CMS FY2014 Proposed IPPS Rule

FY2014 Inpatient Prospective Payment System (IPPS) proposed rule

The purpose of this document is to provide you with a practical & brief synopsis of Medicare’s FY2014 IPPS proposed rule, released on 4/26/13 at Please call if you would like additional information or to discuss the potential impact on your strategic reimbursement plan.

General Background Information To Be Aware of:

  • CMS FY14 IPPS rule applies to approximately 3,400 acute care hospitals & 440 long-term care facilities (LTCHs).
  • Changes proposed to be effective for discharges occurring on or after October 1, 2013.
  • Proposed payment changes would result in an estimated $110 million decrease in FY 2014 operating payments (or-0.1 percent change) and an estimated $101 million increase in FY 2014 capital payments (or 1.1 percent change).
  • CMS will accept comments on this proposed rule until June 25, 2013.
  • This proposed rule was released on, BUT will appear in the Federal Register on 5/10/13.
  • The final FY14 IPPS rule will be issued by August 1, 2013 & become effective 10/1/13 (FY14).

The following issues pertain to medical-surgical devices. Excerpts are presenting in the order with which they appear in the FY14 IPPS proposed rule.

Admission & Medical Review Criteria for Inpatient Services.

  • Hospital inpatient admissions spanning less than two midnights (that is, less than one Medicare utilization day) will presumptively be inappropriate for payment under Medicare Part A.
  • This presumption may be overcome by documentation in the medical record supporting the admitting physician’s expectation that the beneficiary would need care spanning at least two midnights.
  • Physicians must support their expectation, and accordingly their order for admission, through clear and complete medical documentation.

Bronchial Valves:

  • Given the limited number of cases for this procedure and the advice from our clinical advisors, we are not proposing any MS-DRG changes for bronchial valve(s) insertion for FY 2014.
  • We also are not proposing to change the MS-DRG assignment for procedures involving bronchial valve(s) insertion (procedure codes 33.71 and 33.73) within MS-DRGs 190, 191, and 192.

Total Ankle Replacements:

  • In response to the FY 2013 IPPS/LTCH PPS proposed rule, we received a request to develop a new MS-DRG for total ankle replacements, which we considered to be outside the scope of that proposed rule. We are addressing this request as part of this FY 2014 IPPS/LTCH PPS proposed rule.
  • The cases are captured by procedure code 81.56 (Total ankle replacement) and are assigned to MS-DRGs 469 and 470 (Major Joint Replacement or Reattachment of Lower Extremity with MCC and without MCC, respectively).
  • Our clinical advisors reviewed this issue and determined that the total ankle replacements are appropriately classified within MS-DRGs 469 and 470.
  • They do not support the commenter’s contention that these cases are significantly more complex than knee and hip replacements. They believe that total ankle replacements are clinically consistent with other types of lower extremity joint replacements within MS-DRGs 469 and 470.
  • Our clinical advisors do not support creating a new MS-DRG for total ankle replacements.

Surgical Hierarchies:

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

Proposed Add-On Payments for New Services and Technologies (page 219):

  • Monteris Medical submitted an application for new technology add-on payments for FY 2011 for the AutoLITT™. AutoLITT™ is a minimally invasive, MRI-guided laser-tipped catheter designed to destroy malignant brain tumors with interstitial thermal energy causing immediate coagulation and necrosis of diseased tissue. We are proposing to discontinue new technology add-on payments for the AutoLITT™ for FY 2014.
    • Because Voraxaze® is still within the 3-year newness period, we are proposing to continue new technology add-on payments for this technology for FY 2014.
    • Because the 3-year anniversary date of DIFICID™ will occur in the second half of the fiscal year (after April 1, 2014), we are proposing to continue new technology add-on payments for DIFICID™ for FY 2014.
    • We approved the Zenith® F. Graft for new technology add-on payments for FY 2013. Cases involving the Zenith® F. Graft that are eligible for new technology add on payments are identified by ICD-9-CM procedure code 39.78 (Endovascular implantation of branching or fenestrated graft(s) in aorta). Because the Zenith® F. Graft is still within the 3-year newness period, we are proposing to continue new technology add-on payments for this technology for FY 2014.

FY 2014 Applications for New Technology Add-On Payments:

CMS received five applications for new technology add-on payments for FY 2014.

  • Kcentra™ CSL Behring submitted an application for new technology add-on payments for Kcentra™ for FY 2014. Kcentra™ is a replacement therapy for fresh frozen plasma (FFP) for patients with an acquired coagulation factor deficiency due to warfarin and who are experiencing a severe bleed.
  • Argus® II Retinal Prosthesis System Second Sight Medical Products, Inc. submitted an application for new technology add-on payments for the Argus® II Retinal Prosthesis System (Argus® II System) for FY 2014. The Argus® II System is an active implantable medical device that is intended to provide electrical stimulation of the retina to induce visual perception in patients who are profoundly blind due to retinitis pigmentosa (RP). These patients have bare or no light perception in both eyes.
  • NeuroPace, Inc. submitted an application for new technology add-on payments for FY 2014 for the use of the RNS® System. Seizures occur when brain function is disrupted by abnormal electrical activity. Epilepsy is a brain disorder characterized by recurrent, unprovoked seizures. According to the applicant, the RNS® System is the first implantable medical device (developed by NeuroPace, Inc.) for treating persons with epilepsy whose partial onset seizures have not been adequately controlled with antiepileptic medications.
  • Cook® Medical submitted an application for new technology add-on payments for the Zilver® PTX® Drug Eluting Peripheral Stent (Zilver® PTX®) for FY 2014. The Zilver® PTX® is intended for use in the treatment of peripheral artery disease (PAD) of the above–the-knee femoropopliteal arteries (superficial femoral arteries).
  • Abbott Vascular submitted an application for new technology add-on payments for the MitraClip® System for FY 2014. The MitraClip® System is a transcatheter mitral valve system that includes a MitraClip® device implant, a Steerable Guide Catheter, and a Clip Delivery System.

After reading 1,424 pages of this proposed rule, this is the most significant issue to watch:

Medical Review Criteria for All Hospital Services (page 672)

  • We will continue to review individual claims to ensure the hospital services furnished to beneficiaries are “reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member,” as required by section 1862(a)(1) of the Act. Any hospital service determined to be not reasonable or necessary may not be paid under Medicare Part A or Part B.
  • We have stated in our existing Medicare manual that when a beneficiary receives a minor surgical procedure or other treatment in the hospital that is expected to keep him or her in the hospital for only a few hours (less than 24), the services should be provided as outpatient hospital services, regardless of the hour the beneficiary comes to the hospital, whether he or she uses a bed, and whether he or she remains in the hospital past midnight (Section 10, Chapter 1 of the MBPM). We note that there has been considerable variation in the interpretation of this instruction. Therefore, we are proposing to clarify this policy and codify our general rule that in addition to services designated by CMS as inpatient only, surgical procedures, diagnostic tests, and other treatments would be generally appropriate for inpatient hospital payment under Medicare Part A when the physician expects the patient to require a stay that crosses at least 2 midnights and admits the patient to the hospital based upon that expectation. Conversely, when a patient enters a hospital for a surgical procedure not specified by Medicare as inpatient only under § 419.22(n), a diagnostic test, or any other treatment, and the physician expects to keep the patient in the hospital for only a limited period of time that does not cross 2 midnights, the services would be generally inappropriate for payment under Medicare Part A. Under our proposed policy, the judgment of the physician and the physician’s order for inpatient admission should be based on such complex medical factors as patient history and comorbidities, the severity of signs and symptoms, current medical needs, and the risk of an adverse event. The factors that lead a physician to admit a particular patient based on the physician’s clinical expectation are significant clinical considerations. The physician would be required to clearly and completely document the clinical facts supporting the inpatient hospital admission. It is the documentation of the reasonable basis for the expectation of a stay crossing 2 midnights that would justify the medical necessity of the inpatient admission, regardless of the actual duration of the hospital stay and whether it ultimately crosses 2 midnights.

For specific coding and reimbursement information, please call me at 203-271-3366 or