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. Final ASC Payment for Covered Surgical Procedures a. Background

Our ASC payment policies for covered surgical procedures under the revised ASC payment system are described in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66828 through 66831). Under our established policy, we use the ASC standard ratesetting methodology of multiplying the ASC relative payment weight for the procedure by the ASC conversion factor for that same year to calculate the national unadjusted payment rates for procedures with payment indicators “G2” and “A2.” Payment indicator “A2” was developed to identify procedures that were included on the list of ASC covered surgical procedures in CY 2007 and, therefore, were subject to transitional payment prior to CY 2011. Although the 4-year transitional period has ended and payment indicator “A2” is no longer required to identify surgical procedures subject to transitional payment, we have retained payment indicator “A2” because it is used to identify procedures that are exempted from the application of the office-based designation.

Payment rates for office-based procedures (payment indicators “P2,” “P3,” and “R2”) are the lower of the PFS nonfacility PE RVU-based amount or the amount calculated using the ASC standard rate setting methodology for the procedure. As detailed in section XIII.C.3.b. of this final rule with comment period, we update the payment amounts for office-based procedures (payment indicators “P2,” “P3,” and “R2”) using the most recent available PFS and OPPS data. We compare the estimated current year rate for each of the office-based procedures, calculated according to the ASC standard rate setting methodology, to the PFS nonfacility PE RVU-based amount to determine which is lower and, therefore, would be the current year payment rate for the procedure under our final policy for the revised ASC payment system (Sec. 416.171(d)).

The rate calculation established for device-intensive procedures (payment indicator “J8”) is structured so only the service (non- device) portion of the rate is subject to the ASC conversion factor. We update the payment rates for device-intensive procedures to incorporate the most recent device offset percentages calculated under the ASC standard

ratesetting methodology, as discussed in section XIII.C.4. of this final rule with comment period.

In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75081), we finalized our proposal to calculate the CY 2014 payment rates for ASC covered surgical procedures according to our established methodologies, with the exception of device removal procedures. For CY 2014, we finalized a policy to conditionally package payment for device removal procedures under the OPPS. Under the OPPS, a conditionally packaged procedure (status indicators “Q1” and “Q2”) 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 covered surgical procedure, HCPCS codes that are conditionally packaged under the OPPS are generally packaged (payment indicator “N1”) under the ASC payment system. Under the OPPS, device removal procedures are conditionally packaged and, therefore, would be packaged under the ASC payment system. There is no Medicare payment made when a device removal procedure is performed in an ASC without another surgical procedure included on the claim; therefore, no Medicare payment would be made if a device was removed but not replaced. To ensure that the ASC payment system provides separate payment for surgical procedures that only involve device removal-- conditionally packaged in the OPPS (status indicator “Q2”)--we have continued to provide separate payment since CY 2014 and assign the current ASC payment indicators associated with these procedures. b. Update to ASC Covered Surgical Procedure Payment Rates for CY 2026

We proposed to update ASC payment rates for CY 2026 and subsequent years using the established rate calculation methodologies under Sec. 416.171 and using our definition of device-intensive procedures, as discussed in section XIII.C.4. of this final rule with comment period. As the proposed OPPS relative payment weights are generally based on geometric mean costs, we proposed that the ASC payment system will generally use the geometric mean cost to determine proposed relative payment weights under the ASC standard methodology. We proposed to continue to use the amount calculated under the ASC standard ratesetting methodology for procedures assigned payment indicators “A2” and “G2”.

We proposed to calculate payment rates for office-based procedures (payment indicators “P2,” “P3,” and “R2”) and device-intensive procedures (payment indicator “J8”) according to our established policies and to identify device-intensive procedures using the methodology discussed in section XIII.C.4. of this final rule with comment period. Therefore, we proposed to update the payment amount for the service portion (the non-device portion) of the device-intensive procedures using the standard ASC ratesetting methodology and the payment amount for the device portion based on the proposed CY 2026 device offset percentages that have been calculated using the standard OPPS APC ratesetting methodology. We proposed that payment for office- based procedures would be at the lesser of the proposed CY 2026 PFS nonfacility PE RVU-based amount or the proposed CY 2026 ASC payment amount calculated according to the ASC standard ratesetting methodology.

As we did for CYs 2014 through 2025, for CY 2026, we proposed to continue our policy for device removal procedures, such that device removal procedures that are conditionally packaged in the OPPS (status indicators “Q1” and “Q2”) will be assigned the current ASC payment indicators associated with those procedures and will continue to be paid separately under the ASC payment system. c. Final Payment for ASC Add-On Procedures Eligible for Complexity Adjustments Under the OPPS

In this section, we discuss the policy to provide increased payment under the ASC payment system for combinations of certain “J1” service codes and add-on procedure codes that are eligible for a complexity adjustment under the OPPS. (1) OPPS C-APC Complexity Adjustment Policy

Under the OPPS, complexity adjustments are utilized to provide increased payment for certain comprehensive services. As discussed in section II.A.2.b. of this final rule with comment period, we apply a complexity adjustment by promoting qualifying paired “J1” service code combinations or paired code combinations of “J1” services and add-on codes from the originating Comprehensive APC (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. A “J1” status indicator refers to a hospital outpatient service paid through a C-APC. We package payment for all add-on codes, which are codes that describe a procedure or service always performed in addition to a primary service or procedure, into the payment for the C-APC. However, certain combinations of primary service codes and add-on codes may qualify for a complexity adjustment.

We apply complexity adjustments when the paired code combination represents a complex, costly form or version of the primary service when the frequency and cost thresholds are met. The frequency threshold is met when there are 25 or more claims reporting the code combination, and the cost threshold is met when there is a violation of the 2 times rule, as specified in section 1833(t)(2) of the Act and described in section III.A.2.b. of this final rule with comment period, in the originating C-APC. These paired code combinations that meet the frequency and cost threshold criteria represent those that exhibit materially greater resource requirements than the primary service. 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 that are either assigned to status indicator “J1” or add-on codes to determine if there are paired code combinations that meet the complexity adjustment criteria. Once we have determined that a particular combination of “J1” services, or combinations of a “J1” service and add-on code, 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 previously, we promote the claim 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 C-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).

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 the primary service code reported with the add-on code 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 of 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). (2) CY 2026 ASC Special Payment Policy Proposal for OPPS Complexity- Adjusted C-APCs

For CY 2026, we proposed to continue the special payment policy and methodology for OPPS complexity-adjusted C-APCs that was finalized in the CY 2023 OPPS/ASC final rule with comment period (87 FR 72078 through 72080).

For those ASC complexity adjustment codes for which we have claims data, we proposed to use the claims data to calculate the code combination utilization and estimated payments for the ASC payment system budget neutrality calculations for CY 2026. The ASC complexity adjustment budget neutrality calculations are discussed further in section XIII.H.2.a. of this final rule with comment period. The full list of the proposed ASC complexity adjustment codes for CY 2026 can be found in the CY 2026 proposed ASC Addendum AA and the supplemental policy file, which also includes both the existing ASC complexity adjustment codes and proposed additions and published on the CMS website at https://www.cms.gov/medicare/medicare-fee-for-service-payment/ascpayment/asc-regulations-and-notices. Since the complexity adjustment assignments change each year under the OPPS, the proposed list of ASC complexity adjustment codes eligible for the proposed payment policy changed slightly from the previous year. Additionally, since complexity adjustment assignments may change between the proposed rule and final rule under the OPPS, the final list of ASC complexity adjustment codes eligible for this payment policy may be slightly different than the proposed list of ASC complexity adjustment codes.

We received public comments on these proposals. The following is a summary of the comments we received and our responses.

Comment: A commenter recommended adjustments to our device- intensive determination for ASC complexity adjustment codes. The commenter stated that the current methodology fails to recognize the device-intensive status of add-on codes associated with significant device costs and that failure to capture these costs could present a financial challenge for ASCs who wish to offer these services in the setting that is preferred by many beneficiaries.

Response: We appreciate the commenter's recommendation. We did not propose to calculate the device portion of an ASC complexity adjustment code based on both the device costs of packaged add-on procedures and the device costs of the primary procedure but we will take this suggestion into consideration for future rulemaking.

After consideration of public comments we received, we are finalizing the ASC special payment policy for OPPS complexity-adjusted C-APCs, as proposed. The final ASC complexity adjustment codes, based on the most recent data available for this final rule with comment period, can be found on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/ambulatory-surgicalcenter-asc/annual-policy-files. Existing ASC complexity adjustment codes that do not meet our criteria for separate payment for CY 2026 because the code combination is not eligible for a complexity adjustment under the OPPS for CY 2026 will be non-payable and assigned a status indicator of “B5”--“Alternative code may be available; no payment made”--for CY 2026. Additionally, proposed ASC complexity adjustment codes that met our criteria based on data available for the CY 2026 OPPS/ASC proposed rule but do not meet our criteria based on claims data available for this final rule with comment period will not be finalized. d. Final Low Volume APCs and Limit on ASC Payment Rates for Procedures Assigned to Low Volume APCs

As stated in section XIII.D.1.b. of the CY 2025 OPPS/ASC proposed rule, the ASC payment system generally uses OPPS geometric mean costs under the standard methodology to determine proposed relative payment weights under the standard ASC ratesetting methodology.

In the CY 2022 OPPS/ASC final rule with comment period (86 FR 63743 through 63747), we adopted a universal Low Volume APC policy for CY 2022 and subsequent calendar years. Under our policy, we expanded the low volume adjustment policy that is applied to procedures assigned to New Technology APCs to also apply to clinical and brachytherapy APCs. Specifically, a clinical APC or brachytherapy APC with fewer than 100 claims per year would be designated as a Low Volume APC. For items or services assigned to a Low Volume APC, we use up to 4 years of claims data to establish a payment rate for the APC as we currently do for low volume services assigned to New Technology APCs. The payment rate for a Low Volume APC or a low volume New Technology procedure would be based on the highest of the median cost, arithmetic mean cost, or geometric mean cost calculated using multiple years of claims data.

Based on claims data available for the CY 2026 OPPS/ASC proposed rule, we proposed to designate six brachytherapy APCs and four clinical APCs as Low Volume APCs under the ASC payment system. The four clinical APCs and six brachytherapy APCs met our criteria of having fewer than 100 single claims in the relevant claims year (CY 2024 for the CY 2026 OPPS/ASC proposed rule) and therefore, we proposed that they would be subject to our universal Low Volume APC policy and the APC cost metric would be based on the greater of the median cost, arithmetic mean cost, or geometric mean cost using up to 4 years of claims data. Nine of the ten 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 did not receive any comments on our proposal. Based on claims data available for this final rule with comment period, we are finalizing our proposal to designate the four clinical APCs and six brachytherapy APCs shown in Table 127 as Low Volume APCs under the ASC payment system, because they continue to meet our criteria of having fewer than 100 single claims in the relevant claims year (CY 2024). Table 127 includes the CY 2024 claims available for ratesetting for each of the APCs we are finalizing to be designated as a Low Volume APCs for CY 2026. The cost statistics for our 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 at: https://www.cms.gov/medicare/payment/prospective-payment-systems/ ambulatory-surgical-center-asc/

ascregulations-and-notices; click on the relevant regulation to download the Low Volume APC cost statistics under the standard (ASC) ratesetting methodology in the “Downloads” section of the web page. [GRAPHIC] [TIFF OMITTED] TR25NO25.183

2. Payment for Covered Ancillary Services a. Background

Our payment policies under the ASC payment system for covered ancillary services generally vary according to the particular type of service and its payment policy under the OPPS. Our overall policy provides separate ASC payment for certain ancillary items and services integrally related to the provision of ASC covered surgical procedures that are paid separately under the OPPS and provides packaged ASC payment for other ancillary items and services that are packaged or conditionally packaged (status indicators “N,” “Q1,” and “Q2”) under the OPPS.

In the CY 2013 OPPS/ASC rulemaking (77 FR 45169 and 77 FR 68457 through 68458), we further clarified our policy regarding the payment indicator assignment for procedures that are conditionally packaged in the OPPS (status indicators “Q1” and “Q2”). Under the OPPS, 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 indicator “N1”) under the ASC payment system (except for device removal procedures, as discussed in the CY 2022 OPPS/ASC proposed rule (86 FR 42083)). Thus, our policy generally aligns ASC payment bundles with those under the OPPS (72 FR 42495). In all cases, in order for ancillary items and services also to be paid, the ancillary items and services must be provided integral to the performance of ASC covered surgical procedures for which the ASC bills Medicare.

Our ASC payment policies generally provide separate payment for drugs and biologicals that are separately paid under the OPPS at the OPPS rates and package payment for drugs and biologicals for which payment is packaged under the OPPS. However, as discussed in the CY 2022 OPPS/ASC final rule with comment period, for CY 2022, we finalized a policy to unpackage and pay separately at ASP plus 6 percent for the cost of non-opioid pain management drugs and biologicals that function as a supply when used in a surgical procedure as determined by CMS under Sec. 416.174 (86 FR 63483).

We generally pay for separately payable radiology services at the lower of the PFS nonfacility PE RVU-based (or technical component) amount or the rate calculated according to the ASC standard ratesetting methodology (72 FR 42497). However, as finalized in the CY 2011 OPPS/ ASC final rule with comment period (75 FR 72050), payment indicators for all nuclear medicine procedures (defined as CPT codes in the range of 78000 through 78999) that are designated as radiology services that are paid separately when provided integral to a surgical procedure on the ASC list are set to “Z2” so that payment is made based on the ASC standard ratesetting methodology rather than the PFS nonfacility PE RVU amount (“Z3”), regardless of which is lower (Sec. 416.171(d)(1)).

Similarly, we also finalized our policy to set the payment indicator to “Z2” for radiology services that use contrast agents so that payment for these procedures will be based on the OPPS relative payment weight using the ASC standard ratesetting methodology and, therefore, will include the cost for the contrast agent (Sec. 416.171(d)(2)).

ASC payment policy for brachytherapy sources mirrors the payment policy under the OPPS. ASCs are paid for brachytherapy sources provided integral to ASC covered surgical procedures at prospective rates adopted under the OPPS or, if OPPS rates are unavailable, at contractor-priced rates (72 FR 42499). Since December 31, 2009, ASCs have been paid for brachytherapy sources provided integral to ASC covered surgical procedures at prospective rates adopted under the OPPS.

Our ASC policies also provide separate payment for: (1) certain items and services that CMS designates as contractor-priced, including, but not limited to, the procurement of corneal tissue; and (2) certain implantable items that have pass-through payment status under the OPPS. These categories do not have prospectively established ASC payment rates according to ASC payment system policies (72 FR 42502 and 42508 through 42509; Sec. 416.164(b)). Under the ASC payment system, we have designated corneal tissue acquisition and hepatitis B vaccines as contractor-priced. Corneal tissue

acquisition is contractor-priced based on the invoice costs for acquiring the corneal tissue for transplantation. Hepatitis B vaccines are contractor-priced based on invoiced costs for the vaccine.

Devices that are eligible for pass-through payment under the OPPS are separately paid under the ASC payment system and are contractor- priced. Under the revised ASC payment system (72 FR 42502), payment for the surgical procedure associated with the pass-through device is made according to our standard methodology for the ASC payment system, based on only the service (non-device) portion of the procedure's OPPS relative payment weight if the APC weight for the procedure includes other packaged device costs. We also refer to this methodology as applying a “device offset” to the ASC payment for the associated surgical procedure. This ensures that duplicate payment is not provided for any portion of an implanted device with OPPS pass-through payment status.

In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66933 through 66934), we finalized that, beginning in CY 2015, certain diagnostic tests within the medicine range of CPT codes for which separate payment is allowed under the OPPS are covered ancillary services when they are integral to an ASC covered surgical procedure. We finalized that diagnostic tests within the medicine range of CPT codes include all Category I CPT codes in the medicine range established by CPT, from 90000 to 99999, and Category III CPT codes and Level II HCPCS codes that describe diagnostic tests that crosswalk or are clinically similar to procedures in the medicine range established by CPT. In the CY 2015 OPPS/ASC final rule with comment period, we also finalized our policy to pay for these tests at the lower of the PFS nonfacility PE RVU-based (or technical component) amount or the rate calculated according to the ASC standard ratesetting methodology (79 FR 66933 through 66934). We finalized that the diagnostic tests for which the payment is based on the ASC standard ratesetting methodology be assigned to payment indicator “Z2” and revised the definition of payment indicator “Z2” to include a reference to diagnostic services and those for which the payment is based on the PFS nonfacility PE RVU- based amount be assigned payment indicator “Z3,” and revised the definition of payment indicator “Z3” to include a reference to diagnostic services. b. Final Payment for Covered Ancillary Items and Services for CY 2026

We proposed to update the ASC payment rates and to make changes to ASC payment indicators, as necessary, to maintain consistency between the OPPS and ASC payment system regarding the packaged or separately payable status of services and the proposed CY 2026 OPPS and ASC payment rates and subsequent years' payment rates. We proposed to continue to set the CY 2026 ASC payment rates and subsequent years' payment rates for brachytherapy sources and separately payable drugs and biologicals equal to the OPPS payment rates for CY 2026 and subsequent years' payment rates.

Comment: A commenter stated that there is currently no CMS-level guidance on how MACs should establish separate payment under the ASC payment system for devices that are eligible for pass-through payment under the OPPS.

Response: Devices that are eligible for pass-through payment under the OPPS may be separately paid under the ASC payment system and are contractor-priced. Currently, MACs have been instructed to pay for such devices in the ASC setting based on invoice or cost of the approved transitional pass-through device category. While we understand that many products with different price points may use the same approved transitional pass-through device category, we rely on the MACs to efficiently process these claims such that ASCs can be paid in a timely manner for the services provided and that payment for these pass- through devices is justified with supporting documentation. We believe the current guidance provided in Chapter 14, section 50 of the Medicare Claims Processing Manual (Pub. 100-04) is sufficient.

After consideration of the public comments we received, we are finalizing our proposal to update the ASC payment rates and to make changes to ASC payment indicators, as necessary, to maintain consistency between the OPPS and ASC payment system regarding the packaged or separately payable status of services and the final CY 2026 OPPS and ASC payment rates and subsequent years' payment rates. We are also finalizing our proposal without modification to continue to set the CY 2026 ASC payment rates for brachytherapy sources and separately payable drugs and biologicals equal to the OPPS payment rates for CY 2026 and subsequent years.

Covered ancillary services and their final payment indicators for CY 2026 are listed in Addendum BB of this final rule with comment period (which is available via the internet on the CMS website). For those covered ancillary services where the payment rate is the lower of the rate under the ASC standard rate setting methodology and the PFS proposed rates (similar to our office-based payment policy), the final payment indicators and rates set forth in this final rule with comment period are based on a comparison using the final PFS rates effective January 1, 2026. For a discussion of the PFS rates, we refer readers to the CY 2026 PFS final rule with comment period which is available on the CMS website at https://www.cms.gov/medicare/payment/fee-schedules/physician/federal-regulation-notices. 3. Covered Surgical Procedures Designated as Office-Based Procedures a. Background

In the August 2, 2007 ASC final rule with comment period, we finalized our policy to designate as “office-based” those procedures that are added to the ASC Covered Procedures List (CPL) in CY 2008 or later years that we determine are furnished predominantly (more than 50 percent of the time) in physicians' offices based on consideration of the most recently available volume and utilization data for each individual procedure code and/or, if appropriate, the clinical characteristics, utilization, and volume of related codes. In that final rule, we also finalized our policy to exempt all procedures on the CY 2007 ASC list from application of the office-based classification (72 FR 42512). The procedures that were added to the ASC CPL beginning in CY 2008 that we determined were office-based were identified in Addendum AA to that final rule with payment indicator “P2” (Office-based surgical procedure added to ASC list in CY 2008 or later with PFS nonfacility PE RVUs; payment based on OPPS relative payment weight); “P3” (Office-based surgical procedures added to ASC list in CY 2008 or later with PFS nonfacility PE RVUs; payment based on PFS nonfacility PE RVUs); or “R2” (Office-based surgical procedure added to ASC list in CY 2008 or later without PFS nonfacility PE RVUs; payment based on OPPS relative payment weight), depending on whether we estimated the procedure would be paid according to the ASC standard ratesetting methodology based on its OPPS relative payment weight or at the PFS nonfacility PE RVU-based amount.

Consistent with our final policy to annually review and update the ASC

CPL to include all covered surgical procedures eligible for payment in ASCs, each year we identify covered surgical procedures as either temporarily office-based (these are new procedure codes with little or no utilization data that we have determined are clinically similar to other procedures that are permanently office-based), permanently office-based, or nonoffice-based, after taking into account updated volume and utilization data. b. CY 2026 Final Office-Based Procedures

In developing the CY 2026 OPPS/ASC proposed rule, we followed our policy to annually review and update the covered surgical procedures for which ASC payment is made and to identify new procedures that may be appropriate for ASC payment, including their potential designation as office-based. Historically, we also review the most recent claims volume and utilization data (CY 2024 claims) and the clinical characteristics for all covered surgical procedures that are currently assigned a payment indicator in CY 2025 of “G2” (Non office-based surgical procedure added in CY 2008 or later; payment based on OPPS relative payment weight) as well as for those procedures assigned one of the temporary office-based payment indicators, specifically “P2,” “P3,” or “R2” in the CY 2025 OPPS/ASC final rule with comment period (89 FR 94322 through 94326).

Our review of the CY 2024 volume and utilization data of covered surgical procedures currently assigned a payment indicator of “G2” (Non office-based surgical procedure added in CY 2008 or later; payment based on OPPS relative payment weight) resulted in the identification of one surgical procedure--CPT code 21930 (Excision, tumor, soft tissue of back or flank, subcutaneous; less than 3 cm)--that we believed met the criteria for designation as permanently office-based. The data indicated that this procedure is performed more than 50 percent of the time in physicians' offices, and the services are of a level of complexity consistent with other procedures performed routinely in physicians' offices. We have included CPT code 21930 in our list of surgical procedures to permanently designate as office-based for CY 2026 in Table 128.

As discussed in the August 2, 2007 ASC final rule with comment period (72 FR 42533 through 42535), we finalized our policy to designate certain new surgical procedures as temporarily office-based until adequate claims data are available to assess their predominant sites of service, whereupon if we confirm their office-based nature, the procedures are permanently assigned to the list of office-based procedures. In the absence of claims data, we use other available information, including our clinical advisors' judgment, predecessor CPT and Level II HCPCS codes, information submitted by representatives of specialty societies and professional associations, and information submitted by commenters during the public comment period.

In Table 153 of the CY 2025 OPPS/ASC final rule with comment period, we finalized assigning temporary office-based designations to nine surgical procedures for CY 2025 (89 FR 94325 through 94326). As discussed in section XIII.B. of the CY 2026 OPPS/ASC proposed rule (90 FR 33710 through 33713), two of the nine procedures were deleted effective April 2025--HCPCS codes G0564 and G0565. For two of the remaining seven surgical procedures, interested parties submitted information that suggested 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 its automated counterpart HCPCS C8002 (Preparation of skin cell suspension autograft, automated, including all enzymatic processing and device components (do not report with manual suspension preparation)) are not most similar to CPT code 11310 (Shaving of epidermal or dermal lesion, single lesion, face, ears, eyelids, nose, lips, mucous membrane; lesion diameter 0.5 cm or less) as we stated in the CY 2025 OPPS/ASC final rule with comment period (89 FR 94322 through 94324) since CPT code 15013 must be performed with other skin cell suspension autograft procedure codes and the entirety of the procedure--harvesting of skin, preparation and application of the skin cell suspension autograft--is not expected to be predominantly performed in an office setting. After reviewing the information and consulting with our medical officers, we agree that the entirety of the procedure is not expected to be performed in a physician office setting and that CPT code 11310 would not be an accurate crosswalk for site-of- service utilization. Therefore, as shown in Table 78 of the CY 2026 OPPS/ASC proposed rule (90 FR 33712), we proposed to permanently remove the temporarily office-based designation for CPT code 15013 and HCPCS code C8002.

We reviewed CY 2024 volume and utilization data for the remaining five surgical procedures designated as temporarily office-based in the CY 2025 OPPS/ASC final rule with comment period. As shown in Table 77 and Table 78 of the CY 2026 OPPS/ASC proposed rule (90 FR 33711 through 33712), for one of the five surgical procedures--CPT code 0864T--there are greater than 50 claims available and the volume and utilization indicated this procedure was performed predominantly in the office setting. Therefore, we proposed to no longer designate this procedure as temporarily office-based and to permanently designate this procedure as office-based and assign one of the office-based payment indicators, specifically “P2”, “P3”, or “R2.”

We did not receive any public comments on our proposed permanent office-based designations and proposal to no longer designate the procedures in Table 129 as temporarily office-based; therefore, we are finalizing our proposal to designate the procedures in Table 128 as permanently office-based beginning in CY 2026 and to no longer designate the procedures in Table 129 as temporarily office-based. BILLING CODE 4120-01-P

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For the remaining four procedures that were designated as temporarily office-based in the CY 2025 OPPS/ASC final rule with comment period and temporarily assigned one of the office-based payment indicators, specifically “P2,” “P3,” or “R2,” there were fewer than 50 claims; therefore, there was an insufficient number of claims to determine if the office setting was the predominant setting of care for these procedures. Therefore, as shown in Table 79 of the CY 2026 OPPS/ASC proposed rule (90 FR 33713), we proposed to continue to designate such procedures as temporarily office-based for CY 2026 and assign one of the office-based payment indicators. Additionally, for CY 2026, we did not propose to designate any new CY 2026 CPT codes for ASC covered surgical procedures as temporarily office-based.

We did not receive public comments on this provision, and therefore, we are finalizing our proposed temporarily office-based designation to the procedures shown below in Table 130. The procedures for which the final office-based designation for CY 2026 is temporary are also indicated by an asterisk in Addendum AA to this final rule with comment period (which is available via the internet on the CMS website at https://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ASCPayment/ASCRegulations-and-Notices).

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BILLING CODE 4120-01-C 4. Device-Intensive ASC Covered Surgical Procedures a. Background

We refer readers to the CY 2019 OPPS/ASC final rule with comment period (83 FR 59040 through 59041), for a summary of our existing policies regarding ASC covered surgical procedures that are designated as device-intensive.

In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59040 through 59043), we modified our criteria for device-intensive procedures to better capture costs for procedures with significant device costs. We adopted a policy to allow procedures that involve surgically inserted or implanted, high-cost, single-use devices to qualify as device-intensive procedures. In addition, we modified our criteria to lower the device offset percentage threshold from 40 percent to 30 percent. The device offset percentage is the percentage of device costs within a procedure's total costs. Specifically, for CY 2019 and subsequent years, we adopted a policy that device-intensive procedures would be subject to the following criteria:

All procedures must involve implantable or insertable 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. Corresponding to this change in the cost criterion, we adopted a policy that the default device offset for new codes that describe procedures that involve the implantation of medical devices will be 31 percent beginning in CY 2019. For new codes describing procedures that are payable when furnished in an ASC and involve the implantation of a medical device, we adopted a policy that the default device offset would be applied in the same manner as the policy we adopted in section IV.B.2 of the CY 2019 OPPS/ASC final rule with comment period (83 FR 58944 through 58948). We amended Sec. 416.171(b)(2) of the regulations to reflect these new device criteria.

In addition, as also adopted in section IV.B.2. of the CY 2019 OPPS/ASC final rule with comment period, to further align the device- intensive policy with the criteria used for device pass-through status, we specified, 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 42 CFR 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 any of the following:

++ 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

++ 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).

In the CY 2022 OPPS/ASC final rule with comment period (86 FR 63773 through 63775), we modified our approach to assigning device-intensive status to surgical procedures under the ASC payment system. First, we adopted a policy of assigning device-intensive status to procedures that involve surgically inserted or implanted, high-cost, single-use devices if their device offset percentage exceeds 30 percent under the ASC standard ratesetting methodology, even if the procedure is not designated as device-intensive under the OPPS. Second, we adopted a policy that if a procedure is assigned device-intensive status under the OPPS, but has a device offset percentage below the device-intensive threshold under the standard ASC ratesetting methodology, the procedure will be assigned device-intensive status under the ASC payment system with a default device offset percentage of 31 percent. The policies were adopted to provide consistency between the OPPS and ASC payment system and provide a more appropriate payment rate for surgical procedures with significant device costs under the ASC payment system.

In the CY 2023 OPPS/ASC final rule with comment period (87 FR 72078 through 72080), we finalized our policy to create certain C-codes, or ASC complexity adjustment codes that describe certain combinations of a primary covered surgical procedure as well as a packaged (payment indicator = “N1”) procedure that are otherwise eligible for a complexity adjustment under the OPPS (as listed in Addendum J). Each ASC complexity adjustment code's APC assignment is based on its corresponding OPPS complexity adjustment code's APC assignment. In the CY 2023 OPPS/ASC final rule with comment period, we stated our belief that it would be appropriate for these ASC complexity adjustment codes to qualify for device-intensive status under the ASC payment system if the primary procedure of the code was also designated as device- intensive. Under our current policy, the ASC complexity adjustment code retains the device portion of the primary procedure (also called the “device offset amount”) and not the device offset percentage. Therefore, for device-intensive ASC complexity adjustment codes, we set the device portion of the combined procedure equal to the device portion of the primary procedure and calculate the device offset percentage by dividing the device portion by the ASC complexity adjustment code's APC payment rate. Further, we apply our standard ASC payment system ratesetting methodology to the non-device portion of the ASC complexity adjustment code's APC payment rate; that is, we multiply the OPPS relative weight by the ASC budget neutrality adjustment and the ASC conversion factor and sum that amount with the device portion to calculate the ASC payment rate.

In the CY 2025 OPPS/ASC final rule with comment period, we finalized a modification to our policy regarding default device offset percentages for new codes that meet our criteria for device-intensive status. Under both the OPPS and ASC payment system, for new device- intensive procedures that lack claims data, or lack claims data from a predecessor code or a clinically-similar code that uses the same device, we apply the greater of the APC-wide device offset percentage or 31 percent (the previous default device offset percentage). We believe that an APC-wide average device offset percentage is, in most cases, a better reflection of device costs when the typical device costs of procedures assigned to such APC are significantly greater than 31 percent. This policy does not apply to new device-intensive procedures assigned to New Technology APCs. b. CY 2026 Final Device Intensive Procedures

In section V.B. of this final rule with comment period, we discuss the implementation of the Final Remedy for the 340B-Acquired Drug Payment Policy for Calendar Years 2018-2022 rule and the impact of the OPPS conversion factor on the ASC payment system. Since most ASC payment rates for surgical procedures are constructed from OPPS relative weights or the PFS unadjusted nonfacility PE RVU-based amount, the remedy's proposed prospective offset to the OPPS conversion has a very limited impact on the ASC payment system. The only impact of the proposed reduction to the OPPS conversion factor is the payment rate for device-intensive procedures under the ASC payment system. Since the ASC payment system holds device portions constant between the two settings, the device portion is the device offset percentage multiplied by the OPPS payment rate.

Historically, in our proposed rules, device portions for device- intensive procedures would be based on the proposed prospective OPPS conversion factor multiplied by the proposed prospective OPPS relative weights. However, for the CY 2026 OPPS/ASC proposed rule, we believed it would be inaccurate and inappropriate to use OPPS payment rates that have been reduced by the remedy's prospective offset since this could accumulate to have a potentially noticeable impact on ASC payment rates for certain device-intensive procedures over time. Since the ASC payment system would otherwise set the device portion in the ASC setting at the amount without the proposed offset reduction to OPPS payment rates, we believe it would not be an accurate reflection of the device costs of covered surgical procedures in the ASC setting if we were to incorporate the prospective offset that we proposed in the CY 2026 OPPS/ASC proposed rule. Further, we are concerned beneficiaries could have access issues to certain device-intensive procedures in the ASC setting if we maintained a reduction to the payment rates for device-intensive procedures for each calendar year we applied the prospective offset. Therefore, we proposed that the OPPS payment rates used for ratesetting under the ASC payment system for CY 2026 and subsequent years would not incorporate the prospective offset to the OPPS conversion factor as a result of the 340B remedy offset that we proposed to implement in the proposed rule. For the proposed CY 2026 device offset percentages, which include device offset percentages based on CY 2024 claims processed through March 31, 2025, we refer readers to Addendum FF of the CY 2026 OPPS/ASC proposed rule. Final CY 2026 device offset percentages may differ from the proposed percentages, as we rely on the most recently available claims data for the CY 2026 OPPS/ASC final rule with comment period (CY 2024 claims data processed through June 30th).

We received public comments on our proposal. The following is a summary of the comments we received and our responses.

Comment: A commenter requested that CMS use manufacturer invoices to set the OPPS and ASC device offset amounts/percentages for CPT code 64728 (placeholder code 647XX) (Decompression; median nerve at the carpal tunnel, percutaneous, with intracarpal tunnel balloon dilation, including ultrasound guidance), stating

that the device offset percentage should be significantly higher than the proposed default of 31 percent to ensure appropriate ASC payment and Medicare beneficiary access to CTR-US in ASCs.

Response: We are not accepting the commenter's recommendation. Notwithstanding the rare circumstances of an extremely costly device, we believe the application of our default device offset percentage policy for device-intensive procedures is a reasonable and appropriate approach for determining the device portions of procedures without claims data. Our default device offset percentage policy allows us to both estimate the approximate cost of the device but also supports cost containment objectives that our packaging policies aim to achieve under both the OPPS and ASC payment systems.

Comment: Commenters requested that CMS designate CPT code 43889 (Gastric restrictive procedure, transoral, endoscopic sleeve gastroplasty (ESG), including argon plasma coagulation, when performed) as device-intensive by assigning status indicator “J8” instead of the proposed “G2” status, stating that the procedure includes multiple single-use devices with hospital acquisition costs of $4,000 to $7,000 per patient, including an endoscopic suturing system, tissue helix, polypropylene sutures, and suture anchors. The commenter noted that CMS should not rely on the aberrant and very low volume data set from predecessor HCPCS code C9784 (Gastric restrictive procedure, endoscopic sleeve gastroplasty, with esophagogastroduodenoscopy and intraluminal tube insertion, if performed, including all system and tissue anchoring components), which showed inconsistent device offset percentages ranging from 12.03 percent to 52.94 percent across different years that do not approximate actual device costs. The commenter requested that CMS apply the default device offset amount of 31 percent to CPT code 43889 based on documented invoice cost of the device rather than unreliable claims data.

Response: We are not accepting the commenter's recommendation. CPT code 43889 has available CY 2024 claims data from predecessor code C9784. The device offset percentage of such claims data does not exceed our device-intensive threshold; therefore, we are not accepting the commenter's recommendation to assign device-intensive status to CPT code 43889.

Comment: A commenter recommended that CPT codes 22802 (Arthrodesis, posterior, for spinal deformity, with or without cast; 7 to 12 vertebral segments), 22804 (Arthrodesis, posterior, for spinal deformity, with or without cast; 13 or more vertebral segments), 22810 (Arthrodesis, anterior, for spinal deformity, with or without cast; 4 to 7 vertebral segments), and 22812 (Arthrodesis, anterior, for spinal deformity, with or without cast; 8 or more vertebral segments) receive device-intensive status when added to the ASC CPL. The commenter requested that CMS apply device offsets of 55.46 percent to CPT codes 22802 and 22804 (equivalent to clinically similar CPT code 22800) and 56.97 percent to CPT codes 22810 and 22812 (equivalent to clinically similar CPT code 22808), stating that CMS should use device offsets from clinically similar codes that use the same devices when claims data is not available for procedures recently removed from the IPO list. The commenter emphasized that device offset data frequently may not be available for procedures recently removed from the IPO list, and recommended that CMS use the greater of the APC-wide device offset percentage or the default device offset percentage of 31 percent if clinically similar code data is not available.

Response: We agree with the commenters that such procedures would have significant device costs. We will rely on CY 2024 claims data, where available, for establishing the device portions for CPT codes 22802, 22804, 22810, and 22812 for CY 2026. Where claims data is unavailable, we will rely on default device offset percentage methodology for determining the device portion. We are accepting the commenter's recommendations to assign device-intensive status to CPT codes 22802, 22804, 22810, and 22812 for CY 2026.

Comment: Some commenters recommended that we maintain the device offset percentage for CPT code 0621T (Trabeculostomy ab interno by laser).

Response: Where available, we rely on hospital claims data for determining the device offset percentages for procedures under the ASC payment system. Based on CY 2024 claims data available for this final rule with comment period, we are finalizing device-intensive status for CPT code 0621T as this procedure meets our criteria for device- intensive status. The device offset percentages for CPT code 0621T are based on CY 2024 claims data and can be found in Addendum FF to this final rule with comment period.

Comment: A commenter recommended that we revise the ASC payment indicators for CPT codes 19281 (Placement of breast localization device(s) (e.g., clip, metallic pellet, wire/needle, radioactive seeds), percutaneous; first lesion, including mammographic guidance) and 19285 (Placement of breast localization device(s) (e.g., clip, metallic pellet, wire/needle, radioactive seeds), percutaneous; first lesion, including ultrasound guidance) from their current designation to J8--“Device-intensive procedure added to ASC list in CY 2008 or later; paid at adjusted rate”--to permit Medicare ASC payment for these services. The commenter noted these codes have significant device costs (51.01 percent and 53.87 percent respectively), but current lack of ASC payment prevents Medicare patients from accessing wire-free, nonradioactive soft tissue localization services in the cost-effective ASC setting.

Response: We are not accepting the commenter's recommendation. As we stated in previous rulemaking (78 FR 75081), under the OPPS, a conditionally packaged procedure (status indicators “Q1” and “Q2) 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 covered surgical procedure, HCPCS codes that are conditionally packaged under the OPPS are generally packaged (payment indicator “N1”) under the ASC payment system and their costs are packaged into the cost for the covered surgical procedure and reflected in the payment rate.

Comment: A few commenters supported the designation of CPT code 31295 (Nasal/sinus endoscopy, surgical, with dilation (e.g., balloon dilation); maxillary sinus ostium, transnasal or via canine fossa) as “device intensive,” stating this accurately recognizes device costs and results in appropriate payment. However, commenters expressed concerns regarding the removal of CPT code 31298 (Nasal/sinus endoscopy, surgical, with dilation (e.g., balloon dilation); frontal and sphenoid sinus ostia) from the device intensive list, stating that this procedure continues to involve high device costs and should retain its classification to maintain predictable ASC payments and patient access. The commenter requested CMS reexamine Medicare claims data for accuracy, noting that CPT 31298 should have a device offset greater than 30 percent since it is more device intensive than CPT 31296 (which has a 28.5 percent offset) because it includes both frontal and sphenoid sinuses rather than just frontal.

Response: We appreciate the commenter's recommendation. Based on our review of CY 2024 claims data available for this final rule with comment period, the device offset percentage for CPT code 31298 does not exceed our device-intensive threshold; therefore, we are not assigning device-intensive status to CPT code 31298 for CY 2026.

Comment: A few commenters requested that CMS verify the accuracy of its device offset calculations for CPT code 66174 (Transluminal dilation of aqueous outflow canal (e.g., canaloplasty); without retention of device or stent) and assign device-intensive status (J8) if the device offset exceeds the 30 percent threshold. Both commenters expressed concerns about under-reporting of hospital device costs and inappropriate coding processes that have resulted in denial of device- intensive status despite the procedure requiring advanced microcatheters or permanently implanted devices, which limits Medicare patient access to these procedures in the cost-effective ASC setting.

Response: Based on our review of CY 2024 claims data available for this final rule with comment period, the device offset percentage for CPT code 66174 does not exceed our device-intensive threshold; therefore, we are not accepting the commenter's recommendation to assign device-intensive status to CPT code 66174 for CY 2026.

Comment: A few commenters requested that CMS assign device- intensive status to HCPCS code C9785 (Endoscopic outlet reduction, gastric pouch application, with endoscopy and intraluminal tube insertion, if performed, including all system and tissue anchoring components) and HCPCS code C9901 (Endoscopic defect closure within the entire gastrointestinal tract, including upper endoscopy (including diagnostic, if performed) or colonoscopy (including diagnostic, if performed), with all system and tissue anchoring components) instead of the proposed G2 payment indicator, stating that the procedures includes multiple single-use devices with hospital acquisition costs of $4,000 to $7,000 per patient, including an endoscopic suturing system, tissue helix, polypropylene sutures, cobalt chromium and stainless-steel alloy suture anchors, and polyetheretherketone (PEEK) suture cinches. The commenters noted that the current claims data is insufficient due to extremely low volume (fewer than 10 single frequency claims in 2025 and fewer than 50 in 2026) and should not be used to determine device intensive status. Both commenters requested that CMS apply the default device offset of 31 percent.

Response: We rely on hospitals to accurately report device costs for OPPS/ASC ratesetting and for determining device offset percentages. Based on our review of CY 2024 claims data available for this final rule with comment period, the device offset percentage for HCPCS codes C9785 does not exceed our device-intensive threshold; therefore, we are not accepting the commenter's recommendations to assign device- intensive status to HCPCS codes C9785 for CY 2026. However, the device offset percentage for C9901 based on claims data available for this final rule with comment period does exceed our device-intensive threshold. Based on the more recent claims data, we are finalizing device-intensive status under the ASC payment system for HCPCS code C9901 for CY 2026.

Comment: A commenter requested that CMS re-evaluate device- intensive status to CPT code 55880 (Ablation of malignant prostate tissue, transrectal, with high intensity-focused ultrasound (hifu), including ultrasound guidance) stating that the procedure is as device- intensive as other procedures that treat malignancies through the prostate.

Response: Based on our review of CY 2024 claims data available for this final rule with comment period, the device offset percentages for CPT code 55880 does not exceed our device-intensive threshold; therefore, we are not assigning device-intensive status to CPT code 55880 for CY 2026.

Comment: Commenters recommended adding CPT codes 0582T (Transurethral ablation of malignant prostate tissue by high-energy water vapor thermotherapy, including intraoperative imaging and needle guidance), 0786T (Insertion or replacement of percutaneous electrode array, sacral, with integrated neurostimulator, including imaging guidance, when performed), and 0991T (Cystourethroscopy, with low- energy lithotripsy and acoustically actuated microspheres, including imaging) to the ASC CPL and assigning device-intensive status to each of the CPT codes.

Response: We have reviewed the clinical characteristics and devices required of these procedures and are accepting the commenter's recommendations. As shown in Table 131 we are adding CPT codes 0582T, 0786T, and 0991T to the ASC CPL. We believe these procedures have significant device costs and are assigning these device-intensive status for CY 2026. In the absence of claims data for these three procedures, we are using our default device offset methodology to assign the device offset percentages to CPT codes 0582T, 0786T, and 0991T for CY 2026.

Comment: A commenter requested that we assign device-intensive status to CPT codes 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), and 0954T (Totally implantable active middle ear hearing implant; replacement of sound processor only, with attachment to existing transducers) under the ASC payment system.

Response: These codes are not separately payable under the OPPS; therefore, these procedures are not eligible to be added to the ASC CPL and be assigned device-intensive status under the ASC payment system. We are not accepting the commenters' recommendations to assign device- intensive status to CPT codes 0951T, 0952T, 0953T, or 0954T under the ASC payment system for CY 2026.

Comment: A commenter recommended that CMS establish a drug- intensive policy for ASC rate setting, similar to the current device- intensive policy, stating that the logic behind device-intensive procedures should equally apply to situations where a costly drug is packaged into a procedure payment since ASCs typically do not pay less than hospitals for expensive drugs. The commenter noted that just as the device-intensive policy allows ASC payment rates to better reflect device costs by applying the ASC conversion factor only to the non- device portion of the OPPS rate, a similar drug-intensive mechanism would ensure ASC rates more accurately represent the costs of costly packaged drugs.

Response: We are not accepting this recommendation. Unlike device costs, which are always packaged into the primary procedure (with the exception of devices on transitional pass-through status), many costly drugs that may be packaged under the OPPS into a Comprehensive APC are separately payable under the ASC payment system.

After consideration of public comments, we are finalizing our proposal to not incorporate the prospective offset to the OPPS conversion factor or device-related

portion as a result of the 340B remedy offset that we are finalizing to implement in this final rule with comment period. For final CY 2026 device offset percentages based on claims data for this final rule with comment period, CY 2024 claims processed through June 30, 2025, we refer readers to Addendum FF of this final rule with comment period. c. Adjustment to ASC Payments for No Cost/Full Credit and Partial Credit Devices

Our ASC payment policy for costly devices implanted or inserted in ASCs at no cost/full credit or partial credit is set forth in Sec. 416.179 of our regulations and is consistent with the OPPS policy that was in effect until CY 2014. We refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66845 through 66848) for a full discussion of the ASC payment adjustment policy for no cost/full credit and partial credit devices. ASC payment is reduced 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.

Effective CY 2014, under the OPPS, we finalized our proposal to reduce OPPS payment for applicable APCs by the full or partial credit a provider receives for a device, capped at the device offset amount. Although we finalized our proposal to modify the policy of reducing payments when a hospital furnishes a specified device without cost or with full or partial credit under the OPPS, in the CY 2014 OPPS/ASC final rule with comment period (78 FR 75076 through 75080), we finalized our proposal to maintain our ASC policy for reducing payments to ASCs for specified device-intensive procedures when the ASC furnishes a device without cost or with full or partial credit. Unlike the OPPS, there is currently no mechanism within the ASC claims processing system for ASCs to submit to CMS the amount of the actual credit received when furnishing a specified device at full or partial credit. Therefore, under the ASC payment system, we finalized our proposal for CY 2014 to continue to reduce ASC payments by 100 percent or 50 percent of the device offset amount when an ASC furnishes a device without cost or with full or partial credit, respectively.

Under current ASC policy, all ASC device-intensive covered surgical procedures are subject to the no cost/full credit and partial credit device adjustment policy. Specifically, when a device-intensive procedure is performed to implant or insert a device that is furnished at no cost or with full credit from the manufacturer, the ASC appends the HCPCS “FB” modifier on the line in the claim with the procedure to implant or insert the device. The contractor reduces payment to the ASC by the device offset amount that we estimate represents the cost of the device when the necessary device is furnished without cost or with full credit to the ASC. We continue to believe that the reduction of ASC payment in these circumstances is necessary to pay appropriately for the covered surgical procedure furnished by the ASC.

In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59043 through 59044) we adopted a policy to reduce the payment for a device- intensive procedure for which the ASC receives partial credit by one- half of the device offset amount that would be applied if a device was provided at no cost or with full credit if the credit to the ASC is 50 percent or more (but less than 100 percent) of the cost of the new device. The ASC will append the HCPCS “FC” modifier to the HCPCS code for the device-intensive surgical procedure when the facility receives a partial credit of 50 percent or more (but less than 100 percent) of the cost of a device. To report that the ASC received a partial credit of 50 percent or more (but less than 100 percent) of the cost of a new device, ASCs have the option of either: (1) submitting the claim for the device-intensive procedure to their Medicare contractor after the procedure's performance, but prior to manufacturer acknowledgment of credit for the device, and subsequently contacting the contractor regarding a claim adjustment, once the credit determination is made; or (2) holding the claim for the device implantation or insertion procedure until a determination is made by the manufacturer on the partial credit and submitting the claim with the “FC” modifier appended to the implantation procedure HCPCS code if the partial credit is 50 percent or more (but less than 100 percent) of the cost of the device. Beneficiary coinsurance would be based on the reduced payment amount. As finalized in the CY 2015 OPPS/ASC final rule with comment period (79 FR 66926), to ensure our policy covers any situation involving a device-intensive procedure where an ASC may receive a device at no cost or receive full credit or partial credit for the device, we apply our “FB”/“FC” modifier policy to all device- intensive procedures.

In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59043 through 59044) we stated we would reduce the payment for a device- intensive procedure for which the ASC receives partial credit by one- half of the device offset amount that would be applied if a device was provided at no cost or with full credit, if the credit to the ASC is 50 percent or more (but less than 100 percent) of the cost of the device. In the CY 2020 OPPS/ASC final rule with comment period, we finalized continuing our existing policies for CY 2020. We note that we inadvertently omitted language that this policy would apply not just in CY 2019 but also in subsequent calendar years. We intended to apply this policy in CY 2019 and subsequent calendar years. Therefore, we finalized our proposal to apply our policy for partial credits specified in the CY 2019 OPPS/ASC final rule with comment period (83 FR 59043 through 59044) in CY 2022 and subsequent calendar years (86 FR 63775 through 63776). Specifically, for CY 2022 and subsequent calendar years, we would reduce the payment for a device-intensive procedure for which the ASC receives partial credit by one-half of the device offset amount that would be applied if a device was provided at no cost or with full credit, if the credit to the ASC is 50 percent or more (but less than 100 percent) of the cost of the device. To report that the ASC received a partial credit of 50 percent or more (but less than 100 percent) of the cost of a device, ASCs have the option of either: (1) submitting the claim for the device intensive procedure to their Medicare contractor after the procedure's performance, but prior to manufacturer acknowledgment of credit for the device, and subsequently contacting the contractor regarding a claim adjustment, once the credit determination is made; or (2) holding the claim for the device implantation or insertion procedure until a determination is made by the manufacturer on the partial credit and submitting the claim with the “FC” modifier appended to the implantation procedure HCPCS code if the partial credit is 50 percent or more (but less than 100 percent) of the cost of the device. Beneficiary coinsurance would be based on the reduced payment amount.

We did not receive any comments on our policies related to no cost/ full credit or partial credit devices, and we are finalizing the continuation of our existing policies for CY 2026 without modification.

5. Requirement in the Physician Fee Schedule CY 2026 Final 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.

The CY 2026 PFS proposed rule included proposals related to the discarded drug refund policy, including proposals that may impact hospital outpatient departments (HOPDs) and ambulatory surgical centers (ASCs). Similar to our CY 2023, CY 2024, and CY 2025 notices in the OPPS/ASC proposed rules (87 FR 71988, 88 FR 49760, and 89 FR 59421 through 59422), we included a notice in the CY 2026 OPPS/ASC proposed rule 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 further implement section 90004 of the Infrastructure Act to the CY 2026 PFS proposed rule. Public comments on these proposals are addressed in the CY 2026 PFS final rule with comment period. We note that this same notice appeared in section V.B. of the CY 2025 OPPS/ASC proposed rule (90 FR 33716).

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.

Section 1833(i)(1) of the Act requires us, in part, to specify, in consultation with appropriate medical organizations, surgical procedures that are appropriately performed on an inpatient basis in a hospital but that can also be safely performed in an ASC, a CAH, or an HOPD, and to review and update the list of ASC covered surgical procedures at least every 2 years. We evaluate the ASC covered procedures list (ASC CPL) each year to determine whether procedures should be added to or removed from the list, and changes to the list are often made in response to specific concerns raised by interested parties.

Under our regulations at Sec. Sec. 416.2 and 416.166, covered surgical procedures furnished on or after January 1, 2022, are surgical procedures that meet the general standards specified in Sec. 416.166(b) and are not excluded under the general exclusion criteria specified in Sec. 416.166(c). Specifically, under Sec. 416.166(b), the general standards provide that covered surgical procedures are surgical procedures specified by the Secretary and published in the Federal Register and/or via the internet on the CMS website that are separately paid under the OPPS, that would not be expected to pose a significant safety risk to a Medicare beneficiary when performed in an ASC, and for which standard medical practice dictates that the beneficiary would not typically be expected to require active medical monitoring and care at midnight following the procedure.

Section 416.166(c) sets out the general exclusion criteria used under the ASC payment system to evaluate the safety of procedures for performance in an ASC. The general exclusion criteria provide that covered surgical procedures do not include those surgical procedures that: (1) generally result in extensive blood loss; (2) require major or prolonged invasion of body cavities; (3) directly involve major blood vessels; (4) are generally emergent or life-threatening in nature; (5) commonly require systemic thrombolytic therapy; (6) are designated as requiring inpatient care under Sec. 419.22(n); (7) can only be reported using a CPT unlisted surgical procedure code; or (8) are otherwise excluded under Sec. 411.15.

In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59029 through 59030), we defined a surgical procedure under the ASC payment system as any procedure described within the range of Category I CPT codes that the CPT Editorial Panel of the AMA defines as “surgery” (CPT codes 10000 through 69999) (72 FR 42476), as well as procedures that are described by Level II HCPCS codes or by Category I CPT codes or by Category III CPT codes that directly crosswalk or are clinically similar to procedures in the CPT surgical range that we determined met the general standards established in previous years for addition to the ASC CPL.

For a detailed discussion of the history of our policies for adding surgical procedures to the ASC CPL, we refer readers to the CY 2021 through CY 2025 OPPS/ASC final rules with comment period (85 FR 86143 through 86145; 86 FR 63777 through 63805; 87 FR 72068 through 72076; 88 FR 81923 through 81945; and 89 FR 94331 through 94334). 2. Final Changes to the List of ASC Covered Surgical Procedures for CY 2026

Historically, we have reviewed the clinical characteristics of procedures and consulted with appropriate medical organizations, other interested parties, and our clinical advisors to determine if those procedures would meet our existing regulatory criteria under 42 CFR 416.2 and 42 CFR 416.166.

In the CY 2021 OPPS/ASC final rule with comment period, we significantly revised our policy for adding surgical procedures to the ASC CPL. Specifically, we revised our regulatory criteria by removing certain general standard and general exclusion criteria at 42 CFR 416.166(b) and (c), moving them to a new section as nonbinding physician considerations for patient safety (85 FR 86143 through 86153). We also stated that we would add surgical procedures when we identified a surgical procedure that met general standards criteria or when we were notified of a surgical procedure that could meet general standards criteria and we confirmed that the procedure met those requirements.

In the CY 2022 OPPS/ASC final rule with comment period, we reinstated the general standard and general exclusion criteria as part of the review process, rather than safety factors for physicians to consider, and renamed the notifications process finalized in the CY 2021 rule as a nominations process, later re-named the “Pre-Proposed Rule CPL Recommendation Process” (86 FR 63776 through 63782). Under this process, which became effective in CY 2024, an external party can recommend a surgical procedure by March 1 of a calendar year for the list of ASC covered surgical procedures for the following calendar year. As a result of the reinstatement of the general standard and general exclusion criteria, we finalized the removal of 255 procedures that had been added to the ASC CPL in CY 2021. We also maintained these criteria and the Pre-Proposed Rule CPL Recommendation Process during the CY 2023 through CY 2025 rulemaking cycles.

In the CY 2022 OPPS/ASC final rule with comment period, commenters were largely split on the issue of reinstating the general standard and general exclusion criteria at Sec. 416.166 that were in place prior to CY 2021. Many commenters opposed this proposal and recommended that CMS not re-adopt these criteria. Commenters contended

that this policy may substitute administrative criteria for physician clinical judgment, reduce beneficiary choice, and increase costs since the lack of payment in the ASC setting may push these procedures to be performed in the higher-cost hospital setting.

For CY 2026, we proposed to revise our regulatory criteria at 42 CFR 416.166 to evaluate potential additions to the ASC CPL, similar to the changes we finalized in the CY 2021 OPPS/ASC final rule with comment period. Specifically, we proposed to revise our regulatory criteria by removing certain general standard and general exclusion criteria at 42 CFR 416.166(b) and (c), moving them to a new section as nonbinding physician considerations for patient safety. Under the revised criteria, we proposed to add certain surgical procedures to the ASC CPL, beginning in CY 2026, in order to expand access, while maintaining the safety for Medicare beneficiaries through the nonbinding physician considerations for patient safety. a. ASC CPL Review Process for CY 2026 (1) Final Changes to General Standards and Exclusion Criteria for CY 2026

For CY 2026, we continued to build on our efforts to maximize patient and physician choice and access to care by exploring broader approaches to adding procedures to the ASC CPL in order to further increase the availability of ASCs as an alternative and often lower cost site of care for Medicare beneficiaries, while maintaining patient safety as required by section 1833(i) of the Act. An expansion of the ASC CPL would maximize the ability of ASCs to divert patients that can be safely treated in an ASC setting away from the hospital setting, which would preserve the capacity of hospitals to treat more acute patients. Expanding the procedures placed on the ASC CPL would also build on the policy changes we have made in recent years to further site neutrality between the HOPD and ASC settings.

In light of these objectives, we proposed to modify the existing general standard criteria under 42 CFR 416.166(b) that currently require covered surgical procedures to be surgical procedures specified by the Secretary and published in the Federal Register and/or via the internet on the CMS website, separately paid under the OPPS, not expected to pose a significant safety risk to a Medicare beneficiary when performed in an ASC, and for which standard medical practice dictates that the beneficiary would not typically be expected to require active medical monitoring and care at midnight following the procedure. We retained the condition that procedures be separately paid under the OPPS and moved the latter two standards to a new section outlining possible physician considerations in making site-of-service decisions.

We also proposed to eliminate five of the current general exclusion criteria at 42 CFR 416.166(c)(1) through (c)(5) and move them to the new physician considerations section. We believe these five exclusionary criteria may no longer be necessary to determine what procedures can be safely added to the ASC CPL because many ASCs are currently able to safely provide services with these characteristics, based on prior interested parties' feedback and public comments we have received. This would also allow physicians practicing in the ASC setting, who have the greatest familiarity and insight into the needs of individual beneficiaries, to use their complex medical judgement to determine whether they can safely perform a procedure in the ASC, given the entirety of the circumstances, including the clinical profile of the patient, the surgical back-up available at the ASC, and the ability to safely and timely respond to unexpected complications.

Under this proposal, we would keep the remaining three general exclusion criteria at Sec. 416.166(c)(6) through (c)(8) because the original reasons we adopted them in CY 2008 continue to exist, subject to the proposed modifications to Sec. 416.166(c)(6). These criteria would continue to exclude certain procedures from the ASC CPL, namely those that are designated as requiring inpatient care under 42 CFR 419.22(n), can only be reported using a CPT unlisted surgical procedure code, or are otherwise excluded under 42 CFR 411.15. We believe that these proposed criteria are sufficient guardrails to ensure, along with appropriate patient selection and complex medical judgement of the physician, that the procedure can be performed safely on an ambulatory basis, including procedures that involve these five currently excluded characteristics. We believe that this proposal could advance the goals of increasing physician and patient choice and expanding site neutral options in conjunction with patient safety considerations.

With respect to the existing general exclusion at Sec. 416.166(c)(6), which excludes procedures designated as requiring inpatient care under Sec. 419.22(n) from classification as covered surgical procedures, this proposal would modify this standard since the IPO list is proposed for elimination beginning in CY 2026 with a 3-year transition period, as described in section IX. of this final rule with comment period. While we recognize the need to revisit the criterion at Sec. 416.166(c)(6) following the elimination of the IPO list, we believe that maintaining this criterion for CY 2026 would allow for consistency between the two lists during the 3-year phaseout period. We note that if a service comes off the IPO list at any time, then the general exclusion at Sec. 416.166(c)(6) would cease to apply to the service.

We acknowledge that this approach is a departure from the existing criteria that we established effective beginning in 2008, and from our policy finalized in the CY 2022 OPPS/ASC rule. However, we believe that this approach would expand and build upon our 2008 policy intent. Although there are some differences when comparing our CY 2008 criteria and the proposed CY 2026 criteria, such as removing the general standards and several of the original general exclusion criteria, permitting the addition of procedures to the ASC CPL that would have been prohibited by those criteria, and the different accreditation requirements and conditions of participation requirements between HOPDs and ASCs, these concerns have largely been addressed by the progress in medical practice and ASC capabilities in the 17 years since the criteria were developed as previously noted. In particular, given advances in the practice of medicine and the evolving nature of ASCs, we believe ASCs are now better equipped to safely perform procedures that were once too complex or risky to be performed safely on Medicare beneficiaries in the ASC setting. As previously mentioned, although ASCs and hospitals have different health and safety requirements, many ASCs often undergo accreditation as a condition of State licensure and share some similar licensure and compliance requirements with hospitals. Each of these requirements provides additional safeguards for the health and safety of Medicare beneficiaries receiving surgical procedures in an ASC. Additionally, in the CY 2022 OPPS/ASC final rule with comment period, when we reinstated the ASC CPL criteria that were in effect during CY 2020, we stated that many of the surgical procedures added to the list in CY 2021 may pose a significant safety risk to a typical Medicare beneficiary when performed in an ASC (86 FR 63777). However, we believe that these procedures are safe to

perform in an ASC setting because all procedures identified are already payable in the HOPD setting and, therefore, are already safely performed on an ambulatory basis, consistent with the statutory requirement under section 1833(i)(1) of the Act. In addition, while several of the identified procedures may typically require hospital care that lasts beyond midnight, we expect that appropriately selected patient populations in the ASC setting would be healthier and less complex and would likely not require active monitoring or medical care past midnight beyond the procedure.

Comment: Several commenters, including ASCs, ambulatory surgery associations, and professional societies supported our proposal to revise the ASC CPL criteria under Sec. 416.166 and add 547 surgery or surgery-like procedures to the ASC CPL for CY 2026. Some commenters believed that clinical and technological advances have enabled both outpatient hospital departments and ambulatory surgical centers to deliver equivalent patient outcomes and maintain similar standards of care quality, and allow for procedures to be performed in the ASC setting that previously could not. There was also support for allowing the physician's clinical judgment to make the site of service determinations for these procedures. Some commenters also stated that expanding the ASC CPL would allow for certain procedures to shift from higher-cost inpatient settings to lower-cost outpatient settings, which would also increase access and beneficiary choice. This would also lower hospital burden and preserve hospital capacity for higher acuity patients.

Response: We thank the commenters for their support.

Comment: Many commenters, including hospital systems, hospital associations, and professional societies were opposed to our proposal to expand the ASC CPL by revising the ASC CPL criteria under Sec. 416.166, with patient safety being the primary concern. Some commenters urged CMS not to treat ASCs as the equivalent of hospital outpatient departments because they are not regulated as hospitals and do not have the necessary resources on site to provide the higher level of care necessary to perform many of the surgical procedures proposed for addition to the ASC CPL. Commenters also stated that the ASC CPL serves as an important guardrail for patient safety. A commenter stated that while recognizing a physician's clinical judgement is important, the ASC CPL and the criteria at Sec. 416.166 act as a roadmap for the physician's decision-making. Commenters were concerned removing certain general standards and exclusion criteria could lead to procedures being inappropriately performed in the ASC setting. Commenters supported maintaining the current criteria and review process, as they stated it allowed the ASC CPL to expand while restricting procedures that cannot be safely performed in the ASC setting. One commenter gave the example that for exclusion criteria (5) “commonly require systemic thrombolytic therapy”, despite advances in care, there are still significant safety risks with performing these procedures in the ASC setting. A commenter was also concerned that CMS was not fulfilling the statutory obligation to limit procedures on the ASC CPL to those that can be safely performed in an ASC.

Commenters were also concerned about our proposal to add procedures removed from the IPO list to the ASC CPL, as we proposed to eliminate the IPO list over a 3-year period. Commenters suggested that we implement a 2-year period between removing a code from the IPO list and adding it to the ASC CPL or wait until the procedure was being performed at least 50 percent of the time in the outpatient setting. Commenters also suggested waiting until we have more data on these procedures in the outpatient setting before adding them to the ASC CPL.

Response: We thank the commenters for their input. As we previously stated in the CY 2021 OPPS/ASC final rule with comment period, while these are important considerations in determining whether a surgical procedure may be safely performed in an ASC, we are finalizing the proposed approach because ASCs are currently and increasingly able to safely provide services that would be covered under the revised criteria when considered appropriate for a patient by their physician. Since these general standard and exclusionary criteria will simply be moved to a different section of Sec. 416.166, we believe these criteria will still act as a roadmap for physician decision-making. We also believe there are sufficient guardrails for ASCs, including State and local regulations, Conditions for Coverage (CfCs), accreditation requirements, and medical malpractice laws, to ensure that physicians are able to prioritize patient safety when determining the site of service.

We have previously recognized the importance of maintaining flexibility in our review of procedures that can be safely performed in the ASC setting. In recent years, we have been able to add surgical procedures to the ASC CPL that were once considered solely hospital inpatient procedures, including, for example, total knee arthroplasty, which is currently one of the most frequently performed procedures in ASCs, or certain coronary intervention procedures involving major blood vessels. We believe it is important that we continue to adapt the ASC CPL in light of the significant advances in medical practice, surgical techniques, and ASC capabilities that have enabled some ASCs to safely perform procedures involving major blood vessels and other general exclusion criteria that were once too complex for the ASC setting. As we have heard from several interested parties, many procedures that are currently only payable as hospital outpatient services under Medicare are safely performed in the ASC setting for other payors. We acknowledge that non-Medicare patients tend to be younger and have fewer comorbidities than the Medicare population, but believe that careful patient selection can identify Medicare beneficiaries who are suitable candidates to receive these services in the ASC setting. We have long recognized the importance of ensuring that the health care system has as many access points and patient choices for all Medicare beneficiaries as possible, and we believe it is important that we continue to support both greater flexibility for physicians and patients to choose ASCs as the site of care and patient safety in supporting those important goals.

We recognize commenters' concerns regarding our proposal to add procedures to the ASC CPL that were proposed for removal from the IPO list for CY 2026 as part of the first phase of the elimination of the IPO list. We believe that adding these procedures to the ASC CPL as the IPO list is phased-out allows for greater consistency and less confusion between the two lists. We also believe that current guardrails in place are sufficient to ensure patient safety.

Comment: Some commenters also had concerns about the financial and administrative burden this proposal would have on hospitals. Commenters were concerned that allowing certain procedures to be performed in the ASC setting could increase the burden on hospitals if they face increased transfers from ASC facilities if there are increases in complications from ASCs performing procedures that are not safe in that setting. Commenters were also concerned that this proposal would allow certain higher paying procedures to move over to the ASC setting,

negatively affecting hospitals and their ability to offset lower paying procedures. Additionally, many commenters stated that physicians may face financial and administrative pressure to prioritize performing procedures in lower-cost settings over patient safety.

Response: We disagree that this proposal would negatively impact hospitals due to higher paying procedures being shifted to the ASC setting. Given that physicians will be exercising their judgment to determine the cases and procedures that may be safely performed in the ASC setting, we anticipate that hospitals will continue to provide high paying procedures that will offset lower paying procedures. We have also heard from interested parties that certain procedures we proposed to add to the ASC CPL setting are already being performed safely in the ASC setting. Therefore, given that physicians will be using their clinical judgment to determine the appropriate site of service, we believe that any shifts to the ASC setting that may occur with the expansion of the ASC CPL will be clinically appropriate and reflect ongoing trends. We believe that this proposal will incentivize efficiency and foster access, while continuing to maintain patient safety. Additionally, we would welcome any data or analyses on the effects of potential shifts of high cost procedures to the ASC setting that interested parties would like to share.

We also emphasize that the fact that a procedure is added to the ASC CPL should not be interpreted to mean the procedure is only appropriately performed in ASC setting or that the ASC setting is the most appropriate setting for a beneficiary and instead defer to the clinical judgment of physician. We believe that current safeguards, such as facility accreditations, State licensures, CfCs, medical malpractice laws, and professional guidelines, will prevent inappropriate shifts in the site of service and allow physicians to prioritize patient safety.

Comment: Multiple commenters requested that, if we were to finalize our proposal to revise the criteria and expand the ASC CPL, that CMS provide additional monitoring and guidance. Commenters requested that CMS monitor site of service data to observe any shifts as the ASC CPL is expanded. Commenters also requested that CMS monitor for safety and quality concerns for beneficiaries, such as emergency department admissions following procedures performed in ASCs. Additionally, commenters requested that CMS provide guidance on determining the appropriate site of service selection for procedures being added to the ASC CPL, including considerations for clinical and social factors.

Response: We thank the commenters for their feedback. We agree with the value of monitoring this data, including tracking the complications or readmission rates as procedures are adding the ASC CPL. We would welcome any patient outcomes data, analyses, or recommendations that interested parties would like to share. We will take these recommendations into consideration for future rulemaking.

In regards to providing further guidance, we note the balance between several factors on this important issue, namely, the prohibition on CMS interfering with the practice of medicine in section 1801 of the Act, the need to provide clear information about CMS billing and payment rules that ensure hospitals, physicians, and other interested parties can understand and operate within them, and our belief that the specific decision about the most appropriate care setting for a given surgical procedure is a complex medical judgment made by the physician based on the beneficiary's individual clinical needs and preferences and on the general coverage rules requiring that any procedure be reasonable and necessary. Additionally, we believe that input received from interested parties suggests physicians are sufficiently capable of making the requisite site of service determinations for their patients, and as such, further guidance is not needed.

Comment: Some commenters expressed concern about the potential for increased coinsurance obligations for beneficiaries if we finalize our proposal to expand the ASC CPL. These commenters also recommended CMS ensure beneficiaries are informed in advance that, unlike under the OPPS, ASC cost-sharing is not capped at the inpatient deductible and could exceed cost sharing in the hospital outpatient setting for the same procedure.

Response: We are aware that beneficiaries may incur greater cost- sharing for procedures in an ASC setting that we proposed to add to the ASC CPL, but note that this is not an occurrence that is unique to these procedures. As we stated in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59389), section 4011 of the 21st Century Cures Act (Pub. L. 114-255) amended section 1834 of the Act by adding a new subsection (t), which requires the Secretary to make available to the public via a searchable website, with respect to an appropriate number of items and services, the estimated payment amount for the item or service under the OPPS and ASC payment system and the estimated beneficiary liability applicable to the item or service. We implemented this provision by providing our Outpatient Procedure Price Lookup tool available via the internet at https://www.medicare.gov/procedure-price-lookup. This web page allows beneficiaries to compare their potential cost-sharing liability for procedures performed in the hospital outpatient setting versus the ASC setting. We believe this tool helps inform beneficiaries of potential cost-sharing amounts for receiving a service in the ASC setting compared to the outpatient setting, and note that this tool would include a comparison of cost-sharing liability for procedures in the outpatient hospital and ASC settings in the future. (2) Final Procedure Additions for CY 2026

CMS will add surgical procedures to the ASC CPL in rulemaking as we become aware of new surgical procedures that meet the four criteria requirements at Sec. 416.166(b)(2). A member of the public may also notify CMS of a surgical procedure they believe meets the requirements at new Sec. 416.166(b)(2) through the pre-proposed rule recommendation process or the public comment period. CMS will confirm whether the procedure does meet those requirements and will add it to the ASC CPL if it does meet that criteria. In accordance with the new proposed regulatory text at Sec. 416.166(d), physicians would then assess whether their specific patients can or cannot safely receive such covered surgical procedure in the ASC setting, based on patient- specific considerations.

For CY 2026, we proposed to update the ASC CPL by adding 276 potential surgery or surgery-like codes to the list that we believe would meet the proposed revised ASC CPL criteria under 42 CFR 416.166. This includes procedures submitted through our pre-proposed rule nominations process for addition to the ASC CPL under the proposed revised criteria. Additionally, we proposed to add 271 surgery or surgery-like codes to the CPL that are currently on the IPO list, if we finalize our proposal to remove these services from the IPO list for CY 2026.

Comment: We received comments in support of specific codes that we proposed to add to the ASC CPL for CY 2026, with many commenters supporting the addition of cardiac ablation codes.

Response: We thank the commenters for their support.

Comment: Multiple commenters recommended specific codes to be added to the ASC CPL including, echocardiography, electrophysiological studies, and percutaneous coronary interventions. We received 44 procedure recommendations for the CPL, listed in Table 155, below.

Response: We thank commenters for their recommendations. We individually assessed each of the recommended procedures to determine whether these procedures meet each of the revised regulatory criteria at the Sec. 416.166. Based on our review of the clinical characteristics of the procedures and their similarity to other procedures that are currently on the ASC CPL, we believe that 13 procedures out of the 44 procedure recommendations we received meet the general standards and exclusion criteria for the ASC CPL as set forth in the revised Sec. 416.166(b) and (c), respectively. These procedures, listed in Table 131, are:

CPT code 92960 (Cardioversion, elective, electrical conversion of arrhythmia; external);

CPT code 92961 (Cardioversion, elective, electrical conversion of arrhythmia; internal (separate procedure));

CPT code 92924 (Percutaneous transluminal coronary atherectomy, with coronary angioplasty when performed; single major coronary artery or branch);

CPT code 92933 (Percutaneous transluminal coronary atherectomy, with intracoronary stent, with coronary angioplasty when performed; single major coronary artery or branch);

CPT code 92937 (Percutaneous transluminal revascularization of or through coronary artery bypass graft (internal mammary, free arterial, venous), any combination of intracoronary stent, atherectomy and angioplasty, including distal protection when performed; single vessel);

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);

CPT code 92973 (Percutaneous transluminal coronary thrombectomy mechanical (list separately in addition to code for primary procedure));

CPT code 92974 (Transcatheter placement of radiation delivery device for subsequent coronary intravascular brachytherapy (list separately in addition to code for primary procedure));

CDT code D7440 (Excision of malignant tumor- lesion diameter up to 1.25 cm);

CDT code D7441 (Excision of malignant tumor- lesion diameter greater than 1.25 cm);

CPT code 0582T (Transurethral ablation of malignant prostate tissue by high-energy water vapor thermotherapy, including intraoperative imaging and needle guidance);

CPT code 0786T (Insertion or replacement of percutaneous electrode array, sacral, with integrated neurostimulator, including imaging guidance, when performed); and

CPT code 0991T (Cystourethroscopy, with low- energy lithotripsy and acoustically actuated microspheres, including imaging).

In the upcoming section, we explain our rationale for not including the 26 recommended procedures, organized by category. We note that while we did not add these codes to the ASC CPL, we did determine some of these codes are appropriate to add to list of covered ancillary procedures, as discussed in section XIII.D.3. of this final rule with comment period.

13 cardiovascular codes, including electrophysiological studies, transesophageal echocardiography, and 3D predictive modeling for procedure planning. As these procedures are non-surgical, they would not qualify as separately payable surgical procedures on the ASC CPL. Additionally, 2 cardiovascular procedures requested are currently packaged procedures on the ASC CPL. As these procedures are add-on codes, they would not qualify for separate payment on the ASC CPL.

2 circulatory assist and one percutaneous coronary intervention procedures. As these procedures will remain on the IPO list for CY 2026, they would not qualify as payable surgical procedures on the ASC CPL.

4 percutaneous coronary intervention and 2 thrombolysis procedures. The codes associated with these procedures are scheduled to be deleted for CY 2026.

1 pharmacologic agent administration procedure. As this procedure is non-surgical, it would not qualify as a separately payable surgical procedures on the ASC CPL.

1 neurostimulator analysis procedure. As this procedure is non-surgical, it would not qualify as a separately payable surgical procedures on the ASC CPL.

5 middle ear implant procedures. These procedures are currently nonpayable under the OPPS and would not qualify as payable surgical procedures on the ASC CPL.

After consideration of the public comments, we are finalizing our proposal, with modification, to revise the ASC CPL criteria under Sec. 416.166 by modifying the general standard criteria and eliminating five of the general exclusion criteria and to add the proposed 547 procedures to the ASC CPL for CY 2026. We are also finalizing adding an additional 13 codes recommended by commenters to the ASC CPL for CY 2026. These codes, along with their long descriptors and final payment indicator assignments, are listed in Tables 131, 132, and 133. We believe that these finalized policies will increase the flexibility for physicians to exercise their complex medical judgment, factoring in patient safety considerations, and for patients have more choice in which setting to receive surgical procedures. BILLING CODE 4120-01-P

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BILLING CODE 4120-01-C

Covered ancillary services are specified in Sec. 416.164(b) and, as stated previously, are eligible for separate ASC payment. As provided at Sec. 416.164(b), we make separate ASC payments for ancillary items and services when they are provided integral to ASC covered surgical procedures that include the following: (1) brachytherapy sources; (2) certain implantable items that have pass- through payment status under the OPPS; (3) certain items and services that we designate as contractor-priced, including, but not limited to, procurement of corneal tissue; (4) certain drugs and biologicals for which separate payment is allowed under the OPPS; (5) certain radiology services for which separate payment is allowed under the OPPS; and (6) non-opioid pain management drugs that function as a supply when used in a surgical procedure. Payment for ancillary items and services that are not paid separately under the ASC payment system is packaged into the ASC payment for the covered surgical procedure.

In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59062 through 59063), consistent with the established ASC payment system policy (72 FR 42497), we finalized the policy to update the ASC list of covered ancillary services to reflect the payment status for the services under the OPPS and to continue this reconciliation of packaged status for subsequent calendar years. As discussed in prior rulemaking, maintaining consistency with the OPPS may result in changes to ASC payment indicators for some covered ancillary services. For example, if a covered ancillary service was separately paid under the ASC payment system in CY 2024, but will be packaged under the CY 2025 OPPS, we would also package the ancillary service under the ASC payment system for CY 2025 to maintain consistency with the OPPS. Comment indicator “CH” is used in Addendum BB (which is available via the internet on the CMS website) to indicate covered ancillary services for which we proposed a change in the ASC payment indicator to reflect a proposed change in the OPPS treatment of the service for CY 2025.

In the CY 2022 OPPS/ASC final rule with comment period, we finalized our proposal to revise Sec. 416.164(b)(6) to include, as ancillary items that are integral to a covered surgical procedure and for which separate payment is allowed, non-opioid pain management drugs and biologicals that function as a supply when used in a surgical procedure as determined by CMS (86 FR 63490).

Comment: A commenter requested that CMS work with dental and ASC interested parties to expand the number of dental procedures that can be performed with HCPCS code G0330. They also requested that CMS remove the requirement that HCPCS code G0330 must be billed along with a covered but non-payable dental ancillary service.

Response: We thank the commenter for their input. While we are not adding any additional dental procedures that can be billed with G0330 to the list of covered ancillary services at this time, we will take this into consideration for future rulemaking.

Comment: Multiple commenters recommended specific codes to be added to the list of covered ancillary services for CY 2026. We received a total of 24 recommended procedures, which included esophageal motility, gastrointestinal tract imaging, and magnetic resonance safety procedures.

Response: We agreed with commenters that these recommendations could be added to the list of covered ancillary procedures for CY 2026, with the exception of two procedures. We did not find HCPCS codes G0562 (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 G0563 (Stereotactic body radiation therapy, treatment delivery, per fraction to one or more lesions, including image guidance and real-time positron emissions-based delivery adjustments to one or more lesions, entire course not to exceed 5 fraction) to be appropriate to add to the list of covered ancillary services because we did not find them to be integral to any procedures on the ASC CPL. Therefore, we are adding an additional 22 procedures recommended by commenters to the list of ASC covered ancillary services for CY 2026. In addition to these 22 procedures, we also found that 13 procedures recommended by commenters that did not qualify for addition to the ASC CPL, due to being nonsurgical in nature, could be appropriately placed on the list of ASC covered ancillary services.

In summary, we are finalizing adding 35 procedures recommended by interested parties to the list of ASC covered ancillary services for CY 2026. New CPT and HCPCS codes for covered ancillary services for CY 2026 can be found in section XIII.B. of this final rule.

As we discussed in section III. of the CY 2026 OPPS/ASC proposed rule, beginning January 1, 2026, we proposed to remove skin substitutes from the list of packaged items and services at Sec. 419.2(b)(16) under the OPPS and under Sec. 416.164(a)(5) under the ASC payment system. Our proposal intended to establish a consistent and uniform framework for how these products are treated across different outpatient settings of care to help ensure equitable access and appropriate payment for these services. While we do not believe these products are commonly used in the ASC setting, we believe extending our uniform framework from the physician office and hospital outpatient setting to the ASC setting will help ensure equitable access to these products in the future across the different sites of outpatient care.

Our payment policies under the ASC payment system for covered ancillary services generally vary according to the particular type of item or service and its payment policy under the OPPS. Drugs and biologicals that are separately paid under the ASC payment system are paid at the prospective rates adopted under the OPPS. Similar to how ASCs are paid for brachytherapy sources provided integral to ASC covered surgical procedures at prospective rates adopted under the OPPS, we proposed to pay for groups of skin substitute products at annual prospective rates adopted under the OPPS, effective January 1, 2026. Additionally, these prospective rates would not be subject to the ASC wage index adjustment and beneficiaries would be responsible for 20 percent coinsurance.

To separately pay for the provision of certain groups of skin substitute products when used during a covered surgical procedure, we proposed to revise Sec. 416.164(b) to include groups of skin substitute products as covered ancillary items and services that are integral to a covered surgical procedure. As discussed in section XIII.B.6. of the CY 2026 OPPS/ASC proposed rule, we proposed to identify HCPCS skin substitute codes which may be separately payable with our proposed payment indicator of “S2”--Skin substitute supply group paid separately when provided integral to a surgical procedure on ASC list; payment based on OPPS rate. Therefore, for those existing skin substitute products for which we proposed to separately pay for, we revised the payment indicator from “N1”--Packaged service/item; no

separate payment made--to payment indicator “S2” effective January 1, 2026. Additionally for new skin substitute products which we proposed to add to the list of ASC covered ancillary items and services, we proposed to assign these skin substitute products an ASC payment indicator of “S2”.

We did not receive public comments on this provision, and therefore, we are finalizing as proposed.

All ASC covered ancillary services and their final payment indicators for CY 2026 are also included in Addendum BB to this final rule (which is available via the internet on the CMS website).