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Comments to CMS on Proposed Changes to the Hospital Outpatient Prospective Payment System and CY 2008 Rates – 9/12/07

September 12, 2007  



Herb Kuhn

Acting Administrator

Centers for Medicare and Medicaid Services

Department of Health and Human Services

Attention: CMS 1392-P

P.O. Box 8011

Baltimore, MD 21244-1850


Re:          CMS 1392-P, Proposed Changes to the Hospital Outpatient Prospective Payment System and CY 2008 Rates – Bone Marrow and Stem Cell Processing Services and Blood and Blood Products


Dear Mr. Kuhn:


AABB appreciates the opportunity to comment on the proposed changes to the hospital outpatient prospective payment system for 2008.  AABB (formerly known as the American Association of Blood Banks) is a professional association dedicated to advancing transfusion medicine and cellular therapies.  AABB’s members include approximately 1,800 institutions, including hospital-based blood banks and laboratories, transfusion services and blood and bone marrow collection facilities, as well as approximately 8,000 individuals involved in blood, bone marrow, cord blood and peripheral blood stem cell collection, processing, storage and infusion.


Bone Marrow and Stem Cell Processing Services


AABB is concerned about the APC assignment and the proposed payment levels for the bone marrow and stem cell processing procedures, codes 38207-38215. These services involve the processing of bone marrow and stem cells prior to transplantation, such as removing certain undesirable cells. From the inception of the hospital outpatient prospective payment system (HOPPS) program until the present time, the Centers for Medicare and Medicaid Services (CMS) has not recognized these CPT codes. Rather, three “G” codes were established to report these services.  G0265, Cryopreservation, freezing and storage of cells for therapeutic use, and G0266, Thawing and expansion of frozen cells for therapeutic use, were erroneously classified as clinical diagnostic laboratory tests and excluded from the HOPPS.  G0267, Bone Marrow or peripheral stem cell harvest, modification or treatment to eliminate cell type(s) (e.g., T-cells, metatastic carcinoma), was covered under HOPPS.


After several years of discussion with the agency, AABB was very pleased when CMS announced in the proposed rule that Codes 38207-38215 would be recognized under HOPPS.  However, we are concerned about the payment grouping to which the codes have been assigned. 


First, codes 38207-38209 were assigned to APC 0344, Level IV Pathology, with a proposed payment rate of $54.69. This APC consists of various anatomic pathology services including Codes 88307 and 88309. However, the steps that are involved in cryopreserving, thawing and washing bone marrow/stem cells which will be used for a potentially life-saving transplant are very different and cost significantly more than handling and preparing pathology specimens for microscopic evaluation.  The former involves the collection of much larger volumes (e.g., a liter vs. a few milliliters), testing required by the Food and Drug Administration, sterile equipment and supplies, etc., none of which are needed for diagnostic testing.  The bone marrow/stem cells are products to be transplanted into humans, not specimens that will be discarded. 


AABB, along with other interested societies, recently initiated a survey of hospital centers that perform bone marrow transplantation services. The survey requested data from the centers on direct costs—clinical labor and supplies and reagents. Based on the results received from seven institutions, the mean and median direct costs of performing these services are as follows:


Code 38207, Cryopreservation and storage – mean $809 and median $500

Code 38208, Thawing w/o washing – mean $206 and median $144

Code 38209, Thawing w/ washing – mean $325 and median $206


Assuming direct costs are about 50 percent of total costs, this would indicate that total costs are about double the direct cost estimates. This would raise the estimate of total costs to:

Code 38207, Cryopreservation and storage – mean $1,618, median $1,000

Code 38208, Thawing w/o washing – mean $412, median $288

Code 38209, Thawing w/ washing – mean $650 and median $412


AABB recognizes that ultimately CMS will have charge and cost data when there is reporting under this series of codes. However, these data will not be available until at least the payment rates are established for CY 2010, when payments will be based on CY 2008 claims. In the interim, AABB urges CMS to place these codes in an APC that pays substantially more than $54, which will cover only a small fraction of the costs. We would suggest that APC 0111, Blood Product Exchange (paying $776), would be an appropriate initial payment level.  It would pay substantially less than the costs of freezing and storing the product and somewhat more than the average cost of thawing the same material. However, on average, this APC would be a reasonable interim APC until better data are available in two years.


Second, as noted above, G0267 is currently paid for under HOPPS and is assigned to APC 0110.  This is the blood transfusion APC and CMS proposes to assign all the cell depletion codes, codes 38210-38215, to this APC which has a payment rate of $222.44.  These are very low volume codes, particularly in the Medicare population. The median cost data for G0267 indicate only 194 single claims were billed (438 total claims) with a median cost of $405.84.  It must be emphasized that this is for all the various cell depletion services. However, there are extremely wide differences in the costs of the various cell depletion activities and we are confident that most of the billings within G0267 are for the lower cost services such as red blood cell removal (code 38212).  Two of the codes, 38210 (T-cell depletion) and 38211 (tumor cell depletion) are extremely costly services which are performed by only a limited number of facilities and very rarely in the Medicare age group.  We have data for five facilities that indicate that the reagent kits alone for codes 38210 and 38211 used for these services cost from $5,913 to $7,968 per patient with clinical staff costs from $270 to $1,344. Thus, the $222 payment rate would cover only a miniscule portion of the costs. AABB, therefore, asks that these two codes be placed into a much higher paying APC and would suggest, APC 0112, Apheresis and Stem Cell Procedures, with a payment rate of $2.035.93 would be a reasonable interim rate. 


Alternatively, AABB proposes that CMS reimburse CPT codes 38210 and 38211 using a cost-based payment methodology by providing payment for these services at a hospital’s charges reduced to cost using existing cost-to-charge methodologies for blood products.  This would allow time for hospitals to adapt to the new codes and CMS to collect improved claims data. 


For the other cell depletion codes, 38212-38215, we request that these codes be placed in a separate APC using the median cost data for G0267. (We are confident that the data CMS has on G0267 is overwhelmingly for codes 38212-38215 services.) This would raise the payment level to the $400 level from the proposed $220 rate based on the transfusion codes. When CMS has adequate claims data for the individual codes it might be appropriate to adjust the APC grouping further.



Blood Products


AABB appreciates CMS’ continued attention to payments for life-saving blood products.  AABB is pleased that CMS has proposed increased payments for most commonly transfused blood products.  However, it should be noted that CMS’ proposed payments in 2008 continue to lag behind actual acquisition cost data for the most commonly transfused blood product, leukocyte-reduced red blood cells (RBCs) in 2004, the most recent year for which comprehensive national blood cost data were collected. 


AABB conducted the 2005 Nationwide Blood Collection and Utilization Survey under a contract with the Department of Health and Human Services to collect data on a number of issues relating to blood supply and utilization, including cost issues.  In this nationwide survey, data were collected from approximately 1,600 hospitals.  Hospitals provided information regarding the average amount paid by hospitals in 2004 for blood products. AABB is particularly concerned about the proposed payment for APC 0954, leukocyte-reduced RBCs, which is by far the highest volume blood product reimbursed under Medicare.  In 2004, a unit of leukoreduced RBCs cost $201.07 and yet CMS is proposing to pay only $188.47 for this critical product in 2008.  Implementation of the proposed APC rate will mean that most hospitals will incur a financial loss in providing blood and blood products to Medicare patients.


The costs of blood products continue to increase with new safety advances and increasingly expensive donor recruitment and retention efforts.  Recent safety measures include a new screening test for Chagas’ disease, initiatives to mitigate the risk of transfusion related acute lung injury (TRALI) – the leading reported cause of transfusion related death – and the movement toward improved, ISBT 128, labeling of blood products. 


Given these safety advances, AABB believes it is reasonable to estimate that the average amount hospitals will pay for leukoreduced RBCs in 2008 will have increased from the 2004 $201 acquisition cost.  It should be noted that this rate reflects the cost of acquiring the blood product and does not include any allowance for the cost incurred by hospitals for overhead, storage, handling and wastage due to shelf-life limitations.  Thus, it is clear that the proposed APC rates will not cover the cost of this and other critical blood products.  AABB therefore recommends that CMS continue to increase payments for blood products, including leukoreduced RBCs, to bridge the gap between Medicare payments and the actual costs incurred by hospitals.   


Thank you again for the opportunity to offer these comments.  If you have questions or require additional information, please contact me at 301-215-6554 or




Theresa L. Wiegmann, JD

Director, Public Policy