PRACTICE RESOURCES > Regulation/AUA Positions, Letters, and Talking Points > HCFA Regarding Final Rule on Hospital Outpatient Payment System

HCFA Regarding Final Rule on Hospital Outpatient Payment System

June 6, 2000

Ms. Nancy-Ann Min DeParle
Health Care Financing Administration
Department of Health and Human Services
Attention: HCFA-1005-FC
P.O. Box 8013
Baltimore, MD 21244-8013

Re: HCFA-1005-FC—Medicare Program; Prospective Payment System for Hospital Outpatient Services; Final Rule.

Dear Ms. DeParle:

On behalf of the American Urological Association (AUA), representing 9,200 American urologists, I am pleased to submit comments on the final rule implementing the Medicare prospective payment system (PPS) for hospital outpatient department (HOPD) services. This final rule contains many positive changes to proposed provisions that would have jeopardized beneficiary access to important urologic procedures in the outpatient setting. Nevertheless, there are still some issues of concern to urologists and their Medicare patients, which are explained below.

I. Transitional Pass-through for Additional Costs of Innovative Medical Devices, Drugs and Biologicals Mandated by the 1999 Balanced Budget Refinement Act (BBRA).

We are pleased that HCFA has approved certain chemotherapy drugs, brachytherapy seeds and penile prostheses to receive separate payment under the BBRA provisions, as we expressed concern in our proposed-rule comments that beneficiary access to these items would be jeopardized due to inadequate reimbursement. We are also pleased that HCFA is continuing to consider requests from manufacturers to add additional items to the pass-through list. However, it has come to our attention that HCFA is categorizing items for pass-through and new technology payments based on particular brand names of products. We strongly disagree with this classification system, which arbitrarily favors some companies and disadvantages others, and urge HCFA to immediately discontinue this system and instead create general product categories for pass-through items.

In addition, beneficiary access to the following urologic procedures remains at risk unless changes are made to the current rules:

  1. BPH Heat Therapy Treatments

    In our proposed-rule comments, we pointed out that the following procedures were erroneously placed in APC 524 (now APC 163) based on body system and not the resources required to perform the procedures:

    • CPT® 52647 - non-contact laser coagulation of prostate, using the interstitial laser coagulation (ILC) technique
    • CPT® 53850 - transurethral destruction of prostate tissue by microwave thermotherapy (TUMT)
    • CPT® 53852 - transurethral destruction of prostate tissue by radiofrequency thermotherapy (TUNA)

    Because hospitals incur significant capital and disposable costs when providing the venue for these services, and based on comments received from industry and from physicians who perform these procedures, the proposed HOPD payment rate for these procedures was too low to allow recovery of these costs. Therefore, we gave HCFA detailed break downs of the resource costs of these procedures as well as a June 1998 analysis by the Maryland Cost Review Commission of the costs associated with performing TUMT ($2,626), and we urged HCFA to use the data to derive payments for these codes that factor in the actual resource costs of providing the procedures. Furthermore, we reasoned that this would most likely result in the movement of these codes to an APC group with a higher payment, or creation of one or more new APC groups. After reviewing the AUA's and other comments on this issue, HCFA agreed that these procedures are different from the other procedures in APC 163 and placed them into APC 980, new technology.

    We are pleased that HCFA placed TUMT and TUNA into APC 980, and that ILC will now also be placed into APC 980 in time for the July 1 changes to the system. However, it is still unclear how HCFA derived the payment rate of $1,875 for this APC and we are concerned that a flawed methodology will limit the ability of hospitals to recover their costs for these procedures. While HCFA acknowledges in the rule (page 18477) that one commenter provided data showing that TUMT has a total cost of $2,623, it goes on to explain that payment rates for the new technology APCs are established based on the midpoint of ranges of possible costs.

    Additionally, we have learned that HCFA used a 60 percent labor to cost ratio in deriving the payment levels. However, this type of cost breakdown does not apply to the thermal therapies, all of which have expensive disposables. The Medicare payment of $1,875 falls well below the cost reported by the AUA and industry and cited by HCFA in the final rule, and also falls well below what Medicare is currently paying. If this payment is not corrected, patient access to these new technologies could suffer.

  2. Ureteroscopy with Lithotripsy

    We disagree with the final rule's placement of CPT® code 52337 into APC 162-Level III Cystourethroscopy and Other Genitourinary Procedures, with a payment rate of $848.04. In the proposed rule, this procedure was grouped into Level IV Cystourethroscopy and Other Genitourinary Procedures (APC 524) with a payment rate of $1,398.62. Although this change results in a $550.58 reduction in payment for this code, there is no explanation anywhere in the rule as to why HCFA made the change.

    We assume HCFA originally placed this code into the Level IV cystourethroscopy group based on resource costs, as the procedure requires the use of expensive capital equipment such as holmium lasers as well as endoscopic devices to generate and deliver the energy required to fragment kidney stones intracorporealy. Furthermore, we assume it may have been an error that caused the code to be moved into a different APC in the final rule, and we are concerned that if this mistake is not corrected, Medicare beneficiaries with stones that are best treated using intracorporeal shock wave lithotripsy may be denied access to treatment in the proper setting.

    This is important, as there is a subset of kidney stones in the ureter that respond most favorably to treatment using ureteroscopy with lithotripsy. For instance, the AUA's Clinical Practice Guidelines on the Management of Ureteral Calculi say that shock wave lithotripsy (SWL) and ureteroscopy (URS) with lithotripsy are both acceptable treatment choices of treating stones of one cm or less in the distal ureter:

    SWL and URS are each effective for management of distal ureteral stones. Each has advantages and disadvantages. SWL is minimally invasive and can often be performed either without anesthesia or under intravenous sedation, but may require multiple primary treatments for adequate fragmentation and is more likely to require ancillary treatment. URS has a higher success rate, with the least risk of requiring multiple treatments and the least risk of an ancillary procedure, but is more invasive than SWL.

    Also, for stones greater than one cm in the distal ureter, the guidelines say: "Large stones in the ureter must be fragmented prior to ureteroscopic extraction, and SWL must fragment large stones into passable fragments. Such stones will likely require more SWL treatments than will smaller stones, and URS may be preferable when such cases can be anticipated."

    For that reason, if hospitals are not able to recover their costs for the technology necessary to treat these stones, Medicare beneficiaries may have to undergo multiple courses of less effective treatments or be admitted to the hospital, which could both result in higher total Medicare costs. At least one hospital has already informed physicians that unless this payment changes, it will no longer fill any requests for holmium lasers (see attachment one).

    Therefore, we request that HCFA investigate this matter and move the procedure back into its original group of Level IV Cystourethroscopy and Other Genitourinary Procedures (APC 162) in time for the October 1, 2000 update to the PPS. Also, if HCFA is unable to correct this error by October 1, payment at the higher level should at least be made retroactive to October 1.

  3. Prostate Cryosurgery

    HCFA's recently-released list of additional codes subject to pass-through or new technology payments includes G0160 - cryoablation, prostate, in APC 981 with a payment rate of $2,249.80. According to information we have from a cryosurgery equipment manufacturer and from HCFA's own cost estimates, this payment rate does not cover the hospital's cost or the disposable costs of the equipment used for this procedure. For example, HCFA's February 1, 1999 Decision Memorandum announcing the National Coverage Decision for cryosurgery ablation of the prostate says, "The cost of cryosurgery is approximately $13,500." Also, according to one industry representative, the average hospital cost of performing outpatient cryosurgery is $9,500 (we assume that HCFA's rate of $13,500 includes the physician payment, which narrows the gap between these two cost figures).

    Therefore, because there is no historical claims or cost data for the procedure, we urge HCFA to reimburse this procedure using a pass-through payment as opposed to a new technology payment. This would allow time to collect data in order to set a more accurate payment rate that will not jeopardize beneficiary access to this procedure.

  4. Sling Operation for Incontinence

    Expensive supplies such as sling fixation kits and tissue are required to perform CPT® code 57288. However, there is currently no mechanism to receive separate reimbursement for these supplies, which means that hospitals may not be able to make these items available for incontinence surgery. We have learned that manufacturers of these items have already submitted applications requesting pass-through payments for these items, and urge HCFA to approve these items for pass-through payments and add them to the list as soon as possible.

II. Payment Rate for CPT® Code 50590, (APC 169)

We seek clarification on the payment rate for ESWL and reassert our proposed-rule comment that, to provide the most appropriate payment rate for performing ESWL in an outpatient setting, HCFA should use the 1993 Moore Group cost study, adjusted for inflation, as a basis for setting the HOPD payment for ESWL. Based on the fact that the payment rate for ESWL has actually decreased, it is clear that HCFA did not use the Moore Group cost study or make any inflation adjustments to the rate. However, the final rule lacks any explanation of the derivation of the payment rate or any response to proposed-rule comments regarding this matter, which is disappointing considering this is an issue very important to urologists and their patients.

Thank you for considering our comments. If you have any questions, please call Robin Hudson, Manager of Regulatory Affairs, at 410-689-3762 or


Irwin N. Frank, MD, F.A.C.S.
American Urological Association

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