2025-20907: Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems; Quality Reporting Programs; Overall Hospital Quality Star Rating; Hospital Price Transparency; and Notice of Closure of a Teaching Hospital and Opportunity To Apply for Available Slots

1. Electronically. You may submit electronic comments on this

regulation to http://www.regulations.gov. Follow the ``Submit a comment'' instructions.

2. By regular mail. You may mail written comments to the following

address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1834-FC, P.O. Box 8010, Baltimore, MD 21244-8010. Please allow sufficient time for mailed comments to be received before the close of the comment period.

3. By express or overnight mail. You may send written comments to

the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1834-FC, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850. For information on viewing public comments, see the beginning of the SUPPLEMENTARY INFORMATION section.

1. Purpose

In this final rule with comment period, we are updating the payment policies and payment rates for services furnished to Medicare beneficiaries in hospital outpatient departments (HOPDs) and ambulatory surgical centers (ASCs), beginning January 1, 2026. Section 1833(t) of the Social Security Act (the Act) requires us to annually review and update the payment rates for services payable under the Hospital Outpatient Prospective Payment System (OPPS). Specifically, section 1833(t)(9)(A) of the Act requires the Secretary of the Department of Health and Human Services (the Secretary) to review certain components of the OPPS not less often than annually, and to revise the groups, the relative payment weights, and the wage and other adjustments to take into account changes in medical practice, changes in technology, and the addition of new services, new cost data, and other relevant information and factors. In addition, under section 1833(i)(D)(v) of the Act, we annually review and update the ASC payment rates. This final rule with comment period also includes additional policy changes made in accordance with our experience with the OPPS and the ASC payment system and recent changes in our statutory authority. We describe these and various other statutory authorities in the relevant sections of this final rule with comment period. In addition, this final rule with comment period announces the closure of a teaching hospital and the opportunity to apply for available slots, and updates the requirements for the Hospital Outpatient Quality Reporting (OQR) Program, the Rural Emergency Hospital Quality Reporting (REHQR) Program, the Ambulatory Surgical Center Quality Reporting (ASCQR) Program, and Overall Hospital Quality Star Rating. Finally, we are updating and refining the requirements for hospitals to make public their standard charges and CMS enforcement of hospital price transparency (HPT) regulations.

2. Summary of the Major Provisions

OPPS Update: For CY 2026, we are increasing the payment rates under the OPPS by an outpatient department (OPD) fee schedule increase factor of 2.6 percent. This increase factor is based on the final inpatient hospital market basket percentage increase of 3.3 percent for inpatient services paid under the hospital inpatient prospective payment system (IPPS), reduced by a final productivity adjustment of 0.7 percentage point. Based on this update, we estimate that total payments to OPPS providers (including beneficiary cost sharing and estimated changes in enrollment, utilization, and case mix) for calendar year (CY) 2026 will be approximately $101.0 billion, an increase of approximately $8.0 billion compared to estimated CY 2025 OPPS payments. [[Page 53450]] We are continuing to implement the statutory 2.0 percentage point reduction in payments for hospitals that fail to meet the hospital outpatient quality reporting requirements by applying a reporting factor of 0.9805 to the OPPS payments and copayments for all applicable services. We note that under the final 340B remedy offset, payments for services at hospitals subject to the 340B remedy offset will be reduced by 0.5 percentage points. ASC Payment Update: For CYs 2019 through 2023, we adopted a policy to update the ASC payment system using the hospital market basket update. In light of the impact of the COVID-19 public health emergency (PHE) on healthcare utilization, we extended our policy to update the ASC payment system using the hospital market basket update an additional 2 years--through CYs 2024 and 2025. In this final rule with comment period, we are extending our utilization of the hospital market basket update as the update factor for the ASC payment system for 1 additional year (through CY 2026). Using the hospital market basket update, for CY 2026, we are increasing payment rates under the ASC payment system by 2.6 percent for ASCs that meet the quality reporting requirements under the ASCQR Program. This increase is based on a final hospital market basket percentage increase of 3.3 percent reduced by a final productivity adjustment of 0.7 percentage point. Based on this final update, we estimate that total payments to ASCs (including beneficiary cost sharing and estimated changes in enrollment, utilization, and case-mix) for CY 2026 will be approximately $9.2 billion, an increase of approximately $450 million compared to estimated CY 2025 Medicare payments. Device Pass-Through Payment Applications: For CY 2026, we received eight complete applications for device pass-through payments. We sought public comment on seven applications and make final determinations on these applications in this final rule with comment period. Changes to the List of ASC Covered Surgical Procedures and Ancillary Services Lists: For CY 2026, we are expanding the ASC covered procedures list (CPL) by revising the criteria under Sec. 416.166 to modify the general standard criteria and to eliminate five of the general exclusion criteria, moving them into a new section as nonbinding physician considerations for patient safety. We also are adding 276 procedures to the ASC CPL based on these criteria changes and adding an additional 271 codes to the ASC CPL that we are finalizing for removal from the IPO list for CY 2026. Changes to the Inpatient Only (IPO) List: For CY 2026, we are phasing out the IPO list over 3 years, beginning with the removal of 285 mostly musculoskeletal services for CY 2026. Add-on Payment for Radiopharmaceutical Technetium-99m (Tc- 99m) Derived from Domestically Produced Molybdenum-99 (Mo-99): In the CY 2025 OPPS/ASC final rule with comment period, we finalized that for CY 2026 the add-on payment for radiopharmaceuticals produced without the use of Tc-99m derived from non-Highly Enriched Uranium sources would be replaced with an add-on payment for radiopharmaceuticals that use Tc-99m derived from domestically produced Mo-99. For CY 2026, we are finalizing a $10 per dose amount for this add-on payment, and that at least 50 percent of the Mo-99 used in the Tc-99m generator that produces a dose of Tc-99m must be domestically produced for the dose to qualify for the add-on payment. We are also codifying our definition for domestically produced Mo-99, and to establish new HCPCS C-code C9176 (Tc-99m from domestically produced non-HEU Mo-99, [minimum 50 percent], full cost recovery add-on, per study dose). Cross-Program Updates for the Hospital Outpatient Quality Reporting (OQR), Rural Emergency Hospital Quality Reporting (REHQR), and Ambulatory Surgical Center Quality Reporting (ASCQR) Programs: We are finalizing the removal of: (1) the COVID-19 Vaccination Coverage Among Healthcare Personnel (HCP) measure from the Hospital OQR and ASCQR Program measure sets beginning with the CY 2024 reporting period/ CY 2026 payment determination; (2) the Hospital Commitment to Health Equity (HCHE) measure from the Hospital OQR and REHQR Program measure sets, and the Facility Commitment to Health Equity (FCHE) measure from the ASCQR Program measure set beginning with the CY 2025 reporting period/CY 2027 payment or program determination; and (3) the Screening for Social Drivers of Health (SDOH) measure and the Screen Positive Rate for SDOH measure from the Hospital OQR, REHQR, and ASCQR Program measure sets beginning with the CY 2025 reporting period. Additionally, we received comments regarding measure concepts related to well-being and nutrition for future consideration in the Hospital OQR, REHQR, and ASCQR Programs. We are finalizing our proposal to update and codify the Extraordinary Circumstance Exception (ECE) policy to clarify that CMS has the discretion to grant an extension in response to an ECE request for the Hospital OQR, REHQR, and ASCQR Programs. Hospital Outpatient Quality Reporting (OQR) Program: In addition to the cross-program measure and policy updates, we are finalizing: (1) adoption of the Emergency Care Access & Timeliness eCQM with 1 year of voluntary reporting for the CY 2027 reporting period followed by mandatory reporting for the CY 2028 reporting period/CY 2030 payment determination and subsequent years; (2) removal of the Median Time from Emergency Department (ED) Arrival to ED Departure for Discharged ED Patients and the Left Without Being Seen measures beginning with the CY 2028 reporting period/2030 payment determination; and (3) modification of the Excessive Radiation Dose or Inadequate Image Quality for Diagnostic Computed Tomography (CT) in Adults (Hospital Level--Outpatient) measure (Excessive Radiation eCQM) from mandatory reporting beginning with the CY 2027 reporting period to continue voluntary reporting in the CY 2027 reporting period and subsequent years. Rural Emergency Hospital Quality Reporting (REHQR) Program: In addition to the cross-program measure and policy updates, we are finalizing the: (1) adoption of the Emergency Care Access & Timeliness eCQM beginning with the CY 2027 reporting period/CY 2029 program determination; and (2) related eCQM data submission and reporting requirements, including that REHs will be provided the option of reporting either the Emergency Care Access and Timeliness eCQM or the Median Time from Emergency Department (ED) Arrival to ED Departure for Discharged ED Patients measure beginning with the CY 2027 reporting period/CY 2029 program determination. Ambulatory Surgical Center Quality Reporting (ASCQR) Program: We are not finalizing the adoption of the Patient Understanding of Key Information Related to Recovery After a Facility- Based Outpatient Procedure or Surgery, Patient Reported Outcome-Based Performance Measure (Information Transfer PRO-PM) at this time. Overall Hospital Quality Star Rating Modification to Emphasize the Safety of Care Measure Group: We proposed to update the methodology that will be used to calculate the Overall Hospital Quality Star Rating through implementation of a 2-stage methodologic update. We are finalizing our proposed updates to the methodology to emphasize the [[Page 53451]] importance of the Safety of Care measure group, particularly to address the issue of hospitals receiving a high Star Rating despite performing in the lowest quartile of the Safety of Care measure group. The first- stage methodology update is a narrow but focused transitional step that limits hospitals to a maximum of four out of five stars (based on at least three Safety of Care measure scores) if they performed in the lowest quartile of the Safety of Care measure group in the 2026 Overall Hospital Quality Star Rating. The second stage of the methodology update replaces the first stage update and reduces the Star Rating of any hospital in the lowest quartile of Safety of Care (based on at least three Safety of Care measure scores) by one star, to a minimum 1- star rating for the 2027 Overall Hospital Quality Star Rating and later years. These changes will prioritize safety for both patients and healthcare workers and reflect CMS' fundamental commitment to ensuring high-quality, safe care as a central component of health system performance. Partial Hospitalization and Intensive Outpatient Programs: We finalizing changes to our methodology used to calculate the CY 2026 Community Mental Health Center (CMHC) Partial Hospitalization Program (PHP), and Intensive Outpatient Program (IOP) costs based on 40 percent of the corresponding proposed hospital-based PHP and IOP costs. This change will resolve a cost inversion in CMHC cost data that resulted in higher geometric mean costs for 3-service days than for 4-service days. It also stabilizes rates for CMHCs by basing them on data from a much larger set of providers while preserving the adjustment for the structural differences between CMHC and hospital costs. Notice of Intent to Conduct a Medicare OPPS Drugs Acquisition Cost Survey: Section 1833(t)(14)(D)(ii) of the Act requires the Secretary to periodically conduct surveys of hospital acquisition costs for each specified covered outpatient drug for use in setting the payment rates for such drugs. Additionally, on April 18, 2025, President Trump signed Executive Order (E.O.) 14273, ``Lowering Drug Prices by Once Again Putting Americans First''. Section 5 of the E.O., ``Appropriately Accounting for Acquisition Costs of Drugs in Medicare'', which directs the Secretary of HHS to publish in the Federal Register a plan to conduct a survey under section 1833(t)(14)(D)(ii) of the Act so he can determine the hospital acquisition cost for covered outpatient drugs at hospital outpatient departments. Accordingly, we will be conducting a survey, with the survey submission window opening by early CY 2026, of the acquisition costs for each separately payable drug acquired by all hospitals paid under the OPPS. We intend for the survey to be completed in time for the survey results to be used to inform policymaking beginning with the CY 2027 OPPS/ASC proposed rule. Two-Midnight Rule Medical Review Activities Exemptions: For CY 2026, we are continuing our existing policy exempting procedures that are removed from the IPO list under the OPPS from certain medical review activities related to the two-midnight policy. Under this policy, procedures removed from the IPO list are exempted from site-of- service claim denials, Medicare review contractor referrals to the Recovery Audit Contractor (RAC) for persistent noncompliance with the 2-midnight rule, and RAC reviews for ``patient status'' (that is, site- of-service) until claims data demonstrates that the procedures are more commonly billed in the outpatient setting than the inpatient setting. We are also revising 42 CFR 412.3(d)(2) for clarity. Virtual Direct Supervision of Pulmonary Rehabilitation (PR), Coronary Rehabilitation (CR), Intensive Coronary Rehabilitation and Diagnostic Services. For CY 2026, we are revising Sec. 410.27(a)(1)(iv)(B)(1) and Sec. 410.28(e)(2)(iii) to make the availability of the direct supervision of CR, ICR, PR services and diagnostic services via audio-video real-time communications technology (excluding audio-only) permanent, except for diagnostic services that have a global period indicator of 010 or 090. Prospective Adjustment to Payments for Non-Drug Items and Services to Offset the Increased Payments for Non-Drug Items and Services Made in CY 2018 Through CY 2022 as a Result of the 340B Payment Policy. For CY 2026, we are applying the previously finalized reduction to the OPPS conversion factor under Sec. 419.32(b)(1)(iv)(B)(12) used to determine the payment amounts for non- drug items and services for hospitals for whom this adjustment applies of 0.5 percent. The Remedy for the 340B-Acquired Drug Payment Policy for Calendar Years 2018-2022 (88 FR 77150) codified a 0.5 percent reduction in the OPPS conversion factor applicable to non-drug items and services, excluding hospitals that enrolled in Medicare after January 1, 2018. Payment for Skin Substitute Products under the OPPS. For CY 2026, we are finalizing a policy for CMS to separately pay for the provision of certain groups of skin substitute products as supplies when they are used during a covered application procedure paid under the PFS in the non-facility setting or under the OPPS. We are finalizing a policy to group skin substitutes that are not drugs or biologicals using three FDA regulatory categories (PMAs, 510(k)s, and 361 HCT/Ps) to set payment rates. To effectuate this categorization into a payment policy under the OPPS, we are creating three new APCs for HCPCS codes that describe skin substitute products organized by clinical and resource similarity. These three APCs will divide skin substitutes by their FDA regulatory pathway. Specifically, we are creating: APC 6000 (PMA Skin Substitute Products); APC 6001 (510(k) Skin Substitute Products); and APC 6002 (361 HCT/P Skin Substitute Products). This will result in an initial payment rate of $127.14 for each of the new APCs. We are implementing this policy in both the non- facility, ambulatory surgical center setting, and outpatient hospital settings. Method to Control Unnecessary Increases in the Volume of Outpatient Services Furnished in Excepted Off-Campus Provider-Based Departments (PBDs): For CY 2026, we are finalizing a policy to use our authority under section 1833(t)(2)(F) of the Act to apply the Physician Fee Schedule equivalent rate for any HPCPCs codes assigned to the drug administration services APCs, when provided at an off-campus PBD excepted from section 1833(t)(21) of the Act. We are finalizing a policy to exempt rural Sole Community Hospitals from this method to control the unnecessary volume of drug administration services. Final Market-Based MS-DRG Relative Weight Data Collection and Change in Methodology for Calculating MS-DRG Relative Weights Under the Inpatient Prospective Payment System: As discussed in section XX. of this final rule with comment period, in order to reduce the Medicare program's reliance on the hospital chargemaster, and to support the development of a market-based approach to payment under the Medicare FFS system, we are finalizing a policy that hospitals will be required to report certain market-based payment rate information on their Medicare cost report for cost reporting periods ending on or after January 1, 2026, to be used in a finalized change to the methodology for calculating the IPPS MS-DRG relative weights to reflect [[Page 53452]] relative market-based pricing. Specifically, we are finalizing a requirement for facilities to report market-based rate information on the Medicare cost report; the hospital will be required to report the median of the payer-specific negotiated charges by MS-DRG that the hospital has disclosed for all of its MAOs on the most recent version of the machine-readable file (MRF) that the hospital is required to disclose under the hospital price transparency regulations at 45 CFR part 180. We also are finalizing a change to the methodology for calculating the IPPS MS-DRG relative weights to incorporate this market-based rate information, beginning in FY 2029. This finalized MS- DRG relative weight methodology will utilize the finalized median payer-specific negotiated charge information, collected on the cost report, for calculating the MS-DRG relative weights. Graduate Medical Education (GME) Accreditation: In order to ensure that accreditation for approved medical residency programs is in compliance with applicable laws prohibiting race-based and other unlawful discrimination and to improve the accreditation process, we are finalizing that accrediting organizations may not use accreditation criteria that promote or encourage discrimination on the basis of race, color, national origin, sex, age, disability, or religion, including the use of those characteristics or intentional proxies for those characteristics as a selection criterion for employment, program participation, resource allocation, or similar activities, opportunities, or benefits. The effective date of this policy will be January 1, 2026. Final Updates to Requirements for Hospitals to Make Public a List of Their Standard Charges: We are finalizing our proposals with modifications to the HPT regulations to enhance clarity and standardization in hospital disclosure of standard charges. Specifically, we are finalizing with modification revisions to 45 CFR 180.20 to add definitions for ``tenth (10th) percentile allowed amount'', ``median allowed amount'', and ``ninetieth (90th) percentile allowed amount'', which are values a hospital will encode when a payer- specific negotiated charge is based on a percentage or algorithm, to more accurately reflect the distribution of actual amounts that a hospital has received for an item or service. In tandem with that, we are finalizing revisions to Sec. 180.50 to remove the requirement for hospitals to disclose the estimated allowed amount, and, instead, require hospitals to disclose the 10th percentile, median, and 90th percentile allowed amounts, as well as the count of allowed amounts, in MRFs when payer-specific negotiated charges are based on percentages or algorithms. We are also finalizing with modification our proposal to require that hospitals use electronic data interchange (EDI) 835 electronic remittance advice (ERA) transaction data or an alternative, equivalent source of remittance data to calculate and encode the allowed amounts. We are finalizing our proposals to require that hospitals comply with specific instructions regarding the methodology that must be used to calculate such allowed amounts (including a lookback period), with some modifications. Additionally, we are finalizing, with modifications, our proposals to require hospitals to encode the attestation statement and the name of the hospital chief executive officer, president, or senior official designated to oversee the encoding of true, accurate, and complete data in the MRF. To advance the comparability of HPT data with other healthcare data, we are finalizing our proposal to require that hospitals encode their organizational, or Type 2, National Provider Identifier(s) (NPIs) in the MRFs. These policies are effective as of January 1, 2026, but we will delay enforcement of the requirements until April 1, 2026. Finally, to encourage faster resolution and payment of CMPs, and in exchange for a hospital's admission of having violated HPT requirements, we are finalizing with clarifying edits our proposal to update Sec. 180.90 to reduce the amount of a CMP by 35 percent, under certain conditions, when a hospital waives its right to an ALJ hearing, beginning January 1, 2026. These changes aim to improve transparency in hospital pricing, facilitate efficient enforcement of the HPT requirements, and empower consumers with actionable pricing information.

3. Summary of Costs and Benefits

In section XXVI. of this final rule with comment period, we set forth a detailed analysis of the regulatory and Federalism impacts that the final changes will have on affected entities and beneficiaries. Key estimated impacts are described below. a. Impacts of all OPPS Changes Table 167 in section XXVI.C. of this final rule with comment period displays the distributional impact of all the OPPS changes on various groups of hospitals and CMHCs for CY 2026 compared to all estimated OPPS payments in CY 2025. We estimate that the final policies in this final rule with comment period will result in a 2.4 percent increase in OPPS payments to providers for services. We estimate that total OPPS payments for CY 2026, including beneficiary cost-sharing, to the approximately 3,600 facilities paid under the OPPS (including general acute care hospitals, children's hospitals, cancer hospitals, and CMHCs) will increase by approximately $1.77 billion compared to CY 2025 payments due to the OPD update, excluding changes in enrollment, utilization, and case-mix. However, for providers subject to the 340B remedy offset, the 340B remedy offset is estimated to reduce payments by $275 million in CY 2026. We estimated the isolated impact of our OPPS policies on CMHCs because CMHCs have historically only been paid for partial hospitalization services under the OPPS. Beginning CY 2024, they are also paid for IOP services under the OPPS. Based on our policy to calculate CMHC PHP and IOP costs based on 40 percent of the corresponding proposed hospital-based PHP and IOP costs, we estimate a 2.2 percent increase in CY 2026 payments to CMHCs relative to their CY 2025 payments. b. Impacts of the Updated Wage Indexes We estimate that our update of the wage indexes based on the fiscal year (FY) 2026 IPPS final rule wage indexes will result in a 0.1 percent increase for urban hospitals under the OPPS and a 0.2 percent increase for rural hospitals. These wage indexes include continued implementation of the Office of Management and Budget (OMB) labor market area delineations based on 2020 Decennial Census data, with updates, as discussed in section II.C. of this final rule with comment period. c. Impacts of the Rural Adjustment and the Cancer Hospital Payment Adjustment For CY 2026, we are continuing to provide additional payments to cancer hospitals so that a cancer hospital's payment-to-cost ratio (PCR) after the additional payments is equal to the weighted average PCR for the other OPPS hospitals using the most recently submitted or settled cost report data. Section 16002(b) of the 21st Century Cures Act requires that this weighted average PCR be reduced by 1.0 percentage point. In light of the COVID-19 PHE impact on claims and cost data used to calculate the target PCR, we maintained the CY 2021 target PCR of 0.89 through CYs 2022 and 2023. However, in CY 2024, we finalized a policy to reduce the target PCR by 1.0 percentage point each calendar year [[Page 53453]] until the target PCR equals the PCR of non-cancer hospitals using the most recently submitted or settled cost report data. For CY 2025, we finalized a target PCR of 0.87. For CY 2026, we are finalizing a target PCR of 0.87, the same PCR of non-cancer hospitals using the most recently submitted or settled cost report data, to determine the CY 2026 cancer hospital payment adjustment to be paid at cost report settlement. That is, the payment adjustments would be the additional payments needed to result in a PCR equal to 0.87 for each cancer hospital. d. Impacts of the OPD Fee Schedule Increase Factor For the CY 2026 OPPS/ASC, we are establishing an OPD fee schedule increase factor of 2.6 percent and applying that increase factor to the conversion factor for CY 2025. As a result of the OPD fee schedule increase factor and other budget neutrality adjustments, we estimate that urban hospitals will experience an increase in payments of approximately 2.8 percent and that rural hospitals will experience an increase in payments of 2.4 percent. Classifying hospitals by teaching status, we estimate non-teaching hospitals will experience an increase in payments of 2.7 percent, minor teaching hospitals will experience an increase in payments of 2.9 percent, and major teaching hospitals will experience an increase in payments of 2.6 percent. We also classified hospitals by the type of ownership. We estimate that hospitals with voluntary ownership will experience an increase of 2.8 percent in payments, while hospitals with government ownership will experience an increase of 2.3 percent in payments. We estimate that hospitals with proprietary ownership will experience an increase of 3.4 percent in payments. e. Impacts of the ASC Payment Update For impact purposes, the surgical procedures on the ASC covered surgical procedure list are aggregated into surgical specialty groups using CPT and HCPCS code range definitions. The percentage change in estimated total payments by specialty groups under the final CY 2026 payment rates, compared to estimated CY 2025 payment rates, ranges between an increase of 2 percent and an increase of 12 percent. f. Impacts of the Market-Based MS-DRG Relative Weight Data Collection and Change in Methodology for Calculating MS-DRG Relative Weights Under the Inpatient Prospective Payment System In section XX. of this final rule, we are finalizing a methodology for estimating the MS-DRG relative weights beginning in FY 2029 based on the median payer-specific negotiated charge information we are finalizing to collect on the cost report. We note that the estimated total annual burden hours for this data collection are as follows: 3,038 hospitals times 20 hours per hospital equals 60,760 annual burden hours and $4,857,458.20. We refer readers to section XXIII.E. of this final rule with comment period for further analysis of this assessment. g. Impacts of Hospital Price Transparency We finalizing a policy to require hospitals to report four new data elements when the payer-specific negotiated charge is based on a percentage or algorithm--the median allowed amount (which would replace the estimated allowed amount data element), the 10th percentile allowed amount, the 90th percentile allowed amount, and the count of allowed amounts. We are also finalizing new attestation language that hospitals must include in the machine-readable file (MRF) and requiring hospitals to encode the name of the chief executive officer, president or senior official designated to oversee the encoding of true, accurate and complete data in the MRF. Additionally, we are finalizing our proposal to require hospitals to add their National Provider Identifiers (NPIs) to the MRF. The policy will advance the comparability of standard charge information across hospitals and of the hospital price transparency (HPT) data with other healthcare data, including health plan transparency data from the Transparency in Coverage (TiC) MRFs. These new policies include a one-time burden of $1,461.80 per hospital, and a total national cost of $10,840,708.80 ($1,461.80 x 7,416 hospitals). As discussed in detail in sections XIX. and XXIII. of this final rule with comment period, we believe that the benefits to the public (and to hospitals themselves) outweigh the burden imposed on hospitals.

B. Legislative and Regulatory Authority for the Hospital OPPS

When Title XVIII of the Act was enacted, Medicare payment for hospital outpatient services was based on hospital-specific costs. In an effort to ensure that Medicare and its beneficiaries pay appropriately for services and to encourage more efficient delivery of care, the Congress mandated replacement of the reasonable cost-based payment methodology with a prospective payment system (PPS). The Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) added section 1833(t) to the Act, authorizing implementation of a PPS for hospital outpatient services. The OPPS was first implemented for services furnished on or after August 1, 2000. Implementing regulations for the OPPS are located at 42 CFR parts 410 and 419. The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113) made major changes in the hospital OPPS. The following Acts made additional changes to the OPPS: the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554); the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173); the Deficit Reduction Act of 2005 (DRA) (Pub. L. 109-171), enacted on February 8, 2006; the Medicare Improvements and Extension Act under Division B of Title I of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA) (Pub. L. 109-432), enacted on December 20, 2006; the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (Pub. L. 110-173), enacted on December 29, 2007; the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), enacted on July 15, 2008; the Patient Protection and Affordable Care Act (Pub. L. 111- 148), enacted on March 23, 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (HCERA, Pub. L. 111-152), enacted on March 30, 2010 (these two public laws are collectively known as the Affordable Care Act); the Medicare and Medicaid Extenders Act of 2010 (MMEA, Pub. L. 111-309); the Temporary Payroll Tax Cut Continuation Act of 2011 (TPTCCA, Pub. L. 112-78), enacted on December 23, 2011; the Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA, Pub. L. 112-96), enacted on February 22, 2012; the American Taxpayer Relief Act of 2012 (Pub. L. 112-240), enacted January 2, 2013; the Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) enacted on December 26, 2013; the Protecting Access to Medicare Act of 2014 (PAMA, Pub. L. 113-93), enacted on March 27, 2014; the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015 (Pub. L. 114-10), enacted April 16, 2015; the Bipartisan Budget Act of 2015 (Pub. L. 114-74), enacted November 2, 2015; the Consolidated Appropriations Act, 2016 (Pub. L. 114-113), enacted on December 18, 2015, the 21st Century Cures Act (Pub. L. 114- 255), enacted on December 13, 2016; the Consolidated Appropriations Act, 2018 (Pub. L. 115- [[Page 53454]] 141), enacted on March 23, 2018; the Substance Use Disorder- Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (Pub. L. 115-271), enacted on October 24, 2018; the Further Consolidated Appropriations Act, 2020 (Pub. L. 116-94), enacted on December 20, 2019; the Coronavirus Aid, Relief, and Economic Security Act (Pub. L. 116-136), enacted on March 27, 2020; the Consolidated Appropriations Act, 2021 (Pub. L. 116-260), enacted on December 27, 2020; the Inflation Reduction Act, 2022 (Pub. L. 117-169), enacted on August 16, 2022; and the Consolidated Appropriations Act (CAA), 2023 (Pub. L. 117-238), enacted December 29, 2022. Under the OPPS, we generally pay for hospital Part B services on a rate-per-service basis that varies according to the APC group to which the service is assigned. We use the Healthcare Common Procedure Coding System (HCPCS) (which includes certain Current Procedural Terminology (CPT) codes) to identify and group the services within each APC. The OPPS includes payment for most hospital outpatient services, except those identified in section I.C of this final rule. Section 1833(t)(1)(B) of the Act provides for payment under the OPPS for hospital outpatient services designated by the Secretary (which includes partial hospitalization services furnished by CMHCs), and certain inpatient hospital services that are paid under Medicare Part B. The OPPS rate is an unadjusted national payment amount that includes the Medicare payment and the beneficiary copayment. This rate is divided into a labor-related amount and a nonlabor-related amount. The labor-related amount is adjusted for area wage differences using the hospital inpatient wage index value for the locality in which the hospital or CMHC is located. All services and items within an APC group are comparable clinically and with respect to resource use, as required by section 1833(t)(2)(B) of the Act. In accordance with section 1833(t)(2)(B) of the Act, subject to certain exceptions, items and services within an APC group cannot be considered comparable with respect to the use of resources if the highest median cost (or mean cost, if elected by the Secretary) for an item or service in the APC group is more than 2 times greater than the lowest median cost (or mean cost, if elected by the Secretary) for an item or service within the same APC group (referred to as the ``2 times rule''). In implementing this provision, we generally use the cost of the item or service assigned to an APC group. For new technology items and services, special payments under the OPPS may be made in one of two ways. section 1833(t)(6) of the Act provides for temporary additional payments, which we refer to as ``transitional pass-through payments'', for at least 2 but not more than 3 years for certain drugs, biological agents, brachytherapy devices used for the treatment of cancer, and categories of other medical devices. For new technology services that are not eligible for transitional pass-through payments, and for which we lack sufficient clinical information and cost data to appropriately assign them to a clinical APC group, we have established special APC groups based on costs, which we refer to as New Technology APCs. These New Technology APCs are designated by cost bands which allow us to provide appropriate and consistent payment for designated new procedures that are not yet reflected in our claims data. Similar to pass-through payments, an assignment to a New Technology APC is temporary; that is, we retain a service within a New Technology APC until we acquire sufficient data to assign it to a clinically appropriate APC group.

C. Excluded OPPS Services and Hospitals

Section 1833(t)(1)(B)(i) of the Act authorizes the Secretary to designate the hospital outpatient services that are paid under the OPPS. While most hospital outpatient services are payable under the OPPS, section 1833(t)(1)(B)(iv) of the Act excludes payment for ambulance, physical and occupational therapy, and speech-language pathology services, for which payment is made under a fee schedule. It also excludes screening mammography, diagnostic mammography, and effective January 1, 2011, an annual wellness visit providing personalized prevention plan services. The Secretary exercises the authority granted under the statute to also exclude from the OPPS certain services that are paid under fee schedules or other payment systems. Such excluded services include, for example, the professional services of physicians and nonphysician practitioners paid under the Medicare Physician Fee Schedule (MPFS); certain laboratory services paid under the Clinical Laboratory Fee Schedule (CLFS); services for beneficiaries with end-stage renal disease (ESRD) that are paid under the ESRD prospective payment system; and services and procedures that require an inpatient stay that are paid under the hospital IPPS. In addition, section 1833(t)(1)(B)(v) of the Act does not include applicable items and services (as defined in subparagraph (A) of paragraph (21)) that are furnished on or after January 1, 2017, by an off-campus outpatient department of a provider (as defined in subparagraph (B) of paragraph (21)). We set forth the services that are excluded from payment under the OPPS in regulations at 42 CFR 419.22. Under Sec. 419.20(b) of the regulations, we specify the types of hospitals that are excluded from payment under the OPPS. These excluded hospitals are: Critical access hospitals (CAHs); Hospitals located in Maryland and paid under Maryland's All-Payer or Total Cost of Care Model; Hospitals located outside of the 50 States, the District of Columbia, and Puerto Rico; Indian Health Service (IHS) hospitals; and Rural emergency hospitals (REHs).

D. Prior Rulemaking

On April 7, 2000, we published in the Federal Register a final rule with comment period (65 FR 18434) to implement a prospective payment system for hospital outpatient services. The hospital OPPS was first implemented for services furnished on or after August 1, 2000. Section 1833(t)(9)(A) of the Act requires the Secretary to review certain components of the OPPS, not less often than annually, and to revise the groups, the relative payment weights, and the wage and other adjustments to take into account changes in medical practices, changes in technology, the addition of new services, new cost data, and other relevant information and factors. Since initially implementing the OPPS, we have published final rules in the Federal Register annually to implement statutory requirements and changes arising from our continuing experience with this system. These rules can be viewed on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices.

1. Authority of the Panel

Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of Public Law 106-113, and redesignated by section 202(a)(2) of Public Law 106-113, requires that we consult with an expert outside advisory panel composed of an appropriate selection of representatives of providers to annually review (and [[Page 53455]] advise the Secretary concerning) the clinical integrity of the payment groups and their weights under the OPPS. In CY 2000, based on section 1833(t)(9)(A) of the Act, the Secretary established the Advisory Panel on Ambulatory Payment Classification Groups (APC Panel) to fulfill this requirement. In CY 2011, based on section 222 of the Public Health Service Act (the PHS Act), which gives discretionary authority to the Secretary to convene advisory councils and committees, the Secretary expanded the panel's scope to include the supervision of hospital outpatient therapeutic services in addition to the APC groups and weights. To reflect this new role of the panel, the Secretary changed the panel's name to the Advisory Panel on Hospital Outpatient Payment (the HOP Panel). The HOP Panel is not restricted to using data compiled by CMS, and in conducting its review, it may use data collected or developed by organizations outside the Department.

2. Establishment of the Panel

On November 21, 2000, the Secretary signed the initial charter establishing the Panel, and, at that time, named the APC Panel. This expert panel is composed of appropriate representatives of providers (currently employed full-time, not as consultants, in their respective areas of expertise) who review clinical data and advise CMS about the clinical integrity of the APC groups and their payment weights. Since CY 2012, the Panel also is charged with advising the Secretary on the appropriate level of supervision for individual hospital outpatient therapeutic services. The Panel is technical in nature, and it is governed by the provisions of the Federal Advisory Committee Act (FACA). The current charter specifies, among other requirements, that the Panel-- May advise on the clinical integrity of Ambulatory Payment Classification (APC) groups and their associated weights; May advise on the appropriate supervision level for hospital outpatient services; May advise on OPPS APC rates for ASC covered surgical procedures; Continues to be technical in nature; Is governed by the provisions of the FACA; Has a Designated Federal Official (DFO); and Is chaired by a Federal Official designated by the Secretary. The Panel's charter was amended on November 15, 2011, renaming the Panel and expanding the Panel's authority to include supervision of hospital outpatient therapeutic services and to add critical access hospital (CAH) representation to its membership. The Panel's charter was also amended on November 6, 2014 (80 FR 23009), and the number of members was revised from up to 19 to up to 15 members. The Panel's current charter was approved on November 21, 2024, for a 2-year period. The current Panel membership and other information pertaining to the Panel, including its charter, Federal Register notices, membership, meeting dates, agenda topics, and meeting reports, can be viewed on the CMS website at https://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/AdvisoryPanelonAmbulatoryPaymentClassificationGroups.html.

3. Panel Meetings and Organizational Structure

The Panel has held many meetings, with the last meeting taking place on August 25, 2025. The recommendations of the Panel for the most recent meeting are available on the CMS website at https://www.cms.gov/medicare/regulations-guidance/advisory-committees/hospital-outpatient-payment. Prior to each meeting, we publish a notice in the Federal Register to announce the meeting, new members, and any other changes of which the public should be aware. Beginning in CY 2017, we have transitioned to one meeting per year (81 FR 31941). In CY 2022, we published a Federal Register notice requesting nominations to fill vacancies on the Panel (87 FR 68499). We are currently accepting nominations at: https://mearis.cms.gov. In addition, the Panel has established an administrative structure that, in part, currently includes the use of two subcommittee workgroups to provide preparatory meeting and subject support to the larger panel. The two current subcommittees include the following: APC Groups and Status Indicator Assignments Subcommittee, which advises and provides recommendations to the Panel on the appropriate status indicators to be assigned to HCPCS codes, including but not limited to whether a HCPCS code or a category of codes should be packaged or separately paid, as well as the appropriate APC assignment of HCPCS codes regarding services for which separate payment is made; and Data Subcommittee, which is responsible for studying the data issues confronting the Panel and for recommending options for resolving them. Each of these workgroup subcommittees was established by a majority vote from the full Panel during a scheduled Panel meeting, and the Panel recommended at the August 25, 2025, meeting that these subcommittees continue. We accepted this recommendation. For discussions of earlier Panel meetings and recommendations, we refer readers to previously published OPPS/ASC proposed and final rules, the CMS website mentioned earlier in this section, and the FACA database at https://facadatabase.gov.

F. Public Comments Received on the CY 2026 OPPS/ASC Proposed

We received approximately 3,039 timely pieces of correspondence on the CY 2026 OPPS/ASC proposed rule that appeared in the Federal Register on July 17, 2025 (90 FR 33476). We received comments from elected officials, providers and suppliers, practitioners, and advocacy groups. We provide summaries of the public comments, and our responses are set forth in the various sections of this final rule with comment period under the appropriate headings. We note that we received some public comments that were outside the scope of the CY 2026 OPPS/ASC proposed rule. Out-of-scope-public comments are not addressed in this CY 2026 OPPS/ASC final rule with comment period.

G. Public Comments Received on the CY 2025 OPPS/ASC Final Rule With

Comment Period We received approximately 29 timely pieces of correspondence on the CY 2025 OPPS/ASC final rule with comment period that appeared in the Federal Register on November 27, 2024 (89 FR 93912).

1. Database Construction

a. Database Source and Methodology Section 1833(t)(9)(A) of the Act requires that the Secretary review not less often than annually and revise the relative payment weights for Ambulatory Payment Classifications (APCs). In the April 7, 2000 OPPS final rule with comment period (65 FR 18482), we explained in detail how we calculated the relative payment weights that were implemented on August 1, 2000, for each APC group. For the CY 2026 OPPS, we proposed to recalibrate the APC relative payment weights for services furnished on or after January 1, 2026, and before January 1, 2027 (CY 2026), using the same basic methodology that we described in the CY 2025 OPPS/ASC final rule with comment period (89 FR 93921 through [[Page 53456]] 93922), using CY 2024 claims data. That is, we proposed to recalibrate the relative payment weights for each APC based on claims and cost report data for hospital outpatient department (HOPD) services to construct a database for calculating APC group weights. For the purpose of recalibrating the proposed APC relative payment weights for CY 2026, we began with approximately 143 million final action claims (claims for which all disputes and adjustments have been resolved and payment has been made) for HOPD services furnished on or after January 1, 2024, and before January 1, 2025, before applying our exclusionary criteria and other methodological adjustments. After the application of those data processing changes, we used approximately 76 million final action claims to develop the proposed CY 2026 OPPS payment weights. For exact numbers of claims used and additional details on the claims accounting process, we refer readers to the claims accounting narrative under supporting documentation for the CY 2026 OPPS/ASC proposed rule on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient. Addendum N to the CY 2026 OPPS/ASC proposed rule (which is available via the internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices) includes the proposed list of bypass codes for CY 2026. The proposed list of bypass codes contains codes that are reported on claims for services in CY 2024 and, therefore, includes codes that were in effect in CY 2024 and used for billing. We proposed to retain these deleted bypass codes on the proposed CY 2026 bypass list because these codes existed in CY 2024 and were covered HOPD services in that period, and CY 2024 claims data were used to calculate proposed CY 2026 payment rates. Keeping these deleted bypass codes on the bypass list potentially allows us to create more ``pseudo'' single procedure claims for ratesetting purposes. ``Overlap bypass codes'' that are members of the proposed multiple imaging composite APCs are identified by asterisks (*) in the third column of Addendum N to the CY 2026 OPPS/ASC proposed rule. HCPCS codes that we proposed to add for CY 2026 are identified by asterisks (*) in the fourth column of Addendum N. We did not receive any public comments on our general proposal to recalibrate the relative payment weights for each APC based on claims and cost report data for HOPD services or on our proposed bypass code process. We are finalizing as proposed the ``pseudo'' single claims process and the CY 2026 proposed list of bypass codes, finalized in Addendum N to this final rule with comment period (which is available via the internet on the CMS website). For this final rule with comment period, for the purpose of recalibrating the final APC relative payment weights for CY 2026, we used approximately 81 million final action claims (claims for which all disputes and adjustments have been resolved and payment has been made) for HOPD services furnished on or after January 1, 2024, and before January 1, 2025. For the exact numbers of claims used and additional details on the claims accounting process, we refer readers to the claims accounting narrative under supporting documentation for this final rule with comment period on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient. b. Calculation and Use of Cost-to-Charge Ratios (CCRs) For CY 2026, we proposed to continue to use the hospital-specific overall ancillary and departmental cost-to-charge ratios (CCRs) to convert charges to estimated costs through application of a revenue code-to-cost center crosswalk. To calculate the APC costs on which the proposed CY 2026 APC payment rates are based, we calculated hospital- specific departmental CCRs for each hospital for which we had CY 2024 claims data by comparing these claims data to the most recently available hospital cost reports, which, in most cases, are from CY 2023. For the proposed CY 2026 OPPS payment rates, we used the set of claims processed during CY 2024. We applied the hospital-specific CCR to the hospital's charges at the most detailed level possible, based on a revenue code-to-cost center crosswalk that contains a hierarchy of CCRs used to estimate costs from charges for each revenue code. To ensure the completeness of the revenue code-to-cost center crosswalk, we reviewed changes to the list of revenue codes for CY 2024 (the year of claims data we used to calculate the proposed CY 2026 OPPS payment rates) and updates to the National Uniform Billing Committee (NUBC) 2024 Data specifications Manual. That crosswalk is available for review and continuous comment on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient. In accordance with our longstanding policy, similar to our finalized policy for CY 2025 OPPS ratesetting, we proposed to calculate CCRs for the standard cost centers--cost centers with a predefined label--and nonstandard cost centers--cost centers defined by a hospital--accepted by the electronic cost report database. In general, the most detailed level at which we calculate CCRs is the hospital- specific departmental level. While we generally view the use of additional cost data as improving our OPPS ratesetting process, we have historically not included cost report lines for certain nonstandard cost centers in the OPPS ratesetting database construction when hospitals have reported these nonstandard cost centers on cost report lines that do not correspond to the cost center number. We believe it is important to further investigate the accuracy of these cost report data before including such data in the ratesetting process. Further, we believe it is appropriate to gather additional information from the public as well before including the data in OPPS ratesetting. For CY 2026, we proposed not to include the nonstandard cost centers reported in this way in the OPPS ratesetting database construction. We did not receive any public comments on the general CCR process and therefore, we are finalizing our proposal for CY 2026 to continue to use the hospital-specific overall ancillary and departmental CCRs to convert charges to estimated costs through application of a revenue code-to-cost center crosswalk and we are also finalizing the proposed methodology.

2. Final Data Development and Calculation of Costs Used for Ratesetting

In this section of this final rule with comment period, we discuss the use of claims to calculate the OPPS payment rates for CY 2026. The Hospital OPPS page on the CMS website on which this final rule is posted (https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient) provides an accounting of claims used in the development of the final payment rates. That accounting provides additional detail regarding the number of claims derived at each stage of the process. In addition, later in this section we discuss the file of claims that comprises the data set that is available upon payment of an administrative fee under a CMS data use agreement. The CMS website https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient, includes information about obtaining the ``OPPS Limited Data Set,'' which now includes the additional variables [[Page 53457]] previously available only in the OPPS Identifiable Data Set, including International Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM) diagnosis codes and revenue code payment amounts. This file is derived from the CY 2024 claims that are used to calculate the final payment rates for the CY 2026 OPPS/ASC final rule with comment period. Previously, the OPPS established the scaled relative weights on which payments are based using APC median costs, a process described in the CY 2012 OPPS/ASC final rule with comment period (76 FR 74188). However, as discussed in more detail in section II.A.2.f. of the CY 2013 OPPS/ASC final rule with comment period (77 FR 68259 through 68271), we finalized the use of geometric mean costs to calculate the relative weights on which the CY 2013 OPPS payment rates were based. While this policy changed the cost metric on which the relative payments are based, the data process in general remained the same under the methodologies that we used to obtain appropriate claims data and accurate cost information in determining estimated service cost. We used the methodology described in sections II.A.2.a. through II.A.2.c. of this final rule with comment period to calculate the costs we used to establish the final relative payment weights used in calculating the OPPS payment rates for CY 2026 shown in Addenda A and B to this final rule with comment period (which are available via the internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices). We refer readers to section II.A.4. of this final rule with comment period for a discussion of the conversion of APC costs to scaled payment weights. We note that under the OPPS, CY 2019 was the first year in which the claims data used for setting payment rates (CY 2017 data) contained lines with the modifier ``PN,'' which indicates nonexcepted items and services furnished and billed by off-campus provider-based departments (PBDs) of hospitals. Because nonexcepted items and services are not paid under the OPPS, in the CY 2019 OPPS/ASC final rule with comment period (83 FR 58832), we finalized a policy to remove those claim lines reported with modifier ``PN'' from the claims data used in ratesetting for the CY 2019 OPPS and subsequent years. For the CY 2026 OPPS, we proposed to continue to remove claim lines with modifier ``PN'' from the ratesetting process. We did not receive any public comments on our proposal to continue to remove claim lines reported with modifier ``PN'' from the ratesetting process and are finalizing as proposed. For details of the claims accounting process used in this CY 2026 OPPS/ASC final rule with comment period, we refer readers to the claims accounting narrative under supporting documentation for this final rule with comment period on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient. a. Calculation of Single Procedure APC Criteria-Based Costs (1) Blood and Blood Products Since the implementation of the OPPS in August 2000, we have made separate payments for blood and blood products through APCs rather than packaging payment for them into payments for the procedures with which they are administered. Hospital payments for the costs of blood and blood products, as well as for the costs of collecting, processing, and storing blood and blood products, are made through the OPPS payments for specific blood product APCs. We proposed to continue to establish payment rates for blood and blood products using our blood-specific CCR methodology (88 FR 49562), which utilizes actual or simulated CCRs from the most recently available hospital cost reports to convert hospital charges for blood and blood products to costs. This methodology has been our standard ratesetting methodology for blood and blood products since CY 2005. It was developed in response to data analysis indicating that there was a significant difference in CCRs for those hospitals with and without blood-specific cost centers and past public comments indicating that the former OPPS policy of defaulting to the overall hospital CCR for hospitals not reporting a blood-specific cost center often resulted in an underestimation of the true hospital costs for blood and blood products. To address the differences in CCRs and to better reflect hospitals' costs, our methodology simulates blood CCRs for each hospital that does not report a blood cost center by calculating the ratio of the blood-specific CCRs to hospitals' overall CCRs for those hospitals that do report costs and charges for blood cost centers and applies this mean ratio to the overall CCRs of hospitals not reporting costs and charges for blood cost centers on their cost reports. We proposed to calculate the costs upon which the proposed payment rates for blood and blood products are based using the actual blood-specific CCR for hospitals that reported costs and charges for a blood cost center and a hospital-specific, simulated, blood-specific CCR for hospitals that did not report costs and charges for a blood cost center. We stated in the CY 2026 OPPS/ASC proposed rule (90 FR 33487) that we continue to believe that the hospital-specific, simulated, blood- specific CCR methodology takes into account the unique charging and cost accounting structure of each hospital, as it better responds to the absence of a blood-specific CCR for a hospital than alternative methodologies, such as defaulting to the overall hospital CCR or applying an average blood-specific CCR across hospitals. This methodology also yields more accurate estimated costs for these products and results in payment rates for blood and blood products that appropriately reflect the relative estimated costs of these products for hospitals without blood cost centers and for these blood products in general. For a more detailed discussion of payments for blood and blood products through APCs, we refer readers to: The CY 2005 OPPS proposed rule (69 FR 50524 and 50525) for a more comprehensive discussion of the blood-specific CCR methodology; The CY 2008 OPPS/ASC final rule with comment period (72 FR 66807 through 66810) for a detailed history of the OPPS payment for blood and blood products; and The CY 2015 OPPS/ASC final rule with comment period (79 FR 66795 and 66796) for additional discussion of our policy not to make separate payments for blood and blood products when they appear on the same claims as services assigned to a C-APC. We did not receive public comments on this provision, and therefore, we are finalizing without modification our proposal to calculate the costs upon which the payment rates for blood and blood products are based using the actual blood-specific CCR for hospitals that reported costs and charges for a blood cost center and a hospital specific, simulated, blood-specific CCR for hospitals that did not report costs and charges for a blood cost center. We are also finalizing without modification our proposal to continue to establish payment rates for blood and blood products using our blood-specific CCR methodology, which utilizes actual or simulated CCRs from the most recently available hospital cost reports to convert hospital charges for blood and blood products to costs. Please refer to Addendum B to this final rule with comment period (which is available via [[Page 53458]] the internet on the CMS website) for the final CY 2026 payment rates for blood and blood products. (2) Brachytherapy Sources Section 1833(t)(2)(H) of the Act mandates the creation of additional groups of covered OPD services that classify devices of brachytherapy--cancer treatment through solid source radioactive implants--consisting of a seed or seeds (or radioactive source) (``brachytherapy sources'') separately from other services or groups of services. The statute provides certain criteria for the additional groups. For the history of OPPS payment for brachytherapy sources, we refer readers to prior OPPS final rules, such as the CY 2012 OPPS/ASC final rule with comment period (77 FR 68240 and 68241). As we have stated in prior OPPS updates, we believe that adopting the general OPPS prospective payment methodology for brachytherapy sources is appropriate for several reasons (77 FR 68240). The general OPPS methodology uses costs based on claims data to set the relative payment weights for hospital outpatient services. This payment methodology results in more consistent, predictable, and equitable payment amounts per source across hospitals by averaging the extremely high and low values, in contrast to payment based on hospitals' charges adjusted to costs. We believe that the OPPS methodology, as opposed to payment based on hospitals' charges adjusted to cost, also would provide hospitals with incentives for efficiency in the provision of brachytherapy services to Medicare beneficiaries. Moreover, this approach is consistent with our payment methodology for most items and services paid under the OPPS. We refer readers to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70323 through 70325) for further discussion of the history of OPPS payment for brachytherapy sources. For CY 2026, except where otherwise indicated, we proposed to continue our policy and use the costs derived from CY 2024 claims data to set the proposed CY 2026 payment rates for brachytherapy sources because we proposed to use CY 2024 data to set the proposed payment rates for most other items and services that would be paid under the CY 2026 OPPS. With the exception of the proposed payment rate for brachytherapy source C2645 (Brachytherapy planar source, palladium-103, per square millimeter) and the proposed payment rates for low-volume brachytherapy APCs discussed in section III.D. of the CY 2026 OPPS/ASC proposed rule, we proposed to base the payment rates for brachytherapy sources on the geometric mean unit costs for each source, consistent with the methodology that we proposed for other items and services paid under the OPPS, as discussed in section II.A.2. of the CY 2026 OPPS/ASC proposed rule. We also proposed for CY 2026 and subsequent years to continue the other payment policies for brachytherapy sources that we finalized and first implemented in the CY 2010 OPPS/ASC final rule with comment period (74 FR 60537). For CY 2026 and subsequent years, we proposed to pay for the stranded and nonstranded not otherwise specified (NOS) codes, HCPCS codes C2698 (Brachytherapy source, stranded, not otherwise specified, per source) and C2699 (Brachytherapy source, non-stranded, not otherwise specified, per source), at a rate equal to the lowest stranded or nonstranded prospective payment rate for such sources, respectively, on a per-source basis (as opposed to, for example, per mCi), which is based on the policy we established in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66785). For CY 2026 and subsequent years, we also proposed to continue the policy we implemented in the CY 2010 OPPS/ASC final rule with comment period (74 FR 60537) regarding payment for new brachytherapy sources for which we have no claims data, for the same reasons we discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66786; which was delayed until January 1, 2010, by section 142 of Pub. L. 110-275). Specifically, this policy is intended to enable us to assign new HCPCS codes for new brachytherapy sources to their own APCs, with prospective payment rates set based on our consideration of external data and other relevant information regarding the expected costs of the sources to hospitals. The proposed CY 2026 payment rates for brachytherapy sources are included in Addendum B to the OPPS/ASC proposed rule (which is available via the internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices) and identified with status indicator ``U (Brachytherapy Sources, Paid under OPPS; separate APC payment).'' For CY 2018, we assigned status indicator ``U'' to HCPCS code C2645 (Brachytherapy planar source, palladium-103, per square millimeter) in the absence of claims data and established a payment rate using external data (invoice price) at $4.69 per mm\2\ for the brachytherapy source's APC--APC 2648 (Brachytx planar, p-103) (82 FR 49233 through 49244). For CY 2019, in the absence of sufficient claims data, we continued to establish a payment rate for C2645 at $4.69 per mm\2\ for APC 2648 (Brachytx planar, p-103) (83 FR 58834 through 58836). Our CY 2018 claims data available for the CY 2020 OPPS/ASC final rule with comment period (84 FR 61142) included two claims with a geometric mean cost for HCPCS code C2645 of $1.02 per mm\2\. In response to comments from interested parties, we agreed that, given the limited claims data available and a new outpatient indication for C2645, a payment rate for HCPCS code C2645 based on the geometric mean cost of $1.02 per mm\2\ may not adequately reflect the cost of HCPCS code C2645. In the CY 2020 OPPS/ASC final rule with comment period, we finalized our policy to use our equitable adjustment authority under section 1833(t)(2)(E) of the Act, which states that the Secretary shall establish, in a budget neutral manner, other adjustments as determined to be necessary to ensure equitable payments, to maintain the CY 2019 payment rate of $4.69 per mm\2\ for HCPCS code C2645 for CY 2020. Similarly, in the absence of sufficient claims data to establish an APC payment rate, in the CY 2021, CY 2022, CY 2023, CY 2024, and CY 2025 OPPS/ASC final rules with comment period (85 FR 85879 through 85880, 86 FR 63469, 87 FR 71760-71761, 88 FR 81553, and 89 FR 93925), we finalized our policy to use our equitable adjustment authority under section 1833(t)(2)(E) of the Act to maintain the CY 2019 payment rate of $4.69 per mm\2\ for HCPCS code C2645 for CYs 2021 through 2025. There were no CY 2024 claims available that reported HCPCS code C2645 for the CY 2026 OPPS/ASC proposed rule. Therefore, in the absence of claims data, we proposed to continue to use our equitable adjustment authority under section 1833(t)(2)(E) of the Act to maintain the CY 2025 payment rate of $4.69 per mm\2\ for HCPCS code C2645, which we proposed to be assigned to APC 2648 (Brachytx planar, p-103), for CY 2026. Additionally, for CY 2022 and subsequent calendar years, we adopted a Universal Low Volume APC policy for clinical and brachytherapy APCs. As discussed in further detail in section X.C. of the CY 2022 OPPS/ASC final rule with comment period (86 FR 63743 through 63747), we adopted this policy to mitigate wide variation in payment rates that occur from year to year for APCs with low utilization. Such volatility in payment rates from year to [[Page 53459]] year can result in even lower utilization and potential barriers to access. Brachytherapy APCs that have fewer than 100 single claims used for ratesetting purposes are designated as Low Volume APCs unless an alternative payment rate is applied, such as the use of our equitable adjustment authority under section 1833(t)(2)(E) of the Act in the case of APC 2648 (Brachytx planar, p-103), for which HCPCS code C2645 (Brachytherapy planar source, palladium-103, per square millimeter) is the only code assigned as discussed previously in this section. For CY 2026, we proposed to designate six brachytherapy APCs as Low Volume APCs as these APCs met our criteria to be designated as Low Volume APCs. We did not receive public comments on this provision, and therefore, we are finalizing as proposed. Except for brachytherapy APCs designated as Low Volume APCs and APC 2648, we will continue our policy and use the costs derived from CY 2024 claims data to set the final CY 2026 payment rates for brachytherapy sources. We will continue to pay for the stranded and nonstranded not otherwise specified (NOS) codes, HCPCS codes C2698 (Brachytherapy source, stranded, not otherwise specified, per source) and C2699 (Brachytherapy source, non-stranded, not otherwise specified, per source), at a rate equal to the lowest stranded or nonstranded prospective payment rate for such sources, respectively, on a per-source basis. Further, we will use our equitable adjustment authority under section 1833(t)(2)(E) of the Act to maintain the CY 2025 payment rate of $4.69 per mm2 for HCPCS code C2645, which we are assigning to APC 2648 (Brachytx planar, p1-103), for CY 2026. We refer readers to section III.D. of this final rule with comment period for information on the brachytherapy APCs we are finalizing to designate as Low Volume APCs. The final CY 2026 payment rates for brachytherapy sources are included in Addendum B to this final rule with comment period (which is available via the internet on the CMS website) and are identified with status indicator ``U.'' We continue to invite interested parties to submit recommendations for new codes to describe new brachytherapy sources. Such recommendations should be directed via email to [email protected]. b. Comprehensive APCs (C-APCs) for CY 2026 (1) Background In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861 through 74910), we finalized a comprehensive payment policy that packages payment for adjunctive and secondary items, services, and procedures into the most costly primary procedure under the OPPS at the claim level. The policy was finalized in CY 2014, but the effective date was delayed until January 1, 2015, to allow additional time for further analysis, opportunity for public comment, and systems preparation. The comprehensive APC (C-APC) policy was implemented effective January 1, 2015, with modifications and clarifications in response to public comments received regarding specific provisions of the C-APC policy (79 FR 66798 through 66810). A C-APC is defined as a classification for the provision of a primary service and all adjunctive services provided to support the delivery of the primary service. We established C-APCs as a category broadly for OPPS payment and implemented 25 C-APCs beginning in CY 2015 (79 FR 66809 and 66810). We have gradually added new C-APCs since the policy was implemented beginning in CY 2015, with the number of C-APCs now totaling 72 (80 FR 70332; 81 FR 79584 and 79585; 83 FR 58844 through 58846; 84 FR 61158 through 61166; 85 FR 85885; 86 FR 63474; 87 FR 71769; 88 FR 81562; and 89 FR 93926). Under our C-APC policy, we designate a service described by a HCPCS code assigned to a C-APC as the primary service when the service is identified by OPPS status indicator ``J1''. When such a primary service is reported on a hospital outpatient claim, taking into consideration the few exceptions that are discussed below, we make payment for all other items and services reported on the hospital outpatient claim as being integral, ancillary, supportive, dependent, and adjunctive to the primary service (hereinafter collectively referred to as ``adjunctive services'') and representing components of a complete comprehensive service (78 FR 74865 and 79 FR 66799). Payments for adjunctive services are packaged into the payments for the primary services. This results in a single prospective payment for each of the primary, comprehensive services based on the costs of all reported services at the claim level. One example of a primary service would be a partial mastectomy, and an example of a secondary service packaged into that primary service would be a radiation therapy procedure. Services excluded from the C-APC policy under the OPPS include services that are not covered OPD services, services that cannot, by statute, be paid for under the OPPS, and services that are required by statute to be separately paid. This includes certain mammography and ambulance services that are not covered OPD services in accordance with section 1833(t)(1)(B)(iv) of the Act; brachytherapy seeds, which also are required by statute to receive separate payment under section 1833(t)(2)(H) of the Act; pass-through payment drugs and devices, which also require separate payment under section 1833(t)(6) of the Act; self-administered drugs (SADs) that are not otherwise packaged as supplies because they are not covered under Medicare Part B under section 1861(s)(2)(B) of the Act; and certain preventive services (78 FR 74865 and 79 FR 66800 and 66801). A list of services excluded from the C-APC policy is included in Addendum J to this final rule with comment period (which is available via the internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices). If a service does not appear on this list of excluded services, payment for it will be packaged into the payment for the primary C-APC service when it appears on an outpatient claim with a primary C-APC service. The C-APC policy payment methodology set forth in the CY 2014 OPPS/ ASC final rule with comment period and modified and implemented beginning in CY 2015 is summarized as follows (78 FR 74887 and 79 FR 66800): Basic Methodology. As stated in the CY 2015 OPPS/ASC final rule with comment period, we define the C-APC payment policy as including all covered OPD services on a hospital outpatient claim reporting a primary service that is assigned to status indicator ``J1,'' \1\ excluding services that are not covered OPD services or that cannot by statute be paid for under the OPPS. Services and procedures described by HCPCS codes assigned to status indicator ``J1'' are assigned to C- APCs based on our usual APC assignment methodology by evaluating the geometric mean costs of the primary service claims to establish resource similarity and the clinical [[Page 53460]] characteristics of each procedure to establish clinical similarity within each APC. --------------------------------------------------------------------------- \1\ Status indicator ``J1'' denotes Hospital Part B Services Paid Through a Comprehensive APC. Further information can be found in CY 2026 Addendum D1. --------------------------------------------------------------------------- In the CY 2016 OPPS/ASC final rule with comment period, we expanded the C-APC payment methodology to qualifying extended assessment and management encounters through the ``Comprehensive Observation Services'' C-APC (C-APC 8011). Services within this APC are assigned status indicator ``J2.'' \2\ Specifically, we make a payment through C- APC 8011 for a claim that: --------------------------------------------------------------------------- \2\ Status indicator ``J2'' denotes Hospital Part B Services That May Be Paid Through a Comprehensive APC. Further information can be found in CY 2026 Addendum D1. --------------------------------------------------------------------------- Does not contain a procedure described by a HCPCS code to which we have assigned status indicator ``T;'' \3\ --------------------------------------------------------------------------- \3\ Status Indicator ``T'' is defined as a ``Procedure or Service, Multiple Procedure Reduction Applies'' the OPPS payment status is ``Paid under OPPS; separate APC payment.'' Definitions to all OPPS payment status indicators are available in Addenda D1 to this final rule with comment period. --------------------------------------------------------------------------- Contains 8 or more units of services described by HCPCS code G0378 (Hospital observation services, per hour); Contains services provided on the same date of service or 1 day before the date of service for HCPCS code G0378 that are described by one of the following codes: HCPCS code G0379 (Direct admission of patient for hospital observation care) on the same date of service as HCPCS code G0378; CPT code 99281 (Emergency department visit for the evaluation and management of a patient (Level 1)); CPT code 99282 (Emergency department visit for the evaluation and management of a patient (Level 2)); CPT code 99283 (Emergency department visit for the evaluation and management of a patient (Level 3)); CPT code 99284 (Emergency department visit for the evaluation and management of a patient (Level 4)); CPT code 99285 (Emergency department visit for the evaluation and management of a patient (Level 5)) or HCPCS code G0380 (Type B emergency department visit (Level 1)); HCPCS code G0381 (Type B emergency department visit (Level 2)); HCPCS code G0382 (Type B emergency department visit (Level 3)); HCPCS code G0383 (Type B emergency department visit (Level 4)); HCPCS code G0384 (Type B emergency department visit (Level 5)); CPT code 99291 (Critical care, evaluation and management of the critically ill or critically injured patient; first 30-74 minutes); or HCPCS code G0463 (Hospital outpatient clinic visit for assessment and management of a patient); and Does not contain services described by a HCPCS code to which we have assigned status indicator ``J1.'' The assignment of status indicator ``J2'' to a specific set of services performed in combination with each other allows for all other OPPS payable services and items reported on the claim (excluding services that are not covered OPD services or that cannot by statute be paid for under the OPPS) to be deemed adjunctive services representing components of a comprehensive service and resulting in a single prospective payment for the comprehensive service based on the costs of all reported services on the claim (80 FR 70333 through 70336). Services included under the C-APC payment packaging policy, that is, services that are typically adjunctive to the primary service and provided during the delivery of the comprehensive service, include diagnostic procedures, laboratory tests, and other diagnostic tests and treatments that assist in the delivery of the primary procedure; visits and evaluations performed in association with the procedure; uncoded services and supplies used during the service; durable medical equipment as well as prosthetic and orthotic items and supplies when provided as part of the outpatient service; and any other components reported by HCPCS codes that represent services that are provided during the complete comprehensive service (78 FR 74865 and 79 FR 66800). In addition, payment for hospital outpatient department services that are similar to therapy services, such as speech language pathology, and delivered either by therapists or nontherapists is included as part of the payment for the packaged complete comprehensive service. These services that are provided during the perioperative period are adjunctive services and are deemed not to be therapy services as described in section 1834(k) of the Act, regardless of whether the services are delivered by therapists or other nontherapist health care workers. We have previously noted that therapy services are those provided by therapists under a plan of care in accordance with section 1835(a)(2)(C) and section 1835(a)(2)(D) of the Act and are paid for under section 1834(k) of the Act, subject to annual therapy caps as applicable (78 FR 74867 and 79 FR 66800). However, certain other services similar to therapy services are considered and paid for as hospital outpatient department services. Payment for these nontherapy outpatient department services that are reported with therapy codes and provided with a comprehensive service is included in the payment for the packaged complete comprehensive service. We note that these services, even though they are reported with therapy codes, are hospital outpatient department services and not therapy services. We refer readers to the July 2016 OPPS Change Request 9658 (Transmittal 3523)\4\ for further instructions on reporting these services in the context of a C-APC service. --------------------------------------------------------------------------- \4\ https://www.cms.gov/regulations-and-guidance/guidance/transmittals/downloads/r3523cp.pdf. --------------------------------------------------------------------------- Items included in the packaged payment provided in conjunction with the primary service also include all drugs, biologicals, and radiopharmaceuticals, regardless of cost, except those drugs with pass- through payment status and SADs, unless they function as packaged supplies (78 FR 74868, 74869, and 74909 and 79 FR 66800). We refer readers to Section 50.2M, Chapter 15 of the Medicare Benefit Policy Manual for a description of our policy on SADs treated as hospital outpatient supplies, including lists of SADs that function as supplies and those that do not function as supplies.\5\ --------------------------------------------------------------------------- \5\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c15.pdf. --------------------------------------------------------------------------- We define each hospital outpatient claim reporting a single unit of a single primary service assigned to status indicator ``J1'' as a single ``J1'' unit procedure claim (78 FR 74871 and 79 FR 66801). Line- item charges for services included on the C-APC claim are converted to line-item costs, which are then summed to develop the estimated APC costs. These claims are then assigned one unit of the service with status indicator ``J1'' and later used to develop the geometric mean costs for the C-APC relative payment weights. (We note that we use the term ``comprehensive'' to describe the geometric mean cost of a claim reporting ``J1'' service(s) or the geometric mean cost of a C-APC, inclusive of all the items and services included in the C-APC service payment bundle.) Charges for services that would otherwise be separately payable are added to the charges for the primary service. This process differs from our traditional cost accounting methodology only in that all such services on the claim are packaged (except certain services as described above). We apply our standard data trims, which exclude claims with extremely high primary units or extreme costs. The comprehensive geometric mean costs are used to establish resource similarity and, along with clinical similarity, dictate the assignment of the primary services to the C-APCs. We [[Page 53461]] establish a ranking of each primary service (single unit only) to be assigned to status indicator ``J1'' according to its comprehensive geometric mean costs. For the minority of claims reporting more than one primary service assigned to status indicator ``J1'' or units thereof, we identify one ``J1'' service as the primary service for the claim based on our cost-based ranking of primary services. We then assign these multiple ``J1'' procedure claims to the C-APC to which the service designated as the primary service is assigned. If the reported ``J1'' services on a claim map to different C-APCs, we designate the ``J1'' service assigned to the C-APC with the highest comprehensive geometric mean cost as the primary service for that claim. If the reported multiple ``J1'' services on a claim map to the same C-APC, we designate the most costly service (at the HCPCS code level) as the primary service for that claim. This process results in initial assignments of claims for the primary services assigned to status indicator ``J1'' to the most appropriate C-APCs based on both single and multiple procedure claims reporting these services and clinical and resource homogeneity. Complexity Adjustments. We use complexity adjustments to provide increased payment for certain comprehensive services. We apply a complexity adjustment by promoting qualifying paired ``J1'' service code combinations or paired code combinations of ``J1'' services and certain add-on codes (as described further below) from the originating C-APC (the C-APC to which the designated primary service is first assigned) to the next higher paying C-APC in the same clinical family of C-APCs. We apply this type of complexity adjustment when the paired code combination represents a complex, costly form or version of the primary service according to the following criteria: Frequency of 25 or more claims reporting the code combination (frequency threshold); and Violation of the 2 times rule, as stated in section 1833(t)(2) of the Act and section III.B.2. of this final rule with comment period, in the originating C-APC (cost threshold). These criteria identify paired code combinations that occur commonly and exhibit materially greater resource requirements than the primary service. The CY 2017 OPPS/ASC final rule with comment period (81 FR 79582) included a revision to the complexity adjustment eligibility criteria. Specifically, we finalized a policy to discontinue the requirement that a code combination (that qualifies for a complexity adjustment by satisfying the frequency and cost criteria thresholds described above) also not create a 2 times rule violation in the higher level or receiving APC. After designating a single primary service for a claim, we evaluate that service in combination with each of the other procedure codes reported on the claim assigned to status indicator ``J1'' (or certain add-on codes) to determine if there are paired code combinations that meet the complexity adjustment criteria. For a new HCPCS code, we determine initial C-APC assignment and qualification for a complexity adjustment using the best available information, crosswalking the new HCPCS code to a predecessor code(s) when appropriate. Once we have determined that a particular code combination of ``J1'' services (or combinations of ``J1'' services reported in conjunction with certain add-on codes) represents a complex version of the primary service because it is sufficiently costly, frequent, and a subset of the primary comprehensive service overall according to the criteria described above, we promote the claim including the complex version of the primary service as described by the code combination to the next higher cost C-APC within the clinical family, unless the primary service is already assigned to the highest cost APC within the C-APC clinical family or assigned to the only C-APC in a clinical family. We do not create new APCs with a comprehensive geometric mean cost that is higher than the highest geometric mean cost (or only) C- APC in a clinical family just to accommodate potential complexity adjustments. Therefore, the highest payment for any claim including a code combination for services assigned to a C-APC would be the highest paying C-APC in the clinical family (79 FR 66802). We package payment for all add-on codes into the payment for the C- APC. However, certain primary service add-on combinations may qualify for a complexity adjustment. As noted in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70331), all add-on codes that can be appropriately reported in combination with a base code that describes a primary ``J1'' service are evaluated for a complexity adjustment. To determine which combinations of primary service codes reported in conjunction with an add-on code may qualify for a complexity adjustment for CY 2026, we apply the frequency and cost criteria thresholds discussed above, testing claims reporting one unit of a single primary service assigned to status indicator ``J1'' and any number of units of a single add-on code for the primary ``J1'' service. If the frequency and cost criteria thresholds for a complexity adjustment are met and reassignment to the next higher cost APC in the clinical family is appropriate (based on meeting the criteria outlined above), we make a complexity adjustment for the code combination; that is, we reassign the primary service code reported in conjunction with the add-on code to the next higher cost C-APC within the same clinical family of C-APCs. As previously stated, we package payment for add-on codes into the C-APC payment rate. If any add-on code reported in conjunction with the ``J1'' primary service code does not qualify for a complexity adjustment, payment for the add-on service continues to be packaged into the payment for the primary service and is not reassigned to the next higher cost C-APC. We list the final complexity adjustments for ``J1'' and add-on code combinations for CY 2026, along with all the other final complexity adjustments, in Addendum J to this final rule with comment period (which is available via the internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices). Addendum J to this final rule with comment period includes the cost statistics for each code combination that would qualify for a complexity adjustment (including primary code and add-on code combinations). Addendum J to this final rule with comment period also contains summary cost statistics for each of the paired code combinations that describe a complex code combination that would qualify for a complexity adjustment and be reassigned to the next higher cost C-APC within the clinical family. The combined statistics for all final reassigned complex code combinations are represented by an alphanumeric code with the first four digits of the designated primary service followed by a letter. For example, the final geometric mean cost listed in Addendum J for the code combination described by complexity adjustment assignment 3320R, which is assigned to C-APC 5224 (Level 4 Pacemaker and Similar Procedures), includes all paired code combinations that will be reassigned to C-APC 5224 when CPT code 33208 is the primary code. Providing the information contained in Addendum J to this final rule with comment period allows interested parties the [[Page 53462]] opportunity to better assess the impact associated with the assignment of claims with each of the paired code combinations eligible for a complexity adjustment. We received public comments on these proposals. The following is a summary of the comments received and our responses. Comment: We received support from commenters for a variety of existing and proposed complexity adjustments. Response: We thank the commenters for their support. Comment: Multiple commenters requested that CMS apply a complexity adjustment to additional code combinations. The specific C-APC complexity adjustment code combinations requested by the commenters for CY 2026 are listed in Table 1. BILLING CODE 4120-01-P [[Page 53463]] [GRAPHIC] [TIFF OMITTED] TR25NO25.000 [[Page 53464]] [GRAPHIC] [TIFF OMITTED] TR25NO25.001 [[Page 53465]] [GRAPHIC] [TIFF OMITTED] TR25NO25.002 [[Page 53466]] [GRAPHIC] [TIFF OMITTED] TR25NO25.003 BILLING CODE 4120-01-C Response: We reviewed each of the requested code combinations suggested by commenters, listed in Table 1, against our complexity adjustment criteria. The following code combinations met our cost and frequency criteria, qualifying for a complexity adjustment for CY 2026: Primary HCPCS code 93454 with secondary HCPCS code 0523T. Primary HCPCS code 93460 with secondary HCPCS code 0523T. Primary HCPCS code 28740 with secondary HCPCS code 20902. Primary HCPCS 28750 code with secondary HCPCS code 20900. Primary HCPCS code 28750 with secondary HCPCS code 28308. Primary HCPCS 22513 code with secondary HCPCS code 22515. Primary HCPCS 22514 code with secondary HCPCS code 22515. Primary HCPCS 43255 code with secondary HCPCS code 43245. Primary HCPCS 37187 code with secondary HCPCS code 37248. All the remaining code combinations listed failed to meet our cost or frequency criteria and do not qualify for complexity adjustments for CY 2026. Addendum J to this final rule with comment period includes the cost statistics for each code combination that was evaluated for a complexity adjustment. Comment: Several commenters brought to our attention that some qualifying complexity adjustments pairings were promoted up two APC levels. Commenters requested that we clarify that code pairings that qualify for a complexity adjustment are only promoted to an APC one level higher. Other commenters flagged code pairings that qualified for complexity adjustments but were not mapped to the next highest APC in their clinical family. Other commenters found that some code pairings in Addendum J which qualified for complexity adjustments in the ``Complexity Adjustment Evaluation'' tab were not listed in the ``Complexity Adjustments'' tab. Response: We thank the commenters for bringing this to our attention. It has been our longstanding policy to promote coding pairings that qualify for complexity adjustments to the next highest APC in their clinical family. In Addendum J to this final rule with comment period, all code pairings that qualify for complexity adjustments are mapped to the next highest APC in their clinical family. All code pairings that qualify for complexity adjustments can be found in both ``Complexity Adjustment Evaluation'' tab and the ``Complexity Adjustments'' tab of Addendum J. Comment: We received requests to evaluate HCPCS code pairings for complexity adjustments that were not any combination of ``J1'' or add- on codes. Commenters requested that CMS evaluate codes with status indicators ``S'', which indicates a code is paid separately and is not subject to multiple procedure discounting. Commenters specifically requested that CMS consider G0390 (trauma activation with critical care) and G0257 (emergency/unscheduled dialysis) because the commenters believe that complexity adjustments do not currently recognize the cost of trauma cases. Response: As stated in the CY 2015 OPPS/ASC final rule with comment period (79 FR 66770 through 67034), under our C-APC policy, we designate a service described by a HCPCS code assigned to a C-APC as the primary service when the service is identified by OPPS status indicator ``J1.'' We use complexity adjustments to provide increased payment for certain [[Page 53467]] comprehensive services. We apply a complexity adjustment by promoting qualifying paired ``J1'' service code combinations or paired code combinations of ``J1'' services and certain add-on codes from the originating C-APC (the C-APC to which the designated primary service is first assigned) to the next higher paying C-APC in the same clinical family of C-APCs. If a code pairing is not ``J1'' plus ``J1'' or ``J1'' plus an add-on code, it would not be evaluated for a complexity adjustment. In the CY 2026 OPPS/ASC proposed rule, we did solicit comments on revising our complexity adjustment methodology, which is summarized below in section II.B.2. of this final rule with comment period. Additionally, the assigned status indicators for HCPCS codes are open for public comment through our annual rulemaking process if commenters feel that any code may need to be reevaluated. Comment: Commenters requested that CMS provide additional information so that other interested parties are able to replicate Addendum J in its entirety. Commenters specifically requested additional clarity around the treatment of add-on codes. Response: We refer commenters to the claims accounting narrative under supporting documentation for this CY 2026 OPPS/ASC final rule with comment period on the CMS website. The claims accounting narrative provides a detailed overview of how we processed the CY 2024 claims data to produce the proposed prospective CY 2026 OPPS payment rates. After consideration of public comments, we are finalizing the C-APC complexity adjustment policy for CY 2026 as proposed. We are also finalizing the proposed complexity adjustments, with the addition of nine new code combinations suggested by commenters that meet our complexity adjustment criteria. We have made additional updates to the claims accounting narrative, specifically the section on Comprehensive APCs, in order to provide additional clarity on the claims accounting process used for determining complexity adjustments. We have also updated Addendum J to provide additional transparency on this issue. (2) Comment Solicitation on C-APC Complexity Adjustment Criteria In response to a variety of requests from interested parties, as well as public comments in past rulemaking, related to our C-APC complexity adjustment criteria, in the CY 2026 OPPS/ASC proposed rule (90 FR 33491) we included a comment solicitation on C-APC adjustment criteria. Interested parties and commenters have requested that CMS modify the established C-APC complexity adjustment eligibility criteria of 25 or more claims reporting the code combination (frequency threshold) and a violation of the 2 times rule in the originating C-APC (cost threshold) to allow additional code combinations to qualify for complexity adjustments. Interested parties and commenters have also requested expanding the qualifying code combinations for complexity adjustments to allow clusters of procedures, consisting of a ``J1'' code pair and multiple other associated add-on codes, to be used in combination with that ``J1'' code pair to qualify. These interested parties and commenters have noted these expanded combinations may allow for a more accurate reflection of medical practice when multiple procedures are performed together or there are certain complex procedures that include numerous add-on codes. For CY 2026, we solicited comments on potential refinements to our C-APC complexity adjustment criteria. Under this solicitation, we sought comment on expanding code combinations that qualify for complexity adjustments, including any specifications related to determining specific combination types and how they represent a complex, costly subset of the primary service. We sought comment on how CMS could identify service pairings or clusters of services for complexity adjustments that are clinically appropriate but are currently not evaluated for complexity adjustments. Additionally, if we were to expand our complexity adjustment criteria to allow for clusters of codes, we sought comment on what the appropriate cost and frequency thresholds could be used to identify which code clusters truly reflect complex and resource-intensive code combinations that are commonly performed in the hospital outpatient department setting. We sought comment on which services are clinically integral to the provision of ``J1'' services that would qualify for a complexity adjustment under an expanded evaluation framework. Specifically, we sought comment on what criteria we could add, reflecting clinical practice, that would determine the costly additional components that are often associated with other high-cost packaged items and services. Finally, we sought comment on how we might address the unintended consequences of granular coding on the mechanics of the complexity adjustment criteria and if highly specific coding truly reflects clinical practice in hospital outpatient departments. We received public comments on this comment solicitation. The following is a summary of the comments we received and our responses. Comment: We received a number of comments on C-APC complexity adjustment criteria. Commenters shared their ideas on how to refine the complexity adjustment criteria and methodology, on the mechanics of how complexity adjustments are evaluated, and how the data is presented to the public. Many commenters expressed their need for additional information so that interested parties would be able to accurately replicate Addendum

J. To that end, commenters requested that CMS provide sufficient detail

in the CY 2026 OPPS final rule with comment period Claims Accounting Narrative such that Addendum J could be fully replicated in its entirety. Other commenters suggested that CMS detail the step-by-step claims accounting process used to count claims for the purpose of evaluating complexity adjustment eligibility. Some commenters requested that CMS include the full list of add-on codes eligible for evaluation for the complexity adjustment, along with the method CMS used to determine whether or not a code was eligible for complexity adjustment evaluation. Commenters also requested that CMS provide additional information and greater transparency on the methodology used to evaluate the complexity adjustment frequency criteria for ``J1'' and add-on codes. Specifically, commenters suggested that CMS should evaluate the total costs of ``J1 + N'' code combinations in the same manner as single J1 procedures and ``J1 + J1'' code combinations. Commenters indicated that this would be consistent with how CMS evaluates the cost of single frequency ``J1'' procedures and ``J1 + J1'' procedure code combinations. Many comments suggested CMS could modify the methodology used when determining the cost threshold for a code combination to qualify for a complexity adjustment. Commenters recommended that CMS use the ``lower of'' methodology to determine the eligibility cost threshold: Current methodology using the two times rule, OR The lowest GMC of significant procedures in the APC to which the code combination would be eligible for complexity adjustment. Commenters contended that the current methodology may be appropriate for lower cost APCs where the differences between the APC levels [[Page 53468]] and procedures are less significant. However, for higher-cost APCs, they say that using the two-times rule becomes problematic, and in some instances, the threshold is higher than the cost of any single procedure in the higher paying APC. By adopting the recommended methodology, commenters explained that more code combinations would be eligible for complexity adjustments. Commenters went on to say that the purpose of complexity adjustments is to ensure appropriate payment under the C-APC methodology, and therefore it is critical that CMS employ a methodology that reflects a more appropriate eligibility cost threshold consistent with the single ``J1'' procedures included in each APC. Nearly all commenters on this issue agreed that CMS should expand its review of procedure combinations to include clusters of ``J1'' primary service and add-on codes, rather than only code pairs. Commenters asserted that this would better reflect medical practice when multiple procedures are performed together. Some commenters even suggested that CMS consider procedure combinations that include clusters of ``J1'' and add-on codes, and certain select HCPCS device codes. Commenters had specific suggestions on how using code clusters could work. One commenter suggested using clusters but maintaining cost and frequency thresholds, further suggesting using eligibility for Transitional Pass-Through payment as one criterion by which to identify instances where a code cluster would be appropriate for an expanded complexity adjustment. Other commenters suggested that CMS could limit the evaluation of code clusters to those nominated by the public on an annual basis. Multiple commenters requested that CMS revise the complexity adjustment policy by allowing promotion of qualifying code combinations, even when the primary code is already assigned to the highest level of APCs within a clinical family (for example, creating a new APC level to accommodate these higher cost cases). Other commenters asserted that in order to maintain stability and predictability of payments associated with complex procedures, CMS should allow established qualifying codes to maintain the complexity adjusted payment for three calendar years before they are required to go through the eligibility review. Further, commenters said that APC reassignment for codes that qualify for 3 consecutive years should be made permanent. In response to our request for comments on whether highly specific coding truly reflects clinical practice in hospital outpatient departments, commenters asserted that CMS' broad C-APC packaging policy, including the current eligibility criteria for complexity adjustments, has discouraged complete and accurate hospital reporting of packaged costs. Commenters explained that since hospitals receive the same C-APC payment for furnishing multiple packaged services, there is no incentive to report costs that do not drive reimbursement. Commenters asserted that this underreporting of packaged costs, coupled with CMS' claims edits for device-intensive procedures, leads to underpayment for APCs that rely heavily on packaged items, especially those with expensive routine supplies. We also received a variety of other comments on ways to expand the scope of the complexity adjustment methodology, including establishing a provisional complexity adjustment process for code combinations involving newly removed IPO list procedures, reviewing bilateral procedure claims with high-cost implantable supplies, evaluating non-J1 procedure codes such as status indicators ``S'' and ``T'' for significant cost variation, and waiving the Administrative Procedures Act requirements for public comment to adopt suggested changes in the CY 2026 OPPS/ASC final rule for January 1, 2026. Response: We sincerely thank commenters for their interest and engagement on this important issue. Given the wide array of information presented through this public comment process, we will take the technical recommendations, alternate methodological approaches, and other detailed feedback provided into consideration for future notice and comment rulemaking. We welcome ongoing dialogue and engagement from interested parties regarding suggestions for potential future C-APC complexity adjustment criteria revisions. (3) Exclusion of Procedures Assigned to New Technology APCs From the C- APC Policy Services that are assigned to New Technology APCs are typically new procedures that do not have sufficient claims history to establish an accurate payment for them. Beginning in CY 2002, we retain services within New Technology APC groups until we gather sufficient claims data to enable us to assign the service to an appropriate clinical APC. This policy allows us to move a service from a New Technology APC in less than 2 years if sufficient data are available. It also allows us to retain a service in a New Technology APC for more than 2 years if sufficient data upon which to base a decision for reassignment have not been collected (82 FR 59277). The C-APC payment policy packages payment for adjunctive and secondary items, services, and procedures into the most costly primary procedure under the OPPS at the claim level. Prior to CY 2019, when a procedure assigned to a New Technology APC was included on the claim with a primary procedure, identified by OPPS status indicator ``J1,'' payment for the new technology service was typically packaged into the payment for the primary procedure. Because the new technology service was not separately paid in this scenario, the overall number of single claims available to determine an appropriate clinical APC for the new service was reduced. This was contrary to the objective of the New Technology APC payment policy, which is to gather sufficient claims data to enable us to assign the service to an appropriate clinical APC. To address this issue and ensure that there are sufficient claims data for services assigned to New Technology APCs, in the CY 2019 OPPS/ ASC final rule with comment period (83 FR 58847), we finalized excluding payment for any procedure that is assigned to a New Technology APC (APCs 1491 through 1599 and APCs 1901 through 1908) from being packaged when included on a claim with a ``J1'' service assigned to a C-APC. In the CY 2020 OPPS/ASC final rule with comment period, we finalized that beginning in CY 2020, payment for services assigned to a New Technology APC would be excluded from being packaged into the payment for comprehensive observation services assigned status indicator ``J2'' when they are included on a claim with a ``J2'' service (84 FR 61167). (4) Exclusion of Drugs and Biologicals Described by HCPCS Code C9399 (Unclassified Drugs or Biologicals) From the C-APC Policy Section 1833(t)(15) of the Act, as added by section 621(a)(1) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. 108-173), provides for payment under the OPPS for new drugs and biologicals until HCPCS codes are assigned. Under this provision, we are required to make payment for a covered outpatient drug or biological that is furnished as part of covered outpatient department services but for which a HCPCS code has not yet been assigned in an amount equal to 95 percent of average wholesale price (AWP) for the drug or biological. [[Page 53469]] In the CY 2005 OPPS/ASC final rule with comment period (69 FR 65805), we implemented section 1833(t)(15) of the Act by instructing hospitals to bill for a drug or biological that is newly approved by the Food and Drug Administration (FDA) and that does not yet have a HCPCS code by reporting the National Drug Code (NDC) for the product along with the newly created HCPCS code C9399 (Unclassified drugs or biologicals). We explained that when HCPCS code C9399 appears on a claim, the Outpatient Code Editor (OCE) suspends the claim for manual pricing by the Medicare Administrative Contractor (MAC). The MAC prices the claim at 95 percent of the drug or biological's AWP, using Red Book or an equivalent recognized compendium, and processes the claim for payment. We emphasized that this approach enables hospitals to bill and receive payment for a new drug or biological concurrent with its approval by the FDA. The hospital does not have to wait for the next quarterly release or for approval of a product specific HCPCS code to receive payment for a newly approved drug or biological or to resubmit claims for adjustment. We instructed that hospitals would discontinue billing HCPCS code C9399 and the NDC upon implementation of a product specific HCPCS code, status indicator, and appropriate payment amount with the next quarterly update. We also note that HCPCS code C9399 is paid in a similar manner in the ASC setting, as 42 CFR 416.171(b) outlines that certain drugs and biologicals for which separate payment is allowed under the OPPS are considered covered ancillary services for which the OPPS payment rate, which is 95 percent of AWP for HCPCS code C9399, applies. Since the implementation of the C-APC policy in 2015, payment for drugs and biologicals described by HCPCS code C9399 had been included in the C-APC payment when these products appear on a claim with a primary C-APC service. Packaging payment for these drugs and biologicals that appear on a hospital outpatient claim with a primary C-APC service is consistent with our C-APC packaging policy under which we make payment for all items and services, including all non-pass- through drugs, reported on the hospital outpatient claim as being integral, ancillary, supportive, dependent, and adjunctive to the primary service and representing components of a complete comprehensive service, with certain limited exceptions (78 FR 74869). It was our position that the total payment for the C-APC with which payment for a drug or biological described by HCPCS code C9399 is packaged includes payment for the drug or biological at 95 percent of its AWP. However, we determined that in certain instances, drugs and biologicals described by HCPCS code C9399 are not being paid at 95 percent of their AWPs when payment for them is packaged with payment for a primary C-APC service. In order to ensure payment for new drugs and biologicals described by HCPCS code C9399 at 95 percent of their AWP, for CY 2023 and subsequent years, we finalized our proposal to exclude any drug or biological described by HCPCS code C9399 from packaging when the drug or biological is included on a claim with a ``J1'' service, which is the status indicator assigned to a C-APC, and a claim with a ``J2'' service, which is the status indicator assigned to comprehensive observation services. See Addendum J for the CY 2026 C-APC payment policy exclusions. In the CY 2023 OPPS/ASC final rule with comment period, we finalized the proposal in section XI., ``CY 2023 OPPS Payment Status and Comment Indicators'', to add a new definition to status indicator ``A'' to include unclassified drugs and biologicals that are reportable with HCPCS code C9399 (87 FR 72051). The current definition, as finalized in the CY 2023 OPPS/ASC final rule with comment period, can be found in Addendum D1, would ensure the MAC prices claims for drugs or biologicals billed with HCPCS code C9399 at 95 percent of the drug or biological's AWP and pays separately for the drug or biological under the OPPS when it appears on the same claim as a primary C-APC service. (5) Exclusion of Cell and Gene Therapies From the C-APC Policy As previously discussed in this section, and in the CY 2014 OPPS/ ASC final rule with comment period (78 FR 74865), the C-APC policy packages payment for items and services that are typically integral, ancillary, supportive, dependent, or adjunctive to the primary service and provided during the delivery of the comprehensive service, including diagnostic procedures, laboratory tests and other diagnostic tests and treatments that assist in the delivery of the primary procedure. In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861), we finalized defining a comprehensive APC as a classification for the provision of a primary service and all adjunctive services provided to support the delivery of the primary service. Because a comprehensive APC treats all individually reported codes as representing components of the comprehensive service, we make a single prospective payment based on the cost of all individually reported codes that represent the provision of a primary service and all adjunctive services provided to support that delivery of the primary service. As discussed in the CY 2025 OPPS/ASC proposed rule (89 FR 59201 through 59204), we generally treat all items and services reported on a C-APC claim as integral, ancillary, supportive, dependent, and adjunctive to the primary service and representing components of a comprehensive service. Historically, items packaged for payment provided in conjunction with the primary C-APC service also include all drugs, biologicals, and radiopharmaceuticals, regardless of cost, except those drugs with pass-through payment status and those drugs that are usually self-administered (SADs), unless they function as supplies (78 FR 74868 through 74869 and 74909). However, we recognized in the CY 2025 OPPS/ASC proposed rule (89 FR 59201 through 59204) that there are rare instances in which cell and gene therapies appear on the same claim as a primary C-APC service and therefore, have their payment packaged with payment for the primary C- APC service. As stated in the CY 2025 OPPS/ASC final rule with comment period (89 FR 93932 through 93938), given the unique nature of these therapies, we do not believe they function as integral, ancillary, supportive, dependent, or adjunctive to any of the current primary C- APC services. Additionally, we stated that when these products are administered, they are the primary treatment being administered to a patient and thus, are not integral, ancillary, supportive, dependent, or adjunctive to any primary C-APC services. Therefore, we finalized a policy for CY 2025 and subsequent years (89 FR 93932 through 93938), to not package payment for cell and gene therapies into C-APCs, when those cell and gene therapies are not functioning as integral, ancillary, supportive, dependent, or adjunctive to the primary C-APC service. For new cell and gene therapy products that are not integral, ancillary, supportive, dependent, or adjunctive to any C-APC primary service, we will continue to add their product specific HCPCS codes, when created, to the C-APC exclusion list. The proposed list of qualifying products can be found in Table 2. BILLING CODE 4120-01-P [[Page 53470]] [GRAPHIC] [TIFF OMITTED] TR25NO25.004 BILLING CODE 4120-01-C We list all final C-APC exclusion categories for CY 2026 in Addendum J to this final rule with comment period (which is available via the internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices). Comments on our proposed exclusions are below. Comment: Commenters generally supported and thanked CMS for proposing to continue the exclusion of Cell and Gene Therapies from C- APC packaging in order to support innovation and patient access. Response: We thank commenters for their support. Comment: A few commenters had suggestions on potential modifications and expansions for this policy. For example, one commenter suggested excluding drugs that are the primary therapy and exceed a cost threshold that aligns with the drug's cost relative to the total C-APC claim cost from comprehensive packaging. Bladder cancer drugs were one example suggested for exclusion as C-APC packaging of their product would be cost prohibitive. Response: We thank commenters for their feedback, analysis, and recommendations on potential future approaches for structuring C-APC payment. We are not expanding our C-APC exclusion policy at this time to include additional classes of drugs, but we will take this information into consideration for future rulemaking. Comment: A few commenters asked for CMS to add HCPCS code Q2056 (Ciltacabtagene autoleucel, up to 100 million autologous b-cell maturation antigen (bcma) directed car-positive t cells, including leukapheresis and dose preparation procedures, per therapeutic dose) to this list of Cell and Gene Therapies excluded from C-APC packaging for CY 2026. Commenters noted that this product's pass-through status expired June 30, 2025, and that it was previously indicated as a cell and gene therapy that would be excluded from C-APC packaging. Several commenters asked CMS to be vigilant with adding new products as they are approved and to introduce a formal process for the public to alert CMS that there is a new cell and gene therapy HCPCS code that should be excluded from payment. Response: We thank commenters for recommending the addition of HCPCS code Q2056 to the cell and gene therapy C-APC exclusion list. This HCPCS code has been added to the table of cell and gene therapies excluded from C-APC packaging for CY 2026. We want to clarify for commenters, that although HCPCS code Q2056 was omitted from the CY 2026 OPPS/ASC proposed rule table, the code was excluded from C-APC packaging effective July 1, 2025, [[Page 53471]] after its drug pass-through status expired. Per our finalized policy in the CY 2025 OPPS/ASC final rule with comment period (89 FR 93932 through 93938), for new cell and gene therapy products that are not integral, ancillary, supportive, dependent, or adjunctive to any C-APC primary service, we will continue to add their product specific HCPCS codes, when created, to the C-APC exclusion list. We review products that are updated through the quarterly process to determine if there are qualifying cell and gene therapies that should be excluded from C- APC packaging. We welcome readers to contact us if they have a suggestion of a new qualifying cell and gene therapy that should be excluded from C-APC packaging. We note that we did not make a proposal to alter the substance of the overall policy excluding cell and gene therapies from the C-APC packaging; consistent with public comments received, we are continuing this policy for CY 2026. In response to comments, the finalized list of qualifying products can be found in Table 3 consistent with our finalized policy in the CY 2025 OPPS/ASC final rule with comment period (89 FR 93932 through 93938). BILLING CODE 4120-01-P [GRAPHIC] [TIFF OMITTED] TR25NO25.005 BILLING CODE 4120-01-C (6) Exclusion of Non-Opioid Products for Pain Relief Under Section 4135 of the Consolidated Appropriations Act, 2023 From the C-APC Policy The Consolidated Appropriations Act (CAA), 2023 (Pub. L. 117-328), was signed into law on December 29, 2022. Section 4135(a) and (b) of the CAA, 2023, titled ``Access to Non-Opioid Treatments for Pain Relief,'' amended section 1833(t)(16) and section 1833(i) of the Social Security Act, respectively, to provide for temporary additional payments for non-opioid treatments for pain relief (as that term is defined in section 1833(t)(16)(G)(i) of the Act). In particular, section 1833(t)(16)(G) provides that with respect to a non-opioid treatment for pain relief furnished on or after January 1, 2025, [[Page 53472]] and before January 1, 2028, the Secretary shall not package payment for the non-opioid treatment for pain relief into payment for a covered OPD service (or group of services) and shall make an additional payment for the non-opioid treatment for pain relief as specified in clause (ii) of that section. Clauses (ii) and (iii) of section 1833(t)(16)(G) of the Act provide for the amount of additional payment and set a limitation on that amount. As stated earlier in this section, our current policy is to exclude from the packaged C-APC payment those items and services that are required by statute to be separately paid. Accordingly, in the CY 2025 OPPS/ASC final rule with comment period, we finalized a policy to exclude the non-opioid treatments for pain relief identified as satisfying the required criteria for payment under section 4135 of the CAA, 2023 from the C-APC policy to ensure payment is not packaged into any C-APC and that separate payment is made in accordance with the statute (89 FR 93938 through 93939). (7) C-APCs for CY 2026 For CY 2026 and subsequent years, we proposed to continue to apply the C-APC payment policy methodology. We refer readers to the CY 2017 OPPS/ASC final rule with comment period (81 FR 79583) for a discussion of the C-APC payment policy methodology and revisions. Each year, in accordance with section 1833(t)(9)(A) of the Act, we review and revise the services within each APC group and the APC assignments under the OPPS. As a result of our annual review of the services and the APC assignments under the OPPS, we did not propose to convert any standard APCs to C-APCs in CY 2026; thus, we proposed that the number of C-APCs for CY 2026 would be the same as the number for CY 2025, which is 72 C-APCs. We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: A few commenters requested that CMS reconsider our packaging policies for C-APC 8011 (Comprehensive Observation Services). They requested that CMS remove the rule that the presence of a SI ``T'' \6\ procedure on a claim excludes payment of C-APC 8011 and instead package the payment of the SI ``T'' procedure into C-APC 8011, as is already done with SI ``Q'' \7\ procedures. Commenters stated that this requirement violates the basic tenet of the packaging concept in that when observation services are ordered and furnished, the observation services become the primary service provided to such patients and the SI ``T'' procedure is provided ancillary to that primary service. Commenters cited scenarios in which hospitals provide significant, resource-intensive services to a patient but are paid significantly less than if a SI ``T'' procedure was not done. --------------------------------------------------------------------------- \6\ Status Indicator ``T'' is defined as a ``Procedure or Service, Multiple Procedure Reduction Applies'' the OPPS payment status is ``Paid under OPPS; separate APC payment.'' Definitions to all OPPS payment status indicators are available in Addenda D1 to this final rule with comment period. \7\ Status Indicator ``Q'' is defined as a ``STV-Packaged Codes'' the OPPS payment status is ``Paid under OPPS; Addendum B displays APC assignments when services are separately payable. (1) Packaged APC payment if billed on the same claim as a HCPCS code assigned status indicator ``S,'' ``T,'' or ``V.'' (2) Composite APC payment if billed with specific combinations of services based on OPPS composite-specific payment criteria. Payment is packaged into a single payment for specific combinations of services. (3) In other circumstances, payment is made through a separate APC payment.'' Definitions to all OPPS payment status indicators are available in Addenda D1 to this final rule with comment period. --------------------------------------------------------------------------- Response: We thank the commenters for bringing this to our attention. In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70334 through70336), in response to commenters' concerns regarding packaging payment for potentially high-cost surgical procedures into the payment for an observation C-APC, we finalized a policy that claims reporting procedures assigned status indicator ``T'' do not qualify for payment through C-APC 8011, regardless of whether the procedure assigned status indicator ``T'' was furnished before or after observation services (described by HCPCS code G0378) were provided. In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79562), we stated that services that would otherwise qualify for C-APC 8011 are not considered to be observation services when they are associated with a surgical procedure (assigned to status indicator ``T''). Instead, they are considered to be perioperative recovery, which is always packaged in with the surgical procedure (81 FR 79583). We will continue to review the impacts of this issue and may revisit it in future rulemaking. Comment: Some commenters expressed concerns with the C-APC methodology for surgical insertion codes for brachytherapy treatment, stating that these concerns impact beneficiary access to brachytherapy in the HOPD setting. These commenters stated that the C-APC methodology lacks the appropriate charge capture mechanisms to accurately reflect the services associated with the C-APC, that there are significant variations in the clinical practice and billing patterns in the hospital claims data used for ratesetting, and that the C-APC rates do not accurately or fully reflect the services and costs associated with the primary procedure. Commenters urged the agency to explore alternatives, including that CMS discontinue the C-APC policy for all brachytherapy insertion codes. Alternatively, one commenter suggested that CMS could continue to pay for ``J1'' brachytherapy insertion codes under the C-APC payment methodology but exclude and make separate payment for designated preparation and planning services in addition to the C-APC payment. Another commenter called for education on whether services, like brachytherapy, that are assigned to a ``J1'' indicators and delivered over multiple patient encounters may be reported per encounter. Response: We appreciate the comments on the C-APC methodology. However, we believe that the current C-APC methodology is appropriately applied to surgical insertion for Brachytherapy treatment and is accurately capturing costs, particularly as the brachytherapy sources used for these procedures are excluded from C-APC packaging and are separately payable. We will evaluate if provider education may be appropriate in this circumstance. We will continue to examine these concerns and will determine if any modifications to this policy are warranted in future rulemaking. After consideration of the public comments we received, we are finalizing the C-APCs as proposed. Table 4 lists the final C-APCs for CY 2026. All C-APCs are displayed in Addendum J to this CY 2026 OPPS/ ASC final rule with comment period (which is available via the internet on the CMS website). Addendum J to this final rule with comment period also contains all the data related to the C-APC payment policy methodology, including the list of complexity adjustments and other information for CY 2026. BILLING CODE 4120-01-P [[Page 53473]] [GRAPHIC] [TIFF OMITTED] TR25NO25.006 [[Page 53474]] [GRAPHIC] [TIFF OMITTED] TR25NO25.007 BILLING CODE 4120-01-C c. Calculation of Composite APC Criteria-Based Costs As discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66613), we believe it is important that the OPPS enhance incentives for hospitals to provide necessary, high-quality care as efficiently as possible. For CY 2008, we developed composite APCs to provide a single payment for groups of services that are typically performed together during a single clinical encounter and that result in the provision of a complete service. Combining payment for multiple, independent services into a single OPPS payment in this way enables hospitals [[Page 53475]] to manage their resources with maximum flexibility by monitoring and adjusting the volume and efficiency of services themselves. An additional advantage to the composite APC model is that we can use data from correctly coded multiple procedure claims to calculate payment rates for the specified combinations of services, rather than relying upon single procedure claims which may be low in volume and/or incorrectly coded. Under the OPPS, we currently have composite policies for mental health services and multiple imaging services. We refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66611 through 66614 and 66650 through 66652) for a full discussion of the development of the composite APC methodology, and the CY 2012 OPPS/ ASC final rule with comment period (76 FR 74163) and the CY 2018 OPPS/ ASC final rule with comment period (82 FR 59241, 59242, and 59246 through 52950) for further background. (1) Mental Health Services Composite APC For CY 2026, we proposed to continue our longstanding policy of limiting the aggregate payment for specified less resource-intensive mental health services furnished on the same date to the payment for a day of partial hospitalization services provided by a hospital, which we consider to be the most resource-intensive of all outpatient mental health services (88 FR 49572). We refer readers to the April 7, 2000, OPPS final rule with comment period (65 FR 18452 through 18455) for the initial discussion of this longstanding policy and the CY 2012 OPPS/ASC final rule with comment period (76 FR 74168) for further background. In the CY 2018 OPPS/ASC proposed rule and final rule with comment period (82 FR 33580 and 33581 and 82 FR 59246 and 59247), we proposed and finalized the policy for CY 2018 and subsequent years that, when the aggregate payment for specified mental health services provided by one hospital to a single beneficiary on a single date of service, based on the payment rates associated with the APCs for the individual services, exceeds the maximum per diem payment rate for partial hospitalization services provided by a hospital, those specified mental health services will be paid through composite APC 8010 (Mental Health Services Composite). In addition, we set the payment rate for composite APC 8010 for CY 2018 at the same payment rate for APC 5863, which was the maximum partial hospitalization per diem payment rate for a hospital, and finalized a policy that the hospital would continue to be paid the payment rate for composite APC 8010. This policy applied in CYs 2018 through 2023. In the CY 2024 OPPS/ASC proposed rule, we stated that APC 5863 was no longer the maximum partial hospitalization per diem payment rate for a hospital due to the creation of APC 5864, which is four or more hospital-based PHP services per day (88 FR 49572). We solicited comment on whether APC 5864 would be appropriate to use as the daily mental health cap, as we have historically set the daily mental health cap for composite APC 8010 at the maximum partial hospitalization per diem payment rate for a hospital (88 FR 49572). Based on public comments received and our longstanding policy, in the CY 2024 OPPS/ASC final rule, we finalized APC 5864, four hospital-based PHP services per day, as the daily mental health cap (88 FR 81566). In the CY 2026 OPPS/ASC proposed rule, we stated that we continue to believe that the costs associated with administering a partial hospitalization program represent the most resource intensive of all outpatient mental health services. For CY 2026 and subsequent years, we proposed to continue this policy that when the aggregate payment for specified mental health services provided by one hospital to a single beneficiary on a single date of service, based on the payment rates associated with the APCs for the individual services, exceeds the per diem payment rate for four partial hospitalization services provided in a day by a hospital (the payment amount for APC 5864), those specified mental health services would be paid through composite APC 8010. In addition, we proposed to continue to set the payment rate for composite APC 8010 at the same payment rate that we proposed for APC 5864, which is a partial hospitalization per diem payment rate for four partial hospitalization services furnished in a day by a hospital. Under the proposed policy, the Integrated OCE (I/OCE) would continue to determine whether to pay for these specified mental health services individually, or to make a single payment at the same payment rate established for APC 5864 for all the specified mental health services furnished by the hospital on that single date of service by paying for the services through composite APC 5863. We did not receive public comments on this provision, and therefore, we are finalizing our proposal regarding APC 8010 without modification. When the aggregate payment for specified mental health services provided by one hospital to a single beneficiary on a single date of service, based on the payment rates associated with the APCs for the individual services, exceeds the maximum per diem payment rate for four partial hospitalization services provided in a day by a hospital (the payment amount for APC 5864), those specified mental health services would be paid through composite APC 8010 for CY 2026. In addition, we are finalizing setting the payment rate for composite APC 8010 for CY 2026 at the same payment rate that we set for APC 5864, which is the maximum partial hospitalization per diem payment rate for a hospital. (2) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and 8008) Effective January 1, 2009, we provide a single payment each time a hospital submits a claim for more than one imaging procedure within an imaging family on the same date of service, to reflect and promote the efficiencies hospitals can achieve when performing multiple imaging procedures during a single session (73 FR 41448 through 41450). We utilize three imaging families based on imaging modality for purposes of this methodology: (1) ultrasound; (2) computed tomography (CT) and computed tomographic angiography (CTA); and (3) magnetic resonance imaging (MRI) and magnetic resonance angiography (MRA). The HCPCS codes subject to the multiple imaging composite policy and their respective families are listed in Table 5. While there are three imaging families, there are five multiple imaging composite APCs due to the statutory requirement under section 1833(t)(2)(G) of the Act that we differentiate payment for OPPS imaging services provided with and without contrast. While the ultrasound procedures included under the policy do not involve contrast, both CT/ CTA and MRI/MRA scans can be provided either with or without contrast. The five multiple imaging composite APCs established in CY 2009 are: APC 8004 (Ultrasound Composite); APC 8005 (CT and CTA without Contrast Composite); APC 8006 (CT and CTA with Contrast Composite); APC 8007 (MRI and MRA without Contrast Composite); and APC 8008 (MRI and MRA with Contrast Composite). We define the single imaging session for the ``with contrast'' composite APCs as having at least one or more imaging [[Page 53476]] procedures from the same family performed with contrast on the same date of service. For example, if the hospital performs an MRI without contrast during the same session as at least one other MRI with contrast, the hospital will receive payment based on the payment rate for APC 8008, the ``with contrast'' composite APC. We make a single payment for those imaging procedures that qualify for payment based on the composite APC payment rate, which includes any packaged services furnished on the same date of service. The standard (noncomposite) APC assignments continue to apply for single imaging procedures and multiple imaging procedures performed across families. For a full discussion of the development of the multiple imaging composite APC methodology, we refer readers to the CY 2009 OPPS/ASC final rule with comment period (73 FR 68559 through 68569). For CY 2026, we proposed to continue to pay for all multiple imaging procedures within an imaging family performed on the same date of service using the multiple imaging composite APC payment methodology. In the CY 2026 OPPS/ASC proposed rule, we stated that we continue to believe that this policy would reflect and promote the efficiencies hospitals can achieve when performing multiple imaging procedures during a single session. For CY 2026, except where otherwise indicated, we proposed to use the costs derived from CY 2024 claims data to set the proposed CY 2026 payment rates. Therefore, for CY 2026, the proposed payment rates for the five multiple imaging composite APCs (APCs 8004, 8005, 8006, 8007, and 8008) were based on proposed geometric mean costs calculated from CY 2024 claims available for the CY 2026 OPPS/ASC proposed rule that qualify for composite payment under the current policy (that is, those claims reporting more than one procedure within the same family on a single date of service). To calculate the proposed geometric mean costs, we used the same methodology that we used to calculate the geometric mean costs for these composite APCs since CY 2014, as described in the CY 2014 OPPS/ASC final rule with comment period (78 FR 74918). The imaging HCPCS codes referred to as ``overlap bypass codes'' that we removed from the bypass list for purposes of calculating the proposed multiple imaging composite APC geometric mean costs, in accordance with our established methodology as stated in the CY 2014 OPPS/ASC final rule with comment period (78 FR 74918), are identified by asterisks in Addendum N to this final rule with comment period (which is available via the internet on the CMS website https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices) and are discussed in more detail in section II.A.1.a. of this final rule with comment period. We did not receive any public comments on this policy. We are finalizing without modification our proposal to continue the use of multiple imaging composite APCs to pay for the provision of more than one imaging procedure from the same imaging family on the same date. Table 5 lists the final HCPCS codes that would be subject to the multiple imaging composite APC policy and their respective families and approximate composite APC final geometric mean costs for CY 2026. BILLING CODE 4120-01-P [[Page 53477]] [GRAPHIC] [TIFF OMITTED] TR25NO25.008 [[Page 53478]] [GRAPHIC] [TIFF OMITTED] TR25NO25.009 [[Page 53479]] [GRAPHIC] [TIFF OMITTED] TR25NO25.010 [[Page 53480]] [GRAPHIC] [TIFF OMITTED] TR25NO25.011 BILLING CODE 4120-01-C [[Page 53481]] 3. Changes to Packaged Items and Services a. Background and Rationale for Packaging in the OPPS Like other prospective payment systems, the OPPS relies on the concept of averaging to establish a payment rate for services. The payment may be more or less than the estimated cost of providing a specific service or a bundle of specific services for a particular beneficiary. The OPPS packages payments for multiple interrelated items and services into a single payment to create incentives for hospitals to furnish services most efficiently and to manage their resources with maximum flexibility. Our packaging policies support our strategic goal of using larger payment bundles in the OPPS to maximize hospitals' incentives to provide care in the most efficient manner. For example, where there are a variety of devices, drugs, items, and supplies that could be used to furnish a service, some of which are more costly than others, packaging encourages hospitals to use the most cost-efficient item that meets the patient's needs, rather than to routinely use a more expensive item, which may occur if separate payment is provided for the item. Packaging also encourages hospitals to effectively negotiate with manufacturers and suppliers to reduce the purchase price of items and services or to explore alternative group purchasing arrangements, thereby encouraging the most economical health care delivery. Similarly, packaging encourages hospitals to establish protocols that ensure that necessary services are furnished, while scrutinizing the services ordered by practitioners to maximize the efficient use of hospital resources. Packaging payments into larger payment bundles promotes the predictability and accuracy of payment for services over time. Finally, packaging may reduce the importance of refining service- specific payments because packaged payments include costs associated with higher cost cases requiring many ancillary items and services and lower cost cases requiring fewer ancillary items and services. Packaging encourages efficiency and is an essential component of a prospective payment system; therefore, packaging payments for items and services that are typically integral, ancillary, supportive, dependent, or adjunctive to a primary service has been a fundamental part of the OPPS since its implementation in August 2000. As we continue to develop larger payment groups that more broadly reflect services provided in an encounter or episode of care, we have expanded the OPPS packaging policies. Most, but not necessarily all, categories of items and services currently packaged in the OPPS are listed in 42 CFR 419.2(b). Our overarching goal is to make payments for all services under the OPPS more consistent with those of a prospective payment system and less like those of a per-service fee schedule, which pays separately for each coded item. As a part of this effort, we have continued to examine the payment for items and services provided under the OPPS to determine which OPPS services can be packaged to further achieve the objective of advancing the OPPS toward a more prospective payment system. b. Final CY 2026 Policy on Packaged Items and Services For CY 2026, we examined the items and services currently provided under the OPPS, reviewing categories of integral, ancillary, supportive, dependent, or adjunctive items and services for which we believe payment would be appropriately packaged into payment for the primary service that they support. Specifically, we examined the HCPCS code definitions (including CPT code descriptors) and hospital outpatient department billing patterns to determine whether there were categories of codes for which packaging would be appropriate according to existing OPPS packaging policies or a logical expansion of those existing OPPS packaging policies. For CY 2026, we did not propose any changes to the overall packaging policy discussed. We proposed to continue to conditionally package the costs of selected newly identified ancillary services into payment for a primary service where we believe that the packaged item or service is integral, ancillary, supportive, dependent, or adjunctive to the provision of care that was reported by the primary service HCPCS code (90 FR 33503). We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: Several commenters expressed broad support for unpackaging payments. One commenter believed that CMS packaging policies may encourage efficiencies and help lower costs, but they believed that packaging policies could penalize hospitals that provide complex care to sicker patients. Similarly, commenters believed that unpackaging payment could support patient access and innovations, including to certain drugs, biologicals, and services. Specifically, one commenter suggested that CMS consider unpackaging their product, a contrast agent, and believed CMS's reasoning in the CY 2026 OPPS/ASC proposed rule for unpackaging and paying separately for diagnostic radiopharmaceuticals applies equally or even more to their product, since the cost of their product is over 500 times greater than the amount reported for the policy packaged drugs offset associated with the Level II Urology APC. The commenter believed lack of separate payment was a barrier to beneficiary access and recommended CMS pay for products like theirs when the product costs exceeded a certain threshold. Response: We thank the commenters for their perspectives on packaging within the OPPS, including specific examples of cost exceeding offset amounts. We continue to believe that our packaging policies are a fundamental principle that distinguishes a prospective payment system from a fee schedule. In general, packaging the costs of supportive items and services into the payment for the primary procedure or service with which they are associated encourages hospital efficiencies and enables hospitals to manage their resources with maximum flexibility. We will take the information commenters provided into consideration as appropriate for possible future rulemaking. Comment: Several commenters recommended CMS reassess its policy packaging principles regarding laboratory testing, with a particular emphasis on screening tests and antimicrobial stewardship, including those tests used in the emergency department setting. These commenters explained the public health threat of antibiotic-resistant infections, including the patient and financial impacts. Specifically, these commenters discussed that current APC assignments do not reflect substantial investments in the reagents, instruments, and analytic software that are required for these tests. Therefore, they requested CMS exclude these products from packaging through a narrowly defined exception, similar to preventative services. Response: We thank the commenters for their feedback on these issues, including the importance of antimicrobial stewardship. We note that these costs are generally accounted for through packaging under our policies outlined in 42 CFR 419.2(b). As previously discussed in this section, in general, packaging the costs of supportive items and services into the payment for the primary procedure or service with which they are associated encourages hospital efficiencies and [[Page 53482]] enables hospitals to manage their resources with maximum flexibility. Our overarching goal is to make payments for services under the OPPS more consistent with those of a prospective payment system and less like those of a per-service fee schedule, which pays separately for each coded item. At this time, we do not believe that unpackaging the tests as suggested by commenters helps us to achieve this goal. However, we will take these comments into consideration for any future modifications to our broader packaging policies. Additionally, we received specific recommendations regarding C-APC packaging of Cell and Gene Therapies and associated products, which are addressed in section II.b.4. of this final rule with comment period, and the packaging of non-opioid treatments for pain relief, which are addressed in section XIII.F. of this final rule with comment period. Commenters also made recommendations on our packaging policies in the context of our diagnostic radiopharmaceutical proposal, which is discussed in the next section. After consideration of public comments, we are finalizing our proposal to continue to conditionally package the costs of selected newly-identified ancillary services into payment for a primary service where we believe that the packaged item or service is integral, ancillary, supportive, dependent, or adjunctive to the provision of care that was reported by the primary service HCPCS code, as proposed for CY 2026. c. Payment for Diagnostic Radiopharmaceuticals (1) Background on OPPS Packaging Policy for Diagnostic Radiopharmaceuticals Under the OPPS, we package several categories of nonpass-through drugs, biologicals, and radiopharmaceuticals, regardless of the cost of the products. Because the products are packaged according to the policies in Sec. 419.2(b), we refer to them as ``policy-packaged'' drugs, biologicals, and radiopharmaceuticals. In particular, under Sec. 419.2(b)(15), payment for drugs, biologicals, and, prior to CY 2025, all radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure are packaged with the payment for the related procedure or service. Packaging costs into a single aggregate payment for a service, encounter, or episode of care is a fundamental principle that distinguishes a prospective payment system from a fee schedule. In general, packaging the costs of supportive items and services into the payment for the primary procedure or service with which they are associated encourages hospital efficiencies and enables hospitals to manage their resources with maximum flexibility. In the CY 2008 OPPS/ASC final rule with comment period, we finalized the packaging status of diagnostic radiopharmaceuticals as part of our overall enhanced packaging approach for the CY 2008 OPPS and subsequent years (72 FR 66635 through 66641). Importantly, we noted that we believe diagnostic radiopharmaceuticals are always intended to be used with a diagnostic nuclear medicine procedure and function as supplies when used in a diagnostic test or procedure, making it appropriate to package the payment for the diagnostic radiopharmaceutical into the payment for the related nuclear medicine procedure. Higher cost diagnostic radiopharmaceuticals were one specific type of product that, prior to CY 2025, was policy packaged under the category described by Sec. 419.2(b)(15). Since we implemented this policy in CY 2008, interested parties raised concerns regarding policy packaging of diagnostic radiopharmaceuticals. In the CY 2025 OPPS/ASC proposed rule (89 FR 59213 through 59222), we stated that we continue to believe diagnostic radiopharmaceuticals are always intended to be used with a diagnostic nuclear medicine procedure and function as supplies when used in a diagnostic test or procedure, generally making it appropriate to package payment for them with payment for the related nuclear medicine procedure. However, we stated there are certain situations in which the packaged payment amount attributed to the diagnostic radiopharmaceutical used in an imaging procedure assigned to a nuclear medicine APC may not adequately account for the cost of a diagnostic radiopharmaceutical that has a significantly higher cost, but lower utilization relative to the other diagnostic radiopharmaceuticals that may be used with the procedure. In the CY 2025 OPPS/ASC final rule with comment period (89 FR 93948 through 93963) we finalized a policy to pay separately for any diagnostic radiopharmaceutical with a per day cost greater than $630 for CY 2025. We proposed to use the same methodology that was finalized in the CY 2025 OPPS/ASC final rule with comment period in order to calculate the per day costs for diagnostic radiopharmaceuticals for CY 2026 and future years (89 FR 93953 through 93955). We noted that any diagnostic radiopharmaceutical with a per day cost at or below that threshold will continue to be policy packaged under our longstanding policy at Sec. 419.2(b)(15). Additionally, we finalized the policy that starting in CY 2026 and for subsequent years, we will update the threshold amount of $630 by a forecast of the Producer Price Index (PPI) for Pharmaceuticals for Human Use, Prescription (Bureau of Labor Statistics (BLS) series code WPUSI07003) from IHS Global, Inc (IGI) (89 FR 93955). In the CY 2025 OPPS/ASC final rule with comment period, we also finalized a policy to pay for nonpass-through, separately payable diagnostic radiopharmaceuticals with per day costs above the designated threshold based on our authority under section 1833(t)(14)(A)(iii)(II) of the Act. As we found that the ASP data we had was not usable for the purpose of paying for diagnostic radiopharmaceuticals, we finalized a policy to pay for qualifying nonpass-through diagnostic radiopharmaceuticals with claims data based on mean unit cost data derived from hospital claims. Additionally, we finalized corresponding modifications to the regulation text at Sec. 419.2(b)(15) and Sec. 419.41 to codify our finalized payment policy for diagnostic radiopharmaceuticals and our existing policy for therapeutic radiopharmaceuticals. For additional information regarding the policy finalized for CY 2025, reference 89 FR 93948 through 93963. (2) Diagnostic Radiopharmaceutical Packaging Threshold For CY 2026, we proposed to continue the policy finalized in CY 2025 (90 FR 33504). Specifically, we proposed to continue to calculate the per day cost of diagnostic radiopharmaceuticals based on the methodology described in section V.B.1.b. of the CY 2026 OPPS/ASC proposed rule, which relies on the methodology finalized in the CY 2006 OPPS final rule with comment period (70 FR 68636 through 68638). As finalized in the CY 2025 OPPS/ASC final rule with comment period (89 FR 93955), starting in the OPPS/ASC rulemaking for CY 2026 and for subsequent years, we stated we would update the proposed threshold amount of $630 by a forecast of the PPI for Pharmaceuticals for Human Use, Prescription (BLS series code WPUSI07003) from IHS Global, Inc (IGI) by using most recently available four-quarter moving average PPI levels to trend from the third quarter of the year 2 years prior to the applicable calendar year to the third quarter of the year prior [[Page 53483]] to the applicable calendar year (for example, from the third quarter of 2024 to the third quarter of 2025 for CY 2026). We proposed a technical refinement to this policy. We proposed to use the most recently available four-quarter moving average PPI levels to trend the CY 2025 final threshold forward from the third quarter of the CY 2025 to the third quarter of the payment year (CY 2026) and round the resulting dollar amount to the nearest $5 increment. We believed using the most recently available four-quarter moving average PPI levels more appropriately updates the packaging threshold from CY 2025 for payment in CY 2026. For CY 2027 and subsequent updates, we proposed to trend the CY 2025 threshold of $630 forward using the four-quarter moving average PPI levels for Pharmaceuticals for Human Use, Prescription for CY 2025 (third quarter) forward using the PPI for Pharmaceuticals for Human Use, Prescription for the applicable payment year (third quarter) (90 FR 3362324). This is the same as the update factor used for the OPPS drug packaging threshold, where we originally used the four- quarter moving average PPI levels for Pharmaceutical Preparations, Prescription (BLS series code WPUSI07003, formerly BLS series code 32541DRX) to trend the $50 threshold forward from the third quarter of CY 2005 (when the Pub. L. 108-173 mandated threshold became effective) to the third quarter of the applicable payment year (71 FR 68085 and 68086). Therefore, for CY 2026, we proposed to update the CY 2025 $630 threshold amount by the four-quarter moving average PPI levels for Pharmaceuticals for Human Use, Prescription to trend the $630 threshold forward. Specifically, we proposed to use the most recently available forecast of the four-quarter moving average PPI levels for Pharmaceutical for Human Use, Prescription from the third quarter of 2025 to the third-quarter of 2026, and to round the resulting dollar amount to the nearest $5 increment. Based on this methodology, we trended the $630 threshold forward and rounded the resulting dollar amount ($654.23) to the nearest $5 increment, which yields a proposed figure of $655 per day for CY 2026. Consistent with our methodology and practices listed in section V.B.1.b. of the CY 2026 OPPS/ASC proposed rule, we also proposed that if more recent data are subsequently available (for example, a more recent estimate of the PPI for Pharmaceuticals for Human Use, Prescription), we would use such data, if appropriate, to determine the CY 2026 diagnostic radiopharmaceutical packaging threshold in the final rule. We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: Most commenters were supportive of our proposal to maintain a per day cost threshold in order to determine which diagnostic radiopharmaceuticals should be paid separately under this policy. In general, commenters believed this threshold would help distinguish between older, lower-cost diagnostic radiopharmaceuticals and newer, higher-cost precision diagnostic radiopharmaceuticals. Similarly, most commenters were supportive of the proposed update methodology and the corresponding updated per day cost threshold of $655. Response: We thank commenters for their support. Comment: Some commenters offered feedback on the threshold CMS proposed for CY 2026. Specifically, a few commenters requested that CMS maintain the CY 2025 per day cost threshold of $630 and not update the cost threshold according to the proposed methodology for CY 2026. These commenters believed the policy was too new to warrant an increase in the payment threshold, and commenters noted that these products had unique cost structures, utilization patterns, and roles in patient care. Some requested CMS delay any changes in the threshold until the policy has been in place for at least 2 years. Some commenters were not convinced that the proposed update factor is appropriate or representative of diagnostic radiopharmaceuticals, but generally did not provide an alternative update methodology. Some commenters believed that incorporating radiopharmaceutical-specific cost data would be more appropriate. A commenter also recommended CMS ensure no unintended consequences of this policy occur, such as manufacturers purposefully pricing their products just above the payment threshold. Response: We thank commenters for their feedback. We will monitor the effects of this policy and will consider proposing modifications in future rulemaking if appropriate. We do not believe it is appropriate to maintain the same threshold that was finalized in CY 2025. We continue to believe it is appropriate to subject the diagnostic radiopharmaceutical packaging threshold to the same update factor that is used for the OPPS drug packaging threshold as supported by the majority of commenters. Updating the threshold by the PPI for Pharmaceuticals for Human Use (Prescription) is consistent with our longstanding policy to update the OPPS drug packaging threshold annually. This PPI update factor provides aggregate changes in the selling prices of pharmaceuticals, which makes it an appropriate factor with which to update the diagnostic radiopharmaceutical packaging threshold to ensure that as diagnostic radiopharmaceuticals' costs change over time, the threshold continues to identify products with costs that significantly exceed the otherwise applicable APC payment amounts as determined in this final rule with comment period and that therefore should be eligible for separate payment. We appreciate the recommendation to consider an update factor more specific to diagnostic radiopharmaceuticals, which we will consider for future rulemaking. Comment: A commenter requested that CMS consider unpackaging all radiopharmaceuticals regardless of their cost to ensure proper payment and avoid perverse incentives. They believed that this action would lead to an overall reduction in industry costs by eliminating the incentive for manufacturers to price products above the threshold. Response: We thank the commenter for their concern regarding the avoidance of perverse financial incentives. The threshold amount was originally designed to ensure payment only for those products with costs that significantly exceed their packaged payment. We continue to believe a threshold is an appropriate method to ensure targeted payment as it continues the packaging of most diagnostic radiopharmaceuticals. As previously mentioned in this section, packaging is a fundamental principle that distinguishes a prospective payment system from a fee schedule. In general, packaging the costs of supportive items and services into the payment for the primary procedure or service with which they are associated encourages hospital efficiencies and enables hospitals to manage their resources with maximum flexibility. However, we will continue to monitor this policy for any unintended consequences. After consideration of public comments, we are finalizing our policy as proposed. We are finalizing our proposal to update the CY 2025 $630 threshold amount by the four-quarter moving average PPI levels for Pharmaceuticals for Human Use, Prescription to trend the threshold forward. Specifically, we are using the most recently available forecast of the four-quarter moving average PPI levels for Pharmaceutical for Human Use, [[Page 53484]] Prescription from the third quarter of 2025 to the third quarter of 2026, and to round the resulting dollar amount to the nearest $5 increment. We also proposed, and are now finalizing, a policy that if more recent data were to subsequently become available (for example, a more recent estimate of the PPI for Pharmaceuticals for Human Use, Prescription), we would use such data, if appropriate, to determine the CY 2026 diagnostic radiopharmaceutical packaging threshold in the final rule. Based on this methodology, using the most recent data available for this final rule with comment period, we trended the $630 threshold forward and rounded the resulting dollar amount ($656.65) to the nearest $5 increment, which yields a final diagnostic radiopharmaceutical packaging threshold figure of $655 per day for CY 2026. (3) Amount of Separate Payment for Diagnostic Radiopharmaceuticals Exceeding the Threshold As discussed in the CY 2025 OPPS/ASC final rule with comment period (89 FR 93955 through 93959), once we determine that the per day cost of a nonpass-through diagnostic radiopharmaceutical exceeds the cost threshold, proposed to be $655 per day for CY 2026, we will then assign that radiopharmaceutical to an APC, making it a specified covered outpatient drug (SCOD) per section 1833(t)(14)(B) of the Act. We proposed to continue our current policy for CY 2026, and proposed to pay for those nonpass-through, separately payable diagnostic radiopharmaceuticals based on our authority under section 1833(t)(14)(A)(iii)(II) of the Act. While, under this authority, we would ordinarily use the ASP methodology under section 1847A of the Act, we continued to find that the ASP data we had was not usable for payment purposes. We continued to believe that arithmetic mean unit cost (MUC) would be an appropriate proxy for the average price for a diagnostic radiopharmaceutical for a given year, as it is calculated based on the average costs for a particular year and is directly reflective of the actual cost data that hospitals submit to CMS. Therefore, we proposed to continue our current policy and proposed for CY 2026 to pay for qualifying diagnostic radiopharmaceuticals with per day costs above the diagnostic radiopharmaceutical packaging threshold based on their arithmetic MUC, which would be derived from calendar year 2024 claims data. Although we proposed to base payment for qualifying radiopharmaceuticals on their arithmetic MUC for CY 2026, we continued to encourage manufacturers to submit ASP information for diagnostic radiopharmaceuticals, if possible. While we proposed to continue to use MUC to pay for separately payable diagnostic radiopharmaceuticals in CY 2026, we noted that manufacturers can begin, or continue, to report ASP data for potential future use in paying for diagnostic radiopharmaceuticals. For CY 2026, ASP reporting is voluntary for diagnostic radiopharmaceuticals paid under the OPPS. We encouraged interested parties to submit comments regarding potential issues that may arise that prevent appropriate ASP reporting for diagnostic radiopharmaceuticals. We referred readers to the CY 2025 OPPS/ASC final rule with comment period as it discusses some of the known concerns regarding ASP reporting for diagnostic radiopharmaceuticals (89 FR 93948 through 93963). We reiterated our stance from the CY 2025 OPPS/ ASC final rule with comment period, that if we were to use average sales price as the basis of calculating a payment, we believed there must be more consistent, validated, and universal reporting in order for ASP to be a viable payment methodology (89 FR 93961). We also reiterated, as we stated in the CY 2025 OPPS/ASC final rule with comment period (89 FR 93957), that there could be potential value in the use of ASP data for payment purposes for diagnostic radiopharmaceuticals when reported correctly and by all manufacturers who manufacture a product that is described by a given HCPCS code. We continue to believe that the use of ASP information for OPPS payment could provide an opportunity to improve payment accuracy for separately payable diagnostic radiopharmaceuticals by applying an established methodology that has already been successfully implemented under the OPPS for other separately payable drugs and biologicals, as well as for therapeutic radiopharmaceuticals. To facilitate potential future payment for diagnostic radiopharmaceuticals based on ASP, we sought comment from interested parties on how CMS can ensure more consistent, validated, and universal reporting in order for ASP to be a viable payment methodology utilized in future rulemaking. For example, we sought comment on how CMS may update its past guidance, Submission of OPPS ASP Data for Nonpass- Through Separately Payable Therapeutic Radiopharmaceuticals and Radiopharmaceuticals with Pass-Through Status,\8\ to reflect current clinical practices and to reflect ASP reporting for diagnostic radiopharmaceuticals. --------------------------------------------------------------------------- \8\ https://www.cms.gov/medicare/medicare-fee-for-service-payment/hospitaloutpatientpps/downloads/opps_asp_radiopharm_guidance10302009.pdf. --------------------------------------------------------------------------- Additionally, as discussed in section V.B.5. of the CY 2026 OPPS/ ASC proposed rule (Proposed Payment for Nonpass-Through Drugs, Biologicals, and Radiopharmaceuticals with HCPCS Codes but Without OPPS Hospital Claims Data), we proposed to set the payment rate for new diagnostic radiopharmaceuticals that exceed the diagnostic radiopharmaceutical packaging threshold and with HCPCS codes, but which do not have pass-through status and are without claims data, at ASP plus 6 percent (90 FR 33624). If ASP data for these diagnostic radiopharmaceuticals were not available, we proposed to pay WAC plus 3 percent during the product's initial sales period, consistent with our policy described in section V.B.2. of the CY 2026 OPPS/ASC proposed rule. If the WAC also is unavailable, we proposed to make payment for new diagnostic radiopharmaceuticals at 95 percent of the products' most recent AWP. Following the initial sales period, a payment rate of WAC plus 6 percent would apply, if ASP data for these diagnostic radiopharmaceuticals remain unavailable. We believed the volume of products in this category would typically be very low; however, in these rare situations, we believed it would continue to be appropriate to use ASP plus six percent, WAC plus 3 or 6 percent, or 95 percent of AWP until a MUC is available. As we stated in the CY 2025 OPPS/ASC final rule with comment period, it is appropriate to use this payment hierarchy until a MUC is available. There is typically only one manufacturer for a diagnostic radiopharmaceutical that is new and described by a HCPCS code, but without claims data, so CMS does not have to ensure all manufacturers are reporting ASP for that particular HCPCS code prior to establishing a separate payment amount based on ASP. Additionally, although reporting of ASP is not a condition of CMS approving a HCPCS application, CMS has the opportunity to actively engage with the manufacturer, or sponsor of a HCPCS application, during the HCPCS application process. This allows for ongoing dialogue and education regarding the unique ASP reporting requirements that may be [[Page 53485]] associated with a particular product, including how to ensure the reported ASP aligns with the dose descriptor for the newly assigned HCPCS code (89 FR 93958). We believed the hierarchy previously specified is appropriate to determine the payment for a diagnostic radiopharmaceutical that is new and described by a HCPCS code, but without claims data, as it is consistent with the typical hierarchy associated with payment for drugs and biologicals paid under the OPPS as discussed in section V.A. and V.B. of the CY 2026 OPPS/ASC proposed rule. We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: Commenters were generally in favor of separate payment for diagnostic radiopharmaceuticals. Specifically, for diagnostic radiopharmaceuticals that have claims data, commenters appreciated that CMS is paying for these products separately, but recommended that CMS eventually transition away from an MUC-based payment methodology, which commenters generally viewed as an interim approach. Commenters believe MUC is problematic because hospitals may inconsistently report diagnostic radiopharmaceutical units and costs, which ultimately impact the MUC calculation. Commenters provided suggestions to CMS on how to assess hospital claims data for appropriate submissions. Commenters also stated that many factors contribute to the inaccuracy of MUCs, including charge compression, varied revenue code use, cost-to-charge ratios, outdated data, and inconsistent cost center use by hospitals. These commenters provided data detailing that MUC is consistently lower for their products than ASP. Commenters highlighted how MUC may disadvantage their products. For example, one commenter stated that their product is under a competitive disadvantage while being paid at MUC compared to newer products that may be receiving separate ASP-based payment through pass- through payment status. For these reasons, commenters suggested CMS transition to an average sales price (ASP) based payment, including for purposes of completing the per day cost calculations, for these diagnostic radiopharmaceuticals at the earliest point possible. Commenters stated that ASP is more reflective of the true cost of diagnostic radiopharmaceuticals compared to MUC. Commenters expressed their views on the benefits of ASP, including that ASP is updated quarterly, is more consistent, transparent, and aligned with payment for many other Part B drugs. Commenters stated that a portion of manufacturers are already reporting ASP, and many have recent experience reporting ASP for OPPS drug pass-through status. Some commenters suggested that diagnostic radiopharmaceuticals that currently report ASP, or have been paid based on ASP while on pass-through status, continue to receive ASP-based payment post pass-through status expiration. These commenters believed that an MUC-based payment methodology should only be used in instances where ASP is not reported. Other commenters recommended CMS consider WAC and AWP based payment methodologies. Some commenters stated that if MUC is going to be used as the basis of payment for separately paid diagnostic radiopharmaceuticals, CMS should consider additional instruction to hospitals on reporting, or consider a low volume MUC policy or minimum claim volume to avoid fluctuations in payment due to low claims volume. Broadly, commenters requested CMS provide additional clarity regarding why CMS proposed to continue to pay diagnostic radiopharmaceuticals at their arithmetic mean unit cost rather than ASP. Response: We thank commenters for their support of our proposal to continue to pay diagnostic radiopharmaceuticals separately. We thank commenters for expressing their interest in use of ASP data and appropriate ASP reporting. As we have previously stated, and as commenters have noted, we recognize the complexities associated with reporting ASP for radiopharmaceuticals. We reiterate that we agree that there could be value in the use of ASP for determining separately paid diagnostic radiopharmaceutical payment amounts in the future. However, for CMS to use an ASP-based methodology to set payment rates for separately paid diagnostic radiopharmaceuticals, we believe there must be more consistent, validated, and universal reporting of ASP data for diagnostic radiopharmaceuticals. While commenters have communicated that they are currently, or will, report ASP, we still do not have universal reporting of ASP data to CMS for diagnostic radiopharmaceuticals. While the number of products reporting ASP has slightly increased, we continue to have concerns regarding the accuracy of the reported data. For several diagnostic radiopharmaceuticals that have reported their ASP, their reported ASP exceeds the calculated arithmetic MUCs by several thousand percent. Some of these discrepancies between reported ASP and MUC are so significant, that if we were to accept the ASPs as submitted and base payment for these diagnostic radiopharmaceuticals off the reported ASP, the result would be more than one diagnostic radiopharmaceutical accounting for billions of dollars in projected payment in CY 2026 and these diagnostic radiopharmaceuticals would be estimated to be among the top 10 highest paid HCPCS codes in all of the OPPS. Based on claims data, these extremely high ASP data appear to be erroneously reported. Based on this, coupled with the lack of universal reporting, among other factors, we continue to believe that an ASP-based methodology is not appropriate for setting CY 2026 payment for separately paid diagnostic radiopharmaceuticals. We appreciate the insight from commenters regarding their concerns with CMS continuing to use arithmetic MUC as the payment methodology for diagnostic radiopharmaceuticals. We are taking these comments into consideration for future rulemaking. We note that we rely on providers to accurately report the use of HCPCS codes in accordance with code descriptors and CPT and CMS instructions, to report services accurately on claims, and to report charges and costs accurately for the services on their Medicare hospital cost reports. Regarding the suggestion to develop a low-volume MUC methodology when we calculate payment rates for diagnostic radiopharmaceuticals, we will take this suggestion under advisement for future notice and comment rulemaking. We did not propose to subject low volume diagnostic radiopharmaceutical APCs to the broader OPPS low volume policy, and we note that the low volume APC policy does not apply to APCs to which single drugs, biologicals, or radiopharmaceuticals are assigned, even if there is a low volume of claims for these items. We understand the commenter's concerns; however, we do not believe it would be appropriate to implement this policy modification without further engagement from interested parties. Finally, in response to comments suggesting we adopt WAC or AWP based payment methodologies, we continue to believe that neither WAC nor AWP is an appropriate proxy to provide OPPS payment for average radiopharmaceutical acquisition costs and associated handling costs when manufacturers are not required to [[Page 53486]] submit ASP data. This is because payment based on WAC or AWP for separately payable drugs and biologicals is usually temporary for a calendar quarter until a manufacturer is able to submit the required ASP data in accordance with the quarterly ASP submission timeframes for reporting under section 1847A of the Act. WAC and AWP reported to compendia may not be reflective of a patient ready dose. The absence of an ASP reporting requirement and inappropriate or no reporting of ASP could result in payment for a separately payable diagnostic radiopharmaceutical based on WAC or AWP indefinitely, a result which we believe would be inappropriate, as these pricing metrics do not capture all of the pricing discounts that may be reflected in the ASP. Comment: A few commenters question the legal validity of CMS using MUC as the basis of payment, and some of those commenters believe that radiopharmaceutical manufacturers are required to report ASP by statute. These commenters state that they believe CMS has the authority to require reporting and pay based on ASP. Response: We proposed to pay for nonpass-through, separately payable diagnostic radiopharmaceuticals based on our authority under section 1833(t)(14)(A)(iii)(II) of the Act, and we continue to find this appropriate, as we find that the ASP data we have are not usable for the purpose of paying for diagnostic radiopharmaceuticals. Instead, we are paying based on mean unit cost data derived from hospital claims. We believe that paying for diagnostic radiopharmaceuticals using mean unit cost would appropriately pay for the average price of nonpass-through separately payable diagnostic radiopharmaceuticals for the applicable year. We believe MUC is an appropriate proxy for the average price for a diagnostic radiopharmaceutical for a given year, as it is calculated based on the average costs for a particular year and is directly reflective of the actual cost data that hospitals submit to CMS. We will continue to explore our authority regarding requiring ASP reporting for diagnostic radiopharmaceuticals under the OPPS. Comment: Commenters broadly requested that CMS work collaboratively with manufacturers to identify and implement best practices for average sales price (ASP) data submission for radiopharmaceutical therapies. Some commenters stated that they look forward to working with CMS to identify and implement best practices for ASP data submission, and believed that clear guidance and streamlined reporting processes will help ensure that ASP data is complete and accurate, which supports a sustainable payment environment. A few commenters provided detailed recommendations and requests for how CMS may update our ASP reporting guidelines in the future for diagnostic radiopharmaceuticals. Response: We thank commenters for their helpful feedback regarding future guidance on diagnostic radiopharmaceutical ASP reporting. We will take these comments under advisement for potential updated sub- regulatory guidance CMS intends to explore. We encourage interested parties to continue to engage with CMS on this issue. After consideration of public comments, we are finalizing our proposal without modification. In summary, for CY 2026 we are paying separately for any diagnostic radiopharmaceutical with a per-day cost greater than $655 using the methodology described. Any diagnostic radiopharmaceutical with a per-day cost at or below that threshold would continue to be policy packaged under our longstanding policy codified at Sec. 419.2(b)(15). We are finalizing our proposal to pay for those nonpass-through, separately payable diagnostic radiopharmaceuticals based on our authority under section 1833(t)(14)(A)(iii)(II) of the Act, and to pay for qualifying nonpass- through diagnostic radiopharmaceuticals with claims data based on mean unit cost data derived from hospital claims. As discussed in section V.B.5. of this final rule with comment period, we proposed and are finalizing a policy to set the payment rate for new diagnostic radiopharmaceuticals with HCPCS codes that exceed the diagnostic radiopharmaceutical packaging threshold, but which do not have pass- through status and are without claims data, at ASP plus 6 percent. If ASP data for these diagnostic radiopharmaceuticals were not available, we finalized a policy to pay WAC plus 3 percent during the product's initial sales period, consistent with our policy described in section V.B.2. of this CY 2026 OPPS/ASC final rule with comment period. If the WAC also is unavailable, we finalized a policy to make payment for new diagnostic radiopharmaceuticals at 95 percent of the products' most recent AWP. Following the initial sales period, a payment rate of WAC plus 6 percent would apply, if ASP data for these diagnostic radiopharmaceuticals remain unavailable. (4) Qualifying Diagnostic Radiopharmaceuticals Above the Diagnostic Radiopharmaceutical Packaging Threshold The HCPCS codes that describe diagnostic radiopharmaceuticals with per day costs that exceed the proposed diagnostic radiopharmaceutical packaging threshold were proposed to be assigned to a status indicator of ``K'', indicating separate payment to be paid based on that HCPCS code's arithmetic MUC. A proposed APC and a proposed payment rate would be assigned as shown in Addendum B to the CY 2026 OPPS/ASC proposed rule. HCPCS codes that describe diagnostic radiopharmaceuticals with per day costs that are at or below the proposed diagnostic radiopharmaceutical packaging threshold were proposed to continue to be assigned to a status indicator of ``N'', indicating packaged payment. The proposed list of diagnostic radiopharmaceuticals that we calculated as having per day costs that exceeded $655 and their proposed status indicators can be found in Table 6 (originally set forth in Table 4 of the CY 2026 OPPS/ASC proposed rule at 90 FR 33506). BILLING CODE 4120-01-P [[Page 53487]] [GRAPHIC] [TIFF OMITTED] TR25NO25.012 Proposed definitions of status indicators can be found in Addendum D1 to the CY 2026 OPPS/ASC proposed rule. Addenda to the CY 2026 OPPS/ ASC proposed rule can be found on the CMS OPPS web page. Based on the policy finalized in this section to pay separately at arithmetic MUC for any diagnostic radiopharmaceutical with a HCPCS code and claims data, and with a per-day cost greater than $655 using the methodology previously described, the HCPCS codes that describe diagnostic radiopharmaceuticals with per day costs that exceed the finalized diagnostic radiopharmaceutical packaging threshold are assigned to a status indicator of ``K'', indicating separate payment to be paid based on that HCPCS code's arithmetic MUC. A final APC and payment rate are assigned as shown in Addendum B to this final rule with comment period. HCPCS codes that describe diagnostic radiopharmaceuticals with per day costs that are at or below the proposed diagnostic radiopharmaceutical packaging threshold are assigned to a status indicator of ``N'', indicating packaged payment. The finalized list of diagnostic radiopharmaceuticals that we calculated as having per day costs that exceed $655 and their proposed status indicators can be found in Table 7. [[Page 53488]] [GRAPHIC] [TIFF OMITTED] TR25NO25.013 BILLING CODE 4120-01-C Finalized definitions of status indicators can be found in Addendum D1 to this final rule with comment period. Addenda to this rule can be found on the CMS OPPS web page. 4. Implementation of Section 4135 of the Consolidated Appropriations Act (CAA), 2023 The Consolidated Appropriations Act (CAA), 2023 (Pub. L. 117-328), was signed into law on December 29, 2022. Section 4135(a) and (b) of the CAA, 2023, titled Access to Non-Opioid Treatments for Pain Relief, amended sections 1833(t)(16) and 1833(i) of the Act, respectively, to provide for temporary additional payments for non-opioid treatments for pain relief (as that term is defined in section 1833(t)(16)(G)(i) of the Act). In particular, section 1833(t)(16)(G) of the Act provides that with respect to a non-opioid treatment for pain relief furnished on or after January 1, 2025, and before January 1, 2028, the Secretary shall not package payment for the non-opioid treatment for pain relief into payment for a covered OPD service (or group of services) and shall make an additional payment for the non-opioid treatment for pain relief as specified in clause (ii) of that section. Clauses (ii) and (iii) of section 1833(t)(16)(G) of the Act provide for the amount of additional payment and set a limitation on that amount, respectively. The additional payments required under section 1833(t)(16)(G) of the Act began on January 1, 2025, based on the policy finalized in the CY 2025 OPPS/ [[Page 53489]] ASC final rule with comment period (89 FR 94343 through 94361). In section XIII.F. of the CY 2026 OPPS/ASC proposed rule (90 FR 33742 through 33749), we proposed to continue the policy finalized in the CY 2025 OPPS/ASC final rule with comment period for CY 2026. We also proposed non-opioid treatments for pain relief that would qualify under this policy for CY 2026 and sought public comment on those product evaluations. We refer readers to section XIII.F. of this final rule with comment period for a summary of comments received on this proposal, as well as the finalized policy and qualifying products for CY 2026. 5. Calculation of OPPS Scaled Payment Weights We established a policy in the CY 2013 OPPS/ASC final rule with comment period (77 FR 68283) of using geometric mean-based APC costs to calculate relative payment weights under the OPPS. In the CY 2025 OPPS/ ASC final rule with comment period (89 FR 93964 through 93965), we applied this policy and calculated the relative payment weights for each APC for CY 2025 that were shown in Addenda A and B of the CY 2025 OPPS/ASC final rule with comment period (which were made available via the internet on the CMS website) using the APC costs discussed in sections II.A.1. and II.A.2. of the CY 2025 OPPS/ASC final rule with comment period (89 FR 93921 through 93947). For CY 2026, as we did for CY 2025, we proposed to continue to apply the policy established in CY 2013 and calculate relative payment weights for each APC for CY 2026 using geometric mean-based APC costs. For CY 2012 and CY 2013, outpatient clinic visits were assigned to one of five levels of clinic visit APCs, with APC 0606 representing a mid-level clinic visit. In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75036 through 75043), we finalized a policy that created alphanumeric HCPCS code G0463 (Hospital outpatient clinic visit for assessment and management of a patient), representing all clinic visits under the OPPS. HCPCS code G0463 was assigned to APC 0634 (Hospital Clinic Visits). We also finalized a policy to use CY 2012 claims data to develop the CY 2014 OPPS payment rates for HCPCS code G0463 based on the total geometric mean cost of the levels one through five CPT Evaluation or Assessment and Management (E/M) codes for clinic visits previously recognized under the OPPS (CPT codes 99201 through 99205 and 99211 through 99215). In addition, we finalized a policy to no longer recognize a distinction between new and established patient clinic visits. For CY 2016, we deleted APC 0634 and reassigned the outpatient clinic visit HCPCS code G0463 to APC 5012 (Level 2 Examinations and Related Services) (80 FR 70372). For CY 2026, as we did for CY 2025, we proposed to continue to standardize all the relative payment weights to APC 5012. We believe that standardizing relative payment weights to the geometric mean of the APC to which HCPCS code G0463 is assigned maintains consistency in calculating unscaled weights that represent the cost of some of the most frequently provided OPPS services. For CY 2026, as we did for CY 2025, we proposed to assign APC 5012 a relative payment weight of 1.00 and to divide the geometric mean cost of each APC by the geometric mean cost for APC 5012 to derive the unscaled relative payment weight for each APC. The choice of the APC on which to standardize the relative payment weights does not affect payments made under the OPPS because we scale the weights for budget neutrality. Section 1833(t)(9)(B) of the Act requires that APC reclassification and recalibration changes, wage index changes, and other adjustments be made in a budget neutral manner. Budget neutrality ensures that the estimated aggregate weight under the OPPS for CY 2026 is neither greater than nor less than the estimated aggregate weight that would have been calculated without the changes. To comply with this requirement concerning the APC changes, we proposed to compare the estimated aggregate weight using the CY 2025 scaled relative payment weights to the estimated aggregate weight using the proposed CY 2026 unscaled relative payment weights. For CY 2025, we multiplied the CY 2025 scaled APC relative payment weight applicable to a service paid under the OPPS by the volume of that service from CY 2024 claims to calculate the total relative payment weight for each service. We then added together the total relative payment weight for each of these services to calculate an estimated aggregate weight for the year. For CY 2026, we proposed to apply the same process using the estimated CY 2026 unscaled relative payment weights rather than scaled relative payment weights. We proposed to calculate the weight scalar by dividing the CY 2025 estimated aggregate weight by the unscaled CY 2026 estimated aggregate weight. For a detailed discussion of the weight scalar calculation, we refer readers to the OPPS claims accounting document available on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices. Click on the link labeled ``Hospital Outpatient Prospective Payment--Notice of Final Rulemaking'' for 2026, which can be found under the heading ``Hospital Outpatient Regulations and Notices'' and open the claims accounting document link, which is labeled ``2026 Final Rule OPPS Claims Accounting (PDF).'' We proposed to compare the estimated unscaled relative payment weights in CY 2026 to the estimated total relative payment weights in CY 2025 using CY 2024 claims data, holding all other components of the payment system constant to isolate changes in total weight. Based on this comparison, we proposed to adjust the calculated CY 2026 unscaled relative payment weights for purposes of budget neutrality. We proposed to adjust the estimated CY 2026 unscaled relative payment weights by multiplying them by a proposed weight scalar of 1.4624 to ensure that the proposed CY 2026 relative payment weights are scaled to be budget neutral. The proposed CY 2026 relative payment weights listed in Addenda A and B to the CY 2026 OPPS/ASC proposed rule (which are available via the internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices) are scaled and incorporate the recalibration adjustments discussed in sections II.A.1. and II.A.2. of the CY 2026 OPPS/ASC proposed rule. Section 1833(t)(14) of the Act provides the methodology for payment rates for certain specified covered outpatient drugs (SCODs). Section 1833(t)(14)(H) of the Act provides that additional expenditures resulting from this paragraph shall not be taken into account in establishing the conversion factor, weighting, and other adjustment factors for 2004 and 2005 under paragraph (9) but shall be taken into account for subsequent years. Therefore, the cost of those SCODs (as discussed in section V.B.2. of this final rule with comment period) is included in the budget neutrality calculations for the CY 2026 OPPS. We did not receive any public comments on the proposed weight scalar calculation, and we are finalizing our proposal to use the calculation process described in the CY 2026 OPPS/ASC proposed rule, without modification, for CY 2026. For CY 2026, as we did for CY 2025, we will continue to apply the policy established in CY [[Page 53490]] 2013 and calculate relative payment weights for each APC for CY 2026 using geometric mean-based APC costs. For CY 2026, as we did for CY 2025, we will assign APC 5012 a relative payment weight of 1.00; and we will divide the geometric mean cost of each APC by the geometric mean cost for APC 5012 to derive the unscaled relative payment weight for each APC. To comply with this requirement concerning the APC changes, we will compare the estimated aggregate weight using the CY 2025 scaled relative payment weights to the estimated aggregate weight using the CY 2026 unscaled relative payment weights. Using updated final rule claims data, we are updating the estimated CY 2026 unscaled relative payment weights by multiplying them by a weight scalar of 1.4879 to ensure that the final CY 2026 relative payment weights are scaled to be budget neutral. The final CY 2026 relative payments weights listed in Addenda A and B of this final rule with comment period (available via the internet on the CMS website) were scaled and incorporate the recalibration adjustments discussed in sections II.A.1 and II.A.2. of this final rule with comment period.

1. OPD Fee Schedule Increase Factor

Section 1833(t)(3)(C)(ii) of the Act requires the Secretary to update the conversion factor used to determine the payment rates under the OPPS on an annual basis by applying the OPD fee schedule increase factor. For purposes of section 1833(t)(3)(C)(iv) of the Act, subject to sections 1833(t)(17) and 1833(t)(3)(F) of the Act, the OPD fee schedule increase factor is equal to the hospital inpatient market basket percentage increase applicable to hospital discharges of the Act (or an amount that is computed and applied with respect to covered OPD services). In the FY 2026 IPPS/Long Term Care Hospital (LTCH) proposed rule (90 FR 18266), consistent with current law, based on IHS Global, Inc.'s (IGI's) fourth quarter 2024 forecast, the proposed FY 2026 IPPS market basket percentage increase was 3.2 percent. We noted that under our regular process for the CY 2026 OPPS/ASC final rule with comment period, we would use the market basket update for the FY 2026 IPPS/LTCH PPS final rule. If that forecast is different than the IPPS market basket percentage increase used for the CY 2026 OPPS/ASC proposed rule, the CY 2026 OPPS/ASC final rule with comment period OPD fee schedule increase factor would reflect that updated forecast of the market basket percentage increase. For CY 2026, we proposed to use the estimate of the hospital inpatient market basket percentage increase of 3.2 percent as one component to calculate the OPD fee schedule increase factor. Comment: One commenter supported the CY 2026 update factor. Response: We thank the supporter for the support. Comment: Several commenters expressed concerns that the proposed CY 2026 market basket update of 2.4 percent, through which the majority of hospitals would only receive a 0.06 percent net increase, does not adequately keep up with the increased costs of delivering care across all settings. One commenter suggested that CMS expand the data set to ensure the use of accurate, timely data that reflect real labor costs. Specifically, they requested CMS apply its exceptions and adjustments authority to make a one-time retrospective adjustment of 10 to15 percent to the market basket to account for the update hospitals should have received in 2022 when accounting for inflation. The commenter suggested CMS establish a threshold such that if the payment differential between what was provided and actual costs is greater than 1.5 percentage points, there is a retroactive adjustment to payments above the threshold. The commenter also suggested CMS recalibrate the market basket more frequently, at least once every 3 years to ensure the market basket reflects the appropriate mix of services. Another commenter suggested that the proposed increase is insufficient if the 340B repayment acceleration and volume control policy for medication administration services are finalized. The commenter also stated that CMS should reconsider the data source for workforce costs because the healthcare industry has shifted since the pandemic. The commenter stated that workers have demanded higher salaries to keep up with economic changes and the ECI survey of hospital employment that CMS employs does not account for contracted or contingent workers. Another commenter expressed concern that the update is insufficient and unsustainable for rural hospitals. The commenter stated 196 hospitals have closed or ceased to provide inpatient services since 2010, and there are 432 rural hospitals vulnerable to closure. The commenter stated the Consumer Price Index (CPI) was 4.2 percent as of June 2025 and that the Medicare reimbursement continues to fall behind the actual cost of providing care to beneficiaries. The commenter stated CMS' projections for updating payment rates are lower than actual inflation due to the use of historical data. The commenter stated CMS must explore how it can accurately pay rural hospitals by accounting for inflation and historical underpayment. Commenters stated that since the COVID-19 PHE, IGI has shown a consistent trend of under-forecasting the market basket growth and expressed concern this may indicate a more systematic issue with IGI's forecasting. Several commenters, including many associations, urged CMS to use its special exceptions and adjustments authority under section 1886(d)(5)(I)(i) of the Act to implement a retrospective one-time adjustment for CY 2026 to account for the underestimation of the market basket updates over the last several years. Commenters recommended that CMS implement various one-time adjustments of 4.3 percent to account for underpayments in 1 or more years between CY 2021 and CY 2025 as well as for forecasted underpayments for CY 2026. The commenters stated the underestimation is, in large part, because the market basket is a time-lagged estimate that cannot fully account for unexpected changes that occur, such as historic inflation and increased labor and supply costs. Response: We acknowledge commenters' concerns on the proposed CY 2026 market basket of 2.4 percent, including the challenging financial landscape in which rural hospitals operate. According to section 1833(t)(3)(C)(iv) of the Act, the OPD fee schedule increase factor for a year must be equal to the IPPS market basket percentage increase factor applicable under section 1886(b)(3)(B)(iii) of the Act to hospital discharges in the fiscal year ending in such year. Therefore, we are unable to adopt a final OPD fee schedule increase factor different than the IPPS market basket percentage increase factor finalized in the FY 2026 IPPS/LTCH PPS final rule. We refer commenters to the FY 2026 IPPS/LTCH PPS final rule for responses regarding the market basket issues commenters raised (90 FR 36900 to 36903).

2. Productivity Adjustment

Section 1833(t)(3)(F)(i) of the Act requires that, for 2012 and subsequent years, the OPD fee schedule increase factor under subparagraph (C)(iv) be reduced by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act. Section 1886(b)(3)(B)(xi)(II) of the Act defines the productivity adjustment as equal to the 10-year [[Page 53491]] moving average of changes in annual economy-wide, private nonfarm business multifactor productivity (MFP) (as projected by the Secretary for the 10-year period ending with the applicable fiscal year, year, cost reporting period, or other annual period) (the ``productivity adjustment''). In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51689 through 51692), we finalized our methodology for calculating and applying the productivity adjustment. The U.S. Department of Labor's Bureau of Labor Statistics (BLS) publishes the official measures of private nonfarm business productivity for the U.S. economy. We note that previously the productivity measure referenced in section 1886(b)(3)(B)(xi)(II) of the Act was published by BLS as private nonfarm business multifactor productivity. Beginning with the November 18, 2021, release of productivity data, BLS replaced the term multifactor productivity (MFP) with total factor productivity (TFP). BLS noted that this is a change in terminology only and will not affect the data or methodology. As a result of the BLS name change, the productivity measure referenced in section 1886(b)(3)(B)(xi)(II) of the Act is now published by BLS as private nonfarm business total factor productivity. However, as mentioned, the data and methods are unchanged. Please see www.bls.gov for the BLS historical published TFP data. A complete description of IGI's TFP projection methodology is available on the CMS website at https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-program-rates-statistics/market-basket-research-and-information. In addition, we note that beginning with the FY 2022 IPPS/LTCH PPS final rule, we refer to this adjustment as the productivity adjustment rather than the MFP adjustment to more closely track the statutory language in section 1886(b)(3)(B)(xi)(II) of the Act. We note that the adjustment continues to rely on the same underlying data and methodology. In the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18266), the proposed productivity adjustment for FY 2026 was 0.8 percentage point. Therefore, we proposed that the productivity adjustment for the CY 2026 OPPS/ASC proposed rule would be 0.8 percentage point. We also proposed that if more recent data subsequently become available after the publication of the CY 2026 OPPS/ASC proposed rule (for example, a more recent estimate of the market basket percentage increase and/or the productivity adjustment), we would use such data, if appropriate, to determine the CY 2026 hospital inpatient market basket update and the productivity adjustment for the final rule with comment period, which are components in calculating the OPD fee schedule increase factor under sections 1833(t)(3)(C)(iv) and 1833(t)(3)(F) of the Act. We note that section 1833(t)(3)(F) of the Act provides that application of this subparagraph may result in the OPD fee schedule increase factor under section 1833(t)(3)(C)(iv) of the Act being less than 0.0 percent for a year and may result in OPPS payment rates being less than rates for the preceding year. As described in further detail below, we proposed for CY 2026 an OPD fee schedule increase factor of 2.4 percent for the CY 2026 OPPS/ASC proposed rule (which is the proposed estimate of the hospital inpatient market basket percentage increase of 3.2 percent, less the proposed 0.8 percentage point productivity adjustment). Comment: Commenters requested that CMS eliminate or waive the productivity adjustment for CY 2026 and going forward using CMS' special exceptions and adjustments authority under section 1886(b)(3)(B)(xi) of the Act, which would justify special circumstances. The commenters stated the COVID-19 pandemic years distorted productivity measurements and the application of the full productivity adjustment penalizes hospitals for costs beyond their control. The commenters requested the waiver due to strong concerns about the productivity adjustment cuts given the uncertainty which hospitals and healthcare systems are currently operating. Commenters expressed concerns that the productivity adjustment, which reflects the private nonfarm business total factor productivity, are not achieved by hospitals and the health care field. Commenters stated the TFP, or productivity adjustment does not account for non- profit or government business which account for 60 percent of hospitals and health systems. The commenter requested we provide transparency into the data on the 10-year moving average periods in calculating the productivity adjustment. The commenter is concerned that the productivity adjustment was artificially and inappropriately increased. Response: While we understand the commenters' concerns, section 1833(t)(3)(F)(i) of the Act requires that after determining the OPD fee schedule increase factor under subparagraph (C)(iv), the Secretary shall reduce such increase factor by the productivity adjustment described in section 1886(b)(3)(B)(xi) of the Act. As required by statute, the FY 2026 productivity adjustment is derived based on the 10-year moving average growth in economy-wide productivity for the period ending FY 2026. We thank the commenters for their comments. After consideration of the comments received and consistent with our proposal, we are finalizing an OPD fee schedule increase factor with modification of 2.4 percent for CY 2026, which consists of the IPPS market basket increase factor of 3.2 percent less a 0.8 percentage point productivity adjustment.

3. Other Conversion Factor Adjustments

To set the OPPS conversion factor for 2026, we proposed to increase the CY 2025 conversion factor of $89.169 by 2.4 percent. In accordance with section 1833(t)(9)(B) of the Act, we proposed to further adjust the conversion factor for CY 2026 to ensure that any revisions made to the wage index and rural adjustment are made on a budget neutral basis. We proposed to apply an overall budget neutrality factor of 1.0116 for wage index changes by comparing proposed total estimated payments from our simulation model using the proposed FY 2026 IPPS wage indexes to those payments using the CY 2025 OPPS wage indexes. We further proposed to calculate an additional budget neutrality factor of 0.9955 to account for our proposed policy to cap wage index reductions for hospitals at 5 percent on an annual basis and the CY 2026 proposed transitional exception for low wage index hospitals. For CY 2026, we proposed to maintain the current rural adjustment policy, as discussed in section II.E. of this final rule with comment period. Therefore, the proposed budget neutrality factor for the rural adjustment was 1.0000. We proposed to calculate a CY 2026 budget neutrality adjustment factor for the cancer hospital payment adjustment. We previously finalized transitioning from the target PCR of 0.89 for CYs 2020 through 2023 (which included the 1.0 percentage point reduction as required by section 16002(b) of the 21st Century Cures Act) and incrementally reducing the target PCR by an additional 1.0 percentage point for each calendar year, beginning with CY 2024, until the target PCR equals the PCR of non-cancer hospitals calculated using the most recent data minus 1.0 percentage point as required by section 16002(b) of the 21st Century Cures Act. Based on the most recent data available for this final rule with comment period, the target PCR now equals the PCR of non-cancer [[Page 53492]] hospitals. We proposed a CY 2026 target PCR equal to 0.87 for the cancer hospital payment adjustment, which includes the 1.0 percentage point reduction as required by section 16002(b) of the 21st Century Cures Act. We note that this proposed target PCR is the same as the final target PCR established in the CY 2025 OPPS (89 FR 93979). Therefore, we proposed to apply a budget neutrality adjustment factor of 1.0000 to the conversion factor for the cancer hospital payment adjustment. For the CY 2026 OPPS/ASC proposed rule, we estimated that proposed pass-through spending for drugs, biologicals, and devices for CY 2026 will equal approximately $587 million, which represents 0.59 percent of total projected CY 2026 OPPS spending. Therefore, we stated that the proposed conversion factor would be adjusted by the difference between the 0.37 percent estimate of pass-through spending for CY 2025 and the 0.59 percent estimate of proposed pass-through spending for CY 2026, resulting in a proposed decrease to the conversion factor for CY 2026 of 0.22 percentage point. We proposed that estimated payments for outliers would be 1.0 percent of total OPPS payments for CY 2026. We estimate for the CY 2026 OPPS/ASC proposed rule that outlier payments would be approximately 0.92 percent of total OPPS payments in CY 2025; the 1.00 percent for proposed outlier payments in CY 2026 would constitute a 0.08 percentage point increase in payment in CY 2026 relative to CY 2025. For CY 2026, we proposed to use a conversion factor of $91.747 in the calculation of the national unadjusted payment rates for those items and services for which payment rates are calculated using geometric mean costs; that is, the proposed OPD fee schedule increase factor of 1.024 (2.4 percent for CY 2026), the required proposed wage index budget neutrality adjustment of approximately 1.0116, the proposed 5 percent annual cap for individual hospital wage index reductions adjustment and the proposed transitional exception of approximately 0.9955, the proposed cancer hospital payment adjustment of 1.0000, and the proposed adjustment factor of 0.9978 (a decrease of 0.22 percentage point) for the difference in pass-through spending, and a 0.08 percentage point increase in projected OPPS spending for the projected increase in outlier payments, which resulted in a proposed conversion factor for CY 2026 of $91.747. For CY 2026, we also proposed that hospitals that fail to meet the reporting requirements of the Hospital OQR Program would continue to be subject to a further reduction of 2.0 percentage points to the OPD fee schedule increase factor. For hospitals that fail to meet the requirements of the Hospital OQR Program, we proposed to make all other adjustments discussed above and apply an adjustment factor of 0.9805 to the proposed CY 2026 conversion factor of $91.747. We proposed that the hospitals that fail to meet the requirements of the Hospital OQR Program will use a reduced OPD fee schedule update factor of 0.4 percent (that is, the proposed OPD fee schedule increase factor of 2.4 percent further reduced by 2.0 percentage points). For CY 2026, we proposed to reduce payments for non-drug items and services for hospitals for whom the annual reduction to payment amounts under Sec. [thinsp]419.32(b)(1)(iv)(B)(12) applies with a 2 percentage point reduction to the OPD fee schedule increase factor, explained in more detail in section V.B.7. of this final rule with comment period. This would result in a proposed reduced conversion factor for CY 2026 of approximately $89.958 for this group of hospitals. The calculations we performed to determine the CY 2026 proposed conversion factor are shown in Table 8. Comment: Commenters expressed concerns with the proposed 340B accelerated offset and its reduction on the CY 2026 proposed rate increase. Response: We acknowledge commenters' concerns on the proposed 340B accelerated offset. For a discussion of the CY 2026 340B remedy offset, we refer readers to section V.B.7 of this final rule with comment period. For this CY 2026 OPPS/ASC final rule with comment period, based on more recent data available, the OPD fee schedule increase factor for the CY 2026 OPPS is 2.6 percent (which reflects the 3.3 percent final estimate of the hospital inpatient market basket percentage increase with a--0.7 percentage point productivity adjustment). For CY 2026, we are using a conversion factor of $91.415 in the calculation of the national unadjusted payment rates for those items and services for which payment rates are calculated using geometric mean costs; that is, the OPD fee schedule increase factor of 2.6 percent for CY 2026, the required wage index budget neutrality adjustment of 0.9990, the 5 percent annual cap for individual hospital wage index reductions of 0.9995, the cancer hospital payment adjustment of 1.0000, and the adjustment of 0.07 (or 0.37 less 0.30) percentage point of projected OPPS spending for the difference in pass-through spending that results in a conversion factor for CY 2026 of $91.415. We are also finalizing a reduced conversion factor of $89.632 in the calculation of payments for hospitals that fail to meet the Hospital OQR Program requirements (a difference of -1.783 in the conversion factor relative to hospitals that met the requirements). BILLING CODE 4120-01-P [[Page 53493]] [GRAPHIC] [TIFF OMITTED] TR25NO25.014 [[Page 53494]] [GRAPHIC] [TIFF OMITTED] TR25NO25.015 BILLING CODE 4120-01-C

C. Wage Index Changes

Section 1833(t)(2)(D) of the Act requires the Secretary to determine a wage adjustment factor to adjust the portion of payment and coinsurance attributable to labor-related costs for relative differences in labor and labor-related costs across geographic regions in a budget neutral manner (codified at 42 CFR 419.43(a)). This portion of the OPPS payment rate is called the OPPS labor-related share. The budget neutrality calculation methodology is discussed in section II.A.5. of this final rule with comment period. The OPPS labor-related share is 60 percent of the national OPPS payment. This labor-related share is based on a regression analysis that determined that, for all hospitals, approximately 60 percent of the costs of services paid under the OPPS were attributable to wage costs. We confirmed that this labor-related share for outpatient services is appropriate during our regression analysis for the payment adjustment for rural hospitals in the CY 2006 OPPS/ASC final rule with comment period (70 FR 68553). We proposed to continue this policy for the CY 2026 OPPS/ASC final rule with comment period. We refer readers to section II.C. of this final rule with comment period for a description and an example of how the wage index for a particular hospital is used to determine payment for the hospital. We did not receive any public comments on our proposed labor- related share, and we are finalizing our proposal without modification. As discussed in the claims accounting narrative included with the supporting documentation for this final rule with comment period (which is available via the internet on the CMS website (https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices)), for estimating APC costs, we would standardize 60 percent of estimated claims costs for geographic area wage variation using the same FY 2026 pre-reclassified wage index that we use under the IPPS to standardize costs. This standardization process removes the effects of differences in area wage levels from the determination of a national unadjusted OPPS payment rate and copayment amount. Under Sec. Sec. 419.41(c)(1) and 419.43(c) (published in the OPPS April 7, 2000, final rule with comment period (65 FR 18495 and 18545)), the OPPS adopted the final fiscal year IPPS post-reclassified wage index as the calendar year wage index for adjusting the OPPS standard payment amounts for labor market differences. Therefore, the wage index that applies to a particular acute care, short-stay hospital under the IPPS also applies to that hospital under the OPPS. As initially explained in the September 8, 1998, OPPS/ASC proposed rule (63 FR 47576), we believe that using the IPPS wage index as the source of an adjustment factor for the OPPS is reasonable and logical, given the inseparable, subordinate status of the HOPD within the hospital overall. In accordance with section 1886(d)(3)(E) of the Act, the IPPS wage index is updated annually. The Affordable Care Act contained several provisions affecting the wage index. These provisions were discussed in the CY 2012 OPPS/ASC final rule with comment period (76 FR 74191). Section 10324 of the Affordable Care Act added section 1886(d)(3)(E)(iii)(II) to the Act, which defines a frontier State and amended section 1833(t) of the Act to add paragraph (19), which requires a frontier State wage index floor of 1.00 in certain cases, and states that the frontier State floor shall not be applied in a budget neutral manner. We codified these requirements at Sec. [thinsp]419.43(c)(2) and (3) of our regulations. For CY 2026, we proposed to implement this provision in the same manner as we have since CY 2011. Under this policy, the frontier State hospitals would receive a wage index of 1.00 if the otherwise applicable wage index (including reclassification, the rural floor, and rural floor budget neutrality) is less than 1.00. Because the HOPD receives a wage index based on the geographic location of the specific inpatient hospital with which it is associated, the frontier State wage index adjustment applicable for the inpatient hospital also would apply for any associated HOPD. We refer readers to the FY 2011 through FY 2025 IPPS/LTCH PPS final rules for discussions regarding this provision, including our methodology for identifying which areas meet the definition of ``frontier States'' as provided for in section 1886(d)(3)(E)(iii)(II) of the Act: for FY 2011, 75 FR 50160 through 50161; for FY 2012, 76 FR 51793, 51795, and 51825; for FY 2013, 77 FR 53369 and 53370; for FY 2014, 78 FR 50590 and 50591; for FY 2015, 79 FR 49971; for FY 2016, 80 FR 49498; for FY 2017, 81 FR 56922; for FY 2018, 82 FR 38142; for FY 2019, 83 FR 41380; for FY 2020, 84 FR 42312; for FY 2021, 85 FR 58765; for FY 2022, 86 FR 45178; FY 2023, 87 FR 49006; FY 2024, 88 FR 58977; and for FY 2025, 89 FR 69300. In addition to the changes required by the Affordable Care Act, we note that the proposed FY 2026 IPPS wage indexes continue to reflect a number of adjustments implemented in past years, including, but not limited to, reclassification of hospitals to different geographic areas, the rural floor provisions, the imputed floor wage index adjustment in all-urban States, an adjustment for occupational mix, an adjustment to the wage index based on commuting patterns of employees (the out-migration adjustment), and the permanent 5 percent cap on any decrease to a hospital's wage index from its wage index in a prior FY. Beginning with FY 2024, we include hospitals with Sec. [thinsp]412.103 reclassification along with geographically rural hospitals in all rural wage index calculations, and to exclude ``dual reclass'' hospitals (hospitals with simultaneous Sec. [thinsp]412.103 and Medicare Geographic Classification Review Board (MGCRB) reclassifications) implicated by the hold harmless provision at section [[Page 53495]] 1886(d)(8)(C)(ii) of the Act (88 FR 58971 through 58973). We refer readers to the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18217 through 18236) for a detailed discussion of all proposed changes to the FY 2026 IPPS wage indexes. Comment: MedPAC expressed support for CMS' annual process to update the OPPS wage index with newer wage data and Office of Management and Budget delineations. However, MedPAC also expressed its concerns with flaws in the wage index system. MedPAC emphasized that, in order to improve the accuracy and fairness of Medicare's wage index systems for IPPS and OPPS hospitals and other providers, Medicare needs wage indexes that are less manipulable, that more accurately and precisely reflect geographic differences in market-wide labor costs, and that limit how much wage index values can differ among providers that are competing for the same pool of labor. To address these concerns, MedPAC stated that in its June 2023 report to Congress, it recommended that the Congress repeal the existing Medicare wage index statutes, including current exceptions, and require the Secretary to phase in new wage index systems for hospitals and other types of providers that (1) use all-employer, occupation-level wage data with different occupation weights for the wage index of each provider type; (2) reflect local area level differences in wages between and within metropolitan statistical areas and statewide rural areas; and (3) smooth wage index differences across adjacent local areas. Response: We appreciate MedPAC's concerns, but as MedPAC acknowledges in its comment, the Congress would need to change current law to implement MedPAC's suggestions. Comment: One commenter expressed support for CMS' policy to treat urban hospitals re-designated as rural under Sec. 412.103 the same as geographically rural hospitals for the wage index calculation. The commenter opined that treating urban hospitals re-designated as rural under Sec. 412.103 the same as geographically rural hospitals for the calculation of the rural wage index and rural floor is an appropriate and fair implementation of the statute. Response: We thank the commenter for their support. We note that in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49018 through 49021), we finalized a permanent approach to smooth year-to-year decreases in hospitals' wage indexes. Specifically, for FY 2023 and subsequent years, we apply a 5 percent cap on any decrease to a hospital's wage index from its wage index in the prior FY, regardless of the circumstances causing the decline. That is, a hospital's wage index for FY 2026 would not be less than 95 percent of its final wage index for FY 2025. Except for newly opened hospitals, we apply the cap for a fiscal year using the final wage index applicable to the hospital on the last day of the prior fiscal year. A newly opened hospital would be paid the wage index for the area in which it is geographically located for its first full or partial fiscal year (subject to any reclassification), and it would not receive a cap for that first year, because it would not have been assigned a wage index in the prior year (in accordance with 42 CFR 419.41(c)(1) and 419.43(c), as noted previously). Comment: Several commenters, including MedPAC, supported the policy to cap wage index decreases. MedPAC urged CMS to apply a cap to wage index increases as well. Several commenters urged CMS to exclude the wage index cap policy from budget neutrality. Response: We thank the commenters for their support. We appreciate MedPAC's suggestion that the cap on wage index changes should also be applied to increases in the wage index. However, as we stated in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49021), one purpose of the wage index policy is to help mitigate the significant negative impacts of certain wage index changes. That is, we cap decreases because we believe that a hospital would be able to more effectively budget and plan when there is predictability about its expected minimum level of OPPS payments in the upcoming fiscal year. We do not have a policy to limit wage index increases because we do not believe such a policy is needed to enable hospitals to more effectively budget and plan their operations. Therefore, we believe it is appropriate for hospitals that experience an increase in their wage index value to receive that wage index value. With respect to excluding the wage index cap policy from budget neutrality, under the OPPS, section 1833(t)(2)(D) of the Act requires the Secretary to determine a wage adjustment factor to adjust the portion of payment and coinsurance attributable to labor-related costs for relative differences in labor and labor-related costs across geographic regions in a budget neutral manner. This statutory requirement is inconsistent with the commenters' request to exclude the wage index cap policy from budget neutrality. Consistent with the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18233), we proposed to discontinue for CY 2026 and subsequent years the low wage index hospital policy under the OPPS. Under the low wage index hospital policy that we adopted for the OPPS (84 FR 61186 through 61188), we increased the wage index for hospitals with a wage index value below the 25th percentile wage index value for a calendar year by half the difference between the otherwise applicable final wage index value for a year for that hospital and the 25th percentile wage index value for that year across all hospitals. We removed the low wage index hospital policy from the IPPS wage index calculation for FY 2025 after considering the Court of Appeals for the D.C. Circuit's decision in Bridgeport Hosp. v. Becerra, 108 F.4th 882 (D.C. Cir. 2024). On July 23, 2024, the court held in Bridgeport Hosp. v. Becerra that the Secretary lacked authority under section 1886(d)(3)(E) of the Act or under the ``adjustments'' language of section 1886(d)(5)(I)(i) of the Act to adopt the low wage index hospital policy for FY 2020 for the IPPS, and that the policy for FY 2020 and related budget neutrality adjustment in the IPPS must be vacated. After considering the court's decision, in the interim final action with comment period (IFC) titled ``Medicare Program; Changes to the Fiscal Year 2025 Hospital Inpatient Prospective Payment System (IPPS) Rates Due to Court Decision'' (referred to herein as the FY 2025 IFC) (89 FR 80405 through 80421), we recalculated the FY 2025 IPPS hospital wage index to remove the low wage index hospital policy for FY 2025 and also removed the low wage index budget neutrality factor from the FY 2025 standardized amounts. In the FY 2026 IPPS/LTCH PPS proposed rule, after considering the D.C. Circuit's decision in Bridgeport Hosp. v. Becerra, we proposed to discontinue the low wage index hospital policy for FY 2026 and subsequent fiscal years. We refer the reader to the FY 2025 IFC (89 FR 80405 through 80421) and FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18233 through 18236) for a detailed discussion regarding the removal of the low wage index hospital policy from the IPPS for FYs 2025 and 2026. As discussed previously, from the establishment of the OPPS in 2000 through 2024, we adopted the IPPS wage index on a calendar year basis in the OPPS. From FY 2020 to FY 2024, the IPPS wage index included the low wage index hospital policy and we correspondingly adopted the low wage index hospital policy under the OPPS for CY 2020 to CY 2024. However, when the Bridgeport decision was issued in July 2024, the OPPS did not remove the [[Page 53496]] low wage index hospital policy from the calculation of the CY 2025 wage index. As discussed in the CY 2025 OPPS/ASC final rule with comment period, this decision to continue the low wage index hospital policy under the OPPS for CY 2025 (and thus to diverge from the IPPS wage index for FY 2025) was due principally to the unique circumstances presented by the timing of the court decision and subsequent IFC and the statutory authority that CMS relied upon to implement the low wage index hospital policy under the OPPS was different than the statutory authority relied upon for the policy under the IPPS. We took this approach for the CY 2025 OPPS given the unusual circumstances wherein an appellate court ruled that CMS lacked authority under the IPPS statute for a policy under the FY 2020 IPPS wage index that the OPPS/ ASC proposed rule had already proposed to include in the OPPS wage index. Under these circumstances, we concluded that continuing the low wage index hospital policy for CY 2025 would avoid unexpected and arguably unfair payment consequences for hospitals that were not plaintiffs in Bridgeport. Additionally, we believed that the same reasons underlying adoption of the IFC policies for the FY 2025 IPPS wage index weighed against incorporating those policies for purposes of the CY 2025 OPPS wage index. Specifically, we noted in the IFC that the intention of the policies implemented therein was to ``promote certainty regarding . . . payments'' and ``provide for payment stability and promote predictability,'' in light of the court's decision in Bridgeport (89 FR 80408) and we determined that those interests would be better served by finalizing the OPPS wage index methodology as proposed, including the low wage index hospital policy. Based on these considerations, we continued the low wage index hospital policy under the OPPS for CY 2025 as proposed but indicated that we would explore options for realigning the IPPS and OPPS wage index values through future rulemaking. We refer readers to the CY 2025 OPPS/ ASC final rule with comment period for a detailed discussion regarding our retention of the low wage index hospital policy under the OPPS for CY 2025 (89 FR 93975 through 93976). Given the proposal to discontinue the low wage index hospital policy under the IPPS in the FY 2026 IPPS/LTCH PPS proposed rule and the absence of the timing issues which compelled us to continue the low wage index hospital policy under the OPPS for CY 2025, we stated in the CY 2026 OPPS/ASC proposed rule that we think it is now appropriate to return to our longstanding policy of using the IPPS wage index as the source of an adjustment factor for the OPPS. Consequently, to effectuate full realignment of the IPPS and OPPS wage index values in CY 2026, we proposed to eliminate the low wage index hospital policy under the OPPS and use the IPPS wage index in CY 2026 and subsequent years. To effectuate full realignment of the IPPS and OPPS wage index values in CY 2026, we proposed that the 5 percent cap that will apply to the CY 2026 OPPS wage index will be based off the IPPS wage index for FY 2025 rather than the OPPS wage index for CY 2025. We noted that because the CY 2025 OPPS wage index was different than the FY 2025 IPPS wage index (due to the continuation of the low wage index hospital policy under the OPPS), using the FY 2026 IPPS wage index for the CY 2026 OPPS wage index would result in decreases greater than 5 percent to some hospitals' wage indexes under the OPPS. Therefore, under our proposal the 5 percent cap on wage index decreases in the CY 2026 OPPS would apply in a similar manner to years prior to the CY 2025 OPPS, in which IPPS hospitals would receive the same wage index with the cap on wage index decreases as they would under the FY IPPS, and non-IPPS hospitals and CMHCs would receive a similar corresponding wage index with the cap on wage index decreases policy under the broader wage index adoption. Comment: Most commenters supported our proposal to effectuate full realignment of the IPPS and OPPS wage index values in CY 2026 by eliminating the low wage index hospital policy under the OPPS and using the IPPS wage index in CY 2026 and subsequent years. Response: We thank commenters for their support. Comment: One commenter expressed concern about our proposal to eliminate the low wage index hospital policy, stating that eliminating it without a permanent, equitable alternative will disproportionately harm hospitals that serve vulnerable and underserved populations. Another commenter urged CMS to reconsider its approach to the area wage index following the removal of the low wage index policy and to take corrective action to address its inequities, particularly for rural States. Response: We understand the commenters' concerns that the rationale for implementing the low wage index hospital policy remains. However, we believe it is important to return the IPPS and OPPS wage index values to their historical and longstanding alignment. As initially explained in the September 8, 1998, OPPS/ASC proposed rule (63 FR 47576), we believe that using the IPPS wage index as the source of an adjustment factor for the OPPS is reasonable and logical, given the inseparable, subordinate status of the HOPD within the hospital overall. After consideration of the public comments we received, we are finalizing our proposal without modification to discontinue the low wage index hospital policy under the OPPS and use the FY 2026 IPPS post-reclassified wage index for urban and rural areas as finalized in the FY 2026 IPPS final rule as the wage index for the OPPS. We are also finalizing our proposal without modification that the 5 percent cap that will apply to the CY 2026 OPPS wage index and will be based off the IPPS wage index for FY 2025 rather than the OPPS wage index for CY 2025. We note that in the FY 2026 IPPS proposed rule (90 FR 18233 through 18235) we proposed, using our authority under section 1886(d)(5)(I)(i) of the Act, to adopt a narrow transitional exception to the calculation of FY 2026 IPPS payments for low wage index hospitals significantly impacted by the discontinuation of the low wage index hospital policy. As indicated in that rule, we proposed this temporary payment exception ``to mitigate short-term instability and payment fluctuations that can negatively impact hospitals consistent with principles of certainty and predictability under prospective payment systems.'' To address these same concerns under the OPPS, we correspondingly proposed a transitional payment exception for CY 2026 under the OPPS using our equitable adjustment authority under section 1833(t)(2)(E) of the Act. This authority allows the Secretary to establish, in a budget neutral manner, adjustments as determined to be necessary to ensure equitable payments. The transitional exception policy we proposed would apply to hospitals that benefited from the CY 2024 low wage index hospital policy. For those hospitals, we proposed to compare the hospital's proposed CY 2026 wage index to the hospital's CY 2024 wage index. If the hospital is significantly impacted by the discontinuation of the low wage index hospital policy, meaning the hospital's proposed CY 2026 wage index is decreasing by more than 9.75 percent[thinsp]from the hospital's CY 2024 wage index, then the transitional payment exception for CY 2026 for that [[Page 53497]] hospital would be equal to the additional CY 2026 amount the hospital would be paid under the OPPS if its CY 2026 wage index were equal to 90.25 percent[thinsp]of its CY 2024 wage index. This proposed transitional payment exception would be applied after the application of the 5-percent cap described at 42 CFR 412.64(h)(7). We proposed to make this policy budget neutral under the OPPS through the second wage index budget neutrality adjustment applied to the OPPS conversion factor (which currently includes the 5 percent hold harmless cap policy). Comment: Multiple commenters supported CMS' proposal to establish a transitional payment exception for CY 2026. Commenters also requested that the proposed transitional payment exception be applied in a non- budget neutral manner. Response: We appreciate the commenters' support of our policy to establish a transitional payment exception for CY 2026. For the OPPS, section 1833(t)(2)(D) of the Act requires the Secretary to determine a wage adjustment factor to adjust the portion of payment and coinsurance attributable to labor-related costs for relative differences in labor and labor-related costs across geographic regions in a budget neutral manner. Commenters' request to exclude the proposed transitional payment exception from budget neutrality is inconsistent with the budget neutral requirement under 1833(t)(2)(D) of the Act. Comment: One commenter stated that as proposed, the transitional payment exception would cause disproportionate harm to rural, safety- net, and OPPS hospitals that cannot be reclassified. To avoid this outcome, the commenter recommended that CMS: (1) anchor the 5 percent cap to the CY 2025 OPPS wage-index baseline, not the FY 2025 IPPS baseline; (2) broaden the transitional exception to >5 percent decline, not >9.75 percent, and set the floor at 95 percent of CY 2024, not 90.25 percent; and (3) retain an OPPS low-wage policy or equivalent hold-harmless policies until alignment can occur without producing greater than 5 percent decreases from baseline. Response: We appreciate the alternative methods suggested by the commenter to help mitigate the effect on hospitals of eliminating the low wage index hospitals policy. We note, however, that we had described in the CY 2025 OPPS/ASC final rule with comment period our intention to realign the wage index and by adopting into the OPPS transitional payment exception the same percentages and methodologies used by the IPPS transitional payment exception, we can fully align the wage index across both systems in CY 2026 rather than having discrepancies and inconsistencies that continue into future years based on ongoing transition policies. After consideration of the public comments we received, we are finalizing our proposal without modification to adopt a transitional payment exception for CY 2026 under the OPPS using our equitable adjustment authority under section 1833(t)(2)(E) of the Act. Core Based Statistical Areas (CBSAs) are made up of one or more constituent counties. Each CBSA and constituent county has its own unique identifying codes. The FY 2018 IPPS/LTCH PPS final rule (82 FR 38130) discussed the two different lists of codes to identify counties: Social Security Administration (SSA) codes and Federal Information Processing Standard (FIPS) codes. Historically, CMS listed and used SSA and FIPS county codes to identify and crosswalk counties to CBSA codes for purposes of the IPPS and OPPS wage indexes. However, the SSA county codes are no longer being maintained and updated, although the FIPS codes continue to be maintained by the U.S. Census Bureau. The Census Bureau's most current statistical area information is derived from ongoing census data received since 2010; the most recent data are from 2015. The Census Bureau maintains a complete list of changes to counties or county equivalent entities on the website at https://www.census.gov/programs-surveys/geography/technical-documentation/county-changes.html. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38130), for purposes of crosswalking counties to CBSAs for the IPPS wage index, we finalized our proposal to discontinue the use of the SSA county codes and begin using only the FIPS county codes. Similarly, for the purposes of crosswalking counties to CBSAs for the OPPS wage index, in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59260), we finalized our proposal to discontinue the use of SSA county codes and begin using only the FIPS county codes. For CY 2026, under the OPPS, we are continuing to use only the FIPS county codes for purposes of crosswalking counties to CBSAs. We proposed to use the FY 2026 IPPS post-reclassified wage index for urban and rural areas as the wage index for the OPPS to determine the wage adjustments for both the OPPS payment rate and the copayment rate for CY 2026. Therefore, any policies and adjustments that are finalized for the FY 2026 IPPS post-reclassified wage index would be reflected in the final CY 2026 OPPS wage index beginning on January 1, 2026, if appropriate. We refer readers to the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18217 through 18236) and the proposed FY 2026 hospital wage index files posted on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/fy-2026-ipps-proposed-rule-home-page. Regarding budget neutrality for the CY 2026 OPPS wage index, we refer readers to section II.C. of this final rule with comment period. We continue to believe that using the IPPS post-reclassified wage index as the source of an adjustment factor for the OPPS is reasonable and logical, given the inseparable, subordinate status of the HOPD within the hospital overall. Hospitals that are paid under the OPPS, but not under the IPPS, do not have an assigned hospital wage index under the IPPS. Therefore, for non-IPPS hospitals paid under the OPPS, it is our longstanding policy to assign the wage index that would be applicable if the hospital was paid under the IPPS, based on its geographic location and any applicable wage index policies and adjustments. We proposed to continue this policy for CY 2026. We refer readers to the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18217 through 18236) for a detailed discussion of the proposed changes to the FY 2026 IPPS wage indexes. It has been our longstanding policy to allow non-IPPS hospitals paid under the OPPS to qualify for the out-migration adjustment if they are located in a ``section 505 out-migration county'' (that is, a county identified under section 505 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA)) (Pub. L. 108-173). Applying this adjustment is consistent with our policy of adopting IPPS wage index policies for hospitals paid under the OPPS. We note that, because non-IPPS hospitals cannot reclassify, they are eligible for the out-migration wage index adjustment if they are located in a section 505 out-migration county. This is the same out-migration adjustment policy that would apply if the hospital were paid under the IPPS. For CY 2026, we proposed to continue our policy of allowing non-IPPS hospitals paid under the OPPS to qualify for the outmigration adjustment if they are located in a section 505 out-migration county (section 505 of the MMA) (88 FR 49585 and 49586). Furthermore, we proposed that the wage index that would apply for CY 2026 to non-IPPS hospitals paid [[Page 53498]] under the OPPS would continue to include the rural floor adjustment and any policies and adjustments applied to the IPPS wage index. In addition, we proposed that the wage index that would apply to non-IPPS hospitals paid under the OPPS would include the 5 percent cap on wage index decreases and the previously described proposed transitional payment exception for hospitals significantly impacted by the discontinuation of the low wage index hospital policy. We did not receive any comments on these proposals and are finalizing as proposed. For CMHCs, for CY 2026, we proposed to continue to calculate the wage index by using the post-reclassification IPPS wage index based on the CBSA where the CMHC is located. Furthermore, we proposed that the wage index that would apply to a CMHC for CY 2026 would continue to include the rural floor adjustment and any policies and adjustments applied to the IPPS wage index. In addition, the wage index that would apply to CMHCs would include the 5 percent cap on wage index decreases. Also, we proposed that the wage index that would apply to CMHCs would not include the outmigration adjustment because that adjustment only applies to hospitals. We did not receive any public comments on these proposals, and we are finalizing our proposals regarding CMHC wage index calculations without modification. Table 4A associated with the FY 2026 IPPS/LTCH PPS final rule (available via the internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/fy-2026-ipps-final-rule-home-page) identifies counties that would be eligible for the out-migration adjustment. Table 2 associated with the FY 2026 IPPS/LTCH PPS final rule (available for download via the website noted previously) identifies IPPS hospitals that would receive the out-migration adjustment for FY 2026. We are including the outmigration adjustment information from Table 2 associated with the FY 2026 IPPS/LTCH PPS final rule as Addendum L to this final rule with comment period, with the addition of non-IPPS hospitals that would receive the section 505 outmigration adjustment under this final rule with comment period. Addendum L is available via the internet on the CMS website. We refer readers to the CMS website for the OPPS at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices. At this link, readers will find a link to the final FY 2026 IPPS wage index tables and Addendum L.

D. Final Statewide Average Default Cost-to-Charge Ratios (CCRs)

In addition to using CCRs to estimate costs from charges on claims for ratesetting, we use overall hospital-specific CCRs calculated from the hospital's most recent cost report (OMB control number: 0938-0050 for Form CMS-2552-10) to determine outlier payments, payments for pass- through devices, and monthly interim transitional corridor payments under the OPPS during the PPS year. For certain hospitals, under the regulations at 42 CFR 419.43(d)(5)(iii), we use the statewide average default CCRs to determine the payments mentioned earlier if it is not possible to determine an accurate CCR for a hospital in certain circumstances. This includes hospitals that are new, hospitals that have not accepted assignment of an existing hospital's provider agreement, and hospitals that have not yet submitted a cost report. We also use the statewide average default CCRs to determine payments for hospitals whose CCR falls outside the predetermined ceiling threshold for a valid CCR or for hospitals in which the most recent cost report reflects an all-inclusive rate status (Medicare Claims Processing Manual (Pub. L. 100-04), Chapter 4, Section 10.11). We discussed our policy for using default CCRs, including setting the ceiling threshold for a valid CCR, in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68594 through 68599) in the context of our adoption of an outlier reconciliation policy for cost reports beginning on or after January 1, 2009. For details on our process for calculating the statewide average CCRs, we refer readers to the Claims Accounting Narrative for this final rule with comment period, which is posted on the CMS website. We proposed to calculate the default ratios for CY 2026 using the most recent cost report data. We did not receive any public comments on our proposal, and we are finalizing our proposal without modification to calculate the default ratios for CY 2026 using the most recent cost report data, which are from a June 2025 HCRIS cost report extract. We no longer publish a table in the Federal Register containing the statewide average CCRs in the annual OPPS/ASC proposed rule and final rule with comment period. These CCRs and the upper limit CCR value at which we would apply statewide CCRs will be available for download with each CY OPPS/ASC proposed rule and final rule with comment period on the CMS website. We refer readers to our website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices; click on the link on the left of the page titled ``Annual Policy Files'' and then select the relevant year to download the statewide CCRs and upper limits in the ``Downloads'' section of the web page.

E. Adjustment for Rural Sole Community Hospitals (SCHs) and Essential

Access Community Hospitals (EACHs) Under Section 1833(t)(13)(B) of the Act for CY 2026 In the CY 2006 OPPS final rule with comment period (70 FR 68556), we finalized a payment increase for rural sole community hospitals (SCHs) of 7.1 percent for all services and procedures paid under the OPPS, excluding separately payable drugs and biologicals, brachytherapy sources, items paid at charges reduced to costs, and devices paid under the pass-through payment policy, in accordance with section 1833(t)(13)(B) of the Act, as added by section 411 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173). Section 1833(t)(13) of the Act provides the Secretary the authority to make an adjustment to OPPS payments for rural hospitals, effective January 1, 2006, if justified by a study of the difference in costs by APC between hospitals in rural areas and hospitals in urban areas. Our analysis showed a difference in costs for rural SCHs. Therefore, for the CY 2006 OPPS, we finalized a payment adjustment for rural SCHs of 7.1 percent for all services and procedures paid under the OPPS, excluding separately payable drugs and biologicals, brachytherapy sources, items paid at charges reduced to costs, and devices paid under the pass-through payment policy, in accordance with section 1833(t)(13)(B) of the Act. In the CY 2007 OPPS/ASC final rule with comment period (71 FR 68010 and 68227), for purposes of receiving this rural adjustment, we revised our regulations at Sec. 419.43(g) to clarify that essential access community hospitals (EACHs) are also eligible to receive the rural SCH adjustment, assuming these entities otherwise meet the rural adjustment criteria. Currently, two hospitals are classified as EACHs, and as of CY 1998, under section 4201(c) of the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33), a hospital can no longer become newly classified as an EACH. This adjustment for rural SCHs is budget neutral and applied before calculating outlier payments and [[Page 53499]] copayments. We stated in the CY 2006 OPPS final rule with comment period (70 FR 68560) that we would not reestablish the adjustment amount on an annual basis, but we may review the adjustment in the future and, if appropriate, would revise the adjustment. We provided the same 7.1 percent adjustment to rural SCHs, including EACHs, again in CYs 2008 through 2025 (89 FR 93977). For CY 2026, we proposed to continue the current policy of a 7.1 percent payment adjustment for rural SCHs, including EACHs, for all services and procedures paid under the OPPS, excluding separately payable drugs and biologicals, brachytherapy sources, items paid at charges reduced to costs, and devices paid under the pass-through payment policy, applied in a budget neutral manner (90 FR 33514). We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: Multiple commenters supported our proposal to continue to apply a 7.1 percent payment adjustment for rural SCHs, including EACHs, in CY 2026. Response: We thank the commenters for their support of our proposal. Comment: Several commenters stated that the 7.1 percent payment adjustment should be extended to urban SCHs and Medicare dependent hospitals (MDHs). The commenters stated MDHs are rural hospitals and suggested CMS perform another study to look at the costs that MDHs incur, and opined that CMS has the authority to extend the adjustment to MDHs and urban SCHs without legislation. Response: We note that our authority for an adjustment under section 1833(t)(13)(B) of the Act only applies to rural hospitals, so we would not have authority to extend this adjustment to a hospital classified as urban. We are not performing another study under 1833(t)(13)(A) of the Act for this rule, but we will consider if this is appropriate for future rulemaking. Comment: One commenter stated the supplemental adjustments for rural SCHs and EACHs are essential for their sustainability but stated recipients of these payments need greater accountability for improving beneficiary access. The commenter suggested that CMS publish annual data on outpatient service availability and closures or reductions of service, to ensure that these supplemental payments are tied to tangible results for patients. Response: We thank the commenter for their input and will consider the suggestion for future rulemaking. After consideration of these public comments, we are finalizing our proposal, without modification, to continue our current policy of utilizing a budget neutral 7.1 percent payment adjustment for rural SCHs, including EACHs, for all services and procedures paid under the OPPS, excluding separately payable drugs and biologicals, brachytherapy sources, devices paid under the pass-through payment policy, and items paid at charges reduced to costs.

1. Background

Since the inception of the OPPS, which was authorized by the BBA, Medicare has paid the 11 hospitals that meet the criteria for cancer hospitals identified in section 1886(d)(1)(B)(v) of the Act under the OPPS for covered outpatient department services. These cancer hospitals are exempted from payment under the IPPS. With the Medicare, Medicaid and SCHIP Balanced Budget Refinement Act of 1999 (Pub. L. 106-113), the Congress added section 1833(t)(7) of the Act, ``Transitional Adjustment to Limit Decline in Payment,'' which requires the Secretary to determine OPPS payments to cancer and children's hospitals based on their pre-BBA payment amount (these hospitals are often referred to under this policy as ``held harmless'' and their payments are often referred to as ``hold harmless'' payments). As required under section 1833(t)(7)(D)(ii) of the Act, a cancer hospital receives the full amount of the difference between payments for covered outpatient department services under the OPPS and a ``pre- BBA amount.'' That is, cancer hospitals are permanently held harmless to their ``pre-BBA amount,'' and they receive transitional outpatient payments (TOPs) or hold harmless payments to ensure that they do not receive a payment that is lower in amount under the OPPS than the payment amount they would have received before implementation of the OPPS, as set forth in section 1833(t)(7)(F) of the Act. The ``pre-BBA amount'' is the product of the hospital's reasonable costs for covered outpatient department services occurring in the current year and the base payment-to-cost ratio (PCR) for the hospital defined in section 1833(t)(7)(F)(ii) of the Act. The ``pre-BBA amount'' and the determination of the base PCR are defined at Sec. 419.70(f). TOPs are calculated on Worksheet E, Part B, of the Hospital Cost Report or the Hospital Health Care Complex Cost Report (Form CMS-2552-96 or Form CMS- 2552-10 (OMB No: 0938-0050), respectively), as applicable each year. Section 1833(t)(7)(I) of the Act exempts TOPs from budget neutrality calculations. Section 3138 of the Affordable Care Act (Pub. L. 111-148) amended section 1833(t) of the Act by adding a new paragraph (18), which instructs the Secretary to conduct a study to determine if, under the OPPS, outpatient costs incurred by cancer hospitals described in section 1886(d)(1)(B)(v) of the Act with respect to APC groups exceed outpatient costs incurred by other hospitals furnishing services under section 1833(t) of the Act, as determined appropriate by the Secretary. Section 1833(t)(18)(A) of the Act requires the Secretary to take into consideration the cost of drugs and biologicals incurred by cancer hospitals and other hospitals. Section 1833(t)(18)(B) of the Act provides that, if the Secretary determines that cancer hospitals' costs are higher than those of other hospitals, the Secretary shall provide an appropriate adjustment under section 1833(t)(2)(E) of the Act to reflect these higher costs. In 2011, after conducting the study required by section 1833(t)(18)(A) of the Act, we determined that outpatient costs incurred by the 11 specified cancer hospitals were greater than the costs incurred by other OPPS hospitals. For a complete discussion regarding the cancer hospital cost study, we refer readers to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74200 and 74201). Based on these findings, we finalized a policy to provide a payment adjustment to the 11 specified cancer hospitals that reflects their higher outpatient costs, as discussed in the CY 2012 OPPS/ASC final rule with comment period (76 FR 74202 through 74206). Specifically, we adopted a policy to provide additional payments to the cancer hospitals so that each cancer hospital's final PCR for services provided in a given calendar year is equal to the weighted average PCR (which we refer to as the ``target PCR'') for other hospitals paid under the OPPS. The target PCR is set in advance of the calendar year and is calculated using the most recently submitted or settled cost report data that are available at the time of final rulemaking for the calendar year. The amount of the payment adjustment is made on an aggregate basis at cost report settlement. We note that the changes made by section 1833(t)(18) of the Act do not affect the existing statutory provisions that provide for TOPs for cancer hospitals. [[Page 53500]] The TOPs are assessed, as usual, after all payments, including the cancer hospital payment adjustment, have been made for a cost reporting period. Table 9 displays the target PCR for purposes of the cancer hospital adjustment for CY 2012 through CY 2025. [GRAPHIC] [TIFF OMITTED] TR25NO25.016

2. Policy for CY 2026

Section 16002(b) of the 21st Century Cures Act (Pub. L. 114-255) amended section 1833(t)(18) of the Act by adding subparagraph (C), which requires that in applying Sec. 419.43(i) (that is, the payment adjustment for certain cancer hospitals) for services furnished on or after January 1, 2018, the Secretary shall use a target PCR that is 1.0 percentage point less than the target PCR that would otherwise apply. Section 16002(b) of the 21st Century Cures Act also provides that, in addition to the percentage reduction, the Secretary may consider making an additional percentage point reduction to the target PCR that takes into account payment rates for applicable items and services described under section 1833(t)(21)(C) of the Act for hospitals that are not cancer hospitals described under section 1886(d)(1)(B)(v) of the Act. Further, in making any budget neutrality adjustment under section 1833(t) of the Act, section 16002(b) of the 21st Century Cures Act provides that the Secretary shall not take into account the reduced expenditures that result from application of section 1833(t)(18)(C) of the Act. We proposed to provide additional payments to the 11 specified cancer hospitals so that each cancer hospital's proposed PCR is equal to the weighted average PCR (or ``target PCR'') for the other OPPS hospitals, generally using the most recent submitted or settled cost report data that are available, reduced by 1.0 percentage point, to comply with section 16002(b) of the 21st Century Cures Act. As discussed further below, we did not propose an additional reduction beyond the 1.0 percentage point reduction required by section 16002(b) of the 21st Century Cures Act for CY 2026. To calculate the proposed CY 2026 target PCR, we proposed to use the same extract of cost report data from HCRIS used to estimate costs for the CY 2026 OPPS which, in most cases, would be the most recently available hospital cost reports. Using these cost report data, we included data from Worksheet E, Part B, for each hospital, using data from each hospital's most recent cost report, whether as submitted or settled. We then limited the dataset to the hospitals with CY 2024 claims data that we used to model the impact of the proposed CY 2026 APC relative payment weights (3,388 hospitals) because we believe it is appropriate to use the same set of hospitals that are being used to calibrate the modeled CY 2026 OPPS. The cost report data for the hospitals in this dataset were from cost report periods with fiscal year ends ranging from 2022 to 2024; however, the cost reporting periods were predominantly from fiscal years ending in 2023 and 2024. We then removed the cost report data of the 49 hospitals located in Puerto Rico from our dataset because we did not believe their cost structure reflected the costs of most hospitals paid under the OPPS, and, therefore, their inclusion may bias the calculation of hospital- weighted statistics. We also removed the cost report data of 12 hospitals because these hospitals had cost report data that were not complete (missing aggregate OPPS payments, missing aggregate cost data, or missing both), so that all cost reports in the study would have both the payment and cost data necessary to calculate a PCR for each hospital, leading to a proposed analytic file of 3,327 hospitals with cost report data. Using this smaller dataset of cost report data, we estimated that, on average, the OPPS payments to other hospitals furnishing services under the OPPS were approximately 88 percent of reasonable cost (weighted average PCR of 0.88). Therefore, after applying the 1.0 percentage point reduction, as required by section 16002(b) of the 21st Century Cures Act, using our standard process the payment amount associated with the cancer hospital payment adjustment to be determined at cost report settlement would be the additional payment needed to result in a proposed target PCR equal to 0.87 for each cancer hospital. In the CY 2024 OPPS/ASC final rule with comment period (88 FR 81586 through 81589), we explained that we believe we should begin to take into consideration the PCR of non-cancer hospitals based on the most recently available data for calculating the target PCR. We noted that we do not know if the changes in the data that have yielded lower PCRs for non-cancer hospitals are likely to continue in future years or if, when data from after the PHE [[Page 53501]] is available, we will see the target PCR increase toward its historical norm. Therefore, in the CY 2024 OPPS/ASC final rule with comment period, we finalized our proposal to transition from the target PCR of 0.89 we finalized for CYs 2020 through 2024 (which included the 1.0 percentage point reduction as required by section 16002(b) of the 21st Century Cures Act) and incrementally reduce the target PCR by an additional 1.0 percentage point for each calendar year, beginning with CY 2024, until the target PCR equals the PCR of non-cancer hospitals calculated using the most recent data minus 1.0 percentage point as required by section 16002(b) of the 21st Century Cures Act. Therefore, utilizing this methodology, we finalized in the CY 2025 OPPS/ASC final rule with comment period (89 FR 93977 through 93980) our policy to reduce the CY 2024 target PCR of 0.88 by 1 percentage point and finalized a cancer hospital target PCR of 0.87 for CY 2025. Since the target PCR based on the OPPS payments to other hospitals furnishing services under the OPPS would be 0.87 after applying the 1.0 percentage point reduction, as required by the section 16002(b) of the 21st Century Cures Act, and would equal the CY 2025 target PCR, it is no longer necessary to continue our transition policy of gradually reducing the pre-COVID-19 PHE target PCR by 1.0 percentage point in lieu of our target PCR calculation. For CY 2026 and subsequent years, we proposed to calculate the target PCR based on our longstanding target PCR calculation methodology described in the CY 2026 OPPS/ASC proposed rule, and then apply the 1.0 percentage point reduction as required by section 16002(b) of the 21st Century Cures Act. We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: Some commenters supported the cancer hospital payment adjustment while one commenter recommended the agency conduct a review to determine if the cancer hospital payment adjustment was still appropriate, including reviewing the accuracy of cost report information. Response: As previously discussed, section 1833(t)(7)(D)(ii) of the Act requires that the cancer hospitals that meet the statutory criteria receive the full amount of the difference between payments for covered outpatient department services under the OPPS and a ``pre-BBA amount.'' Additionally, 1833(t)(18)(B) of the Act requires that if the Secretary determines that cancer hospitals' costs are higher than those of other hospitals, to provide an appropriate adjustment under section 1833(t)(2)(E) to reflect these higher costs. The statute does not provide flexibility to discontinue such cancer hospital payment adjustments. Further, we note that Medicare Administrative Contractors routinely perform audits on hospital cost reports to ensure accuracy and completeness. Comment: One commenter supported the Agency's discontinuation of the gradual reduction policy but recommended that we reinstate such a policy in the future to avoid dramatic and unexpected negative reductions in the target PCR. Response: We appreciate the commenter's support and will take their comment regarding reinstating the gradual reduction policy into consideration for future rulemaking. After consideration of public comments we received, we are finalizing without modification our proposal to calculate the target PCR based on our longstanding target PCR calculation methodology described in this final rule with comment and then apply the 1.0 percentage point reduction as required by section 16002(b) of the 21st Century Cures Act. For this final rule with comment period, we are using the most recent cost report data through June 30, 2025 to update the adjustment. We limited the dataset to hospitals with CY 2024 claims data that we used to model the impact of the CY 2026 APC relative payment weights (3,395 hospitals) because it is appropriate to use the same set of hospitals that we are using to calibrate the modeled CY 2026 OPPS. The cost report data for the hospitals in the dataset were from cost reporting periods with fiscal years ends ranging from 2019 to 2024. We then removed the cost report data of the 48 hospitals located in Puerto Rico from our dataset because we do not believe that their cost structure reflects the costs of most hospitals paid under the OPPS and, therefore, their inclusion may bias the calculation of hospital- weighted statistics. We also removed the cost report data of 6 hospitals because these hospitals had cost report data that were not complete (missing aggregate OPPS payments, missing aggregate cost data, or missing both), so that all cost reports in the study would have both the payment and cost data necessary to calculate a PCR for each hospital, leading to an analytic file of 3,341 hospitals with cost report data. Using this smaller dataset of updated cost report data, we estimate that, on average, the OPPS payments to other hospitals furnishing services under the OPPS were approximately 88 percent of reasonable cost (weighted average PCR of 0.88). Therefore, after applying the 1.0 percentage point reduction, as required by section 16002(b) of the 21st Century Cures Act, we are finalizing a target PCR of 0.87. Table 10 shows the estimated percentage increase in OPPS payments to each cancer hospital for CY 2026, due to the cancer hospital payment adjustment policy. The actual, final amount of the CY 2026 cancer hospital payment adjustment for each cancer hospital will be determined at cost report settlement and will depend on each hospital's CY 2026 payments and costs from the settled CY 2026 cost report. We note that the requirements contained in section 1833(t)(18) of the Act do not affect the existing statutory provisions that provide for TOPs for cancer hospitals. The TOPs will be assessed, as usual, after all payments, including the cancer hospital payment adjustment, have been made for a cost reporting period. BILLING CODE 4120-0-P [[Page 53502]] [GRAPHIC] [TIFF OMITTED] TR25NO25.017 BILLING CODE 4120-0-C

1. Background

The OPPS provides outlier payments to hospitals to help mitigate the financial risk associated with high-cost and complex procedures, where a very costly service could present a hospital with significant financial loss. As explained in the CY 2015 OPPS/ASC final rule with comment period (79 FR 66832 through 66834), we set our projected target for aggregate outlier payments at 1.0 percent of the estimated aggregate total payments under the OPPS for the prospective year. Outlier payments are provided on a service-by-service basis when the cost of a service exceeds the APC payment amount multiplier threshold (the APC payment amount multiplied by a certain amount) as well as the APC payment amount plus a fixed-dollar amount threshold (the APC payment plus a certain dollar amount). In CY 2025, the outlier threshold was met when the hospital's cost of furnishing a service exceeded 1.75 times the APC payment amount (the multiplier threshold) and exceeded the APC payment amount plus $7,175 (the fixed-dollar amount threshold) (89 FR 93980 through 93982). If the hospital's cost of furnishing a service exceeds both the multiplier threshold and the fixed-dollar threshold, the outlier payment is calculated as 50 percent of the amount by which the hospital's cost of furnishing the service exceeds 1.75 times the APC payment amount. Beginning with CY 2009 payments, outlier payments are subject to a reconciliation process similar to the IPPS outlier reconciliation process for cost reports, as discussed in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68594 through 68599). It has been our policy to report the actual amount of outlier payments as a percent of total spending in the claims being used to model the OPPS. Our estimate of total outlier payments as a percent of total CY 2024 OPPS payments, using CY 2024 claims available for this final rule with comment period, is approximately 0.82 percent. Therefore, for CY 2024, we estimate that we did not meet the outlier target by 0.18 percent of total aggregated OPPS payments. For the CY 2026 OPPS/ASC proposed rule, using CY 2024 claims data and CY 2025 payment rates, we estimated that the aggregate outlier payments for CY 2025 would be approximately 0.92 percent of the total CY 2025 OPPS payments (90 FR 33517). We provided estimated CY 2026 outlier payments for hospitals and CMHCs with claims included in the claims data that we used to model impacts in the Hospital-Specific Impacts--Provider-Specific Data file on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.

2. Outlier Calculation for CY 2026

For CY 2026, we proposed to continue our policy of estimating outlier payments to be 1.0 percent of the estimated aggregate total payments under the OPPS. We proposed that a portion of that 1.0 percent, an amount equal to less than 0.01 percent of outlier payments (or 0.0001 percent of total OPPS payments), would be allocated to CMHCs for partial hospitalization program (PHP) and intensive outpatient program (IOP) outlier payments. This is the amount of estimated outlier payments that would result from the proposed CMHC outlier threshold as a proportion of total estimated OPPS outlier payments. We proposed to continue our outlier policy that if a CMHC's cost for PHP and IOP services exceeds 3.40 times the APC payment rate, the outlier payment would be calculated as 50 percent of the amount [[Page 53503]] by which the cost exceeds 3.40 times the proposed APC payment rate. For further discussion of CMHC outlier payments, we refer readers to section VIII.C. of this final rule with comment period. To ensure that the estimated CY 2026 aggregate outlier payments would equal 1.0 percent of estimated aggregate total payments under the OPPS, we proposed that the hospital outlier threshold be set so that outlier payments would be triggered when a hospital's cost of furnishing a service exceeds 1.75 times the APC payment amount and exceeds the APC payment amount plus the fixed-dollar threshold. We calculated the proposed fixed-dollar threshold using the standard methodology most recently used for CY 2025 (89 FR 93980 through 93982). For purposes of estimating outlier payments for CY 2026, we used the hospital-specific overall ancillary CCRs available in the April 2025 update to the Outpatient Provider-Specific File (OPSF). The OPSF contains provider-specific data, such as the most current CCRs, which are maintained by the MACs and used by the OPPS Pricer to pay claims. The claims that we generally use to model each OPPS update lag by 2 years. To estimate the CY 2026 proposed hospital outlier payments (90 FR 33841), we inflated the charges on the CY 2024 claims using the same proposed charge inflation factor of 1.1118 that we used to estimate the IPPS fixed-loss cost threshold for the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18434 through 18436). We used an inflation factor of 1.05440 to estimate CY 2025 charges from the CY 2024 charges reported on CY 2024 claims before applying CY 2025 CCRs to estimate the percent of outliers paid in CY 2025. The proposed methodology for determining these charge inflation factors is discussed in the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18434). As we stated in the CY 2005 OPPS final rule with comment period (69 FR 65844 through 65846), we believed that the use of the same charge inflation factors is appropriate for the OPPS because, with the exception of the inpatient routine service cost centers, hospitals use the same ancillary and cost centers to capture costs and charges for inpatient and outpatient services. As noted in the CY 2007 OPPS/ASC final rule with comment period (71 FR 68011), we were concerned that we could systematically overestimate the OPPS hospital outlier threshold if we did not apply a CCR inflation adjustment factor. Therefore, we proposed to apply the same CCR adjustment factor that we proposed to apply for the FY 2026 IPPS outlier calculation to the CCRs used to simulate the proposed CY 2026 OPPS outlier payments to determine the fixed-dollar threshold. Specifically, for CY 2026, we proposed to apply an adjustment factor of 0.970113 to the CCRs that were in the April 2025 OPSF to trend them forward from CY 2025 to CY 2026. The methodology for calculating the proposed CCR adjustment factor is discussed in the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18434 through 18435). To model hospital outlier payments for the CY 2026 OPPS/ASC proposed rule, we applied the overall CCRs from the April 2025 OPSF after adjustment (using the proposed CCR inflation adjustment factor of 0.970113 to approximate CY 2026 CCRs) to charges on CY 2024 claims that were adjusted (using the proposed charge inflation factor of 1.1118 to approximate CY 2026 charges). We simulated aggregated CY 2024 hospital outlier payments using these costs for several different fixed-dollar thresholds, holding the 1.75 multiplier threshold constant and assuming that outlier payments would continue to be made at 50 percent of the amount by which the cost of furnishing the service would exceed 1.75 times the APC payment amount, until the total outlier payments equaled 1.0 percent of aggregated estimated total CY 2026 OPPS payments. We estimated that a proposed fixed-dollar threshold of $6,450 combined with the proposed multiplier threshold of 1.75 times the APC payment rate, would allocate 1.0 percent of aggregated total OPPS payments to outlier payments for CY 2026. For CMHCs, we proposed that, if a CMHC's cost for partial hospitalization or intensive outpatient services exceeds 3.40 times the APC payment rate, the outlier payment would be calculated as 50 percent of the amount by which the cost exceeds 3.40 times the APC payment rate. Section 1833(t)(17)(A) of the Act, which applies to hospitals, as defined under section 1886(d)(1)(B) of the Act, requires that hospitals that fail to report data required for the quality measures selected by the Secretary, in the form and manner required by the Secretary under section 1833(t)(17)(B) of the Act, incur a 2.0 percentage point reduction to their OPD fee schedule increase factor; that is, the annual payment update factor. The application of a reduced OPD fee schedule increase factor results in reduced national unadjusted payment rates that would apply to certain outpatient items and services furnished by hospitals that are required to report outpatient quality data and that fail to meet the Hospital Outpatient Quality Reporting (OQR) Program requirements. For hospitals that fail to meet the Hospital OQR Program requirements, we proposed to continue the policy that we implemented in CY 2010 that the hospitals' costs would be compared to the reduced payments for purposes of outlier eligibility and payment calculation. For more information on the Hospital OQR Program, we refer readers to section XV. of this final rule with comment period. We received one public comment in support of our proposal. After consideration of the public comment we received, we are finalizing our proposal, without modification, to continue to our policy of estimating outlier payments to be 1.0 percent of the estimated aggregate total payments under the OPPS and to use our established methodology to set the OPPS outlier fixed-dollar loss threshold for CY 2026.

3. Final Outlier Calculation for CY 2026

Consistent with historical practice, we used updated data for this final rule with comment period for outlier calculations. For CY 2026, we are applying the overall ancillary CCRs from the July 2025 OPSF file after adjustment (using the CCR adjustment factor of 0.956081 to approximate CY 2026 CCRs) to charges on CY 2024 claims that were adjusted using a charge inflation factor of 1.11313 to approximate CY 2026 charges. These are the same CCR adjustment and charge inflation factors that were used to set the IPPS fixed-dollar thresholds for the FY 2026 IPPS/LTCH PPS final rule (90 FR 37227). We simulated aggregated CY 2026 hospital outlier payments using these costs for several different fixed-dollar thresholds, holding the 1.75 multiple-threshold constant and assuming that outlier payments will continue to be made at 50 percent of the amount by which the cost of furnishing the service would exceed 1.75 times the APC payment amount, until the total outlier payment equaled 1.0 percent of aggregated estimated total CY 2026 OPPS payments. We estimate that a final fixed-dollar threshold of $6,225 combined with the multiple threshold of 1.75 times the APC payment rate, will allocate 1.0 percent of aggregated total OPPS payments to outlier payments. For CMHCs, if a CMHC's cost for partial hospitalization or intensive outpatient services exceeds 3.40 times the APC payment rate, the outlier payment will be calculated as 50 percent of the amount by which the cost [[Page 53504]] exceeds the 3.40 times the APC payment rate.

H. Calculation of an Adjusted Medicare Payment From the National

Unadjusted Medicare Payment The national unadjusted payment rate is the payment rate for most APCs before accounting for the wage index adjustment or any applicable adjustments. The basic methodology for determining prospective payment rates for HOPD services under the OPPS is set forth in existing regulations at 42 CFR part 419, subparts C and D. For this final rule with comment period, the payment rate for most services and procedures for which payment is made under the OPPS is the product of the conversion factor calculated in accordance with section II.B. of this final rule with comment period and the relative payment weight described in section II.A. of this final rule with comment period. The national unadjusted payment rate for most APCs contained in Addendum A to this final rule with comment period (which is available on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient-pps/quarterly-addenda-updates and for most HCPCS codes to which separate payment under the OPPS has been assigned in Addendum B to this final rule with comment period (which is available on the CMS website, see link above) is calculated by multiplying the final CY 2026 scaled weight for the APC by the CY 2026 conversion factor. We note that section 1833(t)(17) of the Act, which applies to hospitals, as defined under section 1886(d)(1)(B) of the Act, requires that hospitals that fail to submit data required to be submitted on quality measures selected by the Secretary, in the form and manner and at a time specified by the Secretary, incur a reduction of 2.0 percentage points to their OPD fee schedule increase factor, that is, the annual payment update factor. The application of a reduced OPD fee schedule increase factor results in reduced national unadjusted payment rates that apply to certain outpatient items and services provided by hospitals that are required to report outpatient quality data and that fail to meet the Hospital OQR Program requirements. For further discussion of the payment reduction for hospitals that fail to meet the requirements of the Hospital OQR Program, we refer readers to section XIV. of this final rule with comment period. Below we demonstrate the steps used to determine the APC payments that will be made in a CY under the OPPS to a hospital that fulfills the Hospital OQR Program requirements and to a hospital that fails to meet the Hospital OQR Program requirements for a service that has any of the following status indicator assignments: ``J1,'' ``J2,'' ``P,'' ``Q1,'' ``Q2,'' ``Q3,'' ``Q4,'' ``R,'' ``S,'' ``T,'' ``U,'' or ``V'' (as defined in Addendum D1 to this final rule with comment period, which is available via the internet on the CMS website), in a circumstance in which the multiple procedure discount does not apply, the procedure is not bilateral, and conditionally packaged services (status indicator of ``Q1'' and ``Q2'') qualify for separate payment. We note that, although blood and blood products with status indicator ``R'' and brachytherapy sources with status indicator ``U'' are not subject to wage adjustment, they are subject to reduced payments when a hospital fails to meet the Hospital OQR Program requirements. Individual providers interested in calculating the payment amount that they would receive for a specific service from the national unadjusted payment rates presented in Addenda A and B to this final rule with comment period (which are available via the internet on the CMS website) should follow the formulas presented in the following steps. For purposes of the payment calculations below, we refer to the national unadjusted payment rate for hospitals that meet the requirements of the Hospital OQR Program as the ``full'' national unadjusted payment rate. We refer to the national unadjusted payment rate for hospitals that fail to meet the requirements of the Hospital OQR Program as the ``reduced'' national unadjusted payment rate. The reduced national unadjusted payment rate is calculated by multiplying the reporting ratio of 0.9805 times the ``full'' national unadjusted payment rate. The national unadjusted payment rate used in the calculations below is either the full national unadjusted payment rate or the reduced national unadjusted payment rate, depending on whether the hospital met its Hospital OQR Program requirements to receive the full CY 2025 OPPS fee schedule increase factor. Step 1. Calculate 60 percent (the labor-related portion) of the national unadjusted payment rate. Since the initial implementation of the OPPS, we have used 60 percent to represent our estimate of that portion of costs attributable, on average, to labor. We refer readers to the April 7, 2000 OPPS final rule with comment period (65 FR 18496 through 18497) for a detailed discussion of how we derived this percentage. During our regression analysis for the payment adjustment for rural hospitals in the CY 2006 OPPS final rule with comment period (70 FR 68553), we confirmed that this labor-related share for hospital outpatient services is appropriate. The formula below is a mathematical representation of Step 1 and identifies the labor-related portion of a specific payment rate for a specific service. X is the labor-related portion of the national unadjusted payment rate. X = .60 * (national unadjusted payment rate). Step 2. Determine the wage index area in which the hospital is located and identify the wage index level that applies to the specific hospital. The wage index values assigned to each area would reflect the geographic statistical areas (which are based upon OMB standards) to which hospitals are assigned for FY 2026 under the IPPS, reclassifications through the Medicare Geographic Classification Review Board (MGCRB), section 1886(d)(8)(B) ``Lugar'' hospitals, and reclassifications under section 1886(d)(8)(E) of the Act, as implemented in Sec. 412.103 of the regulations. For CY 2026, we proposed to apply for the CY 2026 OPPS wage index any adjustments for the FY 2026 IPPS post-reclassified wage index, including, but not limited to, the rural floor adjustment and a wage index floor of 1.00 in frontier states, in accordance with section 10324 of the Affordable Care Act of 2010. For further discussion of the wage index we are applying for the CY 2026 OPPS, including the low wage index hospital policy, we refer readers to section II.C. of this final rule with comment period. Step 3. Adjust the wage index of hospitals located in certain qualifying counties that have a relatively high percentage of hospital employees who reside in the county, but who work in a different county with a higher wage index, in accordance with section 505 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. 108-173). Addendum L to this final rule with comment period (which is available via the internet on the CMS website) contains the qualifying counties and the associated wage index increase developed for the final FY 2026 IPPS wage index, which are listed in Table 3 associated with the FY 2026 IPPS final rule and available via the internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps. (Click on the link on the left side of the screen titled ``FY 2026 IPPS Final Rule Home Page'' and select ``FY 2026 Final Rule Tables.'') This step is to be followed only if the [[Page 53505]] hospital is not reclassified or redesignated under section 1886(d)(8) or section 1886(d)(10) of the Act. Step 4. Multiply the applicable wage index determined under Steps 2 and 3 by the amount determined under Step 1 that represents the labor- related portion of the national unadjusted payment rate. The formula below is a mathematical representation of Step 4 and adjusts the labor-related portion of the national unadjusted payment rate for the specific service by the wage index. Xa is the labor-related portion of the national unadjusted payment rate (wage adjusted). Xa = labor-portion of the national unadjusted payment rate * applicable wage index. Step 5. Calculate 40 percent (the nonlabor-related portion) of the national unadjusted payment rate and add that amount to the resulting product of Step 4. The result is the wage index adjusted payment rate for the relevant wage index area. The formula below is a mathematical representation of Step 5 and calculates the remaining portion of the national payment rate, the amount not attributable to labor, and the adjusted payment for the specific service. Y is the nonlabor-related portion of the national unadjusted payment rate. Y = 0.40 * (national unadjusted payment rate). Step 6. If a provider is an SCH, as set forth in the regulations at Sec. 412.92, or an EACH, which is considered to be an SCH under section 1886(d)(5)(D)(iii)(III) of the Act, and located in a rural area, as defined in Sec. 412.64(b), or is treated as being located in a rural area under Sec. 412.103, multiply the wage index adjusted payment rate by 1.071 to calculate the total payment. The formula below is a mathematical representation of Step 6 and applies the rural adjustment for rural SCHs. Adjusted Medicare Payment (SCH or EACH) = Adjusted Medicare Payment * 1.071. Step 7. The adjusted payment rate is the sum of the wage adjusted labor-related portion of the national unadjusted payment rate and the nonlabor-related portion of the national unadjusted payment rate. Xa is the labor-related portion of the national unadjusted payment rate (wage adjusted). Y is the nonlabor-related portion of the national unadjusted payment rate. Adjusted Medicare Payment = Xa + Y We are providing examples below of the calculation of both the full and reduced national unadjusted payment rates that would apply to certain outpatient items and services performed by hospitals that meet and that fail to meet the Hospital OQR Program requirements, using the steps outlined previously. For purposes of this example, we are using a provider that is located in Brooklyn, New York that is assigned to CBSA 35614. This provider bills one service that is assigned to APC 5071 (Level 1 Excision/Biopsy/Incision and Drainage). The final CY 2026 full national unadjusted payment rate for APC 5071 is $723.47. The final reduced national adjusted payment rate for APC 5071 for a hospital that fails to meet the Hospital OQR Program requirements is $709.36. This reduced rate is calculated by multiplying the reporting ratio of 0.9805 by the full unadjusted payment rate for APC 5071. Step 1. The labor-related portion of the final full national unadjusted payment is approximately $434.08 (0.60 * $723.47). The labor-related portion of the final reduced national adjusted payment is approximately $425.62 (0.60 * $709.36). Step 2 & 3. The FY 2026 wage index for a provider located in CBSA 35614 in New York, which includes the adoption of the final IPPS 2026 wage index policies, is 1.3697. Step 4. The wage adjusted labor-related portion of the final full national unadjusted payment is approximately $594.56 ($434.08 * 1.3697). The wage adjusted labor-related portion of the final reduced national adjusted payment is approximately $582.97 ($425.62 * 1.3697). Step 5. The nonlabor-related portion of the final full national unadjusted payment is approximately $289.39 (0.40 * $723.47). The nonlabor-related portion of the final reduced national adjusted payment is approximately $283.74(0.40 * $709.36). Step 6. For this example of a provider located in Brooklyn, New York, the rural adjustment for rural SCHs does not apply. Step 7. The sum of the labor-related and nonlabor-related portions of the final full national unadjusted payment is approximately $883.95 ($594.56 + $289.39). The sum of the portions of the final reduced national adjusted payment is approximately $866.71 ($582.97 + $283.74) as shown in Table 11. [GRAPHIC] [TIFF OMITTED] TR25NO25.018 We did not receive any public comments on these steps under the methodology that we included in the CY 2026 OPPS/ASC proposed rule to determine the APC payments for CY 2026. Therefore, we are using the steps in the methodology specified above to demonstrate the calculation of the final CY 2026 OPPS payments using the same parameters.

1. Background

Section 1833(t)(3)(B) of the Act requires the Secretary to set rules for determining the unadjusted copayment amounts to be paid by beneficiaries for covered OPD services. Section 1833(t)(8)(C)(ii) of the Act specifies that the Secretary must reduce the national unadjusted copayment amount for a covered OPD service (or group of such services) furnished in a year in a manner so that the effective copayment rate (determined on a national unadjusted basis) for that service in the year does not exceed a specified percentage. As specified in section 1833(t)(8)(C)(ii)(V) of the Act, the effective copayment rate for a covered OPD service paid under the OPPS in CY 2006, and in CYs thereafter, shall not exceed 40 percent of the APC payment rate. Section 1833(t)(3)(B)(ii) of the Act provides that, for a covered OPD service (or group of such services) furnished in a year, the national unadjusted copayment amount cannot be less than 20 percent of the OPD fee schedule [[Page 53506]] amount. However, section 1833(t)(8)(C)(i) of the Act limits the amount of beneficiary copayment that may be collected for a procedure (including items such as drugs and biologicals) performed in a year to the amount of the inpatient hospital deductible for that year. Section 4104 of the Affordable Care Act eliminated the Medicare Part B coinsurance for preventive services furnished on and after January 1, 2011, that meet certain requirements, including flexible sigmoidoscopies and screening colonoscopies, and waived the Part B deductible for screening colonoscopies that become diagnostic during the procedure. For a discussion of the changes made by the Affordable Care Act with regard to copayments for preventive services furnished on and after January 1, 2011, we refer readers to section XII.B. of the CY 2011 OPPS/ASC final rule with comment period (75 FR 72013). Section 122 of the Consolidated Appropriations Act (CAA), 2021 (Pub. L. 116-260), Waiving Medicare Coinsurance for Certain Colorectal Cancer Screening Tests, amended section 1833(a) of the Act to offer a special coinsurance rule for screening flexible sigmoidoscopies and screening colonoscopies, regardless of the code that is billed for the establishment of a diagnosis as a result of the test, or for the removal of tissue or other matter or other procedure, that is furnished in connection with, as a result of, and in the same clinical encounter as the colorectal cancer screening test. We refer readers to section ``X.B. Changes to Beneficiary Coinsurance for Certain Colorectal Cancer Screening Tests'', of the CY 2022 OPPS/ASC final rule with comment period for the full discussion of this policy (86 FR 63740 through 63743). Under the regulation at 42 CFR 410.152(l)(5)(i)(B), the Medicare Part B payment percentage for colorectal cancer screening tests described in the regulation at Sec. 410.37(j) that are furnished in CY 2023 through CY 2026 is 85 percent, with beneficiary coinsurance equal to 15 percent. On August 16, 2022, the Inflation Reduction Act of 2022 (IRA) (Pub.

L. 117-169) was signed into law. Section 11101(a) of the IRA amended

section 1847A of the Act by adding a new subsection (i), which requires the payment of rebates into the Supplementary Medical Insurance Trust Fund for Part B rebatable drugs if the payment limit amount exceeds the inflation-adjusted payment amount, which is calculated as set forth in section 1847A(i)(3)(C) of the Act. The provisions of section 11101 of the IRA were initially implemented through program instruction, as permitted under section 1847A(c)(5)(C) of the Act. On February 9, 2023 and December 14, 2023, we issued initial \9\ and revised \10\ guidance, respectively, implementing the Medicare Part B Inflation Rebate Program, including the computation of inflation-adjusted beneficiary coinsurance under section 1847A(i)(5) of the Act and amounts paid under section 1833(a)(1)(EE) of the Act.\11\ For additional information regarding implementation of section 11101 of the IRA, please see the inflation rebates resources page at https://www.cms.gov/inflation-reduction-act-and-medicare/inflation-rebates-medicare. --------------------------------------------------------------------------- \9\ https://www.cms.gov/files/document/medicare-part-b-inflation-rebate-program-initial-guidance.pdf. \10\ https://www.cms.gov/files/document/medicare-part-b-inflation-rebate-program-revised-guidance.pdf. \11\ In addition, beginning with the April 2023 ASP Drug Pricing file, the file includes the coinsurance percentage for each drug and specifies ``inflation-adjusted coinsurance'' in the ``Notes'' column if the coinsurance for a drug is less than 20 percent of the Medicare Part B payment amount. Drug pricing files are available at https://www.cms.gov/medicare/medicare-fee-for-service-part-b-drugs/mcrpartbdrugavgsalesprice. --------------------------------------------------------------------------- Section 11101(b) of the IRA amended sections 1833(i) and 1833(t)(8) of the Act by adding a new paragraph (9) and subparagraph (F), respectively. Section 1833(i)(9) of the Act requires under the ASC payment system that, in the case of a Part B rebatable drug for which payment is not packaged into a payment for a service, in lieu of calculation of coinsurance that would otherwise apply under the ASC payment system, the provisions of section 1847A(i)(5) of the Act shall, as determined appropriate by the Secretary, apply for calculation of beneficiary coinsurance in the same manner as the provisions of section 1847A(i)(5) of the Act apply under that section. Similarly, section 1833(t)(8)(F) of the Act requires under the OPPS that in the case of a Part B rebatable drug (except for a drug that has no copayment applied under subparagraph (E) of such section or for which payment is packaged into the payment for a covered OPD service or group of services), in lieu of the calculation of the copayment amount that would otherwise apply under the OPPS, the provisions of section 1847A(i)(5) of the Act shall, as determined appropriate by the Secretary, apply in the same manner as the provisions of section 1847A(i)(5) of the Act apply under that section. Section 1847A(i)(5) of the Act requires that for Part B rebatable drugs, as defined in section 1847A(i)(2)(A) of the Act, furnished on or after April 1, 2023, in quarters in which the payment amount described in section 1847A(i)(3)(A)(ii)(I) of the Act (or, in the case of selected drugs described under section 1192(c) of the Act, the payment amount described in section 1847A(b)(1)(B) of the Act), exceeds the inflation-adjusted payment amount determined in accordance with section 1847A(i)(3)(C) of the Act, the coinsurance will be 20 percent of the inflation-adjusted payment amount for such quarter (hereafter, the inflation-adjusted coinsurance amount). This inflation- adjusted coinsurance amount is applied as a percent, as determined by the Secretary, to the payment amount that would otherwise apply for such calendar quarter in accordance with section 1847A(b)(1)(B) or (C) of the Act, as applicable, including in the case of a selected drug described under section 1192(c) of the Act. Paragraph (9) of section 1833(i) of the Act and subparagraph (F) of section 1833(t)(8) of the Act, as added by section 11101(b) of the IRA, also provide that in lieu of the amounts of payment otherwise applicable under the ASC payment system and the OPPS, the provisions of paragraph (1)(EE) of subsection (a) of section 1833 of the Act shall apply, as determined appropriate by the Secretary. Section 11101(b) of the IRA amended section 1833(a)(1) of the Act by adding a new subparagraph (EE), which requires that if the payment amount under section 1847A(i)(3)(A)(ii)(I) of the Act or, in the case of a selected drug described under section 1192(c) of the Act, the payment amount described in section 1847A(b)(1)(B) of the Act, for that drug exceeds the inflation-adjusted payment amount for a Part B rebatable drug, the Part B payment amount would, subject to the Part B deductible and sequestration, equal the difference between such payment amount and the inflation-adjusted coinsurance amount. Consistent with the policy adopted in section 40 of the revised Medicare Part B Drug Inflation Rebate Guidance, the calculation to determine the applicable beneficiary coinsurance amount would not be adjusted for sequestration. CMS codified the Medicare payment for Part B rebatable drugs in the CY 2024 PFS final rule by adding new paragraph (m) to Sec. 410.152 (88 FR 79043). In the CY 2024 OPPS/ASC final rule with comment period (88 FR 81594), we codified the OPPS program payment and cost as required by section 1833(t)(8)(F) of the Act by adding a new paragraph (e) to Sec. 419.41, which cross-references the regulations adopted in the CY 2024 PFS final rule (Sec. Sec. 410.152(m) and 489.30(b)(6)). We [[Page 53507]] also amended the regulation text to reflect our longstanding policies for calculating the Medicare program payment and cost sharing amounts for separately payable drugs and biologicals by adding a new paragraph (d) to Sec. 419.41. Similarly, we codified the ASC cost sharing amounts for Part B rebatable drugs as required by section 1833(i)(9) of the Act by revising Sec. 416.172(d) to include a cross-reference to 42 CFR 489.30(b)(6), which codified the cost sharing amounts for Part B rebatable drugs with prices increasing at a rate faster than inflation. In the CY 2025 PFS final rule (89 FR 98228 through 98275), we codified regulations implementing section 11101 of the IRA in newly added 42 CFR part 427, chapter IV, including new provisions at Sec. Sec. 427.200 and 427.201 to codify the policies regarding the computation of the inflation-adjusted beneficiary coinsurance, defined in Sec. 427.200, for Part B rebatable drugs as required by section 1847A(i)(5) of the Act. As finalized, Sec. 427.201(a) establishes that CMS will use the methodology established in such section to calculate the inflation-adjusted beneficiary coinsurance and associated adjusted Medicare payment percentage and incorporates references to the existing provisions at Sec. Sec. 410.152(m), 419.41(e), and 489.30(b)(6). Section 427.201(c) provides that any category of products that is excluded from the identification of Part B rebatable drugs at Sec. 427.101(b) is not subject to the inflation-adjusted beneficiary coinsurance. Examples of these excluded products include separately payable radiopharmaceuticals, skin substitute products, and qualifying biosimilar biological products. Section 427.201(b) sets forth the calculation of the inflation- adjusted beneficiary coinsurance. We will compare the payment amount in paragraph (b)(3) of such section to the inflation-adjusted payment amount for an applicable calendar quarter; if the payment amount exceeds the inflation-adjusted payment amount, the inflation-adjusted beneficiary coinsurance is calculated by multiplying the inflation- adjusted payment amount by 0.20. Section 427.201(b)(3) specifies that CMS will use the published payment amount in quarterly pricing files \12 13 14\ to determine if a Part B rebatable drug should have an adjusted beneficiary coinsurance. If so, such adjusted beneficiary coinsurance shall be equal to 20 percent of the inflation-adjusted payment amount as described in section 1847A(i)(3)(C) of the Act for a calendar quarter. This approach deviates from the rebate calculation approach set forth in Sec. 427.302, which relies on the specified amount defined at Sec. 427.20 even when the specified amount and the published payment amount in quarterly pricing files differ. --------------------------------------------------------------------------- \12\ See: https://www.cms.gov/medicare/payment/part-b-drugs/asp-pricing-files. \13\ See: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/addendum-a-b-updates. \14\ See: https://www.cms.gov/medicare/payment/prospective-payment-systems/ambulatory-surgical-center-asc/asc-payment-rates-addenda. --------------------------------------------------------------------------- We note that the cost sharing amounts of rebatable drugs paid under the OPPS published in the quarterly Addendum A and B updates reflect the inflation-adjusted coinsurance applied as a percent of the payment amount that would otherwise apply in accordance with section 1847A(b)(1)(B) or (C) of the Act, as determined by the Secretary pursuant to 1847A(i)(5) of the Act using the methodology in Sec. 427.201. As we explained in the CY 2025 PFS final rule (89 FR 98237), this policy is intended to hold beneficiaries harmless in situations where the payment amount is calculated differently from the specified amount, and we believe this approach is consistent with the statutory language and appropriately reflects the differences in the statutory text of section 1847A(i)(5) of the Act, which sets forth the payment amount that is used to determine whether coinsurance should be adjusted, and section 1847A(i)(3)(A) of the Act, which sets forth the ``specified amount'' used to determine rebate amounts. We refer readers to the full discussion at 89 FR 98237 and 98238 for additional details. 2. OPPS Copayment Policy For CY 2026, we proposed to determine copayment amounts for new and revised APCs using the same methodology that we implemented beginning in CY 2004. We refer readers to the November 7, 2003 OPPS final rule with comment period for a discussion of that methodology (68 FR 63458). In addition, we proposed to use the same standard rounding principles that we have historically used in instances where the application of our standard copayment methodology would result in a copayment amount that is less than 20 percent and cannot be rounded, under standard rounding principles, to 20 percent. We refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66687) in which we discuss our rationale for applying these rounding principles. The final national unadjusted copayment amounts for services payable under the OPPS that would be effective January 1, 2026, are included in Addenda A and B to this final rule with comment period (which are available via the internet on the CMS website). As discussed in section XIV.E. of this final rule with comment period, for CY 2026, the Medicare beneficiary's minimum unadjusted copayment and national unadjusted copayment for a service to which a reduced national unadjusted payment rate applies will equal the product of the reporting ratio and the national unadjusted copayment, or the product of the reporting ratio and the minimum unadjusted copayment, respectively, for the service. We note that OPPS copayments may increase or decrease each year based on changes in the calculated APC payment rates, due to updated cost report and claims data, and any changes to the OPPS cost modeling process. However, as described in the CY 2004 OPPS final rule with comment period, the development of the copayment methodology generally moves beneficiary copayments closer to 20 percent of OPPS APC payments (68 FR 63458 through 63459). In the CY 2004 OPPS final rule with comment period (68 FR 63459), we adopted a new methodology to calculate unadjusted copayment amounts in situations including reorganizing APCs, and we finalized the following rules to determine copayment amounts in CY 2004 and subsequent years. When an APC group consists solely of HCPCS codes that were not paid under the OPPS the prior year because they were packaged or excluded or are new codes, the unadjusted copayment amount would be 20 percent of the APC payment rate. If a new APC that did not exist during the prior year is created and consists of HCPCS codes previously assigned to other APCs, the copayment amount is calculated as the product of the APC payment rate and the lowest coinsurance percentage of the codes comprising the new APC. If no codes are added to or removed from an APC and, after recalibration of its relative payment weight, the new payment rate is equal to or greater than the prior year's rate, the copayment amount remains constant (unless the resulting coinsurance percentage is less than 20 percent). If no codes are added to or removed from an APC and, after recalibration of its relative payment weight, the new payment rate is less than the prior year's rate, the copayment amount is calculated as the product of the new payment rate and the prior year's coinsurance percentage. If HCPCS codes are added to or deleted from an APC and, after [[Page 53508]] recalibrating its relative payment weight, holding its unadjusted copayment amount constant results in a decrease in the coinsurance percentage for the reconfigured APC, the copayment amount would not change (unless retaining the copayment amount would result in a coinsurance rate less than 20 percent). If HCPCS codes are added to an APC and, after recalibrating its relative payment weight, holding its unadjusted copayment amount constant results in an increase in the coinsurance percentage for the reconfigured APC, the copayment amount would be calculated as the product of the payment rate of the reconfigured APC and the lowest coinsurance percentage of the codes being added to the reconfigured APC. We noted in the CY 2004 OPPS final rule with comment period that we would seek to lower the copayment percentage for a service in an APC from the prior year if the copayment percentage was greater than 20 percent. We noted that this principle was consistent with section 1833(t)(8)(C)(ii) of the Act, which accelerates the reduction in the national unadjusted coinsurance rate so that beneficiary liability will eventually equal 20 percent of the OPPS payment rate for all OPPS services to which a copayment applies, and with section 1833(t)(3)(B) of the Act, which achieves a 20 percent copayment percentage when fully phased in and gives the Secretary the authority to set rules for determining copayment amounts for new services. We further noted that the use of this methodology would, in general, reduce the beneficiary coinsurance rate and copayment amount for APCs for which the payment rate changes as the result of the reconfiguration of APCs and/or recalibration of relative payment weights (68 FR 63459). We did not receive any public comments on our proposal and we are finalizing our proposal to determine copayment amounts for new and revised APCs using the same methodology that we implemented beginning in CY 2004. The finalized national unadjusted copayment amounts for services payable under the OPPS that will be effective January 1, 2026, are included in Addenda A and B to the CY 2026 OPPS/ASC final rule (which are available on the CMS website). 3. Calculation of an Adjusted Copayment Amount for an APC Group Individuals interested in calculating the national copayment liability for a Medicare beneficiary for a given service provided by a hospital that met or failed to meet its Hospital OQR Program requirements should follow the formulas presented in the following steps. Step 1. Calculate the beneficiary payment percentage for the APC by dividing the APC's national unadjusted copayment by its proposed payment rate. For example, using APC 5071, $144.69 is 20 percent of the full national unadjusted payment rate of $723.47. For APCs with only a minimum unadjusted copayment in Addenda A and B to this final rule with comment period (which are available via the internet on the CMS website), the beneficiary payment percentage is 20 percent. The formula below is a mathematical representation of Step 1 and calculates the national copayment as a percentage of national payment for a given service. B is the beneficiary payment percentage. B = National unadjusted copayment for APC/national unadjusted payment rate for APC. Step 2. Calculate the appropriate wage-adjusted payment rate for the APC for the provider in question, as indicated in Steps 2 through 4 under section II.H. of this final rule with comment period. Calculate the rural adjustment for eligible providers, as indicated in Step 6 under section II.H. of this final rule with comment period. Step 3. Multiply the percentage calculated in Step 1 by the payment rate calculated in Step 2. The result is the wage-adjusted copayment amount for the APC. The formula below is a mathematical representation of Step 3 and applies the beneficiary payment percentage to the adjusted payment rate for a service calculated under section II.H. of this final rule with comment period, with and without the rural adjustment, to calculate the adjusted beneficiary copayment for a given service. Wage-adjusted copayment amount for the APC = Adjusted Medicare Payment * B. Wage-adjusted copayment amount for the APC (SCH or EACH) = (Adjusted Medicare Payment * 1.071) * B. Step 4. For a hospital that failed to meet its Hospital OQR Program requirements, multiply the copayment calculated in Step 3 by the reporting ratio of 0.9805. The unadjusted copayments for services payable under the OPPS that would be effective January 1, 2026, are shown in Addenda A and B to this final rule with comment period (which are available via the CMS website). We note that the final national unadjusted payment rates and copayment rates shown in Addenda A and B to this final rule with comment period reflect the CY 2026 OPD fee schedule increase factor discussed in section II.B. of this final rule with comment period. In addition, as noted earlier, section 1833(t)(8)(C)(i) of the Act limits the amount of beneficiary copayment that may be collected for a procedure performed in a year to the amount of the inpatient hospital deductible for that year. We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: Several commenters requested CMS reconsider the coinsurance policy for diagnostic radiopharmaceuticals on pass-through status, that are above the radiopharmaceutical packaging threshold. The commenters disagreed that these radiopharmaceuticals are no longer considered policy-packaged under Sec. 419.2(b)(15) and instead, treated like separately payable drugs assigned to an APC, and subject to a coinsurance. The commenters believe the coinsurance on diagnostic radiopharmaceuticals on pass-through status will be too financially burdensome for beneficiaries and undermines the intent of the statute and the advantages of having pass-through status. The commenters stated if both pass-through and non-pass-through diagnostic radiopharmaceuticals are subject to coinsurance, the commenters believe the distinction between these categories become meaningless. The commenters request CMS to clarify how the current policy and the cost- sharing calculations for diagnostic radiopharmaceuticals meets the intent of the statute. Response: We disagree with the commenter's interpretation that these diagnostic radiopharmaceuticals would remain policy-packaged under 42 CFR 419.2(b)(15) after we implemented the CY 2025 diagnostic radiopharmaceuticals separate payment policy (89 FR 93948). We consider diagnostic radiopharmaceuticals to be drugs for purposes of pass- through payment (89 FR 94226). We note the copayment for pass-through drugs depends on their OPPS payment status absent pass-through status. For example, if a drug is policy-packaged, the pass-through payment amount is equal to a payment rate calculated using the ASP methodology (89 FR 94226). In accordance with section 1833(t)(8) of the Act, there is no copayment on the pass-through payment amount. Therefore, policy packaged drugs have a zero-dollar copayment amount when granted OPPS drug pass-through status. [[Page 53509]] However, for those drugs that do not fall into the category of policy packaged drugs, those drugs are separately payable drugs in the OPPS. The pass-through amount is the difference between the amount authorized under section 1842(o) of the Act, which is generally ASP plus 6 percent, and the portion of the otherwise applicable OPD fee schedule, which is also generally ASP plus 6 percent, is $0 (89 FR 94225 through 94226). We reiterate that the copayment for pass-through drugs depends on their OPPS payment status absent pass-through status. Therefore, the copay amount, absent pass-through status, under the OPD fee are still subject to the co-insurance established by section 1833(t)(3)(B) of the Act and Sec. 419.41(d) for separately payable drugs. We refer readers to the CY 2026 OPPS/ASC proposed rule for further discussion on pass- through payment for drugs, biologicals, and radiopharmaceuticals (90 FR 33614). We also note that the co-insurance for a separately payable drug under the OPPS shall not exceed the amount of inpatient hospital deductible for that year. Comment: One commenter suggested beneficiaries should not be responsible for drug pricing increases and that CMS should limit or eliminate cost-sharing for beneficiaries, citing the unintended consequences and negative effects on access to health care and health outcomes (such as reduced use of medically necessary services), and increased use of emergency rooms. Response: We thank the commenter for the input. We note that the beneficiary copayment is established by section 1833(t)(3)(B) of the Act and Sec. 419.41(d). Section 1833(t)(8)(F) of the Act provides for an adjustment to the beneficiary coinsurance for Part B drugs and biologicals that are not packaged into payment for an OPD service with prices that have increased faster than the rate of inflation beginning April 1, 2023. In the CY 2024 OPPS/ASC final rule with comment period and the CY 2024 PFS final rule, we codified this inflation-adjusted coinsurance amount at Sec. Sec. 419.41(e), 410.152(m), and 489.30(b)(6), respectively. For these drugs and biologicals, the beneficiary coinsurance is 20 percent of the inflation-adjusted payment amount, which is less than what the beneficiary would pay in coinsurance otherwise. Therefore, beneficiaries are insulated from coinsurance amounts calculated based on drug prices that outpace inflation. More information about the beneficiary coinsurance adjustment and the Medicare Part B Inflation Rebate Program is available at https://www.cms.gov/inflation-reduction-act-and-medicare/inflation-rebates-medicare.

A. OPPS Treatment of New and Revised HCPCS Codes

Payments for OPPS procedures, services, and items are generally based on medical billing codes, specifically, Healthcare Common Procedure Coding System (HCPCS) codes, that are reported on hospital outpatient department (HOPD) claims. HCPCS codes are used to report surgical procedures, medical services, items, and supplies under the hospital OPPS. The HCPCS is divided into two principal subsystems, referred to as Level I and Level II of the HCPCS. Level I is comprised of CPT (Current Procedural Terminology) codes, a numeric and alphanumeric coding system that is established and maintained by the American Medical Association (AMA), and consists of Category I, II, III, MAAA, and PLA CPT codes. Level II, which is established and maintained by CMS, is a standardized coding system that is used primarily to identify products, supplies, and services not included in the CPT codes. Together, Level I and II HCPCS codes are used to report procedures, services, items, and supplies under the OPPS payment system. Specifically, we recognize the following codes on OPPS claims: Category I CPT codes, which describe surgical procedures, diagnostic and therapeutic services, and vaccine codes; Category III CPT codes, which describe new and emerging technologies, services, and procedures; MAAA CPT codes, which describe laboratory multianalyte assays with algorithmic analyses (MAA); PLA CPT codes, which describe proprietary laboratory analyses (PLA) services; and Level II HCPCS codes (also known as alpha-numeric codes), which are used primarily to identify drugs, devices, supplies, temporary procedures, and services not described by CPT codes. The codes are updated and changed throughout the year. CPT and Level II HCPCS code changes that affect the OPPS are published through the annual rulemaking cycle and through the OPPS quarterly update Change Requests (CRs). Generally, these code changes are effective January 1, April 1, July 1, or October 1. CPT code changes are released by the AMA (via their website) while Level II HCPCS code changes are released to the public via the CMS HCPCS website. CMS recognizes the release of new CPT and Level II HCPCS codes outside of the formal rulemaking process via OPPS quarterly update CRs. Based on our review, we assign the new codes to interim status indicators (SIs) and APCs. These interim assignments are finalized in the OPPS/ASC final rules. This quarterly process offers hospitals access to codes that more accurately describe the items or services furnished and provides payment for these items or services in a timelier manner than if we waited for the annual rulemaking process. We solicit public comments on the new CPT and Level II HCPCS codes, status indicators, and APC assignments through our annual rulemaking process. We note that, under the OPPS, the APC assignment determines the payment rate for an item, procedure, or service. The items, procedures, or services not exclusively paid separately under the hospital OPPS are assigned to appropriate status indicators. Certain payment status indicators provide separate payment while other payment status indicators do not. In section XI. ``CY 2026 Payment Status and Comment Indicators'' of this final rule with comment period, we discuss the various status indicators and comment indicators used under the OPPS. We also provide a complete list of the status indicators and their definitions in Addendum D1 to this final rule with comment period.

1. April 2025 HCPCS Codes Proposed Rule Comment Solicitation

For the April 2025 update, 104 new HCPCS codes were established and made effective on April 1, 2025. Through the April 2025 OPPS quarterly update CR (Transmittal 13135, Change Request 13993, dated March 20, 2025), we recognized several new HCPCS codes for payment under the OPPS. We solicited public comments on the proposed APC and status indicator assignments for the codes listed in Table 9 (New HCPCS Codes Effective April 1, 2025) of the CY 2026 OPPS/ASC proposed rule (90 FR 33525 through 33528), which are also displayed in Table 12. We received some public comments on the proposed OPPS APC and SI assignments for the new Level II HCPCS codes that were effective on April 1, 2025. The comments and our responses are addressed in the applicable sections of this final rule with comment period, which include, but are not limited to sections III.C. (New Technology APCs); III.E. (OPPS APC-Specific Policies); and IV. (OPPS Payment for Devices). For [[Page 53510]] those April 2025 codes for which we received no comments, we are finalizing the proposed APC and status indicator assignments as proposed. In addition, in prior years we included the final OPPS status indicators and APC assignments in the coding preamble tables, however, because the same information can be found in Addendum B, we no longer include them in Table 12. Therefore, readers are advised to refer to the OPPS Addendum B for the final OPPS status indicators, APC assignments, and payment rates for all codes reportable under the hospital OPPS. These new codes that were effective April 1, 2025, were assigned to comment indicator ``NP'' in Addendum B to the CY 2026 OPPS/ APC proposed rule to indicate that the codes are assigned to an interim APC assignment and comments would be accepted on their interim APC assignments. The complete list of status indicators and definitions used under the OPPS can be found in Addendum D1 to this final rule with comment period, while the complete list of comment indicators and definitions can be found in Addendum D2 to this final rule with comment period. We note that OPPS Addendum B (OPPS payment file by HCPCS code), Addendum D1 (OPPS Status Indicators), and Addendum D2 (OPPS Comment Indicators) are available via the internet on the CMS website. BILLING CODE 4120-01-P [[Page 53511]] [GRAPHIC] [TIFF OMITTED] TR25NO25.019 [[Page 53512]] [GRAPHIC] [TIFF OMITTED] TR25NO25.020 [[Page 53513]] [GRAPHIC] [TIFF OMITTED] TR25NO25.021 [[Page 53514]] [GRAPHIC] [TIFF OMITTED] TR25NO25.022 BILLING CODE 4120-01-C

2. July 2025 HCPCS Codes Proposed Rule Comment Solicitation

For the July 2025 update, 110 new codes were established and made effective July 1, 2025. Through the July 2025 OPPS quarterly update CR (Transmittal 13258, Change Request 14091, dated June 23, 2025) we recognized several new codes for payment and assigned them to appropriate interim OPPS status indicators and APCs. We solicited public comments on the proposed APC and status indicator assignments for the codes listed in Table 10 (New HCPCS Codes Effective July 1, 2025) of the CY 2026 OPPS/ASC proposed rule (90 FR 33529 through 33533), which are also listed in Table 13. We received some public comments on the proposed OPPS APC and SI assignments for the new Level II HCPCS codes implemented on July 1, 2025. The comments and our responses are addressed in pertinent sections of this final rule with comment period, which include, but are not limited to sections III.C (New Technology APCs); III.E (OPPS APC- Specific Policies); and IV (OPPS Payment for Devices). For those July 1, 2025, codes for which we received no comments, we are finalizing the proposed APC and status indicator assignments. Additionally, we note that in prior years we included the final OPPS status indicators and APC assignments in the coding preamble tables, however, because the same information can be found in Addendum B, we no longer include them in Table 13. Therefore, readers are advised to refer to the OPPS Addendum B for the final OPPS status indicators, APC assignments, and payment rates for all codes reportable under the OPPS. These new codes that were effective July 1, 2025, were assigned to comment indicator ``NP'' in Addendum B to the CY 2026 OPPS/ASC proposed rule to indicate that the codes are assigned to an interim APC assignment and comments would be accepted on their interim APC assignments. The complete list of status indicators and definitions used under the OPPS can be found in Addendum D1 to this final rule with comment period, while the complete list of comment indicators and definitions can be found in Addendum D2 to this final rule with comment period. We note that OPPS Addendum B (OPPS payment file by HCPCS code), Addendum D1 (OPPS Status Indicators), and Addendum D2 (OPPS Comment Indicators) are available via the internet on the CMS website. BILLING CODE 4120-01-P [[Page 53515]] [GRAPHIC] [TIFF OMITTED] TR25NO25.023 [[Page 53516]] [GRAPHIC] [TIFF OMITTED] TR25NO25.024 [[Page 53517]] [GRAPHIC] [TIFF OMITTED] TR25NO25.025 [[Page 53518]] [GRAPHIC] [TIFF OMITTED] TR25NO25.026 [[Page 53519]] [GRAPHIC] [TIFF OMITTED] TR25NO25.027 BILLING CODE 4120-01-C [[Page 53520]]

3. October 2025 HCPCS Codes Final Rule Comment Solicitation

For the October 2025 update, 100 codes were established and made effective October 1, 2025. Through the October 2025 OPPS quarterly update CR (Transmittal 13425, Change Request 14223, dated September 22, 2025), we recognized several new codes for separate payment and assigned them to appropriate interim OPPS status indicators and APCs. For CY 2026, consistent with our established policy, we proposed in the CY 2026 OPPS/ASC proposed rule (90 FR 33533) that the HCPCS codes that would be effective October 1, 2025, would be flagged with comment indicator ``N1'' in Addendum B to the CY 2026 OPPS/ASC final rule with comment period to indicate that we have assigned the codes to interim OPPS status indicators for CY 2026. Table 14 lists the codes that were effective October 1, 2025. We note that several of the temporary C- codes have been replaced with permanent J-codes effective January 1, 2026. We are inviting public comments in this final rule with comment period on the interim payment indicators, which will be finalized in the CY 2027 OPPS/ASC final rule with comment period. We note the proposed APC assignments and status indicators for these same codes will be subject to comment in the CY 2027 OPPS/ASC proposed rule with comment period and will be finalized in the CY 2027 OPPS/ASC final rule with comment period. BILLING CODE 4120-01-P [[Page 53521]] [GRAPHIC] [TIFF OMITTED] TR25NO25.028 [[Page 53522]] [GRAPHIC] [TIFF OMITTED] TR25NO25.029 [[Page 53523]] [GRAPHIC] [TIFF OMITTED] TR25NO25.030 [[Page 53524]] [GRAPHIC] [TIFF OMITTED] TR25NO25.031 [[Page 53525]] [GRAPHIC] [TIFF OMITTED] TR25NO25.032 BILLING CODE 4120-01-C

4. January 2026 HCPCS Codes

a. New Level II HCPCS Codes Final Rule Comment Solicitation Consistent with past practice, we are soliciting comments on the new Level II HCPCS codes that will be effective January 1, 2026, in the CY 2026 OPPS/ASC final rule with comment period, thereby allowing us to finalize the status indicators and APC assignments for the codes in the CY 2027 OPPS/ASC final rule with comment period. Unlike the CPT codes that are effective January 1 and are included in the OPPS/ASC proposed rules, and except for the proposed new C-codes and G-codes listed in Addendum O of the CY 2026 OPPS/ASC proposed rule, most Level II HCPCS codes are not released until sometime around November to be effective January 1. Because these codes are not available until November, we were unable to include them in the OPPS/ASC proposed rules. Consequently, for CY 2026, we proposed to include the new Level II HCPCS codes that will be effective January 1, 2026 (that would be incorporated in the January 2026 OPPS quarterly update CR), in Addendum B to the CY 2026 OPPS/ASC final rule with comment period. Specifically, for CY 2026, we proposed to continue our established policy of assigning comment indicator ``N1'' in Addendum B to this final rule with comment period to the new HCPCS codes that will be effective January 1, 2026, to indicate that we are assigning them an interim status indicator, which is subject to public comment. We are inviting public comments in this final rule with comment period on the status indicators and APC assignments, which would then be finalized in the CY 2027 OPPS/ASC final rule with comment period. Similar to the codes effective October 1, 2025, the proposed APC assignments and status indicators for these new Level II HCPCS codes that will be effective January 1, 2026, will also be subject to comment in the CY 2027 OPPS/ ASC proposed rule, and will be finalized in the CY 2027 OPPS/ASC final rule with comment period. b. New CPT Codes Proposed Rule Comment Solicitation In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66841 through 66844), we finalized a revised process of assigning APC and status indicators for new and revised Category I and III CPT codes that would be effective January 1. Specifically, for the new/revised CPT codes that we receive in a timely manner from the AMA's CPT Editorial Panel, we finalized our proposal to include the codes that would be effective January 1 in the OPPS/ASC proposed rules, along with proposed APC and status indicator assignments for them, and to finalize the APC and status indicator assignments in the OPPS/ASC final rules beginning with the CY 2016 OPPS update. For those new/revised CPT codes that were received too late for inclusion in the OPPS/ASC proposed rule, we finalized our proposal to establish and use HCPCS G-codes that mirror the predecessor CPT codes and retain the current APC and status indicator assignments for a year until we can propose APC and status indicator assignments in the following year's rulemaking cycle. We note that even if we find that we need to create HCPCS G-codes in place of certain CPT codes for the PFS proposed rule, we do not anticipate that these HCPCS G-codes will always be necessary for OPPS purposes. We will make every effort to include proposed APC and status indicator assignments for all new and revised CPT codes that the AMA makes publicly available in time for us to include them in the proposed rule, and to avoid resorting to use of HCPCS G-codes and the resulting delay in utilization of the most current CPT codes. Also, we finalized our proposal to make interim APC and status indicator assignments for CPT codes that are not available in time for the proposed rule and that describe wholly new services (such as new technologies or new surgical procedures), to solicit public comments in the final rule, and [[Page 53526]] to finalize the specific APC and status indicator assignments for those codes in the following year's rule. For the CY 2026 OPPS update, we received the CPT codes that will be effective January 1, 2026, from the AMA in time to be included in the CY 2026 OPPS/ASC proposed rule. The new, revised, and deleted CPT codes can be found in Addendum B to the proposed rule (which is available via the internet on the CMS website). We note that the new and revised CPT codes are assigned to comment indicator ``NP'' in Addendum B to the proposed rule to indicate that the code is new for the next calendar year or the code is an existing code with substantial revision to its code descriptor in the next calendar year as compared to the current calendar year with a proposed APC assignment, and that comments would be accepted on the proposed APC assignment and status indicator. Further, we noted that the CPT code descriptors that appeared in Addendum B were short descriptors and did not accurately describe the complete procedure, service, or item described by the CPT code. Therefore, we included the 5-digit placeholder codes and the long descriptors for the new and revised CY 2026 CPT codes in Addendum O to the CY 2026 OPPS/ASC proposed rule (which is available via the internet on the CMS website) so that the public could adequately comment on the proposed APCs and SI assignments. The 5-digit placeholder codes were included in Addendum O to the CY 2026 OPPS/ASC proposed rule, specifically under the column labeled ``CY 2026 OPPS/ASC Proposed Rule 5-Digit AMA/CMS Placeholder Code.'' We noted that the final CPT code numbers would be included in this CY 2026 OPPS/ASC final rule with comment period. We also noted that not every code listed in Addendum O is subject to public comment. For the new and revised Category I and III CPT codes, we requested public comments on only those codes that are assigned comment indicator ``NP''. In summary, in the CY 2026 OPPS/ASC proposed rule, we solicited public comments on the proposed CY 2026 status indicators and APC assignments for the new and revised CPT codes that would be effective January 1, 2026. The CPT codes listed in Addendum B to the CY 2026 OPPS/ASC proposed rule appear with short descriptors only. We listed them again, with long descriptors, in Addendum O to the CY 2026 OPPS/ ASC proposed rule. We also proposed to finalize the status indicator and APC assignments for these codes (with their final CPT code numbers) in the CY 2026 OPPS/ASC final rule with comment period. The proposed status indicator and APC assignments for these codes were included in Addendum B to the CY 2026 OPPS/ASC proposed rule (which is available via the internet on the CMS website). We received comments on several of the new CPT codes that were assigned to comment indicator ``NP'' in Addendum B to the CY 2026 OPPS/ASC proposed rule. We have responded to those public comments in sections III.C., III.E., and IV. of this final rule with comment period. The final SIs, APC assignments, and payment rates for the new CPT codes that are effective January 1, 2026, can be found in Addendum B to this final rule with comment period. In addition, the SI definitions can be found in Addendum D1 to this final rule with comment period. Addenda B and D1 are available via the internet on the CMS website. Finally, Table 15, which is a reprint of Table 11 from the CY 2026 OPPS/ASC proposed rule (90 FR 33535), shows the comment timeframe for new and revised HCPCS codes. The table provides information on our current process for updating codes through our OPPS quarterly update CRs, seeking public comments, and finalizing the treatment of these codes under the OPPS. [GRAPHIC] [TIFF OMITTED] TR25NO25.033 [[Page 53527]]

1. Background

Section 1833(t)(2)(A) of the Act requires the Secretary to develop a classification system for covered hospital outpatient department services. In addition, section 1833(t)(2)(B) of the Act provides that the Secretary may establish groups of covered OPD services within this classification system, so that services classified within each group are comparable clinically and with respect to the use of resources. In accordance with these provisions, we developed a grouping classification system, referred to as Ambulatory Payment Classifications (APCs), as set forth in regulations at 42 CFR 419.31. We use Level I (also known as CPT codes) and Level II HCPCS codes (also known as alphanumeric codes) to identify and group the services within each APC. The APCs are organized such that each group is homogeneous both clinically and in terms of resource use. Using this classification system, we have established distinct groups of similar services. We also have developed separate APC groups for certain medical devices, drugs, biologicals, therapeutic radiopharmaceuticals, and brachytherapy devices that are not packaged into the payment for the procedure. We have packaged into the payment for each procedure or service within an APC group, the costs associated with those items and services that are typically ancillary and supportive to a primary diagnostic or therapeutic modality and, in those cases, are an integral part of the primary service they support. Therefore, we do not make separate payment for these packaged items or services. In general, packaged items and services include, but are not limited to, the items and services listed in regulations at 42 CFR 419.2(b). A further discussion of packaged services is included in section II.A.3. of this final rule with comment period. Under the OPPS, we generally pay for covered hospital outpatient services on a rate-per-service basis, where the service may be reported with one or more HCPCS codes. Payment varies according to the APC group to which the independent service or combination of services is assigned. For CY 2026, we proposed that each APC relative payment weight represents the hospital cost of the services included in that APC, relative to the hospital cost of the services included in APC 5012 (Clinic Visits and Related Services). The APC relative payment weights are scaled to APC 5012 because it is the hospital clinic visit APC and clinic visits are among the most frequently furnished services in the hospital outpatient setting.

2. Application of the 2 Times Rule

Section 1833(t)(9)(A) of the Act requires the Secretary to review, not less often than annually, and revise the APC groups, the relative payment weights, and the wage and other adjustments described in section 1833(t)(2) of the Act to consider changes in medical practice, changes in technology, the addition of new services, new cost data, and other relevant information and factors. Section 1833(t)(9)(A) of the Act also requires the Secretary to consult with an expert outside advisory panel composed of an appropriate selection of representatives of providers to review (and advise the Secretary concerning) the clinical integrity of the APC groups and the relative payment weights. We note that the Advisory Panel on Hospital Outpatient Payment (also known as the HOP Panel or the Panel) recommendations for specific services for the CY 2026 OPPS update will be discussed in the relevant specific sections throughout this final rule with comment period. In addition, section 1833(t)(2) of the Act provides that, subject to certain exceptions, the items and services within an APC group cannot be considered comparable regarding the use of resources if the highest cost for an item or service in the group is more than 2 times greater than the lowest cost for an item or service within the same group (referred to as the ``2 times rule''). The statute authorizes the Secretary to make exceptions to the 2 times rule in unusual cases, such as for low-volume items and services (but the Secretary may not make such an exception in the case of a drug or biological that has been designated as an orphan drug under section 526 of the Federal Food, Drug, and Cosmetic Act). In determining the APCs with a 2 times rule violation, we consider only those HCPCS codes that are significant based on the number of claims. We note that, for purposes of identifying significant procedure codes for examination under the 2 times rule, we consider procedure codes that have more than 1,000 single major claims or procedure codes that both have more than 99 single major claims and contribute at least 2 percent of the single major claims used to establish the APC cost to be significant (75 FR 71832). This longstanding definition of when a procedure code is significant for purposes of the 2 times rule was selected because we believe that a subset of 1,000 or fewer claims is negligible within the set of approximately 100 million single procedure or single session claims we use for establishing costs. Similarly, a procedure code for which there are fewer than 99 single claims and that comprises less than 2 percent of the single major claims within an APC will have a negligible impact on the APC cost (75 FR 71832). In the CY 2026 OPPS/ ASC proposed rule, we proposed to make exceptions to this limit on the variation of costs within each APC group in unusual cases, such as for certain low-volume items and services. For the CY 2026 OPPS update, we identified the APCs with violations of the 2 times rule, and we proposed changes to the procedure codes assigned to these APCs (with the exception of those APCs for which we proposed a 2 times rule exception) in Addendum B to the CY 2026 OPPS/ ASC proposed rule. We note that Addendum B does not appear in the printed version of the Federal Register as part of this final rule with comment period. Rather, it is published and made available via the internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices. To eliminate a violation of the 2 times rule and improve clinical and resource homogeneity in the APCs for which we did not propose a 2 times rule exception, we proposed to reassign these procedure codes to new APCs that contain services that are similar with regard to both their clinical and resource characteristics. In many cases, the proposed procedure code reassignments and associated APC reconfigurations for CY 2026 included in the CY 2026 OPPS/ASC proposed rule are related to changes in costs of services that were observed in the CY 2024 claims data available for CY 2026 ratesetting. Addendum B to the CY 2026 OPPS/ASC proposed rule identifies with a comment indicator ``CH'' those procedure codes for which we proposed a change to the APC assignment or status indicator, or both, that were initially assigned in the July 1, 2025, OPPS Addendum B Update, which is available via the internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/addendum-a-b-update.

3. APC Exceptions to the 2 Times Rule

While considering the APC changes that we proposed for CY 2026, we reviewed all of the APCs for which we identified 2 times rule violations to determine whether any of the APCs [[Page 53528]] would qualify for an exception. We used the following criteria to evaluate whether to propose exceptions to the 2 times rule for affected APCs: Resource homogeneity; Clinical homogeneity; Hospital outpatient setting utilization; Frequency of service (volume); and Opportunity for upcoding and code fragments. For a detailed discussion of these criteria, we refer readers to the April 7, 2000 final rule (65 FR 18457 through 18458). Based on the CY 2024 claims data available for the CY 2026 OPPS/ASC proposed rule, we found 26 APCs with violations of the 2 times rule. We applied the criteria as described above to identify the APCs for which we proposed to make exceptions under the 2 times rule for CY 2026 and found that all of the 26 APCs we identified meet the criteria for an exception to the 2 times rule based on the CY 2024 claims data available for the CY 2026 OPPS/ASC proposed rule. We note that, on an annual basis, based on our analysis of the latest claims data, we identify violations to the 2 times rule and propose changes when appropriate. Those APCs that violate the 2 times rule are identified and appear in Table 16. In addition, we did not include in that determination those APCs where a 2 times rule violation was not a relevant concept, such as APC 5401 (Dialysis), which only has two HCPCS codes assigned to it that have similar geometric mean costs and do not create a 2 times rule violation. Therefore, we have only identified those APCs, including those with criteria-based costs, such as device- dependent CPT/HCPCS codes, with violations of the 2 times rule, where a 2 times rule violation is a relevant concept. Table 12 of the CY 2026 OPPS/ASC proposed rule (90 FR 33537) listed the APCs for which we proposed to make an exception under the 2 times rule for CY 2026 based on the criteria cited above and claims data submitted between January 1, 2024, and December 31, 2024, and CCRs, if available. The proposed geometric mean costs for covered hospital outpatient services for these and all other APCs that were used in the development of the CY 2026 OPPS/ASC proposed rule can be found via the internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices. Based on the updated final rule CY 2024 claims data used for this final rule with comment period, we found a total of 27APCs with violations of the 2 times rule. Of these 27 total APCs, 24 were identified in the proposed rule and three are newly identified in this final rule with comment period. The following two APCs appeared in Table 12 of the CY 2026 OPPS/ASC proposed rule (90 FR 33537) as violating the 2 times rule. However, after conducting data analysis for this final rule with comment period, we found that the APCs no longer violate the 2 times rule: APC 5613 (Level 3 Therapeutic Radiation Treatment Preparation). APC 5811 (Manipulation Therapy). In addition, the following three APCs are newly identified with 2 times rule violations using updated data for this final rule with comment period: APC 5024 (Level 4 Type A ED Visits). APC 5052 (Level 2 Skin Procedures). APC 5722 (Level 2 Diagnostic Tests and Related Services). We received comments on the APCs located in Table 12 of the CY 2026 OPPS/ASC proposed rule (90 FR 33537), along with comments on APC assignments for specific HCPCS codes. These comments and our responses can be found in section III.E. of this final rule with comment period. Based on our analysis of the CY 2024 costs from hospital claims and cost report data available for this final rule with comment period, we are finalizing our proposals with some modifications. Specifically, we are finalizing our proposal to except the 24 proposed APCs that continue to have 2 times violations in this final rule with comment period data from the 2 times rule for CY 2024 claims data and also except three additional APCs that did not violate the 2 times rule in the CY 2026 OPPS/ASC proposed rule data, but do violate the 2 times rule in this final rule with comment period data, for a total of 27APCs for which we identified 2 times rule violations but that qualify for exceptions. In summary, Table 16 lists the 27 APCs that we are excepting from the 2 times rule for CY 2026 based on the criteria described earlier and a review of updated claims data for dates of service between January 1, 2024, and December 31, 2024, that were processed on or before June 30, 2025, and updated CCRs, if available. We note that, for cases in which a recommendation by the HOP Panel appears to result in or allow a violation of the 2 times rule, we generally accept the HOP Panel's recommendation because those recommendations are based on explicit consideration of resource use, clinical homogeneity, site of service, and the quality of the claims data used to determine the APC payment rates. The geometric mean costs for hospital outpatient services for these and all other APCs that were used in the development of this final rule with comment period can be found via the internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices. [[Page 53529]] [GRAPHIC] [TIFF OMITTED] TR25NO25.034

1. Background

In the CY 2002 OPPS final rule (66 FR 59903), we finalized changes to the time period in which a service can be eligible for payment under a New Technology APC. Beginning in CY 2002, we retain services within New Technology APC groups until we gather sufficient claims data to enable us to assign the service to an appropriate clinical APC. This policy allows us to move a service from a New Technology APC in less than 2 years if sufficient data are available. It also allows us to retain a service in a New Technology APC for more than 2 years if sufficient data upon which to base a decision for reassignment have not been collected. We also adopted in the CY 2002 OPPS final rule the following criteria for assigning a complete or comprehensive service to a New Technology APC: (1) the service must be truly new, meaning it cannot be appropriately reported by an existing HCPCS code assigned to a clinical APC and does not appropriately fit within an existing clinical APC; (2) the service is not eligible for transitional pass-through payment (however, a truly new, comprehensive service could qualify for assignment to a new technology APC even if it involves a device or drug that could, on its own, qualify for pass-through payment); and (3) the service falls within the scope of Medicare benefits under section 1832(a) of the Act and is reasonable and necessary in accordance with section 1862(a)(1)(A) of the Act (66 FR 59898 through 59903). For additional information about our New Technology APC policy, we refer readers to https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthroughpayment on the CMS website and then follow the instructions to access the MEARISTM system for OPPS New Technology APC applications.\15\ --------------------------------------------------------------------------- \15\ Currently approved under OMB control number 0938-0860; expires October 31, 2027. --------------------------------------------------------------------------- In the CY 2004 OPPS final rule with comment period (68 FR 63416), we restructured the New Technology APCs to make the cost intervals more consistent across payment levels and refined the cost bands for these APCs to retain two parallel sets of New Technology APCs: one set with a status indicator of ``S'' (Significant Procedures, Not Discounted when Multiple. Paid under OPPS; separate APC payment) and the other set with a status indicator of ``T'' (Significant Procedure, Multiple Reduction Applies. Paid under OPPS; separate APC payment). These current New Technology APC configurations allow us to price new technology services more appropriately and consistently. For CY 2025, there were 52 New Technology APC levels, ranging from the lowest cost band assigned to APC 1491 (New Technology--Level 1A ($0-$10)) to the highest cost band assigned to APC 1908 (New Technology--Level 52 ($145,001-$160,000)). We note that the cost bands for the New Technology APCs, specifically, APCs 1491 through 1599 and 1901 through 1908, vary with increments ranging from $10 to $14,999. These cost bands identify the APCs to which new technology procedures and services with estimated service costs that fall within those cost bands are [[Page 53530]] assigned under the OPPS. Payment for each APC is made at the mid-point of the APC's assigned cost band. For example, payment for APC 1507 (New Technology--Level 7 ($501-$600)) is made at $550.50. Under the OPPS, one of our goals is to make payments that are appropriate for the services that are necessary for the treatment of Medicare beneficiaries. The OPPS, like other Medicare payment systems, is budget neutral and increases are limited to the annual hospital market basket increase reduced by the productivity adjustment. We believe that our payment rates reflect the costs that are associated with providing care to Medicare beneficiaries and are adequate to ensure access to services (80 FR 70374). For many emerging technologies, there is a transitional period during which utilization may be low, often because providers are first learning about the technologies and their clinical utility. Quite often, parties request that Medicare make higher payments under the New Technology APCs for new procedures in that transitional phase. These requests, and their accompanying estimates for expected total patient utilization, often reflect very low rates of patient use of expensive equipment, resulting in high per-use costs for which requesters believe Medicare should make full payment. Medicare does not, and we believe should not, assume responsibility for more than its share of the costs of procedures based on projected utilization for Medicare beneficiaries and does not set its payment rates based on initial projections of low utilization for services that require expensive capital equipment. For the OPPS, we rely on hospitals to make informed business decisions regarding the acquisition of high-cost capital equipment, taking into consideration their knowledge about their entire patient base (Medicare beneficiaries included) and an understanding of Medicare's and other payers' payment policies. We refer readers to the CY 2013 OPPS/ASC final rule with comment period (77 FR 68314) for further discussion regarding this payment policy. Some services assigned to New Technology APCs have low annual volume, which we consider to be fewer than 100 claims in the year of claims data used for ratesetting (86 FR 63528). Where utilization of services assigned to a New Technology APC is low, it can lead to wide variation in payment rates from year to year, resulting in even lower utilization and potential barriers to access of new technologies, which ultimately limits our ability to assign the service to the appropriate clinical APC. To mitigate these issues, we finalized a policy in the CY 2019 OPPS/ASC final rule with comment period to utilize our equitable adjustment authority at section 1833(t)(2)(E) of the Act to adjust how we determine the costs for low-volume services assigned to New Technology APCs (83 FR 58892 through 58893). Specifically, in the CY 2019 OPPS/ASC final rule with comment period (83 FR 58893), we established that, in each of our annual rulemakings, we would calculate and present the result of each statistical methodology (arithmetic mean, geometric mean, and median) based on up to 4 years of claims data and solicit public comment on which methodology should be used to establish the payment rate for the low-volume new technology service. In the CY 2022 OPPS/ASC final rule (86 FR 63529), we replaced the New Technology APC low volume policy with the universal low volume APC policy. Unlike the New Technology APC low volume policy, the universal low volume APC policy applies to clinical APCs and brachytherapy APCs, in addition to procedures assigned to New Technology APCs, and uses the highest of the geometric mean, arithmetic mean, or median based on up to 4 years of claims data to set the payment rate for the APC. We refer readers to the CY 2022 OPPS/ASC final rule with comment period (86 FR 63529) for further discussion regarding this policy. Despite the universal low volume APC policy, we continued to see payment instability for services with very low claims volume of fewer than 10 claims in the 4-year lookback period used under the universal low volume APC policy. For CY 2025, we finalized a policy to exempt services assigned to New Technology APCs with fewer than 10 claims over the 4-year lookback period used for the universal low volume policy. Instead of assigning these services to a different New Technology APC based on the very few claims available, we maintained the New Technology APC assignment for each service from the prior year, CY 2024. We refer readers to the CY 2025 OPPS/ASC final rule with comment period for a discussion on the policy (89 FR 94016 through 94018). Finally, we note that, in a budget-neutral system, payments may not fully cover hospitals' costs in a particular circumstance, including those for the purchase and maintenance of capital equipment. We rely on hospitals to make their decisions regarding the acquisition of high- cost equipment with the understanding that the Medicare program must be careful to establish its initial payment rates, including those made through New Technology APCs, for new services that lack hospital claims data based on realistic utilization projections for all such services delivered in cost-efficient hospital outpatient settings. As the OPPS acquires claims data regarding hospital costs associated with new procedures, we regularly examine the claims data and any available new information regarding the clinical aspects of new procedures to confirm that our OPPS payments remain appropriate for procedures as they transition into mainstream medical practice (77 FR 68314). For CY 2026, we included the proposed payment rates for New Technology APCs 1491 to 1599 and 1901 through 1908 in Addendum A to the CY 2026 OPPS/ASC proposed rule (which is available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.

2. Continue To Exempt Services With Under 10 Claims in the 4-Year

Lookback Period From APC Reassignment Based on the Universal Low Volume Policy We continue to be concerned about payment stability for services assigned to New Technology APCs, specifically services with fewer than 10 claims in the 4-year lookback period used under the universal low volume APC policy. We also continue to believe that determining initial cost estimates for these services may be particularly challenging, given the lack of cost information for new and innovative technologies, and that we generally utilize claims data from hospitals as soon as these data become available. We proposed to continue our policy to exempt services assigned to New Technology APCs with fewer than 10 claims over the 4-year lookback period from the universal low volume policy. Instead of assigning these services to a different clinical or New Technology APC based on the very few claims available, we proposed to continue maintaining the New Technology APC assignment for each service from the prior year. For example, for CY 2026, services assigned to New Technology APCs with fewer than 10 claims in the previous 4 years would maintain their New Technology APC assignment from CY 2025. We proposed to continue this policy in future years, until, or unless, an alternative policy is finalized. We maintain that it is appropriate to apply this policy to services assigned to New Technology APCs because these services represent new technologies for which it [[Page 53531]] may be more challenging to determine an appropriate cost than for other, more established services. We continue to believe 10 claims is an appropriate ceiling for exempting services from reassignment based on the universal low volume APC policy because we believe that at 10 claims a rough standard distribution begins to appear. We also continue to believe that services with so few claims over the 4-year lookback period would be especially vulnerable to large changes in payment rates year-to-year as a result of one or two new claims being available or one or two claims from what was previously the fourth year of the lookback period no longer being included in that period. Consistent with our overall policy regarding use of updated claims data in the final rule, we proposed to perform a similar analysis for the final rule using updated claims data, including determining whether specific HCPCS codes continue to meet the criteria for our universal low volume APC policy or would be subject to our proposed policy to continue exempting services with fewer than 10 claims in the 4-year lookback period from the universal low volume APC policy and maintain the New Technology APC assignment from the previous year. We would update the APC placement as needed in the final rule. We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: Commenters generally supported our low volume APC policies. Comments were received regarding specific services assigned to New Technology APCs with low claims volume that supported maintaining the APC assignment as a result of our proposal to continue to exempt services assigned to New Technology APCs with fewer than 10 claims over the 4-year lookback period from the universal low volume policy. Response: We thank the commenters for their support. After consideration of public comments, we are finalizing our proposal to continue to exempt services assigned to New Technology APCs with fewer than 10 claims over the 4-year lookback period from the universal low volume policy.

3. Procedures Assigned to New Technology APC Groups for CY 2026

As we described in the CY 2002 OPPS final rule (66 FR 59902), we generally retain a procedure in the New Technology APC to which it is initially assigned until we have obtained sufficient claims data to justify reassignment of the procedure to a clinically appropriate APC. In addition, in cases where we find that our initial New Technology APC assignment was based on inaccurate or inadequate information (although it was the best information available at the time), where we obtain new information that was not available at the time of our initial New Technology APC assignment, or where the New Technology APCs are restructured, we may, based on more recent resource utilization information (including claims data) or the availability of refined New Technology APC cost bands, reassign the procedure or service to a different New Technology APC that more appropriately reflects its cost (66 FR 59903). Consistent with our current policy, for CY 2026, we proposed to retain services within New Technology APC groups until we obtain sufficient claims data to justify reassignment of the service to an appropriate clinical APC. The flexibility associated with this policy allows us to reassign a service from a New Technology APC in less than 2 years if we have obtained sufficient claims data. It also allows us to retain a service in a New Technology APC for more than 2 years if we have not obtained sufficient claims data upon which to base a reassignment decision (66 FR 59902). We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: A commenter stated that the New Technology APC pathway is vital for bringing innovative services to patients before sufficient claims data exist for permanent APC assignment and suggested that we incorporate the perspectives of patients and caregivers into our review to ensure payment decisions reflect unmet needs and treatment burdens. Response: We thank the commenter for their comment. We note that we accept a variety of information as part of the New Technology APC application process. After consideration of public comments, we are finalizing our proposal to retain services within New Technology APC groups until we obtain sufficient claims data to justify reassignment of the service to an appropriate clinical APC. a. Administration of Subretinal Therapies Requiring Vitrectomy (APC 1563) Effective January 1, 2021, CMS established HCPCS code C9770 (Vitrectomy, mechanical, pars plana approach, with subretinal injection of pharmacologic/biologic agent) and assigned it to a New Technology APC based on the geometric mean cost of CPT code 67036 (Vitrectomy, mechanical, pars plana approach) due to similar resource utilization. For CY 2021, HCPCS code C9770 was assigned to APC 1561 (New Technology--Level 24 ($3001-$3500)). This code may be used to describe the administration of HCPCS code J3398 (Injection, voretigene neparvovec-rzyl, 1 billion vector genomes). This procedure was previously discussed in depth in the CY 2021 OPPS/ASC final rule with comment period (85 FR 85939 through 85940). For CY 2022, we maintained the APC assignment of APC 1561 (New Technology--Level 24 ($3001-$3500)) for HCPCS code C9770 (86 FR 63531 through 63532). HCPCS code J3398 (Injection, voretigene neparvovec-rzyl, 1 billion vector genomes) is for a gene therapy product indicated for a rare mutation-associated retinal dystrophy. Voretigene neparvovec-rzyl (Luxturna[supreg]) was approved by FDA in December of 2017 and is an adeno-associated virus vector-based gene therapy indicated for the treatment of patients with confirmed biallelic RPE65 mutation- associated retinal dystrophy.\16\ This therapy is administered through a subretinal injection, which interested parties describe as an extremely delicate and sensitive surgical procedure. The FDA-approved package insert describes one of the steps for administering Luxturna as, ``after completing a vitrectomy, identify the intended site of administration. The subretinal injection can be introduced via pars plana.'' --------------------------------------------------------------------------- \16\ Luxturna. FDA Package Insert. Available: https://www.fda.gov/media/109906/download. --------------------------------------------------------------------------- Interested parties, including the manufacturer of Luxturna[supreg], recommended CPT code 67036 (Vitrectomy, mechanical, pars plana approach) for the administration of the gene therapy.\17\ However, the manufacturer previously contended the administration was not accurately described by any existing codes as CPT code 67036 (Vitrectomy, mechanical, pars plana approach) does not account for the administration itself. CMS recognized the need to accurately describe the unique procedure that is required to administer the therapy described by HCPCS code J3398. Therefore, in the CY 2021 OPPS/ASC [[Page 53532]] final rule with comment period, we established a new HCPCS code, C9770 (Vitrectomy, mechanical, pars plana approach, with subretinal injection of pharmacologic/biologic agent) to describe this process. For CY 2021, we assigned HCPCS code C9770 to APC 1561 (New Technology--Level 24 ($3001-$3500)) using the geometric mean cost of CPT code 67036. For CY 2022, we continued to assign HCPCS code C9770 to APC 1561 (New Technology--Level 24 ($3001-$3500)) using the geometric mean cost of CPT code 67036. --------------------------------------------------------------------------- \17\ LUXTURNA REIMBURSEMENT GUIDE FOR TREATMENT CENTERS. https://mysparkgeneration.com/uploads/2022/09/LUXTURNA-Reimbursement-Guide-for-Treatment-Centers-ISI-Update-April-2022-P-RPE65-US-320025.pdf. --------------------------------------------------------------------------- CY 2023 was the first year that claims data were available for HCPCS code C9770; therefore, we proposed and finalized a policy to base the payment rate of HCPCS code C9770 on claims data for that code rather than on the geometric mean cost of CPT code 67036. Given the low number of claims for this procedure, we designated HCPCS code C9770 as a low volume procedure under our universal low volume APC policy and used the greater of the geometric mean, arithmetic mean, or median cost calculated based on the available claims data to calculate an appropriate payment rate for purposes of assigning HCPCS code C9770 to a New Technology APC. Based on the claims data available for the CY 2023 OPPS/ASC final rule with comment period, we found the median was the statistical methodology that estimated the highest cost for the service. The payment rate calculated using this methodology fell within the cost band for APC 1562 (New Technology--Level 25 ($3501-$4000)). Therefore, we finalized our proposal to assign HCPCS code C9770 to APC 1562 for CY 2023. For CY 2024, we proposed and finalized that we would delete HCPCS code C9770 effective December 31, 2023 and recognize CPT code 0810T (Subretinal injection of a pharmacologic agent, including vitrectomy and 1 or more retinotomies) starting January 1, 2024 (88 FR 81617 through 81619). We determined the payment rate for CPT code 0810T using the claims data for HCPCS code C9770 and designated CPT code 0810T as a low volume procedure under our universal low volume APC policy and used the greater of the geometric mean, arithmetic mean, or median cost calculated based on the available claims data for HCPCS code C9770 to calculate an appropriate payment rate for purposes of assigning CPT code 0810T to a New Technology APC. For CY 2024, we finalized assignment of CPT code 0810T to APC 1563 (New Technology--Level 26 ($4001-$4500)) (88 FR 81617 through 81619). For 2025, claims data for CPT code 0810T was not yet available. Therefore, we continued to use claims data for HCPCS code C9770 to determine the appropriate APC for CPT code 0810T and finalized to continue to assign CPT code 0810T to APC 1563 for CY 2025. CY 2026 is the first year that we have claims data available for CPT code 0810T, and there are 6 claims available. Since the procedure described by CPT code 0810T was billed using HCPCS code C9770 prior to January 1, 2024, we proposed to use the available combined 42 claims for both codes during this time period to allow for a more accurate picture of the costs associated with this procedure. For CY 2026, we proposed to designate CPT code 0810T as a low volume procedure under our universal low volume APC policy, given that there were only 42 combined claims available. This is below the threshold of 100 claims for a service within a year required to designate a service as a low volume service and apply our universal low volume APC policy. Therefore, we proposed to use the greater of the geometric mean, arithmetic mean, or median cost calculated based on the available claims data from a 4-year lookback period to calculate an appropriate payment rate for purposes of assigning CPT code 0810T to a New Technology APC. Using all available claims for CPT code 0810T and HCPCS code C9770 from the 4-year lookback period, based on 42 claims, we determined the geometric mean cost to be approximately $4,040, the arithmetic mean cost to be $4,327, and the median cost to be $3,999. Because the arithmetic mean is the statistical methodology that estimated the highest cost for the service, we proposed to use this cost to determine the New Technology APC placement. The arithmetic mean of $4,327 falls within the cost band for APC 1563 (New Technology--Level 26 ($4001- $4500)). Therefore, we proposed to continue to assign CPT code 0810T to APC 1563 for CY 2026. Additionally, we proposed to perform a similar analysis using updated claims data, including determining if CPT code 0810T continues to meet the criteria for our universal low volume APC policy, in the CY 2026 OPPS/ASC final rule with comment period and update the APC assignment as needed. We did not receive any public comments on our proposal to continue to assign HCPCS code 0810T to APC 1563 for CY 2026. One additional claim for CY 2024 has been processed since the CY 2026 OPPS/ASC proposed rule. Our analysis of the updated claims data found that the greater of the geometric mean, arithmetic mean, or median cost calculated for HCPCS codes C9770 and 0810T is approximately $4,239. This continues to fall into the cost band of New Technology APC 1563. Therefore, we are finalizing our proposal without modification to continue to assign CPT code 0810T to APC 1563 (New Technology--Level 26 ($4001-$4500)). Refer to Table 17 for the final OPPS New Technology APC and status indicator assignment for CPT codes 0810T for CY 2026. The final CY 2026 payment rates can be found in Addendum B to this final rule with comment period via the internet on the CMS website. In addition, we refer readers to Addendum D1 to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Addendum D1 can also be found via the internet on the CMS website. [[Page 53533]] [GRAPHIC] [TIFF OMITTED] TR25NO25.035 b. BgRT (APC 1521 and 1525) Biology Guided Radiation Therapy (BgRT) uses positron-emitting radiopharmaceuticals to control delivery of radiation therapy to treat primary and metastatic lung or bone tumors. During radiation treatment delivery, the same system applies these firing filters to the real-time positron emission tomography (PET) data collected by the radiation treatment delivery machine. Effective January 1, 2024, CMS created HCPCS codes C9794 (Therapeutic radiology simulation-aided field setting; complex, including acquisition of PET and CT imaging data required for radiopharmaceutical-directed radiation therapy treatment planning (i.e., modeling) and C9795 (Stereotactic body radiation therapy, treatment delivery, per fraction to 1 or more lesions, including image guidance and real-time positron emissions-based delivery adjustments to 1 or more lesions, entire course not to exceed 5 fractions) to describe the modeling and treatment delivery portions of the BgRT service. We assigned HCPCS code C9794 to APC 1521 (New Technology--Level 21 ($1901-$2000)) and HCPCS code C9795 to APC 1525 (New Technology--Level 25 ($3501-$4000)) for CY 2024. For CY 2025, we continued to assign HCPCS code C9794 to APC 1521 (New Technology--Level 21 ($1901-$2000)) with a payment rate of $1,950.50 and HCPCS code C9795 to APC 1525 (New Technology--Level 25 ($3501-$4000)) with a payment rate of $3,750.50 because we did not have any claims data for the service. Effective January 1, 2025, HCPCS codes C9794 and C9795 were replaced by HCPCS codes G0562 and G0563, respectively. For CY 2026, the proposed OPPS payment rates are based on available CY 2024 claims data. There are no CY 2024 claims for HCPCS codes G0562 and G0563 since they were not effective until CY 2025. However, as HCPCS codes C9794 and C9795 were still in use until December 31, 2024, we proposed to determine the payment rate for HCPCS codes G0562 and G0563 using the available claims data for HCPCS codes C9794 and C9795, respectively. For CY 2026, we proposed to designate HCPCS codes G0562 and G0563 as low volume procedures under our universal low volume APC policy, given that there are only 16 claims for C9794 and 28 claims for C9795 during the claims period. For HCPCS code G0562, using all available claims for C9794, we determined, for the CY 2026 OPPS/ASC proposed rule, the arithmetic mean cost to be $1,241, the median cost to be $1,203, and the geometric mean cost to be $1,121. Because the arithmetic mean cost is the statistical methodology that estimated the highest cost for the service, we proposed to use this cost to determine the New Technology APC placement. The arithmetic mean cost of $1,241 falls within the cost band for APC 1514 (New Technology--Level 14 ($1201-$1300)). Therefore, we proposed to assign HCPCS code G0562 to APC 1514 (New Technology-- Level 14 ($1201-$1300) with a payment rate of $1,250.50 for CY 2026. For HCPCS code G0563, using all available claims for C9795, we determined the arithmetic mean cost to be $3,606; the median cost to be $2,915, and the geometric mean cost to be $3,348. The arithmetic mean cost is the statistical methodology that estimated the highest cost for the service; therefore, we proposed to use this cost to determine the New Technology APC placement. The arithmetic mean cost of $3,606 falls within the cost band for APC 1525 (New Technology--Level 25 ($3501- $4000)). Therefore, we proposed to assign HCPCS code G0563 to APC 1525 (New Technology--Level 25 ($3501-$4000) with a payment rate of $3750.50 for CY 2026. Additionally, we proposed to perform a similar analysis using updated claims data, including determining if HCPCS codes G0562 and G0563 continue to meet the criteria for our universal low volume APC policy, in the CY 2026 OPPS/ASC final rule with comment period and update the APC assignments as needed. We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: Commenters supported CMS' proposal to assign HCPCS code G0563 to APC 1525 (New Technology--Level 25 ($3501-$4000) with a payment rate of $3750.50 for CY 2026. Response: We thank the commenters for their support. Comment: Several commenters did not support the proposal to assign HCPCS code G0562 to APC 1514 (New Technology--Level 14 ($1201-$1300) with a payment rate of $1,250.50 for CY 2026. Commenters explained that the resulting decrease in payment would not cover the costs to provide the service, especially because the modeling service described by HCPCS code G0562 happens on a different day than the treatment, but on the same high-cost device as the treatment. Commenters emphasized the few single frequency claims available and urged CMS to allot hospitals more time to understand how costs for HCPCS code G0562 should be reported versus a diagnostic CT or PET scan that involves different equipment, workflows, and time. Commenters requested that we maintain the APC assignment for HCPCS code G0562 for CY 2026. Response: We thank the commenters for their input. We agree with commenters who expressed concern that the proposed payment rate was based on an extremely limited number of claims and may not accurately reflect the true resource costs to hospitals associated with furnishing this service. Additionally, we are concerned that, if we were to finalize as proposed, the payment rate for this service would decrease 36 percent based on only 16 single frequency claims and only one year of claims data. As we have stated in prior rules, when only a limited number of claims are available for a given service, it is possible that those claims may not be representative of the full range of hospital costs. We [[Page 53534]] anticipate that, as hospitals gain additional experience furnishing the service and as more claims data becomes available in future years, the claims data will more accurately reflect the typical resource costs of the service. We note that since the CY 2026 OPPS/ASC proposed rule published, we have one additional claim for HCPCS code C9795 to use for HCPCS code G0563 ratesetting, and the revised statistical methodologies are: the geometric mean cost is $3,277, the arithmetic mean is $3,449, and the median is $3,228. The highest of these is the arithmetic mean, which falls outside of the proposed APC assignment of APC 1525 (New Technology--Level 25 ($3501-$4000)). After consideration of public comments and the revised statistical methodologies, we are not finalizing our proposals for HCPCS codes G0562 and G0563. For CY 2026, we are finalizing the assignment of HCPCS code G0562 to APC 1521 and status indicator ``S'' and HCPCS code G0563 to APC 1524 (New Technology--Level 24 ($3001-$3500)) and status indicator ``S''. Refer to Table 18 for the final OPPS New Technology APC and status indicator assignment for HCPCS codes G0562 and G0563 for CY 2026. The final CY 2026 payment rates can be found in Addendum B to this final rule with comment period via the internet on the CMS website. In addition, we refer readers to Addendum D1 to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Addendum D1 can also be found via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.036 c. Blinded Procedure for NYHA Class III/IV Heart Failure (APC 1590) A randomized, double-blinded, controlled IDE study was conducted for the V-Wave interatrial shunt. The V-Wave interatrial shunt is for patients with severe symptomatic heart failure and is designed to regulate left atrial pressure in the heart. All participants who passed initial screening for the study receive a right heart catheterization procedure described by CPT code 93451 (Right heart catheterization including measurement(s) of oxygen saturation and cardiac output, when performed). Participants assigned to the experimental group also receive the V-Wave interatrial shunt procedure while participants assigned to the control group only receive right heart catheterization. The developer of V-Wave was concerned that the current coding of these services by Medicare would reveal to the study participants whether they had received the interatrial shunt because an additional procedure code, CPT code 93799 (Unlisted cardiovascular service or procedure), would be included on the claims for participants receiving the interatrial shunt. Therefore, for CY 2020, we created a temporary HCPCS code to describe the V-Wave interatrial shunt procedure for both the experimental group and the control group in the study. Specifically, we established HCPCS code C9758 (Blinded procedure for NYHA class III/IV heart failure; transcatheter implantation of interatrial shunt or placebo control, including right heart catheterization, trans- esophageal echocardiography (TEE)/intracardiac echocardiography (ICE), and all imaging with or without guidance (for example, ultrasound, fluoroscopy), performed in an approved investigational device exemption (IDE) study) to describe the service, and we assigned the service to APC 1589 (New Technology--Level 38 ($10,001-$15,000)) with a payment rate of $12,500.50. In the CY 2021 OPPS/ASC final rule with comment period (85 FR 85946), we stated that we believe similar resources and device costs are involved with the V-Wave interatrial shunt procedure and the Corvia Medical interatrial shunt procedure (HCPCS code C9760), except that payment for HCPCS codes C9758 and C9760 differs based on how often the interatrial shunt is implanted when each code is billed. An interatrial shunt is implanted one-half of the time HCPCS code C9758 is billed, whereas an interatrial shunt is implanted every time HCPCS code C9760 is billed. Accordingly, for CY 2021, we reassigned HCPCS code C9758 to APC 1590 (New Technology--Level 39 ($15,001-$20,000)), which reflects the cost of furnishing the interatrial shunt one-half of the time the procedure is performed. Since CY 2021, HCPCS code C9758 has continued to be assigned to APC 1590. [[Page 53535]] For CY 2026, the developer of the V-Wave interatrial shunt informed us that the IDE study had concluded and HCPCS code C9758 was no longer being utilized. Therefore, we proposed to delete HCPCS code C9758 for CY 2026. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter requested that CMS not delete HCPCS code C9758, as Corvia Medical is conducting an ongoing clinical study that utilizes this code. Response: Since HCPCS code C9758 is currently being utilized, we will continue to keep this code active for CY 2026. Therefore, we are not finalizing our proposal to delete HCPCS code C9758 for CY 2026. Our updated claims data for the 4-year lookback period for the universal low volume APC policy shows only 8 claims for HCPCS code C9758. Because we are finalizing our proposal to maintain current New Technology APC assignments for CY 2026 for New Technology APC services with fewer than 10 claims in the 4-year lookback period, we are continuing to assign HCPCS code C9758 to APC 1590 for CY 2026. Refer to Table 19 for the final OPPS New Technology APC and status indicator assignment for HCPCS code C9758 for CY 2026. The final CY 2026 payment rates can be found in Addendum B to this final rule with comment period via the internet on the CMS website. In addition, we refer readers to Addendum D1 to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Addendum D1 can also be found via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.037 d. Bronchoscopy With Transbronchial Ablation of Lesion(s) by Microwave Energy (APC 1562) Effective January 1, 2019, CMS established HCPCS code C9751 (Bronchoscopy, rigid or flexible, transbronchial ablation of lesion(s) by microwave energy, including fluoroscopic guidance, when performed, with computed tomography acquisition(s) and 3-D rendering, computer- assisted, image-guided navigation, and endobronchial ultrasound (EBUS) guided transtracheal and/or transbronchial sampling (e.g., aspiration[s]/biopsy[ies]) and all mediastinal and/or hilar lymph node stations or structures and therapeutic intervention(s)). This microwave ablation procedure utilizes a flexible catheter to access the lung tumor via a working channel and may be used as an alternative procedure to a percutaneous microwave approach. Based on our review of the New Technology APC application for this service and the service's clinical similarity to existing services paid under the OPPS, we estimated the likely cost of the procedure would be between $8,001 and $8,500. We assigned the procedure to APC 1571 (New Technology--Level 34 ($8001- $8500)) for CY 2019. In claims data available from CY 2019 for the CY 2021 OPPS/ASC final rule with comment period, there were four claims reported for bronchoscopy with transbronchial ablation of lesions by microwave energy. Given the low volume of claims for the service, we proposed for CY 2021 to apply the universal low volume APC policy we adopted in CY 2019, under which we utilize our equitable adjustment authority under section 1833(t)(2)(E) of the Act to calculate the geometric mean, arithmetic mean, and median costs to determine an appropriate payment rate for purposes of assigning bronchoscopy with transbronchial ablation of lesions by microwave energy to a New Technology APC. Based on this analysis using claims from CY 2019, we assigned HCPCS code C9751 to APC 1562 (New Technology--Level 25 ($3501-$4000)) with a $3750.50 payment rate for CY 2021. There have been no separately payable claims reported for HCPCS code C9751 since 2019. Therefore, we have continued to use claims from CY 2019 to determine the payment rate for this service in CY 2023, CY 2024, and CY 2025 OPPS/ASC final rules with comment period. Based on the information available, we continue to assign HCPCS code C9751 to APC 1562 (New Technology--Level 25 ($3501-$4000)), with a payment rate of $3,750.50. For CY 2026, we were informed that the Neuwave Flex program is no longer available for commercial use, and that HCPCS code C9751 is no longer being utilized. Therefore, we proposed to delete HCPCS code C9751 for CY 2026. We did not receive public comments on our proposal to delete HCPCS code C9751 for CY 2026. Additionally, our updated claims data remain unchanged. Therefore, we are finalizing as proposed. Refer to Table 20 for the final OPPS New Technology APC and status indicator assignment for HCPCS code C9751 for CY 2026. In addition, we refer readers to Addendum D1 to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Addendum D1 can also be found via the internet on the CMS website. [[Page 53536]] [GRAPHIC] [TIFF OMITTED] TR25NO25.038 e. Cardiac Positron Emission Tomography (PET)/Computed Tomography (CT) Studies (APCs 1519 and 1522) For CY 2026, the OPPS payment rates for the service described by CPT codes 78431, 78432, and 78433 were proposed to be based on available CY 2024 claims data. CPT code 78431 had over 30,000 single frequency claims in CY 2024. The geometric mean cost for CPT code 78431 is approximately $2,200. The geometric mean falls within APC 1522 (New Technology--Level 22 ($2001-$2500)) with a payment rate of $2,250.50, which is the current APC assignment for this service. Therefore, we proposed, for CY 2026, to continue to assign CPT code 78431 to APC 1522 (New Technology--Level 22 ($2001-$2500)) with a payment rate of $2,250.50. There were only 31 single frequency claims in CY 2024 for CPT code 78432. As this is below the threshold of 100 claims for a service within a year, we proposed to apply our universal low volume New Technology APC policy and use the highest of the geometric mean cost, arithmetic mean cost, or median cost based on up to 4 years of claims data to assign CPT code 78432 to the appropriate New Technology APC. Using available claims data from CY 2021, CY 2022, and CY 2023, our analysis found the geometric mean cost of the service is approximately $1,591, the arithmetic mean cost of the service is approximately $1,737, and the median cost of the service is approximately $1,364. The arithmetic mean is the statistical methodology that estimates the highest cost for the service. The arithmetic mean cost of $1,737, is an amount that is below the cost band for APC 1520 (New Technology--Level 20 ($1801-$1900)), where the procedure is currently assigned. Therefore, we proposed, for CY 2026, to assign CPT code 78432 to APC 1519 (New Technology--Level 19 ($1701-$1800)) with a payment rate of $1,750.50. There were over 1,400 single frequency claims for CPT code 78433 in CY 2024. The geometric mean for CPT code 78433 is approximately $2,037, which is an amount that is above the current New Technology APC cost band APC 1521 (New Technology--Level 21 ($1901-$2000)) to which it is assigned. Therefore, for CY 2026, we proposed to reassign CPT code 78433 to APC 1522 (New Technology--Level 22 ($2001-$2500)) with a payment rate of $2,250.50. We note that, over the past several years, the claims volumes for CPT codes 78431 and 78433 have increased significantly while the geometric mean costs of the codes have remained relatively stable. However, CPT code 78432, which is closely related to CPT codes 78431 and 78433, continues to have low claims frequency and fluctuating geometric mean costs. Due to our concerns regarding CPT code 78432 and the lack of an appropriate clinical APC for CPT codes 78431 and 78433 at this time based on resource cost similarity, we proposed to continue to assign CPT codes 78431 through 78433 to New Technology APCs for CY 2026. We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: Commenters supported the proposed APC assignments for CPT codes 78431 and 78433 for CY 2026 based on our analysis of the available claims data. Response: We thank the commenters for their support. Comment: Some commenters did not support the proposed APC assignment for CPT code 78432 to APC 1519 (New Technology--Level 19 ($1701-$1800)) with a payment rate of $1,750.50. A commenter explained that CPT code 78432 consumes more resources than CPT code 78431. The commenter stated that with similar, but enhanced, clinical staff and radiotracer workflows to CPT code 78431, it is not appropriate for CPT code 78432 to be assigned to an APC with payments lower than CPT code 78431. Response: As we have stated in previous rulemaking, New Technology APCs are cost bands rather than clinical groupings. Unlike when we assign a service to a clinical APC and consider resource and clinical similarities to other services in a clinical APC, we assign services to New Technology APCs based on cost. While we appreciate the commenter's information regarding the clinical differences between CPT codes 78431 and 78432, we adjust New Technology APC assignments based on the claims data available rather than clinical characteristics of a service. We note that additional claims for CPT codes 78431 through 78433 have been processed since the CY 2026 OPPS/ASC proposed rule. Based on updated claims data, CPT code 78431 has an updated geometric mean cost of approximately $2,182. Because the geometric mean cost of CPT code 78431 is still within the range for APC 1522, the proposed APC assignment for CPT code 78431 for CY 2026, we are finalizing the proposed APC assignment of CPT code 78431 without modification. There were three additional single frequency claims for CY 2024 processed for CPT code 78432 since the CY 2026 OPPS/ASC proposed rule, bringing the total number of single frequency claims to 34 for CPT code 78432 for CY 2024. Based on the updated claims data for CPT code 78432, the geometric mean cost is approximately $1,428; the [[Page 53537]] arithmetic mean cost is approximately $1,517; and the median cost is approximately $1,274. Of these, the highest statistical methodology is the arithmetic mean cost of $1,517. Since the updated arithmetic mean cost for CPT code 78432 is outside of the cost band for APC 1519 (New Technology--Level 19 ($1701-$1800), we are not finalizing our proposal to assign CPT code 78432 to APC 1519 for CY 2026. Based on the updated statistical methodologies, we are assigning CPT code 78432 to APC 1517 for CY 2026 (New Technology--Level 17 ($1501-$1600)) with a payment rate of $1,550.50. Based on updated claims data, CPT code 78433 has an updated geometric mean cost of approximately $2004. Because the geometric mean cost of CPT code 78433 is still within the range for APC 1522, the proposed APC assignment for CPT code 78433 for CY 2026, we are finalizing the proposed APC assignment of CPT code 78433 without modification. Refer to Table 21 for the final OPPS New Technology APC and status indicator assignments for CPT codes 7843, 78432, and 78433 for CY 2026. The final CY 2026 payment rates can be found in Addendum B to this final rule with comment period via the internet on the CMS website. In addition, we refer readers to Addendum D1 to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Addendum D1 can also be found via the internet on the CMS website. BILLING CODE 4120-01-P [GRAPHIC] [TIFF OMITTED] TR25NO25.039 BILLING CODE 4120-01-C f. CardiAMP (APC 1590) The CardiAMP cell therapy IDE studies are two randomized, double- blinded, controlled IDE studies: the CardiAMP Cell Therapy Chronic Myocardial Ischemia Trial \18\ and the CardiAMP Cell Therapy Heart Failure [[Page 53538]] Trial.\19\ The two trials are designed to investigate the safety and efficacy of autologous bone marrow mononuclear cell treatment for the following: (1) patients with medically refractory and symptomatic ischemic cardiomyopathy; and (2) patients with refractory angina pectoris and chronic myocardial ischemia. On April 1, 2022, we established HCPCS code C9782 to describe the CardiAMP cell therapy IDE studies and assigned HCPCS code C9782 to APC 1574 (New Technology-- Level 37 ($9,501-$10,000)) with the status indicator ``T.'' We subsequently revised the descriptor for HCPCS code C9782 to: (Blinded procedure for New York Heart Association (NYHA) Class II or III heart failure, or Canadian Cardiovascular Society (CCS) Class III or IV chronic refractory angina; transcatheter intramyocardial transplantation of autologous bone marrow cells (e.g., mononuclear) or placebo control, autologous bone marrow harvesting and preparation for transplantation, left heart catheterization including ventriculography, all laboratory services, and all imaging with or without guidance (e.g., transthoracic echocardiography, ultrasound, fluoroscopy), all device(s), performed in an approved Investigational Device Exemption (IDE) study) to clarify the inclusion of the Helix trans endocardial injection catheter device in the descriptor. Additionally, we determined that APC 1590 (New Technology--Level 39 ($15,001-$20,000)) most accurately accounted for the resources associated with furnishing the procedure described by HCPCS code C9782. --------------------------------------------------------------------------- \18\ ClinicalTrials.gov. ``Randomized Controlled Pivotal Trial of Autologous Bone Marrow Cells Using the CardiAMP Cell Therapy System in Patients With Refractory Angina Pectoris and Chronic Myocardial Ischemia.'' Accessed May 10, 2022. https://clinicaltrials.gov/ct2/show/NCT03455725?term=NCT03455725&rank=1. \19\ ClinicalTrials.gov. ``Randomized Controlled Pivotal Trial of Autologous Bone Marrow Mononuclear Cells Using the CardiAMP Cell Therapy System in Patients With Post Myocardial Infarction Heart Failure.'' Accessed May 10, 2022. https://clinicaltrials.gov/ct2/show/NCT02438306. --------------------------------------------------------------------------- For CY 2025, the OPPS payment rates were based on available CY 2023 claims data. We identified three single frequency paid claims for C9782 for ratesetting for CY 2025. Because we finalized our proposal to maintain current New Technology APC assignments for CY 2025 for New Technology APC services with fewer than 10 claims in the 4-year lookback period, we continued to assign HCPCS code C9782 to APC 1590 with a payment rate of $17,500.50 for CY 2025. For CY 2026, there were no new claims reported for HCPCS code C9782. Therefore, there are still only three single frequency claims available for HCPCS code C9782 in the 4-year lookback period. Given our proposal to maintain current New Technology APC assignments for CY 2026 for New Technology APC services with fewer than 10 claims in the 4-year lookback period applicable for the universal low-volume APC policy moving forward, we proposed to continue to assign HCPCS code C9782 to APC 1590 (New Technology--Level 39 ($15,001-$20,000)) with a payment rate of $17,500.50. We did not receive public comments on this provision, and our updated claims data did not show any additional claims for HCPCS Code C9782. Therefore, we are finalizing our proposal to continue to assign HCPCS code C9782 to New Technology APC 1590 with a status indication of ``T'' for CY 2026. Refer to Table 22 for the final OPPS New Technology APC and status indicator assignment for HCPCS code C9782. The final CY 2026 payment rates can be found in Addendum B to this final rule with comment via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.040 g. Atherosclerosis Imaging-Quantitative Computer Tomography (AI-QCT) (APC 1511) Atherosclerosis Imaging-Quantitative Computer Tomography (AI-QCT) is a Software as a Service (SaaS) that assesses the extent of coronary artery disease severity. This procedure is performed to quantify the extent of coronary plaque and stenosis in patients who have undergone coronary computed tomography analysis (CCTA). The AMA CPT Editorial Panel established the following four codes associated with this service, effective January 1, 2021: 0623T: Automated quantification and characterization of coronary atherosclerotic plaque to assess severity of coronary disease, using data from coronary computed tomographic angiography; data preparation and transmission, computerized analysis of data, with review of computerized analysis output to reconcile discordant data, interpretation and report. 0624T: Automated quantification and characterization of coronary atherosclerotic plaque to assess severity of coronary disease, using data from coronary computed tomographic angiography; data preparation and transmission. 0625T: Automated quantification and characterization of coronary atherosclerotic plaque to assess severity of coronary disease, using data from coronary computed tomographic angiography; computerized analysis of [[Page 53539]] data from coronary computed tomographic angiography. 0626T: Automated quantification and characterization of coronary atherosclerotic plaque to assess severity of coronary disease, using data from coronary computed tomographic angiography; review of computerized analysis output to reconcile discordant data, interpretation and report. Of these four CPT codes, only CPT code 0625T was determined to be separately payable in the OPPS and was assigned to status indicator = ``S'' (Procedure or Service, Not Discounted When Multiple) starting October 1, 2022. We assigned CPT code 0625T to a separately payable status indicator based on the technology and its potential utilization in the HOPD setting, our evaluation of the service, as well as input from our medical advisors. The procedure was assigned to APC 1511 (New Technology--Level 11 ($900-$1000)) with a payment rate of $950.50. For CY 2024, the OPPS payment rates were based on available CY 2022 claims data. There were 37 claims for CPT code 0625T during this time period. As this was below the threshold of 100 claims for a service within a year, we explained that we could propose to designate CPT code 0625T as a low volume service under our universal low volume New Technology APC policy and use the highest of the geometric mean cost, arithmetic mean cost, or median cost based on up to 4 years of claims data to assign code 0625T to the appropriate New Technology APC. We found the geometric mean cost for the service to be approximately $3.70, the arithmetic mean cost to be approximately $4.10, and the median cost to be approximately $3.50. Under our universal low volume New Technology APC policy, we would use the greatest of the statistical methodologies, the arithmetic mean, to assign CPT code 0625T to New Technology 1491 (New Technology Level 1A--(0-$10)) with a payment rate of $5.00. However, we acknowledged that, because CPT code 0625T was only made separately payable as part of the OPPS in October 2022, and, therefore, the CY 2022 claims available only reflected two months of data, we were concerned that we did not have sufficient claims data to justify reassignment to another New Technology APC (66 FR 69902). Therefore, consistent with our current policy to retain services within New Technology APC groups until we obtain sufficient claims data to justify reassignment (66 FR 59902), for CY 2024, we finalized our proposal to maintain CPT code 0625T's assignment to APC 1511 (New Technology--Level 11 ($901-$1000) with a payment rate of $950.50 rather than applying the universal low volume APC policy. For 2025, there were only 3 available claims for 0625T. We continued to have concerns that we did not have sufficient claims data to justify reassignment to another New Technology APC based on the CY 2023 geometric mean cost of $180. Therefore, we used our authority under section 1833(t)(2)(E) for CY 2025 to continue to assign CPT code 0625T to APC 1511 (New Technology--Level 11 ($901-$1000) with a payment rate of $950.50. Effective January 1, 2026, the AMA CPT Editorial Panel is creating a new Category I CPT code for AI-QCT, which is currently described by CPT code 75577 (placeholder code 75XX6) (Quantification and characterization of coronary atherosclerotic plaque to assess severity of coronary disease, derived from augmentative software analysis of the data set from a coronary computed tomographic angiography, with interpretation and report by a physician or other qualified healthcare professional). CPT codes 0623T-0626T are being deleted and replaced with CPT code 75577 (placeholder code 75XX6). Since CPT placeholder code 75XX6 will not be effective until January 1, 2026, we will not have claims data available for ratesetting for this code until the CY 2028 rulemaking cycle. However, as CPT code 0625T will still be in use until December 31, 2025, we proposed to determine the payment rate for CPT placeholder code 75XX6 using the available CY 2024 claims data for CPT code 0625T. For the CY 2026 OPPS/ASC proposed rule, there were 22 separately payable claims in the CY 2024 data reported for CPT code 0625T with a geometric mean cost of approximately $496. Given that there were fewer than 100 claims, CPT code 0625T would fall under our universal low volume New Technology APC policy where we would use the highest of the geometric mean cost, arithmetic mean cost, or median cost based on up to 4 years of claims data to assign CPT code 0625T to the appropriate New Technology APC. Using a 4-year lookback of claims data, we determined the geometric mean cost to be $13.21, the arithmetic mean cost to be $243, and the median cost to be $3.51. However, this lookback includes the claims from CY 2021 and CY 2022 that indicate that the cost of the procedure is less than $5, which would not appear to cover the basic costs of this procedure including computing time, generating a report, and having medical personnel interpret the report. The claims were also significantly lower than the expected cost of this procedure based on evidence submitted by the manufacturer when this technology was initially evaluated for placement in a New Technology APC. For CY 2024, the geometric mean cost of around $496 based on 22 claims may better reflect the cost of the procedure described by CPT code 0625T, but there are not enough claims to be confident about the result. Due to these issues, we are not confident that the results of the 4-year lookback period accurately reflect the actual costs of CPT code 0625T. Additionally, we recognize that software-based technologies are unique and rapidly evolving and that a significant fluctuation in payment may hinder patient access to these new services. We issued a comment solicitation in section III.F. of the CY 2026 OPPS/ASC proposed rule to collect information on alternative and consistent payment methods that seek to reflect the underlying value of SaaS under the OPPS to consider in future rulemaking. We hope to identify whether specific adjustments to our payment policies for SaaS are needed to more accurately and appropriately pay for these products and services across settings of care. Therefore, we proposed to use our authority under section 1833(t)(2)(E) to assign CPT code 75577 (placeholder code 75XX6) to APC 1511 (New Technology--Level 11 ($901-$1000) with a payment rate of $950.50 for CY 2026, which based on the information currently available to us, best reflects the cost of the service as described by the New Technology APC application. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: Several commenters supported the assignment of CPT code 75577 (placeholder code 75XX6) to APC 1511 (New Technology--Level 11 ($901-$1000) for CY 2025. Response: We note that since the CY 2026 OPPS/ASC proposed rule was issued, nine additional claims for CPT code 0625T have been processed, with the updated geometric mean cost decreasing to approximately $375. Although we have nine additional claims, we are not certain that we have enough claims data to be confident in the calculated geometric mean cost for CPT code 0625T. Therefore, we are finalizing our proposal, without modification, to assign CPT code 75577 to APC 1511 (New Technology--Level 11 ($901-$1000). Comment: Multiple commenters requested that CMS proactively ensures [[Page 53540]] that Medicare Administrative Contractors (MACs) do not issue an edit that restricts certain revenue codes for CPT code 75577 (placeholder code 75XX6), as had previously been issued for CPT code 75580. Response: We are able to confirm that there are no MAC edits in place for CPT code 75577. Facilities may bill CPT 75577 with any appropriate revenue code. As a reminder, it is longstanding CMS policy that hospital outpatient facilities are responsible for reporting the appropriate cost centers and revenue codes on claims. As stated in section 20.5 in Chapter 4 (Part B Hospital) of the Medicare Claims Processing Manual, CMS ``does not instruct hospitals on the assignment of HCPCS codes to revenue codes for services provided under OPPS since hospitals' assignment of cost vary. Where explicit instructions are not provided, HOPDs should report their charges under the revenue code that will result in the charges being assigned to the same cost center to which the cost of those services are assigned in the cost report.'' After consideration of the public comments we received, we are finalizing our proposal without modification. Refer to Table 23 for the final OPPS New Technology APC and status indicator assignment for HCPCS codes 0625T and 75577 for CY 2026. The final CY 2026 payment rates can be found in Addendum B to this final rule with comment period via the internet on the CMS website. In addition, we refer readers to Addendum D1 to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Addendum D1 can also be found via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.041 h. Corvia Medical Interatrial Shunt Procedure (APC 1592) On July 1, 2020, we established HCPCS code C9760 (Non-randomized, non-blinded procedure for nyha class ii, iii, iv heart failure; transcatheter implantation of interatrial shunt or placebo control, including right and left heart catheterization, transeptal puncture, trans-esophageal echocardiography (tee)/intracardiac echocardiography (ice), and all imaging with or without guidance (for example, ultrasound, fluoroscopy), performed in an approved investigational device exemption (ide) study) to facilitate payment for the implantation of the Corvia Medical interatrial shunt. As we stated in the CY 2021 OPPS final rule with comment period (85 FR 85947), we believe that similar resources and device costs are involved with the Corvia Medical interatrial shunt procedure and the V- Wave interatrial shunt procedure. Unlike the V-Wave interatrial shunt, which is implanted half the time the associated interatrial shunt procedure described by HCPCS code C9758 is billed, the Corvia Medical interatrial shunt is implanted every time the associated interatrial shunt procedure (HCPCS code C9760) is billed. Therefore, for CY 2021, we assigned HCPCS code C9760 to APC 1592 (New Technology--Level 41 ($25,001-$30,000)) with a payment rate of $27,500.50. We also modified the code descriptor for HCPCS code C9760 to remove the phrase ``or placebo control,'' from the descriptor. For CY 2025, the OPPS payment rates were based on available CY 2023 claims data. There were two claims for HCPCS code C9760 in CY 2023. We continued to assign HCPCS code C9760 to APC 1592 (New Technology--Level 41 ($25,001- $30,000)) based on our CY 2025 policy to maintain current New Technology APC assignments for CY 2025 for New Technology APC services with fewer than 10 claims in the 4-year lookback period applicable for the universal low-volume APC policy. For CY 2026, the OPPS payment rates were proposed to be based on available CY 2024 claims data. There were no claims for HCPSC code C9760 in CY 2024. Therefore, for CY 2026, given our proposal to maintain current New Technology APC assignments for CY 2026 for New Technology APC services with fewer than 10 claims in the 4-year lookback period applicable for the universal low-volume APC policy moving forward, we proposed to continue to assign HCPCS code C9760 [[Page 53541]] to APC 1592 (New Technology--Level 41 ($25,001- $30,000)) with a payment rate of $27,500.50. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter supported CMS' proposal and stated that it would preserve access. Response: We thank the commenter for their support. We note that there were no additional claims for HCPCS code C9760 in our updated claims data. Therefore, for CY 2026, we are finalizing our proposal without modification. Specifically for CY 2026, we are assigning HCPCS code C9760 to APC 1592 (New Technology--Level 41 ($25,001-$30,000)) with a payment rate of $27,500.50. Refer to Table 24 for the final OPPS New Technology APC and status indicator assignments for HCPCS code C9760 for CY 2026. The CY 2026 payment rates can be found in Addendum B to this final rule via the internet on the CMS website. In addition, we refer readers to Addendum D1 to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Addendum D1 can also be found via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.042 i. DARI Motion Procedure (APC 1505) Effective January 1, 2022, CPT code 0693T (Comprehensive full body computer-based markerless 3D kinematic and kinetic motion analysis and report) is associated with the DARI Motion Procedure, a service that provides human motion analysis to aid clinicians in pre- and post- operative surgical intervention and in making other treatment decisions, including selecting the best course of physical therapy and rehabilitation. The technology consists of eight cameras that surround a patient, which send live video to a computer workstation that analyzes the video to create a 3D reconstruction of the patient without the need for special clothing, markers, or devices attached to the patient's clothing or skin. Since CPT code 0693T became effective January 1, 2022, we have had no claims for the DARI Motion Procedure and, therefore, have maintained its initial APC assignment to APC 1505 (New Technology--Level 5 ($301- $400)) with a payment of $350.50. For CY 2026, the OPPS payment rates were proposed based on available CY 2024 claims data. Because we did not have any available claims data, we proposed to continue to assign CPT code 0693T to APC 1505 (New Technology--Level 5 ($301-400)), with a payment rate of $350.50, for CY 2026. CMS did not receive any public comments on our proposal, and there continue to be no claims for this service. Therefore, for CY 2026, we are finalizing our proposal without modification to continue to assign CPT Code 0693T to New Technology APC 1505 (New Technology--Level 5 ($301-$400)) with a status indicator of ``S'' for CY 2026, found in Table 25. The CY 2026 payment rates can be found in Addendum B to this final rule with comment period via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.043 [[Page 53542]] j. Instillation of Anti-Neoplastic Pharmacologic/Biologic Agent Into Renal Pelvis (APC 1551) Effective October 1, 2023, CMS established HCPCS code C9789 (Instillation of anti-neoplastic pharmacologic/biologic agent into renal pelvis, any method, including all imaging guidance, including volumetric measurement if performed) and assigned it to APC 1559 (New Technology--Level 22 ($2001-$2500)), with a payment rate of $2,250.50 based on our review of the clinical and resource characteristics of this service. This code may be used to describe the unique procedure associated with the administration of the drug described by HCPCS code J9281 (Mitomycin pyelocalyceal instillation, 1 mg) or similar products. HCPCS code J9281 may be used to describe the product, JELMYTO[supreg] (mitomycin for pyelocalyceal solution). The FDA approved JELYMTO[supreg] in 2020, and the FDA approved indication and usage for JELMYTO[supreg] is as an alkylating drug indicated for the treatment of adult patients with low-grade Upper Tract Urothelial Cancer (LG- UTUS).\20\ --------------------------------------------------------------------------- \20\ Jelymyto Package Insert, Revised: 01/2021. https://www.accessdata.fda.gov/drugsatfda_docs/label/2021/211728s002lbl.pdf. --------------------------------------------------------------------------- For CY 2025, the OPPS payment rates were based on available CY 2023 claims data. Because we created HCPCS code C9789 effective October 1, 2023, we had limited claims data from CY 2023 available for CY 2025 rulemaking. Specifically, we only had 6 claims available for ratesetting, so we maintained the New Technology APC assignment of APC 1559 (New Technology--Level 22 ($2001-$2500)) with a payment of $2,250.50 for CY 2025, based on our CY 2025 policy to maintain the New Technology APC assignment for New Technology APC services with fewer than 10 claims in the 4-year lookback period applicable for the universal low-volume APC policy. For CY 2026, the OPPS payment rates were proposed based on available CY 2024 claims data. HCPCS code C9789 had 109 single frequency claims in CY 2024, which exceeds the 100 claims threshold generally used for the universal low volume APC policy. The geometric mean cost for HCPCS code C9789 is approximately $1,401. Therefore, for CY 2026, we proposed to assign HCPCS code C9789 to APC 1553 (New Technology--Level 16 ($1401-$1500)) with a payment rate of $1,450.50. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter supported HCPCS code C7989 remaining in a New Technology APC but requested that HCPCS C7989 remain assigned to New Technology APC 1559 (New Technology--Level 22 ($2001-$2500)). The commenter stated they do not believe providers are consistently reporting HCPCS code C9789 when JELMYTO[supreg] is administered and are using alternative CPT codes for the procedure. As a result, the commenter believes the 2024 claims do not adequately reflect the costs for administering JELMYTO[supreg]. The commenter expressed concerns about beneficiaries having future access to the instillation procedure for JELMYTO[supreg] if the procedure was no longer assigned to a New Technology APC and requested that CMS issue a MLN Matters[supreg] or similar guidance to provide information on how to code and bill the instillation procedure with the drug JELMYTO[supreg]. Response: Providing coding guidance is out of scope for the OPPS/ ASC final rule with comment period. We note that if hospitals have questions about appropriate coding that they cannot resolve on their own, the initial first step would be to review the HCPCS code descriptors or consult the appropriate Medicare Administrative Contractor (MAC) for their jurisdiction. We note that HCPCS code J9281 is assigned to a status indicator of `K' (Nonpass-Through Drugs and Nonimplantable Biologicals, Including Therapeutic Radiopharmaceuticals; Paid under OPPS; separate APC payment.) and procedures and services assigned to a New Technology APC are excluded from the C-APC packaging policy. (See the Medicare Claims Processing Manual, Chapter 4, Section 10.2.3 for a list of exclusions to the comprehensive APC packaging policy.) Therefore, providers may receive separate payment for both the drug and installation procedure when providing this service. In response to maintaining the CY 2025 New Technology APC assignment, we note that HCPCS code C9789 has over 100 claims, and therefore, the New Technology APC assignment is based on the geometric mean cost for that code. We note that the geometric mean cost and claims data for HCPCS code C9789 has changed since the CY 2026 OPPS/ASC proposed rule. Based on the updated claims data for this final rule with comment period, the geometric mean cost for HCPCS code C9789 is $1,211 based on 222 single frequency claims. We believe that 222 single frequency claims is adequate for ratesetting for this service. As we do every year, we will reevaluate the APC assignments for these codes in the next rulemaking cycle. We remind hospitals that we review, on an annual basis, the APC assignments for all items and services paid under the OPPS. In summary, after consideration of the public comment we received, we are finalizing with modification a New Technology APC assignment for HCPCS code C9789 to APC 1551 (New Technology--Level 14 ($1201-$1300)) with a payment rate of $1,250.50. Refer to Table 26 for the final OPPS New Technology APC and status indicator assignments for CPT code C9789 for CY 2026. The final CY 2026 payment rates for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the SI definitions for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website. [[Page 53543]] [GRAPHIC] [TIFF OMITTED] TR25NO25.044 k. LimFlow TADV Procedure CPT Code 0620T (APC 1580) The LimFlow TADV procedure which is described by CPT code 0620T (Endovascular venous arterialization, tibial or peroneal vein, with transcatheter placement of intravascular stent graft(s) and closure by any method, including percutaneous or open vascular access, ultrasound guidance for vascular access when performed, all catheterization(s) and intraprocedural roadmapping and imaging guidance necessary to complete the intervention, all associated radiological supervision and interpretation, when performed) is an endovascular procedure that is used to treat patients with chronic limb-threatening ischemia. According to the developer, these patients are no longer eligible for conventional endovascular or open bypass surgery to treat their artery blockage, and without this procedure, they are likely to face limb amputation. CPT code 0620T was established in January 2021 and was assigned to APC 5194 (Level 4 Endovascular Procedures) with a payment rate of approximately $17,400, which is the highest-paying APC for endovascular procedures. While we proposed to continue to assign CPT code 0620T to APC 5194 for CY 2024, we finalized a reassignment from a clinical APC to a New Technology APC with a higher payment rate based on comments received expressing concern that the low payment rate of the procedure would discourage providers from performing the procedure and deny access to the procedure. For CY 2024, the procedure was assigned to APC 1578 (New Technology--Level 41 ($25,001-$30,000)). For CY 2025 ratesetting, there were 11 single frequency claims for CPT code 0620T in the CY 2023 claims data. As this is below the threshold of 100 claims for a service within a year, we applied our universal low volume APC policy and used the highest of the geometric mean cost, arithmetic mean cost, or median cost based on up to 4 years of claims data to assign the service to the appropriate New Technology APC. Based on our review of the available claims and the application of the universal low volume APC policy, we assigned HCPCS code 0620T to APC 1579 (New Technology--Level 42 ($30,001-$40,000)) with a payment rate of $35,000.50 based on the median cost of approximately $36,400. For CY 2026, the OPPS payment rates were proposed to be based on available CY 2024 claims data. There were 19 single frequency claims for 0620T in the CY 2024 claims data. As this is below the threshold of 100 claims for a service within a year, we proposed to again apply our universal low volume APC policy and use the highest of the geometric mean cost, arithmetic mean cost, or median cost based on up to 4 years of claims data to assign the service to the appropriate New Technology APC. Based on our review of the available claims, we have determined that the arithmetic mean is approximately $39,000; the median is approximately $38,000; and the geometric mean cost is approximately $35,000. Of these, the arithmetic mean is the statistical methodology that estimated the highest cost for the service. The payment rate calculated using this methodology falls within the cost band for APC 1579 (New Technology--Level 42 ($30,001-$40,000)) with a payment rate of $35,000.50. Therefore, for CY 2026, we proposed to designate this service as a low volume service under our universal low volume APC policy and to continue to assign HCPCS code 0620T to APC 1579 (New Technology--Level 42 ($30,001-$40,000)) with a payment rate of $35,000.50. We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: A commenter supported the proposal to assign CPT code 0620T to APC 1579 (New Technology--Level 42 ($30,001-$40,000)) with a payment rate of $35,000.50 for CY 2026 based on the application of the universal low volume APC policy. The commenter stated that the assignment accurately reflects the resources used in the procedure. Response: Based on the public comments received, we are finalizing our proposal to apply our universal low volume APC policy and use the highest of the geometric mean cost, arithmetic mean cost, or median cost based on up to 4 years of claims data to assign the service to the appropriate New Technology APC. Three additional claims for CY 2024 have been processed since the CY 2026 OPPS/ASC proposed rule. Our analysis of the updated claims data found that the greater of the geometric mean, arithmetic mean, or median cost calculated for CPT code 0620T is $43,748.64 based on the arithmetic mean. This value falls within APC 1580 (New Technology--Level 43 ($40,001-$50,000)) with a payment rate of $45,000.50. Therefore, for CY 2026, we are assigning CPT code 0620T to APC 1580 based on the application of the universal low volume APC policy. Refer to Table 27 for the final OPPS New Technology APC and status indicator assignments for CPT code 0620T for CY 2026. The final CY 2026 payment rates can be found in Addendum B to this final rule with comment period via the internet on the CMS website. [[Page 53544]] [GRAPHIC] [TIFF OMITTED] TR25NO25.045 l. Liver Histotripsy Service (APC 1579) CPT code 0686T (Histotripsy (i.e., non-thermal ablation via acoustic energy delivery) of malignant hepatocellular tissue, including image guidance) was first effective July 1, 2021, and describes the histotripsy service associated with the use of the HistoSonics system. Histotripsy is a non-invasive, non-thermal, mechanical process that uses a focused beam of sonic energy to destroy cancerous liver tumors and is currently in a non-randomized, prospective clinical trial to evaluate the efficacy and safety of the device for the treatment of primary or metastatic tumors located in the liver.\21\ When HCPCS code 0686T was first effective, the histotripsy procedure was designated as a Category A IDE clinical study (NCT04573881). Since devices in Category A IDE studies are excluded from Medicare payment, payment for CPT code 0686T only reflected the cost of the service that is performed (absent the cost of the device) each time it is reported on a claim. On March 2, 2023, the histotripsy IDE clinical study was re-designated as a Category B (Non-experimental/Investigational) IDE study. Due to this new designation, payment for CPT code 0686T in CY 2024 reflected payment for both the service that was performed and the device used each time it was reported on a claim. For CY 2024, we assigned CPT code 0686T to APC 1576 (New Technology--Level 39 ($15,001-$20,000)) with a payment rate of $17,500.50. For CY 2025, we continued to assign CPT code 0686T to APC 1576 (New Technology--Level 39 ($15,001-$20,000) due to our CY 2025 policy to maintain current New Technology APC assignments for CY 2025 for New Technology APC services with fewer than 10 claims in the 4-year lookback period applicable for the universal low volume APC policy, and based on the fact that there were only 3 claims for CPT code 0686T in the prior 4-year period. --------------------------------------------------------------------------- \21\ ClinicalTrials.gov. ``The HistoSonics System for Treatment of Primary and Metastatic Liver Tumors Using Histotripsy (#HOPE4LIVER) (#HOPE4LIVER).'' Accessed May 10, 2022. https://clinicaltrials.gov/ct2/show/study/NCT04573881. --------------------------------------------------------------------------- For CY 2026, the OPPS payment rates were proposed to be based on available CY 2024 claims data. For the CY 2026 OPPS/ASC proposed rule, we identified 94 claims for CPT code 0686T within this period. As this is below the threshold of 100 claims for a service within a year, we propose to apply our universal low volume APC policy and use the highest of the geometric mean cost, arithmetic mean cost, or median cost based on up to 4 years of claims data to assign CPT code 0686T to the appropriate New Technology APC. We identified $32,307.41 as the arithmetic mean, $20,577.77 as the median, and $21,264.91 as the geometric mean. The arithmetic mean was the statistical methodology that estimated the highest cost for CPT code 0686T. For CY 2026, we proposed to reassign CPT code 0686T to APC 1579 (New Technology--Level 42 ($30,001-$40,000)) with a payment rate of $35,000.50. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter supported the proposal to reassign CPT code 0686T to APC 1579 (New Technology--Level 42 ($30,001-$40,000)) for CY 2026 based on the 94 claims data available. Response: We thank the commenter for their input. Six additional claims for CY 2024 have been processed since the CY 2026 OPPS/ASC proposed rule, bringing the total number of claims to 100. Since the total number of CY 2024 single frequency claims for CY code 0686T surpasses the 99 claim threshold for the universal low volume APC policy, we would use the geometric mean cost of the CY 2024 claims data to set the payment rate for CY 2026 under our standard ratesetting methodology, rather than the highest of the three statistical methodologies over a 4-year lookback period. Based on the updated claims data available for this final rule with comment period, the geometric mean cost for HCPCS code 0686T is around $16,008. Due to the updated claims data available for this final rule with comment period, we are finalizing a New Technology APC assignment for HCPCS code 0686T to APC 1576 (New Technology--Level 39 ($15,001-$20,000)) with a payment rate of around $17,500.50. This is the same APC to which the service is currently assigned in CY 2025. Refer to Table 28 for the final OPPS New Technology APC and status indicator assignments for CPT code 0686T for CY 2026. We refer readers to Addendum B to this final rule with comment period for the final CY 2026 OPPS payment rate for this code. [[Page 53545]] Addendum B is available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.046 m. LiverMultiScan Service (APC 1511) CPT codes 0648T (Quantitative magnetic resonance for analysis of tissue composition (e.g., fat, iron, water content), including multiparametric data acquisition, data preparation and transmission, interpretation and report, obtained without diagnostic mri examination of the same anatomy (e.g., organ, gland, tissue, target structure) during the same session; single organ) and 0649T (Quantitative magnetic resonance for analysis of tissue composition (e.g., fat, iron, water content), including multiparametric data acquisition, data preparation and transmission, interpretation and report, obtained with diagnostic mri examination of the same anatomy (e.g., organ, gland, tissue, target structure); single organ (list separately in addition to code for primary procedure)) became effective July 1, 2021 and are associated with the LiverMultiScan service. LiverMultiScan is a Software as a medical Service (SaaS) that is intended to aid the diagnosis and management of chronic liver disease, the most prevalent of which is Non-Alcoholic Fatty Liver Disease (NAFLD). It provides standardized, quantitative imaging biomarkers for the characterization and assessment of inflammation, hepatocyte ballooning, and fibrosis, as well as steatosis, and iron accumulation. LiverMultiScan receives MR images acquired from patients' providers and analyzes the images using their proprietary Artificial Intelligence (AI) algorithms. It then sends the providers a quantitative metric report of the patient's liver fibrosis and inflammation. In accordance with our SaaS add-on codes policy (87 FR 72032 to 72033), SaaS CPT add- on codes are assigned to the same APCs and status indicators as their standalone codes. Thus, CPT code 0649T, the add-on code for LiverMultiScan, is assigned to the identical APC and status indicator as CPT code 0648T, the standalone code for the same service. For CY 2024 and CY 2025, we used our equitable adjustment authority under section 1833(t)(2)(E) to continue to assign CPT codes 0648T and 0649T to APC 1511 (New Technology--Level 11 ($901-$1,000) with a payment rate of $950.50. For CY 2026, the OPPS payment rates were proposed based on available CY 2024 claims data. We identified 107 single frequency claims for CPT code 0648T and 104 single frequency claims CPT code 0649T for CY 2024. The geometric mean cost for CPT code 0648T was $253.68 and the geometric mean cost for CPT code 0649T was $162.96. Based on the geometric mean cost for CPT code 0648T, we would have assigned CPT codes 0648T and 0649T to APC 1504 (New Technology--Level 4 ($201-$300)) with a payment rate of $250.50. However, assigning these SaaS technologies based on the geometric costs would have decreased the payment rate by around 75 percent. We recognized that software-based technologies, like those described by CPT codes 0648T and 0649T, continue to evolve and that the limited claims data may not have truly represented the cost of this service. We issued a comment solicitation in section III.F. of the CY 2026 OPPS/ASC proposed rule to collect information on alternative and consistent payment methods that seek to reflect the underlying value of SaaS technologies under the OPPS to consider in future rulemaking. We hoped to identify whether specific adjustments to our payment policies for SaaS technologies are needed to more accurately and appropriately pay for these products and services across settings of care. Therefore, we proposed to use our authority under section 1833(t)(2)(E) of Act for CY 2026 to continue to assign CPT codes 0648T and 0649T to APC 1511 (New Technology--Level 11 ($901- $1000)) with a payment rate of $950.50, which we believed best reflected the cost of the service, based on information provided by the applicant. We note that since the CY 2026 OPPS/ASC proposed rule was published, CPT code 0648T has an updated geometric mean cost of around $269 based on 114 single frequency claims, and CPT code 0649T has an updated geometric mean cost of around $158 based on 111 single frequency claims. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A number of comments were received in support of maintaining the APC assignments to New Technology APC 1511. Commenters stated that maintaining the current payment rate for LiverMultiScan will allow continued access to this valuable non-invasive imaging tool service. Many commenters noted the clinical relevance of these procedures in obtaining information on a patient's liver health and developing appropriate treatment plans. A commenter supported the proposed New Technology APC assignment but also provided possible explanations for the payment variability, including the inappropriate use of CPT codes and distorted data due to inappropriate cost to charge ratios. The commenter noted the need for reliable claims data for ratesetting. Response: We appreciate the commenters' input and support for the proposed APC assignment. We hope to glean valuable information from the SaaS comment solicitation that will help us understand the potential factors that affect payment consistency. We hope by having this additional information, we can put forth a policy in future rulemaking that provides a [[Page 53546]] more stable payment method for SaaS technologies. After consideration of the public comment we received, we are finalizing our proposal without modification. We will use our equitable adjustment authority under section 1833(t)(2)(E) of the Act to continue to assign CPT codes 0648T and 0649T to New Technology APC 1511 (New Technology--Level 11 ($901-$1,000) with a payment rate of $950.50 for CY 2026. Refer to Table 29 for the OPPS New Technology APC and status indicator assignments for CPT codes 0648T and 0649T for CY 2026. The final CY 2026 payment rates can be found in Addendum B to this final rule via the internet on the CMS website. In addition, we refer readers to Addendum D1 to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Addendum D1 can also be found via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.047 n. Optellum Lung Cancer Prediction (LCP) (APC 1508) CPT codes 0721T (Quantitative computed tomography (CT) tissue characterization, including interpretation and report, obtained without concurrent CT examination of any structure contained in previously acquired diagnostic imaging) and 0722T (Quantitative computed tomography (CT) tissue characterization, including interpretation and report, obtained with concurrent CT examination of any structure contained in the concurrently acquired diagnostic imaging dataset (list separately in addition to code for primary procedure)) became effective July 1, 2022, and are associated with the Optellum LCP technology. The Optellum LCP applies an algorithm to a patient's CT scan to produce a raw risk score for a patient's pulmonary nodule. The physician uses the risk score to quantify the risk of lung cancer and to determine what the next management step should be for the patient (for example, CT surveillance versus invasive procedure). In accordance with our SaaS add-on codes policy (87 FR 72032 to 72033), SaaS CPT add-on codes are assigned to the same APCs and status indicators as their standalone codes. Thus, CPT code 0722T, the add-on code for the Optellum LCP service, is assigned to the identical APC and status indicator as CPT code 0721T, the standalone code for the same service. For CY 2024, we assigned CPT codes 0721T and 0722T to APC New Technology 1508 (New Technology--Level 8 ($601-$700)). For CY 2025, we continued to assign CPT codes 0721T and 0722T to APC 1508 (New Technology--Level 8 ($601-$700)) with a payment rate of $650.50 based on our CY 2025 policy to maintain New Technology APC assignments for CY 2025 for New Technology APC services with fewer than 10 claims in the 4-year lookback period applicable for the universal low-volume APC policy. For CY 2026, OPPS payment rates were proposed based on available CY 2024 claims data. There were 496 combined claims for CPT codes 0721T and 0722T for CY 2024: 7 claims for CPT code 0721T and 489 claims for 0722T. The geometric mean cost of CPT code 0721T is $30.24 and the geometric mean cost for CPT code 0722T is $60.47. Based on the geometric mean cost for CPT code 0722T, which has a significantly greater number of claims than 0721T, we would assign CPT codes 0721T and 0722T to APC 1502 (New Technology--Level 2 ($51-$100) with a payment rate of $75.50. However, assigning these SaaS technologies based on the geometric costs would decrease the payment rate by close to 90 percent in 1 year. We recognize that software-based technologies, like those described by CPT codes 0721T and 0722T, continue to evolve and that the limited claims data that we have may not truly represent the cost of this service. We issued a comment solicitation in section III.F. of the CY 2026 OPPS/ASC proposed rule to collect information on alternative and consistent payment methods that seek to reflect the underlying value of SaaS under the OPPS to consider in future rulemaking. We hope to identify whether specific adjustments to our payment policies for SaaS technologies are needed to more accurately and appropriately pay for these products and services across settings of care. While we recognize that there are certain unknowns regarding the cost of technologies like the Optellum LCP service, we believe it would be unlikely for the cost to be 90 percent less than the initial estimated costs based on our [[Page 53547]] review of the information provided in the New Technology APC application. Therefore, we proposed to use our authority under section 1833(t)(2)(E) for CY 2026 to continue to assign CPT codes 0721T and 0722T to APC 1508 (New Technology--Level 8 ($601-$700)) with a payment rate of $650.50 based on the information provided to us by the manufacturer in their application, which we believed may better reflect the cost of the service at the time of the CY 2026 OPPS/ASC proposed rule than the available claims data. We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: Commenters were supportive of the proposal to use our equitable adjustment authority to continue to assign CPT codes 0721T and 0722T to APC 1508. Commenters believe the proposed APC assignment aligned with the cost of the service. Commenters expressed concern that the claims data do not accurately reflect the true cost to hospitals and imaging providers of delivering the service. A commenter stated that they believe the inaccurate claims data was the result of hospitals reporting inappropriate revenue codes for the service and expressed support for the creation of a new cost center with revenue codes for AI-based services. Response: While CMS does not provide billing advice to hospitals, we encourage manufacturers and distributors to provide outreach to hospitals regarding billing practices that are most appropriate for their individual technologies. We will consider the commenter's suggestion to create a new cost center for AI-based services as we explore how to appropriately pay for software as a service in future rulemaking. We note that we solicited comments on payment policies for ``software as a service'' in the CY 2026 OPPS/ASC proposed rule and refer readers to section III.F. of this final rule with comment period for a summary of the comments received. After consideration of the public comments, we are finalizing our proposal without modification. Specifically, for CY 2026, we are finalizing our proposal to assign CPT codes 0721T and 0722T to APC 1508 (New Technology--Level 8 ($601-$700)) with a payment rate of $650.50. [GRAPHIC] [TIFF OMITTED] TR25NO25.048 Refer to Table 30 for the proposed and final OPPS New Technology APC and status indicator assignments for HCPCS codes 0721T and 0722T for CY 2026. The final CY 2026 payment rates can be found in Addendum B to this final rule with comment period via the internet on the CMS website. o. Quantitative Magnetic Resonance (QMR) for Analysis of Tissue Composition (APC 1511) Effective January 1, 2022, CPT codes 0697T (Quantitative magnetic resonance for analysis of tissue composition (e.g., fat, iron, water content), including multiparametric data acquisition, data preparation and transmission, interpretation and report, obtained without diagnostic mri examination of the same anatomy (e.g., organ, gland, tissue, target structure) during the same session; multiple organs) and 0698T (Quantitative magnetic resonance for analysis of tissue composition (e.g., fat, iron, water content), including multiparametric data acquisition, data preparation and transmission, interpretation and report, obtained with diagnostic mri examination of the same anatomy (e.g., organ, gland, tissue, target structure); multiple organs (list separately in addition to code for primary procedure)) are associated with the CoverScan Software as a medical Service (SaaS). This service is a medical image management and processing software package that analyzes MR data and provides quantified metrics of multiple organs such as the heart, lungs, liver, spleen, pancreas, and kidney. For CY 2024, we assigned CPT codes 0697T and 0698T to APC 1511 (New Technology--Level 11 ($900-$1,000)). For CY 2025, there were fewer than 100 claims for ratesetting and because we recognized that the number of claims used to apply our universal low volume policy (using the highest of the geometric mean cost, arithmetic mean cost, or median cost based on up to 4 [[Page 53548]] years of claims data) may not have represented the cost of this SaaS, we used our equitable adjustment authority under section 1833(t)(2)(E) to continue to assign CPT codes 0697T and 0698T to APC 1511 (New Technology--Level 11 ($900-$1,000)) with a payment of $950.50. In accordance with our SaaS add-on codes policy (87 FR 72032 to 72033), SaaS CPT add-on codes are assigned to the same APCs and status indicators as their standalone codes. Thus, CPT code 0698T, the add-on code for CoverScan was assigned to the identical APC and status indicator as CPT code 0697T, the standalone code for the same service. For CY 2026, the proposed OPPS payment rates were based on available CY 2024 claims data. We identified 55 single frequency claims for CPT code 0698T and no claims for CPT code 0697T in CY 2024. Because the SaaS standalone and add-on services are identical, we believe it is important for purposes of ratesetting to use the data that is available, whether it is associated with the standalone code or the add-on code. As the 55 single frequency claims are below the threshold of 100 claims for a service within a year, we would have proposed applying our universal low volume APC policy and would have used the highest of the geometric mean cost, arithmetic mean cost, or median cost based on up to 4 years of claims data to assign CPT codes 0697T and 0698T to the appropriate New Technology APC. Our analysis of the combined data, zero claims for CPT code 0697T and 137 claims for CPT code 0698T, yielded a geometric mean cost of approximately $422, an arithmetic mean cost of approximately $600, and a median cost of approximately $777. The median cost is the statistical methodology that estimated the highest cost for CPT codes 0697T and 0698T. Based on the median cost, we would have proposed to assign CPT codes 0697T and 0698T to APC 1509 (New Technology--Level 9 ($701-$800)) with a payment of $750.50. As in CY 2025, for the CY 2026 OPPS/ASC proposed rule, we recognized that the few claims available for CPT codes 0697T and 0698T may not have truly represented the cost of this SaaS. We recognized that software-based technologies, like those described by CPT codes 0697T and 0698T, are unique and rapidly evolving and that a significant fluctuation in payment may hinder patient access to these new services. We issued a comment solicitation in section III.F of the CY 2026 OPPS/ ASC proposed rule to collect information on alternative and consistent payment methods that seek to reflect the underlying value of SaaS under the OPPS to consider in future rulemaking. We hoped to identify whether specific adjustments to our payment policies for SaaS are needed to more accurately and appropriately pay for these products and services across settings of care. Because we have continued to have the same concerns about payment variability and the possible effects the payment may have on patient access to SaaS, we proposed to use our authority under section 1833(t)(2)(E) for CY 2026 to continue to assign CPT codes 0697T and 0698T to APC 1511 (New Technology--Level 11 ($900-$1,000)) with a payment of $950.50 which we believe best reflects the cost of the service at this time. Comment: A commenter provided possible explanations for the payment variability, including the inappropriate use of CPT codes and distorted data due to inappropriate cost to charge ratios and stated the need for reliable claims data for ratesetting. While concerns were expressed as to the payment variability, the commenter supported the proposed APC assignment to APC 1511 (New Technology--Level 11 ($900-$1,000)) with a payment of $950.50. The commenter indicated that this APC assignment provides adequate payment for this service which enables beneficiaries to have continued access to these technologies. Response: We appreciate the commenter's input and support for the proposed APC assignment. We hope to glean valuable information from the SaaS comment solicitation that will help us understand the potential factors that affect payment consistency. We hope by having this additional information, we can put forth a policy in future rulemaking that provides a more stable payment method for SaaS technologies. After consideration of the public comment we received, we are finalizing our proposal without modification. We will use our equitable adjustment authority under section 1833(t)(2)(E) to continue to assign CPT codes 0697T and 0698T to New Technology APC 1511 (New Technology-- Level 11 ($901-$1,000) with a payment rate of $950.50 for CY 2026. Refer to Table 31 for the OPPS New Technology APC and status indicator assignments for CPT codes 0697T and 0698T for CY 2026. The final CY 2026 payment rates can be found in Addendum B to this final rule with comment period via the internet on the CMS website. In addition, we refer readers to Addendum D1 to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Addendum D1 can also be found via the internet on the CMS website. [[Page 53549]] [GRAPHIC] [TIFF OMITTED] TR25NO25.049 p. Quantitative Magnetic Resonance Cholangiopancreatography (QMRCP) (APC 1511) Effective July 1, 2022, CPT codes 0723T (Quantitative magnetic resonance cholangiopancreatography (QMRCP) including data preparation and transmission, interpretation and report, obtained without diagnostic magnetic resonance imaging (MRI) examination of the same anatomy (e.g., organ, gland, tissue, target structure) during the same session) and 0724T (Quantitative magnetic resonance cholangiopancreatography (QMRCP), including data preparation and transmission, interpretation and report, obtained with diagnostic magnetic resonance imaging (MRI) examination of the same anatomy (e.g., organ, gland, tissue, target structure) (list separately in addition to code for primary procedure)) are associated with the QMRCP Software as a medical Service (SaaS). The service performs quantitative assessment of the biliary tree and gallbladder. It uses a proprietary algorithm that produces a three-dimensional reconstruction of the biliary tree and pancreatic duct and also provides precise quantitative information of biliary tree volume and duct metrics. In accordance with our SaaS add-on codes policy (87 FR 72032 to 72033), SaaS CPT add-on codes are assigned to the same APCs and status indicators as their standalone codes. Consistent with our SaaS add-on codes policy, CPT code 0724T, the add-on code for QMRCP is assigned to the identical APC and status indicator as CPT code 0723T, the standalone code for the same service. For CY 2024, we assigned CPT codes 0723T and 0724T to APC 1511 (New Technology--Level 11 ($900-$1,000)). For CY 2025, we continued to assign CPT codes 0723T and 0724T to APC 1511 (New Technology--Level 11 ($900-$1,000)) based on there being fewer than 10 claims in the 4-year lookback period and the exception from the universal low-volume APC policy. For CY 2026, the OPPS payment rates were proposed to be based on available CY 2024 claims data. There were only four new claims for HCPCS code 0724T and no claims for CPT code 0723T. Given our proposal to maintain current New Technology APC assignments for CY 2026 for New Technology APC services with fewer than 10 claims in the 4-year lookback period due to an exception from the universal low-volume APC policy, we proposed, for CY 2026, to continue to assign CPT codes 0723T and 0724T to APC 1511 (New Technology--Level 11 ($901-$1000)), with a payment rate of $950.50. Comment: A commenter supported the proposals to continue to assign 0723T and 0724T to APC 1511. Response: We thank the commenter for their support. Our updated claims data for the 4-year lookback period for the universal low volume APC policy shows no claims for HCPCS code 0723T and four single claims for 0724T. Because we are finalizing our proposal to maintain current New Technology APC assignments for CY 2026 for New Technology APC services with fewer than 10 claims in the 4-year lookback period, we are continuing to assign HCPCS code 0723T and 0724T to APC 1511. Refer to Table 32 for the final OPPS New Technology APC and status indicator assignments for CPT codes 0723T and 0724T for CY 2026. The final CY 2026 payment rates can be found in Addendum B to this final rule with comment period via the internet on the CMS website. [[Page 53550]] [GRAPHIC] [TIFF OMITTED] TR25NO25.050 q. Supervised Visits for Esketamine Self-Administration (APCs 1512 and 1518) On March 5, 2019, FDA approved Spravato\TM\ (esketamine) nasal spray, used in conjunction with an oral antidepressant.\22\ for treatment of depression in adults who have tried other antidepressant medicines but have not benefited from them (treatment-resistant depression (TRD)). This is the first FDA approval of esketamine for any use. --------------------------------------------------------------------------- \22\ Subsequently, the FDA approved a prior approval supplemental new drug application (sNDA) providing for the following labeling modification: expansion of the indication to include monotherapy of Spravato\TM\ (esketamine) for treatment resistant depression (TRD). See https://www.accessdata.fda.gov/drugsatfda_docs/appletter/2025/211243Orig1s016ltr.pdf. --------------------------------------------------------------------------- Esketamine is a noncompetitive N-methyl D-aspartate (NMDA) receptor antagonist. It is a nasal spray supplied as an aqueous solution of esketamine hydrochloride in a vial with a nasal spray device. Each device delivers two sprays containing a total of 28 mg of esketamine. Patients would require either two (2) devices (for a 56 mg dose) or three (3) devices (for an 84 mg dose) per treatment. Because of the risk of serious adverse outcomes resulting from sedation and dissociation and respiratory depression caused by esketamine nasal spray administration, and the potential for abuse and misuse of the product, it is only available through a restricted distribution system under a Risk Evaluation and Mitigation Strategy (REMS). A REMS is a drug safety program that the FDA can require for certain medications with serious safety concerns to help ensure the benefits of the medication outweigh its risks. The Spravato\TM\ REMS program requires, among other requirements, that the esketamine nasal spray be dispensed and administered to enrolled patients in health care settings that are certified in the REMS. See www.fda.gov for more information regarding the Spravato\TM\ REMS program requirements. A treatment session of esketamine consists of instructed nasal self-administration by the patient followed by a period of at least 2 hours post-administration observation of the patient under direct supervision of a health care professional in the certified health care setting. Refer to the CY 2020 PFS final rule and interim final rule for more information about supervised visits for esketamine nasal spray self-administration (84 FR 63102 through 63105); see also the Spravato REMS document and Spravato labeling available on the FDA website.\23\ --------------------------------------------------------------------------- \23\ The REMS document is available at https://www.fda.gov/drugs/drug-safety-and-availability/risk-evaluation-and-mitigation-strategies-rems, and labeling can be found at https://www.accessdata.fda.gov/scripts/cder/daf/index.cfm. --------------------------------------------------------------------------- To facilitate prompt beneficiary access to the new, potentially life-saving treatment for TRD using esketamine, we created two new HCPCS G codes, G2082 and G2083, effective January 1, 2020. HCPCS code G2082 is for an outpatient visit for the evaluation and management of an established patient who requires the supervision of a physician or other qualified health care professional and provision of up to 56 mg of esketamine through nasal self-administration and includes two hours of post-administration observation. HCPCS code G2083 describes a similar service to HCPCS code G2082 but involves the administration of more than 56 mg of esketamine. For CY 2025, HCPCS code G2082 was assigned to APC 1513 (New Technology--Level 13 ($1101-$1200)) with a payment rate of $1,150.50 and HCPCS code G2083 was assigned to APC 1516 (New Technology--Level 16 ($1401-$1,500)) with a payment rate of $1,450.50. For CY 2026, the OPPS payment rates were proposed based on available CY 2024 claims data as the available single frequency claims exceed the 100 claims threshold generally used for our universal low volume policy. Therefore, for CY 2026, we proposed to assign HCPCS codes G2082 and G2083 to New Technology APCs based on each of the codes' geometric mean costs. Specifically, we proposed to assign HCPCS code G2082 to APC 1512 (New Technology--Level 12 ($1001-$1100)) with a payment rate of $1,050.50 based on its geometric mean cost of $1,019, which was calculated using the available 558 single frequency claims from CY 2024 claims data. We also proposed to assign HCPCS code G2083 to APC 1517 (New Technology--Level 17 ($1501-$1600)) with a payment rate [[Page 53551]] of $1,550.50 based on its geometric mean cost of $1,549, which was calculated using the available 4,138 single frequency claims from CY 2024 claims data. As we continue to gather adequate claims data on these codes, we invited public comment on the appropriate clinical APC assignments for HCPCS codes G2082 and G2083. We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: Commenters supported the proposed APC assignment. They encouraged CMS to continue to provide adequate payment and not to undervalue this needed treatment, as that would cause access issues for beneficiaries in need of this service. Some commenters requested that we maintain the APC assignment for HCPCS code G2082 in APC 1513 (New Technology--Level 13 ($1101-$1200)) with a payment of $1,150.50, stating that adequate payment is needed to preserve access while additional cost data is collected. Another commenter suggested that we create a new clinical APC family with two levels that are specific to this service. The commenter stated that the creation of the new APC would ensure clinical and resource homogeneity and provide an opportunity in the future for similar services to be placed in the same APC. Response: As readers are aware, we have been contemplating potential clinical APC assignments for the past number of rulemaking cycles but are not convinced as to what clinical APC would be appropriate in terms of clinical and resource homogeneity. We appreciate the public's suggestion of creating a new APC for this service. We note the geometric mean costs for both HCPCS codes G2082 and G2083 have changed since the CY 2026 OPPS/ASC proposed rule. Based on the updated claims data available for this final rule, the geometric mean cost for HCPCS code G2082 is around $1,015 and the geometric mean cost for HCPCS code G2083 is around $1,612. Based on updated claims data available for this final rule with comment period, we are finalizing a New Technology APC assignment for HCPCS code G2083 to APC 1518 (New Technology--Level 18 ($1601-$1700)) with a payment of $1,650.50. Finally, we note that because we have gathered additional claims data and seen increases in claims volume, we will continue to consider potential clinical APC placements for HCPCS codes G2082 and G2083 through future rulemaking. Refer to Table 33 for the CY 2026 proposed and final APC and status indicator assignments for HCPCS codes G2082 and G2083. The CY 2026 payment rates can be found in Addendum B to this final rule with comment period via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.051 r. Surfacer[supreg] Inside-Out[supreg] Access Catheter System (APC 1534) HCPCS code C9780 (Insertion of central venous catheter through central venous occlusion via inferior and superior approaches (e.g., inside-out technique), including imaging guidance) describes the procedure associated with the use of the Surfacer[supreg] Inside- Out[supreg] Access Catheter System that is designed to address central venous occlusion. HCPCS code C9780 was established on October 1, 2021, and since its establishment the code has been assigned to APC 1534 (New Technology--Level 34 ($8001-$8500)). For the CY 2026 OPPS/ASC proposed rule, there were only three new claims for HCPCS code C9780. Therefore, there are only seven single frequency claims available for HCPCS code C9780 in the 2 years of data since the code has been available. Given our proposal to maintain current New Technology APC [[Page 53552]] assignments for CY 2026 for New Technology APC services with fewer than 10 claims in the 4-year lookback period applicable for the universal low-volume APC policy, we proposed for CY 2026 to continue to assign HCPCS code C9780 to APC 1534 (New Technology--Level 34 ($8001-$8500)) with a payment rate of $8,250.50. We did not receive any public comments on our proposal to continue to assign CPT code C9870 to APC 1534 (New Technology--Level 34 ($8001- $8500)). We note that there were no additional claims in our updated claims data. Therefore, given our policy to maintain current New Technology APC assignments for CY 2026 for New Technology APC services with fewer than 10 claims in the 4-year lookback period applicable for the universal low volume APC policy, we are finalizing as proposed to continue to assign CPT code C9870 to APC 1534. Refer to Table 34 for the final OPPS New Technology APC and status indicator assignment for HCPCS code C9780. The final CY 2026 payment rates can be found in Addendum B to this final rule with comment period via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.052 s. Transcatheter Atrial Shunt System (TASS) (APC 1537) The Transcatheter Atrial Shunt System (TASS) is a nitinol self- expanding cardiovascular implant consisting of four arms including two left atrial (LA) arms and two coronary sinus (CS) arms placed between the left atrium and coronary sinus to create a 7mm flow diameter channel for blood to flow from the high pressure region of the left atrium to the lower pressure region of the right atrium via the coronary sinus. TASS was designated as a Category A IDE clinical study (NCT03523416) on July 31, 2019. Effective October 1, 2023 CMS created HCPCS code C9792 (Blinded or nonblinded procedure for symptomatic New York Heart Association (NYHA) Class II, III, IVa heart failure; transcatheter implantation of left atrial to coronary sinus shunt using jugular vein access, including all imaging necessary to intra procedurally map the coronary sinus for optimal shunt placement (e.g., TEE or ICE ultrasound, fluoroscopy), performed under general anesthesia in an approved investigational device exemption (IDE) study) to describe the TASS service and assigned it to APC 1537 (New Technology-- Level 37 ($9501-$10000)) with a payment rate of $9750.50. Since devices in Category A IDE studies are not covered by Medicare during the study, the payment for HCPCS code C9792 reflects only the cost of the service that is performed each time it is reported on a claim. For CY 2025, there were no claims available, so we maintained the APC assignment for HCPCS code C9792 to APC 1537 (New Technology--Level 37 ($9501-$10000)). For CY 2026, the proposed OPPS payment rates are based on available CY 2024 claims data. We do not have any claims data for HCPCS code C9792. Therefore, for CY 2026, we proposed to continue to assign HCPCS code C9792 to APC 1537 (New Technology--Level 37 ($9501-$10000)) with a payment rate of $9,750.50. We did not receive public comments on this provision, and therefore, we are finalizing as proposed. HCPCS Code C9792 will remain assigned to APC 1537 (New Technology--Level 37 ($9,501-$10,000)) with a payment rate of $9,750.50. Refer to Table 35 for the final OPPS New Technology APC and status indicator assignment for HCPCS code C9792. The final CY 2026 payment rates can be found in Addendum B to this final rule with comment period via the internet on the CMS website. [[Page 53553]] [GRAPHIC] [TIFF OMITTED] TR25NO25.053 t. Magnetic Resonance Imaging With Inhaled Hyperpolarized Xenon-129 Contrast Agent (APC 1551) HCPCS code C9791 (Magnetic resonance imaging with inhaled hyperpolarized xenon-129 contrast agent, chest, including preparation and administration of agent) was established on October 1, 2023. For CY 2023, we assigned HCPCS code C9791 to APC 1551 (New Technology--Level 14 ($1201-$1300)). Due to the effective date of the service of October 1, 2023, there were no claims available for HCPCS code C9791 for rate setting in CY 2024. Therefore, in CY 2024, we continued to assign HCPCS code C9791 to APC 1551(New Technology--Level 14 ($1201-$1300)). There were no claims available for HCPCS code C9791 when we were setting rates for CY 2025, so we continued to assign HCPCS code C9791 to APC 1551 (New Technology--Level 14 ($1201-$1300)). For CY 2026, the proposed OPPS payment rates were based on the available CY 2024 data. There were only four new claims for HCPCS code C9791. Given our proposal to maintain current New Technology APC assignments for CY 2026 for New Technology APC services with fewer than 10 claims in the 4-year lookback period applicable for the universal low-volume APC policy, we proposed for CY 2026 to continue to assign HCPCS code C9791 to APC 1551--New Technology--Level 14 ($1201-$1300)), with a payment rate of $1,250.50. We did not receive public comments on our proposal to continue to assign HCPCS code C9791 to APC 1551. Our updated claims data for the 4-year lookback period for the universal low volume APC policy shows only five claims for HCPCS code C9791. Because we are finalizing our proposal to maintain current New Technology APC assignments for CY 2026 for New Technology APC services with fewer than 10 claims in the 4-year lookback period, we are finalizing our proposal without modification to continue to assign HCPCS code C9791 to APC 1551. Refer to Table 36 for the final OPPS New Technology APC and status indicator assignment for HCPCS code C9791 for CY 2026. The final CY 2026 payment rates can be found in Addendum B to this final rule with comment period via the internet on the CMS website. In addition, we refer readers to Addendum D1 to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Addendum D1 can also be found via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.054 u. SAINT Neuromodulation System (APCs 1511 and 1525) The SAINT Neuromodulation System is a non-invasive repetitive transcranial magnetic stimulation (rTMS) system that identifies an individualized target and delivers navigationally directed repetitive magnetic pulses to that individualized target located within the left dorsolateral prefrontal cortex to treat major depressive disorder (MDD). The patient first receives structural MRI and functional MRI scans that are analyzed by the provider to identify and localize the personalized stimulation target in the patient's dorsolateral prefrontal cortex. Once the areas targeted for treatment are identified, the patient [[Page 53554]] receives non-invasive magnetic stimulation in the targeted area. The patient has 10 treatment sessions per day with each treatment session lasting 10 minutes followed by 50 minutes of rest before another treatment session occurs. The treatment is administered over five days for a total of 50 sessions of non-invasive magnetic stimulation therapy. There are four CPT codes listed in Table 37 that describe the MRI scans that are used to target the treatment and describe the administration of the non-invasive magnetic stimulation therapy. [GRAPHIC] [TIFF OMITTED] TR25NO25.055 For CY 2025, the OPPS payment rates were proposed based on available CY 2023 claims data. However, CPT codes 0889T, 0890T, 0891T, and 0892T did not become effective until July 1, 2024, which means there were no claims data for the procedures described these CPT codes. We assigned our proposed rates for these services based on our evaluation of the resources needed to perform these services. For CY 2026, the OPPS payment rates were proposed based on available CY 2024 claims data. There were only five claims for CPT code 0889T and three claims for CPT code 0892T within this period. Given our proposal to maintain current New Technology APC assignments for CY 2026 for New Technology APC services with fewer than 10 claims in the 4-year lookback period applicable for the universal low-volume APC policy, we proposed to continue to assign CPT code 0889T to APC 1511 (New Technology--Level 11 ($901-$1000)) with a payment of $950.50 and CPT code 0892T to APC 1525 (New Technology--Level 25 ($3501-$4000)) with a payment of $3750.50. There were 12 single frequency claims for CPT 0890T and 39 single frequency claims for CPT 0891T. As this is above the threshold of 10 claims and below the threshold of 100 claims for a service within a year, we proposed to apply our universal low volume New Technology APC policy and use the highest of the geometric mean cost, arithmetic mean cost, or median cost based on up to 4 years of claims data to assign CPT codes 0890T and 0891T to the appropriate New Technology APCs. Using available claims data from CY 2024, our analysis found the geometric mean cost of CPT 0890T was approximately $1,646, the median cost was approximately $1,009, and the arithmetic mean cost was approximately $1,950. The arithmetic mean was the statistical methodology that estimates the highest cost for the service. Therefore, we proposed, for CY 2026, to assign CPT code 0890T to APC 1521 (New Technology--Level 21 ($1901-$2000)) with a payment rate of $1,950.50. For CPT 0891T, using the available claims data from CY 2024, our analysis found the geometric mean cost was approximately $1,692, the median cost was approximately $1,009, and the arithmetic mean cost was approximately $2,010. The arithmetic mean was the statistical methodology that estimated the highest cost for the service. Therefore, we proposed, for CY 2026, to assign CPT code 0891T to APC 1522 (New Technology--Level 22 ($2001-$2500)) with a payment rate of $2,250.50. Since the CY 2026 OPPS/ASC proposed rule was published, we note that CPT code 0889T now has 11 single frequency claims; CPT code 0890T has an updated geometric mean cost of $1,687; and CPT code 0891T now has 41 single frequency claims and a geometric mean cost of around $1,690. There were no changes to the claims information for CPT code 0892T. We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: Many commenters requested that CMS maintain the current New Technology APC assignments as the current assignments more appropriately reflect the resources required to provide this highly resource intensive therapy. Commenters noted that if CMS finalized the proposed rates, it would result in a 40-48 percent decrease in payment for two of the SAINT codes. They indicated that not only would the payment reduction affect current access to these services for patients who are suffering from major depressive disorder and treatment- resistant depression, but it would also impede providers from implementing SAINT. As a result, this would further widen the disparities in care, especially in rural and underserved communities where treatment options may be limited. Commenters stated that the limited claims data (less than 1 year) does not accurately reflect the costs of providing SAINT and that CMS should not use the small dataset that is available for determining the rates for CY 2026. A commenter noted that one of the early providers of SAINT confirmed with [[Page 53555]] them that their reported costs were made in error and were highly inaccurate. The commenter stated that the charges and revenue code assignments for CPT codes 0890T and 0891T dramatically under-reported costs for SAINT, potentially by 80 percent of actual costs for providing this service. Response: We agree that the proposed rates based on a partial year of claims do not accurately reflect the costs for implementing, providing, and maintaining this service. After consideration of the public comments we received, we are not finalizing our proposal for CY 2026. For CY 2026, we are using our equitable adjustment authority under section 1833(t)(2)(E) of the Act to maintain the current APC assignments for CPT codes 0889T, 0890T, 0891T, and 0892T. Refer to Table 38 for the proposed and final OPPS New Technology APC and status indicator assignments for CPT codes 0889T, 0890T, 0891T, and 0892T. The final CY 2026 payment rates for these codes can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the SI definitions for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website. BILLING CODE 4120-01-P [GRAPHIC] [TIFF OMITTED] TR25NO25.056 BILLING CODE 4120-01-C v. Implantable Glucose Monitoring System (APC 1563) Effective January 1, 2017, the AMA CPT Editorial Panel established CPT codes 0446T (Creation of subcutaneous pocket with insertion of implantable interstitial glucose sensor, including system activation and patient training) and 0448T (Removal of implantable interstitial glucose sensor with creation of subcutaneous pocket at different anatomic site and insertion of new implantable sensor, including system activation) to describe an implantable glucose sensor for patients with diabetes. These codes were used to describe sensors with a 90-day or 180-day battery life. Although these CPT codes were effective January 1, 2017, the implantable interstitial glucose sensor did not receive FDA approval for marketing until June 6, 2019. For CY 2021, we assigned CPT codes 0446T and 0448T to APC 5054 (Level 4 Skin Procedures) and a status indicator of [[Page 53556]] ``T'' (Procedure or Service, Multiple Procedure Reduction Applies; Paid under OPPS; separate APC payment.) and have maintained these APC assignments since then. In the CY 2025 OPPS/ASC final rule with comment period, we created the following two HCPCS G codes effective January 1, 2025, to describe the implantable interstitial glucose sensor with a 365-day battery life. G0546 (Creation of subcutaneous pocket with insertion of 365 day implantable interstitial glucose sensor, including system activation and patient training); and G0565 (Removal of implantable interstitial glucose sensor with creation of subcutaneous pocket at different anatomic site and insertion of new 365 day implantable sensor, including system activation). We assigned HCPCS codes G0564 and G0565 to APC 1561 (New Technology--Level 24 ($3001-$3500)) with a payment rate of $3,250.50. For the April 1, 2025, quarterly update, we deleted HCPCS codes G0564 and G0565 and assigned 0446T and 0448T to APC 1561 (New Technology--Level 24 ($3001-$3500)) with a payment rate of $3,250.50 to describe the new implantable interstitial glucose sensor with a 365-day battery life. The 365-day glucose sensor replaced previous versions of the implantable interstitial glucose sensor with shorter battery lives. Therefore, the 365-day sensor is the only sensor on the market and can only be described by CPT codes 0446T and 0448T. For CY 2026, the proposed OPPS payment rates were based on available CY 2024 claims data. As CPT codes 0446T and 0448T were assigned to New Technology APCs to describe this new sensor for the April 2025 quarterly update and the G codes describing this service were only effective for one quarter, we do not have any claims data for the service. Therefore, for CY 2026, we proposed to continue to assign CPT codes 0446T and 0448T to APC 1561 (New Technology--Level 24 ($3001- $3500)) with a payment rate of $3,250.50. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter requested that CMS reassign CPT codes 0446T and 0448T to APC 1530 (New Technology--Level 30 ($6001-$6500)). The commenter cited the increased cost of the implanted 365-day glucose sensor as the reason for their request and the value of the longer sensor duration, including fewer insertion and removal procedures and better adherence to therapy. They explained that extensive research and development, along with high manufacturing costs, have contributed to the cost of the implantable continuous glucose monitoring system (iCGM system) which they state is $6,800. The commenter also requested that the OPPS payment align with the PFS payment (approximately $5,800) to provide consistent payment regardless of setting. Response: We appreciate the public comment and understand the implicated value that a longer life sensor brings to Medicare beneficiaries. We agree that there would be inherently increased costs to hospitals for the new technology of a 365-day system, but we do not agree that the costs to hospitals would be almost double the costs of the 180-day system. In summary, after consideration of the public comment we received, we are finalizing our proposal with modification based on our statutory authority set out at section 1833(t)(2)(E) of the Act, to assign CPT code 0446T and 0448T to APC 1563 (New Technology--Level 26 ($4001- $4500)) with a payment of $4,250.50. We remind hospitals that we review, on an annual basis, the APC assignments for all items and services paid under the OPPS. Refer to Table 39 for code descriptor, APC assignment and status indicator assignments for CPT codes 0446T and 0448T for CY 2026. The final CY 2026 payment rates for these codes can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the SI definitions for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.057 w. Skin Cell Suspension Autograft (SCSA) Procedures (CPT Code 15013 and HCPCS Code C8002) (APC 1567) Effective January 1, 2025, both CPT code 15013 (Preparation of skin cell suspension autograft, requiring enzymatic processing, manual mechanical disaggregation of skin cells, and filtration; first 25 sq cm or less of harvested skin) and HCPCS code C8002 (Preparation of skin cell suspension autograft, automated, including all enzymatic processing and device components (do not report with manual suspension preparation)) describe the preparation step of a skin cell suspension autograft (SCSA) procedure to treat acute thermal burn injuries. Both codes describe the preparation step of a three-step SCSA procedure: harvesting, preparation, and [[Page 53557]] application. The difference between the codes is that CPT code 15013 describes the manual preparation of the SCSA, and HCPCS code C8002 describes the automated preparation of the SCSA. Due to the similarities between the procedures, in the CY 2025 OPPS/ASC final rule with comment period, we assigned both CPT code 15013 and HCPCS code C8002 to APC 1567 (New Technology--Level 30 ($6,001-$6,500)) with a payment rate of $6,250.50 and status indicator ``T''. In the CY 2025 OPPS/ASC final rule with comment period, we noted that we believed the sum of the payment rates for the three-step process should approximate $10,000. However, because of the effect of the multiple procedure reduction, the total payment for the skin cell suspension autograft furnished using the RECELL System would have been approximately $8,000, contrary to the intended target of $10,000 as stated in the CY 2025 OPPS/ASC final rule with comment period. To correct this error, in the CY 2025 OPS/ASC Correction Notice, we assigned both CPT code 15013 and HCPCS code C8002 to APC 1532 (New Technology--Level 32 ($7,001-$7,500)) with a payment rate of $7,250.50 and status indicator ``S'' (Procedure or service, not discounted when multiple, paid under OPPS; separate APC payment). For CY 2026, the OPPS payment rates are proposed to be based on available CY 2024 claims data. Since CPT code 15013 and HCPCS code C8002 were not effective until January 1, 2025, we did not have any claims for either code for CY 2024. Therefore, for CY 2026, we proposed to continue to assign CPT code 15013 and HCPCS code C8002 to APC 1532 (New Technology--Level 32 ($7,001-$7,500)) with a payment rate of $7,250.50. We did not receive public comments on this provision, and therefore, we are finalizing as proposed. Refer to Table 40 for the proposed and final OPPS New Technology APC and status indicator assignments for CPT code 15013 and HCPCS code C8002 for CY 2026. The final CY 2026 payment rates can be found in Addendum B to this final rule via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.058 x. Renal Histotripsy Service (APC 1576) HCPCS code C9790 (Histotripsy (that is, non-thermal ablation via acoustic energy delivery) of malignant renal tissue, including image guidance) was created October 1, 2023, and was used to describe the Medicare approved Category B IDE (investigational device exemption) clinical study involving the renal histotripsy procedure associated with the use of the HistoSonics Edison System. CPT code 0888T (Histotripsy (i.e., non-thermal ablation via acoustic energy delivery) of malignant renal tissue, including image guidance) replaced HCPCS code C9790 effective July 1, 2024. Renal histotripsy is a non-invasive, non-thermal, mechanical process that uses a focused beam of sonic energy to destroy solid renal tumors and is currently in a prospective, multi-center, single-arm pivotal trial designed to evaluate the effectiveness and safety of the device for the destruction of kidney tissue by treating primary solid renal tumors.\24\ Because the renal histotripsy clinical study is designated as a Category B (non-experimental/investigational) IDE study, the Medicare payment for CPT code 0888T reflects payment for both the service that is performed, and the device used each time it is reported on a claim. For CY 2025 we assigned CPT code 0888T to APC 1576 (New Technology--Level 39 ($15,001-$20,000)) with a payment rate of $17,500.50 based on the previous APC and status indicator assignments for HCPCS code C9790. --------------------------------------------------------------------------- \24\ See ``The HistoSonics System for Treatment of Primary Solid Renal Tumors Using Histotripsy (#HOPE4KIDNEY) at https://clinicaltrials.gov/study/NCT05820087. --------------------------------------------------------------------------- For CY 2026, the proposed OPPS payment rates were based on available CY 2024 claims data. We identified one single frequency claim for HCPCS code C9790 and six single frequency claims for CPT code 0888T. Since the CY 2026 OPPS/ASC proposed rule has been published, we have eight single frequency claims for CPT code 0888T. Given our proposal to maintain current New Technology APC assignments for CY 2026 for New Technology services with fewer than 10 claims in the 4-year lookback period applicable for the universal low-volume APC policy, we proposed to continue to assign CPT code 0888T to APC 1576 (New Technology--Level 39 ($15,001-$20,000)) with a payment rate of $17,500.50. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter supported the proposed New Technology APC assignment. Response: We thank the commenter for their support. [[Page 53558]] In summary, we are finalizing our proposal without modification. We will continue to assign CPT code 0888T to APC 1576 with a status indicator of `S' for CY 2026. The New Technology APC and status indicator assignment for CPT code 0888T is shown in Table 41. The final CY 2026 payment rates for this CPT code can be found in Addendum B to this final rule via the internet on the CMS website. In addition, we refer readers to Addendum D1 to this final rule with comment period for the status indicator meanings reported under OPPS. Addendum D1 can also be found via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.059

D. Universal Low Volume APC Policy for Clinical and Brachytherapy APCs

In the CY 2022 OPPS/ASC final rule with comment period (86 FR 63743 through 63747), we adopted a policy to designate clinical and brachytherapy APCs as low volume APCs if they have fewer than 100 single claims that can be used for ratesetting purposes in the claims year used for ratesetting for the prospective year. For the CY 2026 OPPS/ASC proposed rule, CY 2024 claims were generally the claims used for ratesetting; and clinical and brachytherapy APCs with fewer than 100 single claims from CY 2024 that can be used for ratesetting would be low volume APCs subject to our universal low volume APC policy. As we stated in the CY 2022 OPPS/ASC final rule with comment period, we adopted this policy to reduce the volatility in the payment rate for those APCs with fewer than 100 single claims. Where a clinical or brachytherapy APC has fewer than 100 single claims that can be used for ratesetting, under our low volume APC payment adjustment policy, we determine the APC cost as the greatest of the geometric mean cost, arithmetic mean cost, or median cost based on up to 4 years of claims data. We excluded APC 5853 (Partial Hospitalization for CMHCs) and APC 5863 (Partial Hospitalization for Hospital-based PHPs) from our universal low volume APC policy given the different nature of policies that affect the partial hospitalization program. We also excluded APC 2698 (Brachytx, stranded, nos) and APC 2699 (Brachytx, non-stranded, nos) as our current methodology for determining payment rates for non- specified brachytherapy sources is appropriate. Based on claims data available for the CY 2026 OPPS/ASC proposed rule, we proposed to designate six brachytherapy APCs and five clinical APCs as low volume APCs under the OPPS (90 FR 33561 through 33562). The six brachytherapy APCs and five clinical APCs meet our criteria of having fewer than 100 single claims in the claims' year used for ratesetting (CY 2024 for the CY 2026 OPPS/ASC proposed rule). Ten of the 11 APCs were designated as low volume APCs in CY 2025. Based on data for the CY 2026 OPPS/ASC proposed rule, APC 2645 (Brachytx, non- stranded, gold-198) had 103 single claims and no longer met our criteria to be designated as a low volume APC; however, APC 2643 (Brachytx, non-stranded, c-131) had only 88 single claims and met our criteria to be designated as a low volume APC. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: Commenters supported our proposal to continue our low volume APC policy. Response: We thank commenters for their support. After consideration of public comments, based on CY 2024 claims data available for this final rule with comment period, we are finalizing our proposal to designate six brachytherapy APCs and five clinical APCs as low volume APCs under the OPPS. Table 42 includes the CY 2024 claims available for ratesetting for each of the APCs we are designating as low volume APCs for CY 2026. The final cost statistics for our CY 2026 low volume APCs, such as the median, arithmetic mean, and geometric mean cost are available for download with this final rule with comment period on the CMS website. We refer readers to our website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices; click on the relevant regulation to download the low volume APC cost statistics under the comprehensive (OPPS) ratesetting methodology in the downloads section of the web page. [[Page 53559]] [GRAPHIC] [TIFF OMITTED] TR25NO25.060

1. APC Structure

a. Diagnostic Tests and Related Services (APCs 5721 Through 5724) The Diagnostic Tests and Related Services APC series was created as part of the APC restructuring and consolidation in the CY 2016 OPPS (80 FR 70384 through 70386). Since its initial establishment, we have maintained a four-level APC structure for the series. In the CY 2026 OPPS, as part of our standard process of reviewing the OPPS structure based on updated claims data, we proposed to make changes to the APC series, and included those changes in the associated cost statistics files and addenda made available with each proposed and final rule via the internet on the CMS website. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: Several commenters requested that CMS does not finalize the proposed changes to the Diagnostic Tests and Related Services APC series. They requested that CMS refrain from shifting services in the APC family until there was sufficient opportunity for meaningful public comment on such changes. Commenters noted the impact on geometric mean costs for each of the APCs. Other commenters requested that CMS delay the changes and conduct further analysis so that the public can evaluate them. A commenter requested that CMS rerun the cost modeling for the APCs excluding low volume or anomalous facility reports and consider volatility guards, public analysis regarding observed changes, and maintain payment levels that preserve beneficiary access until stable cost data can be established. Commenters noted individual impacts on codes related to the changes in the Diagnostic Tests and Related Services APCs. A commenter noted the impact on CPT code 95924 (Testing of autonomic nervous system function; combined parasympathetic and sympathetic adrenergic function testing with at least 5 minutes of passive tilt), which had an expected decrease in payment of 29 percent. Another commenter noted CPT code 93017 (Cardiovascular stress test using maximal or submaximal treadmill or bicycle exercise, continuous electrocardiographic monitoring, and/or pharmacological stress; tracing only, without interpretation and report) which had an expected decrease of about 29 percent in its payment rate, which the commenter wanted maintained at $311.40. A few commenters recommended that CPT code 90870 (Electroconvulsive therapy (includes necessary monitoring)) be maintained in its current assignment or moved to a clinically coherent APC since the code represents a therapeutic procedure and not a diagnostic test. Response: As discussed earlier in this rule, section 1833(t) of the Act requires CMS to annually review and update the payment rates for services payable under the OPPS. Section 1833(t)(2)(B) of the Act provides that the Secretary may establish groups of covered OPD services within this classification system, so that services classified within each group are comparable clinically and with respect to the use of resources. In addition, section 1833(t)(2) of the Act provides that, subject to certain exceptions, the items and services within an APC group cannot be considered comparable regarding the use of resources if the highest cost for an item or service in the group is more than 2 times greater than the lowest cost for an item or service within the same group (referred to as the ``2 times rule''). As part of that review and update process we made changes to the APC assignments within the APC series such that the cost and clinical APC groupings would be more reflective of the codes assigned to them. We note that the changes in geometric mean costs for these APCs are associated with the APC recalibrations so that the services with clinical cost patterns that are more similar to each other are assigned to the same APC. In general, we do not believe that the alternative cost modeling the commenter requested is appropriate for ratesetting for these APCs. In the broader OPPS ratesetting process we generally aim to use as much as data is available that is appropriate for ratesetting, and typically only remove claims data from that process through the systematic trims that are described in the claims accounting narrative document made available on the CMS website. We believe that sufficient opportunity for public notice and comment was provided, as the proposed changes to the APC assignments and the APC levels are reflected through the cost statistics and two times files we make available with each proposed and final rule. In addition, any changes associated with individual codes are noted in the [[Page 53560]] Addendum B through the Change Indicator column. CPT codes 95924 and 93017 were both proposed to be placed in APC 5722 (Level 2 Diagnostic Tests and Related Services) in the CY 2026 OPPS/ASC proposed rule, which has a cost significant range from approximately $165 to $298. (The addenda for CY 2026 OPPS/ASC proposed rule can be found on the CMS website located at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices/cms-1834-p.) In the final rule claims data available for OPPS ratesetting CPT code 95924 has a geometric mean cost of $281.10, while CPT code 93017 has a geometric mean cost of $271.62. While we recognize that APC geometric mean costs can fluctuate based on a variety of factors, including updated claims and cost report data update, APC level recalibration, and others, the geometric mean costs of both codes suggests that they are appropriately placed in the Level 2 APC based on their estimated resource costs. We note that we generally do not set APC payment rates at predetermined rates for clinical APCs. In the claims available for OPPS ratesetting for this final rule, CPT code 90870 has an estimated geometric mean cost of $713.14 based on 52,518 single claims. The geometric mean cost of APC 5724 (Level 4 Diagnostic Tests and Related Services) is $884.07. We believe that the proposed placement of CPT code 90870 in APC 5724 remains appropriate based on its geometric mean cost relative to that of the APC and the similarity of its resource costs relative to other procedures assigned to the APC and clinical similarity to some of the related services assigned to the APC series more broadly. As a result, we are finalizing the assignment of CPT code 90870 to APC 5724. We note that we will continue to monitor the APC series as more claims data are available for the procedures assigned to this series and continue to be interested in suggestions regarding changes to those assignments for future years. After consideration of the public comments we received, we are finalizing the proposed APC recalibration changes for the Diagnostics Tests and Related Procedures APC series. In addition, we are finalizing the assignments of CPT codes 95924 and 93017 to APC 5722, and CPT code 90870 to APC 5724. b. Nerve Procedures (APCs 5431 Through 5432) The current APC structure of the Nerve Procedures series was developed during the broader CY 2016 OPPS reorganization and consolidation of APCs. Since that time, it has maintained that same two-level APC structure (89 FR 70379 through 70380). Comment: A few commenters noted that there was a significant decrease in the estimated geometric mean cost of the Level 2 Nerve Procedures APC due to the impact of a new eligible complexity adjustment code combination. They requested that CMS either map the complexity adjustment 6471R back into the Level 1 Nerve Procedures APC (APC 5431) or alternatively develop a level 3 APC that could accommodate some of the higher cost procedures in the current Level 2, such that there was less of an impact on some portion of the procedures. Commenters had requested that these codes be included in that level 3 APC: 61215--Insertion of subcutaneous reservoir, pump or continuous infusion system for connection to ventricular catheter 63741--Creation of shunt, lumbar, subarachnoid-peritoneal, - pleural, or other; percutaneous, not requiring laminectomy 64864--Suture of facial nerve; extracranial 64885--Nerve graft (includes obtaining graft), head or neck; up to 4 cm in length 64886--Nerve graft (includes obtaining graft), head or neck; more than 4 cm length 64890--Nerve graft (includes obtaining graft), single strand, hand or foot; up to 4 cm length 64891--Nerve graft (includes obtaining graft), single strand, hand or foot; more than 4 cm length 64892--Nerve graft (includes obtaining graft), single strand, arm or leg; up to 4 cm length 64895--Nerve graft (includes obtaining graft), multiple strands (cable), hand or foot; up to 4 cm length 64896--Nerve graft (includes obtaining graft), multiple strands (cable), hand or foot; more than 4 cm length 64897--Nerve graft (includes obtaining graft), multiple strands (cable), arm or leg; up to 4 cm length 64898--Nerve graft (includes obtaining graft), multiple strands (cable), arm or leg; more than 4 cm length 64907--Nerve pedicle transfer; second stage 64912--Nerve repair; with nerve allograft, each nerve, first strand (cable) A commenter also requested special consideration for CPT code 64912, and that the CPT code be included in the Level 3 Nerve Procedures APC. Response: While we note that APC geometric mean cost changes are expected under the current structure of the C-APCs and the complexity adjustments, we agree that a Level 3 Nerve Procedures APC is appropriate, in particular to resolve what would otherwise be a significant ``two times rule'' violation in the Level 2 APC. We are including the above requested codes in the Level 3 APC. We believe that there are several additional codes for which it would appropriate from a clinical and resource cost similarity perspective to include in the Level 3 APC. We are finalizing the inclusion of the following additional codes into the Level 3 APC: 61720--Creation of lesion by stereotactic method, including burr hole(s) and localizing and recording techniques, single or multiple stages; globus pallidus or thalamus 62230--Replacement or revision of cerebrospinal fluid shunt, obstructed valve, or distal catheter in shunt system 62350--Implantation, revision or repositioning of tunneled intrathecal or epidural catheter, for long-term medication administration via an external pump or implantable reservoir/infusion pump; without laminectomy 64840--Suture of posterior tibial nerve 64856--Suture of major peripheral nerve, arm or leg, except sciatic; including transposition 64905--Nerve pedicle transfer; first stage 64910--Nerve repair; with synthetic conduit or vein allograft (e.g., nerve tube), each nerve 64911--Nerve repair; with autogenous vein graft (includes harvest of vein graft), each nerve 0442T--Ablation, percutaneous, cryoablation, includes imaging guidance; nerve plexus or other truncal nerve (e.g., brachial plexus, pudendal nerve) Under the current C-APC methodology, complexity adjustments are mapped to the next higher cost APC within the clinical family. Within this structure, we currently do not have a mechanism for removing eligibility complexity adjustments by assigning them to alternative APCs including the originating primary APC. Therefore, we do not currently believe it is appropriate to manually assign the complexity adjustment represented by 6471 to APC 5431. Despite this, we understand that there are potential opportunities to [[Page 53561]] refine the C-APC and complexity adjustment methodology to address cost modeling concerns. We continue to remain interested in suggestions regarding the C-APC and complexity adjustment methodology, as noted in section II.A.2.b. of this final rule with comment period. After consideration of the comments, we are finalizing a 3-Level APC structure for the Nerve Procedures APC series. c. Endovascular Procedures (APCs 5191 Through 5194) The Endovascular Procedures APC series was initially mapped and assigned as a 3 level series in the CY 2016 OPPS. In the CY 2017 OPPS, an additional APC level was created. Since that time the Endovascular Procedures APC series has been maintained as a 4-level APC series. Comment: A commenter requested that APC 5200 (Implantation Wireless PA Pressure Monitor) be converted into a Level 5 Endovascular Procedures APC, and that the following codes be included into that APC: C9774--Revascularization, endovascular, open or percutaneous, tibial/peroneal artery(ies); with intravascular lithotripsy and atherectomy, includes angioplasty within the same vessel(s), when performed. C9775--Revascularization, endovascular, open or percutaneous, tibial/peroneal artery(ies); with intravascular lithotripsy and transluminal stent placement(s), and atherectomy, includes angioplasty within the same vessel(s), when performed. C9767--Revascularization, endovascular, open or percutaneous, lower extremity artery(ies), except tibial/peroneal; with intravascular lithotripsy and transluminal stent. placement(s), and atherectomy, includes angioplasty within the same vessel(s), when performed. C9797--Vascular embolization or occlusion procedure with use of a pressure-generating catheter (e.g., one-way valve, intermittently occluding), inclusive of all radiological supervision and interpretation, intraprocedural roadmapping, and imaging guidance necessary to complete the intervention; for tumors, organ ischemia, or infarction. They believe that doing so would be appropriate based on the similarity of the codes' geometric mean costs. That commenter also stated that with the proposal to eliminate the inpatient only list over three years beginning in 2026, creating a Level 5 Endovascular Procedures APC could allow for appropriate clinical APC placement for procedures being removed from the list. Response: We note that the APC geometric mean cost of APC 5194 (Level 4 Endovascular Procedures) is $18,872.40 while that of APC 5200 (Implantation Wireless PA Pressure Monitor) is $29,529.47. We recognize that the general approximate geometric mean costs for inclusion in the requested Level 5 APC would range from about $24,500 to $27,900. However, that level 5 APC payment weight would still continue to be primarily driven by the estimated costs of the currently assigned HCPCS code 33289 (Transcatheter implantation of wireless pulmonary artery pressure sensor for long-term hemodynamic monitoring, including deployment and calibration of the sensor, right heart catheterization, selective pulmonary catheterization, radiological supervision and interpretation, and pulmonary artery angiography, when performed), which has a geometric mean cost of $29,529.47. We recognize the commenter concerns around procedure codes potentially being removed from the IPO list requiring appropriate clinical APC placements. For the CY 2026 OPPS, we do not believe that the procedures being removed from the IPO list would require the level 5 Endovascular Procedures APC that the commenter requested. At this time, we do not believe that it is appropriate to convert the APC 5200 (Implantation Wireless PA Pressure Monitor) into a level 5 Endovascular Procedures APC. However, we will continue to monitor the available claims and cost data for the APC series and in the context of codes being removed for the IPO list. After consideration of the comments, we are finalizing the 4-level APC structure of the Endovascular Procedures APC series as proposed. d. Laparoscopy and Related Services (APCs 5361 Through 5362) As part of the CY 2016 OPPS APC restructuring process, the four level APC series for Laparoscopy and Related Services was consolidated into a 2-level APC series (80 FR 70379) through. Since that time, we have maintained that 2-level APC structure based on the clinical and resource homogeneity of the services assigned to those APCs. Comment: A commenter requested that CMS create a Level 3 Laparoscopy and Related Services APCs that would include the highest cost and complexity services in the current Level 2 APC. The commenter believes that this would restore the previously existing structure of the Laparoscopy and Related Services APCs while allowing potential placements for services being removed from the IPO list. The commenter believes that it would be appropriate to place services with geometric mean costs of $12,000 or more into that level 3 APC. Response: While we monitor the structure of the OPPS and the various APCs, we note that some of the principles guiding the CY 2016 OPPS APC restructuring and consolidation included improved resource and clinical homogeneity, as well as reduced resource overlap in APCs within a clinical family (80 FR 70379). The Level 2 Laparoscopy and Related Services APC has an estimated geometric mean cost of $10,943.41, with a range of geometric mean costs for two times rule purposes ranging from $8,909.96 for CPT code 58552 (Laparoscopy, surgical, with vaginal hysterectomy, for uterus 250 g or less; with removal of tube(s) and/or ovary(s)) to $13,085.27 for CPT code 55866 (Laparoscopy, surgical, with vaginal hysterectomy, for uterus 250 g or less; with removal of tube(s) and/or ovary(s)). While some of the services in the cost range indicated by the commenter have significant claims volume, we do not believe that there is a current need for an additional APC level given that the estimated geometric mean cost of the requested Level 3 APC would be significantly distinct from a cost perspective. We note that we are not removing any services from the IPO list in CY 2026 that would require assignments to the Laparoscopic and Related Services APC series. However, we will continue to monitor the claims data as they become available and the need for additional APC levels in the future. After consideration of the public comments, we are finalizing the 2-level APC structure for the Laparoscopy and Related Services APC series in this final rule with comment period as proposed.

2. ActiGraft System, HCPCS Code G0465 (APC 5054)

Effective April 2021, HCPCS code G0465 (Autologous platelet rich plasma (PRP) or other blood-derived product for diabetic chronic wounds/ulcers, using an FDA-cleared device for this indication, (includes as applicable administration, dressings, phlebotomy, centrifugation or mixing, and all other preparatory procedures, per treatment) describes autologous blood derived products for chronic non- healing wounds. For CY 2026, we proposed to assign HCPCS code G0465 to APC 5054 [[Page 53562]] (Level 4 Skin Procedures) and status indicator ``T.'' We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter requested that CMS change the status indicator from ``T,'' which allows for multiple procedure discounting, to a status indicator that pays the full payment rate each time the service is billed on a claim. The commenter explained that CMS recognized that HCPCS code G0465 could be billed twice on the same claim by revising the Medically Unlikely Edit (MUE) for HCPCS code G0465 from ``1'' to ``2'' in April 2025. Per the commenter, when more than one treatment is required for a patient with a single large wound or multiple wounds, providers would need to bill HCPCS code G0465 twice on the same claim to reflect the multiple treatments. The commenter believes that applying a multiple procedure discount to HCPCS code G0465 is inappropriate because the cost of the treatment kit would not be paid fully if billed multiple times. The commenter notes that CPT code 43877, which is also proposed to be assigned to APC 5054, is assigned a status indicator other than ``T,'' specifically ``Q2,'' to demonstrate that CMS has assigned codes in APC 5054 a status indicator other than ``T.'' Finally, the commenter requested that CMS revise the place of service (POS) codes for G0465 to allow for the service to be furnished in the nursing home setting. Response: With regard to the commenter's request to revise the POS codes for HCPCS code G0465, changes to allow for services to be paid in facilities other than the hospital outpatient department or ambulatory surgical center are outside the scope of this rule. With regard to the request to not finalize the assignment of the proposed status indicator of ``T'' to HCPCS code G0465, we note that the OPPS uses certain payment principles, including packaging and multiple procedure discounting, in an effort to control costs and promote more efficient care. HCPCS code G0465 describes a service that may be billed more than once on a claim in particular instances when the patient has multiple or large wounds that would require additional product. In reviewing the other services that are assigned to APC 5054, we note there are many other similar skin services (for example, HCPCS code G0460) that are also assigned to status indicator ``T'' and that are described on a ``per treatment'' basis, like HCPCS code G0465. To align with the 80 other similar skin procedure codes assigned to APC 5054 and status indicator ``T,'' we are finalizing our proposal to assign status indicator ``T'' to HCPCS code G0465 as reflected in Table 43. The final CY 2026 OPPS payment rate for all the codes payable under the OPPS can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the SI meanings for all codes reported under the OPPS. Addendum D1 is available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.061 Audiology Related Procedures and Services

3. Audiology-Related Services, CPT Codes 92540, 92579, 92588 (APC 5722)

For CY 2025, we assigned CPT codes 92540 (Basic vestibular evaluation, includes spontaneous nystagmus test with eccentric gaze fixation nystagmus, with recording, positional nystagmus test, minimum of 4 positions, with recording, optokinetic nystagmus test, bidirectional foveal and peripheral stimulation, with recording, and oscillating tracking test, with recording) and 92579 (Visual reinforcement audiometry (vra)) to APC 5721 (Level 1 Diagnostic Tests and Related Services) with a payment rate of $156.46. CPT code 92588 (Distortion product evoked otoacoustic emissions; comprehensive diagnostic evaluation (quantitative analysis of outer hair cell function by cochlear mapping, minimum of 12 frequencies), with interpretation and report) was assigned to APC 5722 (Level 2 Diagnostic Tests and Related Services) with a payment rate of $311.40. In the CY 2026 OPPS/ASC proposed rule, we proposed to assign all three CPT codes to APC 5722 (Level 2 Diagnostic Tests and Related Services) with a proposed payment rate of $221.14. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter stated that they were concerned with the placement of CPT code 92540 in APC 5721 because the time and resources required to perform CPT 92540 are clinically analogous to the electrophysiological tests in APC 5722. Therefore, the commenter requested a reassignment of CPT 92540 from APC 5721 to APC 5722. The same commenter supported the placement of CPT codes 92579 and 92588 to APC 5722 and urged CMS to finalize the assignment. Response: As we have already proposed to assign CPT code 92540 to APC 5722, we are finalizing our proposal without modification to assign CPT codes 92540, 92579 and 92588 to APC 5722 for CY 2026. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes [[Page 53563]] reportable under the OPPS. Addendum B is available via the internet on the CMS website.

4. Fully Implanted Active Middle Ear Implant (FI-AMEI), CPT Codes

0951T-0955T Effective July 1, 2025, The AMA CPT Editorial Board created five new Category III CPT codes to report total implantation, revision or replacement with or without mastoidectomy; replacement of sound processor only; and removal, including all implant components of a FI- AMEI. Specifically, the following CPT codes were created: 0951T--Totally implantable active middle ear hearing implant; initial placement, including mastoidectomy, placement of and attachment to sound processor; 0952T--Totally implantable active middle ear hearing implant; revision or replacement, with mastoidectomy and replacement of sound processor; 0953T--Totally implantable active middle ear hearing implant; revision or replacement, without mastoidectomy and replacement of sound processor; 0954T--Totally implantable active middle ear hearing implant; replacement of sound processor only, with attachment to existing transducers; and 0955T--Totally implantable active middle ear hearing implant; removal, including removal of sound processor and all implant components. In the CY 2026 OPPS/ASC proposed rule, we proposed to assign CPT codes 0951T-0955T to status indicator ``E1'' to indicate that these codes are not paid by Medicare when submitted on outpatient claims (any outpatient bill type) because we believe that these codes meet the definition of a hearing aid and therefore are not covered by Medicare. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter stated that FI-AMEI is not a hearing aid but instead is a prosthetic device that meets the definition of an osseointegrated implant, and therefore, should be covered by Medicare. The commenter stated that an FI-AMEI is a prosthetic device because it produces the perception of sound by replacing the function of the middle ear. More specifically, the commenter stated that an FI-AMEI is an osseointegrated implant. The commenter requested that CMS change the proposed OPPS status indicator assignment for CPT codes 0951T-0955T from status indicator ``E1'' to status indicator ``S'' given the FI-AMEI is a covered prosthetic device as defined by the Medicare Benefit Policy Manual. The commenter requested CMS assign codes 0951T-0953T to New Technology APC 1577, code 0954T to New Technology APC 1575, and code 0955T to New Technology APC 1534. Response: We thank the commenter for their input. Section 1862(a)(7) of the Act excludes hearing aids from Medicare coverage. Certain devices that produce perception of sound by replacing the function of the middle ear, cochlea or auditory nerve are excepted and payable by Medicare. Cochlear implants and auditory brainstem implants that replace the function of the cochlea or auditory nerve and provide electrical stimulation to auditory nerve fibers are excepted. Osseointegrated implants that replace the function of the middle ear and provide vibratory mechanical energy through the skull to both cochleae are excepted. Middle ear implants, including fully implanted active middle ear hearing devices, do not function like osseointegrated implants and are not excepted. Therefore, we are finalizing the assignment of status indicator ``E1'' for CPT codes 0951T-0955T without modification to indicate that these codes are not paid by Medicare when submitted on outpatient claims (any outpatient bill type). In addition, we refer readers to Addendum D1 to this final rule with comment period for the SI meanings for all codes reported under the OPPS. Addendum D1 is available via the internet on the CMS website. Breast and Lymph Procedures

5. Ablation of Breast Tumor Procedures, CPT Codes 0970T and 0971T (APC

5091) Effective July 1, 2025, the AMA CPT Editorial Panel established the CPT codes 0970T and 0971T. CPT codes 0970T (Ablation, benign breast tumor (e.g., fibroadenoma), percutaneous, laser, including imaging guidance when performed, each tumor) and 0971T (Ablation, malignant breast tumor(s), percutaneous, laser, including imaging guidance when performed, unilateral) describe procedures for the ablation of breast tumors. For CY 2026, we proposed to maintain both CPT codes in APC 5091 (Level 1 Breast/Lymphatic Surgery and Related Procedures). We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter requested that CMS reassign CPT codes 0970T and 0971T to APC 5093 (Level 3 Breast/Lymphatic Surgery and Related Procedures), which had a proposed payment rate of $6,575.63. The commenter stated that the device associated with these procedures had a cost of around $2,700 and the total costs of the procedure would be more appropriately covered by the payment rate of APC 5093. Response: After clinical review of these procedures, we continue to believe that these procedures are appropriately assigned to APC 5091. Therefore, we are finalizing our proposal, without modification, to continue to assign CPT codes 0970T and 0971T to APC 5091 (Level 1 Breast/Lymphatic Surgery and Related Procedures). Table 44 shows the finalized status indicator and APC assignment for the procedure codes. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website. [[Page 53564]] [GRAPHIC] [TIFF OMITTED] TR25NO25.062

6. Lymphovenous Bypass, CPT Code 1019T (APC 5092)

The CPT Editorial Panel created Category III CPT code 1019T (placeholder code X476T) (Lymphovenous bypass, including robotic assistance, when performed, per extremity) effective January 1, 2026. For CY 2026, we proposed to assign CPT code 1019T to APC 5091 (Level 1 Breast/Lymphatic Surgery and Related Procedures) with a proposed payment of around $4,049 and a status indicator of `J1' (Hospital Part B Services Paid Through a Comprehensive APC; Paid under OPPS). We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: Several commenters requested higher payment for this procedure providing the following rationale to support their request: The procedure is a curative procedure versus managing the condition of lymphedema. The procedure requires 2 to 5 hours of operative time. The procedure is performed by surgeons who have advanced surgical training in this specialty area. The procedure is resource intensive utilizing a highly specialized and expensive equipment (for example, microscope and robot). A couple of commenters suggested alternative crosswalk codes to determine APC placement such as, CPT code 19357 (Tissue expander placement in breast reconstruction, including subsequent expansion(s)) and CPT code 35883 (Revision, femoral anastomosis of synthetic arterial bypass graft in groin, open; with nonautogenous patch graft (e.g., polyester, ePTFE, bovine pericardium). The commenter suggested using the claims information for CPT code 35883 and the cost information associated with that procedure as a basis for determining an appropriate New Technology APC assignment. Response: After review of the comments, we believe that CPT code 1019T should be reassigned to APC 5092, noting that there are currently other lymph procedures assigned to APC 5092. We do not believe a New Technology APC assignment would be appropriate as the procedure is described by a Category III CPT code and can be assigned to a clinical APC. In summary, after consideration of the public comments we received, we are finalizing our proposal with modification, to assign CPT code 1019T to APC 5092 as reflected in Table 45. The final CY 2026 payment rates for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the SI definitions for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.063 Cardiac Related Procedures and Services

7. Cardiac CT Services, CPT Codes 75572, 75573, and 75574 (APC 5572)

Cardiac computed tomography services are described by the following Category I CPT codes and have been effective since January 1, 2010: 75572--Computed tomography, heart, with contrast material, for evaluation of cardiac structure and morphology (including 3D image postprocessing, assessment of cardiac function, and evaluation of venous structures, if performed); 75573--Computed tomography, heart, with contrast material, for evaluation of cardiac structure and morphology in the setting of congenital heart disease (including 3D image postprocessing, assessment of left ventricular [LV] cardiac function, right ventricular [RV] structure and function and evaluation of vascular structures, if performed); and 75574--Computed tomographic angiography, heart, coronary arteries and bypass grafts (when present), with contrast material, including 3D image postprocessing (including evaluation of [[Page 53565]] cardiac structure and morphology, assessment of cardiac function, and evaluation of venous structures, if performed). In prior rulemaking, we have received comments noting that the payment for these codes has declined since 2017. Comments on previous OPPS proposed rules have indicated that the payment amount is insufficient to cover the cost of providing the service and have stated that the payment amount does not consider the hospital resources required to perform these services, including the use of the equipment, medication administration, staff time, and scanner time. We have maintained over the years that an analysis of our claims data for these three codes have shown geometric mean costs consistent with the geometric mean cost for the APC to which they were assigned to since 2015. We have also received comments in the past urging CMS to allow hospitals the flexibility to submit charges for cardiac CT services with a revenue code other than CT scan (035X) and Radiology Diagnostic (032X) revenue codes, implying that MACs had applied edits to the cardiac CT codes that prevented hospitals from reporting a cardiology (048X) revenue code when appropriate. It is longstanding CMS policy that hospital outpatient facilities are responsible for reporting the appropriate cost centers and revenue codes on claims. As stated in section 20.5 in Chapter 4 (Part B Hospital) of the Medicare Claims Processing Manual, CMS ``does not instruct hospitals on the assignment of HCPCS codes to revenue codes for services provided under OPPS since hospitals' assignments of cost vary. Where explicit instructions are not provided, HOPDs should report their charges under the revenue code that will result in the charges being assigned to the same cost center to which the cost of those services are assigned in the cost report.'' We have consistently stated that hospital outpatient facilities must determine the most appropriate cost center and revenue code for the cardiac CT codes (87 FR 71849, 88 FR 81664 and 89 FR 94058). After we issued the CY 2024 OPPS/ASC final rule, interested parties notified us of a specific claims edit that may have limited the revenue codes reported with the cardiac CT codes in prior years' claims data. We removed the outdated revenue code edit in early December 2023 to allow for the cardiac CT codes to be billed with any appropriate revenue code. We informed the public of our findings and the changes that we made in the January 2024 OPPS Update (Transmittal 12421, Change Request 13488), dated December 21, 2023. We believe the edit may have prevented some providers from reporting the cardiology revenue code (048X), which maps to the cardiology cost center (03140), when billing for cardiac CT services. In the past, commenters have indicated that the cardiology cost center has a higher cost-to-charge ratio (CCR) than the imaging cost centers, and they believe the inability to report the cardiology revenue code has resulted in a lower payment rate for cardiac CT services. Since the OPPS ratesetting process utilizes the applicable cost center's CCR to reduce the charges on the claim to estimated cost, utilizing cost centers with lower CCRs results in a lower OPPS payment compared to utilizing cost centers with higher CCRs. With the edit no longer in place, we stated that hospitals may bill for cardiac CT services with whichever revenue code they believe appropriate, including cardiology revenue code 048X. In CY 2025 rulemaking, we conducted studies to calculate HCPCS geometric mean costs for the cardiac CT codes based on a simulation that assumed that differing numbers of HOPDs (specifically 25 percent, 50 percent, and 75 percent of the total number of HOPDs billing for these services) would have assigned these services to the cardiology revenue code (048X) and cardiology cost center (03410). Based upon the results of the studies, we found that if 50 percent or more of HOPDs had billed these services with the cardiology revenue code (048X) and cardiology cost center (03140), the geometric mean cost for these codes would have increased and would have resulted in a revised APC assignment from APC 5571 (Level 1 Imaging with Contrast) to APC 5572 (Level 2 Imaging with Contrast). We were persuaded by the public comments submitted that a majority of the providers who bill these codes would have preferred to bill them with the cardiology revenue code but were not able to do so due to the prior revenue code edit and the remaining procedural hurdles that flowed from the prior revenue code edit. For CY 2025, we used our equitable adjustment authority under section 1833(t)(2)(E) of the Act to utilize an alternative methodology to calculate the payment for the cardiac CT services in CY 2025. We finalized temporary reassignment of the cardiac CT codes (CPT codes 75572, 75573, and 75574) to APC 5572 (Level 2 Imaging with Contrast). For CY 2026, CPT code 75572 had 33,272 single claims for ratesetting and a geometric mean cost of around $152. CPT code 75573 had 488 single claims for ratesetting and a geometric mean cost of around $216. CPT code 75573 had 94,419 single claims for ratesetting and a geometric mean cost of around $187. Review of the current claims data indicates that there are providers who are utilizing the cardiology revenue codes. For CY 2026, we proposed to continue assignment of CPT codes 75572, 75573, and 75574 to APC 5572 (Level 2 Imaging with Contrast) with a proposed payment rate of $358.35, noting as we did in last year's final rule that we anticipate that it may take 3 to 4 years to see an impact from changes in billing practices. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comments: Several commenters supported the APC assignment of CPT codes 75572, 75573, and 75574 to APC (Level 2 Imaging with Contrast). Commenters stated that accurate and stable reimbursement is essential in ensuring that Medicare beneficiaries benefit from evidence-based innovations that improve cardiovascular care. Providers believe that the current APC assignment provides adequate reimbursement that appropriately reflects the clinical complexity and resource requirements to provide these services. Many commenters believe that these services are underutilized, in part due to historical underpayment and billing restrictions that they encountered in the past and expressed concern about the continued challenges with making changes to billing patterns. Commenters requested that CMS provide a specific timeline of when to expect that these codes would be reassigned to APCs, based on their geometric mean costs, if there is not a notable shift in their geometric mean costs over time. Some commenters shared that they have been working with the various departments within their facilities to effectuate the changes in billing practices, but notable changes are slow. Another commenter shared that they are working with major chargemaster software and advice companies to ensure that providers and facilities are aware that may choose the revenue code that they believe is most appropriate for the services provided. This commenter has also reached out to the National Uniform Billing Committee (NUBC) to suggest new revenue codes that better capture mixed modality services. Commenters noted that because the descriptors for these codes contain ``CT'', staff are hesitant to use a revenue code that is not an imaging revenue code. [[Page 53566]] Many commenters requested educational materials and guidance that specifically indicates that it is appropriate to bill the cardiology revenue codes with cardiac CT services. A commenter suggested specific language that they would like to see CMS use. Response: We agree with commenters that effectuating change in any size health system can be challenging. As stated in the CY 2025 OPPS/ ASC final rule, we will continue to monitor the claims data for these services, anticipating that it may take 3 to 4 years before we see changes in the claims data. While we have seen a number of providers utilizing the cardiology revenue codes for these services, we do not believe that it would be beneficial to provide a specific timeline or deadline for when we would anticipate moving these codes based on their geometric mean costs. If we believe that providers continue to need more time to overcome procedural and logistical hurdles with billing the cardiology revenue codes, we do not believe that a `fixed' timeline should be the determining factor of whether we allow that flexibility or not. We will continue to monitor the claims data for changes in billing practices. If we do not see a significant change in the geometric mean costs after several years, we would revert payment for these services to the standard OPPS payment methodology and assign the cardiac CT codes to the appropriate APCs based on their geometric mean costs. Many commenters requested guidance from CMS (Medicare Learning Network or ``MLN'') that explicitly states that it is appropriate to use the cardiology revenue codes when billing for cardiac CT services. We acknowledge that we had stated in last year's final rule that we would provide public education and instruction through MLN and anticipate that we will do so. As a reminder to our readers, we do not provide specific coding guidance. We refer our readers to section 20.5 in Chapter 4 (Part B Hospital) of the Medicare Claims Processing Manual, CMS ``does not instruct hospitals on the assignment of HCPCS codes to revenue codes for services provided under OPPS since hospitals' assignments of cost vary. Where explicit instructions are not provided, HOPDs should report their charges under the revenue code that will result in the charges being assigned to the same cost center to which the cost of those services are assigned in the cost report.'' We have consistently stated that hospital outpatient facilities must determine the most appropriate cost center and revenue code for the cardiac CT codes (87 FR 71849, 88 FR 81664). In summary, for CY 2026, we are finalizing our proposal without modification and assigning CT codes 75572, 75573, and 75574 to APC 5572 (Level 2 Imaging with Contrast). See Table 46 for the CY 2026 final OPPS status indicator and APC assignments. The final CY 2026 payment rates for these codes can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the SI definitions for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.064

8. Cardiac Magnetic Resonance (CMR) Imaging, CPT Codes 75557, 75559,

75561, 75563 (APCs 5523, 5524, 5572, and 5573) For CY 2026, we proposed to continue to assign the following cardiac magnetic resonance imaging (MRI) CPT codes to APC 5523, 5524, 5572, and 5573 respectively: CPT code 75557--(Cardiac magnetic resonance imaging for morphology and function without contrast material) to APC 5523 (Level 3 Imaging without Contrast) with a proposed payment of $245.72 based on a geometric mean cost of around $299 and 1,452 single frequency claims used for ratesetting; CPT code 75559--(Cardiac magnetic resonance imaging for morphology and function without contrast material; with stress imaging) to APC 5524 (Level 4 Imaging without Contrast) with a proposed payment of $562.07 based on a geometric mean cost of around $479 and 22 single frequency claims used for ratesetting; CPT code 75561--(Cardiac magnetic resonance imaging for morphology and function without contrast material(s), followed by contrast material(s) and further sequences) to 5572 (Level 2 Imaging [[Page 53567]] with Contrast) with a proposed payment of $358.35 based on a geometric mean cost of around $459 and 29,162 single frequency claims used for ratesetting; and CPT code 75563--(Cardiac magnetic resonance imaging for morphology and function without contrast material(s), followed by contrast material(s) and further sequences; with stress imaging) to APC 5573 (Level 3 Imaging with Contrast) with a proposed payment of $802.38 based on a geometric mean cost of around $819 and 3,202 single frequency claims used for ratesetting. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: Commenters requested that CPT codes 75557, 75559, 75561, 75563 be reassigned to the Nuclear Medicine and Related Services APC family because cardiac MRI procedures are not clinically similar or similar in resource use to the other procedures assigned to the current APCs. The commenter indicated that the cardiac MRI procedures are more resource intensive because of stress protocols, continuous patient monitoring, specialized staff to care for patients undergoing these procedures, longer procedure room time, and post-stress observation time and many of the other procedures that are in these APCs are lower- acuity, non-cardiac tests. The commenter believes that their current APC assignments are directly responsible for the low use of cardiac MRIs in cardiac patients. The commenter stated that reassigning these procedures to APC 5593 (Level 3 Nuclear Medicine and Related Services) would restore appropriate payment for similar advanced cardiac imaging modalities and resolve the distorted payment signals (that is, blended geometric mean costs are suppressed by high-volume, low-acuity studies). Alternatively, the commenter suggested creating a cardiac imaging sub-APC that would include cardiac MRI services, stress echocardiography, and nuclear cardiology services that include patient monitoring and recovery. In addition, the commenter had several recommendations for CMS to implement in the interim to improve the accuracy of ratesetting: Issue sub-regulatory guidance encouraging hospitals to map cardiac MRI charges to cardiac/stress imaging cost centers rather than generic MRI; Ensure packaged items are consistently captured in the claims data; and Consider a complexity adjustment or modality-neutral cardiac imaging APC framework. Response: The OPPS payment rates were proposed based on available CY 2024 claims data. Our claims data shows that APC 5593 (Level 3 Nuclear Medicine and Related Services) has a geometric mean cost of around $1,332 which is significantly higher than the geometric mean costs for the cardiac MRI codes ($299 to $819). We do not believe that cardiac MRI with stress imaging is very similar to myocardial perfusion imaging because both tests are performed under a stress protocol and therefore should be assigned to APC 5593. APC 5593 contains procedures that describe nuclear medicine tests, not MRI services. We have noted in previous rulemaking that we do not believe MRI services should be assigned to the nuclear medicine APCs (81 FR 79630). In response to issuing sub-regulatory guidance encouraging HOPDs to utilize a certain revenue code or map charges to a certain cost center, we refer readers to the Medicare Claims Processing Manual, Chapter 4 (Part B Hospital), section 20.5, where we state, ``Generally, CMS does not instruct hospitals on the assignment of HCPCS codes to revenue codes for services provided under OPPS since hospitals' assignment of cost vary. Where explicit instructions are not provided, providers should report their charges under the revenue code that will result in the charges being assigned to the same cost center to which the cost of those services are assigned in the cost report.'' In summary, after consideration of the public comment, we are finalizing our proposal without modification to maintain the APC assignments for the cardiac MRI codes for CY 2026. The final CY 2026 payment rates for these codes can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the SI definitions for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website. Refer to Table 47 for code descriptor, APC assignment and status indicator assignment for CPT codes 75557, 75559, 75561, and 75563 for CY 2026. [GRAPHIC] [TIFF OMITTED] TR25NO25.065 [[Page 53568]]

9. Computational Electrocardiogram (ECG) Analysis System (vMap), CPT

Code 0897T (APC 5724) CPT code 0897T (Noninvasive augmentative arrhythmia analysis derived from quantitative computational cardiac arrhythmia simulations, based on selected intervals of interest from 12-lead electrocardiogram and uploaded clinical parameters, including uploading clinical parameters with interpretation and report) utilizes ECG data to identify potential arrhythmia focal points for patients. The vMap provides augmented information which enables physicians to characterize arrhythmia and assists in triage and treatment of abnormal rhythm. CPT code 0897T became effective July 1, 2024, and since its establishment, the code has been assigned to APC 5724 (Level 4 Diagnostic Tests and Related Services) for CY 2024. For CY 2025, we maintained the APC assignment to APC 5724 (Level 4 Diagnostic Tests and Related Services). For CY 2026, we proposed maintaining the current APC assignment noting that there were no single frequency claims for ratesetting under OPPS and 34 multiple frequency claims, meaning the procedure was completed with other primary services. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: The manufacturer requested that CMS reassign CPT code 0897T to a New Technology APC when the procedure is performed on the day of but separate from the ablation procedure itself until there are sufficient claims data available to support an appropriate clinical APC assignment. The commenter believes that the vMap procedure meets the New Technology APC criteria based on the demonstrated costs of the procedure and that there is precedent for SaaS technologies. In addition to vMap, the commenter urged that CMS pay for all SaaS technologies separately from any underlying procedures and assign these services to New Technology APCs until there are sufficient claims data to support an appropriate clinical APC assignment. Response: We thank the manufacturer for their input. We do not believe that the vMap procedure meets the New Technology APC criteria based on the costs of the service or because there is precedent for SaaS technologies. There are no cost criteria for a New Technology APC placement. We review the information provided to determine if a service is ``truly new'' meaning there is not a code or combination of codes to describe the complete service. (We refer readers to the final rule in the November 30, 2001, Federal Register (66 FR 59897) for a full discussion of the criteria and information needed for a New Technology APC assignment.) All New Technology APC applications are reviewed to determine if they meet the criteria for a New Technology APC placement. The vMap procedure has a Category III CPT code which we crosswalked to CPT code 75580 (HeartFlow[supreg]) (Noninvasive estimate of coronary fractional flow reserve (FFR) derived from augmentative software analysis of the data set from a coronary computed tomography angiography, with interpretation and report by a physician or other qualified health care professional) and assigned to APC 5724 (Level 4 Diagnostic Tests and Related Services). In summary, after consideration of the public comment we received, we are finalizing our proposal without modification, to assign CPT code 0897T to APC 5724 (Level 4 Diagnostic Tests and Services as reflected in Table 48. The final CY 2026 payment rates for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the SI definitions for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.066

10. Fractional Flow Reserve Derived From Computed Tomography (FFRct)

CPT Code 75580 (APC 5724) Fractional Flow Reserve Derived from Computed Tomography (FFRct), also known by the trade name HeartFlow[supreg], is a noninvasive diagnostic service that allows physicians to measure coronary artery disease in a patient through the use of coronary CT scans. The HeartFlow[supreg] service is indicated for clinically stable symptomatic patients with coronary artery disease, and, in many cases, may avoid the need for an invasive coronary angiogram procedure. HeartFlow[supreg] uses a proprietary data analysis process performed at a central facility to develop a three-dimensional image of a patient's coronary arteries, which allows physicians to identify the fractional flow reserve to assess whether patients should undergo further invasive testing (that is, a coronary angiogram). HeartFlow[supreg] is described by CPT code 75580 (Noninvasive estimate of coronary fractional flow reserve (FFR) derived from augmentative software analysis of the data set from a coronary computed tomography angiography, with interpretation and report by a physician or other qualified health care professional) effective January 1, 2024. CPT code 0503T was the predecessor code for HeartFlow[supreg]. HeartFlow[supreg] was assigned to APC 5724 (Level 4 Diagnostic Tests and Related Services) for CY 2024 and CY 2025. In last year's rule, we received a comment stating that several of the Medicare Administrative Contractors (MACs) had an edit in place that prohibited the use of the cardiology revenue code (0480) when billing CPT code 75580 as evidenced by claims [[Page 53569]] denials with ``Invalid Revenue Code'' errors. Based on the information the commenter provided, we were able to identify the outdated edit and removed it. We reminded readers that it is longstanding CMS policy that hospital outpatient facilities are responsible for reporting the appropriate cost centers and revenue codes on claims. We referred readers to Section 20.5 in Chapter 4 (Part B Hospital) of the CMS Medicare Claims Processing Manual, where we state CMS ``does not instruct hospitals on the assignment of HCPCS codes to revenue codes for services provided under OPPS since hospitals' assignment of cost vary. Where explicit instructions are not provided, HOPDs should report their charges under the revenue code that will result in the charges being assigned to the same cost center to which the cost of those services are assigned in the cost report.'' We proposed for CY 2026 to continue to assign HeartFlow[supreg] (CPT code 75580) to APC 5724 (Level 4 Diagnostic Tests and Related Services). We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comments: Commenters were supportive of the continued APC assignment to APC 5724 (Level 4 Diagnostic Tests and Related Services); however, the commenters universally requested that CMS exclude the ``flawed'' or ``erroneous'' data due to the claims edit that was in place that prohibited them for choosing a revenue center that they deemed most appropriate for the service provided. Several commenters also requested guidance when choosing a revenue center code. They note that this would ensure accurate claims reporting and support reliable data for future ratesetting. Response: As noted previously in this final rule with comment period, we removed the outdated edit as soon as we were aware that there was an edit in place. HOPDs can use whatever revenue code they believe is most appropriate. We generally do not exclude available claims data, based on the assumption that what is being billed to Medicare is in compliance with coding and billing guidance. We acknowledge that there are a number of procedural and logistical hurdles associated with changing billing practices and will continue to monitor the claims data. Comment: Many commenters expressed concerns about the lower reimbursement rate for APC 5724 and the movement of services within the APC family. We refer the readers to section III.E.1. of this final rule with comment period for a full discussion about the movement of services within the APC family and the payment variability. In summary, after consideration of the public comments we received, we are finalizing our proposal without modification to continue to assign CPT 75580 to APC 5724 (see Table 49). The final CY 2026 payment rates for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the SI definitions for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.067

11. Chimeric Antigen Receptor (CAR-T) Administration, CPT Codes 38228

(APC 5694) Chimeric Antigen Receptor T-Cell (CAR T-cell) therapy is a cell- based gene therapy in which T-cells are collected and genetically engineered to express a chimeric antigen receptor that will bind to a certain protein on a patient's cancerous cells. The CAR T-cells are then administered to the patient to attack certain cancerous cells, and the individual is observed for potential serious side effects that would require medical intervention. We refer readers to previous discussions in the OPPS/ASC final rules with comment period for background regarding the specific CAR T-cell products, including the CY 2020 OPPS/ASC final rule with comment period (84 FR 61231 through 61234) and the CY 2019 OPPS/ASC final rule with comment period (83 FR 58904 through 58908). The AMA created four Category III CPT codes that are related to CAR T-cell therapy, effective January 1, 2019. We also finalized that the procedures described by CPT code 0540T would be assigned status indicator ``S'' (Procedure or Service, Not Discounted when Multiple) and APC 5694 (Level 4 Drug Administration) from CY 2019 through CY 2024 and did not propose to change the APC assignment for CY 2025 when CPT code 0540T was replaced by CPT code 38228. As listed in Addendum B to the CY 2026 OPPS/ASC proposed rule, we proposed to continue to assign CPT code 38228 to status indicator ``S'' (Procedure or Service, Not Discounted when Multiple) and APC 5694 (Level 4 Drug Administration). We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: Several commenters recommended the reassignment of CPT code 38228 to APC 5242 (Level 2 Blood Product Exchange and Related Services). A commenter suggested that rationale for the reassignment of CPT code 38228 to APC 5242 is that APC more accurately reflects the higher facility costs associated with the significant nurse monitoring for the outpatient administration of CAR T-cell therapy. The commenter supported this claim as the AMA placed CPT code 38228 in the same section as stem cell transplant codes, which were initially [[Page 53570]] recognized in the inpatient setting under MS-DRGs 016 and 017. Another commenter also stated CPT code 38228 is analogous to CPT code 38241 (Hematopoietic progenitor cell (hpc); autologous transplantation) and that CMS initially assigned CAR-T related codes to autologous stem cell transplant MS-DRGs 016 and 017, which they believe is the appropriate crosswalk for OPPS. Another commenter disagreed with the current APC 5694 assignment and stated that CPT code 38338 (and CPT codes 67028 and 67516) do not have the facility NA indicator in the Medicare Physician Fee Schedule and the RUC assigned both facility and non-facility RVUs. Thus, the commenter stated that physicians perform and document the services when they perform the services in facilities. Response: We continue to believe that the procedures described by CPT codes 38225, 38226, and 38227 describe the various steps required to collect and prepare the genetically modified T-cells, and Medicare does not generally pay separately for each step used to manufacture a drug or biological product. We believe CPT code 38228 is appropriately assigned to APC 5694, which shares similar clinical and resource use as other complex cancer drug administrations. We note that the IPPS established MS-DRG 018 for CAR-T and other immunotherapies and CAR-T therapies are no longer assigned to MS-DRGs 016 and 017. We also disagree that CPT code 38228 is similar clinically and in resource to CPT code 38241 because we view CPT code 38228 as the administration of the CAR-T drugs, while CPT code 38241 involves the transplantation of hematopoietic progenitor cells. Therefore, we are not convinced by the commenter's reason to reassign CPT code 38228 to APC 5242. Furthermore, we believe it is inappropriate to use the IPPS MS-DRGs as an analog to the APC assignments in the OPPS because there are significant differences in resource consumption between the HOPD and inpatient setting. We are also not compelled to reassign CPT code 38228 to APC 5242 because of the lack of the NA indicator in the Medicare Physician Fee Schedule and because the RUC assignment of both facility and non- facility RVUs do not support the reassignment of CPT codes 38338, 67028 and 67516 to APC 5242. We rely on input from a variety of sources for our APC assignments, including, but not limited to, review of the resource costs and clinical similarity of the service to existing procedures; input from CMS medical advisors; and information from interested specialty societies. We evaluated the recommendations, modeled the suggestions, analyzed the cost results of the suggested APC reassignments, and received additional input from our medical advisors. We note that the drug administration codes that the commenter mentioned were assigned to their respective APCs with similar clinical and resource similarity. Furthermore, the commenter only suggested an APC reassignment for CPT code 38228 but did not provide any APC suggestions for CPT codes 67028 and 67516. After consideration of the public comments we received, we are finalizing our proposed APC assignment and status indicator for CPT code 38228 to APC 5694 without modification. Refer to Table 50 for the final OPPS APC and status indicator assignment for CPT code 38228 for CY 2026. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.068

12. CVi[supreg] Contrast Delivery System

The CVi[supreg] Contrast Delivery System is an automated Contrast Management System with multiuse syringes. Contrast Management Systems are designed to assist physicians in infusing iodinated contrast media administered to patients in common angiograph procedures. Contrast with angiography procedures is often administered through a handheld, manual injection device. Automated contrast management systems use variable rate technology to deliver a specific amount of contrast. We received public comments on this topic. The following is a summary of the comments we received and our responses. Comment: A commenter requested that CMS establish a G-code to provide additional payment to recognize the cost of automated contrast management systems with angiography procedures. The commenter stated that providing additional payment through the establishment of a new code would facilitate expanded patient access to automated systems that address important policy goals and address significant unmet needs such as reducing the incidence of Acute Kidney Injury (CA-AKI), reducing costs related to CA-AKI related hospitalization, reducing contrast waste, alleviating contrast media shortages precipitated by supply chain issues and reducing physician radiation exposure. The commenter stated that it is necessary to establish a G-code because existing Medicare payment policies for Percutaneous Coronary Intervention (PCI) and other procedures do not differentiate procedures that involve an automated variable rate contrast injector [[Page 53571]] with multiuse syringe for the administration of iodinated contrast media. They also noted that these procedures are coded and paid identically, regardless of whether the provider has invested in automated contrast management systems that they state provide better health outcomes. Response: After reviewing the information provided by the commenter and following consultation with our medical officers, we have determined that this equipment is only used in conjunction with another procedure and would be packaged for payment consistent with our policy of packaging items and services that are typically integral, ancillary, supportive, dependent, or adjunctive to a primary service. Therefore, we are not creating a G-code to describe the use of an automated variable rate contrast injector with multiuse syringe for the administration of iodinated contrast media for CY 2026. Dental Related Procedures

13. Malignant Tumor/Lesion Removal Dental Procedures, CDT Codes D7440-

D7441 (APC 5164) Effective January 1, 2024, we made over 200 additional dental codes payable under the OPPS when payment and coverage requirements are met, as provided in the relevant PFS payment rules regarding Medicare Part B payment for dental services (88 FR 81540-82185). Of these payable dental codes, we assigned Current Dental Terminology (CDT) codes D7440 (Excision of malignant tumor-lesion diameter up to 1.25cm) and D7441(Excision of malignant tumor- lesion diameter greater than 1.25 cm) to APC 5164 (Level 4 ENT Procedures) and status indicator ``J1.'' For CY 2026, we proposed to continue to assign CDT codes D7440 and D7441 to APC 5164 and status indicator ``J1.'' We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter requested that CMS add CDT codes D7440 and D7441 to the list of covered outpatient services for CY 2026. Response: We are clarifying that CDT codes D7440 and D7441 are already payable when performed in the outpatient hospital department and coverage requirements are met. Our proposal would maintain the APC and status indicator assignments for CY 2026. Therefore, we are finalizing our proposal to continue to assign CDT codes D7440 and D7441 to APC 5164 and status indicator ``J1'' for CY 2026. Endoscopy Procedures

14. Biliary Endoscopy Procedure, CPT Code 47555 (APC 5341)

CPT code 47555 (Biliary endoscopy, percutaneous via T-tube or other tract; with dilation of biliary duct stricture(s) without stent) describes the procedure for dilation of bile ducts using an endoscope. Using CY 2024 claims data, CPT code 47555 had geometric mean cost of $8,577.51 in the CY 2026 OPPS/ASC proposed rule. For CY 2026, we believed this procedure was still appropriately assigned to APC 5341 (Level 1 Abdominal/Peritoneal/Biliary and Related Procedures), which had a proposed payment rate of $3,698.49. Therefore, we proposed to continue assigning CPT code to APC 5341. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter requested that CMS reassign CPT code 47555 to APC 5342 (Level 2 Abdominal/Peritoneal/Biliary and Related Procedures), which had a proposed payment rate of $6,667. The commenter stated that the cost of this procedure exceeded the payment rate for APC 5341. Response: CPT code 47555 has an updated GMC of $8,068.88. After further clinical review, we agree with the commenter that resources and costs associated with CPT code 47555 would be more appropriately reflected by APC 5342. In summary, we are finalizing our proposal with modification to assign CPT code 47555 to APC 5342 (Level 2 Abdominal/ Peritoneal/Biliary and Related Procedures) for CY 2026. Table 51 shows the finalized status indicator and APC assignment for the procedure code. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.069

15. Endoscopic Procedure--Upper GI Tract, CPT Code 43252 (APC 5302)

CPT code 43252 (Esophagogastroduodenoscopy, flexible, transoral; with optical endomicroscopy) describes a service that is used to visualize the upper portions of the GI tract from the esophagus to the duodenum. Using CY 2024 claims data, CPT code 43252 had geometric mean cost of $1,739.85 in the CY 2026 OPPS/ASC proposed rule. For CY 2026, we believed this procedure was still appropriately assigned to APC 5302 (Level 2 Upper GI Procedures), which had a proposed payment rate of $1,975.59. Therefore, we proposed to continue assigning CPT code to APC 5302. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A few commenters requested that CMS assign CPT code 43252 to APC 5303 (Level 3 Upper GI Procedures) with a payment rate of around $4,002 for CY 2026. The commenters stated that hospitals have historically underreported the costs for this procedure, therefore skewing the GMC for CPT code 43252. Response: We have stated regularly over the history of the OPPS, it is the responsibility of providers and other interested parties and not CMS to resolve potential claims and reporting issues for individual CPT codes and medical services payable by Medicare. The updated GMC for the service, which is around $1,737.41, is lower than the payment rate for APC 5302 which is [[Page 53572]] around $1,960. Therefore, we are finalizing our proposal, without modification, to continue to assign CPT code 43252 to APC 5302 (Level 2 Upper GI Procedures). Table 52 shows the finalized status indicator and APC assignment for the procedure codes. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.070

16. Endoscopic Retrograde Cholangiopancreatography (ERCP) With Stone

Destruction Procedure, CPT Code 43265 (APC 5331) CPT code 43265 (Endoscopic retrograde cholangiopancreatography (ERCP); with destruction of calculi, any method (eg., mechanical, electrohydraulic, lithotripsy)) describes the procedure for destruction of stone of bile or pancreatic ducts. Using CY 2024 claims data, CPT code 43265 had geometric mean cost of $9,011.93 in the CY 2026 OPPS/ASC proposed rule. For CY 2026, we believed this procedure was still appropriately assigned to APC 5331 (Complex GI Procedures), which had a proposed payment rate of $6,276.20. Therefore, we proposed to continue assigning CPT code to APC 5331. Comment: A commenter requested that CMS reassign CPT code 43265 to APC 5362 (Level 2 Laparoscopy and Related Services), which had a proposed payment rate of $10,966.50, due to the similarity to CPT code 47554 (Biliary endoscopy, percutaneous via t-tube or other tract; with removal of calculus/calculi). Response: We thank the commenter for their input. CPT code 43265 has an updated geometric mean cost of $8,754.94. After clinical review of this procedure, we continue to believe that this procedure is appropriately assigned to the APC 5331. Therefore, we are finalizing our proposal, without modification, to continue to assign CPT codes 43265 to APC 5331 (Complex GI Procedures). Table 53 shows the finalized status indicator and APC assignment for the procedure codes. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.071

17. Endoscopic Submucosal Dissection (ESD) Procedure, HCPCS Code C9779

(APC 5303) We established HCPCS code C9779 (Endoscopic submucosal dissection (ESD), including endoscopy or colonoscopy, mucosal closure, when performed) effective October 1, 2021, to describe the endoscopic submucosal dissection (ESD) performed during an endoscopy or colonoscopy. HCPCS code C9779 was established based on a New Technology application that was submitted to CMS for New Technology consideration under the OPPS. Based on our assessment, we assigned the code to APC 5313 (Level 3 Lower GI Procedures) because we believed the ESD procedure had similar clinical characteristics and resource costs as the surgical procedures assigned to APC 5313. We announced the assignment to APC 5313 in the October 2021 OPPS quarterly update CR (Transmittal 10997, Change Request 12436, dated September 16, 2021). In CY 2022, we continued to assign the code to APC 5313. For CY 2023, we assigned HCPCS code C9779 to APC 5303 (Level 3 Upper GI Procedures) after receiving public comments that stated that the ESD procedure's resource requirements and geometric mean cost were more similar to the resource requirements and geometric mean costs of procedures found in APC 5303. Further, commenters noted that the ESD procedure is technically more demanding, requires advanced skills to perform, and is clinically similar to CPT code 43497 (Lower esophageal myotomy, transoral (i.e., peroral endoscopic myotomy [POEM])), which was assigned to APC 5303. For CY 2026, we proposed to maintain HCPCS code C9779, which had a geometric mean cost of $5,516.81, in APC 5303 (Level 3 Upper GI Procedures). APC 5303 had a proposed CY 2026 payment rate of $4,002.57. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: Commenters requested that CMS reassign HCPCS code C9779 to APC 5331 (Complex GI procedures), which had a proposed payment rate of [[Page 53573]] $6,276.20. The commenters reasoned that HCPCS code C9779 would be more appropriately placed in APC 5331 due to its similarity to CPT code 43479. Additionally, the commenters stated that as HCPCS code C9779 includes both combined upper and lower GI ESD procedures, there is great variability in the costs reported by hospitals which could affect the accuracy of the geometric mean cost. Response: HCPCS code C9779 has an updated geometric mean cost of $5,182.09. While the geometric mean cost for HCPCS code C9779 is slightly closer to the payment rate for APC 5331, we continue to believe that HCPCS code C9779 is appropriately assigned, based on both clinical and resource similarity, to APC 5303 (Level 3 Upper GI Procedures). Therefore, we are finalizing our proposal, without modification, to continue to assign CPT code C9779 to APC 5303 (Level 3 Upper GI Procedures). Table 54 shows the finalized status indicator and APC assignment for the procedure codes. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.072

18. Esophageal Balloon Distention Study, CPT Code 91040 (APC 5723)

Esophageal balloon distension studies are used to diagnose conditions of the esophagus and may be used to determine the source of certain types of pain, such as chest pain. The esophageal balloon study is often performed in conjunction with esophagogastroduodenoscopy procedures. Using CY 2024 claims data, CPT Code 91040 (Esophageal balloon distension study, diagnostic, with provocation when performed) had a proposed geometric mean cost of $2,007.29 in the CY 2026 OPPS/ASC proposed rule. For CY 2026, we proposed to continue to assign CPT code 91040 to APC 5723 (Level 3 Diagnostic Tests and Related Services) with a proposed payment rate of around $382. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: Commenters requested that CMS reassign CPT code 91040 to APC 5724 (Level 4 Diagnostic Test and Related Services). Commenters stated that CPT code 91040 has the highest geometric mean cost of all codes assigned to APC 5723 and had a higher device offset percentage than other procedures in the same APC. Response: We note that the updated geometric mean cost for CPT code 91040 is $2,001.92, and the geometric mean cost for APC 5723 is $384.16. While this is a significant difference, the CY 2024 claims data shows that only 2.6 percent (approximately 102 claims) of all the claims billed with CPT code 91040 (3,927 total claims frequency) were billed with only CPT code 91040 on the claim. We believe that, in addition to the higher costs of the packaged items, the costs from the other procedures that are performed with CPT code 91040 have driven up the geometric mean cost of CPT code 91040. Based on review of this procedure, other procedures in the same APC family, and the claims data, we believe that the clinical and resource characteristics of CPT code 91040 are sufficiently like other procedures assigned to APC 5723 and CPT code 91040 should continue to be assigned to APC 5723. Therefore, for CY 2026 we are finalizing our proposal, without modification, to continue to assign CPT code 91040 to APC 5723 (Level 3 Diagnostic Tests and Related Services). Table 55 shows the finalized status indicator and APC assignment for the procedure codes. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.073

19. Transnasal EGD, CPT Codes 0652T, 0653T, and 0654T (APCs 5302 and

5303) CPT codes 0652T (Esophagogastroduodenoscopy, flexible, transnasal; diagnostic, including collection of specimen(s) by brushing or washing, when performed (separate procedure)), 0653T (Esophagogastroduodenoscopy, flexible, transnasal; with biopsy, single or multiple), and 06534T (Esophagogastroduodenoscopy, flexible, transnasal; with insertion of intraluminal tube or catheter) describe the procedures for transnasal esophagogastroduodenoscopy. Using CY 2024 claims data, CPT codes 0652T, 0653T, and 0654T had geometric mean costs of $1,897.72, $1,107.54, $1,064.23, [[Page 53574]] respectively, in the CY 2026 OPPS/ASC proposed rule. For CY 2026, we believed CPT codes 0652T and 0653T were still appropriately assigned to APC 5302 (Level 2 Upper GI Procedures), which had a proposed payment rate of $1,975.59. We also believed that CPT code 0654T was still appropriately assigned to APC 5303 (Level 3 Upper GI Procedures), which had a proposed payment rate of $4,002.57. Therefore, we proposed to continue assigning CPT codes 0652T and 0653T to APC 5302 and CPT code 0654T to APC 5303. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter requested that CMS reassign CPT codes 0652T and 0653T to APC 1562 (New Technology--Level 25 ($3,501-$4,000)) and CPT code 0654T to APC 1563 (New Technology--Level 26 ($4,001-$4,500)). The commenter stated that since these are low volume procedures, reassigning these procedures to New Technology APCs would allow them to receive payment rates appropriate to their resource costs. Response: We thank the commenter for their input. CPT codes 0652T, 0653T, and 0654T have updated GMCs of $1,744.52, $1,096.83, and $1,111.46 in the final rule data. After further clinical review, we continue to believe that CPT codes 0652T, 0653T, and 0654T are still appropriately assigned to APCs 5302 and 5303. Additionally, all three procedures have GMCs lower than the payment rate of their assigned APCs. Therefore, we are finalizing our proposal, without modification, to continue to assign CPT codes 0652T and 0653T to APC 5302 (Level 2 Upper GI Procedures) and CPT code 0654T to APC 5303 (Level 3 Upper GI Procedures). Table 56 shows the finalized status indicator and APC assignment for the procedure codes. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.074 Gastrointestinal Services

20. Gastric Electrophysiology Mapping With Simultaneously Validated

Patient System Profiling (GEMS) Service, CPT Code 0868T (APC 5723) Effective July 1, 2023, based on a New Technology application received by CMS for the GEMS service, CMS established HCPCS code C9787 (Gastric electrophysiology mapping with simultaneous patient symptom profiling) and assigned it to APC 5723 (Level 3 Diagnostic Tests and Related Services) based on a crosswalk to CPT code 0779T. Effective July 1, 2024, HCPCS code C9787 was deleted and replaced by CPT code 0868T (High-resolution gastric electrophysiology mapping with simultaneous patient symptom profiling, with interpretation and report). CMS assigned CPT code 0868T to APC 5723, the same APC to which its predecessor code, HCPCS code C9787, was assigned. For CY 2026, CMS proposed to continue to assign CPT code 0868T to APC 5723 with a proposed payment rate of $381.96 for CY 2026. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: Several commenters requested that CMS not finalize the proposed APC assignment for CPT code 0868T. A commenter explained that the current payment amount is too low and has impacted the ability for the service to be provided to pediatric patients because Medicare payment rates impact the rates of commercial payors and state Medicaid programs. Some commenters drew distinctions between the CPT codes 0868T and 0779T. For example, a commenter stated that CPT code 0868T is fundamentally different from CPT code 0779T across every domain, including the technology, clinical protocol, staff and facility resources, and diagnostic outputs. Commenters requested that CMS assign CPT code 0868T to APC 5724 (Level 4 Diagnostic Tests and Related Services) or a new technology APC. Response: We appreciate the commenters' input. First, we note that there is extremely low claims volume currently available for CPT code 0868T to justify a change in APC assignment based on existing claims data at this time. While the geometric mean cost of CPT code 0868T is approximately $3,000, this geometric mean cost is based on only 7 single frequency claims, which means that there is a high degree of variability in the limited claims data available. Additionally, based on our review of the technology and in consultation with our medical officers, we continue to believe that CPT codes 0868T and 0779T are comparable services in that they are both studies measuring gastrointestinal physiological activity. Additionally, there are other similar codes that describe gastrointestinal services assigned to APC 5723, such as CPT code 91020. Therefore, we believe that our proposal to assign CPT code 0868T is appropriate for CY 2026. We will continue to monitor the claims data and adjust the APC placement for CPT code 0868T based on the claims data in future rulemaking. After consideration of the public comments, we are finalizing our proposal without modification to continue to assign CPT code 0868T to [[Page 53575]] APC 5723. The final CY 2026 payment rate for the code can be found in Addendum B to this final rule with comment period. We also refer readers to Addendum D1 to this final rule with comment period for the SI meanings for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website.

21. IB--Stim, CPT 64567 (APC 5301)

CPT code 64567 replaces placeholder code 64X11 (Percutaneous electrical nerve field stimulation, cranial nerves, without implantation) and is effective January 1, 2026. The code describes a neuromodulation therapy for the treatment of functional gastrointestinal disorders. CPT code 64567 replaces existing CPT code 0720T (Percutaneous electrical nerve field stimulation, cranial nerves, without implantation). For CY 2026, we proposed to assign CPT code 64567 to APC 5724 (Level 4 Diagnostic Tests and Related Services) and delete predecessor CPT code 0720T. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter requested that CMS reassign CPT code 64567 to APC 1515 (New Technology--Level 15 ($1301-1400)) with a payment rate of $1,350.50 for CY 2026. The commenter believes the procedure requires more resources than other services currently assigned to APC 5724, and that it is not clinically similar to those other procedures since it represents a therapeutic intervention rather than a diagnostic service. They further explained that no appropriate clinical APC exists for this procedure and note that it has very low Medicare utilization rates upon which to base a clinical APC assignment. Response: After careful review of the service and the comment received as well as discussions with our medical officers, we are finalizing our proposals with modification. First, we are finalizing our proposal to delete CPT code 0720T as CPT code 64567 is replacing the predecessor code. However, we are not finalizing our proposal to assign CPT code 64567 to APC 5724, due to the clinical characteristics of the service. Specifically, we agree with the commenter that continued assignment to APC 5724 would not be appropriate because we believe CPT code 64567 represents a therapeutic service rather than a diagnostic procedure, based on the information available. We note that there were no claims for the service in CY 2024 for us to consider in our analysis. Therefore, due to the service's clinical characteristics, for CY 2026, we are assigning CPT code 64567 to APC 5301 (Level 1 Upper GI Procedures) as reflected in Table 57 with a payment rate of $926.63. We note that we will continue to monitor the claims data and update the payment rate in future rulemaking based on the available claims. The final CY 2026 payment rate for the code can be found in Addendum B to this final rule with comment period. We also refer readers to Addendum D1 to this final rule with comment period for the SI meanings for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.075 Imaging Services

22. Computed Tomographic Colonography, CPT Code 74263 (APC 5523)

For CY 2024, we assigned CPT code 74263 (Computed tomographic (CT) colonography, screening, including image postprocessing) to status indicator ``E1'' indicating that the service was not covered and not payable by Medicare under OPPS. For CY 2025, we finalized assigning CPT code 74263 to APC 5523 (Level 3 Imaging without Contrast) using CPT code 74176 (Computed tomography, abdomen and pelvis; without contrast material) as a crosswalk code because of the coverage changes for colorectal cancer screening services. (See 89 FR 94287 through 94290 for a full discussion of the coverage changes for colorectal cancer screening services.) For the CY 2026 OPPS/ASC proposed rule, we proposed to maintain the APC assignment for CPT code 74263 in APC 5523 (Level 3 Imaging without Contrast) with a proposed payment of around $245 and a status indicator of `S' (Procedure or Service, Not Discounted When Multiple; Paid under OPPS). We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter requested that CMS reassign CPT code 74263 to APC 5524 (Level 4 Imaging without Contrast) with a proposed payment of approximately $562. The commenter noted that CT colonography is a safe, minimally invasive exam that can save lives by detecting early disease. They stated that a lower reimbursement rate is likely to disproportionately affect underserved communities and exacerbate disparities in the early diagnosis of colorectal cancer. Response: We thank the commenter for the input; however, we disagree with the commenters and believe that CPT code 74263 is appropriately assigned to APC 5523 (Level 3 Imaging without Contrast). Given that any claims data in CY 2024 would be from before the service was payable in the OPPS, it would be difficult to rely on the claims data to determine the APC assignment for this code. We reviewed the claims data and cost information for the crosswalk code and continue to believe that CPT code 74176 is an appropriate crosswalk code for CPT 74263. CPT code 74176 has a geometric mean cost around $164 based on 228,147 single frequency claims used for ratesetting under OPPS. After review and input from our CMS Medical Officers, we believe that CPT code 74263 is [[Page 53576]] appropriately assigned to APC 5523 (Level 3 Imaging without Contrast). In summary, after consideration of the public comments we received, we are finalizing our proposal without modification, to assign CPT code 74263 to APC 5523 (Level 3 Imaging without Contrast). The final CY 2026 payment rates for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the status indicator definitions for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website. Refer to Table 58 for code descriptor, APC assignment and status indicator assignment CPT code 74263 for CY 2026. [GRAPHIC] [TIFF OMITTED] TR25NO25.076

23. Computed Tomographic Services (Head, Neck, and Cerebral Perfusion),

CPT Codes 70471 and 70473 (APCs 5572, 5571) The CPT Editorial Panel created 3 new Category I CPT codes 70471, 70472, and 70473 effective January 1, 2026 to replace the Category III CPT code 0042T. CPT code 0042T will be deleted effective January 1, 2026. The new final CPT codes (along with their placeholder codes) and the deleted Category III code are listed below with their long descriptors. 70471 (70XX1): Computed tomographic angiography (CTA), head and neck, with contrast material(s), including noncontrast images, when performed, and image postprocessing 70472 (70XX2): Computed tomographic (CT) cerebral perfusion analysis with contrast material(s), including image postprocessing performed with concurrent CT or CT angiography of the same anatomy (List separately in addition to code for primary procedure) 70473 (70XX3): Computed tomographic (CT) cerebral perfusion analysis with contrast material(s), including image postprocessing performed without concurrent CT or CT angiography of the same anatomy 0042T: Cerebral perfusion analysis using computed tomography with contrast administration, including post-processing of parametric maps with determination of cerebral blood flow, cerebral blood volume, and mean transit time For CY 2026, we proposed to assign these codes to the following APCs and status indicators (SIs): Assign CPT code 70471 to APC 5572 (Level 2 Imaging with Contrast), SI of `S' (Procedure or Service, Not Discounted When Multiple; Paid under OPPS); Assign CPT code 70472 to SI of `N' (Items and Services Packaged into APC Rates; Paid under OPPS; payment is packaged into payment for other services); and Assign CPT 70473 to APC 5571 (Level 1 Imaging with Contrast), SI of `S' (Procedure or Service, Not Discounted When Multiple; Paid under OPPS). We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter requested that CMS assign CPT code 70473 to APC 5572 (Level 2 Imaging with Contrast). The commenter indicated that the procedure described by CPT code 70473 is similar clinically and in resource use to the computed tomographic angiography procedure described by CPT code 70471. The commenter noted that the angiography procedure and the perfusion analysis are not always performed on the same date of service. Response: After review of these new codes and input from our CMS Medical Officers, we believe that CPT code 70473 is more clinically similar to CPT code 70460 (Computed tomography, head or brain; with contrast material(s)),which has a geometric mean cost of around $173 and 2,659 single frequency claims in the CY 2024 claims data used for CY 2026 OPPS ratesetting. CPT code 70460 is currently assigned to APC 5571 (Level 1 Imaging with Contrast) and has a proposed payment of around $179. We remind hospitals that we review, on an annual basis, the APC assignments for all items and services paid under the OPPS. In summary, after consideration of the public comments we received, we are finalizing our proposal without modification. The final CY 2026 payment rates for these codes can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the SI definitions for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website. Refer to Table 59 for code descriptors, APC assignments and status indicator assignments for CPT codes 70471, 70472, and 70473 for CY 2026. [[Page 53577]] [GRAPHIC] [TIFF OMITTED] TR25NO25.077

24. Duplex Scan of Extracranial Arteries, CPT Code 93880 (APC 5523)

For CY 2026, we proposed to continue to assign CPT code 93880 (Duplex scan of extracranial arteries; complete bilateral study) to APC 5523 (Level 3 Imaging without Contrast) and a status indicator of `S' with a proposed payment of $245.72. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter requested that CMS reassign CPT code 93880 to APC 5524 (Level 4 Imaging without Contrast) with a proposed payment of $562.07. The commenter stated that CPT code 93880 should be reassigned due to its clinical and resource similarity to CPT code 93306 (Echocardiography, transthoracic, real-time with image documentation (2d), includes m-mode recording, when performed, complete, with spectral doppler echocardiography, and with color flow doppler echocardiography), which is assigned to APC 5524. Response: We thank the commenter for their input; however, we disagree with their recommendation. We review, on an annual basis, the APC assignments for all services and items paid under the OPPS based on our analysis of the latest claims data. For the CY 2026 OPPS update, based on CY 2024 claims data, our analysis for this final rule with comment period supports the continued assignment of CPT code 93880 to APC 5523 (Level 3 Imaging without Contrast) based on its clinical and resource homogeneity to the procedures and services in APC 5523. Specifically, our claims data show a GMC of approximately $230 based on 410,021 single frequency claims for CPT code 93880, which is consistent with the GMC of approximately $246 for APC 5523, rather than the GMC of approximately $563 for APC 5524 (Level 4 Imaging without Contrast). We believe the resource requirements for CPT code 93880 are more similar to procedures found in APC 5523 (Level 3 Imaging without Contrast) rather than APC 5524 (APC Level 4 Imaging without Contrast). In summary, after consideration of the public comment, we are finalizing our proposal without modification to assign CPT code 93880 to APC 5523 (Level 3 Imaging without Contrast) for CY 2026. The final CY 2026 payment rates for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the SI definitions for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website.

25. Duplex Scan of Hemodialysis Fistula, CPT Code 0876T

The AMA CPT Editorial Panel established CPT code 0876T (Duplex scan of hemodialysis fistula, computer-aided, limited (volume flow, diameter, and depth, including only body of fistula)) effective July 1, 2024. We assigned CPT code 0876T to status indicator `E1' for July 1, 2024, based on our belief that the implantable marker used with this procedure did not have FDA approval. For CY 2026, we proposed to continue to assign CPT code 0876T to E1 (Not covered by any Medicare outpatient benefit category; Statutorily excluded by Medicare, Not reasonable and necessary; Not paid by Medicare when submitted on outpatient claims) because we have not been notified by interested parties regarding an updated FDA status. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter requested that CMS assign CPT code 0876T to an APC for payment under the OPPS. The commenter noted that the vast number of end-stage renal disease admissions are related to complications with patients' vascular access and the cost savings of salvaging fistulas versus replacing them. Response: We are unable to determine if all parts of this service have been approved by the FDA and therefore are maintaining the status indicator assignment of `E1'. We look forward to hearing from the manufacturer when FDA approval has been obtained. In summary, after consideration of the public comment that we received, we are finalizing the status indicator assignment for 0876T without modification. The final CY 2026 payment rates for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the SI definitions for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website.

26. Non-Cardiac Contrast Enhanced Ultrasound (CEUS), CPT Codes 76978

and 76979 (APC 5572) CPT codes 76978 and 76979 describe non-cardiac contrast enhanced ultrasounds. Their code descriptors are as follows: 76978: Ultrasound, targeted dynamic microbubble sonographic [[Page 53578]] contrast characterization (non-cardiac); initial lesion. 76979: Ultrasound, targeted dynamic microbubble sonographic contrast characterization (non-cardiac); each additional lesion with separate injection (List separately in addition to code for primary procedure). For CY 2026, we proposed to assign CPT codes 76978 and 76979 to APC 5571 (Level 1 Imaging with Contrast). CPT code 76978 had a geometric mean cost of around $287 based on 710 single frequency claims and CPT code 76979 was packaged with a primary procedure. Comment: Several commenters requested reassignment of CPT codes 76978 and 76969 from their current assignment in APC 5571 (Level 1 Imaging with Contrast) to APC 5572 (Level 2 Imaging with Contrast). CPT code 76978 describes ultrasound, targeted dynamic microbubble sonographic contrast characterization (non-cardiac) for the initial lesion, while CPT code 76979 describes each additional lesion with a separate injection and is packaged with the primary procedure code per OPPS policy. The commenters stated that the current APC assignment does not adequately reflect the resource costs associated with these specialized contrast-enhanced ultrasound procedures. Response: We agree with the commenters' request for APC reassignment. After reviewing the clinical characteristics and resource costs associated with CPT codes 76978, we are reassigning 76978 from APC 5571 (Level 1 Imaging with Contrast) to APC 5572 (Level 2 Imaging with Contrast) for CY 2026 as reflected in Table 60. This reassignment better reflects the complexity and resource intensity of non-cardiac contrast enhanced ultrasound procedures. CPT code 76978 will be assigned status indicator ``S'' (separately payable) under APC 5572, while CPT code 76979 will maintain status indicator ``N'' (packaged) and will continue to be packaged with the primary procedure code 76978 under the new APC assignment. This change recognizes the specialized nature of contrast-enhanced ultrasound technology and ensures appropriate payment for these services. The reassignment will be effective beginning January 1, 2026. [GRAPHIC] [TIFF OMITTED] TR25NO25.078

27. Irreversible Electroporation Ablation of Tumors (NanoKnife[supreg]

System), CPT Codes 0600T, 47384, 55877 (APC 5362) Effective July 1, 2020, the AMA CPT Editorial Panel established CPT code 0600T (Ablation, irreversible electroporation; 1 or more tumors per organ, including imaging guidance, when performed, percutaneous) which describes a technique in which an electrical field is applied to cells in order to increase the permeability of the cell membranes through the formation of nanoscale defects in the lipid bilayer. The result is creation of nanopores in the cell membrane and disruption of intra-cellular homeostasis, ultimately causing cell death. The procedure received CPT code 0600T from the AMA in July 2020, and we assigned CPT code 0600T to APC 5362 (Level 2 Laparoscopy and Related Services) in the CY 2021 OPPS/ASC final rule with comment period. For the CY 2026 OPPS/ASC proposed rule, CPT code 0600T had a geometric mean cost of around $13,068 and we proposed to continue to assign the procedure to APC 5362, which has a proposed payment rate of around $10,967 and status indicator J1 (Hospital part B services paid through a comprehensive APC). For the CY 2026 OPPS/ASC proposed rule, we proposed CPT code 0600T to be a device intensive procedure with a proposed device offset percentage of 57.02 percent based on claims data for CPT code 0600T. Effective July 1, 2025, the AMC CPT Editorial Panel established placeholder CPT code 4001X (Ablation, irreversible electroporation, liver, 1 or more tumors, including imaging guidance, percutaneous); and placeholder CPT code 5XX11 (Ablation, irreversible electroporation, prostate, 1 or more tumors, including imaging guidance, percutaneous). CPT code 47384 is the final code for 4001X and CPT code 55877 is the final code for 5XX11. For the CY 2026 OPPS/ASC proposed rule, we proposed to assign CPT code 47384 and CPT code 55877 to APC 5362 and status indicator J1. For the CY 2026 OPPS/ASC proposed rule, we proposed CPT code 47384 and CPT code 55877 to be device intensive procedures with a proposed device offset percentage of 31 percent which is the default for new device intensive procedures that lack claims data, or lack claims data from a predecessor code or a clinically related or similar code. We note that at the August 25, 2025, HOP Panel Meeting, a presentation was made requesting: (1) reassignment to APC 5377 (Level 7 Urology and Related Services) for CPT code 55877; (2) reassignment to APC 1575 (New Technology--Level 38) for CPT codes 47384 and 0600T; and (3) the use of the claims data for CPT code 0600T to determine the device offset percentage for CPT codes 47384 and 55877. Based [[Page 53579]] on the information presented at the meeting, the Panel recommended that CMS use the claims data for CPT code 0600T to determine the device offset percentage for CPT code 47384 and CPT code 55877. The Panel made no recommendation on the APC assignments for CPT codes 0600T, 47384 and 55877. We received public comments on this topic. The following is a summary of the comments we received and our responses. Comment: A few commenters requested reassignment from APC 5362 to APC 5377 (Level 7 Urology and Related Services) for CPT code 55877 and reassignment from APC 5362 to APC 1575 (New Technology--Level 38) for CPT codes 47384 and 0600T. One of the commenters additionally requested device-intensive status for CPT codes 0600T, 47384 and 55877. We refer readers to sections IV.B. and XIII.C. of this final rule with comment period for our response those requests. The commenters stated that all three procedures need to be reassigned because the CY 2024 claims data for CPT code 0600T shows a geometric mean cost of $13,068, which is higher than the proposed APC 5362 geometric mean cost of $11,137. For which specific APCs the procedures should be assigned to, the commenters stated that it is appropriate to assign CPT code 55877 to APC 5377 (Level 7 Urology and Related Services) based on resource and clinical coherence. The commenters stated that the costs associated with CPT code 0600T are more akin to the geometric mean of APC 5377 and the clinical range of services included in APC 5377 encompass ablation procedures, including CPT 55882, that are used in treating the same patient diagnoses and population. For CPT codes 0600T and 47384, commenters stated that there is no clinically appropriate APC that fits these procedures from both a clinical and resource perspective, so they proposed to reassign them to APC 1575 based on geometric mean cost. Alternatively, the commenter suggested, if CMS believes that all three procedures should be assigned to the same APC, the alternative APC assignment for placeholder code 55877 could be APC 1575. Response: We thank the commenters for their recommendations. After consideration of the public comments we received and discussion and input from our Medical Officers, we are finalizing our proposal without modification for the APC assignments for CPT codes 0600T, 47384 and 55877. We believe the current claim data for 0600T indicates that APC 5362 is an appropriate assignment for these services. We note that we review the APC assignments for all items and services paid under the OPPS on an annual basis. We will reevaluate the APC assignments for CPT codes 0600T, 47384 and 55877 in the next rulemaking cycle. Table 61 shows the finalized status indicator and APC assignment for these procedure codes. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.079 Laboratory Related Services Certain clinical diagnostic laboratory tests that are listed on the Clinical Laboratory Fee Schedule (CLFS) are packaged in the OPPS as integral, ancillary, supportive, dependent, or adjunctive to the primary service or services provided in the hospital outpatient setting during the same outpatient stay. Specifically, we conditionally package laboratory tests and only pay separately for laboratory tests when (1) they are the only services provided to a beneficiary on a claim; (2) they are molecular pathology tests; (3) they are advanced diagnostic laboratory tests (ADLTs) that provide an analysis of multiple biomarkers of DNA, RNA, or proteins combined with a unique algorithm to yield a single patient-specific result; or (4) the laboratory tests are considered preventive services. When laboratory tests are not packaged under the OPPS and are listed on the CLFS, they are paid at the CLFS payment rates, outside the OPPS, under Medicare Part B.

28. Diagnostic Biomarker Tests for Alzheimer's Disease, CPT Codes 0551U

and 0568U Recently, the AMA CPT Editorial Panel created two new CPT codes to describe diagnostic biomarker tests for Alzheimer's disease. CPT code 0551U became effective April 1, 2025, and CPT code 0568U became effective October 1, 2025. The CPT codes and their descriptors are as follows: 0551U (Tau, phosphorylated, pTau217, by single-molecule array (ultrasensitive digital protein detection), using plasma); and 0568U (Neurology (dementia), beta amyloid (A[beta]40, A[beta]42, A[beta]42/40 ratio), tau-protein phosphorylated at residue (eg, pTau217), neurofilament light chain (NfL), and glial fibrillary acidic protein (GFAP), by ultra-high sensitivity molecule array detection, plasma, algorithm reported as positive, intermediate, or negative for Alzheimer pathology). In the CY 2026 OPPS/ASC proposed rule, we proposed to assign CPT codes [[Page 53580]] 0551U and 0568U status indicator ``Q4'' under OPPS. Comment: We received one comment in support of our proposal. A commenter commended CMS's commitment to developing the basis of payment for these new clinical diagnostic laboratory tests with the addition of CPT codes 0551U and 0568U. Response: We thank the commenter for their support. However, on October 1, 2025, the AMA CPT Editorial Panel deleted CPT code 0551U effective January 1, 2026. Therefore, for CY 2026, we will delete this code from this final rule with comment period and the January 2026 Update. However, we are finalizing our proposal to assign status indicator ``Q4'' to CPT code 0568U for CY 2026. We refer readers to Addendum D1 of this final rule with comment period for the SI meanings for all codes reported under the OPPS. Addendum D1 is available via the internet on the CMS website.

29. PreciseBreast Test, CPT Code 0220U

AMA CPT Editorial Panel created CPT code 0220U on October 1, 2020 to describe a clinical diagnostic laboratory test that utilizes an Al- digital risk assessment methodology to measure protein-based biomarkers that are digitized to recapitulate the location, morphology and biological grade of a patient's invasive (ductal) breast cancer. In the CY 2026 OPPS/ASC proposed rule, we proposed to continue assigning CPT code 0220U to status indicator ``Q4'' under OPPS. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter requested that CMS update its guidance on the laboratory date of service (DOS) policy for protein-based multianalyte algorithmic tests for cancer indications. Under the DOS regulations at Sec. 414.510(b)(5), a clinical diagnostic laboratory test on a specimen collected during a hospital outpatient encounter can be billed by the performing laboratory if the test involves DNA, RNA or protein biomarkers or is classified as an Advanced Diagnostic Laboratory Test (ADLT). PreciseBreast[supreg] test (0220U) \1\ is a cancer-related protein-based multi-analyte algorithmic test, however, because it is assigned a Proprietary Laboratory Analyses'' (PLA) code by AMA CPT Editorial Panel, it does not meet the exclusion from the DOS policy under CMS's current interpretation. According to the commenter, they cannot bill Medicare for their PreciseBreast[supreg] test even though it is performed in their laboratory outside of the hospital. This has significantly limited access to the targeted clinical diagnostic information that the test provides to breast cancer patients. The commenter requested that CMS update the laboratory DOS policy at Sec. 414.510(b)(5) to clarify that PreciseBreast[supreg], as a cancer-related protein-based MAAA, can be billed by the performing lab with a DOS of the date of test performance. PreciseBreast[supreg] should be added to CMS's list of ``Laboratory Tests Subject to Exceptions to Laboratory DOS Policy Defined at Sec. 414.510(b)(5))'', reassigned to Status Indicator ``A'', and excluded from packaging in the outpatient setting. Response: We thank the commenter for their input but note that the comment related to the Date of Service (DOS) policy is out of scope for the purposes of this OPPS/ASC final rule with comment period as there was no proposal to modify the DOS regulations in the CY 2026 OPPS/ASC proposed rule. We also do not believe that PreciseBreast[supreg] test qualifies as an exception to the OPPS laboratory packaging policy based on criteria discussed in the Laboratory Related Services section. Based on that information, we continue to believe that the assignment of status indicator ``Q4'' to CPT code 0220U is still appropriate and are finalizing without modification, our proposal to assign CPT code 0220U to status indicator ``Q4'' for CY 2026.

30. Screening DNA/RNA Test for Hepatitis C Virus, HCPCS Code G0567

In the April 2025 quarterly update, effective June 27, 2024, CMS created a new HCPCS code, G0567, to describe a new screening DNA/RNA test for Hepatitis C Virus. We assigned this code to status indicator ``A'' under OPPS indicating that this code would be paid separately under clinical laboratory fee schedule (CLFS), similar to other preventive screening tests that are excluded from the OPPS packaging policy for the laboratory tests. In the CY 2026 OPPS/ASC proposed rule, we proposed to continue to assign HCPCS code G0567 to status indicator ``A''. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter requested confirmation on the assignment of status indicator ``A'' where a commenter stated that such an assignment would be fully consistent with CMS precedent for other ``screening'' G- codes, such as G0472 (Hepatitis c antibody), G0475 (HIV antigen/ antibody), G0476 (HPV co-testing), G0499 (Hep B screening)). Response: We thank the commenter for their feedback and believe that the assignment of status indicator ``A'' continues to be appropriate for CY 2026. Therefore, we are finalizing our proposal, without modification to assign HCPCS code G0567 to status indicator ``A'' for CY 2026. We refer readers to OPPS Addendum D1 to this final rule with comment period for the status indicator definitions for all codes reported under the OPPS.

31. Laparoscopic Hernia Repair and Appendectomy, Procedures, CPT Codes

49650, 49651, and 44970 (APC 5342) CPT codes 49650 (Laparoscopy, surgical; repair initial inguinal hernia) and 49651 (Laparoscopy, surgical; repair recurrent inguinal hernia) describe laparoscopic hernia repair procedures. CPT code 44970 (Laparoscopy, surgical, appendectomy) describes the procedure for laparoscopic appendectomy. Using CY 2024 claims data, CPT codes 49650, 49651, and 44970 had geometric mean costs of $7,050.22, $7,173.25, $6,777.47, respectively, in the CY 2026 OPPS/ASC proposed rule. For CY 2026, we believed these were still appropriately assigned to APC 5361 (Level 1 Laparoscopy and Related Services), which had a proposed payment rate of $6,228.97. Therefore, we proposed to continue assigning CPT codes 49651, 49651, and 44970 to APC 5361. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: The HOP Panel recommended that we reassign CPT codes 49650, 49651, and 44970 to APC 5342 (Level 2 Abdominal/Peritoneal/ Biliary and Related Procedures) based on clinical and resource similarity to procedure in that APC. A commenter disagreed with the HOP Panel's recommendation and instead requested that CMS finalize our proposal without modification due to potential disruption to the payment rate for APC 5361 if we were to remove the three procedures. Response: We thank the commenter for their input. CPT codes 49650, 49651, and 44970 have updated GMCs of $6,902.69, $7,040.05, and $6,638.55 in the final rule data. While these are closer to the payment rate for APC 5342, after clinical review of these procedures, we did not find APC 5342 to be the clinically appropriate APC family for CPT codes 49650, 49651, and 44970. We [[Page 53581]] continue to believe that these procedures belong in the Laparoscopy and Related Procedures family and are appropriately paid based on the payment rate for APC 5361. After consideration of the public comment we received, we are finalizing our proposal without modification to continue to assign CPT codes 49650, 49651, and 44970 to APC 5361 (Level 1 Laparoscopy and Related Services). Table 62 shows the finalized status indicator and APC assignment for the procedure codes. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.080

32. Medical 3D Printing, CPT Codes 0559T, 0561T (5734)

CPT codes 0559T (Anatomic model 3D-printed from image data set(s); first individually prepared and processed component of an anatomic structure) and 0561T (Anatomic guide 3D-printed and designed from image data set(s); first anatomic guide) were established in 2019 to describe medical 3D printing services. For the CY 2026 OPPS/ASC proposed rule, CPT code 0559T had a geometric mean of approximately $183 based on 12 single frequency claims and 16 total frequency claims, and CPT code 0561T had a geometric mean cost of approximately $255 based on 8 single frequency claims and 84 total frequency claims. For CY 2026, we proposed to continue to assign CPT codes 0559T and 0561T to APC 5733 (Level 3 Minor Procedures) and status indicator ``Q1.'' We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter requested that CMS assign CPT codes 0559T and 0561T to APC 5735 (Level 5 Minor Procedures) because the resources and supplies needed to provide these services are greater than the proposed payment rates. The commenter explained that the low utilization for both codes caused a lack of reliable claims data for ratesetting and urged us to assign the codes to a clinical APC with a higher payment rate to ensure patient access. Per the commenter, the 3D-printed models cost close to $3,000 per patient. Response: Based on the geometric mean cost of both codes, we agree with the commenter that the proposed payment rate is not appropriate for CPT codes 0559T and 0561T, as the payment rate is significantly lower than the geometric mean cost of the codes. Based on the claims data available, we believe an assignment to APC 5734, a higher payment level within the same clinical APC, would align more closely with the geometric mean costs for both codes. After consideration of the public comment we received, we are finalizing our proposal with modification to assign CPT codes 0559T and 0561T to APC 5734 and status indicator ``Q1'' as reflected in Table 63. As we do every year, we will re-evaluate the APC assignments for these codes in the next rulemaking cycle. [GRAPHIC] [TIFF OMITTED] TR25NO25.081 Neuro and Nerve Related Procedures

33. Continuous EEG Monitoring, CPT Codes 0956T, 0960T (APC 5117)

Continuous EEG monitoring involves an implantable device. The device is an electroencephalographic (EEG) recording and transmitting device implanted under the scalp. It is a prescription device indicated to acquire, transmit, and store EEGs continuously from patients between 18-75 years of age with drug-resistant epilepsy who are intolerant or not indicated for more conservative monitoring tools. The device is intended to aid a physician's remote assessment and monitoring of the indicated patient's condition. The medical use of the data acquired by the continuous EEG monitoring system is to be performed under the direction and interpretation of a licensed medical professional. The device does not provide any diagnostic conclusions about the patient's condition. The AMA CPT Editorial Board created five new Category III CPT codes to describe various procedures associated with a sub-scalp bilateral continuous [[Page 53582]] EEG monitoring system to assist in identifying seizure activity for patients with drug resistant epilepsy (DRE). Specifically, effective July 1, 2025, the three new CPT codes are: 0956T--Partial craniectomy, channel creation, and tunneling of electrode for sub-scalp implantation of an electrode array, receiver, and telemetry unit for continuous bilateral electroencephalography monitoring system, including imaging guidance 0957T--Revision of sub-scalp implanted electrode array, receiver, and telemetry unit for electrode, when required, including imaging guidance 0958T--Removal of sub-scalp implanted electrode array, receiver, and telemetry unit for continuous bilateral electroencephalography monitoring system, including imaging guidance 0959T--Removal or replacement of magnet from coil assembly that is connected to continuous bilateral electroencephalography monitoring system, including imaging guidance 0960T--Replacement of sub-scalp implanted electrode array, receiver, and telemetry unit with tunneling of electrode for continuous bilateral electroencephalography monitoring system, including imaging guidance In the CY 2026 OPPS/ASC proposed rule, we proposed to assign CPT codes 0956T and 0960T to status indicator ``S'' and APC 1577 (New Technology--Level 40 ($20,001-$25,000)) with a proposed payment rate of $22,500.50. CPT code 0957T was assigned to status indicator ``J1'' and APC 5112 (Level 2 Musculoskeletal Procedures) with a proposed payment rate of $1,659.95. CPT code 0958T was assigned to status indicator ``J1'', APC 5113 (Level 3 Musculoskeletal Procedures) with a proposed payment rate of $3,377.20. CPT code 0959T was assigned to status indicator ``Q2'' APC 5072 (Level 2 Excision/Biopsy/Incision and Drainage) with a proposed payment rate of $1,692.22. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: Several commenters requested that CMS reexamine and revise the reimbursement rates for CPT codes 0956T and 0960T because, according to the commenters, outpatient reimbursement for services associated with sub-scalp EEG monitoring is substantially below the actual resources required to deliver them. A few commenters urged CMS to move CPT codes 0956T and 0960T to a higher-paying New Technology APC. A commenter recommended that CMS assign both CPT codes to APC 1579 (New Technology--Level 42 ($30,001-$40,000)). Their analysis indicated that a similar procedure is the implantation of a cochlear implant. In evaluating the CY 2026 OPPS claims data, the procedure costs of implanting a cochlear implant (CPT code 69930) are $8,461. The commenter stated that the cost of the device is $25,000, so total estimated hospital costs of the procedure are $33,461. The commenter requested that CMS reassign CPT codes 0956T and 0960T to APC 1579. Another commenter estimated that the total procedure costs for 0956T and 0960T exceed $35,000. Device costs are approximately $25,000. Surgical and facility costs for outpatient implantation procedures add approximately $10,000. The commenter stated that with the current proposed reimbursement falling $12,500 short of actual costs, a hospital would be unlikely to offer this service, and patients would not be able to access this service. Response: Based on clinical similarity and resource homogeneity of the procedures described by CPT codes 0956T and 0960T to existing procedures assigned to the Level 7 Musculoskeletal Procedures APC, and based on input from our medical advisors, we are assigning CPT codes 0956T and 0960 to status indicator ``J1'' and APC 5117 (Level 7 Musculoskeletal Procedures) for CY 2026 as reflected in Table 64. The final payment rates for the codes can be found in Addendum B to this final rule with comment period. In addition, we refer to Addendum D1 to this final rule with comment period for the status indicator (SI) meanings for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.082

34. Transcutaneous Magnetic Peripheral Nerve Stimulation CPT Codes

0766T and 0767T (APC 5722) Transcutaneous Magnetic Peripheral Nerve Stimulation is intended to stimulate peripheral nerves for relief of chronic intractable pain, post[hyphen]traumatic pain, post[hyphen]surgical pain and/or for relief of chronic painful diabetic peripheral neuropathy in the lower extremities for patients 18 and older. CPT code 0766T (Transcutaneous magnetic stimulation by focused low-frequency electromagnetic pulse, peripheral nerve, with identification and marking of the treatment location, including noninvasive electroneurographic localization (nerve conduction [[Page 53583]] localization), when performed; first nerve) became effective January 1, 2023. For CY 2025, CPT code 0766T was reassigned to APC 5722 (Level 2 Diagnostic Tests and Related Services) with the status indicator ``S'' (Significant Procedures, Not Discounted when Multiple. Paid under OPPS; separate APC payment). There are no claims available for CPT code 0766T in CY 2024. For CY 2026, we proposed to continue assigning CPT code 0766T to APC 5722. CPT code 0767T (Transcutaneous magnetic stimulation by focused low- frequency electromagnetic pulse, peripheral nerve, with identification and marking of the treatment location, including noninvasive electroneurographic localization (nerve conduction localization), when performed; each additional nerve (list separately in addition to code for primary procedure)) became effective January 1, 2023 and assigned status indicator ``N'' (packaged). CPT code 0767T is an add-on code and we proposed to continue assignment of status indicator ``N'' for this code for CY 2026. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: Commenters requested CPT code 0766T be reassigned to APC 5724 (Level 4 Diagnostic Tests and Related Services), claiming that CPT code 0766T is not clinically similar and does not use comparable resources to other services in APC 5722. The commenters requested that CMS follows the 2025 HOP Panel recommendations to reassign 0766T to APC 5724 (Level 4 Diagnostic Tests and Related Services) and reassign the 0767T status indicator to ``S'' (Significant Procedures, Not Discounted when Multiple. Paid under OPPS; separate APC payment). Response: We disagree that CPT code 0766T is comparable, clinically and in resource costs, to the services assigned to APC 5724. We continue to believe CPT code 0766T is more comparable, clinically and from a resource cost perspective, to CPT code 90867 (Therapeutic repetitive transcranial magnetic stimulation (tms) treatment; initial, including cortical mapping, motor threshold determination, delivery and management), and CPT code 90868 (Therapeutic repetitive transcranial magnetic stimulation (tms) treatment; subsequent delivery and management, per session), which are assigned to APC 5722 (Level 2 Diagnostic Tests and Related Services), because these services share similar magnetic stimulation and nerve localization processes. We note that CPT code 0767T is an add-on code. Add-on codes are always performed in addition to the primary service or procedure and not reported as a stand-alone code. As specified under regulation 42 CFR 419.2(b)(18), add-on codes are generally packaged under the OPPS, and payment for the codes are bundled with the primary codes. Consequently, CPT code 0767T is not paid separately under the OPPS and its payment is packaged into payment for the primary code. After consideration of the public comments we received, we are finalizing our proposed APC assignment and status indicators for CPT codes 0766T and 0767T without modification. Refer to Table 65 for the final OPPS APC and status indicator assignment for CPT codes 0766T and 0767T for CY 2026. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.083

35. Ultrasound Guided Carpal Tunnel Release Procedure, CPT Code 64728

(APC 5431) For CY 2026, the AMA CPT Editorial Board created a new Category I CPT code 64728 (Placeholder code 647XX) to describe carpal tunnel release procedures using ultrasound guidance. In the CY 2026 OPPS/ASC proposed rule, we proposed to assign CPT code 647XX to APC 5431 (Level 1 Nerve Procedures) with status indicator ``J1'' and a proposed payment rate of $1,999.82. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter believes overall hospital resources for this service can be approximated using other similar procedures--for example, endoscopic carpal tunnel release (CPT code 29848 (Endoscopy, wrist, surgical, with release of transverse ligament)) and [[Page 53584]] open carpal tunnel release (CPT code 64721 (Neuroplasty and/or transposition; median nerve at carpal tunnel))--and adding the single- use device cost of $1,099, plus the $140 cost of intraprocedure ultrasound to those other costs. Using the geometric mean costs for these services and adding the single-use device and intraprocedure ultrasound costs results in an estimated cost of between $3,048 and $3,454 for the new 647XX procedure. Based on this information, the commenter suggested that CMS re- assign CPT code 64728 to APC 1524 (New Technology--Level 24 ($3001- $3500) with status indicator ``S'' and a proposed payment rate of $3,250.50 or alternatively re-assign it to APC 5432 (Level 2 Nerve Procedures) with status indicator ``J1'' and a proposed payment rate of $6,667.00 or to APC 5113 (Level 3 Musculoskeletal Procedures) with status indictor ``J1'' with a proposed payment rate of $3,377.20. Response: Based on the estimated resource costs and clinical similarity of CPT code 64728 to other surgical procedures assigned to APC 5431, we continue to believe that the assignment of CPT code 64728 to APC 5431 is appropriate. Therefore, we are finalizing without modification our proposal to assign CPT code 64728 to APC 5431 for CY 2026. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website. Neurostimulators

36. Creation of a Level 6 Neurostimulator APC

In prior rulemaking, some interested parties have requested that we create a Level 6 Neurostimulator and Related Procedures APC, due to their concerns around clinical and resource cost similarity in the Level 5 Neurostimulator and Related Procedures APC. We most recently responded to this request in the CY 2025 OPPS/ASC final rule with comment period (89 FR 94064). We noted that we believed that the current 5 level APC structure for the Neurostimulator and Related Procedures series provided for an appropriate distribution of clinical and cost similarity at the different APC levels. As discussed in the CY 2021 OPPS/ASC final rule with comment period, we reiterate that the OPPS is a prospective payment system. We group procedures with similar clinical characteristics and resource costs into APCs and establish a payment rate that reflects the geometric mean of all services in the group even though the cost of any individual service within the APC may be higher or lower than the APC's geometric mean. As a result, in the OPPS, any individual procedure may potentially be paid more or less than the cost of the services because the payment rate is based on the geometric mean of the entire group of services in the APC. However, the impact of these payment differences should be mitigated when distributed across a large number of APCs (85 FR 85968). While we continued to believe that a five-level structure for the Neurostimulator and Related Procedures APC series remains appropriate, we solicited comment from interested parties on the need for a Level 6 APC, given the clinical and estimated cost characteristics of the services currently assigned to the Level 5 APC and New Technology APC 1580 (New Technology--Level 43 ($40,001-$50,000)). In summary, for the CY 2026 OPPS, we proposed to maintain the current 5 level structure for the Neurostimulator and Related Procedure APC series. We also solicited comments on potentially creating an additional Level 6 APC in the series. See Table 66 for proposed CY 2026 SI and APC assignments for specific HCPCS codes in the series and Table 67 for the proposed CY 2026 Neurostimulator and Related Procedures APCs. [GRAPHIC] [TIFF OMITTED] TR25NO25.084 [[Page 53585]] [GRAPHIC] [TIFF OMITTED] TR25NO25.085 We received public comments on the proposal to maintain the 5 level APC structure. The following is a summary of the comments we received and our responses. Comment: Some commenters supported the proposal to continue assigning CPT code 0266T/64XX5 (Implantation or replacement of carotid sinus baroreflex activation device; total system (includes generator placement, unilateral or bilateral lead placement, intra-operative interrogation, programming, and repositioning, when performed)) to New Technology APC 1580. Commenters also supported maintaining assignment of CPT code 33276 (Insertion of phrenic nerve stimulator system (pulse generator and stimulating lead[s]), including vessel catheterization, all imaging guidance, and pulse generator initial analysis with diagnostic mode activation, when performed) to New Technology APC 1580. Other commenters noted that CPT code 64568 (Open implantation of cranial nerve (e.g., vagus nerve) neurostimulator electrode array and pulse generator) which has similar characteristics to 33276 and 0266T/ 64XX5 should similarly be placed in New Technology APC 1580, based on its geometric mean cost and that continuing to assign CPT code 64568 to the Level 5 Neurostimulator and Related Procedures APC would be an inconsistent treatment of the procedure code, relative to the others. Finally, a commenter suggested that a combined C-code be created to pair 64568 with C1827 (Generator, neurostimulator (implantable), non- rechargeable, with implantable stimulation lead and external paired stimulation controller). At the August 2025 HOP Panel meeting, the HOP panel made a recommendation to consider placement of CPT code 64568 to New Technology APC 1580. Response: We appreciate the commenters' support for the proposed assignments of HCPCS codes 33276 and 0266T/64XX5 to New Technology APC 1580. We agree that it is appropriate to assign CPT code 64568 to New Technology APC 1580 based on its geometric mean cost of $46,926.67 and apply a similar temporary New Technology APC assignment, as we have for the other neurostimulator procedure codes assigned to that APC. We will continue to monitor the claims data for the code as additional claims become available. Finally, we do not believe the creation of a C-code pairing CPT code 64568 and device code C1827 is necessary or appropriate, given a final placement for the primary procedure code to New Technology APC 1580 in this final rule with comment period. Comment: Many commenters requested the creation of a Level 6 Neurostimulator and Related Procedures APC, with some requesting that specific codes or codes with similar costs be included in that Level 6 APC. We note that at the August 2025 HOP Panel meeting, the HOP panel made a recommendation to create a Level 6 Neurostimulator APC. Commenters stated that while they appreciated the assignment of specific codes to New Technology APCs and that those assignments represent a viable short term solution, a Level 6 APC represents a more long term solution to commenter concerns, including those around procedure payment relative to costs. A commenter also noted that some of the factors supporting the creation of the Level 7 Musculoskeletal Procedures APC would also apply to this series, such as the bimodal distribution of cost and potential placement of procedures being removed from the IPO list. A commenter also noted that although a Level 6 Neurostimulator and Related Procedures APC would have relatively low claims volume, that there are already other comparable APCs with low volume in the Intraocular Procedures APC series. A few commenters supported maintaining the current 5 level structure of the APC series. One of the commenters requested that CMS not make any changes to the APC series structure or any of its assignments until a more comprehensive review of the current APC family could be performed. Response: We appreciate the thoughtful responses commenters have provided with regard to the Neurostimulator and Related Procedures APC series and our request for comments. At this time, we believe the 5-level APC structure for the APC series remains appropriate and individual temporary New Technology APC assignments with respect to the high cost procedures in this evolving area resolve some of the concerns around procedure payment relative to cost. We will continue to monitor the claims data for these procedures as more information around their volume and estimated costs become available. After consideration of public comments, we are assigning CPT code 64568 to New Technology APC 1580 and maintaining the 5-level APC structure for the Neurostimulator and [[Page 53586]] Related Procedures APC series in the CY 2026 OPPS. See Table 68 for final CY 2026 SI and APC assignments for specific HCPCS codes in the series and Table 69 for the final CY 2026 Neurostimulator and Related Procedures APCs. BILLING CODE 4120-01-P [GRAPHIC] [TIFF OMITTED] TR25NO25.086 [[Page 53587]] [GRAPHIC] [TIFF OMITTED] TR25NO25.087 BILLING CODE 4120-01-C

37. Neurostimulator and Related Procedures (APCs 5461 Through 5465)

In the CY 2021 OPPS/ASC final rule with comment period, we finalized a five-level APC structure for the Neurostimulator and Related Procedures series (85 FR 85968 through 85970). For a detailed discussion of the history of neurostimulators policy, we refer readers to the CY 2015, CY 2020, CY 2021, CY 2023, CY 2024, and CY 2025 OPPS/ ASC final rules with comment period (79 FR 66807 through 66808; 84 FR 61162 through 6116, 85 FR 85968 through 85970; 87 FR 71869; 88 FR 81645 through 81658; 89 FR 94062 through 96045). CPT Codes 61885 and 64590 Effective January 1, 1982, The AMA CPT Editorial Board created Category I CPT code 61885 (Insertion or replacement of cranial neurostimulator pulse generator or receiver, direct or inductive coupling; with connection to a single electrode array) and CPT code 64590 (Insertion or replacement of peripheral, sacral, or gastric neurostimulator pulse generator or receiver, requiring pocket creation and connection between electrode array and pulse generator or receiver). Based on the estimated resource costs and clinical similarity of HCPCS code 61885 to other procedures assigned to APC 5465 and because the geometric mean cost for that procedure aligned with the geometric mean cost of APC 5465, we proposed to reassign CPT code 61885 from APC 5464 (Level 4 Neurostimulator and Related Procedures) with a proposed payment rate of $20,126.69 for CY 2026 to APC 5465 (Level 5 Neurostimulator and Related Procedures) with a proposed payment rate of $31,751.65 for CY 2026. We also proposed to continue assigning CPT code 64590 to APC 5464 (Level 4 Neurostimulator and Related Procedures). We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: Some commenters supported these proposals and other commenters were concerned that since CMS was proposing to reassign CPT code 61885 from APC 5464 to APC 5465, the OPPS proposed payment rate for APC 5464 will decline significantly, when calculated both with and without the comprehensive APC (C-APC) methodology. A commenter stated that the decrease in the payment rate for services remaining in APC 5464 will limit access for Medicare beneficiaries to important therapies reported under CPT code 64590 and other codes in that APC. Other commenters requested that CMS utilize the adjustment authority at section 1833(t)(2)(E) of the Act to ensure equitable payments under the OPPS and calculate the OPPS payment rates for APC 5464 with and without the C-APC methodology using a geometric mean cost that phases in the reassignment of 61855. During the 4-year phase-in, the payment rate calculation for APC 5464 would include a declining share of the mean cost of 61855 according to the following schedule: 2026--75%. 2027--50%. 2028--25%. 2029--0%. The commenters requested that CMS apply this adjustment only to APC 5464; the calculation of the payment rate for APC 5465 should not be affected by this adjustment. Response: Under the OPPS, we use the latest claims data to set the annual payment rates. For this final rule with comment period, the OPPS payment rates are based on claims submitted between January 1, 2024, and December 31, 2024, processed through June 30, 2025. Based on our evaluation of the claims data, the geometric mean cost for CPT code 61885 is $31,169.28 based on 3,008 single claims (out of 3,030 total claims), which is much more consistent with the geometric mean cost for APC 5465 (geometric mean cost of $31,767.96) than APC 5464 (geometric mean cost of $19,972.38). In addition, the geometric mean costs of HCPCS codes that are assigned to APC 5464 are in line with the geometric mean cost for APC 5464. For instance, the geometric mean cost of CPT code 64590 which has over 95 percent of the claims volume in APC 5464, is $20,065.44 based on 11,062 single claims (out of 11,254 total claims) which is comparable with the geometric mean cost of $$19,972.38 for APC 5464. In summary, after consideration of the public comments, we are finalizing without modification our proposal to assign CPT code 61885 to APC 5465 for CY 2026. CPT code 61891 (Responsive neurostimulation (RNS)) is an epilepsy treatment that uses an implanted device to help prevent seizures before they begin, similar to how a pacemaker detects and treats abnormal heart rhythms. With RNS, surgeons implant a small battery-powered device called a [[Page 53588]] neurostimulator in the patient's skull. The neurostimulator is connected to thin wires, which the surgeon places in the area or areas of the brain where the patient's seizures originate. The neurostimulator monitors the brain's electrical activity, and when activity that could lead to a seizure is detected, it delivers a pulse of electrical stimulation that may stop the seizure before it begins. The neurostimulator's battery generally lasts about 11 years. The neurostimulator is surgically replaced on an outpatient basis when the battery is at end of service. The RNS procedures are described by CPT codes: 61889, 61891 and 61892. 61889--Insertion of skull-mounted cranial neurostimulator pulse generator or receiver, including craniectomy or craniotomy, when performed, with direct or inductive coupling, with connection to depth and/or cortical strip electrode array(s). 61891--Revision or replacement of skull-mounted cranial neurostimulator pulse generator or receiver with connection to depth and/or cortical strip electrode array(s). 61892--Removal of skull-mounted cranial neurostimulator pulse generator or receiver with cranioplasty, when performed. In the CY 2026 OPPS/ASC proposed rule, we proposed to continue assigning CPT code 61889 to status indicator ``C'' since this procedure is only performed in the inpatient setting. We proposed to continue assigning CPT code 61891 to status ``J1'', APC 5464 (Level 4 Neurostimulator and Related Procedures) with a proposed payment rate of $20,126.69 and we proposed to continue assigning CPT code 61892 to status indicator ``J1'', APC 5113 (Level 3 Musculoskeletal Procedures) with a proposed payment rate of $3,377.20. At the August 25, 2025, HOP Panel Meeting, a presenter advised the Panel to request that CMS reassign CPT code 61891 to APC 5465 (Level 5 Neurostimulator and Related Procedures). Based on the information presented at the meeting, the Panel recommended that CMS reassign CPT code 61891 to APC 5465 for CY 2026. Comment: Commenters disagreed with CMS' assignment of APC 5464 and requested that CMS reassign CPT code 61891 to APC 5465. The commenters cited the inadequacy of APC 5464 from a cost and payment perspective, the fact that the predecessor CPT code 61886 was assigned to APC 5465, and that revision procedures are extremely rare. A few commenters stated that while they understood CMS' concern about overpaying for a revision procedure that does not involve replacing the neurostimulator, the likelihood of this occurring is extremely rare. One of the commenters noted that based on internal data collected by NeuroPace, the company that manufactures the RNS System, it is less than one case per year across all payers. Several commenters also noted that in their own practices, they have never performed a revision to the neurostimulator but have performed a number of replacements. Another commenter stated that the current APC assignment for CPT code 61891 does not adequately reflect hospital costs, nor does it provide adequate outpatient payment for the service. A few commenters stated that CY 2024 claims data published with the CY 2026 OPPS/ASC proposed rule demonstrates that the geometric mean cost (GMC) of CPT code 61891 is more appropriately aligned with the GMC of APC 5465. The commenter noted that per the Cost Statistics file, CPT code 61891 has a geometric mean cost (GMC) of $32,487. This is significantly higher than the GMC of current APC 5464 ($20,440) and the proposed payment rate of APC 5464 ($20,127). If finalized, hospitals will incur a loss of over $12,000 per procedure in CY 2026 for this procedure. Some commenters also pointed out that assigning CPT code 61891 to APC 5465 is consistent with the APC assignment for the predecessor CPT code 61886--Insertion or replacement of cranial neurostimulator pulse generator or receiver, direct or inductive coupling; with connection to two or more electrode arrays. Prior to the implementation of CPT code 61891 in January 2024, the replacement of a skull-mounted cranial neurostimulator was reported with CPT code 61886 and assigned to APC 5465. CPT code 61891 was created to differentiate the services associated with skull-mounted cranial neurostimulators and cranial neurostimulators implanted in the chest (for example, CPT code 61886). Another commenter acknowledged that the volume of procedures coded with CPT code 61891 remains low. However, a further reduction in payment has the potential to create access issues for the vulnerable patient population of patients with intractable epilepsy in whom these neurostimulator are utilized. Response: We agree with the commenters and the HOP Panel that CPT code 61891 should be reassigned to APC 5465. After consideration of the public comments we received, we are assigning CPT code 61891 to APC 5465 for CY 2026. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website. CPT Code 0786T Effective January 1, 2024, the CPT Editorial Panel separated integrated from non-integrated (i.e., traditional) sacral neurostimulator procedure by establishing a new CPT code, 0786T to report procedures using integrated sacral neurostimulator devices, while CPT code 64590 was updated to reflect the use of traditional technology: 0786T: Insertion or replacement of percutaneous electrode array, sacral, with integrated neurostimulator, including imaging guidance, when performed. 64590: Insertion or replacement of peripheral, sacral, or gastric neurostimulator pulse generator or receiver, requiring pocket creation and connection between electrode array and pulse generator or receiver. In the CY 2026 OPPS/ASC proposed rule, we proposed to continue assigning CPT code 0786T to status indicator ``E1'' to indicate that it is still pending the FDA approval. However, this service received FDA approval on June 17, 2025. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: At the August 25, 2025 HOP Panel Meeting, the presenter advised the panel to request that CMS assign CPT code 0786T to APC 5464 (Level 4 Neurostimulator and Related Procedures). The HOP Panel agreed with the presenter and made that recommendation. A commenter stated CPT code 0786T should not map to the same APC (APC 5464) as the traditional peripheral and sacral nerve stimulation devices that require lead insertion and pocket formation for the insertion of an implanted neurostimulator (INS). The traditional approach for a neurostimulator implant is reported with CPT code 64561 (Percutaneous implantation of neurostimulator electrode array; sacral nerve (transforaminal placement) including image guidance, if performed) or 64555 (Percutaneous implantation of neurostimulator electrode array; peripheral nerve (excludes sacral nerve)) for a percutaneous lead implant. These codes define the trial lead and permanent lead insertion. CPT code (64590 Insertion or replacement of peripheral, sacral, or gastric [[Page 53589]] neurostimulator pulse. generator or receiver, requiring pocket creation and connection between electrode array and pulse generator or receiver is used to report the insertion of a neurostimulator pulse generator or receiver and requires the creation of a pocket and the connection between the electrode array and the pulse generator). This does not occur with integrated devices. As a predicate, CPT code 64596 (Insertion or replacement of percutaneous electrode array, peripheral nerve, with integrated neurostimulator, including imaging guidance, when performed; initial electrode array) is used to report the permanent placement of an integrated system that includes the contacts and the receiver on the other end of the lead and maps to APC 5463 (Level 3 Neurostimulator and Related Procedures). Therefore, the commenter recommended assignment of CPT codes 0786T, to either APC 5462 (Level 2 Neurostimulator and Related Procedures) or APC 5463 as either APC is a more accurate assignment given the cost and resources required to perform the procedure with an integrated device. Another commenter recommended that we assign CPT code 0786T to APC 5462. CMS has assigned CPT code 0587T, describing the percutaneous implantation of an integrated single-device neurostimulation system for bladder dysfunction targeting the posterior tibial nerve, to APC 5462. The commenter believed that assignment of CPT code 0786T to the same APC as CPT code 0587T (APC 5462) would be much more clinically coherent than assignment to APC 5464, because both procedures involve percutaneous implantation of integrated neurostimulators for the treatment of bladder dysfunction with the only difference being the nerve target (sacral vs. posterior tibial nerve). Another commenter requested that CMS assign CPT code 0786T to APC 5464 with a status indicator of ``J1'' based on clinical and resource homogeneity. The commenter believes that assignment to APC 5464 creates clinical alignment with other urinary urge incontinence (UUI) procedures, including both integrated and non-integrated systems. Response: We thank the commenters for their input. We agree with one of the commenters that APC 5463 is the most appropriate assignment based on the cost and resources required to perform the procedure with an integrated device. Therefore, we are reassigning CPT code 0786T from status indicator ``E1'' to status indicator ``J1'', APC 5463 for CY 2026. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reportable under the OPPS. We also refer readers to Addendum D1 to this final rule with comment period for the SI meanings for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website. CPT Codes 0817T and 0988T For CY 2024, the CPT Editorial Panel established four new Category III CPT codes, specifically, CPT codes 0816T, 0817T, 0818T, and 0819T to describe integrated neurostimulation services for bladder dysfunction, effective January 1, 2024. For CY 2026, we proposed to continue assigning CPT code 0817T--Open insertion or replacement of integrated neurostimulation system for bladder dysfunction including electrode(s) (e.g., array or leadless), and pulse generator or receiver, including analysis, programming, and imaging guidance, when performed, posterior tibial nerve; subfascial, to APC 5464 with status indicator ``J1''. For CY 2026, CPT Editorial Panel created new Category III CPT code 0988T (placeholder code X400T)--Open insertion or replacement of integrated neurostimulation system for bladder dysfunction including electrode(s) (e.g., array or leadless), and pulse generator or receiver, including analysis, programming, and imaging guidance, when performed, posterior tibial nerve; subcutaneous and subfascial, effective January 1, 2026. In the CY 2026 OPPS/ASC proposed rule, we proposed to assign it to APC 5464 with status indicator ``J1''. We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: A commenter recommended assigning CPT codes 0988T and 0817T to either APC 5462 or APC 5463 as either APC is a more accurate assignment given the cost and resources required to perform the procedure with an integrated device. Another commenter was concerned that the proposed 2026 OPPS payment rate for CPT 0817T is significantly lower than the 2025 rate. Response: In the CY 2026 OPPS/ASC proposed rule, we inadvertently listed CPT code X400T as receiving FDA-approval even though the Coloplast's implantable tibial nerve stimulator that is described by this code is still pending FDA approval. Therefore, in the Final Rule, we are changing the status indicator for CPT code 0988T to status indicator ``E1'' Not covered by any Medicare outpatient benefit category; Statutorily excluded by Medicare; Not reasonable and necessary; Not paid by Medicare when submitted on outpatient claims (any outpatient bill type)) for CY 2026 because the device is not yet FDA approved. We thank the commenters for their feedback related to our proposal for CPT code 0817T and we agree with one of the comments that it is appropriately placed in APC 5464 based on resource cost and clinical homogeneity to other similar codes in that APC. We also believe that its geometric mean cost is in line with the geometric mean cost of APC 5464. For the CY 2026, based on claims submitted between January 1, 2024, and December 31, 2024, processed through June 30, 2025, our analysis of the latest claims data for this final rule with comment period shows a geometric mean cost of approximately $21,783.06 for CPT code 0817T based on 93 single claims, which is comparable to the geometric mean cost of about $19,972.38 for APC 5464. Based on the data, we continue to believe that assignment to APC 5464 for CPT code 0817T is appropriate. We refer readers to Addendum D1 to this final rule with comment period for the SI meanings for all codes reported under the OPPS. Addendum D1 is available via the internet on the CMS website.

38. New Technology Applications

a. Digital Mental Health Treatment (DMHT), HCPCS Code G0552 (APC 5012) HCPCS code G0552 (Supply of digital mental health treatment device and initial education and onboarding, per course of treatment that augments a behavioral therapy plan). became effective January 1, 2025, and describes digital mental health treatment devices. We proposed to assign HCPCS code G0552 to APC 5012 (Clinic Visits and Related services) and status indicator V (clinic or emergency department visit) for CY 2026. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: Commenters recommended that CMS not finalize the proposal to continue to assign HCPCS code G0552 to APC 5012 for CY 2026, stating that the proposed payment rate of approximately $134 would not cover the costs associated with furnishing the service. A commenter explained that CMS should not use CPT code 98975 [[Page 53590]] (Remote therapeutic monitoring (e.g., therapy adherence, therapy response, digital therapeutic intervention); initial set-up and patient education on use of equipment) as a crosswalk code to assign HCPCS code G0552 to APC 5012, noting certain differences between the codes. For example, the commenter explained that HCPCS code G0552 treats a condition while a remote monitoring device is designed to monitor a patient's status at home related to treatment. As a result of these differences, the commenter noted that DMHT devices, like those described by HCPCS code G0552, are significantly more costly to design, develop, study, obtain clearance, and commercialize compared with remote monitoring devices. Response: We thank the commenters for their input. The New Technology APC application for the service described by HCPCS code G0552 is currently under consideration. After careful review and discussion with our CMS medical officers and leadership, we will render a decision through the subregulatory process through which the New Technology APC placement was initially requested. b. Leadless Pacemaker (WiSE CRT System), CPT Code 0515T (APC 5231) CPT code 0515T (Insertion of wireless cardiac stimulator for left ventricular pacing, including device interrogation and programming, and imaging supervision and interpretation, when performed; complete system (includes electrode and generator [transmitter and battery]) became effective January 1, 2019, and describes the insertion of a wireless cardiac stimulator for left ventricular pacing. CPT code 0515T is currently assigned to APC 5231 (Level 1 ICD and Similar Procedures) and status indicator of J1 (Hospital Part B Services Paid Through a Comprehensive APC; Paid under OPPS). For CY 2026, we proposed to continue assignment of CPT code 0515T to APC 5231 (Level 1 ICD and Similar Procedures) with a proposed payment of around $22,725. This code had 2 claims for ratesetting and a geometric mean cost (GMC) of $16,837.74. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter requested that CMS reassign CPT code 0515T to New Technology APC 1576--Level 39 ($15,001-$20,000) to ensure that there is adequate payment for the non-device costs as this code is tentatively approved for pass-through payment (device costs). Response: The New Technology APC application is currently under consideration. After careful review and discussion with our CMS medical officers and leadership, we will render a decision through the sub- regulatory process through which the New Technology APC placement was initially requested. We refer the readers to section IV. of this final rule with comment period for a discussion of applications that have been submitted for pass-through payment. c. Paired Vagal Nerve Stimulation (Vivistim[supreg] System), CPT Code 64568 (APC 5465) The Vivistim[supreg] System is an implanted neurostimulator that is used to stimulate the vagal nerve for upper extremity motor deficits and motor function in chronic ischemic stroke patients with moderate to severe arm impairment. CPT code 64568 (Open implantation of cranial nerve (e.g., vagus nerve) neurostimulator electrode array and pulse generator) is used to describe the implantation of the Vivistim[supreg] System. CPT code 64568 is assigned to APC 5465 (Level 5 Neurostimulator and Related Procedures), status indicator of `J1' (Hospital Part B Services Paid Through a Comprehensive APC;) and has a geometric mean cost (GMC) of around $49,319 with 151 single frequency claims used for ratesetting under OPPS. We note that the Vivistim[supreg] System was granted transitional device pass-through status on January 1, 2023, that is set to expire December 31, 2025. Comment: Many commenters shared their experience with the Vivistim[supreg] System (paired vagus nerve stimulation) noting the effectiveness of the system to restore motor function in patients living with long term disabilities after having a stroke. Many of the commenters expressed concern about the lack of reimbursement once the transitional pass-through payments expire. They encouraged CMS to create a Level 6 Neurostimulator and Related Procedures APC to ensure that there is adequate and sustainable reimbursement for this advanced therapy. Commenters indicate that the current reimbursement for CPT code 64568 will not adequately cover hospital costs, putting access for Medicare beneficiaries at risk. A commenter provided three options to ensure that there is adequate reimbursement for this advanced neuromodulation. The commenter requested that CMS consider creating a Level 6 Neurostimulator APC that includes CPT code 64568, reassigning 64568 to New Technology APC 1580 (New Technology--Level 43 ($40,001-$50,000)) or creating a C-code through the pending New Technology APC application and assigning the C- code to New Technology APC 1581 (New Technology--Level 44 ($50,001- $60,000)). Response: We appreciate the input from commenters. As stated earlier in section ``36. Creation of a Level 6 Neurostimulator APC'', we are assigning the primary procedure code to New Technology APC 1580 (New Technology--Level 43 ($40,001-$50,000)) in this final rule with comment period. We refer readers to the above noted section for a full discussion of the comments and our responses regarding CPT code 64568.

39. Noncontact Near-Infrared (NIR) Spectroscopy, CPT 0640T (APC 5732)

Effective CY 2024, there are three codes that describe the service related to NIR spectroscopy: CPT codes 0640T (Noncontact near-infrared spectroscopy (e.g., for measurement of deoxyhemoglobin, oxyhemoglobin, and ratio of tissue oxygenation), other than for screening for peripheral arterial disease, image acquisition, interpretation, and report; first anatomic site), 0859T (Noncontact near-infrared spectroscopy (e.g., for measurement of deoxyhemoglobin, oxyhemoglobin, and ratio of tissue oxygenation), other than for screening for peripheral arterial disease, image acquisition, interpretation, and report; each additional anatomic site (list separately in addition to code for primary procedure)), and 0860T (Noncontact near-infrared spectroscopy (e.g., for measurement of deoxyhemoglobin, oxyhemoglobin, and ratio of tissue oxygenation), for screening for peripheral arterial disease, including provocative maneuvers, image acquisition, interpretation, and report, one or both lower extremities). Only CPT code 0640T is currently separately paid under the OPPS. For CY 2026, we proposed to assign CPT code 0640T to APC 5732 (Level 2 Minor Procedures) and status indicator ``S'' with a payment rate of approximately $39. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter requested that CMS reassign CPT code 0640T to APC 5722 (Level 2 Diagnostic Tests and Related Services), which had a proposed payment rate of approximately $220 for CY 2026, based on a crosswalk to CPT code 0598T (Noncontact real-time fluorescence wound imaging, for bacterial presence, location, and load, per session; first anatomic site (e.g., lower extremity)). The commentor noted [[Page 53591]] certain similarities between both codes, such as that CPT code 0640T and CPT code 0598T are both Category III CPT codes, diagnostic imaging services, and neither use contrast. Response: We note that for CY 2026, OPPS payment rates are based on available CY 2024 claims data. Based on our analysis of the claims data for this final rule with comment period, we found a geometric mean cost of approximately $11 for CPT code 0640T based on 347 single frequency claims (out of 1,067 total claims). In contrast, we found a geometric mean cost of approximately $200 for CPT code 0598T based on 1974 single frequency claims (out of 4,063 total claims). Based on the data, the resource cost associated with noncontact real-time fluorescence imaging (CPT code 0598T), is significantly higher compared to noncontact near- infrared (NIR) spectroscopy (CPT code 0640T). We disagree that the resource costs for NIR spectroscopy is similar to noncontact real-time fluorescence imaging based on the claims data available. After consideration of the public comment, we continue to believe that CPT code 0640T is appropriately assigned to APC 5732. Therefore, for CY 2026, we are finalizing our proposal to assign CPT code 0640T to APC 5732 as reflected in Table 70. The final CY 2026 OPPS payment rate for all the codes payable under the OPPS can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the SI meanings for all codes reported under the OPPS. Addendum D1 is available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.088 Nuclear Medicine Tests

40. Nuclear Medicine Services: Single-Photon Emission Computed

Tomography (SPECT) Studies, CPT 78803 (APC 5592) CPT code 78803 (Radiopharmaceutical localization of tumor, inflammatory process or distribution of radiopharmaceutical agent(s) (includes vascular flow and blood pool imaging, when performed); tomographic (spect), single area (e.g., head, neck, chest, pelvis), single day imaging) describes a SPECT scan to find and map a tumor, inflammatory process, or how a radioactive tracer is distributed in a single body area, like the head, chest, or pelvis. For the CY 2026 OPPS/ASC proposed rule, CPT code 78803 had a geometric mean cost of around $585 and we proposed to reassign the procedure from APC 5593 (Level 3 Nuclear Medicine and Related Services) with a proposed payment rate of around $1,323 to APC 5592 (Level 2 Nuclear Medicine and Related Services) with a proposed payment rate of around $559 and status indicator S (Procedure or service not subject to multiple procedure discounting). Comment: Commenters objected to the reassignment of CPT code 78803 to APC 5592 and requested that CMS not finalize the proposal but rather maintain the current placement in APC 5593. These commenters stated that the significant payment decrease of 57 percent resulting from the reassignment would limit patient access, affect patient care, and restrict hospitals from offering the test. Most commenters referenced the fact that costs were pulled out of 78803 last year when CMS finalized its policy to separately pay for certain radiopharmaceuticals and stated that physicians and hospitals needed time to properly account for resources and inputs associated with 78803 for services that do not use high-cost radiopharmaceuticals. These commenters requested that CMS collect several years of geometric mean data before reassigning CPT code 78803 from its current APC 5593. A commenter stated that CPT code 78803 should remain in APC 5593 because it is used to report SPECT (not planar) imaging, and other SPECT procedures are assigned to APC 5593. Response: As acknowledged by commenters, last year we finalized a policy to unpackage diagnostic radiopharmaceuticals with per day costs above an annually adjusted threshold and pay separately for them. As a result of this shift from packaged payment to separate payment, the geometric mean cost for CPT 78803 understandably dropped, from around $1,137 for CY 2024 to around $588 for CY 2025. We appreciate commenters' concerns about providing additional time for hospitals to adjust and for additional geometric mean data to accumulate, however given that costs that were previously packaged into CPT code 78803 are now separately paid as a result of the policy we instituted last year, we think it is appropriate to reassign CPT 78803 to an APC that better aligns with 78803's CY 2026 geometric mean cost of around $585. After consideration of the public comments we received, we are finalizing our policy without modification for CPT code 78803. We note that we review the APC assignments for all items and services paid under the OPPS on an annual basis. We will reevaluate the APC assignment for CPT code 78803 in the next rulemaking cycle. Table 71 shows the finalized status indicator and APC assignment for this procedure code. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website. [[Page 53592]] [GRAPHIC] [TIFF OMITTED] TR25NO25.089

41. Nuclear Medicine Study (1 Area), CPT Code 78800 (APC 5591)

CPT code 78800 (Radiopharmaceutical localization of tumor, inflammatory process or distribution of radiopharmaceutical agent(s) (includes vascular flow and blood pool imaging, when performed); planar, single area (e.g., head, neck, chest, pelvis), single day imaging) describes a planar (2D) nuclear medicine scan of a single area on a single day, used to locate tumors, inflammatory processes, or track the distribution of a radioactive tracer. It includes vascular flow and blood pool imaging if they are performed as part of the study. CPT code 78800 is assigned to APC 5591 (Level 1 Nuclear Medicine and Related Services) and status indicator S (Procedure or Service, Not Discounted When Multiple). Comment: A commenter stated that CPT code 78800 is assigned to APC 5591 in proposed Addendum B but is assigned to APC 5573 in the proposed ``Data Addendum B'' and ``2 Times Rule'' files. The commenter believes that the code assignment to APC 5573 in the ``Data Addendum B'' and ``2 Times Rule'' files is incorrect, and that the correct APC assignment for CPT code 78800 is APC 5591. Response: We agree that the correct APC assignment for CPT code 78800 is APC 5591. However, we note that the proposed 2026 ``Data Addendum B'' and ``2 Times Rule'' files (which are available via the internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices/cms-1834-p) both indicate that the code is assigned to APC 5591. The final CY 2026 payment rates for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the SI definitions for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website. Ophthalmology Related Services

42. Administration of Lacrimal Ophthalmic Insert Into Lacrimal

Canaliculus, CPT Code 68841 (APC 5503) HCPCS code J1096 (Dexamethasone, lacrimal ophthalmic insert, 0.1 mg), describes the drug Dextenza and is a drug indicated for ``the treatment of ocular inflammation and pain following ophthalmic surgery'' and for ``the treatment of ocular itching associated with allergic conjunctivitis.'' \25\ Dextenza is administered via a natural opening in the eyelid (called the punctum) and delivers a tapered dose of dexamethasone to the ocular surface for up to 30 days. CPT code 68841 (Insertion of drug-eluting implant, including punctal dilation when performed, into lacrimal canaliculus, each) describes the insertion of the implant to administer Dextenza. --------------------------------------------------------------------------- \25\ See FDA Package Insert. https://www.accessdata.fda.gov/drugsatfda_docs/label/2021/208742s007lbl.pdf. --------------------------------------------------------------------------- In the CY 2024 OPPS/ASC final rule with comment period (88 FR 81651 through 81653), we stated that based on the claims data available at the time, we continued to believe that the assignment of CPT code 68841 to APC 5503 (Level 3 Extraocular, Repair, and Plastic Eye Procedures) was appropriate based on the geometric mean costs. We also reiterated our reasoning that CPT code 68841 was appropriately assigned to an OPPS status indicator of ``Q1'' and ASC payment indicator of ``N1.'' We continued to believe that CPT code 68841 is mostly performed during ophthalmic surgeries, such as cataract surgeries. A status indicator ``Q1,'' indicating a conditionally packaged procedure, describes a HCPCS code where the payment is packaged when it is provided with a significant procedure but is separately paid when the service appears on the claim without a significant procedure. Because ASC services always include a surgical procedure, HCPCS codes that are conditionally packaged under the OPPS are generally packaged (payment indictor ``N1'') under the ASC payment system. Although interested parties stated this is an independent surgical procedure and should not be packaged into the primary ophthalmic procedure in which the drug and drug administration are associated, we did not agree based on observed clinical patterns of how the drug is used. Based on CY 2023 claims data, out of over 7,000 total frequency claims, CPT code 68841 was used independently only about 2 percent of the time, meaning that the other 98 percent of the time CPT code 68841 had its payment packaged into the primary procedure with which it is associated. These data reinforced our belief that Dextenza and CPT code 68841 are not furnished independently of a surgical procedure and should be packaged into the primary ophthalmic procedure with which the drug and drug administration are associated. While we recognized that there are some claims that may only include CPT code 68841 without a primary ophthalmic surgery on the claim, we did not believe that this is a frequent occurrence based on our claims data and clinical use patterns; as previously mentioned, our claims data showed that only 2 percent of claims are performed independently of another primary procedure. For CY 2025, we continued to assign CPT code 68841 to APC 5503 (Level 3 Extraocular, Repair, and Plastic Eye Procedures). We also maintained the OPPS status indicator ``Q1'' and an ASC payment indicator of ``N1.'' For CY 2026, we proposed to continue to assign CPT code 68841 to APC 5503 (Level 3 Extraocular, Repair, and Plastic Eye Procedures). We also proposed to continue to assign CPT code to OPPS status indicator `Q1' and an ASC payment indicator of `N1'. We note that CPT code 68841 does not have any single frequency claims [[Page 53593]] out of 2,930 total frequency claims. As stated above, this data once again reinforces our belief that Dextenza and CPT code 68841 are not furnished independently of a surgical procedure and should be packaged into the primary ophthalmic procedure with which the drug and drug administration are associated. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: Commenters requested that CMS revise the status indicator to `J1' (Hospital Part B Services Paid Through a Comprehensive APC; Paid under OPPS) to allow for separate ASC payment. The commenter stated that Dextenza replaces the use of self-administered eye drops, which can be difficult for some patients to administer and adhere to the regimen. The commenter also stated the lack of payment disproportionately and negatively affects the ASC setting where this procedure is done 80 percent of the time. The commenter did not agree with CMS that the fact that CPT code 68841 was performed as a standalone procedure a small percentage of the time was adequate justification for assigning a `Q1' status indicator. The commenter stated that CMS is treating this procedure (CPT 68841) differently than the other procedures assigned to APC 5503 with a `J1' status indicator and that there are other comparable drug delivery procedures, specifically CPT codes 64415, 66020, 66030, and 0699T that also have J1 status indicators and receive separate payment in the ASC setting. Response: We have long maintained that Dextenza is a drug that functions as a surgical supply and should be packaged under our packaging policy at Sec. 419.2(b), which lists the types of items and services for which payment is packaged under the OPPS. Specifically, Sec. 419.2(b)(16) includes drugs and biologicals that function as supplies when used in a surgical procedure as packaged costs. Historically, we have stated that we consider all items related to the surgical outcome and provided during the hospital stay in which the surgery is performed, including postsurgical pain management drugs, to be part of the surgery for purposes of our drug and biological surgical supply packaging policy (79 FR 66875). As such, the drug administration procedure, CPT code 68841, is also supporting the main ocular procedure being performed. CPT code 68841 should, therefore, be packaged as an intraoperative service under Sec. 419.2(b)(14). We do not believe the listed HCPCS codes suggested by the commenter are analogous to CPT code 68841: 64415--Injection(s), anesthetic agent(s) and/or steroid; brachial plexus, including imaging guidance, when performed; assigned to APC 5443 (Level 3 Nerve Injections), status indicator of `T'; 66020--Injection, anterior chamber of eye (separate procedure); air or liquid; assigned to APC 5491 (Level 1 Intraocular Procedures), status indicator of `J1'; 66030--Injection, anterior chamber of eye (separate procedure); medication; assigned to APC 5491 (Level 1 Intraocular Procedures), status indicator of `J1'; and 0699T--Injection, posterior chamber of eye, medication; assigned to APC 5491 (Level 1 Intraocular Procedures), status indicator of `J1'. We disagree with the commenter that lack of payment for the procedure in the ASC setting is a disincentive to use Dextenza. We note the number of claims continue to increase. We also note that HCPCS code J1096, which may be used to describe the drug, Dextenza, is a qualifying product for separate payment in both the OPPS and ASC under our policy to implement section 4135 of the CAA, 2023. For the reasons discussed, we continue to believe that it is appropriate to assign CPT code 68841 to a status indicator ``Q1,'' indicating a conditionally packaged procedure, which describes a HCPCS code where the payment is packaged when it is provided with a significant procedure but is separately paid when the service appears on the claim without a significant procedure. Because ASC services always include a surgical procedure, HCPCS codes that are conditionally packaged under the OPPS are generally packaged (payment indictor ``N1'') under the ASC payment system. After consideration of the public comment, we are finalizing our proposal, without modification, to assign CPT code 68841 to APC 5503 with OPPS status indicator ``Q1'' (STV Packaged Codes) for CY 2026, which typically means there will be a packaged APC payment if this code is billed on the same claims as a HCPCS code assigned to status indictor ``S,'' ``T,'' or ``V'' (Clinic or Emergency Department Visit). In addition, based on the OPPS assignments, we are finalizing an ASC payment indicator of ``N1'' (Packaged service/item; no separate payment made) for CPT code 68841 for CY 2026. For the final CY 2026 OPPS payment rates, we refer readers to OPPS Addendum B to this final rule with comment period. In addition, we refer readers to OPPS Addendum D1 to this final rule with comment period for the status indicator definitions for all codes reported under the OPPS. For the final CY 2026 ASC payment rates and payment indicators, we refer readers to Addendum AA and Addendum BB for the ASC payment rates, and Addendum DD1 for the ASC payment indicator and their definitions. The OPPS Addenda B and D1 and ASC Addenda AA, BB, and DD1 are available via the internet on the CMS website.

43. Comprehensive Aqueous Outflow Procedure

The comprehensive aqueous outflow procedure consists of more than 90 degrees of microcatheterization followed by more than 90 degrees of ab interno trabeculotomy used to treat patients with glaucoma. We received public comments on this topic. The following is a summary of the comments we received and our responses. Comment: A commenter stated that this service is more complex, utilizes more intraoperative time, and resource utilization. The other commenter stated that the current coding structure does not adequately reflect the differences in procedures currently reported with CPT code 66174 (Transluminal dilation of aqueous outflow canal (e.g., canaloplasty); without retention of device or stent) and the comprehensive aqueous outflow procedure. The commenter indicated that these differences risk limiting hospitals from adopting the procedure and thus hindering patient access. The commenters requested that CMS create a C code and finalize a New Technology APC assignment that appropriately recognizes this unique procedure. Response: We thank the commenters for their input. After review of the comment, we do not believe the commenter has provided sufficient explanation to justify the creation of a new C-code at this time. Orthopedic Related Services

44. First Carpometacarpal Total Joint Arthroplasty, CPT Code 1003T (APC

5115) The CPT Editorial Panel established CPT code 1003T to describe a total joint arthroplasty procedure involving the thumb effective January 1, 2026. The long descriptor for CPT code 1003T is as follows: Arthroplasty, first carpometacarpal joint, with distal [[Page 53594]] trapezial and proximal first metacarpal prosthetic replacement (e.g., first carpometacarpal total joint). Because the final CY 2026 CPT code numbers were not available when we published the CY 2026 OPPS/ASC proposed rule, the code was listed as placeholder code CPT code X459T in the OPPS Addendum B to the CY 2026 OPPS/ASC proposed rule. For CY 2026, we proposed to assign CPT code 1003T to APC 5114 (Level 4 Musculoskeletal Procedures) and status indicator `J1' (Hospital Part B Services Paid Through a Comprehensive APC; Paid under OPPS.) with a proposed payment of around $7,533 based on clinical similarity to CPT code 26531 (Arthroplasty, metacarpophalangeal joint; with prosthetic implant, each joint). At the August 25, 2025, HOP Panel Meeting, a presenter provided information to the Panel regarding new CPT code 1003T. The presenter advised the Panel to request that CMS reassign CPT code 1003T from APC 5114 to APC 5116. The HOP Panel agreed with the presenter and recommended that CMS reassign CPT code 1003T to APC 5116 (Level 6 Musculoskeletal Procedures), with a proposed payment of $18,056.80. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: Commenters noted that while other hand and wrist procedures are assigned to APC 5114, this procedure involves a total joint reconstruction with an implantation of a complex and costly prosthesis. The commenter believes that CPT 1003T is more similar to other arthroplasty procedures in APC 5116 suggesting CPT code 25446 (which describes a total wrist arthroplasty) and CPT code 25442 (which describes a distal ulna arthroplasty) as appropriate crosswalks. Commenters urged CMS to reassign CPT code 1003T to APC 5116 (Level 6 Musculoskeletal Procedures) as the HOP Panel recommended. Response: We agree with the commenters that CPT code 1003T should not be assigned to APC 5114; however, we disagree that CPT code 1003T should be reassigned to APC 5116. After reviewing the comments and taking into consideration the HOP Panel recommendation, we believe that CPT code 1003T should be reassigned to APC 5115 crosswalking to CPT code 25441 (Arthroplasty with prosthetic replacement; distal radius). As we do every year, we will reevaluate the APC assignments for this code in the next rulemaking cycle. We remind hospitals that we review, on an annual basis, the APC assignments for all items and services paid under the OPPS. In summary, after consideration of the public comments we received, we are finalizing the APC and status indicator assignment for CPT code 1003T with modification and assigning CPT code 1003T to APC 5115 (Level 5 Musculoskeletal Procedures) with a status indicator of J1. The final CY 2026 payment rates for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the SI definitions for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website. Refer to Table 72 for code descriptor, APC assignment and status indicator assignment for CPT code 1003T for CY 2026. [GRAPHIC] [TIFF OMITTED] TR25NO25.090

45. Fusion of Foot Bones, CPT Code 28740 (APC 5114)

CPT code 28740 (Arthrodesis, midtarsal or tarsometatarsal, single joint) describes the fusion of foot bones. In the CY 2026 OPPS/ASC proposed rule, we proposed to continue to assign CPT code 28740 to APC 5114 (Level 4 Musculoskeletal Procedures) with a status indicator of `J1' (Hospital Part B Services Paid Through a Comprehensive APC; Paid under OPPS) and proposed payment rate of $7,533.87. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter stated that the assignment of CPT code 28740 to APC 5114 may represent a violation of the 2 times rule, which may impede access to care for beneficiaries. The commenter recommended that CMS consider a volume threshold of 500 single major claims (or the existing greater or equal to 99 claims that constitute greater than or equal to the 2 percent criterion) as the standard for designating an item or service ``significant'' for purposes of the 2 times rule. Response: We appreciate the commenter's request. We did not identify a 2-times rule violation for APC 5114. Our updated claims data found CPT code 28740 has fewer than 1,000 claims and does not meet the significance threshold for the 2-times rule evaluation for APC 5114. We believe that the current APC assignment of CPT code 28740 to APC 5114 continues to be appropriate for CY 2026. However, we will take the commenter's suggestion on the 500-claim significance threshold into consideration for the future rulemaking. In summary, after consideration of the public comments we received, we are finalizing our proposal without modification, to assign CPT code 28740 to APC 5114 (Level 4 Musculoskeletal Procedures). The final CY 2026 payment rates for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the status indicator definitions for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website. Refer to Table 73 for code descriptor, APC assignment and status indicator [[Page 53595]] assignment CPT code 28740 for CY 2026. [GRAPHIC] [TIFF OMITTED] TR25NO25.091 Oncology Related Services

46. Radiation Oncology Treatment Delivery, CPT Codes 77402, 77407,

77412 (APCs 5621, 5622, and 5623) At the September 2024 CPT Editorial Panel meeting, the Panel approved the revision of radiation therapy CPT codes 77402, 77407 and 77412 to establish a technique-agnostic family of codes and bundle imaging into the three CPT codes. In addition, Intensity Modulated Radiation Therapy (IMRT) treatment delivery codes 77385 and 77386 and CT guidance code 77014 were deleted and consolidated into this new code structure: Revised CPT code 77402 (Radiation treatment delivery; Level 1 (e.g., single electron field, multiple electron fields, or 2D photons), including imaging guidance, when performed) describes the delivery of a low-complexity form of radiation to a cancer or tumor and includes any imaging that is used during the session to ensure the radiation beam is accurately targeting the cancer. For the CY 2026 OPPS/ASC proposed rule, we proposed to continue to assign CPT code 77402 to APC 5621 (Level 1 Radiation Therapy), which has a payment rate of around $108, and status indicator S (Procedure or service not subject to multiple procedure discounting). Revised CPT code 77407 (Radiation treatment delivery; Level 2, single isocenter (e.g., 3D or IMRT), photons, including imaging guidance, when performed) describes the delivery of a more complex form of radiation using a single central point of radiation (isocenter) with high-energy photons which may be delivered through 3D conformal radiation therapy (3D-CRT) or Intensity-Modulated Radiation Therapy (IMRT) and includes any imaging that is used during the session. For the CY 2026 OPPS/ASC proposed rule, we proposed to continue to assign CPT code 77407 to APC 5622 (Level 2 Radiation Therapy), which has a payment rate of around $275, and status indicator S. Revised CPT code 77412 (Radiation treatment delivery; Level 3, multiple isocenters with photon therapy (e.g., 2D, 3D, or IMRT) OR a single isocenter photon therapy (e.g., 3D or IMRT) with active motion management, OR total skin electrons, OR mixed electron/ photon field(s), including imaging guidance, when performed) describes the most complex radiation treatment delivery where multiple points of focus (isocenters) are used with photon therapy (2D, 3D, or IMRT) or a single isocenter is used but with active motion management or specialized techniques like total skin electrons or mixed electron/ photon beams are performed and includes any imaging that is used during the session. For the CY 2026 OPPS/ASC proposed rule, we proposed to continue to assign CPT code 77412 to APC 5622 (Level 2 Radiation Therapy), which has a payment rate of around $275, and status indicator S. A comment letter was submitted to the HOP Panel in advance of the August 25, 2025 HOP Panel Meeting that provided information about CPT codes 77407 and 77412. The letter advised the Panel to request that CMS reassign CPT code 77407 to APC 5623 and CPT code 77412 to APC 5624 for CY 2026. The HOP Panel had no recommendations. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: Many commenters expressed concern that CMS' proposed APC assignments for CPT codes 77407 and 77412 did not adequately reflect the procedures described by the revised codes and would not provide sufficient payment. Many commenters pointed out that these revised codes now included 3D conformal and IMRT treatment delivery that were previously described by deleted CPT codes 77385 and 77386. Several commenters suggested that for the purposes of rate setting, CMS should treat the three revised CPT codes as new codes. A commenter stated that ``[a]lthough the CPT code numbers are the same for the remaining three CPT codes in the new treatment delivery family, they represent completely different services. For HOPPS rate setting purposes, CMS should treat 77402, 77407, and 77412 as new codes.'' Several commenters suggested alternative APC assignments, recommending that CPT code 77407 be reassigned from APC 5622 to APC 5623 (Level 3 Radiation Therapy), which has a CY 2026 proposed payment rate of around $600. These commenters reasoned that reassigning CPT code 77407 to APC 5623 would more accurately reflect the higher resource utilization associated with IMRT. On the same basis, roughly half of these commenters suggested that CPT code 77412 be reassigned from APC 5622 to APC 5623 and the other half suggested reassignment to APC 5624 (Level 4 Radiation Therapy) with a CY 2026 proposed payment rate of $716. Proponents of reassignment to APC 5624 stated that the higher APC assignment was warranted as CPT code 77412 is intended to account for the highest complexity therapy and such therapy requires additional time and incremental capital equipment resources to deliver multi-isocenter treatments and active motion management. Finally, a few commenters suggested that CPT code 47702 be reassigned from APC 5621 to APC 5622. Response: We agree with commenters that the proposed APC assignments and the resulting payment rates for CPT codes 77407 and 77412 could more properly account for the revisions made to those codes and that the geometric mean costs of CPT codes 77385 ($568) and 77386 ($634) should be considered when assigning the appropriate APC for these codes. Accordingly, to establish a geometric mean cost for CPT codes 77407 and 77412 that better reflects the geometric mean costs under CPT codes 77385 and 77386, we have crosswalked the claims volume of CPT codes 77385, 77386, 77407, and 77412 in the following manner: For CPT code 77407, we are imputing all CY 2024 claims in CPT code 77407, the bottom 50 percent (with respect to total estimated cost) of single claims from CPT code 77412, and [[Page 53596]] all of the claims from CPT code 77385. For CPT code 77412, we are imputing the highest 50 percent (with respect to total estimated cost) of claims in 77412, and all of the claims from 77386. As a result of this crosswalking of claims, we are continuing to assign CPT code 77407 to APC 5622, which now has a geometric mean cost of around $397 and reassigning CPT code 77412 to APC 5623, which now has a geometric mean cost of around $569. We note that, while CPT code 77407 is assigned to the same APC it was assigned in the CY 2026 OPPS/ASC proposed rule, as a result of the crosswalk described above, the payment rate for that APC is much greater than it was in the CY 2026 OPPS/ASC proposed rule. With respect to 77402, we disagree with commenters that reassignment to APC 5622 is appropriate. Unlike CPT codes 77407 and 77412, CPT code 77402 was not revised to incorporate IMRT which is the basis for the crosswalk/APC reassignment for CPT codes 77407 and 77412 above. We note that we received a few comments on our proposal that, due to the proposed deletion of radiation therapy G-codes (G6001-G6017), nonexcepted off-campus PBDs use the revised CPT codes 77402, 77407 and 77412 to continue our existing policy of paying the PFS-equivalent rate for radiation therapy to these departments. For a summary of and response to those comments, we refer readers to section III.G. of this final rule with comment period. After consideration of the public comments we received, we are: (1) finalizing as proposed to continue to assign CPT code 77402 to APC 5621 and CPT code 77407 to APC 5622, while noting that the payment rate for APC 5622 is much greater than in the CY 2026 OPPS/ASC proposed rule as a result of the above code crosswalk; and (2) reassigning CPT code 77412 to APC 5623. We note that we review the APC assignments for all items and services paid under the OPPS on an annual basis. We will reevaluate the APC assignments for CPT codes 77402, 77407 and 77412 in the next rulemaking cycle. Table 74 shows the finalized status indicator and APC assignment for these procedure codes. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.092

47. Radiofrequency Ablation of Bone Tumors, CPT 20982 (APC 5116)

CPT code 20982 (Ablation therapy for reduction or eradication of 1 or more bone tumors (e.g., metastasis) including adjacent soft tissue when involved by tumor extension, percutaneous, including imaging guidance when performed; radiofrequency) describes a primarily palliative procedure that reduces the size of bone tumors and addresses the pain from the tumors. For the CY 2026 OPPS/ASC proposed rule, CPT code 20982 had a geometric mean cost of around $18,375 and we proposed to continue to assign the procedure to APC 5115 (Level 5 Musculoskeletal Procedures), which has a proposed payment rate of around $13,254. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter requested that CMS reassign CPT code 20982 from APC 5115 to APC 5116 (Level 6 Musculoskeletal Procedures) with a payment rate of around $18,057. The commenter noted that according to the CY 2026 OPPS/ASC proposed rule cost statistics file, CPT code 20982 has a geometric mean cost of approximately $18,375, which exceeds the overall APC cost of $13,461 by nearly $5,000 or 36 percent. In contrast, the commenter pointed out that the overall cost of APC 5116 is $18,338, which very closely aligns with the cost of CPT code 20982. The commenter also noted that the cost of the bone tumor ablation procedure exceeds that of 10 procedures proposed for assignment to APC 5116 with claims data, including two of the three procedures with significant volume in the APC (described by CPT codes 22612 [[Page 53597]] and 27279), which have costs that are over $1,000 less than CPT code 20982. The third procedure with significant volume in APC 5116, described by CPT code 23472, has a geometric mean cost of $18,452, which is nearly identical to CPT code 20982. Response: After reviewing the information provided by the commenter, the claims data and input from our CMS Medical Officers, we agree with the commenter that it is appropriate to reassign CPT code 20982 from APC 5115 to 5116 based on the resource costs related to CPT code 20982. After consideration of the public comments we received, we are assigning CPT code 20982 to APC 5116 (Level 6 Musculoskeletal Procedures). Table 75 shows the finalized status indicator and APC assignment for this procedure code. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.093

48. Scalp Cooling, CPT Codes 97007, 97008, and 97009 (APC 1517)

For CY 2025, the scalp cooling service is described by temporary CPT codes 0662T and 0663T. CPT code 0662T (Scalp cooling, mechanical; initial measurement and calibration of cap) became effective on July 1, 2021, to describe initial measurement and calibration of a scalp cooling device for use during chemotherapy administration to prevent hair loss. According to Medicare's National Coverage Determination (NCD) policy, specifically, NCD 110.6 (Scalp Hypothermia During Chemotherapy to Prevent Hair Loss), the scalp cooling cap itself is classified as an incident to supply to a physician service, and would not be paid under the OPPS; however, interested parties have indicated that there are substantial resource costs of around $1,900 to $2,400 associated with calibrating and fitting the cap. CPT guidance states that CPT code 0662T should be billed once per chemotherapy session, which we interpret to mean once per course of chemotherapy. Therefore, if a course of chemotherapy involves, for example, 6 or 18 sessions, HOPDs should report CPT 0662T only once for those 6 or 18 therapy sessions. We note that CPT code 0663T (Scalp cooling, mechanical; placement of device, monitoring, and removal of device (List separately in addition to code for primary procedure)) describes an ancillary service and is assigned to status indicator ``N'' to indicate that OPPS payment is packaged into the payment for the primary service. We assigned CPT code 0662T to APC 1519 (New Technology--Level 19 ($1,701- $1,800)) with a payment rate of $1,750.50 and CPT code 0663T to status indicator ``N'' for CY 2025. Beginning January 1, 2026, CPT codes 0662T and 0663T will be deleted and replaced with three new Category I CPT codes: 97007 (formerly placeholder 9XX01)--Mechanical scalp cooling, including individual cap supply with head measurement, fitting, and patient education. 97008 (formerly placeholder 9XX02)--Mechanical scalp cooling; including hair preparation, individual cap placement, therapy initiation, and precooling period). 97009 (formerly placeholder 9XX03)--Mechanical scalp cooling; provided after discontinuation of chemotherapy, each 30 minutes (List separately in addition to code for primary procedure). In the CY 2026 OPPS/ASC proposed rule, we stated that we believed that CPT code 97007 most closely describes the primary service currently described by CPT code 0662T, while CPT codes 97008 and 97009 describe ancillary services for which payment would be packaged in the primary service. Therefore, for CY 2026, we proposed to assign CPT code 97007 to APC 1517 (New Technology--Level 17 ($1,501-$1,600)) with a $1,550.50 payment rate based on existing claims data for CPT code 0662T. We also proposed to assign status indicator ``N'' to CPT codes 97007 and 97009 to align with our current packaging policies generally, and specifically with regard to our current packaging of CPT code 0663T. Finally, we noted that because CPT is deleting CPT codes 0662T and 0663T, we would similarly delete the temporary codes under the OPPS/ASC payment systems. We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: A few commenters expressed concerns with the proposal to assign the new CPT codes to lower payment rates based on low claim volumes and requested that we withhold any payment reductions until the volume of claims increases. Other commenters supported the proposed APC assignment for CPT code 97007 based on claims data for CPT code 0662T but took issue with the proposal to package payment for CPT code 97008. These commenters requested that we assign CPT code 97008 to APC 1506 (New Technology--Level 6 ($401-$500)) and status indicator ``S'' instead of the proposed status indicator ``N.'' The commenter stated that there is no service to which CPT code 97008 can be packaged into, while also explaining that it is reported once for each chemotherapy session for an average of 5 to 7 sessions per patient. Per the commenters, scalp cooling is a [[Page 53598]] standalone treatment that requires specialized nursing resources and significant chair time, with an average cost of $500 outside of the chemotherapy service. The commenters emphasized that there is no service to which scalp cooling can be appropriately packaged, as it is not ancillary to any other procedure. They also highlighted certain concerns about patient access if the proposal to package payment for CPT code 97008 were to be finalized, noting that packaging this service would create financial barriers for Medicare beneficiaries and limit hospitals' ability to offer this treatment. Response: With regard to the proposed APC assignment for CPT code 97007, we thank the commenters for their support to utilize claims data for CPT code 0662T and assign CPT code 97007 to APC 1517. Since the CY 2026 OPPS/ASC proposed rule was released, 15 additional CY 2024 claims for CPT code 0662T have been processed upon which to base the APC assignment for CPT code 97007. The revised geometric mean cost for CPT code 97007 is approximately $1,410. Therefore, we are finalizing our proposal to use available claims data for CPT code 0662T to finalize the APC assignment for CPT code 97007 to APC 1516 (New Technology-- Level 16 ($1,401-$1,500) with a payment rate of $1,450.50 and status indicator ``S.'' With regard to comments on the status indicator assignment for CPT code 97008, we disagree with comments asserting that there is no service to which scalp cooling can be appropriately packaged. Scalp cooling is always furnished in conjunction with chemotherapy administration, for the purpose of addressing a side effect of chemotherapy treatment. Unlike CPT code 97007 describing the fitting of the cap, which is performed on a date of service distinct from the chemotherapy administration and for which we proposed separate payment, CPT codes 97008 and 97009 would always be performed on the same date of service as the chemotherapy treatment. We acknowledge commenters' concerns regarding the resources required to furnish scalp cooling and potential impacts to patient access; however, we believe that the costs associated with the scalp cooling service are appropriately captured within the packaged payment for chemotherapy treatment. Therefore, we believe it is appropriate to package payment for CPT codes 97008 and 97009 with the primary chemotherapy service. In summary, for CY 2026, we are finalizing our proposal to use available claims data for CPT code 0662T to finalize the APC assignment for CPT code 97007 to APC 1516 (New Technology--Level 16 ($1,401- $1,500) with a payment rate of $1,450.50 and status indicator ``S.'' We are also finalizing our proposals to assign CPT codes 97008 and 97009 to status indicator ``N'' for CY 2026. These changes are reflected in Table 76. The final CY 2026 OPPS payment rate for all the codes payable under the OPPS can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the SI meanings for all codes reported under the OPPS. Addendum D1 is available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.094 Respiratory Related Services and Procedures

49. Group Respiratory Therapy, HCPCS G0239 (APC 5732)

HCPCS code G0239 (Therapeutic procedures to improve respiratory function or increase strength or endurance of respiratory muscles, two or more individuals (includes monitoring)) describes a medical service for two or more patients to improve their breathing and strengthen their respiratory muscles, conducted in a group setting under the supervision of a healthcare professional. For the CY 2026 OPPS/ASC proposed rule, HCPCS code G0239 had a geometric mean cost of around $43.00, and we proposed to continue to assign the procedure to APC 5732 (Level 2 Minor Procedures), which has a payment rate of around $39.00. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter expressed concern that the payment amount for APC 5732 dropped by 2.5 percent, from $39.96 in CY 2025 to $38.91 in CY 2026. The commenter requested that CMS provide further explanation for what is driving the decrease in payment for APC 5732 and, specifically, for HCPCS code G0239. Response: There are a number of factors pertinent to the OPPS that may cause geometric mean costs to change from one year to the next. Some of these are a reflection of hospital behavior, and some of them are a reflection of fundamental characteristics of the OPPS, as defined in statute. For example, the OPPS payment rates are based on hospital cost report and claims data. However, hospital costs and charges change each year and this results in both changes to the cost-to- [[Page 53599]] charge ratios (CCRs) taken from the most currently available cost reports and also differences in the charges on the claims that are the basis of the calculation of the geometric mean costs on which OPPS rates are based. Similarly, hospitals adjust their mix of services from year to year by offering new services, and ceasing to furnish services, or changing the proportion of the various services they furnish, which has an impact on the CCRs that we derive from their cost reports. CMS cannot stabilize these hospital-driven fundamental inputs to the calculation of OPPS payment rates. Moreover, there are other essential elements of the OPPS which contribute to the changes in relative weights each year. These include, but are not limited to, reassignments of HCPCS codes to APCs to rectify 2 times violations as required by the law, to address the costs of new services, to address differences in hospitals' costs that may result from changes in medical practice, and to respond to public comments. In summary, after consideration of the public comment, we are finalizing our proposal without modification. Specifically, we are continuing to assign HCPCS code G0239 to APC 5732 (Level 2 Minor Procedures) with a payment rate of $38.16. We note that we review the APC assignments for all items and services paid under the OPPS on an annual basis. Table 77 shows the finalized status indicator and APC assignment for this HCPCS code. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.095

50. Insertion of Endobronchial Valves, CPT Code 31647 (APC 5155)

CPT code 31647 (Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when performed; with balloon occlusion, when performed, assessment of air leak, airway sizing, and insertion of bronchial valve(s), initial lobe) describes a procedure used for conditions such as severe emphysema or persistent bronchopleural air leaks, where a device is placed to control airflow into a portion of the lung. For the CY 2026 OPPS/ASC proposed rule, CPT code 31647 had a geometric mean cost of $11,385.22 and we proposed to continue to assign the procedure to APC 5155 (Level 5 Airway Endoscopy) and status indicator J1, which has a payment rate of around $7,269. We note that at the August 25, 2025, HOP Panel Meeting, a presentation was made requesting the reassignment of CPT code 31647 from APC 5155 to New Technology APC 1575 (New Technology Level 38). Based on the information presented at the meeting, the Panel recommended this reassignment. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: Commenters recommended that CMS reassign CPT code 31647 from APC 5155 to New Technology APC 1575 (New Technology Level 38). The commenters noted that the cost of the procedure exceeds payment by approximately $4,000 and expressed concern that this discrepancy would result in patient access to the procedure being limited, particularly considering that the alternatives for severe emphysema patients involve much more invasive and expensive treatment options. A commenter stated that the reassignment to a New Technology APC was necessary because (1) there is no higher-level APC in the Airway Endoscopy APC family and (2) there is no other clinical APC that would be an appropriate clinical and resource fit. The commenter claimed that the geometric mean costs for CPT code 31647 have been stable and significantly more than the geometric mean cost for the APC into which it maps (APC 5155). While acknowledging that there is not a 2-times rule violation (given the number of single frequency claims for the procedure), the commenter noted that the GMC for CPT code 31647 is significantly above the GMC of the other procedures assigned to APC 5155 and more than double that for many procedures in the APC. The commenter stated that they considered an alternative clinical APC but could not identify a clinically and resource cohesive clinical APC into which to move it. The commenter stated that with no appropriate clinical APC to use as an alternative, CMS should assign the procedure to a new technology APC that more closely aligns with its GMC. The commenter concluded that APC 1575 is the appropriate new technology APC for the service given that the GMC for CPT code 31647 has been in the $11,000-$12,000 range for the past 3 plus years and is $11,385 in the 2024 claims data that CMS released. Response: As recognized by one of the commenters, APC 5155 does not currently have a 2 times rule violation in the final rule data and APC 5155 appears to be the best clinical fit for CPT code 31647 of any existing clinical APC. After consideration of the public comments we received and discussion and input from our Medical Officers, we are finalizing our proposal without modification to assign CPT code 31647 to APC 5155. We note that we review the APC assignments for all items and services paid under the OPPS on an annual basis. We will reevaluate the APC assignment for CPT code 31647 in the next rulemaking cycle. Table 78 shows the finalized status indicator and APC assignment for this procedure code. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website. [[Page 53600]] [GRAPHIC] [TIFF OMITTED] TR25NO25.096

51. Non-Invasive Gas Exchange and Cardiorespiratory Status (AGM 100),

CPT Code 0893T (APC 5734) Effective July 1, 2024, the AMA CPT Editorial Panel established CPT code 0893T (Noninvasive assessment of blood oxygenation, gas exchange efficiency, and cardiorespiratory status, with physician or other qualified health care professional interpretation and report) to describe a non-invasive method for assessing a patient's blood oxygenation, gas exchange efficiency, and overall cardiorespiratory status using a special breathing device and monitor, with the resulting data interpreted and reported by a healthcare professional. We assigned CPT code 0893T to APC 5733 (Level 3 Minor Procedures) in the CY 2025 OPPS/ASC final rule. For the CY 2026 OPPS/ASC proposed rule, we did not have any claims for rate setting, so we proposed to continue to assign the procedure to APC 5733 (Level 3 Minor Procedures), which has a proposed payment rate of around $61.00 and status indicator Q1 (STV- Packaged Codes; Paid under OPPS). We note that at the August 25, 2025, HOP Panel Meeting, a presentation was made requesting the reassignment to APC 5723 (Level 3 Diagnostic Tests and Related Services) for CPT code 0893T. Based on the information presented at the meeting, the Panel made no recommendation on the APC assignment for the code. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comments: Commenters requested that CPT code 0893T be reassigned from APC 5733 (Level 3 Minor Procedures) to APC 5723 (Level 3 Diagnostic Tests and Related Services) with a proposed payment rate of around $382.00. The commenters stated that the cost of the procedure is approximately $350 to $360 and therefore the proposed payment rate of $61.00 falls far short of adequate reimbursement and threatens patient access to the procedure. Some commenters additionally stated that the current APC assignment is inappropriate because there are no clinically similar procedures in that classification. These commenters stated that CPT 0893T involves exhaled gas analysis of oxygen, carbon dioxide, non- invasive blood oxygenation (PO2) and A-a gradient calculations and state that this procedure is comparable to CPT 94681 (oxygen uptake with exhaled gas analysis including carbon dioxide to assess lung function). According to these commenters, these two procedures utilize the same methodology and measure the physiological impairment parameters involving integrated cardiopulmonary assessment, supporting reclassification to APC 5723 (Level 3 Diagnostic Tests and Related Services). Response: While we note that we do not have any claims for rate setting, based upon the input provided by commenters, we agree that CPT code 0893T should be reassigned to an APC that better reflects the costs of the procedure. However, we do not agree that the appropriate APC is 5723 (Level 3 Diagnostic Tests and Related Services). We are also not persuaded that the device is diagnostic in nature. While it provides additional information about a patient's oxygen level and other factors that may be helpful in formulating a diagnosis, it is not itself diagnosing a specific condition. Accordingly, after consideration of the public comments we received and discussion and input from our Medical Officers, we have decided to reassign 0893T to APC 5734 (Level 4 Minor Procedures) with a payment amount of around $136. We note that we review the APC assignments for all items and services paid under the OPPS on an annual basis. Table 79 shows the finalized status indicator and APC assignment for this procedure code. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.097 [[Page 53601]] SaaS Imaging

52. 3D Anatomical Segmentation Imaging Software Service, HCPCS Code

C8001 (APC 5721) In the January 2025 update, we established HCPCS code C8001 to describe the 3D anatomical segmentation imaging intended as software for preoperative surgical planning and as software for the intraoperative display of multi-dimensional digital images. We initially assigned HCPCS code C8001 to APC 5521 (Level 1 Imaging without Contrast) with a status indicator of `S' (Procedure or Service, Not Discounted When Multiple; Paid under OPPS; separate APC payment). After receiving feedback from external parties, we reassigned HCPCS code C8001 to APC 5721 (Level 1 Diagnostic Tests and Related Services) for the April 2025 quarterly update. For CY 2026, we proposed to continue to assign HCPCS code C8001 to APC 5721 which has a proposed rate of around $132. We note that because this is a new service, we do not have any claims data. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter requested for HCPCS code C8001 to be reassigned from APC 5721 (Level 1 Diagnostic Tests and Related Services) to APC 5723 (Level 3 Diagnostic Tests and Related Services). The commenter cited the technical expertise required by the technologist and the additional hardware and software costs as justification for the higher-level APC assignment. The code describes 3D anatomical segmentation imaging for preoperative planning, data preparation, and transmission obtained from previous diagnostic computed tomographic or magnetic resonance examination of the same anatomy. Response: After careful review of the request to reassign C8001 from APC 5721 to APC 5723, we do not believe it would be appropriate to reassign the APC for C8001 until we have claims data for this service. We will continue to monitor claims and utilization patterns for C8001 and may reconsider the APC assignment in future notice-and-comment rulemaking. In summary, after consideration of the public comment we received, we are finalizing the APC assignment for HCPCS code C8001 without modification. The final CY 2026 payment rates for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the SI definitions for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website. Refer to Table 80 for code descriptor, APC assignment and status indicator assignment for HCPCS code C8001 for CY 2026. [GRAPHIC] [TIFF OMITTED] TR25NO25.098

53. 3D Image Generation Used in Surgical Planning and Navigation for

Placement of Implants and Devices (BoneMRI), HCPCS Code G0566 (APC 5721) In CY 2025, we established HCPCS code G0566 (3D radiodensity-value bone imaging, algorithm derived, from previous magnetic resonance examination of the same anatomy) to describe the BoneMRI software as a service (Change Request 13993).\26\ This service provides 3D radiodensity-value bone imaging from previous magnetic resonance images. For CY 2025, HCPCS code G0566 was assigned to APC 5721 (Level 1 Diagnostic Tests and Related Services) with the status indicator ``S'' (separate APC payment). --------------------------------------------------------------------------- \26\ https://www.cms.gov/files/document/r13135cp.pdf. --------------------------------------------------------------------------- As HCPCS code G0566 is a new code in 2025, we have no claims data. For CY 2026, we proposed to assign HCPCS Code G0566 to APC 5721 (Level 1 Diagnostic Tests and Related Services). We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: Several commenters expressed concern with the low payment rate for this service which commenters stated may provide a financial barrier for providers to adopt this new technology into their practice and limit access. A commenter stated the proposed payment rate is not comparable to other SaaS technologies payment, such as EchoGo Heart Failure (CPT code 0932T) or HeartFlow FFRct (CPT code 75580), which ranges from about $316 to $879. The commenter stated the payment rate for BoneMRI does not reflect the value and resources for this service. The commenters recommended that HCPCS code be reassigned to APC 5723 (Level 3 Diagnostic Tests and Related Services) as that APC reflects the clinical value and cost of this service. Response: In determining the appropriate APC placement for CPT/ HCPCS codes, we rely on input from a variety of sources, including, but not limited to, review of the resource costs and clinical similarity of the service to existing procedures; input from CMS medical advisors; and information from interested specialty societies. We evaluated the recommendations, modeled the suggestions, analyzed the cost results of the suggested APC reassignments, and received additional input from our medical advisors. We note the SaaS codes that the commenter mentioned were assigned to their respective APCs based on similar clinical and resource similarity. While we recognize that there is not currently a one-to-one match to crosswalk to the new codes, we based the proposed APC assignments for HCPCS code G0566 on crosswalks to CPT/HCPCS codes that have similar service and resource [[Page 53602]] elements to the new codes. Based on our review of the service compared to other services assigned to the Diagnostic Tests and Related Services Series, we believe HCPCS code C8001 (3d anatomical segmentation imaging for preoperative planning, data preparation and transmission, obtained from previous diagnostic computed tomographic or magnetic resonance examination of the same anatomy) is an appropriate crosswalk code for HCPCS code G0566, which is currently assigned to APC 5721 (Level 1 Diagnostic Tests and Related Services). After consideration of the public comments we received, we are finalizing our proposed APC assignment and status indicator for HCPCS code G0566 to APC 5721 without modification. Refer to Table 81 for the final OPPS APC and status indicator assignment for HCPCS code G0566 for CY 2026. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.099

54. Augmentative Analysis of CT Imaging Data for Interstitial Lung

Disease, CPT Code 0877T (APC 1508) In the CY 2026 OPPS/ASC proposed rule, we proposed to continue assigning CPT code 0877T (Augmentative analysis of chest computed tomography (ct) imaging data to provide categorical diagnostic subtype classification of interstitial lung disease; obtained without concurrent ct examination of any structure contained in previously acquired diagnostic imaging) to APC 1508 (New Technology--Level 8 ($601-$700)) with a proposed payment rate of $650.50 and status indicator ``S''. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter requested that CMS remove CPT Code 0877T from the current OPPS rule and fee schedule because according to the commenter, this service is best categorized as an ambulatory service, not an outpatient service to be reviewed and priced under the OPPS. That is, there are currently no hospitals that can provide the type of service described in CPT code 0877T. For this reason, any claims billed for this service in the hospital setting were billed in error and are the result of miscoding. They also stated that CPT code 0877T is currently designated as contractor-priced under the Medicare Physician Fee Schedule (PFS), meaning that the local Medicare contractors determine payment rates for the service within the PFS geographic areas in their jurisdiction. Since IMVARIA's IDTF is located in Texas, Novitas Solutions, Inc., the local Medicare Administrative Contractor (MAC), is solely responsible for evaluating coverage and payment for CPT 0877T. Finally, they stated that the rate posted by OPPS for 0877T appears potentially based on an inaccurate and unrelated crosswalk to the published rate for CPT code 0721T, which bears no clinical, procedural, or technological relationship to the Fibresolve test or the commenter's area of focus. Another commenter supported CMS' proposal and urged CMS to finalize the proposed payment structure for CPT code 0877T which enables facilities to bill for state-of-the-art ILD diagnostic services. They also noted that it came to their attention that there was a comment submitted to CMS that claimed that there are currently no hospitals that can provide the type of service described in CPT code 0877T. For this reason, any claims billed for this service in the hospital setting were billed in error and are the result of miscoding. The commenter noted that their company is not operating as an Independent Diagnostic Testing Facility (IDTF) but rather entering into contractual agreements with facilities to offer e-Lung as a software- as-a-medical-device (SaMD) for which the hospitals will then submit claims as the provider. Therefore, another commenter's claim that existing claims were billed in error, and the result of miscoding is not accurate. Response: Based on our review and input from our medical advisors, we believe that there may be other services that could be described by CPT code 0877T and therefore, we continue to believe that the current assignment of CPT code 0877T to APC 1508 with status indicator ``S'' is appropriate. Therefore, we are finalizing without modification our proposal to assign CPT code 0877T to APC 1508 for CY 2026. The final payment rates for the codes can be found in Addendum B to this final rule with comment period. In addition, we refer to Addendum D1 to this final rule with comment period for the status indicator (SI) meanings for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website.

55. Noninvasive Arterial Plaque Analyses, CPT Code 0712T (5722)

Established in 2022, Category III CPT code 0712T is related to noninvasive arterial plaque analysis and describes the steps required for a software as a service (SaaS) imaging service that uses data from computed tomography angiography (CTA) to produce clinical information about arterial plaque for providers. See Table 82 for the CPT code, its long descriptor, and the proposed payment assignments. [[Page 53603]] [GRAPHIC] [TIFF OMITTED] TR25NO25.100 For CY 2026, we proposed to assign CPT code 0712T to APC 5521 (Level 1 Imaging without Contrast), which has a proposed payment rate of approximately $89. The issue of payment for CPT code 0712T was brought to the Advisory Panel on Hospital Outpatient Payment (also known as HOP Panel) in August 2025 for CY 2026 rulemaking. At the 2025 HOP Panel, several presenters provided information to the Panel regarding 0712T and advised the Panel to request that CMS reassign 0712T to New Technology APC 1511 with a payment rate of $950.50. Based on the information presented, the HOP Panel did not make a recommendation to CMS to reassign 0712T to a different APC for CY 2026. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: Several commenters requested that CMS reassign CPT code 0712T to a New Technology APC 1511 with a payment rate of $950.50. Commenters detailed the procedural methodology and stated that the procedure involves segmentation, quantification, and assessment of high-risk biomarkers such as lipid-rich necrotic core plaque, which are critical for predicting strokes and other cardiovascular events. Several commenters recommended using CPT code 0625T (Automated quantification and characterization of coronary atherosclerotic plaque to assess severity of coronary disease, using data from coronary computed tomographic angiography; computerized analysis of data from coronary computed tomographic angiography) as a crosswalk code for CPT code 0712T, as they believe that CPT code 0625T and CPT code 0712T resemble each other in methodology, clinical purpose, and resource demands. Additionally, commenters stated that the current APC assignment fails to cover the cost of performing noninvasive arterial plaque analysis from CTA data and that hospitals cannot absorb the financial loss associated with this service. Further, commenters stated that undervaluing the complexity and resource cost of CPT code 0712T would discourage adoption, limit data collection, and impede CMS's ability to monitor utilization and outcomes. Response: After consideration of the public comments, additional review of the procedures, and input from our CMS Medical Officers, we do not agree with the recommended crosswalk code of CPT code 0625T. Based on our review of the clinical characteristics of the procedure and input from our medical advisors, we believe that CPT code 0712T is more similar clinically and in terms of resource requirements and procedure costs to the procedures assigned to APC 5722 (Level 2 Diagnostic Tests). We remind hospitals that we review, on an annual basis, the APC assignments for all items and services paid under the OPPS and we will continue to monitor the claims data as they become available. In summary, after consideration of the public comments we received, we are finalizing our proposal with modification and reassigning CPT code 0712T to APC 5722 (Level 2 Diagnostic tests). The final CY 2026 payment rates for these codes can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the status indicator definitions for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website. Refer to Table 83 for code descriptors, APC assignments and status indicator assignments for CPT code 0712T. [GRAPHIC] [TIFF OMITTED] TR25NO25.101 [[Page 53604]] Urology Related Services

56. Aquabeam Waterjet Ablation Procedure, CPT Code 52597 (APC 5376)

CPT code 0421T (Transurethral waterjet ablation of prostate, including control of post-operative bleeding, including ultrasound guidance, complete (vasectomy, meatotomy, cystourethroscopy, urethral calibration and/or dilation, and internal urethrotomy are included when performed) describes the Aquabeam waterjet ablation procedure. According to the manufacturer, Aquabeam is for treating lower urinary tract symptoms (LUTS) due to benign prostatic hyperplasia (BPH) by using a high-velocity water stream to ablate and remove tissue from enlarged prostates. Effective January 1, 2026, CPT code 0421T will be replaced with CPT code 52XX1 (52597), Transurethral robotic-assisted waterjet resection of prostate, including intraoperative planning, ultrasound guidance, control of postoperative bleeding, complete, including vasectomy, meatotomy, cystourethroscopy, urethral calibration and/or dilation, and internal urethrotomy, when performed. We will assign the underlying claims associated with HCPCS code 0421T to CPT code 52XX1 (52597). For the CY 2026 OPPS/ASC proposed rule, we estimated the geometric mean cost for CPT code 0421T to be $10,342 based on 7,557 single claims and proposed to assign the service to APC 5376 (Level 6 Urology and Related Services), which has a geometric mean cost of $9,746. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: Several commenters requested CMS reassign CPT code 52597 (0421T) from APC 5376 (Level 6 Urology and Related Services) to APC 5377 (Level 7 Urology and Related Services) in the CY 2026 OPPS/ASC final rule with comment period. The commenters stated that CPT code 52597 (0421T) requires greater complexity and more resource than other CPT codes 55880 (Ablation of malignant prostate tissue, transrectal, with high intensity-focused ultrasound (hifu), including ultrasound guidance) and 55873 (Cryosurgical ablation of the prostate (includes ultrasonic guidance and monitoring)) that are currently in APC 5376 (Level 6 Urology and Related Services). The commenters stated that CPT code 52597 (0421T) is similar both clinically and in resource use to the procedures assigned to APC 5377 (Level 7 Urology and Related Services), citing CPT code 55882 (Ablation of prostate tissue, transurethral, using thermal ultrasound, including magnetic resonance imaging guidance for, and monitoring of, tissue ablation; with insertion of transurethral ultrasound transducer for delivery of thermal ultrasound, including suprapubic tube placement and placement of an endorectal cooling device, when performed). Response: We appreciate the commenter's recommendation regarding the APC assignment of CPT code 52597 (0421T) but we disagree that the clinical complexity and resource required for CPT code 52597 (0421T) is comparable to CPT code 55882. We believe that CPT code 52597 (0421T) fits more appropriately in APC 5376 rather than in APC 5377 based on resource cost and clinical similarity and to the procedures in APC 5376. We note that while both CPT code 52597 (0421T) and CPT code 55882 CPT provides imaging guidance, we believe that the use of magnetic resonance imaging guidance in CPT code 55882 necessitates greater resource than ultrasound guidance. After consideration of the public comment we received, we are finalizing our proposal without modification to assign CPT code 52597 (0421T) to APC 5376. Refer to Table 84 for the final OPPS APC and status indicator assignment for CPT code 52597 (0421T) for CY 2026. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.102

57. Enhanced Lithotripsy System, CPT Code 0991T (APC 5376)

CPT code 0991T (Cystourethroscopy, with low-energy lithotripsy and acoustically actuated microspheres, including imaging) describes the lithotripsy with acoustically actuated microspheres in an approved investigational device exemption (IDE) study (NCT06942949). According to the manufacturer, this prospective, single arm study utilizes low pressure ultrasound to actuate proprietary microbubble to fragment urinary stones. The AMA CPT Editorial Panel established CPT code 0991T effective January 1, 2026. As this is a new code in 2026, we have no claims data for CPT code 0991T. For CY 2026, we proposed to assign CPT Code 0991T with the status indicator ``E1.'' We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A few commenters stated that CPT code X432T has transitioned to CPT code 0991T, effective July 1, 2025 and that CMS incorrectly assigned status indicator ``E1'' to CPT code X432T in the CY 2026 OPPS/ASC proposed rule. Additionally, the commenters requested the assignment of CPT code 0991T to APC 5376 (Level 6 Urology and Related Services), based on the commenter's resource cost of [[Page 53605]] $10,131, and be designated as device intensive with a device offset of 44 percent. Response: We note that according to the AMA, CPT code 0991T will replace CPT code X432T, effective January 1, 2026. While CPT code 0991T was released on the AMA website on July 1, 2025, the code is not effective until January 1, 2026. We also note that our status indicator assignment of ``E1'' for CPT code 0991T (X432T) was appropriate in the CY 2026 OPPS/ASC proposed rule. During our CY 2026 OPPS/ASC proposed rule assessment of CPT code X432T, we determined that the enhanced lithotripsy service involved a non-FDA approved device not excepted by any IDE status and therefore not payable under the OPPS/ASC because non-FDA approved devices are considered not reasonable and necessary under Section 1862(a)(1)(A) of the Act. The Evaluation of Enhanced Lithotripsy System (ELS) in the Treatment of Urinary Stones (NCT06942949) did not receive CMS category B IDE approval until August 1, 2025. Therefore, status indicator ``E1'' was an appropriate assignment for a service involving a non-FDA approved device. The definition of the OPPS status indicators can be found in Addendum D to this final rule with comment period via the internet on the CMS website. In determining the appropriate APC placement for new codes, we rely on input from a variety of sources, including, but not limited to, review of the resource costs and clinical similarity of the service to existing procedures; input from CMS medical advisors; and information from interested specialty societies. We evaluated the recommendations, modeled the suggestions, analyzed the cost results of the suggested APC reassignments, and received additional input from our medical advisors. We agree with the commenter's request to assign CPT code 0991T (X432T) to APC 5376 (Level 6 Urology and Related Services). While we recognize that there is not currently a one-to-one match to crosswalk to the new codes, we based our APC assignment for CPT code 0991T (X432T) on crosswalks to CPT codes that have similar service and resource elements, as well as required staff, to the new codes. Based on our review of the enhanced lithotripsy service compared to other services assigned to the Urology and Related Services series, we believe HCPCS code C9761 (Cystourethroscopy, with ureteroscopy and/or pyeloscopy, with lithotripsy, and ureteral catheterization for steerable vacuum aspiration of the kidney, collecting system, ureter, bladder, and urethra if applicable (must use a steerable ureteral catheter)) is an appropriate crosswalk code for CPT code 0991T (X432T), which is currently assigned to APCs 5376 (Level 6 Urology and Related Services). For this service's device offset, we refer readers to section IV.B. of this final rule with comment period. After consideration of the public comment we received, we are finalizing our proposal with modification to assign CPT code 0991T (X432T) to APCs 5376 (Level 6 Urology and Related Services) with a status indicator of ``J1''. Refer to Table 85 for the final OPPS APC and status indicator assignment for CPT code 0991T (X432T) for CY 2026. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.103

58. Insertion of Permanent Urethral Stent, CPT Code 52282 (APC 5374)

CPT code 52282 (Cystourethroscopy, with insertion of permanent urethral stent) describes the insertion of a permanent urethral stent using an endoscope procedure. CPT code 52282 became effective January 1, 1998. For the CY 2026 OPPS/ASC proposed rule, we estimated the geometric mean cost for CPT code 52282 to be approximately $3,382 based on 111 single claims and proposed to continue to assign the service to APC 5374 (Level 4 Urology and Related Services), which had a proposed geometric mean cost of $3,686. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: Several commenters requested the APC reassignment of CPT code 52282 to APC 5376 (Level 6 Urology and Related Services). The commenter stated that the current payment rate of APC 5374 (Level 4 Urology and Related Services) and the lack of device intensive status do not cover the cost of the stent and the procedure. The commenters stated CPT code 52282 is similar in device intensity to CPT code 53865. The commenters further stated that the inappropriate low payment creates a patient access issue which may push patients to other higher cost treatment options for both Medicare and beneficiaries. Furthermore, the low payment in ASCs for this treatment drives patients to HOPDs which can be more costly for the both Medicare and beneficiaries. Another commenter stated that there has not been a permanent urethral stent device on the US market for the past decade. The commenter stated the 2024 claims showed CPT code 52282 had a mean device cost of $485, which is far below the price that will be available in the Q4 2025 and 2026. The commenter reported that about 33 percent of the 2024 claims are female patients, which indicate that these were incorrect [[Page 53606]] billings and that they should be removed from CY 2026 claims accounting. The commenter further stated that their analysis of the OPPS CPT 52282 claims revealed diagnosis codes do not correspond to treatment with a permanent urethral stent. The commenter also reported that their analysis of the CPT 52282 claims included device codes such as HCPCS code C2617 (Stent, non-coronary, temporary, without delivery system) and HCPCS code C1758 (Catheter, ureteral) that do not correspond to the treatment represented by CPT code 52282. The commenter suggested the following: (1) CMS exclude all CPT code 52282 claims for ratesetting, and device offset calculations, reassign CPT code 52282 to APC 5376, and use the manufacturer's price as a device offset or use CPT code 53865 that has a temporary urethral stent) until accurate claims are available; (2) Create a new device code for a permanent urethral stent with the suggested descriptor (Stent, prostatic, permanent with integrated transurethral delivery system); (3) Conduct annual reviews of device offset and review all surgical procedures; and (4) Coordinate with the FDA and AMA CPT Editorial Panel when devices are withdrawn from the market. Response: We appreciate the commenters' suggestions regarding CPT code 52282. We rely on hospitals and providers to accurately report the use of HCPCS codes in accordance with their code descriptors, and CPT and CMS instructions, and to report services accurately on claims and charges and costs for the services on their Medicare hospital cost report. We defer to the clinicians and providers to provide the appropriate course of treatment, at the appropriate site of treatment. We will take the commenter's concerns regarding the US market availability of a permanent urethral stent and the claims surrounding CPT code 52282 into consideration for future rulemaking. We note that all comments requesting the reassignment of CPT code 52282 to APC 5376 were related to a device that has not received FDA approval or any exceptions such as an Investigational Device Exemptions (IDE) or PMA/ 510K Exemptions, and so those comments are out of the scope for this final rule with comment period. For this service's device offset, we refer readers to section IV.B of this final rule with comment period. After consideration of the public comments we received, we are finalizing our proposed APC assignment and status indicator for CPT code 52282 without modification. Refer to Table 86 for the final OPPS APC and status indicator assignment for CPT code 52282 for CY 2026. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.104

59. Penile Prosthesis, CPT Code 54417 (APC 5377)

CPT code 54417 (Removal and replacement of non-inflatable (semi- rigid) or inflatable (self-contained) penile prosthesis through an infected field at the same operative session, including irrigation and debridement of infected tissue) describes the removal and replacement of penile implant and debridement of infected tissue. For the CY 2026 OPPS/ASC proposed rule, we calculated the geometric mean for CPT code 54417 to be about $18,732, and we proposed to assign the service to APC 5377 (Level 7 Urology and Related Services), which has a geometric mean cost of $13,635. There were 11 single claims used to calculate the geometric mean cost for CPT code 54417. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter requested that CMS reassign CPT code 54417 to APC 5478. The commenter stated CPT code 54417 is similar to CPT codes 54411 (Removal and replacement of all components of a multi-component inflatable penile prosthesis through an infected field at the same operative session, including irrigation and debridement of infected tissue) and 54416 (Removal and replacement of non-inflatable (semi- rigid) or inflatable (self-contained) penile prosthesis at the same operative session) both clinically and in resource utilization. The commenter stated CPT code 54417 is a low frequency procedure, which is the expected utilization pattern, but its geometric mean has been increasing year over year. The commenter stated all three procedures involve the similar operative complexity of removing and replacing a penile prosthesis, while CPT codes 54411 and 54417 also includes irrigation and debridement of an infected tissue. The commenter stated that CPT code 54417 has the highest geometric mean cost in APC 5377, that exceeds CPT code 54416 and is closer to the geometric mean cost of APC 5378. Response: We agree with the commenter that CPT code 54417 is similar clinically and in resource utilization to CPT codes 54411 and 54416. APC 5378 (Level 8 Urology and Related Services) is a more appropriate placement for CPT code 54417 due to the clinical work and resources utilized to furnish the removal and replacement of penile implant and/or debridement of infected tissue irrigation, which is clinically similar to CPT codes 54411 and 54416. We also agree with the commenters that the geometric mean cost of CPT code 54417 more closely matches the geometric mean cost of APC 5378 than APC 5377. Therefore, we will be reassigning CPT code 54417 to APC 5378 for CY 2026. After consideration of the public comment we received, we are finalizing [[Page 53607]] a modification to our proposal to assign CPT code 54417 to APC 5378 (Level 8 Urology and Related Services) with a status indicator of ``J1''. Refer to Table 87 for the final OPPS APC and status indicator assignment for CPT code 54417 for CY 2026. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.105

60. Prostate Biopsy Codes, CPT Codes 55712, 55713, 55714, and 55715

For 2026, the AMA CPT Editorial Panel established four new codes to describe the various services related to report prostate biopsy to replace CPT code 55770 (Biopsy, prostate; needle or punch, single or multiple, any approach) which will be retired December 31, 2025. The four new codes are effective January 1, 2026, and describe the biopsy of the prostate with various imaging guidance. The codes and their complete long descriptors are listed in Table 88. When determining the proposed status indicators and APC assignments for CY 2026, we reviewed the clinical and resource characteristics of the procedures, we considered input from our medical advisors and reviewed existing APC classifications to identify similar and closely related procedures. We note that CPT codes 55712, 55713, 55714, and 55715 were listed as placeholder codes 5XX07, 5XX08, 5XX09, and 5XX10 respectively, in OPPS Addendum B and Addendum O that were released with the CY 2026 OPPS/ASC proposed rule. Because we had not received the final CPT code numbers from AMA for the new codes that would be effective January 1, 2026, in time for the publication of the CY 2026 OPPS/ASC proposed rule, we listed the new CPT codes with their respective placeholder codes in OPPS Addendum B and Addendum O. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: Some commenters sought clarification on the new prostate biopsy CPT codes with more detailed code descriptors for high-field and low-field MRI technologies, including in-office MRI systems. Response: We thank the commenters for their input, but these comments are out of scope of this OPPS/ASC final rule with comment period. We note the CPT code descriptors are copyright property of the American Medical Association and we do not have the ability to modify CPT codes. After consideration of the public comments we received, we are finalizing our proposal without modification for CPT codes 55712 through 55715. Table 88 shows the finalized status indicators and APC assignments for all the four prostate biopsy codes. The final CY 2026 payment rates for these codes can be found in Addendum B to this final rule with comment period. We also refer readers to Addendum D1 to this final rule with comment period for the SI meanings for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.106 [[Page 53608]]

61. Ureteroscopy, HCPCS Code C9761 (APC 5376)

The ureteroscopy procedure addresses kidney stones and may apply catheterization to vacuum aspirate the fragmented kidney stones. HCPCS code C9761 (Cystourethroscopy, with ureteroscopy and/or, with lithotripsy, and ureteral catheterization for steerable vacuum aspiration of the kidney, collecting system, ureter, bladder, and urethra if applicable (must use a steerable ureteral catheter) became effective October 1, 2020. For CY 2026, the OPPS payment rates were proposed based on available CY 2024 claims data. For the CY 2026 OPPS/ASC proposed rule, we found a total of 721 single frequency claims and a geometric mean cost of approximately $9,470 for HCPCS code C9761. For CY 2026, we proposed to continue to assign HCPCS code C9761 to APC 5376 (Level 6 Urology and Related Services) with a proposed payment rate of approximately $9,746. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: Commenters requested CMS provide coding guidance on the appropriate device billed under HCPCS code C9761. Response: Comments on coding guidance are out of scope of this OPPS/ASC final rule with comment period. We note that if hospitals have questions about appropriate coding that they cannot resolve on their own, the appropriate first step would be to review the HCPCS codes or consult a Medicare Administrative Contractor (MAC).

62. Water Vapor Thermotherapy CPT Code 0582T (APC 5377)

CPT code 0582T (Transurethral ablation of malignant prostate tissue by high-energy water vapor thermotherapy, including intraoperative imaging and needle guidance) describes an Category B IDE study where water vapor is used to ablate localized prostate cancer. It was designated a Category B IDE study (NCT05683691) on October 12, 2023. The purpose of this prospective, single arm study is to evaluate the safety and effectiveness of utilizing water vapor ablation delivered transurethrally in patients with immediate risk, localized prostate cancer. For CY 2025, CPT code 0582T was assigned status indicator ``E1.'' For the CY 2026 OPPS/ASC proposed rule, we proposed to continue assigning CPT code 0582T with the status indicator ``E1.'' We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter requested CPT code 0582T be reassigned to APC 5378 (Level 8 Urology and Related Services) with a status indicator of J1 where other clinically and cost similar procedures are assigned. The commenter stated that this service is currently an approved Category B IDE study, Water Vapor Ablation for Localized Intermediate Risk Prostate Cancer (VAPOR 2) [G220303-NCT05683691]. Furthermore, the commenter stated the procedure cost ranges between $21,672 to $22,233, including the device cost of $16,415 and requested device intensive status and a device offset percentage of 74 percent. Response: We thank the commenter for the notification that CPT code 0582T represents a Category B IDE study. While we recognize that there is not currently a one-to-one match to crosswalk to the new codes, we based the APC assignment on crosswalks to CPT codes that have similar service and resource elements to the new codes. Based on our review of the service compared to other services assigned to the Urology and Related Services APC series, we believe CPT code 55882 (Ablation of prostate tissue, transurethral, using thermal ultrasound, including magnetic resonance imaging guidance for, and monitoring of, tissue ablation; with insertion of transurethral ultrasound transducer for delivery of thermal ultrasound, including suprapubic tube placement and placement of an endorectal cooling device, when performed) is an appropriate crosswalk code for CPT code 0582T. CPT code 55882 is currently assigned to APC 5377 (Level 7 Urology and Related Services). After consideration of the public comment we received, we are finalizing our proposed APC assignment and status indicator for CPT code 0582T with modification to assign CPT code 0582T to APC 5377 (Level 7 Urology and Related Services) with a status indicator of ``J1''. Refer to Table 89 for the final OPPS APC and status indicator assignment for CPT code 0582T for CY 2026. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.107 Vascular Procedures

63. Arteriovenous Fistula (AVF) Creation Procedures, CPT Codes 36836

and 36837 (APC 5194) CPT codes 36836 (Percutaneous arteriovenous fistula creation, upper extremity, single access of both the peripheral artery and peripheral vein, including fistula maturation procedures (eg, transluminal balloon angioplasty, coil embolization) when performed, including all vascular access, imaging guidance and radiologic supervision and interpretation) and 36837 (Percutaneous arteriovenous fistula creation, upper extremity, separate access sites of the peripheral artery and peripheral vein, including fistula [[Page 53609]] maturation procedures (e.g., transluminal balloon angioplasty, coil embolization) when performed, including all vascular access, imaging guidance and radiologic supervision and interpretation) describe a percutaneous arteriovenous fistula creation of an upper extremity. CPT code 36836 became effective January 1, 2023 and replaced HCPCS codes C9754 and G2170, while CPT code 36837 became effective January 1, 2023, and replaced HCPCS codes C9755 and G2171. In the CY 2020 OPPS/ASC final rule with comment period (84 FR 61246 through 61247), in response to public comment, input from our medical advisors, and the available claims data, we reassigned C9754 and C9755 from APC 5193 to APC 5194. In the CY 2021 OPPS/ASC final rule with comment period (85 FR 85954 through 95955), we used our equitable adjustment authority to maintain the assignment of HCPCS codes G2170 and G2171 to APC 5194 (Level 4 Endovascular Procedures), given that both procedures are for ESRD patients that need dialysis, the predecessor codes had very similar median costs, and there were low claims data available. We continued the assignment of CPT codes 36836 and 36837 to APC 5194, with commenter support, for CY 2022. In the CY 2023 OPPS/ASC final rule with comment period (87 FR 71863 through 71864), we assigned the newly established CPT codes 36836 and 36837 to APC 5194 based on our assessment of the CY 2023 geometric mean cost of predecessor codes HCPCS codes G2170 ($12,055.90) and G2171 ($13,486.08) and their APC assignment. For CYs 2024 and 2025, we continued assignment to APC 5194 for CPT codes 36836 and 36837, with commenter support. For CY 2026, we proposed to continue assignment of both CPT codes 36836 and 36837 to APC 5194 (Level 4 Endovascular) with a proposed payment rate of $18,791.32. For the CY 2026 OPPS/ASC proposed rule, CPT code 36836 had 170 single claims for ratesetting, a geometric mean cost (GMC) of around $11,260, and CPT code 36837 had 77 single claims for ratesetting and a GMC of around $19,615. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter requested that CMS reassign CPT code 36836 to APC 5193 (Level 3 Endovascular Procedures) stating that there is a significant cost differential between CPT codes 36836 and 36837. Response: At this time, we continue to believe that both CPT codes 36836 and 36837 are assigned to appropriate APCs. We will continue to monitor the geometric mean costs and claims data and revise their APC assignments as appropriate. In summary, after consideration of the public comment we received, we are finalizing the APC assignments for CPT codes 36836 and 36837 without modification. Specifically, we are finalizing the APC assignment of CPT codes 36836 and 36837 to APC 5194 (Level 4 Endovascular Services). Refer to Table 90 for the code descriptor, proposed and final status indicator (SI) assignment, and proposed and final APC assignment. The final CY 2026 payment rates for the codes can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the SI definitions for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website. [GRAPHIC] [TIFF OMITTED] TR25NO25.108

64. Atherectomy With Angioplasty, CPT Code 92924 (APC 5193)

CPT code 92924 (Percutaneous transluminal coronary atherectomy, with coronary angioplasty when performed; single major coronary artery or branch) describes a procedure to treat coronary artery disease by removing plaque from the coronary vessels. For the CY 2026 OPPS/ASC proposed rule, CPT code 92924 had a geometric mean cost (GMC) of around $16,262 based on 498 single frequency claims. We proposed to maintain the APC assignment to APC 5193 (Level 3 Endovascular Procedures), with a proposed payment of around $11,873. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: Commenters requested that CMS reassign CPT code 92924 to APC 5194 (Level 4 Endovascular Procedures). The commenters stated that CPT code 92924 is a technically demanding complex procedure and is more clinically similar to other procedures assigned to APC 5194 (Level 4 Endovascular Procedures). They note that in the CY 2026 OPPS/ASC proposed 2 Times Rule File, CPT code 92924 has the 3rd highest GMC in its current APC assignment (APC 5193) and has a higher GMC than 7 other procedures assigned to APC 5194. Based on the GMC of CPT code 92924, the commenters believe it is more appropriate to assign CPT code 92924 to [[Page 53610]] APC 5194 (Level 4 Endovascular Procedures). Response: After reviewing the comments, we believe that CPT code 92924 is more clinically similar to the procedures assigned to APC 5193. As with many APC families, there may be services and procedures that have higher GMCs than other procedures in the next level. We determine APC assignments based on resource and clinical homogeneity and review and revise the services within each APC group and the APC assignments under the OPPS. In summary, after consideration of the public comments we received, we are finalizing our proposal without modification, to assign CPT code 92924 to APC 5193 (Level 3 Endovascular Procedures). The final CY 2026 payment rates for this code can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the SI definitions for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website. Refer to Table 91 for code descriptor, APC assignment and status indicator assignment for CPT 92924 code for CY 2026. [GRAPHIC] [TIFF OMITTED] TR25NO25.109

65. Coronary Therapeutic Services and Procedures CPT Codes 92930, 92945

(APCs 5194, 5193) The CPT Editorial Panel created 2 new Category I codes 92930 and 92945, effective January 1, 2026. The new final CPT codes (along with their placeholder codes) are as follows: 92930 (92X01): Percutaneous transcatheter placement of intracoronary stent(s), with coronary angioplasty when performed, single major coronary artery and/or its branch(es); 2 or more distinct coronary lesions with 2 or more coronary stents deployed in 2 or more coronary segments, or a bifurcation lesion requiring angioplasty and/or stenting in both the main artery and the side branch; and 92945 (92X02): Percutaneous transluminal revascularization of chronic total occlusion, single coronary artery, coronary artery branch, or coronary artery bypass graft, and/or subtended major coronary artery branches of the bypass graft, any combination of intracoronary stent, atherectomy and angioplasty; combined antegrade and retrograde approaches. For CY 2026, we proposed to assign both of these procedures to APC 5193 (Level 3 Endovascular Procedures) and a status indicator (SI) of `J1' with a proposed payment of $11,873.70. We note that at the August 25, 2025, HOP Panel Meeting, a presentation was made requesting the APC reassignment of CPT codes 92930 (92X01) and 92945 (92X02). Based on the information presented at the meeting, the HOP Panel recommended that we reassign both CPT codes 92930 and 92945 from APC 5193 (Level 3 Endovascular Procedures) to APC 5194 (Level 4 Endovascular Procedures). We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: Commenters requested that CMS reassign CPT codes 92930 and 92945 to APC 5194 (Level 4 Endovascular Procedures) to better reflect the increased complexity of these procedures and resource utilization. The commenters noted that while CMS crosswalked these codes to the straightforward versions of these procedures, the new codes include additional procedural work and resources that warrant a higher APC assignment. They note that CPT code 92930 includes 2 or more lesions with 2 or more stents deployed in 2 or more coronary segments versus the crosswalk code CPT code 92928 (Percutaneous transcatheter placement of intracoronary stent(s), with coronary angioplasty when performed; single major coronary artery or branch) which only refers to a single coronary artery or branch. Commenters also pointed to the multiple procedural approaches (antegrade and retrograde) with CPT code 92945, whereas the crosswalk CPT code 92943 (Percutaneous transluminal revascularization of chronic total occlusion, coronary artery, coronary artery branch, or coronary artery bypass graft, any combination of intracoronary stent, atherectomy and angioplasty; single vessel) is only a single approach (antegrade). A commenter suggested using C9607 (Percutaneous transluminal revascularization of chronic total occlusion, coronary artery, coronary artery branch, or coronary artery bypass graft, any combination of drug-eluting intracoronary stent, atherectomy and angioplasty; single vessel) as a crosswalk code for CPT code 92945. Commenters urged CMS to not undervalue these services from the outset and that CMS should reassign these codes to APC 5194 (Level 4 Endovascular Procedures and monitor the claims data to ensure that these codes are assigned to an appropriate APC based on clinical and resource homogeneity. Response: After review of the public comments and input from our Medical Officers, we agree with the commenters that CPT code 92930 is more complex and utilizes more resources (that is, additional stents) than its crosswalk code. However, we disagree with commenters that more resources are used with CPT 92945. As we do every year, we will monitor the claims data and reevaluate the APC assignments for these codes in the next rulemaking cycle to determine if a more appropriate APC assignment is warranted. In summary, after consideration of the public comments we received, input from our Medical Officers, and the HOP Panel recommendation, we are finalizing the APC and status indicators for CPT codes 92930 and 92945 with modification. Specifically, we are assigning CPT 92930 to APC 5194 and continuing to assign CPT 92945 to APC 5193. The final CY 2026 payment rates for these codes can be found in Addendum B to this final rule with comment period. In addition, we refer readers to [[Page 53611]] Addendum D1 to this final rule with comment period for the SI definitions for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website. Refer to Table 92 for code descriptor, APC assignment and status indicator assignments for CPT codes 92930 and 92945 for CY 2026. [GRAPHIC] [TIFF OMITTED] TR25NO25.110

66. Lower Extremity Revascularization, CPT Codes 37254 Through 37299

(APCs 5192, 5193, and 5194) For CY 2026, the CPT Editorial Panel deleted 16 CPT codes that described lower extremity revascularization and replaced them with 46 new codes. The new codes establish an additional peripheral vessel territory as well as being more granular in describing the procedures. The 16 revascularization codes will be deleted December 31, 2025, and replaced with the new CPT codes effective January 1, 2026. The deleted revascularization CPT codes are listed in Table 93, along with their current APC and status indicator assignments. Table 94 lists the new revascularization CPT code (along with its placeholder), the long descriptor, status indicator, APC assignment, and the crosswalk code that was used to determine the proposed APC assignment. BILLING CODE 4120-01-P [[Page 53612]] [GRAPHIC] [TIFF OMITTED] TR25NO25.111 [[Page 53613]] [GRAPHIC] [TIFF OMITTED] TR25NO25.112 [[Page 53614]] [GRAPHIC] [TIFF OMITTED] TR25NO25.113 [[Page 53615]] [GRAPHIC] [TIFF OMITTED] TR25NO25.114 [[Page 53616]] [GRAPHIC] [TIFF OMITTED] TR25NO25.115 [[Page 53617]] [GRAPHIC] [TIFF OMITTED] TR25NO25.116 [[Page 53618]] [GRAPHIC] [TIFF OMITTED] TR25NO25.117 [[Page 53619]] [GRAPHIC] [TIFF OMITTED] TR25NO25.118 [[Page 53620]] [GRAPHIC] [TIFF OMITTED] TR25NO25.119 [[Page 53621]] [GRAPHIC] [TIFF OMITTED] TR25NO25.120 [[Page 53622]] [GRAPHIC] [TIFF OMITTED] TR25NO25.121 [[Page 53623]] [GRAPHIC] [TIFF OMITTED] TR25NO25.122 BILLING CODE 4120-01-C We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: Commenters were supportive that CMS used the corresponding codes that are being deleted as crosswalks for the new codes, noting that we have extensive claims history for the codes that are being deleted, and this approach provides payment stability. A commenter requested that CMS reassign CPT codes 37263, 37265, and 37269 to APCs 5193, 5194, and 5194, respectively because of the complexity of these codes and the additional resources used during these procedures. Several of the commenters had comments related to complexity adjustments and device offset percentages involving these new codes. We refer the readers to the applicable sections in this final rule with comment period for responses to those comments. Response: We reviewed the commenter's request to reassign CPT codes 37263, 37265, and 37269 to APCs 5193, 5194, and 5194 respectively. After review and discussion with our CMS Medical Officers, we believe that we assigned these codes to appropriate APCs utilizing the predecessor codes as crosswalks. In summary, after consideration of the public comments we received, we are finalizing our proposals without modification, to assign CPT codes 37254 through 37299 to the APCs and status indicators noted in Table 94. The final CY 2026 payment rates for these codes can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the SI definitions for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website.

67. Percutaneous Transcatheter Therapeutic Drug Delivery (CPT Code

0913T) The CPT Editorial Panel created CPT code 0913T (Percutaneous transcatheter therapeutic drug delivery by intracoronary drug-delivery balloon (e.g., drug-coated, drug-eluting), including mechanical dilation by nondrug-delivery balloon angioplasty, endoluminal imaging using intravascular ultrasound (IVUS) or optical coherence tomography (OCT) when performed, imaging supervision, interpretation, and report, single major coronary artery or branch) effective January 1, 2025. For CY 2026, we proposed to assign CPT code 0913T to APC 5192 (Level 2 Endovascular Procedures) based on the crosswalk code CPT 92920 (Percutaneous transluminal coronary angioplasty; single major coronary artery or branch) which is assigned to APC 5192 (Level 2 Endovascular Procedures) and a status indicator of ``J1'' (Hospital Part B Services Paid through a Comprehensive APC; Paid under OPPS). For the CY 2026 OPPS/ASC proposed rule, the OPPS payment rates were proposed based on available CY 2024 claims data. Because CPT code 0913T became effective January 1, 2025, we have no claims for ratesetting. We also note that the device associated with this procedure (AGENTTM Paclitaxel-Coated Balloon Catheter) received device pass-through status effective January 1, 2025 (89 FR 91434 through 91439). We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: Commenters requested that CMS reassign CPT code 0913T to APC 5193 (Level 3 Endovascular Procedures). Commenters stated that CPT code 0913T was more clinically coherent with procedures assigned to Level 3 Endovascular Procedures than Level 2 Endovascular Procedures. To support their requested APC changes, commenters suggested that CMS consider crosswalking CPT code 0913T to HCPCS C9600 (Percutaneous transcatheter placement of drug eluting intracoronary stent(s), with coronary angioplasty when performed; single major coronary artery or branch). Commenters stated that both services are performed in addition to angioplasty, suggesting that both drug-coated balloon and stent placement serve a separate and distinct purpose, as compared to coronary angioplasty alone. Commenters also provided an analysis of 294 single frequency claims and indicated that the geometric mean cost of those claims was $11,000. Moreover, commenters stated that assignment of CPT code 0913T to APC 5192 would pose a two times rule violation. In addition to the APC reassignment request, commenters also requested a complexity adjustment for CPT code 0913T and procedure code 93459. Response: We note that APC 5192 does not currently have a two times rule violation in the final rule data. In addition, CPT code 0913T does not meet the requirements for cost significance for 2 times rule violation purposes, under the requirements described in section III.B.2. of this final rule with comment period. After consideration of the public comments, additional review of the procedures, and input from our CMS Medical Officers, we believe that the resource costs of CPT code 0913T is more aligned with the procedures in APC 5193, which includes HCPCS code C9600 (Percutaneous transcatheter placement of drug eluting intracoronary stent(s), with coronary angioplasty when performed; single major coronary artery or branch). We remind hospitals that we review, on an annual basis, the APC assignments for all items and services paid under the OPPS and we will continue to monitor the claims data for APC 5193 as they become available. Additionally, we refer readers to XIII.C. of this final rule with comment period for a discussion of the complexity adjustment policies. In summary, after consideration of the public comments we received, we are finalizing our proposal with modification and reassigning CPT code 0913T to APC Level 5193. The final CY 2026 payment rates for these codes can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for the status indicator definitions for all codes reported under the OPPS. [[Page 53624]] Addenda B and D1 are available via the internet on the CMS website. Refer to Table 95 for code descriptors, APC assignments and status indicator assignments for CPT code 0913T. [GRAPHIC] [TIFF OMITTED] TR25NO25.123

68. APC Specific Comments That Support the Proposed APC Assignment

Each year, in accordance with section 1833(t)(9)(A) of the Act, we review and revise the services within each APC group and the APC assignments under the OPPS. As a result of our annual review of the services and the APC assignments, we may reassign some services to another APC or maintain the current APC assignment. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: Commenters supported the proposed CY 2026 assignments for various HCPCS and CPT codes and requested that CMS finalize the payment assignments for CY 2026 as proposed. Response: We thank the commenters for their input. Therefore, for CY 2026, we are finalizing without modification the APCs and status indicators for the CPT codes listed in Table 96. The final CY 2026 payment rates for the codes listed below can be found in Addendum B to this final rule with comment period. In addition, we refer readers to Addendum D1 to this final rule with comment period for all codes reported under the OPPS. Addenda B and D1 are available via the internet on the CMS website. BILLING CODE 4120-01-P [[Page 53625]] [GRAPHIC] [TIFF OMITTED] TR25NO25.124 [[Page 53626]] [GRAPHIC] [TIFF OMITTED] TR25NO25.125 BILLING CODE 4120-01-C

69. Dialysis Related Services and Technologies

a. Dialysis-Related Amyloidosis (DRA) Treatment With Lixelle[supreg] Apheresis Columns LIXELLE[supreg] [beta]2-microglobulin Apheresis Column is indicated for use in the treatment of dialysis-related amyloidosis (DRA), a disease that affects people with end-stage renal disease (ESRD). DRA is a metabolic disorder from the failure of the kidney to filter and remove [beta]2-microglobulin, typically from chronic hemodialysis (typically 5 years or longer). The LIXELLE[supreg] device is used in an apheresis procedure that selectively removes [beta]2-microglobulin from circulating blood and is used in accordance with a physician prescription in conjunction with hemodialysis. It is intended to be used at each hemodialysis session (that is, frequency of treatment is expected to be 3 times per week). In March 2015, FDA approved LIXELLE[supreg] as a Class III Humanitarian Use Device (HUD) with an approved Humanitarian Device Exemption (HDE). For CY 2026, there are currently no specific HCPCS or CPT codes that represent the LIXELLE[supreg] apheresis service. We received public comments on this topic. The following is a summary of the comments we received and our responses. Comment: Several interested parties commented requesting coverage for Lixelle[supreg] apheresis columns for treating dialysis-related amyloidosis (DRA). Commenters noted that Lixelle[supreg] has FDA Humanitarian Use Device approval and has been successfully utilized in Japan. Response: We recognize the clinical need for effective treatments for dialysis-related amyloidosis and appreciates the information provided regarding Lixelle[supreg] apheresis columns. We acknowledge that DRA represents a serious complication for long-term dialysis patients and that treatment options have been limited. We are actively reviewing coverage pathways for innovative treatments that address unmet medical needs in the ESRD population, including those with FDA Humanitarian Use Device designations. We note this complex, ongoing issue is still under consideration and continues to merit a thorough evaluation to ensure an appropriate Medicare benefit category and payment pathway for the service is determined. b. Dialysis Technologies We received public comments on this topic. The following is a summary of the comments we received and our responses. Comment: A commenter supported the payment of dialysis technologies not included in the End Stage Renal Disease (ESRD) bundle through the OPPS. The commenter noted that CMS continues to evaluate potential avenues of payment for treatments using medical devices administered during dialysis procedures that are not considered ``renal dialysis services'' under the Medicare statute and requested that CMS provides payment for such services through the OPPS. Response: We appreciate the input regarding coverage and payment for medical device technologies used in conjunction with dialysis services. We recognize the importance of ensuring appropriate payment pathways for innovative treatments that may be administered during dialysis but fall outside the definition of a renal dialysis service under Sec. [thinsp]413.171 and thus are not paid for under the ESRD PPS. We will continue to evaluate the appropriate payment mechanisms for such technologies for future rulemaking. [[Page 53627]] c. Open Surgical Fistula Creation CPT code 36821 (Arteriovenous anastomosis, open; direct, any site (e.g., Cimino type) (separate procedure) describes an open surgical fistula creation for hemodialysis procedures. CPT code 36821 is currently assigned to APC 5183 (Level 3 Vascular Procedures) with a proposed payment of around $3,254, and a status indicator of `J1' (Hospital Part B Services Paid Through a Comprehensive APC; Paid under OPPS). We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter expressed concern about payment disparities between traditional surgical arteriovenous fistula (AVF) creation and endovascular procedures. The commenter noted that ASC payment for endovascular creation can be substantially higher than traditional fistula creation, despite the benefits that surgical AVFs may offer to both patients and providers, particularly the greater versatility that surgical AVFs can offer in placement locations when compared to endovascular AVFs. The commenter expressed concern that low payment may cause skilled surgeons to preferentially choose better-paying procedures and potentially diminish the availability of AVF creation. Response: We acknowledge the concerns regarding payment disparities between surgical and endovascular fistula creation procedures. We recognize that both approaches serve important clinical roles in vascular access for dialysis patients. We will continue to evaluate payment rates for these procedures to ensure appropriate payment that reflects the clinical value and resource costs associated with each approach. d. Peritoneal Dialysis (PD) Catheter Placement There are a number of CPT codes that describe placing a catheter for peritoneal dialysis. These codes and their payment assignments include the following: 49324--Laparoscopy, surgical; with insertion of tunneled intraperitoneal catheter; assigned to APC 5361 (Level 1 Laparoscopy and Related Services) and status indicator `J1' (Hospital Part B Services Paid Through a Comprehensive APC; Paid under OPPS); 49418--Insertion of tunneled intraperitoneal catheter (e.g., dialysis, intraperitoneal chemotherapy instillation, management of ascites), complete procedure, including imaging guidance, catheter placement, contrast injection when performed, and radiological supervision and interpretation, percutaneous; assigned to APC 5341 (Level 1 Abdominal/Peritoneal/Biliary and Related Procedures) and status indicator `J1' (Hospital Part B Services Paid Through a Comprehensive APC; Paid under OPPS); and 49421--Insertion of tunneled intraperitoneal catheter for dialysis, open; assigned to APC 5341 (Level 1 Abdominal/Peritoneal/ Biliary and Related Procedures) and status indicator `J1' (Hospital Part B Services Paid Through a Comprehensive APC; Paid under OPPS). For CY 2026, we proposed to continue to assign these codes to their current payment assignments. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter expressed concern that current CMS payment for peritoneal dialysis (PD) catheter placement may have created a disincentive for performing the procedure. The commenter specifically noted that low payment for PD catheter placement relative to vascular access procedures may create barriers to patients receiving more convenient home-based treatment. The commenter requested that CMS equalize payment between PD catheter procedures and vascular access procedures to avoid possible disincentives to home treatment and provide patients with additional quality care options. Response: We support policies that facilitate appropriate home- based dialysis care when clinically appropriate. We recognize the importance of ensuring that payment policies do not inadvertently create barriers to home dialysis modalities, including peritoneal dialysis. We will review the current payment rates for PD catheter placement procedures and consider any adjustments that better align with the clinical value and resource requirements of these services for future notice-and-comment rulemaking.

70. Mobile Stroke Units

Mobile stroke units (MSU) are specialized ambulances equipped with various skilled healthcare personnel, specialized equipment, including imaging capability to diagnose and treat acute stroke in the prehospital setting.\27\ --------------------------------------------------------------------------- \27\ See https://www.ahajournals.org/doi/10.1161/STROKEAHA.121.037376. --------------------------------------------------------------------------- We received public comments on this topic. The following is a summary of the comments we received and our responses. Comment: A commenter requested that MSU services be reimbursed as hospital outpatient services rather than ambulance transport services. The commenter noted that the current Ambulance Fee Schedule (AFS) payment does not cover the cost of CT scans and other essential components of an MSU, leading to financial challenges for MSU operators. The commenter cited clinical evidence pointing to improved outcomes associated with the use of MSUs. Response: We appreciate the detailed comment regarding MSU payment challenges. We appreciate the thoughtful recommendations and will consider them for future rulemaking. We note that MSUs are currently paid under the AFS.

F. Comment Solicitation on Payment Policy for Software as a Service

(SaaS) In recent years, there have been rapid developments in the use of software-based technologies with new functionalities, including artificial intelligence, to support clinical decision-making in the outpatient and physician office settings. Medicare refers to these software-based technologies as software as a service (SaaS). Prior to CY 2018, SaaS procedures were considered supportive or ancillary services, and therefore, payment for the SaaS was packaged into the payment for the underlying clinical service. For example, payment for image processing software that visually enhances an image in an existing MRI, would be packaged into the payment for the MRI service. In recent years, CMS has paid separately for SaaS procedures under the OPPS through New Technology APCs, which are cost bands that allow us to provide appropriate and consistent payment for designated new procedures that are not yet reflected in our claims data, and various clinical APCs based on clinical and resource similarity to existing services, including Imaging APCs and Diagnostic Tests and Related Services APCs. We currently do not have a payment methodology specifically for SaaS, and as these technologies have continued to evolve and diversify, some interested parties have stated that the lack of a consistent payment policy for SaaS can be an impediment to patient access when these services are otherwise approved by the FDA. Interested parties have requested that CMS consider development of a payment policy for these services that is stable and [[Page 53628]] consistent across settings of care, payment systems, and types of SaaS. In the CY 2026 OPPS/ASC proposed rule, we welcomed public comment as we consider how to appropriately pay for these services, including any applicable lessons or best practices from risk-bearing payment arrangements, how we can determine that Medicare payments for SaaS truly reflect the value of the technologies to medical practice, and how to ensure that any payment policies on this topic demonstrate fiscal responsibility and good stewardship by promoting high-value, cost-effective care. For pricing new technologies where we do not have substantive supporting data, there are ambiguities regarding the service costs for purposes of setting a payment rate. For example, we have observed wide variations in the purported costs of clinically similar SaaS technologies. The various costs that manufacturers consider when pricing their technologies, including research and development as well as software maintenance, are often not publicly verifiable. It is also unclear to what extent Medicare should pay for the research and development costs of SaaS that could be frequently used by non-Medicare beneficiaries in hospital outpatient departments and ambulatory surgical center settings. Additionally, due to the novel and evolving nature of these technologies, there are rarely existing medical items or services that can be utilized for comparison purposes to determine clinical and resource similarity. Finally, while there has been a rapid increase in the development and coding of these services in recent years, there is a very limited amount of Medicare claims data for these services. Given these issues and our interest in developing payment policies that seek to reflect the underlying value of a service or technology to the practice of medicine, we requested public comment on future SaaS payment ideas, including: What factors could Medicare consider when setting payment rates for SaaS? What APCs, existing or new, should we use to pay for SaaS? How should we assess the costs of SaaS, and how can we account for hospital acquisition costs? What cost or claims data should be used to establish the payment rates for the services? Why are the geometric mean costs, as provided in our claims data, for SaaS currently assigned to APCs (both clinical and New Technology APCs) consistently lower than the manufacturers' purported costs of the technologies? Is there an alternative data source outside of the limited Medicare claims data currently available and hospital invoices provided by manufacturers, which may not fully depict total hospital acquisition costs, that can accurately reflect the costs of the SaaS? What kinds of efficiencies, if any, would SaaS provide for services performed in hospital outpatient departments and ambulatory surgical centers? In the context of setting Medicare payment rates, how can CMS best reflect the quality and efficacy of SaaS technologies? We welcomed input from interested parties on these questions as well as any additional suggestions that would enhance our ability to provide accurate and consistent payment for SaaS procedures. Finally, we noted that there is a similar comment solicitation on a payment policy for SaaS under the Physician Fee Schedule, and directed readers to the CY 2026 PFS proposed rule to provide comments. We received public comments on this topic. The following is a summary of the comments we received and our responses. Comment: Several commenters requested that CMS more explicitly define the technologies we would consider to be SaaS. Some commenters suggested that CMS use an alternative term to refer to these technologies, such as ``Software as a Medical Device'' in conformance with FDA definitions, or ``clinical decision support tools.'' Some commenters provided suggestions on how CMS should categorize these types of services in terms of payment. Suggestions included classifying the technologies by the type of solution they provide, such as diagnostic, therapeutic, augmentative, patient-facing, operational. Commenters encouraged CMS to work with interested parties to establish definitions to help clarify which technologies are payable, while maintaining flexibility to adopt definitions as technologies evolve. Generally, commenters supported a dedicated payment policy for innovative technologies. Commenters requested that CMS create an evidence-based, flexible framework that encourages the use and innovation of SaaS while maintaining fair and adequate payment for the services in which they are incorporated. Commenters offered ideas for potential payment policies. For example, most commenters recommended that CMS assign all SaaS to New Technology APCs for a certain amount of time, usually between 3 to 5 years, to allow for CMS to gather sufficient claims data upon which to make an appropriate clinical APC assignment. Some commenters supported and referenced the payment pathway outlined in The Health Tech Investment Act (S. 1399). Another suggestion was for CMS to treat SaaS technologies as ancillary items and package payment with the related primary services as long as patient access was not adversely affected. In general, commenters encouraged CMS to adopt a payment approach that balances innovation, patient access, and value to the Medicare program. Many commenters urged CMS to exercise caution and consider several factors in creating a payment methodology specifically for SaaS. Several commenters explained that costs for these technologies are difficult to determine. For example, some commenters explained the different variations in pricing models for SaaS, noting that some services are invoiced as a subscription or per-click fee as opposed to a one-time purchase of software or equipment. Commenters also stated that appropriately accounting for research and development costs in Medicare payments would be challenging. Many commenters addressed why they believe even current Medicare claims data may be unreliable for setting payment rates for SaaS, including that hospitals may be reporting various revenue center codes with different cost-to-charge ratios. To address the lack of price transparency across vendors and practice types, and to collect real-world cost data, a commenter encouraged CMS to work with the Congress to establish authority to incentivize standardized vendor disclosures, stratified by practice or facility size, setting, and geography. Other commenters suggested that CMS consider creating new revenue codes to facilitate more accurate hospital cost reporting for AI-based services. Others requested that CMS establish a unique cost center for AI-based diagnostic and decision-support services within the cost reporting structure to enable the collection of accurate, disaggregated cost and charge data specific to these technologies. Many commenters requested detailed guidance regarding charging and cost reporting practices for these services given the various pricing models available. Some commenters were concerned about the potential for costs to increase if CMS were to finalize a new payment policy specific to SaaS. A commenter explained that providing separate payment for SaaS items under the OPPS, rather than packaging payment for SaaS with the related primary service for which it is used, would not [[Page 53629]] provide any downward pricing pressures on SaaS developers to provide value to the Medicare program. Commenters urged that, if not carefully designed, such a policy for SaaS could create significant financial risk, administrative burden, and access issues, without delivering clear clinical value. To that end, some commenters suggested CMS package payment when tools are integral to a service or pursue value- based payment models and risk-based contracts that reward outcomes and efficient care delivery. Regarding coding, some commenters believe CMS should develop broad HCPCS codes to describe multiple SaaS technologies. Commenters also encouraged CMS to pursue future code development for SaaS and valuation through the American Medical Association CPT/RUC process, which allows for transparency and dialogue with involved interested parties. Commenters also requested new codes for certain SaaS technologies. Finally, many commenters recommended that CMS adopt a site-neutral payment policy for SaaS across the facility and non-facility settings. Response: The comments received illustrate the complexity intrinsic to paying for SaaS, and we will proceed with awareness of these challenges. We continue to recognize the need for a payment policy that accounts for the unique and heterogenous characteristics of SaaS, and we remain interested in ensuring that any such payment policy reflects the value provided to Medicare providers and beneficiaries. We intend to take the comments submitted into consideration as we develop our proposals for future rulemaking.

G. Continuation of Payment Policy for Radiation Therapy Services

Furnished at Nonexcepted Off-Campus Provider Based Departments (PBDs)

1. Background on Section 603 of the Bipartisan Budget Act of 2015 and

the PFS Relativity Adjuster Section 603 of the Bipartisan Budget Act of 2015 (Pub. L. 114-74) (BBA, 2015) (hereinafter referred to as ``section 603'') amended section 1833(t) of the Act by adding a new clause (v) to paragraph (1)(B) and adding a new paragraph (21). As a general matter, under sections 1833(t)(1)(B)(v) and (t)(21) of the Act, applicable items and services furnished by certain off-campus outpatient departments of a provider on or after January 1, 2017, are not considered covered OPD services as defined under section 1833(t)(1)(B) of the Act for purposes of payment under the OPPS. Instead such items are paid ``under the applicable payment system'' under Medicare Part B if the requirements for such payment are otherwise met. Section 603 amended section 1833(t)(1)(B) of the Act by adding a new clause (v), which excludes from the definition of ``covered OPD services'' applicable items and services (defined in paragraph (21)(A) of the section) that are furnished on or after January 1, 2017, by an off-campus PBD, as defined in paragraph (21)(B) of the section. In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79699 through 79719), we adopted a number of policies to implement section 603. Broadly, we: (1) defined applicable items and services in accordance with section 1833(t)(21)(A) of the Act for purposes of determining whether such items and services are covered OPD services under section 1833(t)(1)(B)(v) of the Act or whether payment for such items and services will instead be made under the applicable payment system designated under section 1833(t)(21)(C) of the Act; (2) defined off-campus PBD for purposes of sections 1833(t)(1)(B)(v) and (t)(21) of the Act; and (3) established policies for payment for applicable items and services furnished by an off-campus PBD (nonexcepted items and services) under section 1833(t)(21)(C) of the Act. To do so, we finalized policies that define whether certain items and services furnished by a given off-campus PBD may be considered excepted and, thus, continue to be paid under the OPPS; established the requirements for the off-campus PBDs to maintain excepted status (both for the excepted off-campus PBDs and for the items and services furnished by such excepted off-campus PBDs); and described the applicable payment system for nonexcepted items and services (generally, the PFS). To effectuate payment for nonexcepted items and services, in the CY 2017 interim final rule with comment period (81 FR 79720 through 79729), we established a new set of payment rates under the PFS that reflected the relative resource costs of furnishing the technical component of a broad range of services to be paid under the PFS specific to the nonexcepted off-campus PBDs of a hospital. Specifically, we established a PFS Relativity Adjuster that is applied to the OPPS rate for the billed nonexcepted items and services furnished in a nonexcepted off-campus PBD in order to calculate payment rates under the PFS. The PFS Relativity Adjuster reflects the estimated overall difference between the payment that would otherwise be made to a hospital under the OPPS for the nonexcepted items and services furnished in nonexcepted off-campus PBDs and the resource-based payment under the PFS for the technical aspect of those services with reference to the difference between the facility and nonfacility (office) rates and policies under the PFS. Nonexcepted items and services furnished by nonexcepted off-campus PBDs are generally paid under the PFS at the applicable OPPS payment rate adjusted by the PFS Relativity Adjuster of 40 percent (that is, 60 percent less than the OPPS rate) (82 FR 53030). In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79719 and 79725), we created modifier ``PN'' to collect data for purposes of implementing section 603 but also to trigger payment under the newly adopted PFS-equivalent rates for nonexcepted items and services. Nonexcepted off-campus PBDs bill for nonexcepted items and services on the institutional claim utilizing modifier ``PN'' to indicate that an item or service is a nonexcepted item or service. For a full discussion of our initial implementation of section 603, we refer readers to the CY 2017 OPPS/ASC final rule with comment period (81 FR 79699 through 79719) and the interim final rule with comment period (79720 through 79729). For a detailed discussion of the current PFS Relativity Adjuster related to payments under section 603, we refer readers to the CY 2018 OPPS/ASC final rule with comment period (82 FR 52356 through 52637) and the CY 2019 PFS final rule with comment period (82 FR 59505 through 59513).

2. Payment for Radiation Therapy Services Furnished at Nonexcepted Off-

Campus PBDs The PFS Relativity Adjuster is not applied to radiation therapy services (radiation treatment delivery and related imaging guidance services) furnished by nonexcepted off-campus PBDs. Due to section 1848(c)(2)(K) of the Act, which required maintenance of the CY 2016 coding and payment inputs for these services for CY 2017 and CY 2018 under the PFS, when the section 603 requirements were implemented in the CY 2017 final OPPS rule, we instructed nonexcepted off-campus PBDs to bill the PFS G-codes for these services. As we explained in that rule: ``. . . [S]everal radiation treatment delivery and imaging guidance services also are reported using different codes under the MPFS and the OPPS. CMS established HCPCS Level II G-codes to describe radiation treatment delivery services when furnished in the physician office setting (79 FR 67666 [[Page 53630]] through 67667). However, these HCPCS G-codes are not recognized under the OPPS; rather, CPT codes are used to describe these services when furnished in the HOPD. Both sets of codes were implemented for CY 2015 and were maintained for CY 2016. Under the MPFS, there is a particular statutory provision under section 1848(c)(2)(K) of the Act that requires maintenance of the CY 2016 coding and payment inputs for these services for CY 2017 and CY 2018. Accordingly, the finalized CY 2017 MPFS rates for these services were calculated based on the maintenance of the CY 2016 coding payment inputs. On that basis, we are establishing payment amounts for nonexcepted items and services consistent with the payments that would be made to other facilities under the MPFS. That is, an off-campus PBDs submitting claims for nonexcepted items and services will bill the HCPCS G-codes established under the MPFS to describe radiation treatment delivery procedures. However, the off-campus PBD must append modifier ``PN'' to each applicable claim line for nonexcepted items and services. The payment amount for these services will be set to reflect the technical component rate for the code under the MPFS.'' (81 FR 79726).'' As discussed in the CY 2026 Physician Fee Schedule (PFS) final rule, we are finalizing our proposal to delete radiation therapy G- codes (G6001 through G6017) that describe imaging guidance for radiation treatment (G6001, G6002, G6017) and radiation treatment delivery (G6003-G6015) because CPT codes 77402, 77407, and 77412 have been revised and may be used to report these services instead. See Table 97 for the long descriptors of the G codes that we are deleting effective January 1, 2026 and Table 98 for the current and revised long descriptors for CPT codes 77402, 77407, and 77412. The final CY 2026 payment rates for the radiation treatment delivery codes can be found in Addendum B to this final rule via the internet on the CMS website. As we noted in the CY 2026 OPPS/ASC proposed rule, nonexcepted off- campus PBDs currently use the above referenced G codes to report radiation therapy services and, were we to finalize our proposal to delete them, they would no longer be available after December 31, 2025. To continue paying the PFS-equivalent rate for these services to these departments, we proposed that, effective January 1, 2026, nonexcepted off-campus PBDs would use the revised CPT codes described in the CY 2026 PFS proposed rule. In other words, because the G codes are being eliminated, we proposed that the revised CPT codes be used to preserve the existing policy of paying nonexcepted off-campus PBDs a specific radiation treatment rate, which is the technical component for the code under the Medicare PFS (MPFS). Crosswalk information between the G codes and the revised CPT codes is available under the Downloads section \28\ of the CY 2026 PFS proposed rule, under ``CY 2025 Analytic Crosswalk to CY 2026.'' We additionally proposed that nonexcepted off- campus PBDs would continue to append the ``PN'' modifier to each applicable claim line for these services. We emphasized in the CY 2026 OPPS/ASC proposed rule that this was not a new policy but rather a continuation of current policy adjusting for the newly revised CPT codes and the corresponding deletion of the G codes. --------------------------------------------------------------------------- \28\ https://www.cms.gov/medicare/payment/fee-schedules/physician/federal-regulation-notices. --------------------------------------------------------------------------- BILLING CODE 4120-01-P [[Page 53631]] [GRAPHIC] [TIFF OMITTED] TR25NO25.126 [[Page 53632]] [GRAPHIC] [TIFF OMITTED] TR25NO25.127 BILLING CODE 4120-01-C We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: A commenter opined that the continuation of the policy was essential to preserve access for patients with cancer who might otherwise face long travel burdens and encouraged CMS to monitor visit utilization rates after implementation to ensure that beneficiaries with multiple chronic conditions do not lose timely access to complex management in outpatient settings. Response: We thank the commenter for their support. Comment: A commenter supported the deletion of the G codes and the use of the revised CPT codes by all radiation treatment providers. However, the commenter requested that CMS not apply the PFS Relativity Adjustor to the revised codes when billed by nonexcepted off-campus provider-based departments. The commenter expressed concern that doing so would have an ``untenable impact on payment'' to these departments because, based on the proposed radiation treatment delivery APCs in CY 2026, the reimbursement for IMRT in these locations would fall to $110 per treatment which is well below cost. The commenter contended that it is not logical to use OPPS data to set PFS rates for offices and then reduce those rates by 60 percent. The commenter recommended that, since CMS plans to use OPPS data for developing MPFS Practice Expense Relative Value Units (PE RVUs), CMS should not apply the PFS adjustor to the new radiation treatment codes and simply pay the MPFS PE rates for these services when billed with modifier PN. Response: We appreciate the commenter's concerns for the application of the PFS Relativity Adjustor to the new radiation treatment codes when billed by nonexcepted off-campus PBDs. We note that, while the off-campus PBD must append modifier ``PN'' to each applicable claim line for the new radiation treatment codes, the payment amount for these services when billed with modifier ``PN'' will be set to reflect the technical component rate for the code under the MPFS. We do not intend for radiation therapy services furnished by nonexcepted off-campus PBDs to be paid any differently than they were paid previously when billed as G codes. We believe that the commenter's concerns for adequate payment to these departments for codes involving IMRT is further addressed by our final APC assignments for CPT codes 77407 and 77412 discussed in section III.E. of this final rule with comment period. After consideration of the public comments we received, we are finalizing, without modification, our proposal that, effective January 1, 2026, nonexcepted off-campus PBDs use the revised radiation treatment CPT codes described in the CY 2026 PFS proposed rule and append modifier ``PN'' to each applicable claim line for nonexcepted items and services. The payment amount for these services when billed with the ``PN'' modifier will be set to reflect the technical component rate for the code under the MPFS.

1. Beginning Eligibility Date for Device Pass-Through Status and

Quarterly Expiration of Device Pass-Through Payments a. Background The intent of transitional device pass-through payment, as implemented at 42 CFR 419.66, is to facilitate access for beneficiaries to the advantages of new and truly innovative devices by allowing for adequate payment for these new devices while the necessary cost data is collected to incorporate the costs for these devices into the procedure APC rate (66 FR 55861). Under section 1833(t)(6)(B)(iii) of the Act, the period for which a device category eligible for transitional pass- through payments under the OPPS can be in effect is at least 2 years but not more than 3 years. In the CY 2017 OPPS/ASC final rule with comment period, in accordance with section 1833(t)(6)(B)(iii)(II) of the Act, we amended Sec. 419.66(g) to provide that the pass-through eligibility period for a device category begins on the first date on which pass-through payment is made under the OPPS for any medical device described by such category (81 FR 79654). In addition, in the CY 2017 OPPS/ASC final rule with comment period, we finalized a policy to allow for quarterly expiration of pass-through payment status for devices to afford a pass- through payment period that is as close to a full 3 years as possible for all pass-through payment devices (81 FR 79655). We also established a policy to package the costs of the devices that are no longer eligible for pass-through [[Page 53633]] payments into the costs of the procedures with which the devices are reported in the claims data used to set the payment rates (67 FR 66763). We refer readers to the CY 2017 OPPS/ASC final rule with comment period (81 FR 79648 through 79661) for a full discussion of the current device pass-through payment policy.\29\ --------------------------------------------------------------------------- \29\ To apply for OPPS transitional device pass-through status, applicants complete an application that is subject to the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq.). This information collection (CMS-10052) is currently approved under OMB control number 0938-0857 and has an expiration date of November 30, 2025. The information collection is in the resubmission process. The 60-day FR notice published on August 21, 2025 (90 FR 40831). The 30- day notice will publish at a future date in the Federal Register before the information collection is formally submitted to OMB for reapproval. --------------------------------------------------------------------------- In the CY 2023 OPPS/ASC final rule with comment period, we finalized our policy to publicly post online OPPS device pass-through applications received on or after March 1, 2023, beginning with the issuance of the CY 2025 proposed rule and for each OPPS rulemaking thereafter. We refer readers to the CY 2023 OPPS/ASC final rule with comment period (87 FR 71934 through 71938) for a full discussion of the policy to publicly post OPPS device pass-through applications. b. Expiration of Transitional Pass-Through Payments for Certain Devices As stated earlier, section 1833(t)(6)(B)(iii) of the Act requires that, under the OPPS, a category of devices be eligible for transitional pass-through payments for at least 2 years, but not more than 3 years. Currently, there are 20 device categories eligible for pass-through payment. These devices are listed in Table 99, previously published as Table 46 of the CY 2026 OPPS/ASC proposed rule (90 FR 33570 and 33571), where we detail the expiration dates of pass-through payment status for each of the 20 devices currently receiving device pass-through payment. BILLING CODE 4120-01-P [[Page 53634]] [GRAPHIC] [TIFF OMITTED] TR25NO25.128 [[Page 53635]] [GRAPHIC] [TIFF OMITTED] TR25NO25.129 BILLING CODE 4120-01-C

2. New Device Pass-Through Applications for CY 2026

a. Background Section 1833(t)(6) of the Act provides for pass-through payments for devices, and section 1833(t)(6)(B) of the Act requires CMS to use categories in determining the eligibility of devices for pass-through payments. As part of implementing the statute through regulations, we continue to believe that it is important for hospitals to receive pass- through payments for devices that offer substantial clinical improvement in the treatment of Medicare beneficiaries to facilitate access by beneficiaries to the advantages of the new technology. Conversely, we have noted that the need for additional payments for devices that offer little or no clinical improvement over previously existing devices is less apparent. In such cases, these devices can still be used by hospitals, and hospitals will be paid for them through appropriate APC payment. Moreover, a goal is to target pass-through payments for those devices where cost considerations are most likely to interfere with patient access (66 FR 55852; 67 FR 66782; and 70 FR 68629). As specified in regulations at Sec. 419.66(b)(1) through (3), to be eligible for transitional pass-through payment under the OPPS, a device must meet the following criteria: If required by FDA, the device must have received FDA approval or clearance and FDA marketing authorization (except for a device that has received an FDA investigational device exemption (IDE) and has been classified as a Category B device by FDA), or meet another appropriate FDA exemption; and the pass-through payment application must be submitted within 3 years from the date of the initial FDA marketing authorization, if required, 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; The device is determined to be reasonable and necessary for the diagnosis or treatment of an illness or injury or to improve the functioning of a malformed body part, as required by section 1862(a)(1)(A) of the Act; and The device is an integral part of the service furnished, is used for one patient only, comes in contact with human tissue, and is surgically implanted or inserted (either permanently or temporarily), or applied in or on a wound or other skin lesion. In addition, according to Sec. 419.66(b)(4), a device is not eligible to be considered for device pass-through payment if it is any of the following: (1) equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets as defined in Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a material or supply furnished incident to a service (for example, a suture, customized surgical kit, or clip, other than a radiological site marker). Separately, we use the following criteria, as set forth under Sec. 419.66(c), to determine whether a new category of pass-through payment devices should be established. The device to be included in the new category must-- Not be appropriately described by an existing category or by any category previously in effect established for transitional pass- through payments, and was not being paid for as an outpatient service as of December 31, 1996; [[Page 53636]] Have an average cost that is not ``insignificant'' relative to the payment amount for the procedure or service with which the device is associated as determined under Sec. 419.66(d) by demonstrating: (1) the estimated average reasonable cost of devices in the category exceeds 25 percent of the applicable APC payment amount for the service related to the category of devices; (2) the estimated average reasonable cost of the devices in the category exceeds the cost of the device-related portion of the APC payment amount for the related service by at least 25 percent; and (3) the difference between the estimated average reasonable cost of the devices in the category and the portion of the APC payment amount for the device exceeds 10 percent of the APC payment amount for the related service (with the exception of brachytherapy and temperature-monitored cryoablation, which are exempt from the cost requirements as specified at Sec. 419.66(c)(3) and (e)); and Demonstrate a substantial clinical improvement, that is, substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment, or, for devices for which pass- through payment status will begin on or after January 1, 2020, as an alternative pathway to demonstrating substantial clinical improvement, a device is part of the FDA's Breakthrough Devices Program and has received marketing authorization for the indication covered by the Breakthrough Device designation. In the CY 2016 OPPS/ASC final rule with comment period, we changed our device pass-through evaluation and determination process. Device pass-through applications are still submitted to CMS through the quarterly process, but the applications are subject to notice and comment rulemaking in the next applicable OPPS annual rulemaking cycle. Under this process, all applications that are preliminarily approved upon quarterly review will automatically be included in the next applicable OPPS annual rulemaking cycle, while submitters of applications that are not approved upon quarterly review will have the option of being included in the next applicable OPPS annual rulemaking cycle or withdrawing their application from consideration. Under this notice-and-comment process, applicants may submit new evidence, such as clinical trial results published in a peer-reviewed journal or other materials, for consideration during the public comment process for the proposed rule. This process allows those applications that we are able to determine meet all of the criteria for device pass-through payment under the quarterly review process to receive timely pass-through payment status, while still allowing for a transparent, public review process for all applications (80 FR 70417 through 70418). In the CY 2020 OPPS/ASC final rule with comment period, we finalized an alternative pathway for devices that are granted a Breakthrough Device designation (84 FR 61295) and receive FDA marketing authorization for the indication covered by the Breakthrough Device designation. Under this alternative pathway, devices that are granted an FDA Breakthrough Device designation are not evaluated in terms of the current substantial clinical improvement criterion at Sec. 419.66(c)(2) for the purposes of determining device pass-through payment status, but do need to meet the other requirements for pass- through payment status in our regulation at Sec. 419.66. Devices that are part of the Breakthrough Devices Program, have received FDA marketing authorization for the indication covered by the Breakthrough Devices designation, and meet the other criteria in the regulation can be approved through the quarterly process and announced through that process (81 FR 79655). Proposals regarding these devices and whether pass-through payment status should continue to apply are included in the next applicable OPPS rulemaking cycle. This process promotes timely pass-through payment status for innovative devices, while also recognizing that such devices may not have a sufficient evidence base to demonstrate substantial clinical improvement at the time of FDA marketing authorization. More details on the requirements for device pass-through payment applications are included on the CMS website in the application form itself at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html, in the ``Downloads'' section. In addition, CMS is amenable to meeting with applicants or potential applicants to facilitate information sharing to support the evaluation of an OPPS device pass-through payment application or discuss general application criteria, including the substantial clinical improvement criterion. In accordance with section V.B.9. of this final rule with comment period, skin substitutes with an approved Biologics License Application (BLA) will be considered under transitional drug pass-through payment status and skin substitutes with FDA Premarket approval (PMA) or FDA 510(k) clearance will continue to be evaluated under transitional device pass-through payment status. b. Applications Received for Device Pass-Through Status for CY 2026 We received eight complete applications by the March 3, 2025, quarterly deadline, which was the last quarterly deadline for applications to be received in time to be included in the CY 2026 OPPS/ ASC proposed rule. Of the complete applications, we received one application in the second quarter of 2024, three applications in the third quarter of 2024, one application in the fourth quarter of 2024, and three applications in the first quarter of 2025. One application was withdrawn. Two of the applications were approved for device pass- through payment during the quarterly review process: VasQ, which was preliminarily approved upon quarterly review under the alternative pathway effective October 1, 2024, and the SCOUT MDTM Surgical Guidance System which was preliminarily approved upon quarterly review under the alternative pathway effective January 1, 2025. As previously stated, all applications that are preliminarily approved upon quarterly review will automatically be included in the next applicable OPPS annual rulemaking cycle. Therefore, VasQ and the SCOUT MDTM Surgical Guidance System were discussed in section IV.2.b.1. of the CY 2026 OPPS/ASC proposed rule and within this section. Applications received for the later deadlines for the remaining 2025 quarters (the quarters beginning June 1, September 1, and December 1 of 2025), if any, will be discussed in the CY 2027 OPPS/ASC proposed rule. We note that the quarterly application process and requirements have not changed because of the addition of rulemaking review. Detailed instructions on submission of a quarterly device pass-through payment application are included on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/catapp.pdf. Discussions of the applications we received by the March 3, 2025, deadline are included in section IV.2.b.1. of the CY 2026 OPPS/ASC proposed rule and in this section. We do not include in this final rule with comment period the description and discussion of new device category for transitional pass-through payment status applications [[Page 53637]] which were included in the CY 2026 OPPS/ASC proposed rule that were withdrawn for consideration for the upcoming calendar year. We also do not summarize or respond to public comments received regarding these withdrawn or ineligible applications. Comment: One commenter opined that all of the nominated devices included in the CY2026 OPPS/ASC proposed rule meet the criteria for device pass-through. Another commenter encouraged CMS to approve or finalize all qualifying applications that meet the statutory criteria, especially those demonstrating clear clinical improvements. This commenter further noted that the substantial clinical improvement criterion should be applied rigorously and that innovations should earn supplemental payment only if they offer a real patient-care advantage, not merely convenience. This commenter commended CMS's careful scrutiny, particularly in regard to the single-use endoscope application, and urged CMS to continue evidence-based evaluations. Response: We appreciate the commenters' input. We have taken these comments into consideration in our final determination for pass-through status for the nominated devices included in the CY 2026 OPPS/ASC proposed rule. (1) Alternative Pathway Device Pass-Through Applications As discussed in the CY 2026 OPPS/ASC proposed rule, we received four device pass-through applications by the March 2025 quarterly application deadline for devices that have received Breakthrough Device designation from FDA and FDA marketing authorization for the indication for which they have a Breakthrough Device designation and, therefore were eligible to apply under the alternative pathway. (a) aprevo[supreg] Cervical ACDF System, aprevo[supreg] Cervical ACDF-X System, aprevo[supreg] Cervical ACDF-X NO CAM System Carlsmed, Inc. submitted an application for a new device category for transitional passthrough payment status for the -aprevo[supreg] Cervical ACDF system, aprevo[supreg] Cervical ACDF-X system, and aprevo[supreg] Cervical ACDF-X NO CAM system (herein after collectively referred to as the aprevo[supreg] Cervical ACDF System) for CY 2026. Per the applicant, the aprevo[supreg] Cervical ACDF System is designed to stabilize the cervical spinal column and facilitate fusion. The applicant further explained that the personalized aprevo[supreg] Cervical ACDF System devices incorporate patient-specific features to allow the clinician to tailor the deformity correction to the individual needs of the patient and include an aperture for the packing of bone graft. Per the applicant, the aprevo[supreg] Cervical ACDF System includes the following components: (1) aprevo[supreg] implant, which includes two implants with slightly different heights for each vertebral level, (2) aprevo[supreg] insertion instrument, and (3) for the aprevo[supreg] Cervical ACDF-X system only, integrated fixation screws. The applicant further stated that the aprevo[supreg] Cervical ACDF-X NO CAM system does not have a part that blocks screws from backing out. Please refer to the online application posting for the aprevo[supreg] Cervical ACDF System, available at https://mearis.cms.gov/public/publications/device-ptp/DEP250303GJ8LW. Comment: The applicant noted that, after FDA authorization, it changed the devices' names from aprevo[supreg] Cervical ACDF system and aprevo[supreg] Cervical ACDF-X system to aprevo[supreg] Cervical ACDF interbody and aprevo[supreg] Cervical ACDF-X interbody, respectively. Response: We appreciate the applicant's clarification. Based on the information available to us, we referred to the nominated technology as the aprevo[supreg] Cervical ACDF system, the aprevo[supreg] Cervical ACDF-X system, the aprevo[supreg] Cervical ACDF-X NO CAM system, and collectively as the aprevo[supreg] Cervical ACDF System in the CY 2026 OPPS/ASC proposed rule and will continue to refer to the technology as the aprevo[supreg] Cervical ACDF System in this final rule with comment period for clarity and consistency. Comment: The applicant and a commenter expressed their support for approval of transitional pass-through payment for the aprevo[supreg] Cervical ACDF System, stating that they believe the device meets all the transitional pass-through payment criteria. The applicant also asserted that beneficiary access is at risk if CMS payment policies do not reflect the actual cost of providing custom-made, anatomically- designed interbody fusion device technology, like the aprevo[supreg] Cervical ACDF System, to more Medicare beneficiaries. Response: We appreciate the commenters' input and support for the aprevo[supreg] Cervical ACDF System application for transitional pass- through payment. We have taken these comments into consideration in our final determination for pass-through status for the aprevo[supreg] Cervical ACDF System. As stated previously, to be eligible for transitional pass-through payment under the OPPS, a device must meet the criteria at Sec. 419.66(b)(1) through (4). With respect to the newness criterion at Sec. 419.66(b)(1), the aprevo[supreg] Cervical ACDF System received FDA Breakthrough Device designation effective September 15, 2023, under the name aprevo[supreg]-C cervical interbody fusion device. The approved FDA indication for the aprevo[supreg] Cervical ACDF System is: For use in skeletally mature patients with degenerative cervical conditions including cervical disc degeneration, stenosis, deformity, and/or instability of the cervical spine (C2-T1) at one or more levels. DDD \30\ is defined as discogenic pain with degeneration of the disc confirmed by history and radiographic studies. These patients should have had at least six (6) weeks of non-operative treatment. These devices are to be filled with autograft bone and/or allogenic bone graft composed of cancellous, cortical, and/or cortico- cancellous bone. The aprevo[supreg]-C cervical interbody fusion devices can be used with supplemental fixation, such as an anterior plate, or as a standalone construct to be used [with the] integrated bone screw fixation. --------------------------------------------------------------------------- \30\ The Medicare Coverage Database defines DDD as degenerative disc disease. In addition, we believe that DDD is commonly referred to as degenerative disk disease in the healthcare industry. --------------------------------------------------------------------------- FDA granted the applicant 510(k) clearance for the aprevo[supreg] Cervical ACDF System on November 15, 2024, with separate indications for the aprevo[supreg] Cervical ACDF system and the aprevo[supreg] Cervical ACDF-X system (with and without CAM).\31\ We note that while the indication for the FDA Breakthrough Device designation and the indication for the FDA 510(k) clearance for the aprevo[supreg] Cervical ACDF System vary, per FDA, the FDA 510(k) clearance indication is covered by the Breakthrough Device designation. We received the application for a new device category for transitional pass-through payment status for the aprevo[supreg] Cervical ACDF System on March 3, 2025, which is within 3 years of the date of the initial FDA marketing authorization. --------------------------------------------------------------------------- \31\ For more information on the aprevo[supreg] Cervical ACDF System's indications, we refer readers to the November 15, 2024, FDA 510(k) clearance letter (K242260) https://www.accessdata.fda.gov/cdrh_docs/pdf24/K242260.pdf. --------------------------------------------------------------------------- We stated in the CY 2026 OPPS/ASC proposed rule that it was unclear to us whether the aprevo[supreg] Cervical ACDF system and the aprevo[supreg] Cervical ACDF-X system (with and without CAM) are different devices such that they should be evaluated separately for OPPS pass-through payment status. We noted that the aprevo[supreg] Cervical ACDF-X system [[Page 53638]] (with and without CAM) includes additional components, such as the integrated fixation screws, and has a different indicated use as stated in the November 15, 2024, FDA 510(k) clearance letter (K242260). Specifically, based on the FDA 510(k) clearance indication, we noted that a key difference of the aprevo[supreg] Cervical ACDF-X system (with and without CAM)'s interbody implant is that it incorporates integrated screw fixation and may be used as a standalone system for certain indications. We also noted that, for deformity procedures to correct coronal angulation or any use of hyperlordotic correction (>=20[deg]), the aprevo[supreg] Cervical ACDF-X system (with and without CAM) must include supplemental fixation such as posterior cervical screw fixation or anterior plating. We invited public comments on whether the aprevo[supreg] Cervical ACDF system and aprevo[supreg] Cervical ACDF-X system should be evaluated separately for OPPS pass-through payment status. Separately, we invited public comments on whether the aprevo[supreg] Cervical ACDF System meets the newness criterion at Sec. 419.66(b)(1). Comment: The applicant and a commenter expressed support for evaluating the aprevo[supreg] Cervical ACDF system and the aprevo[supreg] Cervical ACDF-X system together for pass-through payment status, stating that two configurations are part of the same system and noting that the difference between these two configurations is limited to supplemental fixation requirements. Specifically, the applicant stated that the aprevo[supreg] Cervical ACDF system requires supplemental fixation that is not provided in the kit, whereas the aprevo[supreg] Cervical ACDF-X system's kit includes interfixation screws. In addition, the applicant noted that the incremental cost of each screw is an additional 1.3 percent of the price of the single- level aprevo[supreg] Cervical ACDF system. The applicant claimed that this difference does not justify a separate pass-through category code. Response: We appreciate the applicant's and commenter's clarification. We agree with the applicant that the aprevo[supreg] Cervical ACDF system and the aprevo[supreg] Cervical ACDF-X system should not be evaluated separately for transitional pass-through payment status. Therefore, we will review the aprevo[supreg] Cervical ACDF system and the aprevo[supreg] Cervical ACDF-X system together as the aprevo[supreg] Cervical ACDF System. Comment: The applicant stated it agreed with CMS that the aprevo[supreg] Cervical ACDF systems are FDA Breakthrough-designated devices that meet the newness criterion. Further, the applicant stated that it submitted its transitional pass-through payment application for aprevo[supreg] Cervical ACDF System on March 3, 2025, which is within 3 years of the FDA marketing authorization date of November 15, 2024. Response: We appreciate the applicant's input. We received the application for a new device category for transitional pass-through payment status for the aprevo[supreg] Cervical ACDF System within 3 years of the date of FDA 510(k) clearance. After consideration of the public comments we received and our review of the application, we have determined that the aprevo[supreg] Cervical ACDF System meets the newness criterion at Sec. 419.66(b)(1). With respect to the eligibility criteria at Sec. 419.66(b)(3), the device must be an integral part of the service furnished, be used for one patient only, come in contact with human tissue, and be surgically inserted or implanted, or applied in or on a wound or other skin lesion. Per the applicant, the aprevo[supreg] Cervical ACDF System meets the requirements at Sec. 419.66(b)(3). With respect to the aprevo[supreg] Cervical ACDF System, in the CY 2026 OPPS/ASC proposed rule, we questioned whether the aprevo[supreg] insertion instrument, the integrated fixation screws, and/or the CAM components or parts are integral to the service furnished. We noted that, in the CY 2014 OPPS/ASC final rule with comment period (78 FR 75005), we stated that we have interpreted the term ``integral'' to mean that the device is necessary to furnish or deliver the primary procedure with which it is used. For example, a pacemaker is integral to the procedure of implantation of a pacemaker. Given our interpretation of integral, we questioned whether these components and parts of the aprevo[supreg] Cervical ACDF System are integral to the service furnished as it remains unclear which of these components and parts are utilized during the primary procedure and we questioned whether some of these components or parts may be purely additive in nature and not necessary to furnish the service. Specifically, we noted that it is unclear whether other available insertion instruments may be used to implant the aprevo[supreg] implant, and, for the aprevo[supreg] Cervical ACDF-X system, whether any or all of the integrated fixation screws may be replaced with other commercially available screws. In addition, we stated it was unclear whether the CAM is part of the aprevo[supreg] implant, part of the integrated fixation screws, or is a separate part altogether. We stated it was also unclear whether the CAM can be removed and replaced by other products, and whether there are any requirements for its utilization. We stated that we were interested in additional information about these components and parts of the aprevo[supreg] Cervical ACDF System, including how and when they are used, and whether they can be substituted with other products. We invited public comments on whether the aprevo[supreg] Cervical ACDF System meets the eligibility criterion at Sec. 419.66(b)(3). Comment: In response to our concerns that all components or parts of the aprevo[supreg] Cervical ACDF System may not be integral parts of the service furnished because it is unclear how and when these components or parts are used and whether they can be substituted with other products, the applicant commented that the aprevo[supreg] insertion instrument, integrated fixation screws, and the CAM components are all part of the 510(k) cleared aprevo[supreg] Cervical ACDF System's kit, are integral to the implant and arthrodesis services furnished, and are not supplies that are incident to the procedure. The applicant stated that the aprevo[supreg] insertion instrument is an FDA class II instrument integral to the device systems and that other commercially available inserters are not FDA-authorized for use with or compatible with the aprevo[supreg] Cervical ACDF System. The applicant also noted that only the aprevo[supreg] insertion instrumentation, cleared by FDA, is authorized to implant the aprevo[supreg] Cervical interbody device, and these instruments are not available to be purchased separately for use with other devices. Further, the applicant stated that other commercially available screws are not authorized for use with or compatible with the aprevo[supreg] Cervical ACDF System; only the FDA-cleared aprevo[supreg] screws are authorized for use with the aprevo[supreg] Cervical ACDF-X system, and therefore, the fixation screws are integral to the device systems. The applicant also noted that these screws may not be purchased separately for use with other devices. Additionally, the applicant stated that the CAM is a non- separable, integral component of the FDA-cleared aprevo[supreg] Cervical ACDF-X system, cannot be removed from the interbody device, cannot be replaced by other products, and is designed to prevent screw backout. The applicant added that, once the integrated fixation screws have been inserted through the interbody device [[Page 53639]] and properly placed into the vertebral body, the CAM lock is rotated to cover a portion of the fixation screw's head, which is designed to prevent the screw from backing out. The applicant stated that these items cannot be substituted with other items. Response: We appreciate the applicant's clarification. Based on the information provided in the comment, we agree with the applicant that all components of the aprevo[supreg] Cervical ACDF System, including the aprevo[supreg] insertion instrument, integrated fixation screws, and CAM, are integral parts of the service furnished. After consideration of the public comments we received and our review of the application, we have determined that the aprevo[supreg] Cervical ACDF System meets the eligibility criterion at Sec. 419.66(b)(3). With respect to the exclusion criteria at Sec. 419.66(b)(4), a device is not eligible to be considered for pass-through payment if it is any of the following: (1) equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets as defined in Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a material or supply furnished incident to a service (for example, a suture, customized surgical kit, or clip, other than a radiological site marker). Per the applicant, the aprevo[supreg] Cervical ACDF System is (1) not considered equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets, and is (2) not a material or supply furnished incident to a service, and, therefore, is eligible to be considered for pass-through payment. With respect to the aprevo[supreg] Cervical ACDF System, in the CY 2026 OPPS/ASC proposed rule, we questioned whether the aprevo[supreg] insertion instrument, the integrated fixation screws, and/or the CAM components or parts may be considered a material or supply furnished incident to the service. Specifically, as discussed previously with respect to criteria at Sec. 419.66(b)(3), we noted that it is unclear whether other available insertion instruments may be used to implant the aprevo[supreg] implant and, for the aprevo[supreg] Cervical ACDF-X system, whether any or all of the integrated fixation screws may be replaced with other commercially available screws. In addition, we stated that we are unclear about whether the CAM is part of the aprevo[supreg] implant, part of the integrated fixation screws, or is a separate part altogether, and whether the CAM can be removed and replaced by other products. We requested clarification about each of these components and parts, including how and when they are used and whether they can be substituted with other commercially available products. We questioned whether these components or parts of the aprevo[supreg] Cervical ACDF System may be considered a supply or material furnished incident to a service and excluded from device pass- through payment eligibility under Sec. 419.66(b)(4). We invited public comments on whether the aprevo[supreg] Cervical ACDF System meets the criterion at Sec. 419.66(b)(4). Comment: The applicant submitted a response to our concerns that some components or parts of the aprevo[supreg] Cervical ACDF System, specifically the aprevo[supreg] insertion instrument, the integrated fixation screws, and/or the CAM, may be considered a material or supply furnished incident to the service, because, as previously discussed with respect to criteria at Sec. 419.66(b)(3), it is unclear how and when these components or parts are used, and whether they can be substituted with other products. The applicant commented that the components of aprevo[supreg] Cervical ACDF System (insertion instrument, the integrated fixation screws, and the CAM) are part of the 510(k)-cleared aprevo[supreg] Cervical ACDF System and other commercially available insertion instruments and screws are not FDA authorized or compatible with the aprevo[supreg] Cervical ACDF System. In addition, the applicant commented that the CAM is a non-separable component of the aprevo[supreg] Cervical ACDF-X System and cannot be substituted with other items. Finally, the applicant noted that insertion instruments and screws are not available for purchase separately for use with other devices. Therefore, the applicant asserted that the components of aprevo[supreg] Cervical ACDF System are integral to the implant services furnished and are not supplies that are incident to the procedure. Response: We appreciate the applicant's clarification. Based on the information provided in the comment and our review of the application, we agree with the applicant that the aprevo[supreg] Cervical ACDF System meets the criterion because the referenced components are only intended to be used with the aprevo[supreg] Cervical ACDF System, commercially available insertion instruments or screws cannot be utilized with the device, and the use of these components is necessary and/or required to furnish or deliver the primary procedure(s) with which it is used, and are not supplies incident to the procedure. As such, we have determined that the aprevo[supreg] Cervical ACDF System meets the criterion at Sec. 419.66(b)(4). In addition to the criteria at Sec. 419.66(b)(1) through (4), the criteria for establishing new device categories are specified at Sec. 419.66(c). The first criterion, at Sec. 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996. Per the applicant, the existing pass-through code C1831 \32\ (Interbody cage, anterior, lateral or posterior, personalized (implantable)) does not appropriately describe the aprevo[supreg] Cervical ACDF System because C1831 was created for the original (lumbar-specific) aprevo[supreg] product. According to the applicant, the aprevo[supreg] Cervical ACDF System device is different from C1831 because (1) the original (lumbar- specific) aprevo[supreg] and the nominated aprevo[supreg] Cervical ACDF System are separate and distinct products that have no overlap in anatomical indications for use or patient population; (2) the original (lumbar-specific) aprevo[supreg] and the aprevo[supreg] Cervical ACDF System are billed with different primary procedure CPT codes, are indicated for a different set of surgical approaches, are typically assigned to different places of service, and are mapped to different payment classifications; and (3) CMS transmittals state that C1831 is limited to lumbar procedures. --------------------------------------------------------------------------- \32\ The aprevo[supreg] Intervertebral Fusion Device (IFD) received quarterly approval under the alternative pathway effective October 1, 2021, and final approval in the CY 2023 OPPS/ASC final rule (87 FR 71891 through 71895). CMS established device category code C1831 based on the approval of the aprevo[supreg] IFD. Device pass-through payment status eligibility for C1831 expired effective September 30, 2024. --------------------------------------------------------------------------- We noted, in the CY 2026 OPPS/ASC proposed rule, that based on the description provided by the applicant, that the aprevo[supreg] Cervical ACDF System is a personalized interbody cage that is implanted using an anterior surgical approach, and therefore, could be appropriately described by C1831. Specifically, we stated that C1831 may appropriately describe the aprevo[supreg] Cervical ACDF System because it describes any device that is a personalized interbody cage, designed for anterior, lateral, or posterior procedures. We noted that CMS does not establish pass-through device categories for the purposes of describing [[Page 53640]] specific devices, but rather, device categories which are intended to encompass all devices that can be appropriately described by a category. In this context, we stated that we believed that the aprevo[supreg] Cervical ACDF System may be similar to devices described by C1831 and therefore, the aprevo[supreg] Cervical ACDF System may be appropriately described by C1831. We invited public comment on whether the aprevo[supreg] Cervical ACDF System meets the device category criterion at Sec. 419.66(c)(1). Comment: In response to our concerns that the aprevo[supreg] Cervical ACDF System may be appropriately described by C1831, the applicant and a commenter stated that they believe the aprevo[supreg] Cervical ACDF System meets all the criteria for establishing a new device category and asserted that CMS has used C1831 to describe personalized lumbar interbody fusion devices and that C1831 should not be used to describe the personalized cervical interbody fusion device that is the subject of this transitional pass-through payment application. The applicant and commenter further contended that CMS guidance indicates that CMS intended for C1831 to be lumbar-specific. In addition, the applicant noted that there are differences in the FDA indications, applicable CPT codes, and APC assignments for the nominated device and the original (lumbar-specific) aprevo[supreg] device. A commenter stated that the device categories differ in applicable CPT codes, APCs and FDA indications. The applicant further summarized evidence included in its application to support its assertion that the aprevo[supreg] Cervical ACDF System is substantively distinct and significantly different from the expired device category C1831. The applicant reiterated that it believes that the original (lumbar-specific) aprevo[supreg] and the aprevo[supreg] Cervical ACDF System are separate and distinct products that have no overlap in FDA anatomical indications for use or patient population. The applicant stated that CMS has previously made similar distinctions between device categories with anatomical indications when it created device category codes C1748 (Endoscope, single-use (i.e., disposable), upper GI, imaging/illumination device (insertable)), effective July 1, 2020, and subsequently created both C1747 (Endoscope, single use (i.e., disposable), urinary tract, imaging/illumination device (insertable)), effective January 1, 2023, and C1601 (Endoscope, single-use (i.e., disposable), pulmonary, imaging/illumination device (insertable)), effective January 1, 2024. Additionally, the applicant asserted that CMS previously made distinct device categories for anatomical locations when it created device category codes C1888 (Catheter, ablation, non-cardiac, endovascular (implantable)), effective July 1, 2002, and C1886 (Catheter, extravascular tissue ablation, any modality (insertable)), effective January 1, 2012. The applicant and commenter also stated that the original (lumbar- specific) aprevo[supreg] and the aprevo[supreg] Cervical ACDF System are billed with different primary procedure CPT codes, are indicated for different surgical approaches, and are assigned to different APCs. Moreover, the applicant noted that anterior lumbar approaches are currently assigned to the Medicare Inpatient Only list and may not be performed in the outpatient setting. In addition, the applicant and commenter noted that several prior CMS transmittals (#R10997CP, #R11004CP, and #R11801CP) have stated that C1831 is to only be used in lumbar fusion procedures. The applicant and commenter stated that the criteria to apply an existing category to a new device, as stated in Sec. 419.66(f)(2), requires that the new device conforms to CMS guidance relating to the definition of terms and other information in conjunction with the category descriptors and codes. Furthermore, the applicant claimed that no CMS transmittals have stated that C1831 can be appropriately billed with cervical fusion CPT codes. The applicant and commenter asserted that the aprevo[supreg] Cervical ACDF System does not conform to CMS guidance related to the category codes, and therefore, they believe that C1831 is specific to the original (lumbar-specific) aprevo[supreg] and does not apply to the aprevo[supreg] Cervical ACDF System. Response: We appreciate the commenters' input. After consideration of the public comments we received and our review of the application, we continue to believe that C1831 appropriately describes the aprevo[supreg] Cervical ACDF System, because the aprevo[supreg] Cervical ACDF System is a personalized interbody cage that is implanted using an anterior surgical approach, and C1831 describes any device that is a personalized interbody cage, designed for anterior, lateral, or posterior procedures. We note that the applicant asserted that the aprevo[supreg] Intervertebral Fusion Device (IFD) (referred to as the original (lumbar-specific) aprevo[supreg] by the applicant) and the aprevo[supreg] Cervical ACDF System are separate and distinct products. We reiterate that CMS does not establish pass-through device categories for the purposes of describing specific devices. Rather, device categories are intended to encompass any device that can be appropriately described by the category, while ensuring that no medical device is described by more than one category in accordance with section 1833(t)(6)(B)(ii)(II) of the Act. When we evaluate a potential pass-through device to determine whether it meets the device category criterion at Sec. 419.66(c)(1), we compare the nominated device to the device category descriptor rather than to the specific device for which the device category was created. Section 419.66(f) states that a device is described by a category if, (1) it matches the long descriptor of the category code established by CMS, and (2) conforms to the guidance issued by CMS relating to the definition of terms and other information in conjunction with the category descriptors and codes. Per the applicant, the aprevo[supreg] Cervical ACDF System is a personalized interbody cage that is implanted using an anterior surgical approach, which matches the descriptor for C1831 (interbody cage, anterior, lateral or posterior, personalized (implantable)). We also believe that the aprevo[supreg] Cervical ACDF System conforms to the guidance issued on C1831 as discussed in the following paragraphs. We disagree with the applicant's assertion in its application and comment that C1831 is ``de facto lumbar-specific'' and that CMS intended to limit C1831 to lumbar procedures. We note that CMS establishes the reportable procedure codes for each device pass-through category based on the information available at the time in which the code is established and, unless specified in the descriptor, device category codes are not anatomically specific. CMS has included specific anatomic language in the descriptors of previous device category codes when such language was necessary based on the unique circumstances surrounding the establishment of a particular device category code, as acknowledged in the CY 2025 OPPS/ASC final rule with comment period (89 FR 94137). When CMS established C1831 as a new device category based on the approval of the aprevo[supreg] (IFD) application for transitional pass-through payment status, there were no circumstances which warranted the use of vertebrae-specific language in the long descriptor, as such, none was included (87 FR 71894 and 71895). The applicant acknowledged this in its device pass- [[Page 53641]] through payment application for the aprevo[supreg] Cervical ACDF System, stating that when CMS established C1831 there was no need to make anatomical distinctions as it was the first and only personalized interbody cage. We agree with the applicant that no vertebral distinctions were warranted because C1831 was established to describe any device that is a personalized interbody cage, designed for anterior, lateral, or posterior procedures. The aprevo[supreg] Cervical ACDF System is a device that is a personalized interbody cage, designed for anterior procedures, and as such we believe that the aprevo[supreg] Cervical ACDF System is described by C1831. As noted by the applicant and acknowledged, CMS has established anatomically specific device category codes in the past, specifically for endoscopes and some ablation catheters. However, the device category codes referenced by the applicant were intentionally defined with anatomically specific descriptors from their inception (e.g., C1748 (Endoscope, single-use (i.e., disposable), upper GI, imaging/ illumination device (insertable)) followed by C1747 (Endoscope, single use (i.e., disposable), urinary tract, imaging/illumination device (insertable)), and C1601 (Endoscope, single-use (i.e., disposable), pulmonary, imaging/illumination device (insertable)), as well as C1888 (Catheter, ablation, non-cardiac, endovascular (implantable)) followed by C1886 (Catheter, extravascular tissue ablation, any modality (insertable))). The anatomical specificity included in these device descriptors demonstrated our intention that these device category codes be anatomically specific. We further note that the descriptor for C1831 contains no such anatomical distinction within the spinal column, which demonstrates that CMS did not intend C1831 to be anatomically specific within the spinal column as the applicant and commenter believe. We also disagree with the applicant and commenter's assertion that C1831 does not describe the aprevo[supreg] Cervical ACDF System because the aprevo[supreg] (IFD) and the aprevo[supreg] Cervical ACDF System are billed with different primary CPT procedure codes and assigned to different APCs. First, as previously stated, the procedure codes with which a device category code may be reported are approved when the device category code is established and are based on the current indication of the subject device and information available to us at the time. For the reasons discussed, the list of reportable procedure codes approved for a device category code is not intended to create a de facto determination regarding other devices or exclude devices that may also be appropriately described by the device category code descriptor. It is also not intended to change, restrict, or redefine the device category code in any manner that is inconsistent with the device category code descriptor. Second and relatedly, the list of procedure codes with which device category codes may be reported is not unalterable. The list of approved procedure codes with which the device category code may be reported can, and do, change as required throughout the device pass-through payment eligibility period. Reportable procedures are updated for many reasons, including FDA approval of a new indication for an existing device or of a new device with an indication that includes additional procedures that are reportable with an existing device category code, necessitating the inclusion of those additional procedure codes in the reportable procedures list. For example, when CMS established C2623 as a device category code effective April 1, 2015, the procedure codes with which C2623 could be reported (HCPCS codes 37224 and 37226) were limited to use in the femoral or popliteal arteries (89 FR 94136). However, based on FDA approval of a new indication for an existing device (a drug-coated balloon catheter for use with dialysis circuit procedures for the treatment of patients with dysfunctional arteriovenous fistulae), CMS added two procedure codes, HCPCS codes 36902 and 36903 (transluminal balloon angioplasty procedures in peripheral dialysis segments), with which C2623 could be reported effective August 25, 2017.\33\ As another example, after we established C1748 as a device category code effective July 1, 2020, we updated the list of procedure codes (HCPCS codes 43260 through 43265 and HCPCS codes 43274, 43276 through 43278) associated with HCPCS code C1748 in 2022 to include transnasal services (HCPCS codes 0652T, 0653T, 0654T, 43197, and 43198).\34\ In line with these examples, had other devices that were appropriately described by C1831 received marketing authorization during the time C1831 was eligible for device pass- through payments, CMS likely would have added the appropriate additional procedure codes with which C1831 could be reported. In this instance, we believe HCPCS codes 22551 and 22554 (the HCPCS codes with which the aprevo[supreg] Cervical ACDF System is reported) could have been included in the list of reportable procedure codes for C1831 either when the device category code was first established or during the device category code status eligibility period, if the nominated device had received FDA marketing authorization. Third, beginning October 1, 2024, upon the expiration of device pass-through payment status for C1831, CMS packaged the payment for the costs of each of the devices described by C1831 into the payment for the costs related to the procedure with which each device is reported in the hospital claims data.35 36 We note that upon becoming packaged for payment, C1831 effectively became reportable with other musculoskeletal procedure codes, including procedure codes for cervical-specific procedures. Additionally, we note that since payment has been packaged for C1831, cervical procedure codes, including HCPCS code 22551 (Arthrodesis, anterior interbody, including disc space preparation, discectomy, osteophytectomy and decompression of spinal cord and/or nerve roots; cervical below C2), one of the two procedure codes with which the aprevo[supreg] Cervical ACDF System may be billed, have been performed and billed with C1831. As such, we believe that the aprevo[supreg] Cervical ACDF System is appropriately described by C1831 and that CMS is already collecting cost data for the nominated device in the appropriate APC. Regarding the APC assignment, while we acknowledge that the aprevo[supreg] Cervical ACDF System and the aprevo[supreg] (IFD) are currently assigned to different APCs, we note that many device category codes are reportable with multiple APCs and HCPCS (procedure) codes, and therefore, we do not agree with the applicant or the commenter that this warrants the establishment of a new device category code. We do not believe, in this case, that the procedure codes and APC [[Page 53642]] assignments distinguish the aprevo[supreg] Cervical ACDF System from the aprevo[supreg] (IFD) device for purposes of the device category code determination. --------------------------------------------------------------------------- \33\ Centers for Medicare & Medicaid Services (2017). Pub 100-04 Medicare Claims Processing, Transmittal 3941, Change Request 10417, dated December 22, 2017. Accessed at https://www.cms.gov/regulations-and-guidance/guidance/transmittals/2017downloads/r3941cp.pdf. \34\ Centers for Medicare & Medicaid Services (2022). Pub 100-04 Medicare Claims Processing, Transmittal 11305, Change Request 12666, dated March 24, 2022. Accessed at https://www.cms.gov/files/document/r11305cp.pdf. \35\ Centers for Medicare & Medicaid Services (2024). Pub 100-04 Medicare Claims Processing, Transmittal 12816, Change Request 13784, dated August 29, 2024. Accessed at https://www.cms.gov/files/document/r12816cp.pdf. \36\ Centers for Medicare & Medicaid Services (2024). Hospital Outpatient Prospective System Quarterly Addenda Updates October 2024, Addendum B. Accessed at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/addendum-a-b-updates/october-2024-updated-10/02/2024-0. --------------------------------------------------------------------------- Similarly, we disagree with the applicant and commenters' assertion that the CMS transmittals limit C1831 to lumbar procedures. The purpose of CMS transmittals is to describe changes to, and billing instructions for, various payment policies implemented for a specified time period. The guidance for device pass-through category codes is based on the current applicable indications and is not intended to restrict or redefine a device category code descriptor. Since device pass-through payment status expired for C1831, CMS transmittals have appropriately described the changes to, and updated billing instructions for C1831, and explained that C1831 would remain an active code and its payment would be included in the primary service. We believe hospitals are very familiar with the approval and expiration of transitional pass-through status for device category codes and how to correctly report device costs under the OPPS. We also disagree with the applicant's assertion that the aprevo[supreg] (IFD) and the nominated aprevo[supreg] Cervical ACDF System are separate and distinct products that have no overlap in anatomical indications for use or patient population. We note that a commenter indicated that the device categories differ in FDA indications. While we are not clear to which other device categories the commenter is referring, we believe there is only one relevant device category code, C1831, we believe the FDA indications are similar and note that both aprevo[supreg] devices treat many of the same conditions, including degenerative disc disease, deformity (kyphosis or scoliosis), spinal stenosis, and failed previous fusion, at different levels of the spine.\37\ Moreover, the aprevo[supreg] Cervical ACDF System and the aprevo[supreg] (IFD) appear to be intended for use in the same, or very similar procedures, differentiated only by the section of the spinal column in which the procedure is performed. As such, we disagree with the applicant that the devices have no overlap in anatomical indication and that they treat a different patient population. --------------------------------------------------------------------------- \37\ As stated in the CY 2023 OPPS/ASC final rule with comment period (87 FR 71892), the aprevo[supreg] (IFD) is indicated for use as an adjunct to fusion at one or more levels of the lumbar spine in patients having an Oswestry Disability Index (ODI) >40 and diagnosed with severe symptomatic adult spinal deformity (ASD) conditions. These patients should have had 6 months of non-operative treatment. The devices are intended to be used with autologous and/or allogenic bone graft comprised of cancellous and/or cortico-cancellous bone graft. These implants may be implanted via a variety of open or minimally invasive approaches. These approaches may include anterior lumbar interbody fusion or lateral lumbar interbody fusion. --------------------------------------------------------------------------- We note that for the purposes of transitional pass-through payments, if we determine that a device is not appropriately described by any of the existing device categories or by any category previously in effect, then we issue a new category code.\38\ Unlike previously established device category codes where CMS has made an anatomical specification based on a clear anatomical distinction in the device indication, such as a ureter and the bronchi, a different indication such as drug-delivery rather than angioplasty, or different mechanisms of action like radiofrequency versus ultrasound, with regard to the nominated technology, we did not believe at the time the code was established, nor do we believe at this time, that such an anatomical distinction is necessary for C1831. As such, we do not believe that the anatomical indications for different regions of the spinal column sufficiently distinguish the aprevo[supreg] Cervical ACDF System from the aprevo[supreg] (IFD) for purposes of the device category code determination. --------------------------------------------------------------------------- \38\ For examples, please see our decisions regarding CavaClear Inferior Vena Cava Filter Removal Laser Sheath (88 FR 81718 through 81720), which differed from devices described in C2629 and C1773 by mechanism of action, clinical use, impacted anatomy, and FDA clearance pathway; CERAMENT[supreg] G (88 FR 81723 through 81725), which differed from the device described in C1734 by composition, mechanisms of action, indication for use, intended patient population, associated treatment cases and procedures, and FDA designation and classification; and AGENT\TM\ Paclitaxel-Coated Balloon Catheter (89 FR 94136 through 94137), which differed from devices described in C2623 by indication and type of procedure. --------------------------------------------------------------------------- Further, even though the aprevo[supreg] Cervical ACDF System is only placed through an anterior surgical approach and the aprevo[supreg] (IFD) may be placed through multiple surgical approaches, we note that per the device category code descriptor, C1831 is intended to cover all surgical approaches to the spine: anterior, lateral, or posterior. In the CY 2023 OPPS/ASC final rule with comment period (87 FR 71894 through 71895), we updated the device descriptor for C1831, effective January 1, 2023, to include the posterior/ transforaminal approach at the request of the applicant.\39\ Moreover, we declined the applicant's request to remove the anterior and lateral approaches from the descriptor and, instead, stated that the anterior and lateral approaches should remain in the descriptor and clarified our intent that the descriptor address all potential surgical approaches. We note, that while the C1831 descriptor was updated effective January 1, 2023, the anterior surgical approach--the surgical approach for which the aprevo[supreg] Cervical ACDF System is indicated--has been included in the category's descriptor since its establishment and, as previously noted, cervical-specific procedures using the anterior surgical approach have been reported with C1831 in the outpatient setting. HCPCS codes 22630 and 22633 (which can be reported with C1831) and HCPCS codes 22551 and 22554 (the aprevo[supreg] Cervical ACDF System procedure codes) are procedures that can be performed in the outpatient setting. --------------------------------------------------------------------------- \39\ Centers for Medicare & Medicaid Services (2023). Pub 100-04 Medicare Claims Processing,Transmittal 11801, Change Request 13031, dated January 20, 2023. Accessed at https://www.cms.gov/files/document/r11801cp.pdf. --------------------------------------------------------------------------- Finally, we disagree with the applicant's assertion that the healthcare setting in which procedures utilizing the aprevo[supreg] Cervical ACDF System device and the aprevo[supreg] (IFD)are typically performed has relevance to the device category discussion. We note that both devices may be used in the outpatient setting, as such, we do not believe that the surgical approach or healthcare setting distinguishes the aprevo[supreg] Cervical ACDF System from the aprevo[supreg] (IFD) for purposes of the device category code assignment. After consideration of the public comment we received and our review of the device pass-through application, we have determined that the aprevo[supreg] Cervical ACDF System does not meet the device category eligibility criterion at Sec. 419.66(c)(1) because it is appropriately described by an existing category or a category previously in effect. Therefore, in this final rule with comment period, we will not address whether the technology meets the other remaining criteria required for transitional pass-through payment for devices. We are not approving the aprevo[supreg] Cervical ACDF System for transitional pass-through payment status for CY 2026 because the technology does not meet the device category eligibility criterion at Sec. 419.66(c)(1). Comment: The applicant commented that CMS assigned a $0.00 device offset amount associated with the device pass-through payment for the original (lumbar-specific) aprevo[supreg] and requested that CMS be consistent with this policy determination and assign a $0.00 to the aprevo[supreg] Cervical ACDF System device pass-through payment. Response: We appreciate the applicant's input regarding the device offset amount associated with the [[Page 53643]] aprevo[supreg] Cervical ACDF System; however, as the device pass- through application for the aprevo[supreg] Cervical ACDF System has not been approved in this final rule with comment period, we will not address the device offset assignment. Comment: The applicant expressed concern that the placement of the anterior and lateral procedures associated with the original (lumbar- specific) aprevo[supreg] on the IPO list effective January 1, 2022 following the approval of device pass-through payment status for C1831 effective October 1, 2021 prevented CMS from collecting sufficient and proper cost data to assign the procedures to an appropriate APC following the expiration of device pass-through payment status on September 30, 2024. The applicant commented that it was unable to market the original (lumbar-specific) aprevo[supreg] in the outpatient setting due to this change and that limited applicable use of the anterior and lateral surgical approaches and inconsistent coding guidance for the posterior surgical approach disincentivized adoption. As such, the applicant requested that CMS reinstate C1831 to ensure a full 3 years of device pass-through payment status and to capture the necessary cost data. Response: We thank the commenters for their input. We appreciate the applicant's concern with the timing of the placement of the anterior and lateral procedures on the IPO list, however, we cannot reinstate the pass-through payment status of HCPCS code C1831, neither do we agree we should. Consistent with section 1833(t)(6)(B)(iii) of the Act and Sec. 419.66(g), the period for which a device category for transitional pass-through payments under the OPPS can be in effect is at least 2 years, but not more than 3 years, beginning on the first date on which pass-through payment is made. Once 3 years has passed since a device category first received transitional pass-through payments, the device category is no longer eligible for pass-through payments and we utilize the established policy (first described in the CY 2003 OPPS/ASC final rule, 67 FR 66763) to package the costs of the devices that are no longer eligible for pass-through payments into the costs of the procedures with which the devices are reported in the claims data used to set the payment rates. We note that device pass- through payment status is intended to be temporary, and we consider the cost data to be included in the payment rates regardless of whether the technology's use in the Medicare population has been frequent or infrequent during the time period under which a device was receiving transitional pass-through payments. The C1831 device category was made effective in the OPPS on October 1, 2021, and expired on September 30, 2024, as such, we cannot reinstate the pass-through payment status of C1831 because reinstatement would make the pass-through payment status effective longer than the maximum 3-year period permitted under section 1833(t)(6)(B)(iii) of the Act and Sec. 419.66(g). (b) SCOUT MDTM Surgical Guidance System Merit Medical Systems submitted an application for a new device category for transitional pass-through payment status for the SCOUT MDTM Surgical Guidance System for CY 2026. According to the applicant, the SCOUT MDTM Surgical Guidance System communicates the location of tumor tissue during a tumor excision procedure. Per the applicant, the SCOUT MDTM Surgical Guidance System consists of the SCOUT MDTM Delivery System, SCOUT MDTM Guide, SCOUT MDTM Handpiece, and SCOUT MDTM Console. The applicant stated that it is only seeking a new device category for transitional pass-through payment status for the SCOUT MDTM Delivery System component of the SCOUT MDTM Surgical Guidance System. The SCOUT MDTM Delivery System consists of the SCOUT MDTM Reflectors and the SCOUT MDTM Delivery Device, a plastic, molded handle attached to a 16 GA introducer needle with a SCOUT MDTM Reflector preloaded inside. According to the applicant, the SCOUT MDTM Delivery System is used to implant each of the SCOUT MDTM Reflectors, which identify the location of the tumor tissue to be excised and/or the boundaries of the region of tissue to be excised during a separately scheduled procedure. The applicant further explained that there are four unique configurations of the SCOUT MDTM Reflectors, which return a detectable signal within surrounding tissue when illuminated by the micro-impulse radar signal from the SCOUT MDTM Guide and Handpiece used during the tumor excision procedure. Per the applicant, each single-use SCOUT MDTM Delivery System contains one SCOUT MDTM Delivery Device with one preloaded SCOUT MDTM Reflector. Please refer to the online application posting for the SCOUT MDTM Surgical Guidance System, available at https://mearis.cms.gov/public/publications/device-ptp/DEP240830W9M8U. As stated previously, to be eligible for transitional pass-through payment under the OPPS, a device must meet the criteria at Sec. 419.66(b)(1) through (4). With respect to the newness criterion at Sec. 419.66(b)(1), the SCOUT MDTM Surgical Guidance System received FDA Breakthrough Device designation effective February 1, 2023. The approved FDA indication for the SCOUT MDTM Surgical Guidance System is: The SCOUT MD Reflectors are intended to be placed percutaneously in soft tissue, (>30 days) \40\ to mark a biopsy site or a soft tissue site intended for surgical removal. Using imaging guidance (such as ultrasound, MRI, or radiography) or aided by non- imaging guidance (SCOUT MD System), the SCOUT MD Reflector is located and surgically removed with the target tissue. The SCOUT MDTM Delivery System is intended only for the non-imaging detection and localization of the SCOUT MD Reflector that has been implanted in a soft tissue biopsy site or a soft tissue site intended for surgical removal. --------------------------------------------------------------------------- \40\ The SCOUT MD Reflectors are implanted percutaneously in soft tissue and may remain in place for 30 days or longer. --------------------------------------------------------------------------- FDA granted 510(k) clearance for the SCOUT MDTM Surgical Guidance System on February 12, 2024, for the same indication as the one covered by the Breakthrough Device designation. We received the application for a new device category for transitional pass-through payment status for the SCOUT MDTM Surgical Guidance System on August 30, 2024, which is within 3 years of the date of the initial FDA marketing authorization. We invited public comments on whether the SCOUT MDTM Surgical Guidance System, inclusive of the SCOUT MDTM Delivery System meets the newness criterion at Sec. 419.66(b)(1). Comment: The applicant reiterated that the SCOUT MDTM Surgical Guidance System received FDA clearance on February 12, 2024, and the application for transitional pass-through payment status for the SCOUT MDTM Surgical Guidance System was submitted on August 30, 2024 which is within 3 years from the date of FDA clearance. Response: We appreciate the applicant's input. We agree that we received the application for a new device category for transitional pass-through payment status for the SCOUT MDTM Surgical Guidance System within 3 years of the date of FDA 510(k) clearance. After consideration of the public comment we received and our [[Page 53644]] review of the application, we have determined that the SCOUT MDTM Surgical Guidance System meets the newness criterion at Sec. 419.66(b)(1). As previously noted, the applicant is only seeking a new device category for transitional pass-through payment status for the SCOUT MDTM Delivery System component of the SCOUT MDTM Surgical Guidance System; as such, the eligibility and exclusion criteria will evaluate SCOUT MDTM Delivery System. With respect to the eligibility criteria at Sec. 419.66(b)(3), the device must be an integral part of the service furnished, be used for one patient only, come in contact with human tissue, and be surgically inserted or implanted, or applied in or on a wound or other skin lesion. Per the applicant, the SCOUT MDTM Delivery System meets the requirements at Sec. 419.66(b)(3). We invited public comments on whether the SCOUT MDTM Delivery System meets the eligibility criterion at Sec. 419.66(b)(3). Comment: The applicant reiterated that the SCOUT MDTM Delivery System meets all the eligibility criteria. Response: We appreciate the applicant's input. After consideration of the public comment we received and our review of the application, we agree with the applicant and have determined that the SCOUT MDTM Delivery System meets the eligibility criterion at Sec. 419.66(b)(3). With respect to the exclusion criteria at Sec. 419.66(b)(4), a device is not eligible to be considered for pass-through payment if it is any of the following: (1) equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets as defined in Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a material or supply furnished incident to a service (for example, a suture, customized surgical kit, or clip, other than a radiological site marker). Per the applicant, the SCOUT MDTM Delivery System is (1) not considered equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets, and is (2) not a material or supply furnished incident to a service, and, therefore, is eligible to be considered for pass-through payment. We invited public comments on whether the SCOUT MDTM Delivery System meets the exclusion criterion at Sec. 419.66(b)(4). Comment: The applicant reiterated that the SCOUT MDTM Delivery System is not a depreciating asset as defined in Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1) nor is it a material or supply furnished incident to a service. Response: We appreciate the applicant's input. After consideration of the public comment we received and our review of the application, we agree with the applicant and have determined that the SCOUT MDTM Delivery System meets the criterion at Sec. 419.66(b)(4). In addition to the criteria at Sec. 419.66(b)(1) through (4), the criteria for establishing new device categories are specified at Sec. 419.66(c). The first criterion, at Sec. 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996. Per the applicant, the existing pass-through codes C1879 \41\ (Tissue marker (implantable)) and C1819 (Tissue localization excision device) do not appropriately describe the SCOUT MDTM Delivery System because the SCOUT MDTM Delivery System is different than other wire-free localization/fiducial devices used for breast conserving surgery and is the only device that: (1) incorporates application-specific integrated circuit (ASIC) technology customized for use with the SCOUT MDTM Surgical Guidance System; (2) uses radar technology to detect, locate and identify the implanted reflector(s) within 1 millimeter (mm) of accuracy; (3) utilizes up to four uniquely shaped reflectors for a more clearly defined radiographic image of the area of interest to be excised; (4) incorporates differentiated radar signatures and detection cadences specific to each reflector; (5) can detect up to four unique reflectors simultaneously or individually to more precisely identify pre-defined surgical margins; and (6) has no significant MRI artifact. The applicant further explained that the SCOUT MDTM Delivery System includes four distinct implant (SCOUT MDTM Reflector) shapes, each with a unique radar signature that enables clear detection and identification of the multiple localization devices previously placed to mark the desired surgical margins during the excision procedure. Upon review, we stated in the CY 2026 OPPS/ASC proposed rule that we did not identify an existing pass-through payment category that describes the SCOUT MDTM Delivery System. --------------------------------------------------------------------------- \41\ Effective July 1, 2013, CMS deleted C1879 (Tissue marker, implantable) because it is described by A4648 (Tissue marker, implantable, any type). Centers for Medicare & Medicaid Services (2013). Pub 100-04 Medicare Claims Processing (Transmittal 2718) in CMS Manual System. Accessed at https://www.cms.gov/regulations-and-guidance/guidance/transmittals/2013-transmittals-items/r2718cp. --------------------------------------------------------------------------- We invited public comment on whether the SCOUT MDTM Delivery System meets the device category criterion at Sec. 419.66(c)(1). Comment: The applicant reiterated that the SCOUT MDTM Delivery System is not appropriately described by any of the existing categories or by any category previously in effect, and that it has not been paid for as an outpatient service as of December 31, 1996. Response: We appreciate the applicant's input. After consideration of the public comment we received and our review of the application, we continue to believe that there is no existing category or category previously in effect that appropriately describes the SCOUT MDTM Delivery System. Therefore, we have determined that the SCOUT MDTM Delivery System meets the device category eligibility criterion at Sec. 419.66(c)(1). The second criterion for establishing a device category, at Sec. 419.66(c)(2), provides that CMS determines either of the following: (1) that a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment; or (2) for devices for which pass-through status will begin on or after January 1, 2020, as an alternative to the substantial clinical improvement criterion, the device is part of the FDA's Breakthrough Devices Program and has received FDA marketing authorization for the indication covered by the Breakthrough Device designation. The SCOUT MDTM Surgical Guidance System has a Breakthrough Device designation and marketing authorization from FDA for the indication covered by the Breakthrough Device designation (as explained in more detail of the newness criterion) and therefore was not evaluated for substantial clinical improvement. We invited public comment on whether the SCOUT MDTM Delivery System meets the device category criterion at Sec. 419.66(c)(2). Comment: The applicant confirmed that the SCOUT MDTM Delivery System received a Breakthrough Device designation from FDA. The applicant also asserted that it believes that, even if the SCOUT MDTM Delivery System did not have Breakthrough Device designation, the device would still meet [[Page 53645]] the device category criterion at Sec. 419.66(c)(2). Response: We appreciate the applicant's input. The SCOUT MDTM Surgical Guidance System, inclusive of the SCOUT MDTM Delivery System, has a Breakthrough Device designation effective February 1, 2023, and marketing authorization from FDA effective February 12, 2024, for the indication covered by the Breakthrough Device designation. Therefore, the SCOUT MDTM Surgical Guidance System meets the criterion at 419.66(c)(2)(ii) and is not evaluated for substantial clinical improvement at Sec. 419.66(c)(2)(i). After consideration of the public comment we received and our review of the application, we have determined that the SCOUT MDTM Delivery System meets the device category criterion at Sec. 419.66(c)(2). The third criterion for establishing a device category, at Sec. 419.66(c)(3), requires CMS to determine that the cost of the device is not insignificant, as described in Sec. 419.66(d). Section 419.66(d) includes three cost significance criteria that must each be met. The applicant stated that the SCOUT MDTM Delivery System would be reported with HCPCS codes as shown in Table 100, previously published as Table 49 of the CY 2026 OPPS/ASC proposed rule (90 FR 33579). [GRAPHIC] [TIFF OMITTED] TR25NO25.130 To meet the cost criterion for device pass-through payment status, a device must pass all three tests of the cost criterion for at least one APC. As we explained in the CY 2005 OPPS final rule with comment period (69 FR 65775), we generally use the lowest APC payment rate applicable for use with the nominated device when we assess whether a device meets the cost significance criterion, thus increasing the probability the device will pass the cost significance test. Beginning in CY 2017, we calculate the device offset amount at the HCPCS/CPT code level instead of the APC level (81 FR 79657). We noted in the CY 2026 OPPS/ASC proposed rule that the applicant utilized the CY 2025 payment rates for the three tests of the cost criterion. For our calculations, we used APC 5071, which had a CY 2025 payment rate of $703.59 at the time the application was received. HCPCS code 19287 in APC 5071 had a device offset amount of $240.56 at the time the application was received.\42\ Per the applicant, an average of 1.95 SCOUT MDTM Reflectors are placed per procedure with a selling price of $550.00 for each single-use SCOUT MDTM Delivery System containing a SCOUT MDTM Delivery Device with one preloaded SCOUT MDTM Reflector. Therefore, according to the applicant, the average cost per procedure for the SCOUT MDTM Delivery System is $1,072.00. --------------------------------------------------------------------------- \42\ We noted the applicant selected APC 5072 and an APC payment rate of $1,620.24 for the three tests of the cost criteria. However, for our calculation, we selected APC 5071, which we believe had the lowest applicable APC payment rate of $703.59 found in the CY 2025 OPPS/ASC final rule with comment period, among the APCs related to the HCPCS/CPT codes provided by the applicant. We selected the HCPCS/CPT code level device offset amount of $240.56 related to HCPCS 19287 in APC 5071. We stated that, based on our initial assessment in the CY 2026 OPPS/ASC proposed rule, using the APC payment rate of $703.59 and the device offset amount of $240.56 would result in the SCOUT MDTM Delivery System meeting the cost significance requirement. --------------------------------------------------------------------------- Section 419.66(d)(1), the first cost significance requirement, provides that the estimated average reasonable cost of devices in the category must exceed 25 percent of the applicable APC payment amount for the service related to the category of devices. The average reasonable cost of $1,072.00 for the SCOUT MDTM Delivery System is 152.36 percent of the applicable APC payment amount for the service related to the category of devices, of $703.59 (($1,072.00/ $703.59 x 100 = 152.36 percent). Therefore, we stated in the CY 2026 OPPS/ASC proposed rule that we believe that the SCOUT MDTM Delivery System meets the first cost significance requirement. The second cost significance requirement, at Sec. 419.66(d)(2), provides that the estimated average reasonable cost of the devices in the category must exceed the cost of the device-related portion of the APC payment amount for the related service by at least 25 percent, which means that the device cost needs to be at least 125 percent of the offset amount (the device-related portion of the APC found on the offset list). The estimated average reasonable cost of $1,072.00 for the SCOUT MDTM Delivery System is 445.63 percent of the cost of the device-related portion of the APC payment amount for the related service, of $240.56 ($1,072.00/$240.56 x 100 = 445.63 percent). Therefore, we stated in the CY 2026 OPPS/ASC [[Page 53646]] proposed rule that we believe that the SCOUT MDTM Delivery System meets the second cost significance requirement. The third cost significance requirement, at Sec. 419.66(d)(3), provides that the difference between the estimated average reasonable cost of the devices in the category and the portion of the APC payment amount for the device must exceed 10 percent of the APC payment amount for the related service. The difference between the estimated average reasonable cost of $1,072.00 for the SCOUT MDTM Delivery System and the portion of the APC payment amount for the device of $240.56 is 118.17 percent of the APC payment amount for the related service, of $703.59 ((($1,072.00-$240.56)/$703.59) x 100 = 118.17 percent). Therefore, we stated in the CY 2026 OPPS/ASC proposed rule that we believe that the SCOUT MDTM Delivery System meets the third cost significance requirement. We invited public comment on whether the SCOUT MDTM Delivery System meets the cost criterion at Sec. 419.66(c)(3). Comment: The applicant reiterated that the SCOUT MDTM Delivery System meets all three of the cost significance criteria and confirmed that the cost analysis in the CY 2026 OPPS/ASC proposed rule is accurate. Response: We appreciate the applicant's input. We agree with the applicant and continue to believe that the SCOUT MDTM Delivery System meets the first, second, and third cost significance tests described at Sec. 419.66(d). As discussed previously in this section, we preliminarily approved the SCOUT MDTM Delivery System application for transitional pass-through payment under the alternative pathway effective January 1, 2025. After consideration of the public comment we received and our review of the device pass-through application, we have determined that the SCOUT MDTM Delivery System meets the requirements for device pass-through status described at Sec. 419.66. We are finalizing approval for device pass-through payment status for the SCOUT MDTM Delivery System under the alternative pathway for devices that have an FDA Breakthrough Device designation and have received FDA marketing authorization for the indication covered by the Breakthrough Device designation. Comment: The applicant requested that CMS withdraw C1739, the device category code established upon the preliminary approval of the SCOUT MDTM Delivery System application for device pass- through payment status and issue a new HCPCS code with descriptor language including, ``radar detectable implantable reflectors'', effective January 1, 2026, to ensure that the SCOUT MDTM Delivery System receives the full 3 years of pass-through status. The applicant asserted that the code descriptor for C1739, ``tissue marker, probe detectable any method (implantable), with delivery system,'' is overly broad, describes numerous legacy tissue marker systems that the applicant believes are not eligible for device pass-through, and does not appropriately differentiate the SCOUT MDTM Delivery System or other similar systems from the wide range of existing tissue markers currently on the market. The applicant stated it believes this change is necessary so that only those devices truly eligible for device pass-through status can use the HCPCS code and so that the claims data appropriately reflects accurate billing. The applicant further asserted that the code description for C1739 has allowed thousands of claims to be submitted by hospitals for devices not eligible for pass-through payment, resulting in millions of dollars of waste and abuse. Specifically, the applicant asserted that as of the end of June 2025, over 2,000 claims have been submitted using C1739 for tissue markers which were commercialized before the issuance of C1739. The applicant clarified that not one of those claims have been for the use of the SCOUT MDTM Delivery System, because the device is not yet commercially available. The applicant estimated that those 2,000 claims would have been paid under APC 5071, but for the creation of C1739, and resulted in $2,000,000 of waste. The applicant further projected that continued use of the current descriptor would result in $4,000,000-$5,000,000 of waste by the end of 2025 and could represent as much as $32,000,000 to $64,000,000 of waste over the next 2 years. Finally, the applicant stated that, under the regulation at Sec. 419.66(a), CMS makes a pass-through payment for a medical device that meets the requirements in paragraph (b) of that section and that is described by a category of devices established by CMS under the criteria in paragraph (c) of that section, and that, further, according to Sec. 419.66(g), the pass-through period begins on the first date on which pass-through payment is made. The applicant asserted that while CMS has been paying for devices submitted using C1739, none of those payments are pass-through payments because CMS has not paid for the SCOUT MDTM Delivery System or any other devices that would be described by a device pass-through category code with an appropriately specific descriptor. Because the device pass-through category code descriptor is overly broad, according to the applicant, the agency has been paying for devices that do not meet the eligibility requirements in paragraph (b) or the criteria for establishing device categories in paragraph (c) and thus, has not been making pass-through payments. As such, the applicant requested that CMS withdraw C1739 and issue a new device pass-through category code effective January 1, 2026 with a descriptor that describes only the SCOUT MDTM Delivery System and any devices legitimately eligible for pass-through status. Response: Although we acknowledge the applicant's concerns regarding the descriptor for C1739, we do not agree that the device category code should be withdrawn and replaced with a new code effective January 1, 2026, for the following reasons: First, per the applicant's request prior to CY 2026 rulemaking, CMS revised the descriptor for C1739 to read, effective October 1, 2025: Tissue marker, uniquely detectable and identifiable with probe/sensor, any method (implantable), with delivery system. The short descriptor was also revised to: Marker unique detect w/probe. These revisions were retroactive to January 1, 2025.\43\ We believe that the updated descriptor accurately reflects the devices intended to be described by C1739, inclusive of the SCOUT MDTM Delivery System, and addresses the applicant's concerns that the prior descriptor was overly broad. --------------------------------------------------------------------------- \43\ Center of Medicare & Medicaid Services (2025). Pub 100-04 Medicare Claims Processing, Transmittal 13425, Change Request 14223, dated September 22, 2025. Accessed at https://www.cms.gov/files/document/r13425cp.pdf. --------------------------------------------------------------------------- Second, we wish to reiterate that device category codes are not device specific; rather, CMS establishes device categories that are intended to encompass all devices that can be appropriately described by the category under Sec. 419.66. We disagree with the applicant's assertion that CMS has not made any pass-through payments for C1739. Any device described by the descriptor associated with a currently payable device pass-through category code qualifies for pass-through payment. The fact that no claims have purportedly been submitted for the SCOUT MDTM Delivery System does not mean that no appropriate pass-through payments have been made for C1739. As such, we believe that appropriate pass-through payments for C1739 have been made in accordance with Sec. 419.66(g). [[Page 53647]] We further note that, consistent with section 1833(t)(6)(B)(iii) of the Act and Sec. 419.66(g), the period for which a device category for transitional pass-through payments under the OPPS can be in effect is at least 2 years, but not more than 3 years, beginning on the first date on which pass-through payment is made. Once 3 years has passed since a device category first received transitional pass-through payments, the device category is no longer eligible for pass-through payments and we utilize the established policy (first described in the CY 2003 OPPS/ASC final rule, 67 FR 66763) to package the costs of the devices that are no longer eligible for pass-through payments into the costs of the procedures with which the devices are reported in the claims data used to set the payment rates. Moreover, device pass- through payment status is intended to be temporary, and we consider the cost data to be included in the payment rates regardless of whether the technology's use in the Medicare population has been frequent or infrequent during the time period under which a device was receiving transitional pass-through payments. Finally, we agree with the applicant that the pass-through period begins on the first date on which pass-through payment is made in accordance with Sec. 419.66(g), which we finalized in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79654 and 79655). Therefore, for the purposes of C1739, CMS considers the start of the device pass-through payment status eligibility period to be January 1, 2025, and, as such, CMS does not agree with the applicant that the device category code for C1739 should be withdrawn, and a new code issued effective January 1, 2026. We believe that the updated device category code descriptor for C1739 issued on October 1, 2025, addresses the applicants' concerns and that the necessary cost data will be collected to incorporate the costs for these devices into the procedure APC rate during the device pass-through payment status eligibility period. CMS will continue to monitor utilization and payment trends for C1739 to ensure accurate and appropriate payment. (c) VasQTM Laminate Medical submitted an application for a new device category for transitional pass-through payment status for VasQTM for CY 2026. Per the applicant, VasQTM is a nitinol implant which is surgically placed outside and/or around an artery and/or vein to provide external support to arteriovenous fistulas created for vascular access by means of vascular surgery. The applicant further explained that VasQTM reinforces the juxta-anastomotic region against increased wall tension in the newly arterialized vein, guides a more laminate hemodynamic profile of flow with its tapered configuration, and maintains the structural integrity of the anastomotic configuration. Please refer to the online application posting for VasQTM, available at https://mearis.cms.gov/public/publications/device-ptp/DEP2405312T1JR. As stated previously, to be eligible for transitional pass-through payment under the OPPS, a device must meet the criteria at Sec. 419.66(b)(1) through (4). With respect to the newness criterion at Sec. 419.66(b)(1), VasQTM received FDA Breakthrough Device designation effective June 5, 2020. The approved FDA indication for VasQTM is: For use as an external support for upper extremity arteriovenous fistulas created for vascular access by means of vascular surgery. FDA granted De Novo classification for VasQTM on September 26, 2023, for the same indication as the one covered by the Breakthrough Device designation. We received the application for a new device category for transitional pass-through payment status for VasQTM on May 31, 2024, which is within 3 years of the date of the initial FDA marketing authorization. We invited public comments on whether VasQTM meets the newness criterion at Sec. 419.66(b)(1). We did not receive public comments regarding whether VasQTM meets the newness criterion at Sec. 419.66(b)(1). We received the application for a new device category for transitional pass-through payment status for VasQTM within 3 years of the date of the FDA De Novo classification. Based on our review of the application, we have determined that VasQTM meets the newness criterion at Sec. 419.66(b)(1). With respect to the eligibility criteria at Sec. 419.66(b)(3), the device must be an integral part of the service furnished, be used for one patient only, come in contact with human tissue, and be surgically inserted or implanted, or applied in or on a wound or other skin lesion. Per the applicant, VasQTM meets the requirements at Sec. 419.66(b)(3). We invited public comments on whether VasQTM meets the eligibility criterion at Sec. 419.66(b)(3). We did not receive public comments regarding whether VasQTM meets the eligibility requirements of Sec. 419.66(b)(3). Based on our review of the application, we agree with the applicant, and have determined that VasQTM meets the eligibility criterion at Sec. 419.66(b)(3). With respect to the exclusion criteria at Sec. 419.66(b)(4), a device is not eligible to be considered for pass-through payment if it is any of the following: (1) equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets as defined in Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a material or supply furnished incident to a service (for example, a suture, customized surgical kit, or clip, other than a radiological site marker). Per the applicant, VasQTM is (1) not considered equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets, and is (2) not a material or supply furnished incident to a service, and, therefore, is eligible to be considered for pass-through payment. We invited public comments on whether VasQTM meets the exclusion criterion at Sec. 419.66(b)(4). We did not receive public comments regarding whether VasQTM meets the exclusion requirements of Sec. 419.66(b)(4). Based on our review of the application, we agree with the applicant and have determined that VasQTM meets the criterion at Sec. 419.66(b)(4). In addition to the criteria at Sec. 419.66(b)(1) through (4), the criteria for establishing new device categories are specified at Sec. 419.66(c). The first criterion, at Sec. 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996. Per the applicant, no existing (current or previous) device categories for pass-through payment appropriately describe VasQTM. According to the applicant, pass-through code: C1877 (Stent, non-coated/non-covered, without delivery system) does not appropriately describe VasQTM because VasQTM is not a stent and does not come in contact with blood. The applicant also stated that pass-through code C1768 (Graft, vascular) does not appropriately describe VasQTM because VasQTM is not a dialysis graft, is not permitted to be cannulated, and does not have direct contact with blood. The applicant asserted that pass-through code C1881 (Dialysis access system (implantable)) does not appropriately describe VasQTM because VasQTM is not a dialysis access system, is not [[Page 53648]] permitted to be cannulated, and does not have direct contact with blood. Upon review, we stated in the CY 2026 OPPS/ASC proposed rule that we did not identify an existing pass-through payment category that describes VasQTM. We invited public comment on whether VasQTM meets the device category criterion at Sec. 419.66(c)(1). We did not receive public comments regarding whether VasQTM meets the eligibility requirements at Sec. 419.66(c)(1). Based on our review of the application, we continue to believe there is no existing category or category previously in effect that appropriately describes VasQTM. Therefore, we have determined that VasQTM meets the device category eligibility criterion at Sec. 419.66(c)(1). The second criterion for establishing a device category, at Sec. 419.66(c)(2), provides that CMS determines either of the following: (1) that a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment; or (2) for devices for which pass-through status will begin on or after January 1, 2020, as an alternative to the substantial clinical improvement criterion, the device is part of the FDA's Breakthrough Devices Program and has received FDA marketing authorization for the indication covered by the Breakthrough Device designation. VasQTM has a Breakthrough Device designation and marketing authorization from FDA for the indication covered by the Breakthrough Device designation (as explained in more detail of the newness criterion) and therefore was not evaluated for substantial clinical improvement. We invited public comment on whether VasQTM meets the device category criterion at Sec. 419.66(c)(2). We did not receive public comments regarding whether VasQTM meets the eligibility requirements at Sec. 419.66(c)(2). VasQTM has a Breakthrough Device designation effective June 5, 2020, and De Novo classification from FDA effective September 26, 2023, for the indication covered by the Breakthrough Device designation. Therefore, VasQTM meets the criterion at 419.66(c)(2)(ii) and is not evaluated for substantial clinical improvement at Sec. 419.66(c)(2)(i). Based on our review of the application, we have determined that VasQTM meets the device category criterion at Sec. 419.66(c)(2). The third criterion for establishing a device category, at Sec. 419.66(c)(3), requires CMS to determine that the cost of the device is not insignificant, as described in Sec. 419.66(d). Section 419.66(d) includes three cost significance criteria that must each be met. The applicant stated that VasQTM would be reported with HCPCS codes as shown in Table 101, previously published as Table 50 of the CY 2026 OPPS/ASC proposed rule (90 FR 33581). [GRAPHIC] [TIFF OMITTED] TR25NO25.131 To meet the cost criterion for device pass-through payment status, a device must pass all three tests of the cost criterion for at least one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), we generally use the lowest APC payment rate applicable for use with the nominated device when we assess whether a device meets the cost significance criterion, thus increasing the probability the device will pass the cost significance test. Beginning in CY 2017, we calculate the device offset amount at the HCPCS/CPT code level instead of the APC level (81 FR 79657). We noted that the applicant used the CY 2024 payment rates for the three tests of the cost criterion. For our calculations in the CY 2026 OPPS/ASC proposed rule, we used APC 5183, which had a CY 2024 payment rate of $3,037.01 at the time the application was received. HCPCS code 36821 in APC 5183 had a device offset amount of $49.81 at the time the application was received. According to the applicant, the cost of VasQTM is $4,900.00. Section 419.66(d)(1), the first cost significance requirement, provides that the estimated average reasonable cost of devices in the category must exceed 25 percent of the applicable APC payment amount for the service related to the category of devices. The average reasonable cost of $4,900.00 for VasQTM is 161.34 percent of the applicable APC payment amount for the service related to the category of devices of $3,037.01 (($4,900.00/$3,037.01) x 100 = 161.34 percent). Therefore, we stated in the CY 2026 OPPS/ASC proposed rule that we believe that VasQTM meets the first cost significance requirement. The second cost significance requirement, at Sec. 419.66(d)(2), provides that the estimated average reasonable cost of the devices in the category must exceed the cost of the device-related portion of the APC payment amount for the related service by at least 25 percent, which means that the device cost needs to be at least 125 percent of the offset amount (the device-related portion of the APC found on the offset list). The estimated average reasonable cost of $4,900.00 for VasQTM is 9,837.38 percent of the cost of the device-related portion of the APC payment amount for the related service of $49.81 (($4,900.00/$49.81) x 100 = 9,837.38 percent). Therefore, we stated in the CY 2026 OPPS/ASC proposed rule that we [[Page 53649]] believe that VasQTM meets the second cost significance requirement. The third cost significance requirement, at Sec. 419.66(d)(3), provides that the difference between the estimated average reasonable cost of the devices in the category and the portion of the APC payment amount for the device must exceed 10 percent of the APC payment amount for the related service. The difference between the estimated average reasonable cost of $4,900.00 for VasQTM and the portion of the APC payment amount for the device of $49.81 is 159.70 percent of the APC payment amount for the related service of $3,037.01 ((($4,900.00-$49.81)/$3,037.01) x 100 = 159.70 percent). Therefore, we stated in the CY 2026 OPPS/ASC proposed rule that we believe that VasQTM meets the third cost significance requirement. We invited public comment on whether VasQTM meets the cost criterion at Sec. 419.66(c)(3). We did not receive any public comments regarding whether VasQTM meets the cost significance criteria as described at Sec. 419.66(d). Based on our findings from the first, second, and third cost significance tests, we continue to believe that VasQTM meets the cost significance criteria specified at Sec. 419.66(d). As discussed, the VasQTM pass-through application was preliminarily approved for transitional pass-through payment under the alternative pathway effective October 1, 2024. After our review of the device pass-through application, we have determined that VasQTM meets the requirements for device pass-through status described at Sec. 419.66. We are finalizing approval for device pass- through payment status for VasQTM under the alternative pathway for devices that have an FDA Breakthrough Device designation and FDA marketing authorization for the indication for which the device has Breakthrough Device designation. (2) Traditional Device Pass-Through Applications (a) Axoguard HA+ Nerve ProtectorTM Axogen Corporation submitted an application for a new device category for transitional pass-through payment status for the Axoguard HA+ Nerve ProtectorTM for CY 2026. Per the applicant, the Axoguard HA+ Nerve ProtectorTM is a porcine small intestinal submucosa (SIS) decellularized extracellular matrix (ECM), with a dry coating of sodium hyaluronate and sodium alginate applied to both sides of the device that forms a thin layer of lubricious hydrogel when hydrated. According to the applicant, the Axoguard HA+ Nerve ProtectorTM is designed to be a protective interface between the nerve and the surrounding tissue to minimize the potential for soft tissue attachments and tethering that restricts the nerve's ability to glide and move through the tissue structures during anatomic movement. Please refer to the online application posting for the Axoguard HA+ Nerve ProtectorTM, available at https://mearis.cms.gov/public/publications/device-ptp/DEP240830YUKGT. Comment: The applicant expressed its general support for approving transitional pass-through status for the Axoguard HA+ Nerve ProtectorTM. The applicant asserted its belief that the nominated device offers a meaningful advancement for patients with challenging peripheral nerve injuries and that it meets the regulatory criteria for a transitional pass-through payment under Sec. 419.66. Response: We appreciate the applicant's input. We have taken these comments into consideration in making our determination for pass- through status for the Axoguard HA+ Nerve ProtectorTM. As stated previously, to be eligible for transitional pass-through payment under the OPPS, a device must meet the criteria at Sec. 419.66(b)(1) through (4). With respect to the newness criterion at Sec. 419.66(b)(1), FDA granted the applicant 510(k) clearance for the Axoguard HA+ Nerve ProtectorTM on April 7, 2023, and then granted a second 510(k) clearance for an expanded indication on October 12, 2023. The approved FDA indications for the Axoguard HA+ Nerve ProtectorTM are: For the management of peripheral nerve injuries where there is no gap; For the management and protection of peripheral nerve injuries where there is no gap or following closure of the gap. We received the application for a new device category for transitional pass-through payment status for the Axoguard HA+ Nerve ProtectorTM on August 30, 2024, which is within 3 years of the date of the initial FDA marketing authorization. Per the applicant, the OPPS pass-through application for the Axoguard HA+ Nerve ProtectorTM is only for the protection of peripheral nerve injuries where there is no nerve gap, specifically for protecting a nerve following a revision (secondary) carpal tunnel (CT) or cubital tunnel (CuT) nerve decompression procedure. We invited public comments on whether the Axoguard HA+ Nerve ProtectorTM meets the newness criterion at Sec. 419.66(b)(1). We did not receive public comments regarding whether the Axoguard HA+ Nerve ProtectorTM meets the newness criterion at Sec. 419.66(b)(1). We received the application for a new device category for transitional pass-through payment status for the Axoguard HA+ Nerve ProtectorTM within 3 years of the date of the initial FDA 510(k) clearance. Based on our review of the application, we have determined that the Axoguard HA+ Nerve ProtectorTM meets the newness criterion at Sec. 419.66(b)(1). With respect to the eligibility criteria at Sec. 419.66(b)(3), the device must be an integral part of the service furnished, be used for one patient only, come in contact with human tissue, and be surgically inserted or implanted, or applied in or on a wound or other skin lesion. Per the applicant, the Axoguard HA+ Nerve ProtectorTM meets the requirements at Sec. 419.66(b)(3). We invited public comments on whether the Axoguard HA+ Nerve ProtectorTM meets the eligibility criterion at Sec. 419.66(b)(3). We did not receive public comments regarding whether the Axoguard HA+ Nerve ProtectorTM meets the eligibility requirements of Sec. 419.66(b)(3). Based on our review of the application, we agree with the applicant and have determined that the Axoguard HA+ Nerve ProtectorTM meets the eligibility criterion at Sec. 419.66(b)(3). With respect to the exclusion criteria at Sec. 419.66(b)(4), a device is not eligible to be considered for pass-through payment if it is any of the following: (1) equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets as defined in Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a material or supply furnished incident to a service (for example, a suture, customized surgical kit, or clip, other than a radiological site marker). Per the applicant, the Axoguard HA+ Nerve ProtectorTM is (1) not considered equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets and is (2) not a material or supply furnished incident to a service, and therefore, is eligible to be considered for pass-through payment. We invited public comments on whether the Axoguard HA+ Nerve ProtectorTM meets the exclusion criterion at Sec. 419.66(b)(4). We did not receive public comments regarding whether the Axoguard HA+ Nerve ProtectorTM meets the exclusion requirements of Sec. 419.66(b)(4). Based on [[Page 53650]] our review of the application, we agree with the applicant and have determined that the Axoguard HA+ Nerve ProtectorTM meets the criterion at Sec. 419.66(b)(4). In addition to the criteria at Sec. 419.66(b)(1) through (4), the criteria for establishing new device categories are specified at Sec. 419.66(c). The first criterion, at Sec. 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect and was not being paid for as an outpatient service as of December 31, 1996. According to the applicant, no existing device categories for pass-through payment appropriately describe the Axoguard HA+ Nerve ProtectorTM because the existing device categories C1763 (Connective tissue, non-human (includes synthetic)), C1765 (Adhesion barrier), and C1781 (Mesh (implantable)) describe similar, but distinct products. The applicant stated that the existing pass-through code C1763 does not appropriately describe the Axoguard HA+ Nerve ProtectorTM because the devices described by C1763 are used for treating urinary incontinence or for implantation to reinforce soft tissues where weakness exists in the urological or musculoskeletal anatomy, whereas the Axoguard HA+ Nerve ProtectorTM is indicated for the management of peripheral nerve injuries. In addition, the applicant asserted that the existing pass-through code C1765 does not appropriately describe the Axoguard HA+ Nerve ProtectorTM because the devices described by C1765 are bioresorable substances and principally used in spinal surgeries, while the Axoguard HA+ Nerve ProtectorTM is indicated for peripheral nerves. Moreover, the applicant stated that the existing pass-through code C1781 does not appropriately describe the Axoguard HA+ Nerve ProtectorTM because the nominated device is indicated specifically for management of peripheral nerve injuries, whereas devices described by C1781 are for use in hernia repair. The applicant further asserted that C1765 and C1781 do not describe the Axoguard HA+ Nerve ProtectorTM because the device's porcine SIS ECM is not simply resorbed but is remodeled into a meso/epineurium-like tissue, while its sodium hyaluronate and sodium alginate coating reduces friction and promotes nerve gliding. We noted in the CY 2026 OPPS/ASC proposed rule that based on the description the applicant provided, the Axoguard HA+ Nerve ProtectorTM is a porcine SIS ECM with hyaluronate-alginate coating used for the management and protection of peripheral nerve injuries where there is no gap or following closure of a gap, and thus, could be encompassed by the descriptors C1763 and C1765. Specifically, we stated that we believe that the description the applicant provided for the C1763 category definition is incomplete. The applicant stated that C1763 is indicated for treating urinary incontinence resulting from hypermobility or Intrinsic Sphincter Deficiency (ISD), pelvic floor repair, [or implantation] to reinforce soft tissues where weakness exists in the urological or musculoskeletal anatomy. However, we noted that, in reference to C1763, section 60.4.3, Chapter 4 of the Medicare Claims Processing Manual provides that these tissues include a natural, acellular collagen matrix typically obtained from porcine or bovine small intestinal submucosa, or pericardium. This bio-material is intended to repair or support damaged or inadequate soft tissue. They are used to treat urinary incontinence resulting from hypermobility or Intrinsic Sphincter Deficiency (ISD), pelvic floor repair, or for implantation to reinforce soft tissues where weakness exists in the urological or musculoskeletal anatomy. [This excludes those items that are used to replace skin.] Thus, because the Axoguard HA+ Nerve ProtectorTM is an ECM obtained from porcine SIS and intended to support a damaged or inadequate soft tissue (nerve), we stated that we believe that the pass-through payment category C1763 may appropriately describe the Axoguard HA+ Nerve ProtectorTM. Additionally, we stated in the CY 2026 OPPS/ASC proposed rule that we believe that the pass-through payment category C1765 may also appropriately describe the Axoguard HA+ Nerve ProtectorTM because the device, as described by the applicant, is designed to be placed on and around neural structures to be a protective interface between a nerve and the surrounding tissue, to minimize the potential for soft tissue attachments, and to ensure the nerve's ability to glide through tissue structures during anatomic movement, and therefore may be appropriately described as an adhesion barrier consistent with devices described by C1765. We further noted in the CY 2026 OPPS/ASC proposed rule that the two neuroplasty procedure codes that could be used with the Axoguard HA+ Nerve ProtectorTM (CPT[supreg] codes 64718 and 64721) have previously been used with both categories C1763 and C1765 and that FDA has previously approved devices described by C1763 and C1765 and billed using CPT[supreg] codes 64718 or 64721 for neuroplasty and/or transposition of the ulnar nerve at elbow or median nerve at carpal tunnel. We also noted that the inclusion of these neuroplasty devices in categories C1763 and C1765 appears contradictory to the applicant's assertion that the categories are inapplicable for devices indicated for peripheral nerves. In this context, we stated that we believe the Axoguard HA+ Nerve ProtectorTM may be similar to the devices described by C1763 and C1765, and therefore, the Axoguard HA+ Nerve ProtectorTM may be appropriately described by C1763 and C1765. We invited public comment on whether the Axoguard HA+ Nerve ProtectorTM meets the device category criterion at Sec. 419.66(c)(1). Comment: In response to our concern that the Axoguard HA+ Nerve ProtectorTM may be appropriately described by C1763 and C1765, the applicant commented that although the Axoguard HA+ Nerve ProtectorTM, on a superficial level, shares some attributes with products billed to those HCPCS codes, the existing codes were established for different materials and clinical uses, and thus, do not accurately describe the nominated device or its intended application. The applicant asserted that a new, distinct device category is warranted. The applicant acknowledged that C1763 (Connective tissue, non-human (includes synthetic)) generally covers acellular collagen matrices derived from animal sources, which sounds similar to Axoguard HA+ Nerve ProtectorTM's extracellular matrix component. The applicant noted, however, that the Medicare Claims Processing Manual's definition for C1763 clarifies that these matrices are ``intended to repair or support damaged or inadequate soft tissue'' and are typically used for ``urinary incontinence (e.g., pelvic floor repair) or to reinforce soft tissues where weakness exists in the urological or musculoskeletal anatomy,'' explicitly excluding products used as skin replacements. The applicant further asserted that CMS created C1763 to describe implants like surgical grafts or slings for pelvic floor and orthopedic reinforcement, not nerve protectors. The applicant stated that the Axoguard HA+ Nerve ProtectorTM is indicated for the management and protection of peripheral nerves, which is neither a urological nor a musculoskeletal application. In addition, the applicant asserted its belief that a peripheral nerve's needs (i.e., gliding in a tissue [[Page 53651]] bed and protection from adhesions) are very different from the structural support typically provided by C1763 devices used in incontinence or hernia repairs. The applicant stated that using C1763 for a nerve protector is a clinical stretch beyond the code's intended scope, even if the base material (porcine SIS) is similar. In response to our statement that some neuroplasty procedures (CPT 64718 and 64721) have previously been billed for devices in the C1763 category, the applicant opined that such practice reflects the absence of a nerve- specific device code rather than a proper fitting of nerve products into C1763. The applicant stated that a new code would eliminate ambiguity and ensure more precise coding for nerve repair technologies. In regard to the applicability of C1765 (Adhesion barrier), the applicant stated that, although one might consider Axoguard HA+ Nerve ProtectorTM an adhesion barrier since it aims to prevent scar adhesion around nerves, C1765 is defined as a bioresorbable substance placed on or around neural structures, which inhibits fibroblast migration and minimizes scar tissue formation, principally used in spine surgeries (laminectomies, discectomies). The applicant also stated that paradigmatic C1765 devices are spinal dura shields or gels that prevent epidural fibrosis after back surgery. The applicant asserted that the Axoguard HA+ Nerve ProtectorTM differs in both composition and clinical context, as it is a biological matrix implant (not just a synthetic or biochemical barrier), which is used in peripheral nerve surgeries of the limbs, not in the spine. The applicant further added that Axoguard HA+ Nerve ProtectorTM's ECM is intended to integrate into the nerve's outer tissue layer over time (providing long-term support), rather than resorb away like typical adhesion barriers. The applicant added that, as with C1763, any device assigned to C1765 currently receives no transitional pass-through payment, as C1765 was a pass-through category long ago and is now a packaged supply code, and continuing to use C1765 for a new nerve-specific technology would perpetuate the lack of appropriate payment, contrary to the purpose of establishing new device categories for innovations. The applicant also stated that C1781 (Mesh, implantable) is used for hernia repair, which is different from the Axoguard HA+ Nerve ProtectorTM's indication. The applicant asserted that the Axoguard HA+ Nerve ProtectorTM does not fit any existing mesh or patch category used for general surgical repair because it is a specialized nerve protector and stands apart from surgical meshes used in abdominal or orthopedic procedures. The applicant concluded that, given these distinctions, no existing HCPCS Level II code adequately describes Axoguard HA+ Nerve ProtectorTM's combination of material, function, and clinical indication. The applicant stated that assigning the nominated device to C1763, C1765, or C1781 would not only be inappropriate from a descriptive standpoint but would also fail to facilitate tracking of the device's utilization and outcomes since its use would be obscured under codes that include many other dissimilar products. The applicant asserted that, by creating a new device category and code, CMS will ensure that claims for the Axoguard HA+ Nerve ProtectorTM can be accurately identified, and thus, improve transparency and allow the collection of meaningful data regarding the device's cost and performance during the transitional pass-through period, as intended under Sec. 419.66. Finally, the applicant also stated that CMS regulations stipulate that a new device category may be established if the device is not appropriately described by any of the existing categories. For these reasons, the applicant believes that the Axoguard HA+ Nerve ProtectorTM meets the device category criterion. The applicant reiterated its belief that the Axoguard HA+ Nerve ProtectorTM satisfies the requirements described at Sec. 419.66(c)(1) regarding distinct category status. According to the applicant, the alternative to establishing a new category code--forcing the device into a category like C1763 or C1765--would continue the current disincentive for adoption, contradicting CMS's goal of enabling access to worthwhile new therapies, whereas creating a new category code would signal to hospitals that the Axoguard HA+ Nerve ProtectorTM is recognized as an innovation and encourage appropriate use in patients who need it. Finally, the applicant stated that finalizing the creation of a new code would accurately describe the device's unique characteristics and clinical use. Response: We appreciate the applicant's input. We agree with the applicant that C1781 does not appropriately describe the Axoguard HA+ Nerve ProtectorTM. However, based on the information available to us, we continue to believe that C1763 and C1765 may describe the Axoguard HA+ Nerve ProtectorTM. We have taken this into consideration in making our determination for device pass- through payment status for the Axoguard HA+ Nerve ProtectorTM. The second criterion for establishing a device category, at Sec. 419.66(c)(2), provides that CMS determines either of the following: (1) that a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment; or (2) for devices for which pass-through status will begin on or after January 1, 2020, as an alternative to the substantial clinical improvement criterion, the device is part of the FDA's Breakthrough Devices Program and has received FDA marketing authorization for the indication covered by the Breakthrough Device designation. The applicant asserted that the Axoguard HA+ Nerve ProtectorTM represents a substantial clinical improvement over existing technologies in the management of peripheral nerve injuries where there is no nerve gap, specifically in protecting a nerve following a revision (secondary) CT or CuT nerve decompression procedure. The applicant provided three redacted manufacturer internal reports to support these claims, as well as eight background articles/documents about the predicate device, the Axoguard Nerve ProtectorTM. We noted in the CY 2026 OPPS/ASC proposed rule that the predicate device differs from the Axoguard HA+ Nerve ProtectorTM in that the nominated device has a dry coating of sodium hyaluronate and sodium alginate applied to both sides that forms a thin layer of lubricious hydrogel when hydrated. We stated that the addition of the dry coating of sodium hyaluronate and sodium alginate to the Axoguard Nerve ProtectorTM appears to be the distinguishing feature of the device that is the subject of this application. In addition, the applicant submitted 32 supplemental background articles describing topics including general disease processes and disease prevalence. The applicant's assertions regarding the substantial clinical improvement criterion are shown in Table 102, previously published as Table 51 of the CY 2026 OPPS/ASC proposed rule (90 FR 33584 through 33588). Please see the online posting for the Axoguard HA+ Nerve ProtectorTM for the applicant's complete statements regarding the substantial clinical improvement [[Page 53652]] criterion and the supporting evidence provided. BILLING CODE 4120-01-P [GRAPHIC] [TIFF OMITTED] TR25NO25.132 [[Page 53653]] [GRAPHIC] [TIFF OMITTED] TR25NO25.133 [[Page 53654]] [GRAPHIC] [TIFF OMITTED] TR25NO25.134 [[Page 53655]] [GRAPHIC] [TIFF OMITTED] TR25NO25.135 [[Page 53656]] [GRAPHIC] [TIFF OMITTED] TR25NO25.136 BILLING CODE 4120-01-C After review of the information provided by the applicant, we noted in the CY 2026 OPPS/ASC proposed rule that we have the following concerns regarding whether the Axoguard HA+ Nerve ProtectorTM meets the substantial clinical improvement criterion. The applicant asserted that the Axoguard HA+ Nerve ProtectorTM demonstrates clinical improvement in: (1) nerve health in an injured tissue bed through less adhesion, extraneural scarring, and inflammatory markers, (2) nerve health in an injured tissue bed through decreased friction between the nerve and surrounding tissue to allow for gliding and to minimize potential for soft tissue attachment, (3) device performance due to its sodium hyaluronate and sodium alginate gel layer that allows for nerve gliding, and (4) sensory and motor symptoms. We noted that the applicant provided redacted internal studies of animal models (Axogen Corporation, 2024; Axogen Corporation, n.d.; Axogen Corporation, 2022) and an abstract (Alsmadi et al., 2025) on Axoguard HA+ Nerve ProtectorTM in rats. We noted that the applicant did not submit studies assessing the Axoguard HA+ Nerve ProtectorTM in humans. Therefore, we questioned whether data from animal studies is sufficient to extrapolate to human populations for the purposes of demonstrating substantial clinical improvement. For the other claims, the applicant provided only background evidence, specifically retrospective studies, which describe findings for a predicate device, the Axoguard Nerve Protector\TM\, which received FDA 510(k) clearance on January 10, 2014, not the nominated device, the Axoguard HA+ Nerve Protector\TM\. We noted that the applicant stated that the nominated Axoguard HA+ Nerve Protector\TM\ improved on the predicate device, but the applicant did not provide any additional information or evidence to support this claim. We also noted that the application did not include comparative outcome data between the Axoguard HA+ Nerve Protector\TM\ and its predicate device. We stated that we welcome additional information that compares outcome data from the Axoguard HA+ Nerve Protector\TM\ and the predicate device, the Axoguard Nerve Protector\TM\, to help inform our assessment of whether the Axoguard HA+ Nerve Protector\TM\ demonstrates a substantial clinical improvement. In addition, we stated in the CY 2026 OPPS/ASC proposed rule that we are concerned that the provided evidence did not directly support the applicant's 10 claims that the Axoguard HA+ Nerve Protector\TM\ demonstrates substantial clinical improvement over existing technologies. We noted that no evidence was provided comparing the Axoguard HA+ Nerve Protector\TM\ to other currently available treatments for the indicated condition including autologous flaps/fat pads and xenografts or off-the-shelf wraps that include materials sourced from human amniotic membrane, bovine, porcine, and plants. We stated that we welcome further evidence that compares the Axoguard HA+ Nerve Protector\TM\ to currently available treatments in the clinical setting where it is most likely to be used. To demonstrate substantial clinical improvement over currently available treatments, we stated that we consider supporting evidence, preferably published peer- reviewed clinical trials, that show improved clinical outcomes, such as reduction in mortality, complications, subsequent interventions, future hospitalizations, recovery time, pain, or a more rapid beneficial resolution of the disease process compared to the standard of care. We stated that additional supporting evidence demonstrating these improved clinical outcomes would help inform our assessment of whether the Axoguard HA+ Nerve Protector\TM\ demonstrates substantial clinical improvement over existing technologies. We invited public comment on whether the Axoguard HA+ Nerve Protector\TM\ meets the device category criterion at Sec. 419.66(c)(2). Comment: The applicant acknowledged that CMS applies a high evidentiary standard for substantial clinical improvement, typically requiring robust clinical data showing improved patient outcomes such as reduced complications, fewer reoperations, faster recovery, or better functional results compared to the current standard of care. The applicant further acknowledged the concerns CMS [[Page 53657]] included in the CY 2026 OPPS/ASC proposed rule regarding the Axoguard HA+ Nerve Protector\TM\ application and agreed that demonstrating improved clinical outcomes in patients is essential to meeting the substantial clinical improvement criterion. In response to our concerns, the applicant commented that it is committed to providing the clinical evidence necessary to satisfy the substantial clinical improvement standard and indicated that it is currently conducting an ongoing prospective, multicenter, open-label, single-arm clinical study\44\ to evaluate the Axoguard HA+ Nerve Protector\TM\ in patients undergoing a first revision cubital tunnel decompression procedure for recurrent or recalcitrant cubital tunnel syndrome. The applicant explained that the study has enrolled 19 study participants with recurrent cubital tunnel syndrome following a failure to maintain the functional improvements from their primary decompression procedure, allowing participants to serve as their own in-patient controls for analysis of the treatment effect of repeating the decompression procedure with the addition of the Axoguard HA+ Nerve Protector\TM\. The applicant noted that the study is currently in the participant follow-up phase, with the intent for each participant to complete 18 months of follow-up. The applicant reported that although the study is not complete, it has completed a planned interim analysis of the study that it believes directly addresses the previous lack of human outcomes data for the Axoguard HA+ Nerve Protector\TM\. The applicant asserted that the preliminary results demonstrate a decrease in pain, improvements in grip strength and sensory testing, and no adverse effects. --------------------------------------------------------------------------- \44\ Nerve Protection Evaluation: Revision Cubital Tunnel Syndrome Decompression (COVERED); (NCT06117501). --------------------------------------------------------------------------- Specifically, the applicant stated that 84.2 percent of study participants reported a level of none to mild (0-30 mm on 0-100 mm in the Visual Analog Scale (VAS)) pain at 6 months post-operatively. Further, the study found a mean VAS score at first pre-operative visit of 73.6 mm (SD = 18.3) and a post-operative score of 13.5 mm at 6 months (SD = 23.8), representing an 81.7 percent decrease in mean VAS- reported pain. The applicant also stated that, 26.3 percent of participants reported a VAS of zero at the 6-month post-operative timepoint. Moreover, the applicant added that the participants demonstrated functional recovery of the ulnar nerve as measured by improvements in grip strength (68.4 percent of participants) and sensory testing (63.2 percent of participants) from baseline to 6 months. The applicant finally asserted that the study data showed improvement in investigator-rated ulnar neuropathy assessed by the Modified McGowan Classification of Ulnar Nerve Neuropathy and that there have been no second revision procedures performed, no reports of recurrences of ulnar neuropathy, and no safety issues. The applicant noted that these interim findings are descriptive in nature, and the final analysis will be available upon completion of the 18-month follow-up period, database lock, and final statistical review. Finally, the applicant highlighted that, while the study is ongoing and data remains subject to final investigator approval and statistical analysis, preliminary, 100 percent source-verified observations to date are consistent with the FDA-cleared intended use and function of the Axoguard HA+ Nerve Protector\TM\. The applicant stated that it believes that the nominated device meets the substantial clinical improvement threshold, given its novel mechanism addressing unmet need for recurrent nerve compression injuries, and requested that CMS consider the provided clinical data and recognize the Axoguard HA+ Nerve Protector\TM\ as an innovative device offering improved clinical outcomes. Response: We appreciate the applicant's input; however, we maintain some of our concerns listed in the CY 2026 OPPS/ASC proposed rule (90 FR 33588 through 35589), including the lack of comparative data between the Axoguard HA+ Nerve Protector\TM\ and the predicate device and other currently available treatments for the indicated condition. While the new information from the preliminary findings of the 19-patient clinical trial currently underway may address our concern about the lack of human clinical trial evidence, we believe that the data provided does not sufficiently demonstrate substantial clinical improvement. Specifically, we believe that the preliminary findings may contain uncontrolled confounding variables specific to the study participants' initial procedures that may cast doubt on the validity of the study's outcomes. We note that the new evidence provided is preliminary data gathered during the first 6 months of an 18-month long clinical trial. The applicant specifically stated that these interim findings are descriptive in nature, and the final analysis will be conducted upon completion of follow-up, database lock, and final statistical review. At this time, the provided summary of the preliminary data is insufficient to draw a conclusion that the clinical benefits purportedly resulting from use of the Axoguard HA+ Nerve Protector\TM\ are substantial when compared to existing treatments. In addition, we note that the small sample size may affect the quality and reliability of the data provided in support of the Axoguard HA+ Nerve Protector\TM\ and may limit the statistical significance and generalizability of the results. Further, we question whether using patients as their own controls for subsequent decompression procedure with Axoguard HA+ Nerve Protector\TM\ demonstrates a substantial clinical improvement when compared to other available treatments. Finally, it is unclear based on the data submitted by the applicant which prior procedures were performed. For the reasons discussed, we do not believe that the Axoguard HA+ Nerve Protector\TM\ represents a substantial clinical improvement relative to existing therapies currently available. Therefore, after consideration of the public comment we received and our review of the device pass-through application, we are not approving the Axoguard HA+ Nerve Protector\TM\ for transitional pass-through payment status for CY 2026 because the technology does not meet the substantial clinical improvement criterion at Sec. 419.66(c)(2). Because we have determined that the Axoguard HA+ Nerve Protector\TM\ does not meet the substantial clinical improvement criterion, we will not address in this final rule with comment period whether the technology meets the cost criterion required for transitional pass-through payment for devices. (b) LithoVue\TM\ Elite Digital Flexible Ureteroscope System With Pressure Monitoring Boston Scientific Corporation submitted an application for a new device category for transitional pass-through payment status for the LithoVue\TM\ Elite Digital Flexible Ureteroscope System with Pressure Monitoring (the LithoVue\TM\ Elite System) for CY 2026. Per the applicant, the LithoVue\TM\ Elite System consists of a single-use, disposable flexible ureteroscope (the LithoVue\TM\ Elite Ureteroscope) and a workstation (the StoneSmart Connect Console), that provide real- time intraluminal pressure monitoring in the kidney and ureter during ureteroscopy and can be used in conjunction with endoscopic accessories to perform various diagnostic and therapeutic procedures in the urinary tract. The applicant stated that the distal tip of the LithoVue\TM\ [[Page 53658]] Elite Ureteroscope's shaft includes the working channel, the illumination optics, the digital imaging sensor, and a Micro-Electro- Mechanical Systems (MEMS) pressure sensor for monitoring the real-time intraluminal pressure during ureteroscopy. The applicant is only seeking a new device category for transitional pass-through payment status for the LithoVue\TM\ Elite Ureteroscope, a component of the LithoVue\TM\ Elite System. Please refer to the online application posting for the LithoVue\TM\ Elite Digital Flexible Ureteroscope System with Pressure Monitoring, available at https://mearis.cms.gov/public/publications/device-ptp/DEP2503038TF22. Comment: A few commenters expressed support for approval of transitional pass-through payment for the LithoVue\TM\ Elite Ureteroscope. The commenters expressed their belief that the LithoVue\TM\ Elite Ureteroscope benefits patients by minimizing the post-operative risks of pyelonephritis, urosepsis, and pain. However, a few commenters expressed that the LithoVue\TM\ Elite Ureteroscope should not receive approval for transitional pass-through payments, because the applicant did not provide sufficiently robust, peer-reviewed clinical evidence that demonstrates a clear benefit to patient outcomes over existing ureteroscopes. Response: We appreciate the commenters' input and acknowledge the commenters' support for and against the approval of the LithoVue\TM\ Elite Ureteroscope for transitional pass-through status. We have taken these comments into consideration in our final determination for pass- through status for the LithoVue\TM\ Elite Ureteroscope. As stated previously, to be eligible for transitional pass-through payment under the OPPS, a device must meet the criteria at Sec. 419.66(b)(1) through (4). With respect to the newness criterion at Sec. 419.66(b)(1), FDA granted the applicant 510(k) clearance for the LithoVue\TM\ Elite System on February, 2023. The approved FDA indication for the LithoVue\TM\ Elite System is: To be used to visualize organs, cavities, and canals in the urinary tract (urethra, bladder, ureter, calyces and renal papillae) via transurethral or percutaneous access routes. It can also be used in conjunction with endoscopic accessories to perform various diagnostic and therapeutic procedures in the urinary tract. On July 1, 2024, FDA granted the applicant Special 510(k) clearance for the LithoVue\TM\ Elite Ureteroscope (with pressure monitoring) with a redesigned distal tip to improve its durability during a ureteroscopy for this same indication. We received the application for a new device category for transitional pass-through payment status for the LithoVue\TM\ Elite System on March 3, 2025, which is within 3 years of the date of the initial FDA marketing authorization. We invited public comments on whether the LithoVue\TM\ Elite System meets the newness criterion at Sec. 419.66(b)(1). Comment: With respect to the newness criterion at Sec. 419.66(b)(1), the applicant reiterated that FDA granted 510(k) clearance for the LithoVue\TM\ Elite Ureteroscope on February 2, 2023. The applicant also noted that it submitted an application for transitional pass-through payment on March 3, 2025, which is within 3 years of the initial market authorization, and therefore, the LithoVue\TM\ Elite Ureteroscope meets the criterion at Sec. 419.66(b)(1). Response: We appreciate the applicant's input. We agree with the applicant that we received the application for a new device category for transitional pass-through payment status for the LithoVue\TM\ Elite Ureteroscope within 3 years of the date of FDA 510(k) clearance. After consideration of the public comments we received and our review of the application, we have determined that the LithoVue\TM\ Elite System meets the newness criterion at Sec. 419.66(b)(1). As previously noted, the applicant is only seeking a new device category for transitional pass-through payment status for the LithoVue\TM\ Elite Ureteroscope component of the LithoVue\TM\ Elite System, and as such, the eligibility and exclusion criteria will evaluate the LithoVue\TM\ Elite Ureteroscope. With respect to the eligibility criteria at Sec. 419.66(b)(3), the device must be an integral part of the service furnished, be used for one patient only, come in contact with human tissue, and be surgically inserted or implanted, or applied in or on a wound or other skin lesion. Per the applicant, the LithoVue\TM\ Elite Ureteroscope meets the requirements at Sec. 419.66(b)(3). With respect to the LithoVue\TM\ Elite Ureteroscope, we questioned in the CY 2026 OPPS/ASC proposed rule whether the MEMS pressure sensor is integral to the service furnished. In the CY 2014 OPPS final rule with comment period (78 FR 75005), we stated that we have interpreted ``integral'' to mean that the device is necessary to furnish or deliver the primary procedure with which it is used. For example, a pacemaker is integral to the procedure of implantation of a pacemaker. Per the applicant, the LithoVue\TM\ Elite Ureteroscope differs from other currently available ureteroscopes, because the device includes the MEMS pressure sensor which is located at the distal tip of the ureteroscope and enables continuous, real-time monitoring of intrarenal pressure (IRP) during ureteroscopy. We noted that neither the FDA 510(k) indication nor the FDA Special 510(k) indication includes the MEMS pressure sensor, and the cleared indications appear to be consistent with the indications for other FDA approved ureteroscopes. In addition, as discussed in more detail in the Sec. 419.66(c)(2) discussion in the CY 2026 OPPS/ASC proposed rule, we questioned whether there is sufficient evidence to support the assertion that continuous pressure monitoring is necessary and/or required to furnish or deliver the primary procedure (ureteroscopy) with which it is used. While we did not question whether the ureteroscope itself is integral to the service furnished, we questioned whether the MEMS pressure sensor, the mechanism which the applicant asserts is the distinguishing feature of the LithoVue\TM\ Elite Ureteroscope, is integral to the service furnished in accordance with Sec. 419.66(b)(3), because pressure monitoring during ureteroscopy procedures appears to be purely additive and not necessary to furnish the ureteroscopy. We invited public comments on whether the LithoVue\TM\ Elite Ureteroscope meets the eligibility criterion at Sec. 419.66(b)(3). Comment: The applicant reiterated that the LithoVue\TM\ Elite Ureteroscope is used for one patient only, comes in contact with human tissue, and is surgically inserted during a ureteroscopy procedure. In response to our concern whether the LithoVue\TM\ Elite Ureteroscope's MEMS pressure sensor is integral to the services furnished, specifically whether continuous pressure monitoring is required to perform ureteroscopy, the applicant commented that it disagrees with our interpretation of integral and believes that the MEMS pressure sensor is an intrinsic part of the LithoVue\TM\ Elite Ureteroscope because it is not a detachable or an adjunctive component. The applicant further stated that the LithoVue\TM\ Elite Ureteroscope's unique pressure sensing capability is the device's key feature and the basis for its substantial clinical improvement claim. Specifically, the applicant asserted that [[Page 53659]] the ability to measure IRP makes ureteroscopy safer because the surgeon is able (through use of this new technology) to avoid dangerously high IRPs, which the surgeon has no way of detecting with a conventional ureteroscope. The applicant also asserted that CMS's literal application of its example that ``a pacemaker is integral to the procedure of implantation of a pacemaker'' is overly simplistic and suggests that any feature beyond the basic function of a device could be considered ``non-integral.'' In addition, the applicant asserted that CMS has previously deviated from this approach when determining transitional pass-through payment status. For example, according to the applicant, pass-through categories distinguish between neurostimulators with rechargeable and non-rechargeable batteries. The applicant noted that different power supplies have different clinical advantages for neurostimulators, but the type of power supply does not affect the basic function of the neurostimulator. The applicant stated that the LithoVue\TM\ Elite Ureteroscope with the MEMS pressure sensor is integral to the ureteroscopy codes listed in Table 54 of the CY 2026 OPPS/ASC proposed rule (90 FR 33597 and 33598) in that it is a ureteroscope with a novel capability (IRP measurement) that allows for fewer complications associated with high (and unchecked) IRP during ureteroscopy. In contrast, a few commenters stated that they do not believe that the LithoVue\TM\ Elite Ureteroscope with the MEMS pressure sensor is integral to the services furnished. One commenter asserted that the LithoVue\TM\ Elite Ureteroscope is not integral to the procedures listed in the application and uses technology in a manner like device applications previously rejected on this basis. The commenter also stated that it agrees with CMS that the pressure sensor technology that is the basis of the LithoVue\TM\ Elite Ureteroscope application is not integral to the procedures presented in the application. According to the commenter, CMS has consistently applied its interpretation of integral to mean that the device is necessary to furnish or deliver the primary procedure with which it is used. The commenter noted that interested parties rely on consistent and reliable rulemaking to make informed decisions about when to engage with CMS and what to expect. The commenter claimed that CMS made a similar ``decision'' when it ``rejected'' the CANARY Canturio\TM\ Tibial Extension (CTE) with CHIRP[supreg] System application in the CY 2025 OPPS/ASC proposed rule after concluding that the CTE implant within the CHIRP[supreg] system was not integral to the arthroplasty procedure identified in the application. The commenter stated that the CHIRP[supreg] System's CTE implant included technology that provided kinematic data, and in this manner, is similar to the LithoVue\TM\ Elite Ureteroscope's pressure sensor providing data. The commenter noted that, in the CY 2025 OPPS/ ASC proposed rule, CMS questioned if the CTE implant was integral to the service provided because the utilization appeared to be purely additive and unnecessary to furnish or deliver the underlying procedure. The commenter stated that the LithoVue\TM\ Elite Ureteroscope pressure sensor is of a similar nature to the CHIRP[supreg] System's CTE implant because ureteroscopy can be completed without IRP monitoring. The commenter expressed its belief that CMS has articulated, in the CY 2026 OPPS/ASC proposed rule, a position on the LithoVue\TM\ Elite Ureteroscope that is consistent with prior rulemaking related to Sec. 419.66(b)(3). Another commenter asserted that monitoring a physiological parameter does not inherently translate to improved outcomes unless accompanied by actionable thresholds and validated interventions. Further, the commenter asserted that without consensus on what constitutes a safe IRP level or how to respond to elevated readings, the utility of the sensor remains theoretical. Response: We appreciate the applicant's clarification and the commenters' input. First, we agree with the applicant that the LithoVue\TM\ Elite Ureteroscope is used for one patient only, comes in contact with human tissue, and is surgically implanted or inserted or applied in or on a wound or other skin lesion. However, we disagree with the applicant's assertion that we deviated from our approach of assessing whether a device is integral regarding neurostimulators with rechargeable and non-rechargeable batteries because neurostimulators require a power source to operate and the batteries are, therefore, integral to the device regardless of how they are charged. We also note that while we did express concerns in the CY2025 OPPS/ASC proposed rule that the CHIRP[supreg] System's CTE implant may not be integral (89 FR 59294), we cannot comment further on the CHIRP[supreg] System's CTE implant because the applicant for that device withdrew the application prior to the final rule and we made no final determination of the eligibility of the CHIRP[supreg] System's CTE implant. We also disagree with the applicant's interpretation of the pacemaker example. Pacemakers are used as an example of a device being utilized in an integral manner for illustrative purposes. The example is not intended to suggest or imply any standard as the applicant asserts. Finally, while we maintain our concern regarding the overall utility of the MEMS pressure sensor, we agree with the applicant that the LithoVue\TM\ Elite Ureteroscope, inclusive of the MEMS pressure sensor, meets the criterion because the MEMS pressure sensor is not a detachable or an adjunctive component to the ureteroscope itself, which we previously agreed is necessary and/or required to furnish or deliver the primary procedure (ureteroscopy) with which it is used. After consideration of the public comments we received and our review of the application, we have determined that the LithoVue\TM\ Elite Ureteroscope meets the eligibility criterion at Sec. 419.66(b)(3). With respect to the exclusion criteria at Sec. 419.66(b)(4), a device is not eligible to be considered for pass-through payment if it is any of the following: (1) equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets as defined in Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a material or supply furnished incident to a service (for example, a suture, customized surgical kit, or clip, other than a radiological site marker). Per the applicant, the LithoVue\TM\ Elite Ureteroscope, the component nominated in this application, is (1) not considered equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets, and (2) not a material or supply furnished incident to a service, and therefore, is eligible to be considered for pass- through payment. We invited public comments on whether the LithoVue\TM\ Elite Ureteroscope meets the exclusion criterion at Sec. 419.66(b)(4). Comment: The applicant reiterated that the LithoVue\TM\ Elite Ureteroscope is a single-use ureteroscope, is not subject to capital equipment depreciation schedules, and is therefore not excluded under the criterion at Sec. 419.66(b)(4). Response: We appreciate the applicant's input. After consideration of the public comments we received and our review of the application, we agree with the applicant and have determined [[Page 53660]] that the LithoVue\TM\ Elite Ureteroscope meets the criterion at Sec. 419.66(b)(4). In addition to the criteria at Sec. 419.66(b)(1) through (4), the criteria for establishing new device categories are specified at Sec. 419.66(c). The first criterion, at Sec. 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not paid for as an outpatient service as of December 31, 1996. Per the applicant, the existing pass- through code C1747 (Endoscope, single-use (i.e., disposable), urinary tract, imaging/illumination device (insertable)) does not appropriately describe the LithoVue\TM\ Elite Ureteroscope because the category description does not include the LithoVue\TM\ Elite Ureteroscope's pressure monitoring feature. The applicant also stated that the existing pass-through code C2624 (Implantable wireless pulmonary artery pressure sensor with delivery catheter, including all system components) does not appropriately describe the LithoVue\TM\ Elite Ureteroscope because the nominated device is an insertable ureteroscope that measures IRP, whereas C2624 is specific to sensors that measure pulmonary artery pressure. We noted in the CY 2026 OPPS/ASC proposed rule that, based on the description the applicant provided, the LithoVue\TM\ Elite Ureteroscope is a single-use, disposable ureteroscope inserted into the urinary tract for imaging and illumination, and thus, could be appropriately described by C1747. Specifically, we stated that we believe that C1747 may appropriately describe the LithoVue\TM\ Elite Ureteroscope because it describes any device that is a single-use (i.e., disposable) endoscope with imaging/illumination capabilities intended for use in the urinary tract to perform ureteroscopy procedures. We noted that the descriptor for C1747 does not reference device features that would exclude the inclusion of a pressure monitoring feature. Further, we noted that the HCPCS procedure codes with which the applicant has stated the LithoVue\TM\ Elite Ureteroscope would be reported are consistent with the HCPCS codes approved for C1747. In this context, we stated that we believe that the LithoVue\TM\ Elite Ureteroscope may be similar to the devices described by C1747, and therefore, the LithoVue\TM\ Elite Ureteroscope may also be appropriately described by C1747. We invited public comment on whether the LithoVue\TM\ Elite Ureteroscope meets the device category criterion at Sec. 419.66(c)(1). Comment: In response to our concern that the LithoVue\TM\ Elite Ureteroscope may be appropriately described by C1747, the applicant stated that while C1747 does describe a single-use ureteroscope, the descriptor is too broad and does not include the key feature--IRP monitoring--that makes the LithoVue\TM\ Elite Ureteroscope unique. The applicant stated it strongly believes that the IRP monitoring capabilities that make the LithoVue\TM\ Elite Ureteroscope unique, merit a new pass-through device category. In contrast, a few commenters stated their belief that the LithoVue\TM\ Elite Ureteroscope is appropriately described by the existing code C1747. One commenter agreed with CMS that the LithoVue\TM\ Elite Ureteroscope is appropriately described by existing device category C1747 and that the presence of the additional feature of a pressure sensor is not, by itself, a reason to exclude the LithoVue\TM\ Elite Ureteroscope from C1747. The commenter also stated that, from its experience with providers, billers, facilities, and other interested parties in the field of urology, C1747 has already been used for the LithoVue\TM\ Elite Ureteroscope. Therefore, the commenter stated it supports a conclusion that C1747 remains the appropriate device category for the LithoVue\TM\ Elite Ureteroscope, and no new device category is warranted. Another commenter stated that, per the criteria described at Sec. 419.66(c), CMS has previously established this device category in the CY 2023 OPPS/ASC final rule with comment period. Specifically, the commenter noted that CMS approved a device category code for single-use ureteroscopes--C1747 (Endoscope, single-use (that is, disposable), urinary tract, imaging/illumination device (insertable))--and asserted that CMS created this device category for Uretero1\TM\. The commenter also noted that 1 month after C1747 was established based on the approval of the STERIS Uretero1\TM\ device pass-through application, FDA granted the LithoVue\TM\ Elite System 510(k) clearance, on February 2, 2023. The commenter asserted that, therefore, the nominated device has been eligible for transitional pass-through payment for 35 out of the full 36-month eligibility period, which expires December 31, 2025. The commenter stated its belief that the applicant is clearly aware that the LithoVue\TM\ Elite System has already benefited from transitional pass-through status for single-use ureteroscopes. In addition, the commenter noted that advertisement on the applicant's website recommends billing C1747 for single-use ureteroscopes, including the LithoVue\TM\ Elite Single-Use Digital Flexible Ureteroscope. Furthermore, the commenter stated that, in the new study by Bhojani et al. (2025),\45\ the methods indicate that the authors used claims data to ascertain the study's conclusions. The commenter stated that for the Bhojani et al. (2025) study, the authors queried Medicare claims data submitted with C1747 alongside either CPT code 52353 or 52356. According to the commenter, in using the C1747 data for the Bhojani et al. (2025) study alongside the LithoVue\TM\ Elite Ureteroscope, the authors are demonstrating that this device has previously been identified by the established device category code and has already benefited from its use. Moreover, the commenter noted that the initial LithoVue\TM\ Elite Ureteroscope application cited literature that suggests IRP relevance is limited to kidney stone procedures. The commenter further highlighted that the Bhojani et al. (2025) study only references lithotripsy procedures. The commenter asserted that, despite this, the LithoVue\TM\ Elite Ureteroscope application does not appropriately narrow the associated CPT code set to reflect this clinical specificity; instead, the applicant generalizes the clinical claims to all ureteroscopy procedures. Per the commenter, if the LithoVue\TM\ Elite Ureteroscope pressure sensor were integral to improved outcomes in stone management, as the applicant claims, then the applicable CPT codes should have been refined accordingly, as not all ureteroscopy procedures are performed for the treatment of kidney stones. --------------------------------------------------------------------------- \45\ Bhojani, N, Morris, K, White, J, Rojanasarot, S Tran, E.D, Monga, M. (2025). Post-operative infection with a single-use ureteroscope with real-time intrarenal pressure monitoring vs. all other single-use ureteroscopes. Expert Review of Medical Devices, 1- 9. https://doi.org/10.1080/17434440.2025.2557403. --------------------------------------------------------------------------- Additionally, the commenter stated that in the CY 2026 OPPS/ASC proposed rule, CMS appropriately acknowledged that the LithoVue\TM\ Elite Ureteroscope may fall within the scope of the existing device category C1747, which includes all single-use ureteroscopes and their associated procedures. The commenter asserted that creating a new device category code without clear differentiation risks redundancy and confusion in coding practices. The commenter further asserted that it may also set a precedent for incremental innovations to seek separate reimbursement pathways [[Page 53661]] without sufficient clinical justification. The commenter stated that, therefore, it agrees that the LithoVue\TM\ Elite Ureteroscope may be appropriately described by C1747. Response: We appreciate the applicant's and commenters' input. After consideration of the public comments we received and our review of the application, we continue to believe that C1747 appropriately describes the LithoVue\TM\ Elite Ureteroscope because C1747 includes any device that is a single-use (that is, disposable) endoscope with imaging/illumination capabilities intended for use in the urinary tract to perform ureteroscopy procedures. We also continue to believe that the procedure codes with which the applicant has stated that the LithoVue\TM\ Elite Ureteroscope would be reported are consistent with the CPT codes approved for C1747. We disagree with the applicant's assertions that the IRP monitoring capabilities that make the LithoVue\TM\ Elite Ureteroscope unique merit a new pass-through device category because the LithoVue\TM\ Elite Ureteroscope is consistent with C1747, regardless of the presence of the additional pressure sensing feature, as a few commenters noted. We agree with the commenter that the nominated device has already benefited from transitional pass-through status for single-use ureteroscopes and that CMS is already collecting cost data for the nominated device in the appropriate APC. Therefore, we have determined that the LithoVue\TM\ Elite Ureteroscope does not meet the device category eligibility criterion at Sec. 419.66(c)(1), because it is appropriately described by an existing category or a category previously in effect. We conclude that the LithoVue\TM\ Elite Ureteroscope does not meet the device category eligibility criterion to be considered as a device for transitional pass-through payment. Therefore, in this final rule with comment period, we will not address whether the technology meets the other remaining criteria required for transitional pass-through payment for devices. We are not approving the LithoVue\TM\ Elite Ureteroscope for transitional pass-through payment status for CY 2026 because the technology does not meet the device category eligibility criterion at Sec. 419.66(c)(1). (c) VersaVue\TM\ Single-Use Flexible Cystoscope Boston Scientific Corporation submitted an application for a new device category for transitional pass-through payment status for the VersaVue\TM\ Single-Use Flexible Cystoscope for CY 2026. Per the applicant, the VersaVue\TM\ Single-Use Flexible Cystoscope is used in cystoscopy procedures to diagnose or treat diseases of the lower urinary tract. According to the applicant, the VersaVue\TM\ Single-Use Flexible Cystoscope is a single-use, disposable flexible cystoscope intended to be operated with its compatible display system, the VersaVue\TM\ Tablet (a tablet where the image is present directly on the tablet) or the VersaVue\TM\ Video Box (a standalone imaging transfer system which can be connected to a computer to project live imaging), that provides live imaging of the lower urinary tract. Please refer to the online application posting for the VersaVue\TM\ Single-Use Flexible Cystoscope, available at https://mearis.cms.gov/public/publications/device-ptp/DEP250211C4HRV. Comment: A commenter expressed its support for approval of transitional pass-through payment for the VersaVue\TM\ Single-Use Flexible Cystoscope. The commenter stated that single-use, disposable cystoscopes provide clinical benefit in the diagnosis and treatment of lower urinary tract diseases and the elimination of reprocessing steps, not only enhancing safety but also streamlining workflow and improving operational efficiency for providers. Response: We appreciate the commenter's input. We have taken this comment into consideration in our final determination for pass-through status for the VersaVue\TM\ Single-Use Flexible Cystoscope. As stated previously, to be eligible for transitional pass-through payment under the OPPS, a device must meet the criteria at Sec. 419.66(b)(1) through (4). With respect to the newness criterion at Sec. 419.66(b)(1), FDA granted the applicant 510(k) clearance for the VersaVue\TM\ Single-Use Flexible Cystoscope on October 6, 2023. The approved FDA indication for the VersaVue\TM\ Single-Use Flexible Cystoscope is: The VersaVue\TM\ Single-Use Flexible Cystoscope is a sterile, single-use, and flexible device intended to be operated with its compatible display system (VersaVue\TM\ Tablet or VersaVue\TM\ Video Box). The device provides endoscopic procedure and surgical treatment within the lower urinary tract. The Cystoscope is intended to provide visualization via [the] displaying unit. The Cystoscope is intended for use in a hospital environment or medical office environment. It is designed for use in adults. We received the application for a new device category for transitional pass-through payment status for the VersaVue\TM\ Single- Use Flexible Cystoscope on February 11, 2025, which is within 3 years of the date of the initial FDA marketing authorization. We invited public comments on whether the VersaVue\TM\ Single-Use Flexible Cystoscope meets the newness criterion at Sec. 419.66(b)(1). Comment: With respect to the newness criterion at Sec. 419.66(b)(1), the applicant reiterated that the VersaVue\TM\ Single-Use Flexible Cystoscope received 510(k) clearance from FDA on October 6, 2023, and that it submitted an application for pass-through status on February 11, 2025, which is within 3 years of the initial market authorization. Response: We appreciate the applicant's input. We received the application for a new device category for transitional pass-through payment status for the VersaVue\TM\ Single-Use Flexible Cystoscope on February 11, 2025, which is within 3 years of October 6, 2023, the date of FDA 510(k) clearance. After consideration of the public comment we received and our review of the application, we have determined that the VersaVue\TM\ Single-Use Flexible Cystoscope meets the newness criterion at Sec. 419.66(b)(1). With respect to the eligibility criteria at Sec. 419.66(b)(3), the device must be an integral part of the service furnished, be used for one patient only, come in contact with human tissue, and be surgically inserted or implanted, or applied in or on a wound or other skin lesion. Per the applicant, the VersaVue\TM\ Single-Use Flexible Cystoscope meets the requirements at Sec. 419.66(b)(3). We invited public comments on whether the VersaVue\TM\ Single-Use Flexible Cystoscope meets the eligibility criterion at Sec. 419.66(b)(3). Comment: The applicant reiterated that the VersaVue\TM\ Single-Use Flexible Cystoscope is an integral part of a cystoscopy procedure, used for one patient only, comes in contact with human tissue, and is surgically inserted during a cystoscopy procedure. Response: We appreciate the applicant's input. We agree with the applicant that the VersaVue\TM\ Single-Use Flexible Cystoscope is an integral part of the service furnished, used for one patient only, comes in contact with human tissue, and is surgically implanted or inserted. After consideration of the public comment we received, and our review of the [[Page 53662]] application, we have determined that the VersaVue\TM\ Single-Use Flexible Cystoscope meets the eligibility criterion at Sec. 419.66(b)(3). With respect to the exclusion criteria at Sec. 419.66(b)(4), a device is not eligible to be considered for pass-through payment if it is any of the following: (1) equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets as defined in Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a material or supply furnished incident to a service (for example, a suture, customized surgical kit, or clip, other than a radiological site marker). Per the applicant, the VersaVue\TM\ Single-Use Flexible Cystoscope is (1) not considered equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets, and is (2) not a material or supply furnished incident to a service, and, therefore, is eligible to be considered for pass-through payment. We invited public comments on whether the VersaVue\TM\ Single-Use Flexible Cystoscope meets the exclusion criterion at Sec. 419.66(b)(4). Comment: The applicant reiterated that the VersaVue\TM\ Single-Use Flexible Cystoscope is not a supply furnished incident to the service, is a single-use cystoscope, is not subject to capital equipment depreciation schedules, and cannot be reprocessed. Response: We appreciate the applicant's input. We agree with the applicant that the VersaVue\TM\ Single-Use Flexible Cystoscope is not equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets, or a material or supply furnished incident to a service. After consideration of the public comment we received and our review of the application, we have determined that the VersaVue\TM\ Single-Use Flexible Cystoscope meets the criterion at Sec. 419.66(b)(4). In addition to the criteria at Sec. 419.66(b)(1) through (4), the criteria for establishing new device categories are specified at Sec. 419.66(c). The first criterion, at Sec. 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996. Per the applicant, the existing pass-through code C1747 (Endoscope, single-use (i.e., disposable), urinary tract, imaging/illumination device (insertable)) does not appropriately describe the VersaVue\TM\ Single-Use Flexible Cystoscope because cystourethroscopy procedures are not encompassed by this pass-through device category.\46\ The applicant also stated that the existing code C1889 (Implantable/insertable device, not otherwise classified) does not appropriately describe the VersaVue\TM\ Single-Use Flexible Cystoscope. We noted in the CY 2026 OPPS/ASC proposed rule that C1889 is not a device pass-through category code and therefore would not describe the VersaVue\TM\ Single-Use Flexible Cystoscope for the purposes of device pass-through status. Upon review, we stated that we did not identify an existing pass-through payment category that describes the VersaVue\TM\ Single-Use Flexible Cystoscope. --------------------------------------------------------------------------- \46\ As discussed in section IV.A.2 (New Device Pass-Through Applications for CY 2023) of the CY 2023 OPPS/ASC final rule with comment period, we approved C1747 (Endoscope, single-use (i.e., disposable), urinary tract, imaging/illumination device (insertable)), as a new device category for pass-through status under the OPPS, with an effective date of January 1, 2023. For the full discussion on the criteria used to evaluate device pass-through applications, refer to the CY 2023 OPPS/ASC final rule with comment period, which was published in the Federal Register on November 23, 2022 (87 FR 71929 through 71934). We note that C1747 was established for a ureteroscope that can only be used for a single procedure and cannot be reprocessed. As such, C1747 only describes devices that cannot be reprocessed. --------------------------------------------------------------------------- We invited public comment on whether the VersaVue\TM\ Single-Use Flexible Cystoscope meets the device category criterion at Sec. 419.66(c)(1). Comment: The applicant commented that FDA first issued the VersaVue\TM\ Single-Use Flexible Cystoscope 510(k) clearance in 2023, that the VersaVue\TM\ Single-Use Flexible Cystoscope was not receiving payment as an outpatient service as of December 31, 1996, and that it is not described by any current or previous device categories. The applicant stated that, in correspondence between Boston Scientific and CMS from September 2023, CMS determined that C1747 (Endoscope, single- use (i.e., disposable), urinary tract, imaging/illumination device (insertable)) does not include cystoscopy or cystourethroscopy devices. Response: We appreciate the applicant's input. After consideration of the public comment we received and our review of the application, we continue to believe that there is no existing category or category previously in effect that appropriately describes the VersaVue\TM\ Single-Use Flexible Cystoscope. Therefore, we have determined that the VersaVue\TM\ Single-Use Flexible Cystoscope meets the device category eligibility criterion at Sec. 419.66(c)(1). The second criterion for establishing a device category, at Sec. 419.66(c)(2), provides that CMS determines either of the following: (1) that a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment; or (2) for devices for which pass-through status will begin on or after January 1, 2020, as an alternative to the substantial clinical improvement criterion, the device is part of the FDA's Breakthrough Devices Program and has received FDA marketing authorization for the indication covered by the Breakthrough Device designation. The applicant asserted that single- use, disposable cystoscopes, including the VersaVue\TM\ Single-Use Flexible Cystoscope, represent a substantial clinical improvement over reusable cystoscopes. The applicant provided five documents to support these claims, which included three studies and two FDA communications concerning reusable, reprocessed urological endoscopes. The applicant's assertions regarding the substantial clinical improvement criterion are shown in Table 103, previously published as Table 55 of the CY 2026 OPPS/ASC proposed rule (90 FR 33600 and 33601). Please see the online posting for the VersaVue\TM\ Single-Use Flexible Cystoscope for the applicant's complete statements regarding the substantial clinical improvement criterion and the supporting evidence provided. BILLING CODE 4120-01-P [[Page 53663]] [GRAPHIC] [TIFF OMITTED] TR25NO25.137 [[Page 53664]] [GRAPHIC] [TIFF OMITTED] TR25NO25.138 BILLING CODE 4120-01-C After review of the information provided by the applicant, we stated in the CY 2026 OPPS/ASC proposed rule that we had the following concerns regarding whether the VersaVue\TM\ Single-Use Flexible Cystoscope meets the substantial clinical improvement criterion. Overall, we noted that the applicant indicated that the technology does not offer a treatment option for patients unresponsive to or ineligible for currently available treatments, stating that the same patient population could be treated using a reusable, reprocessed cystoscope. Further, the applicant did not claim that the nominated device, the VersaVue\TM\ Single-Use Flexible Cystoscope, offers a substantial clinical improvement over other single-use, disposable cystoscopes available on the market. Specifically, the applicant stated that no claim is being made that a specific disposable device offers a substantial clinical improvement over other disposable devices in the same category. Rather, the applicant stated that it presented evidence to support its claim that single-use, disposable cystoscopes (as a group) demonstrate substantial clinical improvement over reusable cystoscopes. We noted that for the purposes of the device pass-through evaluation process, CMS evaluates the nominated device that is the subject of an application to determine if the device meets the eligibility criteria described in Sec. 419.66. Further, for the purposes of our substantial clinical improvement evaluation in the CY 2026 OPPS/ASC proposed rule, we considered both reusable, reprocessed cystoscopes and single-use, disposable cystoscopes as available treatment options for this patient population and noted that single-use, disposable cystoscopes appear to be widely accessible and well utilized in the outpatient setting. According to the applicant, of the 2.2 million flexible cystoscopy procedures furnished annually across all payers, 23 percent are performed with single-use, disposable cystoscopes. As discussed in more detail in this section, we stated in the CY 2026 OPPS/ASC proposed rule that we were interested in additional evidence that demonstrates substantial clinical improvement with the use of the VersaVue\TM\ Single-Use Flexible Cystoscope over other available treatment options (both single-use, disposable cystoscopes and reusable, reprocessed cystoscopes). In order to evaluate substantial clinical improvement over currently available treatments to meet the transitional pass- through payment criterion at Sec. 419.66(c)(2), we stated that we consider supporting evidence, preferably published peer-reviewed clinical trials, that demonstrates improved clinical outcomes, such as reduction in mortality, complications, subsequent interventions, future hospitalizations, recovery time, pain, or a more rapid beneficial resolution of the disease process comparing the nominated device to the standard of care (88 FR 81733). We stated in the CY 2026 OPPS/ASC proposed rule that, first, the evidence provided did not include data demonstrating that the use of the VersaVue\TM\ Single-Use Flexible Cystoscope compared to other available single-use, disposable cystoscopes for this patient population results in substantial clinical improvement. The applicant identified other devices it believes are closely related or similar to the VersaVue\TM\ Single-Use Flexible Cystoscope, including the following: (1) Ambu[supreg] aScope 4\TM\ Cysto manufactured by AMBU A/ S, (2) Ambu[supreg] aScope 5\TM\ Cysto manufactured by AMBU A/S, (3) WiScope[supreg] SingleUse- Digital Flexible Cystoscope manufactured by OTU Medical AnQing, (4) Medical Single Use Flexible Cystoscope manufactured by Shanghai AnQing Medical Instrument Company, and (5) Pusen Single Use Flexible Video Cystoscope System manufactured by Zhuhai Pusen Medical Technology Company. We noted that the VersaVue\TM\ Single-Use Flexible Cystoscope was determined to be substantially equivalent to a legally marketed device, the Ambu[supreg] aScope 4\TM\ Cysto (K193095), which received 510(k) clearance on April 2, 2020.\47\ The [[Page 53665]] FDA 510(k) summary for the VersaVue\TM\ Single-Use Flexible Cystoscope stated that both devices have the same intended use and similar specifications, and that there are no significant differences. According to the applicant, these five similar devices would also become eligible for transitional pass-through payment under the additional category proposed by the applicant. We reiterated that we consider other single-use, disposable cystoscopes as available treatment options for this patient population and that the devices appear to share similar technological and/or procedural characteristics. We noted that none of the studies the applicant included reference another single-use, disposable device as a comparator against which to evaluate and assess the VersaVue\TM\ Single-Use Flexible Cystoscope. While we found that the source articles provided background information about multiple risks associated with reprocessing reusable devices, we stated that we would welcome additional evidence demonstrating a comparison of the VersaVue\TM\ Single-Use Flexible Cystoscope's performance against other similar single-use, disposable devices. We questioned whether the VersaVue\TM\ Single-Use Flexible Cystoscope offers a substantial clinical improvement over other single-use, disposable cystoscopes currently on the market. We stated that we would welcome evidence that demonstrates substantial clinical improvement with the use of the VersaVue\TM\ Single-Use Flexible Cystoscope over other single-use, disposable cystoscopes. --------------------------------------------------------------------------- \47\ U.S. Food and Drug Administration. (2020, April 2). Decision Summary for K193095 [Ambu[supreg] aScope\TM\ 4 Cysto]. U.S. Department of Health and Human Services. https://www.accessdata.fda.gov/cdrh_docs/pdf19/K193095.pdf. --------------------------------------------------------------------------- Second, in the CY 2026 OPPS/ASC proposed rule, we questioned whether the supporting evidence submitted by the applicant demonstrates substantial clinical improvement of the VersaVue\TM\ Single-Use Flexible Cystoscope over reusable, reprocessed cystoscopes for this patient population. In the first claim, the applicant asserted that the use of single-use, disposable cystoscopes decreases post-procedure encounters and infections compared to reusable cystoscope devices. However, while Geldmaker et al. (2023) reported some improved clinical outcomes with the use of a specific single-use, disposable cystoscope when compared to the use of a specific reusable cystoscope,\48\ we noted that the study does not assess, evaluate, or review clinical outcomes associated with the use of the VersaVue\TM\ Single-Use Flexible Cystoscope or compare clinical outcomes associated with the use of the VersaVue\TM\ Single-Use Flexible Cystoscope to reusable cystoscopes. Rather, we stated that the evidence provided compared clinical outcomes associated with another device, the single-use, disposable Ambu aS4C cystoscope [Ambu[supreg] aScope 4\TM\ Cysto] to the reuseable Olympus[supreg] CYF-5 V2 Flexible cystoscope. Therefore, we questioned whether the use of the VersaVue\TM\ Single-Use Flexible Cystoscope resulted in substantial clinical improvement as compared to reusable, reprocessed cystoscopes. --------------------------------------------------------------------------- \48\ Geldmaker, L.E., Baird, B.A., Lyon, T.D., Regele, E.J., Wajswol, E.J., Pathak, R.A., Petrou, S.P., Haehn, D.A., Gajarawala, N.M., Ball, C.T., Broderick, G.A., & Thiel, D.D. (2023). Conversion to disposable cystoscopes decreased post-procedure encounters and infections compared to reusable cystoscopes. Urology Practice, 12(1), 58-64. https://doi.org/10.1097/UPJ.0000000000000410. --------------------------------------------------------------------------- In addition, we noted that, as a retrospective study, Geldmaker et al. (2023) fails to establish that the differences in the observed clinical outcomes are caused by using reusable, reprocessed cystoscopes versus single-use, disposable cystoscopes. We noted that retrospective studies can only suggest associations between variables and cannot establish cause and effect relationships. While the propensity score matching did an adequate job of balancing the two groups (reusable, reprocessed cystoscope procedures versus single-use, disposable cystoscope procedures) and yielded statistically significant results, we questioned whether the propensity score matching variables used in the study adequately account for patient factors that may impact the outcomes, such as the reason for the cystoscopy, positive preoperative UTI, and other comorbid conditions. We noted that data were collected during different time periods (reusable, reprocessed cystoscope data were collected in 2020, and single-use, disposable cystoscope data were collected in 2021), which may introduce systematic errors in the measurement due to retrospective data collection or confounders not accounted for, such as changes in clinical practice between the 2 study years. Further, per the study authors, we noted that urine cultures were ordered more frequently in the reusable cystoscope group, potentially increasing the likelihood of a UTI diagnosis in the reusable cystoscope group. We stated that we would be interested in whether equivalent pre- and post-procedure urine cultures from patients in both groups would have yielded different results. We noted that the evidence is not conclusive to support whether the use of single-use, disposable cystoscopes results in improved clinical outcomes compared to reusable, reprocessed cystoscopes. Moreover, while not included in the evidence submitted by the applicant in support of the substantial clinical improvement claims for the VersaVue\TM\ Single-Use Flexible Cystoscope, we noted two studies, Anderson et al. (2024) and Johnson et al. (2023), provide notable evidence directly related to the use of single-use, disposable cystoscopes versus reusable cystoscopes.49 50 Anderson et al. (2024), a systematic review (using meta-analyses techniques) comparing the clinical outcomes of all single-use, disposable endoscopes used in urology with those of reusable endoscopes across a range of urological procedures, found that of the seven studies that reported the rate of postoperative infections, none found a statistically significant difference in postoperative infection rates between single-use, disposable endoscopes and reusable endoscopes.\51\ Further, we noted that the Anderson et al. (2024) sub-group analysis of cystoscopes found no difference in overall complication rates or postoperative infection rates between the single-use, disposable cystoscopes and the reusable cystoscope subgroups. Similarly, Johnson et al. (2023) found no statistically significant difference in adverse events in a multicenter, randomized trial comparing single-use, disposable cystoscopes (Ambu[supreg] aScope 4\TM\ Cysto) with reusable cystoscopes for ureteral stent removal in 102 patients.\52\ Given the evidence in these additional studies, we questioned in the CY 2026 OPPS/ASC proposed rule whether the totality of available evidence establishes that the use of a single-use, disposable cystoscope results in substantial clinical improvement when compared to reprocessed cystoscopes, and furthermore, whether the use of the VersaVue\TM\ Single-Use Flexible Cystoscope compared to reusable, reprocessed cystoscopes results in decreased adverse events, including post- procedure encounters and infections. We stated that we would welcome studies that evaluate whether the use of the VersaVue\TM\ Single-Use Flexible Cystoscope results in [[Page 53666]] substantial clinical improvement over reusable, reprocessed cystoscopes, such as a reduction in mortality, complications, subsequent interventions, future hospitalizations, recovery time, pain, or a more rapid beneficial resolution of the disease process compared to reusable, reprocessed cystoscopes. --------------------------------------------------------------------------- \49\ Anderson, S., Patterson, K., Skolarikos, A., Somani, B., Bolton, D.M., & Davis, N.F. (2024). Perspectives on technology: To use or to reuse, that is the endoscopic question--a systematic review of single-use endoscopes. BJU International, 133(1), 14-24. https://doi.org/10.1111/bju.16206. \50\ Johnson, B.A., Raman, J.D., Best, S.L., & Lotan, Y. (2023). Prospective randomized trial of single-use vs reusable cystoscope for ureteral stent removal. Journal of Endourology, 37(10). https://doi.org/10.1089/end.2023.0134. \51\ Anderson, 2024, op. cit. \52\ Johnson, 2023, op. cit. --------------------------------------------------------------------------- Third, in the second, third, fourth and fifth claims, the applicant asserted that the use of single-use, disposable cystoscopes avoids post-cystoscopy infections, device malfunctions, and contamination problems associated with reusable devices, and eliminates the need for reprocessing and avoids the risk of infection associated with improper reprocessing. In support of these claims, the applicant provided two retrospective reviews (Lee et al., 2022 and Muscarella, 2022) of medical device reports (MDRs) from the FDA Manufacturer and User Facility Device Experience (MAUDE) database, an FDA News Release (2021, April 1) concerning infection and contamination risks associated with reusable urological endoscopes, and an FDA Update (2025, January 31) communicating the recall of endoscope accessories from Olympus[supreg] reusable urological endoscopes as supporting evidence.53 54 55 56 First, we questioned whether, per the applicant, the avoidance of device malfunctions, contamination problems, and the elimination of the need for reprocessing demonstrates substantial clinical improvement, as these are not clinical outcome metrics. Second, while we concurred that avoiding post-cystoscopy infections is important, we noted that none of the studies the applicant submitted as evidence evaluated or assessed the VersaVue\TM\ Single-Use Flexible Cystoscope and that none of the studies compared clinical outcomes, such as adverse events (including post-cystoscopy infection) associated with the use of the VersaVue\TM\ Single-Use Flexible Cystoscope to clinical outcomes associated with reusable cystoscopes. Third, while these studies discuss potential adverse events from reusable cystoscope procedures, we noted that FDA states that the FDA MAUDE database's MDR data are not intended to be used to evaluate rates of adverse events, evaluate a change in event rates over time, or compare adverse event occurrence rates across devices.\57\ FDA explains that the MAUDE database is a passive surveillance system, and that incidence, prevalence, or cause of an event cannot be determined from this surveillance system alone due to under-reporting of events, inaccuracies in reports, lack of verification that the device caused the reported event, and lack of information about frequency of device use.\58\ FDA further explains that the submission of an MDR itself does not necessarily demonstrate that the device caused or contributed to the adverse outcome or event.\59\ Therefore, we questioned whether these reports can substantiate that the use of single-use, disposable cystoscopes, like the VersaVue\TM\ Single-Use Flexible Cystoscope, would result in substantial clinical improvements over currently available reusable, reprocessed cystoscopes. Fourth, while the applicant asserted that the FDA News Release (2021, April 1) encouraged manufacturers to transition to single-use, disposable devices, we noted that this FDA News Release does not specifically reference single-use, disposable cystoscopes but, rather encouraged manufacturers to transition to devices with features that eliminate the need for reprocessing and provided information to manufacturers on how to modify and validate their reprocessing instructions. As such, we questioned the assertion that this FDA communication encouraged manufacturers to transition to single-use, disposable cystoscopes, such as the VersaVue\TM\ Single-Use Flexible Cystoscope. We further noted that FDA stated that the risk of infection from reusable, reprocessed urological endoscopes was low based on its data.\60\ We also noted that the FDA Update (2025, January 31) communicated a medical device recall of the Olympus[supreg] endoscope accessory (MAJ-891 Forceps/Irrigation Plug) that is attached to the instrument channel port of a certain endoscope, due to the risk of infection that may result from improper reprocessing, but that this communication made no mention of the use of the nominated device or single-use, disposable cystoscopes, instead it appears to be a concern related to a particular reusable device component.\61\ --------------------------------------------------------------------------- \53\ Lee, J., Kaplan-Marans, E., Jivanji, D., Tennenbaum, D., & Schulman, A. (2022). Post-cystoscopy infections and device malfunctions in reprocessed flexible cystoscopes in a national database. Canadian Journal of Urology, 29(6), 11361-11365. https://pubmed.ncbi.nlm.nih.gov/36495577. \54\ Muscarella, L.F. (2022, January 28). Contamination of flexible endoscopes and associated infections: A comprehensive review and analysis of FDA adverse event reports. Discussions in Infection Control. https://lfm-hcs.com/2022/01/contamination-of-flexible-endoscopes-and-associated-infections/. \55\ U.S. Food and Drug Administration. (2021, April 1). FDA is investigating reports of infections associated with reprocessed urological endoscopes: Agency is taking action to remind health care providers about the proper way to clean certain devices for reuse. [FDA News Release]. https://www.fda.gov/news-events/press-announcements/fda-investigating-reports-infections-associated-reprocessed-urological-endoscopes. \56\ U.S. Food and Drug Administration. (2025, January 31). Update on alert: Endoscope accessories forceps/irrigation plug issue from Olympus. https://www.fda.gov/medical-devices/medical-device-recalls/update-alert-endoscope-accessories-forcepsirrigation-plug-issue-olympus. \57\ U.S. Food and Drug Administration. (2024, June 6). About the Manufacturer and User Facility Device Experience (MAUDE) database. U.S. Department of Health and Human Services. https://www.fda.gov/medical-devices/mandatory-reporting-requirements-manufacturers-importers-and-device-user-facilities/about-manufacturer-and-user-facility-device-experience-maude-database. \58\ U.S. Food and Drug Administration, 2024, op. cit. \59\ U.S. Food and Drug Administration, 2024, op. cit. \60\ U.S. Food and Drug Administration, 2021, op. cit. \61\ U.S. Food and Drug Administration, 2025, op. cit. --------------------------------------------------------------------------- While the applicant asserted that the use of single-use, disposable cystoscopes avoids risk of infection associated with improper reprocessing, the applicant did not submit any FDA safety communications directly related to single-use, disposable cystoscopes. We questioned whether the evidence provided by the applicant directly supports this claim. Finally, we noted in the CY 2026 OPPS/ASC proposed rule that the intent of transitional device pass-through payment, as implemented at Sec. 419.66, is to facilitate access for beneficiaries to the advantages of new and truly innovative devices by allowing for adequate payment for these new devices while the necessary cost data is collected to incorporate the costs for these devices into the procedure APC rate (66 FR 55861). Based on the information provided by the applicant, approximately 510,600 units of single-use, disposable cystoscope devices, like those that would be included in the proposed device category for single-use, disposable cystoscopes, are estimated to have sold annually in the U.S. Moreover, the applicant provided that, of the 2.2 million flexible cystoscopy procedures furnished annually, 23 percent are performed with single-use, disposable cystoscopes, further, single-use, disposable cystoscopes are used in at least 500 hospitals and clinics, including 35 to 50 academic medical centers. Based on the information provided in the application, we stated that it appears as though single-use, disposable cystoscopes are widely available and consistently utilized for the purposes of performing cystoscopy procedures in outpatient facilities. As such, we questioned whether the creation of a device pass-through payment category code for single-use, disposable cystoscopes is consistent [[Page 53667]] with the intent of transitional device pass-through payment and necessary to appropriately incorporate adequate cost data of these devices into the applicable procedure APC. We questioned whether the evidence submitted by the applicant demonstrates that the use of single-use, disposable cystoscopes results in improved patient outcomes and reduced patient risk compared to the use of reusable devices. Further, we questioned whether the VersaVue\TM\ Single-Use Flexible Cystoscope offers a substantial clinical improvement in the treatment of Medicare beneficiaries over other available treatment and whether a transitional device pass- through category for single-use, disposable cystoscopes is in alignment with the intent of the transitional device pass-through payment program policy. We invited public comment on whether the VersaVue\TM\ Single-Use Flexible Cystoscope meets the device category criterion at Sec. 419.66(c)(2). Comment: The applicant provided responses to concerns raised by CMS in the CY 2026 OPPS/ASC proposed rule. In response to the concern that the data provided did not compare the VersaVue\TM\ Single-Use Flexible Cystoscope to other single-use, disposable cystoscopes, the applicant stated its belief that such evidence would not be relevant to this application, and that CMS did not explain why such evidence is necessary or how it could apply to the application under review. Further, the applicant explained that it did not assert that the VersaVue\TM\ Single-Use Flexible Cystoscope offers a substantial clinical improvement compared to other single-use cystoscopes, stating that the substantial clinical improvement claims and evidence provided were in support of the category of single-use cystoscopes compared to reusable cystoscopes rather than the VersaVue\TM\ Single-Use Flexible Cystoscope compared to other single-use, disposable cystoscopes or reusable cystoscopes. The applicant stated its belief that CMS has recognized similar claims for categories of other types of disposable endoscopes, including upper GI endoscopes, ureteroscopes, and bronchoscopes. As an example, the applicant cited language from the Uretero1\TM\ decision in which CMS agreed that the device met the criterion for substantial clinical improvement, which stated that while comparative studies between Uretero1\TM\ and other disposable devices would be helpful, CMS agreed that the evidence demonstrating improved outcomes and reduced patient risk associated with the disposable device in comparison with reusable devices represented substantial clinical improvement (87 FR 71932). The applicant asserted that the VersaVue\TM\ Single-Use Flexible Cystoscope evidence is directly equivalent to the Uretero1\TM\ evidence in both type and claims. Additionally, the applicant asserted that the Uretero1\TM\ decision makes clear that the lack of such evidence comparing the nominated device to other disposable devices does not and should not preclude an applicant from meeting the substantial clinical improvement standard. The applicant stated that CMS should consider the VersaVue\TM\ Single-Use Flexible Cystoscope application using the same standard applied to other recent decisions for disposable devices and determine that the improved patient outcomes and reduced patient risk associated with the disposable nominated device in comparison with reusable devices is a substantial clinical improvement. Response: We appreciate the applicant's input. However, we maintain our concern regarding the lack of data comparing the VersaVue\TM\ Single-Use Flexible Cystoscope to other single-use, disposable and reusable, reprocessed cystoscopes. First, regarding the applicant's statement that the evidence provided in support of the category of single-use cystoscopes should suffice for a demonstration of substantial clinical improvement, we reiterate that, CMS evaluates transitional pass-through applications using the substantial clinical improvement criterion described at Sec. 419.66(c)(2)(i), which requires CMS to determine if ``the device'' that has been nominated has demonstrated that ``it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment.'' The regulatory provision refers to ``the'' device (singular) being compared to ``a device or devices'' for purposes of substantial clinical improvement. For the purposes of the device pass-through evaluation process, CMS evaluates the nominated device that is the subject of an application, not a category of devices, to determine if the device meets the eligibility criteria described in Sec. 419.66. The applicant referenced studies comparing the category of single-use cystoscopes to reusable cystoscopes but did not provide evidence that its specific device demonstrates a substantial clinical improvement. Second, we disagree with the applicant that CMS has recognized similar claims for other types of disposable endoscopes, including upper GI endoscopes, ureteroscopes, and bronchoscopes. For example, while we concluded that Uretero1\TM\ met the criterion for substantial clinical improvement, we note that CMS agreed that the evidence demonstrated improved outcomes for ``the disposable device'' (singular), i.e., Uretero1\TM\ (87 FR 71932). In response to additional comments, we explain more about our evaluation of the evidence submitted for both applications. Finally, we disagree with the applicant that the evidence for the VersaVue\TM\ Single-Use Flexible Cystoscope is equivalent to that used for Uretero1\TM\, and, as we previously explained in the CY 2024 and CY 2025 OPPS/ASC final rules with comment period for Ambu[supreg] aScope\TM\ 5 Broncho HD (88 FR 81736) and Ambu[supreg] aScope\TM\ Gastro (89 FR 94182), and as discussed in more detail in our responses to comment, we evaluate all evidence submitted for each device pass- through application as it applies to the nominated device. Due to inherent differences in the devices themselves and the supporting documentation submitted, CMS may have different concerns as they relate to the nominated device. As discussed in the following responses, we continue to believe that the evidence submitted for the VersaVue\TM\ Single-Use Flexible Cystoscope application fails to demonstrate a substantial clinical improvement as required. Comment: In response to our concerns that the single-use device included in the Geldmaker et al. (2023) study was not the VersaVue\TM\ Single-Use Flexible Cystoscope, the applicant commented that the Geldmaker et al. (2023) study provides important evidence about the impact of disposable cystoscope use on clinical practice and demonstrates one of the substantial clinical improvement claims for single-use cystoscopes. The applicant acknowledged that the device involved in this study was not the VersaVue\TM\ Single-Use Flexible Cystoscope but asserted that this situation is identical to the Uretero1\TM\ transitional pass-through evaluation and approval. The applicant asserted that the Uretero1\TM\ application used a study by Bozzini et al. (2021) to support the claims that Uretero1\TM\ reduced hospitalization rates, antibiotic therapy, complication rates, and post-operative infection rates. The applicant further asserted that the Bozzini et al. (2021) study did not utilize Uretero1\TM\ but the study findings were directly applicable [[Page 53668]] to the Uretero1\TM\ application. The applicant stated its belief that CMS appropriately accepted that study in support of the Uretero1\TM\ substantial clinical improvement claims, allowing the findings to be directly applicable to Uretero1\TM\. The applicant opined that CMS should apply the same standard to the VersaVue\TM\ Single-Use Flexible Cystoscope application and recognize that Geldmaker et al. (2023) demonstrates the substantial clinical improvement afforded by use of disposable cystoscopes, including the VersaVue\TM\ Single-Use Flexible Cystoscope. In response to our concerns regarding the Geldmaker et al. (2023) study's design, the applicant commented that the study is a high- quality, retrospective analysis of a large outpatient urology practice's real-world experience following conversion from reusable to disposable cystoscopes and stated that it strongly disagrees with CMS's assessment of the study in the CY 2026 OPPS/ASC proposed rule. Additionally, the applicant asserted that the specific substantial clinical improvement claim addressed by Geldmaker et al. (2023) is the impact that the type of scope has on post-procedural health care resource utilization--that is, whether the type of scope affects unplanned interactions or the incidence of UTIs. The applicant further asserted that a large study population is essential for meaningful findings and this retrospective review allowed the authors to include 1,000 patients. Regarding our question whether the propensity score matching variables adequately account for patient factors, such as the reason for cystoscopy, positive preoperative UTI, and other comorbid conditions, the applicant stated that the reason for cystoscopy, specifically including UTI, was the basis for the propensity score weighting. The applicant also noted that after propensity-score weighting, the study considered all differences in the reason(s) for cystoscopy to be negligible and collected data from a single institution's integrated electronic medical record. The applicant asserted its belief that the specific focus on equivalent pre- and post-procedure urine cultures suggests that CMS may have misunderstood the intent of the Geldmaker et al. (2023) study. The applicant stated that the study included urine cultures which were only ordered based on post-procedure, patient-reported lower urinary tract symptoms and noted that Geldmaker et al. (2023) found patients in the reusable scope group were three times as likely to have an encounter, which would likely include reporting of symptoms, and therefore, it is not surprising that the group also had more urine cultures ordered. The applicant agreed that systematic urine cultures would have produced different evidence related to the incidence of UTIs, but it would also have eliminated key data on health resource utilization. The applicant asserted its belief that the study was appropriately designed and provides strong evidence that the use of disposable scopes is associated with reduced post- procedure encounters. Response: We appreciate the applicant's input. However, we maintain our concerns listed in the CY 2026 OPPS/ASC proposed rule regarding the Geldmaker et al. (2023) study. First, the device involved in this study was not the VersaVue\TM\ Single-Use Flexible Cystoscope, and second, the Geldmaker et al. (2023) study has design limitations as discussed. As previously stated, we disagree with the applicant that this situation is identical to the Uretero1\TM\ transitional pass-through evaluation and approval. First, no two applications are identical in nature given the fact that the basic premise of device pass-through is to provide additional payment for novel technologies and, as such, these innate differences for each technology requires a robust evaluation of each application on its own merits. As the applicant indicated, CMS approved Uretero1TM 62 for transitional pass- through payment status in the CY 2023 OPPS/ASC final rule with comment period. We note that we expressed similar concerns relating to the lack of comparative studies between the single-use Uretero1\TM\ device and other disposable devices and indicated that, while we ultimately agreed that the totality of evidence demonstrated improved patient outcomes and reduced patient risk associated with the disposable device in comparison with reusable devices represents substantial clinical improvement, we stated it would have been helpful to see comparative studies (87 FR 71932). The applicant seems to suggest that because we determined that the Uretero1\TM\ device demonstrated substantial clinical improvement despite providing a study which did not include the nominated device as a comparator, that we must similarly determine that the type of evidence submitted for the VersaVue\TM\ Single-Use Flexible Cystoscope represents substantial clinical improvement. We do not believe that this implied approach to application evaluation is appropriate. Rather, we continue to believe that our current process, wherein we evaluate all evidence submitted for each device pass-through application as it applies to the nominated device, is appropriate and consistent with the regulatory requirements. We reiterate that, due to inherent differences in the devices themselves and the supporting documentation submitted, CMS may have different concerns as they relate to the nominated device. In addition, we are not precluded from evaluating evidence, expressing concerns, or making a determination on the applicability or validity regarding evidence submitted in support of an application, simply because that type of evidence has been submitted in support of a previous application. --------------------------------------------------------------------------- \62\ In the CY 2023 OPPS/ASC final rule with comment period CMS approved Uretero1\TM\ as a new device category for transitional pass-through payment status and established C1747 as a new device category beginning in January 2023 (87 FR 7129 through 71934) effective January 1, 2023. --------------------------------------------------------------------------- Furthermore, we maintain our concerns listed in the CY 2026 OPPS/ ASC proposed rule that the Geldmaker et al. (2023) study has design limitations. Specifically, we note that retrospective studies can only suggest associations between variables and cannot establish causation. While we appreciate the applicant's explanation about the propensity score matching in Geldmaker et al. (2023), we question whether the propensity score matching variables used in the study adequately account for all patient factors that may impact outcomes, such as the reason for cystoscopy and other comorbid conditions. We also maintain our interest in whether equivalent pre- and post-procedure urine cultures from patients in both study groups would have yielded different results, which the applicant agreed would have produced different evidence related to UTI incidence. Finally, we continue to maintain concerns over potential systematic errors in measurement due to retrospective data collection and unaccounted for confounders, such as changes in clinical practice between the 2 study years. The Geldmaker et al. (2023) study did not assess, evaluate, review, or compare clinical outcomes associated with the use of the VersaVue\TM\ Single-Use Flexible Cystoscope to reusable cystoscopes. Likewise, none of the other evidence provided compared the benefits of the VersaVue\TM\ Single-Use Flexible Cystoscope to currently available treatments, including other single-use cystoscopes. For these reasons, we do not believe that the Geldmaker et al. (2023) study supports a demonstration of substantial clinical improvement. [[Page 53669]] Based on our review, we continue to believe that the current application lacks sufficient evidence to demonstrate that the VersaVue\TM\ Single-Use Flexible Cystoscope significantly improves clinical outcomes in patients receiving cystoscopy using either reusable scopes or other single-use scopes. Comment: In response to our request for additional evidence of substantial clinical improvement, the applicant stated its belief that the Anderson et al. (2024) and Johnson et al. (2023) studies, which we identified in the CY 2026 OPPS/ASC proposed rule, have substantial limitations. Specifically, the applicant asserted that while the Anderson et al. (2024) meta-analysis included 12 studies, only 4 of them involved cystoscopes, which makes the subgroup analysis particularly challenging. The applicant also stated that the cystoscope studies were not specifically intended to identify post-procedure complications and that two of the included studies provided no data on those outcomes. Additionally, the applicant noted that only one of the two remaining cystoscopy studies reported the overall complication rate, and the other cystoscopy study reported the post-operative infection rate. Therefore, the applicant asserted that when Anderson et al. (2024) reported a disposable cystoscopes subgroup analysis for each of these outcomes, the study was simply reporting the result of a single study from its meta-analysis. The applicant also noted Anderson et al. (2024) supports the understanding that disposable scope use reduces the risk of infection and explains why data is unavailable to document that conclusion, stating: The use of single-use endoscopes should reduce the risk of transmission of these important public health infections to a negligible level. However, the absolute risk of transmission of these pathogens with reusable endoscopes is so low that it is unlikely any study will be sufficiently powered to show a difference when compared to [single-use flexible ureteroscopes]. In addition, the applicant stated that the Johnson et al. (2023) study, a multicenter, randomized trial that compared disposable cystoscopes with reusable cystoscopes for ureteral stent removal, found no statistically significant difference in adverse events. The applicant asserted that based on the study design, this outcome is unsurprising and should not be considered evidence that no difference exists in adverse events for single-use versus multiple-use cystoscopes. The applicant noted that Johnson et al. (2023) was a randomized, dual-arm post-market clinical trial that compared single- use cystoscopes (Ambu[supreg] aScope\TM\ 4 Cysto; Ambu A/S) for removal of ureteral stents to routine flexible reusable cystoscopes (combination of digital and fiberoptic). The applicant further opined that, although not explicitly stated, the paper presumably calculated the sample size based on the primary endpoint of stent removal, not to detect any clinical differences and, while Johnson et al. (2023) collected patient-reported adverse event data as a secondary endpoint, the study would have been severely underpowered to detect any group differences in adverse events. The applicant added that the single serious adverse event observed during the study occurred in the standard of care reusable arm and that the authors noted that patients in the reusable cystoscope group reported significantly higher pain with urination post-procedure. The applicant submitted a new study, Chew et al. (2025), with its public comment. According to the applicant, Chew et al. (2025),\63\ is a retrospective study that compared 30-day health care utilization between patients treated with single-use cystoscopes and patients treated with reusable cystoscopes. The applicant stated that the Chew et al. (2025) study used propensity score matching (1:5 ratio) to control for demographics, comorbidities, clinical history, and prior utilization and performed a pre-defined subgroup analysis in patients aged 65 years. The applicant also noted that of the study's 62,965 eligible encounters, 1,473 (2.3 percent) used single-use cystoscopes and 61,492 (97.7 percent) used reusable cystoscopes. The applicant explained that, after propensity score matching, Chew et al. (2025) compared 1,473 single-use procedures with 7,365 reusable procedures and found that single-use devices resulted in lower 30-day health care utilization (5.2 percent vs. 13.0 percent; hazard ratio (HR)=0.34; 95 percent confidence interval (CI): 0.26, 0.45; p<0.001). The applicant further noted that the study's component analyses favored single-use cystoscopes for acute care events (p<0.001), emergency department visits (p=0.03), same-day surgery (p=0.01), and clinic visits (p<0.001). The applicant reported that Chew et al. (2025) found that single-use cystoscopes resulted in lower complication rates (1.8 percent vs. 4.3 percent; HR=0.40; 95 percent CI: 0.27, 0.60; p<0.001) and serious complications (HR=0.65, 95 percent CI: 0.49, 0.86; p=0.003), and that these findings were similar in patients aged 65 years. The applicant asserted that this study provides important new evidence that use of disposable cystoscopes is associated with a lower risk of serious complications and found comparable infection rates between disposable and reusable cystoscopes. The applicant acknowledged that Chew et al. (2025) has the same underpowering issue identified in Anderson et al. (2024) and stated that the study's authors speculate that mechanical factors associated with reprocessing may influence morbidity following cystoscopy. The applicant expressed its belief that the totality of the evidence, particularly with the addition of the Chew et al. (2025) study, strongly supports that single-use, disposable cystoscope use reduces complication rates, post-procedure encounters, and health care utilization. --------------------------------------------------------------------------- \63\ Chew, B.H., Miller, L.E., Morris, K.C., Shin, Y.E., Tsacogianis, T., White, J., Rojanasarot, S., & Forbes, C.M. (2025) Healthcare Utilization and Complications Associated With Single-Use Versus Reusable Flexible Cystoscopy in Hospital Outpatient Settings. Cureus, 17(9): e91879. https://doi.org/10.7759/cureus.91879. --------------------------------------------------------------------------- Response: We appreciate the applicant's input. However, we maintain our concerns listed in the CY 2026 OPPS/ASC proposed rule that additional evidence is needed to establish the VersaVue\TM\ Single-Use Flexible Cystoscope's substantial clinical improvement over reusable, reprocessed cystoscopes or other single-use cystoscopes, such as that which shows a reduction in mortality, complications, subsequent interventions, future hospitalizations, recovery time, pain, or a more rapid beneficial resolution of the disease process. We appreciate the applicant's critique of the Anderson et al. (2024) and Johnson et al. (2023) studies and for sharing the Chew et al. (2025) study. While we agree that all studies have their limitations, we note that Anderson et al. (2024) is reportedly the largest study to compare outcomes of single-use urologic endoscopes to those of reusable endoscopes and presents evidence suggesting that single-use urologic endoscopes provide no improvement with regard to postoperative infection rates or overall complication rates compared to reusable urologic endoscopes. This is contradictory to the applicant's assertions that the VersaVue\TM\ Single-Use Flexible Cystoscope or any other single-use disposable cystoscope represents a substantial clinical improvement compared to a reusable cystoscope. Moreover, we have concerns regarding the Chew et al. (2025) study. First, similar to our concern with [[Page 53670]] Geldmaker et al. (2023), Chew et al. (2025) does not compare the VersaVue\TM\ Single-Use Flexible Cystoscope to other single-use or reusable devices, and retrospective studies can only suggest associations between variables, not establish causation. Second, the methodology used by Chew et al. (2025) for selecting and matching cases retrospectively is unclear, specifically, how the 7,365 matched reusable procedures were selected from the potential pool of 62,965. We also question if the study's results demonstrate substantial clinical improvement of single-use cystoscopes compared to reusable cystoscopes. While we acknowledge that Chew et al. (2025) reports an association between single-use cystoscopes and significantly lower 30-day complication rates (cumulative incidence: 1.8 percent vs. 4.3 percent) with a 60 percent relative risk reduction (HR=0.40; 95 percent CI: 0.27, 0.60; p<0.001), we note that there were no statistical differences between the single-use device group and the reusable device group in regard to recatheterization (47 percent risk reduction; p=0.11), UTI (6 percent risk increase; p=0.85), or sepsis/bacteremia (87 percent risk reduction; p=0.17). Finally, we note that the Chew et al. (2025) study cited the systematic review by Anderson et al. (2024) of 21 studies that reported no differences in overall complications or infection rates between single-use and reusable urologic endoscopes. Comment: In response to our question whether the avoidance of device malfunctions, contamination problems, and the elimination of the need for reprocessing are clinical outcome metrics, the applicant commented that these are items that put patients at risk of complications and additional healthcare encounters, and that avoidance of these outcomes is clearly a clinical benefit. The applicant stated that CMS has recognized the complication risk in consideration of previous device pass-through applications. Specifically, the applicant pointed to CMS's consideration of the Utereo1\TM\ pass-through application in which CMS concluded that the evidence demonstrated that the improved patient outcomes and reduced patient risk associated with the disposable device in comparison to reusable devices represented a substantial clinical improvement. The applicant asserted that many of the substantial clinical improvement claims for Uretero1\TM\ related to these same outcomes, including infection transmission prevention, contamination risk reduction, procedure delays reduction, and increased patient safety and education. The applicant further expressed its belief that CMS should consider reduction in patient risk as a clinical outcome metric and recognize this evidence as demonstrating a substantial clinical improvement for the VersaVue\TM\ Single-Use Flexible Cystoscope. Response: We appreciate the applicant's input. We agree that risk of device malfunction, device contamination, and faulty reprocessing are important considerations that may affect device integrity and subsequent clinical outcomes. However, we note that these risks may not be the same between different types of devices, such as a ureteroscope and a cystoscope, and they may not even be the same between different models of similar devices, such as two cystoscopes. Further, for some devices, these risks may be so small that they render no significant clinical impact on a patient population. Thus, we believe it is not sufficient to simply argue that the elimination of risk must result in a substantial clinical improvement, especially if that risk is small. Therefore, we do not believe the applicant has sufficiently established that avoidance of device malfunctions, contamination problems, and the elimination of the need for reprocessing demonstrates substantial clinical improvement. We further note that when there are currently-available treatment options for a patient population (as is the case for the VersaVue\TM\ Single-Use Flexible Cystoscope), substantial clinical improvement is demonstrated when the candidate device demonstrates significantly improved clinical outcomes compared to the currently available treatments.\64\ We evaluate all evidence submitted for each device pass-through application as it applies to the nominated device that is the subject of the application. In this context, the submitted evidence in support of the VersaVue\TM\ Single-Use Flexible Cystoscope's substantial clinical improvement must demonstrate that the VersaVue\TM\ Single-Use Flexible Cystoscope results in substantial clinical improvement when compared to available reusable and single-use devices for the treatment of the patient population. Inferences that the device may improve clinical outcomes because it may obviate complications associated with other available treatments are insufficient to demonstrate substantial clinical improvement. Therefore, the inferences derived from submitted evidence here do not establish substantial clinical improvement. --------------------------------------------------------------------------- \64\ Device Pass-through Requirements: https://mearis.cms.gov/public/resources. --------------------------------------------------------------------------- Comment: In response to our concerns regarding the use of FDA data in support of substantial clinical improvement claims, the applicant asserted that CMS cited two concerns with the use of FDA information in the VersaVue\TM\ Single-Use Flexible Cystoscope application. Per the applicant, CMS cited guidance from FDA about use of MDRs compiled in the MAUDE database and questioned whether a study that includes analysis of that data can be used to demonstrate substantial clinical improvement. The applicant stated that CMS also questioned the appropriateness of an FDA News Release concerning infection and contamination risks associated with reusable urological endoscopes, including cystoscopes, because the release did not specifically mention single-use devices. The applicant commented that these concerns appear to represent a reversal of CMS's position taken 3 years prior when evaluating the Uretero1\TM\ application. The applicant further asserted that one of the primary studies, Ofstead et al. (2022), used for the Uretero1\TM\ application's literature review included 892 MDRs submitted to FDA, and that CMS raised no concerns about use of MAUDE data in that application. Regarding the FDA News Release, the applicant stated that FDA encouraged manufacturers to transition to devices with features that eliminate the need for reprocessing and helped manufacturers modify and validate their reprocessing instructions. The applicant opined that single-use devices are not reprocessed, thus eliminating the need for reprocessing. The applicant further commented that the Uretero1\TM\ application included the same release and that CMS noted at that time that the release did not specifically mention single-use devices. The applicant stated that, despite receiving no comments as to whether Uretero1\TM\ met the substantial clinical improvement criteria, CMS approved Uretero1\TM\ for device pass-through and therefore, the applicant inferred that CMS concluded that this concern, while noted, was not significant. The applicant acknowledged that CMS's intent is to evaluate applications by consistently applying the standards for each criterion, and that each pass-through application presents its own unique circumstances, but, according to the applicant, the similarities between the Uretero1\TM\ and the VersaVue\TM\ Single-Use Flexible Cystoscope applications are [[Page 53671]] overwhelming. According to the applicant, both devices are urological endoscopes, both applications include evidence that is not specific to the nominated device, and both applications include claims of substantial clinical improvement related to avoidance of patient risk, documented in part through analysis of FDA MAUDE data. The applicant stated its belief that this level of evidence appropriately supported the Uretero1\TM\ application and also supports the substantial clinical improvement provided by VersaVue\TM\ Single-Use Flexible Cystoscope and other disposable cystoscopes. The applicant asked that if CMS reaches a different conclusion, the agency provide a detailed rationale as to what requirements have changed since the rulemaking cycle for 2023. Response: We appreciate the applicant's input. As an initial matter, we note that the requirements under Sec. 419.66(c)(2) have not changed since we revised the alternative pathway provision effective January 1, 2021 (85 FR 86303), and CMS has consistently explained that its approach is to evaluate all evidence submitted for each device pass-through application as it applies to the nominated device (88 FR 81736, 89 FR 94182). In this case, we maintain our concerns listed in the CY 2026 OPPS/ASC proposed rule about whether the use of data that solely rely on MDRs compiled in the MAUDE database can be used to demonstrate that the use of single-use, disposable cystoscopes, like the VersaVue\TM\ Single-Use Flexible Cystoscope, would result in substantial clinical improvement. Additionally, we continue to be concerned that the FDA News Release (2021, April 1) does not specifically reference single-use, disposable cystoscopes or encourage manufacturers to transition to single-use, disposable cystoscopes, such as the VersaVue\TM\ Single-Use Flexible Cystoscope. With respect to the concern that the use of MDRs compiled in the MAUDE database can be used to demonstrate substantial clinical improvement, we acknowledge that, since the Uretero1\TM\ approval, we have more critically evaluated and questioned the utility of studies and reports using data solely collected from the MAUDE database, which claim associations between infections and devices for the purposes of demonstrating substantial clinical improvement. For example, in our decision for Ambu[supreg] aScope\TM\ Gastro (89 FR 94179 through 94182), we found that the applicant's self-sponsored analyses of FDA adverse event reports and the FDA MAUDE report did not provide evidence on the prevalence of infection, establish a clear relationship between infection risk and reprocessing procedures, or substantiate that single-use disposable scopes, or the nominated device specifically, would be a substantial clinical improvement over currently-available devices. As we discussed in the CY 2026 OPPS/ASC proposed rule, the FDA MAUDE database's MDR data are not intended to be used to evaluate rates of adverse events, evaluate a change in event rates over time, or compare adverse event occurrence rates across devices. Further, FDA describes the MAUDE database as a passive surveillance system, and that incidence, prevalence, or cause of an event cannot be determined from this surveillance system alone due to underreporting of events, inaccuracies, or bias in reports; untimely reports; lack of verification that the device caused the reported event; and lack of information about frequency of device use. Additionally, MDRs submitted to MAUDE have not been independently reviewed and the reported adverse events, by themselves, are not definitive evidence of faulty or defective medical devices. Finally, we note that the MAUDE database lacks the clinical granularity, such as comorbidities, procedure details, or the etiology of an adverse event, needed to calculate the true incidence of any post-cystoscopy complication. These same limitations of the MAUDE database are also acknowledged in the Lee et al. (2022) and Muscarella (2022) articles, which the applicant submitted as part of the VersaVue\TM\ Single-Use Flexible Cystoscope application. For these reasons, we maintain our concerns that data from MAUDE alone cannot substantiate that the VersaVue\TM\ Single-Use Flexible Cystoscope exhibits substantial clinical improvement over currently available devices. With respect to the MAUDE data included as evidence in the Uretero1\TM\ application, we note that, in addition to 892 MDRs, the Ofstead et al. (2022) study also included five articles describing reprocessing breaches, contamination, infections, or injuries related to fully reprocessed flexible ureteroscopes, as well as conference abstracts. We note that the inclusion of Ofstead et al. (2022), which contained additional studies and data sources, provided evidence other than MAUDE data for the Uretero1\TM\ application. In contrast to Ofstead et al. (2022), the Lee et al. (2022) and Muscarella (2022) articles included in the VersaVue\TM\ Single-Use Flexible Cystoscope application rely solely on MAUDE data and do not evaluate other data or sources. Moreover, the Muscarella (2022) article is not peer-reviewed and is self-published. For these reasons, we maintain our concerns that the use of studies that solely rely on MDRs compiled in the MAUDE database cannot substantiate that the use of single-use, disposable cystoscopes, like VersaVue\TM\ Single-Use Flexible Cystoscope, results in substantial clinical improvement over currently available devices. Regarding the FDA News Release (April 1, 2021), we note that within the document, FDA does not make specific recommendations for the use of single-use, disposable cystoscopes, including the VersaVue\TM\ Single- Use Flexible Cystoscope, over reusable, reprocessed devices. Rather, FDA stated that its Letter to Health Care Providers issued recommendations for reprocessing and using these devices, such as following the reprocessing instructions and developing schedules for routine device inspection and maintenance. Additionally, FDA stated that it believes the risk of infection from reusable, reprocessed urological endoscopes was low based on its data. We also note that the FDA Update (January 31, 2025) communicated a medical device recall of a specific device component, the Olympus[supreg] endoscope accessory (MAJ-891 Forceps/Irrigation Plug) that is attached to the instrument channel port of a certain endoscope, due to the risk of infection that may result from improper reprocessing; however, it made no mention of, or recommendation for, the use of single-use, disposable devices, including the VersaVue\TM\ Single-Use Flexible Cystoscope, over reusable, reprocessed devices. For these reasons, we maintain our concern that the FDA News Release (April 1, 2021) does not specifically reference single-use, disposable devices, including the nominated device. In response to the applicant's comment comparing the Uretero1\TM\ application summary with the nominated device's application summary, we note that we expressed a similar concern for Uretero1\TM\, specifically that the FDA advisory letter regarding ureteroscopes did not mention single-use devices and that it was unclear how the news release's recommendations supported Uretero1\TM\'s claims of substantial clinical improvement (87 FR 71932). While we ultimately determined that evidence submitted as part of the Uretero1\TM\ pass-through application was sufficient to demonstrate substantial clinical improvement at that [[Page 53672]] time, we would like to reiterate, again, that we evaluate all evidence submitted for each device pass-through application as it applies to the nominated device at the time the current application is submitted. As previously noted, we have gained additional knowledge about the limitations of what is reported and included in the MAUDE database. Based on the totality of the evidence, we do not believe that the applicant has submitted documentation demonstrating that the use of the VersaVue\TM\ Single-Use Flexible Cystoscope results in a substantial clinical improvement compared to other existing technologies. Further, we disagree with the assertion that our acceptance of FDA guidance documents for previous applications controls the outcome of our evaluation of evidence of substantial clinical improvement for the VersaVue\TM\ Single-Use Flexible Cystoscope. The ultimate determination of whether evidence demonstrates substantial clinical improvement for one application is not controlling on future determinations because, due to inherent differences in the devices themselves and the supporting documentation submitted, CMS may have different concerns as they relate to the nominated device. We do not believe our evaluation of the totality of the evidence provided by the applicant, including the FDA data and News Release, represents a change in requirements for evaluating transitional pass-through applications. Comment: In response to our concern that the utilization data submitted as part of the VersaVue\TM\ Single-Use Flexible Cystoscope application suggests that disposable cystoscopes are widely available and consistently used in outpatient facilities, the applicant commented that neither the statute nor the regulations describe a standard related to whether a device is widely available or consistently used. The applicant stated its belief that CMS has never applied such a standard in the past and should not apply such a requirement to an individual application. The applicant asserted that, while it opposes such an approach, if CMS intends to limit pass-through categories for devices it determines are widely available, then CMS must go through rulemaking to establish that standard. Further, the applicant stated that it understood the utilization data CMS collects is requested to calculate the estimated total utilization across pass-through items in a given year. Finally, the applicant clarified that some of the marketing data provided on its application was inaccurate and that the Chew et al. (2025) study indicates that, based on review of outpatient hospital claims data, 2.3 percent of encounters involved single-use cystoscopes, rather than the estimated 23 percent initially provided. Response: We appreciate the applicant's input. The applicant is correct that volume and utilization data are used to calculate the estimated cost of pass-through items. However, we may use any information submitted as part of a device pass-through application for the purposes of evaluating that application, if such information is relevant to other eligibility criteria. In addition, we continue to believe that our approach, including the question raised regarding the creation of a device pass-through payment category code for certain categories of devices, is consistent with both the statutory intent of section 1833(t)(6)(B) of the Act and with the implementing regulation at Sec. 419.66. As explained in the CY 2002 OPPS interim final rule with comment period (66 FR 55852 and 55853) and in other final and proposed rules (see, for example, the CY 2023 final rule with comment period, 87 FR 71886) thereafter, the transitional pass-through payment provision is intended as an interim measure to facilitate beneficiary access by allowing for adequate payment of new, innovative technology while we collect the necessary data to incorporate the costs for these items into the base APC rates. The statute and regulations specifically limit the payment for individual pass-through items to at least 2 years but no more than 3 years, with the intention that the costs for these items should be incorporated into the APC rates for the procedures associated with these items after that period. We believe that in if CMS has already collected cost data in the appropriate APC for devices that would be described by a potential device category code, then establishing such a device category code would be unnecessary and contrary to the intent of the statute. Further, CMS is not establishing a new standard as the applicant suggests; rather, the standard is set by the statute and regulation and our discussion of volume and utilization is part of our review of the evidence to determine compliance with the requirements of Sec. 419.66(c)(2), which we believe is consistent with both the language and intent of transitional pass-through payment provisions. We continue to believe that, consistent with the statute and regulations, transitional pass-through payment should be limited to those new and innovative technologies for which the necessary data to appropriately incorporate adequate cost data of these technologies into the applicable procedure APC have not been collected. Because of the reasons discussed in this section, the VersaVue\TM\ Single-Use Flexible Cystoscope does not meet the substantial clinical improvement criterion to be considered as a device for transitional pass-through payment. Therefore, in this final rule with comment period, we will not address whether the technology meets the cost criterion required for transitional pass-through payment for devices. We are not approving the VersaVue\TM\ Single-Use Flexible Cystoscope for transitional pass-through payment status for CY 2026 because the technology does not meet the substantial clinical improvement criterion at Sec. 419.66(c)(2). (d) Other Comments Comment: Multiple commenters recommended CMS calculate the device- related portion of APCs for purposes of determining transitional pass- through payment status eligibility and the device offset using only the cost of the devices replaced by the proposed device pass-through payment status device category. Specifically, the commenters recommended CMS eliminate the evaluation of device pass-through cost significance criteria when a proposed device does not replace any existing devices used in a procedure. For devices that replace some, but not all, of the devices used in a procedure, the commenters requested CMS revise the methodology of device pass-through cost significance criteria to assess the cost of proposed device using only the cost of the devices the proposed device replaces in the associated procedure. For approved pass-through devices, the commenters recommended CMS identify and apply an offset amount that reflects only the costs of the replaced devices for devices that replace only a portion of device-related costs within a procedure. The commenters asserted that the refinement of the device offset calculation would ensure a more accurate and fair evaluation of device costs and reduce unnecessary barriers for a procedure to perform safely and successfully. In addition, one commenter proposed that CMS consider a new policy to set the device offset at the lesser of the APC offset or the HCPCS-level offset for purposes of calculating transitional pass- through payments when insufficient claims data are available to demonstrate that the costs of a pass-through device are meaningfully reflected in the associated APC payment for the procedure. The commenter opined that this approach would prevent excessive and [[Page 53673]] unwarranted device costs from being deducted from hospital payments. Response: We appreciate the commenters' recommendations regarding the revision of the methodology for calculating the device-related portion of APCs for the purpose of determining the transitional pass- through payment status eligibility and the device offset of a nominated device. We will continue to consider the issues and any additional public comments related to them. Comment: We received multiple comments supporting the OPPS transitional device pass-through payment pathway and highlighting the important role the program plays in the treatment of Medicare beneficiaries. One commenter noted that the program bridges the gap between FDA approval of novel devices and their full integration into OPPS rates and encourages manufacturers to invest in innovation without delaying patient access. Response: We appreciate the commenters' input and ongoing support of the device pass-through payment program. Comment: We received several public comments requesting changes to the device pass-through payment policies, such as, but not limited to: modifying or removing the requirement that a device be surgically inserted or implanted. We also received multiple public comments requesting updates to the device offset amounts for existing device category codes. In addition, we received comments on devices that were not under consideration for device pass-through payment status for CY 2026. Response: These comments were outside the scope of the proposals included in the CY 2026 OPPS/ASC proposed rule and we are therefore not addressing them in this final rule with comment period.

1. Background

Under the OPPS, prior to CY 2017, device-intensive status for procedures was determined at the APC level for APCs with a device offset percentage greater than 40 percent (79 FR 66795). Beginning in CY 2017, CMS began determining device-intensive status at the HCPCS code level. In assigning device-intensive status to an APC prior to CY 2017, the device costs of all the procedures within the APC were calculated and the geometric mean device offset of all of the procedures had to exceed 40 percent. Almost all of the procedures assigned to device-intensive APCs utilized devices, and the device costs for the associated HCPCS codes exceeded the 40-percent threshold. The no cost/full credit and partial credit device policy (79 FR 66872 through 66873) applies to device-intensive procedures and is discussed in detail in section IV.B.4. of the CY 2026 OPPS/ASC proposed rule. A related device policy was the requirement that certain procedures assigned to device-intensive APCs require the reporting of a device code on the claim (80 FR 70422) and is discussed in detail in section IV.B.3. of the CY 2026 OPPS/ASC proposed rule. For further background information on the device-intensive APC policy, we refer readers to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70421 through 70426). a. HCPCS Code-Level Device-Intensive Determination As stated earlier, prior to CY 2017, under the device-intensive methodology we assigned device-intensive status to all procedures requiring the implantation of a device that were assigned to an APC with a device offset greater than 40 percent and, beginning in CY 2015, that met the three criteria as listed. Historically, the device- intensive designation was at the APC level and applied to the applicable procedures within that APC. In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79658), we changed our methodology to assign device-intensive status at the individual HCPCS code level rather than at the APC level. Under this policy, a procedure could be assigned device-intensive status regardless of its APC assignment, and device-intensive APC designations were no longer applied under the OPPS or the ASC payment system. We believe that a HCPCS code-level device offset is, in most cases, a better representation of a procedure's device cost than an APC-wide average device offset based on the average device offset of all of the procedures assigned to an APC. Unlike a device offset calculated at the APC level, which is a weighted average offset for all devices used in all of the procedures assigned to an APC, a HCPCS code-level device offset is calculated using only claims for a single HCPCS code. We believe that this methodological change results in a more accurate representation of the cost attributable to implantation of a high-cost device, which ensures consistent device-intensive designation of procedures with a significant device cost. Further, we believe a HCPCS code-level device offset removes inappropriate device-intensive status for procedures without a significant device cost that are granted such status because of their APC assignment. Under our existing policy, procedures that meet the criteria listed in section IV.C.1.b. of this final rule with comment period are identified as device-intensive procedures and are subject to all the policies applicable to procedures assigned device-intensive status under our established methodology, including our policies on device edits and no cost/full credit and partial credit devices discussed in sections IV.C.3. and IV.C.4. of this final rule with comment period. b. Use of the Three Criteria To Designate Device-Intensive Procedures We clarified our established policy in the CY 2018 OPPS/ASC final rule with comment period (82 FR 52474), where we explained that device- intensive procedures require the implantation of a device and additionally are subject to the following criteria: All procedures must involve implantable devices that would be reported if device insertion procedures were performed. The required devices must be surgically inserted or implanted devices that remain in the patient's body after the conclusion of the procedure (at least temporarily); and The device offset amount must be significant, which is defined as exceeding 40 percent of the procedure's mean cost. We changed our policy to apply these three criteria to determine whether procedures qualify as device-intensive in the CY 2015 OPPS/ASC final rule with comment period (79 FR 66926), where we stated that we would apply the no cost/full credit and partial credit device policy-- which includes the three criteria listed previously--to all device- intensive procedures beginning in CY 2015. We reiterated this position in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70424), where we explained that we were finalizing our proposal to continue using the three criteria established in the CY 2007 OPPS/ASC final rule with comment period for determining the APCs to which the CY 2016 device intensive policy will apply. Under the policies we adopted in CYs 2015, 2016, and 2017, all procedures that require the implantation of a device and meet the previously described criteria are assigned device-intensive status, regardless of their APC placement.

2. Device-Intensive Procedure Policy

As part of our effort to better capture costs for procedures with significant device costs, in the CY 2019 OPPS/ASC final rule with comment period (83 FR [[Page 53674]] 58944 through 58948), for CY 2019, we modified our criteria for device- intensive procedures. We had heard from interested parties that the criteria excluded some procedures that interested parties believed should qualify as device-intensive procedures. Specifically, we were persuaded by interested party arguments that procedures requiring expensive surgically inserted or implanted devices that are not capital equipment should qualify as device-intensive procedures, regardless of whether the device remains in the patient's body after the conclusion of the procedure. We agreed that a broader definition of device- intensive procedures was warranted, and made two modifications to the criteria for CY 2019 (83 FR 58948). First, we allowed procedures that involve surgically inserted or implanted single-use devices that meet the device offset percentage threshold to qualify as device-intensive procedures, regardless of whether the device remains in the patient's body after the conclusion of the procedure. We established this policy because we no longer believe that whether a device remains in the patient's body should affect a procedure's designation as a device- intensive procedure, as such devices could, nonetheless, comprise a large portion of the cost of the applicable procedure. Second, we modified our criteria to lower the device offset percentage threshold from 40 percent to 30 percent, to allow a greater number of procedures to qualify as device intensive. We stated that we believed allowing these additional procedures to qualify for device-intensive status would help ensure these procedures receive more appropriate payment in the ASC setting, which would help encourage the provision of these services in the ASC setting. In addition, we stated that this change would help to ensure that more procedures containing relatively high- cost devices are subject to the device edits, which leads to more correctly coded claims and greater accuracy in our claims data. Specifically, for CY 2019 and subsequent years, we finalized that device-intensive procedures will be subject to the following criteria: All procedures must involve implantable devices assigned a CPT or HCPCS code; The required devices (including single-use devices) must be surgically inserted or implanted; and The device offset amount must be significant, which is defined as exceeding 30 percent of the procedure's mean cost (83 FR 58945). In addition, to further align the device-intensive policy with the criteria used for device pass-through payment status, we finalized, for CY 2019 and subsequent years, that for purposes of satisfying the device-intensive criteria, a device-intensive procedure must involve a device that: Has received FDA marketing authorization, has received an FDA investigational device exemption (IDE), and has been classified as a Category B device by FDA in accordance with Sec. Sec. 405.203 through 405.207 and 405.211 through 405.215, or meets another appropriate FDA exemption from premarket review; Is an integral part of the service furnished; Is used for one patient only; Comes in contact with human tissue; Is surgically implanted or inserted (either permanently or temporarily); and Is not either of the following: ++ Equipment, an instrument, apparatus, implement, or item of the type for which depreciation and financing expenses are recovered as depreciable assets as defined in Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or ++ A material or supply furnished incident to a service (for example, a suture, customized surgical kit, scalpel, or clip, other than a radiological site marker) (83 FR 58945). In addition, for new HCPCS codes describing procedures requiring the implantation of devices that do not yet have associated claims data, in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79658), we finalized a policy for CY 2017 to apply device-intensive status with a default device offset set at 41 percent for new HCPCS codes describing procedures requiring the implantation or insertion of a device that did not yet have associated claims data until claims data are available to establish the HCPCS code-level device offset for the procedures. This default device offset amount of 41 percent was not calculated from claims data; instead, it was applied as a default until claims data were available upon which to calculate an actual device offset for the new code. The purpose of applying the 41-percent default device offset to new codes that describe procedures that implant or insert devices was to ensure ASC access for new procedures until claims data become available. As discussed in the CY 2019 OPPS/ASC proposed rule and final rule with comment period (83 FR 37108 through 37109 and 83 FR 58945 through 58946, respectively), in accordance with our policy stated previously to lower the device offset percentage threshold for procedures to qualify as device-intensive from greater than 40 percent to greater than 30 percent, for CY 2019 and subsequent years, we modified this policy to apply a 31-percent default device offset to new HCPCS codes describing procedures requiring the implantation of a device that do not yet have associated claims data until claims data are available to establish the HCPCS code-level device offset for the procedures. In conjunction with the policy to lower the default device offset from 41 percent to 31 percent, we continued our current policy of, in certain rare instances (for example, in the case of a very expensive implantable device), temporarily assigning a higher offset percentage if warranted by additional information such as pricing data from a device manufacturer (81 FR 79658). Once claims data are available for a new procedure requiring the implantation or insertion of a device, device-intensive status is applied to the code if the HCPCS code-level device offset is greater than 30 percent, according to our policy of determining device-intensive status by calculating the HCPCS code-level device offset. In addition, in the CY 2019 OPPS/ASC final rule with comment period, we clarified that since the adoption of our policy in effect as of CY 2018, the associated claims data used for purposes of determining whether or not to apply the default device offset are the associated claims data for either the new HCPCS code or any predecessor code, as described by CPT coding guidance, for the new HCPCS code. Additionally, for CY 2019 and subsequent years, in limited instances where a new HCPCS code does not have a predecessor code as defined by CPT, but describes a procedure that was previously described by an existing code, we use clinical discretion to identify HCPCS codes that are clinically related or similar to the new HCPCS code but are not officially recognized as a predecessor code by CPT, and to use the claims data of the clinically related or similar code(s) for purposes of determining whether or not to apply the default device offset to the new HCPCS code (83 FR 58946). Clinically related and similar procedures for purposes of this policy are procedures that have few or no clinical differences and use the same devices as the new HCPCS code. In addition, clinically related and similar codes for purposes of this policy are codes that either currently or previously describe the procedure described by the [[Page 53675]] new HCPCS code. Under this policy, claims data from clinically related and similar codes are included as associated claims data for a new code, and where an existing HCPCS code is found to be clinically related or similar to a new HCPCS code, we apply the device offset percentage derived from the existing clinically related or similar HCPCS code's claims data to the new HCPCS code for determining the device offset percentage. We stated that we believe that claims data for HCPCS codes describing procedures that have minor differences from the procedures described by new HCPCS codes will provide an accurate depiction of the cost relationship between the procedure and the device(s) that are used, and will be appropriate to use to set a new code's device offset percentage, in the same way that predecessor codes are used. If a new HCPCS code has multiple predecessor codes, the claims data for the predecessor code that has the highest individual HCPCS-level device offset percentage is used to determine whether the new HCPCS code qualifies for device-intensive status. Similarly, in the event that a new HCPCS code does not have a predecessor code but has multiple clinically related or similar codes, the claims data for the clinically related or similar code that has the highest individual HCPCS level device offset percentage is used to determine whether the new HCPCS code qualifies for device-intensive status. In the CY 2025 OPPS/ASC final rule with comment period (89 FR 94214 through 92419), we finalized a change to our methodology for applying default device offset percentages for new device-intensive procedures. Under our previous policy, if a new CPT/HCPCS code did not have available claims data, either from the new HCPCS code or any predecessor code or clinically-similar code that uses the same device, and the CPT/HCPCS code otherwise met our criteria for device-intensive status, we would apply a default device offset percentage of 31 percent. However, we were aware of certain situations where the default device offset amount might not adequately reflect the existing device portion of the procedure's costs when compared to the cost of similar devices. A potential large difference between the default device offset amount and the device portion of similar devices might impede our ability to accurately remove device offset amounts from new device- intensive procedures under the OPPS and to set payment rates for device-intensive procedures under the ASC payment system. Therefore, for CY 2025 and subsequent CYs, we finalized our proposal to modify our default device offset percentage policy for new device-intensive procedures. Specifically, for new CPT/HCPCS codes that both describe a procedure that requires the surgical implantation or insertion of a single-use device that exceeds 30 percent of the procedure's cost and that meets our requirements of a device as described here and lack claims data (from either the new HCPCS code or any predecessor code or clinically-similar code that uses the same device), we would apply a default device offset percentage that is the greater of 31 percent or the device offset percentage of the APC to which the procedure has been assigned. We stated that we still believe that a HCPCS code-level device offset is, in most cases, a more accurate representation of a procedure's device cost than an APC-wide average device offset based on the average device offset of all the procedures assigned to an APC. However, because newer device-intensive procedures lack claims data, we believe the APC-wide average device offset percentage is, in many cases, a better reflection of the estimated device costs of the procedure than a default 31 percent offset. Additionally, there can be instances where the typical device costs of procedures in an APC can be significantly greater than the 31 percent default device offset. For these reasons, we finalized our modification to our default device offset percentage for new device-intensive procedures. This methodological change was finalized for both the OPPS and ASC Payment System for CY 2025 and subsequent CYs and applies to new procedures assigned to clinical APCs, but not to new procedures assigned to New Technology APCs. Additionally, in the CY 2025 OPPS/ASC final rule with comment period (89 FR 92414 through 92419), we stated that we were persuaded by commenters that the lack of a device edit for device-intensive procedures, particularly new technologies, might lead to an underreporting of device costs and total procedure costs and potentially impede beneficiary access to such new technologies over time. Therefore, in addition to finalizing a modification to our device edits policy for CY 2025, we finalized a modification to our device offset percentage calculation. For procedures subject to our modified device edits policy for CY 2025 that cannot report modifier ``CG'' to bypass this claims processing edit, the device offset percentages calculated (for the CPT/HCPCS code or its predecessor code) are based on hospital claims that reported a device code. We stated that we believed that hospital outpatient claims that report a device code with such procedures provide, in general, a more accurate representation of the procedures' total costs. We also finalized, for purposes of determining device offset percentages, that we will not use claims data from procedures that had a status indicator of ``E1'' during the calendar year we are using for ratesetting and determining device offset percentages. Lastly, we refined our process for applying device offset percentages to use available claims data from predecessor codes annually, rather than the first year of the successor code's activation date, until we have available claims data from the successor code. In the CY 2026 OPPS/ASC proposed rule (90 FR 33609), we proposed to continue these policies for CY 2026. As we indicated in the CY 2019 OPPS/ASC proposed rule and final rule with comment period, additional information for our consideration of an offset percentage higher than the default of 31 percent (or the APC-wide default offset percentage) for new HCPCS codes describing procedures requiring the implantation (or, in some cases, the insertion) of a device that do not yet have associated claims data, such as pricing data or invoices from a device manufacturer, should be directed to the Division of Outpatient Care, Mail Stop C4-01-26, Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, MD 21244-1850, or electronically [email protected]. We stated in the CY 2026 OPPS/ASC proposed rule that additional information can be submitted prior to issuance of an OPPS/ASC proposed rule or as a public comment in response to an issued OPPS/ASC proposed rule. Device offset percentages will be set in each year's final rule. We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: Commenters supported our assignment of device-intensive status and the proposed device offset percentages for the following CPT/HCPCS codes: CPT code 0671T (Insertion of anterior segment aqueous drainage device into the trabecular meshwork, without external reservoir, and without concomitant cataract removal, one or more); CPT code 0970T (Ablation, benign breast tumor (e.g., fibroadenoma), percutaneous, laser, including imaging guidance when performed, each tumor); [[Page 53676]] CPT code 0971T (Ablation, malignant breast tumor(s), percutaneous, laser, including imaging guidance when performed, unilateral); CPT code 52284 (Cystourethroscopy, with mechanical urethral dilation and urethral therapeutic drug delivery by drug-coated balloon catheter for urethral stricture or stenosis, male, including fluoroscopy, when performed); CPT code 52443 (placeholder code 52XX2) (Cystourethroscopy with initial transurethral anterior prostate commissurotomy with a nondrug-coated balloon catheter followed by therapeutic drug delivery into the prostate by a drug-coated balloon catheter, including transrectal ultrasound and fluoroscopy, when performed); CPT codes 66989 (Extracapsular cataract removal with insertion of intraocular lens prosthesis (1-stage procedure), manual or mechanical technique (e.g., irrigation and aspiration or phacoemulsification), complex, requiring devices or techniques not generally used in routine cataract surgery (e.g., iris expansion device, suture support for intraocular lens, or primary posterior capsulorrhexis) or performed on patients in the amblyogenic developmental stage; with insertion of intraocular (e.g., trabecular meshwork, supraciliary, suprachoroidal) anterior segment aqueous drainage device, without extraocular reservoir, internal approach, one or more), CPT code 66991 (Extracapsular cataract removal with insertion of intraocular lens prosthesis (1 stage procedure), manual or mechanical technique (e.g., irrigation and aspiration or phacoemulsification); with insertion of intraocular (e.g., trabecular meshwork, supraciliary, suprachoroidal) anterior segment aqueous drainage device, without extraocular reservoir, internal approach, one or more), and HCPCS code C9781 (Arthroscopy, shoulder, surgical; with implantation of subacromial spacer (e.g., balloon), includes debridement (e.g., limited or extensive), subacromial decompression, acromioplasty, and biceps tenodesis when performed); Response: We appreciate the commenters' support for our proposed device-intensive assignments and proposed device offset percentages based on CY 2024 claims data available for the CY 2026 OPPS/ASC proposed rule. Final device-intensive assignments are based on CY 2024 claims data available found in Addendum P of this final rule with comment period. Comment: One commenter recommended a nomination process for device- intensive procedures. Response: We thank the commenter for their recommendation. We believe it is important for our current methodology to rely on cost information from claims data for determining device-intensive status for CPT/HCPCS codes. Additionally, we believe our current methodology of determining device-intensive status and device offset percentages in the absence of claims data and seeking public comments on our determinations in our notice and comment rulemaking remains an appropriate methodology that relies on engagement with healthcare interested parties. Therefore, we do not see a need to create a nomination process for device-intensive procedures at this time. Comment: One commenter requested that CMS update Addendum P for the CY 2026 OPPS/ASC final rule to include the default device offset of 31 percent for CPT codes 0956T (Partial craniectomy, channel creation, and tunneling of electrode for sub-scalp implantation of an electrode array, receiver, and telemetry unit for continuous bilateral electroencephalography monitoring system, including imaging guidance) and 0960T (Replacement of sub-scalp implanted electrode array, receiver, and telemetry unit with tunneling of electrode for continuous bilateral electroencephalography monitoring system, including imaging guidance) as these are device-intensive procedures requiring sophisticated implantable devices with external wearable components and cloud services. Response: We thank the commenter and note that we inadvertently omitted CPT codes 0956T and 0960T from Addendum P in the CY 2026 OPPS/ ASC proposed rule, although we did propose in the CY 2026 OPPS/ASC proposed rule that such procedures were device-intensive in the ASC setting in Addenda AA and FF. We are therefore accepting the commenter's recommendation and assigning device-intensive status to CPT codes 0956T and 0960T with a device offset percentage of 31 percent in this CY 2026 OPPS/ASC final rule with comment period. Comment: Some commenters recommended that we modify our definition of device-intensive procedures to include non-insertable or implantable devices. The CPT/HCPCS codes commenters recommended assigning device- intensive status include: CPT code 0686T (Histotripsy (i.e., non-thermal ablation via acoustic energy delivery) of malignant hepatocellular tissue, including image guidance); CPT code 0888T (Histotripsy (i.e., non-thermal ablation via acoustic energy delivery) of malignant renal tissue, including imaging guidance); CPT code 15013 (Preparation of skin cell suspension autograft, requiring enzymatic processing, manual mechanical disaggregation of skin cells, and filtration; first 25 sq cm or less of harvested skin); and HCPCS code C8002 (Preparation of skin cell suspension autograft, automated, including all enzymatic processing and device components (do not report with manual suspension preparation)). The commenters asserted that failure to assign device-intensive status to these procedures will result in ASC payment rates that do not accurately reflect the resource costs of furnishing these services, potentially limiting beneficiary access to innovative skin cell suspension autograft procedures and certain histotripsy procedures in the ASC setting. Response: We appreciate the commenters' recommendations. We do not believe we should expand our definition of devices to include the costs of skin substitute products or capital-intensive equipment, as our current ratesetting methodology adequately captures the costs for such items and services for developing OPPS/ASC payment rates. Therefore, we are not accepting the commenter's recommendation. Comment: One commenter disagreed with our proposed device offset percentage for CPT code 0202T (Posterior vertebral joint(s) arthroplasty (e.g., facet joint[s] replacement), including facetectomy, laminectomy, foraminotomy, and vertebral column fixation, injection of bone cement, when performed, including fluoroscopy, single level, lumbar spine) at 59.21 percent. The commenter was unclear how we determined this figure, and stated it is unclear since this procedure was previously on the IPO list and the APC-wide device offset percentage is 59.63 percent. Response: While CPT code 0202T was on the inpatient-only list for CY 2024, we did receive one claim for CY 2026 OPPS/ASC ratesetting from CY 2024. Based on this CY 2024 claim available for this final rule with comment period, we are not relying on our default device offset methodology and assigning device-intensive status to CPT code 0202T using the CY 2024 claim data available. The final device offset percentage for CPT code 0202T under the OPPS can be found in Addendum P to this final rule with comment period. [[Page 53677]] Comment: Two commenters requested that CMS assign device-intensive status to HCPCS code C9779 (Endoscopic submucosal dissection (esd), including endoscopy or colonoscopy, mucosal closure, when performed). The commenters noted that endoscopic submucosal dissection requires specialized, expensive single-use devices and equipment that represent a significant portion of the total procedure cost, warranting device- intensive recognition to ensure appropriate reimbursement. Both commenters asserted that without proper device-intensive status, the payment may be insufficient to cover the actual costs of performing this complex procedure, potentially limiting patient access to this advanced endoscopic technique in both hospital outpatient and ASC settings. Response: For this final rule with comment period, the device offset percentage for HCPCS code C9779 is below our device-intensive threshold based on 963 claims for this service in the CY 2024 data and, therefore, does not qualify for device-intensive for CY 2026. Comment: Some commenters recommended that we establish the device offset percentage for CPT code 47384 (placeholder code 4001X) (Ablation, irreversible electroporation, liver, one or more tumors, including imaging guidance, percutaneous) and CPT code 55877 (placeholder code 5XX11) (Ablation, irreversible electroporation, prostate, one or more tumors, including imaging guidance, percutaneous) using CPT code 0600T (Ablation, irreversible electroporation; one or more tumors per organ, other than liver or prostate, including imaging guidance, when performed, percutaneous). The commenters argue that CPT code 0600T was the predecessor code to CPT codes 47384 and 55877 and therefore under our policy for establishing device offset percentages for new device-intensive procedures, we should rely on claims data from CPT code 0600T to establish the device offset percentages for the new procedures. Response: We agree with the commenters' recommendation. We inadvertently did not use claims data from predecessor CPT code 0600T for establishing the proposed device offset percentages for CPT codes 47384 and 55877 for the CY 2026 OPPS/ASC proposed rule. We are accepting the commenters' recommendations and establishing the device offset percentage for CPT codes 47384 and 55877 using the claims data from CPT code 0600T for CY 2026. Comment: Multiple commenters requested that CMS classify CPT code 52282 (Cystourethroscopy, with insertion of permanent urethral stent) as device-intensive. The commenters believed that CMS's claims data analysis is fundamentally flawed because no permanent urethral stents have been available in the U.S. market since April 2016, making any recent claims data implausible and not reflective of actual procedural activity, with analysis showing that over 33 percent of the 111 claims used were inappropriately billed to female patients despite the procedure being indicated only for males. The commenters urged CMS to exclude all existing hospital outpatient claims for CPT 52282 from payment calculations, designate the procedure as device-intensive using manufacturer pricing as a device offset, and ensure adequate reimbursement to support patient access to upcoming clinically proven permanent urethral stent technologies for BPH treatment. Separately, a commenter requested that CMS consider granting device-intensive status for CPT code 62287 (Decompression procedure, percutaneous, of nucleus pulposus of intervertebral disc, any method utilizing needle based technique to remove disc material under fluoroscopic imaging or other form of indirect visualization, with discography and/or epidural injection(s) at the treated level(s), when performed, single or multiple levels, lumbar) due to a lack of consistent reporting of device costs associated with this procedure. The commenter stated that if the invoice cost of devices used in the procedure were compared to the reimbursement rate, the device-related portion of the reimbursement would exceed the 30 percent threshold required for device-intensive status. Response: We appreciate the concerns the commenters have raised but note that hospitals have reported these CPT codes across a significant number of claims in total over the past several years and the device offset percentages of such claims has not exceeded our device-intensive threshold of 30 percent in each of the past several years. We believe it would be inappropriate to disregard the entirety of such claims data for determining device-intensive status as we rely on hospitals to accurately report device costs for OPPS/ASC ratesetting. Therefore, we are not accepting the commenters' recommendation to assign device- intensive status to CPT codes 52282 and 62287 for CY 2026. Comment: Commenters requested that CMS retain the predecessor device offset percentages for the newly restructured lower extremity revascularization CPT codes (placeholder codes 37X02-37X46) rather than adopting the APC device offset percentage, arguing that this approach aligns with CMS's standard policy of maintaining historical device offset data when codes are revised or bifurcated. Response: We agree with the commenters that the newly-restructured lower extremity revascularization CPT codes have a suitable predecessor code for which we can use claims data for determining device offset percentages. Therefore, for such procedures that are separately payable, we are accepting the commenters' recommendation and will assign a device offset percentage to the new lower extremity revascularization CPT codes based on claims data from the predecessor code. Specifically, for CY 2026, we rely on the mapping that follows: Claims data from CPT code 37220 (Revascularization, endovascular, open or percutaneous, iliac artery, unilateral, initial vessel; with transluminal angioplasty) for determining the device offset percentage for CPT codes 37254 (Revascularization, endovascular, open or percutaneous, iliac vascular territory, with transluminal angioplasty, including all maneuvers necessary for accessing and selectively catheterizing the artery and crossing the lesion, including all imaging guidance and radiological supervision and interpretation necessary to perform the angioplasty within the same artery, unilateral; straightforward lesion, initial vessel) and 37256 (Revascularization, endovascular, open or percutaneous, iliac vascular territory, with transluminal angioplasty, including all maneuvers necessary for accessing and selectively catheterizing the artery and crossing the lesion, including all imaging guidance and radiological supervision and interpretation necessary to perform the angioplasty within the same artery, unilateral; complex lesion, initial vessel) (placeholder codes 37XX1 and 37X03); Claims data from CPT code 37221 (Revascularization, endovascular, open or percutaneous, iliac artery, unilateral, initial vessel; with transluminal stent placement(s), includes angioplasty within the same vessel, when performed) for determining the device offset percentage for CPT codes 37258 (Revascularization, endovascular, open or percutaneous, iliac vascular territory, with transluminal stent placement, including transluminal angioplasty when performed, including all maneuvers necessary for accessing and selectively catheterizing the artery and crossing the lesion, including all imaging guidance and radiological [[Page 53678]] supervision and interpretation necessary to perform the stent placement and angioplasty when performed, within the same artery, unilateral; straightforward lesion, initial vessel) and 37260 (Revascularization, endovascular, open or percutaneous, iliac vascular territory, with transluminal stent placement, including transluminal angioplasty when performed, including all maneuvers necessary for accessing and selectively catheterizing the artery and crossing the lesion, including all imaging guidance and radiological supervision and interpretation necessary to perform the stent placement and angioplasty when performed, within the same artery, unilateral; complex lesion, initial vessel) (placeholder codes 37X05 and 37X07); Claims data from CPT code 37224 (Revascularization, endovascular, open or percutaneous, femoral, popliteal artery(s), unilateral; with transluminal angioplasty) for determining the device offset percentage for CPT codes 37263 (Revascularization, endovascular, open or percutaneous, femoral and popliteal vascular territory, with transluminal angioplasty, including all maneuvers necessary for accessing and selectively catheterizing the artery and crossing the lesion, including all imaging guidance and radiological supervision and interpretation necessary to perform the angioplasty within the same artery, unilateral; straightforward lesion, initial vessel) and 37265 (Revascularization, endovascular, open or percutaneous, femoral and popliteal vascular territory, with transluminal angioplasty, including all maneuvers necessary for accessing and selectively catheterizing the artery and crossing the lesion, including all imaging guidance and radiological supervision and interpretation necessary to perform the angioplasty within the same artery, unilateral; complex lesion, initial vessel) (placeholder codes 37X10 and 37X12); Claims data from CPT code 37225 (Revascularization, endovascular, open or percutaneous, femoral, popliteal artery(s), unilateral; with atherectomy, includes angioplasty within the same vessel, when performed) for determining the device offset percentage for CPT codes 37271 (Revascularization, endovascular, open or percutaneous, femoral and popliteal vascular territory, with transluminal atherectomy, including transluminal angioplasty when performed, including all maneuvers necessary for accessing and selectively catheterizing the artery and crossing the lesion, including all imaging guidance and radiological supervision and interpretation necessary to perform the atherectomy and angioplasty when performed, within the same artery, unilateral; straightforward lesion, initial vessel) and 37273 (Revascularization, endovascular, open or percutaneous, femoral and popliteal vascular territory, with transluminal atherectomy, including transluminal angioplasty when performed, including all maneuvers necessary for accessing and selectively catheterizing the artery and crossing the lesion, including all imaging guidance and radiological supervision and interpretation necessary to perform the atherectomy and angioplasty when performed, within the same artery, unilateral; complex lesion, initial vessel) (placeholder codes 37X18 and 37X20); Claims data from CPT code 37226 (Revascularization, endovascular, open or percutaneous, femoral, popliteal artery(s), unilateral; with transluminal stent placement(s), includes angioplasty within the same vessel, when performed) for determining the device offset percentage for CPT codes 37267 (Revascularization, endovascular, open or percutaneous, femoral and popliteal vascular territory, with transluminal stent placement, including transluminal angioplasty when performed, including all maneuvers necessary for accessing and selectively catheterizing the artery and crossing the lesion, including all imaging guidance and radiological supervision and interpretation necessary to perform the stent placement and angioplasty when performed, within the same artery, unilateral; straightforward lesion, initial vessel) and 37269 (Revascularization, endovascular, open or percutaneous, femoral and popliteal vascular territory, with transluminal stent placement, including transluminal angioplasty when performed, including all maneuvers necessary for accessing and selectively catheterizing the artery and crossing the lesion, including all imaging guidance and radiological supervision and interpretation necessary to perform the stent placement and angioplasty when performed, within the same artery, unilateral; complex lesion, initial vessel) (placeholder codes 37X14 and 37X16); Claims data from CPT code 37227 (Revascularization, endovascular, open or percutaneous, femoral, popliteal artery(s), unilateral; with transluminal stent placement(s) and atherectomy, includes angioplasty within the same vessel, when performed) for determining the device offset percentage for CPT codes 37275 (Revascularization, endovascular, open or percutaneous, femoral and popliteal vascular territory, with transluminal stent placement, with transluminal atherectomy, including transluminal angioplasty when performed, including all maneuvers necessary for accessing and selectively catheterizing the artery and crossing the lesion, including all imaging guidance and radiological supervision and interpretation necessary to perform the stent placement, atherectomy, and angioplasty when performed, within the same artery, unilateral; straightforward lesion, initial vessel) and 37277 (Revascularization, endovascular, open or percutaneous, femoral and popliteal vascular territory, with transluminal stent placement, with transluminal atherectomy, including transluminal angioplasty when performed, including all maneuvers necessary for accessing and selectively catheterizing the artery and crossing the lesion, including all imaging guidance and radiological supervision and interpretation necessary to perform the stent placement, atherectomy, and angioplasty when performed, within the same artery, unilateral; complex lesion, initial vessel) (placeholder codes 37X22 and 37X24); Claims data from CPT code 37228 (Revascularization, endovascular, open or percutaneous, tibial, peroneal artery, unilateral, initial vessel; with transluminal angioplasty) for determining the device offset percentage for CPT codes 37280 (Revascularization, endovascular, open or percutaneous, tibial and peroneal vascular territory, with transluminal angioplasty, including all maneuvers necessary for accessing and selectively catheterizing the artery and crossing the lesion, including all imaging guidance and radiological supervision and interpretation necessary to perform the angioplasty within the same artery, unilateral; straightforward lesion, initial vessel), 37282 (Revascularization, endovascular, open or percutaneous, tibial and peroneal vascular territory, with transluminal angioplasty, including all maneuvers necessary for accessing and selectively catheterizing the artery and crossing the lesion, including all imaging guidance and radiological supervision and interpretation necessary to perform the angioplasty within the same artery, unilateral; complex lesion, initial vessel), 37296 (Revascularization, endovascular, open or percutaneous, inframalleolar vascular territory, with transluminal angioplasty, including all maneuvers necessary for accessing and selectively catheterizing the artery and [[Page 53679]] crossing the lesion, including all imaging guidance and radiological supervision and interpretation necessary to perform the angioplasty within the same artery, unilateral; straightforward lesion, initial vessel), 37298 (Revascularization, endovascular, open or percutaneous, inframalleolar vascular territory, with transluminal angioplasty, including all maneuvers necessary for accessing and selectively catheterizing the artery and crossing the lesion, including all imaging guidance and radiological supervision and interpretation necessary to perform the angioplasty within the same artery, unilateral; complex lesion, initial vessel) (placeholder codes 37X27, 37X29, 37X43, and 37X45); Claims data from CPT code 37229 (Revascularization, endovascular, open or percutaneous, tibial, peroneal artery, unilateral, initial vessel; with atherectomy, includes angioplasty within the same vessel, when performed) for determining the device offset percentage for CPT codes 37288 (Revascularization, endovascular, open or percutaneous, tibial and peroneal vascular territory, with transluminal atherectomy, including transluminal angioplasty when performed, including all maneuvers necessary for accessing and selectively catheterizing the artery and crossing the lesion, including all imaging guidance and radiological supervision and interpretation necessary to perform the atherectomy and angioplasty when performed, within the same artery, unilateral; straightforward lesion, initial vessel) and 37290 (Revascularization, endovascular, open or percutaneous, tibial and peroneal vascular territory, with transluminal atherectomy, including transluminal angioplasty when performed, including all maneuvers necessary for accessing and selectively catheterizing the artery and crossing the lesion, including all imaging guidance and radiological supervision and interpretation necessary to perform the atherectomy and angioplasty when performed, within the same artery, unilateral; complex lesion, initial vessel) (placeholder codes 37X35 and 37X37); Claims data from CPT code 37230 (Revascularization, endovascular, open or percutaneous, tibial, peroneal artery, unilateral, initial vessel; with transluminal stent placement(s), includes angioplasty within the same vessel, when performed) for determining the device offset percentage for CPT codes 37284 (Revascularization, endovascular, open or percutaneous, tibial and peroneal vascular territory, with transluminal stent placement, including transluminal angioplasty when performed, including all maneuvers necessary for accessing and selectively catheterizing the artery and crossing the lesion, including all imaging guidance and radiological supervision and interpretation necessary to perform the stent placement and angioplasty when performed, within the same artery, unilateral; straightforward lesion, initial vessel) and 37286 (Revascularization, endovascular, open or percutaneous, tibial and peroneal vascular territory, with transluminal stent placement, including transluminal angioplasty when performed, including all maneuvers necessary for accessing and selectively catheterizing the artery and crossing the lesion, including all imaging guidance and radiological supervision and interpretation necessary to perform the stent placement and angioplasty when performed, within the same artery, unilateral; complex lesion, initial vessel) (placeholder codes 37X31 and 37X33); Claims data from CPT code 37231 (Revascularization, endovascular, open or percutaneous, tibial, peroneal artery, unilateral, initial vessel; with transluminal stent placement(s) and atherectomy, includes angioplasty within the same vessel, when performed) for determining the device offset percentage for CPT codes 37292 (Revascularization, endovascular, open or percutaneous, tibial and peroneal vascular territory, with transluminal stent placement, with transluminal atherectomy, including transluminal angioplasty when performed, including all maneuvers necessary for accessing and selectively catheterizing the artery and crossing the lesion, including all imaging guidance and radiological supervision and interpretation necessary to perform the stent placement, atherectomy, and angioplasty when performed, within the same artery, unilateral; straightforward lesion, initial vessel) and 37294 (Revascularization, endovascular, open or percutaneous, tibial and peroneal vascular territory, with transluminal stent placement, with transluminal atherectomy, including transluminal angioplasty when performed, including all maneuvers necessary for accessing and selectively catheterizing the artery and crossing the lesion, including all imaging guidance and radiological supervision and interpretation necessary to perform the stent placement, atherectomy, and angioplasty when performed, within the same artery, unilateral; complex lesion, initial vessel) (placeholder codes 37X39 and 37X41); After consideration of the public comments we received, we are finalizing our proposed continued use of HCPCS code-level device- intensive determination and three criteria to designate device- intensive procedures, in accordance with existing policies as discussed in the CY 2026 OPPS/ASC proposed rule section IV.B.1.a (90 FR 33607). We are also finalizing our proposed continuation of our device- intensive procedure policy, proposed use of CY 2024 claims information for determining device offset percentages and assigning device- intensive status, and our proposed default device offset policy for determining device offset percentages in the absence of claims data for device-intensive procedures, in accordance with existing policies as discussed in the CY 2026 OPPS/ASC proposed rule section IV.B.1.b (90 FR 33607). Comments and our responses related to device-intensive procedure policy and the procedures we proposed for device-intensive status under the ASC payment system for CY 2026 can be found in section XIII.C.4. of this final rule with comment period. Our responses and final determinations related to device-intensive status for certain procedures under the ASC payment system are also applied to our final determinations of device-intensive status under the OPPS. The full listing of the final CY 2026 device-intensive procedures can be found in Addendum P to this final rule with comment period (which is available via the internet on the CMS website). Further, our claims accounting narrative contains a description of our device offset percentage calculation. Our claims accounting narrative for this final rule with comment period can be found under supporting documentation for the CY 2026 OPPS/ASC final rule with comment period on our website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.

3. Device Edit Policy

In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66795), we finalized a policy and implemented claims processing edits that require any of the device codes used in the previous device-to- procedure edits to be present on the claim whenever a procedure code assigned to any of the APCs listed in Table 5 of the CY 2015 OPPS/ASC final rule with comment period (the CY 2015 device-dependent APCs) was reported on the claim. In addition, in the CY 2016 OPPS/ASC final rule with [[Page 53680]] comment period (80 FR 70422), we modified our previously existing policy and applied the device coding requirements exclusively to procedures that require the implantation of a device assigned to a device-intensive APC. In the CY 2016 OPPS/ASC final rule with comment period, we also finalized our policy that the claims processing edits are such that any device code, when reported on a claim with a procedure assigned to a device-intensive APC (listed in Table 42 of the CY 2016 OPPS/ASC final rule with comment period (80 FR 70422)), will satisfy the edit. In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79658 through 79659), we changed our policy for CY 2017 and subsequent years to apply the CY 2016 device coding requirements to the newly defined device-intensive procedures. For CY 2017 and subsequent years, we also specified that any device code, when reported on a claim with a device- intensive procedure, will satisfy the edit. In addition, we created HCPCS code C1889 to recognize devices furnished during a device- intensive procedure that are not described by a specific Level II HCPCS Category C-code. Reporting HCPCS code C1889 with a device-intensive procedure will satisfy the edit requiring a device code to be reported on a claim with a device-intensive procedure. In the CY 2019 OPPS/ASC final rule with comment period, we revised the description of HCPCS code C1889 to remove the specific applicability to device-intensive procedures (83 FR 58950). For CY 2019 and subsequent years, the description of HCPCS code C1889 is ``Implantable/insertable device, not otherwise classified.'' In the CY 2024 OPPS/ASC final rule with comment period (88 FR 81758 through 81759), we finalized our proposal to establish a procedure-to- device edit for the procedures assigned to APC 5496 (Level 6 Intraocular Procedures) and require hospitals to report the correct device HCPCS codes when reporting any of the four procedures--CPT codes 0308T and 0616T, 0617T, and 0618T. (We note that CPT codes 0617T and 0618T were deleted effective January 1, 2025 and CPT code 0616T was deleted effective January 1, 2025 and replaced with new CPT code 66683.) We have noted that interested parties have previously recommended in past rulemaking that we reestablish all our previous procedure-to-device edits, but we do not expect to extend this policy beyond the procedures assigned to APC 5496 (Level 6 Intraocular Procedures). This APC represents a unique situation--the APC (which was the Level 5 Intraocular APC in previous years) had been a Low Volume APC (fewer than 100 claims in a claims year) since we established our Low Volume APC policy, the procedures associated with this APC have significant procedure costs often greater than $15,000, and the procedures associated with this APC require the implantation of a high- cost intraocular device. In the CY 2025 OPPS/ASC final rule, we finalized to continue this policy for APC 5496 (Level 6 Intraocular Procedures) for CY 2025 and subsequent years. In the CY 2025 OPPS/ASC final rule with comment period (89 FR 92419 through 92422), we finalized a modification to our device edits policy. While historically our device edits policy has only applied to procedures that are device-intensive based on the most recent claims data available, commenters had raised concerns about hospitals underreporting device costs in years when certain device-intensive procedures had lost device-intensive status because the device portion of a procedure can fluctuate above and below our device-intensive threshold of 30 percent. Commenters indicated to us that the presence of the device edit requirement can have a significant impact on the device portion and geometric mean cost of a procedure, particularly for newer technologies. Therefore, for CY 2025 and subsequent CYs, we finalized a policy to apply our device edits policy permanently once a procedure is designated as a device-intensive procedure in a given year. Additionally, we finalized a policy to reinstate our device edits policy for procedures that have been device-intensive since we began assigning device-intensive status at the HCPCS code level on January 1, 2017. We believed that by applying our device edit policy to procedures that were device-intensive on or after January 1, 2017, we might continue to receive device cost information for relatively new procedures with limited claims data, which may have been impacted by our policy to require that only existing device-intensive procedures be subject to our device edits policy. For CY 2026, under our modified device edits policy, our device edits requirement will apply to procedures that are designated as device-intensive in CY 2026 and will apply in subsequent years. We did not propose any changes to our device edit policy for CY 2026 in the CY 2026 OPPS/ASC proposed rule. We received public comments. The following is a summary of the comments we received and our responses. Comment: Some commenters supported CMS's current device edits policy. Response: We appreciate commenters support of our device edits policy. Comment: One commenter recommended we reinstate procedure-to-device edits, particularly for joint replacement procedures. Response: We believe hospitals have adequate experience in coding and billing for joint replacement procedures, which are subject to our device edits policy, and do not believe it is necessary to reinstate specific procedure-to-device edits for joint replacement procedures. Therefore, we are not accepting the commenter's recommendation. Comment: Commenters recommended that CMS establish specific new device category HCPCS C-codes to improve capturing device costs for certain procedures under the OPPS/ASC ratesetting methodologies. Specifically, commenters requested we establish a C-code for a bone- anchored annular implant, C-codes for devices used with procedures we are finalizing to remove from the inpatient-only list for CY 2026, and C-codes to describe the drug-coated balloon catheter and guidewire used for urethral stricture or prostatic hyperplasia. Response: While we may create new device category C-codes for device categories approved under transitional pass-through status to be paid at charges reduced to cost, we do not believe it is appropriate or necessary to create additional device category C-codes outside of the transitional pass-through approval process. We believe hospitals have sufficient experience in coding and reporting significant device costs correctly on hospital claims using the existing device category HCPCS C-codes as well as uncoded revenue codes After consideration of public comments, we are finalizing our proposal, without modification, to continue our device edits policy for CY 2026.

4. Adjustment to OPPS Payment for No Cost/Full Credit and Partial

Credit Devices a. Background To ensure equitable OPPS payment when a hospital receives a device without cost or with full credit, in CY 2007, we implemented a policy to reduce the payment for specified device-dependent APCs by the estimated portion of the APC payment attributable to device costs (that is, the device offset) when the hospital receives a specified device at no cost or with full credit (71 FR 68071 through 68077). [[Page 53681]] Hospitals were instructed to report no cost/full credit device cases on the claim using the ``FB'' modifier on the line with the procedure code in which the no cost/full credit device is used. In cases in which the device is furnished without cost or with full credit, hospitals were instructed to report a token device charge of less than $1.01. In cases in which the device being inserted is an upgrade (either of the same type of device or to a different type of device) with a full credit for the device being replaced, hospitals were instructed to report as the device charge the difference between the hospital's usual charge for the device being implanted and the hospital's usual charge for the device for which it received full credit. In CY 2008, we expanded this payment adjustment policy to include cases in which hospitals receive partial credit of 50 percent or more of the cost of a specified device. Hospitals were instructed to append the ``FC'' modifier to the procedure code that reports the service provided to furnish the device when they receive a partial credit of 50 percent or more of the cost of the new device. We refer readers to the CY 2008 OPPS/ASC final rule with comment period for more background information on the ``FB'' and ``FC'' modifiers payment adjustment policies (72 FR 66743 through 66749). In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75005 through 75007), beginning in CY 2014, we modified our policy of reducing OPPS payment for specified APCs when a hospital furnishes a specified device without cost or with a full or partial credit. For CY 2013 and prior years, our policy had been to reduce OPPS payment by 100 percent of the device offset amount when a hospital furnishes a specified device without cost or with a full credit and by 50 percent of the device offset amount when the hospital receives partial credit in the amount of 50 percent or more of the cost for the specified device. For CY 2014, we reduced OPPS payment, for the applicable APCs, by the full or partial credit a hospital receives for a replaced device. Specifically, under this modified policy, hospitals are required to report on the claim the amount of the credit in the amount portion for value code ``FD'' (Credit Received from the Manufacturer for a Replaced Device) when the hospital receives a credit for a replaced device that is 50 percent or greater than the cost of the device. For CY 2014, we also limited the OPPS payment deduction for the applicable APCs to the total amount of the device offset when the ``FD'' value code appears on a claim. For CY 2015, we continued our policy of reducing OPPS payment for specified APCs when a hospital furnishes a specified device without cost or with a full or partial credit and to use the three criteria established in the CY 2007 OPPS/ ASC final rule with comment period (71 FR 68072 through 68077) for determining the APCs to which our CY 2015 policy will apply (79 FR 66872 through 66873). In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70424), we finalized our policy to no longer specify a list of devices to which the OPPS payment adjustment for no cost/full credit and partial credit devices would apply and instead apply this APC payment adjustment to all replaced devices furnished in conjunction with a procedure assigned to a device-intensive APC when the hospital receives a credit for a replaced specified device that is 50 percent or greater than the cost of the device. b. Policy for No Cost/Full Credit and Partial Credit Devices In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79659 through 79660), for CY 2017 and subsequent years, we finalized a policy to reduce OPPS payment for device-intensive procedures, by the full or partial credit a provider receives for a replaced device, when a hospital furnishes a specified device without cost or with a full or partial credit. Under our current policy, Under our current policy, hospitals continue to be required to report on the claim the amount of the credit in the amount portion for value code ``FD'' when the hospital receives a credit for a replaced device that is 50 percent or greater than the cost of the device. In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75005 through 75007), we adopted a policy of reducing OPPS payment for specified APCs when a hospital furnishes a specified device without cost or with a full or partial credit by the lesser of the device offset amount for the APC or the amount of the credit. We adopted this change in policy in the preamble of the CY 2014 OPPS/ASC final rule with comment period and discussed it in subregulatory guidance, including chapter 4, section 61.3.6 of the Medicare Claims Processing Manual. Further, in the CY 2021 OPPS/ASC final rule with comment period (85 FR 86017 through 86018, 86302), we made conforming changes to our regulations at Sec. 419.45(b)(1) and (2) that codified this policy. We did not propose any changes related to our policies regarding payment for no cost/full credit and partial credit devices for CY 2026 in the CY 2026 OPPS/ASC proposed rule, and we did not receive public comments. We are maintaining our current policy for CY 2026.

A. OPPS Transitional Pass-Through Payment for Additional Costs of

Drugs, Biologicals, and Radiopharmaceuticals

1. Background

Section 1833(t)(6) of the Act (42 U.S.C. 1395l(t)(6)) provides for temporary additional payments or ``transitional pass-through payments'' for certain drugs and biologicals. A ``biological'' as used in this final rule with comment period, and as codified at 42 CFR 414.802 and 414.902 includes a ``product licensed under section 351 of the PHS [Public Health Service] Act''. As enacted by the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106- 113), this pass-through payment provision requires the Secretary to make additional payments to hospitals for: current orphan drugs for rare diseases and conditions, as designated under section 526 of the Federal Food, Drug, and Cosmetic Act; current drugs and biologicals and brachytherapy sources used in cancer therapy; and current radiopharmaceutical drugs and biologicals. ``Current'' refers to those types of drugs or biologicals mentioned above that are hospital outpatient services under Medicare Part B for which transitional pass- through payment was made on the first date the hospital OPPS was implemented. Transitional pass-through payments also are provided for certain ``new'' drugs and biologicals that were not being paid for as a Hospital Outpatient Department (HOPD) service as of December 31, 1996, and whose cost is ``not insignificant'' in relation to the OPPS payments for the procedures or services associated with the new drug or biological. For pass-through payment purposes, radiopharmaceuticals are included as ``drugs.'' As required by statute, transitional pass- through payments for a drug or biological described in section 1833(t)(6)(C)(i)(II) of the Act can be made for a period of at least 2 years, but not more than 3 years, after the payment was first made for the drug as a hospital outpatient service under Medicare Part B. Final CY 2026 pass-through drugs and biologicals and their designated APCs are assigned status indicator ``G'' in Addenda A and [[Page 53682]] B to this final rule with comment period (which are available on the CMS website).\65\ --------------------------------------------------------------------------- \65\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient. --------------------------------------------------------------------------- Section 1833(t)(6)(D)(i) of the Act specifies that the pass-through payment amount, in the case of a drug or biological, is the amount by which the amount determined under section 1842(o) of the Act (42 U.S.C. 1395u(o)) for the drug or biological exceeds the portion of the otherwise applicable Medicare Outpatient Department (OPD) fee schedule that the Secretary determines is associated with the drug or biological. The methodology for determining the pass-through payment amount is set forth in regulations at 42 CFR 419.64. In accordance with section V.B.9. of the CY 2026 OPPS/ASC proposed rule, skin substitutes with an approved Biologics License Application (BLA) would be considered under transitional drug pass-through payment status. As such, we proposed to amend our regulation at Sec. 419.64 to remove paragraph (a)(4)(iv), which currently reads ``A biological that is not a skin substitute or similar product that aids wound healing.'' The regulations at 42 CFR 419.64(d) specify that the pass-through payment equals the amount determined under section 1842(o) of the Act minus the portion of the Ambulatory Payment Classification (APC) payment that CMS determines is associated with the drug or biological. Section 1847A of the Act (42 U.S.C. 1395w-3a) establishes the average sales price (ASP) methodology, which is used for payment for drugs and biologicals described in section 1842(o)(1)(C) of the Act furnished on or after January 1, 2005. The ASP methodology, as applied under the OPPS, uses several sources of data as a basis for payment, including the ASP, the wholesale acquisition cost (WAC), and the average wholesale price (AWP). In this final rule with comment period, the term ``ASP methodology'' and ``ASP-based'' are inclusive of all data sources and methodologies described therein. Additional information on the ASP methodology can be found on our website at https://www.cms.gov/medicare/payment/fee-for-service-providers/part-b-drugs/average-drug-sales-price. The pass-through application \66\ and review process for drugs and biologicals is described on our website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/pass-through-payment-status-new-technology-ambulatory-payment-classification-apc. --------------------------------------------------------------------------- \66\ To apply for OPPS transitional Pass-Through Payment Status and New Technology Ambulatory Payment Classification (APC), applicants complete an application that is subject to the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq.). This information collection (CMS-10008) is currently approved under OMB control number of 0938-0802 and has an expiration date of July 31, 2027. --------------------------------------------------------------------------- We received a comment on our proposal. Comment: We received a comment requesting that CMS codify in regulation that biologicals classified and approved by the FDA under section 351 will be evaluated for coding and pass-through payment under CMS' drugs and biologics pathways and applications. Response: While under this policy, skin substitute products approved as a drug or biological product (via the BLA pathway) under section 351 of the PHS Act may be eligible for drug pass-through, we note that, the policy does not apply to the evaluation for coding or transitional pass-through payment for other products that are not skin substitute products, including other drugs and biological products approved under section 351 of the PHS Act. In accordance with section V.B.9. of the CY 2026 OPPS/ASC final rule with comment period, skin substitutes with an approved BLA will be considered under the transitional drug pass-through payment process. As such, we are finalizing our proposal to amend our regulation at Sec. 419.64 to remove paragraph (a)(4)(iv) ``A biological that is not a skin substitute or similar product that aids wound healing.'' For more information on our payment policy for skin substitute products, we refer readers to section V.B.9 of this final rule with comment period.

2. Transitional Pass-Through Payment Period for Pass-Through Drugs,

Biologicals, and Radiopharmaceuticals and Quarterly Expiration of Pass- Through Status As required by statute, transitional pass-through payments for a drug or biological described in section 1833(t)(6)(C)(i)(II) of the Act can be made for a period of at least 2 years, but not more than 3 years, after the payment was first made for the drug or biological as a hospital outpatient service under Medicare Part B. Drugs and biologicals pass-through applications are accepted and approved on a quarterly basis in which pass-through payments for approved applications could begin on the next available OPPS quarterly update. Furthermore, our current policy, which was finalized in CY 2017 OPPS/ ASC final rule with comment period (81 FR 79662), is to allow for quarterly expiration of pass-through payment status for drugs, biologicals, and radiopharmaceuticals to afford a pass-through payment period that is as close to a full 3 years as possible to allow, on a prospective basis, for the maximum pass-through payment period without exceeding the statutory limit of 3 years. Notice of drugs for which pass-through payment status is ending during the calendar year is included in the quarterly OPPS Change Request transmittals.

3. Drugs and Biologicals With Expiring Pass-Through Payment Status in

CY 2025 There are 28 drugs and biologicals for which pass-through payment status expires by December 31, 2025, as listed in Table 104. These drugs and biologicals will have received OPPS pass-through payment for 3 years during the period of April 1, 2022 through December 31, 2025. In accordance with the policy finalized in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79662) and described earlier, pass- through payment status for drugs and biologicals approved in CY 2017 and subsequent years will expire on a quarterly basis, with a pass- through payment period as close to 3 years as possible. With the exception of those groups of drugs and biologicals that are always packaged when they do not have pass-through payment status (specifically, anesthesia drugs; drugs, biologicals, and radiopharmaceuticals \67\ that function as supplies when used in a diagnostic test or procedure; and drugs and biologicals that function as supplies when used in a surgical procedure), our standard methodology for providing payment for drugs and biologicals with expiring pass-through payment status in an upcoming calendar year is to determine the product's estimated per day cost and compare it with the OPPS drug packaging threshold for that calendar year, which is proposed to be $140 for CY 2026 for all drugs, biologicals, and therapeutic radiopharmaceuticals (for high-cost diagnostic radiopharmaceuticals, we would provide separate payment when their per day cost greater than the finalized threshold of $655). These policies are discussed further in section V.B.1. of this final rule with comment period. If the estimated per day cost for the drug or biological is less than or equal to the applicable OPPS drug packaging threshold, we package payment for the [[Page 53683]] drug or biological into the payment for the associated procedure in the upcoming calendar year. If the estimated per day cost of the drug or biological is greater than the OPPS drug packaging threshold, we provide separate payment at the applicable ASP methodology-based payment amount (which is generally ASP plus 6 percent), as discussed further in section V.B.2. of this final rule with comment period. --------------------------------------------------------------------------- \67\ In the CY 2025 OPPS/ASC final rule with comment period (89 FR 93948), we finalized the diagnostic radiopharmaceuticals policy to separately pay those products when the per-day costs are greater than a threshold. Please refer to section II.A.3.c. of the CY 2025 OPPS/ASC final rule for more information regarding this policy. --------------------------------------------------------------------------- BILLING CODE 4120-01-P [[Page 53684]] [GRAPHIC] [TIFF OMITTED] TR25NO25.139 [[Page 53685]] [GRAPHIC] [TIFF OMITTED] TR25NO25.140 BILLING CODE 4120-01-C

4. Drugs, Biologicals, and Radiopharmaceuticals With Pass-Through

Payment Status Expiring in CY 2026 We proposed to end pass-through payment status in CY 2026 for 52 drugs and biologicals. These drugs and biologicals, which were initially approved for pass-through payment status between April 1, 2023 and January 1, 2024, are listed in Table 105. The APCs and Healthcare Common Procedure Coding System (HCPCS) codes for these drugs and biologicals, which have pass-through payment status that will end by December 31, 2026, are assigned status indicator ``G'' (Pass-Through Drugs and Biologicals) in Addenda A and B to this final rule with comment period (which are available on the CMS website).\68\ The APCs and HCPCS codes for these drugs and biologicals are assigned status indicator ``G'' only for the duration of their pass-through status. --------------------------------------------------------------------------- \68\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient. --------------------------------------------------------------------------- Section 1833(t)(6)(D)(i) of the Act sets the amount of pass-through payment for pass-through drugs and biologicals (the pass-through payment amount) as the difference between the amount authorized under section 1842(o) of the Act and the portion of the otherwise applicable OPD fee schedule that the Secretary determines is associated with the drug or biological. For CY 2026, we are continuing our policy to pay for pass-through drugs and biologicals using the ASP methodology, meaning a payment rate based on ASP, WAC, or AWP, as applicable. This payment rate is generally ASP plus 6 percent, equivalent to the payment rate these drugs and biologicals would receive in the physician's office setting in CY 2026. We note that, under the OPD fee schedule, separately payable drugs assigned to an APC are generally payable at ASP plus 6 percent. Therefore, a $0 pass-through payment amount will continue to be paid for pass-through drugs and biologicals under the CY 2026 OPPS because the difference between the amount authorized under section 1842(o) of the Act, which is generally ASP plus 6 percent, and the portion of the otherwise applicable OPD fee schedule that the Secretary determines is appropriate, which is generally ASP plus 6 percent, is $0. In the case of policy-packaged drugs (which include the following: anesthesia drugs; drugs, biologicals, and radiopharmaceuticals \69\ below the applicable cost threshold that function as supplies when used in a diagnostic test or procedure; and drugs and biologicals that function as supplies when used in a surgical procedure), their pass- through payment amount will continue to be equal to a payment rate calculated using the ASP methodology, meaning a payment rate based on ASP, WAC, or AWP. This payment rate will generally continue to be ASP plus 6 percent for CY 2026, minus a payment offset for the portion of the otherwise applicable OPPS payment that the Secretary determines is associated with the drug or biological. We note that if not for the pass-through payment status of these policy-packaged products, payment for these products would be packaged into the associated procedure and therefore, there are associated OPPS payment amounts for them. --------------------------------------------------------------------------- \69\ In the CY 2025 OPPS/ASC final rule with comment period (89 FR 93948), we finalized the diagnostic radiopharmaceuticals policy to separately pay those products when the per-day costs are greater than a threshold. Please refer to section II.A.3.c. of the CY 2025 OPPS/ASC final rule for more information regarding this policy. --------------------------------------------------------------------------- We note that in the CY 2025 OPPS/ASC final rule with comment period (89 FR 93948 through 93963), we modified the regulation text at 42 CFR 419.2(b)(15) to specify that only those [[Page 53686]] diagnostic radiopharmaceuticals with per-day costs at or below the per- day diagnostic radiopharmaceutical packaging threshold for the applicable year are policy-packaged. Meaning, for those diagnostic radiopharmaceuticals that are below the diagnostic radiopharmaceutical packaging threshold, for purposes of pass-through co-insurance calculations, they are treated like policy packaged drugs. For those diagnostic radiopharmaceuticals above the diagnostic radiopharmaceutical packaging threshold, they are not packaged, and are not considered policy packaged; therefore, for purposes of pass-through co-insurance calculations, they are treated like separately payable drugs assigned to an APC. Accordingly, a $0 pass-through payment amount is assigned consistent with our policy described previously in this section for separately payable drugs assigned to an APC. We will continue our policy to update pass-through payment rates on a quarterly basis on the CMS website during CY 2026 if later quarter ASP submissions (or more recent WAC or AWP information, as applicable) indicate that adjustments to the payment rates for these pass- through payment drugs or biologicals are necessary. For a full description of this policy, we refer readers to the CY 2006 OPPS/ASC final rule with comment period (70 FR 68632 through 68635). For CY 2026, consistent with our CY 2025 policy for diagnostic and therapeutic radiopharmaceuticals, we will continue to provide payment for both diagnostic and therapeutic radiopharmaceuticals that are granted pass-through payment status based on the ASP methodology. As stated earlier, for purposes of pass-through payment, we consider radiopharmaceuticals to be drugs under the OPPS. Therefore, if a diagnostic or therapeutic radiopharmaceutical receives pass-through payment status during CY 2026, we will continue to follow the standard ASP methodology to determine the pass-through payment rate that drugs receive under section 1842(o) of the Act, which is generally ASP plus 6 percent. If ASP data are not available for a radiopharmaceutical, we will continue to provide pass-through payment at WAC plus 3 percent (consistent with our policy in section V.B.2.a. of this final rule with comment period), the equivalent payment provided for pass-through drugs and biologicals without ASP information. Additional detail on the WAC plus 3 percent payment policy can be found in section V.B.2.a. of this final rule with comment period. If WAC information also is not available, we will continue to provide payment for the pass-through radiopharmaceutical at 95 percent of its most recent AWP. We refer readers to Table 105 for the list of drugs and biologicals with pass-through payment status expiring during CY 2026. BILLING CODE 4120-01-P [[Page 53687]] [GRAPHIC] [TIFF OMITTED] TR25NO25.141 [[Page 53688]] [GRAPHIC] [TIFF OMITTED] TR25NO25.142 [[Page 53689]] [GRAPHIC] [TIFF OMITTED] TR25NO25.143 [[Page 53690]] [GRAPHIC] [TIFF OMITTED] TR25NO25.144 BILLING CODE 4120-01-C We did not receive public comments on our proposal, and therefore, we are finalizing our proposal to end pass-through payment status in CY 2026 for 52 drugs and biologicals. However, we did receive comment regarding our clarification included in the CY 2026 OPPS/ASC proposed rule regarding the co-insurance calculations for diagnostic radiopharmaceuticals (90 FR 33614). In the CY 2025 OPPS/ASC final rule with comment period (89 FR 93948 through 93963), we modified the regulation text at 42 CFR 419.2(b)(15) to specify that only those diagnostic radiopharmaceuticals with per-day costs at or below the per-day diagnostic radiopharmaceutical packaging threshold for the applicable year are policy-packaged. Meaning, for those diagnostic radiopharmaceuticals that are below the diagnostic radiopharmaceutical packaging threshold, for purposes of pass-through co-insurance calculations, they are treated like policy packaged drugs. For those diagnostic radiopharmaceuticals above the diagnostic radiopharmaceutical packaging threshold, they are not packaged, and are not considered policy packaged; therefore, for purposes of pass-through co-insurance calculations, they are treated like separately payable drugs assigned to an APC. Accordingly, a $0 pass-through payment amount is assigned consistent with our policy described previously in this section for separately payable drugs assigned to an APC. Comment: A few commenters asked for additional clarification from CMS regarding the calculation of beneficiary copayments for diagnostic radiopharmaceuticals while on drug pass-through. Commenters requested that CMS clarify that diagnostic radiopharmaceuticals that exceed the applicable cost threshold while on transitional pass-through status would have a beneficiary copayment listed. Commenters also asked for clarification regarding the beneficiary co-insurance for specific product HCPCS codes, such as HCPCS Code A9608 (Flotufolastat f18 diag 1 mci) and HCPCS code A9611 (flurpiridaz F 18). Commenters also requested clarification that, for any diagnostic radiopharmaceutical that is separately paid specifically because it is on transitional drug pass-through status, and whose payment is expected to be below the diagnostic radiopharmaceutical cost threshold, no beneficiary copayment should apply, which the commenter states is consistent with the principle that such costs are packaged. Commenters contend that when a diagnostic radiopharmaceutical is applying for drug pass-through status, CMS is not making a fair comparison if it uses the diagnostic radiopharmaceutical's ASP, WAC, or AWP to determine if the diagnostic radiopharmaceutical would otherwise be packaged, because if the product had claims data, CMS would use the MUC, which is often lower than ASP, WAC, and AWP, to determine if the product was above or below the packaging threshold. Therefore, in the commenter's view, CMS is incorrectly determining that pass-through applicants would otherwise be above the packaging threshold, and thus that the product would otherwise be separately paid and that the pass- through amount is $0, resulting in applicable co-insurance for the beneficiary. One commenter believed CMS should calculate the co-insurance for all diagnostic radiopharmaceuticals under [[Page 53691]] the policy packaged method. Additionally, this commenter stated that it is impossible for interested parties or CMS to know whether a product will exceed the cost threshold under the MUC methodology in future claims data and therefore whether a product will or will not be considered policy packaged. Response: We thank the commenters for engaging with CMS on this issue. Only those diagnostic radiopharmaceuticals with estimated per- day costs at or below the per-day diagnostic radiopharmaceutical packaging threshold for the applicable year are policy-packaged. Meaning, for these diagnostic radiopharmaceuticals that are estimated to be below the diagnostic radiopharmaceutical packaging threshold, for purposes of pass-through co-insurance calculations, they are treated like policy packaged drugs. These diagnostic radiopharmaceuticals would have an overall $0 co-insurance payment. If a drug is policy packaged, meaning absent pass-through status there would be no separate payment for the drug, the pass-through payment amount is generally equal to a payment rate calculated using the ASP methodology (89 FR 94226). Per statute, 1833(t)(8) of the Act, there is no copayment on the pass- through payment amount. Therefore, policy packaged drugs have a $0 copayment amount, since the entirety of their separate payment amount is due to their passthrough payment status. For those diagnostic radiopharmaceuticals estimated to be above the diagnostic radiopharmaceutical packaging threshold, their payment is not policy packaged, and they are not considered policy packaged; therefore, for purposes of pass-through co-insurance calculations, they are treated like a separately payable drug assigned to an APC. Accordingly, a $0 pass-through payment amount is assigned consistent with our policy described previously in this section for separately payable drugs assigned to an APC. The pass-through amount is the amount that is not subject to co-insurance. The non-pass-through payment amount is still subject to co-insurance provisions, including 1833(t)(3)(B) of the Act and Sec. 419.41(d). These diagnostic radiopharmaceuticals would have a co-insurance payment. Estimating the per day costs of radiopharmaceuticals with HCPCS codes, but without hospital claims data, is consistent with our longstanding policy regarding payment for non-pass-through drugs, biologicals, and radiopharmaceuticals with HCPCS codes but without OPPS Hospital Claims Data where CMS estimates the average number of units of each product that would typically be furnished to a patient during one day in the hospital outpatient setting and utilizes the available payment rate for the product, to determine whether their payment will be packaged. Specifically for HCPCS Codes A9608 (Flotufolastat f18 diag 1 mci) and A9611 (flurpiridaz F 18), these HCPCS codes have co-insurance assigned during CY 2025 as these products were determined to have an estimated per day cost above the diagnostic radiopharmaceutical packaging threshold. Comment: A commenter asked CMS to confirm that multiple offsets are not applied to the pass-through payment for diagnostic radiopharmaceuticals. This commenter was concerned that CMS may be inappropriately subtracting both the ASP-based payment under the separately payable drug methodology and subtracting the policy-packaged drug amount under the policy-packaged drug methodology. Response: We can confirm that the payment should not have multiple offsets subtracted, either the policy-packaged offset or the threshold- packaged offset depending on the calculations performed as discussed earlier in this section to determine co-insurance status.

5. Drugs, Biologicals, and Radiopharmaceuticals With Pass-Through

Payment Status Continuing Through CY 2026 We proposed to continue pass-through payment status in CY 2026 for 61 drugs and biologicals. These drugs and biologicals, which were approved for pass-through payment status with effective dates beginning between April 1, 2024 and October 1, 2025, are listed in Table 106. The APCs and HCPCS codes for these drugs and biologicals, which have pass- through payment status that would continue after December 31, 2026, are assigned status indicator ``G'' in Addenda A and B to the CY 2026 OPPS/ ASC proposed rule (which are available on the CMS website).\70\ --------------------------------------------------------------------------- \70\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient. --------------------------------------------------------------------------- Section 1833(t)(6)(D)(i) of the Act sets the amount of pass-through payment for pass-through drugs and biologicals (the pass-through payment amount) as the difference between the amount authorized under section 1842(o) of the Act and the portion of the otherwise applicable OPD fee schedule that the Secretary determines is associated with the drug or biological. For CY 2026, we are continuing our policy to pay for pass-through drugs and biologicals at a payment rate based on the ASP methodology, which may be based on ASP, WAC, or AWP, but is generally ASP plus 6 percent, which is equivalent to the payment rate these drugs and biologicals would receive in the physician's office setting in CY 2026. We will continue with our policy of paying a $0 pass-through payment amount for pass-through drugs and biologicals that are not policy-packaged under the CY 2026 OPPS, because the difference between the amount authorized under section 1842(o) of the Act, which would generally be ASP plus 6 percent, and the portion of the otherwise applicable OPD fee schedule that the Secretary determines is appropriate, which would also generally be ASP plus 6 percent, is $0. In the case of policy-packaged drugs (which include the following: anesthesia drugs; drugs, biologicals, and radiopharmaceuticals \71\ that function as supplies when used in a diagnostic test or procedure; and drugs and biologicals that function as supplies when used in a surgical procedure), their pass-through payment amount would continue to be equal to a payment rate based on the ASP methodology, which may be based on ASP, WAC, or AWP, but would generally be ASP plus 6 percent for CY 2026, minus a payment offset for any predecessor drug products contributing to the pass-through payment. We note if not for the pass- through payment status of these policy-packaged products, payment for these products would be packaged into the associated procedure and therefore, there are associated OPD fee schedule amounts for them. --------------------------------------------------------------------------- \71\ In the CY 2025 OPPS/ASC final rule with comment period (89 FR 93948), we finalized a diagnostic radiopharmaceuticals policy to separately pay those products when the per-day costs are greater than a threshold. Please refer to section II.A.3.c. of the CY 2025 OPPS/ASC final rule for more information regarding this policy. --------------------------------------------------------------------------- We are continuing our policy to update pass-through payment rates on a quarterly basis on our website during CY 2026 if later quarter ASP submissions (or more recent WAC or AWP information, as applicable) indicate that adjustments to the payment rates for these pass-through payment drugs or biologicals are necessary. For a full description of this policy, we refer readers to the CY 2006 OPPS/ASC final rule with comment period (70 FR 68632 through 68635). For CY 2026, consistent with our CY 2025 policy for diagnostic and therapeutic radiopharmaceuticals, we proposed to continue our policy to provide payment for both diagnostic and therapeutic radiopharmaceuticals [[Page 53692]] that are granted pass-through payment status based on the ASP methodology. As stated earlier, for purposes of pass-through payment, we consider radiopharmaceuticals to be drugs under the OPPS. Therefore, if a diagnostic or therapeutic radiopharmaceutical receives pass- through payment status during CY 2026, we will continue to follow the standard ASP methodology to determine the pass-through payment rate that drugs receive under section 1842(o) of the Act, which would generally be ASP plus 6 percent. If ASP data are not available for a radiopharmaceutical, we would provide pass-through payment at WAC plus 3 percent (consistent with our policy in section V.B.2.a. of this final rule with comment period), the equivalent payment provided for pass- through drugs and biologicals without ASP information. Additional detail on the WAC plus 3 percent payment policy can be found in section V.B.2.a. of this final rule with comment period. If WAC information also is not available, we would provide payment for the pass-through radiopharmaceutical at 95 percent of its most recent AWP. The drugs and biologicals that would have pass-through payment status expire after December 31, 2026, are shown in Table 106. BILLING CODE 4120-01-P [[Page 53693]] [GRAPHIC] [TIFF OMITTED] TR25NO25.145 [[Page 53694]] [GRAPHIC] [TIFF OMITTED] TR25NO25.146 [[Page 53695]] [GRAPHIC] [TIFF OMITTED] TR25NO25.147 [[Page 53696]] [GRAPHIC] [TIFF OMITTED] TR25NO25.148 BILLING CODE 4120-01-C We received public comments on these proposals. The following is a summary of the comments we received and our responses. [[Page 53697]] Comment: A commenter expressed support for maintaining pass-through status for iDose[supreg] TR for all of CY 2026. Response: We thank the commenter for their comment. We are maintaining drug pass-through status for iDose TR, which may be described by HCPCS Code J7355, for all of CY 2026. Comment: A commenter expressed support for our inclusion of IMDELLTRA[supreg] and PAVBLU[supreg] in the List of Drugs with Pass- Through Payment Status Expiring After 2026 (Table 106) and acknowledged that we did not include drugs that were granted pass-through status after April 1, 2025 in Table 106 in the CY 2026 OPPS/ASC proposed rule, due to the timing of preparation of the CY 2026 OPPS/ASC proposed rule. The commenter requested that BKEMV\TM\, which was granted pass-through status effective July 1, 2025, be included in Table 106 in the CY 2026 OPPS/ASC final rule with comment period. Response: We thank the commenter for their comment. BKEMV\TM\ is included in Table 106 in this final rule final rule with comment period. After consideration of public comments, we are finalizing as proposed to continue pass-through payment status in CY 2026 for 61 drugs and biologicals.

B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals

Without Pass-Through Payment Status We note that several commenters made comments on the Inflation Reduction Act Medicare Drug Price Negotiation Program, provider status for pharmacists under Medicare Part B, Most Favored Nation-style reference pricing, among other topics that were not discussed in the CY 2026 OPPS/ASC proposed rule. These topics are out of scope for purposes of this notice and comment rulemaking, but we will consider these comments as we consider these issues for future rulemaking.

1. Criteria for Packaging Payment for Drugs, Biologicals, and

Radiopharmaceuticals a. Packaging Threshold In accordance with section 1833(t)(16)(B) of the Act, the threshold for establishing separate APCs for payment of drugs and biologicals was set to $50 per administration during CYs 2005 and 2006. In CY 2007, we used the four-quarter moving average Producer Price Index (PPI) levels for Pharmaceutical Preparations (Prescription) to trend the $50 threshold forward from the third quarter of CY 2005 (when the Pub. L. 108-173 mandated threshold became effective) to the third quarter of CY 2007. We then rounded the resulting dollar amount to the nearest $5 increment to determine the CY 2007 threshold amount of $55. Using the same methodology as that used in CY 2007 (which is discussed in more detail in the CY 2007 OPPS/ASC final rule with comment period (71 FR 68085 through 68086)), we set the packaging threshold for establishing separate APCs for drugs and biologicals at $140 for CY 2025 (89 FR 94237). Following the CY 2007 methodology, for the CY 2026 OPPS/ASC proposed rule, we proposed to use the most recently available four quarter moving average PPI levels to trend the $50 threshold forward from the third quarter of CY 2005 to the third quarter of CY 2026 and round the resulting dollar amount ($141.67) to the nearest $5 increment, which yields a figure of $140. In performing this calculation, we used the most recent forecast of the quarterly index levels for the PPI for Pharmaceuticals for Human Use (Prescription) (Bureau of Labor Statistics series code WPUSI07003) from IGI. IGI is a nationally recognized economic and financial forecasting firm with which CMS contracts to forecast various price indexes including the PPI Pharmaceuticals for Human Use (Prescription). Based on these calculations, we proposed a packaging threshold for CY 2026 of $140 for drugs, biologicals, and therapeutic radiopharmaceuticals. We also proposed that if more recent data subsequently become available after the publication of the CY 2026 OPPS/ASC proposed rule, we would use such updated data, if appropriate, to determine the final CY 2026 OPPS drug packaging threshold amount in the CY 2026 OPPS/ASC final rule with comment period. We finalized in section II.A.3.c. of the CY 2025 OPPS/ASC final rule with comment period (89 FR 94238 through 94241) to pay separately for diagnostic radiopharmaceuticals with a per-day cost above the packaging threshold for CY 2025 of $630. We also finalized that starting in CY 2026 and subsequent years, we would update this threshold by the PPI for Pharmaceuticals for Human Use (Prescription) (Bureau of Labor Statistics series code WPUSI07003) from IHS Global, Inc (IGI). For the diagnostic radiopharmaceutical packaging threshold, we finalized using the same methodology as that used in CY 2007 (which is discussed in more detail in the CY 2007 OPPS/ASC final rule with comment period (71 FR 68085 and 68086)) to calculate the update to the OPPS drug packaging threshold. Specifically, we finalized that, starting for the CY 2026 rulemaking, we would use the most recently available four quarter moving average PPI levels to trend the final current year (CY 2025) threshold forward from the third quarter of the data year (CY 2024) to the third quarter of the current year (CY 2025) and round the resulting dollar amount to the nearest $5 increment. In the CY 2026 OPPS/ASC proposed rule, we proposed a technical refinement to this policy to use the most recently available four-quarter moving average PPI levels to trend the CY 2025 final threshold forward from the third quarter of CY 2025 to the third quarter of the payment year (CY 2026) and round the resulting dollar amount to the nearest $5 increment. We believed using the most recently available four quarter moving average PPI levels more appropriately updates the packaging threshold from CY 2025 for payment in CY 2026. For the CY 2026 OPPS/ASC proposed rule, we used the most recently available four quarter moving average PPI levels to trend the $630 diagnostic radiopharmaceutical packaging threshold forward from the third quarter of CY 2025 to the third quarter of CY 2026 and we rounded the resulting dollar amount ($654.23) to the nearest $5 increment, which yielded a figure of $655. We also proposed that if more recent data subsequently becomes available after the publication of the CY 2026 OPPS/ASC proposed rule, we would use such updated data, if appropriate, to determine the final CY 2026 diagnostic radiopharmaceutical packaging threshold amount in the CY 2026 OPPS/ASC final rule with comment period. For CY 2027 and subsequent updates, we therefore proposed to trend the CY 2025 threshold of $630 forward using the four-quarter moving average PPI levels for Pharmaceuticals for Human Use, Prescription for CY 2025 (third quarter) forward using the PPI for Pharmaceuticals for Human Use, Prescription for the applicable payment year (third quarter). We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: Some commenters supported the drug packaging threshold. One commenter stated that a static threshold would fail to account for rapid drug inflation. This same commenter urged CMS to implement a transparent and predictable methodology for adjusting the threshold annually to reflect drug price inflation. Response: We thank the commenters for their support. We believe using the [[Page 53698]] four-quarter moving average PPI levels for Pharmaceuticals for Human Use, Prescription to adjust the OPPS drug packaging threshold through notice and comment rulemaking is a transparent and predictable methodology that has been in use under the OPPS for many years. Comment: Several commenters did not support CMS following the proposed methodology to update the OPPS drug packaging threshold. These commenters had concerns that the packaging threshold approach introduces financial and operational concerns, especially when multiple packaged drugs are used during a procedure. Commenters recommended using a different inflation factor, maintaining the current threshold, or rolling back the threshold. Response: We appreciate these perspectives; however, we believe that the PPI update factor provides aggregate changes in the selling prices of pharmaceuticals, which makes it an appropriate factor with which to update the OPPS drug packaging threshold to ensure that as costs change over time, the threshold continues to identify products appropriate for payment packaging, a fundamental principle of a prospective payment system. For CY 2026, the update to the inflation factor results in the same rounded final OPPS drug packaging threshold for CY 2026 compared to CY 2025. After consideration of public comments, we are finalizing our proposal to use the most recently available four-quarter moving average PPI levels to trend the $50 threshold forward from the third quarter of CY 2005 to the third quarter of CY 2026 and round the resulting dollar amount to the nearest $5 increment for the OPPS drug packaging threshold. We proposed that if more recent data subsequently become available after the publication of the CY 2026 OPPS/ASC proposed rule, we would use such updated data, if appropriate, to determine the final CY 2026 OPPS drug packaging threshold amount in the CY 2026 OPPS/ASC final rule with comment period. Using the most recent forecast of the quarterly index levels for the PPI for Pharmaceuticals for Human Use (Prescription) (Bureau of Labor Statistics series code WPUSI07003) from IGI, we trended the $50 threshold forward from the third quarter of CY 2005 to the third quarter of CY 2026 and round the resulting dollar amount ($140.13) to the nearest $5 increment, which yields a figure of $140. We refer readers to section II.A.3.c.(2). of this final rule with comment period for additional details regarding the diagnostic radiopharmaceutical packaging threshold comment and response discussion. We are finalizing our proposal to update the CY 2025 $630 threshold amount by the four-quarter moving average PPI levels for Pharmaceuticals for Human Use, Prescription to trend the $630 threshold forward. Specifically, we are using the most recently available forecast of the four-quarter moving average PPI levels for Pharmaceutical for Human Use, Prescription from the third quarter of 2025 to the third quarter of 2026, and to round the resulting dollar amount to the nearest $5 increment. We also proposed, and are subsequently finalizing, that if more recent data are subsequently available (for example, a more recent estimate of the PPI for Pharmaceuticals for Human Use, Prescription), we would use such data, if appropriate, to determine the CY 2026 diagnostic radiopharmaceutical packaging threshold in the final rule. Based on this methodology, using the most recent data available for this final rule, we trended the $630 threshold forward and rounded the resulting dollar amount ($656.65) to the nearest $5 increment, which yields a final diagnostic radiopharmaceutical packaging threshold figure of $655 per day for CY 2026. b. Packaging of Payment for HCPCS Codes That Describe Certain Drugs, Certain Biologicals, and Certain Radiopharmaceuticals Under the Cost Thresholds To determine the proposed CY 2026 packaging status for all nonpass- through drugs, biologicals, diagnostic and therapeutic radiopharmaceuticals that are not policy packaged, we calculated, on a HCPCS code-specific basis, the per day cost of all drugs, biologicals, and therapeutic radiopharmaceuticals that had a HCPCS code in CY 2024 and were paid (via packaged or separate payment) under the OPPS. We used data from CY 2024 claims processed through December 31, 2024, for this calculation. However, we did not perform this calculation for those drugs and biologicals with multiple HCPCS codes that include different dosages, as described in section V.B.1.d. of this final rule with comment period, or for the following policy-packaged items that we proposed to continue to package in CY 2026: anesthesia drugs; drugs, biologicals, and contrast agents and other drugs that function as supplies when used in a diagnostic test or procedure; and drugs and biologicals that function as supplies when used in a surgical procedure. Consistent with our policy described in section V.B.5. of this final rule with comment period, in situations where we have no claims data and must determine if these products exceed the per-day cost threshold, we estimated the average number of units of each product that would typically be furnished to a patient during one day in the hospital outpatient setting and utilized the ASP methodology to determine whether their payment will be packaged as well as their payment status indicators. To calculate the per day costs for drugs, biologicals, diagnostic radiopharmaceuticals, and therapeutic radiopharmaceuticals to determine their proposed packaging status in CY 2026, we used the methodology that was described in detail in the CY 2006 OPPS proposed rule (70 FR 42723 through 42724) and finalized in the CY 2006 OPPS final rule with comment period (70 FR 68636 through 68638). For each drug and biological HCPCS code, we used an estimated payment rate based on the ASP methodology, which is generally ASP plus 6 percent (which is the payment rate we proposed for separately payable drugs and biologicals) for CY 2026, as discussed in more detail in section V.A.1. and V.B.2. of the CY 2026 OPPS/ASC proposed rule to calculate the CY 2026 proposed rule per day costs. We used the manufacturer-submitted ASP data from the fourth quarter of CY 2024 (data that were used for payment purposes in the physician's office setting, effective April 1, 2025) to determine the CY 2026 OPPS/ASC proposed rule per day cost. As is our standard methodology, for CY 2026, we proposed to use payment rates based on the ASP data from the fourth quarter of CY 2024 for budget neutrality estimates, packaging determinations, impact analyses, and completion of Addenda A and B to the CY 2026 OPPS/ASC proposed rule (which are available via the internet on the CMS website) because these are the most recent data available for use at the time of development of the CY 2026 OPPS/ASC proposed rule. These data also are the basis for drug payments in the physician's office setting, effective April 1, 2025. Exceptions to our standard methodology include: For therapeutic radiopharmaceuticals that do not have pass-through status as of April 1, 2025, and do not have an ASP-based payment rate, we did not use a payment rate based on WAC or AWP for those items, consistent with our policy described in section V.B.3.a. of this final rule with comment period. Instead, we used their arithmetic mean unit cost derived from the CY 2024 hospital claims data to determine their per day cost. [[Page 53699]] For diagnostic radiopharmaceuticals that do not have pass- through status as of April 1, 2025, we used their mean unit cost derived from the CY 2024 hospital claims data to determine their per day cost. We did not use an ASP-based, WAC-based, or AWP-based payment rate for those items unless there was no mean unit cost reported for the product, consistent with our finalized policy described in section V.B.3.b of this final rule with comment period. For items other than diagnostic or therapeutic radiopharmaceuticals that did not have either an ASP-based payment rate, a payment rate based on WAC, or a payment rate based on AWP, we used the arithmetic mean unit cost of the items derived from the CY 2024 hospital claims data to determine their per day cost. We proposed to package drugs, biologicals, and therapeutic radiopharmaceuticals with a per day cost less than or equal to $140 and identify items with a per day cost greater than $140 as separately payable unless they are policy-packaged. For diagnostic radiopharmaceuticals, we proposed to package those items with a per day cost less than or equal to $655 and identify items with a per day cost greater than $655 as separately payable. Consistent with our past practice (72 FR 667580), we cross-walked historical OPPS claims data from the CY 2024 HCPCS codes that were reported to the CY 2024 HCPCS codes that we display in Addendum B to the CY 2026 OPPS/ASC proposed rule (which is available on the CMS website) \72\ for proposed payment in CY 2026. --------------------------------------------------------------------------- \72\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient. --------------------------------------------------------------------------- Our policy during previous cycles of OPPS rulemaking has been to use updated ASP and claims data to make final determinations of the packaging status of HCPCS codes for drugs, biologicals, and therapeutic radiopharmaceuticals for the OPPS/ASC final rule with comment period (71 FR 68086; 78 FR75022; 89 FR 94238). We note that it is also our policy to make an annual packaging determination for a HCPCS code only when we develop the OPPS/ASC final rule with comment period for the update year (71 FR 68086). Only HCPCS codes that are identified as separately payable in the final rule with comment period are subject to quarterly updates. For our calculation of per day costs of HCPCS codes for drugs, biologicals, and radiopharmaceuticals in the CY 2026 OPPS/ ASC proposed rule, we proposed to use ASP data from the fourth quarter of CY 2024, which is the basis for calculating payment rates for drugs and biologicals in the physician's office setting using the ASP methodology, effective April 1, 2025, along with updated hospital claims data from CY 2024. We note that we also proposed to use these data for budget neutrality estimates and impact analyses for the CY 2026 OPPS/ASC proposed rule. We proposed that payment rates for HCPCS codes for separately payable drugs and biologicals included in Addenda A and B of the CY 2026 OPPS/ASC final rule with comment period would be based on ASP data from the second quarter of CY 2025. These data are the basis for calculating payment rates for drugs and biologicals in the physician's office setting using the ASP methodology, effective October 1, 2025. These payment rates would then be updated in the January 2026 OPPS update, based on the most recent ASP data to be used for physicians' office and OPPS payment as of January 1, 2026. For drugs and biologicals that do not currently have a payment rate based on ASP, WAC, or AWP, for therapeutic radiopharmaceuticals that do not currently have an ASP payment rate, and for all diagnostic radiopharmaceuticals, we will calculate their arithmetic mean unit cost from all of the CY 2024 claims data and updated cost report information available for the CY 2026 final rule with comment period to determine their final per day cost. Consequently, the final rule with comment period packaging status of some HCPCS codes for drugs, biologicals, and radiopharmaceuticals in the CY 2026 OPPS/ASC proposed rule may be different from the same drugs' HCPCS codes' packaging status determined based on the data used for this final rule with comment period. Under such circumstances, we proposed to continue to follow the established policies initially adopted for the CY 2005 OPPS final rule with comment period (69 FR 65780) is in order to more equitably pay for those drugs whose costs fluctuate relative to the proposed CY 2026 OPPS drug packaging threshold and the drug's payment status (packaged or separately payable) in CY 2026. These established policies have not changed for many years and are the same as described in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70434). Specifically, for CY 2026 and subsequent years, consistent with our historical practice, we proposed to apply the following policies to those HCPCS codes for drugs, biologicals, and therapeutic radiopharmaceuticals whose relationship to the drug packaging threshold changes based on the updated drug packaging threshold and on the final updated data: HCPCS codes for drugs, biologicals, and radiopharmaceuticals that were paid separately in CY 2025 and that are proposed for separate payment in CY 2026, and that then have per day costs equal to or less than the CY 2026 final rule drug packaging threshold or diagnostic radiopharmaceutical packaging threshold, based on the updated ASPs and hospital claims data used for the CY 2026 final rule, would continue to receive separate payment in CY 2026. HCPCS codes for drugs, biologicals, and radiopharmaceuticals that were packaged in CY 2025 and that are proposed for separate payment in CY 2026, and that then have per day costs equal to or less than the CY 2026 final rule drug packaging threshold or diagnostic radiopharmaceutical packaging threshold, based on the updated ASPs and hospital claims data used for the CY 2026 final rule, would remain packaged in CY 2026. HCPCS codes for drugs, biologicals, and radiopharmaceuticals for which we proposed packaged payment in CY 2026 but that then have per-day costs greater than the CY 2026 final rule drug packaging threshold or diagnostic radiopharmaceutical packaging threshold, based on the updated ASPs and hospital claims data used for the CY 2026 final rule, would receive separate payment in CY 2026. We did not receive public comments on this provision, and therefore, we are finalizing as proposed. c. Policy-Packaged Drugs, Biologicals, and Radiopharmaceuticals As mentioned earlier in this section, under the OPPS, we package several categories of nonpass-through drugs, biologicals, and radiopharmaceuticals, regardless of the cost of the products. Because the products are packaged according to the policies in 42 CFR 419.2(b), we refer to these packaged drugs, biologicals, and radiopharmaceuticals as ``policy-packaged'' drugs, biologicals, and radiopharmaceuticals. These policies are either longstanding or based on longstanding principles and inherent to the OPPS and are currently as follows: Anesthesia, certain drugs, biologicals, and other pharmaceuticals; medical and surgical supplies and equipment; surgical dressings; and devices used for external reduction of fractures and dislocations (Sec. 419.2(b)(4)); Intraoperative items and services (Sec. 419.2(b)(14)); [[Page 53700]] Drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure (including but not limited to, diagnostic radiopharmaceuticals with per-day costs at or below the per-day diagnostic radiopharmaceutical packaging threshold for the applicable year, contrast agents, and pharmacologic stress agents) (Sec. 419.2(b)(15)); and Drugs and biologicals that function as supplies when used in a surgical procedure (including, but not limited to, skin substitutes and similar products that aid wound healing and implantable biologicals) (Sec. 419.2(b)(16)). The policy at Sec. 419.2(b)(16) is broader than the policy at Sec. 419.2(b)(14). As we stated in the CY 2015 OPPS/ASC final rule with comment period: ``We consider all items related to the surgical outcome and provided during the hospital stay in which the surgery is performed, including postsurgical pain management drugs, to be part of the surgery for purposes of our drug and biological surgical supply packaging policy'' (79 FR 66875). The category described by Sec. 419.2(b)(15) is large and includes diagnostic radiopharmaceuticals that have a per day cost below the finalized diagnostic radiopharmaceutical packaging threshold that we discuss in section II.A.3. of this final rule with comment period, contrast agents, stress agents, and some other products. The category described by Sec. 419.2(b)(16) currently includes skin substitutes and some other products. We believe it is important to reiterate that cost consideration is not a factor when determining whether an item is a surgical supply (79 FR 66875). We received public comments on these policies. The following is a summary of the comments we received and our responses. Comment: One commenter suggested CMS should develop a policy that covers drugs that are administered at the time of ophthalmic surgery, that are direct substitutes for postoperative medications, or that have an FDA-approved indication to treat/prevent post-operative issues, such as pain, inflammation, or infection, separately under Medicare Part B. Response: We thank the commenter for their suggestion. We believe such a policy already exists under 42 CFR 419.2(b)(16)), in which drugs and biologicals that function as supplies when used in a surgical procedure (including, but not limited to, skin substitutes and similar products that aid wound healing and implantable biologicals) have their payment policy-packaged into the procedures in which the product is used. We believe these drugs function as supplies and are supportive to the procedures in which they are used, which maintains the important packaging principles of the OPPS to encourage efficiencies. We did not propose any changes to our policy for policy-packaged drugs, biologicals, and radiopharmaceuticals; therefore, after consideration of comments received, we are continuing the policies at 42 CFR 419.2(b). d. Packaging Determination for HCPCS Codes That Describe the Same Drug or Biological but Different Dosages In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60490 through 60491), we finalized a policy to make a single packaging determination for a drug, rather than an individual HCPCS code, when a drug has multiple HCPCS codes describing different dosages because we believe that adopting the standard HCPCS code-specific packaging determinations for these codes could lead to inappropriate payment incentives for hospitals to report certain HCPCS codes instead of others. We continue to believe that making packaging determinations on a drug-specific basis eliminates payment incentives for hospitals to report certain HCPCS codes for drugs and allows hospitals flexibility in choosing to report all HCPCS codes for different dosages of the same drug or only the lowest dosage HCPCS code. Therefore, we proposed to continue our policy to make packaging determinations on a drug-specific basis, rather than a HCPCS code-specific basis, for those HCPCS codes that describe the same drug or biological but different dosages in CY 2026. To propose a packaging determination that is consistent across all HCPCS codes that describe different dosages of the same drug or biological, we aggregated both our CY 2024 claims data and our pricing information, which is based on the ASP methodology, generally ASP plus 6 percent, across all of the HCPCS codes that describe each distinct drug or biological in order to determine the mean units per day of the drug or biological in terms of the HCPCS code with the lowest dosage descriptor. The following drugs did not have pricing information available for the ASP methodology for the CY 2026 OPPS/ASC proposed rule; and, as is our current policy for determining the packaging status of other drugs, we used the mean unit cost available from the CY 2024 claims data to make the proposed packaging determinations for them: HCPCS code J3472 (Injection, hyaluronidase, ovine, preservative free, per 1000 usp units); HCPCS code J7100 (Infusion, dextran 40,500 ml); and HCPCS code J7110 (Infusion, dextran 75,500 ml). For all other drugs and biologicals that have HCPCS codes describing different doses, we then multiplied the proposed weighted average ASP methodology based payment rate, which is generally ASP plus 6 percent, per-unit payment amount across all dosage levels of a specific drug or biological by the estimated units per day for all HCPCS codes that describe each drug or biological from our claims data to determine if the estimated per day cost of each drug or biological is less than or equal to the proposed CY 2026 drug packaging threshold of $140 (in which case all HCPCS codes for the same drug or biological would be packaged) or greater than the proposed CY 2026 drug packaging threshold of $140 (in which case all HCPCS codes for the same drug or biological would be separately payable). The proposed and final packaging status of each drug and biological HCPCS code to which this methodology would apply in CY 2026 is displayed in Table 107. BILLING CODE 4120-01-P [[Page 53701]] [GRAPHIC] [TIFF OMITTED] TR25NO25.149 BILLING CODE 4120-01-C We proposed that our policy to make packaging determinations on a drug-specific basis, rather than a HCPCS code-specific basis, for those HCPCS codes that describe the same drug or biological but different dosages in CY 2026 would also apply to diagnostic radiopharmaceuticals. This is because, as with drugs and biologicals, we believe that adopting standard HCPCS code-specific packaging determinations for radiopharmaceutical codes could lead to inappropriate payment incentives for hospitals to report certain HCPCS codes instead of others. To propose a packaging determination that is consistent across all HCPCS codes that describe different dosages of the same diagnostic radiopharmaceutical, we would aggregate our CY 2024 claims data across all the HCPCS codes that describe each distinct diagnostic radiopharmaceutical to determine the mean units per day of the diagnostic radiopharmaceutical in terms of the HCPCS code with the lowest dosage descriptor. We would then analyze the aggregate per day cost of the diagnostic radiopharmaceutical to determine if the per day cost is less than or equal to the proposed CY 2026 diagnostic radiopharmaceutical packaging threshold of $655 (in which case all HCPCS codes for the same diagnostic radiopharmaceutical would be packaged) or greater than the proposed CY 2026 diagnostic radiopharmaceutical packaging threshold of $655 (in which case all HCPCS codes for the same diagnostic radiopharmaceutical would be separately payable). There are currently no diagnostic radiopharmaceuticals that this policy would apply to. We did not receive any public comments on our proposal, and we are finalizing our proposal without modification, and confirm that the final CY 2026 drug packaging threshold remains at $140 per day as described in section V.B.1.a. of this final rule with comment period. All parts of the proposal are finalized without modification.

2. Payment for Drugs and Biologicals Without Pass-Through Status That

Are Not Packaged a. Payment for Specified Covered Outpatient Drugs (SCODs) and Other Separately Payable Drugs and Biologicals Section 1833(t)(14) of the Act defines certain separately payable radiopharmaceuticals, drugs, and biologicals and mandates specific payments for these items. Under section 1833(t)(14)(B)(i) of the Act, a ``specified covered outpatient drug'' (known as a SCOD) is defined as a covered outpatient drug, as defined in section 1927(k)(2) of the Act, for which a separate APC has been established and that either is a radiopharmaceutical agent or a drug or biological for which payment was made on a pass-through basis on or before December 31, 2002. Under section 1833(t)(14)(B)(ii) of the Act, certain drugs and biologicals are designated as exceptions and are not included in the definition of SCODs. These exceptions are-- A drug or biological for which payment is first made on or after [[Page 53702]] January 1, 2003, under the transitional pass-through payment provision in section 1833(t)(6) of the Act. A drug or biological for which a temporary HCPCS code has not been assigned. During CYs 2004 and 2005, an orphan drug (as designated by the Secretary). Section 1833(t)(14)(A)(iii) of the Act requires that payment for SCODs in CY 2006 and subsequent years be equal to the average acquisition cost for the drug for that year as determined by the Secretary, subject to any adjustment for overhead costs and considering the hospital acquisition cost survey data collected by the Government Accountability Office (GAO) in CYs 2004 and 2005, and later periodic surveys conducted by the Secretary as set forth in the statute. If hospital acquisition cost data are not available, the law requires that payment be equal to payment rates established under the methodology described in section 1842(o), section 1847A, or section 1847B of the Act, as calculated and adjusted by the Secretary as necessary for purposes of paragraph (14). We refer to this alternative methodology as the ``statutory default.'' Most physician Part B drugs are paid at ASP plus 6 percent in accordance with section 1842(o) and section 1847A of the Act. Section 1833(t)(14)(E)(ii) of the Act provides for an adjustment in OPPS payment rates for SCODs to consider overhead and related expenses, such as pharmacy services and handling costs. Section 1833(t)(14)(E)(i) of the Act required MedPAC to study pharmacy overhead and related expenses and to make recommendations to the Secretary regarding whether, and if so how, a payment adjustment should be made to compensate hospitals for overhead and related expenses. Section 1833(t)(14)(E)(ii) of the Act authorizes the Secretary to adjust the weights for ambulatory procedure classifications for SCODs to consider the findings of the MedPAC study.\73\ --------------------------------------------------------------------------- \73\ Medicare Payment Advisory Committee. June 2005 Report to the Congress. Chapter 6: Payment for pharmacy handling costs in hospital outpatient departments. Available at https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/June05_ch6.pdf. --------------------------------------------------------------------------- It has been our policy since CY 2006 to apply the same treatment to all separately payable drugs and biologicals, which include SCODs, and drugs and biologicals that are not SCODs. Therefore, we apply the payment methodology in section 1833(t)(14)(A)(iii) of the Act to SCODs, as required by statute, but we also apply it to separately payable drugs and biologicals that are not SCODs, which is a policy determination rather than a statutory requirement. For CY 2023 and subsequent years, we finalized a policy to apply section 1833(t)(14)(A)(iii)(II) of the Act to all separately payable drugs and biologicals, including SCODs. Although we do not distinguish SCODs in this discussion, we note that we are required to apply section 1833(t)(14)(A)(iii)(II) of the Act to SCODs; but we also are applying this provision to other separately payable drugs and biologicals, consistent with our history of using the same payment methodology for all separately payable drugs and biologicals. For a detailed discussion of our OPPS drug payment policies from CY 2006 to CY 2012, we refer readers to the CY 2013 OPPS/ASC final rule with comment period (77 FR 68383 through 68385). In the CY 2013 OPPS/ ASC final rule with comment period (77 FR 68386 through 68389), we first adopted the statutory default policy to pay for separately payable drugs and biologicals at ASP plus 6 percent based on section 1833(t)(14)(A)(iii)(II) of the Act. We have continued this policy of paying for separately payable drugs and biologicals at the statutory default for CYs 2014 through 2025. In the case of a drug or biological during an initial sales period in which data on the prices for sales of the drug or biological are not sufficiently available from the manufacturer, section 1847A(c)(4) of the Act permits the Secretary to make payments that are based on WAC. Under section 1833(t)(14)(A)(iii)(II) of the Act, the amount of payment for a separately payable drug equals the average price for the drug for the year established under, among other authorities, section 1847A of the Act. As explained in greater detail in the CY 2019 PFS final rule, under section 1847A(c)(4) of the Act, although payments may be based on WAC, unlike section 1847A(b) of the Act (which specifies that payments using ASP or WAC must be made with a 6 percent add-on), section 1847A(c)(4) of the Act does not require that a particular add-on amount be applied to WAC-based pricing for this initial period when ASP data are not available. Consistent with section 1847A(c)(4) of the Act, in the CY 2019 PFS final rule (83 FR 59661 to 59666), we finalized a policy that, effective January 1, 2019, WAC-based payments for Part B drugs made under section 1847A(c)(4) of the Act will utilize a 3 percent add-on in place of the 6 percent add-on that was being used according to our policy in effect as of CY 2018. For the CY 2019 OPPS, we followed the same policy finalized in the CY 2019 PFS final rule (83 FR 59661 to 59666). Since CY 2020, we have continued to utilize a 3 percent add-on instead of a 6 percent add-on for drugs that are paid based on WAC pursuant to our authority under section 1833(t)(14)(A)(iii)(II) of the Act (84 FR 61318 and 85 FR 86039), which provides, in part, that the amount of payment for a SCOD is the average price of the drug in the year established under section 1847A of the Act. We also apply this provision to non-SCOD separately payable drugs, biologicals, and certain radiopharmaceuticals. Because we establish the average price for a drug paid based on WAC under section 1847A of the Act as WAC plus 3 percent instead of WAC plus 6 percent, we believe it is appropriate to price separately payable drugs paid based on WAC at the same amount under the OPPS. Our policy to pay for drugs and biologicals at WAC plus 3 percent, rather than WAC plus 6 percent, applies whenever WAC-based pricing is used for a drug, biological, or radiopharmaceutical under section 1847A(c)(4). When WAC-based pricing is used for a drug, biological, or radiopharmaceutical, but not under section 1847A(c)(4), the payment of WAC plus 6 percent would apply. We refer readers to the CY 2019 PFS final rule (83 FR 59661 to 59666) for additional background on this policy. Consistent with our current policy, payments for separately payable drugs, biologicals, and radiopharmaceuticals are included in the budget neutrality adjustments, under the requirements in section 1833(t)(9)(B) of the Act. Also, the budget neutral weight scalar is not applied in determining payments for these separately payable drugs and biologicals. Separately payable drug, biological, and radiopharmaceutical payment rates were listed in Addenda A and B to the CY 2026 OPPS/ASC proposed rule (available on the CMS website).\74\ These addenda provided the proposed CY 2026 payment rates based on the ASP methodology for separately payable nonpass-through drugs, biologicals, and radiopharmaceuticals, with exceptions for certain radiopharmaceuticals previously discussed, and the ASP methodology for pass-through drugs, biologicals, and radiopharmaceuticals. Except for proposed payment rates for certain radiopharmaceuticals, these rates were based either on ASP information that is the basis for calculating payment rates for drugs and biologicals in the physician's office [[Page 53703]] setting effective April 1, 2025, or WAC, AWP, or mean unit cost from CY 2024 claims data and updated cost report information available for the proposed rule. For nonpass-through therapeutic radiopharmaceuticals, payment rates were based on ASP data or mean unit cost. We proposed to pay separately at mean unit cost for diagnostic radiopharmaceuticals with per day costs above the proposed threshold; the payment rates proposed for qualifying diagnostic radiopharmaceuticals are entirely mean unit cost if available. See section II.A.3.c.(3) for the finalized policy regarding payment of qualifying diagnostic radiopharmaceuticals. In general, these published proposed payment rates will not be the same as the actual January 2026 payment rates. This is because payment rates for drugs, biologicals, and therapeutic radiopharmaceuticals with ASP information for January 2026 will be determined through the standard quarterly process where ASP data submitted by manufacturers for the third quarter of CY 2025 (July 1, 2025, through September 30, 2025) will be used to set the payment rates that are released for the quarter beginning in January 2026 in December 2025. In addition, in Addenda A and B to the CY 2026 OPPS/ASC proposed rule, payment rates for drugs, biologicals, and therapeutic radiopharmaceuticals for which there was no ASP, WAC, or AWP information available for April 2025, as well as all separately payable diagnostic radiopharmaceuticals, were based on mean unit cost in the available CY 2024 claims data. --------------------------------------------------------------------------- \74\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient. --------------------------------------------------------------------------- If new pricing information becomes available for payment for the quarter beginning in January 2026, we will price payment for these drugs, biologicals, therapeutic radiopharmaceuticals, and diagnostic radiopharmaceuticals based on their newly available information. Finally, there may be drugs, biologicals and therapeutic radiopharmaceuticals that had ASP, WAC, or AWP information available for the proposed rule (reflecting April 2025 ASP data) that do not have ASP, WAC, or AWP information available for the quarter beginning in January 2026. These drugs, biologicals and therapeutic radiopharmaceuticals would then be paid based on arithmetic mean unit cost data derived from CY 2024 hospital claims. Therefore, the proposed payment rates listed in Addenda A and B to the CY 2026 OPPS/ASC proposed rule were not for January 2026 payment purposes and were only illustrative of the CY 2026 OPPS payment methodology using the most recently available information at the time of issuance of the CY 2026 OPPS/ASC proposed rule. As previously discussed, we proposed that payment rates for HCPCS codes for separately payable drugs and biologicals included in Addenda A and B of this CY 2026 OPPS/ASC final rule with comment period would be based on ASP data from the second quarter of CY 2025. These data are the basis for calculating payment rates for drugs and biologicals in the physician's office setting using the ASP methodology, effective October 1, 2025. These payment rates would then be updated in the January 2026 OPPS update, based on the most recent ASP data to be used for physicians' office and OPPS payment as of January 1, 2026. For drugs and biologicals that do not currently have a payment rate based on ASP, WAC, or AWP, for therapeutic radiopharmaceuticals that do not currently have an ASP payment rate, and for all diagnostic radiopharmaceuticals, we would calculate their arithmetic mean unit cost from all of the CY 2024 claims data and updated cost report information available for the CY 2026 final rule with comment period to determine their final per day cost. We note that payment amounts for most drugs separately payable under Medicare Part B are determined using the methodology in section 1847A of the Act, and in many cases, payment is based on the average sales price (ASP) plus a statutorily mandated 6 percent add-on. In CY 2025, we clarified that only ASP data or, if ASP data are not available, mean unit cost data, would be used to set payment rates for separately payable nonpass-through therapeutic radiopharmaceuticals under the OPPS. For CY 2026, we did not propose any changes to our policies for payment for separately payable therapeutic or diagnostic radiopharmaceuticals other than the technical update that was proposed to the diagnostic radiopharmaceutical packaging threshold update factor as discussed in section V.B.1. of this final rule with comment period. For CY 2026, we did not propose any additional changes to our policies for payment for separately payable drugs, biologicals, and radiopharmaceuticals. We proposed to continue our payment policy that has been in effect since CY 2013 to pay for separately payable drugs and biologicals in accordance with section 1833(t)(14)(A)(iii)(II) of the Act (the statutory default). We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: Several commenters supported our proposals related to the separate payment for separately payable non-passthrough drugs and biologicals under the OPPS. Response: We thank the commenters for their support. Comment: Several commenters suggested technical improvements for CMS to consider regarding the operationalization of drug payment. Suggestions included improving transparency regarding updates to the CMS Average Sales Price Pricing Files, the OPPS/ASC Addenda Files, and the NCCI Medically Unlikely Edits. A commenter also suggested enabling a timelier issuance of J-codes to improve transparency for new drugs and to accelerate the rate at which ASP data is utilized following ASP reporting to CMS by the manufacturer. Two commenters requested CMS designate additional resources, including career staff and guidance, for communication with the pharmaceutical industry to increase transparency and ensure timely inclusion of new products in the OPPS payment files. One commenter indicates that uncertainty regarding Medicare payment often causes providers to hesitate or delay adoption of new therapies. Additionally, one commenter suggested CMS develop a drug-intensive policy for ASC rate setting similar to the current device-intensive policy. Additionally, two commenters recommended CMS increase transparency regarding packaging status post pass-through expiration and include the expected packaging status of a drug as part of the rulemaking process. Response: We thank the commenters for their feedback and recommendations. While these comments are generally out of scope for purposes of this rulemaking, we will take these comments into consideration for future rulemaking, future issuance of sub-regulatory guidance, and future internal process improvements. Based on these comments we may also consider publishing additional files, documents, and data as part of the rulemaking process in future years. After consideration of public comments, we are finalizing, without modification, our proposals to continue our payment policy for separately payable drugs and biologicals in accordance with section 1833(t)(14)(A)(iii)(II) of the Act. b. Biosimilar Biological Products For CY 2024, we finalized the exception of biosimilars from the OPPS threshold packaging policy when their [[Page 53704]] reference products are separately paid (88 FR 81783 through 81785). This policy allows for separate payment for biosimilars even if the biosimilar's per-day cost is below the packaging threshold if the biosimilar's reference product is separately paid. This policy removes the financial incentive to use a more expensive separately payable biological and promotes biosimilar use as a lower cost alternative to higher cost reference products. Payment rates for drugs and biologicals (including biosimilars) under Medicare Part B are determined using the methodology in section 1847A of the Act, and in many cases, payment is based on the average sales price (ASP) plus a statutorily mandated 6 percent add-on. Additionally, section 11403 of the IRA requires that a qualifying biosimilar be paid at ASP plus 8 percent of the reference product's ASP rather than 6 percent during the applicable 5-year period. Section 1847A(b)(8)(B)(ii) of the Act defines the applicable 5-year period for a qualifying biosimilar for which payment has been made using ASP (that is, payment under section 1847A(b)(8) of the Act) as of September 30, 2022, as the 5-year period beginning on October 1, 2022. For a qualifying biosimilar for which payment is first made using ASP during the period beginning October 1, 2022, and ending December 31, 2027, the statute defines the applicable 5-year period as the 5-year period beginning on the first day of such calendar quarter of such payment (88 FR 81783). These payment rates are published in the quarterly release of Addendum B or ASP pricing files. Comment: A few commenters supported the continuation of our biosimilar packaging exception policy that was implemented in CY 2024. The commenters stated they support policies that encourage a competitive marketplace and do not penalize price competition. Furthermore, a commenter suggested CMS expand the current biosimilar packaging exception policy to all biosimilars regardless of the reference product's packaging status. Another commenter expressed concerns regarding the OPPS packaging policy and believed it hinders competition against the reference products. Response: We thank the commenters for their support of continuing our biosimilar packaging exception policy. We believe the current policy supports both our intent to promote the use of biosimilars as a less expensive alternative to the reference products while also preserving our longstanding OPPS packaging intent to create incentives for efficiency. We continue to believe packaging is an essential component of a prospective payment system and do not support categorically excepting all biosimilars from the threshold packaging policy. After consideration of public comments we received, we are finalizing our proposal without modification to continue the exception of biosimilars from the OPPS threshold packaging policy when their reference products are separately paid. For CY 2026, we will pay separately for these biosimilars even if their per-day cost is below the threshold packaging policy when their reference products are separately paid. c. Invoice Drug Pricing for CY 2026 In the CY 2025 OPPS/ASC final rule with comment period (89 FR 94243 to 94244), we finalized that, for separately payable drugs or biologicals for which CMS does not provide a payment rate in Addendum B, which would indicate to MACs that CMS does not have pricing information (specifically, that ASP, WAC, AWP, and mean unit cost information is not available to determine a payment rate), MACs would calculate the payment based on provider invoices. The drug or biological invoice cost would be the net acquisition cost minus any rebates, chargebacks, or post-sale concessions. Before calculating an invoice-based payment amount, MACs would use the provider invoice to determine that: (a) the drug is not policy packaged; and (b) the per- day cost of the drug, biological, therapeutic radiopharmaceutical or diagnostic radiopharmaceutical is above the threshold packaging amount, as applicable. If both conditions are met, the MACs would use the provider invoice amount to set a payment rate for the separately payable drug, biological, or radiopharmaceutical until its payment amount becomes available to CMS. We generally expect invoice pricing to be temporary, lasting two to three quarters, for qualified drugs required to report ASP under section 1847A of the Act. For drug products that are not required to report ASP under section 1847A of the Act (that is, diagnostic pharmaceuticals), invoice pricing may be used on a longer-term basis until a MUC can be calculated. We finalized the invoice pricing policy for drugs to be effective January 1, 2026, with the intent to make technical updates to outpatient hospital claims and to allow providers time to prepare for any operational changes. We noted that the National Uniform Billing Committee (NUBC) created a value code that would allow for the reporting of invoice prices of drugs, biologicals, and radiopharmaceuticals for CY 2026 for the purpose of this policy. The NUBC value code created is 92 (Drug/ Biologic Invoice Cost), with the definition of: ``Invoice Cost of drug/ biologic. For use with Revenue Category 0636 when required by federal regulation.'' We proposed a technical clarification to this policy in the CY 2026 OPPS/ASC proposed rule. Previously, we stated that MACs would use the provider invoice to determine that: (1) the drug is not policy packaged; and (2) the per-day cost of the drug, biological, therapeutic radiopharmaceutical or diagnostic radiopharmaceutical is above the threshold packaging amount, as applicable. However, we proposed to clarify that CMS will determine whether the first condition is met, whether the drug is not policy packaged; however, the MAC will continue to determine whether the second condition is met, whether the per-day cost of the drug, biological, therapeutic radiopharmaceutical or diagnostic radiopharmaceutical is above threshold packaging amount, as applicable. Comment: A commenter sought clarification regarding ``invoice pricing''. The commenter stated that ``invoice pricing'' by nature does not reflect post sale adjustment and that the CMS text on this subject, ``The drug or biological invoice cost would be the net acquisition cost minus any rebates, chargebacks, or post-sale concessions'' may create confusion and result in unintended consequences. Response: We thank the commenter for seeking clarification on this subject. The invoice pricing policy aims to enhance transparency and accuracy in the determination of payment rates for drugs and biologicals when CMS lacks pricing information. By using the net acquisition cost and accounting for various post-sale adjustments, this policy ensures that the payment rates reflect the true cost incurred by providers. Therefore, in the CY 2026 OPPS/ASC proposed rule, we defined ``invoice pricing'' to be net acquisition cost minus any rebates, chargebacks, or post-sale concessions. To illustrate the calculation of the net acquisition cost: if the acquisition cost of a unit of drug X is $10, and the rebate was $2. The net acquisition cost of drug X per unit is $8 ($10-$2). Therefore, the invoice price to submit to the MAC is $8 per unit. After consideration of the public comments we received, we are implementing this policy without modification in CY 2026. We refer readers to the previous discussion when we finalized the policy in the CY 2025 OPPS/ASC final rule with comment period (89 FR 94243 to 94244). [[Page 53705]]

3. Payment Policy for Radiopharmaceuticals

For a complete history of the OPPS payment policy for radiopharmaceuticals, we refer readers to the CY 2005 OPPS final rule with comment period (69 FR 65811), the CY 2006 OPPS final rule with comment period (70 FR 68655), and the CY 2010 OPPS/ASC final rule with comment period (74 FR 60524). We received public comments on our payment policy for radiopharmaceuticals in general. The following is a summary of the comments we received and our responses. Comment: One commenter requested that CMS determine HCPCS specific radiopharmaceutical offsets and include preliminary nuclear medicine APC offset data with the proposed rule in order to inform public comments. Additionally, this commenter requested that CMS restore the radiopharmaceutical edits used in nuclear medicine procedures to increase the accuracy of claims data used to set rates for both separately payable diagnostic radiopharmaceuticals as well as the nuclear medicine APCs. Response: We appreciate the commenter's feedback; however, we are not reinstating the radiolabeled product edits for nuclear medicine procedures, which required a diagnostic radiopharmaceutical to be present on the same claim as a nuclear medicine procedure for payment to be made under the OPPS. As previously discussed in the CY 2020 OPPS/ ASC final rule with comment period (85 FR 86033 and 86034), the edits were in place between CY 2008 and CY 2014 (78 FR 75033). We believe the period of time in which the edits were in place was sufficient for hospitals to gain experience reporting procedures involving radiolabeled products and to become accustomed to ensuring that they code and report charges so that their claims fully and appropriately reflect the costs of those radiolabeled products. As with all other items and services recognized under the OPPS, we expect hospitals to code and report their costs appropriately, regardless of whether there are claims processing edits in place. We welcome ongoing dialogue and engagement from interested parties regarding suggestions for payment changes for consideration in future rulemaking. We will take into consideration additional files and data that may be helpful to readers as supplements to future notice and comment rulemaking. a. Payment Policy for Therapeutic Radiopharmaceuticals In the CY 2023 OPPS/ASC final rule with comment period, we adopted as final our proposal to continue our longstanding payment policy for therapeutic radiopharmaceuticals for CY 2023 and subsequent years. Accordingly, this payment policy for therapeutic radiopharmaceuticals will continue to apply in CY 2026. Specifically, our policy of paying for separately payable pass- through therapeutic radiopharmaceuticals under the ASP methodology adopted for separately payable drugs and biologicals described in section V.A.1. of this CY 2026 OPPS/ASC final rule will continue to apply for CY 2026. We will pay for separately payable nonpass-through therapeutic radiopharmaceuticals through a modified ASP methodology where we pay at ASP plus 6 percent if ASP data are available. However, if ASP information is unavailable for a separately payable nonpass- through therapeutic radiopharmaceutical, we will continue to base the payment rate on arithmetic mean unit cost data derived from hospital claims. Our policy not to use WAC or AWP to establish payment for separately payable nonpass-through therapeutic radiopharmaceuticals if ASP is not available will continue for CY 2026. We explained our rationale in the CY 2010 OPPS/ASC final rule with comment period (74 FR 60524 through 60525) when we first adopted our policy to apply the principles of separately payable drug pricing to therapeutic radiopharmaceuticals. For a full discussion of ASP-based payment for therapeutic radiopharmaceuticals, we refer readers to the CY 2010 OPPS/ASC final rule with comment period (74 FR 60520 through 60521). We will rely on CY 2024 mean unit cost data derived from hospital claims data for payment rates for separately payable nonpass-through therapeutic radiopharmaceuticals for which ASP data are unavailable and update the payment rates for these products according to our usual process for updating the payment rates for separately payable drugs and biologicals on a quarterly basis if updated ASP information becomes available. The CY 2026 payment rates for separately payable nonpass-through therapeutic radiopharmaceuticals are included in Addenda A and B of this final rule with comment period (which are available on the CMS website).\75\ --------------------------------------------------------------------------- \75\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient. --------------------------------------------------------------------------- Though we made no proposal regarding payment for therapeutic radiopharmaceuticals, we received public comments that were generally in support of these policies. We thank the commenters for their support. We are continuing our policies unchanged for CY 2026. b. Payment Policy for Diagnostic Radiopharmaceuticals Without Claims Data For CY 2025, we finalized, as described in the CY 2025 OPPS/ASC final rule (89 FR 93948 through 93963), to pay separately at arithmetic mean unit cost for diagnostic radiopharmaceuticals with a per day cost above our diagnostic radiopharmaceutical packaging threshold ($655 for CY 2026). We also finalized our policy to pay for pass-through diagnostic radiopharmaceuticals based on ASP, WAC, and AWP. We continue to believe that paying for nonpass-through diagnostic radiopharmaceuticals using arithmetic mean unit cost would appropriately pay for the average price of a nonpass-through separately payable diagnostic radiopharmaceutical, as discussed in section II.A.3.c of this final rule with comment period. In our view, MUC is an appropriate proxy for the average price for a diagnostic radiopharmaceutical for a given year, as it is calculated based on the average costs for a particular year and is directly reflective of the actual cost data that hospitals submit to CMS. As we stated in the CY 2010 OPPS/ASC final rule with comment period (74 FR 60523), we believe that WAC or AWP is not an appropriate proxy to provide OPPS payment for radiopharmaceuticals because these pricing methodologies do not include discounts. Specifically, the absence of appropriate ASP reporting could result in payment for a separately payable diagnostic radiopharmaceutical based on WAC or AWP indefinitely, a result which we believe would be inappropriate, as these pricing metrics do not capture all of the pricing discounts that may be reflected in the ASP. Additionally, in the CY 2025 OPPS/ASC final rule with comment period (89 FR 93948 through 93963), we finalized to base the initial payment for new diagnostic radiopharmaceuticals with HCPCS codes that do not have pass-through status or claims data on ASP, and on the WAC for these products if ASP data for these diagnostic radiopharmaceuticals are not available. To further clarify, these products will be paid based on ASP plus 6 percent, and [[Page 53706]] at WAC plus 3 or 6 percent according to the policy in section V.B.2.a. of this final rule with comment period if ASP data are not available. If the WAC also is unavailable, we proposed to make payment for new diagnostic radiopharmaceuticals at 95 percent of the products' most recent AWP. We believe the volume of products in this category will typically be very low; however, in these rare situations, we believe it would be appropriate to use ASP, WAC, or AWP until a MUC is established for new diagnostic radiopharmaceuticals with HCPCS codes that do not have passthrough status or claims data. We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: Commenters were generally supportive of our policy regarding payment for non-passthrough diagnostic radiopharmaceuticals without claims data. While commenters had suggestions regarding payment for diagnostic radiopharmaceuticals with claims data and while on pass- through status, commenters generally supported the policies to pay for diagnostic radiopharmaceuticals without claims data according to the existing methodology. Response: We thank the commenters for their support. After consideration of public comments, we are continuing our policy, without modification, to base the initial payment for new diagnostic radiopharmaceuticals with HCPCS codes that do not have pass- through status or claims data on ASP, at ASP plus 6 percent, and on the WAC for these products if ASP data for these diagnostic radiopharmaceuticals are not available. To further clarify, these products will be paid based on ASP plus 6 percent, and at WAC plus 3 or 6 percent according to the policy in section V.B.2.a. of this final rule with comment period if ASP data are not available. If the WAC also is unavailable, payment for new diagnostic radiopharmaceuticals will be made at 95 percent of the products' most recent AWP. We believe the volume of products in this category will typically be very low; however, in these rare situations, we believe it would be appropriate to use ASP, WAC, or AWP until a MUC is established for new diagnostic radiopharmaceuticals with HCPCS codes that do not have passthrough status or claims data. Please refer to section II.A.3.c of this final rule with comment period for information regarding our broader payment policies for diagnostic radiopharmaceuticals, including our policy to pay separately for diagnostic radiopharmaceuticals above a certain cost threshold, our policy to pay for separately payable diagnostic radiopharmaceuticals with claims data based on mean unit cost data derived from hospital claims, and a list of the final qualifying diagnostic radiopharmaceuticals with per day costs exceeding the $655 threshold for CY 2026 in Table 7. The final CY 2026 payment rates for separately payable nonpass-through diagnostic radiopharmaceuticals are included in Addenda A and B of this final rule with comment period (which are available on the CMS website).\76\ --------------------------------------------------------------------------- \76\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient. ---------------------------------------------------------------------------

4. Payment for Blood Clotting Factors

For CY 2026, we proposed to continue our established policy to provide payment for blood clotting factors using the same methodology as other separately payable drugs and biologicals under the OPPS and to continue to pay a furnishing fee. For a full discussion of our established payment policy for blood clotting factors, please refer to the CY 2023 OPPS/ASC final rule with comment period (87 FR 71969 through 71970). In accordance with our policy as finalized in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66765), we will announce the actual figure of the percent change in the applicable CPI and the updated furnishing fee calculation based on that figure through the applicable program instructions and posting on the CMS website at https://www.cms.gov/medicare/payment/fee-for-service-providers/part-b-drugs/average-drug-sales-price. Comment: Commenters supported our proposal to continue to provide payment for the for blood clotting factors using the same methodology as other separately payable drugs and biologicals under the OPPS and to continue to pay a furnishing fee. Response: We thank the commenters for their support of our policy. After consideration of public comments, we are finalizing our proposal without modification to pay for clotting factors using the same methodology as other separately payable drugs and biologicals under the OPPS, and to provide a clotting factor furnishing fee. For CY 2026, the blood clotting factor furnishing fee is $0.265. The actual percentage change in the applicable CPI and the updated furnishing fee calculation based on that figure through the applicable program instructions are posted on the CMS website.\77\ --------------------------------------------------------------------------- \77\ https://www.cms.gov/files/document/r13379cp.pdf. ---------------------------------------------------------------------------

5. Payment for Nonpass-Through Drugs, Biologicals, and

Radiopharmaceuticals With HCPCS Codes But Without OPPS Hospital Claims Data In the CY 2023 OPPS/ASC final rule with comment period, we adopted as final our proposal to continue our longstanding payment policy for nonpass-through drugs, biologicals, and radiopharmaceuticals with HCPCS codes but without OPPS hospital claims data for CY 2023 and subsequent years. Therefore, for CY 2026, this policy will continue to apply. For a detailed discussion of the payment policy and methodology, we refer readers to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70442 through 70443). Consistent with our policy, because we have no claims data and must determine if these products, drugs, biologicals, therapeutic radiopharmaceuticals, and diagnostic radiopharmaceuticals, exceed the per-day cost threshold, we estimated the average number of units of each product that would typically be furnished to a patient during one day in the hospital outpatient setting and utilized the payment rate for the product, typically the ASP methodology, to determine whether their payment will be packaged as well as their payment status indicators. We did not make a proposal on this policy. This policy did not receive public comments on this provision. We are continuing this policy unchanged for CY 2026.

6. Requirement in the CY 2026 PFS Proposed Rule for HOPDs and ASCs To

Report Discarded Amounts of Certain Single-Dose or Single-Use Package Drugs Section 90004 of the Infrastructure Investment and Jobs Act (Pub.

L. 117-9, November 15, 2021) (``the Infrastructure Act'') amended

section 1847A of the Act to re-designate subsection (h) as subsection (i) and insert a new subsection (h), which requires manufacturers to provide a refund to CMS for certain discarded amounts from a refundable single-dose container or single-use package drug. We explained in the CY 2026 OPPS/ASC proposed rule (90 FR 33631) that the CY 2026 Physician Fee Schedule (PFS) proposed rule (90 FR 32538 through 32540) includes proposals related to the discarded drug refund [[Page 53707]] policy, including proposals that may impact hospital outpatient departments (HOPDs) and ambulatory surgical centers (ASCs). Similar to our past notices in OPPS/ASC proposed rules, such as in the CY 2025 OPPS/ASC proposed rule (89 FR 59370), we wanted to ensure interested parties were aware of these proposals and knew to refer to the CY 2026 PFS proposed rule for a full description of the proposed policy. Interested parties were asked to submit comments on any proposals to implement section 90004 of the Infrastructure Act to the CY 2026 PFS proposed rule. We noted that public comments on these proposals would be addressed in the CY 2026 PFS final rule with comment period. We refer readers to the CY 2026 PFS final rule with comment period for a summary of comments, our responses, and the finalized policy for CY 2026. 7. CY 2026 Prospective Adjustment to Payments for Non-Drug Items and Services To Offset the Increased Payments for Non-Drug Items and Services Made in CY 2018 Through CY 2022 as a Result of the 340B Payment Policy a. Overview Under the OPPS, we generally set payment rates for separately payable drugs, and biologicals (hereinafter referred to collectively as ``drugs'' in this section) under section 1833(t)(14)(A) of the Act). Section 1833(t)(14)(A)(iii)(II) of the Act provides that, if hospital acquisition cost data are not available, the payment amount is the average price for the drug in a year established under sections 1842(o), 1847A, or 1847B of the Act, as the case may be. Payment rates for drugs have usually been established under section 1847A of the Act, which generally sets a default rate of the average sales price (ASP) plus 6 percent. Section 1833(t)(14)(A)(iii)(II) of the Act also provides that the average price for the drug in the year as established under section 1847A of the Act, is calculated and adjusted by the Secretary as necessary for purposes of paragraph (14). In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59353 through 59371), CMS reexamined the appropriateness of paying the ASP plus 6 percent for drugs acquired through the 340B Drug Pricing Program (hereinafter referred to as the ``340B Program''), a Health Resources and Services Administration (HRSA)-administered program that allows covered entities to purchase certain covered outpatient drugs at discounted prices from drug manufacturers. Based on findings of the Government Accountability Office (GAO),\78\ the HHS Office of the Inspector General (OIG),\79\ and the Medicare Payment Advisory Commission (MedPAC) \80\ that 340B hospitals were acquiring drugs at a significant discount under the 340B Program, CMS adopted a policy beginning in 2018 generally to pay an adjusted amount of ASP minus 22.5 percent for certain separately payable drugs or biologicals acquired through the 340B Program. This adjustment amount was based on our concurrence with an analysis by MedPAC that concluded that the estimated average minimum discount of 22.5 percent of ASP adequately represented the average minimum discount that a 340B participating hospital received for separately payable drugs under the OPPS (82 FR 59354 through 59371). Our intent in implementing this payment reduction was to reflect more accurately the actual costs incurred by participating hospitals in acquiring 340B drugs. We stated our belief that such changes would allow Medicare beneficiaries and the Medicare program to pay a more appropriate amount when hospitals participating in the 340B Program furnished drugs to Medicare beneficiaries that were purchased under the 340B Program (82 FR 59353 through 59371). --------------------------------------------------------------------------- \78\ Government Accountability Office. ``Medicare Part B Drugs: ``Action Needed to Reduce Financial Incentives to Prescribe 340B Drugs at Participating Hospitals.'' June 2015. Available at https://www.gao.gov/assets/gao-15-442.pdf. \79\ Office of Inspector General. ``Part B Payment for 340B Purchased Drugs. OEI-12-14-00030''. November 2015. Available at: https://oig.hhs.gov/oei/reports/oei-12-14-00030.pdf. \80\ Medicare Payment Advisory Commission. March 2016 Report to the Congress: Medicare Payment Policy. March 2016. Available at Medicare Payment Advisory Commission. March 2016 Report to the Congress: Medicare Payment Policy. March 2016. Available at https://www.medpac.gov/document/http-www-medpac-gov-docs-default-source-reports-may-2015-report-to-the-congress-overview-of-the-340b-drug-pricing-program-pdf/. --------------------------------------------------------------------------- b. Payment for 340B Drugs and Biologicals in CYs 2018 Through 2022 From January 1, 2018 through September 27, 2022, under the OPPS we generally paid for certain separately payable drugs acquired through the 340B Program at ASP minus 22.5 percent. In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59369 through 59370), we finalized our proposal to adjust the payment rate for separately payable drugs (other than drugs with pass-through payment status and vaccines) acquired under the 340B Program from ASP plus 6 percent to ASP minus 22.5 percent. We also noted that critical access hospitals are not paid under the OPPS and therefore were not subject to the OPPS 340B drug payment adjustment policy. For ease of reference, the OPPS 340B drug payment adjustment policy is hereinafter referred to as the ``340B Payment Policy'' and refers both to the adjustments made to payment rates for 340B-acquired drugs described here and the corresponding rate adjustment for non-drug services and items described later in section V.B.7.c. of this final rule with comment period. We note that rural sole community hospitals, children's hospitals, and PPS-exempt cancer hospitals were exempted from the adjustments made to payment rates for 340B-acquired drugs primarily due to these hospitals receiving special payment adjustments under the OPPS. In addition, as stated in the CY 2018 OPPS/ASC final rule with comment period, this policy change did not apply to drugs with pass-through payment status, which are required to be paid based on the ASP methodology, or vaccines, which are excluded from the 340B Program. In the CY 2019 OPPS/ASC final rule with comment period (83 FR 58981), we continued the Medicare 340B payment policies that were implemented in CY 2018 and adopted a policy to pay for non-pass-through 340B-acquired biosimilars at ASP minus 22.5 percent of the biosimilar's ASP, rather than the reference biological product's ASP. Additionally, in the CY 2019 OPPS/ASC final rule with comment period (83 FR 59015 through 59022), we finalized a policy to pay ASP minus 22.5 percent for 340B-acquired drugs furnished in non-exempted off-campus provider-based departments (PBDs) paid under the PFS. We adopted this payment policy for CY 2019 and subsequent years. Also, during the CY 2019 OPPS/ASC rulemaking cycle, we clarified that the 340B payment adjustment applied to drugs priced using either wholesale acquisition cost (WAC) or average wholesale price (AWP), and since the policy was first adopted, we applied the 340B payment adjustment to 340B-acquired drugs priced using these pricing methodologies. The 340B payment adjustment for WAC- priced drugs was WAC minus 22.5 percent. 340B-acquired drugs that were priced using AWP were paid an adjusted amount of 69.46 percent of AWP (83 FR 37125).\81\ --------------------------------------------------------------------------- \81\ The 69.46 percent of AWP was calculated by first reducing the original 95 percent of AWP price by 6 percent to generate a value that is similar to ASP or WAC with no percentage markup. Then we applied the 22.5 percent reduction to ASP/WAC-similar AWP value to obtain the 69.46 percent of AWP, which was similar to either ASP minus 22.5 percent or WAC minus 22.5 percent. --------------------------------------------------------------------------- [[Page 53708]] As discussed further in section V.B.7.f. of the CY 2026 OPPS/ASC proposed rule, the results of this policy meant that hospitals received an estimated $10.6 billion less in 340B drug payments (including money that would have been paid by Medicare and money that would have come from beneficiaries as copayments) than they would have for drugs provided in CY 2018 through September 27th of 2022 had the 340B Payment Policy not been implemented (88 FR 77162). These reduced payments are detailed in Table 108 and are derived from Addendum AAA published with the Final Remedy rule (88 FR 77150). [GRAPHIC] [TIFF OMITTED] TR25NO25.150 For more detailed descriptions of our OPPS payment policy for drugs acquired under the 340B Program during this timeframe, we refer readers to the CY 2018 OPPS/ASC final rule with comment period (82 FR 59353 through 59371); the CY 2019 OPPS/ASC final rule with comment period (83 FR 59015 through 59022); the CY 2020 OPPS/ASC final rule with comment period (84 FR 61321 through 61327); the CY 2021 OPPS/ASC final rule with comment period (85 FR 86042 through 86055); the CY 2022 OPPS/ASC final rule with comment period (86 FR 63640 through 63649); the CY 2023 OPPS/ASC final rule with comment period (87 FR 71972 through 71973); and the CY 2024 OPPS/ASC final rule with comment period 88 FR 81789 through 81792). c. Payment for Non-Drug Items and Services in CY 2018 Through CY 2022 In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59216, 59258), to comply with the statutory budget neutrality requirements under sections 1833(t)(9)(B) and (t)(14)(H) of the Act, we finalized our proposal to redistribute our estimated reduction in payments for separately payable drugs as a result of the 340B Payment Policy by increasing the conversion factor used to determine the payment amounts for non-drug items and services. As further described in the CY 2018 OPPS/ASC final rule with comment period, we used updated CY 2016 claims data and a list of 340B-eligible providers to calculate an estimated impact of $1.6 billion based on the final CY 2018 policy to pay for OPPS 340B-acquired drugs at a payment rate of generally ASP minus 22.5 percent. To effectuate the budget neutrality provisions of the OPPS for CY 2018, we redistributed an estimated $1.6 billion in reduced drug payments from adoption of the final 340B payment methodology to all hospitals paid under the OPPS by increasing the payment rates by 3.19 percent for nondrug items and services furnished by all hospitals paid under the OPPS for CY 2018. We carried through this conversion factor adjustment from CYs 2019 through 2022, increasing payments for non-drug items and services in these CYs. This resulted in approximately $7.769 billion, which for ease of reference in this rule we hereafter refer to as $7.8 billion, in additional spending on non-drug items and services from CYs 2018 through 2022. d. Litigation History of the 340B Payment Policy The 340B Payment Policy was the subject of extensive litigation. See the Proposed Remedy for the 340B-Acquired Drug Payment Policy for Calendar Years 2018-2022 (hereinafter referred to as the ``proposed remedy rule'') for a more comprehensive summary of the litigation history (88 FR 44079 through 44080). On June 15, 2022, the Supreme Court held that because we had not conducted a survey of hospitals' acquisition costs, we could not vary the payment rates for outpatient prescription drugs by hospital group. See Am. Hosp. Ass'n v. Becerra, 142 S. Ct. 1896, 1906 (2022). The Supreme Court declined to opine on the appropriate remedy, id. at 1903, and on September 28, 2022, the district court vacated the reimbursement rate for 340B-acquired drugs for the remainder of 2022. See Am. Hosp. Ass'n v. Becerra,1:18-cv-2084-RC, 2022 WL 4534617, at *5.\82\ On January 10, 2023, the district court remanded without vacatur to give the agency the opportunity to determine the proper remedy for the reduced payment amounts to 340B hospitals under the payment rates in the final OPPS rules for CY 2018 through CY 2022. See Am. Hospital Ass'n v. Becerra, 1:18-cv-2084-RC, 2023 WL 143337, at *6.\83\ --------------------------------------------------------------------------- \82\ https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2018cv2084-79. \83\ https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2018cv2084-86. --------------------------------------------------------------------------- e. Payment for 340B-Acquired Drug Claims for September 28, 2022 Through CY 2025 The agency complied with the district court's September 28, 2022 decision by uploading revised OPPS drug files to pay the default rate (generally ASP plus 6 percent) for all CY 2022 claims for 340B-acquired drugs paid from September 28, 2022, through the end of CY 2022. In the CY 2023 OPPS/ASC final rule with comment period (87 FR 71970), we finalized a policy reversing the 340B Payment Policy so that going forward we would pay for 340B acquired drugs no differently than we pay for drugs that are not acquired through the 340B program. To do so, we first provided that drugs acquired through the 340B Program would be paid at the statutory default rate (generally ASP plus 6 [[Page 53709]] percent) for CY 2023. Second, to ensure budget neutrality for CY 2023 OPPS payment rates as required by statute, we finalized a reduction of 3.09 percent to the 2023 OPPS conversion factor. This one-time adjustment to the conversion factor removed the effect of this aspect of the 340B Payment Policy, as originally adopted in CY 2018, for CY 2023 and subsequent years. This adjustment to the conversion factor reduced the conversion factor to the conversion factor that would have been in place in CY 2023 if the 340B payment policy had never been implemented. For more detail on the payment rate for drugs acquired under the 340B Program for CY 2023 and the corresponding adjustment to the conversion factor to maintain budget neutrality as a result of reversing the 340B adjustment and paying for all separately payable drugs at ASP plus 6 percent (or WAC plus 3 or 6 percent or 95 percent of AWP), we refer readers to the CY 2023 OPPS/ASC final rule with comment period (87 FR 71973 through 71976). For CYs 2024 and 2025, consistent with our policy finalized for CY 2023, we continued to pay the statutory default rate for 340B acquired drugs (88 FR 81789 through 81791). f. Remedy Payment Adjustment for 340B-Acquired Drugs From CY 2018 Through September 27, 2022 The agency complied with the district court's January 10, 2023, remand order by issuing the Final Remedy for the 340B-Acquired Drug Payment Policy for Calendar Years 2018-2022 (hereinafter referred to as the ``Final Remedy rule'') on November 8, 2023 (88 FR 81540). The purpose of this rule was to address the reduced payment amounts to 340B hospitals under the reimbursement rates in effect for CY 2018 through September 27, 2022 and to comply with the statutory requirement to maintain budget neutrality under the OPPS. To address the reduced payment amounts to 340B hospitals under the reimbursement rates in effect for CY 2018 through September 27, 2022, CMS made one-time lump sum payments to affected 340B covered entity hospitals, calculated as the difference between what an affected 340B covered entity hospital received for 340B-acquired drugs from CY 2018 through September 27, 2022 and what they would have received for those drugs if the 340B adjustment had not been in place. These one-time lump sum payments were issued in early 2024. For more information on the calculation and distribution of the one-time lump sum payments, see the Final Remedy rule (88 FR 77156 through 77170). g. Prospective Adjustment to Payments for Non-Drug Items and Services To Offset the Increased Payments for Non-Drug Items and Services Made in CY 2018 Through CY 2022 As we described under section V.B.7.c. of the CY 2026 OPPS/ASC proposed rule and section I.A.3 of the Final Remedy rule, to comply with statutory budget neutrality requirements, the decreased payments made to 340B hospitals for drugs in CY 2018 through September 27, 2022 were budget neutralized by corresponding increased payments to all hospitals for non-drug items and services starting in CY 2018 through CY 2022. When these past payments were subsequently increased through the one-time lump sum payments in 2024, the same budget neutrality requirements correspondingly required us to decrease the non-drug item and services payments made from CY 2018 through CY 2022. To reduce the burden on providers of immediately offsetting the estimated $7.8 billion of increased non-drug item and services payments made from CY 2018 through CY 2022, we decided to implement the offset prospectively over the course of several years. As we explained in the CY 2026 OPPS/ASC proposed and Final Remedy rules (88 FR 44088, 88 FR 77172), this approach was similar to the original budget neutrality adjustment in the 340B Payment Policy that increased the payment for every non-drug item and service for CY 2018 through CY 2022 to offset the downward adjustment in the payment rate for drugs acquired under the 340B Program. We finalized in the Final Remedy rule that, beginning in CY 2026, we would reduce the conversion factor for non-drug items and services to all OPPS providers--except any hospital that enrolled in Medicare after January 1, 2018 (as described further below)--by 0.5 percent each year until the total offset was reached (which we estimated would take approximately 16 years (88 FR 77181)). As we stated in the CY 2026 OPPS/ASC proposed and Final Remedy rule, we believed an annual reduction in the conversion factor would be appropriate because it would balance the need to address the past payments for non-drug items and services to ensure budget neutrality while also ensuring that the offset was not immediately overly financially burdensome on impacted entities, which we believed would be the case if we were to apply an adjustment for the full offset amount in a single year. (88 FR 44087, 88 FR 77170). Accordingly, the Final Remedy rule finalized changes to the calculation of the OPPS conversion factor applicable to non-drug items and services beginning in CY 2026. Specifically, we codified a 0.5 percent reduction in the OPPS conversion factor applicable to non-drug items and services in the regulations by adding new paragraph (b)(1)(iv)(B)(12) to Sec. [thinsp]419.32. This 0.5 percent reduction would remain in effect until the estimated payment reduction reached $7.8 billion, which we estimated would occur in CY 2041. For a fuller discussion of the CY 2026 adjustment to the conversion factor for non- drug items and services in the Final Remedy rule, see the Final Remedy rule (88 FR 77156 through 77170). In finalizing our policy to apply a prospective adjustment, we recognized that any hospital that enrolled in Medicare after January 1, 2018 (hereinafter referred to as a ``new provider'') received less than the full amount of the increased non-drug item and service payments made during that time than they otherwise would have received if enrolled prior to that date (88 FR 44080). We therefore exempted these providers from the prospective rate reduction, which was predominantly designed to account for non-drug item and service payments made during CY 2018 through CY 2022. As we explained, that meant that we would calculate payment rates for new providers using the conversion factor before applying the 0.5 percent annual reduction to the conversion factor for non-drug items and services that would apply for hospitals that are not ``new providers'' for purposes of this policy. For the purpose of designating a new provider, we defined the date of enrollment in Medicare as the provider's CMS certification number (CCN) effective date. We codified the exclusion of these new providers from the prospective payment adjustment to the conversion factor for the duration of its application in the regulations by adding new paragraph (b)(1)(iv)(B)(12) to Sec. [thinsp]419.32. In the CY 2026 OPPS/ASC proposed rule we indicated that we had reviewed our provider enrollment and OPPS billing records, and based on that data, the providers that would be subject to the proposed payment reduction were listed in Addendum R--340B Remedy Offset Providers to the CY 2026 OPPS/ASC proposed rule. We welcomed comment on the providers listed in this Addendum, and based upon those comments, we proposed to publish a final Addendum R--340B Remedy Offset Providers for CY 2026 in the CY 2026 OPPS/ASC final rule with [[Page 53710]] comment period. We indicated in the CY 2026 OPPS/ASC proposed rule that providers not included on this list (providers that began billing Medicare under the OPPS after January 1, 2018) would not be subject to the proposed payment reduction. For a complete discussion of our exclusion of new providers from the prospective payment adjustment, we refer readers to the Final Remedy rule (88 FR 77182 through 77185). We did not receive public comments on Addendum R--List of Providers Subject to the Reduction to Non-Drug Item and Service Payments as a Result of the 340B Payment Policy Remedy, and therefore, we are finalizing as proposed. h. CY 2026 Prospective Payment Adjustment When we considered how to recover the estimated $7.8 billion in increased estimated payments made for non-drug items and services from 2018 through 2022, we considered several alternatives, including those that would fully recover that amount in a single year. For example, in the Proposed Remedy rule, we rejected an aggregate payment approach that would have implemented budget neutrality requirements through an immediate lump sum recoupment that would mirror the lump sum remedy payment because ``[s]uch an approach would require immediate, and in many cases large, retroactive recoupments from the majority of OPPS hospitals and would impose a substantial, immediate burden on these hospitals as well as an uncertain impact on beneficiaries'' (88 FR 44083). To avoid imposing such a burden, we elected to reduce payments prospectively until the total offset was reached, which we estimated would take approximately 16 years. As we discussed in the CY 2026 OPPS/ASC proposed rule, we considered various methods to implement this prospective payment reduction. In the Final Remedy rule, we made the prospective payment reduction by applying an annual 0.5-percentage point downward adjustment to the OPPS conversion factor. We stated in the CY 2026 OPPS/ASC proposed rule that we continued to believe that a downward adjustment to the OPPS conversion factor was a fair way to apportion the $7.8 billion reduction amongst hospitals, because relative hospital utilization of non-drug items and services beginning in 2026 would approximately track the relative hospital utilization for non-drug items and services each hospital received from CY 2018 through CY 2022. We stated in the CY 2026 OPPS/ASC proposed rule that the future payment reductions would thus roughly offset the windfall those hospitals received from increased payments from CY 2018 through CY 2022. And we noted our statement in the final rule that the approach of tethering future payments for each non-drug item and service for each hospital ``was similar to the original budget neutrality adjustment in the 340B Payment Policy that increased the payment for every non-drug item and service for CY 2018 through CY 2022 to offset the downward adjustment in the payment rate for drugs acquired under the 340B Program'' (88 FR 77172). Finally, the methodology does so with minimal administrative burden to hospitals and beneficiaries, because we can effectuate the offset by calculating the appropriate payment reduction in annual rulemaking without requiring any subsequent action by hospitals. Other methodologies--like delivering a series of demand letters to each hospital for a share of the $7.8 billion--would not only require us to recalculate the proper amount to apportion to each hospital but would most likely require large lump-sum payments from hospitals. We expressed concern that hospitals might find it financially disruptive to promptly write such one-time checks depending on their financial circumstances when we issue the demand letters, whereas implementing a percentage reduction in their Medicare OPPS payments over a number of years would be less disruptive. Such one-time payments would impose greater administrative burden on hospitals and possibly introduce complications to our collections efforts if hospitals delay payments. We stated in the CY 2026 OPPS/ASC proposed rule that while we continued to believe that a reduction to the OPPS conversion factor was the best way to effectuate budget neutrality, we had reconsidered whether the timing we selected--a 0.5-percentage point annual reduction for approximately 16 years--best achieved the overarching goal of the Final Remedy rule, which is to restore hospitals to as close to the financial position they would have been in had the 340B Payment Policy never been implemented as is reasonably feasible. In particular, we indicated that the further away from CY 2018 through CY 2022 the adjustments extend, the less likely that relative hospital utilization of non-drug items and services would correlate to the relative hospital utilization of non-drug items and services from 2018 through 2022. In other words, a hospital's utilization of non-drug items and services is likely going to diverge more from CY 2018 utilization in CY 2041 than it would in CY 2031 or CY 2026. And the more a hospital's utilization of non-drug items and services diverge, the less hospitals would be restored to as close as possible to the approximate financial position as they would have been in had the 340B Payment Policy never been implemented. By beginning the decrease to non-drug item and service payments in CY 2026, there is already an 8-year delay between the first year of the OPPS 340B payment policy and the first year of the prospective offset. Thus, the longer it takes for us to fully recover the $7.8 billion, the less likely that the relative burden on hospitals from the adjustments will match the relevant benefits those hospitals previously received. In addition, it is possible that at least some hospitals that benefited from the increased payments from CY 2018 through CY 2022 will leave the market before 2041, increasing the risk that the remaining hospitals might ultimately account for a larger share of the payment reductions than they would have if the annual reduction to the OPPS conversion factor concluded sooner. We noted that the $7.8 billion dollar figure calculated in the Final Remedy rule (88 FR 77150) does not and will not account for inflation and does not contain interest even though the prospective offset is occurring many years after both the start of the 340B payment policy in CY 2018 as well as the lump sum remedy payments made in CY 2024. Accordingly, effective January 1, 2026, we proposed to revise the annual reduction to the OPPS conversion factor under Sec. [thinsp]419.32(b)(1)(iv)(B)(12) used to determine the payment amounts for non-drug items and services from 0.5 percent to 2 percent. Under this revised rate, we expected it would take approximately 6 years to reach the total offset of $7.8 billion (see Table 62 in the CY 2026 OPPS/ASC proposed rule (90 FR 33636)). Consistent with the Final Remedy rule, we noted, this reduction would not apply to new providers. We also included on Table 62 in the CY 2026 OPPS/ASC proposed rule, and Table 109 in this final rule with comment period, an alternative policy option with an annual reduction of 5 percent which would reach the total offset of $7.8 billion in approximately 3 years. We acknowledged that this revised annual reduction would be a change to the approach we finalized in the Final Remedy rule and that, at that time, we considered but did not adopt a [[Page 53711]] suggestion from a commenter requesting that we recover the amount over a shorter timeframe than 16 years. (88 FR 77179.) We indicated that our basis for not accepting the suggestion in the Final Remedy rule was that the 0.5 percent rate/16-year timeframe ``properly reverses the increased payments for non-drug items and services to comply with statutory budget neutrality requirements while at the same time accounting for any reliance interests and ensuring that the offset is not overly burdensome to impacted entities''. We stated in the CY 2026 OPPS/ASC proposed rule that we now thought that this balancing insufficiently accounted for the main premise of the Final Remedy rule, which is to implement the budget neutrality requirement in a manner that restores affected 340B covered entity hospitals to the financial position they would have been in had the 340B Payment Policy not been implemented in 2018. For the reasons explained in the CY 2026 OPPS/ASC proposed rule, we believed that a 6-year time frame better achieved that main goal. We also stated that we believed this time frame balanced better that goal and our budget neutrality obligations against hospital burden and reliance interests. We provided as an example that the 16-year timeframe is more than three times longer than the 5-year period the 340B Payment Policy was in place. The 6 years we expect that the revised policy would be in effect, by contrast, is closer to the timeframe the 340B Payment Policy was in place, and the 2 percent payment reduction we proposed is still well below the 3.19 percent payment increase hospitals received for that time period (82 FR 52624 through 52625). We also stated that because we proposed this policy in advance of CY 2026 and before any rate reductions go into effect for OPPS and Medicare Fee for Service payments, any reliance interests hospitals have in a policy that has not been implemented yet for these payment systems would be minimal and outweighed by the other considerations discussed in the CY 2026 OPPS/ASC proposed rule. BILLING CODE 4120-01-P [[Page 53712]] [GRAPHIC] [TIFF OMITTED] TR25NO25.151 BILLING CODE 4120-01-C We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: Most commenters opposed our proposal. Many of these commenters referenced previous comments they or others made to the Final Remedy rule alleging that CMS lacks the statutory authority to budget neutralize the remedy and that CMS' approach to budget neutrality is inconsistent with its past practices. Based on these reasons, these commenters requested that we abandon the proposal and rescind the regulation codified in that rule, 42 CFR 419.32(b)(1)(iv)(B)(12) to implement the offset. Response: We direct readers to our responses to those comments in the [[Page 53713]] Final Remedy rule at 88 FR 77150 through 77194. Comment: One commenter stated that CMS does not have the legal authority to apply an additional 2.0-percentage point reduction to OPPS rates because, under section 1833(t)(3)(C)(iv) of the Act, CMS is required to update OPPS rates by the same update that applied under the IPPS. Since CMS has already finalized an update of 2.6 percent for the FY 2026 IPPS, the commenter stated that CMS must apply the same update to the OPPS for CY 2026 without further changes. Response: We disagree with the commenter, who conflates two distinct statutory obligations. Under section 1833(t)(3)(C) of the Act, the Secretary updates the conversion factor used to determine the payment rates under the OPPS on an annual basis by applying the OPD fee schedule increase factor. The commenter is correct that we have implemented that fee schedule increase factor under section 1833(t)(3)(C)(iv) of the Act by applying the hospital inpatient market basket percentage increase applicable to hospital discharges under section 1886(b)(3)(B)(iii) of the Act, subject to sections 1833(t)(17) and (t)(3)(F) of the Act. As we explain in section XXVI. of this final rule with comment period, we continue to do so by increasing the OPD fee schedule for CY 2026 by a factor of 2.6 percent--the same as applicable to hospital discharges for fiscal year 2026 under section 1886(b)(3)(B)(iii) of the Act. The commenter is incorrect, however, that the statute makes the fee schedule increase factor the only update the Secretary can make to the OPPS conversion factor each year. Section 1833(t)(3)(C)(iii) of the Act, for example, authorizes the Secretary further to modify the conversion factor in certain circumstances based on adjustments to service mix. And many parts of the OPPS statute require the Secretary to budget neutralize particular payments, including sections 1833(t)(2)(E), (t)(9)(B), and (t)(14)(H) of the Act. Since the very first payment rule implementing OPPS, we have implemented OPPS's budget neutrality requirements by adjusting the conversion factor. (65 FR 18476 (implementing budget-neutrality requirement)). We have long rejected the commenter's suggestion that section 1833(t)(3)(C)(iv) of the Act means that the conversion factor cannot account for these budget neutrality requirements, explaining that the ``[s]tatute requires us to ensure that a conversion factor for covered OPD services in subsequent years is an amount equal to the conversion factor applicable to the previous year before any increases due to the market- basket increase.'' (67 FR 66788.) We accordingly applied that same policy when we first decreased payments for 340B-acquired drugs in the CY 2018 OPPS/ASC final rule with comment period, which we budget neutralized through an upward adjustment of 1.0319 to the OPPS conversion factor on top of the annual OPD fee schedule increase factor under 1833(t)(3)(C)(iv) of the Act. (82 FR 59353 through 59371). Even on the commenter's statutory theory, then, that increase--in place from CY 2018 through CY 2022--was itself unlawful and so should be repaid. Comment: One commenter stated that the statute does not authorize CMS to impose what the commenter characterized as a compressed repayment schedule or heightened offset and disagreed with CMS' stated justification for it, which the commenter characterizes as ``that a shorter offset period is preferable because it more closely aligns with the duration of the unlawful 340B payment policy''. The commenter contended that the statute does not authorize CMS to ``calibrate budget neutrality offsets based on temporal symmetry or administrative convenience'' and that such an approach ignores the disproportionate impact that a 2 percent annual reduction will have on hospitals that did not receive full remedy payments, including those with high Medicare Advantage penetration or limited exposure to the original 340B cuts. Response: We disagree with the commenter that the statute prohibits the proposed budget neutrality adjustment schedule or amount, or that our rationale for that proposed schedule is flawed based on hospitals' reduced payments for drug acquired under the 340B program from CY 2018 through 2022. As we explained in the CY 2026 OPPS/ASC proposed rule, the main reason we proposed to shorten the timeframe for the adjustment was to recognize that OPPS utilization changes over time. As we have explained, the purpose of any rate reduction is to unwind the 3.19 percent increase budget neutrality hospitals received from CY 2018 through 2022. (For example, 88 FR 77170.) Current OPPS utilization for a hospital is a reasonable proxy for past OPPS utilization for a hospital, but it becomes a less accurate proxy the longer the recoupment timeframe. The commenter is wrong to suggest that our proposed policy would pursue symmetry for symmetry's sake. By pointing out that adjusting rates by 2 percent for 6 years is similar to the initial policy of adjusting rates by 3.19 percent for 4 years, we meant to illustrate both that the proposed larger decrease would still be the type of ``adjustment'' to payment rates authorized by sections 1833(t)(2)(E), (9)(B), and (14)(H) of the Act (88 FR 77158 through 77159) and that the reduction would still fall within the type of year- to-year rate fluctuations in OPPS rates that hospitals should reasonably expect in annual ratemaking. Nor was it inherently unreasonable for us to consider how long it will take fully to implement the adjustment; no statute requires us to implement our budget neutrality obligations so that a policy in place only from CY 2018 through 2022 still drives payment rates in 2040. Finally, the commenter is correct that not all hospitals received 340B remedy payments and might have been impacted differently by the payment reductions for 340B-acquired drugs from CY 2018 through 2022. But the commenter is wrong that we should treat those hospitals differently here. We accounted for the fact that some hospitals received payment reductions for 340B-acquired drugs from CY 2018 through 2022 by making remedy payment to those hospitals. By contrast, and as noted above, the payment cuts in 42 CFR 419.32 (b)(1)(iv)(B)(12) unwinds the 3.19 percent budget neutrality increase hospitals received from CY 2018 through 2022. We are applying this cut only to the hospitals who received the full increase. Because hospitals received the 3.19 percent increase from CY 2018 through 2022 regardless of whether they also were paid less for 340B-acquired drugs, we disagree that whether hospitals were paid less for 340B-acquired drugs is relevant here. Comment: Many commenters noted that in the Final Remedy rule we rejected annual percent reductions greater than 0.5 based on our conclusion that a 0.5 percent reduction ``properly reverses the increased payments for non-drug items and services to comply with statutory budget neutrality requirements while at the same time accounting for any reliance interests and ensuring that the offset is not overly burdensome to impacted entities''. (88 FR 77179). These commenters critiqued our subsequent determination in the CY 2026 OPPS/ ASC proposed rule that the 0.5 percent reduction ``insufficiently accounted for the main premise of the Final Remedy rule which is to implement the budget neutrality requirement in a manner that restores affected 340B covered entity hospitals to the financial position they would have been in had the 340B Payment Policy [[Page 53714]] not been implemented in 2018'' and our conclusion that ``a 6 year time frame better achieves that main goal'' and ``balances better that goal and our budget neutrality obligations against hospital burden and reliance interests''. These commenters stated that CMS does not sufficiently explain how it reassessed the relationship between budget neutrality obligations, hospital reliance interests, and the financial burden on providers and that CMS has attributed insufficient weight to the reliance interest and hospital burden side of the equation. One commenter accused CMS of a ``bait-and-switch'' because it changed its position after initially rejecting the proposal for a quicker recoupment and faults CMS for not offering any new facts or circumstances not known to CMS when it published the Final Remedy rule that would warrant a change in policy. That commenter suggested that CMS failed to provide a rational basis for its position change, because another policy best achieves CMS' stated goal: reprocessing of all claims for the period in which the unlawful policy was in effect. Commenters also raised several alleged reliance interests. They emphasized that we finalized the 0.5 percent reduction in the Final Remedy rule and that they have relied on that amount in good faith in the nearly 2 years since to engage in financial planning and long-term investment decisions. These commenters challenged CMS' contention that any reliance interests hospitals have in a policy that has not been implemented yet would be minimal because the proposal to increase the offset was made in advance of CY 2026 and before any rate reductions go into effect for OPPS and Medicare Fee for Service payments. These commenters stated that this fails to account for the long-term, multi- year nature of hospital budgeting and they described the many expenditures (opening new facilities, buying new medical equipment, hiring staff and expanding services lines, etc.) they have allegedly made based on the 0.5 percent reduction. Commenters maintained that CMS recognized their reliance interests in the Final Remedy rule when it delayed the start of the offset to 2026 so that hospitals could ``assess and prepare for the new payment rates that will be calculated using a reduced conversion factor''. One commenter stated that the reliance interest discussed in the Final Remedy rule is ``clearly the reliance interest on continued, stable payments in the OPPS'' and that CMS took this interest into account by deciding not to impose the 0.5 percent reduction until 2026 ``allowing adequate time for impacted parties to assess and prepare for the new payment rates that will be calculated using a reduced conversion factor''. The commenter contended that the CY 2026 OPPS/ASC proposed rule not only entirely fails to address hospitals' reliance interest as envisioned in the Final Remedy rule but also undermines the separate reliance interests that CMS allowed to be built from the date of the Final Remedy rule's publication to the CY 2026 OPPS/ASC rule's publication. The commenter stated that the budget process for CY 2026 is already materially complete and a roughly 2-month planning period (assuming a November OPPS/ASC final rule with comment period release) is simply not reasonable and would have drastic consequences without the ability to plan or adjust. Another commenter argued that CMS cannot ignore these considerations, ``which informed CMS' choice in 2023 to adopt a lengthy recovery period and to extend the implementation of even a 0.5 percent reduction from 2025 to 2026, giving hospitals over 2 years to prepare.'' Response: While we disagree with many of the arguments these commenters raise, we are persuaded by the commenters to the extent that we will not finalize in CY 2026 our proposal to increase to 2 percent the 0.5 percent adjustment in 42 CFR[thinsp]419.32(b)(1)(iv)(B)(12). We currently anticipate delaying a change for just 1 year. Thus, while we will retain the original 0.5 percent adjustment in the conversion factor in CY 2026, hospitals should anticipate that we will implement a larger adjustment (such as 2 percent or other adjustment greater than 0.5 percent) beginning in CY 2027. Any change to the adjustment in 42 CFR[thinsp]419.32(b)(1)(iv)(B)(12) that applies beginning in CY 2027 would go through the usual annual rulemaking process. We do so based on the unique circumstances here. We finalized outside the standard annual rulemaking cycle a 0.5 percent reduction to payment rates that would not begin for 2 years and explained that we were giving hospitals that second year before implementing the payment reduction in part ``to provide entities additional time to prepare for the new payment rate'' (88 FR 77180). It might not have been unreasonable for hospitals to do just as we suggested and used that additional year to prepare for only a 0.5 percent payment decrease in CY 2026--particularly because our decision to announce the rate adjustment outside the usual calendar year rulemaking process and then delay that rate adjustment was atypical. While hospitals may be correct that they often plan their budgets in advance, section 1833(t)(9)(A) of the Act requires us to update OPPS rates annually, and section 1871(e)(1)(B) of the Act requires only that changes to Medicare payment rates be finalized at least 30 days before they take effect. We therefore often implement policy changes with significant financial impacts for the upcoming year through the annual rulemaking process, and nothing here should be construed to suggest a change to that general practice, nor should hospitals expect us to generally give them additional time to prepare for policy changes beyond what the Congress prescribes in the statute. As we noted above, we changed hospital payments by over 3 percent through the annual ratemaking process for CY 2018 as part of our budget neutralization obligations, and so a 1.5 percentage point change through those same rulemaking procedures falls within the type of annual rate fluctuations hospitals can reasonably expect. Neither the APA nor the Medicare statute imposes a one-way ratchet in which we may increase payments through annual rulemaking but not decrease them through annual rulemaking. Also important to our decision is that giving hospitals an additional year before any increase to the adjustment still fulfills the rationale underlying the Final Remedy rule that motivated our proposed change: to implement the budget neutrality requirement in a manner that restores affected 340B covered entity hospitals to the financial position they would have been in had the 340B Payment Policy not been implemented in 2018. We proposed to increase the adjustment to 2 percent so that the hospital utilization that will ultimately determine each hospital's payment reduction would better map onto payment increase from CY 2018 through 2022. We are still beginning the reductions this year, and we doubt that 1 year of reduced reductions will materially undermine that rationale. Nor do we agree that because reprocessing every claim would more perfectly place hospitals in the position they would have been in absent the 340B Payment Policy than the repayment policy we adopt here, it makes relying on that general approach irrational. We already explained the flaws with claims reprocessing (88 FR 77153 through 77154), including significant delays and administrative burden on us and hospitals alike. We anticipate that adopting in future years a larger percent prospective payment reduction will [[Page 53715]] better serve that goal than a 0.5 percent reduction while still avoiding the pitfalls of full claims reprocessing. We also disagree with commenters to the extent that they suggest more explanation would be required, including any suggestion that we need to define precisely the relationship between budget neutrality obligations, hospital reliance interests, and the financial burden on providers. As the U.S. Supreme Court recently explained, when changing positions, ``the agency does not need to show that the reasons for the new policy are better than the reasons for the old one'' or ``provide a more detailed justification than what would suffice for a new policy created on a blank slate'' so long as it remains ``cognizant'' that ``longstanding'' policies might have engendered reliance interests. Food & Drug Admin. v. Wages & White Lion Invs., L.L.C., 604 U.S. 542, 570 (2025) (internal quotation marks omitted and emphasis in original). We identified in the CY 2026 OPPS/ASC proposed rule that we were proposing to change our policy, and we gave an explanation for why we believed our proposed new policy reasonably balanced the relevant interests. We specifically considered reliance interests in the CY 2026 OPPS/ASC proposed rule, and in this final rule with comment period we are finalizing to delay by an additional year any increase in payment reductions to further respect any reliance interest. Any change to the adjustment in 42 CFR[thinsp]419.32(b)(1)(iv)(B)(12) that applies beginning in CY 2027 would go through the usual annual rulemaking process. Nothing more is required. Comment: One commenter suggested that CMS failed in the CY 2026 OPPS/ASC proposed rule to adequately to grapple with why CMS did not implement a commenter's suggestion to impose percent reductions greater than 0.5 in the Final Remedy rule. In the CY 2026 OPPS/ASC proposed rule, we explained that ``[o]ur basis for not accepting the suggestion was that the 0.5 percent rate/16-year timeframe `properly reverses the increased payments for non-drug items and services to comply with statutory budget neutrality requirements while at the same time accounting for any reliance interests and ensuring that the offset is not overly burdensome to impacted entities''. (90 FR 33635 [quoting 88 FR 77179]) In the commenter's estimation, this incorrectly suggests that CMS' response to these comments as being the entire rationale for selecting the 0.5 percent reduction when the Final Remedy rule had additional rationales. The commenter identified these rationales as ``potential impact on vulnerable providers and their communities'', ``standard remedial principles'' and ``basic fairness''. The commenter stated that CMS fails to account for these concerns in the CY 2026 OPPS/ASC proposed rule ``leaving affected communities without any information about how the proposed rule is lawful, much less fair''. Response: We disagree that our proposal failed to properly account for the potential impact on vulnerable providers and their communities, standard remedial principles, and basic fairness when proposing a new schedule for the budget neutrality adjustment. As an initial matter, we did not cite any of those rationales as the basis for rejecting a higher reduction rate in the Final Remedy rule. Instead, as we noted in the CY 2026 OPPS/ASC proposed rule, our explanation turned on the fact that a 0.5 percent reduction complies with budget neutrality requirements while accounting for reliance interests and burden on providers. We cited remedial principles and basic fairness when rejecting a suggestion that we recoup the full $10.6 billion payment we were also making to providers who had previously acquired drugs through the 340B program instead of simply unwinding the $7.8 billion payment increase to hospitals from CY 2018 through 2022 to place hospitals in as close to a position as they would have been absent the 340B Payment Policy. We also addressed vulnerable patients and communities in response to a suggestion that we exempt from the budget neutrality policy hospital groups that serve certain communities. We explained in part that the payment reductions were the mirror image of prior payment increases that would otherwise be a windfall to providers--windfalls that those communities would share in the cost of funding through taxes, premiums, and cost sharing. We did not propose to revisit either policy and so there was no reason to revisit those rationales. In any event, our proposal was consistent with those principles. As we noted, ``standard remedial principles and basic fairness support situating hospitals as closely as possible to the financial situation they would have been in absent the 340B Payment Policy'' (88 FR 77179)--the same rationale we explained in the CY 2026 OPPS/ASC proposed rule supports a quicker recoupment period (90 FR 33635). And we continue to be sensitive to the potential impact on vulnerable patients, their communities, and providers. The proposed decreases were the mirror image of prior payment increases--in fact, they would be even more so if we ultimately implement a quicker recoupment period. Additionally, as we noted in the Final Remedy rule, the statute authorizes transitional outpatient payments to cancer and children's hospitals that insulate them from the payment impact of policies like these. (88 FR 77181) Comment: One commenter, reiterating their comments to the Final Remedy rule, suggested that CMS abandon reliance on ``inapt'' payment rules and its budget neutrality proposal altogether and instead invoke section 1870 of the Act (42 U.S.C. 1395gg), which describes when and how CMS may recover incorrect payments it makes on behalf of an individual. The commenter explained that this authority would allow CMS to forgo recovery where the individual for whom the incorrect payment was made was without fault and making the adjustment would ``defeat the purposes of subchapter II or subchapter XVIII or would be against equity and good conscience'' and that it would be appropriate for CMS to exercise this discretion as ``[c]learly the beneficiaries for whom providers received increased payments from 2018 to 2022 were without fault''. The commenter additionally contended that CMS recovering from recipient hospitals is also against equity and good conscience from a broader economic standpoint. The commenter stated that the increased OPPS payments hospitals received have been incorrectly characterized as a ``windfall'' and such a characterization ``does not square with the modest 3.19 percent adjustment that was in place from 2018 to 2022. Over that time period, even a compounded 3.19 percent adjustment would not have kept up with the rate of inflation.'' Finally, the commenter alleged that recoupment is bad policy because it excuses statutory non- compliance. By setting a precedent of financing its remedy payments, the commenter stated that CMS removes an incentive to engage in thoughtful, judicious and textually grounded rulemaking. In the absence of clear statutory authority to offset its remedy payments, the commenter argued that CMS should choose not to do so, and allow the Congress to intervene if it chooses to do so. Response: We refer readers to our response in the Final Remedy rule to the same commenter's suggestion that we rely on section 1870 of the Act (42 U.S.C. 1395gg) (88 FR 77178). As we explained there, section 1870 of the Act specifies when providers can shift liability to beneficiaries for overpayments, which can in turn be [[Page 53716]] waived when, among other requirements, liability would ``defeat the purposes of . . . subchapter XVIII or would be against equity and good conscience.'' Section 1870 is silent about the situation here where CMS adjusts future payments through its budget neutrality authority, and the commenter does not suggest we are required to invoke section 1870 of the Act in this circumstance. We disagree with the commenter's suggestion that the payment statute that we have invoked to make the lump-sum remedy payments-- section 1833(t)--is comparatively ``inapt.'' That is the payment statute governing the OPPS, and as we explained in the Final Remedy rule, sections 1833(t)(2)(E) and (14) of the Act authorize the $10.6 billion in payments that compensate hospitals for the reduced payments they received. (88 FR 77156 through 77161.) Those authorities, however, have budget neutrality consequences, which we have implemented through prospective payment decreases. (88 FR 77169 through 77182.) The commenter does not explain how section 1870 of the Act interacts with those authorities, or how abandoning section 1833(t) of the Act in favor of section 1870 of the Act would have allowed us to make billions of dollars in lump-sum remedy payments. And even if the commenter could, we do not find under section 1870 of the Act that honoring the budget neutrality requirements under section 1833 of the Act through our policy here would ``defeat the purposes of . . . subchapter XVIII'' of the Act. Disregarding the Congress' instruction that OPPS generally be budget neutral here would instead defeat the purposes of subchapter XVIII--one of which is sustainability. Nor do we find under section 1870 of the Act that honoring the budget neutrality requirements under section 1833 of the Act through the budget neutrality policy we proposed would be against equity and good conscience. It is incongruous to suggest that the 3.19 percent increase from 2018 through 2022 is ``modest'', but our proposed 2 percent decrease or finalized 0.5 percent decrease to unwind that increase would be against equity and good conscience. As we have repeatedly stated, even a 2 percent decrease would be within the usual annual payment fluctuations. With regards to inflation, the OPPS primarily accounts for increased costs through other mechanisms like the annual market basket increase and wage index, not through the payment changes for hospitals from budget neutralization requirements. We maintain that allowing hospitals to keep past payment increases due to the 340B Payment Policy would be a windfall in the sense that hospitals would be retaining payment increases after we unwound the corresponding payment decreases that both justified and authorized them. See, for example, windfall, Mirriam Webster Online (``an unearned . . . gain or advantage'').\84\ --------------------------------------------------------------------------- \84\ https://www.merriam-webster.com/dictionary/windfall. --------------------------------------------------------------------------- Finally, we disagree with the commenter's policy statements against budget neutrality. As an initial matter, such arguments cannot overcome the text of the statute. And the commenter is wrong that we are financing remedy payments to the extent the commenter means that we are charging hospitals for the cost of the Final Remedy rule. We rejected comments suggesting that we budget neutralize the full $10.6 billion remedy payments in the Final Remedy rule. Instead, we are simply unwinding the $7.8 billion in payment increases from CY 2018 through 2022 predicated on the invalidated payment decreases to place all parties as close as we can to the situation they would have been in if the 340B Payment Policy had never been adopted. Doing so does not excuse statutory non-compliance or disincentivize us from seeking the best reading of the statute. Rather, as we have noted, it ensures that the only money actually spent is money authorized to be spent by the statute and avoids strategic behavior on behalf of regulated entities. (88 FR 77176.) Comment: The same commenter stated that section 1833(t)(14)(A) of the Act creates a ``workaround'' to section 1833(t)(14)(D) of the Act, which requires CMS to conduct acquisition cost surveys to assess in setting the drug APC payment rates, that ``absolves'' the Secretary from actually using data resulting from the acquisition cost surveys. In the commenter's view, this allows the Secretary to ``game the system'' for any rates set under section 1395l(t)(14) of the Act. The commenter alleged that there is no information in the CY 2026 OPPS/ASC proposed rule to suggest the pricing information was set with data obtained from compliance with section 1833(t)(14)(D) of the Act or its ``workaround'' in 1833(t)(14)(A) of the Act. The commenter claimed that this lack of transparency prevents meaningful comment and does not adequately explain the agency's authority to budget neutralize. The commenter concluded that ``[a]s the requisite survey is just being rolled out in this same Proposed Rulemaking, these `budget neutrality offset adjustments' should not be allowed to continue because the agency is under no obligation to neutralize the effects of its 340B payments cuts that the Supreme Court found to be in violation of another statute.'' Response: The commenter correctly identifies that 1833(t)(14) of the Act authorizes two options to set drug APC payment rates, depending on the circumstance, though we would not necessarily characterize either as a ``workaround'' for the other. As the Supreme Court explained, section 1833(t)(14)(A)(III)(i) of the Act ``applies if [CMS] collects `hospital acquisition cost survey data' from hospitals'' under paragraph (D), and section 1833(t)(14)(A)(III)(ii) of the Act applies if we ``do not conduct a survey of hospitals' acquisition costs and if acquisition cost data are therefore `not available.' '' Am. Hosp. Ass'n v. Becerra, 596 U.S. 724, 734 (2022). Because we have not yet completed a survey under paragraph (D), we have set payment rates under section 1833(t)(14)(A)(III)(ii) of the Act, just as we have for two decades. We explained that policy and how we set rates under section 1833(t)(14)(A)(III)(ii) of the Act in the CY 2026 OPPS/ASC proposed rule (88 FR 33628 through 33629) and published for comments the proposed rates in Appendices A and B to that proposed rule.\85\ The commenter does not identify any flaw with those explanations, and we disagree that doing so inadequately explains those rates or failed to provide adequate information for comment, or that by following the statutory process we have ``game[d] the system.'' As we have previously explained, we do not rely on section 1833(t)(14)(A)(III)(i) or (ii) of the Act for the payment adjustment here, but instead our budget neutralization authority.\86\ We explained at length how we arrived at the reduction and the amount of the total reduction, and the commenter does not identify any flaws with that methodology besides reiterating its disagreement with our statutory interpretation. We therefore disagree that we have provided insufficient information for comment. --------------------------------------------------------------------------- \85\ Available at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices/cms-1834-p. \86\ See 88 FR 77169 through 77181; see also Id. at 77156 through 77161; 90 FR 33633 through 33634. --------------------------------------------------------------------------- Comment: One commenter stated that CMS has not provided meaningful notice of its intent to recoup because CMS has not provided affected hospitals with concrete information for review and consideration. To support this contention, the commenter focuses on CMS' use of the words ``estimated'' and [[Page 53717]] ``approximately'' in the CY 2026 OPPS/ASC proposed rule's discussion of payment for non-drug items and services in CY 2018 through CY 2022 and stated that ``3 years later the agency is still talking in estimates and approximations''. The commenter alleged a discrepancy between an estimated impact of $1.6 billion that is listed in the narrative and an approximate impact of $1.9B noted for FY 2018 in Table 61 on the same page. The commenter also compared Table 4 in the Final Remedy rule, describing the repayment schedule, scheduled to begin in CY 2026, that would take back 0.5 percent per year from 2026-2041 and Table 62 in the CY 2026 OPPS/ASC proposed rule, describing the repayment schedule that would take back 2 percent per year from 2026-2031 and alleged that ``[s]eemingly, something has changed in the math. The 2023 0.5 percent reduction dollar amounts in Table 4 multiplied by 4 yield very different numbers than what appears in Table 62. Yet, no meaningful explanation walks the public through these numbers, nor is there any confirmation that the $7.769 billion was the actual reinstatement. It is referred to as an ``estimate'' in the Table 62''. The commenter stated that 42 U.S.C. 1395hh(a)(2) requires the agency to undergo notice and comment rulemaking regarding anything that affects a provider's payment and that this is separate from its other obligations regarding notice and comment requirements in the Administrative Procedure Act (APA) (5 U.S.C. 553). The commenter stated that in order for there to be proper notice under either statute, the notice must provide sufficient detail for the reviewer to fully understand the substantive change to be made and that that is not possible because the commenter does not know why CMS is using estimates for data that was completed more than a year ago or why CMS' numbers changed from the 2023 Final Remedy rule to the CY 2026 OPPS/ASC proposed rule. Response: We disagree that using the terms ``estimated'' and ``approximately'' means that this rulemaking fails to meet any requirement to engage in notice-and-comment rulemaking. The commenter does not suggest that we failed adequately to explain how we arrived at our estimations or approximations or that we gave the commenter inadequate information to comment on our methodology or data. Instead, the commenter appears to read into sections 1870 of the Act and the APA a categorical ban on setting policy based on estimations or approximations. We are unaware of any such requirement, nor would one make sense in a prospective payment system where the statute requires us routinely to set policy based on future predictions. We routinely approximate the results of our calculation rather than describe every calculation to the cent. However, for the readers awareness, in the Final Remedy rule, we state that our estimate of the total amount of additional spending on non-drug item and service spending ``rounds to $7.8 billion, but is more precisely $7,768,568, 239'' (88 FR 77153). And here, it was more precise to refer to estimations when we did. We are unwinding payment increases for non-drug items and services between CY 2018 and 2022 based on the rate increase for those items and services that CMS estimated in 2017 would redistribute the amount it estimated it would save for drugs acquired through the 340B program. We are not recouping the actual amount CMS saved by decreasing payments for drugs acquired through the 340B program, which, as we explained in the Final Remedy rule, exceeded our 2017 expectations. (See 88 FR 77177 and 77187.) That difference between estimated payments and actual payments also explains the alleged discrepancy between the estimated impact of $1.6 billion for CY 2018 that is listed in the narrative and the approximate impact of $1.9 billion for that year listed in Table 61 on the same page of the CY 2026 OPPS/ASC proposed rule. As we explained in the CY 2026 OPPS/ASC proposed rule, to effectuate the budget neutrality provisions of the OPPS in CY 2018 rulemaking, CMS redistributed the $1.6 billion it estimated in 2017 that it would save in CY 2018 in reduced drug payments to increase nondrug item and service payments (90 FR 33632). That is the $1.6 billion number we reference in the narrative and that contributes to the $7.8 billion we intend to recoup through budget neutrality policy. Again, actual savings on drug payments in CY 2018 through CY 2022 exceeded our projections. (88 FR 77177 and 77187.) Table 61 of the CY 2026 OPPS/ASC proposed rule summarizes the actual reduced 340B drug payment amounts, which we derived from Addendum AAA published with the Final Remedy rule. (90 FR 33632). Thus, adding the amounts in Table 61 together totals to $10.6 billion--the total remedy payments we made to hospitals that acquired drugs through the 340B program at a reduced payment rate. Nor has anything changed in the math between Table 4 in the Final Remedy rule and the projected recoupments in Table 62 in the 2026 OPPS/ASC proposed rule. Since Table 4 was published in 2023, CMS has updated its payment projections for Medicare based on additional data. Table 62 uses those updated projections when estimating the impact of a 2 percent reduction, rather than just multiplying the original 0.5 percent reduction dollar amount by 4 like the commenter. Comment: One commenter referenced CMS' statement in the CY 2026 OPPS/ASC proposed rule that the main premise of the Final Remedy rule was to implement the budget neutrality requirement in a manner that restored affected 340B covered entity hospitals to the financial position they would have been in had the 340B Payment Policy not been implemented in 2018. The commenter stated that there is no need to restore affected 340B entity hospitals to the financial position they would have been in had the 340B payment policy not been implemented in 2018 because that restoration already occurred with the early 2024 lump sum payments. Response: We do not agree that the lump sum payments paid to hospitals in 2024 restored 340B covered entity hospitals, or any OPPS- paid hospital, to the financial position they would have been in had the 340B Payment Policy not been implemented from 2018 through 2022. The lump sum payment does not account for the additional payments for non-drug items and services that were made to all hospitals from CY 2018 through CY 2022 to achieve budget neutrality for the reduced 340B drug payments. Comment: Many commenters stated that CMS' proposal failed to appreciate the financial strain the proposed increased reduction would impose on hospitals that are already operating on tight margins. These commenters claimed that CMS' proposal failed to account for adverse financial trends that have occurred since 2023, such as increased costs of labor, supplies and pharmaceuticals, aging hospital infrastructure, inflation, inadequate government reimbursements that lag behind inflation, eroding margins, supply chain disruptions, an aging population with more complex, chronic conditions, the lingering effects of the COVID-19 PHE and impending economic strains such as the OBBBA's reduction to Medicaid and Health Insurance Marketplace payments, IRA drug reductions, Medicare sequestration, and HRSA's recently noticed 340B Rebate Model. These commenters stated that the financial burden imposed by the proposal would threaten the services that they provide. [[Page 53718]] Response: We recognize that hospitals may have experienced financial strain in recent years, but other statutory provisions address many of the issues hospitals raise like inflation or the medical complexity of the Medicare population, and we do not believe that relaxing OPPS's budget neutrality provisions is the proper policy response. With respect to interest specifically, we note that the first of the increased payment amounts occurred in 2018, whereas the last of the recoupment amounts may not be until after 2030--in effect a more than 10-year loan without any attached interest. Ultimately, though, we cannot ignore the financial windfall that hospitals received from 2018 to 2022 and our statutory obligation to recover that windfall. We hope that delaying for a year any increase to the 0.5 percent reduction will allow hospitals to do any necessary planning and help to mitigate any financial strain Comment: One commenter contended that the CY 2026 OPPS/ASC proposed rule fails to address how a 2 percent reduction is not ``overly burdensome'' when it previously concluded in the Final Remedy rule that reductions of 1.25 percent, 2.25 percent, and 3 percent would have been. Response: We have addressed above why we reevaluated in the CY 2026 OPPS/ASC proposed rule our burden analysis in the Final Remedy rule and believed a larger offset percentage was more appropriate and better achieved the overarching goal of the Final Remedy rule, which is to restore hospitals as close to the financial position they would have been in had the 340B Payment Policy never been implemented. However, also for the reasons we have described above, we are maintaining the 0.5 percent reduction for CY 2026. Comment: Many commenters characterized the offset, whether increased or not, as a penalty, arguing that it is unfair for hospitals to be penalized for mistakes or past unlawful actions by CMS. Response: The offset is not a penalty on hospitals. Rather, it is a rate adjustment under section 1833(t) of the Act that accomplishes an incremental and interest free recovery of windfall payments to hospitals. It is calibrated to the amount of extra money hospitals received and thus achieves payment precision, not punishment. It returns hospitals to the position they would have been absent the unlawful 340B Payment Policy and ensures that the only money ultimately spent is the money authorized to be spent by the statute. As we stated in the Final Remedy rule, in determining the specific annual percent reduction by which to recover the funds from hospitals, our goal was to appropriately balance our statutory budget neutrality obligations against hospitals' burden and reliance interests. The adjustment we proposed in the CY 2026 OPPS/ASC proposed rule to the percent reduction we finalized in the Final Remedy rule is our attempt to more precisely balance these elements. Comment: Multiple commenters expressed concern about the disproportionate financial effect the increased rate of recoupment would have on safety-net providers, rural providers, 340B hospitals and teaching hospitals and stated that the recoupment would reduce resources available to provide services to their patients, particularly to low-income, rural, underserved and vulnerable populations. Response: As we said in response to similar concerns expressed by commenters in the Final Remedy rule, we recognize that our proposal to decrease future payments will have a financial impact across all hospitals paid under the OPPS, except for new providers, and we are particularly mindful of the impact on vulnerable patients and communities. But, as we also stated in the Final Remedy rule, future decreases are, on aggregate, the mirror image of prior payment increases that would otherwise be a windfall to providers and such windfalls are not cost-free; the costs are ultimately borne by beneficiaries and taxpayers--including the vulnerable patients and communities served by the hospitals to which commenters themselves refer. In fact, this remedy will reduce any beneficiary cost sharing obligations, and incrementally reduce beneficiary Part B premiums, for all Medicare beneficiaries, including the vulnerable patients to which the commenters refer. (88 FR 77180 through 77181) Comment: Many commenters expressed concern that, if implemented, the 2 percent reduction would effectively wipe out the CY 2026 OPPS rate increase. Others referenced recent estimates from the Congressional Budget Office predicting a new 4 percent Medicare sequestration to begin in January 2026 and argued that, coupled with the proposed 2 percent reduction, outpatient hospital services would be reduced by as much as 8 percent in CY 2026. Response: Commenters are referencing distinct statutory obligations or potential future statutory obligations. Section 1833(t)(3)(C)(ii) of the Act requires the Secretary to update the conversion factor used to determine the payment rates under the OPPS on an annual basis by applying the OPD fee schedule increase factor. Sections 1833(t)(9)(B), (t)(14)(H) and (t)(2)(E) of the Act require that the OPPS be a budget neutral system, and we decline the commenters' invitation to implement those budget neutrality provisions in a way that defeats the purpose of other statutory policies. Comment: Many commenters recognized CMS' statutory obligation to implement a budget neutral recoupment but, based on concern about the financial impact of a two percent reduction, requested the reduction to remain at 0.5 percent. Some commenters requested that the reduction be no larger than one percent while others requested 0.25 percent. One commenter suggested that if we could not maintain the 0.5 percent reduction then we should exempt non-340B hospitals entirely and specifically, physician owned hospitals. Nearly all commenters opposed our suggested alternative of a 5 percent reduction. Response: We appreciate commenters' acknowledgement of our statutory obligation to budget neutralize the recoupment and their suggestions for alternative annual percent reductions to do so. With respect to a 0.25 percent reduction, we do not believe that an approximately 40 year recoupment timeframe would appropriately implement the budget neutrality requirement in a manner that restores affected 340B covered entity hospitals to the financial position they would have been in had the 340B Payment Policy not been implemented in 2018. This would be over 6 times the timeframe that the 340B Payment Policy was in place and exacerbates the concern that was driving the proposed 2 percent reduction--that the longer it takes to complete the recoupment, the more likely hospital utilization or other payment factors will change from CY 2018 through 2022, and so the less each hospital's total payment reduction will correspond with that hospitals' payment increase from CY 2018 through 2022. As for the other suggestions, we are this year finalizing a 0.5 percent reduction for the reasons we discussed previously. That is consistent with these commenters' suggestion of a 0.5 percent reduction, and less than the alternative 1 percent reduction. As we noted above, however, we anticipate implementing a larger adjustment (such as 2 percent or other adjustment greater than 0.5 percent) in next year's rulemaking, and we can consider additional alternatives at that time. [[Page 53719]] Comment: One commenter stated that CMS is required to pay interest under 42 U.S.C. 1395l(j) for the remedy payments from the Final Remedy rule. The commenter stated that section 1395l(j) of the Act provides that interest is due when a provider received an OPPS payment ``in excess of or less than the amount of payment that is due'' that is not corrected within 30 days and that CMS paid 340B hospitals ``less than the amount of payment that [was] due''. The commenter alleged that although the Supreme Court's decision applied only to 2018 and 2019, since CMS has never disputed that the rule was just as unlawful in 2020, 2021, and 2022, CMS must pay affected hospitals interest at the rate determined under 42 U.S.C. 1395l(j), with the clock on interest beginning no later than July 15, 2022. Response: The amount of the remedy payments, including interest on the remedy payment, is outside the scope of this rulemaking. In any event, we have addressed the issue of interest under 42 U.S.C. 1395l(j) in the Final Remedy rule and in subsequent court briefing in Board of Trustees of University of Alabama v. Becerra, 22-cv-3367 (D.D.C.), which we incorporate here. (88 FR 77167 through 77168.) At least one court has agreed with our interpretation. See Bd. of Trs. of Univ. of Alabama v. Becerra, No. CV 22-3367 (RC), 2025 WL 2239289 (D.D.C. Aug. 6, 2025). Comment: One commenter stated that for the same reasons we exempted new providers from the adjustment, we should exempt new procedures from the adjustment. The commenter stated that a procedure that did not exist or was not yet billable in CY 2018 through 2022 should be excluded from the reduction. The commenter suggested that recoupment be done ``through individual hospital payment terms, not a nonspecific process linked to ongoing or future services''. In the event CMS does not adopt the commenter's suggestion, the commenter alternatively suggested that CMS adopt the 5 percent reduction to expedite repayment. Response: A similar request was made by a commenter in the Final Remedy rule. As we said in our response to that comment, ``exempting new items and services from this payment adjustment may distort providers' incentives to prescribe items and services based on whether they existed between CY 2018 and 2022 rather than whether they are medically appropriate, potentially impacting the care providers give to beneficiaries. And the more exceptions we create, the more complicated we make the payment reduction. Complications increase the risk of delays or errors in implementing this final rule''. (88 FR 77180.) This continues to be true. With respect to the commenter's recommendation that we consider adopting a 5 percent reduction to expedite repayment, we do not believe that it would be appropriate to implement such a reduction in CY 2026 for the same reasons that we are not implementing a 2 percent reduction in CY 2026, as we have explained previously. Comment: Several commenters offered an alternative method of recoupment in which CMS would incrementally increase the 340B repayment percentage to shorten the overall repayment period but do so in a way that accommodates other financial pressures in the industry. In such a scenario, the commenters suggested, the CY 2026 reduction would remain at 0.5 percent since there are other planned cuts for Medicare providers due to sequestration, and CMS could plan to move to 0.75 and then one percent in future years if the sequester cuts are mitigated by Congress. Response: We thank the commenter for their suggestions. While we disagree that we should implement our budget neutrality obligations in a way that frustrates other Congressional payment directives such as sequestration, we have partially adopted this commenter's proposed phased approach by retaining a 0.5 percent reduction for CY 2026 while delaying any larger reduction until CY 2027. As we note, we believe an additional year is sufficient time for providers to adequately prepare for the change in policy. Comment: Many commenters posited that CMS failed to consider a sufficient number of alternative timeframes and adequately explain why it selected 3 years as the one alternative it did consider. As a result of this failure, these commenters stated that the 6-year timeframe CMS did propose is arbitrary, inadequately justified, and does not satisfy the APA's requirement to consider reasonable alternatives. These commenters stated that CMS needs to consider more alternatives, including those longer than 16 years, and explain why 6 years is the appropriate timeframe compared to them. Response: For the reasons we have explained, we believe that our proposal properly acknowledged that it was shifting course and adequately explained the rationale behind the proposed shift. We disagree that we needed to propose more options to consider. Ultimately, commenters ask us to, but neither the APA nor the Act requires us to, consider every possible alternative. We are just required to consider significant ones. In the CY 2026 OPPS/ASC proposed rule, we discussed the initial 0.5 percent reduction for 16 years, a 2 percent reduction for 6 years, and a 5 percent reduction for 3 years. (90 FR 33636.) We proposed that a 2 percent reduction for 6 years adequately balanced budget neutrality against hospital burden and reliance. (90 FR 33635.) Hospitals have not raised additional interests we failed to consider, but convinced us that we could better account for their reliance interests, which we have done by retaining the 0.5 percent reduction for CY 2026 this while planning to raise the reduction to a larger percentage (such as 2 percent) beginning in CY 2027. In the course of finalizing this rule, we also considered commenters' suggestion that we extend the budget neutrality policy, such as implementing a 0.25 percent reduction for 40 years. As we explained above, any extension would likely exacerbate differences between how much hospitals received in excess payments from CY 2018 through 2022 and their total reductions in CY 2026 and thereafter, thus undermining our goal of returning hospitals as close as reasonably possible to the position they would have been absent the 340B Payment Policy. We have rejected this option. While there are many possible specific payment reductions, the particular amount is necessarily an exercise in line-drawing. Commenters raise no specific reduction range that we fail to address in this final rule with comment period, and we disagree that there are significant other options commenters do not identify that we have not considered. Comment: Several commenters requested that CMS establish an appeals process for hospitals that disagree with cost assignments. One commenter indicated that the CY 2026 OPPS/ASC proposed rule states that CMS will direct MACs to remedy the hospital 340B drug underpayments with budget neutrality adjustments between 2026-2031 but it does not clearly state how those remedy payments fit into the existing claims, reimbursement, and appeal structures. The commenter recommended that CMS state in the final rule that (1) dissatisfied hospitals will have a clear path to appeal the amount of CMS' budget neutrality adjustment recoupments and describe the appeals process; and (2) that CMS intends the final rule to be subject to judicial review. Specifically, the commenter stressed, CMS should state that reliance on section 1833(t)(2)(E) of the Act as authority for its proposed adjustments is not intended to create any implication that the adjustments are [[Page 53720]] not subject to judicial review under section 1833 (t)(12) of the Act. Response: With respect to a process for hospitals to appeal the amount of CMS' budget neutrality adjustment recoupments, we believe these adjustments, like the initial adjustments in 2018, ultimately adjudicate claims for payment and so any available appeal would follow the procedures set out under section 1869 of the Act and its implementing regulations. We respectfully decline the commenter's request to opine in advance on how the jurisdictional provisions of section 1833(t)(12) of the Act might impact the Departmental Appeals Board's or courts' jurisdiction. Those bodies will adjudicate their jurisdiction in specific cases in the ordinary course with the benefit of appropriate briefing. Comment: One commenter suggested that if we proceed with the two percent reduction that we should conduct robust monitoring for any unintended consequences and consideration of flexibilities or targeted supports for safety-net and teaching hospitals that may be disproportionately affected. Response: We agree that it is important to monitor the effects of the increase for any unintended consequences and will take the commenter's suggestion under consideration for future rulemaking. We also appreciate the commenter's suggestion with respect to future consideration of flexibilities or targeted supports for hospitals based on that monitoring. We will consider this for future rulemaking. Comment: One commenter recommended that CMS consider stronger regulation of the pricing by pharmaceutical companies to allow hospitals to get more of a discount ``since pharmaceutical companies continue to have high profit margins while non-profit health systems continue to struggle to provide 340B drugs to many underserved patients.'' Response: This rule implements budget neutralization requirements in section 1833(t)(14) of the Act based on the Final Remedy rule, and the CY 2026 OPPS/ASC proposed rule did not propose additional regulations of pharmaceutical prices. This comment is therefore out of its scope. Comment: A few commenters supported our proposal to revise the annual reduction to the OPPS conversion factor under Sec. 419.32(b)(1)(iv)(B)(12) used to determine the payment amounts for non- drug items and services from 0.5 percent to 2 percent. One commenter stated that faster repayment would ensure greater certainty in repayment amounts and also, due to the time value of money, reduce the strain on the Federal budget. Response: We thank commenters for their support of our proposal. As we note, while we are not finalizing that proposal at this time, we anticipate proposing a larger offset beginning in CY 2027. Comment: Several commenters expressed concern about the implications of the proposed 2 percent reduction in OPPS non-drug payments for providers contracting with Medicare Advantage (MA) organizations. Commenters stated that CMS has provided remedy payments under traditional Medicare following AHA v. Becerra in accordance with the Medicare Program; Hospital Outpatient Prospective Payment System: Remedy for the 340B-Acquired Drug Payment Policy for calendar years 2018-2022 OPPS/ASC rule.\87\ Further, commenters shared that MA organizations, who adopted a similar reimbursement rate for 340B- acquired drugs during that same time period, may not have made the corresponding remedy payments to providers. Commenters emphasized that this could leave hospitals disadvantaged as they may not have received the benefit of a remedy payment from MA organizations, and they may be subject to the new prospective reductions to provider reimbursement for non-drug payments. Several commenters stated that this dynamic unfairly shifts resources to MA organizations and compounds the financial strain on hospitals, particularly given high and growing MA enrollment. --------------------------------------------------------------------------- \87\ https://www.federalregister.gov/documents/2023/11/08/2023-24407/medicare-program-hospital-outpatient-prospective-payment-system-remedy-for-the-340b-acquired-drug. --------------------------------------------------------------------------- Several commenters recommended that CMS take additional steps in this CY 2026 OPPS/ASC final rule with comment period to mitigate the impact of the proposed adjustment. Commenters specifically urged CMS to clarify that MA organizations are expected to make hospitals whole for 340B-acquired drugs administered between 2018-2022 and to prevent the prospective reductions from being passed through to providers absent repayment by MA organizations. Response: We appreciate commenters' feedback on this issue. Under the MA program, CMS provides a capitated prospective payment to MA organizations to provide coverage to enrollees, and the MA organizations pay providers for this care. CMS calculated and paid CY 2018-2022 MA rates under the Advance Notice and Rate Announcement,\88\ and those MA rates reflected the FFS policies as of the time they were finalized. --------------------------------------------------------------------------- \88\ Prior Advance Notice and Rate Announcement documents are available at https://www.cms.gov/medicare/payment/medicare-advantage-rates-statistics/announcements-and-documents. --------------------------------------------------------------------------- We also appreciate commenters' concerns regarding the potential implications of the Final Remedy rule for MA organizations' payments to providers. We understand from commenters that many MA organizations base their privately contracted reimbursement rates with providers on FFS rates set by CMS and that existing MA contracts may not account for the remedy provisions established in the Final Remedy rule. However, CMS establishes payment policies and payment rates for services payable under FFS through a separate, distinct process that is not directly related to the terms of private contracting arrangements between MA organizations and providers. Further, section 1854(a)(6)(B)(iii) of the Act prohibits CMS from requiring an MA organization to contract with a particular hospital, physician, or other entity to furnish items and services, including 340B-acquired drugs, or requiring a particular price structure for payment under such a contract. Providers and MA organizations may engage in any contract negotiations or re- negotiations independently of CMS. Section 1852(a)(2) of the Act mandates that MA organizations reimburse non-contract providers at least the amount they would have received under Medicare FFS. We expect that MA organizations will comply with this statutory requirement. We note that the Final Remedy rule excluded providers that enrolled in Medicare after January 1, 2018, from the prospective rate reduction. After consideration of public comments received, we are finalizing our proposal to adopt Addendum R--340B Remedy Offset Providers for CY 2026. For the reasons discussed above, we are not finalizing for CY 2026 our proposal to revise the reduction to the OPPS conversion factor under 42 CFR 419.32(b)(1)(iv)(B)(12) used to determine the payment amounts for non-drug items and services for hospitals for whom this adjustment applies from 0.5 percent to 2 percent. However, also for the reasons discussed above and in the 2026 OPPS/ASC proposed rule, we anticipate implementing a larger percent reduction (such as 2 percent or other reduction greater than 0.5 percent) beginning in CY 2027. Any change to the adjustment [[Page 53721]] in 42 CFR 419.32(b)(1)(iv)(B)(12) that applies beginning in CY 2027 would go through the usual annual rulemaking process. Please see Table 110, for an estimate of the impacts of the offset for CY 2026. We note that the status indicators impacted by this finalized policy include, SI = J1, J2, P, Q1, Q2, Q3, R, S, S1, T, U, V. These status indicators generally capture the non-drug items and services impacted by a change in the OPPS conversion factor. Status indicator S1 will be newly effective starting in CY 2026 per our policy finalized in section V.B. of this final rule with comment period. The new ``S1'' status indicator represents products that were once packaged into procedures assigned to a status indicator of ``S''. This aligns with our goal of reducing non-drug item and service spending to situate hospitals in the approximate financial position they would have been in absent the 340B payment policy. Additionally, we note that although New Technology APCs are assigned to a status indicator of ``S'' or ``T'' they are assigned to fixed payment rates that are unaffected by this reduction to the OPPS conversion factor. [GRAPHIC] [TIFF OMITTED] TR25NO25.152 i. Impact of the Prospective Offset to the OPPS Conversion Factor on the ASC Payment System As we noted in the CY 2023 OPPS/ASC final rule with comment period (87 FR 71975), budget neutrality adjustments to the OPPS conversion factor do not impact the ASC conversion factor. However, we also noted in that rule that revisions to the OPPS conversion factor can have an indirect impact on the ASC payment system because the ASC standard rate setting methodology adopts OPPS payment rates and the device portion (or device offset amount). Specifically, because the device portion for device-intensive procedures is held constant with the OPPS and is not calculated with the ASC conversion factor, a reduction to the OPPS conversion factor will lower the device portion for device-intensive procedures, including the payment rates for device-intensive procedures under the ASC payment system. We further clarified, however, that any decline in expenditures for device portions under the ASC payment system would be fully offset through the ASC weight scalar, which would increase payment for the non-device portions of all covered surgical procedures and certain covered ancillary services. Together, that means that reducing the OPPS conversion factor can mean that we pay relatively less for device-intensive procedures and relatively more for other surgical procedures. In the Final Remedy rule (88 FR 77179), a commenter referenced this discussion in the CY 2023 OPPS/ASC final rule with comment period and requested that CMS provide an analysis of the impact of the remedy's proposed OPPS conversion factor reduction on ASC payment rates. Specifically, the commenter requested additional details on the magnitude of the change in payments for device-intensive procedures with and without the OPPS conversion factor reduction. As further discussed in section XIII. of the CY 2026 OPPS/ASC proposed rule, historically, the ASC payment system has generally adopted the final OPPS conversion factor for a calendar year in determining the OPPS payment rates that are used for determining the device portions for device-intensive procedures under the ASC payment system. A 2 percent reduction in OPPS payment rates would otherwise reduce ASC payments for device-intensive procedures by approximately 1 percent; the non-device portions for all covered surgical procedures would otherwise be increased to offset reduction to device portions for device-intensive procedures. For CY 2026, we estimated that the reduction to device portions would be approximately $42 million and would otherwise increase the ASC weight scalar by 0.1 percent. However, we proposed to set ASC payment rates based on the OPPS payment rates without the remedy's 2 percent prospective offset. In other words, we proposed that these payment rates would be based on OPPS payment rates for hospitals that enrolled in Medicare after January 1, 2018. We acknowledged that in the CY 2023 OPPS/ASC proposed rule we stated that ``the revised OPPS conversion factor will have an impact on the ASC payment system'', but we were responding to a comment asking about how unwinding the 340B Payment Policy would reduce the OPPS conversion factor prospectively beginning in CY 2023, not about how we should approach any temporary reduction in the OPPS conversion factor to unwind the 340B Payment Policy in place from CY 2018 through 2022 (87 FR 71975). In this context, we believed that selecting the higher OPPS payment rate is more consistent with the history [[Page 53722]] and logic of both the ASC payment system as well as the Final Remedy rule. As for the ASC payment system, including the 2-percent prospective offset would not be an accurate reflection of the device costs of covered surgical procedures in the ASC setting. Further, we are concerned beneficiaries could have access issues to certain device- intensive procedures in the ASC setting, such as total knee arthroplasty and total hip arthroplasty, if we maintained a 2 percent reduction to the payment rates for device-intensive procedures for each calendar year we applied the prospective offset. The total payment for device portions of device-intensive procedures under the ASC payment system is roughly 27 percent of total ASC payments. We stated in the CY 2026 OPPS/ASC proposed rule that this proposed policy would also be consistent with the logic of the Final Remedy rule. As we explained in that rule, the reduction to the OPPS payment rate is intended to comply with statutory budget neutrality requirements and was implemented in a manner to place hospitals in as close to the financial position they would have been in had this policy not been implemented in CY 2018 as is reasonably feasible. By contrast, it would not satisfy any similar statutory budget neutrality requirements to pass through this reduction to ASC payment rates. Nor would changing ASC payment rates for the next several years help place hospitals affected by the 340B Payment Policy in the same position as they have been absent that policy. Even if the agency wanted to extend the Final Remedy rule's logic to ASCs and try to place ASCs--none of whom ever challenged the 340B Payment Policy--in the same position as they would have been absent that policy, we doubt that passing through the 2 percent OPPS payment reduction to the device portion of ASC payment rates would do so. That is because, as discussed in the CY 2026 OPPS/ASC proposed rule, doing so would have a purely distributional impact on ASC payment rates that financially favors procedures that are less device-intensive. Therefore, as discussed in section XIII.C.4. of the CY 2026 OPPS/ASC proposed rule, we proposed that the OPPS payment rates used for rate setting under the ASC payment system for CY 2026 and subsequent years would not include the two percent prospective offset to the OPPS conversion factor as a result of the 340B remedy offset that we proposed to implement in that rule. We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: Two commenters supported our proposal to set ASC payment rates based on OPPS payment rates without the two percent prospective offset. Both commenters stated that not doing so would result in inaccurate payments for device costs in covered surgical procedures in the ASC setting. Response: We thank commenters for their support. After consideration of public comments, we are finalizing, without modification, our proposal to set ASC payment rates based on the OPPS payment rates without the remedy's prospective offset. 8. All-Inclusive Rate (AIR) Add-On Payment for High-Cost Drugs Provided by Indian Health Service and Tribal Facilities a. Background In the CY 2000 OPPS final rule (65 FR 18434), CMS implemented the PPS for hospital outpatient services furnished to Medicare beneficiaries, as set forth in section 1833(t) of the Act. In the CY 2000 OPPS final rule, we noted that the OPPS applies to covered hospital outpatient services furnished by all hospitals participating in the Medicare program with a few exceptions. We identified one of these exceptions as ``outpatient services provided by hospitals of the Indian Health Service (IHS).'' We stated that these services would ``continue to be paid under separately established rates which are published annually in the Federal Register'' and, in the CY 2002 OPPS/ ASC final rule (66 FR 59856), we finalized a revision to Sec. 419.20 (Hospitals subject to the hospital outpatient prospective payment system) by adding paragraph (b)(4), which specifies that hospitals of the IHS are excluded from the OPPS. In the intervening years, IHS and tribal facilities have been paid under the separately established All-Inclusive Rate (AIR). On an annual basis, the IHS calculates and publishes, in the Federal Register, calendar year reimbursement rates.\89\ Due to the higher cost of living in Alaska, separate rates are calculated for Alaska and the lower 48 States. For CY 2025, the Medicare Outpatient per visit rate is $718 for the lower 48 States (hereinafter referred to as ``the lower 48 AIR'') and $1,193 for Alaska.\90\ --------------------------------------------------------------------------- \89\ https://www.ihs.gov/BusinessOffice/reimbursement-rates/. \90\ 89 FR 101607 (December 16, 2024); https://www.federalregister.gov/documents/2024/12/16/2024-29505/reimbursement-rates-for-calendar-year-2025. --------------------------------------------------------------------------- In the CY 2025 OPPS/ASC final rule with comment period (89 FR 94280 through 94286), we finalized a policy to separately pay IHS and tribal hospitals for high-cost drugs, biologicals, and radiopharmaceuticals (hereinafter referred to as ``drugs'' for the purpose of this section) furnished in hospital outpatient departments through an add-on payment in addition to the AIR using the authority under which the AIR is calculated.\91\ We note that the AIR and the add-on payment are paid out of the Part B trust fund and are not subject to OPPS budget neutrality. --------------------------------------------------------------------------- \91\ Sections 321(a) and 322(b) of the Public Health Service Act (42 U.S.C. 248(a) and 249(b)), Public Law 83-568 (42 U.S.C. 2001(a)), and the Indian Health Care Improvement Act (25 U.S.C. 1601 et seq.). --------------------------------------------------------------------------- We defined high cost drugs (that is, drugs qualifying for the add- on payment) for the purpose of the policy as all drugs covered under Medicare Part B and for which payment would otherwise be made under the OPPS whose per day cost exceeds two times the lower 48 AIR amount in effect at the time of the release of each year's OPPS/ASC final rule. In the CY 2025 OPPS/ASC final rule with comment period, this amount was identified as $1,334 (2) times the CY 2024 lower 48 AIR of $667). To determine the calculated per day cost for each drug HCPCS code, we employed a methodology similar to our longstanding methodology used to calculate the per day cost of drugs for OPPS payment purposes. Specifically, to calculate the per day cost for CY 2025, we used an estimated payment rate based on the ASP methodology payment rate, which for purposes of the policy was generally ASP plus 0 percent (which is the payment rate for separately payable IHS drugs under the policy). We then used the manufacturer-submitted ASP data from the fourth quarter of CY 2023 to determine the per day cost. For drugs that did not have either an ASP-based payment rate or a payment rate based on WAC, we used mean unit cost (MUC) of the items derived from the CY 2023 hospital claims data to determine their per day cost. We finalized that the amount of the add-on payment for a high-cost drug would be the average sales price (ASP) for the drug with no additional payment (that is, ASP plus zero percent). We note that this add-on payment was implemented on a per-dose basis. In the event ASP pricing information was not available for a particular drug, we paid the WAC plus 0 percent and if WAC pricing information was not available, we paid 89.6 percent of average [[Page 53723]] wholesale price (AWP). We also adopted a drug packaging threshold exception for biosimilars in which the add-on payment is made for biosimilars whose per-day costs do not exceed the threshold of two times the lower 48 AIR but whose reference products do exceed the threshold. To implement this policy, we finalized in the CY 2025 OPPS/ASC final rule with comment period a recurring annual process in which the lower 48 AIR in effect at the time of the release of each year's OPPS/ ASC final rule with comment period would be used to create a list of drugs qualifying for the add-on payment for the following calendar year. Once the drugs qualifying for the add-on payment were determined, the payment rate for a unit of the drug would be determined in accordance with the above described pricing hierarchy. The results of that process for CY 2025 were displayed in Addendum Q to the CY 2025 OPPS/ASC final rule with comment period. We additionally finalized that during the calendar year, the list of drugs would be modified on a quarterly basis to add new-to-market drugs with per-day costs that exceeded two times the lower 48 AIR and to update qualifying drugs' ASPs. For a full discussion of the AIR add-on payment for high cost drugs provided by IHS and tribal hospitals, we refer readers to the CY 2025 OPPS/ASC final rule with comment period (89 FR 94280 through 94286). b. AIR Add-On Payment for High-Cost Drugs Provided by IHS and Tribal Facilities Policy for CY 2026 For CY 2026, we proposed to continue to separately pay IHS and tribal hospitals for high-cost drugs furnished in hospital outpatient departments through an add-on payment in addition to the AIR using the authorities under which the AIR is calculated. We proposed to continue to define high cost drugs (that is, drugs qualifying for the add-on payment) for the purpose of the policy as any drugs covered under Medicare Part B and for which payment would otherwise be made under the OPPS which have per day costs exceeding two times the lower 48 AIR amount in effect at the time of the release of the CY 2026 OPPS/ASC final rule with comment period. For CY 2026, we proposed that if the CY 2025 lower 48 AIR amount was still in effect at the time of the release of the CY 2026 OPPS/ASC final rule with comment period, this amount would be $1,436 (2 times the CY 2025 lower 48 AIR of $718). To determine the calculated per day cost for each drug HCPCS code, we proposed to continue using an estimated payment rate based on the ASP methodology payment rate (generally ASP plus 0 percent) and then using the manufacturer-submitted ASP data from the fourth quarter of CY 2024 to determine the per day cost. For drugs that do not have either an ASP-based payment rate or a payment rate based on WAC, we proposed to continue to use the MUC of the items derived from the CY 2024 hospital claims data to determine their per day cost. With respect to the amount of the add-on payment, we proposed to use the same pricing hierarchy that we adopted in the CY 2025 OPPS/ASC final rule with comment period. For CY 2025, we explained that we adopted a practice of paying the MUC when AWP pricing is not available for a particular drug, and we proposed to continue that practice for CY 2026. We proposed for CY 2026 that the amount of the add-on payment for each dose of a high-cost drug would continue to be the average sales price (ASP) for the drug with no additional payment (that is, ASP plus zero percent). In the event ASP pricing information is not available for a particular drug, we proposed to continue to pay the wholesale acquisition cost (WAC) plus 0 percent. If WAC pricing information is not available, we proposed to continue to pay 89.6 percent of AWP. And, consistent with our practice for purposes of CY 2025, if AWP pricing information is not available, we proposed to pay the MUC. Finally, we proposed to continue the drug packaging threshold exception for biosimilars in which the add-on payment is made for biosimilars whose per-day costs do not exceed the threshold of two times the lower 48 AIR but whose reference products do exceed the threshold. c. List of Drugs Qualifying for the Add-On Payment for CY 2026 Using two times the lower 48 AIR amount of $718 that is in effect for CY 2025 and applying the above described per-day cost methodology and pricing hierarchy, we included as Addendum Q to the CY 2026 OPPS/ ASC proposed rule a preliminary list of the drugs qualifying for the proposed add-on payment and their proposed add on payment rates for CY 2026. We proposed to create a final Addendum Q in the CY 2026 OPPS/ASC final rule with comment period using the claims data (units used per day) and ASPs available at that time. We also proposed that for HCPCS codes for drugs that are proposed for separate payment in CY 2026, but then have per day costs equal to or less than $1,436 (2 times $718) in the CY 2026 OPPS/ASC final rule with comment period, based on the updated ASPs and hospital claims data used for the CY 2026 OPPS/ASC final rule with comment period, those drugs would still receive separate payment in CY 2026. Finally, during CY 2026, as we did during CY 2025, we proposed to modify the list on a quarterly basis (January, April, July, October) to add new-to-market drugs with per-day costs that exceed two times the lower 48 AIR and to update qualifying drugs' ASPs. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: All commenters supported our proposal to continue to separately pay IHS and tribal hospitals for high-cost drugs furnished in hospital outpatient departments through an add-on payment in addition to the AIR using the authorities under which the AIR is calculated. Response: We thank commenters for their support. Comment: One commenter suggested that CMS consider whether the current threshold and payment methodology adequately supports access to the full range of cell and gene therapies (CGTs) that may become available for outpatient administration. The commenter recommends that as experience with CGT delivery in these settings grows, CMS should be prepared to make additional adjustments to ensure that payment policies continue to support access to innovative therapies for underserved populations. The commenter stated that this may include evaluating whether additional reimbursement support is needed for the specialized infrastructure and training requirements associated with CGT administration. Response: We thank the commenter for their input and will keep it in mind for future rulemaking. After consideration of the public comments we received, we are finalizing our proposed policy without modification to continue to separately pay IHS and tribal hospitals for high-cost drugs furnished in hospital outpatient departments through an add-on payment in addition to the AIR using the authorities under which the AIR is calculated. 9. Payment for Skin Substitutes For the public's awareness: as the policies discussed in this section are closely aligned with those addressed in the CY 2026 PFS final rule, the preamble language is largely consistent [[Page 53724]] across both rules. Because we proposed to apply these policies across both the HOPD, ASC, and non-facility setting, we believe it is important for us to address the issues raised by commenters in a comprehensive way and provide the public with a unified understanding of how these policies would apply under both the PFS and OPPS/ASC payment systems. While the majority of the discussion is the same in both rules, we have also included additional information specific to technical payment issues that commenters raised in response to the OPPS proposals and did not include certain highly technical issues unique to the PFS that were not proposed or included in the CY 2026 OPPS/ASC proposed rule. That said, our approach here is to provide a comprehensive discussion of the payment for skin substitute products in both the facility and non- facility settings. This approach promotes transparency, consistency, and reflects CMS' strong interest in aligning payment policies across care settings when appropriate. Finally, because the proposals under both rules are substantively the same apart from technical differences arising from the distinct characteristics of each payment system, such as geometric mean costs of APCs and Practice Expense RVUs, we believe it is reasonable and efficient to present a unified discussion of the policy. a. Background The CY 2014 Hospital Outpatient Prospective Payment System (OPPS)/ Ambulatory Surgical Center (ASC) final rule with comment period describes skin substitutes as ``a category of products that are most commonly used in outpatient settings for the treatment of diabetic foot ulcers and venous leg ulcers'' (78 FR 74930 through 74931). When a procedure utilizing a skin substitute product is performed, providers bill one or more Healthcare Common Procedure Coding System (HCPCS) codes to describe the preparation of the wound, the use of at least one skin substitute product, and application of the skin substitute product through suturing or various other techniques. Specifically, CPT codes 15271 through 15278 describe the application of skin substitutes to various size wounds and anatomical locations. Recently, several novel industry practices have come to our attention, likely driving substantial and unusual increases in the number of available skin substitute products, the sales and distribution structure for these products, and the rapidity of products changing manufacturer ownership. These industry changes are causing a significant increase in spending under Medicare Part B for skin substitute products in the non-facility setting. According to Medicare claims data, Part B spending for these products rose from approximately $250 million in 2019 to over $10 billion in 2024, a nearly 40-fold increase, while the number of patients receiving these products only doubled. Increases in payment rates, and launch prices for skin substitutes, especially newer products, account for the majority of observed Medicare spending increases on these products. Of note, as part of its workplan, the U.S. Department of Health and Human Services' Office of the Inspector General announced, in November 2024, plans to review Medicare Part B claims for skin substitutes to identify payments that were at risk for noncompliance with Medicare requirements with an expected issue date of fiscal year 2026.\92\ --------------------------------------------------------------------------- \92\ https://oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000894.asp. --------------------------------------------------------------------------- We outlined our HCPCS Level II coding and payment policy objectives for skin substitutes in the CY 2023 OPPS/ASC proposed rule (87 FR 71985) because we concluded it would be beneficial for interested parties to understand our priorities as we work to create a consistent approach for the suite of products we have referred to as skin substitutes. As discussed in the CY 2023 OPPS/ASC proposed rule, we have a number of objectives related to refining our Medicare policies in this area, including: (1) ensuring a consistent payment approach for skin substitute products across the physician office and hospital outpatient department settings; (2) ensuring that appropriate HCPCS codes describe skin substitute products; (3) employing a uniform benefit category across products within the physician office setting, regardless of whether the product is synthetic or comprised of human- or animal-based material, so we can incorporate payment methodologies that are more consistent; and (4) promoting clarity for interested parties on CMS skin substitutes policies and procedures. Interested parties have asked CMS to address what they have described as inconsistencies in our payment and coding policies, indicating that treating clinically similar products (for example, animal-based and synthetic skin products) differently for purposes of payment is confusing and problematic for healthcare providers and patients. These concerns exist specifically within the non-facility setting; however, interested parties have also indicated that further alignment of our policies across the non-facility and hospital outpatient department settings would reduce confusion. On April 25, 2024, the Medicare Administrative Contractors (MACs) released a proposed Local Coverage Determination (LCD) to provide appropriate coverage for skin substitute grafts used for chronic non- healing diabetic foot and venous leg ulcers. The MACs issued the collaborative proposed Skin Substitute Grafts/Cellular and Tissue-Based Products for the Treatment of Diabetic Foot Ulcers and Venous Leg Ulcers LCD to make sure that Medicare covers, and people with Medicare have access to, skin substitute products that are supported by evidence that shows that they are reasonable and necessary for the treatment of diabetic foot and venous leg ulcers in the Medicare population and that coverage aligns with professional guidelines for appropriately managing these wounds. All of the MACs have delayed the effective date of the final LCDs for cellular and tissue-based products for wounds, or skin substitutes, in diabetic foot ulcers and venous leg ulcers, moving the implementation date across all MAC jurisdictions to January 1, 2026. For details, please see the final LCD, titled: Skin Substitute Grafts/ Cellular and Tissue-Based Products for the Treatment of Diabetic Foot Ulcers and Venous Leg Ulcers at: https://www.cms.gov/medicare-coverage-database/basket/basket.aspx?loadBasketLink=Y&basketLinkId=552. We note that additional coverage determinations may apply to skin substitute products. The Medicare statute, regulations, and manual provisions empower the Medicare program to determine if a product is reasonable and necessary for the treatment of a beneficiary's condition and safe and effective, not experimental or investigational, and appropriate and therefore eligible for coverage under Part B. (See, for example, section 1833(e) of the Act (42 U.S.C. 1395l(e)), section 1862(a)(1)(A) of the Act (42 U.S.C. 1395y(a)(1)(A)), 42 CFR 411.15(k)(1), 424.5(a)(6), Medicare Program Integrity Manual section 3.6.2.2, Medicare Benefit Policy Manual chapter. 15, section 50.4.1-50.4.3, and Medicare Program Integrity Manual, chapterch.13 section 13.5.3, 13.5.4.) Coverage is a threshold determination that must be satisfied before payment considerations arise. The inclusion of a product in this payment rule or in any payment file does not necessarily imply that a determination has been made by CMS or its contractors that it is reasonable and necessary and meets the other preconditions to Medicare coverage. Any skin substitute could not [[Page 53725]] be covered if it were determined to be unreasonable or unnecessary for a particular beneficiary. Similarly, the use of short descriptors and associated FDA regulatory categories \93\ may reflect current FDA regulation but are not intended to imply that FDA has determined that a product meets any specific FDA statutory or regulatory requirements. FDA's statutory and regulatory framework, including, for example, FDA's findings that a product is ``safe and effective,'' is not controlling of Medicare's determination under its own authorities of whether a product is ``reasonable and necessary'' for a Medicare beneficiary and meets all preconditions for Medicare coverage and payment. FDA does not make Medicare coverage or payment determinations, nor do FDA statutes and regulations govern Medicare coverage or payment determinations. --------------------------------------------------------------------------- \93\ The term ``FDA regulatory categories'' is used in this final rule with comment period when referring to the basis for CMS' payment policies but is not intended to reflect or imply that the products discussed within this final rule with comment period are characterized as such or grouped together by FDA. --------------------------------------------------------------------------- Medicare coverage and payment are also governed under separate statutory authorities and serve fundamentally different purposes. Coverage determinations under section 1862(a)(1)(A) of the Act (and related provisions) of the Act establish whether a service is reasonable and necessary while payment methodologies under section 1848 of the Act (and other applicable payment provisions) of the Act establish the amount Medicare will pay for covered physician services based on considerations such as resource similarity. CMS has determined that setting payment rates on a prospective basis is a different inquiry and exercise with a different set of considerations and that it makes sense here to consider how FDA regulates skin substitute products as a factor in grouping those products in various categories as described below. We continue to believe that our existing payment policies are unsatisfactory, unsustainable over the long term, and rooted in historical practice established two decades ago prior to significant evolutions in medical technology and practice. After holding a town hall \94\ to provide an opportunity for public input, including discussion of potential approaches to the methodology for payment of skin substitute products, as well as reviewing several years of comments in response to CY rulemaking in 2023, 2024, and 2025 on this subject, we developed a proposal that addressed our stated objectives as well as many of the comments we have received. --------------------------------------------------------------------------- \94\ CMS Skin Substitutes Town Hall, which was held virtually on January 18, 2023. More information regarding the CMS Skin Substitutes Town Hall such as links to recording and transcripts is available at https://www.cms.gov/medicare/payment/fee-schedules/ physician/skin- substitutes#:~:text=The%20CMS%20Skin%20Substitutes%20Town,Physician%2 0Fee%20Schedule%20(PFS). --------------------------------------------------------------------------- b. Medicare Part B Payment for Skin Substitutes (1) Payment for Skin Substitutes When Used During a Covered Application Procedure Under the PFS in the Non-Facility Setting CMS has historically considered skin substitutes to be biologicals for payment purposes under Medicare Part B. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. 108-173) (MMA) established a payment methodology for drugs and biologicals under section 1847A of the Act. Under this methodology, a vast majority of drugs and biologicals separately paid under Medicare Part B are paid at the Average Sales Price (ASP) plus six percent. Section 303 of the MMA, titled ``Payment reform for covered outpatient drugs and biologicals,'' amended Title XVIII of the Act by adding new section 1847A of the Act. In part, this section established the use of the ASP to determine the payment limit for drugs and biologicals described in section 1842(o)(1)(C) of the Act (42 U.S.C. 1395u(o)(1)(C)) (that is, drugs or biologicals billed by a physician, supplier, or any other person and not paid on a cost or prospective payment basis) furnished on or after January 1, 2005. Because Medicare is currently paying for most skin substitutes as biologicals using the methodology under section 1847A of the Act, each skin substitute product receives a unique billing code (typically, a Level II HCPCS code) and payment limit. Section 401 of Division CC, Title IV of the Consolidated Appropriations Act, 2021 (Pub. L. 116-260) (CAA, 2021) amended section 1847A of the Act to add new section 1847A(f)(2) of the Act, which requires certain manufacturers without a Medicaid drug rebate agreement, such as certain manufacturers of skin substitutes, to report ASP data to CMS for calendar quarters beginning on January 1, 2022, for drugs or biologicals payable under Medicare Part B and described in sections 1842(o)(1)(C), (E), or (G) or 1881(b)(14)(B) of the Act (42 U.S.C. 1395rr(b)(14)(B)), including items, services, supplies, and products that are payable under Part B as a drug or biological. Because most skin substitutes are currently paid as biologicals using the methodology described in section 1847A of the Act, manufacturers of these products are currently required to report their ASP data to CMS every quarter. Prior to this, section 1927(b)(3)(A)(iii)(I) of the Act only required manufacturers with a Medicaid drug rebate agreement to report ASP data to CMS for drugs or biologicals described in section 1842(o)(1)(C) of the Act. Section 1847A of the Act also includes several relevant definitions. While the definition of ``single-source drug or biological'' provided at section 1847A(c)(6)(D) of the Act includes ``a biological,'' sections 1847A(c)(6)(H) and (I) of the Act offer more insight into the meaning of the term for purposes of this section. Subparagraph (I) of such section defines the term ``reference biological product'' as a biological product licensed under section 351 of the PHS Act (42 U.S.C. 262). Subparagraph (H) of section 1847A(c)(6) defines the term ``biosimilar biological product'' as ``a biological product approved under an abbreviated application for a license of a biological product that relies in part on data or information in an application for another biological product licensed under section 351 of the Public Health Service Act.'' Section 1927 of the Act (42 U.S.C. 1396r-8), which is referred to multiple times in section 1847A of the Act, also references section 351 of the PHS Act when referencing biologicals. The title of section 303 of the MMA, which added section 1847A to the Act, refers to ``covered outpatient drugs,'' defined in section 1927(k)(2) of the Act. Subparagraph (B) of section 1927(k)(2) adds biological products to this definition when those products are licensed under section 351 of the PHS Act, among other requirements. In the CY 2022 PFS final rule, to address the need to establish a payment mechanism for synthetic skin substitutes in the physician office setting and to be responsive to feedback received from commenters, we finalized an approach for payment of each synthetic skin substitute for which we had received a HCPCS Level II coding application. We finalized that those products would be payable in the physician office setting and billed separately from the procedure to apply them using HCPCS A-codes (86 FR 65120). [[Page 53726]] (2) Payment for Skin Substitutes Under the Outpatient Prospective Payment System (OPPS) Prior to CY 2014, all products considered to be skin substitutes were separately paid under the OPPS as if they were biologicals according to the ASP methodology (78 FR 74930 through 74931). In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74938), we unconditionally packaged skin substitute products furnished in the hospital outpatient setting into their associated application procedures as part of a broader policy to package all drugs and biologicals that function as supplies when used in a surgical procedure. As part of the policy to package skin substitutes, we also finalized a methodology that divides the skin substitutes into a high- cost group and a low-cost group, to ensure adequate resource homogeneity among Ambulatory Payment Classification (APC) assignments for the skin substitute application procedures (78 FR 74933). In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66886), we stated that skin substitutes are best characterized as either surgical supplies or devices because of their required surgical application and because they share significant clinical similarity with other surgical devices and supplies. Skin substitutes assigned to the high-cost group are described by CPT codes 15271 through 15278. Skin substitutes assigned to the low- cost group are described by HCPCS codes C5271 through C5278. Claims billed with primary CPT codes 15271, 15273, 15275, or 15277 are used to calculate the geometric mean costs for procedures assigned to the high- cost group, and claims billed with primary HCPCS codes C5271, C5273, C5275, or C5277 are used to calculate the geometric mean costs for procedures assigned to the low-cost group (78 FR 74935). The graft skin substitute administration add-on codes, which include ``each additional 25 sq cm'' in the description (that is, CPT codes 15272, 15274, 15276, and 15278; HCPCS codes C5272, C5274, C5276, and C5278), are packaged into the payment rates for the primary administration codes. For CY 2025, each of the HCPCS codes described earlier are assigned to one of the following three skin procedure APCs according to the geometric mean cost for the code: APC 5053 (Level 3 Skin Procedures): HCPCS codes C5271, C5275, and C5277; APC 5054 (Level 4 Skin Procedures): HCPCS codes C5273, 15271, 15275, and 15277; or APC 5055 (Level 5 Skin Procedures): HCPCS code 15273. In CY 2025, the payment rate for APC 5053 (Level 3 Skin Procedures) is $612.13, the payment rate for APC 5054 (Level 4 Skin Procedures) is $1,829.23, and the payment rate for APC 5055 (Level 5 Skin Procedures) is $3,660.97. Table 111 lists the APC assignments and CY 2025 payment rates for the HCPCS codes describing the skin substitute application procedures. This information is also available in Addenda A and B of the CY 2025 final OPPS/ASC rule with comment period (the Addenda A and B are available on the CMS website https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices). [GRAPHIC] [TIFF OMITTED] TR25NO25.153 Beginning in CY 2016, we adopted a policy where we determine the high-cost/low-cost status for each skin substitute product based on either a product's geometric mean unit cost (MUC) exceeding the geometric MUC threshold or the product's per day cost (PDC), which is calculated as the total units of a skin substitute multiplied by the mean unit cost and divided by the total number of days, exceeding the PDC threshold. We assign each skin substitute that exceed either the MUC threshold or the PDC threshold to the high-cost group. In addition, we assign any skin substitute with a MUC or a PDC that does not exceed either the MUC threshold or the PDC threshold to the low-cost group (87 FR 71976). We also assign skin substitutes with pass-through payment status to the high-cost category. We assign skin substitutes with some pricing information but without claims data for which to calculate a geometric MUC or PDC to either the high-cost or low-cost category based on the product's ASP plus 6 percent payment rate as compared to the MUC threshold. If ASP is not available, we use the wholesale acquisition cost (WAC) plus 3 percent to assign a product to either the high-cost or low-cost category. Finally, if neither ASP nor WAC is available, we use 95 percent of average wholesale price (AWP) to assign a skin substitute to either the high-cost or low-cost category. In the CY 2021 OPPS/ASC final rule with comment period, after the first entirely synthetic skin substitute products were introduced into the market, we revised our description of skin substitutes to include both biological and synthetic products (85 FR 86064 through 86067). Any skin substitute product that is assigned to a code in the HCPCS A2XXX series is assigned to the high-cost skin substitute group, including new products without pricing information. New skin substitutes without pricing information that are not assigned a code in the HCPCS A2XXX series are assigned to the low-cost category until pricing information is available to compare to [[Page 53727]] the MUC and PDC thresholds (89 FR 94247). In the CY 2014 OPPS/ASC final rule, we also noted that several skin substitute products are applied as either liquids or powders per milliliter or per milligram and are employed in procedures outside of CPT codes 15271 through 15278. We stated that these products ``. . . will be packaged into the surgical procedure in which they are used.'' (78 FR 74930 through 74931). We also clarified that our definition of skin substitutes does not include bandages or standard dressings, and that, under the OPPS, these items cannot be assigned to either the high-cost or low-cost skin substitute groups or be reported with either CPT codes 15271 through 15278 or HCPCS codes C5271 through C5278 (85 FR 86066). c. Current FDA Regulation of Products CMS Considers To Be Skin Substitutes The FDA regulates products that CMS considers to be skin substitutes based on a variety of factors, including product composition, mode of action, and intended use. Relevant categories of FDA regulation for skin substitute products include the following: (1) Self-Determination Under Section 361 of the PHS Act and the Regulations in 21 CFR 1271 (361 HCT/Ps) Human Cells, Tissues, and Cellular and Tissue-Based Products (HCT/ Ps) are defined in 21 CFR 1271.3(d) as articles containing or consisting of human cells or tissues that are intended for implantation, transplantation, infusion, or transfer into a human recipient. Examples include bone, ligament, skin, dura mater, heart valve, cornea, hematopoietic stem/progenitor cells derived from peripheral and cord blood, manipulated autologous chondrocytes, epithelial cells on a synthetic matrix, and semen or other reproductive tissue. Pursuant to section 361 of the Public Health Service (PHS) Act, FDA promulgated regulations at 21 CFR 1271, et seq. that create an electronic registration and listing system for establishments that manufacture HCT/Ps, regulate donor eligibility, and establish current good tissue practice and other procedures to prevent the introduction, transmission, and spread of communicable diseases by HCT/Ps. A subset of HCT/Ps are those that are regulated solely under section 361 of the PHS Act and the regulations in 21 CFR 1271 (361 HCT/ Ps). The FDA has taken a risk-based, tiered approach in regulating HCT/ Ps; as the potential risk posed by a product increases, so does the level of oversight (63 FR 26745). Although FDA is authorized to apply the applicable requirements in the Federal Food, Drug, and Cosmetic Act (FD&C Act) and/or the PHS Act to those products that meet the definition of drug, biological product, or device, under a tiered, risk-based approach, HCT/Ps that meet specific criteria or fall within detailed exceptions do not require premarket review and approval. HCT/ Ps that do not meet all the criteria in 21 CFR 1271.10(a) are not regulated solely under section 361 of the PHS Act and the regulations in 21 CFR part 1271. Unless an exception in 21 CFR 1271.15 applies, such products are regulated as drugs, devices, and/or biological products under the FD&C Act and/or the PHS Act and are subject to additional regulation, including applicable premarket review and approval. An HCT/P is regulated solely under section 361 of the PHS Act and 21 CFR part 1271 if it meets all of the following criteria (21 CFR 1271.10(a)): The HCT/P is minimally manipulated; The HCT/P is intended for homologous use only, as reflected by the labeling, advertising, or other indications of the manufacturer's objective intent; The manufacture of the HCT/P does not involve the combination of the cells or tissues with another article, except for water, crystalloids, or a sterilizing, preserving, or storage agent, provided that the addition of water, crystalloids, or the sterilizing, preserving, or storage agent does not raise new clinical safety concerns with respect to the HCT/P; and Either: ++ The HCT/P does not have a systemic effect and is not dependent upon the metabolic activity of living cells for its primary function; or ++ The HCT/P has a systemic effect or is dependent upon the metabolic activity of living cells for its primary function, and: -- Is for autologous use; -- Is for allogeneic use in a first-degree or second-degree blood relative; or -- Is for reproductive use. Establishments that manufacture 361 HCT/Ps, as defined by 21 CFR 1271.3(e), must register and list their 361 HCT/Ps in the FDA's electronic Human Cell and Tissue Establishment Registration System (eHCTERS), but premarket review and approval by FDA is not needed. However, FDA acceptance of an establishment registration and 361 HCT/P listing form does not constitute a determination that an establishment is compliant with applicable FDA rules and regulations, that the FDA has agreed with the manufacturer's self-determination as a 361 HCT/P, or that the HCT/P is licensed or approved by FDA (21 CFR 1271.27(b)). When this proposed rule refers to 361 HCT/Ps, it generally refers to products where an establishment has self-determined that their product is a 361 HCT/P.\95\ If an HCT/P does not meet the criteria set out in 21 CFR 1271.10(a), and the establishment that manufactures the HCT/P does not qualify for any of the exceptions in 21 CFR 1271.15, the HCT/P will be regulated as a drug, device, and/or biological product under the FD&C Act, and/or section 351 of the PHS Act (42 U.S.C. 262), and applicable regulations, including 21 CFR part 1271, and premarket review generally is required. --------------------------------------------------------------------------- \95\ We note that establishments may seek feedback from FDA regarding their self-determination analysis and conclusion that a particular product is a 361 HCT/P. See, for example, https://www.fda.gov/vaccines-blood-biologics/tissue-tissue-products/tissue-reference-group. --------------------------------------------------------------------------- (2) 510(k) Premarket Notification Submissions, Premarket Approval Applications, and De Novo Requests ``Devices,'', as defined under 21 U.S.C. 321(h)(1), do not achieve their primary intended purposes through chemical action and are not dependent upon being metabolized for the achievement of their primary intended purposes. Devices may be subject to premarket review through: (1) a 510(k) premarket notification submission (510(k)) in accordance with section 510(k) of the FD&C Act and implementing regulations in subpart E of 21 CFR part 807; (2) a premarket approval application (PMA) under section 515 of the FD&C Act and regulations in 21 CFR part 814; or, potentially, (3) a De Novo classification request (De Novo request) under section 513(f)(2) of the FD&C Act and regulations in subpart D of 21 CFR part 860. A 510(k) is a premarket submission made to the FDA to demonstrate that the device to be marketed is substantially equivalent to a legally marketed device that is not subject to premarket approval (sections 510(k) and 513(i) of the FD&C Act). Premarket approval is the most rigorous type of review and generally is required for class III medical devices. Class III devices are those devices for which insufficient information exists to determine that general controls and special controls would provide a reasonable assurance of safety and effectiveness and are purported or represented to be for a use in supporting or sustaining human life or for a use which is of substantial importance in preventing impairment of human health, or present potential unreasonable risk of illness or injury (section 513(a)(1)(C) of the FD&C Act). De Novo classification is a marketing [[Page 53728]] pathway for novel medical devices for which general controls alone (class I), or general and special controls (class II), provide reasonable assurance of safety and effectiveness, but for which there is no legally marketed predicate device. Devices that are classified into class I or class II through a De Novo request may be marketed and used as predicates for future premarket notification (that is, 510(k)) submissions, when applicable. (3) Biologics License Application To lawfully introduce or deliver for introduction into interstate commerce a drug that is a biological product, a valid biologics license application (BLA) must be in effect under section 351(a)(1) of the PHS Act, 42 U.S.C. 262(a)(1), unless exempted under 42 U.S.C. 262(a)(3). Such licenses are issued only after showing that the product is safe, pure, and potent. Approval of a biologics license application or issuance of a biologics license shall constitute a determination that the establishment(s) and the product meet applicable requirements to ensure the continued safety, purity, and potency of such products (21 CFR 601.2(d)). Potency has long been interpreted to include effectiveness (21 CFR 600.3(s)). The definition of the term ``biological product'' in section 351(i) of the PHS Act is: ``a virus, therapeutic serum, toxin, antitoxin, vaccine, blood, blood component or derivative, allergenic product, protein, or analogous product . . . applicable to the prevention, treatment, or cure of a disease or condition of human beings.'' (42 U.S.C. 262(i)). In contrast to the registration and listing requirements for a 361 HCT/P or the substantial equivalence requirements for 510(k)s, products licensed under section 351 of the PHS Act are required to meet stringent pre-and post-market requirements to ensure the products' safety and efficacy when marketed. Table 112 lists several other notable differences between the relevant FDA regulatory categories for products CMS considers to be skin substitutes. [GRAPHIC] [TIFF OMITTED] TR25NO25.154 d. Payment of Skin Substitute Products Under the PFS and OPPS

1. Payment for Skin Substitute Products as Incident-to Supplies

--------------------------------------------------------------------------- \96\ No premarket authorization is required for 361 HCT/Ps. \97\ https://www.fda.gov/industry/fda-user-fee-programs/medical-device-user-fee-amendments-mdufa. \98\ These numbers include either a review within 180 days for decisions without advisory committee input or a review within 320 days for decisions with advisory committee input, respectively. \99\ PDUFA performance goals call for FDA to review and act on 90 percent of original BLA submissions within 10 months of the 60- day filing date. Other regulatory pathways may have different timelines. See https://www.fda.gov/patients/learn-about-drug-and-device-approvals/fast-track-breakthrough-therapy-accelerated-approval-priority-review; https://www.fda.gov/drugs/development-approval-process-drugs. \100\ https://www.fda.gov/industry/fda-user-fee-programs/prescription-drug-user-fee-amendments. --------------------------------------------------------------------------- We have carefully considered our policy objectives, which include: (1) ensuring a consistent payment approach for skin substitute products across the physician office, hospital outpatient department, and ambulatory surgical center (ASC) settings; (2) ensuring that appropriate HCPCS codes describe skin substitute products; (3) employing a uniform approach across products within the physician office setting, regardless of whether the product is synthetic or comprised of human- or animal-based material; and (4) providing clarity for interested parties on CMS skin substitutes policies and procedures. We proposed, starting January 1, 2026, to separately pay for the provision of certain groups of skin substitute products as incident-to supplies when, for those products that are coverable under Medicare's rules, they are used during a covered application procedure paid under the PFS in the non-facility setting or under the OPPS. This proposal does not apply to biological products licensed under section 351 of the PHS Act, which would continue to be paid as biologicals under the ASP methodology in section 1847A of the Act. While we considered proposing to pay separately for skin substitutes initially under just the PFS in non-facility settings consistent with current practice, one of our primary policy objectives is to ensure a consistent payment approach for skin substitute products across the physician office and hospital outpatient department settings; and so, we ultimately determined that the suite of products referred to as skin substitutes should be treated in a uniform manner across different outpatient care settings, to the extent permitted by applicable law, such as section 1833(t)(2)(B) of the Act. The physician, in consultation with his or her patient, decides the site of service for treatment. While many factors are considered as a part of that decision, substantial differences in payment for the application of the same skin substitute product in one site of service versus another, or between similar skin substitute products, should not be one of them. Establishing a consistent framework for how these products are treated within the non-facility and hospital outpatient settings would empower providers to make the best treatment decisions for their patients, ensure equitable access to needed services, and pay appropriately for these services. We also considered bundling payment for skin substitute products in both the PFS and OPPS as part of this proposal. While supplies are generally bundled into the payment of the service in both the physician office and hospital outpatient departments, for many years skin substitute products [[Page 53729]] have been paid separately in the physician office setting, where the majority of these products are currently applied. So, we have determined that bundling payment for skin substitute products with their administration procedures across both settings under this new proposal, before efforts are made to address improper utilization patterns, would be premature. Depending on the outcomes of a final policy, we may consider packaging skin substitute products with the related application procedure in both the hospital outpatient setting and non-facility setting in future rulemaking. We sought comments on our proposal to separately pay for the provision of certain groups of skin substitute products as well as on our proposal to implement this policy in both the non-facility and hospital outpatient settings. In the CY 2014 OPPS/ASC final rule with comment period, we finalized a policy to package the payment for skin substitutes into high- and low-cost administration codes (see 78 FR 74930 through 74931 and 42 CFR 419.2(b)(16)). Under the proposal in the CY 2026 OPPS/ASC proposed rule, the payment for skin substitutes would no longer be packaged into the administration procedures under the OPPS, when performed in the outpatient hospital setting. Rather, we proposed to remove skin substitutes from the list of packaged items and services at 42 CFR 419.2(b)(16) and specify that we will continue to package payment for products that aid wound healing that are not skin substitute products. Accordingly, the C-codes describing the low-cost group, HCPCS codes C5271 through C5278, would be deleted; and skin substitutes assigned to the high-cost group, described by HCPCS codes 15271 through 15278, would remain to describe skin substitute administration procedures. As a result of the unbundling of the skin substitute products from HCPCS codes 15271 through 15278, the costs associated with the HCPCS codes may be impacted, resulting in changes in APC assignments. We refer readers to Addendum B to the CY 2026 OPPS/ ASC proposed rule for the APC assignments and associated payment rates for HCPCS codes 15271 through 15278. We also proposed to combine the existing claims data available for the two sets of current OPPS codes, the low-cost and the high-cost administration groups, to set the initial payment rate for the proposed skin substitute administration procedures described by HCPCS codes 15271 through 15278. We believe it is appropriate to combine the available claims data from both the low- cost and high-cost administration groups to calculate the payment rate for the proposed skin substitute administration procedures as both the low-cost and high-cost groups describe skin substitute administration. While HCPCS add-on administration codes 15272, 15274, 15276, and 15278 would still be packaged in the hospital outpatient setting, because add-on codes are generally packaged in the hospital outpatient setting, we anticipate that many of the concerns expressed by presenters at previous meetings of the Advisory Panel on Hospital Outpatient Payment (HOP Panel) and by public commenters on previous rules that providers are discouraged from treating larger wounds in the hospital outpatient setting (89 FR 94247) would be addressed by our proposal to pay separately for codes describing provision of skin substitute products from their associated administration codes. We sought comment on our proposal to pay separately for provision of skin substitutes as incident-to supplies when used as part of an administration procedure in the hospital outpatient setting. We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: Many commenters expressed strong support for CMS' goal of aligning payment and coding policies across different sites of care. They agree that a consistent, site-neutral payment system empowers providers to choose the most clinically appropriate setting based on patient needs rather than financial incentives. Commenters noted this would reduce the confusion, administrative burden, and disparities in care caused by the current system. They see this policy as a way to establish a fair and uniform standard that centers treatment decisions around the patient. Many commenters also supported CMS' proposal to pay for skin substitutes separately from the application procedure. Several stated that these products add significant clinical value. They noted that separate payment ensures consistent treatment availability, preserves access for patients, and avoids disincentives for treating larger wounds. Several commenters expressed appreciation that CMS did not move forward with a previous proposal to bundle the products, which they believe would have harmed patients with large wounds. They regarded the proposed policy as a more clinically and operationally sound approach. Several commenters specifically supported discontinuing the bundling of skin substitute payments in the Hospital Outpatient Department (HOPD) and Ambulatory Surgical Center (ASC) settings. They argued the current system, which bundles payment in the HOPD and ASC settings, but pays separately in the office, has created a disincentive to treat larger wounds in facilities, pushing those cases disproportionately into the physician's office or even more expensive inpatient settings. They applauded the per-square-centimeter methodology for aligning payment with wound size and expanding access across all sites. Response: We thank commenters for their support. Comment: Other commenters opposed the move away from bundled payments. MedPAC, for example, did not support unbundling skin substitutes in the facility setting, arguing that paying for items separately undermines payment bundles, can lead to overuse, and shifts financial burden from providers to Medicare and its beneficiaries. Another commenter supported maintaining a bundled approach to align with longstanding policy and statutory authority. Several commenters recommended that CMS delay any changes to the HOPD payment methodology. They suggested that CMS should first assess the impact of the payment reforms in the non-facility setting before applying them to the hospital outpatient setting to avoid unintended consequences, such as shifting care to more expensive settings. Response: While we acknowledge the concerns about unbundling raised by commenters, ensuring a consistent payment approach for skin substitute products across the physician office and hospital outpatient department settings has been a long-stated policy objective. As noted above, we determined that it would be premature to bundle payment for skin substitute products with their administration procedures across both settings before efforts are made to address improper utilization patterns. Depending on the outcomes of this policy, we may consider packaging skin substitute products with the related application procedures in the hospital outpatient department setting, ambulatory surgical center setting, and non-facility setting in future rulemaking. Comment: Many commenters warned that the proposed payment rate for the application codes create a new, major disparity between care settings. They pointed out the large gap between the proposed physician application [[Page 53730]] payment rate of ~$150 in an office/mobile setting and the combined facility and physician facility setting payment rates of over $800 in an HOPD. They stated this disparity will create a strong financial incentive to shift patient care to the more expensive HOPD setting, which could strain hospital capacity, create access issues for rural and underserved patients, and cause physician offices and mobile practices to shutter. Several commenters highlighted the unique challenges and higher costs faced by providers serving rural and homebound patients. They recommended CMS offer financial incentives, enhance telemedicine reimbursement, and provide add-on payments or grants to ensure these vulnerable populations do not lose access to care. To achieve true site neutrality, they strongly suggested CMS increase the application payment for clinicians in non-facility settings to close this gap. Other commenters supported the proposed RVUs and payment rates for the application procedure codes in both the HOPD and MPFS settings, finding them to be a fair assessment of clinical resource utilization. Another commenter stated that CMS should increase the proposed APC payment rates for these procedures in the HOPD setting, as the proposal demotes some codes to lower-paying APCs, which exacerbates existing disincentives for treating wounds in the hospital. The commenter also stated that we had not provided any rationale for reassigning skin substitute application procedures to APCs with lower payment rates. The commenter requested that we revert the APC assignments for CPT code 15271, 15273 and 15275 to the APC assignments finalized in the CY 2025 OPPS/ASC final rule. Specifically, the commenter requested that we assign CPT codes 15271 and 15275 to APC 5054 and assign CPT code 15273 to APC 5055. One commenter sought clarification on whether APC rates for the skin substitute application procedures, such as CPT codes 15271 through 15278 would be adjusted to maintain budget neutrality. Response: We acknowledge the disparities in the payment rates for the application codes between settings. As described in section II.B. of this final rule with comment period, we are open to exploring alternative data sources, including use of OPPS cost data, to inform PFS rate setting for certain services in future rulemaking. We also recognize the possibility raised by interested parties that some of the excessive payment for the skin substitute products may have been useful in subsidizing costs associated with providing these services in beneficiaries' home. We look forward to continued dialogue on this point as well as on the point of access to care for homebound and other beneficiaries for whom care is reasonable and necessary. With regard to specific APC assignments for some of the skin substitute application procedures (HCPCS codes 15271-15278), we remind commenters that we provided a rationale for potential APC reassignments. Specifically, we explained in the CY 2026 OPPS/ASC proposed rule that, as a result of the unbundling of the skin substitute products from HCPCS codes 15271-15278, the costs associated with the HCPCS codes may be impacted, resulting in changes in APC assignments. Such was the case when we ran an updated analysis of the geometric mean costs of HCPCS codes 15271-15278, upon which we update APC assignments, when we unbundled the skin substitute products from the application codes. Once we removed the costs of the skin substitute products, we saw approximately a 50 percent decrease in the geometric mean cost of each of the HCPCS application codes. Stated differently, when skin substitute products were packaged into the payment for the application procedure, they accounted for a significant portion of the cost of the procedure. With the product no longer packaged and instead separately paid, it would be expected that the cost of the procedure would decrease, because the procedure no longer includes the cost of the skin substitute product. Table 113 illustrates this in more granular detail. [GRAPHIC] [TIFF OMITTED] TR25NO25.155 We note that, while additional claims have been processed since the CY 2026 OPPS/ASC proposed rule was released, there have not been significant changes to the geometric mean costs of these codes as outlined in the costs statistics files to this final rule available on the CMS OPPS website. Finally, we are clarifying that the prospective payments for skin substitute products and skin substitute administration procedures based on our CY 2026 OPPS payment policy would be included in budget neutrality as it is typically applied. For more detail, we refer readers to section II.A.4 of this final rule with comment period. After careful consideration of the comments, we are finalizing our proposal to pay separately for the [[Page 53731]] provision of certain groups of skin substitute products as well as our proposal to implement this policy in both the non-facility and hospital outpatient settings as proposed. We are also finalizing the proposed APC assignments for HCPCS codes 15271, 15273, 15275, and 15277. Specifically, we are finalizing our proposal to assign HCPCS codes 15271 and 15272 to APC 5053 (Level 3 Skin Procedures) and HCPCS codes 15273 and 15277 to APC 5054 (Level 4 Skin Procedures). The final CY 2026 payment rates can be found in Addendum B to this final rule with comment via the internet on the CMS website. In addition, we refer readers to Addendum D1 of this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Addendum D1 can also be found via the internet on the CMS website. In the CY 2014 OPPS/ASC final rule with comment period, we finalized a policy to treat skin substitutes as biologicals that function as supplies when used in a surgical procedure. Similarly, under this proposal, most skin substitutes would be considered incident-to supplies in accordance with section 1861(s)(2)(A) of the Act. Supplies are a large category of items that typically are either for single use or have a shorter use life span than equipment. Supplies can be anything that is not equipment and include not only minor, inexpensive, or commodity-type items but also include a wide range of products used in outpatient settings, including certain implantable medical devices. ``Incident-to supplies'' refers to supplies that are furnished as an integral, although incidental, part of the physician's personal professional services in the course of diagnosis or treatment of an injury or illness, among other requirements at 42 CFR 410.26(b). Because a skin substitute must be used to perform any of the procedures described by a CPT code in the range 15271 through 15278, and the procedure of treating the wound and applying a covering to the wound is the independent service, skin substitute products serve as a necessary supply for these surgical repair procedures. One purpose of the new proposed policy was to limit some of the current profiteering practices occurring in this industry. For example, as reflected in the last several years of CMS' ASP Pricing Files, we have observed a dramatic increase in launch prices. It is unclear how these prices could be attached to realistic changes in resource costs as many of these new products are allegedly minimally manipulated tissues. Our policy is likely to disincentivize this practice, as well as several other novel industry practices that have come to our attention, by preventing exploitation of skin substitute pricing under section 1847A of the Act, overuse of expensive skin substitute products, and waste resulting from use of more expensive skin substitute products over clinically-appropriate, less expensive alternatives. Notably, there has not been significant growth in payments for skin substitutes in the OPPS, due in part to our packaging principles. We note that the relevant statutory provisions, when considered together, do not require all of these kinds of products to be paid as biologicals under section 1847A of the Act. Therefore, under this policy, unless a skin substitute is approved as a biological product under section 351 of the PHS Act, in which case we would continue to pay for it consistent with section 1847A of the Act, we would consider it a supply for payment purposes under the OPPS with definitions and rates described below. For Medicare purposes, we proposed to codify the definition of ``biological'' as ``a product licensed under section 351 of the Public Health Service Act'' at Sec. Sec. 414.802 and 414.902. We sought comments on our proposal to limit the application of section 1847A of the Act to skin substitutes that are approved as a biological product under section 351 of the PHS Act and our proposed edits to the regulations. We received public comments on these proposals. The following is a summary of the comments we received and our responses. Comment: Many commenters opposed classifying skin substitutes, particularly amniotic and placental-derived products, as supplies. They stated this classification is a misstep that diminishes the products' clinical value, calling the products advanced, life-changing biologic therapies, not simple bandages or dressings. Some stated CMS lacks legal authority, as skin substitutes do not meet the statutory definition of an ``incident-to supply.'' They stated the reclassification is legally, clinically, and definitionally incorrect, as these products are the primary intervention, not an incidental part of a service, and interact directly with body tissues. Response: Section 1861(s)(2)(A) of the Act defines ``medical and other health services'' as services and supplies furnished incident to a physician's professional service that are commonly furnished in physicians' offices and provided either without charge or as part of a physician's bill. As stated above, supplies are a large category of items that typically are either for single use or have a shorter use life span than equipment. Supplies can be anything that is not equipment and include not only minor, inexpensive, or commodity-type items but also include a wide range of products used in outpatient settings, including certain implantable medical devices such as class III medical devices requiring premarket approval, which is the most rigorous review required of a skin substitute that is also a medical device. ``Incident-to supplies'' refers to supplies that are furnished as an integral part of the physician's professional services in the course of diagnosis or treatment of an injury or illness, among other requirements at 42 CFR 410.26(b). Because a skin substitute must be used to perform any of the procedures described by a CPT code in the range 15271 through 15278, and the procedure of treating the wound and applying a covering to the wound is the independent service, skin substitute products serve as a necessary supply for these surgical repair procedures. Comment: Many commenters strongly supported the classification of non-BLA skin substitutes as incident-to supplies. They see it as an essential, rational approach to realign incentives away from overuse and toward more clinically appropriate care. They stated that this classification is expected to curb the significant fraud, waste, and abuse that has plagued the current system. Response: We appreciate the commenters for their feedback on our proposal to treat and pay for all skin substitute products as incident- to supplies. We agree that this proposal will help to resolve issues such as exorbitant price increases and curb fraud, waste, and abuse. After careful consideration of the comments, we are finalizing our proposal to pay separately for the provision of skin substitutes as incident-to supplies under the OPPS in the hospital outpatient department as proposed. We received divided comments on our proposal to codify the definition of ``biological'' in regulation. The following is a summary of the comments we received and our responses. Comment: Several commenters stated that CMS's proposal to narrow the definition of ``biological'' to only include products licensed under section 351 of the PHS Act is a misapplication of the law and conflicts with the Act. They contend that the of the Act itself provides a broader definition in section 1861(t)(1) of the Act, which includes products listed in the U.S. Pharmacopoeia (USP) or approved by hospital P&T committees--a definition [[Page 53732]] that many skin substitutes meet. Commenters state that if Congress had intended to limit the term ``biological'' to section 351 of the PHS Act products in the payment statute (section 1847A of the Act), it would have done so explicitly, as it has in other parts of the law. Furthermore, they noted that the Consolidated Appropriations Act of 2021 referred to these products as ``drugs and biologicals,'' signaling that the Congress considers them as such for payment purposes. Commenters stated that for decades CMS has appropriately classified and paid for CTPs/skin substitutes as drugs or biologicals under section 1847A of the Act. They state the proposal to abruptly reclassify them is an unexplained reversal of this long-standing policy and is therefore ``arbitrary and capricious.'' Response: Section 1861(t)(1) of the Act states, in relevant part, that the term ``drugs'' and the term ``biologicals'' include only products that are included (or approved for inclusion) in the U.S. Pharmacopoeia, the National Formulary, or the United States Homeopathic Pharmacopoeia, or in New Drugs or certain products listed in the Accepted Dental Remedies, or as are approved by the pharmacy and drug therapeutics committee (or equivalent committee) of the medical staff of the hospital furnishing such drugs and biologicals for use in such hospital; subparagraph (t)(2) adds that the term ``drugs'' includes any drugs or biologicals used in certain anticancer chemotherapeutic regimens in the definition. The definition of these terms does not include certain medical supplies. Reliance on this provision to determine that a skin substitute is a biological payable under section 1847A of the Act is problematic for several reasons. To begin, we note that this provision does not require that all products included in the listed compendia are deemed drugs and biologicals. Instead, it states that ``drugs'' and ``biologicals'' include only such drugs and biologicals as are included in the compendia. Second, only one of the listed compendia in section 1861(t)(1) of the Act that is still in publication, a combination compendium containing USP and the National Formulary (USP-NF), which contains standards for medicines, dosage forms, drug substances, excipients, biologics, compounded preparations, medical devices, dietary supplements and other therapeutics.\101\ The compendia issued a statement in 2018 that it would no longer develop new monographs for biologics unless there is other interested parties consensus supporting its creation, including the support of FDA.\102\ As a result, very few of CMS' paid biologicals actually have product- specific monographs in that compendium. Instead of product-specific monographs, the USP primarily develops performance standards and general guidelines to support the quality assessment of biologics. This is also true in the case of skin substitutes. References to these types of products in the USP are not product-specific monographs. Instead, these references are general descriptions of product types. As the source and manufacture of products with biological activity can dramatically change their safety and efficacy, these general references are not sufficient to describe any product with specificity. Therefore, we rely on the language in section 1847A of the Act to authorize payment for products described therein. --------------------------------------------------------------------------- \101\ https://www.uspnf.com/purchase-usp-nf. \102\ https://www.usp.org/news/statement-on-monographs-for- biologics#:~:text=Rockville%2C%20MD%20%E2%80%93%20April%202%2C,About% 20USP. --------------------------------------------------------------------------- The Consolidated Appropriations Act, 2021, Public Law 116-260, division CC, section 401(c), amended section 1847A(f)(A) to state that, manufacturers of drugs or biologicals including items, services, supplies, and products that are payable under Medicare Part B as a drug or biological, that have not entered into a National Medicaid Drug Rebate Agreement are required to report ASP (and WAC) data to CMS. Under this policy, as finalized, skin substitute products (other than those approved via BLA under section 351 of the PHS Act) will no longer be paid as biologicals and will no longer be required to report ASP to us. Finally, as noted previously, we outlined our HCPCS Level II coding and payment policy objectives for skin substitutes in the CY 2023 PFS proposed rule (87 FR 46249) and stated we believed that our existing payment policies were unsatisfactory, unsustainable over the long term, and rooted in historical practice established two decades ago prior to significant evolutions in medical technology and practice. CMS also hosted a town hall to provide an opportunity for public input, including discussion of potential approaches to the methodology for payment of skin substitute products, and reviewed several years of comments in response to CY rulemaking in 2023, 2024, and 2025 on this subject before developing this proposal to address our stated objectives as well as many of the comments we have received. Comment: Other commenters agreed with CMS' interpretation. They supported the proposal to reserve the payment methodology under section 1847A of the Act for products that have undergone the rigorous FDA Biologics License Application (BLA) process under section 351 and agreed that non-BLA products do not meet the statutory definition of biologicals contemplated for payment under section 1847A of the Act, making the ``incident-to supply'' classification a rational approach. They believe this accurately reflects the statutory definition of a biological and rightly rewards manufacturers who invest in the highest level of regulatory review. Other commenters requested that CMS clarify that skin substitute products do not fall under the discarded drug or inflation rebate policies. Response: We appreciate the commenters for their support. We clarify that skin substitute products that are not regulated as biological products under section 351 of the PHS Act and that are paid as incident to supplies are not subject to the Medicare discarded drug policy. At this time, skin substitutes are excluded from Part B inflation rebates as described at Sec. 427.101(b)(5) and as finalized in the CY 2025 PFS final rule (89 FR 98235). Comment: A commenter warned that continuing to pay for the few BLA- approved products under section 1847A of the Act while moving all others to a flat rate would create a perverse incentive for those manufacturers to continue increasing prices. Response: As previously described, we believe that the payment methodology described in section 1847A of the Act applies to drugs and biological products approved under a BLA. Further, such licenses are issued only after showing that the product is safe, pure, potent, and may justify a higher payment rate. Finally, between the longer time required to bring these products to market, potential rebate requirements, and the changes to ASP reporting described in the CY 2026 PFS final rule, we believe opportunities for dramatic pricing increases will be significantly curtailed. However, we will continue to monitor pricing trends for products approved under a BLA. Comment: A commenter requested that CMS codify in regulation that biological products licensed by the FDA under the section 351 BLA process are not considered skin substitutes, are not considered incident-to supplies under the CY 2026 OPPS/ASC proposed rule, and will continue to be eligible for separate payment under section 1847A of the Act (generally, ASP plus 6 percent). [[Page 53733]] Response: While products licensed under section 351 of the PHS Act may properly be used along with skin substitute application codes, they will continue to be separately paid as biological products using the methodology described in section 1847A of the Act. We also received many comments on the growth in payments for this class of products. Comment: Many commenters, including ACOs, primary care providers, and health systems, stated that they have witnessed an explosive and unsustainable growth in skin substitute spending, which they attribute to fraud, waste, and abuse. They report seeing products used in clinically questionable circumstances, often by third-party mobile wound clinics that operate without coordination with the patient's primary care team. The commenters identified the ASP-based payment limits as a primary driver of abuse, as it creates financial incentives to use more expensive products, regardless of clinical need. They described a system where manufacturers can launch new, clinically undifferentiated products at inflated prices and offer deep discounts to providers, who then profit from the spread between their acquisition cost and the high Medicare reimbursement rate. Commenters provided examples of significant patient harm resulting from this misuse, including failure to treat the underlying causes of wounds, unnecessary applications, severe infections, sepsis, and even death. They noted a troubling pattern of skin substitutes being applied to vulnerable and terminally ill patients, including those on hospice, where such treatment is inappropriate. Response: We appreciate the commenters for their input. We believe this policy will dramatically reduce these problematic behaviors in both the physician office and hospital outpatient settings. We also believe this policy has the potential to prevent these harmful practices from occurring in different settings of care, including hospice and home health. Comment: Several commenters referenced analyses indicating that the vast majority of the spending is driven by a very small number of outlier providers. Commenters referenced one analysis by Tettelbach et al.\103\ that found that in 2023, fewer than 3 percent of providers accounted for nearly two-thirds of all Medicare spending on these products. The commenters suggested the problem is not broad utilization but isolated misuse by a few bad actors. Based on the concentration of abuse, some commenters stated that CMS should use targeted program integrity measures, such as audits of outlier providers, NPI-level analytics, and stricter enforcement--rather than implementing sweeping payment cuts that penalize all providers and risk harming patient access. Beyond targeted enforcement, commenters recommended systematic oversight mechanisms. A commenter suggested CMS recognize site accreditation through a self-regulatory organization (SRO) to verify adherence to standard of care, documentation protocols, and product handling, analogous to DMEPOS and CLIA accreditation models. The SRO would conduct inspections, publish outcomes dashboards, and impose sanctions. The commenters contend that slashing payment rates is not a fraud control measure and will disproportionately harm compliant providers and the patients who need these products. --------------------------------------------------------------------------- \103\ Tettelbach W, Armstrong DG, Driver V, et al. Safeguarding access, fiscal responsibility and innovation: a comprehensive reimbursement framework for CAMPs to preserve the Medicare Trust Fund. J Wound Care. 2025;34(10):Ahead of Print. doi:10.12968/ jowc.2025.0396. --------------------------------------------------------------------------- Some commenters caution that increased use of skin substitutes is not, in itself, a negative trend. They stated that the growth also reflects expanded access to care for previously underserved populations (like homebound patients) and increased provider awareness of the products' efficacy in healing chronic wounds. Response: We agree that not all increased use of skin substitutes is improper. However, it is clear that the dramatic growth in spending is not statutorily required and comes without a clear, consistent, and corresponding benefit. The Agency has a responsibility to the public to be good stewards to the Medicare Trust Fund, so CMS has implemented a coordinated effort across several Centers, such as the Center for Medicare, the Center for Clinical Standards and Quality, and the Center for Program Integrity, to address this issue. Comment: Several commenters offered feedback on skin substitute billing as it relates to value-based care programs such as the Medicare Shared Savings Program. These comments acknowledged support for the proposals relating to the changes in skin substitute payment policy, but expressed concern related to negative impacts to some ACOs who may be disproportionately impacted by skin substitute billing compared to the national trend. Some commenters also made recommendations for revisions to value-based care programs that could address skin substitute billing and similar future scenarios that may not be captured by the Significant, Anomalous, and Highly Suspect (SAHS) billing activity policy which was finalized in the CY2025 PFS. Response: As the commenters referenced, on November 1, 2024, we issued the CY 2025 Medicare PFS final rule (89 FR 97710), which included policies discussed under the ``Mitigating the Impact of Significant, Anomalous, and Highly Suspect (SAHS) Billing Activity on Shared Savings Program Financial Calculations in Calendar Year 2024 or Subsequent Calendar Years'' section of the final rule (89 FR 98191). These policies give us the ability to determine that the billing of one or more HCPCS or CPT codes represents significant, anomalous, and highly suspect billing activity for a calendar year that warrants adjustment to calculations made under 42 CFR part 425. Generally, a level of billing for a given HCPCS or CPT code is considered SAHS billing activity when a given HCPCS or CPT code exhibits a level of billing that represents a significant claims increase, either in the volume or dollars, with national or regional impact, and represents a deviation from historical utilization trends that is unexpected and is not clearly attributable to reasonably explained changes in policy or the supply or demand for covered items or services. The billing level must be significant and represent billing activity that would cause significantly inaccurate and inequitable payments and repayment obligations in the Shared Savings Program if not addressed (89 FR 98195). We assessed the impact of an increase in billing to Medicare for skin substitutes and determined that the billing activity for these services does not represent SAHS billing activity for Performance Year (PY) 2024. Skin Substitute billing can have varying impacts on ACOs' performance and could either contribute to increasing or decreasing shared savings and losses, dependent on ACO-level expenditures and national/regional billing activity impacts. We established the SAHS billing policy to address certain unexplained billing anomalies that could impact program wide calculations, to be invoked in rare and extreme cases when we identify a code that meets the high bar to be defined as SAHS billing activity (89 FR 98196). Payments that are not excluded under the SAHS policy are also reviewable at the ACOs' request if improper payments are identified after the initial determination is made under the reopening policy (42 CFR 425.315). [[Page 53734]] We will continue to monitor this area with our program integrity partners and to explore options that could mitigate extreme deviations in costs that are outside of the ACOs' control and not addressed through the SAHS policy. Comment: Some commenters acknowledged that truncation in Medicare Shared Savings Program calculations greatly mitigates a significant amount of outlier billing for skin substitutes. A portion of these commenters also suggested that CMS should apply a lower stop loss truncation threshold in the Medicare Shared Savings Program to address skin substitutes. Response: To minimize variation in catastrophically large claims, the Medicare Shared Savings Program truncates an assigned beneficiary's total annual Medicare Parts A and B fee-for-service (FFS) per capita expenditures at the 99th percentile of national Medicare Parts A and B FFS expenditures as determined for the applicable performance year for assignable beneficiaries identified for the 12-month calendar year corresponding to the performance year (42 CFR 425.605(a)(3) and 425.610(a)(4)(ii)). For all benchmark years and performance years, CMS provides ACOs with the number of assigned beneficiaries with truncated expenditures, the total dollar amount truncated, and the percentage of total annualized expenditures truncated. We also provide this truncation information for the National Assignable FFS population. We have examined the impact of the truncation policy on skin substitute expenditures and found that over 50 percent of PY 2024 Part B expenditures for skin substitutes were addressed by truncation. Skin substitute expenditures, on average for PY 2024, represent roughly 1 percent of total Parts A and B expenditures for ACOs, and with truncation applied, the average skin substitute expenditures equate to less than 0.5 percent of total Parts A and B expenditures for ACOs. This information indicates that truncation effectively mitigates large spending associated with skin substitute billing. Comment: Some commenters also provided feedback requesting a formal process and direct channel for ACOs to report fraud. Response: Medicare Shared Savings Program ACOs are encouraged to report potential fraud or abuse by submitting a complaint to the CMS Center for Program Integrity (CPI), Fraud Investigations Group (FIG), Division of Provider Investigations (DPI) at [email protected]. ACOs can also report potential fraud or abuse by submitting a complaint to the Office of Inspector General (OIG) website at https://oig.hhs.gov/fraud/report-fraud/, OIG hotline at 1-800-HHS-TIPS (1-800- 447-8477), TTY at 1-800-377-4950, by fax at 1-800-223-8164, or by mailing to: Office of Inspector General ATTN: OIG HOTLINE OPERATIONS P.O. Box, 23489 Washington, DC 20026. ACOs suspecting healthcare fraud, waste, or abuse are encouraged to visit the CMS Center for Program Integrity (CPI) website at https://www.cms.gov/medicare/medicaid-coordination/center-program-integrity for more information. After careful consideration of public comments, we are finalizing our proposal to limit application of section 1847A of the Act to skin substitutes that are approved as a biological product under section 351 of the PHS Act and we are finalizing our proposed edits to the regulations as proposed.

2. Payment Categories Based on FDA Regulatory Pathways

Paying separately for skin substitutes in the non-facility setting has led to dramatic price increases for these products, as noted above. Grouping similar products or services into a single billing code and using a single payment amount for them, as we do with many services under the OPPS, some services under the PFS, and all multiple-source drugs under section 1847A of the Act, incentivizes hospitals and prescribers to make more cost-efficient, clinically effective decisions. However, we recognize that grouping dissimilar products and/ or services to set payment rates, can limit beneficiaries' access to appropriate care, especially when some groups encompass products and services with significant clinical and resource variability. In the case of skin substitutes, no single product among the wide range of products stands out as typical; so, we have reviewed several methods to group or classify skin substitutes to determine which best reflects clinical and resource similarities between these products. We proposed that only skin substitute products licensed under section 351 of the PHS Act will be considered drugs and biologicals for Medicare payment purposes. Furthermore, we proposed that, to reflect relevant product characteristics, we would group skin substitutes that are not drugs or biologicals (that is, anything that is not a section 351 product) using three CMS payment categories based on FDA regulatory categories ((PMAs, 510(k)s, and 361 HCT/Ps) to set payment rates. We have previously noted in rulemaking that CMS has no obligation to categorize products based on the FDA's current regulatory framework (74 FR 60476); but, in this case, we have determined that the FDA regulatory categories provide an appropriate level of distinction for a heterogeneous category of products that exhibit clinical and resource variability and that categorizing products based on these categories can ultimately improve the accuracy of payment under the OPPS. Proposing a payment policy that aligns with FDA's current regulatory framework also provides predictability and efficiency for purposes of Medicare payment. Payment for new products, as discussed below, could be achieved quickly and consistently by CMS' capacity to immediately recognize the FDA regulatory categories. a. 361 HCT/Ps As described previously, 361 HCT/Ps are a subset of HCT/Ps that are regulated solely under section 361 of the PHS Act and the regulations in 21 CFR 1271 and listed in the FDA's eHCTERS. Currently, registered 361 HCT/Ps generally are dressings intended only to cover and protect a wound. They are not intended to act on the wound to mediate, facilitate, or accelerate wound healing. Their activity is typically limited to that of a physical covering or wrap. A structural tissue intended for wound care is generally limited to the homologous use of cover and protect in order to be a 361 HCT/P.\104\ Intended uses such as wound treatment, promotion or acceleration of wound healing, or serving as a skin substitute would generally be non-homologous uses of structural tissues. Instead, products for such intended uses (for example, the treatment of wounds) generally are subject to PMA or BLA requirements. --------------------------------------------------------------------------- \104\ See Regulatory Considerations for HCT/Ps: Minimal Manipulation and Homologous Use, July 2020 (pg. 19). --------------------------------------------------------------------------- b. Devices Requiring 510(k) Clearance A 510(k) is a premarket submission made to the FDA generally by the manufacturer of a device to demonstrate that the device to be marketed is substantially equivalent to legally marketed device that is not subject to premarket approval. (FD&C Act sections 510(k),513(i)). Currently, 510(k)-cleared devices that we are considering for purposes of this proposal generally are dressings intended only to cover and protect a wound, to absorb exudate, and to maintain appropriate moisture balance within the wound. They are not intended to act on the wound to mediate, facilitate, or accelerate wound [[Page 53735]] healing. Their activity is typically limited to that of a physical covering or wrap. When intended only to cover and protect a wound, to absorb exudate, and to maintain appropriate moisture balance within the wound and otherwise meeting the device definition, generally the FDA's Center for Devices and Radiological Health (CDRH) regulates wound dressings composed of natural biomaterials, including animal and human derived tissue as devices, and they are currently subject to 510(k) requirements. At this time, wound dressings have not been 510(k) cleared by FDA for indications such as wound treatment, promotion or acceleration of wound healing, or serving as a skin substitute.\105\ Instead, products for such intended uses generally are subject to PMA or BLA requirements. --------------------------------------------------------------------------- \105\ FDA Executive Summary Prepared for the October 26 & 27, 2022 Meeting of the General and Plastic Surgery Devices Panel of the Medical Devices Advisory Panel Classification of Wound Dressings with Animal-derived Materials (Section 3). Available at https://www.fda.gov/media/162539/download. --------------------------------------------------------------------------- For the purposes of this policy, we proposed to group any skin substitutes authorized through the De Novo pathway with those cleared under 510(k)s. Similar to products cleared under 510(k)s, De Novo classification is a marketing pathway for medical devices for which general controls alone (class I), or general and special controls (class II), provide reasonable assurance of safety and effectiveness. While products authorized through the De Novo pathway have no legally marketed predicate device, devices that are classified into class I or class II through a De Novo request may be marketed and used as predicates for future premarket notification (that is, 510(k)) submissions, when applicable. Because of this, we would expect skin substitutes authorized through the De Novo pathway and those cleared under 510(k)s to be similar for payment purposes. We sought comment on our proposal to group skin substitutes into three FDA approval categories, PMA, 510(k), and 361 HCT/P, to set payment rates and our proposal to group any skin substitutes authorized through the De Novo pathway with those cleared under 510(k)s for payment purposes. c. Products Subject to PMAs Premarket approval is the most rigorous type of review of a device and generally is required for class III medical devices. Similar to BLA-approved wound care products, PMA-approved wound care products generally are intended to go beyond a simple wound cover to provide some type of direct treatment effect. The FDA has not defined the term ``skin substitute.'' However, the term has been used as a descriptor for certain wound care constructs that are currently approved under a BLA or PMA for treatment of burns or skin ulcers, including ulcers that appear to have failed to heal after standard of care. The intended uses of these products may include scaffold claims, reference to matrix attributes that promote endogenous cell binding, migration, differentiation, or proliferation, and/or activities mediated by matrix-associated regulatory factors that facilitate wound healing. Currently, wound care products intended to interact with the wound to facilitate, promote, or accelerate wound healing generally require approval of a BLA or, in some instances, a PMA. Approval of these products requires demonstration of safety and efficacy for the intended use, which generally requires the performance of clinical studies. So PMA-approved devices can be readily distinguished from 510(k)-cleared devices and 361 HCT/P products, which are intended mainly to cover and protect the wound. They are clinically different, provide different benefits, and would theoretically be used for patients presenting with different clinical scenarios. As discussed, PMA-approved devices also go through a much more rigorous review process before marketing as compared to the substantial equivalence requirements for 510(k)s and lack of premarket review for registered 361 HCT/Ps. This more rigorous review for PMAs, as well as differences in clinical utility, and the associated costs to manufacturers, suggests that the resources involved in furnishing these products could be distinct from 361 HCT/Ps and 510(k)s. We sought comment on our proposal to group skin substitutes (other than those approved via BLA under section 351 of the PHS Act) into three FDA categories, PMA, 510(k), and 361 HCT/P, to set payment rates. Section 1833(t)(2) requires the Secretary to establish groups so that services classified within each group are comparable clinically and with respect to the use of resources. To effectuate this categorization into a payment policy under the OPPS, we proposed to create three new APCs for HCPCS codes that describe skin substitute products organized by clinical and resource similarity. These three APCs would divide skin substitutes by their FDA regulatory pathway. Specifically, we proposed to create: APC 6000 (PMA Skin Substitute Products); APC 6001 (510(k) Skin Substitute Products); and APC 6002 (361 HCT/P Skin Substitute Products). In addition, as noted previously, we proposed to assign any skin substitutes approved through the De Novo pathway to APC 6001 (510(k) Skin Substitute Products) based on our proposed policy of categorizing products with these two regulatory statuses together. We also proposed to create three new unlisted Q- codes, one to describe skin substitute products in each approval pathway, for new skin substitute products that have received FDA approval or clearance but do not yet have their own code in effect. We proposed to create HCPCS codes Q4431 (formerly placeholder code QXXX1) (Unlisted PMA skin substitute product) and assign it to APC 6000 (PMA Skin Substitute Products); Q4432 (formerly placeholder code QXXX2) (Unlisted 510(k) skin substitute product) and assign it to APC 6001 (510(k) Skin Substitute Products); and Q4433 (formerly placeholder code QXXX3) (Unlisted 361 HCT/P skin substitute product) and assign it to APC 6002 (361 HCT/P Skin Substitute Products). We proposed to create these unlisted codes to prevent delays in Medicare payments for new FDA-approved or cleared skin substitute products. We note that unlisted codes should only be reported when there is no other existing CPT or HCPCS code that adequately describes the service being performed. We note that device pass-through payment status would still be available to new skin substitutes that meet the pass-through payment criteria in the hospital outpatient setting. However, while skin substitutes approved under device pass-through payment status are currently assigned to the high-cost category, because our proposal would eliminate the low- and high-cost groups, we proposed to pay for skin substitutes approved under device pass-through payment status consistent with other devices approved under that payment pathway. For the purposes of eligibility of skin substitutes for transitional drug pass-through payment, we proposed to define the term ``biological'' consistent with our interpretation of the term under section 1847A of the Act. Under this proposal, skin substitutes with an approved BLA would be considered under transitional drug pass-through payment status and skin substitutes with PMA or 510(k) clearance would continue to be evaluated under transitional device pass-through payment status. See section IV.A. of this final rule with comment period for more information on device pass-through payments under the OPPS and see [[Page 53736]] section V.A. of this final rule with comment period for more information on drug pass-through payments under the OPPS. Comment: Many commenters support grouping skin substitutes based on their FDA regulatory categories, viewing it as a clear, logical, and transparent approach. They believe this method acknowledges the different levels of scientific rigor and evidence required for each pathway and can serve as a surrogate for CMS' own evidence review. This framework would allow CMS to differentiate payment over time based on product characteristics and clinical value, which could incentivize competition and innovation. Some suggest a tiered payment structure where products with more rigorous review (like PMA) receive the highest rates, followed by 510(k) and then 361 HCT/P products. One commenter noted that utilizing FDA's existing regulatory paths and associated compliance activities avoids unnecessary duplication of product assessment resources. Response: We appreciate the commenters for their support. Comment: Many commenters opposed using FDA pathways to determine payment, stating that regulatory status does not correlate with clinical effectiveness, outcomes, or resource use. Some commenters noted that none of the skin substitute products approved via the PMA pathway have indications for wound healing in their Instructions for Use or FDA intended use/indications. They point out that some older PMA devices have outdated clinical data and may not be superior to newer 361 HCT/P products or products cleared via the 510(k) pathway. Several commenters stated that 510(k) clearance follows a less intensive pathway than PMA but emphasized that the FDA would never permit any device for market use unless the 510(k) submission sufficiently demonstrates patient safety and clinical efficacy. Some commenters noted that receiving 510(k) clearance does not imply inferior quality to a PMA product, and that it is inappropriate to consider a PMA product superior simply because it went through more testing. Another commenter explained that a 510(k) device can sometimes be superior to a PMA device for the same indication despite the less rigorous approval process, due to technological advancements, improved materials and design, real-world data, and improved usability and safety features. Several commenters stated that establishing payment based on regulatory pathways creates potential for instability over time because FDA pathway choice is not voluntary--FDA determines which pathway is appropriate for which product. A commenter stated that CMS already determined that FDA approval pathways are not appropriate for Medicare payment policy decisions in its CY 2014 OPPS/ASC final rule with comment period, referencing the discussion at 78 FR 74933 regarding CMS' decision not to use the FDA regulatory pathway to determine OPPS skin substitute payment policy. Overall, some commenters believed this policy could entrench outdated classifications, create perverse incentives to choose products based on reimbursement instead of clinical evidence, and penalize innovative products that use newer, more streamlined regulatory pathways. Response: We disagree. The FDA's regulatory framework in this context provides an objective and consistent basis on which to group these products for purposes of development payment rates. Each regulatory path is distinct and provides a specific level/type of information regarding product content and activity that CMS can leverage to inform payment rate decisions. For example, registered 361 HCT/Ps are not approved, cleared or licensed by FDA. There is no premarket review, and manufacturing controls are focused on prevention of infectious disease transmission. These products are often dressings generally intended only to cover and protect a wound. They are not intended to act on the wound to mediate, facilitate, or accelerate wound healing. Similarly, 510(k)-cleared devices \106\ relevant to this policy generally are dressings intended only to act as a physical cover to protect a wound, to absorb exudate, and to maintain appropriate moisture balance within the wound. As for 361 HCT/Ps relevant to this policy, activity claims are typically limited to that of a physical covering or wrap. They are also not intended to act on the wound to mediate, facilitate, or accelerate wound healing. The 510(k) review assesses equivalence to other 510(k) products and generally does not evaluate activities that otherwise require a PMA or BLA. PMA-approved wound care products generally are intended to go beyond a simple wound cover to provide some type of direct treatment effect. The intended uses of these products may include physical scaffold claims or reference to structural matrix attributes that promote endogenous cell binding, migration, differentiation, or proliferation. Currently, wound care products intended to interact with the wound to facilitate, promote, or accelerate wound healing generally require approval of a BLA or a PMA when it meets the statutory definition of a device. As an example, Integra[supreg] Wound Matrix is indicated for the treatment of certain wounds. Approval of these products requires demonstration of safety and efficacy for the intended use, which generally requires the performance of clinical studies. A determination of pathway is informed, in part, by a sponsor's desired indications and ability to prove them. --------------------------------------------------------------------------- \106\ A 510(k) is a premarket submission made to the FDA generally by the manufacturer of a new device to demonstrate that the device to be marketed is substantially equivalent to a legally marketed device that is not subject to premarket approval (sections 510(k) and 513(i) of the FD&C Act). --------------------------------------------------------------------------- Notably, unless a product has obtained approval through a BLA, non- homologous use marketing claims are not allowed. Such claims would directly contradict the regulatory status of registered 361 HCT/Ps, because of the criteria in 21 CFR 1271.10(a)(2). Similarly, 510(k)- cleared devices relevant to this policy generally are dressings intended only to act as a physical cover to protect a wound, to absorb exudate, and to maintain appropriate moisture balance within the wound. Descriptions of purported biological healing factors in these products have not been evaluated by FDA; and there is no guarantee that these factors are present or active and, if present, their concentration because these products are not requires to have undergone purity or potency assessment performed by FDA. Biological products can differ greatly based on their source material and manufacturing, and it is therefore difficult to generalize any conclusions about their safety and effectiveness beyond those allowed by FDA. Finally, while we have no obligation to categorize products based on the FDA's current regulatory framework, in this case, we have determined that the FDA regulatory categories provide an appropriate level of distinction for a heterogeneous category of products that exhibit clinical and resource variability for purposes of setting payment rates. This methodology can ultimately improve the accuracy of the relative value units under the PFS while also being predictable and efficient. Comment: Several commenters emphasized that CMS should acknowledge post-FDA clinical investment if considering FDA pathways as a basis for categorization. One commenter noted investing more than $7.5 million over 6 plus years for two seminal RCTs, stating such investment in post-FDA studies alone [[Page 53737]] exceeds application fees of both PMA and BLA products but is not captured in CMS' FDA pathway analysis. Commenters stated that if an overly generalized distinction is drawn between products approved under different pathways, CMS risks disincentivizing manufacturers from further developing clinical evidence and continuing to innovate improved skin substitute products. Response: We encourage those entities that have made investments in clinical research to work with the FDA to determine if these studies are sufficient to support approval or clearance through the appropriate FDA regulatory pathway and to ensure that essential manufacturing information and controls are available to support approval of a PMA or BLA. Comment: Several commenters noted that regulatory pathways for skin substitutes have evolved significantly over time, and since CMS does not oversee FDA regulatory pathways, future changes by FDA could inadvertently affect categorization. Response: We understand that refinements in categorizations for this policy could be warranted in the future and would, at a minimum, address any potential changes through notice and comment rulemaking. Comment: Commenters generally supported the use of transitional pass-through (TPT) and other payment pathways, like New Technology Add- on Payments (NTAP), to pay for eligible skin substitute products. One commenter requested that we establish a dedicated pass-through pathway for tribally manufactured skin substitute products. With regard to the non-facility setting, several commenters urged CMS to leverage existing programs like NTAP and TPT or create a new, parallel program to NTAP/TPT that would provide temporary add-on payments for innovative products used in the physician office setting to ensure site neutrality for new technologies. Response: We appreciate these comments. We reiterate that drug and device transitional pass-through are available pathways for eligible skin substitute products. With regard to exploring additional payment pathways, we will take commenters' suggestions into consideration as we consider how to incentivize innovation in future rulemaking. After careful consideration of the comments, we are finalizing our proposal to group skin substitutes (other than those approved via BLA under section 351 of the PHS Act) into three FDA categories, PMA, 510(k), and 361 HCT/Ps, for purposes of developing payment rates in future notice and comment rulemaking, as proposed. We are also finalizing our proposals regarding drug and device transitional pass-through payments. Specifically, we are finalizing our proposal to pay for skin substitutes approved for device pass-through payment status consistent with other devices approved for device pass- through payment. For the purposes of eligibility of skin substitutes for transitional drug pass-through payment, we are finalizing our proposal to define the term ``biological'' consistent with our interpretation of the term under section 1847A of the Act. We are also finalizing our proposals to create three new APCs (APCs 6000-6002) and assign skin substitute products, unless the product is licensed under a BLA pursuant to section 351 of the PHS Act, to one of the three clinical APCs based on their FDA regulatory category. We are finalizing our proposal to create three new unlisted codes (HCPCS codes Q4431-Q4433) to describe skin substitute products that are FDA authorized or cleared but have not yet received a specific individual HCPCS or CPT code.

3. Alternative Payment Categories

As a conceptually possible alternative to our proposal to group skin substitutes based on FDA regulatory categories for purposes of payment, we considered aligning these products based on their composition, for example, whether they are non-synthetic or synthetic. Two examples provided by interested parties include grouping the products as allografts (for example, amniotic products, cellular products), xenografts (for example, collagen products derived from animals), synthetics (for example, artificial products made from various biomaterials) and grouping the products as human living/ cryopreserved tissue, dehydrated human/amniotic tissue, animal xenografts, and synthetics/polymers. However, as noted previously, skin substitutes are a heterogenous group with an increasing intersection between tissue, bioengineered, and synthetic components. With many products now including both non-synthetic and synthetic components, clear categorization of skin substitutes by composition is no longer feasible. This alternative categorization would be extremely complex to implement because it would be necessary to determine which category would be most appropriate for each individual product based on the components of its composition and an assessment of the importance of each component. In addition, it is unclear if grouping products based solely on their composition would provide accurate differentiation with respect to resource or clinical similarity for the purposes of setting an appropriate payment rate. Other alternatives we considered include grouping all products together to set a single payment rate or creating two or more categories reflecting product cost, similar to the groupings used currently to set payment rates for skin substitutes in hospital outpatient departments. While these options may offer certain operational advantages for their simplicity, neither recognizes the clinical differences among skin substitutes as reflected by their different intended uses. Paying for similar items and services at a comparable rate is a foundational aspect of our payment systems, but hospital outpatient departments paid under the OPPS and physicians and other practitioners paid under the PFS could potentially have a financial incentive to use the least expensive skin substitute or the product offering the greatest discount, which could negatively affect patient outcomes and disincentivize innovation in this space if clinical differences are not recognized and differential payments rates are not set. In addition, dividing products by cost relies on pricing set by manufacturers. Especially in light of the dramatic growth of skin substitutes' ASP-based payment limits, this method is unlikely to accurately reflect skin substitute resource costs or clinical similarity. We sought comment on whether adding certain subcategories to the three proposed FDA categories would improve clinical or resource similarity. One potential example is creating certain subcategories for payment based on one or more FDA device product codes, which is a categorization process that FDA uses to group similar products together. Other examples that have come to our attention include setting unique payment rates for 361 HCT/Ps based on the number of tissue layers (for example, one layer, two layers, and three or more tissue layers) or entirely synthetic products versus non-synthetic products for 510(k)s. If significant clinical or resource differences were identified between products in one or more of these categories, CMS could create a separate payment grouping for these products for payment purposes. We received public comments on this comment solicitation. The following is a summary of the comments we received and our responses. Comment: Many commenters advocated establishing a single payment rate for all non-BLA skin substitutes. [[Page 53738]] They stated that a single group creates a level playing field, encouraging product selection based on clinical evidence and patient need rather than on which category receives the highest reimbursement. This approach is seen as simpler and avoids the perverse incentives created by past high/low-cost buckets. Response: While a single rate would result in an administratively simpler policy and likely would result in the most savings, the differentiation of the products in this space supports subgrouping to better ensure access to products in each group. A flat payment rate also reduces the incentive to innovate, perform relevant studies, and seek an FDA approval requiring proof of wound treatment or healing. However, we can continue to evaluate the appropriateness of maintaining a single rate in future rulemaking. Comment: Many commenters oppose a single flat rate, characterizing it as a ``one-size-fits-all'' approach that fails to recognize the clinical complexity and diversity of products. They believe it would force providers to use less effective products, stifle innovation, and lead to worse patient outcomes, such as higher amputation rates. They argue that a single rate below acquisition costs for many products will destabilize office-based care and restrict access. The commenters suggested various alternative categorization schemes: Several commenters suggested a tiered system with 2-3 tiers based on product technology, clinical evidence, or cost thresholds. For example, a basic collagen matrix could be in a lower tier, while a cellular product with strong RCT data could be in a higher tier. Another proposal suggested tiers based on whether a product requires one or multiple applications to achieve wound closure. Several commenters suggested grouping products based on their composition (for example, human tissue, animal-derived, synthetic) rather than just their FDA pathway. Specific proposals included creating a distinct category for amniotic/placental tissue products or sub-categorizing 361 HCT/P products based on the number of tissue layers (for example, single-layer vs. multi-layer) to better reflect complexity and resource costs. A commenter suggested greater aggregation into broader categories like ``synthetic'' vs. ``non-synthetic'' would be sufficient. A commenter requested a reimbursement framework that provides higher payment for products supported by product-specific randomized clinical trial (RCT) data. A commenter suggested implementing a tiered system based on the strength of clinical evidence (for example, number of RCTs) rather than just regulatory pathway. Another commenter suggested using the product's FDA cleared/approved label information (for example, product description, including mechanism of action, and indications for use) as well as supporting level 1 human clinical data. Response: We agree that long-term use of a single, flat rate has the potential to create access issues for specific types of products and reduces the incentive to innovate. However, the options suggested here are also problematic. As noted previously, skin substitutes are a heterogenous group with an increasing intersection between tissue, bioengineered, and synthetic components. With many products now including both non-synthetic and synthetic components, clear categorization of skin substitutes by composition is no longer feasible. This makes this alternative extremely complex to implement because it would be necessary to determine which category would be most appropriate for each individual product based on the components of its composition and an assessment of the importance of each. In addition, it is unclear if grouping products based solely on their composition would provide accurate differentiation with respect to resource or clinical similarity for the purposes of setting an appropriate payment rate. In addition, we have concerns about the quality of many of the studies that are being produced as well as whether the results can accurately be extrapolated more broadly. As previously discussed, unless a product has obtained approval through a BLA, non-homologous use marketing claims are not allowed. Such claims would directly contradict the regulatory status of registered 361 HCT/Ps, because of the criteria in 21 CFR 1271.10(a). Similarly, 510(k)-cleared devices relevant to this policy generally are dressings intended only to act as a physical cover to protect a wound, to absorb exudate, and to maintain appropriate moisture balance within the wound. Descriptions of purported biological healing factors in these products have not been evaluated by FDA; and there is no guarantee that these factors are present and active or, if present, their concentrations, because these products have undergone no purity or potency assessment. Biological products can differ greatly based on their source and manufacturing, and it is therefore difficult to generalize any conclusions about their safety and effectiveness beyond those allowed by FDA. While section 1862(a)(1)(A) of the Act directs CMS to make determinations about what is reasonable and necessary for Medicare coverage. FDA's statutorily- defined mandate includes determining the safety, purity, and potency of products such as these. We neither have the resources nor authority to replicate these functions for payment purposes and we believe it would be an inefficient administration of government resources to duplicate them. Comment: A few commenters suggested ways to further subdivide the three FDA categories such as: Creating subcategories for 361 HCT/P products based on tissue composition or number of layers to better reflect resource costs. Creating a separate category for amniotic/placental tissue products. Creating separate categories for products using one or more of FDA device product codes. Response: We will take these comments into consideration for future rulemaking as we implement this policy and begin to gather new cost data. We also sought comments on whether products that are not in sheet form are appropriately considered skin substitutes for the purposes of providing separate payment under this policy. Examples include gel, powder, ointment, foam, liquid, or injected products listed in the nontraditional units of cc, mL, mg, and cm\3\. We requested feedback on whether these products could be appropriately used as part of the CPT administration codes in the range 15271 through 15278, despite existing CPT coding guidelines limiting their use, and how these units could be paid using the FDA regulatory category groups. For example, assuming these products were appropriate to administer using the noted CPT administration codes or other administration codes, CMS could include products listed in units of cc, mL, or cm\3\ in the applicable FDA categories and equate a single cm\2\ unit to each cc, mL, or cm\3\ for payment purposes. We sought comments on whether other administration codes could be used to appropriately describe services performed using products with units other than cm\2\. We received public comments on this comment solicitation. The following is a summary of the comments we received and our responses. Comment: Many commenters recommended CMS include non-sheet product forms (gels, powders, liquids, injectables, 3D-printed constructs etc.) in the definition of skin substitutes eligible for separate payment. They argue these products perform similar [[Page 53739]] functions to sheets, offer additional treatment options for irregularly shaped or tunneling wounds, and excluding them from separate payment would stifle innovation and limit physician choice. The commenters highlighted the following significant challenges with billing for non-sheet products under the proposed framework. The proposed per-cm\2\ payment does not align with products billed by volume (mL) or weight (mg). Commenters stressed the need for a standardized and fair unit conversion methodology (for example, mL to cm\2\ of coverage) to ensure equitable payment and prevent reimbursement misalignment. One commenter suggested that 1 mL of a particular flowable product should be paid at the rate equivalent to 10 cm\2\ of a sheet product. It is unclear if current surgical application codes (CPT 15271-15278) can be used for non-sheet products, creating a risk they may not be payable at all. The CPT manual explicitly excludes powders and injectables from these codes. Commenters recommended CMS either confirm their eligibility, create alternative CPT/HCPCS G-codes for their application, or develop a crosswalk framework pairing product form with appropriate procedure codes. Response: We agree that it is important to maintain access to non- sheet products performing similar functions to sheet skin substitutes, in cases where application of these products is part of reasonable and necessary care. These products have the potential to be payable as skin substitutes; but we agree that units, as expressed in a product's coding, are difficult to standardize for payment purposes. Therefore, we will maintain the current coding mechanism for these products and will direct the MACs to determine appropriate payment in the physician office, which is generally consistent with how these products are currently paid. In the OPPS, these products will continue to be paid through their current packaged payment mechanism. However, we will continue to evaluate payments for these products to determine if an alternative payment methodology might be better suited to non-sheet products. For now, we are also revising HCPCS code A4100 (Non-sheet form skin substitute, FDA cleared as a device, not otherwise specified (list in addition to primary procedure) to allow billing for non-sheet form skin substitute products that do not yet have a more specific code. Comment: A commenter recommended that CMS not pay separately for non-sheet products as skin substitutes. They stated that procedures for these products are reported with different CPT codes and including them could introduce new opportunities for gaming the system. Another commenter stated that for products cleared via the 510(k) pathway that are classified as gels, liquids, or particulates, reimbursement should follow the existing DME pathway, as these products are not skin substitutes and should not be reimbursed under the skin substitute payment framework. Response: We disagree that form should be the singular determinant of payment for these products. Comment: Several commenters stated that CMS has never established a formal definition of ``skin substitutes,'' leading to inconsistent policy, and recommended the agency to develop a comprehensive, clinically grounded definition. Several commenters advocated for defining products based on their clinical function rather than their initial physical form. The commenters cited the cellular, acellular, and matrix-like products (CAMPs) initiative, which defines products by their ability to support tissue regeneration. They stated that a product that forms a ``sheet scaffolding for skin growth'' in situ (in the wound bed) should be considered functionally equivalent to a product pre-packaged as a sheet. Several commenters recommended that the CPT definition and CAMPS definition be adopted as standard references for skin substitute classification, eliminating outdated distinctions based on initial product form, aligning with scientific consensus, and supporting value-based care focused on clinical outcomes and regenerative functionality. Many commenters stated that the American Medical Association CPT definition of skin substitute grafts explicitly includes ``biological products that form a sheet scaffolding for skin growth,'' specifying the operative standard as whether the product forms a sheet scaffolding, not whether it is originally formulated as a sheet. Response: We recognize that skin substitutes have been described but not defined in previous rulemaking. While a formal definition would provide certain advantages, it might also prematurely and unnecessarily limit an evolving category of products. For example, definitions that require products to obtain claims of treatment or healing of wounds or scaffold claims would exclude large numbers of even sheet-form products currently considered by CMS to be skin substitutes for payment purposes. However, we will continue to consider whether a definition or one or more defining characteristics should be identified in future rulemaking. After careful consideration of the comments and given the significant challenges with billing for non-sheet products under the proposed framework, we are not finalizing changes to the current payment arrangement under the OPPS for products that are not sheet form at this time. While non-sheet products will continue to be packaged with a separately payable service for CY 2026, we will continue to explore the issue and consider whether to provide separate payment for non-sheet products under the OPPS for future rulemaking.

4. Establishing Initial Payment Rates

We proposed to establish initial payment rates for the three FDA regulatory categories based on the volume-weighted average ASP, with no additional markup, for skin substitute products in each category as submitted by manufacturers, when available. We developed initial payment rates for each group based on the weighted, per-unit average of ASPs for the fourth quarter of calendar year 2024. These initial payment rates were listed in the file titled ``CY 2026 PFS Proposed Rule Skin Substitute Products by FDA Regulatory Category--Updated 08/ 11/2025'' on the CMS website under downloads for the CY 2026 PFS proposed rule at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html. When ASP was not available, we used the MUC, which we currently use to determine the high-cost/low-cost status for each skin substitute product in the hospital outpatient setting to calculate the proposed initial rates. We considered using only the MUC data to calculate payment rates for these products. However, when ASP is reported, it may serve as a better estimate of cost across both settings as the ASP reflects sales to physicians as well as hospitals. We sought comment on our proposal to calculate payment rates for skin substitute products in each of the three FDA regulatory categories using ASP, or MUC when ASP is not available, using per-unit averaged pricing data from the fourth quarter of 2024. We also sought comments on whether these calculations, if finalized, should be updated with the most recently available data at the time the final rule is drafted. We received public comments on these proposals. The following is a [[Page 53740]] summary of the comments we received and our responses. Comment: A few commenters supported prioritizing ASP data but raised concerns about the reliability of MUC data as a fallback option. These commenters stated that hospital outpatient MUC is less accurate than ASP data submitted in compliance with statute and regulation, citing longstanding challenges with hospital charge compression where reported charges often do not reflect actual acquisition costs. A commenter noted that in some cases CMS did not use ASP data reported to CMS to set Medicare payment limits and recommended the agency to rely on reported ASP data whenever available, given that manufacturers submit this information quarterly in accordance with statutory requirements established by the Consolidated Appropriations Act, 2021. Response: When ASP is available and accurately reported, we generally agree that it may serve as a better estimate of acquisition cost across both settings as the ASP reflects sales to physicians as well as hospitals and is net of certain discounts. However, as discussed in the CY 2026 PFS final rule, we have had concerns with the accuracy of some reported ASP data; specifically, that manufacturers could be classifying certain costs as bona fide service fees (BFSFs) when they should instead be classified as price concessions, which would artificially inflate ASP. Additionally, we cannot expect that all manufacturers of skin substitute products will continue to report ASP data to CMS each quarter. We disagree with the statement that the outpatient hospital MUC is an inaccurate measure of actual acquisition costs. We use cost-to-charge ratios specifically to account for variations in hospital markup, and our use of MUC in this case is consistent with how we price other products in hospital outpatient departments. MUC is a useful alternative based on actual claims data when the ASP is not available. Generally, with limited exceptions, when ASP data was available for a product, it was used to calculate a Medicare Part B payment limit and published on the ASP drug pricing files. An exception is for diagnostic radiopharmaceuticals that are above the packaging threshold, which use MUC. However, for the purposes of this policy, payment rates were determined using pricing for the 361 HCT/P products only. Comment: A few commenters expressed concern that using ASP without markup removes appropriate overhead and handling costs. They noted that drugs and biologicals payable under Medicare Part B are statutorily paid at ASP+6 percent, and using ASP alone eliminates legitimate indirect costs from both OPPS and MPFS systems. Response: We appreciate these comments and note that overhead costs related to application of these products are included in the facility fees or PE RVUs for the application procedures. A recent Office of the Inspector General report \107\ found that, in the third quarter of 2024, a typical beneficiary received 82 units of skin substitutes, meaning that the typical $74 add-on amount per unit alone was worth over $6,000 per patient. Notably, hospitals have been managing these products without separate markup for years through bundled payments. --------------------------------------------------------------------------- \107\ Office of Inspector General, U.S. Department of Health and Human Services. Medicare Part B Payment Trends for Skin Substitutes Raise Major Concerns About Fraud, Waste, and Abuse. September 10, 2025. --------------------------------------------------------------------------- Comment: A commenter recommended using the arithmetic mean unit cost (AMUC) for products without an ASP, rather than the geometric mean (MUC), to better align with the ASP calculation methodology. Conversely, another recommended using a volume-weighted geometric mean for the overall calculation because it is less influenced by extreme outliers. Response: We appreciate the commenters for the additional information and may consider these alternatives in future rulemaking. Comment: A few commenters supported using Q4 2024 ASP data as the foundation for CY 2026 rate calculations. Response: CMS thanks commenters for their support. Comment: Several commenters criticized the use of Q4 2024 ASP data. Some suggested using data from before the recent dramatic increases in price (for example, CY 2019, 2022, 2023, or Q4 2023) to establish a more reasonable baseline free from market distortions. Other commenters stated that more current data (for example, Q3 2025) should be used to reflect real-time market conditions, reasoning that using older data could introduce a systemic underpayment. Response: We agree that much earlier datasets (for example, CY 2019) do not reflect a significant portion of the recent growth in products and payments for this class of products. However, these datasets also do not reflect many new products that might represent quality additions to the market. To avoid this issue, we instead calculated initial rates using hospital outpatient utilization to weight how much each product's price contributes to the final payment rates for skin substitutes. In this setting, skin substitutes are currently paid in two groups (high- and low-cost) to incentivize cost- effective product selection. No similar incentive currently exists in the non-facility setting for physicians and other suppliers billing under the PFS. That is why we consider the hospital outpatient utilization a better source to weight the average among the products. We used the fourth quarter of 2024 because it was the most recent, substantially complete quarter of data and the most complete ASP reporting is typically in the fourth quarter of each year. Finally, use of a later quarter's file would not have allowed us to match up time periods for utilization patterns, and interested parties were given an opportunity to review and comment on that proposed rate. After careful consideration of the comments, we are finalizing our proposal to establish PE RVUs and initial payment rates for skin substitute products in each of the three FDA regulatory categories using ASP, or MUC when ASP is not available, using per-unit averaged pricing data from the fourth quarter of 2024 as proposed. As we proposed to implement this policy for CY 2026 in a site- neutral manner across both the non-facility setting under the PFS and hospital outpatient setting under the OPPS, we included all products used in either setting to calculate the rates. However, when product- specific utilization across both settings is used to calculate volume- weighted average payments, the result is an apparent rank order anomaly; despite having a more rigorous regulatory review process and receiving indications to treat and heal wounds, the PMA category has the lowest average payment. We are concerned that the use of the novel pricing practices noted above has resulted in a decoupling of actual resource costs from the ASP. To address this, as a short-term measure, we proposed to weight the product-specific utilization in calculating the proposed rates using the proportions from only the hospital OPPS data and establish, for CY 2026, a single payment rate that would apply to all skin substitute products in the three FDA regulatory categories, or APCs. We believe the OPPS utilization data may better predict utilization patterns under our proposed policies for non-facility settings because, similar to our proposals, these products are already grouped together for payment purposes under the OPPS. By grouping skin substitutes into high- and low-cost groups in the OPPS, hospitals are [[Page 53741]] incentivized to choose either the lowest-cost, clinically appropriate product in the low-cost group or the lowest-cost, clinically appropriate product in the high-cost group. No similar incentive currently exists in the non-facility setting for physicians and other suppliers billing under the PFS. As the proposed policies are intended to mitigate the current patterns of use in the non-facility setting by establishing payment rates for the products in groups instead of individually, we do not believe it would reflect the expected resource costs involved in providing care if we were to base the initial rates on utilization data from the non-facility setting that may have been skewed by aggressive and/or improper billing practices that would be less likely to exist under our policies. For these reasons, we proposed to initially use hospital outpatient utilization to weigh how much each product's price contributes to the proposed payment rates for skin substitutes cleared through the 510(k) pathway, registered 361 HCT/Ps, or approved under a PMA. We sought comments on the use of these product utilization patterns to set payment rates. We received public comments on this proposal. The following is a summary of the comments we received and our responses. Comment: Several commenters, including MedPAC, strongly support using only OPPS utilization data to set the initial rate. They agree with CMS that utilization data from the physician office setting (PFS) has been distorted by profiteering practices of certain skin substitute product manufacturers. They believe OPPS data is a better predictor of use patterns under a grouped payment approach because hospitals are already incentivized to choose lower-cost products within the existing high/low-cost categories. Response: We thank commenters for their support. Comment: A majority of commenters strongly opposed the exclusion of physician office data, arguing that this methodology is flawed, biased, and not representative of real-world practice. They make several key points: The vast majority of skin substitute utilization (nearly 90% in Q4 2024) occurs in the physician office setting, so excluding data from the predominant site of service is unreasonable. OPPS data is itself skewed. The current bundled payment system in hospitals disincentivizes the treatment of larger wounds in the hospital setting and the use of more advanced, higher-cost products, artificially driving down the average cost in that setting.