06 mg/kg loading dose, and the first 0.40 mg/kg treatment dose—during the hospital stay; patients on a bi-weekly dosing schedule receive an additional 0.80 mg/kg treatment dose during the hospital stay.

The applicant for ELREXFIO TM stated that effective October 1, 2023, the following ICD-10-PCS code may be used to uniquely describe procedures involving the use of ELREXFIO TM : XW013L9 (Introduction of elranatamab antineoplastic into subcutaneous tissue, percutaneous approach, new technology group 9). The applicant stated that C90.00 (Multiple myeloma not having achieved remission), C90.01 (Multiple myeloma in remission), C90.02 (Multiple myeloma in relapse), and Z51.12 (Encounter for antineoplastic immunotherapy) may be used to currently identify the indication for ELREXFIO TM under the ICD-10-CM coding system.

The applicant for TALVEY TM submitted a request for approval for a unique ICD-10-PCS procedure code for TALVEY TM and was granted approval for the following procedure code effective April 1, 2024: XW01329 (Introduction of talquetamab antineoplastic into subcutaneous tissue, percutaneous approach, new technology group 9). The applicant stated that ICD-10-CM codes C90.00 (Multiple myeloma not having achieved remission) and C90.02 (Multiple myeloma in relapse) may be used to currently identify the indication for TALVEY TM .

As stated earlier and for the reasons discussed further later in this section, we believe that ELREXFIO TM and ( print page 69150) TALVEY TM are substantially similar to each other such that it is appropriate to analyze these two applications as one technology for purposes of new technology add-on payments, in accordance with our policy. We also discuss in this section the information provided by the applicants, as summarized in the proposed rule, regarding whether ELREXFIO TM and TALVEY TM are substantially similar to existing technologies. 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 respect to the substantial similarity criteria, in its application for new technology add-on payments for FY 2025, the applicant for ELREXFIO TM asserted that ELREXFIO TM is not substantially similar to other currently available technologies because it is the only therapy approved for the treatment of patients with RRMM who have received four prior lines of therapy including a PI, IMiD, and mAb, that uses a humanized IgG2Δa antibody for the mechanism of action. Per the